Shortage of Labor Claims
- The Federal Reserve Bank of Atlanta says Some Industries Encountering Worker Shortages
- Reuters talks of a World Without Labor ‘Slack’
- MarketWatch says Screaming Labor Shortage Forcing Firms to Get Creative to Fill Record Job Openings
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.”
- 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.
Mike “Mish” Shedlock
This article was originally published on Mish Talk.