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Home Publications Blogs Beat the Press Jamie Dimon Says American Businesses Suffer from Skills Gap at the Top Levels

Jamie Dimon Says American Businesses Suffer from Skills Gap at the Top Levels

Thursday, 02 January 2014 07:57

That is not exactly what he said, but that is what his comments in a Washington Post interview mean. Dimon said that the United States is suffering from a skills gap where firms can't find workers with the skills they need. Dimon claimed that this skills shortage could be raising the unemployment rate by 1-2 percentage points.

In a market economy when there is a shortage of particular item, in this case skilled workers, the price is supposed to rise. There is no substantial sector of labor market seeing wages that are even keeping pace with overall productivity growth, much less rising due to shortages.

If firms really have slots going open because they can't find workers with the skills they need then the problem is that we have employers who don't understand how markets work. If they raised wages firms could attract skilled workers away from their competitors and more workers would try to acquire the necessary skills for their open positions. Perhaps if CEOs were required to take introductory economics courses we could solve this problem.

As a practical matter, we see no evidence to support Dimon's assertion. There are no major occupational groupings with high ratios of vacancies to unemployed workers, nor do we see increases in the length of workweeks, which is another way that employers would deal with a shortage of skilled workers.


Comments (18)Add Comment
Global Problem According to CEOs
written by John, January 02, 2014 7:48
I visit many countries and that is a discussion many CEOs have. Take a look at the overseas American Chamber of Commerce reports. Each report the same thing. The problem these CEOs have is they don't want to pay for this educated talent in tax revenue nor in salary. Companies are raising the bar on entry job qualifications hoping to find these miracle workers. Dimon, Ballmer and others complain about not finding these people (Martians) all the time.
Dimon: a dime a dozen
written by Squeezed Turnip, January 02, 2014 7:59
From the Simon Jones article Dean commented on just previous to this:
And top financial-sector executives continue to enjoy such high prestige that they are still called upon to run public finances. Politicians continue to defer to the supposed wisdom of these individuals.

Jamie Dimon is no better than a pimp. America, just because somebody was born with a silver spoon up their backside and thus floated to the top of the commode-ity market like a giant turd, just because somebody has their hands wrapped around your testicles retirement nest egg, doesn't mean they're as wise as Forrest Gump.

Jamie Dimon is just projecting what he knows to be true about himself: he has no skills, and only luck, and he can't find anybody else in his limited social network that has the skills he needs. It's almost laughable that he generalizes this situation to the entire economy. But then pimps don't need facts, they need johns.
written by JDM, January 02, 2014 8:05
Oh, Simon understands how markets work. The way they work is that execs get huge pay packets for making risky bets which, when they lose those bets, the government reimburses them. And they do illegal things for which they face no jail time ever, instead (and only rarely) facing a fine which consists of a small fraction of the amount stolen. And a fine which gets partially paid by taxpayers who have no connection to the execs' business.
written by Ecomedian, January 02, 2014 8:07
A Chinese business man put it to me this way:

"In America, there are 40 lawyers for each engineer. In China, it's the opposite."

That is the outcome that the labor "market" in America has produced.
written by JDM, January 02, 2014 8:09
BTW, make that "Dimon" instead of "Simon" in my comment. Because the way tablets work is to oh do helpfully "correct" things they should not. ?
written by Ecomedian, January 02, 2014 8:14
I should mention that I believe the real ratio is 1:1, but his point was about the "quantity of quality talent" available, which isn't something that comes out of raw labor statistics.
written by fresno dan , January 02, 2014 9:00
"If firms really have slots going open because they can't find workers with the skills they need then the problem is that we have employers who don't understand how markets work"

Corporations understand economics, or more accurately, political economy much better than economists. They bribe their way to making the law for their own benefit - the last thing in the world they want is a free, lawful market. I haven't followed Mr. Baker long enough to know - was he a NAFTA supporter (like his pal Krugman)? FREE TRADE!!! FREE FREE!!! How'd that all work out?
written by JDM, January 02, 2014 9:06
You're right, Fresno, you obviously haven't followed Dean Baker. :)
written by djb, January 02, 2014 9:15

its called the blame the workers game

unemployment is "structural"

but as is pointed out, if there were so many jobs available that they didnt have people qualified to fill

those that are qualified would command larger and larger salaries through the competitive market place

and a whole bunch more of people would be rushing to get qualified so they could get these high paying jobs

but there is not evidence of either happening

so its just another rationalization for greed

We suffer from an excess of Jamie Dimon
written by ifthethunderdontgetya™³²®©, January 02, 2014 9:43
And Lloyd Blankfein.

And the rest of the filthy-rich plutocrats who built our TBTF banks and outsized financial sector.
The Post could have stated how much Dimon how much JPMorgan spends per new employee or per current employee.
written by John Wright, January 02, 2014 9:59
If we divide the $300 million JPMorgan Chase spends on employee training by the 40K new employees, this becomes $7500 per new employee/year.

Then we ask how many existing employees are counted as being trained in this 300 million?

The latest figure I found, from 2009, has 222,316 employees for JP Morgan Chase.

Spreading the 300 million over all of these has JP Morgan Chase spending $1349/per employee in training per year.

And Dimon can respond in the interview:
"But do you think companies are doing enough on their own to train workers to have these advanced skills, compared to looking to colleges or whatever to do it?"

“That’s part of what we’re going to learn in the data. My guess is [that] big companies do, but there are other ones who can’t really afford it.”

Perhaps if JPMorgan can adequately train/maintain their workers in advanced skills for $1350/year, JPMorgan should open an education branch and train many more USA workers as a public service.

written by Bart, January 02, 2014 10:28

"Dimon said that the United States is suffering from a skills gap where firms can't find workers with the skills they need."

He is obviously referring to firms that have moved off-shore and due to collapsing buildings, fires, and generally bad conditions cannot find enough slave workers.
Not to Worry: Liars at the Top Have No Fear of Structural Unemployment
written by Last Mover, January 02, 2014 10:35

Jamie Dimon says:
“I think businesses do a tremendous amount of training. Big businesses in particular do a tremendous amount of training. And sometimes — I haven’t studied it — some of it might be remedial. They’re doing it because the people could have had those skills coming out of their college or something like that, but they didn’t. Some of it is very specific — they’re going to learn our programs and our businesses. They’re not going to learn that in high school or college.”

Econ 101: No company subject to effective free market competition has an incentive to educate or train its employees, only to see them leave and offer the added value for free to a competing company which depends on similar skills.

That's why in past, before the big investment banks crushed competition in the financial sector into oblivion, they depended heavily on education and skills from higher education institutions, because it would cost them much more to finance the same thing individually.

When Dimon boasts about hiring 40,000/year at an understated cost of $300M to train them, he is effectively bragging about the outright market power wielded by his firm that prevents other firms from hiring them away to secure their added productivity at a huge discount.

If Dimon can force higher education through the assistance bribes he describes to alleviate feigned "structural unemployment", to provide customized education, training and skills to fit exactly what his firm needs, he and his company get that much more subsidy from taxpayers to support his company that survives on privatized gains and socialized losses - not added value in the form of productive efficiency.

Lying through your teeth is also a skill, but as Dean Baker says, when liar skills are needed but can't be found due to structural unemployment, the evidence is right there in your face that enough will be paid until they can be found, hired and paraded around to bash a system that just isn't doing enough to customize itself to provide exactly what economic predators need to carry out their mission - to destroy the middle class.
written by Kat, January 02, 2014 11:53
The Post could have stated how much Dimon how much JPMorgan spends per new employee or per current employee.

The Post could have stated how much JPMorgan spends per half page ad.
So which IMF report is it?
written by Ellen1910, January 02, 2014 11:54
From JPMorgan's PR release --

"According to an IMF analysis, the skills gap accounts for approximately one-third of the U.S. unemployment rate."

Anyone know which IMF analysis they're referring to?

Missing Link, Above
written by Ellen1910, January 02, 2014 11:59


What is the HTML "link" tag? It appears it's not
It appears it's not
written by Ellen1910, January 02, 2014 12:28

less-than sign a rel="nofollow" href= . . . less-than /a more-than sign.

What is it?
The IMF paper the press release MIGHT be referring to actually mentions 0.5%
written by John Wright, January 03, 2014 9:36
I found a paper from July 2010 at the IMF called

United States Selected Issues Paper

This is titled "IMF Country Report No. 10/248"

This has a statement

"This chapter shows that the crisis has created extreme disparities across states in terms of skill mismatches and housing market performance, which could have raised
the national equilibrium unemployment rate by 1 to 1¾ percentage points."

So they COMBINED the housing and skill mis-matches to come to a 1 to 1-3/4% of the unemployment rate %.

Further down the IMF paper relates:

"Skill mismatches would account for around 50 basis points of the increase in the national equilibrium unemployment rate since the end of 2007."

This corresponds to 0.5% of the total unemployment percentage rate.

It appears, JPMorgan Chase rounded up the 1-3/4% number (comprised of BOTH housing effects and skills gap) to get to the 2% number Dimon quoted as related to skills.

But of course, the IMF paper only attributes 0.5% to a skills gap.

Maybe that is how 0.5% multiplied by 4 for public consumption.


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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.