If you want an executive assistant and can’t find one because of a labor “shortage,” then a The Wall Street Journal Today’s story offers the solution: Pay him (or perhaps her) more than $200,000 a year and the deficit is gone. If you’re still having trouble finding the assistant you need, promote his title to “Chief of Staff” and bid the prospect’s salary to $300,000 or $400,000. (“Paying $400,000 for an Executive Assistant? Do-it-all eds are more expensive than ever,” August 4, 2022). The subtitles give the flavor of the story:
Wealthy executives are making six figures for sophisticated assistants that are smart enough to handle complex tasks but humble enough to take on tedious tasks.
One aspect of market complexity lies in submarkets that are characterized by a good or (as in this case) service that is not perfectly homogeneous. There are different types of labor and different types of executive assistants. But in free markets demand and supply determine wages in all cases.
an elderly WSJ The story, on which I considered writing an Econolog post at the time, illustrates the same phenomenon in another market where prices are not capped: If you really want to hire someone, just pay or bid the market wage. If you don’t, you don’t really want it with what you’re willing to pay and what other bidders are willing to pay. And don’t complain about having a “deficiency”! The story’s headline was self-explanatory: “Teen Babysitters Are Now Charging $30 an Hour, Because They Can” (May 2022). The subtitle provided more flavor, although once again the respected newspaper didn’t use the word “scarcity” correctly, proving that if you pay $30 an hour and some benefits, you’ll get a babysitter:
Parents treating teenagers like VIPs for lack of sitters; ‘Order whatever you want for dinner’
A question as an exercise: Are teen babysitters “wages”?
All this reminds me of an old economist joke. Walking down the sidewalk, an economist and his friend pass a Ferrari dealership with a red 296 GTB in the window. (An economist, by definition, we should say, thinks about personal preferences in terms of personal preferences and external constraints like prices, income, etc., but the friend still doesn’t understand that.) “I want it,” the friend says as they continue walking. “No, you don’t,” replied the economist.