Labor markets: comparison between China and the U.S.

In recent years, college graduates in China are having more difficulties finding jobs. According to statistics, 30% graduates do not find jobs after graduation. On the other hand, factories are in need of workers. Why is this happening?

The answer is obvious. College graduates do not want jobs working at factories that pack Barbies for Americans. They believe that with a college education, they will be the one that negotiates with foreign companies that want the Barbies produced in China. However, with the number of college graduates growing exponentially, the job vacancies do not keep up. On the other hand, foreign investers have opened lots of jobs in production, and the number of workers applying is going down.

To analyze this, one should examine the makeup of the labor market. In China's situation, there is a labor market for middle class workers and there is a labor market for working class workers. The supply of workers in the middle class labor market is rising, hence the wage goes down and people are unable to find jobs. On the other hand, the supply of working class workers declines in the working class labor market as the demand continues to increase. The supply decreases because most workers are from the country, and most of these country people who wants a job in the factory in cities have already fulfilled their desires. This causes the shortage of workers in the working class labor market while a surplus or workers in the middle class labor market.

What about the U.S.? U.S. has a higher percentage of college graduates than China, yet there is no discrepancy in the labor market. This is because of the development of this country and the perception of people. First, it is perfectly acceptable and actually recommended for teenagers and college students to get working class jobs such as janitors and cashiers in the U.S., whereas in China it is seen as degrading. The U.S. is more capitalistic, so anything that will give people money and financial independence is embraced. However, in China, people care about their reputation and feels like a college student shouldn't take on those jobs. Second, in the U.S., country and city living is a choice based on personal preference, whereas in China, it is more economical and beneficial to live in Cities. This is because the country is well-developed in the U.S. due to easy transportation, openings of chain stores, and government investment (Westward movement and Manifest Destiny). In China, however, country and the west provide a worse living condition than the city and people have less opportunity to advance. The development in China in the recent year has been mostly in a few big cities, but still lags behind in the country. Lastly, the universities in the U.S. provide students services such as the career center to help student search for jobs and find the right career. Internship opportunities also offer students an idea to the kinds of jobs they will be doing for the rest of their lives. However, in China, students focus on learning mostly and neglect most aspects of career searching and developing. It is no wonder that college graduates have trouble finding the right job after college.

Several solutions are available to this situation. One, the government can invest more to develop the countryside so that it is equally acceptable to live in the country as city. This would mean develop a more connected transportation system, more independent communities (service based), and encourage real estate investment in these areas. This is reasonable because this fiscal expansionary policy will boost the GDP and continue China's growth with no worries about the increase in imports, since China is running a trade surplus of over 100 million dollars. Second, people need to change the perception that factory jobs or cashiers are more degrading jobs than office jobs. People need to realize that a temporary factory job that can get you 500 yuan a month is better than sitting at home with no income. Another solution is for college graduates to find jobs abroad. For example, the U.S. job markets need engineers and IT candidates, which China has a lot. To go along with this, foreign companies should realize that supply of cheap laborer is going down in China, and it might not be profitable to open more factorie sin China.

With China producing more college graduates, this presents a temporary imbalance in two different class labor markets in China. However, with time and possible changes presented, the markets will go back to equilibrium. The result will be a country with a higher general education level, which will improve the long run level of output due to the increase in quality of labor.


References:
https://www.cia.gov/cia/publications/factbook/geos/ch.html
汪伟，“中国大学生太多了吗”