11 ms·

There can't be a labor shortage on a free market, right? There can only be a labor shortage for the price you are offering for that labor.

Mikeb85 5y ago
There can be but we know there isn't. The labour shortage right now is definitely a disconnect between what employers want to pay and what employees are willing to work for.
retbull 5y ago
Did you read the article at all? They aren't talking about the pay as it is a separate issue. There literally isn't time for the managers to train and onboard people resulting in a bad experience for the new employee, the customers, and sometimes even resulting in termination for violation of policies the employee never learned about. You can't put knowledge in someones head with just money.
- shlurpy 5y ago
  The article explicitly agrees with the sentiment of GP; it states that among the solutions is increasing compensation to reduce turnover. Obviously it's not the only part to the solution, since you've dug yourself hole by having poor retention in the first place, but it certainly helps to stop creating the problem as you solve it.
hellojesus 5y ago
The market isn't quite free atm with the government directly competing with companies on wages.* Extended unemployment benefits may now be over, but many are still not hungry enough to accept current wage levels. Post-lockdown demand is also different as many people realized life is better spending time with family than burning the midnight oil just to purchase more toys that will never be used. This is not to say wage increases are bad. They are good. This is what we would want to see: jobs paying too little not getting applicants, forcing companies to increase wages. It is, however, bad that the government interferes.
- shlurpy 5y ago
  Why is it bad? If government competition forces wages up, that seems like would finally solve the decades long wage stagnation that markets have been unable to, right?
  - hellojesus 5y ago
    The government didn't compete by providing better goods/services. They just taxed everyone through inflation to pay for it. This is not sustainable and anti free market.
- dvdhnt 5y ago
  > It is, however, bad that the government interferes. I wrote something much longer, but to distill it down, the government didn't interfere. They did the very least they could possibly do compared to what they did for other transfers of wealth during the height of the pandemic. Most people can't just go spend time with their family, and those toys are distractions from the shit show that is our corporate democracy.
  - hellojesus 5y ago
    The government absolutely did interfere. The government told businesses they can't operate; that is interference. Not only did they do that, but they also became arbiters of which businesses were "essential", part of the wealth transfer problem you mentioned. Couple that with ppp loans being processed by requested size because the government attached size percentages to the payouts realized by banks. Government paying people not to work was interference, along with everything else. I believe that people are owed just compensation for it too! But that would look a lot different than extended unemployment benefits - people would be receiving their full salary. All of this is interference and bad and not supportive of free markets. Rather, the government should have done the necessary thing and forced people to evaluate their own risk. Nobody wants to visit your store anymore? You go out of business, and the gov isn't on the hook. That would be free markets.
    - 5y ago
lexapro 5y ago
Of course there can be a labor shortage. If there are 10 open positions but only 8 qualified people, then there's a shortage. It is impossible to fill all 10 positions, even with all the money in the world.
- iso1631 5y ago
  So employ someone and train them so they are qualified
- joshlemer 5y ago
  I think this comment misunderstands the whole supply/demand curve idea. At a low enough price, there would be an arbitrarily high number of "open positions". The statement "there are 10 open positions but only 8 qualified people" therefor is trivially true and meaningless. If I could pay people $1/hour then I might hire 5 of them full time personal assistants. But people wouldn't work for $1/hour, so in that case do we say that there are 5 open positions but 0 candidates?
- nitwit005 5y ago
  That just means the cost to hire includes the cost to train people. And realistically, training is always a cost, even if people don't acknowledge it. It takes time for experienced people to get up to speed at a new workplace.
- cosmolev 5y ago
  If I am the only qualified person and there are 2 jobs that are paying all the money in the world I will work 16 hours a day on both and earn 2x all the money in the world.
missedthecue 5y ago
No? There can be a shortage of anything. I̶f̶ ̶s̶t̶o̶r̶m̶s̶ ̶k̶n̶o̶c̶k̶ ̶o̶u̶t̶ ̶2̶5̶%̶ ̶o̶f̶ ̶c̶o̶r̶n̶ ̶f̶i̶e̶l̶d̶s̶ ̶n̶e̶x̶t̶ ̶y̶e̶a̶r̶,̶ ̶w̶o̶u̶l̶d̶ ̶y̶o̶u̶ ̶c̶a̶l̶l̶ ̶t̶h̶a̶t̶ ̶a̶ ̶s̶h̶o̶r̶t̶a̶g̶e̶ ̶o̶f̶ ̶c̶o̶r̶n̶ ̶o̶r̶ ̶a̶ ̶s̶h̶o̶r̶t̶a̶g̶e̶ ̶o̶f̶ ̶p̶e̶o̶p̶l̶e̶ ̶w̶i̶l̶l̶i̶n̶g̶ ̶t̶o̶ ̶p̶a̶y̶ ̶u̶p̶ ̶f̶o̶r̶ ̶c̶o̶r̶n̶?̶ (people can't get past the corn analogy) What about the cost of housing? Do you call that a shortage or do you blame homebuyers for not paying enough? In the US right now, the workforce participation rate is at all time lows. There are more than 5 million people that were working in 2019, that are not working/looking for work today. That is a lack of supply, AKA a shortage.
- WarOnPrivacy 5y ago
  This would be a better fit if corn had free will and was against harvesting conditions.
- Aliabid94 5y ago
  Theoretically, the price of corn would rise until demand falls to meet it at that price. Demand falls because consumers turn to substitutes (e.g. sugar vs corn syrup)
  - FalconSensei 5y ago
    Only in case corn has something to substitute. Think like... doctors. If you don't have enough doctors graduating, the hospitals still need them. It's not like they can hire veterinarians or mechanics instead
    - darkwizard42 5y ago
      Yeah, but the GP comment is using corn (generally substitutable) to make a point about service/line-level food workers. That role isn't exactly specialized labor. It is pretty clear in this case that the supply exists, just not willing to enter the market at the clearing price.
    - pchristensen 5y ago
dvdhnt 5y ago
Eh, what you're saying is accurate but you'll get argued with and downvoted because human capital is so engrained in this economy that these people don't even realize that's what they are. They're strictly divided by class whether they realize it or not.
deleted 5y ago
[deleted]
omginternets 5y ago
This. Any talk of "labor shortage" should be seen for what it is: a request for subsidized immigration to keep labor costs low. I highly recommend this paper from the '90s. It's just as relevant today as it was then. https://www.ineteconomics.org/uploads/papers/Weinstein-GUI_NSF_SG_Complete_INET.pdf https://www.ineteconomics.org/uploads/papers/Weinstein-GUI_N... To be clear, there is a place for H1-B and O-2 visas, but they are systematically abused, especially in the tech sector.
- cogman10 5y ago
  I don't have a problem allowing an unlimited number of H1-B/O-2. What I have a problem with is their salary is FAR too low. To bring someone in from a foreign market they should be earning the top 10% of income for their field. The fact that they are synonymous with "cheap" is a major issue with the way the system works. The current H1-B minimum salary is $60k That's FAR too low. They should be earning at least double that number so as not to artificially depress wages in the US. It creates perverse incentives for companies to "look" but not find employees (unless they are willing to take a sub H1-B wage). But further, H1-B employees are often in a terrible power dynamic. Being fired from their job often means being deported.
  - thatfrenchguy 5y ago
    > The current H1-B minimum salary is $60k That's FAR too low. They should be earning at least double that number so as not to artificially depress wages in the US. You can't compare H1B salaries for like nurses in the midwest with tech salaries though. H1B salaries also have a tendency to be under-reported (because they're base salaries): if you look at my L-1 form, it says a salary that's at worst half of what I made in my worst year in the United States.
  - silicon2401 5y ago
    > I don't have a problem allowing an unlimited number of H1-B/O-2. There is a huge problem with allowing unlimited immigration of any category of people. Resources and space are finite. One country can only hold so many people and still offer a comfortable and safe life, just like one home can only hold so many people.
darkwizard42 5y ago
Can't be a labor shortage IF a substitute exists. I believe in this case, I agree with you but you would probably want to say "there can't be a labor shortage on unskilled labor" -> because there is generally a ton of unskilled labor able to be employed
mistrial9 5y ago
there is apparently a shortage of people who are "not YOU"
jdlyga 5y ago
There can be a labor shortage until the market reacts to the labor shortage. Kind of like a rubber band snapping back.
theknocker 5y ago
Funny how the "well that's not what I learned in economics" attitude only comes into play when we're justifying exploiting workers, but when workers make their own life adjustments, it's now principally a matter of social dysfunction.
SpicyLemonZest 5y ago
Most companies can't easily set labor prices on the spot market - it's hard to even imagine a business saying "it's easier to find workers now so I'm cutting everyone's pay 20%". So even if there can't be long-term shortages (and I'm very sympathetic to that argument), it's easy to have a situation where employers structurally can't pay a temporarily increased market-clearing price.
snowwrestler 5y ago
Consider a model where there are 10 companies and 1 worker. Each company can reliably fill their job opening by raising their salary offer over the rest. But from an overall perspective, this is a labor shortage in that most companies are at a standstill most of the time, due to lack of available labor. This is obviously a simplified extreme, but it scales. If there are not enough people to work the available demand, then economic activity is less than it could be—even if salaries are going up and roles are being filled.

Mikeb85 5y ago

There can be but we know there isn't. The labour shortage right now is definitely a disconnect between what employers want to pay and what employees are willing to work for.

retbull 5y ago

Did you read the article at all? They aren't talking about the pay as it is a separate issue. There literally isn't time for the managers to train and onboard people resulting in a bad experience for the new employee, the customers, and sometimes even resulting in termination for violation of policies the employee never learned about. You can't put knowledge in someones head with just money.

shlurpy 5y ago
The article explicitly agrees with the sentiment of GP; it states that among the solutions is increasing compensation to reduce turnover. Obviously it's not the only part to the solution, since you've dug yourself hole by having poor retention in the first place, but it certainly helps to stop creating the problem as you solve it.

hellojesus 5y ago

The market isn't quite free atm with the government directly competing with companies on wages.* Extended unemployment benefits may now be over, but many are still not hungry enough to accept current wage levels. Post-lockdown demand is also different as many people realized life is better spending time with family than burning the midnight oil just to purchase more toys that will never be used. This is not to say wage increases are bad. They are good. This is what we would want to see: jobs paying too little not getting applicants, forcing companies to increase wages. It is, however, bad that the government interferes.

shlurpy 5y ago
Why is it bad? If government competition forces wages up, that seems like would finally solve the decades long wage stagnation that markets have been unable to, right?
- hellojesus 5y ago
  The government didn't compete by providing better goods/services. They just taxed everyone through inflation to pay for it. This is not sustainable and anti free market.
dvdhnt 5y ago
> It is, however, bad that the government interferes. I wrote something much longer, but to distill it down, the government didn't interfere. They did the very least they could possibly do compared to what they did for other transfers of wealth during the height of the pandemic. Most people can't just go spend time with their family, and those toys are distractions from the shit show that is our corporate democracy.
- hellojesus 5y ago
  The government absolutely did interfere. The government told businesses they can't operate; that is interference. Not only did they do that, but they also became arbiters of which businesses were "essential", part of the wealth transfer problem you mentioned. Couple that with ppp loans being processed by requested size because the government attached size percentages to the payouts realized by banks. Government paying people not to work was interference, along with everything else. I believe that people are owed just compensation for it too! But that would look a lot different than extended unemployment benefits - people would be receiving their full salary. All of this is interference and bad and not supportive of free markets. Rather, the government should have done the necessary thing and forced people to evaluate their own risk. Nobody wants to visit your store anymore? You go out of business, and the gov isn't on the hook. That would be free markets.
  - 5y ago

lexapro 5y ago

Of course there can be a labor shortage. If there are 10 open positions but only 8 qualified people, then there's a shortage. It is impossible to fill all 10 positions, even with all the money in the world.

iso1631 5y ago
So employ someone and train them so they are qualified
joshlemer 5y ago
I think this comment misunderstands the whole supply/demand curve idea. At a low enough price, there would be an arbitrarily high number of "open positions". The statement "there are 10 open positions but only 8 qualified people" therefor is trivially true and meaningless. If I could pay people $1/hour then I might hire 5 of them full time personal assistants. But people wouldn't work for $1/hour, so in that case do we say that there are 5 open positions but 0 candidates?
nitwit005 5y ago
That just means the cost to hire includes the cost to train people. And realistically, training is always a cost, even if people don't acknowledge it. It takes time for experienced people to get up to speed at a new workplace.
cosmolev 5y ago
If I am the only qualified person and there are 2 jobs that are paying all the money in the world I will work 16 hours a day on both and earn 2x all the money in the world.

missedthecue 5y ago

No? There can be a shortage of anything. I̶f̶ ̶s̶t̶o̶r̶m̶s̶ ̶k̶n̶o̶c̶k̶ ̶o̶u̶t̶ ̶2̶5̶%̶ ̶o̶f̶ ̶c̶o̶r̶n̶ ̶f̶i̶e̶l̶d̶s̶ ̶n̶e̶x̶t̶ ̶y̶e̶a̶r̶,̶ ̶w̶o̶u̶l̶d̶ ̶y̶o̶u̶ ̶c̶a̶l̶l̶ ̶t̶h̶a̶t̶ ̶a̶ ̶s̶h̶o̶r̶t̶a̶g̶e̶ ̶o̶f̶ ̶c̶o̶r̶n̶ ̶o̶r̶ ̶a̶ ̶s̶h̶o̶r̶t̶a̶g̶e̶ ̶o̶f̶ ̶p̶e̶o̶p̶l̶e̶ ̶w̶i̶l̶l̶i̶n̶g̶ ̶t̶o̶ ̶p̶a̶y̶ ̶u̶p̶ ̶f̶o̶r̶ ̶c̶o̶r̶n̶?̶ (people can't get past the corn analogy) What about the cost of housing? Do you call that a shortage or do you blame homebuyers for not paying enough? In the US right now, the workforce participation rate is at all time lows. There are more than 5 million people that were working in 2019, that are not working/looking for work today. That is a lack of supply, AKA a shortage.

WarOnPrivacy 5y ago
This would be a better fit if corn had free will and was against harvesting conditions.
Aliabid94 5y ago
Theoretically, the price of corn would rise until demand falls to meet it at that price. Demand falls because consumers turn to substitutes (e.g. sugar vs corn syrup)
- FalconSensei 5y ago
  Only in case corn has something to substitute. Think like... doctors. If you don't have enough doctors graduating, the hospitals still need them. It's not like they can hire veterinarians or mechanics instead
  - darkwizard42 5y ago
    Yeah, but the GP comment is using corn (generally substitutable) to make a point about service/line-level food workers. That role isn't exactly specialized labor. It is pretty clear in this case that the supply exists, just not willing to enter the market at the clearing price.
  - pchristensen 5y ago

dvdhnt 5y ago

Eh, what you're saying is accurate but you'll get argued with and downvoted because human capital is so engrained in this economy that these people don't even realize that's what they are. They're strictly divided by class whether they realize it or not.

deleted 5y ago

[deleted]

omginternets 5y ago

This. Any talk of "labor shortage" should be seen for what it is: a request for subsidized immigration to keep labor costs low. I highly recommend this paper from the '90s. It's just as relevant today as it was then. https://www.ineteconomics.org/uploads/papers/Weinstein-GUI_NSF_SG_Complete_INET.pdf https://www.ineteconomics.org/uploads/papers/Weinstein-GUI_N... To be clear, there is a place for H1-B and O-2 visas, but they are systematically abused, especially in the tech sector.

cogman10 5y ago
I don't have a problem allowing an unlimited number of H1-B/O-2. What I have a problem with is their salary is FAR too low. To bring someone in from a foreign market they should be earning the top 10% of income for their field. The fact that they are synonymous with "cheap" is a major issue with the way the system works. The current H1-B minimum salary is $60k That's FAR too low. They should be earning at least double that number so as not to artificially depress wages in the US. It creates perverse incentives for companies to "look" but not find employees (unless they are willing to take a sub H1-B wage). But further, H1-B employees are often in a terrible power dynamic. Being fired from their job often means being deported.
- thatfrenchguy 5y ago
  > The current H1-B minimum salary is $60k That's FAR too low. They should be earning at least double that number so as not to artificially depress wages in the US. You can't compare H1B salaries for like nurses in the midwest with tech salaries though. H1B salaries also have a tendency to be under-reported (because they're base salaries): if you look at my L-1 form, it says a salary that's at worst half of what I made in my worst year in the United States.
- silicon2401 5y ago
  > I don't have a problem allowing an unlimited number of H1-B/O-2. There is a huge problem with allowing unlimited immigration of any category of people. Resources and space are finite. One country can only hold so many people and still offer a comfortable and safe life, just like one home can only hold so many people.

darkwizard42 5y ago

Can't be a labor shortage IF a substitute exists. I believe in this case, I agree with you but you would probably want to say "there can't be a labor shortage on unskilled labor" -> because there is generally a ton of unskilled labor able to be employed

mistrial9 5y ago

there is apparently a shortage of people who are "not YOU"

jdlyga 5y ago

There can be a labor shortage until the market reacts to the labor shortage. Kind of like a rubber band snapping back.

theknocker 5y ago

Funny how the "well that's not what I learned in economics" attitude only comes into play when we're justifying exploiting workers, but when workers make their own life adjustments, it's now principally a matter of social dysfunction.

SpicyLemonZest 5y ago

Most companies can't easily set labor prices on the spot market - it's hard to even imagine a business saying "it's easier to find workers now so I'm cutting everyone's pay 20%". So even if there can't be long-term shortages (and I'm very sympathetic to that argument), it's easy to have a situation where employers structurally can't pay a temporarily increased market-clearing price.

snowwrestler 5y ago

Consider a model where there are 10 companies and 1 worker. Each company can reliably fill their job opening by raising their salary offer over the rest. But from an overall perspective, this is a labor shortage in that most companies are at a standstill most of the time, due to lack of available labor. This is obviously a simplified extreme, but it scales. If there are not enough people to work the available demand, then economic activity is less than it could be—even if salaries are going up and roles are being filled.