Subject: Unemployment

Posted by Jack Harich on 3/11/2009
In Reply To:Unemployment Posted by Richard Turnock on 3/7/2009

Message:

Richard Turnock wrote:
>
> Quotes^^[1] <#_ftn1>:
>
> “This time, the government needs to place a greater emphasis on
> retraining workers for other careers, these economists say.”
>
> “The stimulus spending bill signed last month includes $4.5 billion
> for job training.”
>
> “You’ve got to use this moment to retrain for jobs” said Andrew
> Stettner, deputy director of the National Employment Law Project in
> New York.
>
> Where are the jobs and other careers for these trained and retrained
> people?
>
A good question, Richard.

There are a fixed number of jobs in any locality. Training does not increase them directly. But it can increase them indirectly, if a more skilled workforce allows an employer to sell more (due to higher quality, lower cost, better features, etc), and hence increase workforce size in response to higher sales.

The problem is that the cost of training is probably going to exceed the increase in jobs, because currently the US and many other countries are seeing a steady decrease in jobs, due to cheaper foreign labor. There will be some small exceptions for niche industries or companies, but the overall relationship is clear.

Richard, I agree with your implication: this is a false promise.

I wonder what researchers have to say about this?

And I can't help but wonder if the planners in the Obama administration realize this is a false promise, but feel compelled to make it anyhow.

> From what I’ve read about the Urban Dynamics model: government
> intervening with job training causes business to stop on-the-job
> training of unskilled labor and begin hiring only skilled labor. As a
> result, unemployment for unskilled labor increases. As the government
> intervenes and increases the numbers of skilled workers, unemployment
> of skilled workers increases.
>

Another good point.

Thanks,

Jack

Follow Ups:

Unemployment - Bill Rathborne 3/11/2009