How To Alleviate The Alleged "Worker Shortage" - Stop Subsidizing Non-Work

Tyler Durden's picture

Submitted by Heritage's Stephen Moore via David Stockman's Contra Corner blog,

The great conundrum of the U.S. economy today is that we have record numbers of working age people out of the labor ‎force at the same time we have businesses desperately trying to find workers. As an example, the American Transportation Research Institute estimates there are 30,000 – 35,000 trucker jobs that could be filled tomorrow if workers would take these jobs–a shortage that could rise to 240,000 by 2022.

While the jobs market overall remains weak, demand is high for in certain sectors. For skilled and reliable mechanics, welders, engineers, electricians, plumbers, computer technicians, and nurses, jobs are plentiful; one can often find a job in 48 hours. As Bob Funk, the president of Express Services, which matches almost one-half million temporary workers with emplo‎yers each year, “If you have a useful skill, we can find you a job. But too many are graduating from high school and college without any skills at all.”

The lesson, to play off of the famous Waylon Jennings song: Momma don’t let your babies grow up to be philosophy majors

Three years ago the chronic disease of the economy was a shortage of jobs. This shortage persists in many sectors. But two other shortages are now being felt—the shortage of trained employees and of low-skilled employees willing to work. Patrick Doyle, the president of Domino’s Pizza, says that the franchises around the country are having a hard time filling delivery and clerical positions. “It’s a very tight labor market out there now.”

This shortage has an upside for workers because it allows them to bid up wages. When Wal-Mart announced last month that wages for many starter workers would rise to $9 an hour, well above the federal legal minimum, they weren’t being humanitarians. They were responding to a tightening labor market.

The idea that blue collar jobs aren’t a pathway to the middle class and higher is antiquated and wrong. Factory work today is often highly sophisticated and knowledge-based with workers using intricate scientific equipment. After several years honing their skills, welders, mechanics, carpenters, and technicians can, earn upwards of $50,000 a year–which in most years still places a household with two such income earners in the top 25 percent for income. It’s true these aren’t glitzy or cushy jobs, but they do pay a good salary.

So why aren’t workers filling these available jobs–or getting the skills necessary to fill them. I would posit five impediments to putting more Americans back to work:

First, government discourages work. Welfare consists of dozens of different and overlapping federal and state income support programs. A recent Census Bureau study found more than 100 million Americans collecting a government check or benefit each month. The spike in families on food stamps, SSI, disability, public housing, and early Social Security remains very high even 5 years into this recovery. This should come as no surprise given the combination of the scaled back welfare work requirements and the steep phase-out of benefits as a recipient begins earning income.

Economist Peter Ferrara ‎argues in his new book “Power to the People,” that if ” we simply required work for all able-bodied welfare recipients, the number on public assistance would fall dramatically. This is what happened after the work for welfare requirements in 1996.”

Second, our public school systems often fail to teach kids basic skills. Whatever happened to shop classes? We ‎have schools that now concentrate more on ethnic studies and tolerance training than teaching kids how to use a lathe or a graphic design tool. Charter schools can help remedy this. Universities are even more negligent. Kids commonly graduate from four year colleges with $100,000 of debt and little vocational training. A liberal arts education is valuable, but it should come paired with some practical skills.

Third, negative attitudes toward “blue collar” work. I’ve talked to parents who say they are disappointed if their kids want to become a craftsman–instead of going to college. This attitude discourages kids from learning how to make things, which contributes to sector-specific worker shortages. Meanwhile, too many people who want to go into the talking professions: lawyers, media, clergy, professors, and so on. Those who can’t “do,” become attorneys and sociology professors.

Fourth, a cultural bias against young adults working. The labor force participation rate is falling fastest among workers under 30 (see chart). Anytime a state tries to change laws to make it easier for teenagers to earn money, the left throws a tantrum about repealing child labor laws. The move to raise minimum wages in states and at the federal level could hardly be more destructive to young people. ‎My own research finds that the higher the minimum wage in a state, the lower the labor force participation rate among teenagers.

Anecdotally, I’ve always been struck by how many successful people I have met who grew up on farms and started working–milking cows, building fences, cleaning out the barn–at the age of 10 or 11. They learn a work ethic at a young age and this pays big dividends in the future. Many studies document this to be true.

Fifth, higher education has become an excuse to delay entry into the workforce. I always cringe when I talk to 22 year olds who will graduate from college and who tell me their next step is to go to graduate school. Maybe by time they are 26 or 27 they will start working. Here’s an idea: Colleges could encourage kids to have one or two years of work experience before they enroll.

Here’s an even better idea: Abolish federal student loans and replace the free government dollars with privately sponsored college work programs. For instance, schools like College of the Ozarks require kids to work 15 hours a week to pay their tuition. It’s hardly a violation of human rights if a 21 year old works to fund for their own education–and they will probably get more out of their classes if they do work. Anything easily attained is lightly valued. This would drive down tuition costs too, because students would start demanding more financial accountability and less waste. After all, federal subsidies have increased college costs.

These may seem like old-fashioned and even outmoded ideas. But the decline in work among the young bodes ill for the future. Many European nations have removed the young from the workforce and the repercussion appears to be lower lifetime earnings. A renewed focus on working would also help erode the entitlement mentality ingrained in so many millennials. Instead of more benefits and handouts, this generation needs to get a job.

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agstacks's picture

“As you hear from these stories, this is a liberation,” Pelosi said

“This is what our founders had in mind--ever expanding opportunity for people.

“You want to be a photographer or a writer or a musician, whatever --  an artist, you want to be self-employed, if you want to start a business, you want to change jobs, you no longer are prohibited from doing that because you can’t have access to health care"

cossack55's picture

CCC/WPA.  No workee, no eatee.

kaiserhoff's picture

Close the borders and put a bounty on illegals.

Ze problem, she is sol-ved.

          Hercule Poirot

Creepy A. Cracker's picture

Now wait a minute...  Dear ex-House Speaker Pelosi emphatically has stated that one of the BEST things for the U.S. economy is more people on welfare.  You see they are getting money to spend, boosting the economy.

Simple, right?  Simple-minded, right.

(The money has to come from somewhere)

max2205's picture
There are no jobs....period.
kaiserhoff's picture

VA has tons of jobs in fast food, but you're right.

There is nothing at all worth applying for, except the government jobs.

The end is near.

Lost My Shorts's picture

Yes, remember that this comes from the Heritage Foundation, the old boys who belong to Mitt Romney's country club.  When they talk about "businesses desperately trying to find workers" they mean "businesses desperately trying to find people who will do quality work for $9.00 per hour in jobs that paid (inflation-adjusted) $25 per hour a generation ago."

greyghost's picture

well excuse me while a take a WTF moment with this lack of workers crap. you are correct max2205....kaiserhoff....lost my shorts! always remember....the barbed wire is to keep workers out....not in. through these gates your work will make you free

nailgunnin4you's picture

There's five minutes I won't get back. Old man thinks 'dem goddam entitled millenials' are lazy, wishes young people were good little worker bees like his gen was.

 

Stockman this reflects badly on that corner of yours, old man 'feel pieces' are so Kunstler.

jerry_theking_lawler's picture

Well, it is a fact....the reason it got to this point is the reason most miss....but people keep falling back into the arms of the .gov and politicians to 'solve' their problems....but all they actually do is 'create'.

exi1ed0ne's picture

Exactly.  Tons of phantom jobs and whining to Congress to get HB-1 visa limits increased.  If workers were actually sought by companies you'd see increases in pay and perks to attract them.  Most of what I see are entry level positions that require tons of experience and education with entry level pay.  There is no worker shortage if companies can be this choosy.

RECISION's picture

Right.

Blame the workers - coz that's ALWAYS the problem.  (/sarc - in case you didn't get it)

In the Soviet union they had a saying.

"the bosses pretend to pay us, and we pretend to work"

If the workers have stopped even pretending, then that would suggest the problem has slipped past even the Soviet Unions glories...

The problem isn't labour, the problem is the supply of cheap (enough) labour.

If the monkeys wont even work for peanuts anymore, then the only option left is slavery.

Get out the whips and chains...

GoldRulesPaperDrools's picture

And hand out all the ammo the gubmint is hoarding to the people who want to go bounty-hunting.

Miffed Microbiologist's picture

I agree but actually the problem starts in the home. We gave our kids food, clothing and shelter but it was up to them to come up with extra spending money. Their peers had TVs, cell phones and computers in their rooms. We provided books. The bitter complaints and comparisons fell on deaf ears.

Both at 12 were babysitting. At sixteen they were working fast food ( one flipped signs all summer in the heat). We never got them a job, they somehow networked themselves into one. Each at 15 had their own credit card and managed their own money. We never had a problem, though we did monitor them. Because of their maturity they were given much more freedom then their peers, something that irritated their spoiled friends.

People look down on the Millennials but I think their parents are ultimately to blame for not instilling the need for a good work ethic. Funny how initiative blossoms when things don't fall from the sky.

Miffed

Bollixed's picture

I had a paper route as a kid between the ages of 10 and 14 and earned a $1 a day for the two and a half hours I put in each day. That was a lot of money for a kid back in the early to mid '60s. That was also until I was 14 and saw the prettiest girl in school riding around in her boyfriend's new Mustang (they had just come out the year before) and me on my geeky bike delivering papers. What shame...

By the time I turned 17 I was working 60 hours a week at a fast food restaurant and going to high school. I gotta tell ya, that schedule really cuts into your fap time, trust me. But the money allowed me a level of freedom I wouldn't have had otherwise, and it helped me with a good work ethic that served me well.

I see a lot of my friends kids who never had to work until they finished post-grad and they are so far behind where we were as young adults it's sad. God bless inheritance, I guess...

Trogdor's picture

I'll never forget my 8th birthday.  My Dad said, "Happy Birthday, son .... from here on out, there'll be no allowance as you're old enough to get a paper route if I sign a waiver..."  I had two paper routes (morning and evening papers) most of the time from 8 to 14 years old.  When I was 14 I could pass for 16 and got a job at an ice-making plant hauling around 300-lb block ice.  That place was an OSHA nightmare - lol - it was like the whole building was booby-trapped.  At 16 I was living in my own apartment, bought a semi-reliable clunker (and learned how to work on cars), working full-time and going to high school (so I had 20 more hours to mess around than Bollixed ;).  I could barely stand my peers in school - they'd be doing things like complaining that their "Effin' old man" wouldn't buy them that new Holley carburetor for their Camaro - and I'd be thinking, "He feeds your ass, clothes you, and puts a roof over your head, you ungrateful fuck - shut the hell up!"

Although I wasn't happy with the attitude my Dad had regarding buying things for us kids (he didn't buy anything "extra") I will say that those experiences gave me a work ethic and the confidence that I can make a living in just about any conditions.  I will agree with the author when he says that most people really can't "do" anything of value outside their niche - it's crazy how many people find something like replacing a faucet too intimidating.  I guess in a collapsed economy, they can still shovel poop.

exi1ed0ne's picture

Too bad all the retirees are doing those low skill burger flipping jobs now to suppliment their SSI.  Mowing lawns, delivering papers - when was the last time you saw a kid on a damn bike deliver one?

Don't compare yesterday's job market to today.  Things are WAY different (regulation, taxes, employment verifications, etc.)

bobdog54's picture

Right arm, Miffed!  All the BS about low paying jobs, illegal aliens, "can't git no respect", need 5 weeks vacation first year, new father needs paternity leave, can't work after 5pm cuz I need to be with my family (that one is total bullshit), blah, blah, blah and on and on it goes - that is all about how they were raised - crappy, no account parenting.  Both working so they can have a new car or a boat or a golf membership.  Been managing people for 45 years and there was and always will be slackers (cuz we're human - bell curve, right?!) but there has been a very definitive change in the overall work ethic, respect for others, personal responsibility and willingness to gain experiences in the last couple generations.  Enter the lawyers aka political correctness creators so more billing hours issue.  The crappy, no account parents didn't get there by themselves - the lawyers seen to it that boys can't be boys and girls can't be girls, they all have to be "its".  Teachers are wrong, kids are right (and now totally stupid and disrepectful), need black history month but no white shit allowed, got the shittiest president ever cuz it was time to elect a black man (or at least partially) and now we need to elect a woman cuz it's time to elect a woman so lets elect the most inept, non performing, lying, cheating hateful woman we can find.

Our children are sponges, they see all this crap and even the smart ones, over time, go over to the dark side. 

There are jobs out there, perhaps not enough for every person alive but certainly more than the number of people willing to work.

aVileRat's picture

Good post. Great to see you posting again because I'm about 99% confident tracking this moment in US Economic history where 57% of Americans were reported as underemployed will be a key dataset for explaining social effects on reserve wages (think auction reserve prices).

The one rebuttal to the Millennial work ethic is to look through the Prism of marginal wages. Back in the 20th c. the average  15-18 year old could pull down a solid 0.5% of mean middle class wages for about 3 hours of work a week. More than enough for a hard working guy of modest smarts to invest in a share of City Refineries or General Motors.

Anyone who has shaped the data sets has noticed a significant uptick in virutal labor since 2008.  If one were to look up the total volume of Steam Virtual goods sales, much of it done by workforces under the NRU age, you get a healthy offset to the mythical 'lazy millennial' problem. Implied wages for virtual services range from about 14/hour to 27/hour USD by taking online good Unicorns and throwing that into a black-sholes option formula to pull the payoff matrix for striking 1 big payoff per hour. When you compare flipping bits for bitcoins to flipping burgers in McDonalds for 4/hour, you can see why Johnny5 spends all day writing aimbots or making editorial video edits. I'd expect if there was someway to pull the meta-data from Twitter, your grey zone wealth would post it a bit higher given the extensive referral and clickbait/sex trade going down on social media venues.

With deflation now killing physical jobs in primary industires the choice between virtual engineering/creation & physical employment is pretty moot. I suspect existing positions for Truck Driving and Bar Waiting has all the appeal a 1820 yeoman had about going to work in Glascow coal mines or tilling the family half acre, until the (code )factory came along. So now we have an urbanization effect, only into virtualization vs cities; and hoping something as innovative as the personal sewing machine or gearbox comes along along with copious amounts of capital to kickstart. Bandwidth and time is running out. 

So we either cram-down wage expecations of lower-middle class by 1. Killing virtual good & black market wages or 2. Improve labor and capital formation rates until we can Organically get back to 7%/a T-10. Since Wage control has always led to great fiscal policy effects, I guess we're stuck with 2.

And I suspect because of 2, we see so many parents who themselves were horribly underwater after 30 years of horrible non-indexed returns both from ESOP & inflation adjusted security returns (non-index) why so many are encouraging their kids to do anything to survive in hopes they will be someday capable of supporting their Generation of Love, LSD Tripping blue-collar asses in retirement around 2025.

That generational burden is well documented in stagflation economic literature.

 

Miffed Microbiologist's picture

This was very well said and it bring up the personal responsibility issue I see lacking here in the Baby Boomer generation ( I being in the tail end ) The challenges facing the Millennials are completely misunderstood by those who have never faced these issues. I have watched very industrious 20-30 year olds trying to break into my field ending up in 10x the debt I incurred in the 1980s and a marginally better starting salary.

I just had to laugh when grandma scolded my kids for not having a penny jar. I had to explain to them she just was living in a time when that was effectual and their view of it being a waste of time was true. They put together a jar themselves to make grandma happy. Hopefully no one will have to do so for me someday.

Miffed

Creepy A. Cracker's picture

"'As you hear from these stories, this is a liberation,' Pelosi said"

Pelosi is a good Catholic girl.  Well, except for all of that stuff that the Biblle and her church tell her.

2 Thessalonians 3:10 - "...if a man does not work, he should not eat."

agstacks's picture

"This is where the left and right split.  Some among us feel those less fortunate then us should just starve to death in a cold dark alley, huddled around their 4 children shivering to death, while being raped by some patriarchal white man who insists it's his right to do so.  The left looks at this differently..."  -Pelosi

pods's picture

The Arkansas Bible also goes further  "and eatin' ain't cheatin"!"

Or something like that.

pods

10mm's picture

Go to a Catholic Church and just try to find a Bible in the Pew.

Seek_Truth's picture

Goin' to church without your Bible is like going to the shooting range without your gun.

boattrash's picture

Seek, One should carry both.

drendebe10's picture

Soopid fukn progressive liberal democrap tax & spend policies...

blowing winter's picture
blowing winter (not verified) agstacks Apr 7, 2015 1:30 AM

Start working at home with Google ! Its by-far the best mixed bag of goods I've had. Last Thursday I got a trademark new Bmw since getting a check for $6474 this - 4 weeks past. I began this 8-months ago and immediately was coming with house at least $77 per hour. I work through this connection, go.to tech marker for work detail.... www.globe-report.com

froze25's picture

Anyone got a good Head hunter for Pharmaceutical manufacturing?  My wife is looking to leave her company for greener pastures.  She is a senior production manager for manufacturing.  Wrote all the SOPs they currently use.

taketheredpill's picture

Businesses are desperate to find workers?

 

So I guess I had the 6:1 Applicants / Jobs ratio backwards....silly bunt.

 

 

Rainman's picture

Businesses are desperate to find workers ... who can pass the drug test .

    fixed .

kaiserhoff's picture

Oh, so now you're getting choosy, on us?

I suppose you want fewer than five felony convictions too?

Deeescriminatory.

Creepy A. Cracker's picture

... who can leave their iPhone alone, not texting during their interview.

Norm Alcybias's picture

so during th interview have an associate text the person you are interviewing and see if they respond.

If you read this text, just get up and walk out.

Steaming_Wookie_Doo's picture

Yep. I know union welders can get 50/hr (before OT). I also know one guy who can weld, but won't lay off the sauce consistently to not be hung over or shaking. Gets on a gig, maybe lasts a week. Always claims that "it's a popularity contest over at the union hall.' Yeah, I guess drunk guys playing with flammable/explosive materials *aren't* very popular.

I did hear from another older guy who evangelizes welding. Seriously, guys can make 200K+ especially for some offshore work. That is more than I am making in high tech. But these are people with skills, responsible, not drunk or high. Possibly that bar is too high for the increasing pile of detritous occupying this country.

gatorengineer's picture

Where do you find a welder for that cheap?  Must be an apprentice.  that is a cheap rate.  You wont get anyone to show for less than 5x10's, and that 10 is at time and a half.  So you are looking at $3300 a week in Wisconsin.  Move that to the east cost and add 25% to that minimum.

here in the middle of nowhere wisconsin two year old rates

http://www.wilaborers.org/userfiles/2013%20cheat%20sheets/2013%20IronWor...

You are off on the not drunk or high.  The wizz quizz catches about a quarter of them.

 

 

Uber Vandal's picture

The one big problem with welding is:

How many old welders does one know?

If one knows an old welder, how is their physical condition?

Same goes with concrete workers, brick layers, roofers, and other such jobs.

 

 

Hyjinx's picture

It'll be funny when these pampered Union goons don't have a monopoly on the labor market anymore and their little racket goes to shit.  I know someone in the steam fitters union and what they make vs. how much they work is absolutely obscene.  Can't wait to see reality intrude on all of it.

TimmyB's picture

   How about increasing wages.  Funny how "supply and demand" never seems to apply to labor markets.  I thought these guy were capitalists.  

RaceToTheBottom's picture

It is the difference between the subsidy and the wage that drives worker shortages.  

That and the superhighway into the US of low wage worker bees.  Why are bees dieing again?

bobdog54's picture

It does apply to labor markets, if their wasn't enough burger flippers to go around then wages would go up.  The issue is the thousands, no millions of high school dropouts that fit into this no skill, no brains no nothing required but showing up to flipa burger or mop up the ketchup.  The labor unions is the longer term reason we have less quality jobs in this country, drove the capitalists to foreign shores which personally pisses me off but we, as citizens have allowed the trade tariffs to let all the cheap products come on in to the good ol USA.  I had the choice a couple of years ago to buy a stainless steel sink in the USA, union made for $1575 or an exact duplicate (material, worksmanship, everything) for $575 and shipping was half of the one from Illinois - what the hell is that all about??

inhibi's picture

"...record numbers of working age people out of the labor ‎force at the same time we have businesses desperately trying to find workers"

 

Im sorry, did I just read that wrong? 

 

What businesses are trying to find workers exactly? Not financials, engineering, manufacturing, law, construction, retail...oh I see. So they need more truck drivers. Way to over generalize as usual ZH. 

 

And sorry to point out that you would have to be damn desperate to become a truck driver. Id rather live off the government at that point. Dont get to see your family, have to deal with assh0le cops and shit roads, and on top of it, get yelled at and paid practically nothing. Yeah what a great job that we need SKILLED people for. FUck this article.

Omen IV's picture

what this author ignores is that there are a lot of tech jobs (software)  that are posting positions to a very specific criteria and background  to meet the regulations for bringing in 10-1B work visa

this is in many cases a set up

Trogdor's picture

Yeah - the jobs they're "wanting to fill" pay so poorly and have zero benefits - so a person has to ask, "Do I want to get up and go to some mind-numbing job every day and make $18K per year AND deal with taxes and other government parasitism .... or ..... sit at home in my jammies playing XBox making $14K?"

Berspankme's picture

You ever see Obama's pajama boy? Think he's gonna be a welder?

Creepy A. Cracker's picture

You know a common weld is called the butt weld (Google it).  Just sayin...  It might attract him/her/it to the job.

NoDebt's picture

"Second, our public school systems often fail to teach kids basic skills. Whatever happened to shop classes?"

Liability exposure is what happened to that.  Next question.  

Nobody's little angel is allowed to have any physical or mental trauma of any kind.  Which is why the other thing the author is bitching about- lack of skilled workers- is all the more entertaining.

Osmium's picture

Whatever happened to parents teaching their children basic life skills?  I learned a hell of a lot more from working with my dad than I did in school.