“Maine companies just can’t find enough workers.”
But it’s nonsense.
There’s one reason Maine companies can’t find enough qualified workers: they aren’t paying enough.
And if their business model does not allow them to increase their wages enough to attract skilled applicants, then their business model is flawed.
Labor is a commodity that responds to market forces, the same way any material cost does.
If there’s a scarcity of workers, the cost goes up. If there’s a glut, the cost goes down.
Our common paradigm in Maine is that we are a poor state, so we expect to be paid less than in more economically thriving areas. But that’s counter to the economics of our labor market.
Labor costs are naturally going to be higher in Maine than in more moderate climates and more densely populated areas for a number of reasons.
First, it costs more to attract qualified employees because it’s cold here, our taxes are too high, and insurance costs too much. Maine’s a great place for those who can appreciate it, but for the average American, six months of snow a year is a little hard to handle. So if you’re going to attract software engineers from warmer climates and lower-taxed states, you’re going to have to pay them more to compensate for it. But many Maine businesses deny this principle, and offer lower comparable salaries than in other parts of the country.
Second, there aren’t that many people here. This means we have a natural scarcity of labor, which means labor will cost more. But again, many businesses, stuck with the mentality that Maine is a poor state, believe they can pay less because there are fewer opportunities here.
Say, for example, a company needs engineers, and they’ve traditionally paid them $65,000 a year. But now they are unable to find engineers to hire. This is not because there are none, it is because $65,000 a year is not enough to either a) attract engineers to move to Maine to work for them, or b) convince Maine workers to invest in educating themselves to become an engineer.
So what’s the answer? Simple: pay more.
For every $1,000 in additional salary an employer offers, the pool of interested applicants becomes slightly larger. Our proximity to the Boston metro area means there are literally millions of potential workers, highly-skilled and otherwise, within a few hours of southern Maine. But the jobs need to pay competitive salaries in order to attract workers here.
Paying a competitive wage will also increase the chances of Maine workers choosing to invest in their own educations to become qualified for these positions. But, if becoming an engineer, or a software designer, or an auto mechanic, does not yield enough salary to make the investment in education worthwhile, they won’t do it.
This is not a complicated issue, and it shouldn’t be the centerpiece of anyone’s economic development discussion.
Certainly, the cost of doing business in Maine should be discussed. Our energy costs are too high, our taxes are too high, and our government regulation is too cumbersome. All of these issues are worth discussing if we want to grow our economy.
Government can impact some of these things. The LePage administration, unfortunately, has not done anything concrete to provide a more competitive market for energy in Maine and drive costs down. Neither have they done much to untangle the red tape in Maine’s regulatory agencies, or substantially reduce Maine’s tax burden.
But government really shouldn’t be in the business of trying to artificially depress wages as a way to help Maine businesses. By getting involved in job training or other taxpayer-funded programs that are meant to address the alleged labor shortage, government is using taxpayer funds to artificially depress wages, and keeping the market from being able to set wages where they should be. And it means skilled workers end up making less than they would without the government’s involvement.
This goes for the low-wage tourism jobs that seek foreign workers as a remedy as well. Maine businesses need to stop looking toward government as a way to keep wages artificially low.
Every time you hear a business leader saying there aren’t enough workers in Maine to fill the available jobs, what they’re really saying is, “We don’t want to pay workers what the market demands.”
And every time you hear a politician saying we need to fix this problem, what they’re really saying is, “Let’s use your tax dollars to perpetuate lower incomes in Maine.”
Business, not government, needs to solve this problem.
If businesses need workers, they need to pay more. Plain and simple.