What causes unemployment?

[Malthus]

Yeah, it is ridiculous.  And it is because in the late 90s there was a kind of insane competition for new law grads, London started poaching from New York who started poaching from everywhere including Toronto who started poaching from Vancouver etc etc etc.

My first year salary was I think about 40k and only about 5 or 6 years later first year lawyers were being paid more than double that.  Of course what the big firms were not telling them was that the attrition rate was high and most of them would be looking for another job in about 2 years.  The market craziness never corrected itself because no big law firm wants to be the first to lower wage rates back to reasonable levels.  So the profession has adjusted.  The result as been many fewer starting positions for lawyers and a drop in articled positions - they are just too expensive.  It takes a good 2-3 years to train a lawyer to the point where they can justifiably bill at a level that might recover their expense.  That is a pretty big training expense for an employer to take on.

Now take what happened in the Legal community and apply it across many professions and industries where for a whole variety of reasons, including salary expectations, the cost of hiring a new employee has sky rocketed and employers have to look long and hard at whether it is worth hiring that young person.

The attrition rate was just as high when salaries were lower. 

But yeah, there was a period of wage-inflation. Thing is, firms have just as big a need as ever for 3rd year and above lawyers - but now, more investment to get to that spot.

[Ideologue]

I'm all for salary caps.

[Jacob]

But yeah, there was a period of wage-inflation. Thing is, firms have just as big a need as ever for 3rd year and above lawyers - but now, more investment to get to that spot.

I think that dynamic is elsewhere as well.

You hear industry cry about the shortage of engineers, for example. But they don't mean average new grads from middle tier engineering programs, they mean proven engineers with experience in specific sub-fields or, maybe, recent grads that are clearly so bright that the company knows they'll get there without too much effort.

So the engineers (or whatever) there's a shortage of are not the engineers the education system necessarily produces.

At least that's my impression.

[crazy canuck]

The attrition rate was just as high when salaries were lower. 

I dont think so - or at least because the cost of employment was lower the attrition happened latter on - ie in the 5th or 6th year rather than in the 2nd or 3rd year.  That was a big benefit for those losing their jobs because by the 6th year they had built up sufficient skills to be marketable to other firms (and there was a lot of lawyer swapping back in the day at the 5-6 year of call) or to other employers outside law - or even opening their own practices - which quite a few did.

Later when the cost of employment more than doubled attrition occured much earlier and those younger lawyers were essentially sol.

[crazy canuck]

But yeah, there was a period of wage-inflation. Thing is, firms have just as big a need as ever for 3rd year and above lawyers - but now, more investment to get to that spot.

I think that dynamic is elsewhere as well.

You hear industry cry about the shortage of engineers, for example. But they don't mean average new grads from middle tier engineering programs, they mean proven engineers with experience in specific sub-fields or, maybe, recent grads that are clearly so bright that the company knows they'll get there without too much effort.

So the engineers (or whatever) there's a shortage of are not the engineers the education system necessarily produces.

At least that's my impression.

Yes, I think that is right and for the same reasons.  Hiring and training a new engineer has become prohibitatively expensive.

[Ideologue]

Here's a question that I brought up but was mostly ignored:

Will there always be a place for human labor, including intellectual labor, in the economy?

[crazy canuck]

Here's a question that I brought up but was mostly ignored:

Will there always be a place for human labor, including intellectual labor, in the economy?

Why wouldnt there be?

[Zanza]

Here's a question that I brought up but was mostly ignored:

Will there always be a place for human labor, including intellectual labor, in the economy?

Of course. There will also always be jobs for unskilled humans. That's because machines are expensive. In one of our manufacturing locations they considered to install a fancy logistics system iwth conveyor belts and computer control at the factory hall ceiling that would transport parts directly to the assembly line. However, they figured out that it is cheaper to pay unskilled laborers to just transport the parts to the assembly line with forklifts and pallet jacks and thus didn't install the logistics system. And you don't need to be a genius to operate a pallet jack. 

[HisMajestyBOB]

But yeah, there was a period of wage-inflation. Thing is, firms have just as big a need as ever for 3rd year and above lawyers - but now, more investment to get to that spot.

I think that dynamic is elsewhere as well.

You hear industry cry about the shortage of engineers, for example. But they don't mean average new grads from middle tier engineering programs, they mean proven engineers with experience in specific sub-fields or, maybe, recent grads that are clearly so bright that the company knows they'll get there without too much effort.

So the engineers (or whatever) there's a shortage of are not the engineers the education system necessarily produces.

At least that's my impression.

It's not just engineers. Most companies can't afford to hire recent grads from middle-tier schools and give them a chance to prove themselves, especially when there are now many more experienced workers who were recently laid off. Now the recent grads are stuck in the catch-22 of needing experience to get hired, but unable to get hired to get that experience.

[Ed Anger]

But yeah, there was a period of wage-inflation. Thing is, firms have just as big a need as ever for 3rd year and above lawyers - but now, more investment to get to that spot.

I think that dynamic is elsewhere as well.

You hear industry cry about the shortage of engineers, for example. But they don't mean average new grads from middle tier engineering programs, they mean proven engineers with experience in specific sub-fields or, maybe, recent grads that are clearly so bright that the company knows they'll get there without too much effort.

So the engineers (or whatever) there's a shortage of are not the engineers the education system necessarily produces.

At least that's my impression.

It's not just engineers. Most companies can't afford to hire recent grads from middle-tier schools and give them a chance to prove themselves, especially when there are now many more experienced workers who were recently laid off. Now the recent grads are stuck in the catch-22 of needing experience to get hired, but unable to get hired to get that experience.

When I was hiring people to flush out my roster, I mostly went with those on the bench with proven experience. I did hire a couple of n00b kids that had interned with me before, so I knew what I was getting with them.

[Ideologue]

Here's a question that I brought up but was mostly ignored:

Will there always be a place for human labor, including intellectual labor, in the economy?

Why wouldnt there be?

Increasing automation, including of intellectual tasks, leaving the only human-necessary labor beyond the grasp of most people.  A Player Piano-type scenario.

Of course. There will also always be jobs for unskilled humans. That's because machines are expensive. In one of our manufacturing locations they considered to install a fancy logistics system iwth conveyor belts and computer control at the factory hall ceiling that would transport parts directly to the assembly line. However, they figured out that it is cheaper to pay unskilled laborers to just transport the parts to the assembly line with forklifts and pallet jacks and thus didn't install the logistics system. And you don't need to be a genius to operate a pallet jack. 

That seems very near-term to me.

Beyond the question of will it, there's also the question of whether it's desireable that the economy may always need human labor, as well.

[Barrister]

But yeah, there was a period of wage-inflation. Thing is, firms have just as big a need as ever for 3rd year and above lawyers - but now, more investment to get to that spot.

I think that dynamic is elsewhere as well.

You hear industry cry about the shortage of engineers, for example. But they don't mean average new grads from middle tier engineering programs, they mean proven engineers with experience in specific sub-fields or, maybe, recent grads that are clearly so bright that the company knows they'll get there without too much effort.

So the engineers (or whatever) there's a shortage of are not the engineers the education system necessarily produces.

At least that's my impression.

When I went back to Yukon for a week I asked my old boss how hiring a replacement was going.  Tough they said - no applicants.  But when I asked further what they meant was no experienced applicants.

Why they wouldn't be willing to hire a baby lawyer though is beyond me.  There's plenty a new lawyer can do, and do well, in a prosecutions office, and the office when I left was actually pretty senior-heavy - at 10 years I was one of the more junior.

[Zanza]

That seems very near-term to me.

Capital and labor are both scarce. If you increase capital usage, it becomes more expensive and there are dimishing returns. At some point, labor is just cheaper. I don't see why that should ever change. Is the idea that capital will at one point no longer be scarce?

Beyond the question of will it, there's also the question of whether it's desireable that the economy may always need human labor, as well.

As I would be bored without my work, I think it wouldn't be desireable.

[Ideologue]

That seems very near-term to me.

Capital and labor are both scarce. If you increase capital usage, it becomes more expensive and there are dimishing returns. At some point, labor is just cheaper. I don't see why that should ever change. Is the idea that capital will at one point no longer be scarce?

Capital, in the sense of means of production, is not some zero-sum fund.

[The Minsky Moment]

Capital, in the sense of means of production, is not some zero-sum fund.

That's true, but it doesn't alter the fallaciousness of your neo-luddite argument.

Consider that in many traditional subsistence-type economies, where there is little or no mecahnisation, it is common for there to be significant levels of under-employment.  The reason for that is that these economies are not capable of producing economic surplus and thus there is a lack of effective demand that would induce people to work more.

It is not like there is some shortage of productive or societally useful tasks that would require some human labor to perform.   For example, just today there are two threads here on languish that mention in some way critical shortages in the provisions of vital legal services and yet there is also the recognition that there is unemployment and underemployment of many individual lawyers, including the very one posting the above.  This state of affairs does not arise because lexis has invented mechanized attorneys, but because our economic system is not presently allocating resources in such a way that would finance such employment.