Jim Tankersley has an amusing piece about Jamie Dimon, the CEO of JPMorgan, who is trying to distract attention from JPMorgan’s London Whale fiasco, its $13 billion settlement of charges relating to abusive trading in mortgage backed securities, and its role in the Madoff Ponzi scheme, by talking about the ”skills gap.“ Tankersley is appropriately skeptical about the so-called skills gap, which has become the chief excuse of the 1% for wage stagnation and rising inequality. His story’s first line is: “Jamie Dimon has no problem finding skilled workers to hire.”
Dimon himself admits, there’s not much evidence of a skills gap in the banking business: “If I travel all around America, a lot of people talk about the skills gap. We don’t see it ourselves that much.” So what about the rest of American industry? Apparently, Dimon doesn’t really know much, other than hearsay: “But if you go to Silicon Valley, they will talk about nothing but the lack of—they used to call them computer engineers, now they call them software writers. If you go to some of the manufacturing companies, they’ll talk about the lack of technical skills.” Silicon Valley companies do “talk” about a skills gap, but the claim that there are severe IT shortages is contradicted by a good deal of economic evidence that suggests the talk is self-serving.
Dimon says JPMorgan will invest $250 million around the world over five years to help governments and educators figure out what skills need to be upgraded, but this is clearly more about PR than substance, since Dimon admits he doesn’t know very much yet and hasn’t done his homework: “I think businesses do a tremendous amount of training. Big businesses in particular do a tremendous amount of training. And sometimes — I haven’t studied it — some of it might be remedial.” When Tankersley asks him why companies have been trying to shift the costs of training to the public sector, rather than paying for it themselves, Dimon is evasive and then admits he doesn’t know whether “companies are doing enough on their own to train workers to have these advanced skills.” Dimon guesses that big companies do, but says, “That’s part of what we’re trying to learn in the data.”
It is worth noting that there is a strong consensus among researchers who are not simply relying on anecdotes that the weak labor market recovery is not due to a skills mismatch but is instead due to weakness in demand for goods and services (which means businesses do not need to significantly ramp up hiring). For example, a paper by Edward Lazear (economics professor at Stanford University and former chief economist for George W. Bush) and James Spletzer (of the U.S. Census Bureau) states that, “Neither industrial nor demographic shifts nor a mismatch of skills with job vacancies is behind the increased rates of unemployment.”
There certainly is a good case that more education and training can be useful to generate upward mobility for various disadvantaged populations. But the existence of skill shortages, as Dimon maintains, exists mostly in the minds of those wanting access to low-wage, indentured servants or public subsidy for the training that firms should be doing themselves.
Ah, to have so much money that you can commit $250 million to solve a problem that careful research shows doesn’t even exist—or to shore up a tarnished reputation.