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 DOI: 10.1177/0891242414532884

2014 28: 283Economic Development QuarterlyKristen Keith

Book Review: Occupational labor shortages: Concepts, causes, consequences, and cures  

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Book Review

As its title suggests, the book Occupational Labor Shortages: Concepts, Causes, Consequences, and Cures, by Burt S. Barnow, John Trutko, and Jaclyn Schede Piatak, explores the causes, consequences, and cures for labor shortages using four occupations as case studies. It combines economic the-ory with national statistics and quantitative and qualitative survey data to identify whether each occupation is currently or had recently experienced a shortage. As the authors note in the first chapter, at both micro and macro levels, it is impor-tant to study occupational labor shortages. Having an under-standing of which occupations are likely to experience job growth and rising wages will allow individual institutions to offer and their students to invest in more relevant programs of study. At the macro level, accurate information is a prereq-uisite for good policy. It is essential that elected officials understand the extent of current occupational shortages as well as the likelihood of future ones if they are to develop effective solutions to current labor market issues.

The book consists of six chapters. Chapter 1 provides the reader with the theoretical background that is necessary to understand how occupational labor shortages arise and why they persist. It continues with a discussion of several labor shortage models. These include the social demand model (quantity of workers is less than the socially desired number as established by some policy goal), the Blank–Stigler model (supply increases less rapidly than demand), the Arrow–Capron dynamic shortage model (caused by a consistent steady increase in demand), the rate-of-return model (found in occupations with higher than average rates of return), and the monopsonistic labor model (caused by monopoly power). After considering the different models, they define a labor shortage as follows: “A sustained market disequilibrium between supply and demand in which the quantity of work-ers demanded exceeds the supply available and willing to work at a particular wage and working conditions at a par-ticular place and point in time” (p. 3). The primary advantage of this definition is that it is broad enough to examine how labor market institutions adjust to various degrees of labor market tightness. A disadvantage is that it makes identifying

the underlying cause of a shortage more complicated since no single indicator will exist.

Next they consider two conditions necessary for an occu-pational shortage. First, the occupation must be in disequilib-rium, which is caused by the usual factors—too much demand, too much supply or restrictions on wage rates. Second, it must take a significant amount of time for the mar-ket to adjust to the new equilibrium. The rest of the chapter considers the possible reasons for a slow adjustment rate (restrictions on occupational entry, continuous increases in labor demand, etc.) along with the different approaches employers may take to adjust to occupational shortages (increased recruiting efforts, capital/labor substitution, etc.).

In chapters 2 through 5, they apply the definitions and concepts discussed in chapter 1 to the test case occupa-tions—special education teachers, pharmacists, physical therapists, and home health and personal care aides. What these occupations have in common are a history of reported shortages and a high probability that demand will increase in the future. Each occupation has its own chapter in which the authors present and analyze a substantial amount of quantita-tive and qualitative evidence. They document the reasons why a shortage might exist and suggest possible ways of alleviating it.

For special education teachers, legislation, such as exten-sions to the 1975 Education for All Handicapped Children Act, has set the standard that all public and secondary special education teachers must be “highly qualified.” For this rea-son, a shortage in this occupation is more likely to be an issue of quality rather than quantity, causing it to be more consis-tent with the social demand model than the authors’ defini-tion. Resolving this type of shortage requires making difficult policy decisions such as deciding whether the current requirements are too high.

In chapter 3, the authors focus on pharmacists, who repre-sent an occupation where the market has adjusted to remedy any past shortages via the mechanisms predicted in chapter 1. Chapter 4 examines shortages in physical therapy. The authors conclude, although there have been tight labor markets in the

532884 EDQXXX10.1177/0891242414532884Economic Development QuarterlyBook Reviewresearch-article2014

Book Review

Barnow, B. S., Trutko, J., & Piatak, J. S. (2013). Occupational labor shortages: Concepts, causes, consequences, and cures. Kalamazoo, MI: W. E. Upjohn Institute for Employment Research.

Reviewed by: Kristen KeithUniversity of Toledo, USADOI: 10.1177/0891242414532884

at MEMORIAL UNIV OF NEWFOUNDLAND on July 18, 2014edq.sagepub.comDownloaded from

284 Economic Development Quarterly 28(3)

past, that there is not a nationwide shortage of physical thera-pists at this point in time. However, shortages may exist in specific regions of the country, particularly in certain subspecialties.

Chapter 5 introduces their last occupation—home health and personal care aides. It is a low-skilled occupation in a highly regulated field causing compensation to be influenced by the decisions of third-party providers such as Medicare. Given the weakness of the current labor market, they con-clude there is not currently a shortage. However, given the pressure to keep health care costs down along with the increased demand associated with the aging U.S. population, future shortages are possible.

The final chapter presents the authors’ conclusions and their recommendations for future action. They note the cur-rent state of the labor market may be preventing occupa-tional shortages from occurring because there is less demand and workers are less likely to engage in voluntary job or occupational mobility. For occupations subject to mandated quality standards, they believe the social demand model provides a better definition of a shortage and should be used for policy purposes. They end with a discussion of how the data collection process could be improved, making

it more relevant for policy analysis. Of particular impor-tance is an expansion of the type of data collected at the occupational level. For example, a big step in improving occupational shortage data would be to collect job vacancy data by occupation as well as number of applicants per opening.

The book’s strength is the quality of the case studies. Each is well documented, and the analysis is well reasoned. Readers will come away with an in-depth understanding of the history and current state of each occupation. Its weakness is the title—it is a bit misleading as it suggests a broader discussion of occupational shortages than it delivers. This is because the four occupations studied represent a specific segment of the labor market—education and health care. An interesting extension would be to expand the analysis and examine occu-pational shortages in other areas such as the skilled trades.

Author Biography

Kristen Keith is an associate professor of economics in the College of Languages, Literature and Social Sciences at the University of Toledo. Her research interests include gender and racial differences in labor market mobility (employer and occupational), employed job search behavior and paid versus unpaid work.

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