Behind the Labor Shortage-Layoff Paradox: Lack of Skilled Workers
December 1, 2005
One story in The Wall Street Journal last week reported1: "Difficulty in finding enough skilled workers is hampering the ability of many U.S. manufacturers to serve their customers." On a facing page, another story2 said, "General Motors Corp. ... raised its job-cut target by about 5,000 to a total of 30,000, and said it will close operations at nine North American factories."
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Two answers: One, manufacturers aren't investing enough in training. The National Association of Manufacturers survey found only 50% are spending more on training than they did three years ago. Two, manufacturing has earned a bad reputation, as it responds to globalization, competition and stockholders. Mention factory jobs to an American high-school student and he or she thinks about layoffs, benefit cuts and bare-knuckle union bargaining. No wonder so few want to grow up to be machinists.
While I agree that the skill-gap (and lack of training) is part of the problem, I think globablism is also playing a big part.
After all, if workers were really scarce, manufacturing wages would be rising rapidly -- and they're not.
This is a classic economics argument which I no longer think holds true. Wages dont rise from a shortage anymore because the economy is no longer a national game.
While there may be a national shortage of workers but there is no global shortage. If the costs of an end product cannot rise because of low-cost foreign competition, then the costs for making the product have be kept low. If domestic wages wont allow this, the company has to go to a global solution and by moving the work to less expensive countries.
In other words, in order to enjoy the cheap products we like, companies have to move our jobs to cheaper nations. While this trend has been going on for decades in the manufacturing realm, I think we have been seeing just the tip of this "global economy" iceberg. I fear a tipping point is getting near.
