A Shortage of Manufacturing Skills?

President Carter’s domestic policy advisor, Stuart Eizenstat, and Robert Lerman, an Urban Institute Fellow, claim there is a skills gap in manufacturing that threatens America’s manufacturing comeback. [“Bring back the apprentice”, Washington Post, May 5, 2013, and republished on yahoo] Readers are asked to accept a citation from an unnamed survey that claims 600,000 jobs go unfilled because the skills gap is real and America needs an apprenticeship program. They worry “We are at risk of squandering this historic opportunity – mainly because firms interested in investing in the United States are finding too few workers with the skills needed . . .”

Really?

American manufacturing dropped 2.2 million jobs in the recession months from January 2008 until February 2010. Every single manufacturing sub-sector lost jobs. Since February 2010 the manufacturing recovery is confined to primary and fabricated metals, manufacturing for machinery, and transportation equipment but nothing else. All other sub-sectors combined had a net loss of jobs as small job gains in a few sub-sectors were not enough to offset losses in others. From February 2012 to the end of last year manufacturing is up only 491 thousand jobs, less than a quarter of the recessionary losses. With 2.2 million jobs lost in the recession and 491 thousand new jobs in the recovery, the difference suggests a surplus of production workers available for hire, not a shortage.

The Bureau of Labor Statistics lists just four occupations in primary and fabricated metals, machinery and transportation equipment manufacturing that require 12 months or more of on-the-job training: machinist, metal and plastic model makers, metal and plastic pattern makers, and tool and die makers.

Machinists were reported to have 388 thousand jobs as of 2012, but there were 419 thousand machinist jobs in 2008. The authors cite “a dearth of machinists” when 31 thousand machinists laid off in the recession appear available to hire now: a surplus not a shortage.

Model makers had 5,700 jobs in 2012; pattern makers 4,130 jobs. In 2008 there were almost 9,000 jobs as model makers; over 6,000 pattern makers. These are small niche jobs but recessionary layoffs suggest a surplus available to hire, not shortage.

Tool and die makers were reported with 76 thousand jobs as of 2012, but there were almost 86 thousand in 2008. Tool and die maker jobs are up from 70 thousand in 2011, but the increase disguises a long term decline. There were 100 thousand tool and die maker jobs in 2005 and 131 thousand in 2000. Bureau of Labor Statistics reported jobs suggest a surplus of tool and die makers, not a shortage.

The four occupations above that need long term on-the-job training are among 26 production occupations the Bureau of Labor Statistics includes in a category called metal and plastic workers. In 2008, 2.15 million had jobs in these 26 occupations; only 1.84 million in 2012. These 26 occupations require no more than a high school degree as defined and published in the Bureau of Labor Statistics education and training classification. An apprenticeship requirement is defined in the training classification but not necessary for any of the 26 occupations.

The other 22 metal and plastic work occupations require no more than moderate-on-the-training defined as “competency in an occupation that can be acquired during 1 to 12 months of combined on-the-job experience and informal training. The 22 include welders, cutters, solderers, and brazers, and computer numerically controlled machine tool programmers the authors cite as needing an apprentice program.

Assemblers and fabricators are another major category of production worker with 10 occupations and 1.98 million jobs in 2008 but only 1.72 million jobs in 2012. That leaves 260,000 available to hire, another surplus. None of these ten occupations require long term on-the-job training: six need moderate term on-the-job training, four need only short term on-the-job training defined as a month or less of combined on-the-job experience and informal training.

Eizenstat and Lerman make no use of Bureau of Labor Statistics data to support their claims because the data shows a surplus with no need for apprenticeship programs. When a business complains about a shortage of labor, they mean a shortage at the low wage they expect to offer. Instead of bidding up the wage to get the help they want, business moves to far off places like Bangladesh, and then finds a willing or gullible economist to blame the unemployed, who would have a job if they just had the right skills.

Alan Greenspan, the former Fed chair, perfected the “Get some training” propaganda in his capital hill testimony. He was calm and self assured when he placed the blame for unemployment on the unemployed. These guys like drama: “squandering this historic opportunity.” Oh Please! Where is Oprah when we need her?

Executive Administrative Assistants

Executive Secretaries and Executive Administrative Assistants

Standard Occupational Classification #43-6011 Executive Secretaries and Executive Administrative Assistants

SOC Definition--Provide high-level administrative support by conducting research, preparing statistical reports, handling information requests, and performing clerical functions such as preparing correspondence, receiving visitors, arranging conference calls, and scheduling meetings. May also train and supervise lower-level clerical staff.

Examples of other common names in use—Executive Assistant, Administrative Assistant

Executive Secretaries and Executive Administrative Assistants excludes jobs as
43-6012 Legal secretaries, as 43-6013 medical secretaries and as 43-6014 other types of secretaries such as alumni secretary, department secretary, office secretary, personal secretary, school secretary, real estate assistant.

Executive secretaries and executive administrative assistants are sprinkled through almost every sector and sub-sector of the economy. They typically account for only a half percent or less of firm staffing, but selected service sectors are as high six and seven percent. Securities, commodity contracts, and other financial investments establishments have an average of 5.5 to 7 percent staffing of executive secretaries and executive administrative assistants. Various real estate specialty service firms, grant making and giving services, social advocacy organizations, business, professional, labor, political, and similar organizations all have 4 to 6 percent staffing with executive secretaries and executive administrative assistants.

National employment as executive secretaries and executive administrative assistants dropped to 803,040 in 2012. Jobs are down from 1.37 million since 2000 in a steady decline, but job totals for medical secretaries and secretaries except executive, legal and medical are up enough to maintain employment totals for the combined category. The job total for all secretarial and administrative assistant categories continues to hold at 3.6 to 3.7 million in the national market since 2000. The Bureau of Labor Statistics is forecasting modest job growth of 15.6 thousand per year in spite of the decade long decline.

The recently updated BLS Education and Training Classification assignments for Executive Secretaries and Executive Administrative Assistants list high school diploma or equivalent as the entry level education minimum. However, percentages from survey data are published for the executive secretary and executive administrative assistant occupation. Results show an educational distribution where 35 percent have some college, but no degree, and almost 30 percent have an associate’s degree, or baccalaureate degree and a few percent above the BA. Many executive assistants need computer skills beyond word processing that add to necessary education and enhance employability. In general on-the-job training is expected to be minimal for this occupation; applicants need to bring the skills and experience to the job.

Job growth is not the only measure of new hiring. Job openings equal job growth and the number of net replacements. Net replacements are people who permanently leave an occupation for another occupation or retirement and must be replaced before there can be any job growth. Job openings for Executive Secretaries and Executive Administrative Assistants are expected to average around 32,180 per year in the years up to 2020..

The basic wage data from the BLS occupational employment survey includes a wage distribution. Averages are not used much in wage data. A few high wages pull up the average and make it unrepresentative. Instead a distribution range of wages is published with the 10th, 25th, median, 75th, and 90th percentiles of wages. A 10th percentile wage means 10 percent working in this job have wages equal to or less than the 10th percentile wage and so on. Annual wages are converted to hourly wages by dividing annual by

The entry wage for the national market in the 10th percentile for Executive Secretaries and Executive Administrative Assistants is reported as $31,310 in 2012. The 25th percentile wage equals $38,030. The median wage is $47,500, the 75th percentile wage equals $60,130 and the 90th percentile wage is $73,530. Yearly reported wage increases are keeping up with inflation across the whole salary distribution with a small increase in buying power over the last decade.

There are 27,380 Executive Secretaries and Executive Administrative Assistants jobs in the Washington Metropolitan area for 2012. The entry wage for the Washington Metropolitan market in the 10th percentile for Executive Secretaries and Executive Administrative Assistants is reported as $36,640 in 2012. The 25th percentile wage equals $43,790. The median wage is $55,420, the 75th percentile wage equals $69,460 and the 90th percentile wage is $83,360. Legal secretaries earn more; medical and other secretaries earn less than executive secretaries and executive administrative assistants in the Washington metropolitan area.

There are 9,740 Executive Secretaries and Executive Administrative Assistants jobs in the Washington DC for 2012. The entry wage for the Washington DC market in the 10th percentile for Executive Secretaries and Executive Administrative Assistants is reported as $34,180 in 2012. The 25th percentile wage equals $41,100. The median wage is $51,470, the 75th percentile wage equals $66,970 and the 90th percentile wage is $84,440. Legal secretaries earn more; medical and other secretaries earn less than executive secretaries and executive administrative assistants in Washington DC.

The $9.00 an hour minimum

The Obama Administration recently proposed an increase in the minimum wage to $9.00 an hour. The current minimum continues at $7.25 an hour where it has been since July 24th 2009, the date of the last of three planned increases passed by Congress. The proposed increase is a little over 24 percent over the three years from 2009 to 2012, more than inflation but still hardly a self supporting wage.

At $9.00 an hour per full time employee the increase converts $3,640 [$1.75 x 2,080] of profit to cost per full time minimum wage employee. To employers of low wage jobs like ushers, lobby attendants, ticket takers, shampooers, or child care workers higher wage costs bring pressure to experiment with higher prices, and fewer work hours or jobs. Raising prices might raise revenue and restore profits as long as sales don’t fall by much. Otherwise cutting jobs or hours in response to a higher minimum wage should help restore profits.

Since everyone agrees higher wages do pressure employers to cut work hours or jobs for employees paid below the minimum wage that part makes for easy agreement. However, it represents a small part of the minimum wage debate, unless economists and their business clients expect job losers to disappear, never to work again.

In their book Minimum Wages economists David Neumark and William L. Wascher write on page 116, “. . . as we emphasized earlier in this chapter the potential for minimum wage increases to affect wages higher in the wage distribution is also important in assessing the effects of minimum wage policy.” (1)

When the minimum wage jumped by $2.10 an hour from 2006 to 2009, jobs as fast food cooks dropped from 612 thousand to 539 thousand. (2) During the same period there were other jobs as cashiers, retail salespersons, rental and counter clerks and others with wage ranges above the minimum. An increase in applications for these other jobs quite likely holds down wages as economists like to predict from any increase in supply, but in wage ranges above the minimum. As people find other jobs in other industries and occupations the higher minimum wage can work to increase employment at higher wages.

In spite of their conclusions, Neumark and Wascher “. . . find it very difficult to see good economic rationale for continuing to seek a higher minimum wage.” In this they are like all economists who have been reciting conclusions like that for decades. Telling people they are worse off with a higher wage makes it necessary to quickly convince the public that jobs will be lost.

Neumark and Wascher and other economists try to convince people by theorizing in the specialized terminology of the economics fraternity. At page 254 they write “In the model, an increase in the nominal wage that raises the wage rate of unskilled labor not only induces substitution of skilled for unskilled labor, it also leads to substitution of unionized skilled labor for non-unionized skilled labor because the union sector expands and the nonunion sector contracts.” Their predictions come without mention of occupations like cashier, clerk or fast food cook and lead to conclusions applied to generic markets of products and jobs. The authors might recognize the millions of opportunities to move from low wage to higher wage employment by looking at wage distributions by occupation reported by the U. S. Bureau of Labor Statistics in their Occupational Employment Survey.

Business predictably opposes a higher minimum wage year after year. For individual business a higher minimum wage always converts profits to costs, even though the economy needs people with income to put back in the spending stream. Economists repeatedly offer theoretical support as though they are paid spokesmen or women.

Telling people they are better off with lower wages remains a tough sell among wage earners. The continued popularity of a higher minimum wage suggests there are many that work for wages who understand employers and employees have opposite economic interests. Employees outnumber employers by enough to expect a raise, but politics is a messy business. Will Congress go with the numbers?

[1] David Neumark and William L. Wascher, Minimum Wages, (Cambridge, MA: The MIT Press, 2008), 295 pages.

[2] U. S. Bureau of Labor Statistics, Occupational Employment Survey