How Education Impacts Labor Force Dynamics
When looking at the most recent June jobs numbers
from the U.S. Department of Labor, the report shows an addition of roughly 80,000 jobs. What is not initially apparent is where these jobs were added into the economy. Nearly a third of the new jobs are part-time and nearly another third are temporary. Oddly, the press, which seems to be occupied with putting lipstick on the pig, appears not to care about the real story in our labor markets. Once this was seen appropriately as the most important political barometer of how the economy was doing.
If we think about shifts in the American labor force, the full story is not immediately evident. What is not apparent in the scandalously anemic addition of 80,000 jobs is the composition of the gain in new jobs. (Just for reference we have to add about 250,000 new jobs per month just to absorb population growth and the entering of young people into the labor market!)
Labor force dynamics is one of the most interesting of all subjects in economics, but a great caution applies. Workers, be they Ph.D.s or electricians, are happiest when they get to match their aspirations, intuitive skill levels and educational achievement to circumstances that they know are likely to contribute to the bigger economy. We are somewhat in our slow growth pickle because the labor force has been purposely "shaped" by government and foundation experts who thought the society would benefit from new occupations. In fact, much of the engineering of the labor force has brought non-dynamic results. Increasingly colleges are providing specialized occupational training, e.g. a major in forensic accounting, as opposed to general liberal arts exposure. The cost of this is that fewer people are equipped to move to new jobs that require more general skills. In labor economics this idea when applied to the slowing down of labor force dynamics by unions was once referred to as "balkanization." Capitalism is messy but for the politically and economically powerful to try to wring out its dynamic the one predictable cost is the happiness of workers.
In the midst of all this gloom there is a bright spot. Parts of our universities and many of our community colleges are creating a huge population of the world's most creative and talented students. If they can be freed to choose what they want to learn and we can reduce government regulation move of labor markets, we would take a giant step towards letting our workforce solve the recession. To learn more about who's been working in America since 1960, explore the above Working in America data visualization »