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November 12, 2018 | Is There a Shortage of Skilled Labor? Point, Counterpoint

Mike 'Mish' Shedlock

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.
Companies complain about a shortage of labor. Is the complaint real or imaginary?

Shortage of Labor Claims

Record Job Openings

In the above link I discussed fictitious measures.

Case for Fictitious Numbers

Posting job openings on the internet is cheap. This does not mean companies are actually looking to hire.

  • Some companies want to investigate resumes just see what’s out there.
  • Some companies prefer lower-pay foreign workers via the H1B Visa process. They post jobs with more qualifications than they really need to make a case no domestic workers applied.
  • For low-pay high-turnover jobs, companies keep many jobs open because they expect quits. There were 3.6 million quits in September.

I made the claim “If there really was a shortage of 7 million workers, wages would be soaring.”

Reader Comments

  • The Realist commented: “No matter how you try to explain it away, there is a shortage of skilled workers. It may be overstated, statistically speaking, but there is still a shortage.”
  • Pater Tenebrarum at the Acting Man blog replied “It should be noted though that there is a skill mismatch problem it is a remnant of the malinvestment orgy attending the previous cyclical bubble iteration.”

Who is Right

All of us, in different ways.

The Realist is correct. There is a shortage, but an overstated one.

If there really was a shortage of 7 million workers, I stand by my claim that wages would be soaring.

Pater Tenebrarum made the most critical point. Let me rephrase it.

There’s Always a Perceived Shortage at the Top

Think back to 2006. Supposedly there was a shortage of Florida condos.

Alleged “Proof” was easy to find. People were lining up around the corner to enter lotteries for the right to buy a condo.

More recently, in Australia, speculative demand from China made it look like there was a shortage of houses down under. That bubble recently died and has a long way to go before it’s finished.

This time, rather than creating another enormous housing bubble, the Fed revived the junk bond market. Zombie corporations make up 15% of S&P corporations.

Cheap money finances many speculative endeavors.

Is there a shortage of skilled fracking workers? Probably, but how many of those drillers survive only because they can roll over debt?

Is there a shortage of truck drivers? Again, that’s likely. But on top of boomer demographics (millennials don’t want to drive trucks), we have an over-expansion of all kinds of franchises thanks to cheap credit.

As soon as the bubbles pop, there will not be any labor shortages, real or imaginary.

Mike “Mish” Shedlock

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November 12th, 2018

Posted In: Mish Talk

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