Despite years of historically high unemployment, press articles and broadcast segments about America’s alleged shortage of skilled labor are now a commonplace. Still, it was nice to see that CNBC Senior Editor Mark Koba managed to find something new under the sun on this well-worn theme – although he didn’t give it nearly enough attention.
Koba reported on a new survey by a national employment placement company that asked businesses why they thought they were having such a hard time filling positions. Somewhat predictably, 52 percent this year said applicants simply weren’t available. More predictably, 20 percent of employers said they can’t find workers with the right experience or skills.
A lot less predictably, 13 percent cited “not enough pay offered” – presumably, by them. As Koba reminded readers, many job market analysts – like me – have long observed that the notion of a labor shortage is difficult at best to square with the reality of falling real wages. But I’ve never seen a labor market survey ask business owners if they themselves thought their wages offerings are adequate.
And if you think about it a little, that 13 percent figure almost has to be a major understatement. After all, even granted anonymity, how many respondents are going to tell a pollster that the labor shortage they’re being asked about is actually their own fault?
I’m not denying that skills shortages have popped up in certain industries. In fact, an even broader problem may have emerged. The U.S. labor market could be getting sharply bifurcated between workers whose skills are frenetically sought after and those whose skills impress few. Lee Adler of the Wall Street Examiner had a great post this morning discussing this development.
At the same time, economic theory has long taught us that even these kinds of skills-based structural labor shortages are temporary problems at worst. That’s because employers will eventually respond either by raising wages even higher, until they meet their staffing needs, or by figuring out some technological or organizational fix. When neither remedy realistically is available, the textbooks say, those business models are probably, by definition, no longer viable.
So the next time you see an article or segment about U.S. labor shortages, don’t simply remember that they fly in the face of economic theory — not to mention common sense. Ask yourself how much of this labor shortage stems from companies that are simply too cheap to solve a problem they seem eager to complain about.