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Daily Bread for 7.16.22: Free Markets in Labor

Good morning.

Saturday in Whitewater be partly sunny, with scattered afternoon thunderstorms, and a high of 81. Sunrise is 5:31 AM and sunset 8:30 PM for 14h 58m 38s of daytime.  The moon is a waning gibbous with 88.8% of its visible disk illuminated.

On this day in 1945, the Atomic Age begins when the United States successfully detonates a plutonium-based test nuclear weapon near Alamogordo, New Mexico.


  An economy facing labor shortages could alleviate those problems with greater worker productivity, automation (itself a spur to worker productivity), or more workers. America is a productive economy, but gains in worker productivity are nowhere so great that they compensate fully for labor shortages. American businesses do use robots, but there are still many industries where robots cannot compensate fully for labor shortages.

And so, and so… America could use more workers.

Dany Bahar and Pedro Casas-Alatriste ask Who are the 1 million missing workers that could solve America’s labor shortages?:

According to the latest data from the U.S. Bureau of Labor Statistics, there were over 11.2 million job openings (May 2022). In the construction industry, there were an estimated 434,000 job openings (May 2022), yet there were just 389,000 unemployed in that same industry (June 2022). In other words, there is a shortage of almost 50,000 workers. In retail trade, the gap is even wider. With 1.14 million job openings and 720,000 unemployed, there is a labor supply deficit of 420,000 people. If that’s still not surprising enough: The number of unemployed people in the accommodation and food services industry is 565,000, while the number of job openings totaled 1.4 million. Even if every worker in that industry were employed, there would still be 835,000 job openings.

From a broader perspective, in just 12 years, adults 65 and older will outnumber children under 18 for the first time in the history of the United States. And shortly after, by 2040, projections suggest the country will have 2.1 workers per Social Security beneficiary. According to these calculations, the system needs at least 2.8 workers per Social Security beneficiary to maintain its economic feasibility.

….

Let’s now add into the equation some stylized facts about the 1 million workers that the U.S. has deported back to Central America since 2009. The data comes from representative surveys carried out by Colegio de la Frontera, a Mexican research institution that surveys deportees from the U.S. in Mexico’s south border on their way back to their home countries of Guatemala, Honduras, and El Salvador.  

The vast majority of these deportees are men and have a high school diploma or less, according to the most recent data from 2019. They are also overwhelmingly youngwith nearly 90 percent of them between the ages 15 to 39 and 65 percent being between the ages 15 to 29. Compare this to all other migrants in the U.S. who have a median age of 46 years.  

Among the deportees that gathered some work experience in the U.S. during their stay (the ones who stayed for longer, naturally), they worked in a very diverse set of occupations that, ironically, have remarkable overlap with the occupations in high demand right now in the U.S. For instance, about 60 percent were in the construction industry, about 20 percent worked in services (such as the food industry), nearly 10 percent worked in industry, and 8 percent were technicians and administrative staff.

(Emphasis added.)  

Free markets in capital, goods, and labor are to America’s economic advantage. 


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