Supply and Demand

The idea of supply and demand reigning supreme in the marketplace is nothing new. Last week, I wrote of executive bonuses and wondered why there are no employee bonuses of any significant size. Supply and demand (theoretically, at least) should take care of the worker-bees, but subtle shifts have caused a mutation in the original theory, I’d say. I offer some examples:

Doctors: Becoming an M.D. is a laborious and expensive enterprise and it stands to reason that anyone entering into this profession would seek compensation commensurate with the time and energy dedicated to a successful outcome. A young doctor today sees limited income potential in traditional areas of General Practice and seeks, instead, a specialty so as to maximize earnings. But HMO’s, promising to solve the health care crisis, have succeeded only by limiting specialized care and lowering payments to physicians in general. As a result, many reconsider a career in medicine. The prospect of national health care and even lower rewards drives even more medical hopefuls into other, more lucrative, areas.

Despite these facts, medical school tuitions remain high and the prospect of making a reasonable return on investment is leading to an increased shortage of qualified doctors for you and me. Where does supply and demand figure into this problem?

Airline pilots: These folks have traditionally come from the military services with long resumes and more than a modicum of flight time. But the military pipeline has slowed to a trickle. Not that one would notice, what with airlines cutting capacity, but the day will come when demand once again returns. What then? Well, we have a supply of pilots at the regional airline level and they have cut their teeth on smaller jets with similar technology. Their move to a bigger cockpit might be an easy transition, but who fills their spot? You’re right...no one. Much like doctors, professional pilots spend a large portion of time and money obtaining the experience required by the airlines. So, as pilots’ wages and benefits have been slashed through bankruptcy court or concessions coerced through the threat of Chapter 11, why spend time and money on a job that is not currently available and, even if it were, offers little or no reward for the effort? With such a gloomy future in the industry, many choose other career fields.

Teachers: Society once thought of an education as something that just happened. Kind of like the sun rising in the east. Not so (as we now realize). As teacher salaries have been decimated, so, too, has the quality of education available to our students. “Teaching” has been reduced to crowd control and passing a test tied directly to funding at the expense of “learning”. Low pay and dismal job satisfaction combine to, once again, force those that would otherwise seek a career in education to look in other directions to secure a piece of the American dream.

The list of career fields that are short on personnel yet still fail to offer incentives goes on and on. Most are technical in nature or require some sort of specialized skill and the day is fast approaching where the supply falls to zero. How? Well, the folks that currently hold these positions worked a good while to attain their current level of success. Unless their eventual replacements see similar rewards, they go in other directions and replacements simply no longer appear on the horizon. The time to create demand through financial and quality of life possibilities is before the supply line dries out, i.e. now. Waiting until there’s a critical shortage only guarantees a crisis of greater proportion.

There are two areas that still provide opportunity and they lie at opposite ends of the employment spectrum: executives and clerks. I would like to think that today’s unemployment rate would create an opportunity for many businesses to get rid of the recalcitrant clerks, indifferent attendants, and other unpleasant employees in favor of someone who needs a job, wants a job, and realizes the qualities that make for a desirable applicant.

Conversely, doesn’t everyone want to be the boss? With that kind of supply, why the need to create demand? It stands to reason that executive pay would come down to a point where the two were relatively equal, doesn’t it? (Don’t hold your breath on this one, though.)

We depend on many folks with various skills that combine to make our economy and society work. Neglecting them on the premise of corporate productivity and profitability does nothing to ensure a continuing supply of similarly qualified employees.