Finance Finance News The old ‘jobs snobs’ story – a companion piece for ‘dole bludger’ bashing

The old ‘jobs snobs’ story – a companion piece for ‘dole bludger’ bashing

the myth of the job snobs
Can't find an employee with the right skills? Maybe offer a better wage. Photo: Getty
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The key finding of an employer survey conducted by Employment Minister Michaelia Cash’s department is that she is either too ignorant or simply not smart enough for her job.

The kindest reading of the “job snobs” story about employers finding it hard to recruit people is that Senator Cash is not across key issues in her portfolio.

But then again, “jobs snobs” is a companion piece for the “dole bludgers” story the Morrison government is pushing to justify treating Newstart as punishment.

Maybe Senator Cash does know a little, but won’t let facts get in the way of cheap politics – except that she fails to grasp that it would be very good news, something she could boast about as the responsible minister, if employers were really finding it hard to hire.

It would mean upward pressure on wages – low wages growth is our biggest domestic economic problem.

There is nothing new about a survey reporting some or many employers find it difficult to recruit staff of the quality they want.

What such surveys don’t report is that employers want to hire workers able to immediately do the job, to be fully qualified and experienced so that no training is required, and to do the job for much the same sort of wage that has been paid for several years.

It fits in with the Reserve Bank’s somewhat bemused observation that  employers report difficulty hiring suitable people, but aren’t prepared to pay more for them.

In any market except the labour market, it’s taken for granted that a shortage of supply in the face of strong demand will see higher prices.

Until we see employers paying higher prices, it’s hard to believe there’s a genuine shortage.

The big lie in the “jobs snobs” story is pretending the angle is new.

This particular survey is an annual affair.

That “recruitment difficulty” only rose by 7 per cent in a year when unemployment had fallen and jobs growth was strong should actually be pretty good from an employer’s point of view.

Unsurprisingly, the prime examples quoted in the enthusiastic reporting of the survey in The Australian newspaper were two industries offering notoriously low wages: Aged-care centres reporting they were unable to accept all residents “due to a lack of nurses”, and a childcare centre unable to offer long daycare services “due to a lack of teachers”.

They are both industries that, having difficulty recruiting enthusiastic local staff for low wages, turn to temporary work visas for people from low-wage countries.

Contrast Senator Cash’s latest effort with the way the US Federal Reserve Board is increasingly seeing the much tighter US labour market, as reported by the Economist magazine:

Heaven help anyone who complains of a labour shortage to Neel Kashkari, president of the Federal Reserve Bank of Minneapolis. “We just don’t have enough people to build,” said the head of an affordable housing organisation in Aberdeen, South Dakota, on July 11th. A local wind-turbine maker grumbled about his struggles to expand his headcount. Mr Kashkari showed little sympathy: “If you pay more they will come,” he says.

Mr Kashkari has been sceptical of such pleading for years, convinced that the labour market could be hotter. His doubts appear to have spread. When testifying to Congress on July 10th Jerome Powell, the Fed’s chairman, said that “while we hear lots of reports of companies having a hard time finding qualified labour, nonetheless we don’t see wages really responding.”

That’s in a country that presently has 3.8 per cent unemployment, but the impact of reduced training and repeated waves of cost-cutting has long been an issue coming home to roost in hiring.

Five years ago, when the American unemployment rate was much higher, the Wharton School Professor of Management, Peter Cappelli, blew apart related hiring myths in The Washington Post:

Not that long ago, an idea began to circulate that the US economy was going to run out of workers. Consulting firms began pushing the idea, citing each others’ reports as evidence. Reporters wrote about it. And a great many people in the private sector and the government swallowed the concept whole. By the mid-2000s, many big employers and even some government agencies were preparing for the Great Labor Shortage to set in by 2010.

While the idea seems preposterous now, something similarly absurd is happening again. Raise your hand if you’ve heard this: There are good jobs out there for people who have skills. But employers can’t find people to hire because high schools are failing and college students aren’t majoring in the hard subjects where the jobs are. The economy, as they say, is facing a skills gap.

I’ve recently reviewed all the papers and stories on this question, and there is no more truth to this notion than there was to the labour shortage idea. It got popular attention with media reports about a handful of employers in the depths of the Great Recession who could not fill job openings. Then came a series of papers issued by consultants and business associations asking employers whether they were having difficulty hiring employees. Many were, but the investigators didn’t ask what was difficult, or investigate why.

The real issue is that employers’ expectations – for the skills of new graduates, for what they must invest in training, and for how much they need to pay their employees – have grown increasingly out of step with reality.

The professor found that what employers really want is workers they don’t have to train.

And it can be added to that, workers they don’t have to pay more.

As someone facetiously pondered on Twitter: “Gee, if only there were some sort of financial incentive that employers could offer to increase applicants’ enthusiasm …”

Professor Cappelli specifically attacked attempts by employers to blame educational institutions for not providing the perfect, job-ready graduates.

“Companies simply haven’t invested much in training their workers,” he wrote.

“In 1979, young workers got an average of 2.5 weeks of training a year. While data is not easy to come by, around 1995, several surveys of employers found that the average amount of training workers received per year was just under 11 hours, and the most common topic was workplace safety – not building new skills.

“By 2011, an Accenture study showed that only about a fifth of employees reported getting on-the-job training from their employers over the past five years.”

Given the cost-cutting imperative of Australian business, it’s hard to imagine an increase in training here.

Eventually, if the labour market tightens sufficiently and employers really can’t find recruits – as opposed to saying they are having difficulty finding perfect cheap recruits – employers are forced to take people with fewer skills and train them. That would be a very fine thing.

There are areas where Australia has insufficient skills, areas where importing temporary and/or permanent skills allows work to proceed that otherwise would not.

When we simply failed to train enough doctors, we had to import them.

When the LNG plants were being built, there were specific welding skills we didn’t have.

A friend who runs one of the country’s best pizza restaurants has a great deal of difficulty finding locals with the aptitude and dedication required to consistently make excellent pizzas.

But more broadly, given the nation’s excess labour, if business tried paying them more, they would come.

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