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 fr

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.