Tuesday, November 15, 2011

Even in a Sub-Par Jobless Recovery, There Are Labor Shortages in the U.S. and Around the World

1. Wall Street Journal article "The $200,000-a-Year Mine Worker" (HT: Bob Wright):

"Demand for [workers] willing to work 12-hour days in sometimes dangerous conditions, while living for weeks in dusty small [mining] towns, is huge.

"It's an historical shortage," says Sigurd Mareels, director of global mining for research firm McKinsey & Co. Not just in Australia, but around the world. In Canada, for example, the Mining Industry Council foresees a shortfall of 60,000 to 90,000 workers by 2017. Peru must find 40,000 new miners by the end of the decade.

Behind this need for mine workers is a construction boom in China and other emerging economies that has ramped up the demand for iron ore, used to make steel, and other metals used in construction, such as copper, typically used for wiring buildings.

The [labor] shortage is particularly acute in Australia, the world's biggest source of iron ore and the world's second-biggest gold producer. The Minerals Council of Australia estimates the country needs an additional 86,000 workers by 2020, to complement a current work force estimated at 216,000.

"It's a tight labor market and difficult cost environment," said Ian Ashby, president of BHP BillitonLtd.'s iron-ore division. To attract workers, BHP and other companies are building recreation centers, sports fields and art galleries in hardscrabble company towns."

MP: Maybe that's what will happen in places like Williston, ND?

2. Business Week article "Why Americans Won't Do Dirty Jobs":

"Alabama enacted an immigration law in September that requires police to question people they suspect might be in the U.S. illegally and punish businesses that hire them. The law, known as HB56, is intended to scare off undocumented workers, and in that regard it’s been a success. It’s also driven away legal immigrants who feared being harassed.

[There] are [now] thousands of vacant positions and hundreds of angry business owners staring at unpicked tomatoes, uncleaned fish, and unmade beds. “Somebody has to figure this out. The immigrants aren’t coming back to Alabama—they’re gone,” says Randy Rhodes, owner of Harvest Select, a catfish processing plant. “I have 158 jobs, and I need to give them to somebody.”

There’s no shortage of people he could give those jobs to. In Alabama, some 211,000 people are out of work. In rural Perry County, where Harvest Select is located, the unemployment rate is 18.2%, twice the national average. One of the big selling points of the immigration law was that it would free up jobs that Republican Governor Robert Bentley said immigrants had stolen from recession-battered Americans. Yet native Alabamians have not come running to fill these newly liberated positions. 

Many employers think the law is ludicrous and fought to stop it. Immigrants aren’t stealing anything from anyone, they say. Businesses turned to foreign labor only because they couldn’t find enough Americans to take the work they were offering.

At a moment when the country is relentlessly focused on unemployment, there are still jobs that often go unfilled. These are difficult, dirty, exhausting jobs that, for previous generations, were the first rickety step on the ladder to prosperity. They still are—just not for Americans."

MP: More evidence that there's been a structural shift in the U.S. economy (especially the second story), leading to a temporary mismatch between the jobs available (which might be plentiful) and the skills and willingness of available employees to fill those jobs (which might be scarce), which is contributing to a stubbornly high jobless rate. 

60 Comments:

At 11/15/2011 11:06 PM, Blogger The King said...

Hmmm, there's no mention of compensation. Do you suppose the comp is so low as to not attract any applicants? In some places unemployment benefits are the equivalent of $16+ per hour. Might these jobs need to offer more? Nah, we'll offer the same compensation & complain about lack of workers! What will the electorate do when the costs increase? Rescind or adjust the law? Maybe.

 
At 11/15/2011 11:09 PM, Blogger Larry G said...

"Many employers think the law is ludicrous and fought to stop it. Immigrants aren’t stealing anything from anyone, they say. Businesses turned to foreign labor only because they couldn’t find enough Americans to take the work they were offering."

don't businesses usually contribute to the elected sufficiently to protect their interests?

seems to work in many other kinds of things ..why not this one?

very curious.

 
At 11/15/2011 11:10 PM, OpenID Sprewell said...

Precisely what is the "structural shift" these examples are supposed to refer to, that Americans won't work dirty and dangerous mining jobs or low-paid physical jobs anymore? That's not a structural shift, just people being picky. If they're desperate enough or the pay is raised, they're plenty capable of doing those jobs. The real structural shift is that manufacturing is being sucked up by platoons of third-world labor and the US is too ignorant to know how to really roll out the information economy. As long as that's the case, many who want to work are left idle, while govt stupidly tries to turn back the clock and lure manufacturing back while businesses sock money away, waiting for some entrepreneur to really start up the information economy. I've made clear that the solution is micropayments, but many are blindly chasing online ads right now, so until they realize their folly or are put out business by some microapayments entrepreneur, likely the latter, we're stuck with what we've got.

 
At 11/16/2011 2:10 AM, Blogger Don said...

" One of the big selling points of the immigration law was that it would free up jobs that Republican Governor Robert Bentley said immigrants had stolen from recession-battered Americans."

As usual, the politicians and the idiots who vote for them have things upside down and backwards.

Not only do the immigrants NOT steal jobs from native workers, but their presence and low wages are necessities for their companies to be profitable enough to exist. So eliminating the low wage immigrants will increase unemployment as the higher paid domestic workers will lose their jobs as the companies go out of business due to wage costs that cannot be sustained.

Regards, Don Lloyd

 
At 11/16/2011 4:18 AM, Blogger PeakTrader said...

Don, employment of non-immigrants may increase, particularly teens. Also output may fall, e.g. from higher wages and prices.

 
At 11/16/2011 5:49 AM, Blogger rjs said...

"Skinning, gutting, and cutting up catfish is not easy or pleasant work. No one knows this better than Randy Rhodes, president of Harvest Select, which has a processing plant in impoverished Uniontown, Ala. For years, Rhodes has had trouble finding Americans willing to grab a knife and stand 10 or more hours a day in a cold, wet room for minimum wage and skimpy benefits."

that's ice cold; i've done it; you never get warm, even on days off...

 
At 11/16/2011 7:08 AM, Blogger geoih said...

There is no labor shortage. There is only a wages shortage. All labor, no matter how well compensated, is always competing with leisure. It's called the disutility of labor.

 
At 11/16/2011 8:56 AM, Blogger sethstorm said...

There is no mismatch in skills, just a mismatch in employers willing to adjust the job to the skillsets that are available, and the upward price demands that exist.

 
At 11/16/2011 8:57 AM, Blogger sethstorm said...


For years, Rhodes has had trouble finding Americans willing to grab a knife and stand 10 or more hours a day in a cold, wet room for minimum wage and skimpy benefits."


The problem is that he wants disposable people that he can treat with contempt. How about having Mr. Rhodes learn some respect for his fellow US citizen?

 
At 11/16/2011 8:58 AM, Blogger sethstorm said...



Not only do the immigrants NOT steal jobs from native workers, but their presence and low wages are necessities for their companies to be profitable enough to exist. So eliminating the low wage immigrants will increase unemployment as the higher paid domestic workers will lose their jobs as the companies go out of business due to wage costs that cannot be sustained.

New companies that will do the right thing and employ these people at the price will replace those dead companies.

 
At 11/16/2011 9:01 AM, Blogger sethstorm said...


Businesses turned to foreign labor only because they couldn’t find enough Americans to take the work they were offering, at the level of compensation they were offering, and to be able to show a level of contempt towards workers that is illegal to do in the US.


FTFY.

 
At 11/16/2011 9:15 AM, Blogger Michael Hoff said...

So, what some of you are saying is that if the government makes it more lucrative to not work than to work, it's the responsibility of businesses to compensate for that? It seems to me that the problem is that government is incentivizing people to lay claim to the labors of others rather than going out and earning it themselves.

 
At 11/16/2011 9:28 AM, Blogger sethstorm said...


Michael Hoff said...

Since businesses will show contempt for the workers at the lower wages, it is a reasonable expectation.

 
At 11/16/2011 10:14 AM, Blogger Hydra said...

"willingness of available employees to fill those jobs" might have something to do with the pay offered.

Or it might have to do with the perceived risks. If you figure your life is worth $7.5 million, and there is a 0.5% chance of something bad happening to it (over a 20 year carreer) on account of conditions, then you need around $2000 a year premium, over and above the value of the work, just for the risk.

And if it means you have to live someplace where you basically have no life other than work, that has got ot be worth another couple thousand.

$16/hr seems like the high end for unemployment and most places don't pay anything like that. An employer looking for workers need only compete at the low end, providing he can get workers that he wants anywhere near his business for that price.

And again, I don't see the information economy hiring that many people: not enough customers willing to pay for more information on the one hand, and the productivity is so high you don;t need many workers on the other hand.

I think geoih stated the issue precisely. A neighbor was complaining he could not get farm oworkers. What are you paying? \

"$6/hr."

Well, try $12/hr and learn to speak Spanish.

==============================

....if the government makes it more lucrative to not work than to work, it's the responsibility of businesses to compensate for that?

That is one way to look at it. Another way is to consider that government has an interest in setting a floor such that people do not starve. As long as replacement workers are available, business has no such requirement.

It is hard to claim that it is more lucrative to work if the work does not pay sufficient to cover the costs of being able to work. Like any other business, if a worker cannot cover his costs, he is going out of business.

 
At 11/16/2011 10:16 AM, Blogger morganovich said...

if you want to find the source of this "shift" take a look at the welfare programs.

give more people more aid for longer periods, and sure, they would rather take that than actually work.

this is not about globalization, it's about a welfare state creating dependence.

why do hard labor in a field when they'll pay you to sit home and watch tv?

 
At 11/16/2011 10:22 AM, Blogger morganovich said...

"There is no labor shortage. There is only a wages shortage. All labor, no matter how well compensated, is always competing with leisure. It's called the disutility of labor."

nonsense. that's ridiculous, one factor thinking.

let's say we raise the minimum wage to $20/hr.

what happens?

jobs get lost in huge numbers.

price up, demand down.

prices have to rise as well.

thus, in real terms, no one gains.

if you have to pay the fisherman more and the catfish gutter more, consumers have to pay more for catfish.

this higher price leaves everyone, not just people who got wage boosts to $20 with less money to spend on other items.

oops. more job losses and a quality of life decline even for those who kept good jobs.

you are really missing the boat here geo.

you could not be more wrong in you assumptions.

you seem to thing that increased wages benefit everyone.

they don't.

hiking wages without upping productivity actually causes net harm in real terms.

the rise in the price of production keeps those with new, higher wages from benefiting in inflation adjusted terms, but it harms those who already had high wages.

no one benefits, and many lose.

great philosophy you have there.

the world is not one factor nor zero sum.

until you realize that, you will not even have a framework in which to think about these issues.

 
At 11/16/2011 11:08 AM, Blogger Walt G. said...

We use what economists call "supply and demand" to say that wages are not too low at Wal-Mart because of an excess number of job applicants compared to job openings. Doesn't this "law" apply if we have an excess number of fillable job positions?

I realize that raising wages will increase the prices for everyone with limited "winners", but I am questioning why this law only seems to work on one side. That does not seem to fit my definition of what a law is supposed to be and do. Is supply and demand really a law or just an unproven theory?

morganovich, your insights and presentation lately have been outstanding. You should consider teaching and passing your knowledge on to others.

 
At 11/16/2011 11:08 AM, Blogger Walt G. said...

This comment has been removed by the author.

 
At 11/16/2011 11:32 AM, Blogger morganovich said...

walt-

everyhting in economics is subject to certain assumptions.

supply and demand are well tested and work perfectly subject to such. i used to use an economics experiment with students playing producers and buyers of a product each with a utility or cost of production curve and let them find their own equilibrium.

it works as predicted every time.

that said, it works because certain assumptions are upheld.

perfect knowledge of price and opportunity, frictionless transactions, etc.

these assumptions are not always perfectly true in the real world. to the extent that they are not, you can get variance from the predicted equilibrium.

for example, if there are lots of jobs in north dakota and few in california, you would expect people to migrate. but it's not costless either economically or in terms of intangibles like liking to live at the beach or disliking -30 degree winters.

such exogenous preferences and financial concerns (especially if your house is underwater and you literally cannot afford to sell it) can have substantial effects on labor mobility.

that said, such effects do not explain the alabama example from mark's post.

to see why that happens, i think we need to look at the welfare state.

welfare functions as another employer, offering X as a wage.

given that we value free time, if X > wage of working, the choice is obvious. in reality, most of us will quit our jobs for X < wages. this is a rational choice.

if we get more leisure (L) and we value it, then if X + change in L > W, a rational utility maximizer quits his job and goes on the dole.

recent expansions in welfare, medicaid, huge hikes in food stamps, etc essentially create a shadow minimum wage where X +dL is very attractive to many relative to the wages of walmart or catfish gutting and the work that comes with it.

this is why the market doesn't clear in the way you expect. it's not that the relationship of supply and demand are broken, it's that at wages under X +dL, supply essentially goes to zero.

in a non profit bounded system, you would expect walmart to raise wages to an appropriate level to exceed X + dL.

but a profit bounded system works differently.

let's say walmart has 100 employees and needs to hire 1 more.

they pay $10/hr.

to get the new employee, they need to offer $12.

if they do that, everyone working there will see that and want more money for the same job.

thus, costs would go up over 20% for labor.

that would drive a company with margins like walmart into the red or force them to raise prices, dropping volumes of sales and encouraging customers to shop elsewhere.

does that help in your thinking?

 
At 11/16/2011 12:06 PM, Blogger Che is dead said...

Legal Workers Line Up for Restaurant Jobs After Immigration Raids

Americans RUSH to get employment after a local resort gets rid of Illegal Aliens

Hundreds seek to fill vacant positions at Pro's Ranch Market

There are hundreds of these stories out there.

 
At 11/16/2011 12:17 PM, Blogger Che is dead said...

While I am generally sympathetic to morganovichs argument, I think that what is actually happening is cost shifting. Customers are already paying more for their catfish, produce and restaurant meals than they know. They are doing this through higher taxes to pay for the education, health benefits, welfare, law enforcement and other societal costs associated with illegal immigrants. These costs are not offset by the limited taxes that illegals pay and as a result are shouldered by consumers. Welfare needs to be curtailed, wages need to rise and taxes need to be reduced.

 
At 11/16/2011 12:38 PM, Blogger Walt G. said...

morganovich,

That not only helps my thinking, it explains exactly why I am talking a GM buyout offer with a cut in yearly pay to explore other opportunities after 38 years. What we value is not always tangible, quantifiable in $$, or easily explainable to others. Thanks.

 
At 11/16/2011 12:50 PM, Blogger Tom said...

- Wages (and prices) must rise from peasant levels to working class levels.
- Construction workers were devastated by illegal aliens.
- Low wage illegal workers have taken millions of jobs from the working class.
- Either we have borders or we do not; law or not.
- Importing illegal labor and their families is expensive to education and social services.

 
At 11/16/2011 12:50 PM, Blogger RichmondG30 said...

geoih said "There is no labor shortage. There is only a wages shortage. All labor, no matter how well compensated, is always competing with leisure. It's called the disutility of labor."

Exactly! And when leisure offers the same or better pay (in the form of UI, welfare, food stamps, school lunches, government-subsidized cell phones, Medicaid, etc.), these low-wage jobs will continue to remain unfilled.

Turn off the government benefits spigot and Americans will be breaking down the doors to make beds and clean fish. You can take that to the bank!

 
At 11/16/2011 12:57 PM, Blogger RichmondG30 said...

@morganovich: You said "you seem to thing that increased wages benefit everyone."

You are right that increased wages are not the answer. DVD players made in Malaysia sell for <$100 in WalMart. If those DVD players were made in San Francisco, we'd all be paying $500 for them.

I believe you may have missed geoih's point. I believe he is saying that we need to reduce the wages one can earn by leisure (i.e. government handouts), thereby making low-wage jobs more attractive.

 
At 11/16/2011 1:13 PM, Blogger geoih said...

Quote from morganovich: "you are really missing the boat here geo. you could not be more wrong in you assumptions. you seem to thing that increased wages benefit everyone."

I think you're reading more into my comment than is there. I only stated a fact (i.e., the disutility of labor). I made no claims about anybody benefitting from anything.

If people won't do a job for the wages being offered, then you need to offer higher wages. If those higher wages mean that enterprise in no longer profitable, then the market is telling that entrepeneur to go into a different business.

If the wages are artificially high (e.g., due to minimum wage laws), then the result is the same. No profit, so no wages, so no jobs.

If the entrepeneur can invest in capital to offset the higher wages and make the worker more productive, then maybe the enterprise can be profitable. If not, then the first case still applies.

 
At 11/16/2011 1:17 PM, Blogger geoih said...

Quote from sethstorm: "There is no mismatch in skills, just a mismatch in employers willing to adjust the job to the skillsets that are available, and the upward price demands that exist."

Really? There are no differences in people? All labor is homogeneous? The difference between my garbage man and my heart surgeon is just the way the jobs are designed by their employer?

 
At 11/16/2011 1:22 PM, Blogger morganovich said...

richmond-

i don't think geo is talking about welfare.

he's just saying people don't like to work.

 
At 11/16/2011 1:27 PM, Blogger johnsal said...

"Behind this need for mine workers is a construction boom in China and other emerging economies that has ramped up the demand for iron ore, used to make steel, and other metals used in construction, such as copper, typically used for wiring buildings."

Wow! This site is badly behind the times. The above correctly links the minerals demand, and price rises, to the Chinese real estate market. Unfortunately, the Chinese real estate market bubble greatly exceeds even the U.S. pre-subprime bubble. And it is already collapsing (read Asia hedge fund managers Jim Chanos and Michael Pettis). And the Australian real estate, along with the general economy, has entered recession territory.

No, this article is based on out of date and flawed data. Today's investment decisions are difficult because while some bubbles have popped, others have not... but will. The global economy must, and will, undergo a severe deleveraging and malinvestment write off period. It is just starting. And where long term new jobs will emerge is most definitely not yet known.

 
At 11/16/2011 2:16 PM, Blogger morganovich said...

geo-

"If people won't do a job for the wages being offered, then you need to offer higher wages. If those higher wages mean that enterprise in no longer profitable, then the market is telling that entrepeneur to go into a different business."

not true at all.

it tells a business owner to automate more and substitute capital for labor and up productivity.

you get self check out instead of a cashier.

you get a forklift instead of several people to move boxes.

there are lots of rational, successful responses other than increasing wages.

if the cost of increased wages exceeds the cost of enhancing productivity for you existing workers, then you go with productivity enhancers.

"If the wages are artificially high (e.g., due to minimum wage laws), then the result is the same. No profit, so no wages, so no jobs."

wages can also be made artificially high by welfare programs. this goes back to my at X < W * dL argument. welfare is much more pernicious in its effects than a minimum wage.

at least those working at minimum wage are productive.

those on welfare are no only not productive, but must take money from the productive to support their consumption, making it a triple whammy of damage.

wages and prices are up, disposable income drops for those working (as they pay the taxes), and production decreases.

welfare is a shadow minimum wage with far nastier effects on jobs and growth.

 
At 11/16/2011 2:19 PM, Blogger Larry G said...

re: wages too high for a viable product or service...

so can someone name a few things where ...for an entire industry - the wages are too high and the service or product is not viable?

 
At 11/16/2011 2:26 PM, Blogger morganovich said...

che-

"There are hundreds of these stories out there."

true, but they are just anecdotes.

in aggregate, the number of job vacancies advertised has been climbing steadily for 2 years while employment has not recovered.

there has to be some reason for that.

regarding cost shifting, i think you have a point, but perhaps not in the way you think. more welfare does not always drive up the price of catfish, it can drive it down.

you pay more in taxes for welfare, so you have less disposable income. this leaves less monetary demand for fish.

in real terms, you are quite likely correct, the price of catfish goes up, but this is not nesc so of nominal (depending on how supply is affected by available workers).

but clearly, as i argued above, welfare does significant harm to growth, productivity, and real consumption.

paying people not to work is disastrous for output and demand.

it also has the even worse effect of shifting vast resources from the productive to the unproductive, creating long term structural limits on growth.

 
At 11/16/2011 4:55 PM, Blogger Hydra said...

paying people not to work is disastrous for output and demand.

==============================

I just came back from vacation in the caribbean and I remarked to my fellow travelers that the place we were staying seemed to go out of the way to create jobs for locals, much of which could only be described as make-work.

I'm not certain that such a situation is any less disastrous for supply and demand, though it probably increases the demand for brooms.

In my ofice complex a couple of guys will come in with an edging machine and trim around all the sidewalks and garden beds and be gon in a flash. On the island resort it was fifty guys with machetes, who did a nice job, but they never, ever finished: by the time they got to one end, it was time to start over.

Clearly, this was done on purpose: it had to be a conscious effort to create jobs. There were plenty of things being done that would be automated here. I think it is a reasonable queston as to whether the job creators in the US will step up and create jobs, and whether they will be useful fobs or not. It is a question of whether such jobs as I described are worth having (or doing), and furthermore it is a question whether or not at the system level it is he most cost effective thing to do.

Sure, we have this work ethic thing, so we start withthe suppostion that thee is somehing almost morally wrong with not working. Even people who are far beyond having any need to work seem to keep doing it. But starting from this position makes it hard to evaluate whther this is the only system that can work or even if it is the best system.

 
At 11/16/2011 5:00 PM, Blogger Hydra said...

...give more people more aid for longer periods, and sure, they would rather take that than actually work.

================================

This is a frequently stated sentiment, and at a gross level with little inspection it appears to be true.

And yet, of all the people I have known personally who received some kind of aid, NONE of them would not prefer to be independent.

And, as we noted in a previous post about income mobility, manyof the poor do seem to escape, at least for a while.

How do we reconcile the belief that there is a high degree of income mobility and still hold on to this sentiment?

 
At 11/16/2011 5:04 PM, Blogger Hydra said...

why do hard labor in a field when they'll pay you to sit home and watch tv?

=============================
Why do hard, dangererous, hot, laborious, work in a field for $6 an hour, regardless of what your other options are? $7.50 at WalMart looks like a bargain.

If the guy who runs th field can only pay $6 an hour, then he is going to have a labor shortage.

 
At 11/16/2011 5:20 PM, Blogger Hydra said...

nonsense. that's ridiculous, one factor thinking.

let's say we raise the minimum wage to $20/hr.

what happens?

jobs get lost in huge numbers.

price up, demand down.

===============================

What? THAT is ridiculous, and it has nothing to do with the disutility of labor argument. You just changed the subject completely.

My neighbor cannot hire people to work in his field for $6 an hour. At $12 an hour plus lunch, I have no problem. He hasn't got a labor problem, he has a wage problem.

Suppose he raises his own minimum wage, but then his field does not produce enough to cover his costs. He goes out of business, same as he might if the minimum wage is raised by government. If he can't compete he can't compete, no point in blaming that on government.

Or, if you insist on blaming government, consider that it is a feature, not a bug. Given a certain labor pool, it is in the interest of governemtn to encourage the best businesses and discourage the worst ones. From governemtns perspective the best businesses ae the ones that pay more, which allows governement to collect more revenue and provide more services.

As for unemployment payments, it may be in governments interest to pay people enough so that they can look longer and be more selective in what they take. TT for the less competitive businesses.

 
At 11/16/2011 5:32 PM, Blogger Hydra said...

there has to be some reason for that.

==============================
Reminds me of when I resigned my commission and my commander wanted me to stay.

I told him I would take a great job for little money, a lousy job for a lot of money, but I would not take a job that consisted of having someone dump on my head day after day.

You could have a great unit here, but if you want to screw with it, you will do it without me to help.

Seems clear enough to me that if vacancies are going unfilled, it is because people won't do them for the wages offered, or else, employers wnat people who are qualified to do something else, but at a lower class and lower wage of job.

The fact of partial and temporary unemployment, disability, welfare, and even student aid and retirement may be contributing factors, but hardly the whole enchilada.

 
At 11/16/2011 5:34 PM, Blogger Hydra said...

If the entrepeneur can invest in capital to offset the higher wages and make the worker more productive, then maybe the enterprise can be profitable. If not, then the first case still applies.

===============================

Or he might invest capital and do without the worker.

 
At 11/16/2011 9:36 PM, Blogger sethstorm said...


Hydra said...
Well, try $20/hr and have the INS on speed dial.


FTFY.

 
At 11/16/2011 9:39 PM, Blogger sethstorm said...


Turn off the government benefits spigot and Americans will be breaking down the doors to make beds and clean fish. You can take that to the bank!

Instead of forcing desperation, have the business compete with these benefits. That is, unless said word only applies in the worker's direction and not the company's direction.

 
At 11/16/2011 9:41 PM, Blogger sethstorm said...

This comment has been removed by the author.

 
At 11/16/2011 9:43 PM, Blogger sethstorm said...


You are right that increased wages are not the answer. DVD players made in Malaysia sell for <$100 in WalMart. If those DVD players were made in San Francisco, we'd all be paying $500 for them.

No, more like $105-120, but don't let actual costs get in your hyperbole. The worker-friendly Manufacturing Belt would have those things at those prices as well.

 
At 11/17/2011 4:32 AM, Blogger Ron H. said...

"There is no mismatch in skills, just a mismatch in employers willing to adjust the job to the skillsets that are available, and the upward price demands that exist."

How do you think Harvest Select should adjust the jobs they have skinning & gutting catfish, to match the skillsets of available unemployed workers, you moron?

 
At 11/17/2011 7:33 AM, Blogger geoih said...

Quote from morganovich: "not true at all. it tells a business owner to automate more and substitute capital for labor and up productivity."

Investing in capital involves the costs of saving and time, and there is no guarantee that will be profitable. If they were, then people would have been doing that in the first place.

 
At 11/17/2011 10:23 AM, Blogger morganovich said...

"Investing in capital involves the costs of saving and time, and there is no guarantee that will be profitable. If they were, then people would have been doing that in the first place."

not really.

investing in capital is always a function of labor costs. (and there is no guarantee that labor is effective either)

if labor costs go up, then capital become more attractive on a relative basis.

you cannot assess one without the other.

you have to think about this at the margin.

 
At 11/17/2011 10:26 AM, Blogger morganovich said...

"It also tells the business owner that he will be targeted for thinking that he is a divine entity."

wow seth, that is a surreally weird, unfounded, and absurd statement even for you.

buying a forklift makes you a god?

 
At 11/17/2011 10:40 AM, Blogger morganovich said...

"Or, if you insist on blaming government, consider that it is a feature, not a bug. Given a certain labor pool, it is in the interest of governemtn to encourage the best businesses and discourage the worst ones. From governemtns perspective the best businesses ae the ones that pay more, which allows governement to collect more revenue and provide more services."

this is an absurd statement.

you tax the productive, reducing output, growth, and wealth, and use it to fund specifically unproductive behavior (like sitting on the couch) in favor of promoting such people to accept work at lower wags (which would be productive) and you call that a feature?

what's the intended purpose of your machine?

wealth destruction? perpetuation of recession? reduction of the general welfare?

you increase prices, reduce income, subsidize unproductive behavior, and reduce growth.

 
At 11/17/2011 1:47 PM, Blogger Ron H. said...

"buying a forklift makes you a god?"

Well, it probably seems like it to the poor oppressed serfs where sethstorm works, who have never seen a machine before.

 
At 11/17/2011 4:52 PM, Blogger sethstorm said...


morganovich said...

No.

Try to think of the more likely and reasonable case, instead of finding the craziest one.

You seem to have that habit of exaggerating the worst case just to attack character when you fail to attack substance.

 
At 11/17/2011 4:57 PM, Blogger sethstorm said...


How do you think Harvest Select should adjust the jobs they have skinning & gutting catfish, to match the skillsets of available unemployed workers, you moron?

OJT and automation.

One can only scream about "skill deficiency" for so long until you have to put up with the people you have.

 
At 11/17/2011 6:04 PM, Blogger VangelV said...

don't businesses usually contribute to the elected sufficiently to protect their interests?

seems to work in many other kinds of things ..why not this one?


It is a myth. The politicians usually respond far more to big businesses and special interest groups wanting protection from competition, not businesses or workers looking to compete.

 
At 11/17/2011 6:06 PM, Blogger Ron H. said...

"OJT and automation."

Great ideas. OJT probably takes less than an hour., and probably involves working beside an experienced worker. Most employers will risk that amount of training expense.

Automation would eliminate most of the jobs. How does that help the unemployed?

You have suggested that the jobs should be adapted to the worker's skills that are available:

"There is no mismatch in skills, just a mismatch in employers willing to adjust the job to the skillsets that are available, and the upward price demands that exist."

How should the job of skinning and gutting catfish be adapted to the skillset of an unemployed cement finisher, or backhoe operator?

 
At 11/17/2011 6:08 PM, Blogger VangelV said...

Precisely what is the "structural shift" these examples are supposed to refer to, that Americans won't work dirty and dangerous mining jobs or low-paid physical jobs anymore?

Hard rock mining is not very dangerous or all that 'dirty.' It is a good honest job but one that is done in harsh conditions. Which is why it pays so much. But the problem will not be lack of workers for American companies. It will be regulations that make mining unprofitable.

The shift is one in which the US has moved away from wanting to be a producing nation. While production is still high and the industrial sector is very efficient it is harder and harder to stay in business within the United States. Which is why the average American citizen has not participated in the increase of the standard of living that has been experienced by workers in other countries that have treated mining and manufacturing investments more kindly.

 
At 11/17/2011 6:19 PM, Blogger VangelV said...

MP: Maybe that's what will happen in places like Williston, ND?

I think that you need to take a short trip my friend and get more information about mining. It might help you if you went to the PDAC web site and registered for the March conference. There are hundreds of mining and energy companies from all over the world being represented plus hundreds of suppliers to the industry.

You will find that many of these companies have mines in locations where there are no people around. They have to build roads, work camps, power lines, etc., in order to have a viable mine. It is these locations that have trouble attracting people and have to offer huge salaries and benefits. To those workers a place like Williston, ND, with its housing units, hotels, strip joints, bars, movie theaters, etc., would look like paradise.

And if you did show up and talk to the CEOs, CFOs, Presidents, etc., of these companies you would not be nearly as optimistic as your postings make you look.

 
At 11/18/2011 7:55 AM, Blogger geoih said...

Quote from morganovich: "not really. investing in capital is always a function of labor costs. (and there is no guarantee that labor is effective either)"

It is a function of past labor (and capital, and land) costs (because savings happen in the past) and present time costs (because capital is created in the future). These are compared against the present labor costs (which are here, now).

 
At 11/18/2011 2:31 PM, Blogger Hydra said...

$20/hr and have the INS on speed dial.

===========================

You make an unwarranted assumption. There are plenty of legal Spanish speaking workers.

 
At 11/18/2011 2:34 PM, Blogger Hydra said...

Americans will be breaking down the doors to make beds and clean fish.

===========================
After the beds are made and fish are cleaned, then what?

Someone has to hire them to do these things, and only so much is needed.

 
At 11/19/2011 3:52 AM, Blogger Ron H. said...

"After the beds are made and fish are cleaned, then what?"

I suppose they can go home for the evening, then come back in the morning to do it all again.

 
At 11/20/2011 11:53 AM, Blogger Hydra said...

Let. Me know when you hire someone for such work, and pay them enough to live on.

 
At 11/20/2011 4:18 PM, Blogger Ron H. said...

"Let. Me know when you hire someone for such work, and pay them enough to live on."

Since there seems to be plenty of workers available to do those jobs, the pay must be as high as it needs to be.

By the way, if your neighbor can't attract workers at $6/hr and can't operate at a profit at a higher minimum wage, then he doesn't have a viable business in any case. But, if he can attract workers and operate at a profit at $6, but not at a government imposed higher min wage, then he, and we, have plenty to complain about.

Why should it be unlawful to work for $6/hr if I wish to?

 

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