Employer Preference

I see that more people are coming around to my view of the alleged skills deficit in the U. S. workforce. In his column in the Washington Post Robert Samuelson writes:

If shortages were widespread, Burtless and other economists argue, wages would be rising rapidly as employers competed for scarce skilled workers. There’s scant evidence of this. From April 2012 to April 2013, average hourly manufacturing wages rose 1 percent, reports the Labor Department. Over the same period, the gain for all private nonfarm workers was 1.9 percent. Among computer programmers, inflation-adjusted wages have remained flat for a decade, says a study by the Economic Policy Institute, a liberal think tank.

Similarly, economist Paul Osterman of the Massachusetts Institute of Technology surveyed 925 manufacturing establishments in 2012 about worker shortages. Three-quarters reported no shortages, defined as vacancies lasting three months or more. Of the rest, most shortages were less than 10 percent of their workforces. “Very few firms responded by reducing production,” says Osterman. “The most common reaction was to outsource” domestically — to send business to other American firms. Labor bottlenecks haven’t crimped recovery, he concludes. A study by economists Edward Lazear of Stanford University and James Spletzer of the Census Bureau agrees.

He proposes four alternative explanations, each of which is probably true to varying degrees in different companies:

1. doubts about the recovery;
2. government policies raising labor costs;
3. unwillingness to pay for training;
4. fear of squeezed profits.

I think that I would change the fourth to “boosting profits”. If rephrased that way, it would include my pet explanation: they want to chaffer wages down. Previously, I’ve documented here how Microsoft is notorious for paying its H1-1B visa holders less than others with comparable credentials and experience in comparable jobs.

There’s empirical evidence supporting the finding that those most injured by greatly increased employer selectiveness are the long-term unemployed. If I were king, I’d start clamping down on that, starting with companies that have government contracts. I’ve floated my idea for a “central jobs clearing house” many times before.