By
Peter
Coy on June 07, 2012 - Businessweek
Why are people out of work? Is it because there arenft enough jobs, or
because people arenft qualified for the openings that exist? Democrats tend to
favor the gnot-enough-workh theory, while many Republicans lean more to the
unqualified-worker hypothesis. Bloomberg Businessweekfs Matthew Phillips waded
into the debate last month with a good piece called gThe
False Theory of the Growing Jobs Mismatch.h
Now, economic research published June 6 by the Federal
Reserve Bank of Chicago [PDF] concludes that evidence for a skills mismatch
is glimited.h Write senior economists Jason Faberman and Bhashkar Mazunder: gIf
there is a skills mismatch in the U.S. labor market,h it may be most significant
for workers with gmedium skills.h
I asked Faberman and Mazunder what they meant by jobs that require medium
skills, since itfs not in the paper. Herefs the written answer: hMost
occupations in this zone require training in vocational schools, related
on-the-job experience, or an associatefs degree. Some may require a bachelorfs
degree.h
Examples of such jobs?
People who install and repair electronic equipment on motor vehicles
Lathe
and turning machine tool setters and operators
Dental
assistants
Electricians
Fish and game wardens
Legal
secretaries
Personnel recruiters
Recreation workers
Thatfs not to say there are shortages in any of these particular
occupations.
Faberman and Mazunder created an gindex of labor demandh based on the number
of online help-wanted ads for different occupations as compiled by the
Conference Board. An increase in want ads makes the demand index go up. They
found, predictably, that the demand index has been rising since the end of the
recession in 2009. But it has risen the most for medium-skilled occupations.
Demand for the highest- and lowest-skilled occupations grew rapidly in 2010 but
was growing very slowly by the end of last year, when the research ended.
Itfs interesting to think about why there could be shortages for some kinds
of labor and not others. As Faberman and Mazunder point out, labor economist
Robert Shimer of the University of Chicago invented the concept that people live
on different labor gislands.h His islands represent different subsets of the
economy, distinguished by location, skill requirements, and so on. Each person
can search for work only on his or her own island. Some islands have a surplus
of jobs, while some have a surplus of workers.
Shimerfs island metaphor is useful. The way to reduce skills mismatch,
following Shimerfs logic, is to build bridges between islands—make it easier for
workers to change cities, for example, or learn a new skill. But if the big
problem is simply an economywide lack of work, journeying to another island
wonft help a bit. If the Chicago Fed analysis is correct, thatfs probably the
main problem right now.