Labor shortage means two things

How many of you buy President Obama’s argument that we need to relax immigration law so that we can keep foreign workers from leaving the U.S. with their PhDs? I’m just throwing this out there because I view the proposed policy as a means to slow down the growth of other nations while further driving down the wage rate.

If I’m an American born and bred PhD in engineering looking for a job, I don’t want to compete against a foreigner who graduated from a U.S. school because it means I have to bid down my wages in order to get a job.

We have to remember that when the word shortage is used in economics, it means two very related things. First, it could mean we have a literal physical shortage of workers. We can’t find any qualified help.

The other thing it can mean is there is a shortage of workers willing to accept the lower wages we want to pay them. Could this be the real shortage the Administration and high-tech industries are talking about?

Definitely an issue worth exploring. Any how, remember: Don’t drink the kool-aid. Every politician has some Jim Jones in him …

About Alton Drew

Alton Drew brings a straight forward and insightful brand of political market intelligence. Alton Drew graduated from the Florida State University with a Bachelor of Science in economics and political science (1984); a Master of Public Administration (1993); and a Juris Doctor (1999). You can also follow Alton Drew on Twitter @altondrew.
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One Response to Labor shortage means two things

  1. Ken Ciszewski says:

    US electrical engineers have been complaining about this problem since at least the 1990s. The H-1B visa program that allows a certain number of engineers to stay and work in this country is a big part of the problem. We are talking at the BS, MS and PhD levels. The “lack of skilled engineers” argument was being bandied about even in the 1990s.

    I was watching a TV interview recently with a university professor who was talking about the larger question of business complaining about skill sets, and why they don’t want to hire those who have been unemployed for a long period of time. The professor pointed out that he doesn’t think the skill sets required have changed that much in the last three or four years, so he thinks something else is at work here.

    Having spent a lot of time looking at job postings online for engineers and other professions, I can tell you that the skill sets listed there don’t seem to have changed much in the last three or four years. There are some new, more narrowly defined skill sets (like SAP developers and project managers, for instance), and some listings seem to want applicants to have talents beyond what could be expected of any human (very long lists of skills and job duties).

    As the professor pointed out, business was able to be extremely picky during the Great Recession, and so they continue to be so, even though their expectations are not realistic. As for doing things to drive down wage rates, well, that’s par for the course, although I don’t think we should necessarily tolerate that by allowing the hiring of foreigners to drive down wages.

    Part of the argument I heard was that foreigners would like to stay and start businesses, but often don’t or can’t due to immigration status issues. The question becomes, are Americans as entrepreneurial as foreigners? Some say “no”, which is the argument for letting the foreigners stay. The economy can reap the rewards of the new businesses the foreigners start.

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