But you try and tell the young people of today that... and they won't believe ya

I've noticed a couple of recent media stories on the plight of youth ([1],[2]), and I have to say that I've seen worse.

Here is a plot of unemployment rates for people between the ages of 20 and 24:

For those of us who happened to be born in the early 1960's - this group is very large, and includes two WCI bloggers - unemployment rates of 13% would have been the stuff of fantasy; youth unemployment rates in the recession of the early 1980's reached 19%, and were an important factor in my decision to go to graduate school. The recession of the early 1990's wasn't quite as bad, but still worse than anything today's youth saw in the most recent episode.

More generally, the outlook for today's youth is pretty bright. Scarce resources can expect to command a certain amount of bargaining power, and so an aging population means that young workers can pretty much dictate their terms in the labour market.

If you're looking for people to pity, spend some time thinking about the sad fate of a member of Generation X (I was born in the same year as Douglas Coupland) reduced to sounding like one of these guys.

 

Comments

[Joel Snow]

I think you'd be better off using some sort of financial stress ratio. Perhaps average student loan debt/unemployment rate. You try to convince old professors that things are different now.... and they won't believe ya.

[Determinant]

Is this the unreal "Unemployment" number that comes off EI? If it is then it's not worth the time it took to write. Unless it includes discouraged workers then it's irrelevant.

[Stephen Gordon]

I looked at employment rates as well. Same story.

[Stephen Gordon]

And the next time you feel like telling me that something I wrote is 'not worth the time to write', I would kindly invite you to STFU.

[Nick Rowe]

Unemployment numbers come from the StatsCan surveys anyway. Nothing to do with EI numbers.

[Determinant]

The next time you choose to write such patronizing pap I kindly invite you to think before you type. These ill-considered "it was worse in my day" stories show nothing about the duration of unemployment nor financial stress. The Beveridge Curve would be far more useful.

The grandstanding you just did here has characterized your coverage in most recession-related posts here. The arrogance just drips from the screen.

The R8 series is far more illustrative and useful than the hackneyed EI-based "Unemployment" figure.

By the way, why on Earth is graph of 20-24 year olds being claimed as "youth unemployment"? Grad School? This age band covers post secondary education, period. Many people won't show up in it, and won't exit the stage they entered at 24 until much later. Push it out to 28 if you want a real picture. A graph of time from graduation to first employment, or better yet first "career" job (therefore not underemployed) would be far more relevant. This isn't the first recession-metric post which had such analysis errors.

Earth to Ivory Tower, come in Ivory Tower....

[Determinant]

http://www.theglobeandmail.com/report-on-business/theres-jobless-and-officially-jobless/article1244217/

The Globe and Mail illustrating my point on the usefulness (or lack thereof) of the LFS Unemployment figure.

[Stephen Gordon]

So show us what the real data are, and tell us how they contradict what I said.

[Stephen Gordon]

Oh look. R8 data start in 1997, and the most recent recession brought R8 unemployment back to the dark days of 1998.

[Determinant]

Would that I had the money. One of those whiney young'uns lookin' fer a job y'see.

Got the R8 series for 20-28 year olds?

Though there was the time I went for an interview, drove three hours to get there, and at the end was told "we like you, we want to hire you, but our customers overseas have no money because their banks are calling their loans, so we can't hire you." That was October 2008.

People wonder why discouraged workers get discouraged.

[Stephen Gordon]

Ah. My apologies if the OP made it seem as though things were peachy for everyone under 30. The point was that they have been worse in the past, which is not the same thing. And if it's any comfort, many/most of us who traversed these bad times ended up more or less okay. Good luck.

[Patrick]

Dudes. Save a little vitriol for the xmas family row. ;-)

Stephen, how do you square this with the concerns you've voiced in the past about Canadian demographics and productivity? The old will retire, won't be replaced, will consume less and cost more (pensions, medical). Productivity lags, taxes rise, AD shrinks, employment shrinks, youth can't find work, lather rinse repeat.

[Determinant]

Apology accepted.

On a serious note, as the Globe article shows, the R8 definition is far closer to my view of unemployment than the LFS model. The fact that it only goes back to 1998 is regrettable, but it does show that perhaps 1998 wasn't so rosy for youth either. An R8 unemployment rate of 18% as the graph shows is a deplorably high number.

[Stephen Gordon]

Patrick: There's no real conflict. The young will do relatively well, but that's just because there are so few of them. The aggregate picture - the one that includes the not-young - remains dicey.

[Frances Woolley]

Determinant: "The next time you choose to write such patronizing pap I kindly invite you to think before you type."

Yes, it is really tough for people entering the labour market now - I worry about my kids and their futures. A lot.

This isn't supposed to be some Four Yorkshiremen type sketch when people compete about how hard things were back in the day.

Unless you've live through it - and from what you've said in earlier comments I deduce that you didn't - it's hard to understand the desperation that characterized that 1980s labour market.

Breaking Away is a movie that captures it. Douglas Coupland's Generation X is the bible.

But Stephen Gordon's numbers also tell the story.

[Mike]

As a 'discouraged youth' gone back to university, I thank you for this post.

Also, is it just me, or is Macleans really going down the tubes in terms of quality? Their youth article left so many things out.

[Nick Rowe]

This is wandering slightly off-topic, but: David Andolfatto had a post recently on breaking down the flows between Employed; Unemployed; and Not in the labour force. http://andolfatto.blogspot.com/2010/12/is-deficient-demand-hypothesis.html

He was looking for the "signature" of deficient demand vs structural shifts theories of unemployment.

Nick's hypothesis: if structural explanations are correct, there should be a smaller effect on youth unemployment. Because youth is more flexible. They can travel more easily, and also have less job-specific human capital, than older workers. But if deficient demand explanations are correct, the effect should be bigger for youth unemployment. Because firms stop hiring.

Not sure if that's clear.

I know (at least, I think) that youth unemployment is always higher. But does it rise more in recessions, proportionately? And is there any difference in that proportion between this recession and past ones?

[Frances Woolley]

Nick, there's a labour market institutions story that goes like this:

- big shock hits the economy
- firms change their employment offers
- because of their inability to fire workers/renegotiate contracts, keep on existing workers at old terms/conditions
- hire new workers - mostly young workers, immigrants - at new terms/conditions.

E.g. look at what's happening in universities, both north and south of the border - despite the recent hiring spree, it's still true that a lot of the expansion over the past 20 years/30 years has been made possible by hiring instructors on part-time/temporary contracts for much lower wages than those enjoyed by current incumbents.

So structural changes can hit youth hard.

[Nick Rowe]

Frances: Yes. I haven't thought this through properly. I'm not even sure if I should have said "proportional", or "absolute change" in the above. But somehow, if it were structural changes causing the recession, it ought in some way disadvantage youth less, just because they are more mobile, in both senses. I can't find a good test.

[Frances Woolley]

Nick: there's two questions.
1. Given two job seekers, an old one and a young one, who is more likely to be hired?

Your answer is: if it's a structural shock, the young one; if it's a non-structural shock, both are equally likely to be hired.

One problem with this as a test is that, since productivity generally decreases with age (see my first-ever blog post on human capital: myth, literal truth or fairy tale), and an older employee (like a used car) might be a "lemon", employers will usually prefer young over old job seekers, regardless.

2. The second question is: given a recession in the economy, which age group is expected to experience a higher unemployment rate?

The answer to that question depends upon how firms lay off workers, and that depends upon labour market institutions, e.g. the degree of unionization, labour legislation etc. Those things will cause younger workers to experience a higher unemployment rate than older workers for both structural and demand-type shocks.

3. Back in the 80s, the rational strategy for a laid off older worker who'd spent a lifetime in manual labour e.g. working in mines, construction etc. was to go on CPP disability, which will affect the measured unemployment rates.

[Nick Rowe]

Frances: maybe. In my comment on David's blog, I was arguing that a laid-off older worker might get the lower-paid job that would otherwise have gone to a younger worker, leaving school. Everybody who gets laid off just shuffles one step down the ladder, leaving no room for the new entrants to get on. Your lemons story says the opposite, but also makes sense.

[Andrew]

I suspect Nick is right that laid off workers with experience are displacing young workers in lower paid entry level jobs - those are the job postings you mainly see in centres serving unemployed workers. And we know that the rate of turnover is much greater at the bottom of the job maket.

[Determinant]

Frances:

I may not have lived through it, but there is plenty of desperation going around right now. Firms have stopped hiring up and down the value chain, from labourers to entry-level grads (accountants, engineers...). I could see the job ads literally disappearing. The lists just kept getting shorter and shorter.

I have seen firms who just wanted to hire "a few good people" (engineers in this case) get swamped with hundreds of prospects. I really would like to see a time graph on the Beveridge curve. It is impossible to talk to HR people. They don't answer their phones, most resumes are simply stuck in a drawer. In my opinion and experience, this is a case of deficient demand.

Socially the impact is going to be significant. We are having a long recession right at the time when the baby-boom generation is considering retirement and the echo generation, their kids, want in. Except the boomers won't retire because of insecurity and insufficient retirement savings, and firms don't have the money and the will to expand. The echo generation can't get on the job ladder. We have the worst of all possible employment results happening right now.

Of course a good many boomer parents simply can't get their mind around firms not hiring based on insufficient demand. They grew up in a world of jobs and expansion. If you can't get a job, it must be your fault. They can't get their minds around the games that firms and their HR people play. It's a horrible discussion that is playing out all across Canada right now.

This recession isn't a short, sharp shock. It's a long, drawn out constant torture that wears you down.

[Guillaume]

Just want to point out that the situation is not too bad in Canada as far as my experience goes (I'm 26). My friends and I have generally found work after graduation (class of 2007), although it generally took time and the opportunities are generally below what was promised to us (except if you can go for a long series of unpaid or low-pay internships). I had to work in another field for over a year, but it was still stimulating work. I can say that debt might become a big burden for a lot of 20-somethings should interest rates start rising. Plenty of friends who didn't attend university are in much better positions (contruction, restaurants, small business, etc.) are in better positions, but might be hit harder if the economy deteriorates.

The situation in other countries is much more dire. Participation rates and unemployment are reaching records for young people. Europe has been bad for a long time (talk to young Frenchmen about why they come to Québec...) but is getting worst, not just for the periphery. The US seems to be in an unprecedented place for young people, just look at this Mike Konczal post: http://rortybomb.wordpress.com/2010/12/10/employment-population-ratio-young-people-a-potential-lost-generation-of-young-americans/

[CBBB]

I graduated way back in 2008 and still haven't been able to find relevant employment. I think anyone who graduated in 2008 or 2009 and didn't have the foresight to make sure they got themselves either an engineering or accounting degree is pretty much not going to have much of a career what-so-ever.

[Brendon]

maybe Determinant's winning personality is holding back his employment prospects.

[Determinant]

The ad-hominem is always a mistake, Brendon.

Even engineering isn't a guarantee. The market is saturated and without credit and a lax US economy (no exports, no demand), the outlook for engineering is very grim.

[Frances Woolley]

Determinant: "It's a long, drawn out constant torture that wears you down."

Yup. And the thing is: some generations get lucky. Some don't. And it sucks if you're born in an unlucky generation. But what can you do?

People who are born at better times often mistakenly think that their success is due to their winning personalities. Sure, personality helps you get ahead, but it only gets you so far.

"the boomers won't retire because of insecurity and insufficient retirement savings"

Or because they just don't feel like it.

[Determinant]

My opinion of such people is not fit to print.

[Brendon]

when did these comments turn into a therapy session for some unemployable engineering graduate? Pedantry is always a mistake, Determinant.

[Brendon]

In every hiring decision I've been a part of, personality was the key factor. If you made it to the interview we assumed you had the technical qualifications, after that it was all about fit.

[Determinant]

Nope, just sharing experience. If Frances is right, Brendon, then you're part of a Better Times generation.

I'm glad your judgment of character is so acute that a few posts on a blog can give you an accurate portrayal of a person :rolls eyes:

[K]

What, are you hiring exotic dancers, Brendon? I've made lots of hires. The interview is when you find out if all the stuff on the cv means anything at all. Then you do another one with even more technical grilling. And bring in more technical experts and do another interview. Sure you have to like the person, which you start to find out after a few hours of interviews. But technical skills, and creative thinking only get discovered after extensive grilling.

My institution, by the way, instated a hiring freeze two years ago which is still in place. Just random, tragic bad luck for those who were born a couple of years too late.

I do have some advice for those who have some means of support (living with or supported by a parent or something): Take big risks. Try to start a business, or oversell yourself for a job that you really don't know that you can do. Never again in your life will you have so little to lose. I came out of grad school and into the workforce in a very difficult employment environment in the early nineties and so started a technology company with an equally inexperienced group of friends. The timing turned out to be good and It worked out, but even if it hadn't, entrepreneurship and willingness to take risk would have been seen as a huge asset for future employers. I got very lucky and I did have some support from a working fiancée. But I do think there is some general value in taking significant risk at that point in your life.

[brendon]

I wish! Sadly we were hiring economists.

[Nick Rowe]

Stephen's original point, though, is not that it isn't bad for 20-24 year olds today, but that it was even worse for 20-24 year olds in 1983. And sure there must be discouraged workers today. But there must also have been discouraged workers in 1983. Same for 1993. (I dread to think what 1933 was like.)

And I haven't seen any arguments here that contradict that point.

You can all attack me, if you like. I'm one of those lucky mid-boomers, born 1955. Hit the job market in 1981.

Comparing my own generation with that of my children (in their early-mid 20's), and purely anecdotally, I notice two big differences:

1. Their material expectations are in many ways much higher now. Stuff like electronic gizmos, new furniture, clothes, eating out, etc. They are much better off, and treat it as normal. (I could go on and on in this vein, with or without a Yorkshire accent, about how total crap 1970s/80s cars were compared to today, and how I only got cable TV/internet 2 years ago, etc., etc.,)

2. But in terms of the basics, like getting onto the ladder of career-path jobs and buying a house, they are worse off.

Weird thought (though one that maybe violates natural rate theory): I wonder how many of us geezers are staying on in our jobs, just so we can support our kids. But, because we are hanging onto our jobs, our kids can't get them, and so need our support? In other words, we might want to give our (own) kids our jobs, so we could retire.

But all this strikes me as very short-term thinking. Given the demographics (one of Stephen's posts a few months back), there's going to be a labour shortage when we properly exit this recession. So us geezers had better keep on working, because there just ain't enough of you young'uns around to support us all.

[Frances Woolley]

Nick - on working until your kids are well established. Yes, people do this. Especially those with youngish children from second marriages (if you have kids at 25 those kids are usually well established by the time you're 65, though I do have friends/family (born in the early 60s) still reliant on parents into their 40s).

But retirement - and the associated lack of status, lack of structure, etc., - is a pretty traumatic experience for a lot of people. I personally think there's academics who won't retire because if they did, they'd have to clean out their offices, and they have nowhere at home for their books.

As for all of that stuff about finding fulfillment as a volunteer - overrated.

[Nick Rowe]

"I personally think there's academics who won't retire because if they did, they'd have to clean out their offices, and they have nowhere at home for their books."

Must propose this to the BOG: we build a load of offices and rent them out to retired faculty to cover the mortgage. Win-win.

[Frances Woolley]

Nick, it could still be a win-win even if the offices were luxurious, well-appointed and heavily subsidized!

[Mike Moffatt]

"I may not have lived through it, but there is plenty of desperation going around right now. Firms have stopped hiring up and down the value chain, from labourers to entry-level grads (accountants, engineers...). I could see the job ads literally disappearing. The lists just kept getting shorter and shorter."

I have no doubt there's truth to this, but as a business owner when I meet with other business owners, one of the three big topics* that comes up is how difficult it is to find good-entry level employees. I guess it depends which side of the fence you're on.

* The other two topics being taxes/regulation and the Canadian dollar.

[Nick Rowe]

Mike: Please expand. Is it harder now (last 2 years) than it used to be?? What is it employers are looking for that they can't find? (What does "good" mean?). Because this goes right against my own "Unemployment is high because there's a deficiency of aggregate demand" story. This is a structural unemployment story.

[David Andolfatto]

Nick:

As I am not that much younger than you, I feel obliged to join you in "old geezer mode."

Comparing my own generation with that of my children (in their early-mid 20's), and purely anecdotally, I notice two big differences: 1. Their material expectations are in many ways much higher now. Stuff like electronic gizmos, new furniture, clothes, eating out, etc.

This is true, I think, and perfectly natural for an economy that grows its wealth over time. Still, it is interesting to see how little correlation there appears to be between the level of material wealth and measures of "happiness."

2. But in terms of the basics, like getting onto the ladder of career-path jobs and buying a house, they are worse off.

I don't think the statement applies in general. And I'm not sure why the young should be worried about buying a house. The housing stock must pass from one generation to the next (supply will create its own demand). :)

Finally, I want to share my own weird thought with you. We teach the young that there are no jobs because of deficient demand (something beyond their control). So the young give up; they wait for the deficient demand to go away. But it might not go away for a long time. Their passivity--the belief we encourage that their destiny is beyond their control--leads them into a self-reinforcing poverty trap. In this way then, deficient demand might indeed become a self-fullfilling prophesy...though perhaps not for the reasons imagined by Keynes.

[Determinant]

Mike:

If by entry-level you mean two to three years solid experience in the field, then that's not entry-level. That wasn't entry level when the boomers were going through the same career stage. If it is now, then it seems to me that business has developed unrealistic expectations about work experience and training.

David:

Your point about Say's Law is far off the mark. Do we really need to revisit Keynes again? You have also committed the Mortality Fallacy. The average life expectancy of Canadian today is 80 years. It isn't unusual for todays twenty-somethings to have had great-grandparents. My grandmother will be a great-grandmother in a few months. If you want to wait for housing stock to pass from boomers hands, you're going to have to wait another two decades. They are still far from that stage of life. But the next generation is already into their marriage and househunting years. Your assertion is out by about two decades.

[Mike Moffatt]

Going to respond to Nick's point (it's pretty lengthy). But in the meantime, RE: "If by entry-level you mean two to three years solid experience in the field, then that's not entry-level." No, I mean entry level. Why on earth would you think I meant otherwise? Entry-level meaning straight out of high school, college or uni or changing careers entry-level.

Nick: Is it harder now (last 2 years) than it used to be??

This is all anecdotally, but no, it isn't. In my personal experience it is marginally easier, but only marginally.

[Determinant]

Because for many employers, "entry-level" has morphed into that meaning.

[Mike Moffatt]

"Because for many employers, "entry-level" has morphed into that meaning."

Well, it hasn't for our company or my colleagues, but like I said, it's all anecdotal.

[Mike Moffatt]

"What is it employers are looking for that they can't find? (What does "good" mean?)."

I'll try to keep this short. Before I begin, I just want to say that I have the absolute best staff in the world - but they're the exception, not the rule. And again, this is all anecdotal and should not be used in the place of a rigorous study.

In my experience (and those of the other small- and medium-business types I discuss this with on a regular basis at Chamber of Commerce type events) is that it's really difficult to find 'good' entry-level employees. By entry-level I mean fresh out of university or community college. By "good", the skills we find that are lacking are the following:

1. Written communications. Finding someone who can write well is remarkably difficult.

2. Problem solving and 'purposeful' creativity. Finding workable solutions to day-to-day problems.

3. Attention to detail (this could be items 3 through 10). For instance, a full 1/3rd of all job application letters I get spell my name wrong. They're instantly thrown in the round file. I know my surname has a somewhat unusual spelling, but there's no reason you can't double check to make sure you got it right.

4. Punctuality. I would estimate about 20-25% of the people we interview for entry-level positions either show up right at the last second or a few minutes late.

5. Expectations. In the past we've posted ads for entry-level full-time positions that asked applicants to post their salary expectations. You would be shocked how many kids with a Sociology degree expect $75,000 coming out of school.

I'm sure there are all kinds of reasons for this and I don't think a 'kids these days!' attitude is all that useful. Two (of many) might be:

1. Societies focus on credentialism. Yes, it's nice that you spent two years on the Honour Roll, etc., but what we care about is what you can *do*, what skills do you bring to the table. Most small- and medium-business owners aren't impressed by pieces of paper - the most successful business owner I know is a Grade 12 dropout. The problem is, the link between pieces of paper and skills is somewhat tenuous. I would say somewhat, because I imagine students who score well on 'attention to detail' would do well in university.

2. Testing mechanisms in universities. IMO, there is far too much use of multiple choice and short-answer tests in schools, which do nothing but test a student's ability to memorize a bunch of definitions and facts. It does nothing to test items 1 through 3. A curriculum that was more heavily weighted on writing essays and other creative work would go a long way in assisting items 1 through 3. Of course, it comes at higher grading cost.

Again, it's all IMO - would love to read more careful studies. But when I'm at the golf club with other business owners, we don't spend a lot of time talking about a labour surplus.

[Mike Moffatt]

And my experience is similar to Brendon's, in that the interview is all about personality. We wouldn't bother bringing in anyone for an interview that didn't at least meet the minimum qualification(s) for the position. It may be a bit different if you're hiring non-entry level, in which case there may be more resume/CV type questions to ask. But if it were me, I'd get that information from job references first, if at all possible, before bringing in the person for an interview.

[Declan]

"Given the demographics (one of Stephen's posts a few months back), there's going to be a labour shortage when we properly exit this recession."

Just like in Japan?

[Nick Rowe]

Mike:

That was really useful. A few months ago I was talking to someone who hired a lot of entry-level economists, and was trying to persuade him to write a blog post on what he was looking for in a job candidate. So far he hasn't accepted my suggestion. But I think this topic is worthy of a post. (But I'm not the right person to write it, of course).

[Stephen Gordon]

Just like in Japan?

It's not clear they properly exited their recession.

[Determinant]

By definition, most university grads are filled with a lot of theory and not a lot of real-world skills. My English-language abilities are superior and my French has game too. The point of an entry-level job is to take a person with "ability" (not necessarily skills) and give them those skills.

I'm not radical in this notion, my parents and grandparents would agree with this idea.

It's the real-world experience training that seems to be open for debate.

[Determinant]

On a devil's advocate note, Mike is describing an apprenticeship system which universities are expressly not set up to accomodate. ISTM that many businesses want to reap the benefits of an apprenticeship system yet don't want to pay for it.

"Credentialism" is the result of people seeking education at their own expense to remedy this, and yet employers seem to ignore the credentials.

I believe this may be a Catch-22 situation.

[Brendon]

Nick: Having been in on many entry-level and otherwise hiring decisions for economists (in economic consulting,which is much different than grad-school) here is what we want:

1. We know you are smart, if you weren't, you wouldn't have made the interview. More important is can you fit in socially and pull your weight in all aspects of the job(eg. proposals, presentations, and client work). Extra points for attitude - that is, be prepared to work in subjects outside of your comfort zone without complaining.
2. Can you write well, quickly, and for the appropriate audience? If you can't put the econometrics into words that a mid-level decision maker in government or industry can understand, then it isn't worth much.
3. Know when to talk and when to shut up. Can we trust you to come to a client meeting and not say something stupid?

Sadly, the above qualities are very rare in "entry-level" candidates. Echoing what Mike said - the writing skills are particularly absent.

[Mike Moffatt]

Brendon's comment deserves its own post. It's exactly why I hear from business owners of non-econ jobs as well.

[Mike Moffatt]

"On a devil's advocate note, Mike is describing an apprenticeship system which universities are expressly not set up to accomodate."

You need to re-read my post. If we need an apprenticeship system in order to people to show up to interviews on time and to spell people's names correctly, our society is in more trouble than I thought.

"The point of an entry-level job is to take a person with "ability" (not necessarily skills) and give them those skills."

Again, go over my four points. You get a person who can't write in complete sentences, who can't solve simple problems, who ignores simple details and who shows up late.

I absolutely agree with The point of an entry-level job is to take a person with "ability" (not necessarily skills) and give them those skills." The problem is that so many applicants fail to show any basic ability beyond possessing a piece of paper.

[Joseph]

I was a Canadian trying to enter the job market in the early 1990's (1993 on). I do not want to take away any of the frustrations felt by people who are trying to do so right now. But it was really tough back then and it resulted in my making a lot of decisions that I would have rather not been forced into. In particular, moving thousands of miles away from friends and family was a very unwelcome experience.

But I do think it is worth keeping these issues in perspective. Whether or not the current job market is worse (at an absolute level) than the 1980's and 1990's, it is certainly true that a lot of suffering is going on. But I think that inter-generational resentment doesn't really do much to improve matters and shifts the focus away from the actual problems.

Or at least that is a point I took from the post and think is really worth thinking about.

[JDUB]

"You would be shocked how many kids with a Sociology degree expect $75,000 coming out of school"

I'm not shocked at all. When I was in grad school and teaching and TA'ing I got the impression that most econ majors and commerce students believed that they would be guaranteed a job making over $100K upon graduation. I am really unsure of how they formed these unreasonably high expectations. Is it just that in university you do not interact with many people outside your cohort so you have no experiences that temper your expectations? I also think that high school teachers may purposefully skew students expectations of results from obtaining university degrees to encourage students to go on to university. Profs in undergrad are susceptible to this as well, I cannot count how many times in undergrad I was encouraged to go to grad school because "all of the profs will be retiring soon, so there will be tons of academic jobs" (they failed to take into account the expansion of phd programs and the shift towards sessionals). On the PhD job market last year even my salary expectations were sometimes out of whack with some of the private sector jobs I interviewed for, in one instance the HR woman basically laughed at me and said good luck (however, I ended up in a different job with my expected salary).

[Bob Smith]

I think part of the expectation/reality gap between students/recent graduates is, in part, a function of a misunderstanding of what constitutes a "good" job and a somewhat shocking ignorance of what Canadians actually earn. I doubt most university students realize that, if you have a job paying $100k a year, that put you in the top 2% (or so) of income earners. Certainly, I remember having discussions with people in law school (OK, they're future lawyers - so ignorance of reality might be excusable) who were seemingly unaware that a salary of $70,000, far from being a starvation level of income that they imagined, was actually more or less the average FAMILY income (for a 2-income family, at that) in Canada. Knowledge of that fact might make your average B- student ask himself why he's so special that he'll be making 6-figures right out of school.

[JDUB]

Good point Bob. Last winter/spring semester I took a few minutes in my Intro Macro course to talk about the distribution of income in Canada and hopefully this helped temper my students' expectations. Although they may forget about it in four years when they are graduating and searching for jobs.

[Patrick]

Never hired an economist, but I'm on a hiring committee looking for 2 experienced engineers. All the the same issues mentioned previously w.r.t new grads apply equally to openings for people with experience. In our case, if we discarded resumes with spelling or grammar errors we'd have no candidates left over. We're happy if they speak English well enough to be understood at least half the time. If they can speak in or write complete sentences (in English) using mostly correct grammar we're over the moon. If they demonstrate that they know what they're talking about and haven't lied about or misrepresented their technical qualifications (we actually give them an informal oral exam to check)... well, we'd probably hire them!

So far, we've been looking for about 4 months (WITH the aid of a big 'recruiting' outsource company - who has been mostly useless), we've ploughed through hundreds of resumes, and we've interviewed, oh, something like 20 people. No suitable candidates so far. It's very frustrating.

[Determinant]

Mike:

"You need to re-read my post. If we need an apprenticeship system in order to people to show up to interviews on time and to spell people's names correctly, our society is in more trouble than I thought."

You also wrote:

"2. Problem solving and 'purposeful' creativity. Finding workable solutions to day-to-day problems."

"Most small- and medium-business owners aren't impressed by pieces of paper - the most successful business owner I know is a Grade 12 dropout. The problem is, the link between pieces of paper and skills is somewhat tenuous. I would say somewhat, because I imagine students who score well on 'attention to detail' would do well in university."

That's the kind of job-based experience grads don't have.

Anyway, is it not a bit ironic that Mike's point is undermined by his misspelling of "Society's" as "Societies"? I've tried to ignore that, but I just can't any longer.

[JDUB]

It is amazing that students would have spelling and grammar errors considering that most universities now provide staff that will go over students' resumes and cover letters at the request of students.

[Mike Moffatt]

Patrick: That sounds like our experience. I've found it takes roughly 200 resumes to fill one position, so if we want to hire 3 people, we need to get at least 500 applicants.

Determinant: "Anyway, is it not a bit ironic that Mike's point is undermined by his misspelling of "Society's" as "Societies"? I've tried to ignore that, but I just can't any longer."

Not at all. The standard of care should be a lot higher on a job application than it is on a blog post. I think you're missing the point.

"That's the kind of job-based experience grads don't have."

Have problem solving skills is 'job-based experience' now? But even if I grant you that one (which IMO is one heck of a stretch), that's 1 of 4 items I pointed out.

[Mike Moffatt]

But yeah, I admit, I made a grammar mistake. Don't tell my boss. :)

[Mike Moffatt]

In all seriousness, though, if you want to discuss the ways in which a lot of higher education is failing our students, I think that's a conversation worth having.

[Determinant]

Problem-solving skills? Yes, insofar as you qualified it by "realistic" and there are always hidden catches in every situation which only prior experience with the matter can help you master, then you're looking for the kind of knowledge only experience can provide.

And yes, I was segueing into how Higher Education and Business have a mismatch of expectations and outcomes.

Actually, having spoken with a number of resume-writing professionals, their universal consensus is that proper, essay-style grammar is inappropriate for a resume and cover letter. These are people paid for their advice. Their recommendation is that one composes sentences like "Collected data samples using a Really Cool Multimeter" and other verb-object declarations. If it sounds like an essay you've done it wrong.

Even cover letters, according to them, should have just a bare amount of grammar and no fluff. Declarative, short sentences only. They'll edit your resume/cover letter mercilessly toward that end.

Given Mike's observation that he needs 500 resumes to staff three positions, I theorize that even though this sounds like a structural problem, it really isn't. In a labour supply-limited situation he just wouldn't have that many applicants to choose from and his company would have to satisfy itself with the best that there is. I believe businesses raise their screening levels in response to a high number of applications. If there was more demand and less unemployment, Mike's firm couldn't afford to be so picky.

What I am saying is that we have a Beveridge Curve Involuntary Unemployment problem masquerading as a structural problem due to high company screening thresholds, which only developed due to the high unemployment problem in the first place.

[Mike Moffatt]

"Problem-solving skills? Yes, insofar as you qualified it by "realistic" and there are always hidden catches in every situation which only prior experience with the matter can help you master, then you're looking for the kind of knowledge only experience can provide."

Naturally, but we're not expecting people to be perfect at it. More a willingness to even *attempt* it would be nice. A willingness to recognize that there is, in fact, often more than one right answer to a question.

"Actually, having spoken with a number of resume-writing professionals, their universal consensus is that proper, essay-style grammar is inappropriate for a resume and cover letter."

Agreed. Again, I'd just be happy if they spelled my name right.

"Given Mike's observation that he needs 500 resumes to staff three positions, I theorize that even though this sounds like a structural problem, it really isn't. In a labour supply-limited situation he just wouldn't have that many applicants to choose from and his company would have to satisfy itself with the best that there is. I believe businesses raise their screening levels in response to a high number of applications. If there was more demand and less unemployment, Mike's firm couldn't afford to be so picky."

It's been this way since 2006, so unless you want to theorize that the recession started then, it doesn't fit your story (again that this is all anecdotal and should not be used in the place of a thorough study). Of course, as I pointed out to Nick it is marginally easier to find good entry-level people than it used to be. It's still quite difficult, though.

[Mike Moffatt]

The year 2006 being the year I first got involved in any kind of HR decision making. I have no prior experience prior to 2006, so I can't speak for what it was like then.

[Stephen Gordon]

About writing skills. This is one area where the typical economics program falls down badly - although I believe that there are places like U Vic that have initiated writing courses for economists.

[Mike Moffatt]

It might be instructive to describe our hiring process to show why so many resumes are necessary.

We typically start hiring right around graduation time (April-May) since we're looking for grads straight out of university and community college. Due to the time of year and the fact we're in a city with a big university, it's easy to get lots of applications (an ad on a university website might get 300 applications in April-May, but only 45-50 in October).

Say we get 200 resumes. In the old days we'd go through all 200, but that takes way too long and isn't all that instructive. What we do now is send each applicant an application package that involves doing a little research and providing written answers to questions. It takes about 45 minutes to complete. Naturally this drastically cuts down on the number of people to examine - the completion rate is around 40%, as it weeds out the people who are applying to everything. The response rate is typically 40%, so now we're down to ~80 applicants.

We very briefly go through all 80 applications to find ones that are incomplete or obviously very poorly written. Same with cover letters for BIG errors: Mispelling the company name, having the wrong company name (you'd be surprised how often this happens), etc. Typically find 20-25%, so now we're down to ~60-65 applicants.

We then go through the resumes to weed out people who lack the proper qualifications (and since it's an entry-level job, qualifications are pretty basic like "have taken a course in organic chemistry" or "have completed a degree/diploma". This tends to weed out 20-25% of the remaining, so now we're down to ~50 or so.

We then take read the applications and find ones that have multiple major mistakes that aren't noticeable at first glance. We usually cut out the worst 2/3rds, leaving us down to 15-20 applicants.

Out of those, we call one or more of their references. We get at least 2-3 where the reference gives a negative recommendation. Now we're down to about 15.

We bring all of those 15 in for an interview, to meet one of the owners and one or two staff members. At this point they've met the qualifications, they've received a positive reference and their application (assuming it was written by then) is of good enough quality. We're basically looking for a few things:

- Are they who their paperwork suggests they are
- Will the clients like them?
- Will their co-workers like them?
- Will they overall be a good fit (or are they a good candidate to leave/be fired after a couple months)?
- Do they have a positive attitude?

Most candidates fail at this point because either:

- Have a personality that wouldn't fit in well with the company culture
- Don't know much about what the company does
- Make it very clear in the interview that this isn't what they want to do for a living and the second they find something better, they're gone (I'm shocked by how many applicants make this mistake. I'm glad they do, though. I'd rather find out in the interview than later.)
- They clearly don't want to be here and act as if they're doing you a favour by interviewing them
- Show up late/dress inappropriately/drown themselves in axe body spray, etc.

Out of that, we might get 0-3 people we'd consider hiring. If it's 0, we try again. If it's 1, we hire them. If it's 2-3 then it comes down to a second interview, a coin flip, or if it's 2 and we really like both, we hire both, though we were only looking for 1.

Even with all that, only 50% of our hires work out. HR is remarkably tough. But the very long story is - you need LOTS of resumes to find 1 person.

[David]

Wow, I'm a little late to the commenting party. Interesting post. Having been born in 1986, I didn't realize the '80s were so bad.

Still, before I concede to Stephen that his generation had the rawest deal, I'm curious about a few questions:

- How the ratio of the youth unemployment rate to the overall unemployment rate compare over time? If everyone got a raw deal in the '80s whereas today's youth unemployment comes at a time when the rest of the work force is doing alright, I'd have a little less sympathy for Stephen.

- What's the participation rate? It seems like more and more people are taking up post-secondary education these days, many because they can't find a job. And students don't count toward the unemployment rate, even if they'd rather be working than in school. So if today's students would have just stuck it out as members of the unemployed labour force in the '80s, I'd have a little less sympathy for Stephen.

- What kind of real wages are youth who do have jobs earning today relative to the '80s? If more youth have jobs today, but the youth who had jobs in the '80s had better real wage rates, I'd have a little less sympathy for Stephen.

[Determinant]

I attended job fairs in 2006. There were two big-name companies who for some reason had got space at a university job fair but said they weren't actively recruiting. One was at the job fair while lay-offs were being announced at their facilities in Toronto (which represented a significant amount of their presence in Canada).

I have also worked on products during summer jobs that I subsequently learned were cancelled permanently and their primary developer went bankrupt when demand plummeted during 2008.

The lineups and piles of resumes were very long and very deep then too. They only got deeper in 2008. Many more companies shifted to a "not actively recruiting" stance on their website or in person.

In hindsight 2006 exhibited signs of an economic cycle that had grown long in the tooth and there were preliminary indications of a retraction. Of course nobody knew how hard and deep that retraction would be, but in retrospect it did look like all was not going to be well going forward.

[Stephen Gordon]

Between 1976 and 1985, the 20-24 age group accounted for about 24% of total unemployment and 13% of the working-age population. There was a gradual decline of both shares over the next 10 years. Since 1995, 20-24 year-olds have accounted for 14% of unemployed and and 8% of the population, and both shares have been roughly stable

Not exactly sure what one is supposed to do with those numbers, but it seems to me as though the share of unemployment fell faster than the share of population.

Here's the graph.

[Stephen Gordon]

I should also point out that this post is part of my continuing series of posts trying to deflate the "Worst Since The Great Depression" meme. This can arguably be said about the US experience, but not here.

[Determinant]

I'm one who holds that there are different kinds of recession. I was at a talk by Torben Drewes from Trent University in 2008 who said this recession was different from the last several in that it wasn't planned, i.e. it wasn't caused by the Central Bank hiking rates, governments were actively talking Keynesian stimulus in a way that they hadn't in years, etc....

This recession is actually more like the Depression than most because it's the first time in 70 years where we've had a retraction with interest rates at the zero-lower-bound. We also had a global banking meltdown 1930's style and a US real-estate problem that looks just like the 1930's.

The fact that Canada DIDN'T have a banking problem while the US did is also just like the 1930's. Canadian banks didn't go bust in the 1930's. The main transmission mechanism into Canada for the decline was the same both then and now, IMO, a decline in the volume and value of exports through foreign firms cancelling or renegotiating their orders and other business placed here.

Also just because we have the tools to take the rough edge off the decline doesn't mean we've cured the underlying cause. We've still got a demand problem that is mainly caused by weak exports. Given that we have the partial benefit of 70 years of experience (even though we've ignored some of it) this is the outcome one would logically expect.

[Bob Smith]

"It is amazing that students would have spelling and grammar errors considering that most universities now provide staff that will go over students' resumes and cover letters at the request of students."

Universities also provide staff to go over student's essays - that doesn't prevent those students from writing history essays in the present tense. Part of the problem is that kids go through school without knowing how significant little things (if spelling and grammar can be called little things) are because they're never called on it. Why go to the career center or the writing center for help, if you don't think that grammar and spelling matter. Their teachers in high school and their professors in university aren't doing them any favours when they decide not to mark based on spelling and grammar (the same could be said about not enforcing deadlines, not expecting attendance, etc.).

[Alex Plante]

Why are people talking about "generations" when there are on average at least 1 recession per decade. I'm sure it was tough for people who graduated in the mid-70s, the early 80's, the early 90's, the late naughties... and that it was easier for people who happened to graduate in the late 60's -early 70's, late 80's. late 90's-early 00's..

In my case I graduated in the early 90's, and things were very tough for me. It took me 10 year to finally get the kind of job where I finally felt I was performing up to my potential. Now I get so many calls and emails from head-hunters I don't bother answering most of them.

I have enormous sympathy for young people today. I truly understand what they're going through. Inter-generaltional bitching is such a waste of time...

[Determinant]

Alex:

Well, I have seen spelling and grammar errors in official HR communications to me, from rather exalted high places. It made me giggle.

Bob:

It's a surprisingly easy error to make since English Lit essays are written in the present test. Take a history and a lit course at the same time (very popular choice) and it's an easy mistake to confuse one essay for another when you have two or more going at the same time.

Mike:

Why are you shocked when somebody turns up who doesn't want to make your company their career and they tell you that? No honestly, think about it, I'm serious. I have been told by paid recruiters and HR people that the single company-for-a-lifetime career is dead. Our economic system structurally encourages work at any cost, even if you don't want to make the job your career. Try to say that a particular job isn't suitable as a job seeker and people will jump all over you for being picky. I strongly suspect that you do not promise lifetime employment. Therefore you have no rational expectation that they will promise their life to you in return.

Based on a dispassionate analysis, you have no reason to be shocked at what is an honest but frequently unspoken truth. Manners doesn't match economics in this case. From an economics perspective why are we afraid of the truth?

[Mike Moffatt]

"Mike:

Why are you shocked when somebody turns up who doesn't want to make your company their career and they tell you that? No honestly, think about it, I'm serious. I have been told by paid recruiters and HR people that the single company-for-a-lifetime career is dead."

Industry, not company. I don't expect people to work for us until they're 65 (or even 45). But if I'm hiring a research chemist and I ask you "where do you see yourself in 5 years", if you answer "working as an architect", I'm not going to hire you. The last thing we need is to spend 3 months training someone and have them leave in month 4. Due to training costs, a new staff member doesn't produce more than they cost in time until month 4 or 5, even if they were working for *free*.

You continue to read far, far too much into my posts.

[Mike Moffatt]

"Based on a dispassionate analysis, you have no reason to be shocked at what is an honest but frequently unspoken truth."

What I'm shocked at is how they would sabotage themselves in an interview. Why go to all the trouble if you're going to give answers that give you a 0% chance of landing the job?

[K]

Determinant: You don't seriously tell people that when you are interviewing for a job??? People, and especially managers, want to get flattered. They actually think you'd be hugely privileged to get the job, so they sense no irony whatsoever as you stroke their egos, almost no matter how fawning your manner. And if you can't make them feel important, how could they ever expect to trust you with a client? Seriously! "yeah, I'll do the job cause I need the dough, but gawd, it looks dull, and you must be a serious loser to still be working here". Ya think?

[Determinant]

Of course not K, I would never say that. I do actually know what I am doing. Been around the block a few times, eh? Landed more than one job so I know what a successful interview is. I've also some real freak-shows of interviews. Racism anyone?

However on an economics blog I wanted to make the point of why when one party tells the truth in negotiation and the other party has the same expectation aside from emotion, the truth-telling party gets punished. How exactly is that an efficient market? We do this sort of exercise with everything else in economics. Why not labour recruitment?

I'm trying to separate the emotional response from the logical, economics-based response. Looks like I succeeded.

Tell me Mike, rationally, why do you expect a different response? Do you intend to offer lifetime employment with a better-than-average chance of promotion? In writing? Odds are you don't. So economically speaking why do you expect a different response? Are you advocating emotion over reason on an economics blog?

I'm not reading anything into your posts, other than what you wrote. "A job's a job" is a highly prevalent attitude. "It isn't what they want to be doing for a living" refers to the job, as you wrote your post. You made no mention of industry. One does assume that if they are hired on their credential, their "next better opportunity" is another industry-comparable position.

[Alice Woolley]

I have read these posts with interest, and appreciate the variety of opinions expressed. A few observations:

I think economic prospects are pretty regionally variable. I teach at the U of Calgary law school, and we have retained a close to 100% placement rate for our graduates right through the recession. I don't think Ontario law schools have been so fortunate. And that placement rate is nothing like what it was like when I graduated from the U of Toronto in 1994, where close to 25% of our class couldn't find articles, and the "best" hire-back rate post articles was 50%, which seemed pretty grim to me. In Calgary in general employment rates - not just in law - seem to remain fairly high (just observationally), even as wages have softened a little.

I think one of the reasons why 'youth today' can experience the job hunt as worse is because it is so expensive to get the kind of qualifications they have. Law school tuition is far higher, even adjusted, than it was when I went to school. It seems unfair to pay $12-22,000 per year for an education that doesn't perhaps get you anywhere.

I am not convinced that 'youth today' are any different than I/we were at the same age, but I do observe that some of my students are fairly naive about what the working world involves. No, you can't send an application letter to a person with the name misspelled and expect to get hired. You can't go to a job interview at a law firm and say you want to work 9-5. No, people aren't going to give you work-life balance and pay you $150,000 (or more). And, yes, there is still lots of subtle discrimination against people who are "different" for socio-economic, cultural or just, a-little-bit-off-the-norm, ways. I do try and tell students some of these things (in part because I teach a course where it's relevant), but I often feel like they don't really want to hear it. And, to be fair, I'm not sure I would have wanted to hear it either - it was unpleasant to learn it first hand, but that was probably the only way to do so.

I am sorry for anyone who struggles to find a job, and I can understand the feeling that it is a unique experience (doesn't one's own suffering *always* feel like a unique experience?). Especially because in the 2000-2007 period it really seems to have been easier (I'm just observing that - I don't have the numbers). If you have observed it being easy for the group immediately ahead it is likely to seem much harder and tough when it is not easy - and even if no worse than the 80s or 90s, it seems statistically like it still isn't easy.

[Nick Rowe]

Bob: "Their teachers in high school and their professors in university aren't doing them any favours when they decide not to mark based on spelling and grammar (the same could be said about not enforcing deadlines, not expecting attendance, etc.)."

I wonder about that at times.

Many of us profs are ESL, and simply couldn't grade on spelling and grammar! Even those of us who are native speakers may not have that good writing skills. Or may be able to recognise a grammatical mistake, but cannot explain to the student what sort of grammatical mistake it is. And I have been told, a few times, that I must not grade on spelling and grammar, because a particular student is "learning disabled". (Which is a whole other topic, of course, and one that raises emotions.) I try to defend the position that "writing well/clearly is an integral part of what it means to be a good economist. Sure, it's not the only thing that matters, but if two economists are otherwise identical, the one who writes well is a better economist. So I'm going to base my grade (in part) on writing." Dierdre McClosky got me thinking like this originally.

Determinant's point is an interesting one (about honesty on interviews). My guess is that it's a signalling equilibrium. Interviewers are watching for the signal "I really want this job, and will do whatever it takes to get it". And they need that signal because of the high fixed costs of hiring someone.

[Adam P]

Nick: "writing well/clearly is an integral part of what it means to be a good economist..."

But that brings up a sort of curious question as well. Are you teaching economics or training economists?

At the undergrad level, I'd have thought the former.

[Mike Moffatt]

"Tell me Mike, rationally, why do you expect a different response? Do you intend to offer lifetime employment with a better-than-average chance of promotion?"

Okay.. really slowly now. I'm talking industry. Not job. Not my company. INDUSTRY. (Not a game.. a practice, etc.)

Maybe I ought to bold it. I DON'T EXPECT A NEW RECRUIT I HIRE TO BE WITH ME UNTIL THEY RETIRE. I REPEAT. I DON'T EXPECT A NEW RECRUIT I HIRE TO BE WITH ME UNTIL THEY RETIRE.

I also don't want dishonesty. Let me repeat I DON'T WANT DISHONESTY. Can I put that in a bigger font? If someone doesn't want to do the job for a career, I'd like to know! What I'm surprised at is *why* they'd tell me. Do they think it's going to help their chances.

I've got two applicants. One says:

"I don't want to be a lab technician - I want to be a lumberjack."

the other says

"I'm out of school and interested in science. I saw your job posting and it piqued my interest. From what I read it could be a good fit for me."

Why on earth should I hire the first person?

And no, I'm not wanting people to go the OTHER way and state "My dream is to always do NAME OF POSITION". Because we both know it's not. I get a big kick of out applicants who say it's their dream job, but then have trouble describing what the job is and what the company does. It's an insta-fail.

[Mike Moffatt]

Hiring is essentially a matching process. As such, a lack of successful matches does not necessarily mean a lack of supply or a lack of demand - a heterogeneous market doesn't work that way.

I know students out of community college and university struggle to find employment out of school. If they didn't, I wouldn't get hundreds and hundreds of applications per position. And I do. I don't think it's due to the state of the economy either - I was getting hundreds of applications back in 2006.

But we can't infer from this that there's a lack of demand for entry-level positions. Being on this side of the fence, I can tell you that many businesses are crying out for good entry-level applicants. I can't meet a small- or medium-sized business owner for a gin and tonic without the topic coming up. Unless you like in a very, very poor job market (e.g. Windsor), you'd get laughed out of a Chamber of Commerce social for saying there's no demand for entry-level workers.

Then what's the problem? Simply put - the skills that entry-level job seekers hold (and they *are* skilled) is not the skills that firms are looking for. There's no match.

Why is there no match? Because too many schools are developing the wrong skills.

I don't want to turn this post into a plug for Ivey, but the school is doing a terrific job in developing students that can think critically and creatively, have strong verbal communication skills and can write well. Part of that may be due to who the type of students the school admits, but I believe most of it has to do with the curriculum. The whole program revolves around these skills. You won't find a multiple choice test at Ivey.

Now that's a lot easier for us to do because of the nature of topic and the fact we've got a lot more resources than, say, the Psychology department. But there are things other departments can do. The Economics department at UWO has their 4th year undergraduate honours students do a research study (the dreaded 400E paper). Having to pick a topic, investigate a problem from several angles and write about it develops the skills companies are looking for. I had to write one back in 1999 and it was one of the most valuable experiences I had as an undergrad.

[David]

Thanks for the graph, Stephen! I have a little more sympathy for you know :)

[Mike Moffatt]

"And, to be fair, I'm not sure I would have wanted to hear it either - it was unpleasant to learn it first hand, but that was probably the only way to do so."

Oddly enough, the same thing can be said for being at the *other* side of the table.

When I first started doing HR work, I made a couple of hires that didn't pan out at all. A couple of expensive lessons earned.

I then went to every business owner and manager I knew, described what I was doing, and asked (more like begged them to tell me) what I was doing wrong.

Apparently what I was doing wrong was a classic 'rookie mistake' - I was falling in love with a credential-filled or experience-filled resume, without learning enough about the skills and attitudes of the person. I got a lot of pats on the back from my elders and a lot of 'we all were like that when we started out'. Since I stopped falling in love with people due to their resumes, I've made a lot better hires.

I got a big kick out of Frances posting the multiple-choice question about taking additional computer courses at the community college, as that's the kind of resume line item I've been trained (through experience) to largely ignore.

[K]

I agree with you, Mike.  I've been hiring for almost twenty years (and made a few excruciating rookie mistakes in the beginning too).  The ratios are as you say:  hundreds of applicants for every filled position. The vast majority are utterly unqualified (never even read the job requirements). This hasn't changed at all. I've long since learned always to be hiring.  If you find a great candidate, you hire her, since good projects always come up.

That said, it must be incredibly disheartening to be on the other side of this process.  Most of these people (whom I never meet) must have
excessive expectations, and I think the schools are largely to blame.  What fraction of engineers, who weren't educated at top schools, actually end up doing real engineering work?  My sense is that an awful lot of them end up doing peripheral things, like sales and support. It's much like the number of PhD's in fields that have little utility outside of academia who end up as profs:  not very many.  Universities (especially the ones who take in the least qualified candidates) seem to pump up and feed off the hope of young adults, with the principal effect of turning them into disaffected Squidwards, as Frances so aptly pointed out in a post a couple of months ago. This problem is absolutely structural and not cyclical.  It's also not new.  

[Bob Smith]

Determinant: "It's a surprisingly easy error to make since English Lit essays are written in the present test."

I've heard that, thought I'm pretty sure that few of the students I marked had ever taken an English Lit course (or a another history course, for that matter) - I think a lot of them took economic history because they had to take an "essay" course, and they figured economics would be more "mathy" than any other social science/humanities course.

Nick,

I think you're on to something about Professors/teachers not neccesarily being able to identify the problems with their student's writing. My own formal education in english grammar is pretty weak (consisting of one grade 10 teacher who insisted on flooting the Toronto Board of Education's rules and teaching english grammar), but at least I had the advantage of being raised by university-educated native english speakers. Even if I can't tell you the formal rules of English grammar, I can tell you what sounds right and what doesn't. Many of my students didn't have that advantage and without having ever been taught proper grammar just couldn't wrap their minds around the fact that it mattered.

And you're right that grammar and spelling matter, not just because poor grammar and spelling annoy the reader, but more importantly because they alter the meaning of what the writer writes. Take my student who wrote the economic history essay in the present tense. Saying "the fur trade IS very important to the economy of Canada" means something very different from saying "the fur trade WAS very important to the economy of Canada". Whereas the latter statement is arguably correct, the first is clearly wrong. The poor reader is left trying to figure out if the write is (a) illiterate or (b) mindlessly ignorant of the modern Canadian economy.

In any event, for most students, learning to write well is the one skill (along, I suppose, with critical thinking) that they might expect to refine at university that they will actually use for the rest of their lives (because, let's face it, most economics grads don't end up in a field where they're asked to calculate demand curves or run regressions), so it's a shame that universities (and professors) don't demand more from their students on this front.

[Mike Moffatt]

K: Thanks for your post! That's a really good point RE: "I've long since learned always to be hiring. If you find a great candidate, you hire her, since good projects always come up." We should probably be doing that. Our approach is to overhire in April-to-June since that's when the pool of candidates is the largest so we can avoid having to hire someone in the 'off-season' out of need. I've found pretty much every bad hiring (or business for that matter) decision I've made is when I felt I *had* to do something. Always ends up being a mistake.

I should probably try a year-round approach, for the reasons you described.

[JDUB]

Mike I think you are right that what you are describing is a matching problem and not a macroecon sturctural issue. Let me see if I have this right: There is always a relatively large pool of searchers for entry level positions due to post-secondary graduation. And only a few have the skills that your firm needs. And HR methods are imperfect at revealing information. Therefore the matching process suffers from high search costs for the firm with uncertain payoff (you could still end up with a lemon after the process).

Could this be a reason why firms agree to take coop students and interns? The low compensation and impermanence of the position may reduce the amount of applicants to a more manageable level, and then the firm can hire on the student/intern's who have revealed their skill set. The research organization that I work for consistently does this using an intern program and often hires the best interns to permanent positions when they are finished their education.

Also, "the Economics department at UWO has their 4th year undergraduate honours students do a research study (the dreaded 400E paper). Having to pick a topic, investigate a problem from several angles and write about it develops the skills companies are looking for. I had to write one back in 1999 and it was one of the most valuable experiences I had as an undergrad."
It is my experience that most econ departments in Canada have similar requirements. At UBC, honours econ majors must write a thesis, and regular econ majors must write a research study. As someone who went on to get his phd I found the fourth year research study to be an excellent introduction to actually doing economics research using an empirical approach.

[Determinant]

Nick, you got it. At least somebody did. In a world where job-seekers are money-limited, in a way more so than companies (companies have the income, job-seekers don't), we should, thinking just of rational behaviours, job-seekers to flood employers with resumes. And they do. I don't expect to find the holy-grail solution on this blog, but I do want to bring these points up. Heck, maybe there's a paper for some researcher in it. Models and the economists to make need to take them into account. Roger Farmer may have, or so it seems from what I have heard of his latest work. I haven't picked it up to read it.

Bob:

The same point can be made with other areas of academia. I was a TA in a first-year technical writing course. My first stint through it I nearly had to bust one group for cheating. It was a case of they were going for marks at all costs and hadn't been taught the citation guidelines. So the next few times I reached that point with my frosh I gave them my "cheating sucks" speech and introduced them to the citation guidelines and my expectations that they would use them. They all did so and did so exceptionally well. I had reputation on the course TA team of being a TA who first of all cared and got results. Mostly because I took things into my own hands.

[Mike Moffatt]

"job-seekers to flood employers with resumes. And they do."

Agreed. It's one of the reasons why we went to the 'application package' format. The application package provides us with a great deal of useful data, but even if it provided us with none, it'd still be valuable. It raises the cost of applying, which weeds out a lot of the people who are just flooding with resumes. The response rate is around 40%. We've actually considered lengthening it, partly so that we can get more data, but partly so we can *lower* the response rate.

[Nick Rowe]

Don't take this the wrong way Mike :-) :

Mike's an 8,9,10 girl, playing Cads vs. Dads. His "application package" is a (there's a technical term for it, is it:) "bitch shield"(?)

But, the application package dissipates rents. So, why don't entry wages drop, until only the keenest suitors would seek Mike's hand?

Roger Farmer's answer: search is costly, and when a girl/boy employer/employee meet each other, there's a gap between the maximum wage the employer is willing to pay, and the minimum wage the employee would accept. So it's a game of ex-post bilateral monopoly/monopsony bargaining, and the wage is indeterminate, within that gap zone.

But Mike (presumably) advertises. Why doesn't Mike's advertisement say: "Look, we only pay minimum wage for the first x months, so don't even bother applying unless you plan to stick around for more than x months."

The first best would presumably be an application fee, as in universities. But maybe that's illegal, or would lead to moral hazard in the opposite direction, of employers posting jobs that don't exist, just to collect the fees. Maybe minimum wage for the first x months would also lead to a reverse moral hazard problem?

But for some reason, we end up with this very costly signaling game.

[K]

But Mike isn't looking for the keenest suitor who exceeds an attractiveness threshold. He's looking for the hottest one that's willing to marry him. Cutting the wage offer will likely leave only the least attractive, as the most attractive have plenty of options. If you want the most talented applicants, I believe that you need to indicate clearly that you are willing to pay for quality, but set some strict and clearly defined minimum requirements, making it easy to reject candidates on the first pass.

[reason]

Maybe the high youth unemployment of the 1980s were partly the consequence of the high birthrates in the 1960s (plus the rapidly increasing female participation rates). I'm not saying the oil crisis didn't have an effect, just that demographic factors are also important.

[JDUB]

K: It seems to me that part of Mike's problem is that even raising "minimum requirements" does not solve the problem because what he is looking for is uncorrelated with credentials at the entry level (this is not a problem at higher levels because you would hire someone with work experience and references in the field of work).

Nick: "Look, we only pay minimum wage for the first x months, so don't even bother applying unless you plan to stick around for more than x months.": That's essentially what coop placements and internships do. The person gets paid crap for the term of their placement, and if they are good the company will offer a permanent position with a much better salary.

[Determinant]

Nick, I'm glad I've managed to bring out how costly the search for work is. Job-seekers generally have limited resources and that's a problem.

EI is also a problem because it takes so long to get through the process that Mike elaborated on. EI just doesn't pay long enough to get a wide enough pool of applications, then interview(s), plus corporate approval for the hiring for one job seeker, let alone multiple iterations of that.

The job process can stall at any level on the app/resume review/interview(s)/approval stage. I have had applications fail at all four levels.