April 24, 2013 · 1 Comments
By Dean Baker:
The NYT has difficulty finding pundits who can write knowledgeably about economics. Thomas Friedman made this point in his Sunday column. At one point he quotes Gary Green, the president of Forsyth Technical Community College, in Winston-Salem, N.C.:
"'We have a labor surplus in this country and a labor shortage at the same time,' Green explained to me. Workers in North Carolina, particularly in textiles and furniture, who lost jobs either to outsourcing or the recession in 2008, often 'do not have the skills required to get a new job today' in the biotech, health care and manufacturing centers that are opening in the state.
"If before, he added, 'you just needed a high school shop class or a short postsecondary certificate to work in a factory, now you need an associate degree in machining,' a two-year program that requires higher math, I.T. and systems skills. In addition, some employers are now demanding that you not only have an associate degree but that nationally recognized skill certifications be incorporated into the curriculum to show that you have mastered the skills they want, like computer-integrated machining."
Actually there are simple ways to identify labor shortages. First and foremost we should be seeing rapidly rising wages. If employers cannot get the workers they need then they raise the wages they offer to pull workers away from other employers. This is how markets work. (We should also see longer workweeks and increased vacancies.)
In fact there is no major sector of the economy where wages are rising rapidly. This shows rather conclusively that workers do not have skill shortages although it may be the case that many managers are so ignorant of markets that they don't know that the way to attract better workers is to raise wages. Of course that would suggest the need to better train managers, not workers.
At one point the piece tells readers;
"We need to reform Social Security and Medicare so they can support all the baby boomers about to retire. ....
"As Bloomberg News reported on Monday: 'Typical wage-earners retiring in 2010 will receive at least $3 for every $1 they contributed to the Medicare health-insurance program, according to an Urban Institute study.' That’s unsustainable."
It would have been helpful if Friedman had also mentioned that the same Urban Institute study shows workers already paying slightly more into Social Security than they get back. Yet Friedman wants to cut benefits.
The main reason that the Medicare benefits workers receive are more than they pay in taxes is we pay more than twice as much per person as people in other wealthy countries for our health care. This is due to the fact that we pay close to twice as much for our doctors, drugs, and medical equipment. It is not due to the fact that we get better care. This might suggest the need to reduce payments to health care providers rather than cut Medicare. Of course health care providers are a powerful lobby that Friedman apparently does not want to anger.