Structural Unemployment and "Skills gap" - RIP

Michael Collins
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"The last unemployment report said that for the first time in my lifetime, and I’m not young…we are coming out of a recession but job openings are going up twice as fast as new hires. And yet we can all cite cases that we know about where somebody opened a job and 400 people showed up. How could this be? Because people don’t have the job skills for the jobs that are open." President Bill Clinton, September 2010

Former president Clinton took the lead in selling the notion of "structural unemployment" - a gap between employer job requirements and inadequate skills on the part of workers. Clinton's sales skills are considerable. The thoroughly unsupported notion stuck in the minds of the corporate media and some business leaders.

Blame the workers, those who lost jobs since the start of the recession. Clinton and the other representatives for the financial elite asked that we believe in just two short years of the recession, job skill requirements changed so much, workers couldn't be hired back. That was nonsense then and is nonsense now.

Just yesterday, Mike Konczal of the Roosevelt Institute delivered what should be the final blow to the structural unemployment myth.

"In March of 2011, the Bureau of Labor Statistics revised its numbers for job openings from 2006 through 2010, dramatically reducing the number of job openings for the last months of 2008 and the entirety of 2009 and 2010.

"On average, there were 172,000 fewer job openings per month in 2009 and 235,000 fewer job opening per month in 2010 than had previously been reported.

"Nothing has happened since in terms of job openings that would lead me to believe that the recovery is taking off or employers are having trouble finding workers. The job-opening rate is virtually unchanged over the past year, while the unemployment rate has come down due to a combination of weak jobs growth and people leaving the labor force." (Author's emphasis)

Dramatic Job Revisions Bust Structural Unemployment Myths Mike Konczal, The Roosevelt Institute, May 11th, 2011

The basis for Clinton's argument and the notion of structural unemployment officially debunked.

Shortly after Clinton's statement, but before the BLS corrections, the Economic Policy Institute (EPI) offered a devastating rebuttal of the skills gap myth.

"Did the economy transform itself from the end of 2007 to the beginning of 2010? What would lead us to believe that, and what footprints would such a transformation leave? One would imagine that such a transformation would be associated with sizable productivity gains and significant investments."

"One of the curious aspects of this developing structural unemployment storyline is how hard it is to find any research trying to tie this story to actual detailed trends in employment, unemployment, or output data."

Reasons for Skepticism about Structural Unemployment Examining the Demand-Side Evidence, EPI Briefing Paper #279, L. Mishe, H. Shierholz, & K Edwards, Sept 22, 2010

Mishe et al. showed the 2001 recovery compared to the alleged 2009 recovery. There are far fewer jobs since 2009 than there were in the 2001 "jobless recovery."

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Other Critiques after Clinton's Statement

Mark Whitehouse put it succinctly in his Wall Street Journal blog, Employers Aren’t Trying Hard to Hire,

Jonathan Miller and Jeannette Wicks-Lim also provided a strong critique in Dollars and Sense pointing to the adoption of the "skills gap" theme by the media. They asked an important question, as well: "Purveyors of the mismatch theory would have a hard time explaining how it is that underemployed workers who want full time work do not possess the skills to do the jobs full-time that they are already doing, say, 20 hours a week."

Paul Krugman pulled no punches:

'Saying that there are no easy answers sounds wise, but it’s actually foolish: our unemployment crisis could be cured very quickly if we had the intellectual clarity and political will to act.

"In other words, structural unemployment is a fake problem, which mainly serves as an excuse for not pursuing real solutions." Paul Krugman, September 28, 2010

How long will we suffer clueless leaders?

Indefinitely, it seems. However, if knowledge is the highest goal, we can take major satisfaction in Mike Konczal's excellent analysis and other intellectually honest efforts to understand the realities that we face and point to solutions.

A Demand Side Possibility

There is ample proof that the American worker is no longer a viable scapegoat for the failed recovery. There is also empirical proof that workers see the ongoing crisis in the economy as either a recession or depression, according to a recent Gallup Poll. In the spirit of popular democracy, it's time to listen to the people.

We need well paying jobs that add value to both the nation as a whole and workers and their families.

The Fortune 500 companies have at least $2 trillion worth of cash on hand. Coincidentally, the price tag for much needed repairs in the infrastructure of the nation comes to just over $2 trillion according to the American Society of Civil Engineers 2009 "report card." Our democratically elected officials could confiscate the corporate cash and apply it to the needs of the nation. That would stimulate the economy, improve the nation, provide good jobs, and create considerable demand.

We could call the confiscation a Treasury Swap by simply giving the corporations one of those Special Treasury Notes that citizens get for the Social Security payroll tax surpluses currently used to fund the deficit. Then we'd all be in the same boat.

END

N.B. Even if we had structural unemployment, to any degree, the proponents of the argument fail to factor in training. Companies do it all the time. Locate applicants with skill levels that match open jobs and induct them into the company routine. Some tech firms get new hires from a general poll lacking industry expertise, train them, and do quite well. But user anonymous drive-by below has an irrefutable example, Rosie the Riveter:

"How did Rosie the Riveter ever manage to build B-17's? No structural unemployment if the job really has to get done no matter what.

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Comments

It's A No-Brainer

We do NOT have a shortage of skills in this country, nor in our workforce. The American worker can produce as well as any workforce anywhere. I totally agree that the problem is NOT a lack of skills. The only problem our workforce has, is a lack of living wage opportunities that cover all education and skill levels. The sole reason for extremely high unemployment in this country, is "our dependency on, and addiction to, cheap foreign imports". And, the sole reason for that dependency and addiction, is our unfair, unjust, and one-sided anti-America foreign trade agreements and policies. In addition, corporate greed and unpenalized job out-sourcing to foreign labor markets negatively influence our labor market.

We can summarize our unemployment crisis by say that "America no longer produces what America uses and consumes". We've spent decades supporting foreign economies at the expense of our own. And now, the chickens have come home to roost.

Our unemployment crisis is a direct result of actions and inaction on the part of those that we've entrusted with the well-being of this once great nation and her citizens. The American workforce did NOT vote to send our jobs to foreign labor markets. The American workforce did NOT voluntarily close our plants and factories, and consent to job-killers such as NAFTA, CAFTA, and other anti-America economic destroyers.

The solution and "common sense" fix, is to put America back to work, producing what America uses and consumes. This can be accomplished by enacting and enforcing "fair, equal, and balanced foreign trade agreements and policies". In addition, we must penalize job out-sourcing and companies that relocate out-side of our borders.

But, we can't correct our problems until we cut off the head of the snake. That snake is the anti-America Washington Brotherhood. They have, and will continue to sell this country out and impose economic devastation, unless we, the voters, wake-up and smell the coffee.

Our rapidly growing population demands living wage opportunities that cover all education and skill levels. Where will those living wage jobs come from? They'll come from America producing what America uses and consumes, or they won't come at all.

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Because you can do wrong, and get away with it, doesn't make it right

The Lack Of Skill BS

So, we have a lack of skills in America? In reality, most of the technology and innovations used around the globe, are products of The United States of America. In America, we have some of the most educated and brilliant minds that can be found anywhere. Our workforce has laid the foundation and created the standards for products manufactured around the world.

The problem is NOT one of skills, but rather it's one of "living standards". The American worker can NOT work and be self-supporting by making $10.00 a month in wages. Our "living standards" do NOT allow us to work for "third world" wages. Our workforce simply can NOT compete with cheap foreign labor markets. Our workforce can NOT compete with child labor working in sweat shops.

The obvious evidence that supports the above statements is our "import dependency". Over the past several decades, we've lost the textile, steel, electronics, automotive, furniture, tool, toy, housewares, hardware, and plastics industries to cheap foreign labor markets. We even import food products such as produce, nuts, coffee, fish, beef, and may others.

We have the skills necessary to be a "self-supporting workforce and economy", but we lack the backing and support of those that make the rules of the game. And, those that make the rules, wins the game. Now, guess who makes the rules of the game.

It always amazes me that many many report the news concerning our many economic woes, report stats and trends, but almost never point a finger at the villains and anti-America crooks responsible for our troubles. Go figure.

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Because you can do wrong, and get away with it, doesn't make it right

so glad you wrote this up, another BS lie destroyed

This post, also does a good job in showing it's false, but I must say, even before the BLS revisions to the birth/death model, that claim there was a "skills mismatch" was simply not in the numbers, but now it's very clear it's not.

This is also important for the never ending demand of more foreign guest workers and offshore outsourcing.

That is used by lobbyists repeatedly as an excuse. But the reality is America's high tech industry, industry was built up by Americans.

To get that, one has to enable, hire, support, train the U.S., labor force. Since they want to treat all of America as disposable labor, even to get a college degree puts the average student over $22k in debt, right out of the gate, surprise, surprise....

you get what you pay for. High Tech used to send STEM to college, full free ride to graduate school for those who had ability. All companies had paid training.

I mean hot damn, WWII they had to train everybody, you had people who had never touched anything mechanical building ships and airplanes.

Exposing this nonsense is a long time coming. It's an excuse to labor arbitrage, pure and simple and not invest and support the U.S. labor force.

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The Next Step

Yes, you and I, and almost everyone else can clearly see the problems, their adverse effects, as well as their economically devastating results. But how many of us are willing to take the next step? How many are willing to point fingers at the villains, name names, and vote accordingly? How many see the problems, actually feel the harsh effects, but continue to re-elect the anti-America egotistical self-serving crooks to office?

Please note: John Q. Public doesn't vote on the floors of Congress. John Q. Public doesn't legislate and pass harmful laws and policies. John Q. Public doesn't sign and enact anti-America foreign trade agreements and policies. John Q. Public doesn't have the money or resources to hire full-time Lobbyists. John Q. Public didn't vote to send our jobs to foreign labor markets. John Q. Public didn't spend us into astronomical and rising debt. John Q. Public didn't create a society almost totally dependent on government assistance programs for its' survival. In summary, John Q. Public is NOT at fault here, rahter it's the U.S. government that must shoulder the blame for what has happened to this country.

Yes, it's great and informative to report the economic news. Yes, it's great to be able to show the misinformation and obvious bias. But, at the same time, we should show and explain the "who" and the "why". Remember, our present economic "near collapse" didn't happen by chance, nor by accident, but was planned and engineered by the United States Government.

The next step is to oust every single member of Congress, and elect pro-America representatives. Otherwise, re-electing those already in office, will only serve to further our economic downfall. Their agenda is set, their greedy backers are in place, and we don't have the money or power to fight them on their turf. Our vote is our only weapon, and we must use it to our benefit, and not to the benefit of those hell-bent on our destruction.

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Because you can do wrong, and get away with it, doesn't make it right

The Next Step

The Next Step is obvious.

It is to completely replace the system. Paris 1789, St. Petersburg 1917 and Beijing 1949 come to mind.

As long as the current system can perpetuate itself, nothing will change - those who benefit from the "Disemployment Of America" have the money and the influence to buy whatever legislation and regulation they wish to accomplish this goal.

Right now times are NOT HARD ENOUGH - but let U-6 unemployment breach the 30% level and you will see fifty Cairos simultaneously. At that point, the armed forces should take over, with a mandate to make full employment and national self-sufficiency matters of national security and survival.

Through the miracle of arbitrary arrest,trial and punishment of guilty banksters, CEOs and politicians
not only can the economy be saved but the national spirit as well. Televised show trials and executions
will go a long way toward this goal.

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The End Is Near

Yes, the entire system has to be changed, and quickly. It's obvious that the present system is broken and working against us. Instead of constantly talking about our miseries and economic pains, we should be talking about what to do to fix the problems. It seems to me that we're in a rut talking about jobs, debt, unaffordable health care, taxes, wars, deficits, corruption, bankruptcies, home foreclosures, high food and energy cost, illegal immigration, Social Security, Medicare and Medicaid fraud, the rising cost of higher education, rising poverty and homelessness, our import and energy dependency, the injustices in our judicial system, white collar crime, the failed war on illegal drugs, government no-bid contracts, subsidies to rich farmers and big oil, and campaign financing.

I'm sure that we all know and understand the many problems, but how many know what to do about them? How many are willing to discuss the solutions? All of us should not only write about the problems, but spend equal time writing about solutions. The problems are obvious to most of us, and the solution is equally obvious.

I totally agree with your take on this matter.

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Because you can do wrong, and get away with it, doesn't make it right

The End Is Near

Sonny:

Before we tackle any of the problems you have enumerated above, we must first ask ourselves V.I. Lenin's question: "What is to be Done?"

I submit that none of the problems listed above can be solved or even partially ameliorated by the perpetuation of the current system - it has simply gone on for so long that absent the massive application of force it cannot reform itself.

Any system, whether nominally capitalist or nominally socialist, that ceases to have as its main goal the welfare and well-being of the bulk of the population
will lose that population's allegiance and cease to exist.

The Soviet Union ceased to exist the day the people
decided that they would no longer fight to preserve the current system. When even the army and state security forces quit, it was game over.

Even China realizes that the day they can no longer
provide an improved standard of living for their population,their days will also be numbered.

So - as to "What is to be Done?" there are four steps:

1) Broad-based revolt, either peaceful or not, characterized by mass non-participation in the "system", precipitated by a "tipping point" event;

2) An attempt by "The Powers That Be" to suppress
dissent, at first through propaganda, and then through violence;

3) The rejection by the mass of the population of any compromise measures or negotiations with "The Powers That Be" - rather, an insistence that FIRST those "Powers That Be" must yield power before any negotiations can take place;

4) The emergence of new systems and political structures in areas "liberated" by "revolutionary" activity. A key activity in "liberated" areas will be the speedy trial and public punishment of those members of TPTB unlucky enough to fall into revolutionary hands, thereby providing an inspiration to others still fighting.

Revolution could succeed here - we have a well-armed, mechanically inclined population, sufficient natural resources and arable land to support the population,
reasonable literacy, and well-organized means of transport and communication. We are far better prepared and equipped for "transformational revolt" than Egypt, Tunisia, Libya or even Greece or Ireland.

And when it is all over, we will be surprised at how easy it was.

Many would fight and die for their country, families, and way of life - no one in his right mind would give his life for Goldman Sachs.

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Possible Revolt

I agree, and have written about a possible revolt many times over the past six plus years. Certainly the U.S. is not exempt from a citizen revolt, it happens all around the world. I also agree that the present system is broken beyond repair. We've given the government "Carte Blanche" for way too long, and the results are killing all hope of prosperity and justice. Our foundation and basic principles of equality have long since eroded.

Under a governing body, totally supported by greed, egos, the thirst and hunger for power, and absolute influence over monetary control, the "people" have fallen victim to their own trust and patriotism. Totally absent of a representative government, the general population is now at the mercy of a system gone awry.

If we consider just the economic impact alone, of actions and inaction over the past half century or so, there's no way anyone can justify what the Washington Brotherhood has done to this country and her citizens. We were once an industrial power revered around the world. Now, we're nothing more than a market place where other countries dump their cheaply made goods.

Yes, the "people" will soon tire of suppression and make their anger known. It's only a matter of time before the economic pain becomes unbearable.

Each day, many of us report on and write about the many problems and obvious wrongs, but how many of us take it a step farther and present the obvious solutions, and point a finger at the villains responsible for our destruction? I applaud you, and appreciate you, for having the intestinal fortitude ( guts ) to tell it like it is. Except for the affliction of "Blind Patriotism", many many more would see it the same as you and I.

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Because you can do wrong, and get away with it, doesn't make it right

Glad I caught it at rhortybomb

That lead me to the paper released on the same day.  The blog post is quite good.

New Paper: What Does the Dramatic 2009-2010 Revisions in Job Openings Tell Us About Structural Unemployment?

 

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Right - Robert. You mentioned birth/death model recently

It was in a comment on another thread.

The interesting thing is the "skills gap" was obviously debunked around the time it popped up but nobody in corporate media carried it. It's too self-serving plus it blames us, the unskilled masses. Mike Konczal really nails it, without wasting too many words.

I do think my idea of Treasury Swaps after confiscation is a good one;)

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he did indeed

this never ending lobbyist spin machine, presented as fact takes another blow. It's like the terminator, spewing misinformation to anyone willing to take 30 pieces of silver.

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He's on his game

You're talking about it intelligently, the paper comes out on May 11, EPI handled it well in September as did Dollars and Cents... so why does anyone even mention 'structural' unemployment? Because it's in the official hymnal of The Money Party, everyone sing along as we walk off the cliff.

The nation is filled with highly motivated, intelligent and creative people. The nation's workers are highly productive and dedicated.

What's the problem. I like my solution - Treasury Swaps. That's better than the solution offered by Peter Kropotkin.

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JJust look at the WW2 industrial mobilization

How did Rosie the Riviter ever manage to build B-17's? No structural unemployment if the job really has to get done no matter what. No requirement for exactly 3 to 5 years experience and the right image and the right color socks.

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The normative empty shirt

Rosie the Riveter is a great example. I meant to include a comment on training in the original post. I think I'll go back and add it. Reference this proof by sign. Originally, I was oging to reference some tech companies who do nothing but untrained, capable people who are taught the systems sold, used. etc. They do quite well, as do the employees. The one's I've seen don't care much about appearance either;)

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structural of course

What these elites want to do next is oversaturate the job market for people with college degrees. Their unemployment rate is only 4.5% and they generally receive better wages and benefits than other workers. So the next logical step in driving this country into a banana republic is to get everybody to have a degree so that there are more workers than jobs and then the wages will fall like coconuts.
Also, if all those unemployed thought that their ticket to wealth was a degree, then they will take out vast sums of money in student loans to get that degree and then spend that money on 12% inflated tuition. Which then goes to build fancy buildings and gets donated to other elites.

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Chiquita a go go

I was looking at that figure the other day. It's ripe for the picking. Drive up that figure, scare them, and then start the benefits and salary attack. More efficiencies from the crony capitalist imagineers.

Very good point.

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I'd highly suggest anyone

I'd highly suggest anyone reading this stay away from degrees in the advanced sciences. There is a massive (maybe 10 year) glut of PhD and MS students in physics/biology/chemistry etc.
This is due to degree overproduction by greedy academics who want the labs flush with future hobos.

They get tenure and you get the shaft.

A PhD is a one way ticket to poverty.

5yr yr undergrad+5 yr PhD + 5 yr postdoc => poverty

http://www.thenation.com/print/article/160410/faulty-towers-crisis-highe...

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College Grads

In the news today :

About 60% of recent graduates have not been able to find a full-time job in their chosen profession, according to job placement firm Adecco.

Last year, the unemployment rate for college graduates age 24 and younger rose to 9.4%, the highest since the Labor Department began keeping records in 1985.

Adecco also found that 18% of recent grads have been forced to turn to full-time jobs outside their field of study, often jobs for which a college degree is not required.

Many others are underemployed, or working part-time or temporary jobs and internships.

About a third of recent graduates are still living with their parents, Adecco found, with 17% saying they are financially dependant on their parents. Almost one in four say they are in debt.

http://money.cnn.com/2011/05/17/news/economy/recession_lost_generation/i...

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Because you can do wrong, and get away with it, doesn't make it right

Jobs Lost Forever

U.S. factories lost 3 million jobs from 2000 to 2004, jobs that did not return during the boom leading up to the recession, along with another 2.2 million from 2007 to 2010. Those are unlikely to come back, as well. Manufacturing jobs were 20 percent of private-sector payrolls in 1990, 15 percent in 2000, and just over 10 percent in April. Large multinational corporations have cut 2.9 million U.S. jobs over the past decade, while adding 2.4 million workers to their overseas operations.

Job gains in the retail-trade and leisure-and-hospitality sectors, where hourly pay is 32 percent and 43 percent, respectively, below the average for all private-sector employees, have accounted for 27 percent of this year’s job growth.

In addition to the 5.2 million jobs already lost, the recession wiped out nearly three million high-paying jobs in construction and finance, where average hourly pay is 11 percent and 20 percent, respectively, above the $22.95 average for all private-sector employees, which includes both production workers and management. Those jobs are not coming back any time soon, if ever.

Professional and business services, including legal, accounting, computer systems design, and consulting. Jobs there typically pay 20 percent higher than average, and they have accounted for 30 percent of all private-sector job growth over the past year.

Hourly pay for factory workers is 2.4 percent below the U.S. average.
27 percent of small-business employees have no health insurance.
72 percent of small business employees have no retirement plan.

( source ---> http://www.thefiscaltimes.com/Columns/2011/05/16/3-Million-High-Paying-J... ) May 16, 2011

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Because you can do wrong, and get away with it, doesn't make it right