A Requiem for the Magic of Labor Shortages

2,239 words

One of the most beautiful theories in modern thought is the “Invisible Guiding Hand,” credited to 18th century Scottish philosopher Adam Smith. It describes how, through a random, organic process composed of an uncountable number of independent decisions, free markets achieve the most efficient use of resources. It is also an entry point into the idea that actions performed due to self-interest can still be “good.”

While economists and politicians are fond of the theory when it suits them, they seem to ignore the fact that business cycles also perform similar magic. While business cycles may have some unpleasant aspects (nobody likes a recession), they are corrective processes that set the economy straight, remove inefficiencies, and create opportunities. Most specifically, labor shortages are wonderful instruments for both economic and social good.

Yet, it has been decades since such shortages have been permitted to occur. Obviously, employers don’t like them, since they might make satisfactory employees difficult to find and drive up wages. But when modern American business leaders cry that they can’t find enough workers, what they mean is that they can’t find enough workers at reduced wages who will accept less-than-optimal working conditions. The problem has been that high immigration levels and outsourcing jobs have prevented any such labor shortages to appear; their absence has been a deliberate distortion of the labor market by policy-makers. Free market economists who tout the wonders of the Invisible Guiding Hand in general seem not to notice that, when national labor markets are opened up to the entire world, equilibrium wage levels move in the direction of wages in the poorest countries that can supply said labor.

The effects of opening up labor markets in the U.S. to the whole world have been starkly destructive. Most harmful is the way they have driven American citizens out of the labor force. According to the St. Louis Federal Reserve Bank, the Labor Force Participation Rate for white males– all of them age 16 and older except students, military personnel, retirees, and the disabled–dropped from 87.7 percent in October of 1954 to 69.5 percent in May of 2025—nearly one in three white men is not working. The fall has been remarkably steady and cannot be blamed on an aging population. According to a 2016 report by the Office of the US President, the labor force participation rate of “prime-age males” (ages 25-54) dropped from 96.7 percent at the start of 1965 to 88.4 percent by May of 2016, then it fell to ­­­­83.5 by November of 2024. According to the St. Louis Fed, roughly one in six healthy white males in the prime of their lives is idle.

The reasons for this retreat from full employment are not simply a matter of supply and demand but are many and complex. Some are indeed purely economic: businesses naturally want a large supply of workers willing to toil for long hours for low wages. They have put tremendous pressure on the government to give them what they want by permitting offshore production and opening our borders to a massive invasion of new workers, both legal and illegal. With only so many jobs, somebody has to be put on the sidelines.

Others may be the unintended consequences of naive do-gooderism. In the desire to create a “Brave New World” of equality, somebody has to lose as others are deliberately lifted up. Almost invariably, those chosen to lose are white, and most often they are male. The effect on the white male’s self-image when, in a period during which work is hard to come by, he is forced to take jobs in which he is completely surrounded by non-whites. He will likely have to accept an inferior status and frequent slights—and may possibly have to adopt the ways and beliefs of his co-workers to remain employed.

Finding ways not to work may be preferable. Another culprit for white male unemployment is the ever-expanding government “social net” that allows potential workers to escape into indolence. As Morris van de Camp described in his recent review of the book Men Without Work, a great many men are now gaming the system “of various disability programs of the federal and state governments.”

And, of course, there is always the lingering near-certainty that the creation of a permanent white underclass is not merely economic, nor unintentional, but nefarious. White males have been in the cross-hairs of a host of other developments, with a persistent assault on their identity and sense of purpose. Whether unintentional or deliberate, new child-rearing practices, the popular media, and the educational system have combined to produce a sort of “pathological individualism” that reduces the likelihood that one can perform meaningful work for long stretches or even have normal human relationships. White males have been hit hard with social and cultural forces.

The labor markets have played a large part: all of this decay has occurred in a market highly distorted so that shortages will not occur. But these shortages are a necessary part of a healthy economy—and a healthy society. Labor shortages perform many important social functions. Perhaps most important of all, they force a society to set priorities. For instance, over time, a prosperous economy develops a taste for unnecessary luxuries and decadence. Labor flows to where it is most needed, as determined by wages. When there is a general labor shortage, the wages of the most essential jobs—the ones society cannot do without—rise to attract labor. That means, for instance, labor will flow toward jobs such as nurses and HVAC repairman rather than to Brazilian wax technicians and poodle-groomers, the sort of frivolous occupations that thrive when the economy booms with an endless supply of labor. A labor shortage can offset the decadence because of the flight of workers to those endeavors that are truly useful.

That’s not the only important role labor shortages can perform. Freedom suffers when wealth is concentrated in too few hands. Self-rule by a people depends on economic self-sufficiency; living pay check to pay check makes a population weak and dependent, and freedom stands in an inverse relationship to economic dependence. Labor shortages shift wealth to the lower and middle classes through rising wages, enabling the common people to regain lost power and freedom.

Unfortunately, the concentration of wealth at the top in the United States has been increasing since the 1970s—during the period of outsourcing and high immigration that cause labor gluts despite an often-booming economy. The prevalent measure of inequality is the GINI coefficient; according to the St. Louis Federal Reserve, in 1980 it was 34.7. By 2023 it was 41.3 (a higher coefficient means greater inequality). Also according to the Fed, in 1989, the top 0.1 percent of households had three times as much total wealth as the bottom 50 percent. By 2024, that disparity had risen to seven times. Surely that has a lot to do with the way our country now seems to be firmly in the grip of elites.

Another benefit is that, with a shortage of workers, employers are likely to invest more in those they do hire. Such investments are good for the employer-employee relationship. But that seems to be increasingly a thing of the past; lifelong employment in the private sector, once the norm, is becoming rare. Today, employers expect new hires to be ready to go on day one instead of providing expensive on-the-job training. The “gig economy” was once touted as the triumph of the entrepreneurial spirit; in practice, it had the effect of making once-secure positions temporary.

Wages rise during labor shortages in an organic way that is superior to minimum wage laws. Minimum wage laws are artificial, set arbitrarily by “experts” who have no true definition of what the minimum should be. The Invisible Guiding Hand, however, has no such built-in fallacy—wages rise and fall to their natural level according to the demand for workers. That is, unless they are manipulated by such tactics as immigration. Another big problem with minimum wage laws is that, by setting an arbitrary minimum, they remove from the economy many part-time jobs through which young people can get their first work experience.

Especially important is the potential adverse effect the perpetual labor glut has had on white fertility. Clearly, removing 20 percent of potential white male workers from the labor force—and depressing the wages of those who are employed—is no way to keep the maternity wards humming along at full capacity. White males are work animals; without productive activity they often shrink from life altogether. The low fertility rates in the West are correlated with the permanent labor gluts from immigration. Perhaps rising wages and increased employment would reverse the so-called “baby busts”; they affect expectations of the future, which naturally has a direct impact on the birth rate in a K-selected population (those who have fewer children but plan ahead and nurture each child extensively). If wages were permitted to rise naturally without suppression through immigration, it is possible we could see a commensurate surge in the white birth-rate. After all, prosperity and increasing opportunities are unconscious signals to a K-selected population to have more children.

One of the best things about labor shortages is that they can attract marginal workers back into the workforce. These are citizens, too, and society is paying for them in other ways. While some of them may be too far gone, as Morris van de Camp explained in his review, many others should be able to turn their lives around through employment. Of course, joining the ranks of the gainfully employed may require a significant “attitude adjustment” for most marginal workers, but having opportunities to advance is still part of the picture. Bringing these people into the workforce is at least likely to somewhat reduce social net costs and social pathologies. Surely some percentage of the absurdly high number of “deaths of despair” and other crippling realities plaguing Americans should be attributed to a lack of employment opportunities.

Labor shortages can also spur positive innovation: if there is a steady stream of low skill immigrants, there is less reason to automate low skill, low pay, backbreaking functions. But, as the saying goes, necessity is the mother of invention.

Of course, too much of a good thing can cause problems of its own; down cycles have their corrective purposes as well. Without the corrective force of downturns and temporary labor gluts, an economy can become, not just inefficient but distorted, even decadent. Businesses that are not competitive, or are too much in debt, or provide an obsolete or unnecessary service may not survive a downturn, and that’s not always bad. When times are hard, people get creative, and entrepreneurship often increases. The problem with the U.S. is that, even when the economy is roaring ahead, labor gluts persist due to immigration and global outsourcing. And this has proven to be disastrous.

Much of the work needed to restore a society that helps white males to thrive is in the social, cultural, or political realms. But lack of employment opportunities and low wages have still been major contributors to the problem of the unemployed or underemployed white male. And they especially make re-entry into the workforce difficult.

Whatever the cause, we are seeing a whole lot of white males who have given up and are living on the margins of society. Some, as suggested above, are scamming the government safety net. Others may be walking punchlines, comfortably living in their parents’ basement playing video games and smoking weed, oblivious to the real world. At the other extreme, some are prime candidates for living on the streets while addicted to meth, fentanyl, or heroin.

Of course, other distortions that hurt the prospects for white males, such as DEI measures or affirmative action, must be ended to get the full benefits of labor shortages. And some tough love is needed as well: a society should not encourage dependence if it wants productive members. But with greater opportunities, a few lost souls may be pulled back into productive society, and then a few more, and then a few more—each is a great victory over the destructive forces that have caused this decline in white male participation in life.

Yet, one must question whether our policies will ever permit true labor shortages to appear again. Today, President Trump is finally closing our borders, but it may be a case of too little too late, since there is a huge underclass of all races. His deportation efforts may not yet be on the scale needed to affect labor markets. More worrisome is the way legal visa holders are still pouring in. What was done to the white working class is now happening to the middle class. For example, white males are now only 20 percent of medical students—and rapidly falling.

The economist lords of the free market always complain that too much government meddling in the economy can hurt business activity and prosperity, that we need to let the Invisible Guiding Hand work its magic. And yet, they have treated natural business cycles as if Armageddon—and prevented the one element of the Invisible Guiding Hand that would do us the most good. And now it faces perhaps the biggest threat of all: artificial intelligence, which is predicted to have the same effect on the labor market that a horde of locusts has on a field of grain.

Such a beautiful idea. So natural, so coherent, so human, so efficient. Such an opportunity lost.