In response to this NY Times story about a manufacturer unable to find enough applicants with basic reading and math skills to fill the 100 jobs it’s trying to fill, an outraged Duncan Black declaims:
Perhaps the problem is you want highly skilled workers but you want to pay them cr*p, or you aren’t willing to pay to train them.
I don’t recall anything in the article about “highly skilled workers” only about basic skills:
All candidates at Ben Venue must pass a basic skills test showing they can read and understand math at a ninth-grade level. A significant portion of recent applicants failed, and the company has been disappointed by the quality of graduates from local training programs. It is now struggling to fill 100 positions.
$31,000 is above the median household income in most OECD countries (warning: XLS) and far above the incomes in most countries in the world. However, I’m curious. Given that’s the case how do you think that we can boost wages for workers with only basic skills in this country? Close the borders? Put steep tariffs on all goods coming into the country? What? I really want to know.
Also, perhaps I’m mistaken but I thought that teaching people to read and write was the responsibility of the schools rather than employers. If people no longer are expected to learn to read, write, and figure in primary school, what do they learn there? Why do we have them?
Sigh…
Duncan Black, once a respected professor of economics, now a hack.
$31,000 is also above the median household income in Cleveland (about $28,000 according to US Census bureau). This is a pretty odd, disturbing story. I’m inclined to wonder if part of the problem might not just be an uneducated population, but fitness to hold an assembly-line job. I’m not sure I buy that explanation because of the job losses in construction and the auto industry, but people perceiving themselves capable of assembly-line work are a subset of the population.
Over the past 14 years our portfolio of companies has numbered anywhere from 4 – 13, mostly manufacturers. I’ve had a first hand view. I suspect others here have as well. Any business owner will tell you that attracting quality employees is one of the toughest tasks they face. And when you find them, you do everything within reason to keep them.
As for Mr Black, the appropriate points have been made. I would simply add that we have set up structural barriers to unemployed worker mobility. Lots of laid off Detroit workers don’t move to Tennessee because they are on the dole.
Second, a dirty little secret, recessions are used to cull the herd.
Yeah, that’s a point I made regularly on the leading edge of the recession as I listened to a number of companies announce layoffs that certainly didn’t look justified by the companies’ fundamentals to me.
It also raises another point that I’ve made here from time to time. Supply and demand aren’t the only motivations. I think that seeking to avoid regulation (in various forms) is a major motivation, particularly in larger companies with, shall we say, vulnerabilities, e.g. they’re a monopoly, they rely heavily on government contracts, they rely on favorable regulation for a competitive edge, etc.
Ding, ding, ding. Winner.
Is there a reference for that statement about Detroit workers refusing to move to Tennessee? It rings false to me.
It seems unlikely that there has been any research on the subject. Is there some study that has controlled for small factors like, say, owning a home in Detroit, or having kids in schools in Detroit? Are you equating union benefits with “the dole?” Is there some huge difference in “the dole” in Michigan as opposed to Tennessee?
Pitiful, Michael. I’m sure your books are wonderful, but on matters like this you’d be better served by observing, learning and not publicly exposing your ignorance.
Ah, here we have our source:
Right. Seasonal landscape workers. That’s absolutely what was implied by “lots of laid-off Detroit workers.” Still not sure how Tennessee got into the mix.
Drew:
Actually, I just exposed your dishonesty, Drew.
Google is your friend. First try looking for the economic working paper archive. Once you’ve found that, then search on unemployment benefits and unemployment duration. Duration of unemployment spells is positively correlated with the length of unemployment insurance. The longer the insurance the longer the spell.
Here is a paper I found,
http://www.cesifo-group.de/pls/guestci/download/CESifo%20Working%20Papers%202006/CESifo%20Working%20Papers%20July%202006/cesifo1_wp1765.pdf
Abstract: This paper studies a program that extends the maximum duration of unemployment benefits from 30 weeks to 209 weeks. Interestingly, this program is targeted to individuals aged 50 years or older, living in certain eligible regions in Austria. In the evaluation, I use sharp discontinuities in treatment assignment at age 50 and at the border between eligible regions and control regions to identify the effect of extended benefits on unemployment duration. Results indicate that the duration of job search is prolonged by at least .09 weeks per additional week of benefits among men, whereas unemployment duration increases by at least .32 weeks per additional week of benefits among women. The salient differences between men and women are consistent with the lower minimum age for early retirement applying to women.
Some more…
http://econpapers.repec.org/paper/izaizadps/dp4523.htm
http://econpapers.repec.org/paper/izaizadps/dp1181.htm
Great my last comment is awaiting moderation because I posted urls directly vs. embedding them in text. Needless to say Michael, there has been studies on the length of unemployment and benefits duration. The longer the unemployment benefits duration the longer people tend to say unemployed. Tehre are even studies on migration patterns and unemployment benefits.
You’ve exposed only your ignorance, Michael.
“Actually, I just exposed your dishonesty, Drew.”
No, Michael, you exposed the fact that you should stick to your expertise, writing childrens books, and that you have no clue about how the larger economy actually functions.
michael’s got a point on home ownership though. About 50% of Detroit area mortgage holders are underwater. Many probably can’t afford to move to a better economy.
I want to repeat a point I’ve made here before: one size does not fit all but we’re trying to use a uniform policy all over the country. Detroit’s problems are not the same as Las Vegas’s are not the same as Providence’s but we’re treating them all the same.
Maybe there’s a uniform policy that would solve the problems in all of these places. Or maybe we need to implement a more diverse solution. Will Detroit ever return to its former size? It’s hitched to a handful of companies that probably have their best days behind them. I think the solution for Detroit is a smaller Detroit. Perhaps we need to think of ways to make it easier (and more attractive) for underwater homeowners to walk away.
From the Card Austrian study.
“In this paper, we review the literature on the “spike” in unemployment exit rates around benefit exhaustion, and present new evidence based on administrative data for a large sample of job losers in Austria. We find that the way unemployment spells are measured has a large effect on the magnitude of the spike at exhaustion, both in existing studies and in our Austrian data. Spikes are typically much smaller when spell length is defined by the time to next job than when it is defined by the time spent on the unemployment system. In Austria, the exit rate from registered unemployment rises by over 200% at the expiration of benefits, while the hazard rate of re-employment rises by only 20%. The difference between the two measures arises because many individuals leave the unemployment register immediately after their benefits expire without returning to work. The modest spike in re-employment rates implies that most job seekers do not wait until their UI benefits are exhausted to return to work: fewer than 1% of jobless spells have an ending date that is manipulated to coincide with the expiration of UI benefits.”
Please note the last sentence. Also, AFAIK, none of these were done in the middle of a severe recession.
http://www.nber.org/papers/w12893
Steve
PD- Good point. It would appear people here are advocating walking away from underwater loans.
One other key point would be the level of unemployment benefits being offered. Prolonged benefits that are generous are more likely to result in what Steve V. describes, typical of a European plan. I thik that explains why so many of those studies are done in Europe. In the US, you still see people quoting the Katz study, though even Katz notes that his study may not be relevant under current conditions.
http://www.tnr.com/blog/jonathan-cohn/76001/myth-the-day-benefits-make-people-lazy
Steve
OT- Very good Ed Harrison piece. Verdon might like it if he hasnt seen it. I think you would also.
http://www.creditwritedowns.com/2010/06/stimulus-is-no-panacea.html
Steve
Steve and Drew:
Nice try, no sale.
Drew starts with “Laid off Detroit workers.” And “The dole.” And “Tennessee.”
I ask for supporting evidence and Drew pulls his condescending bullshit. A clear giveaway that he’s got nothin’.
So I use the Google and promptly find the source of Drew’s anecdotal “evidence.”
Verdon rushes to Drew’s defense with papers purporting to prove that unemployment insurance is demonstrated to extend unemployment.
Which does nothing to change the fact that the original statement by Drew was baloney. Unemployment insurance is not “the dole.” And “laid off Detroit workers” is a specific imagery. And the mention of Tennessee was specific as well. See, what we had there was a very clear word-picture. Laid-off Detroit workers were refusing to take jobs in Tennessee because they enjoyed being on the dole.
None of which was true. Which is why it smelled, and why I said it smelled, and why I was right. As clearly proven when I found Drew’s “source.” The source he angrily refused to supply.
So, it’s sweet the way you close ranks with your chief toady, Verdon, it really is. But he asserted “A” and you are attempting to prove “B.”
“B” may or may not be true. “A” was not true. It was a distortion of an anecdotal news report. Had Drew said, “I don’t have any factual support, only a news report, and now that I look at it, it was off-topic,” we’d have no problem. Drew chose not to do that, he chose to attack me personally in a sneering, angry, condescending way.
In that he was dishonest.
By the way, a geographical note: Austria is not actually anywhere near Detroit.
Use your Google Maps, Verdon, you’ll find (no doubt to your great surprise) that they are quite far apart. I’m very much afraid that your attempt to equate Austria and Detroit exposes your ignorance.
It’s even possible that there might be very different conditions in the two widely-separated places.
Maybe you should stick to processing utility bills or whatever it is you do in your angry little cubicle.
I thought this was a really interesting article on employment by former Intel CEO Andy Grove.
Also, having worked landscaping for a couple of years, I know what a hard, low pay job it is (but I liked it since I’m outdoorsy). I can completely understand that people would prefer unemployment, even if the income is less.
Points to Reynolds this time. Specifics were cited initially, NOT a bunch of economic papers. (Which show correlation, not causation. Causation may be implied, but not demonstrated.)
Further, the argument about length of UE compensation leading to more UE may not mean squat in the current mess. According to the BLS 652,000 dropped out of the work force last month. Why didn’t they just get a job when their UEC ran out? Answer: There just aren’t any jobs to be had right now. Last I heard it there were six people looking for work for every job opening. I suspect that number is far too low.
Consider last month – ~83,000 jobs created by the private sector. For the week ending June 19 the BLS reported ~4.6M were claiming UEC, inclusive of Teirs 1, 2, 3 & 4. Let’s assume all those people are complete welfare cheating scum living at home eating bon-bons on their $275 a week and are NOT looking for work. That still leaves another 10.oM uneployed people still actively looking for work. That’s what, about 120 people looking for each of those 83,000 private sector jobs? And that DOESN’T include those on UEC, or those who have dropped out, or those working part-time for economic reasons, or those looking because they used to make 60K a year but now make minimum wage.
(I’d put hyperlinks in my comment to back up the numbers quoted, but Steve Verdon claims Google is your friend, so have at it.)
All the talk about economic papers doesn’t mean shit UNLESS you can show that the circumstances now match the circumstances used to generate the data the papers rely on. It requires about 10 seconds of thought for someone paying attention to the current situation to realize those papers DO NOT APPLY to present circumstances.
Grove’s article is interesting. Sounds like contrition to me. Grove has a net worth of about $400 million, much of it the direct result of offshoring. There are a few things that Mr. Grove leaves out of his history of Silicon Valley, namely that his company was a leader in offshoring and by 1980, a scant dozen years after his company was founded to manufacture memories, memories weren’t being produced in the United States anymore.
His solution is protectionism. Lots of luck with that one. It’s a formula for everybody becoming poorer, including the U. S. but particularly China.
I’m open to other suggestions. Protectionism is fatuous.
However, his article does bring up something that I think we should recall. In every emerging industry, whether it’s telephony, automobiles, or electronic components, the winners attempt to prevent upstarts by attacking the very things that enabled them to get a foothold in the first place. This time around the competitors are in Taiwan, China, and, soon, Viet Nam. But the process is the same.
Dave,
The part that I found most interesting, simply because I hadn’t heard the argument before, is his contention that domestic manufacturing is necessary for innovation. Not sure if I agree with that, and I don’t have the experience or knowledge to really have an informed opinion, but it sounds like a reasonable argument at first glance.
It’s a point I’ve made here from time to time and I believe. Heck, I’ve experienced it. Engineering and design inevitably follow manufacturing and I’m glad to see that somebody besides me has noticed it.