Transcription
Despite what CEOs might tell you, the United States does not have a labor shortage or even a skills gap. During a real labor shortage, the economy does some very specific things to try and correct itself. Wages go up as workers have more bargaining power. Companies begin to hire younger and less qualified workers to do professional jobs out of necessity. Simply landing a job becomes infinitely easier, and companies start investing in internships, apprenticeships, and hiring events at universities and technical schools. And most importantly, the U6 measure of unemployment, which is currently hovering around 8%, goes down.
However, this is almost the exact opposite of what we've been seeing in the American job market over the past few decades. Inflation is still rapidly outpacing most Americans wages. The average age of a new hireer at companies is now 42 years old. Nearly a third of openings on public online job boards are estimated to be fake, with 40% of companies admitting to posting fake job listings for the sake of resume mining. And corporate recruiters are outright refusing to hire recent graduates by demanding 2 to 5 years of relevant experience for quote unquote entry-level jobs. And to top it all off, underemployment is at a near crisis level in the United States as the amount of marginally attached and discouraged workers continues to grow. As layoff victims increasingly end up in part-time or gig work in order to pay their bills, and as young men especially drop out of schools in the labor force because they no longer believe that trying to climb the socioeconomic ladder is worth it. Any one of those things would be rare during a true labor shortage, but all of them at once, I just don't buy it.
So why are certain CEOs, politicians, and talking heads online funneling so much money and time into trying to convince you that the United States has a labor shortage? They are because doing so takes your attention away from the wage stagnation, ridiculous interviewing practices, and other hiring failures that have actively created the job market disaster that we are in. All while conveniently blaming scapegoats like colleges, artificial intelligence, or immigration policy instead. The dirty truth is that America does not have a skills gap or a labor shortage. We have a hiring crisis. And today I'm going to expose exactly why.
If you've been watching the news, then you know that the US is experiencing record low unemployment right now at a rate of only 4.2%. And it would be easy for somebody to look at that and go, "Wow, the American economy is doing great, and it's no wonder companies can't hire anyone because everybody has a job." and they would be completely wrong. As of this month, the United States has the lowest labor force participation that we have seen in over half a century. Meaning that millions of working-age adults are no longer working or even applying to jobs anymore.
See, if you didn't know, our official unemployment rate doesn't actually track unemployment as a whole. It tracks people who recently lost their jobs and are actively in the process of landing a new one. So if you lose your job and you go more than 4 weeks without applying for a new one, then you don't actually count as being unemployed anymore. Instead, you are labeled as marginally attached to the workforce and are removed from the data. If you lose your job and then you give up on applying because you don't believe that you're qualified for anything in your area, then you don't count as unemployed either. Instead, you are labeled as a discouraged worker and are once again removed from the data. And finally, if you lose your job and then make literally any money. So, let's say you go from making 200K a year as a software engineer to getting laid off and then you end up mowing a lawn on Saturday for 20 bucks so that you can afford dinner, then you don't count as unemployed either. You have officially become part-time for economic reasons and are removed from the data.
Every single time that an American worker loses their job and then ends up in one of those scenarios, our country's official unemployment rate goes down. And so we have this super messed up irony with unemployment right now where it's at a record low because the amount of people not working is at a record high. And if you think that's confusing and manipulative on purpose, then you'd be on to something. Official labor market data is intentionally designed to make the country look good. Because when things look good on paper, upper middle class people funnel more money into the stock market, companies get bigger loans from banks, incumbent politicians get reelected, and national GDP goes up. But if we were to use a more honest measure of unemployment, then our country's rate would immediately skyrocket to somewhere between 8 and 15% depending on what we choose to count as being unemployed. That could nearly triple the amount of Americans who qualify for welfare benefits, would almost certainly crash the stock market, and would likely lead to mass civil unrest where CEOs and politicians get ousted for the role that they played in creating the job market disaster that we are now in.
And so even though the official unemployment rate is wrong, it serves a convenient purpose for people in power in that it allows numbers to keep going up and for CEOs to pretend that there is a labor shortage, which takes the blame off of companies for the horribly inefficient hiring practices and tools that the tech sector tricked them into adopting over the past 15 years. But not only does it take the blame off of companies, it also gives them an on paper excuse to blame the American worker or more often the American education system for the fact that companies are not hiring entry-level employees or offering competitive salaries for more advanced roles anymore.
So, let's talk about that for a minute because I think that a lot of Americans incorrectly assume that CEOs are becoming so vocally anti-college online because they want to like push anti-intellectualism for political gain. But outside of a small handful of nut jobs, I don't believe that that's what's happening here with the broader anti-college narrative. Because what we see whenever companies remove degree requirements from positions is that this just becomes a convenient excuse to offer less pay for these same roles. So I'm personally convinced that CEOs are so vocally anti-college online while still sending their own kids to Harvard because they know that salaries are one of the last ways that they can cut costs and maximize profits. Which is probably the same reason why so many of them are investing in AI despite the industry being so laughably unprofitable right now. It is desperation and propaganda driven by greed because on average college graduates earn millions of dollars more than their peers who only went to high school over the course of their careers, a gap that only continues to grow after age 32 once workers have a decade of professional experience and become significantly more expensive to hire.
And since companies can't do anything to sabotage those workers, I guess aside from laying them off, what they're trying to do now is actively pull the rug out from under the next generation. They've stopped hiring entry-level professionals. They've stopped the bulk of their college recruiting. They've stopped investing in internships and apprenticeships. And now they're saying, "Look, it was the American education system that failed to prepare young people for the workforce. Therefore, you young man should not go to college and should instead get some slop micro credential from a company mostly owned by BlackRock and then come work for Meta for a fraction of what we would have otherwise paid you if you had a real computer science degree from a legitimate university."
And look, I already did a whole 40-minute video essay on this, and the anti-college narrative isn't really what this video is about. But let me just remind you, dear viewer, that the United States of America has over 340 million people, and that we have over 6,000 colleges and technical schools spanning from sea to shining sea. We do not have a shortage of workers who are qualified for or at least prepared to learn how to do literally all of the work that needs to get done in this country. What we do have is a deeply inefficient and oftentimes corrupt hiring infrastructure that corporations refuse to fix because they are too focused on short-term profit maxing to care about even their own futures.
Did you know that the odds that a single resume submitted to LinkedIn or Indeed will lead to you getting a job is only 1 in 514? That's right. If you apply to a job online right now, then there is only a 0.19% chance that you will end up getting that job. That's crazy. And yet companies keep putting up with these hiring platforms that statistically speaking do not work. They put up with their HR team having to sift through 300 resumes a day. They put up with losing candidates and hurting their reputation through shoddy ATS. And they put up with the fact that some dude in Bangladesh can auto apply to their part-time cashier job in Tulsa, Oklahoma, even though there's no way in hell that they would ever sponsor his work visa. And they put up with it ultimately to save a few bucks on their HR teams. Because when these platforms are already EEOC and Title 9 compliant, that makes it easy to assume that you won't be getting sued anymore for hiring discrimination. And so long as one of those 300 applicants ends up filling your open role, then it's easy for the board of directors to assume that whatever is happening on the hiring side is working. Because after all, the role did get filled, even if you may have pissed off 200 qualified professionals in your industry who will never want to work for your specific company again. Or worse yet, even if you hired one of the worst candidates possible because they just so happen to be the best person at playing the ATS game.
But here's the thing. Even if companies wanted Workday or LinkedIn to run better, those hiring platforms aren't going to improve the user experience because having a bad user experience is literally how they upsell premium services to job seekers and make most of their money. It is actually insane that LinkedIn is such a nightmare to use that unemployed people are willing to pay the website hundreds of dollars just to make it slightly less of a nightmare to use. Like, it's such an obvious and depressing racket that you don't even know whether you're supposed to laugh or cry at all of this. And that's exactly how I feel when I see companies trying to blame some mythical skills gap or labor shortage for the hiring disaster that they've created because the data just doesn't align with that idea at all.
If you're getting hundreds of applicants for every job that you post, then there's not a shortage of workers. If you're posting fake job listings to LinkedIn simply for the sake of data mining, then you're not desperate for workers. And if you are demanding 2 to 5 years of relevant experience for an entry-level job at your company, then you don't actually know whether or not the American education system is preparing young adults to work at your company because you aren't hiring recent graduates. All you care about is not having to hire or train the next generation of professionals in your field, which was a trend that started nearly 20 years ago with millennials and is now nearly at a crisis level with Gen Z.
But here's the reality that companies at all levels need to accept. It doesn't matter whether you're blue collar or white collar, tech-based or analog, or whether your services are in person or behind a screen. If American companies don't start to hire those millions of underemployed people and start paying them competitive salaries today, then all American businesses are going to be utterly screwed when the baby boomers who refuse to retire finally die off. Hell, we're even seeing it now with manual labor jobs, as over half of skilled tradesmen are now considered middle-aged or elderly. And yet, despite that fact, young adults with technical certifications can't get a job because those blue-collar companies don't want to take on apprentices and they don't want to physically show up to schools to recruit.
And I know this better than almost anyone, not just from the data, not just from the news stories, but because I worked as a blue-collar laborer for over a decade, and then started working professionally and academically in rural technical workforce development. I was literally the guy to contact if you wanted to hire a technician in Utah, Idaho, Wyoming, Colorado, or Montana for years. And yet, every company that I met with who had staffing shortages would just kick their feet and complain because I only had inexperienced 22-year-olds to offer them. They did not want to hire or train early career professionals. And now they're facing the consequences of that as the industry is now 349,000 workers short. But that's not because of a shortage of workers available. It's because of a shortage of companies willing to hire and train. There are estimated to be 4 million Americans currently enrolled in trade and vocational programs. Far more than enough to fill all of these shortages that talking heads like to complain about. And trust me, white-collar industries are going to follow close behind after all of their baby boomer leaders start dropping like flies.
But here's the good news. There are still 20 million young Americans enrolled in traditional 4-year programs, too. And they are developing phenomenal analytical and communication skills that your company's leadership is going to need in 15 years. All you have to do is hire them and train them up. Okay? It's not the school's responsibility to teach someone how to be a CFO. The school's job is to make you really good at math, writing, and interpersonal skills so that you will be prepared to be a successful CFO once your company teaches you how to actually be one.
Or let's say you're not even looking for someone with a particular degree. You just need able-bodied adults in the warehouse. Well, I've got good news, too. Because there are approximately 14 million working-age adults who are either part-time for economic reasons or are discouraged and marginally attached to the workforce. Hire them. Stop caring if they have a gap in their resume. Don't make them go through a seven-step interview process. And for the love of God, stop making them answer stupid moral dilemma questions in the job application. Just hire them. The job market crisis that the United States is in was never about there being a lack of qualified workers to do all of the work that needs to get done. Our job market crisis was created because companies stopped investing in the next generation and began outsourcing their workforce to websites that don't even work.
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