Last Call

What a surprise!  Adam Davidson's article on the so-called "skills gap", that employers are unable to find enough people to fill highly skilled manufacturing positions, has found a very definite reason behind it:  near minimum-wage pay rates.

Eric Isbister, the C.E.O. of GenMet, a metal-fabricating manufacturer outside Milwaukee, told me that he would hire as many skilled workers as show up at his door. Last year, he received 1,051 applications and found only 25 people who were qualified. He hired all of them, but soon had to fire 15. Part of Isbister’s pickiness, he says, comes from an avoidance of workers with experience in a “union-type job.” Isbister, after all, doesn’t abide by strict work rules and $30-an-hour salaries. At GenMet, the starting pay is $10 an hour. Those with an associate degree can make $15, which can rise to $18 an hour after several years of good performance. From what I understand, a new shift manager at a nearby McDonald’s can earn around $14 an hour. 

The secret behind this skills gap is that it’s not a skills gap at all. I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs. “It’s hard not to break out laughing,” says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. “If there’s a skill shortage, there has to be rises in wages,” he says. “It’s basic economics.” After all, according to supply and demand, a shortage of workers with valuable skills should push wages up. Yet according to the Bureau of Labor Statistics, the number of skilled jobs has fallen and so have their wages. 

To recap, manufacturing jobs in 2012 consist of people with engineering and computer programming skills with 2-year college degrees who end up making about thirty, thirty-five grand a year.  McDonald's pays more and you don't need a degree.  Think about that.

Now tell yourself the problem is unions and that manufacturing jobs pay too much, and if only those awful unions were gone, America could be more "competitive" by paying workers even less.  And indeed, as a result, wages for manufacturing jobs are going down, not up.

College or trade school educated workers are making $15 an hour, and that's too much money in 2012.  But let's cut taxes on the rich.  That'll solve the problem, right?