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A Labor shortage is an economic condition in which there are insufficient qualified candidates (employees) to fill the market-place demands for employment. This condition is sometimes referred to by Economitists as "an insufficiency in the labor force."

Measuring the labor force

Techniques for measuring the existence and level of shortages in the labor force of a nation's economy are complex and controversial. Sometimes alleged labor shortages are used to justify the importing of temporary foreign labor (in the U.S., this would mean using the H-1 or L-1 Visa Program to import a foreign worker). Critics of such practices argue that the laws of supply and demand would correct such shortages as more citizens enter a field when wages go up due to the shortage, and that companies lobbying for foreign labor simply want the cheaper or more docile employees.

Wages as a factor in labor shortages

Wage levels have been suggested as one way to measure a labor shortage. However, this often does not match people's common perceptions. For example, if wages alone are the best measure of labor shortages, then that would imply that we should be importing doctors instead of farm workers because doctors are far more expensive than farm workers. However, there are institutionally-imposed limits on the number of doctors that are allowed to be licensed (whether these limits are rational or based upon the selfish interests is subject to debate.) If foreign migrant workers were not allowed into a nation, then farm wages may go up, but probably not enough to approach the wages of doctors.

The Atlantic slave trade (which originated in the early 1600's but ended by the early 1800's) was said to have originated due to perceived shortages of agricultural labour in the Americas (particulary in the American South).

Apparent Shortages and Multitudes of Skills

The Programming Wisdom Center has identified a possible conundrum whereby there may be a skills shortage from the employer's perspective but not the employee's perspective. This can happen when many "sub-skills" are involved in the selection process, such as requirements for multiple programming languages and computer tools often found in technical job ads. The phenomenon may account for seemingly contradictory complaints from both large companies and technical professionals regarding visa worker quotas.

The theory suggests that the more skills that are involved, the higher the gap between primary matches and secondary matches. Combing the globe for candidates allegedly increases the chances of a better match. However, it may reduce the chance of a citizen being hired even though on the average their skills are on par. In other words, having a wider choice reduces the chances of a citizen being the best candidate due to probability field increase alone rather than lack of skills on the citizen's part.

A comparable analogy would be the opening of Jewelry store B next to the existing Jewelry store A. Even though store A may have similar prices and selection, their sales will still likely slide downward. A given customer will now purchase from the new store B half the time. Unless more customers in total come to the area, store A sales will be cut in half.

The solution proposed by proponents of free trade appears to be more and tougher education. However, it appears that education is no longer a comparative advantage of most high-wage countries. Asia, the largest source of educated visa workers, has been keen to be competitive in the education arena, yet offers lower wages when compared to similar employment in Western nations. Also, older workers with family and community responsibilities cannot devote as much effort to new skill acquisition as young and single persons who can make themselves more competitve.

Top 10 Fastest Growing Occupations in the U.S.

According to the U.S. Bureau of Labor Statistics (which annually publishes the Occupational Outlook Handbook), the following 10 professions are projected to be the "fastest growing" in the U.S. economy through the year 2014 (obviously labor shortages can be expected in some parts of the U.S. in these occupations):

Occupation: (Expected growth:)

Some have questioned the reliability of such government predictions *. Further, they may lead to misleading conclusions. For example, to become a software engineer (which is listed as growing), one may first have to start out as a computer programmer. However, programming has been at risk due to offshore outsourcing such that the career path toward software engineer may be bumpy.

See also

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This article is licensed under the GNU Free Documentation License. It uses material from the "Labor shortage".

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