25 Nov 2012: Fake Skills Gap
Posted by: Frank Moraes
A couple of weeks ago, my father asked me about a 60 Minutes segment in which some manufacturing executive complained that he couldn't find skilled workers who knew trigonometry. My father didn't know exactly what trigonometry was, but it seemed like some advanced math. So he was confused why a job that required advanced math only paid $12 per hour. I agreed with him. Really, if such works are in demand yet scarce, surely the solution is to raise the rate of pay.I explained to my father—who is naive in many ways—that this was an old story. The executives should be honest and say, "We can't find high skilled workers for low skilled pay." The truth must be that they don't really want to hire people—they just want to complain. The truth is that if they were truly desperate for workers, they would hire smart people and train them—like companies used to.
Last week, Adam Davidson wrote a very interesting article at the New York Times, Skills Don’t Pay the Bills. He talks about the fact that employers are lying about the "skill shortage." This is embarrassing:
Eric Isbister, the C.E.O. of GenMet, a metal-fabricating manufacturer outside Milwaukee, told me that he would hire as many skilled workers as show up at his door. Last year, he received 1,051 applications and found only 25 people who were qualified. He hired all of them, but soon had to fire 15. Part of Isbister's pickiness, he says, comes from an avoidance of workers with experience in a "union-type job." Isbister, after all, doesn't abide by strict work rules and $30-an-hour salaries. At GenMet, the starting pay is $10 an hour. Those with an associate degree can make $15, which can rise to $18 an hour after several years of good performance. From what I understand, a new shift manager at a nearby McDonald's can earn around $14 an hour.
Note that Isbister doesn't just pay poorly.[1] Of the qualified people he found, he fired 60% of them because he doesn't abide strict work rules. What could that mean? State mandated breaks? Occupational safety? I don't know, but it is clear that there are a lot more reasons to not work for Isbister than the poor pay. But I don't want to make too big an issue of this. Eric Isbister is just a good example of the assholes who head America's businesses.
Davidson notes a very damaging aspect of all this fake talk of a skills gap: it is creating a real skills gap. Young people who go to school to get these vaunted in-demand skills quickly learn that they are qualified to take jobs that pay no more than McDonald's. And so they leave the profession for something that will pay their bills—or at least where they don't have to deal with assholes like Eric Isbister. Currently, highly skilled manufacturing workers are old and will soon retire from jobs that pay reasonable salaries. Who will be around to take these jobs? Will these employers go the way of GenMet and lower their wages in the hope that that will draw the workers in?
[1] Given that Isbister is so cavalier about finding workers, I can see how he might think of himself as the mythical job creator. In his case, he clearly doesn't care about maximizing the amount of product he can produce. He just staffs his factory with people he considers deserving. Of course, this makes him a very bad businessman. And that makes him very bad for job creation. If he just tried to maximize profits, he would employ more people. So Eric Isbister isn't just an asshole, he's also an idiot.
JMF wrote:
What else would one expect? These companies have almost no accountability. In the years of the great US industrial boom, consumers bought items that they actually needed -- refrigerators, washing machines, and the like. If a company's product was inferior, word quickly got around. Now, if Apple's latest smartphone is inferior to Samsung's (I don't know, I don't own one) it doesn't matter, as everyone buys a new model in 15 months anyway.
I love how these people venerate the "free market" when that abstraction's supposed efficacy is dependent on consumers having perfect knowledge of the products they buy. While the only companies making any money these days sell items solely on brand identification and advertising moxie. Of course there are what Steiglitz calls "rent collectors," your power company and health-insurer, etc., which contribute absolutely nothing to the economy. (If you make hammer shafts and I make hammer handles and we sell our stuff to one another, we've turned rubber and steel into a device people can use to build things. When Blue Cross takes your money and transfers it to executives, nothing is created.)
There's actually more customer feedback, these days, in government enterprises. Get ten of your friends to write your local Congressperson about a slovenly-run local post office or DMV, and you will probably see results. Get ten of your friends to write Apple or the power company and you've just produced ten pieces of wasted paper.
It'd be a charming relief if one of these executives came right out and admitted they are basically highwaymen. Oddly, however, while they asses themselves on mere monetary intake (they look down on anyone making less, and feel slighted by contract offers which don't give them more), their public self-justification is always utilitarian. Their companies and their roles running them provide valuable services, which the nation would suffer without. Would that we had a P.T. Barnum in the bunch, gleefully admitting to being a crafty racketeer. Oh, well . . .