Businesses can’t find qualified CEOs, don’t know how to raise wages
from Dean Baker
That’s the implication of this CNBC piece that claims that hiring is down because businesses can’t find qualified workers. If this is really the problem, then the solution, as everyone learns in intro economics, is to raise wages. For some reason, CEOs apparently can’t seem to figure this one out, since wage growth remains very modest in spite of this alleged shortage of qualified workers.
Businesses should be well-positioned to absorb higher wages since their profits have soared over the last two decades. In the years from 1980 to 2000, the beneficiaries of upward redistribution were higher paid workers like CEOs, Wall Street-types, and highly paid professionals like doctors and dentists. Since 2000, there has been a substantial shift from wages to profits, as the after-tax profit share of national income has nearly doubled, as shown below.
Source: Bureau of Economic Analysis and author’s calculations.
The profit shares include one-third of the foreign profits of US corporations based on new research showing that this is really just profit shifting to evade taxes. If after-tax profit shares were back at their 2000 level, it would imply another $600 billion a year in wage income or almost $4,000 per worker in additional wages.
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Real-World Economics Review Blog 
It doesn’t take a qualified manager to raise wages, any kind will do, if he/she wants to. But the problem is not with the wages but with the cost of the other two factors of production, land and durable capital goods, both of which are being controlled by different kinds of monopolist.
Manufacturing plant is costly to make and install, and naturally its owner (the capitalist) wants to restrict its use to those who will pay the most for this right. The competition from entrepreneurs is able to produce the same goods with more obsolete plant at less initial expense, and by itself this should influence the rate at which a monopoly on these production techniques can have only a limited effect.
However the other kind of monopolist, the kind who hold land and useful sites from being available for working, the kind who (along with the banks who support him/her) who chooses to speculate in the land values, who also stops the entrepreneurs for setting up their activities in a place where labor is available–that kind of monopolist is the real creator of high costs, because the result of land being help unused is that of high rents for its right of access and even higher production costs. Land values should be taxed so that the effect of this kind of speculation is inhibited. You can;t blame it all on the flow of money and costly management, without seeing the whole of the Big Picture!
CEO’s and CFO’s don’t do badly out of increased profits. Heads they win tails we lose!
Steve Keen shows that in the end game of a Minsky type debt bubble, workers share of output falls dramatically. You don’t need a moral/power relationship type argument to get there. As total private debt explodes workers share falls. It’s just math.
Keen is probably the best economist on the planet. However, he and Minsky have mistaken a trend toward ponzi finance and a tipping point for the moment to moment reality of total costs and so prices exceeding total INDIVIDUAL incomes NOT TOTAL MONEY/CREDIT. The latter reality therefore compels and impels continual borrowing (also made necessary by the present paradigm of Debt/Burden/Additional Cost Only) in the failed attempt to keep the economy from dropping into recession.
They’re quite correct that instability/disequilibrium characterizes the system because the equation above (total costs/prices continually exceed total individual incomes) is a disequilibrium state. This being both inherent and financially compelled in modern economies, merely trying to equilibrate that equation is futile. Rather, what is required is what I told Keen several years ago, i.e. the higher workable and ethical disequilibrium by combining a universal dividend and high percentage discount/rebate policies strategically implemented at the point of retail sale (which is the terminal expression point of all forms of inflation) thus inverting/transforming the present individual monetary scarcity reality which again is a signature of paradigm change.
Having said all of this it really doesn’t matter whether one thinks that the problem is a trend or an inherent and continual condition…only the deeper realization that the current monetary paradigm is enforced on the situation keeping all of its seemingly unresolvable problems in suspension/stimulation….and that the policy combination I recommend is the universally beneficial resolution for all agents.
We must not worry unduly. Markets are nervous. Traders are anxious. They will all calm down after the normal cyclical “cleaning up” has taken place, new deals made, new arrangements put together and new celebrity dinners arranged on those special occasions when all needs to be declared good. On such historical occasions, as we may all knowingly too well, some will smile victoriously, some will attend but look rather serious or unsure, some will be over the moon, others will be absent for personal reasons, or more importantly to see to more urgent matters taking place at the “home economies”.
I’ve talked with dozens of CEOs over the last 10 years. The story on wages is the same for all. First, they won’t raise wages for any employees without some sort of cover from the board or at least promises of non-attack from major institutional investors. Don’t see either coming anytime soon. Second, increasing profits, dividends, or both have priority over wage increases. Third, there is little organized pressure to increase wages, since employees mostly present no unified front. Most of the CEOs I’ve spoken with place employee relations low on their list of work priorities, and employee wages even lower.