If Employers Can't Find Workers With the Right Skills Why Don't They Try Raising Wages?

June 06, 2014

John Ydstie concluded a mostly good piece giving a preview of the May employment report being released today by saying that one reason employment is not growing more rapidly is due to a skills mismatch. According to this story, employers would be hiring more workers if they could find workers who have the skills they need.

While employers and many economists often make this claim the evidence doesn’t seem to support this position. If employers were actually having difficulty finding workers with the necessary skills we should expect to see occupations or industries in which wages are rising rapidly. That is how employers attract workers for positions they have trouble filling.

In fact, there are no major sectors of the economy in which wages are rising rapidly. This means that either there is no serious problem of skills mismatch or that employers are completely clueless about basic economics. Given the ineptitude we saw in the financial sector during the run-up of the housing bubble, the clueless explanation cannot be dismissed out of hand, but it is more likely that there really is no issue of a skills mismatch.


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