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One way to look at it is there is a ceiling on American wages imposed by globalization. Above that ceiling you're better off going overseas. But that ceiling is
by jordanb 9y ago
One way to look at it is there is a ceiling on American wages imposed by globalization. Above that ceiling you're better off going overseas. But that ceiling is below the market-clearing price of labor in the us.
- Retric 9y agoThat does not work. If you can substitute foreign labor then there is no shortage. If you can't substitute foreign labor then it's irrelevant. You can't have a shortage of workers and falling wages. You can have uncompetitive US companies, but they are very profitable so the only thing left is irrational behavior.
- Godel_unicode 9y agoI think"can but really don't want to" would explain part of it. What do people do when presented with a workable but unappealing solution? They complain a lot and then grudgingly do it.
- eli_gottlieb 9y ago>You can't have a shortage of workers and falling wages. You can have uncompetitive US companies, but they are very profitable so the only thing left is irrational behavior. Or insufficient capital investment and bad management holding down productivity. You can't pay a worker more than their productivity, but if the best you can get out of them is too little, it may not be worth their while. You could then plausibly see a shortage of workers, wage suppression, and stagnant productivity statistics at the same time.
- Retric 9y agoYou are describing insufficient demand, not insufficient workers. The reasons for low demand are more or less irrelevant to worker pay, just that demand is low.
- dozzie 9y agoYes, there are many curious effects and phenomena once we dispense with this silly expectation of business being sustainable.
- walshemj 9y agoIf the workers are scared of a recession and losing their jobs you can.
- lkrubner 9y agoNo, a "ceiling on American wages" theory would only make sense if globalization was removing jobs from the USA, in which case you would not have a labor shortage. It would be reasonable to say "Foreign competition has stolen jobs from Americans, therefore the unemployment rate is high, therefore there is a ceiling on American wages via globalization." But that can not be reconciled to "labor shortage". A more fruitful line of research focuses on the growing power of monopoly, and the collapse of new business formation in the USA. Why don't companies with huge profits reinvest their profits? Why are most of the tech giants sitting on piles of cash? Monopoly could explain that, and would also explain a limit on wages that otherwise seems to defy market sense.