A Red Hot Labor Market? Don’t Believe It!

We’ve been seeing headlines screaming about low unemployment rates and a red hot job market.

I’m not seeing any of this.

The people I know still struggle along, looking for a decent job and taking any short term low wage job they can get. I’ve got a gig at a community college and don’t see any of my adjunct colleagues quitting the part time adjunct grind for jobs demanding graduate degrees and specialized knowledge — even though that is what they all have because it is required by the college.

An increase in the availability of good jobs would be reflected throughout the economy, but does not seem to be happening.

Historically, inflation increases when economies come out of recession and hiring picks up. That is because people are making more money and catching up on the buying they have deferred wile unemployed, creating demand.

But that’s not happening.

Inflation is edging up just a little, but that might because the Federal Reserve has been increasing interest rates just in case inflation increases.

If people were getting hired and making more money we would also expect a rise in home sales, but that isn’t happening. In fact just the opposite is happening. Since 2017 home sales have been sliding down and seem to be accelerating over the last six months or so.

We would also expect auto sales to increase, but nothing dramatic is happening there either, although there has been a slight uptick since August of 2018.

Real labor shortages also change the way employers hire.

When employers need workers they start lowering barriers to employment like credit and background checks, unrealistic demands for education and experience and start offering training programs.

Most significantly wages start increasing.

Although some of that is happening it isn’t what we could consider an economic trend.

The latest Employment Situation form the Bureau of Labor Statistics is not showing dramatic changes in any of its common measures of labor.

Long term unemployment, discouraged workers and those no longer in the labor force are all tracking steady. The only thing changing are the number of people who hold multiple jobs. That group has risen by about 25% since the beginning of 2014 and although progress has been jittery this seems to be a long term trend.

Quite possibly the rise in employment is mostly attributable to an increase in low paying part time jobs. This would explain the lack of impact in the rest of the economy that we would expect if well paying full time jobs were being filled. It also explains the increase in multiple job holders.

So, no, claims of a red hot job market are not supported by BLS statistics, the Federal Reserve or the National Association of Realtors.

Most likely this is just hype coming from people and organizations with an agenda who spread economic fantasies in hopes they will come true.


U.S. Bureau of Labor Statistics, Multiple Jobholders, Primary Job Full Time, Secondary Job Part Time [LNU02026625], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/LNU02026625, November 12, 2018. https://fred.stlouisfed.org/series/LNU02026625

National Association of Realtors, Existing Home Sales [EXHOSLUSM495S], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/EXHOSLUSM495S, November 12, 2018. https://fred.stlouisfed.org/series/EXHOSLUSM495S

U.S. Bureau of the Census and U.S. Department of Housing and Urban Development, New One Family Houses Sold: United States [HSN1F], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/HSN1F, November 12, 2018. https://fred.stlouisfed.org/series/HSN1F

U.S. Bureau of Economic Analysis, Light Weight Vehicle Sales: Autos and Light Trucks [ALTSALES], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/ALTSALES, November 12, 2018. https://fred.stlouisfed.org/series/ALTSALES

An Echo from 2001: A Few Words About Jobs And The Economy

Mark Rasmuson Unsplash.com

This essay was written in January 2001. On the ten year anniversary of the collapse of the old industrial economy it is fitting to take a look back. The industrial economy did not suddenly disappear in 2008; there were signs of big changes long before that, but we had no idea of exactly what was coming our way.

Economic Myths and Fairy Tales

Just as people caught up in the upheaval of the Industrial Revolution knew their economy had been turned upside down and had no idea what might happen next, neither do we. No one really knows what is going on with the economy. Economists in academia who we have traditionally depended upon to unravel economic mysteries and predict future trends can’t seem to agree on what’s happening. While some argue that we are on the verge of an economic Golden Age due to the increasing technical educational of the American work force, others claim that we are facing the same kind of demographically induced calamity that crushed the Japanese economy in the mid 1990’s.

Maybe in another fifty or one hundred years historians will assign a name to the revolution now occurring around us. Although to our eyes the modern economy is a chaotic and unpredictable place, historians of the future will see how our present upheaval merges nicely into the streams of time.

A lot of people who should really know better don’t seem to be aware that basic precepts and standards that applied to economics or employment a few years ago no longer exist. Indeed, employment counselors often tell their new clients that “there’s a place in the job market for everyone”, at the same time that the numbers of long term unemployed is higher than it ever has been and continues to grow.

Just figuring unemployment is challenging. So challenging, in fact, that government statisticians often use six different formulas to figure the state unemployment rate. One of the middle numbers is usually given to newspapers and the public as the “official” unemployment rate. The government isn’t trying to hide anything; it’s just that there is no easy way to define unemployment. And if there isn’t a good way to define unemployment, it’s impossible to put a number on how many people are unemployed. Click here to read all about it.

It’s Nothing New

The truth is that we are in a position similar to that which Americans and Europeans found themselves during the early 1800’s. Although craftsmen of many disciplines existed at that time, the real engine of the worldwide economy was farming. Just about everyone was a farmer — just about everyone had to be because farming was so labor intensive. At that time, economics had been closely tied to agriculture for as long as anyone could remember. A trained economist who knew a little about he weather, growing seasons and transportation could make some pretty accurate predictions about economic trends.

This all began to change in 1781 when James Watt reinvented the steam engine and made it a practical source of power for use in manufacturing plants. It was a much slower world in those days, and at the dawn of the 19th century steam engines were still an expensive curiosity. Gradually though, industry saw the advantages of replacing horses with steam engines. This incredible new technology was much cheaper to maintain and operate than horses, and (unlike water power) could be located just about anywhere.

By 1825 a world shattering transformation was occurring. Thanks to the ever increasing use of steam power agriculture was becoming more efficient, and fewer people were needed to operate the new steam powered grinding and milling machines. At the same time heavy textile industries were flourishing in England and Germany, and the Northern United States began a century long industrial building boom that produced the Steel Belt — that portion of the north central United States that would produce most of the worlds raw steel, trains, railroad tracks, and later, trucks, automobiles and war material.

Young people in Europe and the Eastern United States began leaving farms and moving to cities to work in the new high paying industries. Suddenly craftsmen who had labored for years in order to learn to make beautiful silver and copper dining sets or hand stitched saddles and tack found themselves out of work. With the aide of steam power goods that were once the product of intense and conscientious men patiently creating practical art could be manufactured en mass faster and cheaper than an army of craftsmen. The legend of John Henrys race with the steam engine is a cultural myth invented to explain this bit of economics. (The young ‘uns who entered elementary school after the teaching of American culture became passé can visit the John Henry Homepage to find out about this very relevant allegory.)

Of course, these dramatic changes created some harsh truths for a lot of people. Suddenly skills and abilities that had ensured economic security and social status for centuries counted for nothing. Workers who had been displaced by this technological advancement would need to learn new ways to fit into an economy driven by the steam engine. People who failed to integrate into the new economy faced major consequences — it was as if they no longer existed for any economically related purpose. Men who had previously been artists in metal, wood and leather now found themselves faced with the ignoble future of either shoveling coal to fuel the steam engines, or if they too old to compete with 18 year olds at the end of a shovel, simply becoming burdens to their children.

Does This Sound Familiar?

It should. We are experiencing the same sort of economic upheaval right now. Computers and the Internet are reshaping the entire economy, and jobs that were once plentiful have now either disappeared, or have become unrecognizable. At the same time, measures of economic health are quickly losing their ability to reflect important aspects of the economy.

For example, the service manager of the biggest auto dealership in my city says that that his biggest headache is finding mechanics. This sounds strange to those who remember the old world of fifteen or twenty years ago when it was easy for garages and dealerships to find mechanics. Back then lots of kids were so fascinated by turning wrenches that they trained themselves to be auto mechanics by working on their friends cars for little or nothing. There was a bottomless reservoir of mechanics anytime one was needed.

Today, though, cars run on software and silicone as much as they do on gasoline and rubber. Modern autos are loaded with computers that control so many aspects of the vehicle that diagnostic computers are consulted before a wrench is ever pulled from a toolbox.

What we used to think of an as a mechanic no longer exists.

Anyone attempting repairs on a modern vehicle needs a formal technical education in order to perform anything more complex than an oil change. In the mechanics place is a highly trained technician who understands the sophisticated interplay of computer chips, circuit boards, and hot moving parts. Young people with the basic skills and talents for this type of job are becoming more and more rare.

That’s because it takes far more than a mechanical aptitude and a desire to work on cars to become a mechanic these days. Candidates must be able to read and write well, have knowledge of basic science, (especially physics and chemistry), be computer and Internet literate, and accept the fact that constant improvements in automotive technology means constant education for automotive technicians. With these basic qualifications a young person might get accepted into a training program at a community college and pay $7500 for a two-year course that will be relevant only for vehicles produced three to five years after graduation.

Not surprisingly, there are few people willing to take this road. Young people possessing the degree of talent, intelligence and academic commitment needed to be an automotive technician tend to be attracted to more glamorous and better paying careers.

Car mechanics aren’t the only ones facing this dilemma. Science and technology is elevating the bar for entry-level positions every year and in every industry. Here’s what the US Department of Labor says in it’s comprehensive report on the state of the economy, Futurework — Trends and Challenges for Work in the 21st Century:

“…A 1996 American Management Association (AMA) survey of mid-sized and larger businesses found that 19 percent of job applicants taking employer-administered tests lacked the math and reading skills necessary in the jobs for which they were applying. The AMA’s 1998 survey, however, found that this percentage had increased to almost 36 percent. The sharp increase in the deficiency rate is due, the 1998 AMA report concluded, not to a ‘‘dumbing down’’ of the incoming workforce but to the higher literacy and math skills required in today’s workplace.”

Futurework: Trends and Challenges for Work in the 21st Century

Chapter 7 — Implications of workplace change

In other words, in just 2 years jobs had become so math and literacy dependant that the number of applicants who did not have the education to qualify for them doubled. Think about that for a moment, and then consider that people generally believe that they have the skills needed to perform the jobs they apply for. This means that according to the AMA survey cited by the Labor Department about one third of applicants at mid size or larger companies did not realize that they were lacking the basic skills needed for the jobs they desired. Necessary job skills had become so sophisticated so quickly that the applicants frequently did not realize they did not qualify for the job.

How could this crazy situation have arisen? Because the constant advances in technology are quickly adopted by businesses in order to remain competitive with other companies who are doing the same thing. Competition has become so fierce that huge, well-known companies with familiar names that were once pillars of the economy are frequently going out of business. Sears, JC Penny, Montgomery Ward, and Rubbermaid have all either gone bankrupt or been forced to reorganize under Court supervision.

The increasingly rapid spiral of competition and technological sophistication means that workers are expected to become competent in constantly narrowing and arcane specialties. The sad irony is that while companies complain about a shortage of qualified workers, there are plenty of well-educated workers looking for jobs. The speed of change has become so fast, however, that they may not even be aware of the special skills needed to perform the work.

Sometimes even the most menial of jobs requires sophisticated technical skills.

The sales manager of one of the largest manufacturers of wood chipping equipment in the Northwest illustrates this problem nicely. He frequently complains about how difficult it is to find laborers to work on the plant floor. Although the sales manager blames the wonderful economy for the shortage of workers, he seems to be missing some important facts.

First, why is a sales manager concerned with hiring laborers to work on the plant floor? The answer to that question is summed up in one word: Reorganization. The economy is so competitive that businesses of all sizes and types are constantly reexamining the way they manage tasks. The era of mid level managers putting their feet on a desktop and reading the newspaper are long gone. Everyone one in an organization, from the president to the guy who empties the wastebaskets, must constantly prove their worth to the company. Failure to do so results in cutting hours or eliminating positions, and distributing tasks to others in the organization.

This sales manager has to remind himself that the Personnel Department was almost completely eliminated two years ago and replaced with a temp agency. In addition to managing sales, he also serves as the liaison for the temp agency.

In an economic environment so competitive that salesmen are involved with personnel matters it’s no surprise that laborers must be able to do more than sweep floors and clean windows. In a company that survives on its ability to fabricate metal into wood chippers even the laborers at the bottom of the organizational chart must have technical metallurgical skills.

That’s why laborers at this company, working for just above minimum wage, are required to have at least one year of experience in a metal fabrications plant, and be able to recognize all metals used in the plant on sight, as well as have knowledge of the properties of the metals used. This way the company does not have to train newly hired laborers in skills needed to sort and stack the valuable and reusable scrap metal produced in the course of manufacturing wood chippers.

At the other end of the wage spectrum is a man we’ll call Dave. Although Dave is bright, educated, and works hard, there is nothing particularly unusual about him. There is one thing setting him apart from the rest of us, however. He is paid between $200 and $300 dollars for every hour he works at his chosen profession.

Dave writes and maintains the software that medical offices use to organize patient affairs. Everything from X-rays to billing, appointments to insurance claims is instantly accessible to anyone in a medical office using the software he maintains. The software makes managing a medical office so efficient and economical that medical professionals are willing to pay premium prices to lease it and keep it running.

Although Dave is a good programmer, there is nothing exceptional about his education, background, or skills. He graduated with a degree in Computer Programming in 1985, and had the good fortune to go to work for a small company just starting to market medical software. Unlike most of the others who stared with the company, Dave remained in Oregon rather than move to Silicone Valley, and now is one of two programmers in the Northwest who are familiar with this software. Because his skills are so rare, and result in such economy for the medical sector, he is paid an unusually large amount of money for his services.

Job Hunting Realities

So, what do these examples tell us about jobs in the Information Age?

What they show is that in order to be competitive in the job market people need to possess very narrow, specialized skills that are directly relevant to the company and position they are applying to. It is no longer enough to have a degree, or training or even experience. Transferable skills mean nothing to employers — getting the work done is the only thing that matters. Employers are looking for people who can be effective and economical from the first hour they walk into their new position.

Here’s an example form the Classified Section of the Statesman Journal:

Drug and Alcohol
Program Manager

Provide clinical supervision for an outpatient drug and alcohol treatment program. Qualifications: Bachelor’s Degree in a relevant field and four years of paid, full time Human Services experience with a minimum of four years direct D & A experience, one year of which must have been in a supervisory and/or administrative capacity. Call 541–396–3173 x232 for a Coos County application packet. Closing Date: January 24, 2001. EOE

Statesman Journal Subclassification: Professional 1/7/2001

There are some interesting things about this very typical advertisement. First, notice that the standard advise touting volunteer or part time positions as a way to building skills and abilities means nothing as far as this position is concerned. The ad specifies that only paid, full time experience counts towards the minimum experience requirement.

Does this mean that the experience needed to do this job can only be learned in paid increments of 7.5 hours each? Of course not. This requirement is arbitrary — it has nothing to do with the skills or abilities needed to perform the job; it was chosen only to eliminate “non-professionals” from the pool of applicants.

The trend among employers today is to marginalize volunteer and part time experience by interpreting it as an indication that the applicant is not dedicated to the field or lacks professional expertise. The inference of working without pay is that the value of the worker is very low — skills given away for free have no value. As one employer puts it, “Why would I consider paying [an applicant with a history of part time volunteer work] when he’s happy working for nothing?”

The same thing is true for the education requirement. Notice that there is no specific field of education specified for this position. As long as a Bachelors Degree is “relevant”, it meets the education requirements. Why would an employer be so vague about education requirements?

Because the academic details don’t matter.

Non technical Bachelor degrees, (like those in Liberal Arts, Humanities and Business), no longer imply that particular skills and abilities have been learned. Non-specific Bachelors Degree requirements are included in job announcements only to exclude applicants without an academic history in a particular interest such as Psychology or Sociology, and to ensure basic literacy and general knowledge ability.

Academic degrees, like part time volunteer experience, are being marginalized by employers who view them as a tool to exclude applicants, rather than as an objective measure of skills, knowledge or expertise.

(Indeed, this trend has been present for some time and is continuing to expand. An admissions director for Phoenix University recently said that the trend on the East Coast for liberal arts and business undergraduates is to forgo job-hunting until they get a Masters or MBA degree. Think about that for a moment — earning a graduate degree just to compete for entry-level positions!)

In addition to this, the employer also requires four years of specific drug and alcohol experience and a year of supervisory experience. This job announcement can be summarized very quickly — the employer wants an individual who has been doing pretty much the same thing at another agency.

This is a common requirement among local social service agencies.

In a moment of rare candor the personnel director for one of the biggest social service agencies in town explained that local agencies tend to trade employees back and forth rather than hire people from “outside the loop”. It seems that most of the social service employers in the this area area hire off the street only to fill the most entry of entry-level positions, and look to each other to share the burden of training for positions beyond that.

In other words, there are so many applicants that social service agencies only hire people who hold similar jobs for other local social service agencies. This ensures that new hires will have the basic skills, knowledge, and training needed by these agencies. People who might have experience from other states or vocational fields are routinely rejected for employment, even when they are highly qualified, because there are so many others who are familiar with local rules, regulations, and methods of client care.

What to Do?

That is fodder for another essay. The first step, though, is to reassess our assumptions about jobs and the economy. Things are changing so fast that what might be true now won’t be in a few months or years. Of course, the corollary is that what was true a few years ago may not be true now. Loyalty — either from employer to employee or vice versa — no longer exists, and the concept of employment is giving way to the necessity of employability.

Anyone who wants to survive in our increasingly turbulent and unpredictable economy has got to make being well informed a priority. Read books about employment and the economy. Talk to people who hire. Call the people who place job announcements and ask them about why they ask for particular skills or word their advertisements as they do.

The best tool we have to make the job market more comprehensible is knowledge. Knowledge is out there; we might not like what we find, and what we find may not be what we think things ought to be, but it’s the only reality we have.


This essay was written in January 2001, seven years before the official onset of the Great Recession. The seeds for our present jobs problem were brewing even than, obvious to anyone who would look below the surface of news stories and rosy assumptions by employment “experts”. Now we must be just as vigilant in our analysis and suspicious of the pronouncements of experts.