Mark Thoma wrote an interesting article over at CBS Money Watch, Sagging Job Growth: It’s Not Just a Skills Gap. The idea is that the reason the rich are getting richer than the poor is because they went to college and so their job prospects are better because their skills are more in demand. There’s just one problem: that doesn’t seem to be the case. In fact, readers of this blog should be well aware of the issue.
Thoma is a careful guy, so he won’t come right out and say it. But I will: the “skills gap” is little more than apologetics designed to minimize economic inequality. Paul Krugman is fond of pointing out that all the 80,000 odd public school teachers in New York have a combined salary equal to a single hedge fund manager, even though the education level of the jobs is about the same.
This isn’t to say that education and training have nothing to do with inequality. It is just that it isn’t a primary cause and that is what the research Thoma reported on demonstrates. The big issue is what David Harvey has been ranting about for many years: capital can move anywhere, so jobs go where they are cheapest. This causes what seems to be a problem in the system: businesses can only sell things as long as people have the money to buy them. An impoverished middle class today implies an impoverished upper class tomorrow.
Regardless, there is a fundamental problem with the idea that it is the skills gap that creates inequality. Dean Baker wrote about it on Tuesday, Actually, the Chinese Can Do the High-Skilled Jobs at Lower Cost Too. The idea that only Americans can do highly skilled work is, in addition to being arrogant, just wrong. As I am well aware: there no kind of high tech work that you can’t find someone in Romania who is just as qualified to do for half the cost. This is why American companies are so keen to get more H1-B Visas approved in the United States. It ain’t about getting skills that are unavailable here. It is about getting skills that are available all over the world for less money.
It isn’t limited to high tech either. As Baker talks about a lot, there are great doctors all over the world. The reason that they aren’t here is because the American Medical Association has managed to get the government to protect their jobs. So over the last three decades, we’ve see the government allow globalization as it is related to manufacturing workers. But doctors, lawyers, and college professors have been protected. So that’s the reason that there is any kind of basis for the skills gap: if you can get into one of the protected professions, you will do well. But that isn’t because of the skills gap. Rather, it is just government policy.
Whenever you hear someone talking about how the reason we have inequality in this country is that the poor are not getting college educations, remember this. Of course, I think in ten years no one will be able to make this argument. As it is, those with recent college educations are finding the job market really hard. The main thing they have to show for their college degrees is large amounts of debt. And that too is government policy.