Let’s assess our current global workforce shortage. The product, which is people or human resources, is in short supply like never before. There are many reasons for this shortage. For example, a large percentage of employees left the workforce during the pandemic and they are unwilling or unable to come back. Strict immigration policies combined with the pandemic encouraged employees to return or stay in their home countries. Others sought jobs in entirely new industries, joined the gig economy, or started their own companies, leaving employers with a fraction of available employees to fill open positions.
As a result, numerous employers now offer higher compensation to attract potential employees from the limited supply of workers. While several factors contribute to our current inflationary economy, many believe this higher compensation accounts for a significant part of it.
There are various ways to end inflation, such as, using price and wage controls, enforcing anti-trust laws to break up corporate monopolies that raise prices for greater profits only, relaxing tariffs to increase cheaper imports, investing in more production of what’s in short supply, reducing government spending, and so on. While there are various schemes, few offer proven direct benefits in ending inflation timely. Eventually, inflation stops principally because the problems go away, like a tight labor market or supply chain disruptions.