Labor Shortage in Detroit and Michigan Driving Wages Higher?

[Lowell]

I read the following headline in today's Crain's. Question for the forum. Do you see this happening, meaning do you have friends still having difficulty finding work? Do you hear of people getting raises?

Firms struggle to fill jobs at entry level
Offers of higher wages, incentives on table

The region is approaching a labor shortage — one that is only going to get worse, experts predict. There is also evidence that the tightening labor market is starting to push up entry-level wages even as activists pressure for higher minimum wages and major companies make a splash of raising their pay scales.

Last week, J.P. Morgan Chase & Co. and Starbucks Inc. announced they would raise pay for its lowest-paid employees. Starbucks plans to raise pay 5 percent to 15 percent for its roughly 150,000 employees. Chase plans to raise pay for 18,000 employees from $10.50 per hour to between $12 per hour and $16.50 per hour.

That's great news for workers, but for many employers, rising wages are exacerbating the already thinning labor force.

Last week a I read about a resort restaurant in Harbor Springs having to close because it could not find employees.

[SammyS]

Yes, I've been seeing this for years in the professional sector. Engineers have been very hard to find since the GFC.

[Wesley Mouch]

The market still works.

[emu steve]

The market still works.

I do agree, but I don't believe in labor markets w/out min. wage laws nor do I feel that markets are completely efficient and fair.

I still believe min. wage laws set a floor to protect employees who otherwise don't have access to unions, etc. and of course, the market is always free to increase wages higher if conditions warrant.

One thing I like about min. wage increases is that it effects not only those who are paid less than the new min wage BUT ALSO pushes up wages for those who are paid slightly higher than the old min. wage.

[emu steve]

Yes, I've been seeing this for years in the professional sector. Engineers have been very hard to find since the GFC.

BTW, I'm still perplexed that we can't produce enough engineers, nurses, teachers, etc.

This is the purpose of higher education to produce those graduates who can fill these professions.

[SammyS]

BTW, I'm still perplexed that we can't produce enough engineers, nurses, teachers, etc.

This is the purpose of higher education to produce those graduates who can fill these professions.

Experience literally went south starting early 2000's and has never returned. The GFC was the final nail to convince many others, including college graduates, that Michigan was not the place to be. I don't know about current engineering based enrollment in higher education but we do have a major hole that needs filling.

[SammyS]

I do agree, but I don't believe in labor markets w/out min. wage laws nor do I feel that markets are completely efficient and fair.

I still believe min. wage laws set a floor to protect employees who otherwise don't have access to unions, etc. and of course, the market is always free to increase wages higher if conditions warrant.

One thing I like about min. wage increases is that it effects not only those who are paid less than the new min wage BUT ALSO pushes up wages for those who are paid slightly higher than the old min. wage.

IMO, minimum wage laws have nothing to do with benefiting the labour force but rather a tool the government uses to spur inflation during periods of deflation. Unfortunately, the gov. is typically on the wrong side of this equation especially when tech can offset the labour demand completely.

[ndavies]

We can produce far more engineers, nurses, teachers than we need. But this is a choice issue, Students are choosing other fields for work. There are many fields where school was easier to get through and salaries were higher.

Part of the shortage is directly attributable to the salaries companies were handing out before the last recession. Engineers, teachers and nurse salaries were stagnant for at least 15 years. It was easier to get a business degree and go into more lucrative fields.

For those 15 years engineers were telling there sons and daughters not to get into engineering since it was financially a dead end. All the manufacturing was leaving. Layoffs were happening. Many of the people my age who could have been engineers went into banking, since that is were the money was.

[emu steve]

Experience literally went south starting early 2000's and has never returned. The GFC was the final nail to convince many others, including college graduates, that Michigan was not the place to be. I don't know about current engineering based enrollment in higher education but we do have a major hole that needs filling.

I'm perplexed...

The automobile industry is making money hand over fist. They have the funds to pay engineers a competitive salary.

Companies which are dependent on STEM have to 'dance to the music.' Companies which are financially weak will suffer and be noncompetitive [[at least for better talent) but that doesn't describe the U.S. automobile industry.

Detroit isn't California or Florida... So up the salary offers. Let the job applicants decide if a buck in So. Cal or San Fran will buy much OR will that same buck buy much, much more in S.E. MI.

[ndavies]

Salaries are up. The automotive sector is hiring like crazy. The salaries match east and west coast salaries. [[Without the coasts higher costs.)

Unfortunately, they lost 7 or so years worth of engineers during the collapse. They didn't hire them when they came out of school. Those engineers would be just coming into their peak productivity years. They also forced out many baby boom engineers to early retirement. Many previously solved quality issues have returned due to the loss of the knowledge these older engineers had.

Now the industry is losing the rest of the baby-boom age engineers to retirement. I'm one of the last baby boomers. I'll be retired within 10 years. [[No I don't think baby-boomer engineers are any better than the rest. This is just a numbers thing. There are lots of baby-boom engineers, it will require lots of people to replace them.)

As for skilled trades: When I was high school age, Most high schools had skilled trades classes. Now most high schools are college track and have dropped the skilled trades tracks. There's going to be a huge shortage of millwrights, electricians and plumbers. All jobs paying well above average incomes.

[oladub]

"There is also evidence that the tightening labor market is starting to push up entry-level wages "

That's Supply and Demand 101. When labor markets are allowed to get tight, wages increase and a larger percentage of the GNP goes to workers instead of the 1%. That's why the 1% and their puppets always clamor for free trade [[sending jobs abroad to cheaper foreign labor markets) and more immigration. Higher minimum wages help some workers while eventually laying off others. One reason more Americans do not go into STEM curriculums is that after all that difficult study, they are displaced with cheaper foreign H2B workers.

[SammyS]

Salaries are up. The automotive sector is hiring like crazy. The salaries match east and west coast salaries. [[Without the coasts higher costs.)

Unfortunately, they lost 7 or so years worth of engineers during the collapse. They didn't hire them when they came out of school. Those engineers would be just coming into their peak productivity years. They also forced out many baby boom engineers to early retirement. Many previously solved quality issues have returned due to the loss of the knowledge these older engineers had.

Now the industry is losing the rest of the baby-boom age engineers to retirement. I'm one of the last baby boomers. I'll be retired within 10 years. [[No I don't think baby-boomer engineers are any better than the rest. This is just a numbers thing. There are lots of baby-boom engineers, it will require lots of people to replace them.)

As for skilled trades: When I was high school age, Most high schools had skilled trades classes. Now most high schools are college track and have dropped the skilled trades tracks. There's going to be a huge shortage of millwrights, electricians and plumbers. All jobs paying well above average incomes.

You said it better than I could have. Regarding skilled trades, allow me to let you in on how this can blowback big time.

In the early 90's, Australia had a similar policy of granting a relatively free college education to just about anyone who applied. By the late 90's, the economy had roared back [[especially the building industry) but there were very few skilled tradesman to fill demand. Fast forward to the late 2000's. Not only were tradies recieving salaries competative to professionals but the Australian building industry had to import tradies from places like India. Moral of the story, whenever government interferes with the free market, it typically results in negative repercussions that take years to unwind.

[Hermod]

You said it better than I could have. Regarding skilled trades, allow me to let you in on how this can blowback big time.

In the early 90's, Australia had a similar policy of granting a relatively free college education to just about anyone who applied. By the late 90's, the economy had roared back [[especially the building industry) but there were very few skilled tradesman to fill demand. Fast forward to the late 2000's. Not only were tradies recieving salaries competative to professionals but the Australian building industry had to import tradies from places like India. Moral of the story, whenever government interferes with the free market, it typically results in negative repercussions that take years to unwind.

Well, the government could give a tuition cut to STEM students at state universities and colleges and increase the tuition for Philosophy, English, and Art Appreciation majors.

[SammyS]

Well, the government could give a tuition cut to STEM students at state universities and colleges and increase the tuition for Philosophy, English, and Art Appreciation majors.

Without getting too political, it's governments' collusion with banks that's made higher Ed so unaffordable and that especially includes the useless* liberal arts but the free market has a solution to this problem too. Take online courses for instance. They may currently be regarded inferior or even not applicable to STEM but, let's think about it for a minute. If online graduates were required to complete a 6-12 month practical internship as part of thier graduation, why would they not be qualified for a full time job in the field? I would certainly employ one especially knowing he/she does not have the burden of repaying the ridiculous tuition costs that exist in our current system. More likely to retain them at an affordable salary than have them jump to the next higher paying job.

BTW, I think online courses are synonymous to online dating of 15 years ago. They too were regarded shady and lacked credibility in thier infancy.

* useless in regard to employability but if your objective is to be a champion in basket weaving, then all the power to ya 😏

[Scottathew]

I was out in the Jackson-Coldwater-Albion area. My father-in-law is a injection mold technician for a company near Albion.

He said that there's been a lot of investment in the area. Brembo [[premium brakes manufacturer) is building a HUGE addition to its factory. It's hiring a lot of workers and paying above market wage to be able to get them.

You can see an old satellite photo showing the size of the expansion. It's nearly done now: https://www.google.com/maps/place/29...!4d-84.7119428


Also, there's a new hog processing facility being built near there too that's going to employ a lot of people.

The area really needs jobs, Hillsdale County area is one of the poorest in the nation.

My wife moved to the Detroit area with me in part for job opportunities. She grew up in Litchfield.

[Wesley Mouch]

Well, the government could give a tuition cut to STEM students at state universities and colleges and increase the tuition for Philosophy, English, and Art Appreciation majors.

The government could start controlling school tuitions, but right now that's not their job. The schools [[for the most part) set tuition with some oversight.

So we certainly could subsidize STEM degrees, but history shows us that tuition subsidies result in lots of new buildings on campus -- not lower tuition. Oh, and of course lots more administrators.

[Baselinepunk]

The market still works.

Only when the market has been saved by Government.

Better get those hands together for Obama, Wes.

This "market" you are apparently so proud of would not exsist if it were not for the leadership of Obama.

[Baselinepunk]

"The government could start controlling school tuitions, but right now that's not their job"

So then you're against the tution controls placed on the colleges and universities in Michigan by your pal, Snyder.

Hmm. Republican double-speak.

Never seen that before.

Yawn.

[Baselinepunk]

"So we certainly could subsidize STEM degrees, but history shows us that tuition subsidies result in lots of new buildings on campus -- not lower tuition. Oh, and of course lots more administrators."

History show us?

LOL!!

What a crock.

Nice hasty generalization you got there, Buddy.

[emu steve]

One thing which hasn't been discussed is the elasticity of the labor market.

When the labor market[[s) get tight wages should rise. Some, e.g., retired, students, etc. may rejoin the labor market if they feel it is to their benefit. I used to have a joke that if McDonalds would pay $20 / hour that a lot of retired white collar employees would rejoin the work force and go work for them. This won't, of course, ever happen.

[SammyS]

One thing which hasn't been discussed is the elasticity of the labor market.

When the labor market[[s) get tight wages should rise. Some, e.g., retired, students, etc. may rejoin the labor market if they feel it is to their benefit. I used to have a joke that if McDonalds would pay $20 / hour that a lot of retired white collar employees would rejoin the work force and go work for them. This won't, of course, ever happen.

Depends on the driving force behind the underlying increase. If it's demand due to shortage, then wages should naturally rise to meet demand. If it's mandated by buerocrats, robots come in and actually drive labour out eventually lowering wages. Watch this.

https://youtu.be/7Pq-S557XQU

Government and unions always lose in the face of free market driven productivity HOWEVER, when behemoths or monopolies conspire with government [[healthcare, agriculture, insurance, banks etc) to fix prices, that's called crony capitalism and always hurts the market.

[emu steve]

Depends on the driving force behind the underlying increase. If it's demand due to shortage, then wages should naturally rise to meet demand. If it's mandated by buerocrats, robots come in and actually drive labour out eventually lowering wages. Watch this.

https://youtu.be/7Pq-S557XQU

Government and unions always lose in the face of free market driven productivity HOWEVER, when behemoths or monopolies conspire with government [[healthcare, agriculture, insurance, banks etc) to fix prices, that's called crony capitalism and always hurts the market.

One thing about labor markets is that they are dynamic and ever changing.

How many manufacturing jobs were there 100 years ago?

How many computer jobs were there 100 years ago?

So we see demand for certain types of labor decrease because of technology or globalization or whatever BUT other occupations are created and grow.

One real world example is the decrease in mining and extraction jobs. Coal mining is a nearly dead occupation yet 100 years ago it was thriving [[my maternal grandfather was a coal miner in Pa.).

Now we may have thousands and thousands working in say the wind and solar energy fields. Jobs lost in the coal mines of Pa., W.Va., etc may show up in Nevada in Musk's battery factory.

Maybe the best example I can think of where technology has killed an entire industry: Travel agents. Before the Internet everyone went to a travel agent and had them book a trip.

Don't most travelers today go online and make their own plane, lodging, etc. plans?

[SammyS]

^^
Steve, this exact point was covered in the link I provided. Just about every job today existed in one form or another 100 years ago. Computer programmer was the outlier but that is by no means a significant portion of today's labour force.

Technology is the game changer like never before. I agree with the authors comment which went something like "as went the horse, so too will humans". Forced wage increases only accelerates the transition especially when new talents are not created. On that note, solar energy is not a new talent humans need to learn. Furthermore, I personally cannot think of anything a robot or computer cannot displace a human today if not the near future.

I know it all sounds grim but the human mind and our natural tendency to be lazy is what drives technology which in turn crushes wages.

[Wesley Mouch]

"The government could start controlling school tuitions, but right now that's not their job"

So then you're against the tution controls placed on the colleges and universities in Michigan by your pal, Snyder.

Hmm. Republican double-speak....snip...

Yep, I'm against state-mandated pricing.

Some regulation is OK, but price controls are not.

I don't care if you call me a Republican. But I lean far more Libertarian, or classic liberal if you prefer. I will probably vote for Clinton this fall, as Trump is an loose cannon on deck. It'll be hard to do so, but as much as I disagree with Ms. Clinton, she at least has a mind. While she'll screw up a lot, and harm the poor and disadvantaged -- at least she's not irresponsible. And four more years of Democratic bliss just might be enough for the US to vote for a reasonable alternative - -which Trump is not.

But back to this thread... it must be quite a shock to many on this site to see that markets do work. The governments role is best when it lets market forces play out -- while providing a basic-level safety net -- something the Dems can't seem to achieve in spite of their good intentions and massive investment.

[emu steve]

I see computer programming as automation of manual tasks. E.g., I used to do statistics by hand which was cruel. Then programming languages/packages for example, SAS, SPSS, essentially 'automated' the process. Or the Lotus / Excel spreadsheets of the 1990s.

When I first got into computer programming a lot of the tasks were 'number crunching' and 'order entry.' A travel agent or ourselves booking a flight is automating what was once was a manual operation [[I hate to think what happened in 1960 when John Q. Public needed a flight from Detroit to Los Angeles).

So we've automated the assembly lines, 'automated' number crunching and order entry, etc. etc.

We started with machines assisting humans, then added computers and then added robots...

All of which have made humans much, much more productive.

I wish someone could answer this question: Of the jobs lost say in manufacturing what percentage were because of globalization? What percentage because of technological advances and increasing productivity? [[pls can the two numbers add up to 100%).