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Home Publications Blogs Beat the Press When It Comes to Labor Shortages, WSJ Tells Readers Not to Believe What You Can See With Your Own Two Eyes

When It Comes to Labor Shortages, WSJ Tells Readers Not to Believe What You Can See With Your Own Two Eyes

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Friday, 06 May 2011 05:20

The Wall Street Journal ran a piece about how manufacturers are finding it increasingly difficult to find the skilled workers that they need. The problem is that their current workforce is nearing retirement while relatively few younger workers have the necessary skills. The employers featured in the article even talk about how they have been raising wages to get and keep workers.

Of course the wages discussed in the article are not the sort that would sound high to most WSJ readers. According to the article, one of the manufacturers starts workers at full-time jobs paying between $25,000 and $50,000 a year. This is probably a somewhat lower wage than WSJ readers envision for their children.

More importantly, the charts accompanying the article do not show manufacturing wages rising rapidly. In fact, the chart actually shows that average nominal compensation in manufacturing has been flat or even declining slightly. This indicates that real hourly compensation has been falling over the last few years. This means that if the employers discussed in this article really are raising pay, then they are the exceptions. Most employers in the manufacturing sector are cutting pay in real terms, indicating that there is an excess supply of labor, not a shortage.

Comments (2)Add Comment
In With the Old, Out With the New
written by izzatzo, May 06, 2011 8:37
The problem is that their current workforce is nearing retirement while relatively few younger workers have the necessary skills.


Perhaps, but the learning curve from entry point to full experience is much shorter in today's high tech workplace.

Many of the 'skills' in question are gained from general experience on computers and the internet and if anything, the younger generation can come up to speed far faster than older workers in these areas. Much of the hiring is more about reputation and attitude rather than particular skills.

Use of generalized skills means training new workers is risky because they can easily leave and use them with other employers, at least when not in a recession.

It's the opposite of structural unemployment and a shortage of specialized skills. The low wages reflect a combination of rising use of generalized skills and low sales demand at the same time.
...
written by skeptonomist, May 06, 2011 9:44
The NFIB survey of small businesses:

http://www.nfib.com/Portals/0/PDF/sbet/sbet201104.pdf

indicates that except for a slight recent uptick, concern about "labor quality" is lower now than ever. Since corporate profits are higher than they have been in 95 years, big companies have plenty of money to train workers if necessary.

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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.

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