Monday, January 15, 2018

The Upsides of Tight Labor Markets

Photo Credit: Kathryn Decker/Flickr, CC-BY-2.0

If you didn’t see it, the NYT had a front page piece on Sunday about how tight labor markets in some cities are forcing employers to rethink their stance towards hiring people with criminal records.

Employers are also becoming more flexible in other ways. Burning Glass Technologies, a Boston-based software company that analyzes job-market data, has found an increase in postings open to people without experience. And unemployment rates have fallen sharply in recent years for people with disabilities or without a high school diploma.

Until recently, someone like Jordan Forseth might have struggled to find work. Mr. Forseth, 28, was released from prison in November after serving a 26-month sentence for burglary and firearm possession. Mr. Forseth, however, had a job even before he walked out of the Oregon Correction Center a free man.

Nearly every weekday morning for much of last year, Mr. Forseth would board a van at the minimum-security prison outside Madison, Wis., and ride to Stoughton Trailers, where he and more than a dozen other inmates earned $14 an hour wiring taillights and building sidewalls for the company’s line of semitrailers.

After he was released, Mr. Forseth kept right on working at Stoughton. But instead of riding in the prison van, he drives to work in the 2015 Ford Fusion he bought with the money he saved while incarcerated.

“It’s a second chance,” Mr. Forseth said. “I think we’re proving ourselves out there to be pretty solid workers.”

Mr. Forseth got that chance in part because of Dane County’s [Madison’s] red-hot labor market. Stoughton Trailers, a family-owned manufacturer that employs about 650 people at its plant in the county, has raised pay, offered referral bonuses and expanded its in-house training program. But it has still struggled to fill dozens of positions.

A lot of people got essentially exiled from the labor force during the Great Recession and its aftermath. This includes people with criminal record, but as noted in the piece it also includes others like high school drop outs, those with disabilities, people who ended up with a long employment gap on their resume. We could add to that people recovering from addictions of various types, etc.

Businesses love to complain about not being able to attract workers. But now they are starting to take previously off-limits action themselves, instead of asking the government to bail them out.

This is a positive development and I hope it lasts for a while and expands geographically. Employers had been acting like the prima donnas of hiring, demanding the exact right person with the exact right skills, etc. This bad for them and bad for the country.

There’s always been a group of people essentially shut down of the system and living life on the margins. This is probably inevitable in any human society of any size. But when you end up with millions and millions of people in that category, that’s a very bad development.

America is the land of the second chance. There are a lot of people in the country who need another chance. Sadly, not everybody is going to make it. But getting people a job, where they can start taking responsibility for themselves and their family, and start a journey of personal change and growth, is essentially a precondition to getting at least some percentage of people out of a bad spot.

As I noted when talking about proposed “ban the box” regulations:

These companies have become penny-wise and pound foolish.  Today they only care about short term profits in the now. With untold millions of unemployed, underemployed, and out of the labor force Americans of prime working age, these firms would be well-served to change their approach and start making a broader effort to give people a chance to get their foot back into the working world.

When this sort of structural unemployment is high, the social contract broadly construed says it’s something we all should care about and want to do something about.  If American business decides they won’t, ban the box regulation is likely to be among the least of the consequences the discipline of the political marketplace ends up imposing on them.

Perhaps the marketplace is starting to force businesses to take the kinds of actions that are probably beneficial for themselves in the long run.

from Aaron M. Renn

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