If You Want Good Workers, You Need to Pay Market Wages


Today the Wall Street Journal is running yet another article about the inability of manufacturing companies to attract good employees. And Dean Baker is annoyed:

If employers can’t get enough workers then we would expect to see wages rising in manufacturing.

They aren’t. Over the last year the average hourly wage rose by just 2.1 percent, only a little higher than the inflation rate and slightly less than the average for all workers. This follows several years where wages in manufacturing rose less than the economy-wide average….If an employer wants to hire people she can get them away from competitors by offering a higher wage. It seems that employers in the manufacturing sector may need this simple lesson in market economic to solve their skills shortage problem.

The chart on the right shows what Baker is talking about. It’s a slightly different series than the one he uses in his post, but it makes the same point. Manufacturing wages are rising more slowly than in the rest of the economy. If manufacturing companies are really desperate for qualified workers, they have a funny way of showing it.

Now, it’s possible that what they really mean is that they don’t think they can be competitive if they have to pay higher wages. So they want lots of well-qualified employees to work for below-market wages. And who knows? That’s possible. But if that’s really the problem, then apprentice programs and skills training aren’t likely to solve it.

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