Not exactly. The number one factor is hourly productivity, which more than doubled since the 70s. At the same time, demand also doubled, just not as fast (there are a few missing %). That difference is where labour surplus mainly came from.
> This is not a problem!
If your an employer, sure: this is an employer's market. But ultimately, this drives salaries down, and consumption, then employment. There's a reason why Ford advocated the 5 days work-week when everyone else went for 6, and why he paid $5 a day when the norm was $2.5. He wanted his employees to buy his cars.
> artificial shortage of labor
We're already under such "artificial shortage". Minus the shortage, of course, but we have vacations, 5 day work weeks… If you let the market choose, you would soon have many people working 50-60 hours per week for less than the minimum wage. (I mean, we would have more of them.)
I just want to push the cursor further on the "artificial" side.
The labor surplus is caused by decreased scarcity. Prosperity has decoupled from labor. This is not a problem! Even if it was, creating an artificial shortage of labor would not be a sensible.