A U.S. labor Shortage? Here are 10 Problems With That.
Today I saw a series of news articles suggesting that, for the first time, there are more job openings than there are eligible workers to fill them. Let’s ignore the word “eligible” for a moment (I’ll come back to this) and focus on the fact that they said there was a labor shortage. They spoke of the issues this creates and how companies have such a hard time trying to fill those jobs. I had a hard time believing this, so I did some research.
Companies are having a hard time trying to fill their job openings, but I suspect this challenge has more to do with unreal expectations than a lack of willingness from the masses. Let’s remember that we live in a world where over half of millennials believe they will be a millionaire in the coming years. Most Americans seem to have lost their sense of reality.
I hit the job boards and looked around for a while. I would love to call out a few of the businesses specifically, but my point in writing this is not to attack these companies or their unrealistic expectations. That’s merely a part of a much bigger picture. I want to shed some light on the numerous problems we currently face. This is a multifaceted problem, and pointing the finger in a knee-jerk reaction isn’t going to help us find any real answers. Here are ten things that I think we should be examining.
Problem #1 – Boomer Retirement
As you may have already figured out, we are now in what many call a “Baby Boomer Retirement Crisis.” Baby Boomers, born between 1946 and 1964, are heading into retirement in droves at a little over 10,000 people a day. With them comes years of experience and a decent work ethic that employers need. However, Boomers were expensive and economic factors have provided financial relief for employers with their retirement. This relief is not something employers want to give up. As a result, many will seek to exploit the ignorant and desperate.
Problem #2 – Inflation
Inflation has just hit another record high. Unfortunately, the Federal Reserve believes that a steady and predictable increase in inflation is an important sign of a healthy economy. They claim that 2% is an ideal rate of increase for strong, sustainable growth. I fundamentally disagree.
It is my opinion that the Philips Curve is wrong. A history book can definitely prove this. Inflation is theft. It takes from savers, cheats lenders, increases taxes, and encourages stupid investments. Worst yet… it erodes your wages. Want some proof?
- In 1913, you could buy a suit and a gun for an ounce of gold. Today you can buy a suit and a gun for an ounce of gold.
- In 1913, an ounce of gold cost $20.67 – today, it costs $1257.00.
It is worse because people are working more and can afford less. To see this for what it is, consider that our great-grandparents had one person working, mom stayed home, they had a fairly big family, a decent house, and so on. Compare this with the idea that each generation since has a marked DECREASE in lifestyle, smaller family, and smaller house to the point that many are now forced to rent – even with the inclusion of the spouse (and sometimes the kids) taking up full-time work.
Do yourself a favor and imagine what comes next.
Problem #3 – Record Tax Revenue
We now live in a world where this is somehow celebrated. Headlines seen during the research for this article include things like “Oklahoma beats cash collection record,” “Spike in sales tax revenue creates surplus in Wichita Falls budget,” “Washington taxpayers will be providing a record $45 billion in revenues to state lawmakers for 2017-19” and of course, “Feds Collect Record Individual Income Taxes Through May“. I didn’t see a single article about the outcry. Truth be known, most people don’t understand why this is a problem. And to think we just celebrated Independence Day, the celebration of people declaring to their tyrannical government that raising our taxes and taking our arms was simply unacceptable. Thanks to government-run education, most just don’t get it.
Regardless, individual income taxes are on the rise. It’s not just that. ALL taxes are on the rise. In my books, I’ve written about this; you are being taxed to death. This equates to less money for the individual. Remember that inflation has already increased prices; the government is now figuring out ways to take more money from their people. The result is simple… but let me guess… people just need more dollars, right?
Problem #4 – Dollar Devaluation
What do you think would happen if your dollar was devalued? It seems crazy that it would even be an option, but it is. Deliberate currency devaluations happen a lot more than you might think. The U.S. dollar, for instance, is being devalued all the time.
I’ve mentioned this numerous times before, but back in 2012, Forbes reported that the Federal Reserve Open Market Committee (FOMC) made it official and publicly announced its goal to devalue the dollar by 33% over the next 20 years at a rate of about 2% each year. Fun, right?
But what does this all mean for you? Well, understand that dollar devaluations can lead to more inflation – which is just higher prices on the things you already buy. If your wages at work remain the same, you are just working the same amount of time for less buying power.
That just gets the ball rolling, though. If you have an adjustable-rate mortgage, your payments can rise above inflation as money becomes more expensive to borrow. It can cause more of your money to go toward your ARM as its interest rates outpace any pay raises you see. It can also make it more expensive to obtain any new credit if interest rates continually rise, which is just what I can come up with off the top of my head. It’s a very big issue, but it just results in less buying power. This is a HUGE problem when you can’t get more dollars.
(Side Note: Imagine you have $10k. Now erode that $10K by 33% over 20 years. Now consider your retirement. Then add in increasing prices. Then you’ll start seeing what I am seeing.)
Problem #5 – Wages Are Not Increasing
Let’s get real for a second. Most Americans receive their economic growth through the wages they get at work, not through investment income. This presents an incredibly big problem for most Americans. This is especially true when you consider that inflation has eroded savings to the point that investments are more of a pipe dream than a reality.
According to the Brookings Institute, their data shows that the median earnings for prime-age (25-64) working men have DECLINED from 1970 to 2010, FALLING by 4 percent after adjusting for inflation. That’s insanity, but I suspect that it’s simple math that explains this. Remember that inflation’s goal is 2% each year, dollar devaluation’s goal is 2% each, taxes increase like crazy each year… and so on. Unfortunately, Harvard notes that since the early 1970s, the hourly inflation-adjusted wages received by the typical worker have grown barely 0.2% each year. Is this odd? Notice how one is simply not keeping up with the other? I don’t want to get off the point too much here but ask yourself, who is getting the difference?
I digress! Many people are quick to blame this or that. It’s ridiculous because no one seems to want to be honest with themselves. The truth is that it’s a mixture of things, much of which I have already listed and most of which you won’t hear during school or on your nightly news. So when employers are reluctant to raise wages significantly because they fear they will not be able to cut them in the future, all that most people understand is that the few pennies they got for their raise just don’t cover the increase in their bills.
Problem #6 – Credit / Debt Crisis
I’ve written about this before, and I probably don’t have to tell you, but we are living off of credit, and most Americans are in a crazy amount of debt—credit cards, student loans, mortgages, cars, etc. Not many really own anything anymore. It’s getting worse and will continue to get worse until it crushes us.
Problem #7 – Education
As a result of all of this, people assume that their job, their employer, or their skill set is to blame. Of course, it doesn’t help that parents, schools, and television perpetuate the notion that a degree is required over a trade. Regardless, people decide they want to get into a higher-paying field and decide to go to college. They are sold on the idea that a high-priced education answers their prayers, so they take out expensive loans for an expensive education. On a side note, most people don’t quite understand that the banks and government are using this as a source of revenue. Of course, most don’t care because they think this will solve their problems, but it won’t.
Anyway, they suffer through and get their degree. Then they re-enter the job market and discover something horrible; their college degree isn’t worth that much to most employers. In many cases, it’s the minimum credential required to get even the most basic, entry-level job in the field they were seeking. Unfortunately, entry-level jobs don’t usually provide a good income, so they must head back to college to get an even better degree. When they achieve their advanced degree, they head back out only to find that many employers don’t want to provide a higher wage for that advanced education.
This is not good. So what’s the answer? Well, employers want you to miraculously land a job somewhere else willing to train you and hopefully make you angry enough to leave that company after ten years and desperate enough to find them and take the pay cut. It’s quite stupid, but this expectation leaves many unemployed and a rather large industry gap. Employers are then left to seek alternatives.
Problem #8 – Technology
Computers, Artificial Intelligence, robots… have you noticed your world-changing yet? Employers sure have, and many companies are figuring out ways to ensure they don’t have to pay a human. You can’t blame them, though. Humans complain, steal, get injured, want money, want more money, and want benefits, and if someone looks at them wrong or says something about how nice they look, they sue. Employees are the number one expense in any business, and they were all encouraged to have these unreal expectations by the consumerism these companies rely on. Notice the horrible circle we find ourselves in?
In many ways, we have done this to ourselves. Our lack of knowledge, our ridiculous belief that being smart wasn’t cool, our never-ending complaints about having to do anything, and our unreasonable “get something for nothing” mentality has forced the hand of industry. Now, most of us are going to be freelancers in the future. Doing what? Who knows? If only the education system would have taught people what minimum wage really is and how raising it has never worked (among many other things, of course). Yes… a complex problem indeed.
Problem #9 – Employee’s Unreal Expectations
So most millennials think they are going to be millionaires soon. They also expect to achieve this without really working or maybe by selling essential oils or creating a video game startup that will revolutionize the world, and all because their parents didn’t have it in them to explain the truth about the big, bad world. You’re not going to be paid crazy high wages for flipping burgers. You will not land that awesome job that gives you everything just because you have a degree in Gender Studies. And honestly, an employer will try very hard to ensure you’re not given a chance to sue them because you can’t handle a situation. You might have to do some work. Sometimes that work is going to equate to labor. You will probably have more than one job during your career, and many of them will suck until we figure this out.
Unfortunately, it’s not just millennials that I’m talking to here. It’s everyone. Everyone is contributing to this problem, and the unwillingness to see the world for what it is really is just making it worse. Party politics, the blame game, etc. How dumb are we that we encourage the sinking of the boat that we are all on just because we don’t like the captain? How dumb are we that we advocate systems of government known to kill millions just because we are not getting our way?
When I look at it this way, I see that selfishness is the root of the problem. It’s all about me, me, and me. Thanks to guys like Ed Bernays, we are selfish, greedy, and ignorant people willing to destroy everything in a tantrum. Shame on us!
Problem #10 – Employer’s Unreal Expectations
Unfortunately, employers are going to be the ones to bite this bullet. You will either fail, expedite the technological side of things and force the hand of the coming economic upheaval or simply pay up. It is that simple.
Why? People will not buy your stuff if they can’t afford it. Companies will not buy your stuff if their customers cannot afford to buy theirs. This isn’t rocket science. The lower and middle classes need to have substantial revenues to keep this beast moving. But the government… which has started this process, makes sure that whatever wage increase businesses have provided to their workers is gobbled up as soon as it’s given. You are the only ones capable of taming that beast without war. I would get on top of that if I were you.
Furthermore, you will not likely get a worker with over ten years of experience for entry-level pay. You might be able to land an educated worker without experience for that pay, though. You need to make compromises because your boomer is gone, and you didn’t think ahead. Train these people. Help them.
As for the experienced workers you have, you’re probably going to lose them, too, if you do not provide a substantial pay increase. It’s not because they want to leave; they can’t afford to stay. Your unwillingness to see their situation for what it is will ensure that you watch them walk out of your door with their heads hanging low. Understand that their house is over-valued, their taxes are on the rise; their buying power is gone, their bills are on the rise, their savings are gone, their debt is increasing, and their hopes of retirement slip further away every day. If you continue to line your pockets as you continue to complain about their attitude, you are solidifying the result.
The Truth of the Labor Shortage
There is not a labor shortage. Calling it a “labor shortage” implies there are either not enough workers or workers unwilling to work. Well, it’s not an unwillingness to work. According to a report from Juliet B. Schor, an author and professor of sociology at Boston College, Americans today work more than peasants did in medieval times.
Of course, the truth is that many people are willing to work. Gig and freelance jobs are rising at an unreal rate. According to Forbes, the workforce share of gig work will comprise about half of the population by 2020. People are forced to work for themselves. That’s not a labor shortage; that’s a labor shift.
So now, let’s examine the word “eligible” that we initially ignored. In the context of their articles, they mean “suitable,”… and they are right. There are plenty of unsuitable workers. Of course, there are plenty of unsuitable employers as well. We are seeing a lack of workers who are unable or unwilling to subject themselves to the expectations or low wages of employers and a bunch of employers that are unable or unwilling to subject themselves to the expectations or demands of potential employees. The part nobody seems willing to write about is that both parties are simply trying to figure out how to navigate the fact that the money they need is becoming worthless and that they can’t afford to buy the things they need. This should be a clue.
Something has to give, and it will whether we like it or not. We are watching a fundamental change in the way the world does business. Where this ends up is inevitable. Just look at any other time in history when such changes have occurred. What we need to do right now is figure out a way to ensure that this transition isn’t as painful as the previous shifts.
I don’t know exactly what that answer looks like, but I can promise you it starts with all of us truly understanding who is robbing us of our wealth. We need to understand the source before we can address the flood’s damage. I’ll tell you this, if you read through this article a few times, you might be able to find a common denominator. Either way, I wouldn’t buy into the labor shortage narrative. I know plenty of highly skilled and eager people looking for a meaningful job who cannot take the lower pay simply because their bills are higher than the income potential of that job. I am also aware of plenty of businesses being slightly less than honest about their expectations and willingness to pay.
It’s time we start getting real with ourselves. Is there more to this problem? Of course, there is, but this is already getting a little long. Unfortunately, we need to get everyone on the same page here and start with a general overview. I could surely delve into the details of this Keynesian economic nightmare we find ourselves in, but what good would this do? My goal here is to help people see the problem. We need to motivate people to seek solutions, which will only be done when they see how they are being hurt.