Strange Recovery

Few jobs added. Corporate profits broadly stable or rising. Favorable macroeconomic environment. Surplus capital still flowing into new projects. But still few new jobs.

What gives?

I have a theory about the use of capital and labor in the US, partly borrowed from the Economist and partly from experiece.

The Economist writes that under certain macroeconomic circumstances of low nominal interest rates, artifical demand for capital rises and demand for labour shrinks because it is cheaper to use capital than labor (the details are longer than I care to write about just now).

I am not certain that the jobs picture is solely a function of capital being relatively plentiful and cheap at the moment.

Almost all of my friends have graduate degrees, some have multiple degrees. They are finding that the job market is very tight -- not because there are no jobs, but because the job requirements are written in a way that as few people as possible can fit into the job without a day's training. Yet many companies will not train a Harvard Masters degree graduate (who is obviously smarter than the average bear) in any discipline other than his degree.

I might be incorrect, but it seems as if training for a position is given only under rare circumstances, and mostly for entry-level jobs. For a service economy to devalue its stock of intellectual capital because relatively narrow skills have not been learned is to waste productivity (keeping the production possibilities frontier artificially low in the jargon).

When I see jobs that require MBAs from top schools only, I wonder if the rules of finance change starting at school #11 in the US News rankings? Couldn't someone from school #11 be trained for a short time to fill any real or imaginary gaps in their education? Or is it better to keep the job unfilled?

There is more to this jobless recovery than cheap capital. There are also (personal rant here) loads of people working in HR with absolutely no knowledge of what an education is. For them all universities are glorified trade schools whose mission is to teach what to think, not how to think.

Until the process of recruitment is redesigned, there will be larger numbers of structurally unemployed persons than there has to be for full employment. I bet that some of the increasing number of consultants are also children of this phenomenon.

Thoughts on redesign? I don't know if there is a better way than the current one, but hit me, anyway.

The New York Times > AP > Business > U.S. Employment Growth Surprisingly Weak in July