I’m a bit puzzled by this article in the Washington Post by Heather Long, Alyssa Fowers, and Andrew Van Dam. The question they’re considering is clear enough:
A mystery sits at the heart of the economic recovery: There are 10 million job openings, yet more than 8.4 million unemployed are still actively looking for work.
The answer they’re putting forward is, basically, that things are different now:
At heart, there is a massive reallocation underway in the economy that’s triggering a “Great Reassessment†of work in America from both the employer and employee perspectives. Workers are shifting where they want to work — and how. For some, this is a personal choice. The pandemic and all of the anxieties, lockdowns and time at home have changed people. Some want to work remotely forever. Others want to spend more time with family. And others want a more flexible or more meaningful career path. It’s the “you only live once†mentality on steroids. Meanwhile, companies are beefing up automation and redoing entire supply chains and office setups.
The question they don’t address is whether the federal government should be subsidizing that reassessment. For some, e.g. the editors of the WSJ, the answer is obvious—bring in foreign workers willing to take the jobs that are remaining unfilled at the wage being offered. IMO the ROI on that is terrible. There are incremental costs associated with more people and a workers earning $10 or $12 an hour doesn’t pay enough in taxes to cover those incremental costs. Bringing in workers who are willing to work for wages that don’t cover the freight doesn’t make that freight go down. The people who are already here are one thing; bringing in more is something else entirely. I think that we have altogether too many jobs paying low wages and, indeed, there needs to be a reassessment but of a different sort than being discussed in the article. I’m not anti-immigrant. I’m anti-‘low wage immigrant” and anti-“immigrant who is being brought in to keep wages low”. If you don’t think the latter situation is actually happening you haven’t been paying attention to what has been going on in technology in the U. S. over the last couple of decades.
Here’s an interesting passage from the article:
Nationwide, most industries have more job openings than people with prior experience in that sector, Labor Department data show. That’s a very different situation than after the Great Recession, when the number of unemployed far outstripped jobs available in every sector for years. To find enough workers, companies may need to train workers and entice people to switch careers, a process which generally takes longer, especially in fields that require special licenses.
That reminds me of the famous “Help Wanted” ad that appeared in 1982: “Wanted: IBM PC Programmer. Five years experience required.”. The IBM PC was first released in 1981. Do the math. I can’t tell whether they’re hiring or fishing. Is there actually a skills mismatch or are employers trying to see what’s out there and at what wage they’re willing to work?
Here’s the conclusion of the article:
The White House and many business leaders hope a combination of rising vaccination rates, reduced unemployment benefits and more time will lead more unemployed Americans to find new careers — and to be excited about them.
Sarah Henrie, 39, from the San Francisco Bay area, lost her corporate job at Bloomingdale’s in June of 2020 and struggled to find any job openings in her area of expertise: International marketing and tourism. Initially, she was shocked to find herself unemployed for the first time in her career.
But after her daughter was born, she decided she wanted a more flexible career. She’s about to take the real estate exam in California. If all goes well, she will start as a Realtor early next year working with her brother.
“It’s been a crazy year and we’re still kind of navigating,†Henrie said. “The nice thing about real estate is it’s flexible and you’re not commuting and going into an office. I think it will allow me to work and also be able to have more time with my daughter than I would have if I had been in my old role.â€
The key to this great reallocation will be ensuring some workers aren’t left behind.
which sounds quite a few warning notes to me including how unrepresentative Ms. Henrie is of those looking for work, that real estate is notoriously gig work particularly for women with children, that contacts matter, and that California real estate is rather obviously in a “greater fool” bubble.
Joyner, Taylor et al are noodling the same thing over there.
I am in total agreement with your observation that we should not be filling the gap with immigrants. But the corollary is that we can’t stop the natural adjustments in the labor market (wages; geographical mobility) from occurring by subsidizing people who do not want to adapt. Observations were made at OTB that covid has caused a fundamental reassessment of priorities. I find that light thinking. Great migrations of work behavior or location have occurred regularly throughout history. The difference today is that we subsidize the opposite behavior. Covid is just an excuse.
“I can’t tell whether they’re hiring or fishing.”
I can. The shortages are real. All you have to do is be a participant in the labor market and you can experience it.
“Is there actually a skills mismatch or are employers trying to see what’s out there and at what wage they’re willing to work?”
Both. But the second half of the sentence has existed as long as there has been a labor market. Any market for that matter. The sentence needs to be completed as well. Are employees trying to see what’s out there………….
I would agree that we have subsidized being out of work too much and it is time to stop that, actually probably past time. That said, it doesnt look like the problem is limited only to low paying jobs. I am just not buying the idea that someone normally making $70k-$80k (or more) is sitting at home and happy with $300/week in UE.
In health care Covid is an issue. I know the numbers for our network but haven’t seen them nationally yet. Some nurses, CNAs, etc have entirely left the field. Some have left to join agencies where they make 2-4 times as much so they work fewer hours. Working with he Covid pts is exhausting and it is irritating knowing that most of them didnt need to be there. On the doc side there have been some earlier than planned retirements but not a lot where I am.
Steve
That’s sort of what the post is about. Just as subsidies increase willingness to pay, e.g. health care, education, so too do subsidies decrease willingness to work, move, or improve marketable skills. We can’t tell how much or what the elasticity is but I think that it does is intuitive.
I think that our economy needs a recalibration. We need to produce more and we need to do it more efficiently. Employers need to bear more of the costs for training. I think the way to accomplish that is to make it MUCH harder for the Tatas of the world to do business. The tools we are using to measure economic welfare including unemployment, GDP, are not adequate to the task.
Are pre-pandemic employment levels really normal, or optimal?
There was a time when most mothers were not in the workforce and government didn’t subsidize daycare. When the elderly stayed home with some help from family.
Might be staying home for a year made some realize how much they were needed there.
I don’t really care if bar and restaurant owners can’t pay mothers enough to neglect their children, figure it out yourselves.
That’s fine. We should not be borrowing from the future to make that easier to do. If people elect not to work and accept a lower standard of living to do it, that’s their choice.