Thursday, July 24, 2014

The worker shortage myth leads to crony capitalism

In my inbox on July 22nd was an email from VP Joe Biden. The title is "Good for business, good for workers, good for the economy". In the email he talks about the importance of job training programs:

"During his State of the Union address, the President asked me to lead an across-the-board review of our nation's job-training programs.
It's a top priority for the President, and it is absolutely critical to our economy's success."

The VP states in the email that businesses have told him they can't find workers:

"We’ve heard from businesses that many jobs in today's brightest sectors go unfilled because there simply aren't enough people with the skills to do them. " 

But as I explained in an earlier post, a shortage of workers only exists at a non-equilibrium price. If firms want more workers all they have to do is increase the wage they are willing to pay them. We don't need to use taxpayer money to subsidize worker training for firms. But that is what VP Biden wants to do:

"Some of our country's businesses, community colleges, and state and local training programs -- often supported with federal dollars -- have found ways to successfully prepare Americans for these jobs. " 

The worker shortage myth has led to taxpayers footing some of the bill to train workers for profitable firms. This is crony capitalism, or as John Stossel calls it, crapitalism. Job training programs may be good for businesses and good for the workers who get trained, but they are not good for the economy as a whole and certainly not good for the taxpayers.

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