In the labor market, employers’ demand for workers is booming, but the number of workers who want jobs is growing at a sluggish pace. This is evident in economic statistics. In addition, it is easy to find anecdotes about “labor shortages,” with businesses reporting that they want to hire workers but are unable to find enough people who are willing to work.
Skeptics of labor shortages often argue that businesses should simply raise wages if they can’t find enough workers. Complaints about how hard it is to find workers are perennial, and normally I’m sympathetic to that argument. But in this instance it must contend with the fact that wages grew at a very rapid pace — an 8.7 percent annual rate — between March and April.
Employers were raising wages — and it wasn’t enough.
In the debate about "labor shortages," many argue businesses :should just pay workers more." That argument has to contend w/ the fact that wages grew at an *8.7%* annual rate between March & April. Employers *were* paying workers more! And it still seems not to have been enough. pic.twitter.com/hzpY5WY93x
— Michael R. Strain (@MichaelRStrain) May 21, 2021