Corporations prey on the human condition

An article on Yahoo News caught my attention the other night as I was casually surfing the net for anything of interest. “Help Most Wanted: 5 Biggest Worker Shortages,”the piece headlines. Now, I’ll try to refrain from making any excessive commentary on Yahoo News itself, but I must mention that I hardly consider Yahoo’s content to be of any reputable quality, or credibility. On numerous occassions they’ve managed to get away with false data, warrantless claims, and idiotic and unqualified comments from their writers. In fact, to put it simply, I think their material is garbage. But enough bashing. Quality and credibility aside, take the topic they’ve presented for face value. You may need a few minutes to skim the piece before you can understand the details of my thesis.

If you’re finished reading, then the question I’m about to pose should already be lingering in your mind. It regards employment of different sorts, yes, but more generally you should be asking yourself, where are these alleged job openings? The sluggish economy since the 2008 recession has kept a turbulent unemployment rate well above a nationally accepted 8%, but in the past year there have been various claims of employment opportunities that are in dire need of being filled. Closer examination may reveal that these opportunities are in fact bogus. It is my contention that employment opportunities have remained inconcrete since the 2008 economic recession, and any remaining employment opportunities are the result of corporate predation on the American work force.

To do this, I offer the following distinctions of the labor force, as one of three classifications of jobs: undesirable, industry specific, or outsourced. Understand that the names attributed to each classification are unimportant in themselves, as my claim concerns their attributes.

Undesirable jobs are those that could be fulfilled, but aren’t because of the duties or services entailed at the prevailing market price. This distinction is premised upon studies conducted in the field of decision theory, which seeks to understand human judgment and behavior, and prescribe remedies to improve people’s decision making processes. It is also contrary to what classical economics would otherwise dictate on job search because the individual uses market price to establish his or her economic preference, as opposed to using a pre-constructed preference to determine the market price. This intuition, now formally coined by scholars as coherent arbitrariness, is among some of the most recent studies in behavioral economics and decision theory that are defying classical economists. The fundamental assumption made by classical economics is that all individuals act in a rational and self interested manner, but insights in decision theory posit a world in which the individual is not rational at all. In fact, the premise of decision theory is that individuals are guided by biases, rules of thumb, and emotional and psychological factors that corrupt what a rational decision maker ought to do. And we see the evidence everyday.

For any rational agent – that is, the agent that classical economists concern themselves with – finding a job follows a rather straightforward search algorithm. The individual searches, until an offer is found that would exceed the cost of remaining unemployed (i.e. the job’s wage pays more than any welfare check or benefits the person would receive for being unemployed.) This individual would also incur a cost for searching, whether it be the time and money spent on making phone calls or browsing the yellow pages. If the agent follows through, then he/she would keep searching, until the marginal benefit of searching for a job offer again is equal to the marginal cost. At this point, the agent would have reasonably exhausted his resources to search any farther. However, in a world where people are known to be irrational, those that are unemployed may simply give up without having exhausted their full search potential, or be discouraged by the wages they are offered. This behavior is quite persistent in the IT industry. As seen in the Yahoo article, our modern era of technologically savvy people has prompted businesses to seek more skilled labor to produce gadgets for an insatiable demand. But companies offering $8 an hour to prospective IT workers may have to look elsewhere for their labor supply. As experiments in coherent arbitrariness have demonstrated, people seem to construct their economic preferences on the spot, or in this case, after some range of prospective wages is known. A person will compare an engineer making $50 an hour to his own engineering job offer at $10 an hour, and feel that he is being cheated; but while it may make economic sense to take any form of employment, especially in this economy, if it exceeds the benefits of remaining unemployed, further decisional research has yielded that people won’t hesitate to punish others according to some innate sense of fairness if they believe it has been violated (experiments in the ultimatum game fully illustrate this concept.) In this case, at a wage of $8 an hour, individuals would not hesitate to punish their prospective employer by refusing the job offer.

Industry specific jobs are those that require technical expertise or certification beyond formal education or training. These jobs are typically too narrow for most individuals to want to acquire the additional credentials to qualify, such as a network security specialist or a particular type of sales associate. To this end, many continue their job search elsewhere in the hopes that a position matching their particular skill set will open up. But this decision is as irrational as refusing any other job on the basis that the individual feels that he is being cheated. If additional training is the bar between receiving a constant wage and remaining unemployed, economics dictates that the individual would do best to acquire additional credentials. The additional time it would take to undergo whatever training is necessary to qualify for the position is treated as an additional cost to running the search algorithm another time, and if the benefits of receiving the wage exceed the costs of remaining unemployed, then there would be no reason for the individual to search any further. However, decision science indicates that people may lose motivation by the sheer fact that additional credentials belittle their current qualifications. Unless plans to attend graduate school are already made, those only looking for employment associate the additional credentials with skills that are unnecessary or excessive for the kind of industry they have prepared themselves for. Computer scientists looking for a job in web development find the additional certification to become a network security specialist unnecessary for their goals, and pass over the opportunity even if they would otherwise do best by acquiring the incremental education.

Finally, Outsourced jobs are those that could be fulfilled by a qualified American worker during an opening, but are instead outsourced to foreign countries, notably China, where manufacturing costs and regulations are minimal. While the current economy may indicate that employment opportunities are minimal, it is plausible for corporations to advertise job opportunities to front for their true intention to outsource jobs and maximize profits. With the emerging economies in India and Brazil, as well as the Asian miracles, Hong Kong, Singapore, South Korea, and Taiwan, American businesses have a plethora of opportunities to hire equivalently talented and eager young labor in foreign nations for wages that would be unacceptable here. Luckily for them, we may prevent ourselves from having a chance at being hired at all if we allow our decisions to be corrupted or manipulated naively.

If you rely on The U.S. Department of Labor Statistics to provide the employment data, you’ve done no wrong. But it is clear that there is a systematic problem with the way economic policy is conducted, and for the sake of every American, this must be corrected. There’s no doubt that there are factual, employment opportunities, but they are in no way concrete. The flaws in human nature have allowed corporations to take advantage of us when we are most susceptible. Now, in the most trying of economic times, the public must do its best to educate itself and become self aware of its own judgmental biases. Economists and policy makers alike must put aside those neat and eloquently constructed models in favor of a behavioral approach that acknowledges our universal human condition. We may not be the most rational of beings. But that doesn’t mean we can’t fight back.

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