If there’s an oh-so-contrarian thesis that really grates right now, it’s the one that businesses just can’t seem to find workers, despite the fact that millions of people are out of work.
The “can’t find workers” thing has become something of a chestnut in the American press in this recession, so maybe it will help to look how strange it seems when applied to another country.
Dean Baker pointed to a good example the other day, dinging The New York Times for an article that says Germany is in trouble because unemployment hit its lowest point in eighteen years—so low that its businesses can’t find workers.
For most of those eighteen years we’ve heard that Germany was the Sick Man of Europe, that its high unemployment rate showed the perils of a generous welfare state and strict labor laws. We must let the market work! Now that the unemployment rate is down a couple of points, we’re told that that the country doesn’t have enough labor. We must not let the market work! (unless the Germans let in a bunch of cheap foreign labor).
As Baker points out, a low unemployment rate is good for workers. It’s the market at work: More demand for labor pushes up workers’ pay. That makes owners nervous: Might cut into their profit margins a bit. And I’m not going to tell you that’s not a story. It is: Owners Are Worried Tight Labor Markets Will Squeeze Profits. But even with that frame you’d want to talk to a worker or two.
The Times doesn’t bother here. Baker, that wag, puts it this way:
The NYT Can’t Find Anyone In Germany Who Is Not an Employer
Indeed, there are none quoted here. Here’s every source in the piece: nursing-home boss, the consulting firm McKinsey (notoriously labor friendly), Germany’s leading high-tech business organization, the head of another trade organization, the Federal Statistics Office, the chief regional economist for the European Bank for Reconstruction and Development, and the chief operating officer of Accor Germany. The only source quoted who might be partial to workers is the director of the Labor Market Institute at the Federal Labor office, but even he’s a technocrat manager with a payroll (And for all I know about Germany’s government, he could be another Elaine Chao)
That’s a long way of saying Baker’s right: There’s not a single worker, much less a union official, quoted here.
And the NYT writes this line without backing it up:
While a jobless rate in single digits would be cause for celebration in many countries, in Germany it is the sign of a critical lack of workers.
How and why is it a sign of a critical lack of workers? We’re not told.
Indeed, nowhere in the story does the Times bother to tell readers what the actual German unemployment rate is: 7.4 percent. Why is 7.4 percent unemployment a looming disaster for German employers? Recall that before the recession started, U.S. unemployment was 4.6 percent. Even that wasn’t enough to raise the median wage.
Why does a 7.4 percent jobless rate means a super-tight labor market in Germany, while here in the U.S. it’s evidence of a real unemployment problem. Does Germany count differently somehow? Are there structural differences? The Times doesn’t say.
The Times’s lede anecdote, oddly enough, leads us to infer that Germany may have a wages issue:
Dana Russow longs for the day when she will not have to worry about staffing problems.
“It’s not easy finding qualified staff to take care of the elderly,” said Ms. Russow, 41, director of Residenz Zehlendorf, a privately owned nursing home in southwest Berlin. “This profession has such a low status in Germany.”
The low pay does not help, either: Staff members earn the minimum wage of 8.50 euros, or $11.60, an hour.
But even then the paper doesn’t make the obvious connection between a tighter labor market and increasing pay.
It does latch on to the idea that Germany’s woes will be ameliorated by an influx of cheap labor from Eastern Europe. That tide—happily for the German worker—may not be overwhelming. Why not?
“Wages and salaries are not high enough in the hospitality sector to be the only reason for leaving the home country, especially if you also put the higher cost of living in Germany into the equation,” (Accor Germany COO Peter) Verhoeven said.
I’ll give the last word on this Times story to Baker:
This is evidence of not very competent employers. If they need workers and can’t get them, then the answer is to raise wages. People who run businesses should understand this logic.
Some businesses will not be able to pass on higher wages in higher prices. This will squeeze profit margins and might force them out of business. This is the way a market economy works. Workers move from low productivity sectors to high productivity sectors. It is not clear why anyone would think of this as a crisis, although the employers who go out of business are probably not happy.
But as I said up top, it’s not as if this Handelskammer-friendly thesis is limited to stories from Germany. The Times itself has helped perpetuate the idea that even in these rough times, American bosses just can’t find qualified workers because there aren’t enough people with the right skills. Never mind the minor fact that the employers don’t want to pay decent wages:
Here in this suburb of Cleveland, supervisors at Ben Venue Laboratories, a contract drug maker for pharmaceutical companies, have reviewed 3,600 job applications this year and found only 47 people to hire at $13 to $15 an hour, or about $31,000 a year.
The going rate for entry-level manufacturing workers in the area, according to Cleveland State University, is $10 to $12 an hour, but more skilled workers earn $15 to $20 an hour.
I’d like to buy a new Apple laptop for $800. Amazingly, Apple won’t sell it to me. I guess I’ll have to fork over $1,200 or just settle for a Dell.
Of course, according to the press, the labor problem isn’t just with skilled workers. The Denver Post got into the “can’t find workers” act several months ago reporting that, incredibly, a local orchard can’t find Americans to work the farm for eight bucks an hour—$16,000 a year—presumably with no benefits. That segues into beefs about how importing immigrants who will work for such wages is really hard because of red tape. Lazy Americans!
Here’s a piece from the Gaston (North Carolina) Gazette reporting that a sheet-metal manufacturer can’t find workers willing to take $10 an hour—$20,000 a year—since they’re all making more on unemployment benefits.
Minnesota Public Radio reported last summer that a local company couldn’t find coopers willing to work for $10 an hour in the ever-expanding barrel-making industry. In other news, buggy-whip makers are reporting that college graduates are refusing minimum wage and a bright future in buggy-whip manufacturing.
Here’s where I note that the minimum wage in the U.S. in 1968 was an inflation-adjusted $10.10 an hour. Yes, forty-three years ago.
The Wall Street Journal noted last summer that “Some Firms Struggle to Hire Despite High Unemployment” and reported that one firm couldn’t find machinists to take $13 an hour ($26,000 a year). Another shocking anecdote: Emirates airline would have liked more job applicants for flight attendant jobs that pay $15 an hour ($30,000 a year) and require you to move to Dubai.
The idea that these companies might be able to find workers if they paid them—well, that idea might just be just too crazy to broach.
And yep, it’s so crazy that not a single of these stories mentioned it.Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at email@example.com. Follow him on Twitter at @ryanchittum. Tags: Capital, Dean Baker, Labor, Markets, The New York Times