Citizen Economists » highly skilled workers http://www.citizeneconomists.com/blogs Citizen Economists is an online economics magazine written by citizen journalists. These ordinary citizens provide reports and commentary on the current events affecting the economics of the fields they work in. Fri, 10 Feb 2012 20:10:41 +0000 http://wordpress.org/?v=2.8.4 en hourly 1 Why Businesses Are Hiring Even During a Recession http://www.citizeneconomists.com/blogs/2008/08/26/recessionary-employment-shift/ http://www.citizeneconomists.com/blogs/2008/08/26/recessionary-employment-shift/#comments Tue, 26 Aug 2008 22:01:05 +0000 J.D. Seagraves http://www.amateureconomists.com/blogs/?p=239 One of the surest signs that we’re in a recession is the abundance of “We’re Hiring” signs at low-end service-sector places of employment. You’ve probably seen them around your town: fast food restaurants, video stores, retailers looking for new managers, etc.

How can this be? In a recession, shouldn’t businesses be laying people off?

. . . → Read More: Why Businesses Are Hiring Even During a Recession]]> One of the surest signs that we’re in a recession is the abundance of “We’re Hiring” signs at low-end service-sector places of employment. You’ve probably seen them around your town: fast food restaurants, video stores, retailers looking for new managers, etc.

How can this be? In a recession, shouldn’t businesses be laying people off?

On first glance, you might think that Burger King, for example, is hiring because people who formerly patronized restaurants like Bennigan’s and Steak & Ale – both of which have gone bankrupt in this tight economy – are now eating more fast food to save money. There’s some truth to this, but what about the people who were eating at BK and Mickey D’s all along? They’re foregoing the luxury of eating out altogether, so the net result for fast-food chains is a loss. That’s why on August 11, UBS cut McDonald’s stock rating from a “buy” to “neutral,” sending shares plummeting.

Similarly, perhaps the local video store is getting more business from some customers who are foregoing weekly trips to the cineplex. But they’re losing just as much (if not more) business as their traditional customers cut back on their discretionary spending.

This is all part of a “spending shift” in which people take a half-step down the socioeconomic ladder. The places where the middle class once shopped are now patronized by the affluent; where the poor once shopped are patronized by the middle class; and the poor, etc. The net effect is still a loss, though, as everyone cuts back and tightens their belts. Some businesses fail altogether, which leads to the more important shift: the employment shift.

When higher-end businesses lay people off or close down, waves of highly skilled and educated workers become free agents within the labor force. This gives companies like McDonald’s, Burger King, and Blockbuster a chance to upgrade their personnel.

In a tight labor market, low-end businesses have to take what they can get – often workers with bad attitudes and no ambition. But, as the supply of workers begins to greatly exceed the supply of jobs, these employers can be choosier, and they can replace their worst workers with people who have solid work histories and are desperate for work.

Now this employment shift can only happen after we’ve been in recession for a while – which we have, so the laid-off workers have given up hope of finding “good jobs” – and if the recession is expected to continue for quite some time. After all, replacing even a poor worker is costly, and oftentimes low-end employers don’t want to hire “overqualified” workers for fears that they’ll find more suitable employment after the employer has invested time and money in training them. That so many service-sector businesses are looking for “managers” does not bode well for the near future of the U.S. economy.

]]> http://www.citizeneconomists.com/blogs/2008/08/26/recessionary-employment-shift/feed/ 0 How to Overcome Our Shortage of Highly Skilled Workers http://www.citizeneconomists.com/blogs/2008/07/10/how-to-overcome-our-shortage-of-highly-skilled-workers/ http://www.citizeneconomists.com/blogs/2008/07/10/how-to-overcome-our-shortage-of-highly-skilled-workers/#comments Thu, 10 Jul 2008 17:03:49 +0000 G.L.C. http://www.amateureconomists.com/blogs/?p=122 The rise of the United States to economic prominence can be attributed to the presence of the highly skilled workforce. But in the last 30 years or so, the skill level of the American workforce has stagnated. The U.S. is no longer a skill abundant country.

To produce a more highly skilled workforce among . . . → Read More: How to Overcome Our Shortage of Highly Skilled Workers]]> The rise of the United States to economic prominence can be attributed to the presence of the highly skilled workforce. But in the last 30 years or so, the skill level of the American workforce has stagnated. The U.S. is no longer a skill abundant country.

To produce a more highly skilled workforce among Americans, new educational policies must be implemented. But this will take a long term before the effects can be seen. In the short to medium term, the U.S. will increasingly need foreign high-skilled workers and will therefore have to reform its high-skilled immigration policies and procedures not only to welcome the best and the brightest but also to make it easier for them to stay.

The H1B visa program was introduced to allow businesses to bring in skilled workforce from abroad to cope with the shortage of skilled workforce and for the U.S. to retain it economic prominence.

The major beneficiary of the H-1B visa program has been the IT industry. Major IT companies have over the years lobbied with lawmakers to increase the number of H-1B visas issued every year.

The large IT corporations need skilled workforce in order to remain competitive. But with the short supply of skilled workforce in the U.S., these companies have to bring in skilled workforce from abroad. The existing immigration rules made it difficult for these companies to bring in skilled workforce from abroad. However the introduction of the H-1B visa program changed all that.

Critics of the H-1B visa program point out that the H1B employees are a new type of indentured servant. In a new, unfamiliar country, they are docile and focus on working hard. The average salary of an employee on an H1B visa is lower than that of an American employee doing the same job. The H-1B sponsorship provisions make it very difficult for H-1B foreign workers to change jobs. The other major criticism of the H-1B visa program is that it takes away American jobs and gives them to foreign workers.

From a broader economic perspective, H-1B workforce has saved the U.S. economy millions of dollars in human resources and R&D costs, boosting the value of their employers’ stock.

It is just a myth that the use of foreign workforces by American companies using the H-1B program has cost Americans jobs. Instead of taking away jobs, the H-1B visa program has contributed positively to the economy by creating more jobs. The reasoning behind this is simple economics. The availability of skilled workforce enables American companies to retain their competitiveness and grow bigger. As the companies grow, they tend to help the economy grow. Then when the economy grows, it requires even more workers. A recent study found that for each H-1B visa issued by larger IT companies, five additional hires were made as well. With smaller companies, it was even more drastic, showing seven new hires.

Till the U.S. manages to overcome the shortage of skilled workforce in the long term, the H-1B visa program is the only way the United States can overcome the shortage in the short to medium term is to bring in skilled workforce from abroad. If the shortage is not overcome, the U.S. will loose its economic prominence.

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