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If you have 100 prospective employees and 200 jobs, there's a labor shortage by definition. This setup leads to a wage price spiral, as competitors continue to
by adam_arthur 4y ago
If you have 100 prospective employees and 200 jobs, there's a labor shortage by definition.
This setup leads to a wage price spiral, as competitors continue to raise wages to poach employees, and people ping pong between jobs frequently for pay raises.
There is an aspect of LFP where higher wages may draw in new employees, but there's not a huge well to tap there.
Labor market is hotter than ever before, while LFP is declining. Pretty fair to call it a labor shortage. Though more accurately I'd call it an overheated economy. Typically the Fed triggers a recession under these circumstances.
Also keep in mind rising nominal wages above productivity gains does not benefit workers at all. It has to be real wage gains. Real wages have been declining at a record pace
- michael1999 4y agoBoth labour supply and demand have normal curves. Low-value employers will be priced out until there are 110 openings, and 10 people come out of retirement.
- adam_arthur 4y agoYes either openings decline or labor supply increases. Demographic trend is toward lower labor supply though, so most likely outcome is number of job openings needs to be decreased to solve inflation. Again, real wages have been declining so people are getting poorer despite increasing nominal wages. It kind of boggles the mind seeing people talk about wages in nominal terms like it means anything. The poor and downtrodden will suffer most in the end as a result of the steps necessary to control inflation.