Across the U.S. there are many stories that there are labor shortages taking place in certain markets. Aplia has posted a blog regarding the labor shortage issue in the U.S. and U.K., and news stories have cropped up in Washington state, New Orleans, and Wyoming to name a few examples. In most of these cases, there are labor shortages in markets where there is little flexibility to increase the supply of labor in the very near term or even in the “medium” term. It is possible to use basic economic principles that we have already discussed to examine what the cause of these shortages might be, how they might be politically solved, and the economic implications of these possible “solutions.”
Without the use of graphs, you should be able to describe what a shortage (or a surplus is). Briefly discuss the shortage situations in these areas or others that interest you. What is the main principle of a “labor shortage”? High wages attract workers to certain jobs which often require skills or training that may take time to acquire. Other workers are simply attracted to a “job” which they cannot find in their current location, even if it does not require much in terms of skill or experience.
One of the most important things to note in this discussion is that employers demand labor, based on the fact that some consumer has a demand for the product that they produce (such as apples). These products (such as apples that need to be picked) are sold in different markets, and have their own price flexibility (or elasticity). I would like you to take into consideration the power firms who demand labor have at setting the price of their particular good. You must also consider things like the substitutes and complements for that particular good. Remember that an apple produced in Washington, competes for consumers with apples produced in New York, California, and elsewhere.
Questions you might try to answer:
Do these labor situations actually represent shortages in the economic sense of the word?
How might firms go about fixing their shortages? Try to quote an outside source.
If you have another example of a labor shortage, try to briefly describe the situation and why it took place.
What could the state or federal government do to fix the problem?
If the state or federal government decided to enact some political correction, describe some of the unintended consequences.
Also, remember, I want you to keep your descriptions short, basic, and related to classroom content.
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