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"The solution to an observed shortage of labor is “employers pay more and quit whining”." - Keep in mind that going along with higher prices (wages), there will

• dragonwriter 5y ago
  > "The solution to an observed shortage of labor is “employers pay more and quit whining”." - Keep in mind that going along with higher prices (wages), there will be a lower quantity (jobs). No, that would only be true if there was not an observed shortage; that is, if the current market price was clearing the market with no unmet demand at the market clearing price. An observed shortage that is not a real shortage means that the market price can rise to the point of market equilibrium without reducing quantity traded. In fact with a normal supply curve shape, the minimum price increase to achieve equilibrium will increase the quantity traded compared to the status quo, as quantity supplied will increase with price. Quantity demanded will be lower than in the status quo, but since the “observed shortage” is quantity demanded being above quantity supplied and, therefore, traded at the current price, that reduction is literally just reducing the “observed shortage” to zero, not reducing quantity traded.