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Source link: http://archive.mises.org/14903/whats-wrong-with-the-job-market/

What’s Wrong with the Job Market?

December 6, 2010 by

Why is unemployment stuck at 10 percent in the narrowest measure and as high as 30 percent for some demographics? The usual answer is that the broad economy is not recovering. That’s true but superficial; it explains nothing. We have a problem of a specific kind with the job market. FULL ARTICLE by Lew Rockwell

{ 21 comments }

Christopher December 6, 2010 at 9:49 am

Good article but I believe the larger problems are the skill set of the typical American Worker and the cost of living within the United States. As our economy transistions away from manufacturing to technology and service orientated businesses (ex, Banking) the average worker will not have the necessary skill set to gain employment in these industries. For an average family it’s a combination of being cost prohibitive, age, too much time to acquire (2-3 yrs) before one can realize the same standard of living as before. Students can hide in school because their living expenses are extremely low, and they’re at an age where it’s easier to absorb new material. It’s unrealistic to expect “Joe the plumber” at age 45 with a family of four to enroll for his MBA or obtain an degree in engineering/IT, graduate 2-3 yrs later under tremendous student debt, and earn $35k/yr when he was earning $60k year at the factory.This is the biggest problem with gov’t intervention. The $60k/yr factory job may not have been possible w/out gov’t intervention. It’s the intervention which makes the eventual fall to the bottom long and hard.

Scott December 6, 2010 at 11:22 am

Christopher,I disagree. Regulations are an enormous drag on business and productivity. I am employed as a database programmer for a large financial institution and probably 70% of my time is spent working on projects that are related to regulatory compliance. The rest of my time I spend working on automating and optimizing parts of existing processes to deal with the slow attrition in staff over the last year. The costs of all of this compliance are huge, but the fines for failing to do so are even larger.

If those costs were removed, I could spend more of my time optimizing processes, which would free up our existing staff for more productive activities (and yes, there are lots more productive things they could be doing). That, in turn, would generate more profits for the company by making the staff’s time more valuable, pushing up wages. Add to this the fact that if the costs of taxes and regulations that are baked into production were suddenly lifted, the price of quite literally everything would go down by some amount, and your “Joe the plumber” would find that his cost of living is much lower, even if his wages are also lower.

Christopher December 6, 2010 at 1:29 pm

I’m in agreement with you regarding excessive financial burdens placed on businesses, but it still doesn’t address the problem of getting people back to work who were employed in “phantom jobs” which were compliments of the Federal Gov’t?

I’m of the opinion that our population is one generation too large due to gov’t intervention. (This intervention allowed citizens to be employed in ‘phantom jobs’ and as a result the decided to get married, have kids, and those kids grew up and were also employed in ‘phantom jobs’ and the cycle repeats itself).

J. Murray December 7, 2010 at 7:11 am

It does solve the problem. When a company’s non-productive expenses are essentially eliminated, that frees up resources to hire for productive purposes. This is similar to the Luddite Fallacy. Companies don’t produce the same with fewer employees, they tend to produce more with more employees when taxes and regulations are elminiated.

Steve December 6, 2010 at 2:07 pm

The “skill-set” problem is a problem of government regulation. With all the regulations, workers are either unmotivated to adapt and learn new skills or are protected from having to do so. The lack of skills in workers is just another symptom of the underlying problem the author stated (regulation and theft).

Rick December 6, 2010 at 3:16 pm

Education is too labor-intensive and costly. The classroom method is obsolete because of technology and costs could be greatly reduced if computing technology were unleashed in education. However, the government is screwing that up too… letting teachers unions impede the growth of school choice and technology, and giving false incentive to some online education entrepreneurs who rely on the school loan racket which artificially inflates the cost of online classes.

For example, where I live there is a online “college” called AIU that charges up to $30,000 for an AA degree! And their salesmen – excuse me, “counselors” – are basically pitching government student loans and pipe dreams. Why? Because that’s why their incentive is. Students can’t qualify for a loan unless the tuition is a minimum amount. It’s really shameful.

The best education is experience. But now teen-age labor is the same as “child labor” and “exploitation”, even unpaid internships are now discouraged. I don’t know anyone who has ever been an apprentice. And with all the zoning, licensing rackets, and land use rules the common everyday exchange of goods and services is severely restricted… while the government and the politically well-connected do whatever they want with immunity.

Sione December 6, 2010 at 7:55 pm

In the last company I worked with there were two apprentices. I understand that these are the last apprentices I’ll likely ever encounter in the “developed” world. Of the two, one has qualified and is now seeking to move to a new company, the other departed the industry and went to live in another country. I do not know what he is up to now, but I am certain he’ll be fine, as he has skill and a certain work ethic that several of us insisted he learn.

I know plenty of youngsters with substantive education debts (what is the euphemism, Student Loan?). These guys and gals owe tens of thousands of dollars and more. Mostly it’s a hopeless cause. They weren’t apprentices making their way into the world of gainful employment, gaining the skills (and attitudes) necessary to defend a job. They were welfarists on what they thoughlessly considered a birthright without cost.

“Right to Education,” they said.

Yeah. Right.

“Good for the country that we are educated,” they said.

Yeah. Right.

Now they are up a certain creek without a paddle. Now they are arguing that their education debt should be forgiven as “it isn’t my fault” that it can’t be repaid. At this point I usually remind them of how vital their learning was supposed to be for the future of the country and yet here they are costing the country a pile of loot.

What remains disappointing is how they expect their compatriots, the ones who remained in gainful employment all this time (from apprenticship right through to trade qualification), to pay for their piss poor “education” decision….

Sione

Jim December 6, 2010 at 10:31 pm

This is only part of the story. Sure, the 17 and 18 year olds were naive to get into debt that they couldn’t pay back, under the idea that a government subsidized education would open the door to some weird utopian fantasy land of prosperity and worlds on platters. Attend any high school graduation ceremony and listen to the speeches. They are living in a dream. Of course that’s dumb and irresponsible.

But who guarantees the loans for the banks? Who loans money to kids without care if they can pay it back or not? Whose schools are virtually built to funnel kids into this mindset and into this situation? Honestly, I can’t entirely fault generations of kids who get shoehorned into this crazy situation. They wouldn’t and couldn’t have done this, en masse, on their own. Left to their own devices, this can’t happen to high schoolers on any wide scale. It’s not the dumb kids who are “costing the country a pile of loot” – it’s the banks who partner with government. If they want to gamble huge amounts of money on state-trusting, intellectually stunted, institutionally retarded children, let them lose or win as they may. They deserve whatever they get. If the kids default – the banks knew the risk. Intentionally dumbed kids, on the other hand, do not share the same proportion of the blame. They are individual victims more than “society” at large is, because banks and their government partners cannot be held accountable.

Sione December 7, 2010 at 1:13 am

Jim

You are correct. There should be no guarantees for the banks. Also the kids should be able to go bankrupt with the education debts included. Of course, that means they are stiffed for the future- grand credit rating there. Who’d ever trust such dolts with money in the future?

This mess is another example of government interference causing economic and moral distortion. It’s disaster.

Meanwhile there were kids who were not stupid. They were the ones who didn’t pretend the impossible was true. I sure don’t want to see them being put into the position where they are expected to support the imbeciles. When you start seeing the ambitious and the skilled pouring out of the country, that’s when you know they agree that they shouldn’t be held responsible for the consequences of the idiotic choices of others and they are prepared to do something about it.

Sione

guard December 7, 2010 at 12:50 am

Anywhere people are making good money, the “skill set” is political pull. There is always government coercion in it somewhere. Start with the obvious ones, such as tax accountant, a totally useless artificial “skill”. Look further from direct government influence and you find, e.g. computer programming, where Scott (above) spends 70% of his time complying with regulations. A friend is employed in an auto body shop, where people who are forced by law to buy car insurance take them to get fixed. Military contractors. Contractors for military contractors. Licenses of all kinds. The big growth industry now is health care, federally mandated.
Wages are so skewed by government interference that it is hard to imagine what a labor market would look like without it.
I have the skills needed to survive, but they have little value in the current economy. One should try to get as much out of the system as possible, but definitely be prepared to leave.

Ned Netterville December 6, 2010 at 1:01 pm

Lew Rockwell @ “The state is living parasitically off our living standards and hopes for the future. It must die if we are to live well again.” True. One-hundred percent true. However, it is statists not the State itself that must be reformed in order to get rid of the impossible burden of government. The way I see the problem is that statists are addicted in precisely the same way as alcoholics, drug addicts, compulsive gamblers, over eaters, prescription-drug abusers, sex addicts and others with such pathological compulsions. In the case of statists, the objects of their compulsion are the power the State affords them and/or the OPM they obtain by means of the State. (OPM, sounds like opium, is equally addicting, stands for other people’s money.)

During the GW Bush and Obama administrations, the problem has been seriously aggravated with many more Americans sucked into the addiction by various direct and indirect distributions of OPM, including investment bankers (bailouts), bankers (bailouts), manufacturers (bailouts), investment bankers (tarp money) retirees (prescription-drug benefits), car owners (cash for clunkers), investment bankers (QE2 funds), every taxpayer below a certain income level ($250 “stimulus” checks), and so on. In addition, and this is perhaps an even more difficult problem to confront, the power of the federal government and those who wield it has expanded dramatically in recent years with a visible impact on its victim-addicts, generally in the form of increased arrogance, indifference and insensitivity to the plight of their fellow man. A good example of this is the design and implementation by the TSA of its full-body scan or sexually deviant pat-down procedure and to hell with its impact upon liberty, privacy and tho emotional well-being of those subjected to it.

It was only after years and even many centuries of destroying the victims that effective treatments for those other addictions were discovered. The 12-step program of Alcoholics Anonymous and its adaptations to other common addictions has probably proven most effective, but other avenues of recovery have also had some positive results. However, as far as I know there is yet no program whatsoever for the treatment of statism.

As with other addicts, before a statist can recover he or she must want to recover. This is unlikely to happen, except in extremely rare cases, so long as the disease of government addiction is not seen by society for what it is: a disease, which if it goes on untreated and isn’t arrested will ultimately destroys its victims’ honor, integrity, responsibility and eventually even their lives and their immortal souls. Society must stop honoring statists and begin disparaging all those who feed at the public trough before we are ever going to be able to help them.

Sione December 6, 2010 at 8:01 pm

Ned

Wow! I’m well impressed with that summary.

Statism is a degenerative mental disease! Yup!

Sione

guard December 7, 2010 at 12:29 am

Cool! Maybe we should stage an intervention.

Charlie Virgo December 6, 2010 at 2:31 pm

Can someone tell me why I should go get a job when I can go on welfare and have a better standard of living (after taxes) than someone working full-time and making around 37k?

Is it any surprise that when we offer this type of service to people they are less motivated to do what they should?

Rick December 6, 2010 at 2:52 pm

Yes, people respond to incentives and right now a lot of people have incentive to do nothing.

Why should I work hard and save money when my income is taxed and wasted on militarism and the police state, my pathetic interest rate on savings is also taxed, and inflationary monetary policy wipes out whatever I do save (unless my investments out-gain the rate of inflation)? Why should I buy a home when there is a correlation between high home ownership rates and unemployment rates, and many homes are still artificially priced too high? Why should I take a chance and move to another market knowing that the commercial real estate correction and another round of mortgage re-sets are around the corner? Why should I buy or start a business knowing that business taxes in many states have been raised, and in the case of of where I reside, you pay a business income tax regardless if you make a profit or not?

In my opinion, the only thing to do is document your value to your employer and keep your job if you can. Keep you business alive, if you can and if it’s worth saving. Save money, despite the incentive not to. And take a defensive position with your debt, investments, gold, etc., and wait for the economy to collapse because that might be the only way there is any fundamental change. I think that right now it’s not about fighting, but withdrawing, and living to fight another day.

billwald December 6, 2010 at 3:05 pm

Rockwell makes it to complicated. With the exception of new home construction, the job market for occupations that can be sent off shore is terrible and the job market for work which must be done locally is fine. When the big housing tract builders realize their boxes made of ticky tacky can be produced off shore and shipped to the US that will be the end of job market for low end housing. Half the new housing starts are factory mades.

RTB December 6, 2010 at 8:58 pm

Why only half? Why not 80%?

Joe December 7, 2010 at 12:51 pm

@RTB,
You gave me my first laugh of the day.

Scott M December 6, 2010 at 4:28 pm

Why should the banks take risk (lend to small business) when they are making money, hand over fist, from the taxpayer and the fed. As long as the banks keep the money moving in their system, the fed will think the money is circulating but without the desired effect and fed will keep priming the pump. The banks experience risk free profits every time more money is injected into the system.

Stranger December 6, 2010 at 7:08 pm

Not only are new businesses not being formed at a fast enough rate, existing businesses are investing their capital overseas and crying out loud that it has become impossible to do business capitalism in America. America has a severe problem of capital policy, and there is not a single person anywhere close to power that is discussing it.

Ned Netterville December 9, 2010 at 1:41 pm

Progressive theology is just that. It is a belief requiring faith in the State as almighty, possessed of divine attributes, hardly lesser or fewer than those attributed by Judeo-Christian theology to the God of creation. How often have you heard the predominating progressives in the Obama administration speak of the government creating? What?: Jobs, health and welfare, green industries, clean energy, energy independence, alternative fuels, a benign climate, prosperity, education, homeland security, old-age security and general security from the vicissitudes of life, while simultaneously promising CHANGE, always for the better. All these and more can be deliveredd by the State with just a little more State action (read taxes) and an itsy-bitsy more benevolent control of citizens.

Conservative theology is nearly identical, only the objects slated for creation are different: regime change, military might, space exploration, imperialism, warfare upon foreign dangers (Saddam’s Iraq) and domestic problems (drugs, crime,etc). The tools of conservative creation, of course, are identical to those of progressives.

Libertarian theology: live and let live.

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