Wednesday, July 14, 2010

Labor Shortage US Style: Skill Mismatch

The number of unemployed people per job opening. With that many people per job opening, there is a real need for ongoing social safety nets. As Yglesias puts it:

"I don’t think people should be dismissive of the idea that unemployment insurance has a disemploying impact on incentives. And that’s why in normal times you don’t want to offer an unlimited amount of unemployment insurance. But faced with a massive gap between the number of people looking for work and the number of job openings, this just doesn’t matter as much as it otherwise would and the humanitarian and aggregate demand impacts are way more important."

Compounding the problem is a basic skills shortage (hat tip: Newmark):
Plenty of people are applying for the jobs. The problem, the companies say, is a mismatch between the kind of skilled workers needed and the ranks of the unemployed. ... Now they are looking to hire people who can operate sophisticated computerized machinery, follow complex blueprints and demonstrate higher math proficiency than was previously required of the typical assembly line worker. ...

Supervisors at Ben Venue Laboratories, a contract drug maker for pharmaceutical companies, have reviewed 3,600 job applications this year and found only 47 people to hire at $13 to $15 an hour, or about $31,000 a year.... All candidates at Ben Venue must pass a basic skills test showing they can read and understand math at a ninth-grade level. A significant portion of recent applicants failed, and the company has been disappointed by the quality of graduates from local training programs. It is now struggling to fill 100 positions....

Christina D. Romer, chairwoman of the Council of Economic Advisers, said the skills shortages reported by employers stem largely from a long-term structural shift in manufacturing, which should not be confused with the recent downturn....Local leaders worry that the skills shortage now will be exacerbated once baby boomers start retiring....

... 32 percent of [industrial] companies reported “moderate to serious” skills shortages. Sixty-three percent of life science companies, and 45 percent of energy firms cited such shortages.

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