Stop calling workers “low skill”

Policymakers have often erred in attempting to respond to unemployment issues by trying to make employees more “skilled.”

In the aftermath of the Great Recession, pundits and politicians alike made a ton of noise about the so-called “skills gap,” essentially blaming workers for not having the right credentials or expertise for the jobs that were available.

During a recession, the balance of power is in employers’ hands. Bosses knew that many people were out of work; they could stand to be picky when it came to hiring and so they demanded more credentials, complaining when applicants didn’t meet that high bar. Only when the labor market tilted in workers’ favor did they bother to take less obviously credentialed applicants more seriously and stop bleating about a “skills gap.”

Wages aren’t based on skills, they’re based on scarcity and want. You could be the best Ping-Pong champion in the world, and if nobody wants to watch Ping-Pong you probably won’t make a living playing the sport.

Alternatively, you could be a terrible construction worker, but if there’s a severe enough shortage of people needed to build houses, you could get by without ever improving your “skills.”

During the pandemic, the government has pursued expansionary fiscal and monetary policy. As a result, many workers have been empowered to find new and better jobs fueling the “Great Resignation” as they abscond from their employers for better opportunities. These workers did not suddenly become more skilled over the last two years, they gained leverage in a labor market that can no longer demand they jump through hoops in order to do a job they always had the ability to do.