8 ms·

Seems like a good time to mention my old stand-by: There is no such thing as a labor shortage. There may very well be a shortage of qualified people willing t

Seems like a good time to mention my old stand-by: There is no such thing as a labor shortage. There may very well be a shortage of qualified people willing to work under the conditions and for the compensation a company would like to provide. When stated that way you can see that there are several levers to pull, the most obvious being compensation.

nerdsniper 1y ago
99% of the time, I agree with you. But hypothetically, what would you call a situation where 20 companies would all be willing to pay salaries of $1 million/year to fill 10,000 open positions that required 5 years of training, but there are only 5,000 people who have that training? Would that be a "labor shortage"? It seems your solution works for companies willing to pay more to poach from other companies, but might not work in situations where all of them need more skilled labor now. Also, the $1M/year illustrates a point...why not $10 million or $100 million/year? At some point, the salaries are indeed "high enough" but the skills still just aren't available to hire.
- baby_souffle 1y ago
  > At some point, the salaries are indeed "high enough" but the skills still just aren't available to hire. But the incentive to develop the skills should sort this out, no?
  - culturestate 1y ago
    In a perfectly efficient market, yes, but the market is notably not perfectly efficient. People make decisions about which career(s) to pursue or not pursue based on a huge variety of factors that stretch far beyond money. There is absolutely no scenario in which you could convince me to train as e.g. an underwater welder, no matter how much cash you’re offering.
  - nerdsniper 1y ago
    Sure. But the GP is arguing that "there's no such thing as a labor shortage". I'm trying to determine what their definition of "labor shortage" is. Perhaps the GP believes that the term itself is meaningless, or perhaps they believe that no current real-world situation fits their definition. So I created a hypothetical situation to illustrate what, to me, is a clear example of a temporary labor shortage. As you say, "the incentive to develop the skills should sort this out" ... and I'd say that's true, but until it gets sorted out, the situation can reasonably be described as a "labor shortage".
    - baby_souffle 1y ago
      > As you say, "the incentive to develop the skills should sort this out" ... and I'd say that's true, but until it gets sorted out, the situation can reasonably be described as a "labor shortage". That's fair. I wasn't thinking about the types of skills that take years to develop. I was thinking more along the lines of re-training in the sense that I can take somebody that's got a solid base of tangentially related skills and get them up to speed quickly.
  - crazygringo 1y ago
    Yes, but the point is this takes time and stability guarantees. A true labor shortage can actually persist for many years. Because people have to a) take the years to learn/develop those skills, and will only do so if b) they know those jobs are still going to be around for a while after that.
  - freedomben 1y ago
    In the long term, yes definitely, and we saw that work first-hand in software development as bootcamps and comp-sci grads started cranking people out. However, the ramp-up time means that during those 5 years that it takes for more people to get qualified, this corrective affect won't help. Also in the real world the wages are sticky enough that they take time to adjust, and then it takes time for people to realize that X field is becoming well paid and then start pursuing it, so realistically the 5 year period is more like 7 to 10. Plus as long as the industry is growing/expanding, demand can continue to outstrip supply due to that stickiness. Even rapid moving stuff like AI has bee illustrative of this. The AI leaders are all primarily poaching, and wages are astronomical. This is undoubtedly fueling a massive number of people to study/specialize in AI, but it takes years (maybe even a decade) to complete that path (depending on your starting point).
    - hvb2 1y ago
      > In the long term, yes definitely So, in the automotive industry they've been paying too little to attract people. Meaning they now have a shortage. That's still on them. Sounds to me like they made some really nice profits for a couple of years and are now feeling the pain of that. Funny that you mention AI where people are saying there's no need for Juniors anymore. Exactly the same, you'll make some money now and will then likely have to pay for that later.
      - freedomben 1y ago
        Yeah, you're not wrong. But collectively saying "the automotive industry" is a little too simplistic, since in theory they are competing and can't be colluding, so "the automotive industry" paying too little shouldn't be possible. In practice though, we all know it isn't that simple, so your point has merit.
  - snowwrestler 1y ago
    Sure, in an economy with an inexhaustible supply of new workers seeking new skills and employment. Do we think that accurately describes the United States in late 2025?
- jen20 1y ago
  The good news is we will likely get to see this in the software industry over the next many years.
- lelandbatey 1y ago
  What you have mentioned is hypothetically true, but not usually relevant. Folks bring up "there is a labor shortage" for vast swaths of lower skill jobs, famously so: e.g. waitstaff, dishwashers, drywallers. These are jobs that huuuuuge portions of your population can do, if you give them the minimal training the job requires. So it is with many of the entry-level factory jobs discussed in the parent article. Folks in hiring positions for entry level factory jobs, or waitstaff, or dishwashers, those folks say things like "there's a labor shortage" when what they typically should be saying is "wages for the positions I am hiring for need to increase to match market rates."
- otikik 1y ago
  Hypothetically, we could look at reality instead of looking at hypotheticals.
  - tzs 1y ago
    The hypothetical he is describing has actually been reality in the past, such as in the US during much of WW II.
- cwmma 1y ago
  A better thing to say, is that there are no long term labor shortages, in the short term you can have booms where there aren't enough people to fill the jobs but in your example the shortage would last at most 5 years but you'd also have things like better assistance or automation so one person may be able to fill more then one of those positions, you'd probably also have people that could come out of retirement for enough money, or people in related fields that could train in less then 5 years. For enough money on the table you'd probably have people trying to figure out if you can train somebody in less then 5 years. This is also the issue that HB1 visas are intended to solve. If enough money is on the table people can skill up fast.
- sdenton4 1y ago
  Hire an expert and an apprentice to work with them. Now you've got 10k workers.
- pyrale 1y ago
  I would call it posturing. If these companies really needed to fill these openings, they wouldn't raise an offering they know they won't pay ; they would train in-house.
- michael1999 1y ago
  You could call that excess capital as easily as a labour shortage. Or a shortage of training pipelines in an irresponsible industry. When GM realized they needed more mechanical engineers than existed, they built a whole university. These days, capital just whines. If you can spend $100 BILLION on data centers, you have the budget to stand up a proper school.
  - nerdsniper 1y ago
    > If you can spend $100 BILLION on data centers, you have the budget to stand up a proper school. This is an excellent point. Georgia Tech, a top 10 computer science university, has an annual budget of $2.7 billion (2024) for the entire university to educate an enrollment of 53,000 students. Really puts it into perspective; this is 1% of Google's annual expenses.
  - runlaszlorun 1y ago
    > If you can spend $100 BILLION on data centers, you have the budget to stand up a proper school. That is a good point. Odd that our reactions, including my own given that I think the AI data center boom is pretty nuts, to that much being spent on data centers is "not surprising" while a company standing up a school sounds like something from science fiction.
    - michael1999 1y ago
      It was normal for large firms to build schools. All the big 5 accounting consultancies had a month or two of residential boot camp. Toyota built a school. GM too. When you’re that big, you can make your own weather.
- alistairSH 1y ago
  Did that job/skillset just conjure itself into existence? Or were the companies shortsighted in not training in-house 5 years ago? I'm guessing we see a lot more of the latter than the former. Cutting edge knowledge industries might be an outlier here, but certainly for anything related to "factory work", it's probably true.
skeeter2020 1y ago
your old stand-by doesn't make any sense "there is no such thing as a labour shortage" is totally represented by a shortage of qualified people for the given compensation. This is the basis of every economics supply & demand graph, where explicitly refer to the misalignment as a surplus or shortage.
- mindslight 1y ago
  Yes, this is a kind of insidious framings that Economics makes. By choosing which is the X vs the Y axis, it creates an implied causality [0]. An alternative way of looking at the same situation is that employers are not willing to pay enough for labor. By framing it as a shortage of labor rather than a shorting of those looking to pay for labor, the employers hope to encourage more labor to flood the market [1] and lower prices further. This is a continuation of how we've gotten to the current predicament with most jobs being de-skilled commodities that don't pay enough to support their workers. [0] another insidious framing is that by assuming instantaneous response, this downplays the importance of causality. But in the real world markets are not supercomputational. [1] both private individuals choosing an educational path, and by government policy
- freedomben 1y ago
  Can you clarify what you mean by "given compensation", because: > is totally represented by a shortage of qualified people for the given compensation. Sounds like "I want to pay X, there's not enough willing to work for X, therefore there is a labor shortage." I know plenty of people who only want to pay $30 an hour for web development work. It might feel like a labor shortage to these people since they can't find many people willing to work for that wage, but in reality where the price they've chosen lands on the supply/demand curve there is almost no supply, but if they increased the wage, amazingly supply goes up too. If 30 seems high enough, imagine $5 an hour instead of $30. The actual number doesn't matter, it's where it falls on the spectrum that is relevant for this example. If by "given compensation" you meant "market rate" then I think we're largely in agreement.
- moi2388 1y ago
  Economics supply & demand graphs assume entities act rationally. It can however occur that a company requires skill x, cannot find a person for this position, and HR still refuses to increase salary for this position. There is a mismatch in supply & demand of compensation. Not position.
deleted 1y ago
[deleted]
bilekas 1y ago
> There is no such thing as a labor shortage. Of course there isn't. This is out of touch employers saying "Nobody wants to work for $1 an hour, so must mean there's a shortage." It's wild, that same in the service industry, restaraunts for example paying 1/2 dollars an hour and then putting the onus onto the customers to pay in tips. https://www.businessinsider.com/what-its-like-to-work-at-waffle-house-2023-4 https://www.businessinsider.com/what-its-like-to-work-at-waf... It's ridiculous, GenZ has just realized they don't want to participate in the racket and I don't blame them.
- watwut 1y ago
  It is not even that. Plenty dont have a choice and participate in rackets. It is not like they were swimming in money and riches But some places are worst then rackets the town nearby.
  - bilekas 1y ago
    > Plenty dont have a choice and participate in rackets I do appreciate that, but seems to me that the path towards change (CEO epiphanies) is for as many people as possible boycott the job.. It's a mentality change and I'm glad to see GenZ and others pushing to change it.
    - makingstuffs 1y ago
      The problem is that there is a vast number of people in modern societies whom do not come from a stable background. Something I have realised since managing to work my family out of the trenches is that the majority of people really do not have any idea on just how bad things can be. And I should add it is not their fault in the slightest. If you’re not living amongst it the articles you read in mainstream media seem like rare anomalies but the reality is that they are not. The biggest benefit to having a stable background is the ability to be more selective about the job you take as you know there is a safety net. When you are literally living paycheque to paycheque you don’t even want to risk having to complete another round of probation in a better job as you run the risk of being unemployed in three months time and loss of one month’s salary can start a spiral which makes your currently manageable situation a lot less so. I say this from personal experience as someone in the UK, I can’t speak for anywhere else.
greymalik 1y ago
I agree with that, but isn’t it also the case that if an employer raises wages enough to get the workers they need, they have to do some combination of passing those costs along to customers and reducing the benefits to shareholders, which in turn reduces their ability to remain a viable business and keep people employed? It’s a balancing act.
- happymellon 1y ago
  If their business relies on other people doing, what reads to me as charity work then perhaps their business isn't viable.
parineum 1y ago
> and for the compensation a company would like to provide. "would like to" is usually "can justify, financially". Most companies don't have a bunch of extra money laying around. > When stated that way you can see that there are several levers to pull, the most obvious being compensation. I know the way you mean that (companies pay more) and that's an option that does happen but it also goes the other way, employees can accept less (unless minimum wage makes it illegal for people to accept work).
- alistairSH 1y ago
  Sure, but a company doesn't have some mystical right to exist with a below market clearing comp package. Assuming no other factors, the correct solution here is for the company to fold and be replaced by a company that is more efficient. Instead, we have companies complaining about a shortage (that they've created via low pay) and demanding action (more immigrants, or whatever else).
vmchale 1y ago
> When stated that way you can see that there are several levers to pull, the most obvious being compensation. Ford's profit margin was 1.7%. Lots of innovative/productive American companies since 1970 for workers to aspire to = the enterprise can't continue.
fulafel 1y ago
The prospect of working on something that profits from society steaming full speed ahead towards the climate catastrophe (and you being at the forefront) or in the best case being obsolete in a few years as we ramp down fossils should also make the thinking person pause.

nerdsniper 1y ago

99% of the time, I agree with you. But hypothetically, what would you call a situation where 20 companies would all be willing to pay salaries of $1 million/year to fill 10,000 open positions that required 5 years of training, but there are only 5,000 people who have that training? Would that be a "labor shortage"? It seems your solution works for companies willing to pay more to poach from other companies, but might not work in situations where all of them need more skilled labor now. Also, the $1M/year illustrates a point...why not $10 million or $100 million/year? At some point, the salaries are indeed "high enough" but the skills still just aren't available to hire.

baby_souffle 1y ago
> At some point, the salaries are indeed "high enough" but the skills still just aren't available to hire. But the incentive to develop the skills should sort this out, no?
- culturestate 1y ago
  In a perfectly efficient market, yes, but the market is notably not perfectly efficient. People make decisions about which career(s) to pursue or not pursue based on a huge variety of factors that stretch far beyond money. There is absolutely no scenario in which you could convince me to train as e.g. an underwater welder, no matter how much cash you’re offering.
- nerdsniper 1y ago
  Sure. But the GP is arguing that "there's no such thing as a labor shortage". I'm trying to determine what their definition of "labor shortage" is. Perhaps the GP believes that the term itself is meaningless, or perhaps they believe that no current real-world situation fits their definition. So I created a hypothetical situation to illustrate what, to me, is a clear example of a temporary labor shortage. As you say, "the incentive to develop the skills should sort this out" ... and I'd say that's true, but until it gets sorted out, the situation can reasonably be described as a "labor shortage".
  - baby_souffle 1y ago
    > As you say, "the incentive to develop the skills should sort this out" ... and I'd say that's true, but until it gets sorted out, the situation can reasonably be described as a "labor shortage". That's fair. I wasn't thinking about the types of skills that take years to develop. I was thinking more along the lines of re-training in the sense that I can take somebody that's got a solid base of tangentially related skills and get them up to speed quickly.
- crazygringo 1y ago
  Yes, but the point is this takes time and stability guarantees. A true labor shortage can actually persist for many years. Because people have to a) take the years to learn/develop those skills, and will only do so if b) they know those jobs are still going to be around for a while after that.
- freedomben 1y ago
  In the long term, yes definitely, and we saw that work first-hand in software development as bootcamps and comp-sci grads started cranking people out. However, the ramp-up time means that during those 5 years that it takes for more people to get qualified, this corrective affect won't help. Also in the real world the wages are sticky enough that they take time to adjust, and then it takes time for people to realize that X field is becoming well paid and then start pursuing it, so realistically the 5 year period is more like 7 to 10. Plus as long as the industry is growing/expanding, demand can continue to outstrip supply due to that stickiness. Even rapid moving stuff like AI has bee illustrative of this. The AI leaders are all primarily poaching, and wages are astronomical. This is undoubtedly fueling a massive number of people to study/specialize in AI, but it takes years (maybe even a decade) to complete that path (depending on your starting point).
  - hvb2 1y ago
    > In the long term, yes definitely So, in the automotive industry they've been paying too little to attract people. Meaning they now have a shortage. That's still on them. Sounds to me like they made some really nice profits for a couple of years and are now feeling the pain of that. Funny that you mention AI where people are saying there's no need for Juniors anymore. Exactly the same, you'll make some money now and will then likely have to pay for that later.
    - freedomben 1y ago
      Yeah, you're not wrong. But collectively saying "the automotive industry" is a little too simplistic, since in theory they are competing and can't be colluding, so "the automotive industry" paying too little shouldn't be possible. In practice though, we all know it isn't that simple, so your point has merit.
- snowwrestler 1y ago
  Sure, in an economy with an inexhaustible supply of new workers seeking new skills and employment. Do we think that accurately describes the United States in late 2025?
jen20 1y ago
The good news is we will likely get to see this in the software industry over the next many years.
lelandbatey 1y ago
What you have mentioned is hypothetically true, but not usually relevant. Folks bring up "there is a labor shortage" for vast swaths of lower skill jobs, famously so: e.g. waitstaff, dishwashers, drywallers. These are jobs that huuuuuge portions of your population can do, if you give them the minimal training the job requires. So it is with many of the entry-level factory jobs discussed in the parent article. Folks in hiring positions for entry level factory jobs, or waitstaff, or dishwashers, those folks say things like "there's a labor shortage" when what they typically should be saying is "wages for the positions I am hiring for need to increase to match market rates."
otikik 1y ago
Hypothetically, we could look at reality instead of looking at hypotheticals.
- tzs 1y ago
  The hypothetical he is describing has actually been reality in the past, such as in the US during much of WW II.
cwmma 1y ago
A better thing to say, is that there are no long term labor shortages, in the short term you can have booms where there aren't enough people to fill the jobs but in your example the shortage would last at most 5 years but you'd also have things like better assistance or automation so one person may be able to fill more then one of those positions, you'd probably also have people that could come out of retirement for enough money, or people in related fields that could train in less then 5 years. For enough money on the table you'd probably have people trying to figure out if you can train somebody in less then 5 years. This is also the issue that HB1 visas are intended to solve. If enough money is on the table people can skill up fast.
sdenton4 1y ago
Hire an expert and an apprentice to work with them. Now you've got 10k workers.
pyrale 1y ago
I would call it posturing. If these companies really needed to fill these openings, they wouldn't raise an offering they know they won't pay ; they would train in-house.
michael1999 1y ago
You could call that excess capital as easily as a labour shortage. Or a shortage of training pipelines in an irresponsible industry. When GM realized they needed more mechanical engineers than existed, they built a whole university. These days, capital just whines. If you can spend $100 BILLION on data centers, you have the budget to stand up a proper school.
- nerdsniper 1y ago
  > If you can spend $100 BILLION on data centers, you have the budget to stand up a proper school. This is an excellent point. Georgia Tech, a top 10 computer science university, has an annual budget of $2.7 billion (2024) for the entire university to educate an enrollment of 53,000 students. Really puts it into perspective; this is 1% of Google's annual expenses.
- runlaszlorun 1y ago
  > If you can spend $100 BILLION on data centers, you have the budget to stand up a proper school. That is a good point. Odd that our reactions, including my own given that I think the AI data center boom is pretty nuts, to that much being spent on data centers is "not surprising" while a company standing up a school sounds like something from science fiction.
  - michael1999 1y ago
    It was normal for large firms to build schools. All the big 5 accounting consultancies had a month or two of residential boot camp. Toyota built a school. GM too. When you’re that big, you can make your own weather.
alistairSH 1y ago
Did that job/skillset just conjure itself into existence? Or were the companies shortsighted in not training in-house 5 years ago? I'm guessing we see a lot more of the latter than the former. Cutting edge knowledge industries might be an outlier here, but certainly for anything related to "factory work", it's probably true.

skeeter2020 1y ago

your old stand-by doesn't make any sense "there is no such thing as a labour shortage" is totally represented by a shortage of qualified people for the given compensation. This is the basis of every economics supply & demand graph, where explicitly refer to the misalignment as a surplus or shortage.

mindslight 1y ago
Yes, this is a kind of insidious framings that Economics makes. By choosing which is the X vs the Y axis, it creates an implied causality [0]. An alternative way of looking at the same situation is that employers are not willing to pay enough for labor. By framing it as a shortage of labor rather than a shorting of those looking to pay for labor, the employers hope to encourage more labor to flood the market [1] and lower prices further. This is a continuation of how we've gotten to the current predicament with most jobs being de-skilled commodities that don't pay enough to support their workers. [0] another insidious framing is that by assuming instantaneous response, this downplays the importance of causality. But in the real world markets are not supercomputational. [1] both private individuals choosing an educational path, and by government policy
freedomben 1y ago
Can you clarify what you mean by "given compensation", because: > is totally represented by a shortage of qualified people for the given compensation. Sounds like "I want to pay X, there's not enough willing to work for X, therefore there is a labor shortage." I know plenty of people who only want to pay $30 an hour for web development work. It might feel like a labor shortage to these people since they can't find many people willing to work for that wage, but in reality where the price they've chosen lands on the supply/demand curve there is almost no supply, but if they increased the wage, amazingly supply goes up too. If 30 seems high enough, imagine $5 an hour instead of $30. The actual number doesn't matter, it's where it falls on the spectrum that is relevant for this example. If by "given compensation" you meant "market rate" then I think we're largely in agreement.
moi2388 1y ago
Economics supply & demand graphs assume entities act rationally. It can however occur that a company requires skill x, cannot find a person for this position, and HR still refuses to increase salary for this position. There is a mismatch in supply & demand of compensation. Not position.

deleted 1y ago

[deleted]

bilekas 1y ago

> There is no such thing as a labor shortage. Of course there isn't. This is out of touch employers saying "Nobody wants to work for $1 an hour, so must mean there's a shortage." It's wild, that same in the service industry, restaraunts for example paying 1/2 dollars an hour and then putting the onus onto the customers to pay in tips. https://www.businessinsider.com/what-its-like-to-work-at-waffle-house-2023-4 https://www.businessinsider.com/what-its-like-to-work-at-waf... It's ridiculous, GenZ has just realized they don't want to participate in the racket and I don't blame them.

watwut 1y ago
It is not even that. Plenty dont have a choice and participate in rackets. It is not like they were swimming in money and riches But some places are worst then rackets the town nearby.
- bilekas 1y ago
  > Plenty dont have a choice and participate in rackets I do appreciate that, but seems to me that the path towards change (CEO epiphanies) is for as many people as possible boycott the job.. It's a mentality change and I'm glad to see GenZ and others pushing to change it.
  - makingstuffs 1y ago
    The problem is that there is a vast number of people in modern societies whom do not come from a stable background. Something I have realised since managing to work my family out of the trenches is that the majority of people really do not have any idea on just how bad things can be. And I should add it is not their fault in the slightest. If you’re not living amongst it the articles you read in mainstream media seem like rare anomalies but the reality is that they are not. The biggest benefit to having a stable background is the ability to be more selective about the job you take as you know there is a safety net. When you are literally living paycheque to paycheque you don’t even want to risk having to complete another round of probation in a better job as you run the risk of being unemployed in three months time and loss of one month’s salary can start a spiral which makes your currently manageable situation a lot less so. I say this from personal experience as someone in the UK, I can’t speak for anywhere else.

greymalik 1y ago

I agree with that, but isn’t it also the case that if an employer raises wages enough to get the workers they need, they have to do some combination of passing those costs along to customers and reducing the benefits to shareholders, which in turn reduces their ability to remain a viable business and keep people employed? It’s a balancing act.

happymellon 1y ago
If their business relies on other people doing, what reads to me as charity work then perhaps their business isn't viable.

parineum 1y ago

> and for the compensation a company would like to provide. "would like to" is usually "can justify, financially". Most companies don't have a bunch of extra money laying around. > When stated that way you can see that there are several levers to pull, the most obvious being compensation. I know the way you mean that (companies pay more) and that's an option that does happen but it also goes the other way, employees can accept less (unless minimum wage makes it illegal for people to accept work).

alistairSH 1y ago
Sure, but a company doesn't have some mystical right to exist with a below market clearing comp package. Assuming no other factors, the correct solution here is for the company to fold and be replaced by a company that is more efficient. Instead, we have companies complaining about a shortage (that they've created via low pay) and demanding action (more immigrants, or whatever else).

vmchale 1y ago

> When stated that way you can see that there are several levers to pull, the most obvious being compensation. Ford's profit margin was 1.7%. Lots of innovative/productive American companies since 1970 for workers to aspire to = the enterprise can't continue.

fulafel 1y ago

The prospect of working on something that profits from society steaming full speed ahead towards the climate catastrophe (and you being at the forefront) or in the best case being obsolete in a few years as we ramp down fossils should also make the thinking person pause.