"not enough workers" versus "not enough jobs"

Discussion in 'Economics & Trade' started by kazenatsu, May 23, 2019.

  1. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Conventionally in economics, there is often a debate about whether there is a "shortage of jobs" or a "shortage of workers". The question is whether there are "not enough" workers or whether there are actually "not enough" jobs.
    The debate typically assumes that, by definition, the situation must be one or the other.

    I'd like to suggest a new perspective for looking at this. I think there can be situations where there are both simultaneously "not enough" workers and "not enough" jobs, as paradoxical as that may sound.

    Employers have a tendency to want more access to a bigger pool of lower cost labor. Workers have a tendency to want more opportunities to a wider selection of employers at higher pay. So the two are, in some way, diametrically opposed.
    You might never have a situation where businesses both "have enough" workers and workers "have enough" jobs. That could in some ways be an unrealistic goal.

    But there is another big dimension to this that I think is ignored.
    In some economic situations those two metrics can become farther apart from each other than in other situations.
    What could cause this?

    I think the issue has to do with quality of demand from the consumer segment, not just amount of labor demanded by businesses in quantity.
    When consumers are willing to pay more money per unit price, a business can remain profitable.
    When consumers are willing to pay less money per unit price, a business may struggle with being able to cut expenses to remain profitable. That business can expand to sell to more customers, but only if that business can get access to more labor at a cheaper price. Thus the business becomes under tremendous pressure to hire more workers but only at a cheaper price. When they can't find those workers willing to work for lower wages, that is when they say there is a "shortage".

    It's not simply just a plain matter of unemployed people not willing to work at that price. It might be, for example, that due to the demand of labor, the pace of the work becomes very fast, and not all people feel they can do that job. Many jobs will often require training or educational qualifications. This can require the potential worker to have to invest a great deal of money, time, energy, effort, and risk to meet those qualifications, and that potential worker may decide that the offered wage levels do not justify the expense.
    (Of course the employer could provide the training for free, but in a situation where the employer needs to keep per unit labor expenses down to make a profit, that's probably not going to happen)

    And so that's where the dichotomy comes in. The employer will complain that they can't find enough workers. But what they really mean is they can't find enough workers at a certain price, and that employer is unwilling to train new workers.
    Or in some cases they're not able to find enough workers willing to work at a fast pace under difficult working conditions.

    What this ultimately comes back to is consumer demand. The potential consumers are there, but they'll only buy at a lower price. The business model therefore doesn't allow the business to raise wages, or improve working conditions, or provide the training or take the risk of hiring workers without prior experience, things that would allow them access to more workers.

    This is all perfectly natural in economics. A business complaining that it "can't find enough workers" would be a bit like me claiming I "can't find enough diamond rings", when those diamond rings have to meet my stringent specifications and be below a certain price. It's a bit absurd.

    In countries with high per capita GDP (and a strong consumer base), the economy is less likely to have this problem. "Labor shortages" don't really matter because consumers and employers can afford to pay higher prices.

    On the other hand, in impoverished Third World countries there's so much poverty and lack of jobs that no one in their right mind would try to claim their are "labor shortages". But in reality, if one applied the same standards that employers often use (when claiming labor shortages exist in First Word countries) then it could likewise be claimed Third World countries do have labor shortages. It just so happens that the price businesses can afford to pay more workers happens to be below the level at which a human being needs to survive.
    A business can nearly always increase sales if it is able to find a way to reduce expenses and sell things at a lower price.

    Getting back to the original point, when analyzing whether there are "too many" or "too few" workers, one needs to look at more than just the plain number of workers. It is the quality of those workers, and the price.
    If you're not able to see that then it will just seem like a paradox, and people won't be able to understand how both shortages of workers and shortages of jobs can simultaneously exist.

    In some cases the workers actually do exist, but employers just send lobbyists to the government to claim they can't find enough workers so they will be allowed to bring more workers in from other countries who are willing to work for less.
    In other cases, a large business may want to expand sales to a big consumer market in a foreign country, but may not be able to do that unless the business is able to reduce per unit costs. This requires hiring more workers at lower pay. Thus trying to compete in consumer markets with lower wage countries can create "shortages" of labor.

    All this has huge implications for labor and immigration policies, as well as economic policies. It could still be a terrible job market even as employers are complaining that they can't find enough workers. The one does not mean the other does not exist, as commonly thought.
     
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  2. DennisTate

    DennisTate Well-Known Member Past Donor

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    Wow!!!!!!!!!!!!!!!!!!!

    How do you think your theory would probably be affected by the implementation of something like:


    The Tate Plan for a Basic Minimum Income for all Canadians.
     
  3. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Let me state this a different way. The more elastic consumer demand, the more likely it is that the economy will get into a situation where there are both paradoxical shortages of labor and a poor job market existing at the same time.

    Consumer demand is likely to be more elastic if there exists lots of poor consumers rather than a smaller number of wealthier consumers.

    When you increase price and reduce quantity, it becomes much easier for businesses to supply the demand.

    Like drives like, and I believe in this case the type of consumers your economy has will drive what type of jobs the economy has. Many consumers shopping at dollar budget stores will create many lower paying a jobs. A small number of consumers buying expensive quality items will create a small number of high paying jobs.

    (This isn't just a baseless argument because wealth is not only based on labor but also on capital)
     
    Last edited: Jun 6, 2019
  4. Quadhole

    Quadhole Well-Known Member

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    This whole thing reads like RIGHT wing THINK TANK Mises U, Cato Institute, Koch Family Foundation Propaganda. Make a STORY out of NOTHING to confuse the Consumer. Really, it is the supply side econo created in the 1980s, plus the tax cuts on the rich from 90% down to 30% that has destroyed this country. Ship off the good paying jobs to Mexico, China, and you fullfill the Promise of the Xionist Greedy leaders. They now own and control it all, the FED, Think tanks, writers like yourself, the politicians...

    Go back to 1945 - 1985 regulations and tax base and it would all be fixed. Just that easy, and that is exactly what the FILTHY rich dont want. It isnt rocket science, but everyone tries to make it sound so... Thus the normal guy ignores, drinks a beer, and downgrades his life for the GREED of others.
     
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  5. Kode

    Kode Well-Known Member

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    Consumer demand:
    Wages have remained stagnant and have not kept up with productivity, so this puts a dampening influence on consumption. People don't make enough money to consume all that is produced. Add to that the current situation of consumer debt being higher than ever before and you have a big problem with consumer demand.
    https://www.federalreserve.gov/releases/g19/HIST/cc_hist_sa_levels.html
     
  6. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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    That is not nearly enough income - unless one is counting children in the hand-out. In fact, Finland has just come out of a two-year trial at about that level of guaranteed income. The results are inconclusive. Half the people (in the program) liked it, the other half found the sum insufficient. That first half exited the program having found a job that provides an even higher salary than that offered in the program.

    The Poverty Threshold starts at $24K a year for a family of four in the US. The government should thus provide that sum to allow the truly poor an opportunity to exit from poverty. But, the real results depends upon more than just finances, but also "mindset". (And perhaps the will to take courses that afford them the ability to find jobs at a higher income-level.)

    Still, whatever effort made cannot negate the fact that without National Healthcare and a Tertiary Education, the menace (of permanently living below the Poverty Threshold) remains. That is, life-span will remain stagnant - in fact it has just diminished by one year in the US. (Whereas it is stable in Europe - at 4 years more than the US.)

    Post-secondary Education becomes a sine-qua-non for a decent-living income in this Brave New Information Age of ours. And that too is necessarily free, gratis and for nothing if more of our workers are to attain a higher skill-set level.

    Today, in America, the cost of a Tertiary Level state-school education (associate of bachelor degrees) is on average $14K a year. That is way beyond the means of anyone living below the Poverty Threshold.

    So, yes, the Basic Minimum Plan is interesting but has to be implemented correctly. And the same must happen for Higher Skill-set Training as well ...[/QUOTE]
     
    Last edited: Jun 9, 2019
  7. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Well, it is harder for average wages to rise when you keep adding more people.

    I wouldn't say it puts a dampening influence on consumption, I'd say it changes the quality of that consumption.
     
    Last edited: Jun 9, 2019
  8. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    You're just as bad as DennisTate, trying to change the subject.

    "Without a Tertiary Education" applies to the individual, not necessarily to the entire society at large. Let's not forget about the fallacy of composition, something very commonly encountered in economics.

    DennisTate and LafayetteBis, it's very unfair to be bringing up big controversial subjects here, since we're not going to be debating them. That type of thing would derail the subject of this thread. Let's at least have a little focus, please.
     
    Last edited: Jun 9, 2019
  9. Kode

    Kode Well-Known Member

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    When was the last time the population decreased? It has ALWAYS increased.


    No, it's a dampening influence. All graphs of consumption fluctuate over time and decline during poor economic conditions.
     
  10. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    It increases more rapidly at some times than others.

    The type of phenomena I'm referring to here is on a much longer-term time scale. (more like on a generational scale, 20 to 50 years)
     
    Last edited: Jun 9, 2019
  11. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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  12. LafayetteBis

    LafayetteBis Well-Known Member Past Donor

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    In economics that time span is highly irrelevant. It is far too long.

    Why is America so archly "capitalist" in nature? Why has Europe become a Social Democracy?

    Historically America has refused most efforts to introduce Social Democracy in the country. For two hundred years "self-made men" have accumulated capital and were considered "ikons" of the capitalist system. And, what is the result? Hideous Net Worth (Wealth minus Debt) Disparity in the nation:
    [​IMG]

    And nobody really cares that the top 0.01% own as much of the Total Household Wealth as the bottom 90%.

    And this is the factual evidence of a country that is supposedly "fair and equitable". That dichotomy is unacceptable - especially when the evidence shows otherwise ...
     
  13. kazenatsu

    kazenatsu Well-Known Member Past Donor

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    Why always America versus Europe? Why not America versus Mexico? Or America versus somewhere in the Middle East that's not a small country with a lot of oil.
     

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