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The reason why the world doesn't work the way you're suggesting and why shortages do exist is nominal rigidity. And it's much more complicated than "the boss is
by fpig 8y ago
The reason why the world doesn't work the way you're suggesting and why shortages do exist is nominal rigidity. And it's much more complicated than "the boss is reluctant to pay the worker more". The client might also be reluctant to pay for the service more, regardless of supply and demand. Consumers might be reluctant to pay a higher price. If the current increase in demand for trucking services is temporary, and they increased wages, they're kind of stuck with the now higher wages as wages are strongly sticky-down (in other words you can't just constantly adjust wages to their market price, up or down, because humans react very negatively to their wages being cut). It is deeply entrenched in the economy and human minds. This is why shortages often only resolve themselves in the long term. Until they resolve themselves, they certainly do exist.