More Years of Schooling for Fewer and Fewer Jobs

This week’s (July 9/16) New Yorker has a terrific one-page summary by James Surowiecki of why so many job vacancies are left unfilled “for want of any sufficiently qualified candidates” while so many people (especially young people with university degrees) are unable to find work. It’s behind a pay wall, so here’s a synopsis:

  • Unemployment is high not because businesses are shedding jobs but because no one is hiring (in one case cited, a company had 25,000 applicants for a standard engineering job, and rejected all of them).
  • The idea of a “skills gap” (the unemployed don’t have the skills hirers are looking for) is a myth. The truth is that companies want to hire the most experienced and successful people already working at competing companies, so they’ll hit the ground running, so there’s no training cost, and so there’s no risk they won’t work out. “When companies complain they can’t find people with the right ‘skills'”, Surowiecki writes, “they often just mean they can’t find people with the right experience”.
  • This is a direct consequence of the fact that large corporations have slashed internal training budgets as a short-sighted means of cost cutting. The argument, says Surowiecki, is that “job tenure has shrunk, so why spend time and money training somebody who may soon go to work for your competitor”. With the loss of benefits and the disinterest of employers in investing in their employees, employee loyalty has understandably plummeted, creating a vicious cycle that big corporations themselves are to blame for.
  • In a weak economy, “companies worry less about getting every possible dollar of new business than they do about keeping costs down”. The unwillingness of big corporations to invest in genuine domestic production (in lieu of outsourcing and offshoring every possible job) is a direct contributor to that weak economy. But it also reflects the fact that big corporation CEOs realize the economy is on the verge of collapse, and they’re hoarding cash and slashing costs to prepare for that eventuality.

Alas, after this excellent diagnosis, Surowiecki prescribes exactly the wrong medicine: more government stimulus. Of all the “stimulus” money gifted to bail out and subsidize large corporations (especially the banksters), substantially none of it has gone to create new employment. It’s all been invested (in financial, not production assets) or handed out to executives as pay raises and bonuses, or used to buy back the corporations’ own shares to leverage earnings per share (and hence share price).

There are two things that governments and citizens should be doing instead of throwing more taxpayer cash at greedy, corrupt and incompetent corporate executives:

  1. Governments should be encouraging job creation and new employment by reducing corporations’ share of individuals’ social service costs and reducing payroll taxes, i.e. making affordable health care and adequate social security available to all, not just employees and the rich, under a government-run, taxpayer-funded, single-payer system. This of course is especially needed in the US, where health costs (mostly for administration, private insurers’ profits, and legal liability expenses) are eating their economy alive. The goal should be to make employing someone as simple, affordable and low-risk as contracting them, and employing people for local manufacturing as affordable as employing or contracting people to manufacture offshore (which means eliminating all the phony “free” trade agreements, and closing tax loopholes).
  2. What citizens should realize is that, even if governments did take such actions (which is highly unlikely given the amount of money big corporate political donors pay them not to), big corporations are not the solution to endemically high unemployment. There is a time-bomb in the US ticking away: young people keep going back to school to get more education when they can’t get jobs, keeping them out of the job market (and, conveniently, the official unemployment numbers) longer every year (and putting them deeper into debt before they get their first ‘real’ job, if that day ever comes). Citizens instead need to re-learn how to create small sustainable new enterprises, and make a living for themselves (and employ others in their community), instead of depending on big corporations to provide them with jobs. Job ‘growth’ among large corporations has been consistently negative for over a decade, and there is no reason for that to change, ever. All net job creation comes from the entrepreneurial sector (or from government, which is strongly discouraged by citizens in most countries from taking on new employees these days).

This is why I wrote my book, Finding the Sweet Spot. But reading a book alone isn’t enough to give you everything you need to start a small sustainable enterprise. We need an entire, practical curriculum on Making a Living For Yourself, that starts in the junior high school years, connects young people with local entrepreneurs and gives them useful skills (and the self-confidence and knowledge of how to use them in their own enterprises) before they graduate from high school.

This (2012) is the Year of the Co-op. The most appropriate, responsible and sustainable form of small, community-based enterprise is the co-operative, and the curriculum for Making a Living For Yourself should be based on co-op creation.

None of this would be easy. It would require a revolution in the education system (moving a lot of it out of the classroom and into the community). There are almost no teachers currently competent to teach it. Large corporations would find it hugely threatening and would oppose it with everything they’ve got (i.e. money, media and politicians), since it would reduce the demand for large corporate jobs, and encourage people to buy from local not-for-profit co-ops instead of from them. We would have to learn from our mistakes, and hopefully learn quickly and inexpensively.

But it could be done. When our teetering and unsustainable economy collapses, we will have to do this anyway. It would be amazing if we had the foresight to start now.

Thanks to James Surowiecki for the analysis, and to Christoph Niemann for the clever illustration above (from the magazine article).

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5 Responses to More Years of Schooling for Fewer and Fewer Jobs

  1. Pingback: Unemployment is high not because businesses are shedding jobs but because no one is hiring « Job Market Monitor

  2. Sue says:

    Hi Dave,

    As it happens, I read the entire article in the New Yorker yesterday and your synopsis not only accurately nails the main ideas in the article but expands on them with some thoughtful commentary.

    I would add that certified B Corporations (there are 43 of them in Canada and quite a few of them in Vancouver) are also appropriate, sustainable, and responsible forms of small enterprises that can make a positive difference in their communities. There is also an obligation to pay employees a living wage, give back to the community in which the B Corp operates, and conduct business in both a socially and environmentally sustainable fashion.

  3. Andy says:

    Interesting stuff. I was hired by an employer unprepared to invest in my training in 2007 – which was very difficult for me. That kicked me into my current career, which I enjoy much more, and which I do on a self-employed basis.

    I’m currently interested in why there seems to be a lot of unemployment among science graduates, while those who might employ them complain of a lack of skills in the workforce. This narrative very much fits the picture I’m seeing.

  4. Maria says:

    Thank you for your contribute on helping all of us to achieve a more higher level of consciousness
    Our World be much more perfect with persons like you!


  5. Sandor Heder says:

    It seems to me that the same process is happening in Eastern Europe as well.

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