Corporate Welfare State: Taxpayers now on the hook for Job Training, while state pushes importing cheaper "Skills Gap" labor!

Taxpayers are now on the hook, subsidizing private business so they can train workers to fill the “skills gap.” But wait, the “skills gap” is a myth, created by business to keep wages low and import temporary foreign workers. If taxpayers really want to cuts government spending, try cutting this area of corporate welfare first.

Institutionalized Corporate Welfare: Even worse, Scott Walker has now officially institutionalized corporate welfare with taxpayer subsidized job training. It’s all a noble cause, and I feel lousy coming out against this...

…but business created the “skills gap” to import cheap labor, lower wages, and get taxpayers to foot the bill…or at least pay for part of the bill. As so many economists have stated, if there’s a shortage of workers, wages would have gone up. That didn't happen.

Walker’s WEDC gift of taxpayer money to job train is just the beginning:  

jsonline: (It’s an) initiative to train welders in four areas of the state … being funded by the state and the welding industry. The Wisconsin Department of Workforce Development has committed $400,000 to fund the customized technical skill development for the first year, with $100,000 going to each of the four regional sites … In addition, Illinois Tools Works Inc. — the parent company of Miller — is providing $400,000 in matching funds. The American Welding Society has committed $200,000.

Appearing on WPT's Here and Now, the President of the Wisconsin Technology Council Tom Still made a few amazing statements. Not only did he defend importing cheap foreign labor to fill that mythical "skills gap," but he also bragged those same workers have a "propensity" to start their own businesses. If we lag in jobs created, Still said, it's because we don't have enough foreign workers in Wisconsin. Would I kid you?

  

The official sounding “Sullivan Report” Tom Still mentions above is all CEO bluster pushing the “skills gap” myth. Here’s a sample of "Sullivan's" recommendations, including importing temp workers and institutionalizing corporate welfare:

The report by former Bucyrus International Chairman Tim Sullivan offers a series of recommendations to fill that gap … The skills gap "is hurting economic competitiveness in Wisconsin," Sullivan said. Giving the state Department of Workforce Development responsibility for coordinating job training programs … expanding funding for part-time technical college students to keep them enrolled while increasing tuition for technical college students who already have four-year degrees … and welcoming legal immigrants to the state. 

I found the comment below, to the story above, the appropriate less profane response:

Ace Rothstein: If I were to go knocking on doors on Lake Drive how many welders do you think I would come across? Yeah, its a wage problem. If you need more welders then start paying them more. Don't whine to the governor. Don't whine to the Jounal-Sentinel. Bust out your checkbook or go out of business.

Proof: Slow Job Growth a result of new Business Model adopted after the Bush Great Recession.

Republicans are wrong about the “sluggish” jobs recovery under Obama.

While they “blame Obama” for the slow job and economic growth nationally, Republicans governors facing the same problem in their states are asking voters to be patient and celebrate any forward movement.

But the Great Recession is really to blame for the change in hiring. Look, I’m not an economist, but I have been watching how businesses have shifted their employment model in the wake of the recession.

The Milwaukee Biz Journal finally explained why employment has slowed, and part time workers are brought in during peak selling seasons to save money on labor and benefits.

The problem is reflected by temporary staffing increases. It’s a troubling development:

Temporary agencies service employment is at an all-time high for the eighth consecutive month, said Mark Marcon, senior research analyst with Robert W. Baird & Co. Inc. The staffing industry in the U.S. has grown from $55 billion in 1995 to $120 billion in 2013.

In June, temporary help services added 10,100 jobs in June in the U.S., an 8.1 percent increase year over year, according to Baird. “Having a job through a temporary agency was viewed as a sub-optimal type of work, but broadly speaking… it’s increasing in recognition as a social good rather than social negative and it’s a good way to get people from a state of unemployment to employment,” Marcon said.

No, the growth in “sub-optimal type of work” doesn’t suddenly make it into something “good.”

Here’s how the business model changed after the Great Recession, a point no one brings up nationally when they’re talking about slowing jobs and business growth. And while some partially blame the Affordable Care Act, health care benefits alone have always been a problem for business:

Companies prefer hiring through temporary agencies because it gives them more flexibility, and helps them deal with “uncertain times and uncertain regulations,” Marcon said. “Part of the drive behind this increased usage is that companies are facing more regulatory burdens, like the Affordable Care Act … By hiring through temporary agencies, they are offloading that responsibility and putting it onto the temp agency.”

But temp agencies don’t provide health benefits. This might be a little unsettling:

There is a temporary staffing agency service from doctors and lawyers to assembly workers.

Here are a few companies leading the way with their stripped down labor force. I only noticed this trend because many of these companies were from Wisconsin:

Amazon uses temporary workers to fill its seasonal surge at Christmas time. Milwaukee-based Harley-Davidson Inc. uses a flexible workforce in its plants to get motorcycles made faster and just in time to the consumer. Quad/Graphics Inc. in Sussex uses temporary workers to fill their production level jobs. Marcon said, “Most companies are trying to become as lean as possible, so they are bringing in workers on as they need them.”

Skilled labor Shortage? Nope, Temp Labor Model:

Case in point, several former Harley-Davidson Inc. employees have filed a discrimination lawsuit in federal court against Infosys, a staffing firm Harley contracted with … Employees allege that the firm discriminated against American workers by replacing them with temporary workers from South Asia, who had H-1B visas. Infosys, which is based out of India, has disputed the claims saying that the company faced a talent shortage in the U.S..

But that’s a big decades old industry created lie.

Check out this old but shocking CNN report from around 2005 that proved, even then, the skilled labor shortage was a scam. Note: job shortages increase wages, yet wages haven't increased:

Popping the Walker World Bubble!

Salon’s Josh Eidelson wrote this headline:

Right-wing unemployment myths, debunked: “When you look at the data, it’s just not there:” Actual evidence defies what conservatives like Scott Walker are claiming, economist Heidi Shierholz tells Salon.

Point by point Eidelson and Shierholz takes on the fictions pushed by Walker and every other Republican ideologue:

In a Sunday CNN interview, Wisconsin governor Scott Walker argued that “the federal government doesn't require a lot” of the unemployed, and urged that rather than “just putting a check out,” Congress tie unemployment extension to tightened eligibility requirements.

It's part of what I call the big government Republican plan to over regulate people, by putting needless hoops and red tape in the path to help. Besides from getting rid of health care and helping businesses become more "certain," Walker sees making it even tougher on the unemployed by threatening to starve them as a good thing:



Real World logic is Much Simpler:

“Making them jump through more hoops will definitely increase administrative costs, but it’s not going to generate more jobs,” said Economic Policy Institute economist Heidi Shierholz. “Unless he’s looking at it as a jobs program to hire more public sector workers” ... when the labor market is so weak, the economy is so weak, and we know that the overwhelming factor behind that weakness is just weak demand, we’re operating way below our potential. People don’t have the income, so they’re not spending. Businesses aren’t investing ... Weak demand for goods and services means businesses don’t have to ramp up hiring, they don’t have to ramp up to meet the demand, because demand isn't there. So the fact that you’re spending this money on UI, you’re getting money into the economy, is actually exactly what we want to do at a time like this.

Skills Gap Myth: Walker's unwavering commitment to one of the most disproved lies continues here, along with Walker's inability to grasp the idea there are no "entry level" jobs anymore:

Scott Walker told CNN that “one of the biggest challenges people have who are either unemployed or underemployed is many of them don’t have the skills in advanced manufacturing, in healthcare and I.T. where many of those job openings are.” What’s your assessment of that claim?

I think because you hear this anecdote a lot, there’s been a ton of research done on it — a ton. The overwhelming consensus: People looking for any sign of a skills-mismatch in the data, don’t find it. The divide on who finds this is more those who are relying on anecdotes versus those who have looked at the data ... If it were due to ... skills you would have to see some evidence in some meaningfully sized group of workers ...[But] unemployment rates are higher now relative to before the recession started across every education group, across every gender, across every age group, across all racial and ethnic categories, in all major occupations, and all major industries ... you’d see wages being bid up for the workers who can’t be found, people poaching from other companies. And that you also don’t find. 

We’re not seeing something abnormal right now in the long-term unemployment situation, except for an incredibly abnormally weak labor market that’s been incredibly abnormally weak for a very long time. Once you have that, then what’s going on with long-term unemployment is exactly what you would expect. So it’s not like, “if we just get them to look harder, they’re going to find jobs.” The real problem, why we have this long-term unemployment crisis, is that the labor market has been so weak for so long.

Here’s the "final word," for this week, on the “skills gap” myth.

I've blogged about it many times, and even have CNN stories from the 2004 that exposes the “skills gap”myth on my Video History tab, but this time I’ll let Bruce Murphy tell the story, since he's got all the links:

Urban Milwaukee/Murphy’s Law: Yesterday’s Milwaukee Journal Sentinel had a front-page, top-of-the-fold story telling us the Metropolitan Milwaukee Association of Commerce is working to attack “the region’s skills gap” … Others, including many academic researchers, suggest no gap exists and companies simply refuse to pay a competitive wage. 

Former Bucyrus International CEO Tim Sullivan … wrote a long report for Gov. Scott Walker that suggested, among other things, that the state’s education system needed to be changed to address the issue.

In March I did a column noting this and suggested the Journal Sentinel wasn’t sharing the whole story with its readers.

I also cited a 2012 survey by Manpower of U.S. employers who have trouble filling job openings which found that 54 percent of workers turned down the job because they expected higher pay. Milwaukee Area Technical College held a job fair that could have introduced companies needing welders to 50 job candidates, but “few employers” showed up, as the Milwaukee Journal Sentinel reported. If companies are so in need of welders, why didn't they come to the job fair?

GenMet Corp. in Mequon is “one of the companies that have complained the loudest about the inability to hire skilled metalworkers,” but … a New York Times story found this company was offering a starting wage of $10 an hour … a new study by the LaFollette Institute which concluded there was little evidence of a skills gap in Wisconsin.  The report got some coverage in the Business Journal and Madison’s Cap Times.

Which brings me to WKOW’s Capitol City Sunday, and Greg Neumann’s guest from the LaFollette Institute UW Prof. Robert Haveman. It’s dry, but the truth, and isn't that just what we’re seeking?

One final note from Murphy:

If companies need to reduce costs to compete globally why aren't they trimming (or simply holding the line on) salaries in the executive suite? 

Skills Gap Myth Exposed. Big Business wants lower wages and fewer workers.

The skills gap excuse is an old one. Below, from The Progressive, is a look at a recent study that blows the lid off this ridiculous excuse by big business.

Very much related to this, check out my "Video History: Failed Republican Policy" tab, where I have many clips from CNN between 2004-05 explaining just how bogus the "skills gap" really is.

Corporate America has come up with a clever rationale for the plague of high unemployment. The problem is the “skills gap” between the requirements of modern technology and under-educated workers, they claim. This flimsy explanation for persistent unemployment and falling wages is thoroughly dynamited by Prof. Marc Levine’s recent study of the so-called “skills gap.” 

The “ skills-gap” salesmen tell us that we are faced with “structural unemployment” caused by the “mismatch” between the demands of modern technology and the inadequate skills of today’s workforce. Former Bucyrus International CEO Tim Sullivan issued the kind of explanation that we now hear across the nation: “We don’t have a jobs crisis in Milwaukee, we have an education crisis.” 

The blame-the-worker mentality lurking behind the “ skills gap” thesis was more explicitly laid out by PIMCO hedge fund owner Bill Gross, who declared, “Our labor force is too expensive and poorly educated for today’s marketplace.”

Some facts:

Fully 58% of all new jobs created since 2010 pay between $7.69 and $13.83 an hour.  
WAGES RISING TO ATTRACT SKILLED WORKERS? Wages Declining. 
MORE OVERTIME TO FILL THE GAP? Overtime declining. 
UNDER-SKILLED OR OVER-QUALIFIED? Over-qualified. 
FUTURE NEEDS: HIGHEST IN LOW-SKILL AREAS.  

"Skills Gap" another way to describe "Corporate Welfare."

The "skills gap" talking point has been around a long time. It's been used to receive corporate welfare for job training, and to argue for work visa's for labor that typically isn't as expensive.

The drive to soak taxpayers for even more corporate welfare is behind Scott Walker's latest attempt to "create jobs." While the idea behind job training and a public/private alliance isn't bad, it really isn't a problem of the public sector. It seems business is trying to avoid having skin in the game, like it's too much of a gamble, so they're looking for taxpayer handouts. It wasn't always like this either.

This Cap Times editorial by Dave Zweifel explains:

It’s taken as a given these days that many “good” jobs go unfilled because there’s a huge “skills gap.” Here in Wisconsin, the skills gap is what’s behind the push to financially penalize colleges and tech schools unless they devise curriculum that mesh with the needs of employers. Gov. Scott Walker and others in his party have threatened to base state aid to the schools on how well they meet those needs ... there’s a growing suspicion that many firms are feeding the supposed crisis as a way to get taxpayers to finance the job training of their workforce.

There was a time when employers invested heavily in the training and education of their employees. In manufacturing, much of this was done through union contracts that provided for full-time apprenticeships, jobs in which a new employee would work with a skilled welder, for instance, for a number of years to fully learn the trade. But as the union movement has shrunk, so have the apprenticeship programs. Now the vocational and technical system is expected to pick up the slack.

What’s curious is that while many in the business community are strong advocates of a free marketplace, where … the free market would dictate that the wages for the job ought to rise to attract those skills. “If there is a shortage of something, you would expect the price of that something to increase over time,” Steve Hine, director of labor market information for the state of Minnesota, pointed out. Instead, though, the average hourly wage for a welder grew just $1 between 2005 and 2011. Taking inflation into account, that’s a pay cut.

Professor Peter Cappelli, a professor of management at the acclaimed Wharton School at the University of Pennsylvania, openly calls that skills gap “a myth.” Cappelli says companies are demanding changes in the education system to make up for their own lack of investment in workforce training and employee development.

Melanie Holmes of the Milwaukee-based Manpower Group placed part of the blame on being “way too picky about who we’re hiring. “We’re not willing to hire somebody who has most of what’s necessary and then invest in training to get them up and running,” she said.

There’s also no question that some employers are using the perception of a “gap” to keep their costs low. And that shouldn’t be.