Can’t hire? Pay more.

Sat, May 22, 2021 2-minute read

Many recent news stories feature companies having a hard time hiring workers. In capitalism, this means one thing: they’re not paying enough. Period. It’s that simple.

The law of supply and demand says that if demand for a resource outstrips its supply, then price for that resource increases. If a buyer wants to purchase that resource, they have to pay more to compete with the other people who want to buy it. That’s one of the defining features of a free market, and it’s unreasonable to complain that no one is selling at the price they’d like to pay.

There are things that increase the supply of people willing to work for a company, thus lowering the price it can expect to pay, such as offering excellent benefits or earning a reputation as a wonderful employer. Those are forms of compensation that potential employees can and will consider. Conversely, having a reputation as a bad employer decreases the supply. I could name companies that would have to pay me more than I’d be worth to them before I’d even think of working for for them.

Either way, the market — in this case, the other employers competing to hire workers — sets the price of the resource. If a company can’t hire, they need to pay more. The labor market has determined that their current combination of pay and benefits isn’t good enough to attract new employees.

In other words, stop complaining and crack open that wallet.