Three Thoughts On The Skilled Labor Shortage

In a time of 10% unemployment, it's mystifying that any sector of the economy could face a critical labor shortage, but such a shortage among skilled trade workers is exactly the problem facing the U.S. and many other advanced economies. Many argue that the culprits behind this shortage are the social stigma of blue collar work and, conversely, the cache of a university degree and the access to traditionally middle-class white collar professions it provides, but this problem poses a number of interesting questions for me:

1.)Don't we need to consider the role of education in this situation? When my father went to high school, he attended a technical school, and while he went on to study engineering at Cornell, many of his classmates proceeded instead to what were then presumably perfectly respectable careers as tradesmen of various sorts - welders, electricians, and the like. It seems to me that in the U.S. technical education has largely been disfavored at the high school level in favor of curricula aimed more at college prep, and I don't know why that ought to be so. A university is a wonderful thing to have, but unless you need it it is an expensive indulgence, and I don't think it makes the best use of students' talents to funnel them all in that direction. University educations and white collar jobs are not for everyone, and I don't see why it need be an elitist thing to say that. A student who in the hope of becoming a lawyer or doctor spends the years between fifteen and eighteen learning calculus, evolutionary biology, and European history badly, rather than learning the rudiments of plumbing or welding well, is not making the most of either his or her talents or earning potential, given that competition for the best jobs is extremely fierce and entry into both university and white collar professional schools is extremely costly in terms of both time and money. I'm all for some sort of universal standard of basic liberal education, but we need an educational philosophy that also recognizes the varying talents of students and encourages them to develop those at which they show the most promise.

2.)Given that many of those who have lost their jobs in the current downturn are factory workers and other blue-collar types, and that there has been much hand-wringing about the death of American manufacturing and the dire economic prospects for the American working class that it portends, it seems like we have the raw human resources available to plug this gap. Don't we need to think about this shortage as part of the long term solution to the problem of the future employability for non-college graduates? Obviously working on an assembly line at a GM plant and working as an electrician require different skills, training, and professional credentials, but I don't see any reason why someone with the technical mindset to do the former well couldn't, with a few years of schooling, learn to do the latter.

3.)Is this a failure of classical economic theory? Most economists would insist that any rational actor seeks to maximize their own benefit in any given situation, and "benefit" is usually taken to indicate either money or something that can readily be equated to money. But that framework doesn't seem adequate to explain this situation. Let's say high school graduate X has two options. He can A.)undergo a plumbing apprenticeship, during which he can earn money while learning a trade that could eventually net him a very comfortable middle class living. Or he can B.)attain a college degree that will provide him entry into the white-collar labor market at a low-paying level when he's finished it, but means forgoing four years of income and likely saddling himself with a high amount of debt when he finally does graduate. It seems to me that (A) is pretty clearly the more attractive option for a rational actor, i.e., someone seeking to maximize his gains and minimize his losses. The reason so many people in this situation choose (B) can only be attributable, in my opinion, to the fact that people are not in fact rational actors in the classical economic sense and that their decision making is influenced by a number of factors beyond brute tabulation of the pluses and minuses of a given decision. In this case, I'd say the student who chooses (B) is probably influenced by 1.)the fact that plumbing is seen by many in our society as a "dumber" profession than office work, and 2.)a (likely irrational) hope that he will "make it" and achieve a career track that ends not as an office drone or middle manager, but as C.E.O. of the company. There's a lot of exciting new work in the emerging field of behavioral economics exploring what is actuality the oddness and irrationality of human decision-making, but much of the larger field still relies on what appear to me to be clearly flawed assumptions about human nature.

Cause For (Minor) Celebration

One might quibble with categorizing a 208 point rally as "huge", but news that the stock market has gone up is always welcome. The problem is that an improvement in the economic outlook for investors doesn't necessarily translate to an improvement in the outlook for American workers. Job creation numbers remain anemic, and with all the manufacturing and technical capacity that has been permanently lost to offshoring and the summer - and the seasonal labor market it creates in construction, agriculture, and other outdoor-oriented businesses - coming to an end, that seems unlikely to change in the near future. The economy is still almost certain to be the dominant issue in the midterm elections, and is still likely to be an electoral albatross for incumbents - one that will be transferred to the replacements of those who lose shortly after they're sworn in as members of the next Congress. There are still a lot of long-term economic changes to which the country must adjust, so I don't see any reason to celebrate overenthusiastically. A warm day in the dead of winter is pleasant enough, but it shouldn't be mistaken for the arrival of spring.

The Democrats' Conflicting Priorities

The Senate's failure to extend long-term jobless benefits is a potential political double whammy for Democrats - by trying to pass it, they gave Republicans yet one more hammer with which to beat them on the increasingly germane issue of deficit spending, and by failing to do so they've fed the narrative that they're a bunch of bickering incompetents who can't stop grandstanding and backbiting long enough to solve the country's economic problems despite historically large majorities in both houses of Congress. I'm not sure the latter criticism is fair, but I have little sympathy for them - when you sell yourselves as the party of bigger government, and promise voters that bigger government will help solve their problems, you're going to get blamed on those occasions when it fails to do.

Spending on things like employment benefits does ease the suffering of ordinary people during hard times, but it won't end a recession. You need sound economic fundamentals for that. And much of the rest of the Democrats' agenda - e.g. cap and trade - is going to harm economic fundamentals, at least in the short term. Perhaps climate change is enough of a threat that the tradeoff is worth it. I don't know. But the fact is that many of the Democrats' policy priorities are very likely to prolong the economic slump, dent job growth and keep the long-term unemployed, well, unemployed. Given that we can't afford to extend unemployment benefits indefinitely, papering over that problem by giving them money was never going to fly forever. And lo and behold, it hasn't.