The Great Labor Shortage Lie

Posted by David Sirota at 8:34 AM on April 10, 2007.

I've said many times before that the best place for information is the business press. The material is written for people who need cold, hard information in order to make money, rather than for the professional political pontificators who are aroused by Beltway spin. The only challenge when reading the business press is to get through the corporate PR. But if you have the patience, you will find out what's really going on and who is lying to you. This week's piece in Businessweek on the job market is a good example.

The article begins with a sensationalist headline that only Bill Gates and Tom Friedman could love: "Where Are All The Workers? Companies worldwide are suddenly scrambling to manage a labor crunch." This is the public rationale from corporate executives (especially in the high-tech industries) for massive job outsourcing and exploitation of the H-1B program: We can't find the workers we need.

We are expected, for instance, to ignore academic studies published recently by the National Academy of Sciences showing that, in fact, there is no shortage of high-tech engineers here in America. We are expected to ignore the data showing that companies are using the H-1B program to drive down domestic workers' wages by forcing them into competition with imported workers from impoverished countries. We are expected, in short, to believe that layoffs, wage stagnation and pension/health care cutbacks have absolutely nothing to do with corporate executives trying to line their own pockets, and everything to do with workers themselves - and we are expected to believe all this at the very same time new government data shows that the share of national income going to wages is at a record low, and the share going to corporate profits is at a record high.

Yet a few paragraphs into the Businessweek article, the real story starts to trickle out:

"A global labor crunch, already being felt by some employers, appears to have intensified in recent months. That's in spite of widely publicized layoffs, including Citigroup's plans to shed as many as 15,000 staffers... Corporations are determined to keep labor costs under control, so they're reaching deeper into their bag of tricks...Some are lowering their standards for new hires or moving operations to virgin territories other outsourcers haven't discovered... Economists, of course, will tell you there's no such thing as a labor shortage. From a worker's viewpoint, many so-called shortages could quickly be solved if employers were to offer more money. And worldwide, millions of people still can't find jobs. The strongest evidence that there's no general shortage today is that overall worker pay has barely outpaced inflation."

There, finally, is the real story - the story that corporate executives and staid political pundits don't want anyone to talk about: The Great Labor Shortage Lie (related, of course, to the Great Education Myth - the one I've debunked before that claims all of working America's problems are due to a bad education system, and that if we just fixed our education system, everything would be great for workers). There's no labor shortage - there's a cheap labor shortage, because, as the free market fundamentalists all love to say, supply and demand rules everything. And if that's the case - then there's no way you can have a real labor supply shortage at the very same time wages (the monetized manifestation of employer demand for labor) continue to stagnate.

Not surprisingly, politicians will do anything to distract attention from these basic facts. You can best see this in in the immigration debate. You may recall that many of the most corrupt politicians in Washington like John McCain continue to say that illegal immigrant laborers are taking jobs that Americans "don't want to do." Regardless of how you feel about the very complex issues surrounding the immigration debate, this specific mantra is dishonest at best. When McCain was confronted by workers who said those jobs would be filled by legal domestic workers if employers decided to "pay a decent wage," he made the laughable claim that legal domestic workers wouldn't do farm labor for $50 an hour - prompting an eruption of boos.

The reason Big Business groups like the Chamber of Commerce support illegal immigration is because large employers want a pool of desperate workers to either employ at slave wages or to use as a threat to leverage wage concessions out of domestic workers. Put another way, the Big Money interests want to preserve a tool to rig the labor market so as to make sure its natural supply-and-demand dynamics are never allowed to work to raise wages here at home. And politicians like McCain whose campaigns are funded by these same Big Money interests will do anything to help them.

These politicians, of course, couch their bought-off immigration positions in humane terms - pretending that they care about the plight of impoverished Mexicans. Yet, most of these same politicians aggressively supported NAFTA, which deliberately drove 19 million Mexicans into poverty, and even more to the point: advocating for so-called "guest worker" programs that provide a legal framework for American employers to exploit Mexican workers without giving those Mexican workers basic labor/human rights afforded to domestic workers is simply not a humane position either for Mexicans or Americans - it's a position that creates a 21st Century brand of inhumane economic slavery for Mexicans, and embraces the ongoing efforts to drive American wages into the ground.

So the next time you flip on cable TV and see a pinstriped executive bemoaning labor shortages or a craven right-wing politician portraying their bought-off positions on economic issues as the channeling of Cesar Chavez's agenda, just remember: Buried in the business press the real facts about the Great Labor Shortage Lie are right there for everyone to see.

Tagged as: immigration, free trade, john mccain, businessweek, supply and demand, the great labor shortage, the great education myth

David Sirota is a veteran political strategist and author of Hostile Takeover, a New York Times bestseller about the corruption of both political parties.