Higher Skill Levels May Mean Slower Recovery
Paul Krugman waxes gloomy: “So far, there’s nothing pointing to a fundamental turnaround this year, or next, or for that matter as far as the eye can see.” Ryan Avent’s not so sure:
Whoa! There is nothing pointing to a recovery at any time in the future? As I said, the world spent four years doing everything wrong, and yet the Depression finally came to an end. Even if we’re not taking all the steps Krugman would have us take, we are at least avoiding the big errors that doomed the economy before. Krugman is basically saying that this downturn will last as long as the Depression or longer, despite the drastically different — and economically orthodox — policy path taken by the world’s large economies. This seems crazy to me.
Those are good points. On the other hand, there’s at least one factor indicating that recovery is harder on present circumstances than it was during the Great Depression—our much higher level of human capital. Consider this chart from the 1940 Census (apologies for the legibility issues, this is literally a chart from the 1940s, not a new chart based on 1940 Census data):
A majority of Americans hadn’t so much as set foot inside a high school. These days, about 80 percent of Americans have a high school diploma and about a quarter have a bachelor’s degree. As the 2007 CPS report on educational attainment says “this reflects more than a three-fold increase in high school attainment and more than a five-fold increase in college attainment since the Census Bureau first collected educational attainment data in 1940.”
This reflects a large-scale increase in the skill-level of the population which has done a great deal to drive prosperity. But it also points to a problem with recovering from economic downturns in modern circumstances. Unskilled workers do work that, by definition, requires few skills. You need to be willing to show up and work hard, but beyond that it’s easy to teach you how to do the job. That means that an unskilled worker can, broadly speaking, be a generalist. If there’s a downturn in demand for maids in a given labor market but an uptick in demand for CVS cashiers, then unskilled workers can shift from one sector to another without much of a problem. Skills, by contrast, tend to be somewhat specialized. When a fifteen-year veteran newspaper writer gets laid off, his fifteen years worth of experience leave him with skills that have some value outside of the newspaper sector—general writing and verbal ability are always useful. But fifteen years worth of newspaper experience is most valuable in a world where there continues to be robust demand for newspaper writers and that’s not the world we live in.
The skill-base of the American workforce is the cornerstone of our prosperity. But a large economic dislocation typically forces some sectoral shifts. And when you have large sectoral shifts, the value of your workforce’s skills diminishes. I believe something similar is true for capital goods. The cars manufactured in the 1920s and 1930s were crude compared to today’s cars. And the tanks of the 1940s were crude compared to today’s tanks. So it was easier to convert the car factories of the 30s to tank production than it would be to effect an equivalent transformation these days. Or, more to the point, it was easier to do that than it will be to convert capital goods related to the production of houses into capital goods related to the production of import-substituting manufactured goods.
Another issue is that it’s at least possible that America’s key export industries—aviation and entertainment—are both in long-term structural decline.
54 Responses to “Higher Skill Levels May Mean Slower Recovery”
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March 31st, 2009 at 5:01 pm
What Matt said. Plus, adding fuel to the fire is today’s (as opposed to the 1930s) much higher rate of home ownership.
March 31st, 2009 at 5:03 pm
A second really good post in a row. I’m nodding along even as this just confirms that we all might be screwed.
March 31st, 2009 at 5:03 pm
Unskilled workers do work that, by definition, requires few skills
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Really?
March 31st, 2009 at 5:04 pm
I don’t believe that this is necessarily true. I would suggest the opposite is true; due to higher mechanization of the assembly process, workers don’t need as much retraining. It is a matter of reprogramming the machines and getting the tool and die makers to refit the factory. The latter is no different today than 70 years ago.
Really, I see no reason why a GM factory can’t be refitted to make Boeings or Abrams tanks or whatever in just a few months.
March 31st, 2009 at 5:07 pm
Just to follow up on that last sentiment; 50 years ago it took two weeks for the car companies to change the assembly lines for the new year’s production models. As such they gave all the line workers two weeks paid vacation for that time. Today, despite the increased sophistication of cars, the lines only need 2 days to change over. However, the factories are still down for 2 weeks, because that time was long ago negotiated into union contracts (start union bashing in 3,2,1…).
March 31st, 2009 at 5:16 pm
You point about newspaper writers doesn’t match up to the real world. Newspaper veterans shift to other industries all the time. Many radio, TV and online personnel are old newspaper people. Corporations have many needs that the core skills of research, analysis and output that are a core newspaper reporter’s key skills that can be directly applied. I’m 30 and have worked in 3 very different industries and job roles. I leveraged skills and techniques that I’ve learned in my old job and have shifted just fine. I joke with friends and family that I am woefully unqualified for my jobs when I start them and am woefully overqualified by the time I leave them. If you can’t apply your skills in novel ways, you’re not as good at your job as you think you are. The reality of modern life is that technology changes your work environment more than economic conditions ever will. If you can’t adapt, you will fail.
Somehow, all of the guys that did manual spreadsheet work were able to live after Lotus 1-2-3 became popular.
March 31st, 2009 at 5:17 pm
Uh, that’s Krugman’s point, we’re not.
March 31st, 2009 at 5:17 pm
The 15-year MSM veteran can then get a job as a CVS cashier and get some real-world experience. The only way higher-skilled people having to take lower-skilled jobs would have a highly negative impact was if there was some other country that could pull ahead of us during that time, and there isn’t. Once things get better, the MSM veteran can go back to writing news reports, and might do it with more life experience.
P.S. Jennifer Palmieri was supposed to be back in the office yesterday, but I haven’t received a reply to my open letter describing how they could help get some homeless in Fresno back to work (an issue brought to our attention by MattY). Could he contact someone else at CAP and ask them to send me a reply?
March 31st, 2009 at 5:20 pm
Yeah, it took a world war AND rationing. Jeebus, do people just get to make shit up? Why bother quoting this guy with comments like this?
As if this guy doesn’t know about Japan, but he get’s to be quoted by M.Y. I realize he is being used like a tool, no really, to make a larger point, but can’t we stop bringing people in the better conversations who are patently stoopid?
March 31st, 2009 at 5:21 pm
The cars manufactured in the 1920s and 1930s were crude compared to today’s cars. And the tanks of the 1940s were crude compared to today’s tanks. So it was easier to convert the car factories of the 30s to tank production than it would be to effect an equivalent transformation these days.
============================================================
This really doesn’t follow logically at all. Also, if you really look at what happened in WWII, it’s largely a myth that we just switched auto factories to making tanks and planes and then back again after the war. Most defense production came out of new factories and facilities special built for the war. Here’s one account of Chrysler’s struggles
http://www.allpar.com/history/military/preparing.html
And I would recommend this book by Richard Overy “Why the Aliies Won” which has an incredible section comparing Allied and Axis strategies on defense industrialization, that also puts a lot of this to rest
http://www.amazon.com/Why-Allies-Won-Richard-Overy/dp/039331619X/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1238534331&sr=8-1
March 31st, 2009 at 5:22 pm
Matt, Matt. You’re still equating “school” with skills. Get real, the average American male with an 8th grade education in 1940 probably possessed more useful skills than the typical college graduate today. He probably knew basic car repair, basic carpentry, how to fix a fence, how to sew a button on his shirt, how to calculate winnings at the horse track, etc. And working in a car factory in 1940 required a lot more skill than being a cashier at CVS. So basically America was healthier and more dynamic then because we had more generalists. The fetishization of schooling and specialization has been a detriment to society on the whole.
March 31st, 2009 at 5:24 pm
Arnold Kling makes the same mistake, IMHO, as Mr. Yglesias here. Skilled labor will be reflected in our adaption times, we should skillfully adapt such that the aggregate adjustment period remains relatively constant.
The opposite theory implies that some sectors do not respond productively to skills increases. Which sectors are unlikely torespond to skills increase? Probably sectors with soem absolute constraint. Like, it takes a lot of skills to build a house two miles into the ocean, the ocean is a hard constraint.
March 31st, 2009 at 5:30 pm
I don’t agree with this characterization. First, I was under the impression that those with better skills, or in general those with better education, tend to be more flexible and adaptive when forced (or simply incented) to change careers. While proficiency in one skill does not necessarily translate into proficiency in another, it is an indication of an ability to learn that can be applied to other skills. An engineering grad may have no business training, but they are lot more likely to be considered for and better equipped to transition to a position in business than someone with no engineering or business training. And someone with skills can of course do unskilled work if they have to, even temporarily, whereas an unskilled worker doesn’t have that option. Finally, skilled workers tend to make more and therefore have more geographic mobility, allowing them to more easily move to where employment is more abundant; low-income unskilled workers generally lack this mobility. And I haven’t even mentioned the increasing competition of unskilled foreign workers. So, yes, unskilled workers are more easily replaced than skilled workers, but that doesn’t mean that unskilled workers have any easier time finding new work. Just the opposite.
March 31st, 2009 at 5:44 pm
In the interest of being as accurate as possible, I’d like to point out that 35 percent is not a majority, it’s a plurality. You may now begin trashing me.
March 31st, 2009 at 5:45 pm
In addition to the point of the useful skills possessed by many in the “Finished Junior High” category, it should also be noted that when a minority of people attended High School, the academic attainment required for a High School Diploma was substantially higher than it is today, where some students graduate with academic skills that would have counted as “finished sixth grade” half a century ago.
March 31st, 2009 at 5:51 pm
Uh, that’s Krugman’s point, we’re not.
Technically, his point is that we’re not doing enough, not that we’re making the same mistakes. We know what happened with Sweden, Japan, and the Great Depression, etc.
Krugman admits that we’re doing much better than Europe regarding stimulus and Pelosi said they’ll do more stimulus if necessary.
Bernake is dumping money from helicopters. Mortgage relief, etc. They’re doing a lot but they need the financial and credit markets to turn around and that takes a bit and is the open question.
As people pointed out, war brought us out of the Great Depression and exports brought Japan out of its funk. With no one to export to, this will have to be like Sweden on a much bigger scale but I think there’s a chance the Geithner plan will work, depending on how bad the banks are and how the psychology changes. In the meantime the job losses keep mounting.
March 31st, 2009 at 5:51 pm
But how much of a problem is this really? If opportunities shift so that there is a labor shortage, then companies can pay for their generally talented hires to acquire the specific skills they need (or make them pay for courses while getting paychecks from the company, which amounts to the same thing).
It would also be really great if lifelong education were more subsidized. I don’t understand why the US govt massively subsidizes education for kids but does not do the same for adults who care a LOT about it. There is nothing like bad job prospects to focus the mind!
March 31st, 2009 at 5:54 pm
Really, I see no reason why a GM factory can’t be refitted to make Boeings or Abrams tanks or whatever in just a few months.
Workers in all of these industries are not just button pushers. It takes specific skills to do the various (and different) assembly line tasks in all three cases.
Not to mention getting everything and everyone to effectively work as takes literally years of institutional knowledge and practice.
Really, this comment demeans the workers in each industry.
March 31st, 2009 at 5:56 pm
BruceMcF says: it should also be noted that when a minority of people attended High School, the academic attainment required for a High School Diploma was substantially higher than it is today…
Important point. One of my grandfathers had to leave school at 13 in order to go to work and help support the family. By that age, a public school child had learned Latin, algebra, geometry, biological science, read much of English and American classic literature, etc.
March 31st, 2009 at 6:05 pm
Ryan Avent shooting platitudes to the wind. The point isnt that we are catastrophically in a great depression, but that we are not exercising any of the tools to get out of our rut: namely reforming our economic system. Whereas FDR altered American capatalism greater than any President, the current administration is applying very minor changes to the deep and systemic issues we face.
It goes something like this: Reverse the financialization of the American economy, provide workers more bargaining power to earn and consume properly, provide a significant social safety net that decreases the externalities of our economy and raise taxes in a strong progressive fashion to bolster revenue streams.
March 31st, 2009 at 6:30 pm
I’m sorry, but you’re an idiot. I have many friends and relatives that have worked in the auto industry over the years. It really is that easy. Once the lines change over, the lineworker’s jobs are pretty easy. They are largely replaced by machines anyways. Some people punch out at lunch and go home and have someone else watch their station. Some people show up to work drunk and are made to work at the stamping station that makes the plates no one will see. I know all these things from firsthand knowledge. I’ve know the people who make the parts, design the parts, sell the parts, and make the parts that make the parts.
I suggest that you are an ignorant clod with zero knowledge of manufacturing or the auto industry.
Not to mention that these “specific skills” you speak of are virtually identical in the industries I mentioned. There is virtually no difference between riveting a plane, a car, and a tank. Which is exactly what the US did during WW2, when car factories changed production over to wartime use, and virtually overnight trained an army of ladies to do a completely new job. There is a reason it is called “unskilled labor”. The real skill is the tool and die makers.
March 31st, 2009 at 6:31 pm
“Reverse the financialization of the American economy, provide workers more bargaining power to earn and consume properly, provide a significant social safety net that decreases the externalities of our economy and raise taxes in a strong progressive fashion to bolster revenue streams.”
But that isn’t the point either. Krugman presents a thesis which states that the business cycle has effectively ended (his article presumes that there will either be no fundamental turnaround, or that it’s so far distant in the future that it’s useless to even speculate about a recovery).
But that’s an extremely radical thesis: it’s far more radical than any differences of opinion over the size of a stimulus package, or various reforms, etc. It’s so radical it may even strongly contradict much of Krugman’s own previous academic work. (For one thing, it would mean that Krugman is rejecting GE completely.)It’s so radical it isn’t even true about the worst economic downturn the world has ever experienced (the Great Depression). It’s also not true of the other downturns of history.
March 31st, 2009 at 6:32 pm
I don’t see why “college educated” is conflated with “skilled” in this post. Is, for instance, a person who holds a liberal arts degree, in any reasonable sense of the word, “skilled?” Being able to discuss the political context in which “The Overcoat” was written is not really a marketable skill in a meaningful way.
A university education in most cases is not job training, it’s a signifier. I’d argue that it’s becoming a less and less meaningful signifier all the time.
March 31st, 2009 at 6:41 pm
Benny Lava:
These two statements are contradictory. If you know the above from friends and relatives, you know it secondhand.
So your contention is that there’s no practical difficulties in changing the product a manufacturer builds? Conceivably GM could lease out their plants and workforce to, say, a tank manufacturer and there would be easy-peasy? Even though one product is a gasoline powered consumer good, and the other is an armor plated military good?
March 31st, 2009 at 6:54 pm
“Is, for instance, a person who holds a liberal arts degree, in any reasonable sense of the word, “skilled?” Being able to discuss the political context in which “The Overcoat” was written is not really a marketable skill in a meaningful way.”
I would disagree, perhaps even strongly. A huge part of potential skills is being able to analyze things: organizations, processes, markets, products, etc. There are people who simply do not have analytical skills. (True, you don’t need a college degree to gain analytical skills and some people with college degrees don’t have strong analytical skills either). There are numerous jobs which people lacking analytical skills simply cannot do (and no, it’s not a situation where they merely do the analysis worse than others, they are simply unable to do the analysis at all).
Analyzing the politics of “The Overcoat” on an advanced level is a reasonably strong signal that that student has quite well-developed analytical skills. There’s some truth that that student hasn’t applied those skills in more economically–valuable situations, but that doesn’t mean he doesn’t have the basic skills.
March 31st, 2009 at 6:59 pm
“Analyzing the politics of “The Overcoat” on an advanced level is a reasonably strong signal that that student has quite well-developed analytical skills. There’s some truth that that student hasn’t applied those skills in more economically–valuable situations, but that doesn’t mean he doesn’t have the basic skills.”
That’s certainly possible. I work in the financial industry, and I see a marked tendency for people in their 20’s to think that a degree entitles them to rapid advancement.
As I said, I think that a bachelor’s has a lot of limitations as a meaningful signifier.
March 31st, 2009 at 7:05 pm
Good analysis. A lot of former newspaper writers or investment bankers are not going to make good day laborers on infrastructure projects or energy refurbishment.
We do have some major secular changes but underfunding job retraining. Hence why big business complains about a lack of engineering talent in a country with millions of unemployed.
Or why we have an overabundance of language arts teachers but sorely lack math and science teachers.
March 31st, 2009 at 7:24 pm
Matt floats a theory: a highly educated workforce takes longer to adapt to new economic conditions.
Matt gives proof based on historical facts: ahh?
Nice theory, no proof. I believe the last recovery took longer to produce jobs, but was that the fault of the workforce or Bush’s policies?
A carpenter on a house site can easily go to work doing concrete forms and scaffolding on a highway project. An electrician that was wiring homes can certainly install solar panels. All the companies doing work in these new growth areas will need managers, accountants, clerical staff, etc. As the Baby Boomers get older, many will drop out of the work force too opening jobs up for displaced GenX people. Immigration will slow because of the poor economy which will open new jobs up to 20 somethings and new graduates.
As Burritoboy said, the business cycle has always been here. I don’t know how you go against 1000s of years of history.
March 31st, 2009 at 7:40 pm
Yep. Fully 1/4 of the college students I teach write at the 6th-grade level. Though I don’t really blame them; this is the legacy of Prop 13.
“In addition to the point of the useful skills possessed by many in the “Finished Junior High” category, it should also be noted that when a minority of people attended High School, the academic attainment required for a High School Diploma was substantially higher than it is today, where some students graduate with academic skills that would have counted as “finished sixth grade” half a century ago.”
March 31st, 2009 at 8:06 pm
“As I said, I think that a bachelor’s has a lot of limitations as a meaningful signifier.”
Most students graduating from universities that don’t have competitive admissions (non-selective schools, which are the vast majority of US universities) are not liberal arts majors. In fact, liberal arts majors, while they haven’t disappeared in absolute numbers at non-selective schools, are now comparatively fairly rare.
The question is simply what builds analytical skills the best, and further, how to signify (or communicate) the achievement of those skills to potential employers. Overall, since I personally think a good political analysis of “The Overcoat” suggests a relatively high level of analytical ability, I think that’s a relatively useful signifier to be able to demonstrate that one has been able to do such an analysis relatively well at a rigorous institution.
March 31st, 2009 at 8:49 pm
Not “conceivably”, they did it before, in an era when switching production took much longer.
http://www.fighterfactory.com/airworthy-aircraft/tbm-avenger-aircraft.php
Though GM isn’t going to lease production to tank manufacturers, since tank manufacturing has declined and tank plants have shut down. There really isn’t much industrial production left in the US, and nothing that is under-capacity that I am aware.
March 31st, 2009 at 8:54 pm
This would seem logical, but it’s not generally the case. Ever heard of “overqualification”? Despite the fact that these points are indeed true (most people with advanced skills have an ability to pick up new skills pretty easily) a lot of business “theory” has evolved to think of people as specialized pieces (probably largely an attempt of MBAs to justify their skills as unique and irreplaceable) who are unhappy and generally unproductive in roles that don’t “fit” their specialization.
March 31st, 2009 at 9:15 pm
I suggest that you are an ignorant clod with zero knowledge of manufacturing or the auto industry.
I have significant first hand knowledge of how military equipment is manufactured. I’m using that to extrapolate that you can’t just swap out Boeing and GM workers interchangably.
You also should understand the orders of magnitude difference between modern military equipment and WW2 military equipment. As well as the magnitude of difference between the equipment in each era to its civilian counterpart – if one even exists.
Alternatively, you shouldn’t complain as you have lately on how Michigan is losing market share to the South and the rest of the world. If it’s really true any stupid lazy bum can make a car, any stupid lazy bum will. And people will go with the cheapest stupid lazy bums. And there’s nothing that can be done about that.
March 31st, 2009 at 9:21 pm
Well, you seem to have stupidly misread my argument. I complained that Michigan is SUBSIDIZING the loss of its market share.
I also understand the difference in magnitude between current military production and WW2 production. But then again, if you really worked in military manufacturing you’d know that those plans too are closing, and that it is silly to say that a tank plant couldn’t be converted into building something else, like tractors. Which isn’t saying that there is a demand for tractor factories.
March 31st, 2009 at 9:22 pm
”it should also be noted that when a minority of people attended High School, the academic attainment required for a High School Diploma was substantially higher than it is today”
Bull shit
”One of my grandfathers had to leave school at 13 in order to go to work and help support the family. By that age, a public school child had learned Latin, algebra, geometry, biological science, read much of English and American classic literature, etc.”
Algebra, Geometry & Biology are still taught, but yeah, not being able to read Virgil’s Annead in the original Latin is a real drawback when I look for a job
March 31st, 2009 at 9:25 pm
“Reverse the financialization of the American economy, provide workers more bargaining power to earn and consume properly…”
Trying to kepworker’s wages high during a Depression is exactly what Herbert Hoover did in the early 1930s. And it resulted in increased unemployment and an inability of businesses to invest due to lack of profits. I thought that we were against Neo-Hooverism.
The idea that high wages in a time of depression improve the economy by increasing spending has been tried. It failed. During the early years of the Depression, spending on higher-order goods (i.e. capital goods and investment) plummeted while consumer spending stayed fairly high. The result: lack of investment, lack of production. If we repeat that policy, we will repeat its results.
March 31st, 2009 at 9:38 pm
I see no evidence here, and I’ve not heard of any evidence anywhere else, that human capital is harder to transfer from one use to another, than any other kind of capital. Improvements in land and farming equipment are directed toward one kind of crop but don’t work with another; a manufacturing plant is geared to make one specific kind of product; investments in trade and distribution are geared to specific kinds of products which may not be traded in the future. None of these focused improvements make the economy less flexible–actually the opposite. First, greater profits and efficiencies mean more available capital for retooling and other transition costs. Second, much of the sectoral shifts are not made by taking some existing stock and changing it to serve some new purpose. It’s newly created capital–created through previous profits–that’s dedicated to the growing sectors. Thanks to the stimulus package, a lot of people are still going to college even in the downturn, and they’ll fill positions in growing sectors.
The problem is focusing narrowly on the plight of people with obsolete skills and thinking that that’s the predicament of an economy with a lot of skilled people in it. Indeed individuals may suffer from sectoral shift, and that’s a real policy concern, but the overall output of the economy doesn’t suffer in the same way, because of creative destruction. The reason the nespaper writer’s job is being “destroyed” in the first place is that capital is being put to more profitable uses.
March 31st, 2009 at 9:44 pm
This post is spot on. All those boneheads like Jim Cramer screaming for more infrastructure projects don’t seem to understand that 2009’s work force looks nothing like 1932’s.
March 31st, 2009 at 9:53 pm
Benny Lava-
I apologize for misunderstanding your point.
Anything can be transformed to anything else, ’tis true. I just take issue with your original characterization on the relative ease and quickness.
March 31st, 2009 at 9:58 pm
So, your contention is that because it was done in WWII, it can be done now? When the end products have developed along their merry paths, and are much more advanced and involve many more systems than they did then? Well, color me skeptical.
March 31st, 2009 at 10:05 pm
That may be true. I thought the majority of graduates were not in the hard sciences, but I may be mistaken.
I dropped out of the university at about 80 some-odd hours, after deciding after 7 years of working in family law that I didn’t want to spend the rest of my life doing it, and, if I weren’t going to law school, I couldn’t really justify the time and expense of finishing the degree to myself. So, of course, my opinion is that it doesn’t matter that much. But there are certainly career and life paths for which a degree is required, for sure.
March 31st, 2009 at 10:18 pm
Sorry, I get touchy when I drink whiskey.
April 1st, 2009 at 12:16 am
“I would disagree, perhaps even strongly. A huge part of potential skills is being able to analyze things: organizations, processes, markets, products, etc. There are people who simply do not have analytical skills.”
Most jobs — even many mid-level white collar jobs — don’t require much in the way of analytical skills. They require people who can understand and follow directions and use a bit of common sense. Remember how Herman Wouk described the U.S. Navy in The Caine Mutiny — “a system designed by geniuses to be run by idiots”? Most big companies and other organizations are like that as well.
April 1st, 2009 at 12:38 am
Matt, I think you actually have it wrong. That is to say, I believe, deeply, in the value of a liberal arts education. It seems to me that someone with a good general education can switch fields pretty easily because her mind is trained to learn and absorb new things effectively.
April 1st, 2009 at 3:08 am
Though a few others have already hinted at it it, I’d like to explicitly mention the trades. You’re implicitly setting up a dichotomy between skilled, college-educated office-workers on the one hand and and cashiers and maids on the other. And the commenters keep bringing up assembly-line workers. We shouldn’t forget trades! They require a great deal of skills and no high-school.
Now, in the 1940s, the percentage of skilled workers with little formal education was much higher than it is today. In 1940, there were far more bakers and farmers than there are today. Today, it’s all industrial. Yet these “un-educated” wokers had very specific skill sets and couldn’t shift trades readily: a baker can’t immediately start farming, or vice-versa. Still, you do have a point — the more developed and specialised the economy is, the less labour-market flexibility you have.
April 1st, 2009 at 9:13 am
Some skilled workers will have to accept unskilled positions if there are fewer positions that require their skills. I, for one, relish the thought of Judy Miller washing my car at a detailing shop.
April 1st, 2009 at 9:38 am
On the other hand, the need for specific skills argues for employers not laying off workers if they think the downturn is only temporary, limiting the initial increase in unemployment. If it’s tough to find replacements, you’ll want to hold onto your workforce. There is empirical evidence for this: check out the literature on “labor hoarding.”
April 1st, 2009 at 10:39 am
I don’t agree with Matt’s point.
First, the unemployment rate by itself was much higher and will likely not go up to 25 or so percent this time around.
Second, the unemployment rate by educational attainment even this time around is much worse for those with less education. Those with Bachelor’s degrees and higher have a rate of 4.1% compared to 12.6% for those without a hs degree. In addition, the greatest number of unemployed is seen by those in the middle of these two educational categories – the “some college” groups. See the latest numbers below.
ftp://ftp.bls.gov/pub/suppl/empsit.cpseea5.txt
I think this really is more about regional economics. Some regions are going to climb out of this in much better shape while others will struggle. Those with diversified economies will do fairly well – and a set of diversified unemployed workers will be able to find work at diversified companies. The more educated areas may likely bounce back quicker, given their human capital. Areas built upon old industries and construction booms, with less educated workforces, may take a while longer.
April 1st, 2009 at 11:25 am
“Most jobs — even many mid-level white collar jobs — don’t require much in the way of analytical skills. They require people who can understand and follow directions and use a bit of common sense. Remember how Herman Wouk described the U.S. Navy in The Caine Mutiny — “a system designed by geniuses to be run by idiots”? Most big companies and other organizations are like that as well.”
1. Common sense is not as common as one might think.
2. There’s require and there’s require. How much direction does one have to give? (There’s a huge difference between “go make us some money” and a 500 page manual) Can the mid-level manager make the needed adjustments for new situations or difficulties? Can they add any value beyond any other random human body?
3. Remember that Wouk’s schema requires some geniuses (genii?). Further, it’s precisely designed to be a way to run a drafted military service in WWII. Finally, Wouk’s schema actually runs counter to his actual plot: the Caine had a breakdown precisely because the middle-management layer on the ship was weak (geniuses and idiots were both available; but the middle-layer couldn’t implement the doctrines of the geniuses).
April 1st, 2009 at 12:03 pm
“1. Common sense is not as common as one might think.”
True, but it’s generally not a function of formal education either.
“There’s require and there’s require. How much direction does one have to give?”
Have you ever seen the manual for a fast food franchise, or even the worksheet for an assistant D.A.’s sentencing guidelines? Most businesses and other large employers give plenty of direction. They just want people who can follow it.
“. Remember that Wouk’s schema requires some geniuses (genii?).”
Yes, very few. What’s the ratio of geniuses to non-geniuses at McDonald’s or Wal-Mart?
“Further, it’s precisely designed to be a way to run a drafted military service in WWII.”
The system actually pre-dated that, but this is a minor point.
“Finally, Wouk’s schema actually runs counter to his actual plot: the Caine had a breakdown precisely because the middle-management layer on the ship was weak (geniuses and idiots were both available; but the middle-layer couldn’t implement the doctrines of the geniuses).”
Not quite. There was one smarty among the middle management (the ship’s officers below its captain), and he stoked the mutiny. It wasn’t that the middle management couldn’t implement the system, but that he convinced them to buck it.
April 1st, 2009 at 2:50 pm
Isn’t our main export various categories of armaments rather than entertainment and aviation (civilian, I’m assuming). Perhaps this category too is in decline, though I doubt it.
April 1st, 2009 at 4:20 pm
Let’s not make unwarranted assumptions about the US work force of today. In “The Race between Technology and Education,” an important study published last year, Claudia Goldin and Lawrence Katz showed that the supply of educated workers grew more rapidly than the demand for them through most of the 20th century. But since about 1980, the US supply of educated workers actually has stopped growing.
April 9th, 2009 at 9:43 pm
Not that I’m totally impressed, but this is a lot more than I expected when I found a link on SU telling that the info here is quite decent. Thanks.
April 16th, 2009 at 10:13 pm
Greeting. I know that you believe that you understood what you think I said, but I am not sure you realize that what you heard is not what I meant.
I am from Luxembourg and learning to write in English, please tell me right I wrote the following sentence: “Features travel auctions, including airline tickets and vacation packages.”
Thanks for the help 8), Helmut.