South-Western College Publishing - Economics  

Summer Seasonal Shortage
Subject Labor Markets, Equilibration
Topic Product Markets
Key Words Shortages, Labor Markets, Unemployment, Work Force, Overtime, Wages
News Story Staffing shortages are common across many labor markets that hire extra help for the summer season. The cause is the lowest unemployment rate for 28 years?4.3 percent. According to Manpower, a staffing company, it is the best job market in 20 years. About a third of companies polled plan to increase the sizes of their work forces.

However, businesses are finding that there are insufficient applicants or that their credentials are weak. As a result, they are trying different approaches to resolving the shortages. Some are simply opening for shorter hours or are closing their businesses. For example, some beaches have been closed due a lack of lifeguards, and some restaurants are not opening at lunchtime.

Some other concerns are trying innovative recruitment strategies. Busch Gardens is busing employees in from neighboring cities. Cedar Point amusement park in Ohio is recruiting retirees. Others are searching for empty nesters and teachers.

Other approaches are to increase wages, offer tuition remission, give bonuses for staying with an employer, offer more overtime, and benefits such as subsidized housing.
(Updated August 12, 1998)

  1. Draw a labor supply and demand diagram of the U.S. labor market. Bearing in mind the news story, show a shortage of employees, together with the wage rate and the level of employment.
  2. One set of solutions involves recruiting nontraditional workers such as retirees, working more overtime, and busing workers in from other cities. How would this affect the shortage, the wage rate and the level of employment? Illustrate on your diagram.
  3. Another strategy is to reduce operations. For example, beaches have been closed and lunchtime meals have been suspended. Represent this approach on another diagram of the labor market. What happens to the shortage, the wage rate and the level of employment?
  4. A further tactic is to raise wages (including benefits) through bonuses or subsidized housing. In another labor market diagram, show the effect of increasing the wage rate on the shortage and the level of employment.
Source Stephanie Armour, “Frantic employers search high, low for summer help,” USA Today, June 17, 1998.

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