UNDEREMPLOYMENT

BY: Adam Gavriel

After last week’s State of the Union address from President Barack Obama, congressman David Joyce (1st term Republican, Ohio) was quoted on the current job market, and how he feels American’s aren’t well prepared for the market in front of them.

“We need to better prepare our workforce for the jobs that we have,” Joyce said. “There are three million jobs that go vacant each month in this country, so the idea of trying to better prepare our children for the workforce by reforming high schools and stressing technical degrees in engineering, that is something that intrigues me. It’s something that people in other districts hear from their people, who said we have difficulty finding competent workers.”

The website PolitiFact picked up on Joyce’s comments out of intrigue, and decided to do some research. Not willing to believe that in a country with a 7.9% unemployment rate that 3 million jobs could go vacant from month to month.

PolitiFact contacted Joyce’s office, who referred the website to these figures:

“Reports the office issued for previous months in 2012 indicated there were 3.8 million job openings in June, 3.7 million job openings in November, October , July,   May and March,  3.6 million openings in September and August, 3.5 million vacancies in January and February, and 3.4 million unfilled jobs in April,”

Joyce wasn’t wrong.

It is becoming an epidemic in today’s struggling economy that jobs are remaining unfilled. This is due to a believed “skill gap” in the workforce between employers and prospective employees. Currently, employers aren’t paying what prospective employees feel they are worth. With this in turn comes the underemployment number. Underemployment, if you are not familiar with the term, can be defined as people who are working in a lower capacity than they are qualified for, including in a lower-paid job or for less hours than they would like to work.

The current reported underemployment number in the United States sits at around 15%

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Is it possible that all these issues can be tracked back to simple supply and demand theory? There isn’t a very large demand for workers these days, but the supply of those looking for work continues to be at an all-time high. This allows prospective employers to pick and choose as they please, at the rates they wish to pay, with the skills they want to add to their teams.

The job market is always evolving. If you find yourself unemployed at the current time, we encourage you to stick with it, to keep building your resume however you can, and adding those skills that employers in your field desire. If you’re like the many other hardworking unemployed Americans, you are reading job ads daily, you know what companies are looking for. Always remember that unemployed time is NOT vacation time.

At Crossroads Consulting we continue to have over 50 job postings that we’re looking to fill TODAY across the nation. If you believe that your resume is holding you back, we can help you there too with our resume service.

As patriotic as we are, we want to see all of America back on its feet and in the workforce. This economy cannot recover on its own, but requires a team effort from everyone out there. Make your connections, including us, work them, and let’s get working together.

Remember, Crossroads Consulting is here to put the ‘human’ back into ‘human resources.’

One response to “UNDEREMPLOYMENT

  1. Skilled Blue Collar Workers Set Their Own Minimum Wage

    Three point five million unfilled jobs are not caused by a skills gap, but rather by a pay gap. This pay gap has caused many skilled blue-collar workers to turn down these jobs. Driven on by the need to compete internationally, and a poor economy, companies are offering lower wages. These same companies often require higher credentials for the same job. This implies a skills gap until one considers that less credentialed workers have been doing many of the same jobs for years. This causes a shortage of skilled blue-collar workers willing to take these jobs. Currently wages being offered are so low that they cannot compete with unemployment checks. They are often well below what a worker can comfortably live on. John Roberts writes, “Abraham Kirk was a union welder at Chrysler in Illinois. During the downsizing in 2009, he took a buyout but was unable to find another good-paying job in Rockford. ‘I had to take a job working at the gum factory,’ Kirk told Fox News, ‘making $10.50 an hour when I was used to making $18-$22 an hour.’ As money became tight, Kirk had to sell his 2009 Jeep Wrangler.” Some of the CEO’s of these companies explain that the unfilled jobs are not static. Most of the unfilled jobs are actually jobs with high turnover rates. People take these jobs and work them, until due to low pay they leave. [1][2][3][4] During a random search of different job sites, 450 jobs that would fall into the skilled blue-collar worker category were found. Of these jobs, 120 paid under $12 per hour. The lowest paying jobs, in this group, started at $7 per hour. Many of the companies advertise low paying jobs, for a short time, and then stop. Later the same company will advertise the same job again. Many times checking the web site of these companies will show no growth. This supports what CEO’s have said, many unfilled jobs are actually low pay high turnover rate jobs.

    Our government has been compounding the problem by short-circuiting the natural processes of supply and demand by providing entitlements. These entitlements are not directly influenced by supply and demand. This artificially keeps the market price for the most basic necessities higher than it should be under the current economic conditions. In some grocery stores three quarters of sales are paid for with EBT cards. Sales from EBT cards are so lucrative that cash incentives are given to customers using EBT cards. At these levels, standard economic principles would dictate that the EBT card is the driving force on the demand side of the supply and demand dynamic, which sets the price. In seven states, the hourly wage equivalent for welfare is calculated to be more than $12 per hour. From the Statement of Gary D. Alexander Secretary of Public Welfare, Commonwealth of Pennsylvania Before the Senate Budget Committee, United States Senate February 13, 2013, “the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045.” While it is true you cannot stay on welfare forever, the overall roles and spending continue to increase. There are ways to extend your time on welfare, from State of New Jersey Department of Human Services site, “If benefits are received for only dependent children and/or teen parents, the months of receipt are not counted toward the five-year limit.“ Some benefit programs like food stamps have no time limit. [5][6][7][8][9][10]

    This has led to skilled blue-collar workers setting their own minimum wage. So what is the “self-set” minimum wage? To begin with, it’s a case of a phenomenon that naturalists call spontaneous order. It is the emergence of order from chaos caused by individuals acting for their own interests while not trying to create order through planning. In this case, it is many individuals independently deciding just how low of a wage they will work for. Therefore, it’s not set down in writing. We can get a close idea of what it is by examining the competition. Under the current economic conditions, a couple with two children making $1,700 per month can still qualify for food stamps, ($518 per month). [4] That would equate to one person earning $12.80 per hour, and working a 40-hour week. Therefore, we can clearly see that for a skilled blue-collar worker with a stay at home wife and two children any acceptable minimum wage would most likely start at least $12.80 per hour. At that pay, the worker is working to break even with someone sitting at home. Most workers would probably want a fairly high fee to work verses getting money for nothing, perhaps 33 percent, ($17.02 per hour). This self-set minimum wage, is set by spontaneous order not law, and is not one exact amount. In this instance, one must be thinking more about a general range. At $12.80 per hour most workers will continue to look for a better job. At $17.02 per hour many workers will stay where they are at. Wages higher than this range are more or less what someone expects to be paid. If we look at the labor shortages CEO’s are complaining about, they are not in high paying jobs. [5]

    As a final point, it seems most skilled workers won’t take any less then the low end of this pay range. This fact being clear, industry has three choices: Successfully lobby the government to stop interfering with wages by providing entitlements, pay increasingly higher wages workers must have to survive, or suffer with ever-increasing numbers of unfilled jobs.

    1. Solman, Paul. “Why, With Unemployment So High, Do So Many Jobs Go Begging?” pbs.org Public Broadcasting Service 19 Sep 2012. Web. 24 Mar. 2013

    2. Sullivan, Brian. “Need Work? US Has 3.2 Million Unfilled Job Openings” cnbc.com CNBC LLC 10 Oct. 2011. Web 24 Mar. 2013.

    3. Immelt, Jeffrey. Interview by Brian Sullivan CNBC News CNBC TV 10 Oct. 2011 Television.

    4. Roberts, John. “Where the unemployed can find unfilled jobs across America.” FoxNews.com Fox News Network, LLC 11 Sep. 2012 Web 4 Apr. 2013

    5. Saslow, Eli. “The Washington Post National Food stamps put Rhode Island town on monthly boom-and-bust cycle.” washingtonpost.com Katharine Weymouth16 Mar. 2013) Web 24 Mar. 2013

    6. “Welfare Statistics – Statistic Brain.” 2012 Statistic Brain Research Institute, publishing as Statistic Brain. 15 Oct. 2012 Web 24 Mar. 2013

    7. U.S. Congress Senate Budget Committee. “Statement of Gary D. Alexander Secretary of Public Welfare, Commonwealth of Pennsylvania Before the Senate Budget Committee, United States Senate February 13, 2013.” Alexander, Gary.n.p. 13 Feb. 2013 Web 4 Apr. 2013

    8. State of New Jersey “State of New Jersey Department of Human Services Division Of Family Development” Time Limits State of New Jersey 2008 Web 26 Mar, 1013

    9. Chantrill, Christopher. “A Century of Welfare Spending.” usgovernmentspending.com Christopher Chantrill 8 Apr. 2013 Web 8 Apr. 2013

    10. Kulczuga, Aleksandra. “The daily Caller Record numbers receive food stamps as USDA turns blind eye to recipients’ finances.” dailycaller.com The Daily Caller. Version 2.25 15 Feb. 2010 Web 26 Mar. 2013