JIM LEHRER: Now, a further concern underlying the bleak jobs picture. Why are employers not hiring more workers?
NewsHour’s economics correspondent, Paul Solman, has some answers, part of his ongoing reporting on Making Sense of financial news.
PAUL SOLMAN: At the Washington Convention Center, an image that’s becoming a cliché: the job fair line, where Americans wait in hopes of finding work.
Two years after the recession technically ended, some 14 million Americans remain officially idled. Recently, a record 4,000 swarmed the stalls at this fair in D.C.
WOMAN: I’m here because I’m looking for a job, like everyone else.
MAN: It’s very difficult. It’s very difficult
WOMAN: I would almost rather just stayed home than come, stand in this long lines. I just feel worse than I did before I came.
PAUL SOLMAN: Now, you have heard all this before, of course, right here on the NewsHour.
So then, how can it be that the message from some employers we have been interviewing of late seems to contradict the no-jobs story?
BRANDON MELTON, Lifespan: We don’t have enough applicants at the middle-skilled level and above.
WOMAN: We do have difficulty finding good, all-around-quality people.
DREW GREENBLATT, Marlin Steel: We have a deficit of skilled workers.
JEFFREY BROWN: So, employers who can’t find workers, yet workers who can’t find jobs. What gives?
ZACHARY KARABELL, River Twice Research: Well, in my view, we’re experiencing structural unemployment, and it’s the first time in any American’s collective memory that you could say that.
PAUL SOLMAN: By structural unemployment, economist Zachary Karabell means that, because of the progress of technology and globalization, lots of our old jobs are gone, and new ones require skills that many just don’t have.
ZACHARY KARABELL: There is some sort of deep shift going on economically that is changing employment patterns, irrespective of whether or not GDP growth is three percent one quarter or negative-two percent another, and that economic growth doesn’t then lead to substantial hiring. There is a mismatch between what a lot of people are trained or able to do and the kinds of work that are available to them.
PAUL SOLMAN: Now, Karabell’s gloomy analysis is hardly the traditional explanation of today’s unemployment predicament.
MIKE KONCZAL, Roosevelt Institute: The real problem is that there’s just not enough jobs, not that people are incapable of accepting the jobs that are available.
PAUL SOLMAN: Mike Konczal of the Roosevelt Institute insists unemployment is cyclical, not structural, no growth, no jobs.
MIKE KONCZAL: Cyclical unemployment is unemployment that’s associated with the business cycle, with the coming and goings of how — how strong our economy is.
PAUL SOLMAN: So, argues Konczal, just build it, the economy, and they will come — jobs, that is.
MIKE KONCZAL: There are people who are sitting around unemployed, and there are, you know, people who want to open businesses and provide services who could hire them if they had customers. And they don’t have customers because so many people are unemployed, and people are afraid of becoming unemployed, that they’re not spending.
PAUL SOLMAN: And, so, all we have to do is spur that process?
MIKE KONCZAL: Right.
PAUL SOLMAN: With four-and-a-half applicants for every job opening these days, no surprise that folks flooding the job fairs agree.
MAN: I’m thinking there’s just too many people applying and not enough jobs.
MAN: There aren’t enough jobs to meet demand.
PAUL SOLMAN: Karabell insists that this conventional wisdom is wrong, that firms may never need as many workers as they used to, even in times of growth.
ZACHARY KARABELL: One of the best indicators of this is that companies have been making vast amounts of money for the past two years. They have been either firing people or not hiring, and they have been doing so because the combined effects of globalization and information technology means that they do not need more bodies to do more business.
PAUL SOLMAN: We all know this has been happening in manufacturing, says Karabell.
ZACHARY KARABELL: Twenty, 30 years ago, a factory might have led to 5,000 new jobs in a community. We’re opening a factory. It’s great. Now, even if you open an auto parts factory or a semiconductor factory, you might need 500 to 1,000 highly skilled workers to man a highly roboticized factory floor, which changes constantly, so your skill level needs to be pretty high for that. There’s no thousands of jobs needed for manufacturing.
PAUL SOLMAN: And, indeed, at Marlin Steel in Baltimore, engineers design the baskets the company makes, but robots do most of the heavy lifting.
Owner Drew Greenblatt:
DREW GREENBLATT: The only way my employees can exceed the productivity of a Chinese worker or Vietnamese worker is if they have — if they’re harnessing a tremendous asset, like a robot, which makes them much more productive. So they’re 40 and 50 and 60 times more productive than a Chinese worker. That’s the only way it’s going to work.
PAUL SOLMAN: So, in the past year, Greenblatt splurged on new robots, made in plants where robots are also replacing people, meaning a few more hard-skilled robot designers, a lot fewer heavy lifters.
Still, robots can’t do it all. And this brings us to a second aspect of the structural unemployment argument, that for the factory jobs that still exist, today’s work force is short on the somewhat broader skills that hadn’t been part of a factory job description, but now are.
DREW GREENBLATT: We need very nimble, very agile people. They have to be able to do, you know, welding one day and bending the next day, or, you know, setting up this robot this day, then setting up a different robot the next day.
PAUL SOLMAN: Problem is, Greenblatt says, he’s not finding the nimble and agile. And he’s no lone voice.
A National Association of Manufacturers survey found, during the recession, that almost a third of U.S. companies faced skilled labor shortages, and there are indications it may be even worse now.
DREW GREENBLATT: The resumes that are coming in are either people that have no experience setting up a robot, or they don’t know how to read a blueprint, and they don’t know simple math.
PAUL SOLMAN: Denver street performer Robo Mike hopes his unique skills will pay off big time some day. But earlier this year, he told us, he was lucky to make $3,000 a month in tips.
Do you have a college degree?
ROBO MIKE, street performer: Nope, just a basic high school diploma.
PAUL SOLMAN: Basic high school diploma. Do you think you would be doing this if you had a four-year degree?
ROBO MIKE: Hard to say. Probably wouldn’t have, but I finally get a chance to go to Hollywood. It took 25 years, and now they finally want to see me. I’m in a TV show called “America’s Got Talent.”
PAUL SOLMAN: Unfortunately for Robo Mike, these aren’t the talents America’s looking for at the moment.
HOWIE MANDEL, “America’s Got Talent”: It’s a no from me.
SHARON OSBOURNE, “America’s Got Talent”: I have to say no.
PIERS MORGAN, “America’s Got Talent”: I’m going to say no.
PAUL SOLMAN: Robo Mike’s quirky skills may be considerable, but high school grads like him have a 9.6 percent unemployment rate, compared to just 4.3 percent for those with a four-year bachelor’s degree. And only 30 percent of Americans have a B.A. Those with less than a high school education fare even worse; 14.3 percent are unemployed.
WOMAN: I’m just going to take a listen, OK?
PAUL SOLMAN: Consider health care, a still-growing industry. Lifespan, a Rhode Island hospital chain, has plenty of open jobs. Mostly, though, they’re high-skilled.
BRANDON MELTON: Of the almost 500 jobs that we have open right now at Lifespan, only 31 of those jobs require a high school diploma or less.
PAUL SOLMAN: H.R. director Brandon Melton says he’s dealing with a major league skills-worker mismatch.
BRANDON MELTON: We’re looking for individuals with some post-secondary education, all the way up to an associate degree, and then baccalaureate and above, whereas the majority of Rhode Islanders, and actually the majority of our candidates who are applying for jobs, have only a high school diploma, or, in some cases, even less.
PAUL SOLMAN: So many low-skilled applicants, so little low-skilled work. Melton has his pick.
BRANDON MELTON: It’s good for us in a sense that we can be highly, highly selective. We can take the very best. And we often require, in addition to a high school diploma, some experience in that field, food service experience, environmental services experience, laundry.
PAUL SOLMAN: For higher-skilled slots, nurses, physician’s assistants, radiology techs, the competition isn’t nearly as stiff. But Melton still gets five applicants for every opening. So, in the end, is the unemployment problem mainly structural, a lack of skills?
Mike Konczal doubts it.
MIKE KONCZAL: If that was a problem for the United States’ economy as a whole, we would see two things. We would see a lot of job openings that aren’t being filled, and we would also see wages starting to increase very quickly, because the people who would be willing to show up for a job could demand a higher wage.
We see the opposite. We see a very low number of job openings. We see very low wage growth. Though it is true for some places, some firms, some industries, it’s not true at an aggregate-wide level. It’s not true for the whole economy.
PAUL SOLMAN: Thus Konczal’s Rx: Stimulate the economy and create more jobs.
But while that would put some back to work for awhile, spending the way we used to isn’t the long-term cure, says Karabell.
ZACHARY KARABELL: There is a problem here that we have not figured out how to solve. There is not an immediate fix to the mismatch between skills of millions or tens of millions of people and the jobs that might be created in this newer economic world. That mismatch is not going to magically disappear just because the economy grows four percent a year.
PAUL SOLMAN: But, right now, it’s growing at less than half that rate. So we can’t really know yet if unemployment, stuck at around nine percent, is structural or not.