Gas Prices

"Supply and demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy. Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand," according to Investopedia.

Oil, being a finite resource, is subject to supply and demand. 

"What the commodity markets are telling us is that we’re living in a finite world, in which the rapid growth of emerging economies is placing pressure on limited supplies of raw materials, pushing up their prices. And America is, for the most part, just a bystander in this story," explained Paul Krugman.

A Manufactured Paradox

The chief executive of the Wisconsin Economic Development Corporation and the secretary of the state Department of Workforce took to the Journal Sentinel to "inform" readers of a workforce paradox in Wisconsin. Or, to at least lay the groundwork for such a talking-point to help move forward more legislation which will supposedly address this manufactured paradox.

It's amazing when similar-minded people whom have advocated less regulation, lower taxes, and the general expansion of service industry jobs over the past three decades suddenly decide manufacturing is a crucial sector and that we must have a renewed focus on industrial policy.

Nevermind that the typical economic policies they've pushed over the past few decades have decimated manufacturing employment. Policies that have weakened unions, driven down wages, and outsourced many of the good-paying manufacturing jobs to low-wage countries. [The combination of low-road economic development and neoliberal policies.]

Now the government must rework the educational system's curriculum, provide more job training, and provide tax credits and relocation incentives to improve the same manufacturing employment that past policies decimated. Regardless of the fact that, "There is little evidence of absolute declines in cognitive or hard skills in the United States or generally poor performance relative to other advanced industrialized countries," as reported by associate professor Michael Handel.

The writers engage is some fairytales to make their point in the article. They claim part of the reason manufacturing employment and jobs have declined is because we haven't talked about them enough as being desirable employment. They also regurgitate the well-worn idea of structural employment - matching people who can do the jobs with where the jobs are needed. [As Rortybomb informs, "A report the IMF put out - The Great Recession and Structural Unemployment - which found find that structural unemployment is 1%-1.75% nationwide, with skills being 0.5%."]

People have chosen service jobs over manufacturing because of the diminished wages offered by the manufacturing jobs. The manufacturing jobs today have lower wages, reduced health care and slim to non-existent retirement packages. Why would a worker chose a challenging, skilled manufacturing job under such circumstances when they could just as easily take a similarly compensating service industry job, which is often, also, much less physically demanding?

If the writers were serious they would be addressing trade agreements, tax-policy toward outsourcing firms, and discussing the need for a comprehensive industrial policy focused on America's need for a strong manufacturing sector and it's link to our infrastructure and self-sustainability. Instead we get more apologetics and scapegoating. Like most businesses these days, the manufacturers want the inflated profits, but none of the social responsibility of good wages and a secure retirement for their workers.

It's not that we don't have workers who can do these jobs, it's just easier [cheaper] for the well-represented [lobbyists] manufacturing companies to appeal for government hand-outs than to pay wages necessary for the work. Thus, a whole cottage industry of cranks has arisen to create this fantasy of structural unemployment and skills mismatch.

Rather, this is simply a story of supply and demand. Until the manufacturers are willing to pay respectable wages to attract workers to these jobs, the manufacturers will continue claiming the educational system must be failing, the government isn't doing enough, and everyone but the manufacturers are responsible for these supposedly unfilled jobs.

For Further Reading:
Has The Great Recession Raised Structural Unemployment?
Latest in (Lack of) Structural Employment

Labor Shortage Sham

The idea of a labor shortage is getting media buzz again. Companies claim they can't find workers with the skills willing to do the job. The Journal Sentinel pushes this mythology at least once a year. Another excuse why we need to cut corporate taxes and subsidize business operations.

In reality, this is simple supply-and-demand economics. People don't want to work at grueling jobs for low pay, minuscule benefits, and without a retirement plan. If these jobs were paying living wages and had some sense of security people would be lined up around the block for the positions.

So, if they want to end the labor shortage...increase the wages.

For Further Reading:
The Great Labor Shortage Lie
Is A Great Labor Shortage Coming?
It's About Job Shortage, Not Skills Mismatch
The Labor Shortage Myth
Labor Shortages: Myth & Reality
The Myth of Structural Unemployment
The Myth of The Coming Labor Shortage
The Skills Crisis & Job Training
The Skills Myth
What Labor Shortage?