Sunday, May 29, 2016

Hillary's Clinton and the Labor Market

Hillary Clinton has had a rough time so far. Trump has accused her husband of being a rapist and said that she's an "enabler." Berners have accused her of everything from the genocide to sticking chewing gum to the underside of the table.

In the past, I've explained why I was supporting Hillary. I've ripped on Bernie (he deserves more criticism). I've eulogized Ted Cruz. Donald Trump makes fun of himself.

But I haven't praised Hillary Clinton. She deserves more praise. And a foot rub. I'll leave the foot rub to Bill.

The Labor Market

Unemployment is at 5%, the lowest rate we have seen since the recession. Wage growth is improving but lackluster. Recently Business Insider published an interesting piece on the labor market. The number of unemployed people in the U.S. per job opening is down to pre-recession levels (about 1.5 workers per job). The average time to fill a vacancy is up to 26 days. That's the longest it has been this century. Notably the number of job openings per hire has skyrocketed.

hires vs openings

So what to make of this? Either employers are being overly selective, or there aren't enough workers with the skills that employers want. Actually, those are two ways of looking at the same problem. There are enough un/underemployed people to file the job openings, but the job-seekers don't match the job openings. In short, there is a skills gap.

So how should we bridge the skills gap?

Hillary Clinton plans to give a tax credit to companies that employ apprentices. The tax credit will incentivize companies to create apprenticeship programs where they otherwise wouldn't. Companies will only hire apprentices for jobs where they have a need. The company hiring the apprentice has a need, it means there is a skill shortage in that area. Other companies are likely to have such a need. I.e. the skills the apprentice gains will likely be transferrable. The apprentice will contribute to bridging the skills gap.

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