Skip to comments.Skills Donít Pay the Bills
Posted on 11/26/2012 9:40:40 AM PST by ksen
Eric Isbister, the C.E.O. of GenMet, a metal-fabricating manufacturer outside Milwaukee, told me that he would hire as many skilled workers as show up at his door. Last year, he received 1,051 applications and found only 25 people who were qualified. He hired all of them, but soon had to fire 15. Part of Isbisters pickiness, he says, comes from an avoidance of workers with experience in a union-type job. Isbister, after all, doesnt abide by strict work rules and $30-an-hour salaries. At GenMet, the starting pay is $10 an hour. Those with an associate degree can make $15, which can rise to $18 an hour after several years of good performance. From what I understand, a new shift manager at a nearby McDonalds can earn around $14 an hour.
The secret behind this skills gap is that its not a skills gap at all. I spoke to several other factory managers who also confessed that they had a hard time recruiting in-demand workers for $10-an-hour jobs. Its hard not to break out laughing, says Mark Price, a labor economist at the Keystone Research Center, referring to manufacturers complaining about the shortage of skilled workers. If theres a skill shortage, there has to be rises in wages, he says. Its basic economics. After all, according to supply and demand, a shortage of workers with valuable skills should push wages up. Yet according to the Bureau of Labor Statistics, the number of skilled jobs has fallen and so have their wages.
(Excerpt) Read more at nytimes.com ...
Hard to pay those higher wages when other countries pay 1/4 that much, if that much, to workers and sell their cheap crap here. An unrestricted global market if all start at the same place, too bad we started light years ahead in living standards and technology and have to go backwards to let everyone catch up.
Oops, meant to type “global market works if”
Read the last sentence in the article. He’s saying the problem is education. The remedy will be that we need more “education”. It’s the New York Times....they can’t help themselves.
Stupid reality messes lots of things up.
Manufacturers don’t want to pay for labor - skilled or unskilled. I have thirty years of experience in industrial maintenance and have had offers of $15/hr. Luckily I have a job and am making okay money. Don’t think it will last long, though. The only people making any real money these days are govt. workers and money changers.
Isn’t education essentially the same as OJT or shop classes?
They NY Times talking about supply and demand? What has the world come to?
There is a shortage of long-haul truck drivers for this same reason. Trucking companies think people should be eager to jump at a job at any wage. Potential drivers don’t think the pay being offered is worth the downside (long time away from home/family), so they look elsewhere.
Eventually the free market will work it out.
‘Part of Isbisters pickiness, he says, comes from an avoidance of workers with experience in a union-type job. ‘
Unless the job applicant’s last job was in a right-to-work state, he probably didn’t have much choice as to whether or not he was in a union. Turning the applicant down for that reason alone, if he has a good skill-set, work record etc. may be ill-advised.
Not really. What they are really admitting is that all the money that they keep throwing at education is a dismal failure:
"The problem, he finds, is that far too few graduate high school with the basic math and science skills that his company needs to compete."
We didn't have this problem years ago before all the socialist programs in education.
The answer (other than changing Presidents) is to change the laws to favorably treat the hiring of independent contractors. But the unions go ballistic every time that subject comes up.
We pay our Ind. Maint. Techs $21.80/hr to start, and cap at $25. Still can’t find anyone worthwhile, willing to work OT on top of that.
I realized that this was exactly what would happen when we
did NAFTA. It was meant to bring all living standards to
the same level around the world. The world only needs a
few brain surgeons but lots of lesser skilled workers.
Why should a guy with the same skills here live better
than the same guy in India? That’s the way the globalists
see things and they have been in control for a while.
Things are all going according to the plan.
Perhaps the burden of Government is now so great that machine shops cannot make a profit without offering very low wages.
If there’s no Worker-Employer match it’s not the business’s fault. Businesses employ people in order to make a profit, and they must compete with other businesses.
Either there’s no one suitable to hire or the cost-of-employment in the state is simply too high for a Worker-Employer match.
Depends on who you talk to. Many people see a difference between training and education. The point is that the writer writes about the lack of skilled workers in manufacturing jobs and then closes the article by saying that the real problem is a lack of education. I can guarantee you he’s talking about going to college. The Democrats are scared that fewer people will go to college.
Companies used to train and manage. Now they don’t train and they don’t know how to manage. Frankly, very few managers even have skills anymore. “Manager” is now a career field and not a job position. “What do you do?” “I am a manager. I have a degree in management.”, not, “I am a facilities engineer and manage a facility staff of 15 for a heavy equipment company.”
“We pay our Ind. Maint. Techs $21.80/hr to start, and cap at $25. Still cant find anyone worthwhile, willing to work OT on top of that.”
My brother does that kind of work and the rates you mention sound very competitive for the southeast US. Not sure how that would compare nationally.
The Democrats are scared that fewer people will
go to be indoctrinated in college.
Well, my little brother told me point blank that everyone deserves a living wage. Poppycock.
They don’t deserve anything.
They get what they negotiate for and what the job is worth.
For instance: McDonalds....How much right brain does it take to press buttons or wait for a buzzer to tell the fries are ready or now you must turn a burger over?
Seriously, if McDonalds finds them selves paying $15 dollars an hour for burger flippers and my hamburgers start costing me $10 I’m at Smith and Wolensky where they they will serve a “Fat” burger with plank style fries and I can get it rare the way I like it.
Oh, and no salt on my food, another way I like to order my food.
Grocery clerks will absolutely be replaced with only a few for those who just have to interact with other human beings.
I see a “Self Checkout”, I’m there and out of the store, lickity split.
Low level skill jobs pay low level wages. You want moh muhnny, then get your azz to work and figure what it takes to get the skills you need, learn them and then go get that job that pays $100k so you can be a big shot.
It’ll put you in the top 7% as well, of all wage earners and you buy all that stuff you thought people were lucky to have, only to learn they, like you, worked their sorry asses off to get where they are, took a lot of other peoples Shiite, got bumped and scrapped...but, hey...we think we’re happy..with our stuff and facades of happiness.
They won’t figure it out until later in life that no one really cares about the stuff you buy. They aren’t impressed and you are not really interesting.
Better to want more but to want to do more interesting things and build great friendships and family.
I prefer to go for a walk in the woods or walk along the shoreline of the Pacific.
God speaks to me there....
Good insight, the aim of most of our lefty leaders is to promote agendas that facilitate a single global government and there is nowhere for the U.S. to go but down. Everything about socialism sucks the fun out of being free.
Yep. But it’s not just the indoctrination that ticks me off. So many young people are borrowing and paying big money for a worthless education.
Why a cap? Is OT a condition on hiring? If so, why? Can't you manage the dept on straight time workers?
I truly don't understand why some people see OT as a benefit. If people want to work OT fine. But, if they can work regular hours and do the job what's the complaint based on, then?
“”independent contractors” = no benefits and even less job security. Might be good for the employer, but awful for the employee. “
I think this depends on how it is structured and the type of work. It can be beneficial for both sides and I can see more folks doing this as obamacare rolls in, well, depending on what the exchanges look like and what employers do regarding buying insurance or paying the penalty.
Of course not, everyone knows that business owners can do no wrong.
It isn’t highly skilled labor anymore.
It’s Xbox skills.
Many people, including me, understanding computers down to command line issues.
When I say most people I’m talking about those under 45, for the most part.
It ain’t rocket science to us and it’s programming a parameter or an outcome.
Super simple, really....
And yet the starting pay for a new McDonalds shift supervisor is 40% more than what the company in the OP wants to pay someone with much more technical skill.
I encourage to keep taking long walks in the woods, away from the computer.
Business owners are the experts on their bottom line. Not the Government. Not the employee. And not the NYT.
Typically, OT is paid at a higher rate on many pay scales. So, some see the OT work as a pay raise for doing the same kind/type of work.
Some say that "compounding interest is a working man's best friend." That may be true, but if so, OT is maybe the working man's second best friend.
As a salaried employee, I don't get the benefit of OT, but I'm not complaining.
Get some ambition on the workers part and if the complaint on the employers part is a mismatch of skills, outcome and labor costs then they got a problem.
The product is only worth so much.
Complaining about the wage doesn’t really do anyone any good.
If the market says a product is only worth “X” then the wage, the only real cost that can destroy value, has to be “Y”.
That’s why Apple products are produced and assembled in China.
Gonna go for that walk this afternoon and contemplate.
My arm is feeling better and I think I need more money. I think best out there...
Companies will pay a much higher hourly rate to someone they know they can part with easily if times get tough. Being an employee, especially if a union member, does nothing but set you a maximum salary limit, regardless of your ability.
Job security is a nonsensical concept in these times - there is none.
These companies wonder why they can’t find good help. It’s because they’ve made a bad reputation for themselves, and nobody in their right mind will work fork them.
An alien concept in modern, post-capitalist America.
Good story to tell. American born girl student whose parents were from India. She applied for jobs after she graduated from college with BS in computer programming. After tons of resumes no interviews. She even lowered her asking starting salary. Still no responses. One of her friends suggest that she take her American citizenship off her resume and see what happens. Immediately after removal of US citizenship, she had many interviews. After each interview the software companies were making job offers. She took one, worked a year before she told them she was a US citizen from the start. The employers were upset!!! What they really want is a foreign worker on VISA and willing to work low salaries. Moral of the story is even if we were willing to work at the lower salaries, many employers want you to have the mindset of a VISA worker, easy to fire and silent when abused.
Keep this up and corporate America will face class warfare with the rich hanging from lamp posts. Many corporations claim they must keep salaries low to meet slim profit margins. Gee the CEO keeps getting huge raises and bonuses along with his exec staff. The HQ building don’t look like a building trying to keep costs down. Laser edged glass, expensive furniture, art, look more like steel and glass palaces, limo drivers to work, gov bailouts, perks etc etc fit for a king. Until CEO’s live modestly, HQ buildings look economical, hard to sell this crap of slim profit margin to Main Street America. It is more like the guys on top help themselves to the profits first, then claim too little is left for the workers in the factory.
OT is a benefit to the employer. There are usually fixed costs both monetary and others such as regulatory, legal, training, and etc, for having an employee that are not seen in the hourly rate. These fixed costs may make it cheaper in the short run to work OT than to hire another worker.
Wages are not the only consideration when taking a job.
“Many people, including me, understanding computers down to command line issues. When I say most people Im talking about those under 45, for the most part.”
I’ve found the opposite to be true. Those that learned about computers in the GUI age are less technical than their (older) pre-GUI counterparts.
I can’t tell you the number of times I’ve opened a command prompt and had (an otherwise computer savvy person) say they were lost.
Why are you here?
The cost of wages is not set by the employer, is it ? The wage is set by the market, based on demand of the product. At least that’s the way I learned it in economics.
If that’s what you learned in economics class you should ask for a refund.
“The market” is just a euphemism for the employers looked at as a group. And before anyone tries to chime in about employees holding out for better wages it doesn’t work 99% of the time because the employer will just pass you over and take one of the other 500 applicants that will work for what they want to pay.
All the negotiating power right now is in the court of the employers. Thank you for that union bashers.
The churn has its business costs as well. In my view, we are setting up our new employees to fail because we don’t or aren’t allowed to invest enough in training. It’s self-defeating because we’re wasting $4K per new employee.
“Yeah, thats how it works now in the new economy. I worked for over 25 years as an Industrial Electician/Controls Technician, complete with higher education, training, and experience to boot. After that time, Ive seen my wages cut in half, told I have to do twice as much work for half the pay, and threatened with firing if I wouldnt work for what the unskilled workers were getting paid, or get my job shipped to china. Even after biting the bullet and complying with all of those requests, I still lost my job to some shithole in china that the company owners sold their business to. So, I decided that nobody here gets any support from me, especially if theyre so quick and willing to sell out the American people solely to turn a quick buck. Unfortunately for all of the respectable business owners out there, you will be unfairly lumped in with the privateer types so dominate in industry today.
These companies wonder why they cant find good help. Its because theyve made a bad reputation for themselves, and nobody in their right mind will work fork them. “
I said goodbye to manufacturing a number of years ago. Too hard to make a decent living. I had 35 years experience in management and accounting and I have found that the skills learned pay much better outside of manufacturing.
“The cost of wages is not set by the employer, is it ? “
I think it depends on the market position of the company with smaller operations at the most disadvantage and most governed by narrower markets. The larger the company, the more diverse opportunities can be pursued and they will have more flexibility in attracting workers. This is why towns with mostly small business panic when larger manufacturing or the infamous box stores move in. They simply cannot compete for workers or markets.
Also from the linked article: "As he spoke, I realized that this isnt a narrow problem facing the manufacturing industry. The so-called skills gap is really a gap in education, and that affects all of us. "
Both of these statements reveal the author's lack of understanding what is happening in the U.S.
The fact of the matter is that there is nothing which is going to enable a skilled American citizen to out-compete a skilled Chinese while enjoying a higher standard of living, aside from interference by the Chinese government in the Chinese economy to an extent greater than the interference today in the U.S. economy by its government.
The same is true of skilled workers in India.
What we have witnessed over the last several decades (and which we witnessed in regard to Japan in the prior several decades) is that highly-educated, highly-motivated Chinese will naturally identify industries which are relatively easy to start-up and will out-produce more highly paid Americans.
As time goes on, the Chinese must identify more and more industries in which to engage. Those industries that are more challenging to start-up are simply the ones which will be established later rather than sooner.
But the bottom line is that there is very little reason to believe that any job in America that can be done in China won't someday be done in China, given that the Chinese will accept a lower standard of living.
You are 100% right.
That isn’t the orthodoxy here. And will get you flamed.
However, there is a growing disconnect between the large and small. That never ends well.
As others have pointed out, OT hours are incrementally less expensive than base pay hours, even if the employee is being paid 1.5 times their hourly rate for OT.
But my experience in manufacturing is that OT is almost an essential mechanism for handling the ups and down of a competitive company. If you don't want to be running a "hire and fire" operation, then you need a different approach for when sales decline, whether that is because the newer products are disappointing or whether it is because the overall economy is contracting.
If people are working an average of 10 hours OT on top of a 40 hour week, then contracting the business by twenty percent is as simple as reducing overtime to zero. (This is typically much more complicated by the fact that not all product lines contract by the same amount.)
Handling a sales contraction of twenty percent would otherwise have entailed laying off twenty percent of the workforce; a very unpleasant undertaking.