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by dtwest
1862 days ago
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No it works both ways. When someone says there is a labor shortage it doesn't mean it's labor's fault, it just means that labor has the power to set prices. If companies want to hire they need to raise wages. If a company can't afford to raise wages, they will need to operate with less workers or shut down operations. There are winners and losers from this dynamic so I'm sure different sides will have a narrative. But the labor shortage isn't a spin on reality, it's an observation that it is difficult to hire in current conditions. |
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Labor is subject to search costs that create a wedge between supply and demand. It may take me a year to fill a position.
In addition to search costs, there are also onboarding costs. It may cost me 300K to train a dev and then after a year they leave.
So I may not be able to fill a spot even if I am willing to pay a price that someone is willing to accept, as the costs of finding that person and the risk of not being able to keep them may be far too high.
And that is true even if there is a large pool of people willing to work for me at the price I am willing to pay.
So the labor market is a lot more complex than the market for oil, and there are these extra costs that may balloon from time to time and cause the market to freeze up and not clear for many positions. For this reason, both employers and workers need some stability in wages and expectations sufficient to make long term plans and commitments, and when volatility destroys that stability, you get into scenarios where workers and employers can no longer find each other.
It is the flipside of a recession, where people say "there aren't enough jobs". Both the worker saying "there aren't enough jobs" in a downturn and the employer saying "there aren't enough workers" are right because the economist drawing simple supply and demand curves is omitting the complications that exist in labor markets which do not exist in commodities markets.