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Skills Donít Pay the Bills
The New York Times ^ | 11/20/2012 | Adam Davidson

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 Isbister’s pickiness, he says, comes from an avoidance of workers with experience in a “union-type job.” Isbister, after all, doesn’t 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 McDonald’s can earn around $14 an hour.

The secret behind this skills gap is that it’s 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. “It’s 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 there’s a skill shortage, there has to be rises in wages,” he says. “It’s 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 ...


TOPICS: Business/Economy; Culture/Society; Miscellaneous
KEYWORDS: jobs; jobskills; manufacturing; manufacturingjobs
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To: Fee
From what I can tell....you think Dims have the answers.

Why are you here?

41 posted on 11/26/2012 10:59:57 AM PST by Osage Orange ( Liberalism, ideas so good they have to be mandatory.)
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To: ksen

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.


42 posted on 11/26/2012 11:04:54 AM PST by Red Boots
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To: Red Boots

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.


43 posted on 11/26/2012 11:11:04 AM PST by ksen
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To: agere_contra

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.


44 posted on 11/26/2012 11:12:19 AM PST by newzjunkey
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To: factoryrat

“Yeah, that’s 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, I’ve 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 wouldn’t 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 they’re 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 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. “

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.


45 posted on 11/26/2012 11:20:02 AM PST by buffaloguy
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To: Red Boots

“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.


46 posted on 11/26/2012 11:20:44 AM PST by DonaldC (A nation cannot stand in the absence of religious principle.)
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To: ksen
From the linked article: "Many skilled workers have simply chosen to apply their skills elsewhere rather than work for less, and few young people choose to invest in training for jobs that pay fast-food wages. As a result, the United States may soon have a hard time competing in the global economy. "

Also from the linked article: "As he spoke, I realized that this isn’t 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.

47 posted on 11/26/2012 11:43:28 AM PST by William Tell
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To: Fee

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.


48 posted on 11/26/2012 11:44:14 AM PST by redgolum ("God is dead" -- Nietzsche. "Nietzsche is dead" -- God.)
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To: raybbr
raybbr said: "I truly don't understand why some people see OT as a benefit."

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.

49 posted on 11/26/2012 12:04:29 PM PST by William Tell
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To: FreedomNotSafety
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.

Even better is having employees work overtime off the clock.

P&G did this with their hourly employees in the 1980s at one of the technical centers. Lab technicians would work past their quitting time during the week, sometimes for hours and come in on Saturdays, all for no pay. People were under pressure to do this; if you didn't, you were branded with "bad attitude". Management denied this practice, which was not consistent throughout the company, but I observed it for years.
50 posted on 11/26/2012 12:29:00 PM PST by Nepeta
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To: ksen

I don’t agree. And the snarkiness was uncalled for.

Your wage is a cost, one of many, that must come out of the sale of the good or service. I sell HVAC services. I can’t pay employees more than what I can sell them for on the open market, minus their other associated costs. The market for their services is what sets their wage. Employees don’t understand this, but that’s how it is. Wages go up when your services help the company make more money; not because you have worked another year, have worked hard, or whatever other inane reason people come up with.


51 posted on 11/26/2012 1:44:49 PM PST by Red Boots
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To: stuartcr
Isn’t education essentially the same as OJT or shop classes?

Not if a person does't get hands on training. We used to get troops back from AIT maintenance training and they had no clue how to remove / repack and reinstall something as simple as a wheel bearing. BUT, they got to read in out of the manuals.

52 posted on 11/26/2012 1:48:01 PM PST by Arrowhead1952 (0 bummer inherited a worse economy in 2012 than he did in 2008.)
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To: William Tell

Excessive OT has been shown to negatively impact productivity and worker health so while OT may help a bottom line over the short term excessive reliance on it will only hurt a company in the long run.

That won’t stop them though.


53 posted on 11/26/2012 2:17:59 PM PST by ksen
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To: ksen

I’m not sure why you think union-bashers are responsible for employers having some “upper hand”.

Union bashing only works if workers agree that the unions suck. And that is a problem caused by the unions looking out for their own existance, and spending all their money on political conquests, rather than working to actually help workers.

Meanwhile, workers are much more hurt by all the things that happen because unions get democrats elected.

I work three jobs, none of them union. One is my full-time employment, I am paid what I am worth, few people could step in and do what I do, both because I am very good at it with years of experience, and because I’m intimately familiar with the products we produce, and spend time and effort keeping it that way.

But if they could hire some out-of-work college dropout to do my job, that is exactly what the company should do. Companies are not welfare states. Of course, the consumer wins if the products are cheaper, except if the consumer loses their job because of cheap labor, they can’t afford the cheaper products.

My second job is a $10-an-hour part-time job I have one month a year, as a haunt monster at a theme park. They can’t fill all the positions at that price, but my guess is they don’t think the problem with hiring is the salary. It is a weird job, and physically demanding. In california, applicants line up ahead of time for the chance at getting auditions for this kind of job, but here in the east, even with unemployment high among young people, it just isn’t the job people are clamoring for.

For me that’s just a really fun job, and I can afford the time for one month a year.

My 3rd job is a freelance writer, and I get paid peanuts, more or less depending on how long it takes me to write 750 words. I’m losing that job because the paper is going out of business. But I am not aware that anybody was clamoring to take my job.


54 posted on 11/26/2012 2:20:35 PM PST by CharlesWayneCT
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To: Mr. Jeeves

That differential also takes into account the costs that the contractor takes on. Add all the costs normally covered by a proper employer and you make up for those gains.

To suggest that job security is a non sensical concept (and that one should blindly accept indirect work) is to bring the worst of Europe’s hiring practices to the United States. That is, temporary employment promotes a harmful detachment from work.

All of that said, hiring is a business decision - nothing more.


55 posted on 11/26/2012 2:23:55 PM PST by setha
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To: William Tell

Excessive OT has been shown to negatively impact productivity and worker health so while OT may help a bottom line over the short term excessive reliance on it will only hurt a company in the long run.

That won’t stop them though.


56 posted on 11/26/2012 2:25:21 PM PST by ksen
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To: ksen

This is what my son has found. A level II CNC operator is going for $13 and hour in our area. Considering what it takes to learn that machine, that’s insane.


57 posted on 11/26/2012 2:28:15 PM PST by Marie ("The last time Democrats gloated this hard after a health care victory, they lost 60 House seats.")
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To: Resolute Conservative
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.

The fine print in our so-called 'Free Trade' agreements is that harmonization of living standards means that all those who work for a living will drop down to third world squalor. Our wealth will be redistributed to global corporate and finance.
58 posted on 11/26/2012 2:32:59 PM PST by khelus
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To: Red Boots
I don’t agree. And the snarkiness was uncalled for.

You're right and I apologize

Your wage is a cost, one of many, that must come out of the sale of the good or service. I sell HVAC services. I can’t pay employees more than what I can sell them for on the open market, minus their other associated costs. The market for their services is what sets their wage. Employees don’t understand this, but that’s how it is. Wages go up when your services help the company make more money; not because you have worked another year, have worked hard, or whatever other inane reason people come up with.

What you say doesn't really make any sense. Because if a cost other than labor goes up, say copper tubing, you adjust the price of your product to account for the increased copper costs. If you labor expenses have to go up in order to acquire and retain quality employees than the price of your product needs to likewise go up. There is not some magical HVAC equipment price that customers won't go over.

59 posted on 11/26/2012 2:40:10 PM PST by ksen
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To: CharlesWayneCT
I’m not sure why you think union-bashers are responsible for employers having some “upper hand”.

I think it because that's what's been happening. Since the time unions started losing membership and power, the 1970s, the gap between wages and productivity has been steadily increasing whereas before wages and productivity moved pretty much in tandem. I'm not naive enough to think that's the only reason for the widening wage/productivity gap but I do believe it is a major one. After all when employers can keep workers disorganized it is much easier for them to keep wages artificially low along with not implementing other workplace enhancing items.

Union bashing only works if workers agree that the unions suck. And that is a problem caused by the unions looking out for their own existance, and spending all their money on political conquests, rather than working to actually help workers.

Meanwhile, workers are much more hurt by all the things that happen because unions get democrats elected.

Well, I won't argue that the Democrats have been great for workers, but they are a whole lot better towards workers than the current Republican party.

But if they could hire some out-of-work college dropout to do my job, that is exactly what the company should do. Companies are not welfare states. Of course, the consumer wins if the products are cheaper, except if the consumer loses their job because of cheap labor, they can’t afford the cheaper products.

Companies have by and large forgotten Henry Ford's old maxim. We are a consumer driven economy and the more companies withhold wage increases for their employees, i.e. consumers, than consumers will have less disposable income to spend on the company's products thus making management think that wages have to be slashed even more.

Do you want to see the economy recover quickly? Make companies put some of the trillions in cash they are hoarding into circulation.

My second job is a $10-an-hour part-time job I have one month a year, as a haunt monster at a theme park. They can’t fill all the positions at that price, but my guess is they don’t think the problem with hiring is the salary. It is a weird job, and physically demanding. In california, applicants line up ahead of time for the chance at getting auditions for this kind of job, but here in the east, even with unemployment high among young people, it just isn’t the job people are clamoring for.

If the company offered $100/hr do you think they'd have trouble filling the positions? If they wouldn't have trouble filling positions at $100/hr then their hiring problem is a wage issue and the equilibrium wage for that position lies somewhere between $10/hr and $100/hr.

60 posted on 11/26/2012 2:52:42 PM PST by ksen
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