We have lots of job openings these days and lots of unemployed workers. So why aren't those jobs being filled? The Wall Street Journal offers up this explanation:
Employers today rely on increasing levels of automation to fill vacancies efficiently, deploying software to do everything from sourcing candidates and managing the application process to scheduling interviews and performing background checks. These systems do the job they are supposed to do. They also exclude more than 10 million workers from hiring discussions, according to a new Harvard Business School study released Saturday.
....Many company leaders—nearly nine out of 10 executives surveyed by Harvard—said they know the software they use to filter applicants prevents them from seeing good candidates. Firms such as Amazon.com Inc. and International Business Machines Corp. said they are studying these tools as well as other hiring methods to understand why they can’t find the workers they need. Some said the technology can be changed to serve them better.
Hmmm. The robots are attacking humanity by interfering with our labor market. Interesting. Here's another view courtesy of labor economist David Autor:
Let’s start with the causes of the current labor shortage. Research on this question is unambiguous: We don’t know what’s going on.
I think I prefer this explanation.
Wither our robot future?
Bagging our own groceries?
Amazon experimenting with RF UPC labels for all things sold at new Whole Foods stores so that you walk out through an RF scanner that reads everything in your cart and bills your credit card by the time you reach your car?
McDonalds already eliminates the counter person in most locations by using pre-ordering apps or kiosks where you place your order, and pay and either pick it up or they bring it to your table
Never mind the telecom industry that didn't exist in the recent past.
I think robot future is mis-leading. Perhaps digital future? IT's already here
I think the expansive child credit is causing women not wanting to work. Which supports my view transfers like this is anti-consumption, pro-production socialist economy would basically be industrial policy. Getting women out of men's way.
The myth of welfare queens loafing about in luxury on a few hundred dollars a month has been updated for the 21st Century!
If a woman can stretch $250 that far, maybe it’s men CEOs who need to get out of the way of women CEOs.
Well said.
This is possible, although almost certainly the number of cases is small. If a woman with several children holds a near minimum wage job and has to pay for day care from her wages, her actual financial benefit from the job is wages less day care, which may end up being quite a small amount. It would be understandable for such a woman to simply leave the labor force if the child tax credit comes near to her "net" pay. In particular, if the woman in question has a husband who is employed, a determination that the family would be better off overall if the woman left the paid labor force and became a homemaker is an entirely rational decision.
On the other hand, I know several women who are using the child credit to pay for childcare so they can work more hours.
The result of every recession is discontinuous employment records; the algorithms catch that and toss applicants for these discontinuities. There is a reason why, reportedly, one-third of American workers are participating in the gig economy.
It's easy to be disconnected from the reality of growing majority of Americans when your own experience says otherwise because you're not part of that struggle.
Be careful of downplaying the pain and struggles of Americans, lest the Democratic Party loses sight of its values.
This isn't a "real" recession though.
The result of every recession is discontinuous employment records; the algorithms catch that and toss applicants for these discontinuities.
This.
Obviously in many cases such a situation is beyond the control of many workers. But I've long observed that workers in general don't sufficiently prioritize the avoidance (or preferably the elimination) of even modest bouts of employment. Any recruiter or HR manager will tell you there's nearly always a strong hiring preference for currently employed people. I'd advise any young person starting out in the workforce to really keep their ear to the ground, and do everything in their power to jump ship before it's too late (even if that means occasionally being trigger happy about leaving a good job; completely eliminating employment gaps in my view more than makes up for occasionally leaving a job a bit prematurely, at least over the life of a career).
erm, bouts of unemployment
Another strategy, which I've had in place for years, is ti have some secondary gig on the side, from which you may not make a lot of money and maybe you're paid under a 1099. But if you lose your primary job you still have that to show as current employment on a resume keeping AI from tossing it due to a gap.
By luck, St. Louis Fed just posted this stunning review of labor participation: https://is.gd/4Ztd3I
As you can see clearly, Americans under age 60 have suffered greatly in each of the last two recessions while Baby Boomers sucked the air out of employment.
I have wondered about these ads on tv for employee-finding firms. If by advertising they're finding new clients who may in desperation think of hiring them to find employees, that would seem to suggest they're not the problem.
My brother got back into the job market via this route. He was a casualty of the Great Recession, his field is architecture and then he was battling a brain tumor so he went on disability. He was contacted out the blue after being out of the job market for about 3 years and got a gig on a team designing product layout for a national drugstore chain. He's worked there for six years now.
While he had put out feelers amongst headhunters he had given up hope of working again given he had been laid off in 2008 and only had one gig job that ended right as he got his cancer diagnosis.
So...everyone using the same type of software with the same type of algorithms with the same input parameters....and all are going after the same small subset of people.....
Talk about how to kill innovation....
Or....employers are still skittish. Yes, they are advertising positions, but will only hire "perfect" candidates.
Oh I've been subjected to this bias going after a bunch of jobs as a non-traditional job candidate. I have a BA in history but decades of experience in Accounting and various flavors of Oracle systems, mostly financial for the past 20 years. So software that filters out based on major would filter me out.
The only time algorithms worked to my advantage was when I was applying for a Civil Service job of all things. Yes it can be hard to break into Civil Service if you aren't a veteran but in some specialties you don't have many veterans applying.
At this point my resume and work experience would make me a hot candidate in my current field but if I had to apply via filtering, I'd still get dumped!
Said, linked labor economist hits the nail on the head and does, in fact, know what's going on (or suspect it; I suppose he didn't say "know" because it hasn't been proven yet):
"Let’s entertain a third possibility. People’s valuation of their own time has changed: Americans are less eager to do low-paid, often dead-end service and hospitality work, deciding instead that more time on family, education and leisure makes for a higher standard of living, even if it means less consumption."
TL;DR - the jobs out there don't pay wages that people want to work, so people aren't coming out of unemployment to take the jobs. Dead simple.
I do think that's one component of the job market but there's also a mismatch between job seekers and what jobs are needed.
Surprise! Supply-and-demand applies to LABOR as well as to goods!
But there's also a problem filling jobs that do pay reasonable wages. We see this where I work (a well known financial firm), and we are definitely not paying minimum wage or anything close to it.
Yes, for the sorts of jobs that require specialized knowledge or skills that require a year or two to acquire (or longer), this will always be a risk.
I'm talking about the jobs that you can basically walk in and do them - nobody wants to work those for the wages that are being paid, because they're crappy jobs. Perusing the job openings here: https://www.bls.gov/news.release/jolts.t01.htm
Manufacturing openings are declining, while "retail trade" exploded (surprise! nobody wants to work that shitty cashier job at the mall), and things like finance/insurance/real estate are all basically steady as a proportion of job openings.
“ …and lots of unemployed workers.”
Maybe we don’t really have lots of unemployed workers.
The macro outlook for labor has been fairly consistent. Analysts knew the work force would shrink as boomers left. When you think about it Reagan, Clinton in particular did a spectacular job of creating enough jobs to keep the boomers employed while at the same time making enough jobs so that THEIR kids could get a job.
Right now there are more people demanding services as boomers sit around with "nothing to do" and having disposable income too boot. We want cruises, travel, restaurants etc. What we don't want are restrictions.
Look, there are entirely NEW Industries out there that weren't there while we were in the work force. Uber, Lift, Door Dash, Amazon - and there were are jobs that were never there as well. We used to bag groceries. Now you drive up to the door after THEY shop, bag, and bring it out to you. And thsi doesn't even touch the computer, programming industries that were not prevalent until early 00's. (By that time it was too late for my generation to learn those skills)
The answer is both complex, and simple. There are more people, demanding more goods and especially services while there's fewer people in the labor pool and more diverse industries trying to gobble those workers up.
The Dept of Labor knew they'd be shortages of help for Nurse, Truck drivers and skilled tradesmen. They never envisioned a scenario where NEW industries would compete for fewer workers because back in the 80s and 90s those industries did not exist. Couple that with an economy that was operating already at full employment already, then got whacked by a pandemic and you can see the issues
A third explanation could be that the jobs that are available and the ones workers want to do are a mismatch. Low wage jobs without protections are not attractive anymore. But if workers are trying to switch for jobs like in those in tech, they may not have the necessary skills. Oddly enough, many entry level jobs require a couple years of experience which is a bit contradictory.
That would mean they're not entrylevel.
But they're still listed as entry level jobs. See: https://www.linkedin.com/pulse/hirings-new-red-line-why-newcomers-cant-land-35-jobs-george-anders/?published=t
It's especially bad for Software and IT jobs.
There is no (overall) labor shortage. There are, perhaps wider-than-usual, local and topical imbalances: shortages here, surpluses there.
The one thing that no macroeconomic conditions, and no political intervention, can do is make American businessmen want to hire. They may need to hire, but that doesn't mean they want to hire.
The entire 2000 Republican campaign was about creating a permanent labor surplus by deliberately tanking the economy. The purpose of the pivot to the politics of cultural grievance was to reduce the salience of unemployment: and on its own terms it has worked. (There is still, probably, overall, a labor surplus; and the statistics are still being defined so as to conceal the real rate of unemployment. If the "discouraged" were to be counted, the rate in some states would be over 30% or even 40%.)
The point is that business invested very heavily in the political system in the '80s and '90s in order to prevent any future labor shortages, and thought they had accomplished that. Now that that strategy is (even if only locally and topically) failing, and being profoundly stupid people, they have no idea what is happening or what to do about it.
Has the pandemic changed workers so that they how to force employers to give them a better deal? Actually it has, because they were given money through the unemployment supplements and checks and may not need the jobs right now. But this is not a permanent change - the money will run out soon. Employers know this, or anyway they are apparently willing to hold out for a while and not just offer much higher wages to get workers back. Are workers now willing to starve or get evicted in order to force higher wages? Not likely - they have to take what is offered if they have no other source of income.
If the big spending bills go through there should be new jobs and money to pay for them, so the recent situation may be extended. If not, things will likely return to how they were before the pandemic. The overall worker/employer economic balance has not changed and human behavior will be the same. Some ongoing changes such as the extension of contract and temporary work will probably continue.
"We don't know what's going on" i.e. we have a lot of pieces but we can't see the whole puzzle.
One other piece to consider: If rural areas and some cities are still losing population, how are you going to find workers in such areas even to be waiters or grocery clerks? The only people left in such places are the elderly and infirm on disability, hardly employable. Which means, still plenty of job openings and if they can't be filled, places go out of business or be replaced by machines.
Gig workers could be a large reason as well. It may also explain the low pre-2020 unemployment rate despite historically weaker growth than previous expansions. With gig workers coming back off the sideline as the benefit is cut out, it will cause a gig saturation and weak hands will have to return to the regular workforce.
Same with other small business programs ending.
The first explanation doesn't even make sense. Even if this automation is excluding some potential candidates from being interviewed, the article isn't suggesting that the jobs aren't being filled.
So I have kids and am surrounded by families . This is what I am seeing:
Daycare is either not desirable and/or unaffordable. So one parent is staying home. Often the mother, but not always. We are talking $800-1000 a week for childcare, if you can find it. Schools are unreliable because of covid, you don't want your kid on the bus etc, so having a parent home can be invaluable.
A lot of us are dealing with ageing parents and the children we had later in life and having one partner at home can help alleviate some of the stress.
To get more people in the door larger companies are upping pay and benefits to a livable wage. I have noticed more young men are now working for Target and Amazon etc. Men are moving into retail jobs from restaurants, construction and other jobs because the pay is steady and high enough. Between this and cutting back on immigration, small businesses that require hard labor cannot find people to work for them. (ie construction, landscaping, roofing, building)
The child supplement each month is impacting families, giving them more flexibility in their job choices. Helping families weather the child-care shortage.
Is the $9/hr job where they treat you like crap worth covid exposure?
I know so many people who have retired early. Some because they could help younger people keep their jobs, some because they didn't want to deal with the covid risk. We knew this was coming the boomers can only work for so long while requiring a increasing level of service as they get older.
I think this is simply the disruption everyone was expecting it just happened much quicker than we planned on. I liken it to WWII when women worked in factories and traditional man's jobs, it changed our economy.
The comment on the Algorithms kicking people off due to work history (or lack of) is interesting, it makes more sense as to why people apply over and over and never hear back from any company.
Anyways those are just my thoughts on this mess. I am sure it is more complex. If we could get universal health care, I think it would change the dynamic again. More small businesses - they could compete better and more people would be willing to take a risk because they wouldn't lose their insurance.