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I'm really confused - when did we suddenly start having a labor shortage?



Unemployment numbers, as with most official government numbers, are based on a combination of surveys and self-performed actions, such as filing for unemployment, the latter of which essentially amounts to self-reporting [1]. These results are then aggregated into six metrics, U-1 through U-6 [2], of which U-3 has been designated the official and widely-quoted unemployment rate.

The main value of U-3 isn't that it's a particularly insightful reflection on job health, but rather that it's easy to measure, its definition is consistent, and captures a particular subset of the population that has demonstrated overt desire to participate in government programs that ostensibly help them on the path towards employment. This self-selects for workers exceeding a particular desperation ratio, while not counting people who may think that they'd prefer to work, but haven't taken a government-defined sequence of steps towards doing so.

Seasonally-adjusted U-3 is low right now, around 4.1%, so in macro terms the pool of people who have taken overt steps towards getting a job while still not having a job is shrinking. This means there's fewer candidates for a particular position, and on average, less of a chance that any particular candidate is qualified for any particular position. You could argue that this means there's a labor shortage.

[1] https://www.bls.gov/cps/cps_htgm.htm [2] https://www.bls.gov/news.release/empsit.t15.htm


For low skilled jobs, the immigration crack down might have had some effect. It's certainly had a big effect in construction. The legit bigger employers might have always been hiring people with their paperwork all in order, but the smaller contractors are now competing with them for the same pool of legit workers. The ex-cons are the ones who can fill the gaps for people looking to get cheaper labor.

I knew a guy a few years ago, when things were more lax, who lived in Bisbee, Atizona and he said that since it was right next to the border and their was a big border patrol station there that there weren't ay illegal immigrants around, so if he wanted cheap construction help he had to hire ex-cons.


The irony; you can't find any illegal immigrants to hire -- which is against the law! -- so you have to resort to hiring people who have already broken the law.


Broke the law, got caught, served their sentence, and are now looking to re-join society.

As opposed to those who broke the law and haven't been caught yet. (Different laws, granted.)


Economists consider unemployment around 5% as "full employment".

https://en.wikipedia.org/wiki/Full_employment

Hitting that is one way of measuring whether there is a labor shortage. At the moment it does happen to coincide with wage growth (which should be higher when it is more difficult to hire people).


But economists define shortage as a situation where an external mechanism (like government intervention) prevents price from rising. The fact that we are seeing wage growth says that there is not a shortage.


Note that the article doesn't contain the word "shortage". It's just the continuum of supply and demand: if people like the ones you hired last year can't be found this year, you have to pay more, or consider those you'd have overlooked, including felons. If they have a stronger bargaining position, they get a better deal.

Note that the article also doesn't contain the word "immigration". It deserves to be noted that the jobs being discussed here have a huge overlap with the jobs often filled by unskilled immigrants. Whatever your views on ex-cons and low-skill foreigners, I think it's important to understand that there is a trade-off between them.


We do a shitty job at educating people, so it’s hard to hire qualified people in many industries.

Try finding a master plumber or electrician. Or a mid level IT person. They don’t exist.

Companies run so lean there’s no pipeline of internal candidates either. Where I work, it’s impossible to hire competent managers with technical skills. The normal places you’d look are full of young/inexperienced and old/stagnant.


I am working at a place now with plenty of old and good managers who started with coding. If you call someone who stayed at a company more than 5 years "stagnant", you will never find a good manager.

Anyway. They've got good pay and good power in their positions. They rarely change jobs, you won't see them much in the job market.


I can't speak to plumbing and electrical work, those aren't my industries but

Or a mid level IT person. They don’t exist.

My knee jerk reaction is to say "I absolutely refuse to believe this is true", but I will concede that the problem (here, I am defining problem not as a shortage of qualified talent, but a shortage of qualified talent that actually progresses to getting hired) exists because of symptoms you correctly highlighted "pipelines" and "competent managers". I will admit-however-to being biased as someone who's worked in IT for decades and later became a technical recruiter with an agency who wanted someone on staff that could have conversations with tech professionals on a meaningful, personal level.

Unrealistic or otherwise unsustainable hiring manager expectations and offensive constraints on salary compared with demanded skills seem to have created artificial scarcities of talent in IT hiring (pipeline). Candidates are expected to come in the door having every bullet point in a 120 bullet point job ad satisfied as to core-competencies, and when hired, they're given a workstation and sent off to the grind with just enough training and grooming to know the name of the product and the ability to rattle off a list of libraries and frameworks used. Skill gaps get resumes thrown out, even if it's some middling gap that with time and support from senior techs can be rapidly closed with a dose of on the job training. Something that seems as extinct as the pterodactyl nowadays.

Heck, just last week I had a talk with a recruiter who was looking for a DevOps Engineer (not strictly IT in the traditional sense of the phrase, but I bring this up to highlight my point) and we joked about one job spec that was looking for a senior level expert with five years experience in Kubernetes (competent managers). Let that one soak in. The hiring manager demanded a five year expert in Kubernetes, which hasn't been around for a full three.

My recruiter friend told me they dropped this client after a few more job specs like this because they couldn't get a single candidate past a pre-screening due to hiring manager expecting the world-and they were preparing to do the same to a few other clients for the same reason. I asked if she were worried about what this would do to their billings "No, because we have other clients who pay us more, but have much more manageable expectations on job candidates."

I wish this were the exception versus the norm but if I have to hear one more time that there aren't qualified IT people I will probably rip what's left of my greying hair right out of my head because if this is true, it's not the fault of IT personnel, it's the fault of everyone involved in the hiring process refusing to manage their own darn expectations.


"offensive constraints on salary"

This is the entirety of it right here. There's only a shortage when your pay is below market.


This relates to my experience from within a company. When recruiters don't want to work with you anymore, there is something wrong going on with you.

There was also the issue with salary. You won't find any senior DevOps with a clue because anyone who can ssh to a server moved to contracting and is paid double what your perm job is offering.


True. Optimistically, the current "shortage" might result in getting chronically unemployed people back into the job market. People who long ago gave up on finding a job.

That said, we should introduce some job training for these folks since their skulls are likely severely out of date.


There's a labor shortage of people who are going to do the tedious work. The good factory job in part requires a dependable worker. In many places, that dependable worker is hard to find and factories are switching to robots (e.g. https://www.washingtonpost.com/national/rise-of-the-machines... )

> The robots were coming in not to replace humans, and not just as a way to modernize, but also because reliable humans had become so hard to find. It was part of a labor shortage spreading across America, one that economists said is stemming from so many things at once. A low unemployment rate. The retirement of baby boomers. A younger generation that doesn’t want factory jobs. And, more and more, a workforce in declining health: because of alcohol, because of despair and depression, because of a spike in the use of opioids and other drugs.

> ...

> Companies now could pick between two versions of the American worker — humans and robots. And at Tenere Inc., where 132 jobs were unfilled on the week the robots arrived, the balance was beginning to shift.

> ...

> After an hour the workers were heading back to their cars, one saying that everything “sounds okay,” another saying the “pay sucks.” Bader guessed that two of the four “wouldn’t last a week,” because often, he said, he knew within minutes who would last. People who said they couldn’t work Saturdays. People who couldn’t work early mornings. This was the mystery for him: So many people showing up, saying they were worried about rent or bills or supporting children, and yet they couldn’t hold down a job that could help them.

This extends to farms (who often prefer immigrants because they're ok with working with large animals). For a bit on the labor storage in Wisconsin: http://host.madison.com/wsj/business/wisconsin-businesses-gr...

On the other hand, you've got an ex-convict. Many of them are people who have messed up somewhere in the past and don't want to go back.

I am in Wisconsin (and work in the public sector), so this is something I'm a bit more familiar with than other states... and also happens to be the subject of the article... http://buybsi.com/images/PDF/MapofIndustries.pdf - note that three of the facilities are teaching farm skills.

Tying the two articles together - the work release are people that you're sure are going to show up and are going to be drug free. They're not going to stop at the bar on the way home and come into work the next day with a massive hangover.

And when they get out... they are often good workers. https://www.npr.org/2016/04/22/475228335/do-felons-make-good... ... and there's something for the employer too - a tax credit. https://dwd.wisconsin.gov/jobservice/taxcredit/wotc.htm


Have you not seen US unemployment data?


There's been a labor shortage in the big cities for about a year, though IME that shortage hasn't extended to smaller cities or more rural areas of the country.


So its another symptom of rising real-estate prices then?


No, it's a symptom of capital concentration. Big cities are growing economically because that's where the money is, thus that's where the startup and VC money goes. The rest of the country isn't seen by investors as the best place for growth, so remains relatively underdeveloped.




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