Posted on 10/27/2010 5:01:22 AM PDT by expat_panama
The second is a claim which has nothing to do with the post. Whether it is true and whether this belief is well founded is irrelevant at the moment: the post was a reply to yours, where a bunch of "evidence" was submitted; I merely showed that none if made much sense. As for 1 above, you appear to have missed the point. The article claimed that (i) recruiters complain about the difficulties of finding people and (ii) take longer to do do when compared to five years prior, which, it concludes is (iii) inconsistent with the existence of shortages. I pointed out that, while (i) and (ii) are factually correct, they are not inconsistent with (iii), as the article incorrectly claims. These factors are easily explained by the reduction of applicants' costs in submitting the resumes, caused by the Web-based and other computer-related means that came into existence. Where 100 people sent resumes a few years earlier, now 1000 do so. The cost is thus pushed onto the recruiters, who now take longer to weed out additional resumes. In other words, they are now less efficient (hence (ii)). This does not mean that they are effective: they may still fail to find the right candidate, ( hence (i)). None of that has anything to do with (iii): the WSJ author appears to see a logical connection where there is none. [Worse, actually, he (a) assumes that this fallacious connection is self-evident, and does not even bother to argue that it exists; and, (b) confuses efficiency with effectiveness, which is particularly surprising for someone writing for the WSJ].
Of course, not all those additional resumes need to be second-class. The point was that the average quality decreases, which renders the process longer. That is sufficient for my point, and that is all I was trying to say.
But if you insist, in the case of Microsoft, one can actually make an argument that all of the additional resumes are second-class. This is because an applicant, incurring considerable costs, had to have enough confidence that he can actually handle the required responsibilities. MS is notorious for taking the best and conducting wacky interviews. Now the attitude has changed; the logic is "What does it costs me to apply? why not? what if they take me?" I have witnessed the same change in another type of organization. It happens everywhere: where previously people knew that to apply for a Harvard faculty position you had to be from a prestigious enough university. Now they receive applications from those who have not done any kind of research, let alone outstanding research, as Harvard requires. This causes smiles, of course ("Does (s)he even know what we do around here? has (s)he read the job description before applying?"). But it costs nothing from Chippendale University to apply and, as ridiculous as it is, some do. As an elite employer, Microsoft is a similar position. Yes, the vase majority of additional applications are second class. But, to reiteration, this was not central to the argument.
02. Re: your critique of the argument that decreased salaries demonstrate no shortage of skilled workers because there could be a shortage of “skill work”
No, please reread what I said: the price-based argument, to which the author (not I) appeals, does not apply in the presence of rationing. From their basic college classes people often remember the laws and theorems but not the assumptions under which they hold. The price responds to supply and demand only when they are unconstrained.
The author thus falls into a logical trap. "If there were insufficient supply of skilled labor, its price would rise," he argues. "It does not. Therefore supply is not insufficient." This does not apply in the presence of rationing. Please read a post on this thread where I give an example of a "market for Einsteins."
Let me give you a closer-to-home example. Suppose you sell sell 100 identical devices per month, a certain component of which you buy from another manufacturer, and that supplier has a plant with capacity of 110. Suppose your demand jumps to 200 units. You accordingly request 200 components to be produced next month. What will happen to the price of those components. First, the supplier will inform you that the price you pay goes up because the additional 10 units beyond 100 must be manufactured during the night shift, for which he pay more his workers. Here everything is like in Econ 101. Your demand on the supplier went up, and so does the price --- as long as the demand is under 110, the capacity of the plant. But what about the remaining 90. No increase in price will satisfy your demand, simply because production is constrained. The outcome is rationing: the price does not increase (any further than it did up to 110) and some portion of your demand (90) remains unsatisfied. You will be complaining about the shortage of components. The WSJ author at this point says, "Nonsense; if there were shortages of components, the price would be rising but it does not (beyond that for the quantity 110)." Like many others, he simply misunderstands the law of supply and demand: your shortages are real, although the price does not rise.
The problem with skilled labor is exactly the same: we do not manufacture (educate) enough of it. Which is why the numbers I pointed you to are important, in contrast to all the unrelated and logically incorrect verbiage of the articles. Those that argue for the absence of shortages, not I, point to numbers such as 70,000-80,000 of graduates, but overlook the fact that one half of them are foreign. Regardless of whether shortages exist, their argument is therefore fallacious: the actual number is closer to 30,000. [You may be interested: today's NYT quotes the former chancellor of MIT who says that we are 28th among the industrialized countries in the number of science/engineering graduates. Need I say more?] The same thing occurs in all graduate professional programs. Witness how all major MBA programs brag that about one half of the student body is foreign ("You will get international exposure and personal networks if you enter our program"). Does this imply that the number of American MBA graduates is only one half of the total? Of course it does. And the proportion is far worse in sciences and engineering. In sum, any argument that is based on the total number of graduates is fallacious. That is what your articles/blogs use.
Re: your quotation “skill work” from my post. This was a typo; that should've been "skilled work." I am surprised you found it important to point that out, but thank you for bringing it to my attention.
02a. The topic at hand is from Mars, and your from Greenspan quotation is from Jupiter. Before you read something sinister in his words, you should at least understand them. He talks about (i) income inequality in general and in particular about (ii) artificially high salaries, which increase that inequality, pointing out that (iii) extremely high inequality is unsustainable and therefore undesirable. He could also add that the same factor cause distortions in labor markets, for which we all pay. Now what problem do you have with that?
You appear to think that, when it comes to "American salaries" the more is better. It is not always so. Again, you may want to study some more economics before you reach any conclusions.
03. you seem to have an underlying assumption that the US needs more that 40,000 new engineering graduates per year. How many new graduates in engineering do we need each year? How was this figure determined?
Not at all; here too you've misread what I said. It is they who use a certain number (80,000), which is incorrect, rendering their argument inconclusive at best and completely wrong at worst. The burden of proof is on those that make claims. They have failed to provide proof.
The question of "How many new graduates in engineering do we need each year?" is different but relevant. "How was this figure determined?"
The answer is easy: listen to the demand. Employers claim that they are rationed. You can rely on them: they know what they demand, and know whether that demand is satisfied. Currently it is not. When we increase the number of American engineering and science graduates, they will eventually stop complaining about shortages. That's how many graduates we need.
The last statement is false, as I have stated earlier and explained in detail (production nust be unconstrained). Your reply gives no indication that you have even read my post.
2. TQ: “The cost is thus pushed onto the recruiters, who now take longer to weed out additional resumes. In other words, they are now less efficient “.
algernonpj: "You are assuming that they are hand screening all those additional resumes."
Where did you even get this connection? Did I say anything about the technology they use? You continue to put words in my mouth.
The recruiters are less efficient because it costs them more to achieve the same objective. That is the definition of efficiency.
3. "you dismiss the possibility that the increased number of resumes could be related to an increased supply of skilled first-class workers seeking jobs."
Yes I do. The first thing you should learn about labor --- and do so before you arrive at conclusions about complex issues such as labor shortages --- is that it changes very slowly. It takes 25 years for changes in an educational policy to show its effect, for instance; you cannot double the number of Masters' degree recipients in one year. Yes, when the number of applications increases significantly in a span of a few years, it cannot be that first-class workers increased in number, unless they have suddenly arrived from Mars.
Unfortunately, are still missing the problem which I addressed in my original post: the sources that argued for the absence of shortages have persuaded you on false grounds. They brought in irrelevant data and based spurious correlations.
Your difficulties are largely of logical kind. To show that WSJ is wrong or at least inconclusive when they say "A causes B" is sufficient to focus on the relationship between A and B, and that is what I did. Whether A and/or B are true is entirely irrelevant (if you want that formally, look up a book on logic). And that is what you want me to do --- to prove that A (there is shortage of skilled labor) is either true or false.
3. "By the way, cute twist on Greenspan’s remarks "
The patronizing tone you have adopted from the start of your post and continue in this sentence only emphasizes the weaknesses in your logic and holed in your knowledge. Knock it off. You look silly when you characterize someone's statements as cute after you reveal complete ignorance of the substantive issues and the inability to adhere to your own line of logic. If you knew whom you are speaking with you'd know the full extent how immature and stupid you've made yourself look.
4. Here are some more words you put in my mouth:
"the US should import more skilled workers specifically to lower salaries. Sound like you are arguing for government control. Since when is how many people are in a given field and what they are paid up to the government?"
The connection with government control exists only in your head. It appears you don't know what it is and, confusing it with policy, you probably don't know what that word means either. And that is after I suggested that you should first understand the words Greenspan uses.
"Since when is how many people are in a given field and what they are paid up to the government?"
It's a waste of time for me to keep repeating "no, I did not say that; no, there is no connection here.."
I thought you fell into a subtle trap and bought into this anti-corporate garbage of "how they screw our workers." It is now clear that that was not an accident: you arrived at your conclusions first (corporations, Greenspan bad; no shortage, etc.) and then reach for the sources that appear (but fail) to support your desired conclusion. Well, stick with it. Continue to have strong opinions about complex matters while being ignorant about basics --- it's so much easier than opening a real book (without pictures).
Have a good night.
Thank you for your contributions to this thread. I did arrive late, but it was refreshing to read your input. I was getting depressed for awhile....
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