Whatever Happened to On-The-Job Training?

It is a widespread problem: the article reports survey results showing that 83 percent of manufacturers reported a moderate or severe shortage of skilled production workers. The shortages include such categories as machinists. Wages for skilled labor are rising, in some cases at double-digit rates.

Unskilled labor is complementary to skilled labor. If skilled labor cannot be hired, there is no demand for unskilled labor. Some firms report that the inability to hire needed workers is their greatest impediment to growing their business.

Malinvestment in labor markets is the counterpart to malinvestment in capital goods. Higher education is a bubble, and colleges churn out graduates with degrees that have no application in the workplace. Student borrowing to acquire such degrees is malinvestment in the same way that constructions loans to build homes in Las Vegas was malinvestment.

On-the-job training is mostly inevitable in virtually every business because employers do tend to want some core processes done a certain way. Yet, many employers often expect job applicants to be as smart as the person they’re replacing. This seems rather foolish, as careerists generally amass a large amount of very specific information related to their specific jobs. When they retire, they’re going to take their very specific knowledge base, and no other applicant is going to be able to replicate that on day one.

Now, the current college bubble does tend to distort the labor market since those possessing college are nominally qualified for certain careers and jobs. Unfortunately, the college bubble has led to the very unfortunate side effect of dumbing down curricula, and thus graduates, making it more difficult for employers to tell who is actually qualified for certain jobs.

But, beyond that, a highly educated labor market is going to have certain (inflated) requirements for the jobs they wish to accept. For example, college-educated labor market participants are not going to be particularly likely to work as unskilled labor, nor are they ass willing to work for low wages in exchange for job experience and knowledge. (And who can blame them? They’ve been told their whole lives that they should go to college so they can have high-paying high-status jobs.)

As such, the labor market is experiencing failure right now, due mostly to government intervention. The continual and sizable subsidies of college education has for many years encouraged potential labor candidates to avoid learning trades that, though low status, are somewhat easily mastered and decent-paying. The companies that are interested in hiring these sorts of people are finding quite a shortage at this point in time, causing a relative spike in wages to incentivize people to take these jobs.

One thing that companies needing low-status skilled workers could do is recruit directly from high schools by offering a job, complete with on-the-job training, for those who have an inclination for certain skills as well as the ability to learn. The colleges have failed at producing a workforce adequate to meeting the needs of the current labor market. It is therefore time for businesses to bypass them altogether.

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