Talk of a skills gap in the labour market is ‘an incredible cop out’

Heidi Shierholz, former chief economist at the Labour Department, has a great saying when it comes to an alleged “skills gap” in the job market: “If you hear an employer complain they can’t find skilled workers, always ask, at what wage?”

The Business CEO Roundtable has published a report discussing what it says is a shortage of skilled workers in America, and hosted a conference in Washington featuring high profile CEOs, a top aide to Donald Trump and two US senators.

“There are a lot of jobs open,” said Jamie Dimon, CEO of JP Morgan, during a panel discussion sponsored by the pro-industry lobby. But “there are a lot of people who are not properly trained,” he maintained.

But is there really a skills shortage? If so, why have median wages been stuck in a rut for so long? Why aren’t companies investing more in training and labour-saving equipment? Why aren’t they asking workers to work longer hours? It doesn’t add up, says Dean Baker, co-director of the Center for Economic and Policy Research, a liberal think tank in Washington.

“We want better educated people but that’s not the thing holding back the labour market right now,” Baker told Business Insider. “It’s an incredible cop out.”

The Business CEO Roundtable event was held as a preview of Trump’s “workforce development week” in which he vowed to focused on labour market issues despite sharp proposed budget cuts to training programs.

“Apprenticeships place students into great jobs without the crippling debt of a four-year college degree,” Trump said on June 15 before signing an executive order on apprenticeships.

The Federal Reserve’s monthly Beige Book, a report based on conversations between regional Fed officials and businessmen in their districts, tends to perpetuate the notion of a skills gap by unquestioningly regurgitating the complaints of executives.

“Labour markets continued to tighten, with most districts citing shortages across a broadening range of occupations and regions,” said the latest edition, published May 31.

Michael Madowitz, an economist at the Center for American Progress, says he is “unusually unsympathetic to the evergreen skills gap critique.”

“First the Econ 101 ‘pay more for more if you want more’ cuts against this well in a period of little wage growth,” Madowitz said. “Second, there’s fascinating/depressing empirical research showing a ‘skills gap’ occurs because employers add and remove qualifications for the same job postings depending on the labour market, ensuring there is always a skills gap.”

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