The Labor Shortage Myth

Lately, we’ve been absolutely inundated by the term “labor shortage”. There’s been warnings of jobs going unfilled in various service sectors, and the reporting on these stories have been circulated everywhere. Trucking is a good example of one being brought up now.

Industries and their lobbying groups, ALWAYS say they have a “labor shortage”. If you Google “Trucking Labor Shortage” and a specific year, there’s a 1 in 3 chance of finding similar “labor shortage: articles. The implication of a shortage are clear-Americans are lazy and entitled(A familiar and recycled trope). These industries make an investment. Not in new technology or capital. Not even in financial speculation. Instead, they fund think tanks and have financial arrangements with colleges that produce the data to further their claims. The claims are published in trade publications that serve as no more than propaganda for those industries. Business news outlets unquestionably parrot these talking points, and their sister networks (Think CNBC, NBC and MSNBC) usually pick up the story.

In reality, “labor shortages” are oftentimes a manufactured crisis based on cherry picked statistical data or pseudoscientific economic models. Why? To be used as a pretext for the government to subsidize the job training associated with their industry and relax regulatory standards. What does this accomplish? It increases a company or industry’s pool of available labor. Why is that a bad thing? Increasing the labor pool drives down wages and benefits in a race to the bottom. If 1 person is interested in a job, they hold all the power. If 100 people are interested in 1 job, the employer holds the power. If 1 person applies and will only work for $25/hr and full benefits they’re likely to get their wish. If 100 apply, the company will give the job to the person who will settle for $10/hr. (The only buffer against this power imbalance is through collective bargaining).

Not only will the company save money on wages and/or benefits, they will oftentimes be able to shift the burden of job training to the taxpayer in the form of subsidies and tax credits-creating a hopelessly complex system that is virtually impossible to dismantle. Corporations will also be able to be more demanding of their workers due to lax regulation, and the labor oversupply they artificially created acts as a deterrent for unionization as workers are pitted against one another for fear of losing their livelihoods.