Who’s Really To Blame for Unemployment?
Originally published at In These Times
Guided by the mythology of the “American dream”—the idea that, given the opportunity, the deserving will excel and rise above their peers—politicians often attribute unemployment to a mystical “skills gap.” If people can’t find a job, the logic goes, they clearly weren’t fit to be hired. As a consequence, many legislators tout specialized training programs or education reforms as possible solutions to America’s seemingly intractable jobs crisis. But a new study shows that blaming the “skills gap” for unemployment makes about as much sense as blaming a mass famine on “excess hunger.”
A recent analysis by the left-leaning Economic Policy Institute shows that elevated unemployment is due to a general lack of demand in the job market, fueled by overarching economic decline. In other words, this is not a problem that can merely be addressed by retraining workers or revamping the education system.
In the report, economist Heidi Shierholz outlines this economic imbalance by comparing unemployment at different levels of education. Her results reveal that workers are suffering across the board:
Workers with a college degree or more still have unemployment rates that are more than one-and-a-half times as high as they were before the recession began. In other words, demand for workers at all levels of education is significantly weaker now than it was before the recession started. There is no evidence of workers at any level of education facing tight labor markets relative to 2007.
Moreover, the report continues, there are no specific job sectors that appear to be especially “tight.” So it’s not that the economy especially favors, for example, radiologists or software engineers; bosses seem to be shutting the door on workers of all sorts:
[T]he unemployment rate in 2012 in all occupations is higher than it was before the recession. In every occupational category demand for workers is lower than it was five years ago. The signature of a skills mismatch—workers in some occupations experiencing tight labor markets relative to 2007—is plainly missing.
Indeed, when comparing the job-opening-to-job-seeker ratio across different categories, EPI found that “unemployed workers dramatically outnumber job openings in all sectors. There are between 1.4 and 10.5 times as many unemployed workers as job openings in every industry. … In no industry does the number of job openings even come close to the number of people looking for work.”
They found similar evidence of stagnation in the number of hours that people are working and in wage rates—both of which also suggest that there has been no significant jump in demand for more labor in specific job areas.
And this isn’t the first time we’ve seen research debunking the “skill gap” rhetoric. Last year, various analyses of the so-called STEM fields (high-paying professions geared toward science, technology, engineering and math) showed that these much-hyped occupations, which policymakers and the media have tended to revere as potential saviors for U.S. industry, are not exactly lacking qualified U.S. applicants. Rather than hire those skilled workers, however, many managers are opting to fill their openings with “guestworkers,” who are essentially brought in on employment visas as a reliable supply of temporary labor linked to specific firms. According to EPI, these guestworkers are also generally paid less attractive wages than their peers in comparable positions.
In addition, a recent study focused on Wisconsin workers came to similar findings about supply and demand in the workforce. After crunching the 2012 numbers on jobs that require various levels of education, urbanologist Marc Levine concluded in that report, “Even if every unemployed person were perfectly matched to existing jobs, [more than] two-thirds of all jobless workers would still be out of work.” That’s a gap that no amount of extra training will fill.
Schierholz does note that in a dynamic, churning economy, there will always be some “mismatch” between job-seekers and job openings; individuals typically get turned down for positions for which they lack the right skills or experience. But these specific incompatibilities are not enough to explain the dramatic rise in unemployment in the past few years. And the issue before lawmakers now, she says, is how to curb those plummeting jobs numbers.
Rather than focus on grooming workers for specific sectors as a jobs program, EPI therefore recommends another $600 billion stimulus from Washington to help restore state budgets after the deep cuts that severely undermined opportunities and income among public servants during the recession. Another solution for workers would be a New Deal-style launch of infrastructural construction projects, which could immediately create job openings and pump aggregate economic activity. Extending unemployment benefits could also help re-energize the slumped economy, EPI says, by keeping those without a steady income from falling further into poverty.
However, thanks to the current legislature’s general reluctance to take measures that smack of expanding welfare or enact proactive policy interventions to create government-supported jobs, Schierholz isn’t optimistic that Congress will actually put these stimulus reforms into action.
“We actually could do this. The economics is pretty straightforward,” she tells In These Times. Unfortunately, she adds, “Generally, a big fiscal expansion is just not in the cards. So we are instead going to be languishing in this sluggish recovery for a while. It’s going to be four or five years before we get back to something that looks like health in the labor market.”
So when viewed in historical context, what is commonly deemed the “skills gap” in Washington looks more like a gap in knowledge about how the economy actually works. If legislators’ idea is to break out of America’s downward spiral, they shouldn’t blame workers for not having what it takes to “deserve” to be employed. Instead, policymakers ought to acknowledge the fundamentals of matching people with jobs: it’s not just about their usefulness to the economy, but whether the economy is healthy enough to make use of them.