On Wages

I have been hearing for years that wages for most Americans aren't budging, despite an ever-growing GDP, because people simply don't have the skills to demand higher wages. That has always struck me as a cop-out answer put forth by people whose wages have moved just fine, generally as an excuse to do "nothing" about the problem.

Today, I read something interesting in the Urbanophile (an excellent blog if you've never read it).

A taste:

Employers are having trouble finding workers. A big problem is pay, but not many employers plan to add higher wage jobs.

The survey asked how firms dealt with positions they couldn’t fill. Here were the results:

• 55% left unfilled until a candidate was found
• 18% assigned duties internally to other workers
• 11% hired an underqualified candidate
• 16% other

Notice what’s missing from this list: raising the wage on offer in order to attract qualified applicants. Maybe some of that is included in “other” but it’s clearly a small amount.

Generally speaking, if you're in the market to buy a "thing," (whether that "thing" is a cheeseburger or a day's worth of work) and you can't find a willing seller, you offer more. This is not a complicated theory, yet it seems to be lost on our intrepid "job creators" these days.

Another quote:

The real question that needs to be asked is why these firms aren’t offering a market clearing wage.

If they can’t afford to pay the going rate, then these firms don’t have a skills gap problem, they have a business model problem. The problem is with the companies, not the workforce. 

I would agree. Again, I can't help but note the irony of businesses simultaneously demanding that the government shrink in size (presumably in order to shrink their tax obligations) AND train their workers for them. Remember, these are the same types that like to talk about how government is the "problem" and not the "solution." I suppose if the problem is an untrained workforce, it must be the government's fault.

Here is the money line:

It’s not government’s job to underwrite a highly skilled but poorly paid workforce.

Happy Taco Tuesday!