NPR Exposes Structural Unemployment: Managers Who Don't Have a Clue

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Thursday, 18 August 2011 16:31

National Public Radio reporters need to do a bit more homework before they do pieces on the economy. Today they had a piece on a Precision Iron Works, a specialty steel company. The piece told listeners that Precision relies on highly skilled workers. It also told us that it has a hard time finding new workers.

"finding workers like him [the experienced worker interviewed in the piece] is difficult. For months, the company has been advertising several job openings without much success. The company says there's not much interest in gritty, physically demanding work."

But the main point of the story is to tell listeners how government regulations are impeding the growth of business. The piece continues:

"And staffing is just one of many challenges facing Precision Iron Works as it tries to double its revenues from about $10 million to $20 million a year.

A state law that's been on the books for more than a half-century requires Washington companies to pay their workers a prevailing wage — or an hourly rate set by the government — on state-funded projects.

But as Precision's Leighton explains, companies in states like Idaho and Utah, which don't have prevailing wage laws, can pay their workers less.

'It puts us at such a disadvantage,' he says. 'There could be a project right out on our backdoor out here that I can't get because a company in Utah gets such a competitive advantage by not having to pay these rates.'"

Okay, now let's just review what we have been told. Precision Iron Works "has been advertising several job openings without much success." This would imply that the wage it is offering is too low. Higher wages attract more workers [econ 101]. If Precision Iron Works can't get workers, then it needs to offer higher wages.

But then the piece tells us that the real problem is that an outdated Washington state law requires Precision Iron to pay higher wages than its competitors. Okay, but the piece just told us that the market is telling Precision Iron that it has to pay higher wages than it is already paying.

This means that it is not the law that is requiring Precision Iron to pay higher wages, it is the market. If the piece's assertion that Precision Iron can't attract workers is true, then it's claim that the government regulation is hurting business is false. 

[Thanks to Jonathan Lundell.]