Saturday, January 04, 2014

Shooting Blanks At The Wrong Target

Economists are so wedded to their pet theories that they tend to apply them without even knowing in full the situation which is in need of solution. Dean Baker, for instance, addresses a New York Times article on Thursday by retorting that it “Tells Readers About Shortage of Skilled Workers in Europe Without Ever Mentioning Wages,” which in fact it does. I would suggest there’s nothing wrong with that.

Baker starts out by saying that he cannot find a doctor to treat him for $30 per hour, as if that were somehow relevant to the discussion, and then tries to make it relevant by claiming that the Times would interpret that as a doctor shortage. Apparently in addition to being an economist, he’s a mind reader as well.

In the same paragraph about the doctor shortage he points out that the Times says that Europe has a shortage of skilled workers and an unemployment rate of 12%. He does not say that the unemployed are skilled workers who are declining the available jobs because the offered pay rate is too low. He does not say, or appear to care, what wages are being offered for those available jobs, admits that the article does not mention wages, but he does say that if the employers would raise those wage offers there would be plenty of skilled workers.

He is claiming by implication that the skilled workers are available but that the wages are too low to bring them to employment, and he does not know either to actually be the case. He doesn’t know whether or not skilled workers are or are not actually available, in fact the whole point of the Times article is that they are not, and he doesn’t know what wages are being offered. “My mind is made up, don’t confuse me with any stinking facts.”

If I offer a guy $20/hour to run a numerically controlled lathe and he doesn’t know how to do it, all I have to do is offer him $45/hour and he will know how to do it. That’s what Dean Baker says; if you offer higher wages there will be more skilled workers. The man is brilliant. Even better, if I need a doctor and there isn’t one in my town, all I have to do is offer $10,000 to the town drunk, and he will be a doctor.

Those examples are stretching it a bit, but what Baker is saying specifically is that if you are not getting any applicants for a job opening it does not matter what wage you are offering, just offer more and you will be inundated with applicants. It is a ridiculous statement. Paying higher wages does not, of itself, create skills.

In fact, the article isn't even about employers not able to find workers, it's about unemployed people unable to find jobs for which they are qualified. The headline is "Unemployed in Europe Stymied by Lack of Technology Skills," and it's about the plight of the unemployed workers, not about the employers at all. Dean Baker is not only shooting blanks, he's not even shooting at the right target.

1 comment:

  1. bruce9:14 AM

    European countries (especially France) have some strict employment regulations, so that may affect hiring as well.