You Don’t Want it If You Don’t Get it
If you want an executive assistant and can’t find one because of the labor “shortage,” a Wall Street Journal story of today gives the solution: pay her (or perhaps him) more than $200,000 a year and the shortage is over. If you still have problems finding the assistant you need, boost her title to “chief of staff” and bid up the prospects’ salary to $300,000 or $400,000. (“Paying $400,000 for an Executive Assistant? Do-It-All Aides Are Pricier Than Ever,” August 4, 2022). The subtitle gives the flavor of the story:
Wealthy executives are shelling out six figures for sophisticated aides smart enough to handle complicated tasks yet humble enough to take on tedious ones
One aspect of market complexity lies in the submarkets that characterize any good or (as in this case) service that is not perfectly homogeneous. There are different kinds of labor and different kinds of executive assistants. But in all cases, supply and demand determine wages if the market is free.
A less recent WSJ story, on which I considered writing an EconLog post at the time, illustrated the same phenomenon in another market where the price is not capped: if you really want to hire somebody, just pay the market wage or bid it up. If you don’t, it’s just that you don’t really want it given what you are willing to pay and what the other bidders pay. And don’t complain there is a “shortage”! The title of the story was self-explanatory: “Teen Babysitters Are Charging $30 an Hour Now, Because They Can” (May 19, 2022). The subtitle gave more flavor, although again the respectable newspaper did not use the term shortage in its economic meaning, the proof being that you do get a babysitter if you pay $30 an hour plus some perks:
Sitter shortage has parents treating teenagers like VIPs; ‘order anything you want for dinner’
One question as an exercise: Are teen babysitters “wage gougers”?
All this reminds me of an old economist joke. Walking on the sidewalk, an economist and his friend pass by a Ferrari dealership with a red 296 GTB in the window. (An economist, by definition should we say, thinks of individual choices in terms of individual preferences and outside constraints such as prices, income, etc.; but the friend still doesn’t understand that.) “I want this,” the friend says as they continue walking. “No, you don’t,” replies the economist.