There Is No Worker Shortage, There Is A Wage Shortage

I’m sick of hearing about this so-called worker shortage. Shut up already! I know plenty of people willing and able to work, who are dying for jobs. I’m gonna sprinkle some data and anecdotes that will bring a sense of realism to the data.

For starters, it’s easier to get a new job when you are currently employed. I know two people, both non-entry-level engineers from top ranking universities, who each applied to hundreds, yes hundreds, of companies over many months before getting a single offer.

Now, imagine applying, without being an engineer from a top college. Without current employment. Without a six month buffer of wages. Homelessness suddenly seems like a strong possibility.

Or, you see strange occurrences like my friend Jimbo, whose name I’m intentionally obscuring. He’s an international award-winning product owner, and he is applying for both minimum wage roles and those that pay $400,000 at the VP level. Jimbo lost his job and needs to eat.

When I lived in San Francisco, a story went viral about a math teacher with a master’s degree becoming homeless because she couldn’t find a place to live in the city.

Or take someone like me, who worked at Google for two years, then hired a firm whose sole task was to help me get a job. Over the course of a year, they failed. Meanwhile, I became underemployed at a restaurant, because I needed money. Then, the restaurant closed due to COVID.

But wait, it gets even sillier. When the pandemic hit, the feds gave the following benefits: $600 per week if you made less than $300/week from your job; if you made $300+, the feds gave you zero. Presumably, the feds gave an amount that seemed like the bare minimum to survive. I have yet to hear a single person claim that it made them rich.

This is obviously stupid for a number of reasons. For example, many of my restaurant colleagues working overtime made $500 a week while being gainfully employed. This means that despite working overtime, they made less money than what the feds gave when they weren’t employed at all.

They were incentivized to not work. In fact, one of them told me he explained this to the restaurant, and they threatened to report him to the authorities if he didn’t come back to work.

Yet, I frequently hear people telling others to “just get a job.” But, why would anyone go back to working overtime to get paid less than the feds gave? It’s not fun busting your ass and barely making any money.

The classic “just get a job” advice falls horribly flat. Getting a job is hard. On top of that, getting a job that pays well is even harder. “Ok boomer” is as relevant now as ever.

And, as is usually the case, the boomers are unaware as to why they are out to lunch.

Hopefully, the data can convince them.

 
The Data Behind Wages

Some people like arguments from authority. Others scream “trust the science.” So, to placate those of you in my audience, here are some linked charts along with their implications:

1. ​Wage Stagnation In Nine Charts: This article has a bunch of charts explaining inequality. For you social justice warriors, we can skip the causes for now; another article may cover that. One symptom is that relative to the total population, less people are eating increasing parts of the pie, even though the pie is growing! A bigger pie doesn’t mean more for everyone. For some people, it means less.
2. ​The Productivity–Pay Gap: The productivity-pay gap is another way of saying, “We made more widgets, but the financial gains from widget sales did not go to the workers.”
3. ​Labor Costs Relative To Sticker Prices: Shelf prices go up. The increase in the price on the shelf doesn’t go to the people who make the thing on the shelf. If you combine this with the Productivity-Pay Gap, you see that workers make more items AND companies increase the prices of those items, without paying workers accordingly.
4. ​Basic inflation calculator: Inflation reduces the value of money. This incentivizes deceptive behavior on the part of vendors who are now faced with tough choices:
   1. Do nothing, and see a dip in margins due to the decrease in value.
   2. Increase prices to preserve margins, but risk angering customers.
   3. Or dilute the product, change the size, use cheaper ingredients, and engage in all sorts of other cost-cutting behavior. This option often involves leaving prices the same, but changing what happens behind the scenes. For example, I love Breyers chocolate ice cream. When I was a boy, a good deal on ice cream was 2 half-gallon containers for six bucks. It still is. THE CATCH:Breyers doesn’t sell half-gallon tubs anymore; they’ve reduced the quantity to a quart and half.

I made sure to include data that spans many political administrations. This helps us get away from shortsighted fallacies blindly accusing “the left” or “the right.” This is not a political issue; it’s a human issue.

And calling it an issue is dumb! It’s a massive, multivariate problem. But, it’s not nearly as complex as it needs to be.

I’m puzzled why so many people miss this. People are willing to work. They want to work. But they also need to live. Most companies that complain about labor shortages have an accompanying wage shortage. Plenty of people would happily work if they were compensated fairly. People cite “markets at work” as panaceas.

Markets are cudgels. Socrates hated them. Aristotle hated them. I hate them. Think of a market like a record of transactions. We can look at these transaction records to discern fairness. Example: if Bob and Jim paid 5 bucks, then 5 bucks is good for me.

Markets are dynamic; transactions occur over time, and change. But, here’s where markets are massively flawed — they don’t provide any context as to why a transaction occurred; they don’t account for coercion and suffering. Humans frequently take shitty work opportunities while armchair rationalists chuckle, “I can’t believe these idiots are willing to work for so little!”

They frame the problem incorrectly, commonly comparing a crappy job to a better one, when they should be comparing a crappy job to not making rent, which suddenly makes bullshit jobs feel enticing.

But Drew, don’t just whine, give us a better idea! Well, there are many, but here are a few that feel obvious.

• Spectrum-based governance: our laws generally run on binaries. Guilty or innocent, for example. But, life isn’t that simple. Often things exist in a range. Remember the example above where the Feds give you $600 a week if you make <$300, otherwise nothing? What I’m suggesting is more like the following — if I make $200 a week, the feds give me $699. If I make $400, they give me $499. The math isn’t hard, and doesn’t need to be super complex to be obviously better than the model we have now.
• Bake inflation into wage legislation. Again, painfully obvious. We have many economists who calculate inflation. If money literally changes value, we can at least mirror that with wages, say, once every quarter.

Please let me know if I’m missing something here.

For the record, I’m aware that implementation isn’t easy. I’m just tired of lazy arguments and we need more dialogue. I don’t think the Founding Fathers put a bug in the Constitution. But, that document (and our government) uses checks and balances and latency as a means of protecting the system.

The system is slow for a reason. But that same slowness has caused our legislation to lag far behind our technology. For the record, I’m not advocating for increased bureaucratic control here, but that we need to do something different.

Drew
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