Examining the complaints of some CEOs that they just canât find qualified workers, economist Dean Baker lays waste to that argument on several fronts, most notably the CEOsâ apparent inability to apply the laws of supply and demand to fulfilling their stated workforce goals.
Baker, who co-directs the Center for Economic and Policy Research (CEPR), first crunches some data to show that, in fact, the ratio of unfilled jobs to employment is âdown by almost a third from its pre-recession level,â Baker reports in a column titled, âA Generation of CEOs Who Donât Know How to Raise Wages.â He writes:
According to standard economics, when businesses canât fill job openings, they are supposed to offer higher wages. If these businesses offered higher wages, then they could lure away workers from their competitorsâŚIf these CEOs raised wages high enough, then these workers would be willing to work for their companies.
Since it would be rude to imply that CEOs are not being honest when they complain about the lack of skilled workers, we should assume that they donât know how to raise wages. This is a problem that could be easily remedied. The government could offer short courses to CEOs and other top executives that would teach them how to raise wages and why this would be beneficial to their firms.
Of course, CEOs arenât total strangers to methods of upping compensation packages â when it comes to their own, that is. The AFL-CIO annualÂ PayWatch data shows that in 2010, CEOs ofÂ the largest companies received, on average, $11.4 million in total compensation last year.Â Overall, CEOs of the 299 companies in the AFL-CIO Executive PayWatch database received a combined total of $3.4 billion in pay in 2010, enough to support 102,325 jobs paying the median wages for all workers.
InÂ 1964, the apex of performance of the economy, CEO pay relative to average wage-earners was 24 to 1. Now it isÂ 340-1.
This blog originally appeared on AFL-CIO Now Blog on October 27, 2011. Reprinted with permission.
About the Author: Adele Stan isÂ a journalist and lifelong member of the labor movement, reports on a timely forum on inequality and jobs at Georgetown University today.