A Shortage of Labor

A Shortage of Labor - A Shortage of Labor The official...

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A Shortage of Labor The official unemployment rate in America, currently at 4.6%, is relatively low when compared with unemployment rates of previous months. This means that the number of people searching for jobs in the U.S. has been declining, and employers have been faced with a shortage of labor. There is now a smaller pool of labor, so the hiring firms have a smaller selection of applicants, implying that there is a necessity for them to be more competitive in acquiring workers. The labor shortage problem also applies to the rest of the world, as reported in “Where are All the Workers?” by Peter Coy and Jack Ewing. In economics, a shortage of labor usually means that workers are gaining more bargaining power, and they’ll be able to push for higher wages and more benefits, at least in the United States. It doesn’t work this way for the rest of the world, though. The thing is, there is no shortage of bodies to do such things as manual labor. The trouble is the inability of companies to find workers skilled enough and willing to do that work for low wages. Companies just aren’t willing to pay their employees more, no matter how much they need people. Corporate greed is manifesting itself in the massive layoffs of workers in the past months. Despite their complaints of shortages, businesses are firing their employees. This seems almost counter-intuitive. By doing this, it is obvious that these businesses are only attempting to maximize their margin of profit, and they are unwilling to pay needed employees the money they deserve. Also, in keeping down wages and even firing workers, they keep the wages of the working class down, and as we know, the laborers are also consumers. If the consumers have less disposable income, they are less inclined to buy goods and services, which means that the firms end up withholding money from themselves. This is based on the idea that everyone’s income is someone else’s expenditure, and vice versa. Less money is circulating, so the firms
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end up with even less profit, and they, of course, will cut back even further on the cost of labor. It’s a vicious cycle that will continue itself as long as corporations refuse to increase the wages of their workers. For a while, firms were able to get cheaper labor by outsourcing, or moving their business to developing countries, where workers were willing to work for less. In countries such as India and China, there was already a sufficient supply of sufficiently-educated people. Because of this, employers stopped making it necessary to train their workers, probably because they were anticipating a never-ending supply of labor. They are now clearly suffering the consequences. U.S. businesses are also having difficulties that they shouldn’t be having.
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This note was uploaded on 04/10/2008 for the course ECON 104 taught by Professor Dolenc during the Fall '08 term at UMass (Amherst).

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A Shortage of Labor - A Shortage of Labor The official...

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