If the law of Supply and Demand dictates that high demand + low supply = higher prices/rates, why aren’t companies/industries suffering from large scale labor shortages offering suitably higher wages to mitigate the shortage? Contrarily, some of them seem to be figthing this obvious solution tooth and nail. Shouldn’t any businessperson worth their salt realise the labor market has changed beyond their control?
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Imagine you’re in a sandbox, playing with all the other kids. There is only so much sand in the box you can all play with and all of you may have different things you want to build with it. You may want a bigger sandcastle, but that would mean you have to take a little sand from the next kids pile, and he may want to use that for his sculpture.
A company has a lot of moving parts, with a lot of different groups, all of whom have different interests. You could increase your labor costs, but that means hurting your margins. Is that something your shareholders are willing to accept? You could offset the cost by raising prices, but is that something your customer is willing to accept? You could use your profit towards labor, but would you be willing to accept less investment into R&D? Is falling behind and losing market share something you’re willing to accept?
There is only so much sand in the box with different people who are all playing in it, all of who want to build different things. Companies have to figure out how to balance that, and the results are going to look different for everyone.
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