By Andrew Crutchfield, Special Projects Analyst, California Common Sense
At 10.2%, California's unemployment rate is the highest after Nevada and Rhode Island. What is driving high levels of unemployment in California? Michael Bernick, who served as the Director of California’s Employment Development Department from 1999 to 2004, is an expert on the job market and job training. In this interview, Bernick explains that California’s job-training programs are adequate and that a shortage of skilled workers does not exist. Instead, he argues, a shortage of traditional job openings is driving high unemployment due to rising taxes and employee costs.
Has there been a breakdown in job security in California or the U.S. in general? Why?
It is difficult to quantify, but we do see a breakdown in job security in terms of the growth in the number of independent contractors and so called “contingent workers,” defined to include independent contractors, employees of staffing companies, and the self-employed. We have seen a growth in that population over the past decade and a half. And that’s the clearest quantification.
Anecdotally, I grew up in California in the ‘50s and ‘60s, and it wasn’t true that everyone was employed full time in an employer-employee relationship, but it was a far more common structure of work than it is today. The labor market has split in California, with the great majority of workers still in an employer-employee relationship. But we see a rising number of contingent employees….”
What role do state job training programs play in reducing unemployment?
Well they have a role to play. The truth is the government – the public workforce system – is constantly being criticized for training people for jobs that don’t exist, not training people for the right jobs, or not doing the job training we need. In fact, over the past 40 years in California, as in the United States, we have built up an effective workforce system. It’s not perfect, but the system is highly pragmatic. It is geared towards taking unemployed people and either helping them find jobs with some job search assistance or providing job training of less than six months or so and then placing them in jobs. It is an effective system.
The limitations of the system are that it reaches relatively small numbers of the unemployed and it doesn’t really affect the demand side the number of jobs. The problem is not that we can’t train people to be computer software technicians or certified nurse assistants. It’s that the number of job openings is limited.
Were the [federal] stimulus funds spent on job training well spent?
I think most of the job training [stimulus funds] were. I have questions about other areas of stimulus, but the job training funds were administered through the Local Workforce Investment Boards, the WIBS. In my experience, these WIBS – and we have 50 of them in California (they are basically county-based) – are effective placement systems. They are very pragmatic. They are close to their local labor market and place people into jobs. In recent years, they have placed a lot of people in healthcare jobs because it is one job sector in California that has been expanding. They also place people in jobs in education, but they are very tied to the local labor market.
You said in a blog post that skilled labor shortages are typically overstated in the U.S. Could you provide an example of a skilled profession in which there is a false perception of a worker shortage , and an example of one with a real shortage?
I think there are three categories. The first category includes jobs such as nurses. At one time, with nurses there was a shortage and we ramped up training. With the recession beginning in 2007, virtually every sector or occupation went down, including nursing. Nursing historically has been one of the best professions in California in terms of job opportunities and in terms of there not being an excess of supply. Now, even beginning nurses are having trouble finding jobs. In the workforce world, nursing has been one field that if you were trained you could always get a job. That is still generally the case for people with experience, but even that is getting tougher.
Among other jobs, we often hear about shortages of machinists. A machinist is sort of an urban legend in the workforce world. If you actually look at the numbers, the number of machinist job openings is very small. You don’t want to train a lot of people for the profession. You would just have a lot of people out of work. So machinists are one profession where the claim that there are a lot of jobs going unfulfilled because we can’t find skilled workers is false.
In terms of jobs, there are probably a few niche jobs that are high skilled that in California for which there is a so-called “skill shortage.” Even as I say that, most of these jobs employers are reluctant to fill. They are looking for people with a lot of experience. Take construction management for example. There are a lot of former construction workers or engineers that can be trained in construction management skills, but employers will tell you at the same time that they have difficulty finding the people that they want to fill these construction management positions. What they are looking for, even demanding, are people with years of experience. You can see the conundrum right there.
What policies in California contribute to our high long-term unemployment rates?
I think that Governor Brown did a good job with the recent workers comp reform, and the idea that some of these costs will be reduced because I think the cost of employees in California has gone up, discouraging hiring. Anything that can keep workers comp costs low, unemployment insurance costs low, and other employee costs low are going to have a lot of impact in terms of employment. The main forces, again, that are driving this though are outside of government. The forces are globalization and technology. That’s what is driving employment changes including this movement away from full time employer employee relationship to other forms of employment.
What are some policies that offer the greatest return on investment in terms of reducing the unemployment rate in the long run?
There are multiple things that I think we need to be doing. It took us years to get into this situation. It will take years to get out of it. In my own view, we need to look at job creation in terms of the lack of confidence employers and individuals have in their future. As a Democrat, I say this constant talk of increasing taxes and constantly looking at more taxes and so forth is hurting everyone. I think that’s where we need to start. Employers, I find, worry about increased taxes coming in the future and also have very little economic confidence and are hesitant to hire.