I listened to a piece on CBC radio yesterday about a company claiming that there is a shortage of workers qualified to perform a particular task. The company wants to work with governments and universities to fix the situation. I don’t know much about this particular purported shortage, but such claims about worker shortages are almost always nonsense.
During the tech boom we heard similar complaints from Nortel and other high-tech companies. They claimed that there just weren’t enough engineers and programmers. They called for universities to churn out more engineering and computer science graduates.
We live in a free market society. If a business tries to hire workers and can’t find the number they need, the problem is not that there is a worker shortage. The problem is that they are not offering enough money. Worker salaries are driven by supply and demand.
I am a competent programmer, if a little rusty. I haven’t worked as a programmer for many years because what I do instead pays more (and I like it more). If programmer salaries were to rise by enough, I might choose to go back to programming.
Similarly, for almost all types of jobs there are people who could fill the jobs but choose not to because they make more money doing something else. Attracting more candidates is a simple matter of raising the salary offered.
Of course, companies prefer not to do this. They would rather have a glut of highly skilled workers begging at their door. In this case they could lower the salaries they offer.
Notice how this supply and demand view casts the call for more graduates in a different light:
What they say: We need universities to produce more students with degree X to deal with the shortage of qualified candidates.
A more accurate version: We need universities to produce more students with degree X so that we don’t have to pay our workers more and might even be able to reduce salaries.
Notice how the second version generates much less sympathy.
Of course, decisions about the types of programs universities encourage students to take should be driven by supply and demand considerations. Students looking to make a living with their degrees should be looking at available salaries and forces that may increase or decrease these salaries by the time they graduate.
Ironically, if an industry is very successful at encouraging students into the programs the industry needs, it makes these programs less valuable to the students. This is because they can expect lower salaries when their large graduating classes form a glut of workers.