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(What’s Left of) Our Economy: The Big Missing Reason for the Big Jobs Miss

10 Monday May 2021

Posted by Alan Tonelson in (What's Left of) Our Economy

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Anthony S. Fauci, automation, Biden, Build Back Better, CCP Virus, CDC, Centers for Disease Control and Prevention, child care, children, coronavirus, COVID 19, FDR, Franklin D. Roosevelt, immunity, Jobs, jobs report, lockdowns, New Deal, parents, productivity, reopening, school closings, skills, skills gap, teachers, unemployment, unemployment benefits, vaccinations, Wuhan virus, {What's Left of) Our Economy

As reported widely, the big miss marking last Friday’s official monthly U.S. jobs report (for April) ignited a heated debate among politicians, economists, and many others over why the U.S. economy created so much less new employment that month (266,000 net new positions overall) than generally estimated (in the million neighborhood). At the heart of this debate: Do the many positions employers consistently say they’re struggling to fill amid a continuingly high jobless rate mean that the enhanced unemployment benefits offered throughout the pandemic are discouraging Americans from returning to the workplace?

What I’m not seeing, however, is anyone asking whether this is the right debate. It’s increasingly obvious to me that it’s not.

It’s easy to see why those who answer yes are viewing the issue far too narrowly. Surely some unemployed workers are content to stay at home because they’re currently making more from jobless payments than they were making from their previous employer. That should be clear from the number of businesses raising wages to fill the shortages they’re experiencing. (I’m not saying that these raises are or aren’t long overdue or otherwise deserved; simply that the higher pay and other incentives employers are offering can only be interpreted as companies recognizing that the enhanced benefits have, to a degree, increased the relative attraction of remaining on the employment sidelines versus reentering the job market.)

At the same time, is it reasonable to ignore all the other major reasons for this big labor market anomaly? Like ongoing fears of catching the CCP Virus at the workplace, or the need to stay home with school-age children forced to learn remotely? And don’t forget all the uncertainties created by the sudden stop-start nature of the virus-era lockdowns on the economy.

Yes, a rapid U.S. reopening is taking place now. But all over the world, infection surges are producing new economic curbs. Can you blame workers for wondering whether shortly after they leave the unemployment and benefits rolls, their new workplace will need to close, or cut back on its operations, leaving them in the lurch while they either seek other jobs or file for new benefits?

It’s easy to see that all of these developments and circumstances and uncertainties and outright fears are keeping U.S. labor seemingly scarce. You can also add to the list the likelihood of growing skills mismatches in the American economy – that is, the numbers of jobs requiring more or different skills outgrowing the number of workers possessing these skills, and the numbers of companies replacing low-skill jobs with automation of some kind. Not that the resulting mismatches inevitably will be with the nation forever, or even long term. But they’re unmistakably present now.

So maybe the problem is simply too complicated for government to address? Or we’ll simply need to wait until a stable post-CCP Virus normality returns and labor markets start clearing as usual? It seems reasonable that the purely skills-based mismatches will defy ready solutions – unless America’s education system suddenly gets a lot better at preparing students for the economy they’ll be facing, and businesses get more serious about training and retraining workers, and turn  away from needlessly insisting on lofty credentials for jobs that don’t require anything close.

It’s also possible – though that’s the most I’m willing to say – that spreading automation will eventually help businesses become so much more productive that they’ll be able to turn out more products and services, and that this very success will generate all sorts of new jobs whose appearance can’t be predicted with any precision now. (My reservations stem from concerns that the newest forms of automation, especially artificial intelligence and super-sophisticated robotics, are qualitatively more capable of displacing many more kinds of labor than previous technological breakthroughs.)

As long as the federal government and the states remain willing to provide generous unemployment benefits (and other supports), the resulting situation would at least keep most of the jobless adequately fed, clothed, and housed. That’s a big “if,” though, for reasons economic (e.g., maybe Washington can’t keep borrowing and spending massively much longer?) and social and cultural (e.g., maybe ever longer term unemployment will start to produce more in the way of pathological behavior like drug abuse, violent crime, and worse classroom performance from students from families on the dole?).

Consequently, the more progress can be made returning the unemployed to work, the better, and however difficult the challenge of eliminating the purely or largely skills-based mismatches, Americans and their leaders shouldn’t overlook where policy can make a big difference. And the above analysis indicates that one big difference can be made by the U.S. government, and especially its public health authorities.

Specifically, they need finally to stop their CCP Virus alarmism and energetically spread the word that due to a combination of high and mounting degrees of various kinds of immunity, mass vaccinations, and the highly varying nature of the virus’ infectiousness and lethality, normality is unquestionably returning. Further, and crucially, although certain groups of Americans – like the elderly, and those with certain underlying medical conditions – are still too vulnerable and must be protected with special measures, the Biden administration and its health experts should acknowledge that nearly all others can safely return to normal activities because the already low odds of even getting the disease, much less suffering significantly from it, have now plunged to rock bottom.

In other words, Washington should announce that work places are safe to return to, bricks and mortars businesses are now safe to patronize, in-person schooling is just fine for both students and teachers and administrative staff alike, (thus solving the childcare dilemma), and that lockdowns have become a thing of the past.

Instead, of course, you’ve got a Centers for Disease Control and Prevention (CDC) that seems stuck in hyper- (and increasingly unscientific) caution territory, not to mention decimating its own message about vaccines’ effectivness by admitting almost no behavior payoff whatever; and a President and leading figures of his own party continuing to wear facemasks even in settings that “the science” had made crystal clear are as safe as they can be for the fully vaccinated.

To top if off, the President’s chief medical adviser, Dr. Anthony S. Fauci, has just taken pains to speculate that Americans may start wearing facemasks to guard against all sorts of respiratory diseases on a seasonal basis. Given this administration’s record so far, it doesn’t seem all that far-fetched to worry that new CDC guidelines along these lines, plus recommendations to resume some forms of social distancing, and even new business curbs, could quickly follow if this kind of Chicken Little-ism isn’t stopped. For now, though, no wonder so many Americans are still scared stiff of the virus.

It’s becoming more and more common to compare President Biden and his ambitious plans for “Building the U.S. Economy Back Better” with Franklin D. Roosevelt and his New Deal programs.  (See, e.g., here and here.) But it’s hard to imagine Mr. Biden succeeding to any lasting degree if his CCP Virus policy doesn’t start reflecting one of FDR’s most and most deservedly famous insights: “[T]he only thing we have to fear is fear itself.”

Im-Politic: Angry Voters May Not Know the Half of It on High Tech Immigration

29 Saturday Aug 2015

Posted by Alan Tonelson in (What's Left of) Our Economy

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Center for Immigration Studies, Center for Investigative Journalism, Donald Trump, federal contracting, H-1B visa, Im-Politic, Immigration, Jobs, John Miano, KeepAmericaatWork.org, labor shortages, Mainstream Media, Norman Matloff, Obama, skills gap, technology, Virgil Bierschwale, wages

It’s now become commonplace for establishment politicians and their Mainstream Media enablers to acknowledge that so-called “insurgent” presidential candidates – especially Republican Donald Trump – have “tapped into” public anger against their performance. Far less common are signs that the establishment is prepared to take even the most obvious steps to respond constructively to this anger, and Virgil Bierschwale’s excellent “Keep America at Work” blog has just turned up a great and oh-so-revealing example.

As Virgil and many others (including me) have noted, the H-1B program under which the U.S. government hands out temporary work visas to foreigners supposedly with special skills has long been abused by employers, especially in the technology sector. Claiming that they can’t find the talented workers they need in the American workforce, tech companies have frequently hired H-1Bs – and continually lobbied for more – simply in order to drive down wages and therefore boost their profits.

And in the first sentence of this paragraph, I used the word “noted,” very deliberately. For even though expanding the H-1B program enjoys strong bipartisan support among the many American political leaders who receive handsome campaign contributions from the technology industry, the U.S. government itself over the years has charged numerous tech firms with violations of the central H-1B requirement that they pay these workers prevailing wages.

So you’d think that this same federal government would at least refrain from rewarding these crooked companies by denying them federal contracts. As Virgil has just shown, however, you’d be wrong. His August 20 post reported on a study by the Center for Investigative Journalism that found:

“The federal government has awarded contracts and other benefits worth nearly half a billion dollars since 2000 to tech labor brokers cited for violating laws related to the temporary visa program known as H-1B.

“Since 2000, nearly 20 percent of the technology labor brokers and tech firms cited for violating the H-1B visa program have received federal contracts, payments and other government support.

“The Department of Homeland Security and Department of Labor are among the agencies that have looked past H-1B violations or failed to check the record.

“Even labor brokers facing the ultimate penalty for H-1B labor violations – debarment from the temporary visa program – found ways back in.”

And what about President Obama, the self-styled champion of the American worker? This summer, he signed an executive order requiring anyone seeking significant federal contracts to notify Washington if they’ve recently broken labor laws. “Our tax dollars shouldn’t go to companies that violate workplace laws. They shouldn’t go to companies that violate worker rights,” Mr. Obama said.

But H-1B violators have nothing to fear. They’ve been expressly exempted from the new order.

So although I usually shy away from predictions, I feel pretty confident in believing that, throughout this presidential campaign and beyond, establishment politicians in both parties and their media enablers will continue to bemoan the troubles of the American workforce and hail technology industries as a big part of the solution. Federal contracting practices like those described by Virgil will continue to be a big part of the problem (along with other job- and wage-killing measures like amnesty-friendly overall immigration policies and offshoring-friendly trade agreements). And establishment politicians – along with the Mainstream Media which missed this H-1B scandal and keeps ignoring it – will keep pretending that they get it on voter anger.  

FYI, for other terrific sources of information, analysis, and coverage re H-1B and many other immigration issues, check out Norman Matloff’s “Upon Closer Inspection” and the work of the Center for Immigration Studies, notably John Miano’s blog.   

(What’s Left of) Our Economy: Tech Labor Shortage My…Foot

31 Friday Jul 2015

Posted by Alan Tonelson in (What's Left of) Our Economy

≈ 1 Comment

Tags

compensation, ECI, Employment Cost Index, immigrants, inflation, inflation-adjusted wages, labor shortages, skills gap, tech workers, wages, {What's Left of) Our Economy

So many myths were busted in today’s Employment Cost Index (ECI) report from the Labor Department, which should put the kibosh on wage inflation claims until…the next Employment Cost report. One of the most important is the longstanding notion that America is experiencing a scary shortage of high tech workers, and will fall hopelessly behind the rest of the world in the innovation race – with dangerous implications for national security and living standards – if the “skills gap” isn’t filled pronto with zillions of brainy immigrants.

The ECI data – which doesn’t adjust for inflation when it comes to detailed occupational and industry data – lacks information on technology workers per se. But it does provide statistics on pre-inflation total compensation (including non-wage benefits) for workers in the “professional, scientific, and technical services” field, which includes engineering and computer services.

Remember that textbook economics and common sense both tell us that when businesses can’t find the workers they want, they tend to react in one of two ways. They either increase pay to become more attractive to existing workers they need, and over the longer- term to draw more people into their field. Or they figure out a way to get the necessary work done by becoming more efficient – say, by buying or developing some gizmo that can replace human beings, or make their current employees more productive. (The textbooks, incidentally, don’t teach that businesses facing labor shortages typically lobby governments to boost immigration levels in order to create labor gluts and suppress wages – which seems to be the strategy of choice in Corporate America nowadays.)

Of course, economics also teaches that employers urgently needing more workers will try various mixes of both approaches over time. But those facing genuine shortages usually can’t afford to skimp on pay. Why, then, do the data on total compensation for “professional, scientific, and technical services workers” show that that’s exactly what’s happening to compensation?

The new ECI numbers covered the quarter ending in June, and deep in the Labor Department website, you can find statistics going back to 2001. Since that June, here’s how pay has improved over each previous June quarter:

2000-01: 3.4%

2001-02: 2.4%

2002-03: 2.1%

2003-04: 4.5%

2004-05: 2.6%

2005-06: 3.1%

2006-07: 4.7%

2007-08: 4.1%

2008-09: 2.0%

2009-10: 1.4%

2010-11: 3.0%

2011-12: 1.5% 

2012-13: 2.0% 

2013-14: 1.7% 

2014-15: 1.1% 

Do these look like the kinds of pay raises given out by businesses that are desperate to hire? It’s clear that total compensation increases slowed down considerably once the Great Recession took hold in 2008-09. But why should even that deep downturn have produced the dramatic deceleration revealed here? After all, we’re talking about the industries of the future – sectors and companies that are generating outsized growth because they’ve not only found brilliant new ways to meet wants and needs the rest of the economy already has, but because they’re great at identifying completely new wants and needs.  And anyway, the recession ended more than six years ago – remember?

But here’s a finding that’s even more stunning – and destructive to claims of tech worker shortages: For the last three years, total pay for the private sector workforce overall has risen faster than total pay for the professional and scientific etc. workers. 

Lying about the hiring picture isn’t exactly admirable behavior, but we’re talking about businesses here.  They’re supposed to be obsessed with making money in any legal way possible.  But elected officials who swallow their propaganda presumably have a different set of responsibilities.  If I can find information debunking their labor shortage claims, so can the politicians.  Why haven’t they?    

 

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