Is There a Shortage of Skilled Labor? Point, Counterpoint
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