The Sentimentally Great Economy

Conor Sen: A Steady Job Beats a Higher Paycheck

Despite this “hard economic data,” the “soft economic data” — public sentiment — shows that the economy and labor market are perceived to be about as good as they’ve ever been. Gallup has been asking the public every month since 2001 what it considers the nation’s most important problem, and in November only 13 percent responded with an economic problem. The just-completed midterm elections were largely a referendum on health care and President Donald Trump, not on the economy. […]

As a worker, I’d rather be in a labor market with lots of job postings, a low level of jobless claims and a sustainable level of wage growth. It’s certainly preferable to being in one fueled by speculative excess, where I have to constantly worry about when the mania is going to collapse. I’ll take 3 percent wage growth today with good prospects for being employed tomorrow over 4 percent wage growth today and unemployment tomorrow. […]

The good news for workers today, and perhaps why their optimism is higher than some economic data might suggest, is that there’s no reason why this labor market can’t continue for at least several more quarters. The excesses of the past couple years have been in financial markets, not in the real economy. Bubbles in cryptocurrencies, cannabis and private technology companies should not lead to a heavy-handed response from the Fed. Household leverage remains low, and business investment remains modest.

It’s remarkable how much of the employment web site ads I see are aimed at employers rather than people looking for work. That’s a new phenomenon. And like Sen, I don’t think a recession is necessarily right around the corner, as many are predicting. Wishful thinking? Maybe.

On the other hand, there are still some indications that our labor market still has some work to do.

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65 thoughts on “The Sentimentally Great Economy

        • (Starts to google…)
          (Remembers the word “conclusive”)
          (plays out debate in head)
          (finger hovers over the X to close tab)

          In the case that I misplayed that, here’s the report that found that illegal immigration harmed low-wage workers (warning, PDF).

          Here’s an article showing that H-IB visas depress tech wages.

          Here’s an article from George J. Borjas in Politico that points out that, sure, it harms wages (and, by extension, workers) but that means that profits go up and that makes the country wealthier.

          It seems that there is a great deal of evidence that immigration keeps wages down. It only took me three minutes to find those.

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          • Jaybird, I just want to thank you for always making the arguments before I ever even read the comments. I really dislike some of the comments on this site in which I’m expected to basically prove my experience as a human before my viewpoint is even considered worthy of respect – they’re very hurtful and enormously upsetting. And you’re always there first. I really appreciate it.

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            • I absolutely agree.

              More than that, the available data seem to indicate that this principle hasn’t been falsified.

              (That’s why I’m more used to arguing about whether people who oppose proverbial scabs crossing the proverbial picket line are being racist instead of whether they’re actually noticing things.)

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              • Mainstream progressive support for de facto open borders, regardless of stated reasons (anti-racism, humanitarianism, etc.), under current circumstances amounts to a corporate interests/employer first policy position. I cannot figure out if this is a chance, strange bed-fellows kind of thing or if it is part of the broader class and demographic realignment playing out.

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                • Here’s something that I said back in 2013 (we were so young!):

                  I don’t think that it’s a deliberate plan either… but the benefits of illegal (and undocumented) immigration (and, for that matter, large influxes of unskilled workers in the first place) are felt by powerful people with powerful lobbies and the costs are felt by schlubs. On top of that, the ideologies line up pretty well… libertarians like immigration because they like open borders. Businesses like immigration because they like cheap labor. Democrats like immigration because they like the voting tendencies of the immigrants once they’ve registered to vote. Heck, just look at a picture of most of the folks in opposition and the arguments against them just write themselves.

                  Everything lines up perfectly and there’s no need for a conspiracy at all.

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                • I cannot figure out if this is a chance, strange bed-fellows kind of thing or if it is part of the broader class and demographic realignment playing out.

                  If it’s a demographic realignment, the process has been underway since Clinton championed NAFTA (as I allude to in a response to Jaybird’s linked comment above).

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          • Is there any political movement that openly seeks to make wages go up?

            We were told in the 1970s, as the first steel mills and auto plants were closing, that this was a good thing, that lower business costs (meaning wages) would benefit everyone.

            We kept getting told this again in the 1980s as outsourcing took hold;

            Then again in the 1990s as the internet began replacing brick and mortar;

            Again, and again, and again, we have been told that lowering the cost of labor would lead to a better world.

            So who now is going to say, “eff that, we need higher wages!”

            Or is the consensus just be that falling into the permanent underclass is the inevitable fate of a large proportion of our fellow citizens?

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              • Sure!
                Am I wrong to say that even something so basic as that is still viewed as edgy, controversial, and the idea that regular workers above the minimum should be paid more is outside the bounds of polite conversation?

                I’m thinking of the recent relocation of that auto plant to Mexico. The decision to seek lower wages was greeted by most of the media with a nod, like no other alternative existed.

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                • Am I wrong to say that even something so basic as that is still viewed as edgy, controversial, and the idea that regular workers above the minimum should be paid more is outside the bounds of polite conversation?

                  Yeah, I think you’d be wrong to say that. Objections to a $15 national minimum wage are (eg) that it would bankrupt businesses where labor rates are significantly lower. That argument sorta *requires* that the proposal isn’t out of bounds.

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            • Chip, is there any reason this wage movement thing is some what isolated to the US. We have a minimum wage rate that is above what, 80-90% of all other nations. Is there a reason you climb the soap box here and fight instead of somewhere else, like Cuba, China, Venezuela, Vietnam, Indonesia, Malaysia, India, Mexico, Pakistan, Polynesia, etc.?

              Why is this countries minimum wage rate even really a thing right now?

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              • Not to answer for Chip, but my guess would be my own answer: this is my country. The one I am actually living in.

                Why is this countries minimum wage rate even really a thing right now?

                Maybe because so many people in this country are finding that minimum wage is so far below what they need to afford even a fraction of their basic needs?

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                • It’s all good, I’m happy to discuss this with anyone, anytime, and you bring excellent points.

                  I think it may be useful to parse the premise into it’s early stages. Minimum wage sliced away the section of our economy below minimum wage, it also sliced away the opportunities, and industry associated.

                  If minimum wage were never established, wages would have remained (at least more) competitive and basic needs would have been more aligned with wages locally.

                  Since the minimum wage was established here and steadily increased, it made other countries able to game there minimum wage below ours, which setup a condition to suppress their wages (to attract industry) instead of paying higher wages there (locally) in order to be competitive. If there wasn’t these artificial large disparities the wages may have developed more equally with the basics to survive.

                  What happens when minimum wage (globally) is eliminated, production is allowed to distribute, with that opportunity to produce is distributed.

                  Velocity of tangible money returns locally. Tangible capital formations also return locally, so people are able to pay for their needs.

                  Increases in minimum wage doesn’t solve the problems of needs here, as a nation, it makes our labor more non-competitive and continues further in the disparity. Higher minimum wages mean lower velocities of money locally, and less tangible capital formations locally. Did I need to mention with reduced opportunity there might become a debt problem locally, maybe even a drug problem?

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              • Yeah what bookdragon wrote, but also doesn’t it seem absurd to compare America to the worst tier of nations on earth?

                I mean, “But we’re better than Malaysia!” doesn’t sound like making America great again, does it?

                How about we compare ourselves to the UK, the EU, Japan, or Australia?

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  1. It’s remarkable how much of the employment web site ads I see are aimed at employers rather than people looking for work.

    And in particular, that the problem employers will have is too many people applying for their openings. My state’s legislature resists these fads; to apply for a position with the legislative staff, you have to submit a resume and cover letter on paper.

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  2. I wonder if the difference – that of employers misincentivizing – comes from discrepancies in the types of jobs that are available. In other words, people in stagnating industries are attempting to hire like they are in growth industries. What works and is applicable to one industry, like tech, isn’t a working criterion for another industry such as education.

    Just a thought.

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      • Basically, if, for example, you are using hiring criteria and methodology that is designed for teachers, but applying it to the tech sector, you might have a serious mismatch. And vice versa. And yet, we often have people just entering a workforce doing the hiring as that is a low-level HR job. So instead of people who know the industry and its needs, a person who is often only familiar with hiring in the grossest sense and not the industry at all, is writing job ads. So they might ask for 5 years experience with something that has only been around for 2.

        And with that, if you are hiring in a stagnating sector, using the tricks and tips that have been shown to work in a growth industry, such as using job boards or university job fairs* targeting the younger, more mobile employee, may not work with people who are aging out and looking for something different at a later stage in their career. You may need to look at more traditional methods such as employment firms.

        Couple this with the differences in people who go into various fields, and many things might be BS to the outsider are completely factual to people in the field. For example, I have never worked a day in higher education, but that is the entirety of my wife’s career. She will often mention practices that are considered normal in an off-the-cuff manner, but I will fixate on those things as I don’t perceive them as the norm, at least not in a private business world. And that is only one example of the mismatch I am talking about.

        *I have zero idea what works for the yoots these days, as I haven’t been in that position in a long time.

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        • So they might ask for 5 years experience with something that has only been around for 2.

          I always assumed that this was a trick to make sure that you could weed out anybody who applied and hire the person you wanted anyway.

          Oh, you don’t have 5 years experience with this thing? Well, we’re sorry. We’re looking for someone with experience.

          Oh, *YOU* don’t have 5 years experience? Well, we can always make exceptions…

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          • Well, I don’t know from tech, but listening to the wife about talk higher-ed hiring for the last umpteenth years, they don’t do that. But they do slip in the Masters Or Greater Required.

            All. The. Time.

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            • A huge number of my coworkers have shown up from the “HEY! WE NEED A SYSADMIN! DO YOU KNOW ANYBODY?!?” method.

              “Um… yeah? I know a sysadmin that I used to work with back in 2003 who hates his job. Can we match his salary?”

              “Tell him to apply!”

              Knows a guy who knows a guy is still the most reliable way to get quality people.

              I mean, if your seed person is a quality person.

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              • All of my best jobs have been handled that way. With the exception of when I broke into a new (to me) industry. Then it was toil away at crap hours for a crap company and a crap salary.

                And not even realize what your career is until you get recommended for something.

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              • Urg, degrees…I recall a job that I held in the early-mid 2000’s. It was a tech job in the defense industry and there were people from 4-5 different companies all working the same job. One of the employers decided that all of their people needed to get degrees, despite the fact that they’d all been doing the job just fine without one. This is the same employer who told a friend of mine (same industry, different job) that she would get promoted if she got a degree. Well, she got her degree and the employer denied ever having made that promise, and they promptly lost an outstanding employee.

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            • I dunno if your wife runs up against this but in my area of higher ed it’s assumed that more education = better-quality people.

              “We’d like to make all the jobs in our area not require a college degree at all, if experience is commensurate.”

              “BUT WHYYYYYYY!?!?!??!?!!?”

              I mean, 4/5ths of the people in my area have master’s degrees, we just also know how little the person with no college degree at all but 20 years of experience is missing about the job compared to the rest of us. (They ain’t.)

              You’d think we’d tried to set the college on fire, honestly, the first 2 or 3 times we tried this.

              The most recent time, our boss was on our side (different bosses each time), and HR was still weirded out and threatened to cut wages for any new folks accordingly until we strong-armed them into the position where they had to admit that yes, directly relevant experience did matter as much as “having some sort of bachelor’s degree at all”.

              Sheesh.

              (And yet, I’ve also gotten pushback on discarding typo-ridden resumes of people with the right non-qualification qualifications. “are you SURREEEEEE this person isn’t a finalist?” Yes, the job is detail-oriented and highly writtten-verbal in nature. “BUT ARE YOU SUUUUURE????” THEY HAVE EIGHT TYPOS IN THEIR COVER LETTER NOW LEAVE ME ALONE. *ahem* Thank goodness current HR folks are not like that.)

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              • I realize you work at a private institution, so maybe what I’m about to say doesn’t apply to your experience. But where I work (similar type of unit, but my specific job is different from what you do, I’m sure), those frustrating education requirements are part of a larger effort to ensure a certain amount of fairness in our civil service system. Maybe “fairness” isn’t the right word. It’s more like, “adopt inefficient rules in order to forestall something we don’t want (like undue favoritism).”

                I’m not saying I agree with that. I’m more on the side of, it’s better to cultivate experience and not to make an idol of credentials.* And I’d have no problem making “commensurate experience” equal to a college education. I have at least one immediate co-worker who never graduated from college and yet is just as good as, or better than, any of us with what they do.

                *I have a terminal degree, but the wrong one for the job I work. So I guess it’s in my interest to believe that.

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                • Oh, I know why the stuff is there in civil service. That’s why civil service has a lot of test-based hiring, too. Who can pass the tests is relatively independent, and I understand it even when it isn’t all that suitable and leads even more directly to hiring people who are good at taking tests/writing essays rather than good at doing jobs.

                  This was not that. I mean, we give points to people for knowing the college well (spousal, alumni hires). Our hiring is pretty darn fair and open overall, on average, but there are some (deemed to be fair by state and federal employment law) biases baked in.

                  This wasn’t even credentialism on the part of those previous bosses, really, it’s just an excessive amount of faith in the power of Education to make better, more effective workers vs other kinds of learning, from a bunch of people who have a bunch of degrees and not a whole lot of experience in non-academic settings (even working at my level of job in our own setting is not something any of them had done).

                  Plus, anecdotally the number of crappy applications from people we would never hire in a million years really does go up without that filter (amazing what people are willing to claim as directly relevant experience when they have to apply to X many jobs a week to keep their unemployment benefits, and I don’t blame them for that) – I’d just rather kick 200 people’s applications to the curb for the sake of the one amazing, experienced person we would’ve otherwised failed to even interview, than miss the one for the sake of the 200. Being an extremely fast reader no doubt assists me in taking that view… even when scrutinizing, I can plow through a number of apps with very precise detail recall that other people find somewhat astounding (as in, I’ve heard this from professor colleagues, on search committees that have nothing to do with my own job).

                  In any case, our current HR folks (and my current boss) well understand how spreading a wide net in advertising jobs and accepting alternate qualifications broadens the pool in terms of diversity and inclusion, because of the barriers that make college degrees unequally hard to get for people with marked identities, instead of giving me crap about it, so my hiring life is all good now.

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                  • Thanks for clarifying what you meant.

                    I should say that despite the rules, my own institution practices spousal hiring. (Well, not “despite” the rules, but “despite” what one might think from those part of the rules I’ve just described.) And frankly, most of the spousal hires I know about are quite qualified and hardworking. Without the connections, however, they might not have gotten their foot in the door.

                    I realize spousal hiring, etc., doesn’t represent most of what you were saying in your answer to me. I’m just harping on one point.

                    Here’s another point I’ll harp on (or bring up):

                    because of the barriers that make college degrees unequally hard to get for people with marked identities

                    I can see at least two ways of trying to solve what that problem represents, and I’m not sure which side I come down on. The first way, is what I interpret you to be saying. Job requirements may discourage people from applying who might otherwise earn consideration. And there are structural reasons (the barriers you refer to) that may reinforce that discouragement. I.e., if the job says “MA required,” then a non-MA would be less likely to apply, even if they ould do the job without an MA and even if there’s a tacit understanding among those doing the hiring that they’d take a non-MA if they were qualified otherwise.

                    The second way of looking at this, however, is that the credential (and I realize you make clear you’re not talking about credentialism per se) represents a supposedly established track for entering a career. Someone who faces the barriers you refer to might enter that track and get the required degree, only to find that they’re competing against people who didn’t pay those particular dues and who may very well have become contenders thanks to unearned advantages. For example, I’ve mentioned I don’t have the standard terminal degree for my profession. Of the things that helped me get my job, among them are almost definitely, but also indirectly, my race and other cultural advantages. All the while I realize there are scores or hundreds of people who would love to have my job and who got the required degree.

                    I realize I’m probably taking this discussion in a different direction from what you intended with your comment. I’m just riffing off a point that your comment reminded me of.

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                    • No worries, and as someone with the intended terminal degree that goes with our shared profession, I’ve certainly hashed over the arguments on both sides at length, exhaustively, as it pertains to said profession.

                      It is *probably* the case that my bias toward one side of the argument stems partly from being well aware of the context of this particular profession, in which the folks with marked identities who have the credential and then have to deal with folks coming in with unearned weight are far, far, far (I could add a few ‘fars’ in there) outnumbered by similar folks with 10-30 years of experience and no credential (and extremely valid reasons for not getting one) – not your alternative one but no master’s whatsoever, often not a university degree – who are boxed out of jobs they would excel in. This is significantly worse in some settings than others; generally speaking the larger the institution the larger the problem. And it’s just as bad or worse in public libraries as it is in academic ones.

                      The particular credential has a significant diversity problem that experience in the profession *without* that credential is much less messed up about.

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              • Yep. When my mom worked for a sub-Ivy, it was the same thing. She was kept in a secretarial position (and salary level) despite doing an administrator’s work because she didn’t have a college degree.

                After roughly 10 years of that, they did finally give her a promotion and title equal to her work. AFAIK, she’s the only case of that ever happening there, and the exception was made primarily because a very wealthy alumna took a real shine to her – to the extent that she would not write a check without personal contact from my mom. While Mom was recognized as very good at what she did even outside that fundraising, basing HR policy on the whims of wealthy eccentric old ladies isn’t a particularly good solution.

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          • The catch is that many of the application programs are so tight you end up weeding out the person you wanted to apply.

            My husband worked for the NPS in a seasonal position, and during the off season did truck driving training so he could be qualified for a better position – better pay, and while still seasonal, it was several more months out of the year. The bosses knew he was going to do the training, they, knew that he had completed the program and got the qualifications he needed, and he was promised the job when the hiring opened up. They wanted to hire him, he had experience with that park, was well liked by the bosses, and now he was a truck driver, too.

            He put in his application and his application was autorejected by the computer programs, ostensibly because he wasn’t a veteran. Even though he wanted the job, had been promised the job, the bosses wanted to hire him for the position, he couldn’t get his application past the computer program into the hands of the boss he’d worked for, for three years. (the boss was really mad that he “didn’t apply”)

            The job went to a 22 year old who had lied on their application and came to work high several times. We were out several thousand dollars of training for a job my husband had been promised. Oops.

            Husband works for the county now.

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            • Several years back, some high-ups at the FCC wanted to hire one of my economist friends. One of those high-ups provided guidance through every step of the process: the resume must include this experience, the cover letter must include those particular buzzwords, etc. Details changed at every step of the process. The person doing the guidance told him, “We want to hire you, not the person who gets through all of the filters just on random luck.”

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              • Exactly. It’s like “we’re gonna set up our filters to ketch us a unicorn, but here is a trail of bread crumbs that mere mortals can follow to possibly get your application to the person who already plans to hire you.”

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                • At least some current left thought on this is that employment should be a lottery system. You put all qualified applications and select at random somehow. No interview and no looking for a particular person. One of the great things about being a lawyer in real person law is that you get to avoid a lot of modern employment drama because your dealing with firms that tend to have between three to four lawyers at most.

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                  • I suppose that this makes sense if one sees jobs as bullshit and easily trainable.

                    The guy dinking the cans of soup over the scanner at the supermarket? Heck, anybody can do that. They’ve got self-checkouts now to *PROVE* that anybody can do that.

                    Lawyers? Just go to Legalzoom.com and you can set up a will, set up a corporation, set up a patent.

                    Sysadmins? They just google stuff!

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                      • I don’t think it is true. I think nearly everyone at lies on their resumes to varying degrees. Most of it is harmless exaggeration, making something seem more important or bigger than it is. Sometimes the exaggerations get really out of hand.

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                      • I know that, in my corner, there is a joke to the effect of:

                        Job Requirements: Masters Degree in Electrical Engineering
                        Job Duties: Changing lightbulbs, winding extension cords, plugging/unplugging equipment

                        I’m sure you’ve seen people pass around the job postings from various places that say “we need someone smart who can move mountains, has good emotional intelligence, and is humble who is willing to work for $9.50/hour. 20 hours a week, hours will vary.”

                        It makes sense to lie on a resume in an environment like that.

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                      • Empirically, I wonder. Anecdotally, I know. I’ve participated in a number of interviews where the information on the resume could not be supported by answers given in an interview.

                        We had one guy who listed C++ proficiency on his resume, and told us about the GUI he built using C++. So we had him come in for an interview, and I had one of the Dev managers (who was a C++ developer) sit in. Dev manager started asking basic C++ questions that the guy couldn’t answer.

                        Turns out he didn’t know C++, he’d just worked with a GUI builder that spit out C++ code, and he’d learned enough to make edits to the GUI code.

                        Not an outright lie, as such, but clearly he oversold his skills.

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                        • I think it depends on the job. The less skill the job requires, or the more difficult it is to misrepresent credentials/experience/skills/etc., the less an interview matters. In a similar vein, the less that it costs to onboard/let go of an employee, the less it matters.

                          Or rather, the less a formal interview matters.

                          However, the more it costs to turn an employee over, and the more important it is to verify necessary skills, the more an interview matters. If for nothing else, it matters to get a feel for the person and ensure they would be a good fit, because turning the position over is expensive.

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        • My personal example is all the LinkedIn recruiters (or their bots) who

          1. Find me attractive because I work for a well-known employer
          2. Think I’d drop that for a six-month contract in a different state

          Or perhaps this is just because sending message and email is free, so there’s no reward for being more targeted.

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  3. My early 50s wife is currently unemployed, and has been since May. She didn’t really begin to look in earnest for a new job until late summer. She has been working in the same field since she graduated from college, so for about 30 years, and she has amassed a great variety of skills within that profession. Recently, she interviewed for a position for which she was eminently qualified. She didn’t get the job, losing out to someone with 2 years of experience. She was more than a bit miffed. I told her that tells you what they were looking for all along: cheap.

    In a truly tight labor market job seekers of all stripes would be snatched up quickly, and at ever higher wages. It seems as though there is plenty of competition at the bottom, and there always will be, short of complete economic collapse. Competition for those higher up, but not C-level, probably still doesn’t exist in the way it’s being advertised.

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  4. To say that the employment market is tight seems like an oversimplification.

    Law is still struggling to recover from the law school crisis/recession. This hasn’t been helped by the fact that a lot of law schools responded to declining admission by radically lowering standards for admission. When I took the bar a healthy 70 or so percent of us passed the bar on the first attempt. We were inline with other ABA law schools in CA. The passage rate for first time Bar Takers of the July 2018 CA Bar Exam was under 41 percent. My law school’s pass rate was 33 percent.

    Yet Biglaw announced some very nice bonuses for their associates (Class of 2010-2018). These bonuses are for everyone, there is no billable requirement to get them. Starting salaries are around 190K in Biglaw I believe. This would indicate an asymmetric tightened labor market. BigLaw is doing well. The rest, not as much.

    It is also hard to find paralegals because you are going against tech. Tech can offer so many perks that many other employers can’t compete.

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