What Trump Doesn't Understand About Job Creation

Last Fall, presidential candidate Donald Trump said "I’ll be the greatest president for jobs that God ever created."  Then, at his inauguration, he said he would create 25 million jobs over the next decade.  "The most of any President." 

The only problem with those statements is: Who will fill all these jobs?

According to the latest employment report from the Bureau of Labor Statistics (BLS), the number of underutilized workers stands at 10.1 or roughly 16 million.  These are people that are unemployed and looking for work.  Those, who in frustration of not being able to find work, have just given up looking.  In addition, it includes people forced to work part time in lieu of finding a full time job.  It also includes people working in jobs below their skill, experience, or education levels.

Yet despite the 16 million workers needing to improve their current situation in the labor force, more than 5.5 million positions remain unfilled each month.  This according to the monthly Job Openings and Labor Turnover Survey (JOLTS). These are record levels since the BLS has been tracking this data in 2000 as noted by the following chart:

Click on Graphic to Enlarge

It's easy to see, that as jobs have been created since the end of the recession, the number of job openings left on the table keeps increasing.  The reason for this is something called the "skills gap", where employers are unable to match their job openings with the available skills in the under-employed labor force in their local areas. It's the same reason that, in Silicon Valley, 37 percent of all  high tech workers are not U.S. born, with the problem getting worse by the year, as noted by the fact that 74 percent of younger workers are foreign born.

The skills gap isn't just about high tech jobs.  In a survey of General Contractors last year, two-thirds said they were struggling to find "craft" workers.  Those in skilled labor jobs such as roofing, dry wall, heating and air conditioning, plumbers, electricians, etc.

The thing that Trump should seriously focus in on is the pool of workers in this country.  We need people with college degrees in Science, Technology, Engineering, and Mathematics (STEM) so that foreign-born workers don't keep taking these jobs in places like Silicon Valley.  We also need to promote trade schools, so we have an adequate number of plumbers and other skilled workers.  Jobs that may not be as "sexy" as some job-seekers may want, but that would be good paying and far better than being unemployed.

What's the good of creating high paying jobs if there is no one to fill them?  I simply don't see a formula for success in what Trump is trying to sell the country so far.  Perhaps we should subsidize STEM college education as a means of increasing the pool of high-tech workers?  The same would be true for trade schools.  The return in increased income tax revenues from higher paying jobs would greatly offset the cost of subsidizing education in these key fields.


References:

Donald Trump: 'I’ll be the greatest president for jobs that God ever created': http://www.washingtontimes.com/news/2016/sep/28/donald-trump-ill-be-greatest-president-jobs-god-ev/

Trump vows 25 million jobs, most of any president: http://money.cnn.com/2017/01/20/news/economy/donald-trump-jobs-wages/

Table A-15. Alternative measures of labor underutilization: https://www.bls.gov/news.release/empsit.t15.htm

Source of Graph: https://fred.stlouisfed.org/series/JTSJOL

37 percent of Silicon Valley foreign-born: http://www.washingtonexaminer.com/37-percent-of-silicon-valley-foreign-born/article/2583195

Two-Thirds of Contractors Have a Hard Time Finding Qualified Craft Workers to Hire Amid Growing Construction Demand, National Survey Finds: https://www.agc.org/news/2016/08/31/two-thirds-contractors-have-hard-time-finding-qualified-craft-workers-hire-amid

Harvard Business Review: Employers Aren’t Just Whining – the “Skills Gap” Is Real: https://hbr.org/2014/08/employers-arent-just-whining-the-skills-gap-is-real

America's persistent problem: Not enough skilled workers - Aug. 7, 2015: http://money.cnn.com/2015/08/07/news/economy/us-economy-job-skills-gap/?iid=EL