September 20, 2017
It’s good to see the NYT has diverse voices on economic issues. In his “Economic Scene” column on the economy’s supposed labor shortage, Porter argued that “raising barriers to imports — inviting retaliation from trading partners — is exactly the wrong approach.” Three days ago, the NYT had an editorial arguing strongly for increased protectionism in the form of stronger and longer copyright and patent protections. These forms of protection not only raise prices and slow growth, but they redistribute income upward, taking money from most of the population and giving it to those who stand to gain from patent and copyright protection.
It is worth noting that the assertion that the economy is now or will in the near future be suffering from a labor shortage seems dubious. Employment rates for prime-age men at all levels of educational attainment are still below their 2000 rate. That seems hard to reconcile with the view that we have a labor shortage. In the same vein, the percentage of unemployment due to people voluntarily quitting their jobs is still relatively low, suggesting that workers do not feel very secure about their labor market prospects. And, workers are still far from recovering their share of output, with the profit share still well above the pre-recession level.
For these reasons, we should be skeptical about the existence of a labor shortage. It is also worth noting that a labor shortage is 180 degrees at odds with the often asserted problem that the robots will take all the jobs.
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