I received an advance electronic copy of Ryan Avent’s forthcoming The Wealth of Humans. I have not read very far, but he seems to say that a major social problem these days is an over-abundance of workers. However, consider this WSJ blog post.
traits that are hard to define, but ever-present among good employees: professionalism, determination and adaptability and the ability to communicate, work together and take criticism. Or even just show up on time and follow a dress code.
The claim as that these soft skills are in short supply.
I am going to be old-school and say that whenever you see a “shortage” or an “over-abundance” you should ask what is wrong with the price mechanism. If you are having trouble finding workers with the traits that you want, then you are not paying enough for those traits.
Back to Avent. If there appears to be an over-abundance of workers, then what is going wrong? Maybe those individuals have, in Tyler Cowen’s evocative phrase, Zero Marginal Product. Also, it could be that the required marginal product is high because of minimum wages and labor market regulation. Or it could be that labor supply is reduced because of government programs that subsidize non-work and tax work.
Avent wants to assign a large causal role to capital equipment, especially smarter capital equipment. I think that is only one of the four forces, the others being: a shift toward the New Commanding Heights (education and health care) where soft skills matter more; factor-price equalization, meaning that foreign workers now compete more with domestic workers; and assortive mating, which breeds greater inequality.
When journalists and academics warn of a future with a job shortage, the cynic in me is inclined to say, “You mean a shortage of jobs that journalists and academics think of as appropriate for themselves.” Keep in mind that many colleges attempt to indoctrinate students that business is unfulfilling and profit is evil. But profit-seeking businesses are motivated to find uses for otherwise-idle productive resources. The fate of the next generation of Ryan Avents is not to be unemployable. Rather, some of them may end up in business jobs that journalists and academics might have trouble picturing themselves doing.
It’s an interesting contention; but I’d have to say that particularly the ‘follow a dress code’ bit is revealing. Now, how do we define revealing?
It is also the case that jobs can be bought by storing up claims against future production, creating more jobs but elsewhere. Less of an issue these days (other than in campaigns).
I think that noise is a big factor. The process of hiring employees has changed so radically in the last twenty years that good employees are finding it hard to stand out.
As hiring practices become more automated and move to the internet, it is harder for someone who fulfills your criteria to show that.
How far will it get you, if on your resumé you put:
“I’m professional, determined and adaptable. I can communicate well, work well with others and take criticism. Also, I will show up on time and correctly dressed.”
That’s just a basic generic cover letter. And if the letters and resumés are being sorted by algorithm, even the fact that the typography is well done doesn’t matter any more.
I expect that the situation will sort itself out over time, but right now the barrier to entry to leaving a resumé on line is very low. Any particular quality of a resumé or cover letter that would work to get a job will quickly be copied.
“If you are having trouble finding workers with the traits that you want, then you are not paying enough for those traits.”
This perspective is what happens when you are in the middle of engineering jobs out of the picture altogether.
Anyone who has migrated from a human/paper mechanism of doing a set of tasks to an automated, software algorithm based approach will be frustrated by the initial phase where full context, discipline and consistency needs to be applied to the data and workflow before the automation can provide any benefits. Automation and semi-automation require far more discipline than old fashioned human hierarchies.
So, we find ourselves in a world where we want workers who provide robotic consistency of input until we can figure out how to automate those parts too.
Soft skills (or what I call CUTS: complementary uncorrelated traits and skills) are important even in non-new-commanding-heights sectors. I hear this complaint all the time among by employer friends, they have lots of jobs above minimum wage for reliable, trutworthy people of good character, but that they can’t get such people (especially native people) for less than the marginal product of the tasks, and so millions of Americans are both unfit and undesirous of a normal working life in general because their upbringing and current incentives aren’t enough to discipline their behavior to the necessary degree.
Hanson claims that modern schooling evolved as a way to train children to suppress their impulses and drill into them the useful habits that would allow then to more reliably express those potential CUTS which can be cultivated and submit to hierarchy. Clearly it isn’t working very well anymore for increasingly large portions of the population. As such, the traits can’t be found as cheaply on the market as they used to be.
“If you are having trouble finding workers with the traits that you want, then you are not paying enough for those traits.”
But it is functionally illegal to pay for the listed traits, because they are correlated with race and ethnicity, and it’s illegal to discriminate on the basis of race and ethnicity.
Another factor limiting the ability to pay for those traits are laws that set minimum wages, minimum benefits, prevailing wage mandates, and so forth, all tending to set a minimum cost for an employee that is close to the median cost per employee (or sometimes above). If the lowest-paid employee receives close to the median employee, then employees in the 52nd to 99th most employable percentile of the workforce have no incentive to improve characteristics to the 51st percentile. For most of them, it may not be possible to improve beyond that. So there is no incentive to behave better.
Actually, Ryan Avent future is not happening because the modern economies stopped having large families so the human race is already reacting to this reality. (India is almost replacement level fertility rates which only really leaves Africa with increasing populations.)
Actually this ‘labor’ shortage is getting significantly large and the next decade labor markets may edge to closer to the 1950s economy. Low wage positions are up all over the place in California.
That said why would any good hard working young people do more technical labor? The wages are lower, there is no job security, and in 10 years the company will deem you PSST! I am recommending that to anybody.
Abundance of labor, shortage of talent.
I’ll attribute it to a few reasons:
1). Lots of workers are in a tough position where they don’t have the human capital to get the jobs they want, and the money that can be made with the ones they can get isn’t worth exerting a lot of effort for.
2). Tom DeMeo’s point is correct. My own impression from the workplace is that being in a fully human endeavor allows one to act instinctively. Being in an automated or partially automated endeavor requires patience and focus and taxes the type 2 thought system. The fact that many of these automated systems are being put in place to replace the people implementing them does not encourage good morale.
3). The combination of diminishing profits, increasing complexity of marginally profitable economic activities and the large amount of offshoring the last 30 years means companies have genuine holes to fill in their organization but they’re both unwilling to take a chance on unproven workers and have a thin bench of people in the org who are capable of filling them. This results in an acute need for the right types of workers, but often for positions that require very unique training that very few people have been adequately developed for. Browsing the typical jobs section for high wage positions will demonstrate what I mean.
4). ‘Cognitive Fragmentation’ is an underdiscussed phenomenon. Most people want to be disciplined and successful, but for most this behavior taps into a behavioral reservoir that’s finite, and gets shared with an increasingly large amount of non-monetary cognitive tasks like taking care of elderly parents, dealing with the consequences of stagnant income, etc. The combination of this and the poor incentives of both workers and employers results in an under-supply of the valuable workers the economy needs.
5). The bill might finally be coming due for many of the changes in household structure that have gone on for the last 40 years. We’re now entering the third generation of people who’ve been subject to these changes, and maybe the results of that are just kind of ugly.
We should not be shocked to learn:
http://ftalphaville.ft.com/2016/09/12/2174415/least-productive-sectors-only-thing-keeping-inflation-going/
Ahem, Handle-Baumol theory.
For once I would like to see an ad specifying above average rather than competitive pay. I would also like to see employers willing to seek talent to fit jobs to rather than design jobs around minimum talent they can’t find. Jobs not productive enough to pay even competitive salaries are signs of overpaid and under qualified management.