For now, the coming “labor shortage” is good news for workers.
We should root for it to continue.
It’s undoubtedly a headache for some owners and managers. But it’s one they should, hopefully, be made to live with for a few years.
They say “labor shortage” like it’s a bad thing.
“America’s labor shortage is approaching epidemic proportions, and it could be employers who end up paying,” CNBC reported this week. That was before yet another monthly jobs report showing solid growth in jobs and wages.
I always find this framing to be backward. A “labor shortage” is good news: It means it’s easier for unemployed people to find jobs, more appealing for people who quit the workforce out of frustration to get back in, and likelier that companies will decide they must pay higher wages to attract talent.
In theory, we could reach a point where upward wage pressure led to an inflationary spiral, with companies raising prices so they can afford to pay higher wages, and those higher prices eating up much of the wage increases. But we’re far from that point, with corporate profits still high as a share of the economy.
For now, the “labor shortage” is very good news for workers, and we should root for it to continue.
A labor shortage is great for workers
Annie Lowrey recently reported for The Atlantic from Iowa, where the “labor shortage” is considerably more acute than it is nationally.
She spoke with a co-owner of a pizzeria chain who has raised wages and started offering more vacation to attract workers. She spoke with the human resources director at a retirement community, who is hiring and training high-school students for jobs where she would have previously relied on college students.
These two stories reflect how, in a “labor shortage,” two key human capital problems in the economy start to fix themselves.
One problem is that not enough of the benefits of economic growth have been accruing to workers. If workers are scarce, wages have to go up, and that means workers get a larger share of the economic pie.
The other supposed problem is “skills mismatch,” where firms would like to hire but can’t find employees with the right skills. In an environment of rising wages, it suddenly becomes possible to match skills again.
Workers have a greater incentives to get new training, because they can expect a job with a good wage to result. And firms …read more
Source:: Business Insider