
America is pushing the labour market to its limits - rbanffy
https://www.economist.com/finance-and-economics/2018/09/15/america-is-pushing-the-labour-market-to-its-limits
======
duxup
It's frustrating reading about how hot the labor market is compared to my
personal experience.

I worked in a technical field with a number of very skilled, very good people.
These are guys you can tell "hey we need this fixed" and they're capable of
learning what is needed to do the job with very little hand holding, and
they're great teammates too. At their job they were highly valued people and
well paid. An acquisition and layoff occurred and many had trouble finding
jobs, everyone who did find a job is making less now.

You see tons of jobs out there on websites and even "desperate" listings, but
the hiring process takes forever, and these guys just don't get hired.
Something seems off.

These aren't guys with traditional backgrounds, mostly "tech school" types,
but they've got decades of experience and are very capable. The folks I worked
with were mostly hired under the idea that heir resume showed they were
capable and could learn, but I don't hear anyone talk about that anymore. The
hiring process seems to demand only people with EXACTLY the skills listed no
matter how absurd the list, and employers would rather gripe about not hiring
anyone than actually hire someone. Nobody wants anyone to learn anymore or
take the chance on someone having to learn.... even if the job would seem to
require it. It's a nasty combo of the market changing quickly and seemingly
the market demanding only exact qualifications.... you can't have both.

I decided to change careers and move into web development. Needless to say
that was a pay cut but I was ok with it as I am changing careers (and I really
enjoy the work). The process of looking for a job was brutal. It felt like
there was an artificial filter of recruiters and HR whose job it was to delay
hiring and filter out all but what they imagined was a perfect candidate...
but they don't tell you who that is, and honestly those folks have no clue
what the day to day job even IS. It's like they pick the worst people to
initially filter candidates.

I remember when recruiters and HR were deferential to the actual hiring
managers, now it seems more the other way where people who really don't know
the job filter what the hiring managers see... and even in at least two cases
canceled a hire because they didn't like something. That makes no sense.

In the meantime everyone wants a "senior" (I put that in quotes because
everyone's idea was absurdly different) and nobody wants anyone who is
learning.

I was fortunate and found a job, first person that I felt actually tested my
skills via a take home project hired me. After being hired now I get a bunch
of contacts from places I already applied, even was rejected, sometimes for
the same jobs they didn't hire me for. I wasn't good enough now, but "oh man
he got a job" is apparently enough to get my foot in. Meanwhile capable people
aren't getting offers. It's absurd.

The news about hot job market, lack of rising wages, and wonky hiring systems
all seem very weird, and to conflict as far as a narrative goes.

~~~
Balgair
I'll echo the sentiment with anecdata: In my most recent job search, I applied
to ~5k jobs before getting hired via networking. I know the online ad-boards
work less well than spam email, but I mostly used them as lead generation (HN
who's hiring too, but that was near useless). Still, it was ~5k jobs that I
matched with and applied for over about 14 months. I interviewed at <10
companies, and got 3 offers (not too bad!). The most serious offer was for
~90k on the Peninsula, no health insurance. Due to personal medical issues,
that was a hard pass (pills are ~7k/mo w/o insurance)

On the rare chance that I got a rejection from an actual person, I'd email
them with a 'resume bounty' request (like a bug bounty); $15 PayPal to tell me
where I am going wrong in my applications (basically, I'd buy your lunch). No
one took the cash, as they all'd just email me back saying that I was perfect,
just that they already hired, I lacked 5 years in skills $XXXX$, I wasn't
local, I was overqualified, yadda yadda yadda.

I've _really_ tried to get into the mind of these companies and HR
departments, but I can find no logic there. I've taken people at the larger
companies in my sector out to lunch, coffee, beers, etc to pick their brains.
The only thing I can think of that I have a black mark in some database or
another that a lot of people use (credit is near perfect, references are a-ok,
career path is a bit of a mess but what Millennial's isn't? ).

I've no idea what is going on.

~~~
megaman8
What's going on is that there's an oversupply of Skilled labor. They already
found someone else. The greater the oversupply, the more qualified candidates
they have to reject.

I know one person, she's a data analyst (2 years experience, +5 years of
marketing experience) here in the bay area. hasn't been able to get a Data
analyst job for 3 years now, even after applying thousands of jobs and
interviewing dozens of times. Finally, she was forced to take an after school
baby-sitting job for 17$/hour (bay area).

~~~
megaman8
Well, she doesn't have a computer science degree. She's an MBA who's learned
SQL, tableau, excel, etc (working at a large company 500+ people). She pulls
out data with SQL queries and knows how to use excel inside and out. she's
made it all the way to the final interview, but everytime they figure out she
had a baby, they assume she's going to have a 2nd one.

~~~
eli_gottlieb
Isn't that an open-and-shut discrimination case?

~~~
cannonedhamster
Unfortunately no. You can easily not hire someone for "fit" without describing
why you didn't think that they fit. You can also say a million other legal
reasons for not hiring. Unless they specifically say that you were not hired
because you're a momma then you've got a long, long hill to climb.

------
jayalpha
I had tremendous problems finding a job with a background technology (STEM
PhD) in the states. In the end I had to leave to China. If you look for a job
here they ask you "Can you start tomorrow?" They mean it. Nobody can afford a
1st, 2nd, 3rd etc. interview here since they know other will ask the same
question. For my first real job here a company screwed around two months with
the contract. When they were ready I was long gone from the job market.
Impossible here.

Is it like this now in the states?

~~~
prolikewh0a
Everything is contract work in technology now unless you're a software
engineer. They do exactly the same things. It's cheap exploited labor.

~~~
joezydeco
In the last 18-24 months I've seen a huge uptick in software positions are are
C2H, not full-time salaried.

~~~
prolikewh0a
Yep, even they're becoming contract. C2H could mean 1-2 years working for a
company with no benefits, no job security, and much lower pay.

This is not independent contractors I'm talking about, it's contract companies
that are there solely to exploit the workforce.

------
xg15
What I find remarkable about this kind of articles is how a situation in which
economic activity and employment is going so well that the labor market might
shift in favor of employees/workers is described as "the economy is running
hot", a self-evidently bad state that sensible economic policy should seek to
avoid.

I'm kinda baffled by that. I'm no economics major, but this seems to imply
that keeping wages low (or at least decoupled from economic growth) is
actually a _goal_ of economic policy. Is that true?

~~~
codelord
I think there's too much focus on raising wages. While that's not really the
way to improve the situation for low incomes. One should seek to raise the
buying power. A stronger dollar, can mean higher buying power for imported
products. Keeping the inflation low is also as important as raising wages.
Another positive factor is increasing the productivity. The more you produce,
means there's more stuff for everyone to buy and that drives the prices lower.

~~~
xg15
> _One should seek to raise the buying power._

This sounds an easily defeatable measure. If I'm a politician and encourage
the economy to dump all kinds of cheap, low-quality crap onto the market, I
will, on paper, have greatly boosted the buying power of low-income households
- except not in a way that will be helpful for them: They will have choice
between an enormous range of cheap products, except they will all be low-
quality and likely not what the members of the household are looking for.

> _A stronger dollar, can mean higher buying power for imported products._

See other post. Additionally, this does not cover products or services you
can't import, e.g. housing.

> _The more you produce, means there 's more stuff for everyone to buy and
> that drives the prices lower._

Except a lot of that stuff is not actually produced for the domestic market
but exported. Also, between "we produce more" and "we lower prices" there are
usually several layers of management who decide how to price products, which
costs to pass on, which products to sell at a loss and which products to sell
with a margin.

The lower your disposable income, the more your life will depend on that kind
of strategic decisions, independently of what products you're able to buy at
any particular point in time.

~~~
refurb
_This sounds an easily defeatable measure. If I 'm a politician and encourage
the economy to dump all kinds of cheap, low-quality crap onto the market, I
will, on paper, have greatly boosted the buying power of low-income households
- except not in a way that will be helpful for them: They will have choice
between an enormous range of cheap products, except they will all be low-
quality and likely not what the members of the household are looking for._

That wouldn't be an increase in buying power if the replacement item is of
lower quality/value than the original.

------
tabtab
Politicians are not following Keynesian principles, instead focusing on short-
term gains. We should be paying down debt during the top of the cycle so that
we have spending money for slumps. Keynesian policy is Grandmother's advice:
"save up for bad times." The recent tax-cuts were stimulus at the WRONG time.

~~~
cannonedhamster
American politics nowadays has little to do with anything other than cult of
personality. The way we're set up exacerbates the issues as there's little
incentive to work the middle of the aisle anymore where some of the best work
happened. I'm a firm believer in conservative fiscal policy and liberal social
policy. Good luck finding that in modern politics.

------
rtisdale
These articles are almost always based off the wonderfully misleading U-3
statistic instead of the U-6.

[https://www.investopedia.com/articles/investing/080415/true-...](https://www.investopedia.com/articles/investing/080415/true-
unemployment-rate-u6-vs-u3.asp)

The U-6 unemployment rate is nearly double that of the U-3 and is currently at
7.4 percent

[https://www.macrotrends.net/1377/u6-unemployment-
rate](https://www.macrotrends.net/1377/u6-unemployment-rate)

There haven't been any major gains to wages since the 80's except for high
wage workers, who have seen a nearly 35% increase.

Page 4 for table.

[https://fas.org/sgp/crs/misc/R45090.pdf](https://fas.org/sgp/crs/misc/R45090.pdf)

If the unemployment rate is so low why have we seen so little gain to our
wages in the past 40 years?

The issues are greater than just faffing about with the unemployment rate but
learning to spot this sort of trickery and call it out is important.

Here is a great article on Forbes that goes into some of the reasons why this
is the case.

[https://www.forbes.com/sites/teresaghilarducci/2018/07/18/wh...](https://www.forbes.com/sites/teresaghilarducci/2018/07/18/why-
wages-wont-rise-when-unemployment-falls/#5a01251a5d9d)

~~~
bjourne
No, U-3 is not misleading. See the discussion at
[https://news.ycombinator.com/item?id=17475481](https://news.ycombinator.com/item?id=17475481)
The point of metrics is to make them comparable. Comparing apples to apples,
the US unemployment rate is 3.9% vs the EU average at 7.1%. If you want to use
U-6 instead, you can make an orange to orange comparison and get 7.4% for the
US and roughly 14% for the EU.

Given that EU wages have increased much more than US wages we can conclude
that unemployment has very little to do with wage increases. And since
empirical evidence trumps conjectures, we throw the so called "law" of supply
and demand into the garbage bin.

~~~
shawn
_And since empirical evidence trumps conjectures, we throw the so called "law"
of supply and demand into the garbage bin._

Would you mind expanding on this point? It wasn't supported by your other
assertions, and I'm curious how such a counterintuitive conclusion might be
true.

~~~
gota
I interpreted it as follows:

If unemployment is indeed down (and he asserts that it is) then the supply of
extra workers is down also.

The salaries, following the supply/demand ratio, should be up. And they are
not.

Since they're not, the law of supply/demand dictating 'prices' does not work
for worker's compensation.

~~~
bko
What people call "salaries" does not include employer cost of benefits. For
instance, US health care spending grew 4.3% in 2016 [0]. Since many employers
cover health care in the US, a growth in health care expenditures on the
employer side can be seen as a increase in salary. And since health care
benefits is a disproportionate amount for low or middle income workers, this
will hamper their wage growth the most in relative terms.

In other words, if 25% of your "pay" is health care, and health care is
growing at 4%, your effective "salary" can be said to be growing at 1% as long
as your premiums and coverage stay the same.

[0] [https://www.cms.gov/Research-Statistics-Data-and-
Systems/Sta...](https://www.cms.gov/Research-Statistics-Data-and-
Systems/Statistics-Trends-and-
Reports/NationalHealthExpendData/NationalHealthAccountsHistorical.html)

~~~
eptcyka
I think the meager growth in health care spending is not nearly big enough to
cover the discrepancy between the increase in salaries predicted by
extrapolating market forces and what the salaries actually are.

Not to mention, most low paying jobs don't provide health care.

~~~
bko
This is something that can easily be referenced. Benefits make up around 30%
of workers wages with health insurance around 8%. If health care expenditures
grow at 4%, that's 0.32% wage growth from health care costs. You may consider
that insiginificant but I don't.

[https://www.bls.gov/news.release/ecec.nr0.htm](https://www.bls.gov/news.release/ecec.nr0.htm)

~~~
SketchySeaBeast
> If health care expenditures grow at 4%, that's 0.32% wage growth from health
> care costs.

So if you earn $100,000 each year you get a raise of $320 due to health care?
To be honest with you, that seems pretty insignificant. And it's also sort of
a feedback loop - the quality of care isn't increasing - the system is only
costing more because the system can charge more. All that's doing is
accounting for "healthcare inflation", and if a cost of living raise is a
significant raise, something is wrong.

------
throw2016
Greenspans vulgar comments on labor to congress [1]. First labor is unique,
you can't create value or wealth without labor and for the last 40 years
policy has been systematically privileging capital above everything else and
wages have stagnated.

But either they get their fair equity or someone else is going to have to pay
for housing, education, medicare and more, if Bezos and Waltons don't its you
or us who are going to be stranded with the bill.

So the middle class already paying a huge chunk of income to renteers and
asset inflation by the financial class when not bailing them out them out also
have to bankroll poorly paid labor by 'wealth creators' like Bezos and
Waltons.

If your grand plan is feudalism and a new class of serfs this is exactly how
you would go about creating it. And there are other consequences of a narrow
view of wealth and society.

If people are poorly paid then demand is going to tank hence the sudden
fascination for UBI by neoliberals and libertarians. And when people are not
stable you have an unstable society, things like marriage and stable families
goes out of the window, fewer are vested in the future, the pipeline of new
workers comes to a standstill and at this point either you start subsidizing
families or import labor. May you live in interesting times.

[1]
[https://www.federalreserve.gov/boarddocs/hh/1997/february/te...](https://www.federalreserve.gov/boarddocs/hh/1997/february/testimony.htm)

~~~
turtlecloud
I agree with what you say. The percentage of millennials I know starting
families is extremely small. The sentiment is quite low and quite negative.

I believe that the only thing stopping the ruling political elite from
imposing complete serfdom is the 2nd amendment and guns.

The recent push by Mainstream media on gun control is quite alarming and I
wonder if young children now are goaded into school shootings by the messages
seen in mainstream media.

Anyways, throughout history the balance of power has always been revolution /
revolt on the ruling class when things become too unbearable.

I wonder how many amazon workers secretly support taking the head of Jeff
bezos a la Marie Antoinette.

------
sparkling
If someone from the Economist tech team happens to read this: i had to click
away 4 different nag pop-ups before i was able to even read the articles
headline. Cookie consent (thanks EU), some user experience survey, a
newsletter sign up, and a overlay ad for your paid subscription service. Stop
this bullshit, it is unacceptable.

~~~
korm
The state of news sites is well known to everyone on HN. It's not nice to have
this same comment pop up every time instead of discussing the article.

There are article outlining services and add-ons you can use. I really don't
mean to offend, I just think it would be better for HN if this wasn't one of
the first comments on every thread.

~~~
aikah
> The state of news sites is well known to everyone on HN. It's not nice to
> have this same comment pop up every time instead of discussing the article.

This is a technology website, I find UX discussion pretty relevant since all
these news sites have horrible UX, and it should be pointed out each time they
fail at basic UX. They don't need 50 nag screens. They could put most of them
on the side or the top of their page, including GDPR notices. The reason why
they use these invasive and annoying nag screens is that browsers ended up
blocking all these annoying window based pop ups at first place.

Online news media just can't learn their lesson.

~~~
korm
I just don't think the online news media will learn anything from tangential
HN discussions so we might as well do away with these types of comments and
either discuss the article's content or not visit the link at all. I think
that's the proper etiquette, unless of course there's something exceptional
worth noting.

I too wish this terrible UX was an exception, don't get me wrong.

------
pjc50
People will no doubt argue over why this is, but to me it seems readily
traceable to Trump's implementation of classic Keynsianism:

[https://www.marketwatch.com/story/john-maynard-trump-
preside...](https://www.marketwatch.com/story/john-maynard-trump-presidents-
tax-cuts-spending-spree-evoke-liberals-favorite-economist-2018-02-09)

Traditional ideological Republicans hate this, but given a choice between
ideological consistency and power Republicans will pick power every time.

[https://eu.usatoday.com/story/opinion/2018/08/20/donald-
trum...](https://eu.usatoday.com/story/opinion/2018/08/20/donald-trump-
trillion-dollar-plus-deficits-fiscal-ruin-column/986236002/)

Is this tax cut for the rich accidentally a populist measure? Is that why the
labour market is growing but wages aren't rising?

~~~
ainiriand
I think that the trend has been like this for a long time...

~~~
tabtab
We need something like the "balance budget amendment". The problem is nobody
will vote for it because it can slow the economy in the short term, hurting
their re-election. Such a bill would have to kick in _gradually_ to be backed
by representatives, perhaps over say a 20 year period. It should also allow
for stimuluses during slumps. If the budget is balanced via good-times, then
there should be enough spending margin for the bad times.

------
mifreewil
> The Federal Reserve has been raising its benchmark interest rate since
> December 2015, and will probably do so again this month, from a range of
> 1.75-2% to 2-2.25%.

> This is the central banker’s version of twiddling the bath taps, but on a
> national scale. It requires a delicate touch. Too much cold water, in the
> form of higher rates, will choke off demand and hence jobs. Too much hot,
> and rising inflation will eat away at people’s spending power. The aim is to
> find the perfect temperature, where employment is as high as it can be while
> inflation stays subdued.

> It is as if the rate-setters must adjust the flow of hot and cold water not
> only without knowing what temperature is most comfortable, but also without
> knowing how hot the bath is to begin with—or when they will be getting in.

Reading this, you'd swear we were living in a communist society where
academics and policy makers are smart enough to centrally plan the economy and
to guess what the price of the most important thing in our civilization should
be - money.

~~~
AmericanChopper
Controlling the supply of money is all the Fed is doing here, which is nothing
even similar to central planning.

~~~
spectrum1234
There is no free market on the price of money. This is exactly central
planning.

~~~
AmericanChopper
A centrally planned economy is where a single central authority determines how
investment and capital will be allocated. Controlling the supply of money is
not capital allocation, and it is not central planning. Central planning is
not simply any time a central authority does anything at all.

~~~
mifreewil
> A centrally planned economy is where a single central authority determines
> how investment and capital will be allocated.

I think you might be getting too semantic here. If you looked up the
definition of a centrally-planned economy in an academic economics book, that
might be what you get.

When the Fed or any central bank lets one institution fail, saves another,
buys more or less government debt, purchases mortgage-backed securities, or
any other security, I don't see how you could not call that central planning,
investment, or capital allocation.

~~~
AmericanChopper
Because in this case no central authority has a monopoly on resource
allocation, or even anything that comes close to a meanful level of control
over resource allocation.

Central planning is a very well defined system of economics, and involves an
authority taking almost complete control of the supply side. The federal
reserve system does not resemble this in any way. The Fed isn’t particularly
interested in how resources are allocated, and generally only concerns itself
with the supply of money, and maintaining stability in the market. It has no
opinion on what goods and services should be supplied.

The existence of a central bank does not equate to a planned economy.

~~~
bachbach
Can you outline a scenario in which there exists no central bank?

While everything you have said is true, I feel as though there exist giant
icebergs gliding silently past your watertight steel hull.

~~~
AmericanChopper
A central banks job is really only to control the flow of money. There’s a few
decentralized alternative models out there. That’s what bitcoin and all other
cryptocurrencies are.

I really don’t know what the second part of your comment is getting at
though...

~~~
bachbach
Cryptocurrencies are not used directly in the purchase of stock, real estate
or consumer transactions - this isn't an attack on them - just an observation
that private banks used to issue money before central banks existed - and
those monies would have been used for those sorts of purchases. Presently
cryptocurrencies in use look more similar to those tokens/vouchers companies
offer except with a secondary market, esp. the ICO model.

I was pondering at the idea that central banking or any regulation of capital
flow in society is a strange topic. Central banks are these organizations -
people dressed in suits, they have office chairs and receptionists - but this
window dressing as corporation or government office distracts us from what is
a very strange topic. You have this complex network represented by a number.
What is being said by this? That the Federal Reverse is economic homeostasis
and the interest rate represents the equilibrium?

Half the time I think central banks make sense and the other half of it I
think everybody must be insane. Seems like we could use the rationale for
central banking to perform other activities, like population control. Nobody
makes the case for something like that but how is it crazier? They're
different forms of capital, right?

~~~
AmericanChopper
Perhaps your error is thinking of currency as a part of the natural world,
rather than what it really is, an invented medium of exchange. In order for it
to work in its intended fashion, it must have some scarcity. It can’t be so
scarce that it hinders growth, and it can’t be so abundant that it causes too
much inflation. It’s not the only means of exchange, it’s simply the most
efficient one, and the role of the central bank is primarily to maintain
appropriate balance between the forces that push and pull on the money supply.

~~~
bachbach
I realize money is an abstraction - what I'm saying is that the model - its
mapping onto real activity is questionable to people besides hippies. Usually
when a small town or community provide their own currency there is an surge of
economic prosperity. Eventually central banks act as a leveler and the
connection between small businesses like startups and the macroeconomy is so
attenuated it might be compared to those projects in physics to reconcile
small physics and big physics.

The topic is much more mysterious than you're allowing for!

------
maerF0x0
So if unemployment is so low, then its time to wind back supports for those
who claim they cannot find a job.

Also might be time for a minimum wage increase too.

~~~
soared
How does that logic work? There will always be (and always should be) some
amount of unemployed people.. how does that number being smaller impact the
amount of support they should get? I'd argue the opposite - they are having
more trouble despite it being easier, and therefore need extra support.

~~~
maerF0x0
The logic works like this: We had put programs in place to deal with a
recession. Now that the recession is over the programs are just wasted
spending that needs to be put into things like paying down debt so we have
some leeway when the next recession comes around.

~~~
soared
Why is getting unemployed people back into the workforce wasted spend?

~~~
maerF0x0
at least on the surface it looks like a subsidy for companies that pay too
little (and workers can accept "too little" when in conjunction with said
subsidies) . If it was too little to live off, with subsidies removed, workers
would demand more pay and we'd stop underwriting businesses that do not
warrant their underlying resources (the workers).

~~~
soared
It sounds like you're discussing low-income benefits and not unemployment
benefits. Unemployment kicks in when you are actively searching for a job but
can't find one - not when you are underemployed. Your issue is definitely
real, just separate.

