No Skill Mismatch in a Healthy Labor Market

A blog about business and economics.
May 3 2012 3:31 PM

No Skill Mismatch in a Healthy Labor Market

I sometimes hear businessmen blame high levels of joblessness on "skill-mismatch" whereby available workers just don't have the know-how to do the jobs that are available. But if you examine a place like the Washington, DC Metropolitan Statistical Area where the unemployment rate is only 5.5 percent, it turns out that it's possible to solve this problem. From Lydia DePillis' article on fancy coffee in the DC area:

In some cities, making coffee is a standard side job, and skilled baristas are a dime a dozen. In the District, where many people still come to work in or around the federal government, they don’t exist: Almost every shop trains their own people, and tries to keep them around for as long as possible. Ryan Jensen, who worked a machine for six years before starting Peregine Espresso in Eastern Market—and recently opened second location on 14th Street NW—says he even chooses locations based on where his employees felt most comfortable.

By contrast, if you look at Portland where  the MSA unemployment rate is 8.3 percent then "skilled baristas are a dime a dozen" and firms don't invest in worker training or pay high efficiency wages to reduce churn. Which is just to say that there are interesting interplays between productivity and the business cycle beyond the theory that an exogenous positive productivity shock would boost employment. Even when labor markets are tight, you can't magically conjure up any old job skill in the universe. But there are an awful lot of specialized skills that can be taught and learned by a broad mass of people when the circumstances are right.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.



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