Monday, August 9, 2010

Middle-Skilled Employment Gap

In the WSJ today there's a very interesting article detailing a gap between work available in middle-skill industries and people with the appropriate skills for the job. The excess of work has grown during the recession but since 2000 middle-skill employment has been on a downward trend while high- and low-skill employment has been on an upward trend. A couple of reasons for this gap are extensions of unemployment benefits, which keep people looking for jobs similar to what they had in the past, and high personal debt, which makes it much more difficult to move for work. But these reasons only explain part of the story, and aren't particular to the middle-skill jobs market.

I've been hearing for years now from manufacturing firms that they can't find skilled laborers to work in factories. It's hard, for example, to find people who can do mathematics and can run various wood-cutting devices. This is a long-run trend, and it's now gotten worse. I think that I know one of the key factors behind this long-run trend. Actually, the factor can be divided into two issues, but they are sides of one coin, and that coin is education, or rather the education industry.

It boils down to this: too many people are going to university/college instead of trade schools; and the value of high school education is very low. The first factor drives up the demand for "high-skilled" jobs even while driving down the salaries since supply doesn't necessarily keep pace. That leads people with some college education to take "low-skilled" jobs, pushing down salaries for people with only high school education. The problem here is that college education, generally, doesn't prepare people for the "middle-skilled" jobs, which often combine technical knowledge with "hands-on" skills. Ability to dissect a Jane Austen novel not desired. The second factor, poor high school education, leaves those youngsters who do not go on to some post-secondary with a very uncompetitive battery of skills. That spells a lifetime of low-skilled, and low-pay, jobs.

There are many incentives in place to encourage youngsters to go on to college, including grants, scholarships and cheap loans. Combine the monetary incentives with the rhetoric about college (go to college! you're nothing without a degree! it's the path to a good-paying job!) and teenagers face very skewed and somewhat bewildering incentives. Furthermore, their teachers and guidance counselors and principals are all college graduates and therefore have a personal incentive to push college as the default. Okay, so the upshot is too many people going to college/university, and a lack of people getting technical education (like welding, carpentry, etc.).

Now, the failure of secondary education is the other problem. I'm certain many of us have seen those old exams (from the 1930s, say) that crop up now and again. In the midwest, a lot of those exams have to do with agriculture, as might be expected. But while the specific knowledge tested in those exams is now irrelevant, the skills tested on those exams is not. The mathematical demands on students was much higher in years gone by than it is now.

High school even changed while I was in it. My cohort was the last one to be required to take algebra in every grade, and at least two sciences in each grade. We were offered calculus in 12th grade, but it wasn't required. But the cohort immediately following mine had the math requirements gutted. Now, they had to take math every year, but they could substitute elementary math for algebra.

The dumbing down of elementary and high school education is not news, though. Public high school failures make charter school and other program successes very important, but still most youngsters are educated at public schools.

So take these factors all together, and I think that's producing the skill gap that results in a shortage of middle-skill workers on the long-term.

Wednesday, August 4, 2010

Types of Capitalism

Here is my submission to the Mont Pelerin society essay contest. I lost (ah, well) but the discussion over at Cafe Hayek about Cuba and Portugal made me decide to post it. Any comments/critiques very welcome!