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Home Publications Blogs Beat the Press The NYT Can't Find Anyone In Germany Who Is Not an Employer

The NYT Can't Find Anyone In Germany Who Is Not an Employer

Saturday, 05 February 2011 21:06

The NYT told readers that:

"While a jobless rate in single digits would be cause for celebration in many countries, in Germany it is the sign of a critical lack of workers."

Actually, for the vast majority of people in Germany a low unemployment rate is cause for celebration because most of them work for a living. A low unemployment rate both means that they are likely to be able to find work and that they will be in a position to get pay increases through time.

This 2-page article actually presents zero evidence for its claim that Germany is faced with a "critical lack of workers." It reports that:

"employers in many sectors of the German economy are facing labor shortages, under the dual pressures of an aging population and inflation-fighting measures that have kept wages low in comparison with its neighbors."

This is evidence of not very competent employers. If they need workers and can't get them, then the answer is to raise wages. People who run businesses should understand this logic. (It's not clear why "inflation-fighting measures" would keep a business from paying its workers the market wage.)

Some businesses will not be able to pass on higher wages in higher prices. This will squeeze profit margins and might force them out of business. This is the way a market economy works. Workers move from low productivity sectors to high productivity sectors. It is not clear why anyone would think of this as a crisis, although the employers who go out of business are probably not happy.

The article also goes on to complain about worker shortages due to low birth rates and limited immigration. If there are fewer workers this just means that the least productive jobs go unfilled. There will be fewer people working as store clerks in convenience stores, housekeepers in hotels, or as parking lot attendants. There is no obvious economic problem associated with workers moving into more productive occupations.

Comments (10)Add Comment
Neoliberal Clap-Trap
written by Benedict@Large, February 05, 2011 8:50
The idea here is to hold out Germany's relative austerity as a model for US employment growth. This of course is nonsense, as it fails to credit Germany's positive balance of trade as the reason the German government can operate in a non-expansionary mode without hurting its employment figures.

It works everywhere just like this ... except apparently at the New York Times.
written by izzatzo, February 05, 2011 9:52
From the NYT article, this quote:
And with the economy expanding, he added, it is more difficult to recruit “because of competitive job alternatives in other sectors.”

Exactly. This is why the economy is not allowed to expand in the USA under the Obama-Immelt Competitiveness Plan, because it could result in shortages and rising wages as employers are forced to compete for labor.

It's a mystery why the NYT doesn't report on the dramatic success of reduced demand policy in the USA that avoids the same shortages and inflation faced by Germany.

Maybe it has something to do with all those fearmongering consultants making predictions about Germany based on free market failure.

Somehow the market can't seem to clear at a higher wage ... because it's stuck in a shortage at lower wages that appear to be frozen by some mysterious force like structural unemployment and mismatched skills.

Come to the USA where makets clear because shortages are not allowed to occur in the first place.
written by anthrosciguy, February 05, 2011 11:33
Over the past decade I've heard variations of this "can't find workers" story over and over on radio and TV, as some employer complains that they've got jobs but no one wants to work at them. Why they don't accept the idea of the market setting wages and simply raise the wage until someone applies is extremely hypocritical, since these same people have no problem using the market as an excuse for firing people, moving jobs out of the country or into another state, etc.
Is This a Dream?
written by JoblessinJersey, February 06, 2011 7:00
I can hardly believe what I am reading.

You deny the "right" of employers to exist; if they can't find enough workers willing to accept what they pay, you say they must go out of business.

You say it's good for workers to leave low paying jobs for higher paying jobs.

You don't think that outsourcing and low-wage immigrant labor (legal or illegal) should be giving American businesses higher profits while causing unemployment and lowered living standards for American workers?

You are a revolutionary! Now if only more would join the revolution, we could go back to having an economy that functioned well for most Americans, not just the lucky few!

written by Robert, February 06, 2011 10:36
Most American liberals understand Dr. Baker's points in this post perfectly well when thinking about Germany. What they need is for a single extra neuron to fire so they can draw the obvious implication for American policy: REDUCE IMMIGRATION. Importing an enormous underclass has lowered wages and our standard of living.
No economic problem?
written by Bill H, February 06, 2011 11:15
There will be fewer people working as store clerks in convenience stores, housekeepers in hotels, or as parking lot attendants. There is no obvious economic problem associated with workers moving into more productive occupations.

I would suggest that is an “economic problem” for convenience stores, hotels, and parking lots, which is what the New York Times article is about.
Re: ...
written by Paul, February 06, 2011 11:30

You make no sense, as if Germany were something to emulated. Germany is as much a problem in the doomed European system as Ireland is. While it may appear healthy, no economy can export their way to prosperity forever. As economic imbalances build up it becomes apparent that debts accumulated hit unrealistic levels and economies stall.

It is almost time for German banks to hit Zombie bank mode from investing so much in the peripheral Euro economies (assuming the euro survives). Soon after that, Chinese banks will turn into Zombies due to their (mal)investment. Their lost decades are still to come. Germany and China are following the Japan Inc. playbook and I don't see how their long fate can be any different than Japan's lost decade(s).
written by stalinetta, February 06, 2011 1:01
A quick glance on several German statistical portals confirmed my hunch that the NYT article was rather superficial. As your analysis pertains to the NYT article, it is in consequence also superficial.
Personally I don't think that a rate of 7,6% according to the latest AP figures is that great, when I grew up rates of 5% were considered a worry.
The situation is a lot more complicated, as a lot of German unemployed are hidden through enrolment in various government measures, which means they don't get counted as unemployed.
Equally the situation of older qualified workers with experience is not addressed in these figures - there are plenty of qualified engineers, amongst others from the former GDR, who cannot find employment. There seems to be a pronounced bias towards younger workers.
The situation is further compounded and blurred by the opening of the labour market within the EU; with a change in regulations imminent, this has actually resulted in the IAB (the research centre of the federal employment agency) calling for the introduction of a minimum wage before May 2011. Link only in German, sorry.
written by Woody, February 06, 2011 10:09
@anthrosciguy. It wasn't so long ago in the small Texas town where I grew up when all my mother's friends were bemoaning, I kid you not, that you just couldn't find good help anymore -- in this case, help for home care for the aged. Naively I suggested to the women that there were plenty such workers employed at the rest homes, and if they wanted home care attendants they could hire these experienced workers away at higher rates of pay.

The horror! The black and brown workers in the rest homes were being paid the minimum wage, and THAT IS ALL THEY DESERVED! I mean, after all, if you gave them raises, they would be making as much as white people. No no no no no.

Now my own mother is receiving home care from an agency that charges us $14 an hour. Her non-white attendant receives $7.25 an hour, or the current minimum wage.
written by marc sobel, February 07, 2011 11:53
On the positive side, the NYTimes moved its mention of low wages up from its normal place in the anti penultimate paragraph to the second one.

After all if the reason that Bankster bonuses can't be cut is because of the difficulty of finding Banksters, then surely the same logic applies to nursing home staff

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.