How the Other Half Thinks
Be sure you've had a strong cup of coffee before reading this post -- otherwise, you'll end up kicking the dog.
The folks over at the Daily Kos's labor section (count me among those shocked that the entire website isn't considered the labor section) have developed a novel theory of unemployment -- one in which American workers are Charlie Brown and a nation full of impish employers are playing the part of Lucy pulling away the football.
A post there this week by Laura Clawson reacts to a recent study showing that American employers are, on average, devoting fairly limited resources to picking up new hires. Rather than trying to discern the economic rationale that may lead to such behavior, Clawson has developed a more parsimonious theory -- employers are schmucks:
During the recession, businesses didn't have to try much at all to get a slew of ridiculously overqualified applicants for any job, and they got used to that. Now that things are picking up a little, employers are still spoiled, expecting to be able to snap their fingers and get what they want. And if that's not the way it works out, they're content to just sit around waiting and lamenting the lack of qualified applicants, rather than actually making an effort to recruit workers...
... So basically, it's like this: business puts up a couple halfhearted ads offering $10 an hour and no benefits for a job requiring substantial skill and training, then waits for the applications to pour in. Only now, there are some applications but not thousands of desperate people begging for the job. The business takes its sweet time looking through those applications and getting back to people, some of whom may by now have found equivalently good jobs. Business then complains to reporters that there just aren't enough qualified applicants for the jobs it's trying so hard to fill. Reporter dutifully publishes article blaming unemployment on unemployed people.
Put aside, if you can, some of the ball-pein-hammer-to-the-skull stupidity at work here (Is the first word that comes to mind when describing the lot of business owners in this economy "spoiled"?) and consider the broader argument on the merits. Call me crazy, but I have a hard time believing that there is a critical mass of employers out there willing to spend any money on an ad for new hires without an expectation of getting something back for it. I would think that the Daily Kos -- which through its prose seeks to graft a top hat and monocle onto every business owner in the country (excepting those who run pilates studios or macrobiotic smoothie shops) -- would be uniquely sensitive to the self-interest at work here.
A "halfhearted ad" is just not something any entrepreneur worth his salt engages in. They don't generally spend money out of indifference. Moreover, anyone who knows an actual employer knows that they tended to hate the glut of applications that would accompany any job opening during the depths of the recession for the simple reason that it was prohibitively difficult to sort through them.
What's most remarkable here is the total lack of awareness that there are labor markets. Any employers behaving with the lethargy Clawson is describing here are putting themselves at a competitive disadvantage by failing to snap up talent at reasonable wages. The idea that competitors wouldn't jump at the opening thus created defies belief.
It's safe to say that there are a wide variety of explanations for the labor market's prolonged inability to snap back to something approaching a normal equilibrium. But it's also probably safe to say that employers' thirst for the tears of the unemployed is not one of them.
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Comments:
Jul '10
Re: How the Other Half Thinks
If you want to understand why things are as bad as they are, look no further than the fact that a substantial portion of the population has the economic understanding of a gerbil.
Re: How the Other Half Thinks
This is hilariously wrong. Farcically wrong. You're right, Troy -- labor markets exist everywhere, even during high unemployment. And only a total knee-jerk lefty could convince herself that employers, in general, don't want to hire people. More people means more growth. Small business want to hire. And big businesses, too -- ask any recruiter: they're busy. If we got out of the way of small businesses -- which are hobbled by regulation and taxes -- we'd be in much better shape.
Jun '10
Re: How the Other Half Thinks
It's also difficult to spend a lot of time planning new hires when you're working 60 hours a week yourself at half pay, trying to keep your taxes paid, utility bills paid, and your current employees paid.
Apr '12
Re: How the Other Half Thinks
While I'd like to believe that the business world is super-savvy about finding the talent it needs, it's difficult sometimes in view of the (admittedly anecdotal, but still plentiful) evidence I get from my friends/students/associates. So many dumb, incompetent-seeming people find good jobs, and so many intelligent and capable ones don't; I realize that I'm not an employer, but it really does seem like a lottery a lot of the time. Also, people I know who have worked in human resources departments tell me that their prevailing interest is often to hire someone they can "justify" (to higher-ups, or for the purposes of any kind of discrimination suit), not to discern rare talent.
Following on Whiskey Sam's comment, here's the trouble with economists: they tend to overestimate the extent to which people behave rationally, and in their own long-term best interests.
Jul '12
Re: How the Other Half Thinks
Add to this the fact that the labor market has been grievously distorted by the absurd extension of unemployment benefits. Plenty of people who would otherwise be working rationally make the decision to NOT WORK because they understand that the marginal benefits of returning to a job is not worth the work, when they can just sing the song and dance and receive the unemployment benefits, not work and continue living their lives. And if that fails, get yourself declared permanently disabled.
Re: How the Other Half Thinks
Rachel Lu: While I'd like to believe that the business world is super-savvy about finding the talent it needs, it's difficult sometimes in view of the (admittedly anecdotal, but still plentiful) evidence I get from my friends/students/associates. So many dumb, incompetent-seeming people find good jobs, and so many intelligent and capable ones don't;
Following on Whiskey Sam's comment, here's the trouble with economists: they tend to overestimate the extent to which people behave rationally, and in their own long-term best interests. · 1 minute ago
Rachel,
The points are not necessarily mutually exclusive. Markets are smart, even when all their participants aren't.
Apr '11
Re: How the Other Half Thinks
Ok, I follow, analyze, and conduct research about the HR/Recruiting industry for a living and organizations are spending BILLIONs trying to figure out how to improve the way they hire people. Most companies don't have trouble finding resumes, they have trouble finding resumes from qualified candidates. Even for the $10/hr jobs! So yeah, there's a big mismatch between supply and demand going on.
Also do these people not get that organizations are scared of adding to fixed costs right now? That's an incentive for two behaviors: increased scrutiny going into every full time hiring decision and increased usage of contractors.
Contract labor (depending on who you ask and how you define it) may make up as much as 30% of the use workforce currently.
Apr '12
Re: How the Other Half Thinks
I'm very interested in this subject. Is there any literature you could recommend that would give an intelligent-layman-geared overview of how employers think about hiring, and what the current controversies are?
Jul '10
Re: How the Other Half Thinks
FreeWifiDuringSermon:
Also do these people not get that organizations are scared of adding to fixed costs right now? That's an incentive for two behaviors: increased scrutiny going into every full time hiring decision and increased usage of contractors. · 16 minutes ago
The fixed costs are killing growth. I was talking to a friend recently who was complaining that everyone in his department was being forced to work overtime. Why don't they hire more people? Because it's cheaper to make a few existing employees work extra than it is to hire someone fresh who has to be trained, have benefits provided for, and may be difficult to let go if they turn out to not be up to snuff. Reduce the costs of adding new employees and removing unproductive ones, and the economy will take off.
Re: How the Other Half Thinks
Troy Senik, Ed.
Put aside, if you can, some of the ball-pein-hammer-to-the-skull stupidity at work here
I just want to thank you for introducing me to a new spelling for ball-peen. I didn't know that it could be spelled either way.
Feb '12
Re: How the Other Half Thinks
The primary barrier to new hires is "regulation." The least difficult part of hiring someone is actually paying him.
The set of demonstrably bad assumptions that had to have gone into that Kos article is worth a discussion all by itself.
May '10
Re: How the Other Half Thinks
And what we really know is that employers are keeping unemployment artificially high so they can elect Romney! Then they will outsource everything to China! Even though no one will have a job to buy their wares they will make millions more! Right?
Aug '11
Re: How the Other Half Thinks
This is all fairly simple to understand. The left begins with the premise that business is evil. Therefore the explanation for any economic condition must flow from that. After all, Noodles is a dictatorship.
Oct '10
Re: How the Other Half Thinks
Jordan Wiegand:
The set of demonstrably bad assumptions that had to have gone into that Kos article is worth a discussion all by itself. · 5 minutes ago
Simple: If your tummy hurts, someone--actually, someone in power--is to blame. (Government doesn't receive the blame because government is benevolent, like God the mother ... .)
Feb '12
Re: How the Other Half Thinks
Troy Senik, Ed.
Rachel,
The points are not necessarily mutually exclusive. Markets are smart, even when all their participants aren't. · 31 minutes ago
So economists believe in the inverse of Tommy Lee Jones's comment in Men in Black then. ("A person is smart; people are dumb, panicky, irrational, and you know it.")
I chalk it up to the truth of John Maynard Keynes's comment that "the market can stay irrational longer than you can stay solvent." No intelligent company would list the same open position over and over, getting thousands of applicants but hiring no one. I can name several in my city that are doing it anyway.
(And it's one kind of depressing to know that you lost to someone more qualified; it's a whole other level to know that they would rather have no one in the position than hire you.)
Jun '12
Re: How the Other Half Thinks
"I chalk it up to the truth of John Maynard Keynes's comment that "the market can stay irrational longer than you can stay solvent." No intelligent company would list the same open position over and over, getting thousands of applicants but hiring no one. I can name several in my city that are doing it anyway."
Is it possible they do this to get around EEO requirements?
Dec '11
Re: How the Other Half Thinks
I struggle ... really struggle ... to understand how someone can have these beliefs. They make no logical sense at all!
May '10
Re: How the Other Half Thinks
To be fair, while Laura Clawson's post is breathtakingly stupid, so too was the original post on the Roosevelt Institute's site (the "study" was really an opinion piece). The fellow tries to string together a series of different studies that showed employers aren't trying very hard to find candidates and that there is no skills mismatch in our economy (try telling engineering firms and creative writing doctoral candidates that!). The fellow concludes that we can "fix" the problem but Congressional Republicans and bank regulators are to blame. With this sort of intellectual support on the left, it's no wonder we are facing another possible recession.
Apr '12
Re: How the Other Half Thinks
Troy Senik, Ed.
Rachel,
The points are not necessarily mutually exclusive. Markets are smart, even when all their participants aren't. · 42 minutes ago
Well, but only after you get a critical mass of smart employers. So, for example, if you have a society of racist employers, and the talents of some sizable group are being systematically ignored, the market won't correct for that until some non-trivial number of people decide to break the trend and use it to their competitive advantage. But sometimes that takes awhile.
I don't think most employers are racist, or stupid either. But I do think that sub-cultures can develop within professions that can cause many/most people to collectively do things not in their interests, in a way that market forces will not immediately correct. It's not really a defense of the article so much as a warning about the kind of armchair reasoning you're engaging in here: "employers wouldn't behave this way, because it wouldn't be in their interests." I'm reflexively suspicious of that kind of argument
Apr '11
Re: How the Other Half Thinks
Rachel Lu
I'm very interested in this subject. Is there any literature you could recommend that would give an intelligent-layman-geared overview of how employers think about hiring, and what the current controversies are? · 30 minutes ago
Sure! Go to my employer's website for starters: hci.org (*cough*shameless plug). You can get access to most of the info with a free membership. I would search our site for terms like "quality of hire" "candidate assessment" etc. most of it should be pretty layman friendly so long as you have a business background.