Unemployment Is So 2009: Labor Shortage Gives Workers an Edge | Hacker News Reader

Unemployment Is So 2009: Labor Shortage Gives Workers an Edge

nytimes.com

69 pointsdpflan78 comments

I remember reading articles like this in early 2007. Just look at this table:

http://www.multpl.com/unemployment/table

A recession is coming soon. Prolonged low unemployment rates are a pretty reliable sign that the economy is overheating. So are pricy Forward P/E ratios. So are property bubbles.

https://www.economist.com/blogs/graphicdetail/2016/08/daily-...

Also, I disagree that we have a labor shortage. I think we have a skill shortage. If we had double the machine learning experts we might need half the number of commercial drivers, and there are a lot more drivers out there than AI developers.

"I think we have a skill shortage. "

To be more precise we have a lack of will to train people. The big companies sit on piles of cash, complain about worker shortage but they are not willing to invest in their workers.

Its just not as simple as that. Most people wouldn't be willing to go through all that retraining unless they had a compelling reason to do so.

I agree that the environment could be more conducive to encourage people to get education; many companies do have that in place.

How can government motivate people?

Two questions and one observation:

(1) Why is it the government's job to motivate people? Shouldn't people be motivated by their own self-interest?

(2) The rise of bigger government and a welfare state might even be contributing to the problem, but debasing the impetus to train. Some carefully considered welfare can provide relief to an acute problem, but long term welfare is counterproductive.

If it's the company that benefits from the training, shouldn't it be the company's job to train people?

Why should our government and workers subsidize company training with student loans?

Your tone suggests you're arguing against me, but we're both in agreement that this isn't the responsibility of government.

My tone was a partial response to the phrase below, and a partial catchy soundbite to agree with your point that the government shouldn't step in.

> Shouldn't people be motivated by their own self-interest?

It should also be in the company's self-interest to train its workers, it's just because of a bad worker-employer leverage balance that they don't take advantage of that.

They're all run by spreadsheets more so than intuition. Training is difficult to quantify. How to you quantify into dollars the difference between time, cost and results of training versus time, cost and result of putting out headhunters to fill the position with someone already trained?

I mean most companies can't even interview well and it's a lot easier to just do it the old way that they've been doing it forever rather than stick your neck out and try something new and barely quantifiable if at all. Especially when HR has the final say.

lower taxes

I continue to hear this argument, but it isn't 1980. The top tax rate is a little of half what it was then and the lowest marginal income tax rate is still 0% for those who make much below the national average. Those who are currently unemployed would not be directly affected by federal income tax rate changes (except perhaps if the "base is widened" as many fiscal conservatives want).

You can look at Kansas for the problems that are caused by policymakers blindly lowering taxes without respect for the likely consequences.

* Converting social program cliffs into gradients would incentivize people to seek alternatives to unemployment insurance.

* Amnesty for those currently on SSDI if they go back to work (going on disability requires filing a federal form stating that you are physically/mentally unable to work, so later going back to work is effectively fraud).

* Convert programs like {Section 8 housing, Food stamps, etc} to a UBI-like cash program without a cliff when you get a job. Don't penalize people for making a minimal amount of income.

Lower taxes for anyone making less than $1M a year. :)

Yes please.

Government should enforce career caps nationwide, i.e. a max number of students allowed on positions where labor is abundant.

They (government) also could spend the unemployment benefit towards training people instead of just giving them the money.

I'm not sure I agree with caps. I do however agree with not providing any federal financial aid in such circumstances. I'm also in favor of the government funding industry-led studies to forecast demand for labor in those industries. The government shouldn't performing such forecasting, but they can provide minimal financial support to make sure every industry forecasts its labor needs.

Education can take a generation capping things today will led to shortages in the unknown future.

Make it so while you're retraining for a new job, your basic needs are all met.

A lot of people who got laid off had a compelling reason to through retraining. I see that in my company: One division lays off good people while the other division is looking for people. The laid off people could have been retrained but just doesn't happen. What it really comes down to is that they want new, already trained people that make less money.

And I'm guessing they found them otherwise retraining their old employees would have been more attractive.

No, they had trouble finding people for the price they were willing to pay and the skill they expected.

I think it would be more clear if you thought of a company in terms of disjoined silos rather than a large single thinking machine. One division (silo) needs to cut from their P&L while another just got the green light to expand. More than likely they don't talk to each other in large companies. At best you have a VP or SVP a layer or two up that controls both. That person just dictates what the silos need to do and doesn't concern themselves with the how (retraining).

And then you have places like Dell, where one friend was actively forced out by his manager and prevented from moving to a different group that desperately wanted him, just so that the bad manager could get the satisfaction of shitting on this guy as much and as hard as possible.

Oh, and also making sure that he was forced to pay for Cobra and go through the whole re-hire contingency process, and screwing up his seniority at the company.

There are some hateful, hateful people out there whose only joy is causing as much pain as possible for other people.

Hmm. I wonder what POTUS gave them that idea.....

I wonder what would happen if Amazon/Google gave 6 month (lowly) paid courses to help people with otherwise good experience or degrees pass their interviews. There's a lot of focus on whether people "get it" or not, but I'll bet a ton of people would "get it" had they the actual relevant training.

That's a good idea. Like a boot camp for experienced people to get up to speed with the latest stuff.

There's no incentive to do this. Amazon/Google aren't exactly hurting for SWE candidates because of their brand.

Google (and Amazon AFAIK) do give people resources to study with before an interview. Facebook sent me an electronic copy of CLRS beforehand.

I think the real question is: would making the interview process more accessible through offering courses increase the average quality of hires? Or allow more hires of the same quality? That's not clear. The actual white-boarding is pretty far divorced from day to day work, even at BigTechCo. An argument could be made that self-driven prepping for an arbitrary filter is the actual thing being tested, since it correlates more with success. Courses, although reducing the noise that comes from differing levels of prior exposure to those types of questions, would simultaneously decrease the self-motivation signal.

You've seen the interview process for Amazon right?

I mean, it's like they're trying to eliminate all human beings from consideration, before they even get started.

I imagine a couple of things work against this; nobody wants to take the pride hit of working for a small sum of money for awhile. Perhaps they imagine they'll have another high-paying job in a month so it's silly to take low pay for 6mo and HOPE the high paying job comes in after that time. Also, what happens if they can't hack it? Suddenly they probably can't even claim unemployment...

It's a good idea, though, it probably just has a few practical barriers.

For blue collar jobs, we need the return to an apprenticeship model for many trade skills. For many white collar jobs, most learning can be done on the internet in your free time.

The problem with the "in your free time" stance is that you're assuming these people have free time.

I did dirty blue collar jobs for years. Then I would sit on my couch with a laptop and learn Python every night, from 6 or 7PM until I couldn't stay awake any longer. It was no picnic but it can be done.

It is also more difficult if you have kids (I don't), but I agree, in most cases it is possible to make some time.

You had a laptop. And it sounds like you only had one job, not multiple, and you didn't have a family to support.

And, quite frankly, just because you were able to do it, does not mean that it's not an incredibly shitty thing to expect of everyone else, or that those who aren't able to do it aren't somehow less deserving.

I did have a family to support, and a crummy old computer. And I never implied that someone who couldn't do it is less deserving, just that it can be done. Computers are ubiquitous and while not everyone has one, a great many people do.

Spot on. "Free time" becomes exponentially more expensive as soon as your parents aren't obligated to take care of everything you need.

I'd go so far as to argue that the foundations of a successful technical career need the groundwork laid out for them way before someone turns 18. It requires a supportive, nuclear household where science and knowledge are held in high regard. Having at least one parent being technically apt is a big plus also.

Another side to "I think we have a skill shortage. " is either "over qualification" or "it just isn't worth it". When manufacturers say they can't fill jobs, most of the time it's not a skill shortage, it's a shortage of people willing stand and get dirty welding or pressing a button for 8 hours for $10 an hour. If people stayed in these jobs for a while, manufacturers could work them up the learning curve.

It's the $10 per hour part is the killer. No one wants to do dirty work for that much. I did plenty of construction, landscaping, painting, and other dirty jobs. Hours were long, often 10 - 12 hours per day. I remember the day I started making $12 per hour and I felt like a king. I taught myself to code and got out of that game as soon as I could manage.

judging by the uptake of new CS grads, they are willing to put in the time and money to train people who are already proven to be in the upper 10% of intelligence.

the problem is, aptitude for technical skills is, to say the least, not uniformly distributed in the population. it's not like factory work. in addition to programming and sysadmin/devops, this includes stuff like CNC and auto technician/mechanics and electricians and plumbers.

if they were to take un-degreed un-proven people and try to train them in tech work, probably 99% of them would drop out.

have you ever seen a college CS weeder course? it's not pretty. imagine that, except with not even the luxury of a college acceptance filter. so why in the world do that, when there's a perfectly good feeder system of experienced proven workers and proven college grads?

> A recession is coming soon. Prolonged low unemployment rates are a pretty reliable sign that the economy is overheating. So are pricy Forward P/E ratios. So are property bubbles.

Yet inflation is remaining surprisingly low, implying our economy isn't really overheating. At least not for most of the country.

> So are pricy Forward P/E ratios. So are property bubbles.

The upper-middle and upper classes are the only groups that invest in property and stocks at any non-negligible amount. Actually, is it possible for the upper and upper-middle class economies to overheat while the lower class continues to stagnate? Perhaps this could explain the low inflation rates while the price of capital is sky-high.

Inflation doesn't include housing costs, right? So cost of living can go through the roof but as long as consumables are cheap, official measures of inflation won't notice.

It incorporates housing costs by measuring rental costs and imputing the rents of those who own housing:

http://www.slate.com/blogs/moneybox/2014/02/24/housing_infla...

>The upper-middle and upper classes are the only groups that invest in property and stocks at any non-negligible amount.

Not true. A lot of blue collar workers have 401k plans which invest actively in the stock market.

There are always exceptions to the norm, but that doesn't mean the norm doesn't exist: http://news.gallup.com/poll/190883/half-americans-own-stocks...

I feel like inflation has remained low because wages have barely budged despite employers constantly saying there's a labor shortage [1]. It's almost like we're in a weird place where only the upper end of the economy is overheating while the rest is oddly stagnant.

[1] http://www.businessinsider.com/fed-official-businesses-shoul...

It's the Japanese debt trap. It's causing our unusually restrained inflation levels for the exact same reason it did with Japan. Too much of our income is going to service debt. It locks down the money that would otherwise be available to spur inflation. Not only is the debt service cost a restraint, but the vast outstanding debt levels also cause conservative behavior in all sorts of ways (whether at the consumer level, or higher up the financial chain). The higher US debt levels go vs income, the more difficult it will become to spur inflation in traditional ways. Ultimately, direct currency debasement will be the sole remaining means, as with the Japanese and Yen.

For thirty years we've been incorporating low-skill Chinese labour into the global economy. That has depressed inflation for most manufactured things despite prolonged low interest rates. When slowing Chinese productivity growth is finally felt either inflation will normalize and the recession will hit. High debt rates, bad demographics in the west, and asset bubbles are going to make the next major recession especially hard. Especially if knowledge workers are able to emigrate out of their tax bases (either out of state or out of country).

It's not just very high end skills like machine learning. Mike Rowe has done a great job illustrating the blue collar skills shortage.

Compare the US to Europe and you still can't find something as simple as a solid bakery producing bake goods better than the corner store donuts. In SF, you can see how successful one can be as a baker if you have skills by checking out Mr Holmes Bakehouse on Larkin. That place has a line out in front every single day and sells out completely by like 10/11 am.

It is not as simple as that. The US industry has driven down the prices of everything, salaries along with that, so only affluent places have disposable income to contract the services of good bakers. Everywhere else a real baker will starve trying to compete with the local Dunkin Donuts. This creates a vicious cycle of lower salaries, less opportunities for everyone. In short, low prices are killing competition everywhere except where the affluent already live.

It also feels like many of these "good baker" type businesses can't survive/thrive in areas with relatively low population density -- eg, how many people are willing to drive 15 miles out of their way to said baker?

What will the trigger be for the next recession, when will it be, and what assets are you buying/selling to profit from it?

I don't know the trigger. With this president it's hard to call. Low and falling energy prices are going to make an inflation triggered recession tough, but rising wages in the developing world are could push it. If I had to guess though it would probably be the property bubble in China / commonwealth countries popping.

When it will be: 15% chance next 6 months, 50% chance next 12 (inclusive), 75% chance next 18, 93% chance next 24.

Assets: I've sold everything (TSLA, AAPL, BTC, GOOG, SPY, TD, bonds, international index funds) except for Facebook stock, some shares that are outside of my control due to insider knowledge, and some Sia, Dash, and tiny minority of BTC thats sitting in an exchange that I keep around if I need to make a fast cryptocurrency purchase.

I've bought some SPY put options over the next 18 months. I'm essentially risking 5% of the portfolio to double its value if I'm right about the timing and magnitude.

How large is the property bubble in China/commonwealth countries? What could cause it to pop? I ask because this is something I've talked about w/ friends and is very difficult to pin down. As a casual observer it seems like real estate assets are inflated, but not overleveraged, and there is no clear mechanism for a bank run/margin call scenario such as 2007-8.

I think real estate in hong kong costs 18x the gross annual median income, compared for 9x in SF, or SJ (Vancouver is 11.8).

If I had to guess, the property investment train just can't keep going on forever - eventually I'd imagine it has to top out as nobody can afford to live anywhere anymore. The younger generation is locked out of housing markets completely, and only through family inheritance is owning any property affordable unless you are lucky enough to be in a boom area at the right time.

I could just see any major region having a housing crisis cause the dominos to fall - if the Taipei market takes a 30% dive, all those investors need to park their money somewhere else, which will over-inflate other markets even quicker. That or some pillar holding up one of the markets failing (Ad economy stops returning fat multiples as saturation sinks in). It may be my perspective as a younger person but the economy has always been extremely fragile as long as I've been alive, and it seems like while investments have gone up over time the bar to getting in is higher than its been in a century.

I'm 24 so you're preaching to the choir :)

The thing is - the world is currently awash in liquidity. Some small-ish defaults are happening in the auto loan and student loan markets, but nothing on the scale of 2007-8 mortgage defaults. Unless there are just huge, shadow banking markets for derivatives on these debts that nobody has brought to light yet, and all the major banks are involved.

I'm not seeing how my generation (aside from the professional/engineering class) being locked out of the housing market in large urban areas triggers a recession though.

I'm not saying it would trigger it, just that it is a symptom of a system thats gone way out of bounds. I don't even think it will be a mortgage default crisis per say (though when the values go down everyone who's currently stretched to get into their place will be screwed for a while). People parking their money on real estate could all try to get out of a given market at once, making a run on housing values. Strange thing is, thats the only case in which I am personally able to buy a house, so there's a large part of me that wishes it would happen so there would be more units on the market and affordability.

Debt to GDP in China is pretty unsustainable. Asking for a cause is hard and property markets are generally less liquid so rises and falls tend to be more drawn out, but it's probably going to be Chinese banks getting hit by bad loans and the government propping them up. The Chinese stock market isn't as frothy as it was a couple years ago, but the larger Chinese economy still relies on property backed debt for business expansion.

While I agree that property in places like Canada aren't overleveraged, demographics (baby boomers) are masking the true picture because a very large percentage of the population is relying on home equity to sustain their standard of living into retirement and there is a non-trival amount of "off-book" leverage in the form of mom and pops lending a couple hundred grand to their kids to get the 5% or 10% down that you're legally required and the kids are ploughing the majority of their income into their mortgage just before having to support the healthcare system as mom and pops retire and start to really hit it. With less of paycheque available mortgages are going to get strained, even if interest rates stay this low for the next couple decades.

This is all kinda handwavy, I'm not really sure how, but I'm sure that what we have now is unsustainable. I might be wrong about a hard crash, they could try to inflate their way out of the debt / inflated assets, but we're definitely not going to see a good amount of growth in the stock market for the next 7 years or longer if there is no pullback.

Besides SPY, do you store the rest as cash? What if a high inflation rate will be used to avoid a recession? meaning, cash in banks will lose value.

10 years of low interest rates. 10 years of stock market bull market.

FED just announced they intend to raise interest raise further and cut their balance sheet.

A recession in the next few years is a certainty.

As for the labor/skill shortage... I don't believe it. If there was a labor/skill shortage, we'd had high school kids getting paid $50/hr for web dev like we did in the late 90s.

Anyone who was alive in the 90s dotcom bubble knows what a real labor shortage looks like.

> How to get [the workers] back [into the workforce]?

> Give high-quality education, childcare, tax credits, and don't raise the minimum wage.

Wow, these authors just don't get it. Quality of life for the lower and lower-middle class has been declining for decades. Worker leverage is at an all-time low. Most households require two wage-earners to live any sort of quality of life. Jobs are becoming more and more centralized to a handful of urban centers around the country, and jobs that don't require high levels of education have mostly been outsourced. Socioeconomic mobility is declining massively.

Then the authors imply that instead of raising wages or shifting the worker/employer leverage balance, they just want to shuffle more of them through school? Why not create an economic environment where businesses have an incentive to give an increasing quality of life for its workers over time? Instead of shuffling more workers through a broken education system, why not train & promote internally? Why not promote & create jobs that don't require decades of education and experience to live a comfortable life? Why not do something about our anti-trust and global trade laws so that more areas than big urban centers experience economic growth?

Uneducated people in our country shouldn't be pushed out of our economy.

Edit: To those downvoting me, could you please explain why? If I'm wrong in any way, I'd love to learn from your view on it.

They're neoliberal Bootstrap Boys who just love the idea that their own hard work in earning "skills" got them that $100k salary, and that anyone else can, too! They'd rather not face the facts of privilege in this country.

Meta: I'm also wondering why you're being downvoted. I'm noticing brigading-style downvoting recently on HN (which is the main reason I avoid the cesspool of Reddit). Sad to see HN head in the same direction.

Yes. HN is becoming more like Reddit as time goes on. It was probably inevitable as the site became less focused on startups.

EDIT: I should probably add that's just in relation to the voting. The moderators keep the site from getting as nasty as Reddit, and as long as they do I'll like HN better.

>For instance, restricting immigration is not the smartest policy when workers are scarce.

>Raising barriers to imports — inviting retaliation from trading partners — is exactly the wrong approach, especially now that the workers in cheap labor markets that put such pressure on American jobs promise to become big consumers of things made in America.

Regular NYT readers will have guessed where the article was going right from the title's code word "labor shortage".

Stop paying people in America to make things so that people will buy stuff made by Americans...makes sense to me.

What is going on, I was told right here by the bright armchair economists of HN that jobs are _never_ coming back, it's over and done.

> Professor Krueger suggests that the increase in opioid prescriptions could account for about 20 percent of the decline in men’s labor-force participation from 1999 to 2015, and 25 percent of the observed decline in women’s labor-force participation.

Joking aside. That is a scary statistic. Unless you've been through West Virginia or Rust Belt states, then it is believable.

>Professor Krueger suggests that the increase in opioid prescriptions could account for about 20 percent of the decline in men’s labor-force participation from 1999 to 2015, and 25 percent of the observed decline in women’s labor-force participation.

It seems likely that lack of work and resulting depression would drive drug use as well. Depressed people often "self medicate".

A friend was talking to a young girl in a school in WV.

  Friend: What would you like to do when you grow up?
  Girl: I wanna draw, like my daddy.
  Friend: Wonderful, is your daddy an artist?
  Girl: Naw, he draws a check every month.

(ie, her dad receives some type of welfare check every month (perhaps disability, unemployment, etc.), and this is what she aspires to do)

> Workers lose ground for 50 years straight

> Corporate profits now higher than ever before in human history

> Recent news says workers may lose slightly less ground this year than in previous years

> Panic! Quick, raise interest rates and chop off the economy at the knees! Quick, import more foreign workers to keep wages low!

Here's a link around the paywall: https://outline.com/7XaW7b

And can I say I hate this article? I hate this article. Take this:

In 2008, in the midst of the recession, the average hourly pay of production and nonsupervisory workers tracked by the Bureau of Labor Statistics — those who toil at a cash register or on a shop floor — was 10 percent below its 1973 peak after accounting for inflation. Since then, wages have regained virtually all of that ground.

So we've only almost recovered from the recession on this metric and we've almost broken even with how good workers were doing in 1973? That sounds like a pretty shit recovery to me.

More than seven years after the recession ended and the job market began to bounce back, only 60 percent of Americans over the age of 16 are working, about 2.5 percentage points fewer than just before the economy took a dive.

Here's another metric where we haven't even made it back to '08 levels!

And the answer requires removing a roadblock standing in the way of this potential golden age: Even if demand for workers is rising, it may not be for the kind of workers on offer, those sitting on the sidelines of the labor force. “The jobs in demand are more skilled than the workers we have,” Professor Krueger told me.

Because the article won't describe a solution to this "roadblock" can we all take a guess at what it's going to be. I'll give you two choices:

(A) Encouraging firms to hire under-developed american workers and train them in-house to do these jobs.

(B) Loosen immigration restrictions so we can hire cheap overseas labor.

On the supply side, Professor Kearney and Professor Abraham suggest that being cautious about raising the minimum wage, which could price some workers out of jobs, and reforming disability insurance to encourage recipients to seek jobs.

Oh for fucks sake. So simultaneously we are about to enter a labor shortage but we can't raise the minimum wage? A labor shortage is the best time to raise the minimum wage! And of course rather than encouraging any one of our numerous solutions we definitely need to cut disability. This is the grossest bit of neoliberal propaganda I've seen in a while.

Yep, completely agree. Especially love the last point. A labor shortage sounds like the perfect time to implement a wider social safety net. But this article (not to mention the interviewees) displays a clear bias against labor.

I don't really agree. It's not like raising the minimum wage will train workers for tasks they can't already perform. The shortage of laborers in specialized task domains is endemic to our changing times, and I think framing the challenge as an old-school labor rights issue is just... terrible and stupid.

That's just ahistorical, there have always been labor shortages through history, especially since industrialization. That's what makes it an old-school labor challenge. How do we get firms to pay for training? Well probably the same way we got them to do 8 hour days, overtime, paid vacation, weekends, etc.

Ah! A Labor Shortage!

But even as they forecast a brighter future for the working class, these economists also worry that the new age of tight labor markets and rising wages will create a different sort of challenge. As Alan B. Krueger, a Princeton University economist who was the chief economic adviser to President Barack Obama, put it, “We are heading for a labor shortage.”

Emphasis on labor shortage added.

Now where have I heard that before? Oh, yes:

2003 (depths of a recession)

http://aoaconsulting.com/yahoo_site_admin/assets/docs/Will_T...

http://knowledge.wharton.upenn.edu/article/what-labor-shorta...

2004

https://www.fastcompany.com/50595/labor-shortage-myth

2005

https://www.shrm.org/hr-today/news/hr-magazine/Pages/0305cov...

2010 (depths of Great Recession)

https://www.cbsnews.com/news/skilled-labor-shortage-frustrat...

https://www.tlnt.com/a-coming-labor-shortage-the-evidence-ju...

2012

https://secure.marketwatch.com/story/the-looming-us-labor-sh...

2013

http://businessroundtable.org/media/blog/the-u.s.-skills-gap...

https://www.us-immigration.com/us-immigration-news/us-immigr...

http://www.nasdaq.com/article/weekly-review-the-upcoming-lab...

http://money.cnn.com/2013/06/13/news/economy/trucker-shortag...

2015

https://tickertape.tdameritrade.com/investing/2015/06/skille...

https://www.tradesmeninternational.com/news-events/the-const...

Where did all those construction workers laid off at the end of the housing bubble go?

It seems that for employers and their hirelings, there is always a labor shortage or a looming labor shortage.

"It seems that for employers and their hirelings, there is always a labor shortage or a looming labor shortage"

Of course, competition makes the prices go down, ergo, there is never enough competition. The only good price is 0 (or less).

That is also true if you are consuming labour.

> For instance, restricting immigration is not the smartest policy when workers are scarce.

Says who? God forbid a country put it's citizens above the holy dollar.

I'm with you. Labor shortages are what incentivize business to train people and pay more. You can't simultaneously complain about worker pay on the bottom end and advocate policies that reduce the value of their labor.

"Over the next 20 to 25 years, a labor shortage is going to put a binding constraint on growth."

Over the next 20-25 years the labor shortage is going to spur vast new investment into productivity gains after ~15 years of relatively weak productivity growth.

Labor shortage is only a problem if you fail to boost productivity.

Ideally labor and population growth slows or flatlines while productivity soars thanks to robotics, AI, general automation improvements, etc. - with the end result being, finally, another big leap forward in the standard of living (particularly for the bottom 3/4). The absolute last thing the US needs is more people as we enter a potential boom age for automation.

" with the end result being, finally, another big leap forward in the standard of living (particularly for the bottom 3/4)"

Only if those people still have jobs.

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