Labor Shortages: Myth and Reality

[Heracles 417]

David Rosenberg isn't buying it. North American economist at Merrill Lynch, he is one of a number of economists who say the concerns about too few workers are vastly overblown.

...

The issue may not be the number of workers, but rather the level of pay. Economists like Rosenberg argue that in a market economy, there's really no such thing as a true shortage. If you want more of something, you can pay more and have it. When employers say that there's a worker shortage, what they really mean is they can't get enough workers at the price they want to pay, the argument goes.

..

Rosenberg argues the simplest way to gauge whether there's a worker shortage is to look at the price of labor. According to the basic laws of economics, the tighter the supply of labor, the more it should cost. So if the economy were operating with full or near-full employment, we would be seeing an "explosion in labor compensation," he says.

The price of labor, however, is hardly surging. In fact, key indicators of employee costs show they are tracking or trailing inflation.

About time an economist came out and spoke about the reality of swapping illegal immigrants for Americans..

[Heracles 417]

Good! The less workers the better.

I never understood why all the Left leaning loonies on this forum are so pro-illegal alien and have a let-'em-all-in mentality.

It's about as smart as pissing in an electrical receptical...it's not in your best interests.

You got that right. I am right wing, hate the unions and am all for consumerism but I also want what is best for the citizens of this country. Which is a good decent paying job.

The only way minimum wage will ever be increased is if the demand calls for it. Therefore a strong illegal immigration policy would force the dodgy employers to hire Americans again. If the employers or management don't like it, bad luck.. The only reason businesses have remained quite about this is because they are profiteering from illegal immigrants.

[Heracles 417]

Good! The less workers the better.

How do you figure how that works? For example, if the city of Houston has a shortage of teachers by about 200, how can that be better unless you support importing teachers from another state or country?

There is a range of ways. Pay more, train more, recruit more..

This way people can stop whining about the past and slavery. Instead they can put their money where their mouth is an actually help these guys get out of the ghettos, get them educated and get them a job.. Some people don't like school. NP Lets skill them up to work a trade.

Does the US have federal apprenticeship programs? I am guessing no..

Does the US government provide incentives for the long-term unemployed to move to areas of low unemployment?

Edited August 23, 2007 by Boo-Yah!

[SMOKE 1,426]

4 posts in a row. hot button issue for you Boo-Yah?

[Heracles 417]

4 posts in a row. hot button issue for you Boo-Yah?

You know what it is. It seriously saddens me to see people so many people depressed and SOL in the US. It is a great country but boy does it need to move into the 21 century.

The difference between Australia to modern America is that our number 1 'priority', in Aus, is our country and our people; not our own pockets, how cheap we can get a salad or how cheap we can paint a house. That attitude alone plays a huge part in influencing where a country is heading. Now I know some people are going to start hanging ###### on the messenger but I strongly believe it after being here for over 2 years. So don't even start with the #######..

[SMOKE 1,426]

sorry not starting anything. i thought it was funny 4 post in a row.

[Gaby&Talbert 1]

American businesses will find a solution one way or another. If the labor force or afordable labor isn't available they will move more businesses out of the country. For example, how many people have heard of Diasy BB guns? The city were they started was very proud of them (I live there). They have a museum and an office. It was the first manufacturing in the city. About 15 years ago they moved everything to Mexico. We are also next door to Wal-Mart home office, they are another example of buying everything at the cheapest price and guess where everything they sell comes from? Not USA. Unless you can control labor pay for the entire world businesses will find the best way to make money even if it means relocating to another country. We will always need general labor in the US and there will always be people that don't want to do anything more than that type of work. If there is a need for labor and you are paying prevailing wages, we already have visas you can bring foreign labor here to do the work. This just creates a skilled person to handle the paper work with the Dept of Labor and then with USCIS, hire a recruter in Mexico and there you go. The costs will just put the small business owner under and bigger corporations at an advantage.

The bottom line is Americans will find a way no matter what, the question is what is the best way?

[Ban Hammer 14,569]

American businesses will find a solution one way or another. If the labor force or afordable labor isn't available they will move more businesses out of the country. For example, how many people have heard of Diasy BB guns? The city were they started was very proud of them (I live there). They have a museum and an office. It was the first manufacturing in the city. About 15 years ago they moved everything to Mexico. We are also next door to Wal-Mart home office, they are another example of buying everything at the cheapest price and guess where everything they sell comes from? Not USA. Unless you can control labor pay for the entire world businesses will find the best way to make money even if it means relocating to another country. We will always need general labor in the US and there will always be people that don't want to do anything more than that type of work. If there is a need for labor and you are paying prevailing wages, we already have visas you can bring foreign labor here to do the work. This just creates a skilled person to handle the paper work with the Dept of Labor and then with USCIS, hire a recruter in Mexico and there you go. The costs will just put the small business owner under and bigger corporations at an advantage.

The bottom line is Americans will find a way no matter what, the question is what is the best way?

that depends on your nationality. if american, the better way might just be outsourcing your job.

[russ 1]

Creating an artificial shortage of workers so workers can get paid more, even in the face of a cutback in the level of goods and services produced, is no way to go.

Well, we are a capitalist society. The only way that real wage growth can exist is with a scarcity of workers. A surplus of workers will cause wages to fall. (People looking for jobs will eventually accept lower pay, which will lower the marginal cost of a new employee). Perversely, this encourages layoffs, as new employees are now cheaper than existing ones.

A shortage of workers will increase pay, as employers now have an incentive to pay more. Otherwise, they will lose the employee they need to an employer willing to pay more. This discourages layoffs, as replacement workers are more expensive.

As for "artificial shortages" - these are created all of the time. Unions do this, in the short term with strikes, and in the long term by restricting union membership and negotiating contracts that are union only. Regulation also can create artificial shortages by distorting fair market prices, and limiting competition.

Threre is nothing wrong with cutbacks. There is nothing wrong with employers hiring while they are laying off in other areas - an economist would call it "more efficient use of capital."

A key point to remember is that employees do not act rationally. The low savings rate in the US forces employees stay employed, keeping wages in check.

[russ 1]

Germany continues to run double digit unemployment rates. Not sure how one can argue that there are labor shortages. I think if companies would get over their distaste for the long-term unemployed then there would be much less of an issue.

Regulation is the reason for high unemployment in Germany. It is very difficult to fire someone in Germany, so hiring is done as a last resort. The generous social services provided to unemployed workers makes moving or retraining less attractive for the unemployed, compounding the problem.

Loosening labor laws in Germany would decrease the unemployment rate, though German voters are unlikely to go along with such a plan. High unemployment has been typical for the European Socialist Democracies for some time. US/UK/Canadian labor laws are friendlier to the ecomomy, but not nearly as generous to workers.