Our most distinguished economists and government experts tell us that the U.S. has an unemployment crisis. There are millions of high quality workers out there who cannot find jobs. Paul Krugman here speculates that employers have colluded to pay workers less. Yet in situations where an average consumer becomes an employer, the labor market looks very different than how it is described by our brightest minds.
Suppose that you want to hire a house cleaner. This is a job that requires only very basic skills and training. English fluency is not required and the job may be competently performed by a recent immigrant. You might think that you could hire someone for the $9.45/hour figure cited in this article on the 2012 labor market (average wage for a young high school graduate). But in fact you will be paying closer to $25 per hour. Similarly, being able to take care of a child is a common skill and does not require English fluency yet good luck finding a nanny for less than $17-25 per hour.
Are the experts wrong or is the market experience wrong? How is it that people who know that they can’t find a reliable house cleaner or nanny for less than $17-25 per hour can sit down and read, without skepticism, complicated theories about a “skills gap” or a conspiracy theory or that great quality workers are sitting idle?
[At the other end of the labor market, this Bloomberg.com article chronicles California’s public employees, including “Mohammad Safi, graduate of a medical school in Afghanistan, collected $822,302 last year [working as a prison psychiatrist], up from $90,682 when he started in 2006, the data show.”]