In his column at the Wall Street Journal James Freeman takes note of the much-reported shortage of workers:
How are U.S. employers going to fill all of their open positions? That’s the question raised again by the National Federation of Independent Business monthly jobs report, due out later today.
“Reports of employment gains remain strong among small businesses. Owners reported adding a net 0.19 workers per firm on average, virtually unchanged from May and a good number,” says NFIB Chief Economist William Dunkelberg.
That’s certainly good news, but the news could be much better if employers could find more job seekers. “Sixty-three percent reported hiring or trying to hire (up 5 points), but 55 percent (87 percent of those hiring or trying to hire) reported few or no qualified applicants for the positions they were trying to fill,” adds Mr. Dunkelberg.
NFIB finds particularly high demand for workers in home building, “where labor shortages are clearly restricting the construction of new homes and apartments as demand remains strong. The limited supply is resulting in strong house price appreciation.”
Beyond construction, it seems that things are tough all over for small businesses in need of new workers—both skilled and unskilled. “And the hiring strength is in industries that pay well,” notes Mr. Dunkelberg. Along with construction, this category includes manufacturing and financial services.
Let me put my observations in bullet form:
- In some cases there actually aren’t enough workers.
- When we place caps on the number of people who are trained, as is the case, for example, with physicians, it tends to create shortages which otherwise would not exist.
- Some of the shortages are actually attempts to keep wages low. Employers are entitled to keep wages low. Americans are entitled to resist importing workers to keep wages low.
- In some cases the shortage is an over-simplification. Employers aren’t just looking for workers with specific skills. They’re looking for workers with specific skills who don’t do drugs, have no criminal convictions, who haven’t posted nasty things on Facebook.
- In some cases the shortage is nonsense. They’re looking for workers with specific skills, etc. who are under thirty and have fifteen years of experience. I recall seeing ads in 1981 for IBM PC programmers with five years of experience. That such mythical creatures did not exist never occurred to prospective employers.
- In some cases the shortage is a self-inflicted wound. Junior engineers become senior engineers. When you won’t pay junior engineers a living wage, eventually there are no senior engineers. We’ve been reducing vocational training at the high school level for decades. We shouldn’t be surprised that there are no prospective workers with the skills that might be learned in such training let alone workers with those skills and ten years of experience.
And then there are the policies which make it more comfortable to be out of the labor force than in it. Good policy is hard which is why there’s a chronic shortage of it.