Ending Hunger in America, 2014 Hunger Report Full Report | Page 66

There is little hard
evidence to support
claims of too few
workers with the
skills needed to
meet employer
demand for labor.

Ingram Publishing

56? Chapter 1

n

Moreover, if there were a labor shortage, it’s not being reflected in wage rates. Economics
teaches us that if the supply of qualified workers were limited, those few workers who had the
desired skills would be able to command higher wages. There is no evidence of rising wages in
any sector of the economy.87
Mark Price, a labor economist at the Keystone Research Center, dismisses manufacturers’
complaints about the shortage of skilled workers. “If there’s a skill shortage, there has to be
rises in wages,” he says. “It’s basic economics.”88 Employers don’t want to pay higher wages,
or more likely they are not willing to fill jobs in a weak economy.
Let’s recall what caused the Great Recession and the high unemployment that appears
to be its legacy. A housing bubble in the 2000s was driving household consumption. When
this $8 trillion bubble burst, it created a demand gap estimated to be between $1.2 and $1.5
trillion.89 The bursting of the bubble and the financial crisis that ensued pushed the country
into the deepest recession in 75 years. It is the significant contraction in household spending
that is the main reason the economy continues to struggle. In 2012, the gap between what the
economy produced and what it could produce at full capacity or full employment was $995
billion.90 Given this yawning output gap, employers are not likely to rush into rehiring workers
they let go during the recession, much less think about hiring workers to fill new positions.
The skills-gap hypothesis is troubling because policymakers can use it as a convenient
excuse for government not to take the lead in job creation. After all, if high unemployment
is due to significant skills deficits among U.S. workers, the solution must be education and
training. Once workers get the skills they need, unemployment will basically solve itself. But
although education and training are generally good things, this is not a workable solution. Policymakers need to help get people back to work as soon as possible. Unemployed and underemployed people can’t wait until some other, vaguely defined group of workers upgrades its skills,
and the country doesn’t need to. In the late 1990s, the economy was at full employment—but
it was not because large numbers
of workers suddenly became more
educated and better trained.
The Congressional Budget
Office estimates that the economy
must add approximately 90,000
new jobs a month just to keep up
with population growth.91 The
last two cycles of growth beyond
what’s needed to keep up with the
population have been fueled by
asset bubbles—stocks in the late
1990s, housing in the mid-2000s.
The economy now needs to move
forward driven by something more
sustainable than bubbles. Policymakers should be asking what
that something is and starting to
invest there.

Bread for the World Institute