“Why can’t we find enough good people to hire?”
As a consultant to business leaders, I hear this complaint with increasing frequency. From tradesmen to programmers, and from executives to scientists, we seem to be lacking a workforce with the skills and work ethic that businesses seek.
The Federal Reserve Bank is the only central bank with a dual mission to control both inflation and unemployment. An official from the Fed recently told me that we are presently experiencing a historically high rate of long-term unemployment, simultaneous with the highest number of help wanted advertisements in history. That seems to make no sense.
Self-serving political announcements praise the pace of job creation since the Great Recession, but the numbers are deceiving. The U-3, or “official” unemployment rate, counts anyone who works one hour a week as employed, and ignores those who have given up trying to find a job. The Federal Bureau of Labor Statistics also publishes what is designated the U-6 unemployment rate. Unlike the U-3, it includes those who work part-time but would prefer a full time job, and those who have given up looking but say they would take a job if it was offered. That number still stands at over 11% of the workforce. More than one in ten American workers, or around 15,000,000 people, can’t find a job that supports them satisfactorily.
So why are employers complaining? Has the quality of jobs declined, or are workers less able? The answer is a qualified “yes” to both.
The American middle class has been shrinking for the last 20 years. According to economists, technology is the culprit both here and throughout all of the developed economies. Robots on assembly lines, electronic outreach instead of face-to-face sales calls, and a general thinning of middle management ranks all act as cruel Darwinism. If you don’t have the new skills needed to move up the socioeconomic food chain, you move down. Standing pat for your entire career is no longer an option.
While those who lack the skills to follow the better paying jobs find their lifestyles suffering, employers are desperately searching for employees with the qualifications to fill positions higher on the ladder. Scientists, engineers, accountants and skilled leaders of all kinds are in short supply. Too many of them are part of the retiring over-50 Boomer generation, and the educational system isn’t backfilling the gap.
The employers’ logical answer has been to continue replacing duplicable skills with computers, so they are able to pay even more to those employees who can demand it. Wealth transfer taxes to shore up the middle class don’t really address the underlying problem. In the long run, no legislation has ever defeated the law of supply and demand.