Looming Worker Shortage Could Lift Wages

New, qualified workers aren’t keeping pace with the retirement rate of Baby Boomers, which could give workers more market power and businesses an incentive to hire, train and keep their valued employees.

New, qualified workers aren’t keeping pace with the retirement rate of Baby Boomers, which could give workers more market power and businesses an incentive to hire, train and keep their valued employees.

While the GOP health care bill and Russian election meddling dominate the headlines, the issue that a majority of Americans from all political persuasions care about – jobs – is relegated to background noise.

The jawboning President Trump engaged in when first elected has proven illusory. Carrier is laying off workers. Ford is shifting production of one of its small cars from Mexico to China. Major brick-and-mortar retailers are reeling and shedding employment.

Despite pulling out of the Paris Climate Accord, the Trump administration isn’t making any significant progress on putting unemployed coal miners back to work in the mines. Facing bankruptcy, US-based solar panel manufacturers are filing anti-dumping petitions against Chinese and other foreign producers.

The economic stimulus that a large infrastructure investment package could make is on a political side rail, waiting for other issues such as a federal budget, tax legislation and a raise in the debt ceiling to move. States like Oregon are struggling to pass their own transportation financing packages that could generate jobs and address economy-choking congestion.

Despite all that, many American employers, especially in the manufacturing sector, say they can’t find enough qualified workers. So what gives?

Robert J. Samuelson, in his weekly column published in The Washington Post, offers some views on what is happening, and what could happen.

“For months, I’ve planned to write a column on the future of the US labor market. Stacked on my desk are reports on ‘the gig economy,’ ‘independent workers,’ ‘contingent workers,’ ‘freelancers’ and the like. All signify a new, less secure labor market. Workers won’t have long-lasting career jobs, as the old post-World War II employment model promised. Now it’s survival of the fittest. Workers who can adapt to constant change will thrive. As for everyone else, tough luck.

‘I never wrote that column.”

Samuelson believes circumstances may be conspiring to swing a degree of market power from companies to workers. It has nothing to do with economic policy or technology disruption. It has everything to do with demographics. He says America isn’t replacing retiring Baby Boomers fast enough or with people as qualified.

“If companies compete fiercely for scarce employees, workers would benefit,” Samuelson speculates. “Companies would increase wages and fringe benefits or risk losing their best employees to firms with more generous compensation packages.” That, in turn, could reverse the trend of worker wages becoming a smaller share of the overall economy’s gross domestic product, which fell from 63 to 57 percent from 2002 to 2012, and has risen only slightly to 58 percent since then.

Samuelson argues that improved worker training and higher pay should be “informed by common sense and market realities, not government regulations.” He also says industries vary, so there may not be a uniform solution to filling all employee vacancies and worker pocketbooks. “The goal now,” Samuelson claims, “is to convert the worker shortage into a better-paid, better-trained and more productive labor force.”

The growing worker shortage America faces is at once a serious problem and a golden opportunity. An enlightened business response, Samuelson concludes, might be equal parts human decency and economic necessity.

Absorbing wage and benefit increases and shrinking profits may be a hard pill for corporations to swallow, especially as they consider foreign sources of labor and replacing workers with machines. But at some point, business leaders need to recognize that consumer spending is a significant part of US economy and one of the best reflections of a healthy economy.