The Low-skilled Labor Market

Andre Spicer claims,

The fastest-growing jobs are low-skilled repetitive ones in the service sector. One-third of the US labour market is made up of three types of work: office and administrative support, sales and food preparation.

The majority of jobs being created today do not require degree-level qualifications. In the US in 2010, 20% of jobs required a bachelor’s degree, 43% required a high-school education, and 26% did not even require that. Meanwhile, 40% of young people study for degrees. This means over half the people gaining degrees today will find themselves working in jobs that don’t require one.

Some thoughts:

1. Too often, popular discussions of labor markets speak as if “supply” and “demand” are fixed, with no equilibrating mechanism. Instead of upward-sloping supply intersecting with downward-sloping demand, these accounts implicitly depict vertical supply and demand curves.

If it is true that colleges are dumping an excess of high-skilled workers into the market, then the wages of highly skilled workers should fall until supply and demand balance there. Meanwhile, if there are so many excess jobs for low-skilled workers (recall Conor Sen predicting a shortage of construction workers), then wages should rise there.

2. I doubt that it is true that colleges are dumping an excess of highly skilled workers into the market. Instead, I think that our society is dumping an excess of non-college-ready students into college. There, some of them at best may be upgrading their skills to those of a high-school graduate.

3. If the imbalance is real, what are entrepreneurs doing about it? They should be working on ways to eliminate low-skilled jobs, while figuring out ways to use workers with college degrees (the latter supposedly in abundance). I see the first taking place. The second, not so much.

9 thoughts on “The Low-skilled Labor Market

  1. A good parallel is the market for actors in LA. The large inflow of wannabe stars splits into 99.9% waiters and 0.1% actors.

    Same is happening to college grads. The demand curve (of jobs that can use educated people) may not be vertical, but there is no price at which all of them get employed doing something meaningful. And this may be a chronic feature, not a temporary imbalance, as LA illustrates.

  2. “The majority of jobs being created today do not require degree-level qualifications.”

    Why are “jobs” regarded as “being created?”

    Perhaps we need a Coasian, “The Nature of the Job.”

    Simplified, jobs are human activities. The activities of some may be advantageous (or necessary) for others in their own activities (which in turn have links to activities of yet others).

    That could imply that generation of, or removal of impediments to, activities, generally, might be a better focus of efforts than “Creating Jobs.” There has been some notice taken of late to “impediments.” There may also be a trend away from “designing” or centrally selecting the generation of activities. It’s a tough slog !

  3. The obstinacy (arrogance?) of academic administrations in **prescribing** as well as designing degree “programs,” as the basis for “certification” from post secondary facilities is astounding.

    A broad mix of studies in a wide range of subjects over a specific period of (partial) years may produce an erudite individual, but not “qualified” under any particular program for a “Degree.”

    There has come to be a difference in the perceptions of significance to “society” those facilities project, and their significance in the lives of those who would seek learning there.

  4. You won’t see falling wages of college educated other than through being forced to take lower skilled jobs that don’t need it, and you won’t see rising wages of unskilled as long as there are so many college educated needing work. Minimum wage increases are about all you will see. You will see an increase in jobs requiring degrees even though they don’t need them just for search filtering which is why some 60% of current workers don’t fulfill the requirements of their current positions, a case of educational inflation. The percent of college educated hasn’t changed much in 30 plus years so there is little change on that front other than in gender mix.

  5. I’d probably replace “high-skilled” with “high-credentialed”. Does a degree in junk studies + $250K of debt mean that you’re “more skilled” than someone graduating high school?

    An honest question: how is “skill” measured in such economic measures? Is it simply “more school = more skill” or is there some variation of degrees?

  6. They should be working on ways to eliminate low-skilled jobs, while figuring out ways to use workers with college degrees (the latter supposedly in abundance). I see the first taking place. The second, not so much.

    I have to disagree with you about the second point as you are looking at Large Corporations. In my skilled labor office, there are numerous ‘skilled’ positions that did not look for a college degree 20 years ago. (We have call center were expertise is not college related.) However, for new applicants I would recommend DAY ONE for the job is to work college degree today (especially before you start a family) because the company is always looking to eliminate any jobs and you don’t want to caught without the right skills.

    • If we are over-educating our workforce, then why don’t entrepreneurs find and train non-college workers at lower lifetime salaries?

  7. “so many excess jobs for low-skilled workers” << I don't see this as "excess" jobs — I would see excess as firms offering jobs and not getting any respondents to their job offering ads. The article doesn't quite state if this 20-43-26 % split was for all total jobs, or for job offerings.

    On the margin, the job offerings, I see more jobs claiming to require "college ed" — so this implies more job respondents than job openings. With already low wages and using unneeded qualifications as an easy way to reject too many applicants.

    The real problem is that the college educated are not starting businesses. This is partly a failure of college, but mostly a failure of culture, where business is so often "the bad guy", and the vast majority of college students are herd-mentality "get-along" types who strongly do not want to be the bad guy.

    It's almost non-PC to be an entrepreneur, and most college students are super-PC.

    #2) too many unskilled HS grads being dumped into college is very right, but confirms the article's thesis of too many going to "college".

    " wages of highly skilled workers should fall until supply and demand balance there." Actually, globalization is doing this hugely, which is why the post WW II US middle class status is eroding, with more moving up to upper middle & lower upper class, and even more moving to lower middle and even to upper lower class.

    The job market is such that highly skilled & highly educated STEM workers are moving up, while highly educated (with inconsistently known how highly skilled) non STEM workers are seeing wage stagnation or slow degradation; perhaps faster reductions in starting salaries accepted, especially when internships are included.

    Finally, the increase in regulations is acting on a brake for company creation and job creation — no other policy can solve this other than deregulation.

  8. 1. Employees have always meant taking on a lot of risk and responsibility. We keep adding more responsibilities every day, one brick at a time. It’s getting heavy.

    2. The capacity of entrepreneurs to create virtual structures and use technologies to avoid the need for employees is growing almost exponentially. For the first time in history, you can take on major initiatives without hiring anyone.

    Why hire lots of people when you don’t have too?

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