The Economist can be a little hit and miss and a lot condescending, but last week it cracked something that I’ve thought about on an individual, micro level a lot before but never on a large scale.
In a provocatively titled piece, ‘Why “labour shortages” don’t really exist’, the Free Exchange columnist went on an absolute tear.
Inject that into my veins.
The basic premise is that shortage occupations are just occupations for which the prevailing wage on offer is not high enough for positions to be filled.
It makes perfect sense, and the piece goes into some detail about the ‘shortage occupation’ lists many countries create that allow certain workers to be brought in easily or given special visas.
It’s got me thinking about doing some analysis about these lists. Mainly, what happens to the prevailing wages in jobs that appear on them? Does a job being on the shortage list mean long-term wages are suppressed? If so, doesn’t that make them counterproductive?
A purely anecdotal example was the way hospitality businesses struggled to recruit workers after the COVID pandemic. In the UK, the shortage is far less acute now, but back in 2022-23, it meant chefs and experienced front-of-house staff could (and did) demand wage hikes. These wage hikes attracted people into the industry, and the shortages became less pronounced.
I have no data to back this up. It is based purely on chats with people I know who work in the industry. But I will do some digging into both the hospitality industry and others (looking at you, social care) to see if jobs, once on the shortage list, ever come off it. As well as this, what impact being put on the list has on long-term pay and conditions in a so-called ‘shortage occupation’?
So, well done to The Economist. It got me thinking again, and I must say, pieces like this make me look past its shortcomings to cough up north of £200 a year to subscribe. Bravo. This time, anyway.
Macro Aggressions 
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