Tuesday, April 29, 2008

Economics again--the skills fallacy

By which I don't mean that if you have a lot of experience doing a job or start out at a job and learn a lot of other things connected with whatever job you do that take you beyond your particular role that you won't get either higher pay or preference in hiring. Instead, what I'm talking about is the idea that in the face of increasing unemployment and loss of jobs simply going into a program and learning a profession that you think will be the best will ensure you a job.

Mainstream economics says over and over again that if you want more money in the face of inequality the way to get it is to get more skills. If the country that you're a part of is poor, the best way to facilitate development is said to teach people skills.

What they leave out, or at least go a long way to get out of saying, is that that strategy only works if the skills you're learning are in professions where there's an increasing or high demand for workers. If you go to your local community college and enroll in a program that has everything you want on the face of it, that has interesting work, seems to offer a lot of money when you graduate, and it turns out that the market for the skills you have is either small or very very competitive you're sort of out of luck. The program that you've just completed is now not worth a lot since you can't actually get a job with the skills you've acquired.

The only way out of this situation is the dubious notion that given enough supply of people with skills someone will come along and start a company that makes use of them, thereby employing all of the previously screwed people who took the wrong program.

If that does happen it'll be because the amount of people with the skills has increased to the point where it's really cheap to hire them, since no one else is willing to. That would make starting a competing business an attractive proposition.

This, by the way, is the underpinning of the skills for development idea. Give people in a poor African country enough computer skills and people in the United States will find that paying the workers a hundredth of what people in the U.S. command for the same work is a good deal. Instead of just employing folks in the hypothetical country for backbreaking mining work in order to get cheap raw materials it's now profitable to be the big Bwana providing substandard wages for computer work, which will no doubt evaporate if the market forces the wages to go higher and there's an even shittier paying opportunity somewhere on the globe.

Skills can in fact contribute to development, but my unprofessional opinion is that government sponsored development projects done in a sort of socialist fashion is the best course for accomplishing it.

The long and the short of the whole thing is that although trade schools and dubious for profit educational ventures offer dreams of advancement and a good life, they make money off of you no matter whether you're able to find a job or not. Choose wisely, young padawan.

*and getting a bachelor's degree is no guarantee of escaping from the same scenario either. In fact, the idea of simply getting a bachelor's degree making a difference in earnings has lead to such a glut in people getting them that the value of one has dropped significantly, although not as much as it should. College is hugely expensive, and if what you're getting out of it is a marginally better place in a competitive job market in professions that you really don't need a degree for it's very unfair to people who have good skills in the area but not a college degree, at least if the employer really does give preference to someone with a degree just for having a college degree.

The influx of people getting bachelor's degrees has also lead to the dumbing down of the college curriculum since people want certification and are somewhat lackluster about the actual process of a college or university education. For a person to really command a higher wage according to mainstream economics, they need to actually have learned something that merits commanding a higher wage. But what people are banking on in pursuing bachelor's degrees is that it will put them on the other side of the worker/management divide, ensuring that they don't have to do lower paying working class jobs.

**the question of just what these people are studying naturally presents itself. After all, you still need to have a major to graduate from college. Even if your main activity is swilling beer and impressing girls with your extensive knowledge of sports cars you still need a major. I think I have the answer. It's a several years out of date but I remember reading that Business had become the most popular major of U.S. college students. Sort of figures. They hope that after completing their degree while laughing at all of the requirements that make them think and don't have to do directly with making money they'll be employed as managers or higher. But the glut of Business graduates means that, surprise surprise, there'll likely be many more potential managers out there than are actually needed, no matter how many people are unnecessarily hired. Meaning that their ticket to fame, fortune and the good life without any real education or understanding of the world may be short circuited some what.
They may feel bad about not learning anything when they have to really apply themselves.

At least that's what my fantasy is. In all likelihood the system will accommodate them until there's no possible freakin' way that they can justify employing more of these people, and then that fantasy may partially become a reality. Unless managers start preferring people with business degrees for working class jobs, in which case we're all fucked.

1 comment:

People Power Granny said...

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