Better Wages and Working Conditions: The Workers Will Come
While many things taught in introductory economics courses are nonsense, it seems to be true that higher wages will attract more workers.
I hate to sound like an economist, but sometimes simple economics does have the answer to a problem.
As the summer of 2025 continues, executives in U.S. manufacturing companies are complaining that they can’t find enough qualified workers to meet their needs—a problem that will become even greater if, because of the Trump administration’s tariff mania, these companies try to expand production in the United States. According to a June 23 story in The New York Times, “About 400,000 manufacturing jobs are currently unfilled, according to the Bureau of Labor Statistics.” And one executive complains: “For every 20 job postings that we have, there is one qualified applicant right now.”
There is a simple economists’ answer to such complaints: offer a higher wage! And, of course, better benefits and improved working conditions, too. The workers will come.
But, unsurprisingly, this has not been what employers have been doing. In May of this year, the average hourly wage for production and nonsupervisory manufacturing workers was $28.92, while for all such private-sector workers the figure was 7.8% higher, at $31.18. This was a switch from 25 years ago: In May of 2000, the hourly wage for manufacturing workers was 2% higher than the hourly wage for all private-sector workers.
Moreover, in this 25-year period, while the real (i.e., inflation adjusted) median household income rose by about 16%, the real wage for production and nonsupervisory workers in manufacturing rose only about half as much, by 8.5%.
Employers in manufacturing have accomplished this relative decline in workers’ wages by several means—automation, union busting, and shifting (or the threat of shifting) production abroad. In short, they have done just about everything they could to keep wages down.
While many things taught in introductory economics courses are nonsense, it seems to be true that higher wages will attract more workers.
But what about immigration and the labor “shortage”? That is the topic of a post that will follow shortly.
Data used here are from the Federal Reserve Economic Data.
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