Let the Market Fix Labor Shortages
All too often, U.S. politicians and policy makers look at employment through a fogged lens.
Try higher wages—and maybe a bigger sign.
Photographer: Spencer Platt/Getty Images North AmericaThe job market is finally showing some convincing signs of recovery, with the quickest pace of hiring in 10 months recorded in June. Yet that’s done little to alleviate recent concerns about whether the U.S. has enough workers. The term “labor shortage” was Googled more in May than at any other point in the search engine’s history going back to 2004. Headline after headline has cited wage rises, bonuses and other perks that seem to make it a job hunter’s market.
The concept sounds simple — American companies must be struggling to find the employees they need. Yet some labor economists would argue that the picture isn’t complete. Employers are unable to find the workers they want at the wages they’re willing to pay. Failing to appreciate this distinction could lead to policy errors down the road. It’s just one of many popular misconceptions that distort the lens through which U.S. politicians and policy makers view the labor market, with negative consequences for both workers and employers.