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When Peter Cappelli published an industry-admonishing article vis-a-vis the 'skills gap' in the Wall Street Journal, it attracted a good bit of notice.  Steven Cherry at IEEE Spectrum recently interviewed Cappelli masterfully.  Cappelli demolishes the irrational beliefs, the vaulting greed, of the jobs-market gatekeepers.

Cappelli is an expert on management at the Wharton Business School. Not only is his expertise in management formidable, he is a free-marketeer and by no means interested in challenging the economic paradigm.  Instead, he convicts private industry of hypocrisy--claiming to be following the 'invisible hand' (and urging that workers acquiesce to unreasonable demands) while really doing no such thing:

Steven Cherry: Employers can’t find workers at the going wage. True or false?

Peter Cappelli: That’s false, and that’s almost by definition the case, because we know how markets work, and markets adjust and wages adjust. I had an employer write to me the other day saying they had a skills gap, and they really did. It wasn’t wages, because they did market wage surveys, and they were paying what everybody else was paying, and all the employers, by the way, are having a skills gap, so it’s a big problem. Well, if everybody’s got the same problem, and you’re all paying the same wage, it’s probably the case that you’re not paying enough. So the way markets work isn’t you set the wage and say, “Well, this is good enough.” You pay what it takes to get the people you need, and if wages have to go up, then so be it, right? You wouldn’t say, for example, that there’s a shortage of diamonds. Diamonds are very expensive. They cost a lot, but you can buy all the diamonds you want as long as you’re willing to pay.

Much of the blame for this illusion that--There. Are. No. Qualified. Applicants.--lies squarely at the feet of the untouchable HR department:
" every company will tell you they’re getting thousands or tens of thousands of applicants for positions. You couldn’t possibly screen them all by hand, because you can’t look at them all, so they use automated systems to do the screening. But the screening is never as good as somebody who has human judgment, and the way screening works is you build in a series of typically yes/no questions that try to get at whether somebody has the ability to do this job. ...And you have to clear them all, and I think people building these don’t quite understand that once you have a series of these yes/no questions built in, and the probabilities are cumulative right? You have to hit them all, then you pretty easily end with no one that can fit.

"So say that the odds are 50 percent that the typical applicant will give you the right answer in terms of what you’re looking for for the first question, and a 50 percent that they’ll give you the right answer to the second question. Well, then, you’re down to one in four people who will clear those two hurdles, and once you run it out to about 10 questions, it gets you down to about one in 1000 people who would clear those hurdles. And by the way, the first hurdle is usually, What wage are you looking for? And if you guess too high, out that goes, right? So then you’re at the purple squirrel point, where at the end of the day, you find that nobody fits the job requirement."

This is how, Cappelli describes, an opening for a standard engineering position turned up 25,000 applicants and no match. Of course, this drive to reduce applicants to tests (if this seems familiar, it may be drawing parallels with our recent disastrous foray into standardized testing-based education) fails at judging qualitatively, something you need a human's judgement to do on an individual basis. Cappelli argues as such, by the way.

The interview is 16 minutes long and can be listened to here:

Originally posted to Nulwee on Mon Jun 25, 2012 at 09:05 AM PDT.

Also republished by In Support of Labor and Unions, Unemployment Chronicles, and EconKos.

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