It’s Going to Be a Long and Harsh Recession: NYT Warns of Skills Gap

July 14, 2020

When the unemployment rate goes up, a standard theme in the media is that workers don’t have the right skills. We saw that yesterday in the New York Times when an article told us “The Pandemic Has Accelerated Demands for a More Skilled Workforce.” It tells us how the growth of telecommuting in response to the pandemic has led to more demand for skilled labor and less demand for less-skilled workers.

The key point in this sort of argument is that the problem is the workers, who don’t have the right skills, not an economy that doesn’t create enough demand for labor. Of course, we get this skills shortage argument every time the unemployment rate soars. In the summer of 2010, when the Great Recession was still near its trough, the NYT ran a piece telling us about the skills shortage in manufacturing. Over the next nine and a half years the sector added almost 1.3 million jobs (11.3 percent), without any notable improvement in the skills of the U.S. workforce. The overall unemployment rate fell to 3.5 percent, again without any major gains in skills in the U.S. workforce.

The focus on the skills gap is even more infuriating since even if there were an issue with demand for skills that would be the result of policy, not technology, as the piece implies. We have lots of jobs in areas like computers and biotech because the government gives out patent and copyright monopolies in these areas. If we are worried that we are creating too much demand for people with advanced skills and not enough demand for people with less education, we can make these monopolies shorter and weaker, or perhaps not even have them at all.

The latter possibility should be a major topic of debate in the context of the pandemic. The government is paying billions of dollars to drug companies for research and testing of various treatments and vaccines to combat the coronavirus. Incredibly, after putting billions of dollars upfront, and taking the big risks, the government is giving the companies patent monopolies which will allow them to charge whatever they want for what was developed on the government’s nickel.

This will likely mean redistributing tens of billions from everyone else to the shareholders, top executives, and key employees in these companies. If we don’t want to see this upward redistribution (also from Black to white, since the beneficiaries in this story are almost certainly overwhelmingly white) the key is not more skills for our workers, the key is for the government not to be giving out patent monopolies for work it has paid for.

To be clear, this is not an argument against education and training. It would be good for workers and the economy if we had a better-trained workforce. But the reason we have high unemployment today, and may have high unemployment for some time into the future, is not a lack of skills, it is a failure of economic policy.


Support Cepr


If you value CEPR's work, support us by making a financial contribution.

Si valora el trabajo de CEPR, apóyenos haciendo una contribución financiera.

Donate Apóyanos

Keep up with our latest news