There’s no labor shortage - there’s a cheap labor shortage, ... no shortage of high-tech engineers here in America ...

The Great Labor Shortage Lie

I’ve said many times before that the best place for information is the business press. The material is written for people who need cold, hard information in order to make money, rather than for the professional political pontificators who are aroused by Beltway spin. The only challenge when reading the business press is to get through the corporate PR. But if you have the patience, you will find out what’s really going on and who is lying to you. This week’s piece in Businessweek on the job market is a good example.

The article begins with a sensationalist headline that only Bill Gates and Tom Friedman could love: “Where Are All The Workers? Companies worldwide are suddenly scrambling to manage a labor crunch.” This is the public rationale from corporate executives (especially in the high-tech industries) for massive job outsourcing and exploitation of the H-1B program: We can’t find the workers we need. We are expected, for instance, to ignore academic studies published recently by the National Academy of Sciences showing that, in fact, there is no shortage of high-tech engineers here in America. We are expected to ignore the data showing that companies are using the H-1B program to drive down domestic workers’ wages by forcing them into competition with imported workers from impoverished countries. We are expected, in short, to believe that layoffs, wage stagnation and pension/health care cutbacks have absolutely nothing to do with corporate executives trying to line their own pockets, and everything to do with workers themselves - and we are expected to believe all this at the very same time new government data shows that the share of national income going to wages is at a record low, and the share going to corporate profits is at a record high.

Yet a few paragraphs into the Businessweek article, the real story starts to trickle out:

“A global labor crunch, already being felt by some employers, appears to have intensified in recent months. That’s in spite of widely publicized layoffs, including Citigroup’s plans to shed as many as 15,000 staffers… Corporations are determined to keep labor costs under control, so they’re reaching deeper into their bag of tricks…Some are lowering their standards for new hires or moving operations to virgin territories other outsourcers haven’t discovered… Economists, of course, will tell you there’s no such thing as a labor shortage. From a worker’s viewpoint, many so-called shortages could quickly be solved if employers were to offer more money. And worldwide, millions of people still can’t find jobs. The strongest evidence that there’s no general shortage today is that overall worker pay has barely outpaced inflation.”

There, finally, is the real story - the story that corporate executives and staid political pundits don’t want anyone to talk about: The Great Labor Shortage Lie (related, of course, to the Great Education Myth - the one I’ve debunked before that claims all of working America’s problems are due to a bad education system). There’s no labor shortage - there’s a cheap labor shortage, because, as the free market fundamentalists all love to say, supply and demand rules everything. And if that’s the case - then there’s no way you can have a real labor supply shortage at the very same time wages (the monetized manifestation of employer demand for labor) continue to stagnate.
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... Put another way, the Big Money interests want to preserve a tool to rig the labor market so as to make sure its natural supply-and-demand dynamics are never allowed to work to raise wages here at home. And politicians like McCain whose campaigns are funded by these same Big Money interests will do anything to help them. ...