Yes, wages, like other prices, are solely a factor of bargaining power with the worker as the seller and the employer as the buyer. Supply and demand are only two of many factors that comprise bargaining power.
Employers hate paying more for new employees because then the old employees will expect that their pay will be increased as well. So, if Bob who employees ten people, needs two more, he can’t just pay more for those two. He’s going to have have to pay more to all 12 people which he absolutely doesn’t want to do.
Much is made of the “shortage” of Big Rid drivers. What people don’t mention is that 20 years ago big rig drivers were earning about $100K/year and now they’re earning around $40K/year.
Why? Because the job has gotten easier? An increase in supply? A decrease in demand? NO, because employers have consolidated and have more bargaining power and because drivers have become more desperate.
If the trucking industry raised the wage for big-rig drivers from the $40s to, say, $80K, the so-called, employer-created shortage would quickly disappear.
The exact same thing has happened to the airline industry and the need for pilots. Much is made of the “shortage” but regional airlines are still paying commercial pilots about what the manager of a Dunkin Donuts earns so no wonder they’re having trouble finding commercial pilots. But, if they suddenly offer the desperately needed new pilot a salary that’s $15K more than they’re paying their old pilots, they’re in big trouble.
What do they do? They complain that they can’t find qualified pilots which means that they can’t find qualified pilots at the chump-change wages they are still offering.
— David Grace