Bryan Caplan  

Overqualified: What's Wrong With European Labor Markets

Denmark and Sweden: Expectatio... Charles Darwin and Adam Smith...
One of the most striking things about Denmark and Sweden: Almost everyone is overqualified for his job.  The guy who sells train tickets doesn't just punch buttons and collect cash; he knows his regional transit network like the back of his hand, and eagerly helps you plan your trip.

I'm sure that most American tourists find this a welcome change of pace.  Imagine a country where you never have to ask, "Could I talk to your supervisor?"  But it's highly inefficient.  In the U.S., the Dane who mans the ticket window would run the whole office.  In Denmark, he spends 59 minutes out of 60 doing mindless, menial work.

When I explained my observation to some Swedes, there was an interesting misunderstanding.  One told me: "Unskilled workers?  We don't have unskilled workers."  I replied, "I've seen guys picking up garbage.  Isn't that unskilled?"  And the Swede answered, "We have unskilled work, but not unskilled workers."  My point exactly.

What's going on?  Americans tend to credit Europe's better schools, but I doubt that's a major part of the story.  The main reason why European workers seem so good, as many Scandinavians admitted, is that they keep semi-competent workers permanently on welfare.

It's tempting to see this approach as "more efficient" or "kinder-hearted" than ours, but it's neither.  Using high-skilled workers to sell train tickets when low-skilled workers are almost as good violates the principle of comparative advantage.  And it's hardly kind to create a system where workers feel unchallenged, and non-workers feel useless.  The European approach may be good for flustered tourists.  But for the Europeans themselves, it's a tragic waste.

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COMMENTS (16 to date)
david writes:

To cheer you up from the tragic wastage, perhaps you might like to know that European socialist parties have campaigned for free inter-EU labor mobility. If Sweden cannot find the heart to push unskilled Swedish labor to the market, maybe they'll relent to allowing Polish people to enslave themselves...

PeterW writes:

All the more reason to visit and reap the consumer surplus while we can!

Jon Lien writes:

It is interesting that you say it violates the principle of comparative advantage, as that is excactly what it doesn't. The workers who would have had the low-skilled ticket selling job may simply be better at doing something else like public sanitation.

The most interesting difference between the US and Europe, especially the nordics, is the effiency of low-skill professions like electricians, plumbers and carpenters. In the nordics these have vocational high shcool educations and are better at their profession than their American counterparts.

The ticket-seller is also an interesting point for another reason, as many public transport companies have downsized substantially, letting the former middle managers do the work their team did before.

Dave writes:

Their system isn't all bad. Variety is the spice of life. A misguided drive towards a completely pure division of labor system would be a tragic waste on a whole different level.

Finja writes:

Don't you think Danish and Swedish travellers who live there use these seemingly overqualified workers to plan their trips?

And, by the way, someone working at a train station is considered to be an unskilled worker, even if he knows the train schedule by heart... or does "skilled labor" start with the ability to read and write?

Floccina writes:

We have the same problem here. Government jobs are so highly prised that many over qualified people take them. They are sometimes like really really early retirement.

Scott Wentland writes:

One of my favorite barometers for the economy is how well the folks at McDonald's and Burger King could process my order. When they areconsistently fast, accurate, and efficient...the economy must be in bad shape. Overqualified people take jobs at McDonald's and so forth in worse times.

I think this is the same sort of deal in Europe, though a normal European unemployment level is INCREDIBLY HIGH FOR THE US! Therefore, I think, if Europe moved closer to full employment levels (around 5 or 6%), those over qualified folks may move up and find better jobs that properly suit their skills. Until then, expect relatively better workers doing unskilled work in Europe.

BT writes:

If the Swedes don't mind, and they have an excellent standard of living a slightly longer life span and are among the happiest people on the planet, maybe it is we who are wrong.

Publius writes:

Americans are overqualified, too. The guy who bags your groceries in San Diego is in the prime of his life, while the same guy in Tijuana is a 10 year old boy or an old man of 70.

Johannes writes:

The person who bags your groceries in Sweden is you. The cost exceeds the benefit of having someone do it.

olivier writes:

As per Johannes, maybe the Americans *like* having a serving class, and their economic system allows them to revel in it. /sarcasm

Scott Wenland hasn't checked the latest unemployment figures from Denmark. They are not 'incredibly high'. I believe they're lower, actually. Sweden is another story altogether, but that brings me to another problem: Sweden and Denmark differ quite a lot in this and other respects, so I'm afraid there's a bit of generalizing going on here. Not that I'm claiming Europeans can't be guilty of doing the same when talking about America, but still.

Finally, I would like to know the context of the conversation when you talked to Swedes about your definition of skilled workers. Was that in the context of talking about their education system? Because, believe it or not, some Europeans are know to brag about their less costly education system and tend to exaggerate the educational level of the population. As a Western-European, I have yet to meet over-qualified garbage men or train ticket sellers. Working class people can be just as smart or smarter (in the sense of savvy, not naive, and full of know-how and make-do) than academically trained people, but I think that also occurs in the U.S., and is a different story altogether.

Niko writes:

I noticed the same thing in a great deal of European countries that I visited. Many were very intelligent and shouldn't have been doing the jobs they were in. Unskilled jobs pay so low because the workers are supposed to be the relatively low-qualified people in the hierarchy of human kind.

The existence of a welfare state has thrown a huge monkey wrench into the evolutionary process. The warm-heartedness is nice on the compassion scale in the short-term, but the fact is we're not doing the human race any favors. We've effectively stopped our genetic progress in Europe.

Walt French writes:

In contrast to this post with American assumptions presumed as superior, most readers could conjure up the result of a Dane's visit — a “my way must be right” Dane, at that:

One of the most striking things about the US is how impossible it is to find knowledgeable retail people. Whether at the airline ticket counter, where they can't tell you about a competitor's replacement for your 4-hour-delayed flight that will trigger a day's delay on your next connection, or in a coffee shop that serves up coffee with “I dunno, it says, ‘frappuccino’” powder, there seems to be universal ignorance.
It can't be (just) the desperately bad US educational system; California, which has lapped the pack in the race to the bottom under a mantra of starving the teachers‘ union, is not worse in this regard than places like Minnesota, which prides itself in building human capital for its future.
No, I think this is a broader social problem. Americans just don't want to do anything with their countrymen (and the occasional Dane who blunders there) other than take their money in a minimalist transaction. This is in such stark contrast to our home, a society where you go to a café in part to touch base with your neighbors before you head off to your job or your evening.
Americans, especially conservatives, tend to justify this as “more efficient” in that the airline ticket is unbundled from the information about alternatives; spend a few hours on competitors’ web sites if your strange tastes are to make your connection. In fact, it is an obvious ploy to exploit asymmetric information by corporations, to protect their profit margins, and by the government offices to perform only those services spelled out in the literal detail of their mandates.

Sauce for the gander.

mike shupp writes:

How does this "over qualified" European worker differ from the "well educated" American worker (high school degree, maybe some college) that we all want to see manning the shelves at WalMart, MacDonalds, Starbucks, etc, in lieu of the present crop of drones and dropouts?

Skovgaard writes:

Come on. Those unemployment figures are phony. The government is good at those things. And don't trust their inflation figures either. We have 900.000 or so who is not working although they are in their prime work years.

Thomas writes:

To further comment on Shovgaard's numbers... Those 900.000 are out of a population of about 5 million.

Bringing that number up in debates here in Denmark is quite interesting, since people respond with endless excuses and bad explantions, if not with outright disbelief. It was a godsend when one of the red newspapers finally gave the numbers in their editorial, since I could then add that their own propaganade sources acknowledged them.

A problem here in Denmark is the very high government subsidies and excessive taxation on work, which quite frankly, reduces the actual profit of going to work. It is thus no wonder that many simply opt out.

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