November 25, 2016
In spite of all the stories about robots taking all the jobs, we still can’t find any evidence in the productivity data. Productivity has averaged just 0.6 percent annually over the last six years, the slowest growth on record.
But now the Wall Street Journal alerts us to a new problem. It tells us that small businesses can’t find enough workers in low-skilled occupations. If that sounds to you like the direct opposite of the job-killing robots story, then you’re way ahead of many of the pundits who get paid big bucks to say smart things about the economy.
If the Wall Street Journal piece is right, then the jobs-killing robots story is wrong. Our economy is continuing to create large numbers of jobs for people with relatively few skills.
Of course, the labor shortage story is also more than a bit misleading. Capitalism prescribes a simple remedy for addressing labor shortages. It’s called higher wages. The piece does assure us that higher wages is not the problem, but some arithmetic would be helpful here.
In one case it mentions a roofer who is now paying most of his workers over $20 an hour. While this is a better wage than most workers receive, roofing is a physically demanding and dangerous job. If the minimum wage had kept pace with productivity growth since the late 1960s (as it had in the prior three decades), it would be almost $19 an hour today, so crossing $20 an hour hardly seems like especially high pay in 2016. (It’s equal to 0.008 percent of what Goldman Sachs pays its speakers.)
The other area where we are told there are shortages is farmworkers. Here the pay is $11 an hour, but we assured that this is not the problem, the problem is that workers who are U.S. citizens want to be paid in cash so they don’t have to pay taxes.
It’s certainly possible that many of the business owners who are complaining about a labor shortage would not be able to stay in business if they offered higher wages. But this is the way a market economy works. Businesses that can’t afford to pay the prevailing wage go out of business and their workers go into areas where their labor can be more productively employed. This process is the reason that half of the country is no longer working in agriculture.
In short, the story of the job-killing robots seems like a myth that helps to employ highly educated people, while the problem of the labor shortage is one of business owners who don’t understand how a market economy works.
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