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.