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Home Publications Blogs Beat the Press NYT Claims of a Skills Shortage Disproved by Evidence in Article

NYT Claims of a Skills Shortage Disproved by Evidence in Article

Thursday, 01 July 2010 22:31

The NYT reported that manufacturers are having a hard time finding the skilled workers they need for their modern factories. However, the evidence presented in the article suggests the opposite. It reports that in Cleveland, the city on which the article is focused "more skilled workers earn $15 to $20 an hour."

This is not an especially high wage. For example, it is unlikely that many New York Times reporters live on $30,000 to $40,000 a year nor would they be very happy if their children got a job paying this much. The problem appears to be that manufacturers don't want to pay the market wage for the skills that they need. This is like someone who wants to buy a 4-bedroom home with a yard in a good neighborhood in Washington for $200,000, and then complains that there is a shortage of good homes.

There are good homes in Washington and there would be plenty of skilled workers for manufacturers to hire in Cleveland, if they were just willing to pay the market wage. The only evidence of a lack of a skills in this article is that the managers interviewed for the piece don't seem to have a good grasp of basic economics.

Comments (8)Add Comment
Insult to Injury
written by Union Member, July 01, 2010 11:32
What skills do they possess at Goldman (and did they possess at AIG) and the ratings agencies and the mortgage lenders that makes their workers so valuable?

And also, why are we laying off Teachers nationwide if there is such a skill shortage? (Shouldn't the market recognize that the demand for a more skilled workforce requires that it devote more resources to provide for more teachers at higher pay to train this workforce?)

What does it mean to hollow out the economy?

Don't ask the NYT; they seem unsure as to whether torture is a crime or a controversy. The Times appears to value the same skill set possessed by Goldman, AIG, the ratings agencies, and mortgage lenders.

written by izzatzo, July 02, 2010 6:26
The 10% unemployment rate is a myth. It's a structural problem of mismatched skills, not a cyclical problem of insufficient demand.

No matter what employers offer, they can't acquire the skills necessary for the jobs in question. On the supply side, hundreds of underqualified applicants flood the market for jobs they can't do.

It's a classic shortage. Read Econ 101. Not enough supply to satisfy demand at the going rate. Too much demand for too low a wage. Either demand must fall or supply must increase to correct the shortage.

Therefore the 10% unemployment rate is too low. It needs to be higher to correct the shortage with less demand for labor or more supply of labor, then the market for labor will clear at the going wage rate when everyone who wants a job has a job.

Stupid liberals.
written by Union Member, July 02, 2010 6:59

You are torturing logic and it is confessing to what you want to hear.

Dishonest neo-classicals.
written by KJMClark, July 02, 2010 9:30
My thoughts on reading it were:
- The company is too cheap to pay for any training whatsoever.

- The company expects to pay firesale prices for labor.

- The company will probably pay, via lost orders, to another company that's willing to pay the market wage or pay a training wage and train someone.

- If the machinist in the article has been doing that work for 15 years, who trained him? CNC machinery was available 15 years ago, but it was uncommon. More likely, he started out as an entry machinist, and someone gave him on-the-job training in newer equipment. I doubt he's still using the same equipment he started out on 15 years ago.

- Shouldn't the NYTimes headline this as "Companies Refuse to Hire", and byline as "Companies Only Willing to Hire at Lower Wages"?
written by PeonInChief, July 02, 2010 9:35
To the contrary, the managers of these factories have an excellent grasp of economics. They want to buy cheap.
what is a 'high wage'?
written by dave, July 02, 2010 10:20
Dean, you say $15-$20 isn't an 'especially high wage'. But what does that mean? If you mean its not enough to secure a lower-middle-class existence, you are correct. But if you mean it's not high in terms of what other labor market participants are willing to pay, you are dead wrong.

There are admitted members of the New York bar with JDs from decent law schools working in NYC for $20/hr. I am not kidding.

My employer (a profitable public company) hired 4 newly graduated computer science BAs in Q3 2009 for $15/hr in Los Angeles. I am not kidding. These are extremely bright young people with good degrees working for poverty wages because the market is terrible.

So for you to say that $15-$20 is low pay for someone with 9th grade math skills in Cleveland is pretty laughable.
written by Jamaal, July 02, 2010 12:38
He didn't say the wage was low, he just said it wasn't especially high. It's stretching the definition of shortage to say that because you can't get something at a price you are willing to pay that there is a shortage of that thing. The only thing that you can say is that the current market price for that labor is higher than the price that you're offering.

If you're offering what is pretty much the lowest tier middle-class salary (that I myself make, and as a childless single, enjoy greatly), it seems to be more of a demand problem.
I found one of your article on the panama news.com
written by dwayne hall, July 03, 2010 1:26
You have an interesting view of current media writers, reporters, etc. Keep up the good work!

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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.