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The Great Mismatch: Labor Demand and the Supply Profile

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(Article changed on February 4, 2014 at 09:57)

(Article changed on February 3, 2014 at 23:39)

Is ignoring this in our own country seriously the conservative idea of patriotism?
Is ignoring this in our own country seriously the conservative idea of patriotism?
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Although the title of this article highlights the obvious current gap between labor supply and demand, equally if not more important is the somewhat less obvious mismatch between the profiles of labor demand and that of its available supply. We have plenty of jobs that too few are qualified to supply with their labor. There was a book around by the late 1970s that was already predicting that the information technology revolution was going to make much labor obsolete. The book noted that nothing was being done in terms of the education and training urgently needed to forestall the otherwise inevitable future mismatch.

Our failure to pay any attention to this is certainly a large chunk of what is responsible for the current unemployment, underemployment, and just plain surrender to despair in finding suitable work. The lack of foresight and resulting lack of political will to do anything about it has created a mess. Many in industry knew, but this was apparently not collectively important enough to industry, since their lack of demand for lower skilled labor was not nearly as large or immediate a liability for them as it was and still remains for labor because automation was clearly destined to fill the gap.

Around 1980 I was predicting that the noticeably waning quality of education was going to create a private industrial response to close this impending gap. I was right about the increasingly commercialized education aspect, but wrong about it doing much to fill this otherwise inevitable gap.  Much of the marketing in commercial education consists only of selling intellectual snake oil and profiting handsomely on student loans their useless education disallows their students to pay back. Yes, these commercial education institutes are indeed functioning on Ayn Rand's self-interest paradigm, too. Ironically, these same people are probably business oriented conservatives who are disdainful of those dependent on the government while they profit from government loans to their students.

Ayn Rand's noble scenarios and her entire philosophy seem to unwittingly assume ideal people and situations that don't exist in any comprehensive sense in the real world. Ultimately, this is the same flaw in Marxist thinking on the opposite end of the spectrum. Similar idealism is also the flaw in anarchist thinking. 

On the other hand, our founders were realists who implemented checks and balances intended to countermand overly idealistic assumptions. In contrast, Ayn Rand's view was essentially that of people functioning ideally in economic terms working in an environment of relative economic anarchy. Her ideas would work as described only if we assume that ideal people and efficient markets are virtually universal throughout an economy, along with honest government free of conflicts of interest.

Although we currently have plenty of regulations, the political influence of industrial lobbies has dictated too many of them. The sad result is a complex, twisted tangle of regulatory red tape too often combined with ludicrous favoritism toward specific interests. We need a governmental and economic structure that does not depend on any kind of idealism; that works in the real, practical world and that is also relatively free of the conflicts of interest undue political influence creates. Our founders tried to do that, but it has been subverted by all kinds of less than virtuous selfishness as well as by a great deal of naïve idealism.

The scientists who in the sixties were predicting technology would hand us a twenty-hour work week in a few decades failed to factor in short-term profit seeking and the lack of political will in the most politically influential sphere, which was and is naturally constituted mainly of those with the most financial clout. Most of the rest of us were just plain ignorant of the impending realities. It is not too much of a generalization, given the historical evidence, to state that industry has always needed some massive popular uptick in political will to motivate them to treat labor well enough even for their own long term business interests, let alone those of the economy as a whole.

The all too typical corporate mindset is intrinsically short-sighted. These businesses are held captive by their need to keep their quarterly reports looking good for pension fund investors, shareholders, etc. Everyone working in their own interests is natural and inevitable, as Ayn Rand was so fond of pointing out. But contrary to her philosophy, when the economic incentives are intrinsically near-sighted it often fails to actually work in the overall best interests of society. In the long term this fails to work nearly as well as it could have even for the top rungs of the financial and political ladder.

Among many of those fortunate ones somewhat better trained or educated there is a conspicuous lack of any compassion for those left out of the current picture, especially among those from similar social classes that traditionally competed with each other for work. The more fortunate exhibit an overweening pride, a vainglorious basking in their success as contrasted with those less fortunate. 

This tends to show up as disdain for the latter and characterization of them as lazy, dependent people who just want a government handout. Some of us accuse them of eating up our hard-earned money with taxes to pay for unemployment insurance, welfare, food stamps, Medicare, etc. But as even Ayn Rand might have guessed, self-interest also motivates the less fortunate enough to desire their own survival. After all, industry is certainly not taking care of that.

The twenty-hour work week scenario predicted in the sixties could never have worked unless the general population was educated and/or trained to handle the more highly skilled jobs a highly technical economy demands. It also would have required a corporate world willing to share with those increased numbers who had acquired the necessary skills the results of essentially having doubled productivity. These factors would have combined to produce a broader labor base working fewer hours as logically predicted, were it not for Rand's savvy but not always so virtuous selfishness. 

Of course, that would have meant lower profits for industry. As it is, only industry is profiting from the higher productivity, enormously so, while those who have enough skills to find work are not paid anything that remotely corresponds historically with their level of productivity. Too many of the rest languish in despair and have to depend at least to some degree on the government for their survival. Meanwhile, the corporate political lackeys in government want to lower taxes on those at the top. God forbid that anyone should even suggest raising them!

The current labor supply and demand mismatch was not only predictable, but actually predicted by those with a little knowledge, intelligence, and insight. However, the mismatch was inevitable when we consider the lack of these traits in much of the voting population at all social levels. This is not to mention the subversion of our political system with the complicity of too many politically naïve citizens, their often resulting complacence, or the  ironically passionate, unwitting support of others for politicians working against these very supporters' interests. We especially fail to see in most hard right conservatives any understanding or compassion for the less unfortunate. Those who publicly manifest these cold attitudes usually fail to show any of the positive characteristics that would have foreseen this or even the hindsight today that should clearly tell us what has happened and why.

We as a people need to collectively wake up to these realities with a strong desire to do something about them. We can do this both on an individual, creative level as some are already. We can also do it by exhibiting and exerting our political will loudly and clearly. We have infrastructure needs in this country with dire consequences looming if we fail to take care of them. The government needs to institute work programs that address these needs and that are integrated with training for skills needed in the current job market. 

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Robert Wendell is married to a native of Buenos Aires, Argentina, who is now a longtime naturalized U.S. citizen. He is a professional musician (violin; trumpet), choral director, and voice teacher. He also has a technical background in electronics (more...)
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