By Adam Aurioles, Guest Author
As a college student, I would be set for life if I had a dollar for every time I heard other students complain about the job market. However, economists seem to be telling a different story. 90% of economists recently surveyed believe the US economy to be close to or at full employment. But there is another interesting trend going on in American employment. I was recently at a talk with Dr. Erik Hurst of the Booth School of Business on the effects of technology on the employment of prime-age males and females (where prime age is defined to between 25 and 54). I will focus in on males because the results are quite shocking. His research found that on average prime age males are working approximately 180 fewer hours a year (as compared to the 40-year average between 1976 and 2016 of 1950 hours worked a year). Dr. Hurst further found that of those 180 hours, approximately 100 could be explained by playing video games. While those prime age males claim to be happier than they were before, they are ignoring the harmful effect that this has on their future job prospects. Now let’s return back to unemployment.
Full employment means that if unemployment were to fall any further we would begin to see price and wage pressures and in fact, we are beginning to see price and wage pressures. A recent Wall Street Journal article noted that many construction and manufacturing firms cannot find enough workers to serve their needs and instead have had to pay record amounts of overtime hours. The problem with this is twofold: firstly, goods and services become more expensive when companies rely on overtime work and secondly, workers simply don’t want to work the requisite amount of overtime. As a result, some industries costs have gone up and this will eventually have to be supported by price increases. So how do all of the puzzle pieces I have presented to you fit together?
As the economy reaches full employment, we have a large group of prime-age males not working and instead are playing video games meanwhile companies are clamoring for workers. They are clamoring for workers that increasingly need to be skilled as robotics and tech have become integrated into the manufacturing process. As such this glut of prime-age males who will eventually have to find work will be unable to fulfill the roles that the companies so desperately need. The solution is obviously difficult. It will involve disincentivizing prime age males from spending their time playing video games as well as incentivizing them to become the skilled workers that companies so desperately need. This certainly isn’t news to Mike Rowe who has spent much of the past decade speaking in front of Congress and going on TV to advocate for the closing of the skills gap. There hasn’t been much concrete action taken on this issue, and as such, the economy is now increasing wages to try and induce those currently in the workforce to work more and consequently being forced to increase prices. Hopefully, this will be the shock needed to take this issue head-on.
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