Wages Growth Stagnates While Business Demands More Foreign Labor

What is the surest indication that a commodity is in short supply? The price of that commodity.

An outbreak of the avian flu has killed off about 53 million U.S. hens in the past year. The result, a dozen eggs now costs about 60 percent more than they did a year ago. That’s how the law of supply and demand works – except, according to the U.S. business lobby, when it comes to the price of labor.

New data from the Bureau of Labor Statistics reveals that real wage growth for U.S. workers grew at an anemic 1 percent in the fourth quarter of 2022, well below the overall rate of inflation. Moreover, this negligible wage growth occurred amid an alleged worker shortage in the U.S. that has business lobbyists screaming for access to still more foreign workers.

Neal Hare, a former vice president with the U.S. Chamber of Commerce (a powerful lobby that perpetually complains about labor shortages), is again sounding the alarm bells. “Today, immigration reform remains a top priority for the business community,” he writes, adding that 44 percent of business owners surveyed by the National Federation of Independent Businesses, “stated that they were unable to fill open positions.”

Well, maybe they should deal with that problem by offering wage increases that at least keep up with the rate of inflation? Don’t be ridiculous. Instead, his advice to the new Republican majority in the House of Representatives is to “go back to [being] the party that supports American businesses by listening to them and pursuing the policies they need to succeed – like immigration reform that brings more workers into the country.”

Another option might be for American industries – rather than spending huge sums lobbying for more foreign workers – to invest in training of American workers. As Tony Schmitz, a professor at the University of Tennessee suggests, the answer to labor supply issues might be “To grow the skilled manufacturing force, the creation of a more robust K-12 education system that emphasizes STEM subjects – science, technology, engineering and math – while simultaneously providing vocational programs and apprenticeships for all students is important.”

Whether we’re talking about eggs, a gallon of gas, or workers, the most reliable indication of supply is cost. What the latest wage data indicate is not a shortage of labor in the U.S., but rather a shortage of employers willing to offer to pay the wages necessary to attract American workers.