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Some Thoughts About Job Retraining

30 Jan 2010
Posted by Andrew Samwick

At the Economix blog on Thursday, Catherine Rampell posted a must-read analysis of the composition of the unemployed population.  But I think her conclusion is too pessimistic.  She writes:

Whatever the underlying cause, the result is disconcerting: compared with previous recessions, many more of the employment gains in this recovery will have to come from new jobs.

That is much easier said than done.

Workers whose entire occupations — not just the previous payroll positions they held — are disappearing (think: auto workers) will need to start over and find a new career path. But the new skills they will need take a long time to acquire.

Even if the employment gains in this recovery will have to come from new jobs, it is not necessarily the workers whose entire occupations are disappearing that will have to fill the new jobs in emerging fields.  There is far more substitutability among workers than that.  These displaced workers may keep their current skill set and put downward pressure on the wages of all workers with those skill sets in all industries -- not just the ones that are shrinking.  That downward pressure on wages will in turn cause the workers for whom retraining presents the smallest obstacles or the largest potential benefits to seek the new skill sets.  While the displaced workers may be older, given the industries that are declining, those with the most to gain from retraining will be younger, since they have more years to reap the labor market benefits of new skills.  The jobs we should expect the newly unemployed to fill are those vacated by the workers who do get retrained.


Well, I wonder if there is actually going to be any room for retraining. I actually foresee a lot of age discrimination occurring in the future. Right now the US doesn't really have any industry left to train into for these displaced workers. casino en ligne

The World Is Flat

Don't forget that we are just beginning to take our first steps into the murky waters of globalization. Displaced domestic workers aren't the only downward forces on wages. India and China are throwing a billion more people into mix as well. There may now be a difference between a Chinese or Indian education and an American one... but for how long?

It's not just the "low end" either. The newest big thing is Indian radiologists interpreting x-rays over the internet for hospitals in America. Look up "nighthawk radiology" and you'll see that even MD's in America are going to be heading back to school to avoid (for as long as they can) the Asian invasion into the American workforce.

A few million unskilled or semi-skilled Americans out of work is going to have a tiny impact on the American factors of production when compared to the forces that are growing outside the borders.

Some Thoughts About Job Retraining

The only real problem I see is that so many people wear sneakers (running shoes, cross-trainers, etc...) that we can't even retrain as shoe-shine boys (no gender bias intended).

thanks a bunch

Thanks for writing off us old folks.

Oh, yeah, if you can: name one new job that someone in the US (old or young) can retrain for, and that US employee will be cost-competitive to a similarly-aged potential employee in India, China, Indonesia, etc. I'll wait... but I won't be holding my breath.

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