- For now, the coming “labor shortage” is good news for workers.
- We should root for it to continue.
- It’s undoubtedly a headache for some owners and managers. But it’s one they should, hopefully, be made to live with for a few years.
They say “labor shortage” like it’s a bad thing.
“America’s labor shortage is approaching epidemic proportions, and it could be employers who end up paying,” CNBC reported this week. That was before yet another monthly jobs report showing solid growth in jobs and wages.
I always find this framing to be backward. A “labor shortage” is good news: It means it’s easier for unemployed people to find jobs, more appealing for people who quit the workforce out of frustration to get back in, and likelier that companies will decide they must pay higher wages to attract talent.
In theory, we could reach a point where upward wage pressure led to an inflationary spiral, with companies raising prices so they can afford to pay higher wages, and those higher prices eating up much of the wage increases. But we’re far from that point, with corporate profits still high as a share of the economy.
For now, the “labor shortage” is very good news for workers, and we should root for it to continue.
The numbers: Americans quit their jobs in May at the fastest rate since 2001, showing that workers feel so good about the economy they are willing to leave one company for another.
The percentage of people in the private sector who left their jobs by choice rose to 2.7% from 2.5%, the government said Tuesday. The so-called quits rate among all workers edged up to 2.4% from 2.3%. Both hit the highest levels since 2001.
Most workers who leave jobs voluntarily end up getting better pay or benefits elsewhere. More people are willing to make the switch when the economy is booming.