It's not goods, it's a labor market. And when supply is out of whack with demand, your bargaining power goes through the floor -- which leads to situations like this.
jnordwick's excellent point is that demand can grow without any obvious bound. That has an impact on both ends of the labor market. Sure, people will be willing to work more to acquire the things they want, but that demand itself generates a need for jobs and leverage for labor. Somebody needs to design and manufacture the next iPhone or fancy TV. Somebody else needs to refurbish and maintain that lovely seaside Airbnb for jnordwick's next vacation.
This can be a self-reinforcing cycle, and it's how the economic pie can grow even as everyone on the whole takes more.
I think people sometimes don't consider how small a shift in supply and demand in a labor market can change things. A couple percent of the industry's workforce laid off, and even 5-10% fewer open positions (I suspect it's much worse than that), and suddenly a hot job market looks a hell of a lot cooler.
If there isn't a market for it then there isn't a shortage of labor -- the correct equilibrium point has been found. And yet, they're claiming a shortage. They want to eat their cake and have it too.
> Basic supply and demand" is almost always wrong for the labor market.
We’ll just have to agree to differ. Although I would be curious to hear about examples of this scenario where employers hire more people when the cost of labor goes up.
The person you’re replying to didn’t say there isn’t a labor shortage. Only that the cause of the labor shortage is oft incorrectly identified as solely due to demand.
If there really is excess demand for a kind of labor, then the labor can borrow enough to pay for it; it wouldn't make sense to blame an insufficient subsidy as a bottleneck.
It's not a matter of "oversupply" or not. The harder it is for companies to hire, the more they are willing to pay, so long as they can still generate revenue at those wages.
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