Workers are happier than they’ve been for a long time.
“For the first time since data began to be collected in 2000, there are more job openings than there are unemployed workers.” By the Economist’s telling, “Fully 5.8m more Americans are in work than in December of 2015.”
Workers may be happy, but not businesses.
Big and small, business is nattering about labor shortages. “Ninety percent of small businesses who are hiring or trying to hire workers report that there are few or no qualified applicants, according to the National Federation of Independent Business.”
The shortage is reaching a “critical point”, read one recent CNBC headline. A lack of applicants for blue-collar jobs such as trucking and construction has received particular scrutiny, as have states like Iowa where the unemployment rate is especially low (it is just 2.7% in the Hawkeye state).
But portraying widespread labour shortages as an economic problem is misguided. While they may be bad for firms, they are a boon for society—so long as inflation remains contained. In fact, a labour market in which firms must compete for workers, rather than workers competing for jobs should help resolve three of America’s biggest economic problems.
* Inadequate wage growth.
* “Faster productivity growth, which has been disappointing in America—and in other rich countries—since the financial crisis. If less profitable firms have to fold because they cannot pay enough to attract workers, their labour and capital can be put to better use.”
* Wage gains accrued “to the poorest workers. Full-time employees at the 10th percentile of the income distribution are earning almost 4% more than a year ago.”