One of the key aspects of human efficiency is making decisions based on facts, data, and nonideological logic. This is a critical aspect of having an efficient government and political system. In this post, we will continue to look into the issue of jobs in the U.S. The lack of jobs in this country is a growing problem which is having a serious impact on the middle class.
The ironic part is that as of July, 2016 the U.S. had about 5.9 million unfilled jobs. So, with all of these available jobs, why are so many people unemployed? The reason typically given is the jobs skills gap – people not having the skills to fill these jobs. Although this is part of the reason, there are other issues involved.
Most of the other reasons why so many jobs go unfilled is low wages, undesirable shifts, tight qualifications, and potential employees lacking transportation and child care. Some of the available jobs require four-year degrees but others only required vocational training. There are many jobs available for positions like truck drivers, electricians, and plumbers.
So how do we fix the problem of getting available people to fill the available jobs? The first way is to increase the number of apprenticeship programs available and the money that we spend on training. For example, from 2007-2009 the U.S. only spent between 0.04-0.07% of its GDP on job training, a fraction of what some European countries spend. In Germany where they spend about 0.25-0.35% of GDP on job training, about 53% of high schoolers split their time between school and apprenticeship programs.
The second thing we can do is have the Labor Department become more active in matching available jobs to available workers, becoming somewhat of a job placement agency. It may also be necessary to provide additional resources and support to get some people employed. The cost to provide this is no doubt less than providing other financial assistance.
Third, we need to reinforce on companies the need to pay higher salaries for jobs that cannot be filled. One way to do this is to raise the minimum wage to a level where it has historically been. Looking back at the history of the federal minimum wage rate in constant 2015 dollars, it reached a peak around 1968 at about $11 per hour. Since then, it fell and leveled off at between $6-8 per hour, about $8,000 below the poverty line for a family of four. It needs to go up to at least $12 per hour.
According to the UC Berkeley Labor Center, about 73% of people receiving government support are working. In other words, taxpayers are subsidizing low wage work. Increasing the minimum wage would reduce the amount spent on these government support programs. This would make it well worth having to spend a little bit extra for a hamburger at a fast food restaurant.
This will not only serve to provide more incentive to fill jobs but also help the economy. The economy has been stuck at a growth rate of less than 3% since 2005, no doubt in part because many people with low wages are just getting by and not spending much. It will also promote what Jeff Madrick of the Roosevelt Institute calls “Fordism”, Henry Ford’s philosophy of paying workers enough to allow them to buy what they make.
But most important, individual responsibility has to come into play. Long-term, we need to reinforce on young people the need to stay in high school and go on to college. Being efficient means making yourself employable. It means getting a degree in a subject that will allow you to get a good paying job. The days of getting by on a high school diploma are over with. Aside from just being able to get any job at all, data indicates that college graduates earn on average $1 million more over the course of a lifetime than those without a degree, and $3.4 million more with a high paying major.
The goal of these posts is to provide the true story behind issues that we are facing in this country. We can no longer allow ideology to make decisions for us when facts and data prove that we should be doing things differently.
Next: The Impact of Automation and Robots