The solution to unemployment isn’t better-trained workers: Or, Systemic problems have systemic solutions

Following Chomsky’s advice, I follow the business press to see what the ruling class thinks is going on in the world, and more specifically, I subscribe to Bloomberg Businessweek, which occasionally allows reality to creep in (global warming is real, deficits aren’t always bad) as opposed to the more nakedly ideological Economist. Recently, for instance, they ran a piece on the minimum wage which included the fact that raising the minimum wage does not actually decrease employment outside of the artificial environment of Econ 101. Yet it also included this little gem:

“Raising the minimum wage is a short-term fix,” contends Wal-Mart’s [vice president for communications, David] Tovar. The long-term solution, he says, involves “expanding education, training, and workforce development.”

This kind of nonsense drives me absolutely crazy. It makes no sense to assume that changes in the composition of the workforce will lead to significant increases in aggregate employment levels. (There are cases where new industries arise and the type of skills they need are relatively rare, but in a highly-developed economy like the U.S., such phenomena are always going to be small niches.) Indeed, we have a kind of “natural experiment” in my own chosen profession, academia, where there has been a systemic increase in the qualification levels of entry-level professors. Your average applicant for an assistant professor job has done more teaching, published more, and presented at more national conferences than ever before. Strangely, however, universities don’t react to this embarrassment of riches by increasing the number of job openings. Instead, they take advantage of the opportunity to get instantly tenurable professors for cheaper entry-level wages — or even visiting or adjunct wages.

This is where some Econ 101 would come in handy — increasing the supply of something (for instance, high-skilled workers) decreases its price, all things being equal. In the academic example, all things are indeed equal, because administrative cost-minimization priorities remain determinative of the number of job openings. There’s no reason to assume that the situation would be significantly different in other industries, because the reality of our system is that the employers’ priorities determine the number of jobs available. If the government provides job training — or worse, provides loans that allow people to take on the cost of their own job training — the result will be the same as in academia: employers will get highly-trained workers without having to invest in them (i.e., for free), with no appreciable effect on the number of job openings available.

This dynamic is not difficult to understand, but the stupid views I’m critiquing sound better to people because they don’t want to believe that there’s a fundamental mismatch between the interests of workers and businesses (which one might characterize as some type of “struggle” between different economic “classes”). For the sake of communicability, then, I’ll put it in more “neutral” economic terms. Let’s say that we call the number of job openings the “demand” for workers and call the workers themselves the “supply” of workers. High unemployment in a developed country like the U.S. is basically always going to be a demand-side phenomenon (maybe a rapidly expanding developing country could experience skills-deficits with significant system-wide effects, but we’re well past that point in the First World). Changing the skill levels in the work force is a supply-side solution. Obviously there’s a mismatch here — in fact, by changing the composition of the work force to be more in line with stated employer preferences, but with no cost to employers themselves, you’re only going to increase their ability to sustain a high-unemployment equilibrium.

We need demand-side solutions, and since unemployment is a systemic problem, the solutions have to be systemic. One popular systemic solution is to produce higher aggregate economic activity, but the only agent that can choose to do that — the federal government — is basically hamstrung right now. Another solution would be to change laws (which by definition are system-wide effects) such that employers are forced to hire more workers. One example might be to decrease the full-time work week to 30 hours rather than 40 (and ideally, employers would also be forced to keep overall wages the same). Another would be to stop allowing employers to brutally exploit workers who fall into the category of “salaried” rather than “hourly” — if you really need 80 hours worth of work out of all your current employees, then you’d better damn well hire twice as many if they’re limited to 40 hours each.

Here again, we have encouraging examples in the “natural experiment” of academia: clues that accreditators (who have system-wide powers) might start taking employment conditions into account have led some universities to shift over to full-time, one-year contracts rather than patchwork adjunct courses. It’s possible, too, that the Department of Ed could make a top-down decision that the adjunct category has been abused and should be reserved for genuinely supplemental offerings or else genuine short-term staffing shortages — this won’t happen, obviously, but a man can dream. The one thing that we know absolutely for sure, however, is that better training and qualifications for academics don’t lead to more academic job openings. They just mean that universities get the benefit of a whole lot of free labor and free professional development with the people they do decide to hire. It’s a fantasy to assume the result would be different in any other industry.

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18 Responses to “The solution to unemployment isn’t better-trained workers: Or, Systemic problems have systemic solutions”

  1. Patrick Says:

    I think the story the “skills gap” is trying to tell, despite it not making any sense, is a “size of the pie” rather than “how the pie is carved” story. So by producing the “right” workers the economy can be grown producing more output. And then, because we aren’t allowed to see class, but pretend that all workers are paid their marginal product, the workers who now produce more, will receive more wealth in absolute if not relative, terms.

    This of course means studiously avoiding any analysis of changes in distribution of wealth, unless you are actually prepared to conclude that most workers are worth less and less as executives become worth more and more, but that’s what you’ve gotta do.

  2. Charles R Says:

    Isn’t Tovar’s argument a similar argument—just less developed—to the creating capabilities approach? By developing the people through education and skills training, not all of which is technocratic but includes the humanities, overall the effect is greater employment, greater quality of life, reduced poverty, reduced birth rates. But perhaps that’s just in the aggregate, and all those people trained and now publishing and presenting for academic positions end up going on to other disciplines or jobs. It is a great point you’re making that we shouldn’t assume other industries don’t suffer the demand-side symptoms you’re describing, so what is going on with all the education and training that Sen and Nussbaum can produce so much empirical evidence that, on national scales, this seems to work for improving society (at least in the terms they’re using for improvement)?

    Maybe one answer is these trained and educated people in going to other jobs changes the skill levels of the applicants for those jobs, and that incentivizes the previous pool of applicants to increase their own skills because they believe they need to be better, in whatever ways, to compete for the jobs. But, as you’re arguing, this doesn’t change the number of jobs available. At least, jobs at the levels where people feel fit with them; there are still plenty of jobs for migrants and domestic workers, even though employers for those jobs, being accustomed to hiring certain socioeconomic groups for their own reasons, are likely not inclined to hire academics or IT administrators to pick strawberries or prune apple orchards.

  3. Adam Kotsko Says:

    Sorry, Charles, I initially misread your comment (and have deleted the response based on that misunderstanding). I don’t doubt that increasing education increases aggregate quality of life, but as you say, there’s no necessary correlation between that effect and higher employment rates.

  4. nonmanifestation Says:

    This is an example of the general approach to public policy under liberal capitalism: individual responses to competition are taken to be solutions to systemic problems. Individual people get jobs because they’re better qualified than their competitors (in theory at least), therefore the solution to unemployment is for everyone to be better qualified. I keep coming back to the same point in relation to your posts, but basically the idea here is that we can never make an actual decision as to what “the economy” or “society” should be like.
    Didn’t you have a post on here in the last couple of years about advocating for a four-day work week? I’ve been thinking about that quite a bit; I think it’s actually a plausibly achievable political goal. You would probably have to start off by arguing for it in neoliberal-friendly terms: it increases efficiency, it helps people get off welfare. But hopefully in the long run it would help swing economic policy away from the obsession with more jobs, the moralism of the duty to work, etc., and eventually making people not have to work would come to be seen as a basic policy goal. Then of course comes full communism.

  5. Andy Catsimanes Says:

    Like many other things that are rational for individuals to do (e.g. using anti-bacterial soap), the choice to acquire more training/education can indeed produce individual benefits. Such benefits often disappear in the aggregate.

  6. Neil Says:

    Thank you for the post. Two questions:

    1. Is academia different than other forms of employment? I’m sure that you’re aware of recent articles suggesting that academia is very much like a drug cartel. The promise of future wealth – here, the imagined life of an intellectual – causes academic workers to predictably and consistently overlook current or likely working conditions and levels of pay. Of course, the promise of future wealth does attract other sorts of workers in other sorts of markets, but this seductive promise might be intensified in academia because of the singular rewards of becoming a successful academic (erudition, participation in a tradition, becoming a public intellectual, flexible work hours, etc.).

    Thus, administrators can take the “embarrassment of riches” for granted. There will always be highly qualified academic workers who will only be academics. In other markets, we can imagine that suddenly highly qualified workers with increased productivity can change profitability measures, increasing the demand for them, or develop transferable skills, potentially changing the nature of their supply in a specific market.

    2. The David Tovar quote about “expanding education, training, and workforce development” occurs in a paragraph about workers potentially losing their “connection to the world of work.” Isn’t the quote about the very real danger of becoming unemployable? Tovar would probably assume that many workers will be laid-off at some point, perhaps temporarily because of the business cycle, perhaps for longer periods because of structural reasons. The danger is that the unemployed worker will lose her “connection” to the world of work – maybe just in the cold eyes of human resources directors after a suspicious period of unemployment. The worker now has to constantly “develop” to meet a wide variety of possible employer preferences – not merely meet or even exceed a single set of preferences. Ideally, as you’ve already written, the worker has to be McGyver with every “conceivable skill” and an absurd level of flexibility – except, of course, “education” and “training” are possibly quite expensive and McGyver wasn’t in debt. (Obviously, this isn’t a good thing …)

    Sorry if I’ve misunderstood.

  7. Adam Kotsko Says:

    Tovar is still ultimately blaming the worker, I think, or at least posing it as a fundamentally individual problem, even if it is caused by random economic fluctuations.

    I don’t think academia is that different from other professions. Except for the very shittiest jobs, every career path tempts you with the prospect of advancement — and in many careers, the monetary rewards implicitly promised probably far outweigh the benefits of academia for most people. In fact, more and more careers that used to be just “day jobs” (marketing, for example) are positioning themselves as “passion” fields and trying to take advantage of people’s desire to have work that is at least minimally meaningful and creative.

  8. Brennan Breed Says:

    This is exactly right. And wage suppression is the *publicly admitted* reason for pushing people into certain fields with high training (STEM, for one). Here’s Greenspan admitting it, in the context of allowing more skilled immigrants into the country: http://www.boston.com/business/globe/articles/2007/03/14/greenspan_let_more_skilled_immigrants_in/

  9. Muireann O'Dwyer (@Mergito) Says:

    I think it’s interesting to apply what you’ve argued here to internships as well as to skills gained through training/education. To see the logic of the skills gap taken to a truly depressing end, take a look at Ireland’s “JobBridge” programme whereby people who are unemployed are offered internships in private business and given a small extra amount of money each week by the government. The justification for this policy drew on statements by large companies complaining about a skills shortage in relation to computer programming and some other specialised skills. The scheme is meant to involve someone working as an intern for a few months and then moving onto full employment, but the reality is people being trapped in an endless cycle of internships, where, oddly enough, they seem to have the skills to be working full time (and often unpaid overtime) but are still so unskilled that they can’t be considered for “real” work.

  10. Elliott Grieco Says:

    I think you’re onto something here, pointing out the double-speak of the public burden of education. It is always the private sector that must take over the role of education in the sense of for-profit schooling with the sole mission to educate, but never displacing the burden of education on the private productive economy itself. Although like most neoliberal doctrine, the burden of either kind of education (for-profit or pure public) still falls on public budgets, whether it be in the form of subsidies, tax havens, loan backing, etc. The shift is in reality from state to entrepreneurial management.
    It seems that on the job training would create a more perfect alignment between qualifications and job requirements, even more so than a school that responds to market demands. I guess one could say the trouble is evaluating an individual’s qualification status BEFORE the job skills are demonstrated explicitly. However, I have found personally that much of a job interview is about “soft” qualifications anyway? Are you willing and able to learn new skills? Do you care about the company’s mission? Will you fit in with our labor clique? I don’t think this solely applies to creative professionals, but actually seems to be the relevant basis of qualification for minimum-wage, service economy work.

  11. Mikkel Says:

    Interesting perspective, however, I must interject here: “…the choice to acquire more training/education can indeed produce individual benefits. Such benefits often disappear in the aggregate.” Benefits of education are well documented in economics or you can simply compare the wages or unemployment numbers for those with a BA+ vs. those without.

    But, true – if we keep producing college grads to work in non-degree demanding jobs, that is a lot of consumer welfare lost.

  12. Adam Kotsko Says:

    Why should we expect the wage premium for the BA to continue indefinitely as we keep trying to increase the proportion of the population with a BA?

  13. Tons of Tuesday Links | Gerry Canavan Says:

    […] * More Kotsko! The solution to unemployment isn’t better-trained workers: Or, Systemic problems have systemic so… […]

  14. Brennan Breed Says:

    I mean, we ask banks and corporations to make huge decisions about our career paths and our collective financial future, when a few years ago they had to ask the government to bail them out for their complete lack of understanding of the economy. (Like that? Will I be a Twitter phenomenon now?)

  15. Adam Kotsko Says:

    My tweet is ripe for mockery — you should tweet that! Although I think it’s too long.

  16. Frederick Says:

    Henry Giroux addresses this topic and the function of so called education with great passion in his various writings.

  17. Monday links, 12/9/13 | Tutus And Tiny Hats Says:

    […] questions about this week’s fast food strikes. -”I was a warehouse wage slave.” -The solution to unemployment isn’t better trained workers; or, systemic problems have systemic…. -The exploited laborers of the liberal media. -We know who stole the economy–National […]


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