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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When you hire someone for an extra-high wage, you’re locked into paying that price for a long time. I mean, you *can* cut people’s wages, but it really pisses them off and they often quit. So if you think this labor-shortage nonsense will blow over sooner or later, you might prefer to just tough it out and [make your current employees] cope with not having the role filled for a while.
Speaking of your current employees, they’re going to notice if you hire a new coworker for them, and that person is making extra money. Suddenly, everybody will know more about how much you’re willing to pay for labor, and they’re all going to want a piece of that action.
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