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Let's do this experiment: let's have all businesses double whatever wage they are currently paying. Is there still a shortage of workers? No? Ah, in that case,

Let's do this experiment: let's have all businesses double whatever wage they are currently paying. Is there still a shortage of workers? No? Ah, in that case, we have solved the problem.

moxious 10y ago
You miss the point. Labor is inelastic. If you double the wage, it might take the market years to respond if the skill in question is not quickly acquired. Buying high skilled workers is not like buying gumballs, where prices and high demand can quickly stimulate supply, and the two meet in the middle. Gumballs don't have to sell their house and move. Gumballs don't have to take care of their kids while going back to school.
- mason240 10y ago
  True, but this OP's scenario is very similar to what happened during the ND oil boom in 2010. Guys with certain skills (heavy equipment operation, truck driving, ect) could make two or even three times what where in their current jobs. What was the result? A flood of workers coming in how left their families, homes, and everything to live in trailers (or even the truck cabs) for the opportunity. If the this had happened near a real city like Sioux Falls SD with available housing and had been long term (like the OP's scenario), people absolutely would have moved their families and put down roots.
greglindahl 10y ago
This is a flipped version of the lump of labor fallacy. If the price of a service is too high, some consumers will do without. So sure, you can double the wages of housecleaners, but that might drastically shrink the number of houses being cleaned. You've already seen this play out in manufacturing: industries with high wages have tended towards automation and/or offshoring work to low wage countries. If you're building automobiles, there's a limit to what consumers are willing to pay for an auto.
user5994461 10y ago
Added 50%... still got no one. -- based on a real story

Let's do this experiment: let's have all businesses double whatever wage they are currently paying. Is there still a shortage of workers? No? Ah, in that case, we have solved the problem.

moxious 10y ago

You miss the point. Labor is inelastic. If you double the wage, it might take the market years to respond if the skill in question is not quickly acquired. Buying high skilled workers is not like buying gumballs, where prices and high demand can quickly stimulate supply, and the two meet in the middle. Gumballs don't have to sell their house and move. Gumballs don't have to take care of their kids while going back to school.

mason240 10y ago
True, but this OP's scenario is very similar to what happened during the ND oil boom in 2010. Guys with certain skills (heavy equipment operation, truck driving, ect) could make two or even three times what where in their current jobs. What was the result? A flood of workers coming in how left their families, homes, and everything to live in trailers (or even the truck cabs) for the opportunity. If the this had happened near a real city like Sioux Falls SD with available housing and had been long term (like the OP's scenario), people absolutely would have moved their families and put down roots.

greglindahl 10y ago

This is a flipped version of the lump of labor fallacy. If the price of a service is too high, some consumers will do without. So sure, you can double the wages of housecleaners, but that might drastically shrink the number of houses being cleaned. You've already seen this play out in manufacturing: industries with high wages have tended towards automation and/or offshoring work to low wage countries. If you're building automobiles, there's a limit to what consumers are willing to pay for an auto.

user5994461 10y ago

Added 50%... still got no one. -- based on a real story