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Home Publications Blogs Beat the Press NYT Tells Readers About Shortage of Skilled Workers in Europe Without Ever Mentioning Wages

NYT Tells Readers About Shortage of Skilled Workers in Europe Without Ever Mentioning Wages

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Saturday, 04 January 2014 07:26

I can't find a doctor to work for me for $30 an hour. According to the NYT this would mean that the United States has a doctor shortage. That appears to be the logic of a major article asserting that Europe's economy is suffering from a shortage of skilled workers even as its unemployment rate is near 12 percent.

The piece never once mentions the trends in wages for workers with the skills that are allegedly in short supply. As a practical matter, there has been a shift from wages to profits over the last three decades which accelerated with the downturn. In the United States, which also supposedly suffers from a skills shortage, even workers with degrees in science, math, and engineering, are not seeing their wages keep pace with economy-wide productivity growth.

It is understandable that employers will always want lower cost labor just as most of us would be happy to save money by having qualified doctors work for us at $30 an hour. However the desire of companies to increase profits further doesn't mean there is a shortage of skilled workers anymore than the lack of doctors willing to work for $30 an hour implies a shortage of doctors.

Comments (20)Add Comment
...
written by Alex Bollinger, January 04, 2014 7:52
Not quite $30/hour, but a consultation with a doctor in France costs 23 euro, and the state insurance picks up most/all of that. But if you're a tourist, it's about $31, although a consultation is usually 10-20 minutes, not an hour.
The Brainwashing is Complete: Price Signals are Dead
written by Last Mover, January 04, 2014 8:35

The ad nauseum repetition of the skilled worker shortage meme confirms how thoroughly MSM sock puppets have been trained by the 1% to draw attention away from failed private markets, which cannot provide demand in the aggregate sufficient to achieve full employment.

Even the function of prices themselves as price signals, have been bastardized, conveniently wiped off the radar when they get in the way of scripted propaganda.

Prices. Those sacrosanct carriers of information in markets that carry critical information necessary to make economic decisions, especially about shortages and surpluses, and correcting them.

Prices. Those sacrosanct signals which must remain free of government interference, lest their divine guiding light for allocating resources to the highest valued use be compromised in the name of socialist regulations that only benefit takers at the expense of makers.

Indeed. Except of course, when it comes "skilled worker shortages" and the higher wages (price of labor) necessary to correct the claimed shortage. Then suddenly the sock puppet message switches in the opposite direction 180 degrees:

Prices? What prices? What do prices and signals have to do with it? We're talking about a documented shortage of skills here by employers. What more evidence could you possibly need?
At least poor Jaime Dimon probably feels better today
written by jaaaaayceeeee, January 04, 2014 9:10

The New York Times didn't quote him directly making his pronouncement that we have skills shortages, as WaPo did the day before yesterday.

But this cockroach claim is still being reported, against all evidence. Masterful management skills, well, at least of the press and pols.
...
written by AlanInAZ, January 04, 2014 9:36
@ Alex Bollinger

Medicare paid the medical practice of my family doctor $40 for my most recent visit. A bit more than 23 Euros but not much.
And those poor souls who believe in meritocracy
written by Rachel, January 04, 2014 10:10

More and more it seems like a bad idea to go into a career that is not protected by major lobbies. Finance, enormously well protected by lobbyists, that's a profitable field to go into. Medicine is also well protected. If nothing else they've got people like C.Rampell to say, in effect, if you're going to overpay financiers, you have to overpay the doctors too. But scientists and engineers? Not so protected. Unless a student is connected to the right people, one might hesitate to advise that student, however bright and motivated, to pursuit a STEM career. Not in our distorted economy.
Let me see if I have you right here., Low-rated comment [Show]
Where's the wage inflation?
written by anon, January 04, 2014 12:45
Bill H: A genuine shortage of workers in an area is marked by wage inflation. An article that endlessly quotes employers about a shortage without checking that there has been wage inflation is making propaganda.
Hourly rate for doctors
written by Dennis, January 04, 2014 1:28
@AlaninAz: Your recent doctor visit probably involved at most 15 minutes with the doctor, or a wage of $160/hour
...
written by AlanInAZ, January 04, 2014 1:42
@Dennis,

My doctor spent as much time with me as the French doctor spent with @Alex Bollinger. The doctor's wage from that visit was probably only half the Medicare payment. Family practice is not a lucrative business - sorry folks if that doesn't fit the narrative.
Bill H - your argument assumes zero existing workers with skills
written by A Populist, January 04, 2014 2:31

The article claims a skills shortage. However, the picture it paints looks more like a situation where employers are taking maximum advantage of a surplus of labor, to drive the hardest bargain possible.

Companies are in Ireland, to take advantage of low corporate taxes. Then, they hire foreign Phd's - no mention of wages they are paying these foreign workers. The main character (former hotel employee) takes a job managing a data center for $40K US dollar equivalent - after working for free for 6 months. If there were sufficient demand, employers wouldn't have the luxury of getting the government to train their workers for them - they would be competing in the labor market, driving up wages to compete for those needed workers.

Bill's argument assumes that there are zero skilled workers working at other jobs which can be poached by offering higher wages. This is very seldom the case.

In fact, the company in the article is willing to go outside the country for PhD's. But it is not willing to offer higher salaries to take these critical workers from it's competitors? Not willing to train these workers? Nonsense. In WWII US, companies quickly hired and trained housewives to be welders. Non-degreed engineers being trained on the job was a widespread practice. I know of non-degreed engineers with multiple patents who (today) would not be let in the door to even interview to do a job at which they self-trained and excelled. If employers need workers badly enough, they can train them. History shows that.

If there are unmet needs for goods and services, that creates profitable opportunities - which will result in business people doing whatever it takes to get their hands on that profit - including waving cash under the noses of their competitor's employees.

Paul Krugman has cited studies of worker skills mismatch over time. Worker mismatch rose slightly after the housing bubble popped, and quickly returned to it's bubble low.

U6 unemployment peaked at around 17% in 2010, and is still between 13% and 14%. Previously, U6 went down to about 7% with the added demand of the bubble in 2000. It went back up when the bubble demand went away after 2001, falling back down to 8% in 2006/2007 when we had massive demand due to the housing bubble.

http://m.research.stlouisfed.org/fred/series.php?sid=U6RATE&show=chart&range=max&units=lin

Funny how we manage to get very low unemployment whenever we have massive demand from any source... That indicates that our workforce is indeed well trained, trainable, and flexible. It is only a lack of demand keeping workers unemployed.

In the US, IT salaries have been dropping for some time. For all the talk of STEM shortages, US salaries in these fields are stagnant and falling, even as profits and productivity are high.

This paints a picture which is consistent with an excess of labor, relative to consumption demand, and is inconsistent with a skills shortage. Reasons to conclude otherwise, are preconceived notions, groupthink, subjectivity, self-interest, and closed minded-ness.

But instead of logical arguments, we get unfounded claims of worker shortages spouted by companies trying to keep demand low so they can continue to drive down wages - getting taken at face value, and printed in the NYTimes as if they were established fact.
...
written by Kim B, January 04, 2014 2:34
Bill H: Maybe if you offer $45/hr someone will borrow money, go to trade school, acquire the necessary skills, and apply for the job which now pays a wage sufficient to pay off his/her education loan *and* support themselves and a family. If employers don't want to train their workers (like they do in Germany), then employers need to provide the necessary financial incentives. It's Econ 101.
...
written by watermelonpunch, January 04, 2014 3:42
written by Bill H, January 04, 2014 11:30
If I offer someone $20/hour to run a numerically controlled lathe and he doesn't know how to do it, all I have to do is offer him $45/hour and he will know how to do it?


If you offer $45/hour, a bunch of experienced qualified lathe operators will quit their jobs in restaurants, landscaping, warehouses, etc, to take your stressful job in your shithole facility.

Most of my friends & family, all through the years, have had university degrees. Even so, in the past 10 years, I've known at least 30 people experienced as welders, lathe operators, & CNC machinists who work in OTHER professions because to take a job in their trained fields would mean taking on more difficult, more stressful jobs, in worse working environments, for not much more money - or worse, less money!
They say no thank you.
They're not hiding. They're there. They just don't want your shithole job that pays peanuts.
One might suspect the companies want to "have their cake and eat it to"
written by John Wright, January 04, 2014 9:27
The article mentioned the low 12.5% tax rate that appealed to the companies and then moved to the lack of properly skilled Irish workers to staff these new companies.

So message to Ireland, companies like your tax rate, but not your workers.

Apparently the companies are locating in Ireland for low taxes and then want to import their more highly paid workers.

This seems to indicate Ireland has negotiated a bad deal, low tax receipts from new companies and the better jobs lured by the low taxes do not go to Irish natives.

And low tax receipts must squeeze the Irish re-training budget.

Maybe Ireland should change their tax policy to have a rate that is dependent on the percentage of wages paid to native Irish workers.

So if a company had 100% imported workers, supposedly because the Irish couldn't supply properly trained workers, then a higher tax rate charged this company would insure that Ireland COULD train workers for future opportunities.

We do have a doctor shortage!
written by Eric, January 04, 2014 10:12
Hello! Don't you know as well as anyone that the US DOES have a doctor shortage?
...
written by tyoung, January 04, 2014 10:35
Foreign language fluency is a problem in Ireland. You are far more likely to hear a language other than English in the US than you are in Ireland. Foreign languages are badly taught. I went to school there in the 70's and I don't think much has changed.
Being English speaking might be an attraction to US companies looking for a European base but when those companies want to communicate with their customers in Europe the Irish lack of language skills becomes a problem.
watermelonpunch, Kim B and A Polulist
written by Bill H, January 05, 2014 10:09
I was being facetious, because the article cited by Mr Dean, as Mr. Dean himself admitted in his headline, DIDN'T EVEN MENTION WAGES. So how do we know that raising wages would solve the problem? We do not know what wages were being offered. They may be offering the Euro equivalent of $100 per hour. Mr. Dean did not know because he did not ask the question; he merely said that they obviously were not offering enough because if they were they would have a pletheroa of applicants.

Pipeline companies in this country are having a hard time finding qualified welders. Are they paying too little? Seems unlikely, since they start welders at $60,000 per year, and a journeyman with three years experience makes $100,000 per year and more. I'm sure that if you merely say that pipeline companies have a shortage of welders, Mr. Dean would tell them to pay more and they would be covered up with welders.
...
written by watermelonpunch, January 05, 2014 12:22
written by Bill H, January 05, 2014 10:09
So how do we know that raising wages would solve the problem?


We know, because there are tons of people overqualified doing jobs that don't require their education, skills, training, & expertise. Duh.

Join us in the world, and talk to some people.

Every time they mention a skills shortage - it's an industry where everybody knows people with that expertise who can't find work in that field, or can't find work pays more than they can make doing something else.

You'd have to be living in a cave, not to know about this.

Do the math yourself, indeed.
It's easy.

People say there is a shortage of commercial truck drivers.
Yes, there are many ads for drivers in my local job ads, requiring a CDL.
But then find out how much you're likely to get paid at those jobs, and see if it's actually worth it to:
a) spend the time & money to get the training & certification & the CDL license.
b) take the driving job that comes with low pay and a high level of risk
And compare it to other jobs you could have, without a CDL or that training.
Guess what? Getting a CDL doesn't really increase your earning power much in my region!
So why bother?

Same with CNC Machinists.
If you were a machinist, and you could either:
a) get a job as a machinist in a dirty, uncomfortable environment with a high level of responsibility & concentration required, where there's a lot of standing, limited breaks, and a lengthy probationary period before earning vacation time, and a draconian micromanagement going on hounding you constantly, for $12/hour
OR
b) get a job driving a forklift in a warehouse where you can listen to your ipod, work independently with a relatively easy system, get more generous breaks & benefits more quickly, for $14/hour
WHICH WOULD YOU CHOOSE?
Because that's the choice many machinists make in my area!!

People can do math, and they know the value of their time, toiling, and suffering.

They're not going to get training, or if they have training already, take a more grueling & risky job to get paid not much more, or even less.
Would you??
Certainly higher pay will attract more applicants
written by John Wright, January 05, 2014 12:47
Bill H. wrote:

"Pipeline companies in this country are having a hard time finding qualified welders. Are they paying too little? Seems unlikely, since they start welders at $60,000 per year, and a journeyman with three years experience makes $100,000 per year and more."

Why is this unlikely they are paying too little? You make an assumption that the existing salary structure is somehow sufficient to attract enough welders, but there is a fixed pool of available applicants who are ALL currently fully employed.

Americans will perform many dangerous and hazardous tasks when the pay is high enough.

Turn on the TV today and watch many Americans labor under very hazardous, but highly paid, conditions in NFL football.

High pay attracts great talent to football, it should also function in the same way for qualified pipeline welders.
...
written by PeonInChief, January 05, 2014 1:27
Pipeline welders who make $100K work in remote areas under very stressful conditions, often with 12-hour shifts etc. In addition they often can't find affordable housing--or any housing--for their families, and therefore pay an exorbitant rent in a shared apartment or trailer, as well as the costs for the family back home. A welder with a regular job makes close to $50K, and may not think that the additional wages make up for the labor conditions.
...
written by watermelonpunch, January 05, 2014 4:30
Yeah there's a lot of myopic ignorance about CONTEXT of some of these "skilled jobs".

While it's true that SOME people would stay in their profession for minimum wage & had to be away from family, & spend a lot of money on relocation, etc... because of love of their field... things like welding out in the elements under harsh conditions is NOT one of those professions.
The types of industrial skilled labor being discussed - such as welding and lathe operators... Those are professions that blue collar workers have traditionally encouraged their children to go into as a lucrative way to make a living, support a family, and live comfortably without the need for going to college. If it's not a lucrative way to make a living that negates the #1 reason it was once a wise technical career choice.

Also, yeah, where there's gas drilling going on, you'd be hard pressed to find anywhere affordable to live.
In the Northern Tier of PA, rents have forced many average people out of the areas.
I read a story awhile back that 2 bedroom apartments in Towanda, PA, were going for nearly $2,000 per month.
You'd need to make $100k to pay that - just to get by!

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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.

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