Tax Cuts Might Create Jobs. But Where Are the Workers?
CNN/Stylemagazine.com Newswire | 12/27/2017, 8:02 a.m.
(CNN Money) -- The GOP tax reform was billed as a job creator. But there's one thing missing: Workers.
The United States has 6 million job openings -- near a record high. The good news is that means companies are hiring. The negative: They can't find the workers they need at the price they're willing to pay.
The lack of available and skilled workers is another reason why many economists say now is not the right time to juice the economy by cutting taxes.
There are never zero job openings. The economy is always churning with layoffs, hires, resignations and new openings.
Still, there are reasons why so many jobs are going unfilled.
Employers say in surveys that workers don't have the right job skills and need to be trained or retrained. Construction and manufacturing employers say finding qualified talent is their top problem, according to the National Federation of Independent Businesses, a small business advocacy.
From California farmers to New York City garbage companies, employers say they struggle to find qualified workers willing to do the physically-demanding jobs.
On the other hand, some economists argue that job skills aren't the problem. If companies are really looking to fill a job, they won't have any trouble if they offer more money. After all, wage growth is 2.5%, a sluggish pace.
"Employers really aren't trying that hard. If you really want to fill a position, you would raise the wage," says Susan Helper, a professor at Case Western University in Cleveland who served as the chief economist in the Commerce Department under President Obama. "Employers seem extremely reluctant to raise wages."
Some argue that the tax savings will allow companies to pay higher wages. In fact, some companies, such as AT&T and Wells Fargo, have announced they are raising wages or offering bonuses as a result of the newly-enacted tax plan.
However, some say wages won't move up significantly if workers' skills aren't up to par. If workers have more advanced job skills, generally their wages increase because what they produce is more valuable or their new knowledge is more in demand. For example, if you go from manufacturing clothing to jet engines because you went through job training or apprenticeship, your wage would likely go up. But training and developing skills can take months to years depending on the jobs in demand in a particular town or city.
"Wages are going nowhere without job training and increased productivity, and there's little to nothing in this tax bill that could catalyze that," says Michael Block, chief strategist at Rhino Trading Partners, an investment firm.
It's not just slow productivity growth that's holding down wages: Automation and globalization have an impact too, but it's hard to parse out or quantify the loss an individual suffers from those big-picture trends, economists say.
But this all assumes employers are looking to hire, train or boost wages.
Many indicators show jobs and wages are on the back burner. Paying down debt and buying stock back from shareholders were the top two goals CEOs mentioned in a survey done this summer by Bank of America. Mergers and acquisitions was third. Capital spending -- like building plants or upgrading equipment, which can lead to more hiring -- placed fourth.
Only 14% of CEOs said they plan to make immediate capital investments as a result of the tax overhaul, according to a December survey conducted by Yale University. About 43% of executives said they will ramp up hiring in the next six months, according to those polled by Business Roundtable, a business lobby that's spent millions championing tax reform.
In November, a moderator at the Wall Street Journal's CEO Council conference asked for a show of hands to see how many corporate leaders planned to invest in the U.S. from tax cuts. Only a few hands went up.
"Why aren't the other hands up?" White House Economic Adviser Gary Cohn asked laughingly.
--CNNMoney's Matt Egan contributed reporting to this article.