If you need an govt assistant and might’t discover one due to the labor “scarcity,” a Wall Road Journal story of at the moment offers the answer: pay her (or maybe him) greater than $200,000 a yr and the scarcity is over. In case you nonetheless have issues discovering the assistant you want, increase her title to “chief of employees” and bid up the prospects’ wage to $300,000 or $400,000. (“Paying $400,000 for an Govt Assistant? Do-It-All Aides Are Pricier Than Ever,” August 4, 2022). The subtitle offers the flavour of the story:
Rich executives are shelling out six figures for classy aides sensible sufficient to deal with difficult duties but humble sufficient to tackle tedious ones
One side of market complexity lies within the submarkets that characterize any good or (as on this case) service that’s not completely homogeneous. There are completely different sorts of labor and completely different sorts of govt assistants. However in all instances, provide and demand decide wages if the market is free.
An much less latest WSJ story, on which I thought-about writing an EconLog submit on the time, illustrated the identical phenomenon on one other market the place the worth will not be capped: in case you actually need to rent anyone, simply pay the market wage or bid it up. In case you don’t, it’s simply that you simply don’t really need it given what you might be prepared to pay and what the opposite bidders pay. And don’t complain there’s a “scarcity”! The title of the story was self-explanatory: “Teen Babysitters Are Charging $30 an Hour Now, As a result of They Can” (Could 19, 2022). The subtitle gave extra taste, though once more the respectable newspaper didn’t use the time period scarcity in its financial that means, the proof being that you simply do get a babysitter in case you pay $30 an hour plus some perks:
Sitter scarcity has dad and mom treating youngsters like VIPs; ‘order something you need for dinner’
One query as an train: Are teen babysitters “wage gougers”?
All this jogs my memory of an outdated economist joke. Strolling on the sidewalk, an economist and his good friend cross by a Ferrari dealership with a pink 296 GTB within the window. (An economist, by definition ought to we are saying, thinks of particular person decisions when it comes to particular person preferences and outdoors constraints equivalent to costs, revenue, and many others.; however the good friend nonetheless doesn’t perceive that.) “I would like this,” the good friend says as they proceed strolling. “No, you don’t,” replies the economist.
