[SiVal]

I'm not sure what you think the "market value" is that employers won't pay. I'd guess it's something reasonable like the minimum you'd have to pay to get all the skilled workers you need. Raise your pay offer slowly, gradually attracting more people, until you have the people you need, and that amount of pay is the market rate.

But what if that rate of pay is more than the new employees are worth to the company, so hiring them would not benefit the company at all? Then it's not a market rate, because market rate isn't just the outer edge of what one side finds acceptable. If both sides don't find the rate acceptable, there's no market rate.

If a "greedy" employer refuses to pay what it takes to hire all the people they need, while their enlightened competitor does pay what it takes to get the necessary additional labor, one of those employers will have higher profits than the other, and the one with lower profits will be pressured by their investors to become more like the other.

That has been going on for centuries, and the result is a "labor shortage" in some areas, meaning companies (that always face competition from other companies) can't get all the labor they want at existing rates and wouldn't benefit from additional labor at higher rates. The problem may well be gradually driving the company out of business, but still, raising their wages would just drive them out of business faster.

[fiesycal]

What I'm saying is if you can't find employees at the current wage you're paying and increasing the wage means the employee is no longer worth it than you have the right amount of employees and there is no shortage. Companies aren't entitled to employees or entitled to be in business. Just because you can't afford something doesn't mean there is a shortage. But companies who are in this situation complain that there is a shortage when really they just can't afford the employees. All I meant was that I was annoyed at the constant talk of 'shortages'.

[SiVal]

I understand your position, and I don't think your definition of "shortage" here is unreasonable. But shortage is a relative term--"short" relative to what?--and by some measures, there are real shortages in these situations. If we use corn instead of labor, for example, we might have a bad harvest one year, and the price of corn goes so high that it's not worth buying for certain products. The market still clamors for those products but isn't willing to pay what they would have to pay given the new price of corn. Your definition, if I understand it, would say that there is no shortage of corn; it's just more expensive than you can pay.

I'd still call it a shortage of corn, because I'm thinking of it relative to previous years, future expectations, the causes of the price change, etc. Rent control or earthquakes cause what many would consider a housing shortage, gov't price controls or bad weather create commodity shortages, and sufficiently generous welfare programs (you have to pay a lot more to make it worth working at all) or explosive increases in customer demand (not enough time for labor to learn new skills) can create labor shortages.

From the perspective of an employer, no longer being able to hire people at a wage that makes them worth hiring can be seen as a labor shortage, while from the perspective of a worker, no longer being able to get a job at a wage worth working for can be seen as a jobs shortage, but I agree with you that, especially if the changes are just the long-term evolution of the economy, there comes a point where it no longer makes sense to refer to something that will never come back as a "shortage".

[fiesycal]

Agreed the corn would be a shortage. But do you think there is a current shortage in STEM fields? A lot of people don't. http://spectrum.ieee.org/at-work/education/the-stem-crisis-i...

[SiVal]

Thanks for that link. VERY interesting. My impression, subject to change, is that there is a STEM shortage at the bottom (technicians) that rapidly diminishes as you head toward the top (PhDs), where there is a significant surplus.

I think we are short technicians, because so many people who would have been happy with two years of technical training and a basic, working class wage after graduation are instead herded into 4-yr bachelor's programs, where they end up dropping out with a few semesters of Nonsense Studies classes and a mountain of debt, qualifying them only for welfare or Walmart. By the time they realize they would have been much better off with a skilled technician job and a working class lifestyle, it's too late. I think if we changed our attitude toward skilled tradespeople, we would almost all be better off. Since we used to do this, and the Germans still do, it's an artificial shortage in my opinion.

On the other hand, I think we're overloaded with PhDs, because so many want the prestige, but the marginal value to an employer of additional specialized education in a specialty other than the job itself falls off so rapidly. Someone who did years of PhD work on turkey feathers is not much more valuable to a drug company than he was when he got his bachelors in biology. For many, the prestige of the PhD will have to be its own reward.

[fiesycal]

Yea I'd'd agree that trades jobs/technicians are probably experiencing a slight shortage due to the reasons you said. In Australia trades people can easily clear 100k.