Skill Mismatch Myths and Counter-Myths

The idea that high unemployment is due to “skill mismatch” is largely a myth—generally based on a fallacy and ignoring the basic reality that in a properly functioning capitalist labor market employers are able to train workers to do jobs. But the other day on Twitter I saw David Dayen offering what I think is a counter-myth and counter-fallacy, objecting to a University of Phoenix ad that was suggesting to potential customers that they could get themselves out of the unemployment hole by going to school and upgrading their skills.

Not to be an apologist for any particular University of Phoenix program (try Kaplan University!) but I think this is a kind of equal and opposite fallacy.

The way to think about skills and employment in a depressed economy is to think about surgeons. There are basically no unemployed surgeons. There may be some well-qualified surgeon out there somewhere who’s not currently employed due to some frictional factors related to location, but basically the American economy is prepared to employ all the properly trained surgeons we have. That said, it would obviously be a huge error to suggest that if only everyone had an MD we wouldn’t have unemployment. What we would have is a lot of heavily indebted security guards and waitresses and a broadly similar overall level of employment. But by the same token, it’s still true that any particular unemployed 19 year-old can probably guarantee herself a lifetime of stable employment by managing to graduate from college and medical school.

In other words there’s a difference between good advice and good policy. And you see this across the board. “Move to North Dakota” is totally solid advice for someone wondering how to find a job, but “let’s have everyone move to North Dakota” doesn’t work at all for a country with millions of unemployed people.