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So theoretically, without pricing controls, there's no such thing as a shortage because prices will rise until demand == supply. So the arguments that there's

So theoretically, without pricing controls, there's no such thing as a shortage because prices will rise until demand == supply. So the arguments that there's no shortage of STEM workers (only a shortage of below-market-price STEM workers) makes sense. But let me pitch a different angle: there are a lot of people who could do their job better if they had certain specific STEM skills (e.g. business analysts who were better at statistics, spreadsheets, and maybe SQL). It's true that you can get these skills if you pay more. However, the cost of hiring someone with these skills might be >= the business value, even though the business value might be >= the cost of the education for these skills. So I would argue that we're underinvesting in certain STEM skills.

arjie 10y ago
Wait a minute, your premise is easily susceptible to a counterexample. Take a 2-employer world with 1 candidate. Let's say both employers have the same desire for the candidate, i.e. no matter what salary one employer offers, the other will offer the same and if one employer believes a salary is too high so will the other. This system will perpetually be in a shortage. No matter what rate is offered, at least one employer will go without an employee.
- thedevil 10y ago
  Wikipedia: "a shortage occurs when for some reason the price does not rise to reach equilibrium" In your example, the price is at equilibrium, even though one buyer cannot buy at market price. Thus there is no shortage. If we define shortage as one buyer not being able to buy at market price, then you are technically correct.
  - arjie 10y ago
    That's just a problem with Wikipedia being Wikipedia. That's not a definition. If you read the actual source that's used in that section§, you'll see that what he uses as a definition is the following: > A shortage is a market condition existing at any price where the quantity supplied is less than the quantity demanded. He then goes on to talk about how the shortage provides a signal to sellers to move the price closer to equilibrium (upwards, in this case) but that doesn't make it not a shortage. In questions of definitions, it's also informative to try an alternative source. I propose the website of the Federal Reserve Bank of St. Louis (simply because they have a convenient online glossary): https://www.stlouisfed.org/education/glossary https://www.stlouisfed.org/education/glossary > Shortage: When the quantity demanded of a good or service exceeds the quantity supplied at a particular price. I'm not going to update the Wikipedia page because the Definition section needs quite some rewording and citation to make it authoritative and if I just add this in, it will make that part incoherent. § Tucker's Economics for Today, which is also wrongly named in that section as Economics Today. In the 7th edition, this is on Page 80

arjie 10y ago

Wait a minute, your premise is easily susceptible to a counterexample. Take a 2-employer world with 1 candidate. Let's say both employers have the same desire for the candidate, i.e. no matter what salary one employer offers, the other will offer the same and if one employer believes a salary is too high so will the other. This system will perpetually be in a shortage. No matter what rate is offered, at least one employer will go without an employee.

thedevil 10y ago
Wikipedia: "a shortage occurs when for some reason the price does not rise to reach equilibrium" In your example, the price is at equilibrium, even though one buyer cannot buy at market price. Thus there is no shortage. If we define shortage as one buyer not being able to buy at market price, then you are technically correct.
- arjie 10y ago
  That's just a problem with Wikipedia being Wikipedia. That's not a definition. If you read the actual source that's used in that section§, you'll see that what he uses as a definition is the following: > A shortage is a market condition existing at any price where the quantity supplied is less than the quantity demanded. He then goes on to talk about how the shortage provides a signal to sellers to move the price closer to equilibrium (upwards, in this case) but that doesn't make it not a shortage. In questions of definitions, it's also informative to try an alternative source. I propose the website of the Federal Reserve Bank of St. Louis (simply because they have a convenient online glossary): https://www.stlouisfed.org/education/glossary https://www.stlouisfed.org/education/glossary > Shortage: When the quantity demanded of a good or service exceeds the quantity supplied at a particular price. I'm not going to update the Wikipedia page because the Definition section needs quite some rewording and citation to make it authoritative and if I just add this in, it will make that part incoherent. § Tucker's Economics for Today, which is also wrongly named in that section as Economics Today. In the 7th edition, this is on Page 80