Is There a Shortage of Skilled Labor? Point, Counterpoint

Companies complain about a shortage of labor. Is the complaint real or imaginary?

Shortage of Labor Claims

Record Job Openings

I discussed record job openings in Job Openings Decline by 284,000 But Still Near Record Highs

In the above link I discussed fictitious measures.

Case for Fictitious Numbers

Posting job openings on the internet is cheap. This does not mean companies are actually looking to hire.

  • Some companies want to investigate resumes just see what's out there.
  • Some companies prefer lower-pay foreign workers via the H1B Visa process. They post jobs with more qualifications than they really need to make a case no domestic workers applied.
  • For low-pay high-turnover jobs, companies keep many jobs open because they expect quits. There were 3.6 million quits in September.

I made the claim "If there really was a shortage of 7 million workers, wages would be soaring."

Reader Comments

  • The Realist commented: "No matter how you try to explain it away, there is a shortage of skilled workers. It may be overstated, statistically speaking, but there is still a shortage."
  • Pater Tenebrarum at the Acting Man blog replied "It should be noted though that there is a skill mismatch problem it is a remnant of the malinvestment orgy attending the previous cyclical bubble iteration."

Who is Right

All of us, in different ways.

The Realist is correct. There is a shortage, but an overstated one.

If there really was a shortage of 7 million workers, I stand by my claim that wages would be soaring.

Pater Tenebrarum made the most critical point. Let me rephrase it.

There's Always a Perceived Shortage at the Top

Think back to 2006. Supposedly there was a shortage of Florida condos.

Alleged "Proof" was easy to find. People were lining up around the corner to enter lotteries for the right to buy a condo.

More recently, in Australia, speculative demand from China made it look like there was a shortage of houses down under. That bubble recently died and has a long way to go before it's finished.

This time, rather than creating another enormous housing bubble, the Fed revived the junk bond market. Zombie corporations make up 15% of S&P corporations.

Cheap money finances many speculative endeavors.

Is there a shortage of skilled fracking workers? Probably, but how many of those drillers survive only because they can roll over debt?

Is there a shortage of truck drivers? Again, that's likely. But on top of boomer demographics (millennials don't want to drive trucks), we have an over-expansion of all kinds of franchises thanks to cheap credit.

As soon as the bubbles pop, there will not be any labor shortages, real or imaginary.

Also see Rise of the Zombie Corporations: Percentage Keeps Increasing, BIS Explains Why.

Mike "Mish" Shedlock

Comments (40)
No. 1-20
jivefive99
jivefive99

The model for the last 40 years has been that those with lots of money to invest (millions for Pizza Hut franchises comes to mind) did so either with zero interest money or money from some source, and then the dollars rolled in. But this model relied on paying workers nothing to ensure millionaires stayed millionaires. Working for dismal wages and no benefits is so ingrained in the American "gig" economy that workers dont even expect anything better. Offer REAL jobs with REAL wages and benefits, likely to the detriment of the millionaire owners (poor babies), and we'll see how many "available" workers come out of the woodwork.

Kinuachdrach
Kinuachdrach

That is a strange graph. From 2002 to 2015, the number of hires exceeded the number of job openings by 10-30%, continuously. That creates questions about definitions and accuracy of data. And that maybe suggests the reversal to an excess of openings over hires post-2015 should be taken with a grain of salt.

Eighthman
Eighthman

Many jobs at utility companies and colleges are filled only by crony hiring. The ads for jobs are simply a requirement and fake. In applying, this was admitted to me.

JL1
JL1

There is NO shortage of workers. The issue is just that companies try to pay low wages and complain about shortage of Labor instead of increasing wages until they find all the workers they need.

The illegal immigration of tens of millions illegal immigrants has been used to lower wages in many jobs and this illegal immigration has to be stopped and those jobs have to be given to African-Americans and Hispanic-Americans and all Americans and companies need to pay them good wages. All current illegal immigrants need to be sent back home.

The market needs to allowed to work so companies increase the wages since too high mandatory minimum wages like 15 dollars an hour lead to less productive workers not finding employment at all. However federal minimum wage should be set at about 9-10 dollars an hour.

There might be some shortages of skilled labor and this is due to mal-investment like mal-education where students study worthless degrees and rack up huge student debts and then find no work in their field of study and end up making lattes at Starbucks with a 100k-200k student debt destroying any chances for them to start a family or save money to start a business etc.

This mal-education should be stopped by making student debts dischargeable in bankruptcy and removing all federal guarantees from student debt. This would cause all students studying usable degrees where they can find and most likely find a well paid job in the field they studied still getting student loans but those studying worthless degrees NOT getting student loans so colleges and universities have to remove places from those degree programs and charge less for those degrees and increase amount of students in those degrees where students find well paid jobs after getting their degree.

However companies like Facebook and Google and Microsoft have been abusing H1B program for years to get workers they can pay less than they would have to pay to get comparably educated Americans to do those jobs.

There should be a minimum wage of 200,000 dollars for H1B's so companies could NOT use H1B's to find lower wage workers and they would have to employ Americans and pay well-educated Americans in those fields more and only those H1B's who are genuinely brilliant should be allowed to USA.

Unless a H1B is getting paid 200k then he is not really brilliant and the companies are just using him to pay less in wages and thereby increase the profit margin of the company and increase the stock price and executive compensation for the company.

The saddest example of H1b abuse was Disney forcing their IT department to train low wage Indian H1b workers that would replace most of American IT workers at Disney. Train Indian H1B workers brought in to replace you to get a few more months where you keep your job before being fired by greedy Disney.

Disney should have been boycotted by all Americans for that blatant H1B abuse.

JL1
JL1

From Financial Times today:

1. "US student loan debt is ballooning at a dangerous rate. Total debt topped $1.5tn this year and studies suggest that nearly 40 per cent of borrowers are likely to default on their loans by 2023."

1500 billion is quite a lot of student debt.

2. " One recent survey found that 43 per cent of college grads are underemployed. "

Study worthless degrees and you will have trouble finding work in the field you studied.

3. "There are plenty of MBAs who can read a balance sheet but have neither operational nor soft skills. Four-year business administration graduates are settling for low wage gigs, while $20-an-hour manufacturing jobs go unfilled because employers can’t find anyone with vocational training. "

There should be more vocational training together with companies.

4. " Walmart Academy has trained thousands of workers, including in basic skills they should have learnt in high schools."

So many high schools are worthless as well.

5. "For some middle-level positions in 2015, two-thirds of employers were asking for a college degree, even though only 16 per cent of people working successfully in similar positions had them."

So many applicants for jobs that some companies are trying to cut through the avalanche of applications by credentialism aka requiring degrees for jobs where one does not really require a degree.

Read the rest: