Employers have forgotten how to hire. But they’ll learn

I’ve written before about what I called the high-employment generation, which I use to describe people entering the workforce today who have no memory of the long, grinding recession which destroyed countless American communities in the aftermath of the global financial crisis of 2007-2008.

Four pieces have come across my desk in the last few weeks which highlight the consequences of high employment in different ways:

• Why a white town paid for a class called ‘Hispanics 101’
• How Bad Is the Labor Shortage? Cities Will Pay You to Move There
• Crab crisis: Maryland seafood industry loses 40 percent of work force in visa lottery
• A Fast-Food Problem: Where Have All the Teenagers Gone?

These articles are almost universally written from the perspective of employers, rather than employees, and there’s no surprise there: it’s a lot easier to get the owner of a Subway sandwich shop to speak on the record than it is to get a quote from the employee making $10.93 an hour and who depends on their job for survival.

Learning to hire is hard, but I believe employers can be taught

During the low-employment generation which I belong to, employers had the dual luxury of being able to hire relatively-well-educated workers (high school and college graduates) for relatively low wages. The cliche about PhD’s working as baristas was commonly used as a dig against the value of PhD’s, but from a workforce perspective coffeeshops were lucky to be able to hire easily-trained PhD’s to make coffee due to the abundance of slack in the labor market.

It’s fashionable to respond to employer complaints of difficulty hiring by saying they should raise wages, and indeed, they’ll find it’s necessary to raise wages. But you can see from the articles above that employers already see the outline of a much larger problem: in the context of an entire economy of steadily rising wages, employers will need to not only match competitors’ wage increases, but outbid them if they want to retain workers or expand their workforce. And that’s the process that we’re not yet seeing take place.

How bad is the labor shortage?

The best illustration of this process is the WSJ article “How Bad Is the Labor Shortage? Cities Will Pay You to Move There.” Here are the specific examples given in the article for the drastic measures cities are taking to respond to what they consider extreme labor shortages:

• “A local community foundation opened applications for 11 scholarships—$5,000 toward student loans of people in engineering, technology, science or the arts, if they agree to live for two years in downtown Hamilton, about 45 minutes from Cincinnati.”
• “The Community Foundation of St. Clair County has awarded eight grants from among 40 applicants and recently raised its award to $15,000 from $10,000, targeting local young people who have moved away.”
• “In Grant County, Ind., the economic development office offers $5,000 toward a home for people moving to the area. The requirements are a job and advanced training or a college degree. The money must be repaid if recipients leave within five years.”
• “The chamber of commerce is developing a $9,000 scholarship program to help repay student loans.”
• “A local committee in Marne offers newcomers free land to build a house…The town’s free-lots program—funded by donations—began before the recession. So far, though, only one home has been built.”
• “The North Platte, Neb., chamber of commerce last year started offering up to $10,000 to move into town for a job…The first grant went to Audrey Bellew, a 25-year-old law school graduate. She grew up nearby and had planned to return home. The money helped pay for her move and provided support while she studied for the bar exam and prepared for a job at a local law firm….The town has landed a second newcomer, a physical therapist who moved from Colorado with her husband.”

These efforts are, not to be rude to the people of North Platte, Nebraska, ridiculous. They have identified an issue that they consider of sufficient important to organize a community initiative around, and their community initiative is utterly inadequate to address the problem. $9,000 to repay student loans? How will that attract people who don’t have student loans? Free land to build a house? Who wants to build a house? $5,000 “towards a home?” What does that even mean?

This might lead one to despair that we’re doomed to dumb employers and dumb communities proposing dumb initiatives doomed to failure.

Stunts calibrated to the scale of the problem work great

The University of California, Irvine, opened a law school that admitted its first students for classes in the fall semester of 2009. That first class had all 3 years of tuition paid for through a private scholarship program (the next two classes had their tuition by the same scholarship covered at a lower rate). The goal was to attract the nation’s top law students to a program that had just sprung into existence.

And it worked. The UC Irvine School of Law is ranked 21st in the latest U.S. News and World Report rankings of US law schools — a school that has been open for barely a decade!

Relocation stunts are the beginning, not the end, of these experiments

As I said, the stupidity of the relocation stunts I linked to above (merengue classes?) might lead some folks to despair. Maybe employers and communities really can’t muster up sufficiently bold initiatives to solve the problems of falling populations and unfilled jobs. Maybe their brains have atrophied so much in the face of a decade of low employment and cheap labor that hysteresis will extract decades of subpar wage and employment growth.

But I do not despair, and I think the UC Irvine stunt illustrates that we haven’t entirely lost our capacity for ingenuity. I think when the relocation initiatives I mentioned continue to fail, bigger and bolder initiatives will be developed.

Of course, they’ll be developed unevenly, just as the existing initiatives offer different incentives in different places. Maybe Branson, Missouri, will figure out how to attract workers before Grant County, Indiana, and Branson will thrive while Grant County continues to decline.

In hyper-local industries like the Eastern Shore of Maryland’s crab-picking firms, they may not adapt fast enough to stay in business and jumbo lump crab meat might disappear from mid-Atlantic diets entirely, or appear only as the occasional delicacy. But if this occurs, it will not be a failure of immigration policy, it will be a failure of imagination.

And I’m not yet prepared to bet against the American imagination.