Dean Baker explains why we stupid people do not understand “how the labor market works” to the owner of a roofing contractor in an extraordinarily thick headed manner last week. This is an example of why I seldom read Dean Baker’s column any more. (I quit reading Paul Krugman more than a year ago.)
The roofer is paying a starting wage of $17/hr, well over the state’s minimum wage of $9/hr, and not getting enough new hires. She explains that she would cheerfully pay $35/hr but is constrained by competition and, even more so, by what insurance companies dictate for roof repairs.
Baker’s response is that, if she cannot pay $35/hr, she can still pay $20/hr and thus hire new workers away from her competition, thereby solving her worker shortage. His column continues, offering erudite comments about “textbook economics,” which is a lot less enlightening than he thinks it is, because the roofing company owner is not dealing in Dean Baker’s “economic world” but rather in a business world.
He suggests that, “Maybe the government should provide employers with an incentive for learning basic labor economics,” but I’m thinking that maybe the course should be for economists. Raising wages to hire workers away from competing companies in the same industry is a refrain continuously sung by Dean Baker, and it is utter drivel. Moving a worker shortage from one employer to another does not eliminate the shortage.
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