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This isn't really much of a revelation or hot take. That's literally what an economist means when they say there is a labor shortage. The graph for labor shows

by anm89 5y ago

This isn't really much of a revelation or hot take. That's literally what an economist means when they say there is a labor shortage. The graph for labor shows the intersection between the quantity supplied and the price it is supplied at. It would be meaningless to talk about one without the other.

whimsicalism 5y ago
No, shortage in this context is actually a colloquialism, it is not what an economist means when they refer to a shortage. In this case, business owners are using this as a short hand for "the market equilibrium price for this labor is too high!" The only people imposing price ceilings here are the managers themselves for their individual firm. My argument is that this is a bad colloquialism, and a political one.
- anm89 5y ago
  > the market equilibrium PRICE for this labor is too high Are you saying that an economist wouldn't say we are in a labor shortage right now? Because that is dead wrong. So then an economist would say that we are in a labor shortage but what they mean is that not enough labor is being supplied at THE CURRENT PRICE? Right? As in that is what an economist means by a labor shortage. So I really don't get what you are saying.
  - whimsicalism 5y ago
    https://en.wikipedia.org/wiki/Shortage https://en.wikipedia.org/wiki/Shortage Look at the difference between the "economic" and the "common" usage. Namely, > There are almost always willing buyers at a lower-than-market-clearing price; the narrower technical definition doesn't consider failure to serve this demand as a "shortage", even if it would be described that way in a social or political context (which the simple model of supply and demand does not attempt to encompass). If we've failed to reach equilibrium price for some reason or other, it is because of monopsony effects - namely firms failing to raise wages to equilibrium level. It is in this sense that I think flipping "labor shortage" to "wage shortage" is valuable.
    - anm89 5y ago
      The colloquialism means the exact same thing as what the economist means and it's because the term was taken from the economics vocabulary and is only ever used specifically when discussing economics even if by non economists. There's not a shortage of human beings. There is a shortage of human beings who want to work at the current market prices. No matter how many ways you try to twist it a labor shortage implies information about wages.
      - tarboreus 5y ago
        Not the person you're arguing with, but you're on the wrong side of this one. It's a shortage if there's an artificial constraint on price such that raising or lowering prices can't affect the supply. Say I'm shopping for breakfast. I go to the store and see the price of avocadoes, they're $5 per avocado. I say, "Damn, the price of avocodoes has gone WAY up! There must be a shortage of avocadoes." That's fine to say in a colloquial sense, meaning that, for whatever reason, avocadoes are more expensive, and you're figuring demand hasn't gone up, so that something must be going on with supply. It's not a shortage in the technical sense, though. It's just the market working to supply avocadoes, which may be cheap or expensive depending on supply and demand. Now, imagine congress passes a law that says all avocadoes must be sold at $3. What follows this is likely to be a shortage in the technical sense, because the market can't incease prices to encourage more people to farm avocadoes, increasing supply. There will be people out there that would pay more for avocadoes, and they won't have avocadoes to buy. SO yeah, we're not in a labor shortage. Companies just don't want to pay for labor at new prices because they're so used to paying much lower prices. Once companies start paying higher wages, more actors will move to take advantage (people coming out of retirement, people starting bootcamps, people switching careers, w/e), which will exert stabilizing or downward pressure on wages. This is all just the normal action of the market. A decrease in supply is not a shortage, it's a decrease in supply.

by anm89 5y ago

whimsicalism 5y ago

No, shortage in this context is actually a colloquialism, it is not what an economist means when they refer to a shortage. In this case, business owners are using this as a short hand for "the market equilibrium price for this labor is too high!" The only people imposing price ceilings here are the managers themselves for their individual firm. My argument is that this is a bad colloquialism, and a political one.

anm89 5y ago
> the market equilibrium PRICE for this labor is too high Are you saying that an economist wouldn't say we are in a labor shortage right now? Because that is dead wrong. So then an economist would say that we are in a labor shortage but what they mean is that not enough labor is being supplied at THE CURRENT PRICE? Right? As in that is what an economist means by a labor shortage. So I really don't get what you are saying.
- whimsicalism 5y ago
  https://en.wikipedia.org/wiki/Shortage https://en.wikipedia.org/wiki/Shortage Look at the difference between the "economic" and the "common" usage. Namely, > There are almost always willing buyers at a lower-than-market-clearing price; the narrower technical definition doesn't consider failure to serve this demand as a "shortage", even if it would be described that way in a social or political context (which the simple model of supply and demand does not attempt to encompass). If we've failed to reach equilibrium price for some reason or other, it is because of monopsony effects - namely firms failing to raise wages to equilibrium level. It is in this sense that I think flipping "labor shortage" to "wage shortage" is valuable.
  - anm89 5y ago
    The colloquialism means the exact same thing as what the economist means and it's because the term was taken from the economics vocabulary and is only ever used specifically when discussing economics even if by non economists. There's not a shortage of human beings. There is a shortage of human beings who want to work at the current market prices. No matter how many ways you try to twist it a labor shortage implies information about wages.
    - tarboreus 5y ago
      Not the person you're arguing with, but you're on the wrong side of this one. It's a shortage if there's an artificial constraint on price such that raising or lowering prices can't affect the supply. Say I'm shopping for breakfast. I go to the store and see the price of avocadoes, they're $5 per avocado. I say, "Damn, the price of avocodoes has gone WAY up! There must be a shortage of avocadoes." That's fine to say in a colloquial sense, meaning that, for whatever reason, avocadoes are more expensive, and you're figuring demand hasn't gone up, so that something must be going on with supply. It's not a shortage in the technical sense, though. It's just the market working to supply avocadoes, which may be cheap or expensive depending on supply and demand. Now, imagine congress passes a law that says all avocadoes must be sold at $3. What follows this is likely to be a shortage in the technical sense, because the market can't incease prices to encourage more people to farm avocadoes, increasing supply. There will be people out there that would pay more for avocadoes, and they won't have avocadoes to buy. SO yeah, we're not in a labor shortage. Companies just don't want to pay for labor at new prices because they're so used to paying much lower prices. Once companies start paying higher wages, more actors will move to take advantage (people coming out of retirement, people starting bootcamps, people switching careers, w/e), which will exert stabilizing or downward pressure on wages. This is all just the normal action of the market. A decrease in supply is not a shortage, it's a decrease in supply.