[Market Economy Guide] The Age of Labor Shortages

“After the Black Death killed one-third of Europe’s population, population decline drove up wages, and the Middle Ages ultimately collapsed.”

Disease leaves deep scars on human history and sometimes even changes history itself. The Spanish flu that spread in the 1910s claimed tens of millions of lives. The damage was so severe that some even assess that the Spanish flu hastened the end of World War I.

What the Mongol Army Brought

The Black Death appeared in Europe in the 14th century, around 1348–1350. In the short span of just three or four years, 25 million people—equivalent to one-third of medieval Europe’s population—died from the plague. The outbreak period itself was not especially long, yet the devastation was extreme because once symptoms appeared, death came in as little as six hours and at most within five days.

The bacterium that caused the Black Death, bubonic plague, had originally been endemic to parts of Asia and Africa. It began spreading into Europe as the Mongol Empire advanced westward. In 1347, the Mongol army attacked Kaffa, a port city on the Crimean Peninsula. During the siege, they used catapults to hurl the corpses of soldiers who had died of the plague over the city walls. The Mongols already knew well that the disease had caused enormous fatalities in China. Soon mass deaths broke out inside the city, and the Mongol forces were able to capture it with little effort. Some Italian merchants survived there and returned to their homeland, carrying the Black Death into Europe.

An Unexpected Opportunity

The damage in Asia and Africa, where the Black Death had begun, was even more severe. In China, 33 million people died—more than in Europe. Africa also suffered tremendously. In Egypt, for example, the population in the 19th century was only one-third of what it had been 1,200 years earlier, in the 7th century CE.

There is a reason why Europe’s experience of the Black Death receives so much attention even though the devastation was global. It is because after the plague, the course of European history changed completely. So many people died that once the epidemic subsided, some in Europe became suddenly wealthy by inheriting estates from multiple relatives. In addition, as the sharp population decline created a labor shortage, feudal lords began improving the treatment of the peasantry. The wages of surviving peasants continued to rise, and their social standing improved as well.

In England, as peasants’ demands for higher wages grew stronger, the king even enacted a law to prevent wage increases. Edward III used this law to freeze workers’ wages, prohibit begging by adults under the age of 60, and require them to work. It also banned one farm from recruiting peasants away from another with better conditions. The law’s purpose was to cap workers’ wages at the pre-plague level—specifically, the 1346 level. But his attempt had no effect at all. Wage increases caused by labor shortages continued for another 100 years. Only after the population-to-land ratio recovered to its pre-plague level did wage growth begin to subside.

For a considerable period, the quality of life enjoyed by workers and peasants improved dramatically. The Black Death was a terrifying force that claimed an enormous number of human lives, but at the same time, it was also a driving force that powerfully turned the wheels of history forward.

Modern Population Decline

The global population is gradually showing a tendency to decline, especially in advanced countries. The cause is population decline resulting from individuals’ voluntary family planning aimed at maintaining a high quality of life. In economic terms, a declining population means a declining labor force. In other words, an era of labor shortages is approaching.

The unprecedented crisis brought by the Black Death unexpectedly gave rise to the Renaissance, one of the most creative and productive periods in human history. Today’s job market may feel difficult, and it may seem as though this hardship will never end, but the future now taking shape is by no means unfavorable to workers. As always, the future belongs to those who prepare for it. Rather than simply lamenting one’s current situation, it is necessary to find even a small job and steadily build one’s own career step by step. The point is to raise one’s labor productivity and prepare to sharply increase one’s market value in the coming age of labor shortages. Let us not forget that every crisis is also an opportunity.

■ Let’s Think About It

Human catastrophes do not end as mere disasters. They act as forces that change something and create something new. Paradoxically, the Black Death led to population decline → rising wages → the fall of the Middle Ages. Let us find out whether there are other such examples.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: [시장경제 길라잡이] 노동력 부족의 시대

Author: Sung-no Choi

Date: 2018-12-17

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=15&idx=11340