
Companies struggling to fill jobs 'should try paying more,' Fed's Kashkari says - SQL2219
https://www.cnbc.com/2018/11/13/firms-trying-to-fill-jobs-should-try-paying-more-feds-kashkari-says.html
======
jedberg
I was listening to a great podcast about this. They said they asked owners of
businesses, "If you're having trouble hiring, why don't you offer more
money?". Their response was all a variation on, "because then I'd have to pay
all my other workers more when they found out, and it's cheaper to just pay
the current folks overtime at their lower rate than give everyone a raise".

~~~
DanTheManPR
Under normal market conditions, they would hemorrhage current employees to any
alternative local employers who raise their wages. But if all local business
owners are freezing their wages while unemployment is low, then the liquidity
of the workforce freezes, and you get into a weird equilibrium. Workers might
want to leave, but there's no alternative that improves their compensation.
Businesses are engaged in a natural cartel behavior, but where the incentives
to cheat are reversed - the first to raise wages hurts themselves the most.

~~~
robben1234
I've seen this in my hometown in Ukraine. It has ~20 outsource companies in
different sectors and if you're good at doing what you're doing and kind of
swapping jobs, there's still a ceiling they wouldn't want to break for you
despite usually being paid by US citizens for their services. It's easy for
companies to get new trainees and juniors as city has 2 universities with CS
courses and everyone seems to want to work in IT.

Most of folks who want bigger salary either move to a city with product
companies (Kyiv, Odessa, Lviv, Kharkiv, etc), so there's natural competition
and outsource rise their salaries too, or go remote.

~~~
idontpost
> It's easy for companies to get new trainees and juniors as city has 2
> universities with CS courses and everyone seems to want to work in IT.

If its easy for them to hire, then it's not the same situation at all.

------
megaman8
I dont have much sympathy for companies that turn down highly qualified
intelligent workers by the truckload. There are so many people with MBAs who,
for years struggle to get any kind of job at all.

I mean sure, paying more can help alot, but first of all, just fix your Hiring
process. The hiring process at these some of the companies I've heard about
are absolutely abysmal. I've heard first hand: They get great candidates who
pass the phone screen and all the in person interviews: then at the last
minute change their mind about hiring.

I've seen this at software companies when I was on the hiring side of the
equation. HR told us we had an extra slot open. We don't wanna waste the slot
so decide to hire somone. we wasted months turning down excellent candidates
because engineers don't know how to interview a candidate because there's
never time to train someone when teams are changing every year. Then we
finally find a perfect one that everyone likes, and the manager above us
decides to cancel the position and use the slot to hire a college buddy of his
for a completely different role.

My theory is, a lot of these so called job openings are for jobs that aren't
really needed. And the stake holders don't realize that the jobs aren't needed
until the final hiring decision sign off is needed.

~~~
zeroname
> I have no sympathies for companies that turn down highly qualified
> intelligent workers by the truckload. There are so many people with MBAs
> who, for years struggle to get any kind of job at all.

An "MBA" doesn't make you "highly qualified". People (especially those with an
MBA) should realize that it's about supply and demand: There's too many MBAs
and too few jobs where just an MBA makes you a good candidate.

Companies are never complaining about finding workers, they are complaining
about finding workers _at the right price_. For obvious reasons, they don't
phrase it that way though.

> My theory is, a lot of these so called job openings are for jobs that aren't
> really needed.

At least they're not desperately needed. I assume you have a computer. I also
assume you'll replace it at some point. As long as the old one is still
working or you have a spare, you could you delay that purchase for months,
even years. In the meantime, you can just go window shopping.

------
dominicr
Related to this: customers need to pay more.

Many businesses have very small profit margins, so paying staff more or
training staff could turn them unprofitable.

When you're buying products cheaply it's likely that somebody (or someone's
environment) is paying a price for it. Once you bear that in mind there is
such a thing as products being uncomfortably cheap.

(I live in Norway where nothing is cheap but almost everyone earns a good
wage. The result is that people don't buy so much stuff but lead good lives.)

~~~
nawitus
If everyone earns 2x but everything costs 2x, what changes?

~~~
scarejunba
Because that never happens. TVs aren't affected by the price of milk. Your
vacation in Germany costs the same whether you live in San Francisco or San
Luis Obispo. Your iPhone costs the same. Etc. Etc.

~~~
flukus
It does happen to a certain extent, compare basic food like rice and bread in
a third world country to a developed one, for a lot of products the price is
more a case of what the market more than it is cost of creation.

------
esotericn
Is it the case that companies are actually struggling to fill positions, or
are statements to that effect just an aspect of the metagame?

There's a ton of stuff that goes on outside of the actual mechanics of
'company hires for job and person applies for job'.

Unless you've been pretty lucky you've almost certainly dealt with euphemisms
at work when it comes to discussions around pay, for example.

It's kind of annoying that we can't just speak frankly about these things, but
such is life.

------
helen___keller
My last job that I quit I had worked for a "growth stage" startup. Our
valuation was probably in the 500~M range and we had a real shot at making it
to unicorn status. The entire time I worked there, every couple months the CEO
would give this inspiring talk at the company all hands about how we're
doubling down on recruiting and we're about to grow like you've never seen and
change the world, etc.

When I left after two years, the number of engineers was about the same as
when I joined, but they were almost all different engineers. The company both
struggled to hire and retain because the salaries were just ok, the options
pitiful, and the management downright awful.

We talked about getting the best and brightest from top universities, but at
one point I learned our recruitment strategy was to look for "bargain" hires,
which we defined as really bright & competitive new grads coming out of top
schools, willing to work long hours, but willing to accept low salaries.

(Yes, I was one of those bargain hires, minus the long hours. I quit after
suspecting that my lack of long hours was holding me back from getting
promotions in spite of the significant responsibilities I had as one of the
more tenured engineers).

~~~
collyw
Keeping salaries low for proven engineers is the height of short sightedness.

------
crispyambulance
"Pay more" works fine for companies that are at the top of the pyramid:
google, amazon, facebook, etc. For the rest of the employers there's a hard
stop at some point well below what the top 5 are paying.

The next thing to consider is training.

Unfortunately, it is now fashionable for medium-sized businesses to be over-
run with project management types that hold everyone nose to the
"deliverables" grindstone and enforce performance measures that are hostile to
anyone who needs to pick up new skills on job and anyone that deigns to mentor
colleagues (god forbid, they slip on a trite deliverable because they were
cultivating the next generation of grindstone-licker).

~~~
krigath
> Unfortunately, it is now fashionable for medium-sized businesses to be over-
> run with project management types that hold everyone nose to the
> "deliverables" grindstone and enforce performance measures that are hostile
> to anyone who needs to pick up new skills on job and anyone that deigns to
> mentor colleagues (god forbid, they slip on a trite deliverable because they
> were cultivating the next generation of grindstone-licker).

Wow, I'm so glad that I am part of a company culture that values mentorship
and teaching younger employees. Since joining in August last year I have spent
a large proportion of my time both mentoring and pair programming.

Our team of 8 developers is fairly junior with 3 graduating last year and one
this year. It's been great to see last year's graduates grow to become very
independently productive members of the team, and I like to think that they
would not have grown as much without my support and trust.

------
stakhanov
The article is kind of saying the opposite of what the headline implies. It
says that Kashkari had previously been making the argument about paying more,
but that, with unemployment falling to its lowest level in 49 years, we might
now be getting to a point where there might actually be truth to the notion
that there are just not enough bodies out there.

I see a solution to the problem: Remote work. Put people who are on site into
jobs that actually require people to be on site, and fill jobs that don't have
that requirement remotely. That way you can get around the absence of bodies
in the U.S. (coupled with the tight immigration regime) and the skills
shortage.

------
growlist
I guess I'm not very clever because I don't understand how encouraging inward
immigration in search of cheap labour isn't akin to a ponzi scheme. Another
thing I never see discussed is: what is the top limit to the population a
country can carry without things becoming miserable? Surely at some point
inward migration will have to stop unless we aim to have every single citizen
of the world living in a single country, and what then?

Also, how is it morally or economically justifiable to let existing citizens
languish on unemployment benefit whilst solving the problem of their lack of
participation in the labour market by opening doors to cheap migrants?

It seems to me like if we care about our fellow citizens we should all get
used to paying higher prices in support of them, which might enable them to
obtain the necessities of life in a more fulfilling manner.

~~~
digitaltrees
If you pay more, people bid up prices on things they buy like housing and
food. There is no silver bullet that solves all things. The reality is it is a
combination of policies that promote equality and opportunity, or they promote
concentration of wealth and power in a few individuals, corporations and
political bodies.

~~~
growlist
> no silver bullet

that doesn't change the fact that a race to the bottom i.e. lower prices is
surely a bad thing.

------
zwaps
There is so much demand for non-mindless consumption these days, and in some
areas certainly also the money for it, that I wonder why American companies
don't start to signal.

Like, put a huge sign in front of the door: "America needs higher wages, but
someone needs to start! Our prices include fair wages to our workers, 25%
above industry average". Or something more clever. Building this into the
company ethos has the advantage, in the current economy, to not only take
higher prices for hopefully little drop in demand, but also to attract better
workers.

Since there are almost no labor related laws in the US, the only way to afford
above average wages is to generate demand by differentiation. And that might
be done, after all, Americans are willing to tip ridiculous amounts (like 25%)
just so that waiters or delivery drivers get to make a living.

Has this ever been attempted? I have no prior on whether it actually works,
people might care too much about the price...

~~~
scarejunba
If you take the mean tip and raise your prices by that much and move it to
workers, they will make less.

Cash tips are usually tax frauded away.

------
hinny
Two thoughts:

1) I've been saying this for years, but nobody wants to hear it. In
particular, an oft-repeated maxim from the immigration debate is “these are
jobs Americans will not do!”. This statement is plainly and obviously false.
Most Americans will not do these jobs FOR THE WAGE YOU ARE WILLING TO PAY.

Picking tomatoes is backbreaking soul-killing work. I won't do it for minimum
wage. I will do it for $10,000/hr. Somewhere between these extremes is the
optimal wage (from the employer's point of view) which will attract a field
full of pickers. Perhaps that wage is $100/hr. Now, I hear the grower growling
“$100/hr is not a reasonable wage for a tomato picker”. To which I reply,
“define ‘reasonable’ ”. Is it not a tenet of Republican free-market orthodoxy
that the fair value of a commodity is that which is determined by market
forces? Why is this orthodoxy so quickly extinguished when applied to wages,
and especially when its application argues for better wages for low-status
people?

2) I've referred to products and labor as commodities with prices set by
market forces. However, I caution against viewing the employer-employee
relationship as being exactly analogous with the manufacturer-customer
relationship. Both business and labor make money by selling something -- the
manufacturer sells his goods to a customer; the laborer sells her labor to an
employer. But the two are very different in one regard: companies (mostly)
have a multitude of customers, while a worker generally has ONE customer: her
employer.

Most companies strive to avoid overreliance on a single customer. They
diversify their offerings and try to establish a large customer base. The IT
company selling its software to Walmart, and only Walmart, is surely aware of
the inherent peril.

Laborers can't do this. An employee is selling his time; he cannot slice his
day into 5-minute segments and sell each 5-minute labor period to a different
buyer. He may even be contractually constrained from trying this (“no
moonlighting”).

A laborer selling her time is not really in the same boat as a producer
selling a product. [There are exceptions, generally to the benefit of the
laborer. For example, self-employed physicians and lawyers really do have many
customers who purchase small segments of their time].

------
sbhn
What, there is a shortage of workers willing to work for low pay? The Answer.
Create competition in the labour sector by relaxing border controls and let in
immigrants. Keep there status as illegal, so that you don’t need to pay all
the costs that legally protected employees are entitled to

~~~
toxik
That’s very cynical, and implies that the government is even able to pull a
stunt on that scale. I think an easier explanation is available here.

~~~
richardknop
Don't large part of some American industries depend on such immigrant labor? I
even hear comedians like Bill Maher joke about this all the time saying things
like "without illegal immigrants there would be nobody to pick fruit" so it
almost seems like an accepted reality of US, at least agriculture industry in
border states. Is that no true? I just assumed jokes and lines like that are
based on some sort of universally accepted "unofficial" truth, that's what
makes them funny.

~~~
rhexs
If an industry requires illegal subsidies to thrive, there is no industry.
They should naturally go bankrupt. If a nation decides it is important enough
to subsidize (i.e. strategic food stock to feed a populace), then they should
do so through funding bills instead of hiding the true cost through the lack
of immigration enforcement.

But the farming lobby is powerful.

~~~
anticensor
> They should naturally go bankrupt.

No, they should disinstitute by themselves.

------
mk89
The alternative is trying to get cheap workers from abroad, which worked quite
well in the past and still seems to do well to some extent - if you can accept
all the challenges this way of doing business carries along on
social/security/national level.

Times are changing, though, and absolute poverty is thankfully not everywhere
an issue anymore, which leaves it to relative poverty: I can't afford Netflix
=> I am poor. In such cases, people are much less likely to do that "shitty
not-well-paid job" for long. Selling drugs is much more convenient and
profitable, for example. Also, more and more countries are restricting their
borders, making it harder for cheap workers from abroad to come and do such
jobs.

So, yes, the other alternative is: raise the salary!

~~~
hvindin
Interesting comment:

> Selling drugs is much more convenient and profitable, for example.

I know its not related to the original topic, nor the core point of your
comment but I'd be fascinated to know why you think this.

Based on my knowledge of the market WRT wholesale prices/retail (street)
prices/legal risks/product expiry/supply chain reliability as well as just the
statistics around anyone towards the bottom few levels of the pyrmaid on this
I'm almost certain that this is roughly never the case.

I find it interesting that this assumption seems to still exist, and suspect
that a suprising number of people would harbor a fallback position of "if shit
gets really bad I could just sell drugs" which makes a lot of assumptions
about how profitable it could possibly be.

~~~
mk89
I think it highly depends on 1) the severity of the law of your country, 2)
the demand, 3) where you live (how many gangs are out there, how dangerous it
is ..etc.).

Also, selling drugs doesn't imply selling hard drugs, which in many countries
(in Europe at least) is the real "reason" to worry.

The money they make in 1-2 days, depending on what they sell, is way above an
average salary (again... talking only about Europe). 1 or 2 days of selling
marijuana and maybe cocaine in "good" places (of course, not in the middle of
nowhere). So, why wouldn't someone do it, instead of wiping people's asses or
cleaning toilets?

------
keiferski
I’m pretty convinced that as the realization that most work is meaningless,
combined with concepts like basic income, employers will need to provide more-
and-more incentives to get motivated workers.

Maybe they should study how trash men, sewer cleaners and other “undesirable”
jobs are staffed?

------
austincheney
Ugggghhhhh, there is absolutely no data to back up the proposition that
throwing more money at the problem is a magical fix. This is a guess based on
vapor out of convenience and desire.

As a software developer in the Dallas metro I make over 6 figures, twice the
average income. The work isn't that hard and the perks are amazing. At _EVERY_
software development job I have ever held I have worked with a huge number of
immigrants.

If the pay is so damn good (already) and the benefits are so damn fantastic
why aren't more Americans writing software? Why aren't so many of those people
who are writing software so incompetent?

I get asked all the damn time by young people in my side job how they can
become software developers so they too can make the big bucks. Simple, put
fingers on keyboard, struggle, and figure it out through practice. None of
them follow through. None. Some of these guys make far less than the national
average and they still aren't motivated.

So let's propose a hypothetical. Let's say entry level were $150,000 and
senior were $500,000. A ridiculous increase. Would more people be interested
in programming: absolutely. Would there would be a substantial increase in
senior developers? I suspect there would be a minor increase, because it takes
effort. Competence isn't a gift and gifting additional income won't work.

Now, I could be wrong, but as it stands all the objective evidence is on my
side on this.

~~~
justin66
> Simple, put fingers on keyboard, struggle, and figure it out through
> practice. None of them follow through. None.

If that's the actual advice you're giving, I wouldn't expect anyone to follow
through.

~~~
austincheney
Then what would you suggest?

~~~
justin66
If I wanted someone to actually heed what I was saying, I'd suggest a textbook
or a set of online lessons to work through and offer to answer questions about
the subject matter or the profession. "Simple, put fingers on keyboard,
struggle, and figure it out through practice" would be equally useless advice
for learning musicianship, writing, or anything else involving a keyboard.
With computers it's especially strange since there are so many resources today
for people starting out.

In fairness, it's a free country, and these people could have found _someone_
to recommend a textbook or some classes easily enough.

~~~
austincheney
I have done this as well. Spent my time gathering a large number of resource
and good starting points for beginners only to have the audience run away in
utter intimidation (i think).

Now I just lay it out for people. Programming is like playing the piano. You
are as good as your practice allows and its clearly evident in your quality of
product.

------
feefie
> There is no such thing as "shortage" of anything. Just pay more, and you'll
> get it.

Businesses are also limited by how much their customers are willing to pay for
the item/service their workforce produces.

If a company's labour costs are higher than the price their customers are
willing to pay for the product they are selling, then that product won't be
produced.

e.g. if the labour that goes into making raspberries means the customer has to
pay $6.99 for a tiny little package of raspberries at the grocery store, and
no one in the world is willing to pay that, then raspberries will no longer be
sold.

I'm not saying that there currently isn't room to pay higher wages, I'm just
saying there is a practical limit to "just pay more".

------
gwbas1c
I think that's an oversimplification.

I'd love to move back to Silicon Valley and work for an early stage startup.
But, now that I'm a bit more established and have kids, that means that I want
something more than a budget 2-bedroom apartment. (And, I also want a
reasonable commute.)

The cost of living is just too darn high for many businesses to afford to "pay
more."

So, part of the problem isn't just paying more. Part of the problem is
ensuring that areas with job openings are affordable for employees at what the
employers can afford to pay.

------
mrarjen
These things always remind me of two things.

Only wanting young employees with many years of experience, and that time the
Dutch government tried to get unemployed people to work in the green houses.
They got hundreds of people on buses, drove them to the green houses "look how
wonderful it is to work here", a few million investment later, two people
started working there. Both because this was a good way to meet others, and
they didn't mind getting a lot less money if they took the job over government
payment.

~~~
dep_b
The greenhouses paid less because unemployed have many benefits that don't
apply to working people, so getting a minimum wage job would be 40 hours +
travel of your life gone for effectively a few % of more expendable income.

The people that actually do the work are people from Eastern Europe that don't
get that kind of money from welfare in their own country if it exists at all.

If welfare would be less or preferably the actual minimum wage would be taxed
less the gap between having a job and not having a job would be really worth
the effort.

It's utterly strange that within some of the people that are rescued from war
there's up to 80% of unemployment while The Netherlands needs to import people
to do unskilled labor.

------
georgeburdell
Paying more could work for certain kinds of jobs, but others are simply not
productive enough to justify paying more. I recently went to a country without
a minimum wage and it was amazing what they were paying people (presumably
very little) to do, such as sell napkins and straws in a market. Without a
regulatory requirement to do so, it's simply impossible for an employer to
extract a U.S. minimum wage's worth of productivity doing that kind of
activity.

That's not to say that every low paying job is like this. We in the U.S. have
gotten used to certain blue collar jobs paying very little because of massive
numbers of new immigrants, legal and illegal. Now that the spigot is being
turned off, there's a labor shortage at the low end. Maybe, e.g., food and
construction ought to cost more to compensate, which will certainly change the
type of offerings of each, but we might get more efficient usage as a result.

------
sailfast
I agree that increasing wages is definitely a good way to get more folks in
the door!

That said, a very real problem here is the fact that health care and basic
benefits costs have been increasing significantly over the past 10 years but
it's much harder to convince an employee of that value vs. dollars in the door
on a salary number.

Just keeping your health care premiums steady year over year as an employer
could be the equivalent of a huge wage increase, but your employees won't see
it that way because nobody understands the true costs of care.

Nobody says "Thanks for the 10% raise" when they get to keep their benefits.
This is only part of the problem with "you should try paying more." as an
argument.

That said - for jobs without benefits especially, paying more should be the
first reaction to this, 100%.

~~~
jcadam
Yea, in my industry most employers give a piddly 2-3% annual COL raise, which
is then whittled down to nothing (or less than nothing) after the new "changes
to our medical benefits to align us with the rest of the industry and make us
more competitive" are announced during open enrollment each fall.

Factor in inflation and you effectively take a pay cut every year until you
'hop' to your next job.

------
penglish1
The companies appear to be complaining that they can't hire skilled people.

Paying more is one solution - hire the skilled people away from their current
job.

But so is training. Training could be considered a benefit, but at one time it
was the standard assumption - all jobs include training, particularly jobs
that are in any way skilled. And not just training at the beginning, but
ongoing. Every year. Like a salary, vacation and sick time. As part of the
standard budget. Not the first thing to be cut - because it is just as
necessary as salary, vacation and sick time.

Unless of course, the job isn't really skilled, and companies doesn't actually
need skilled people.

------
AngeloAnolin
One missed point is that companies should also fill jobs with people who are
willing to do the work. Most of the time, their economics and hiring processes
are blurred by trying to get what they perceive the best and those who usually
have a lot of clout based off some social media information they have
gathered.

It is far easier to train and make an expert of someone who wants to work with
you than getting someone who has all the nice credentials that pretends their
_expertise_. People who embrace what you are providing are generally more
inclined to stay and contribute.

------
sheepybloke
My company wants to hire around 50 new people, but their pay is only decent
and their facilities meh... And they wonder why they're having issues filling
the different positions.

------
mynegation
That can well be true for one particular company, but what does it mean for
employment as a whole? Say you increase the comp and you find a person for the
position. It's not like they have been sitting twiddling their thumbs, you
hire them away from some other company. Now a different company has this
problem.

Without some external contribution, like willingness to invest into on-job
training, availability of online and brick-and-mortar education, this is a
zero-sum game.

------
Animats
I just saw a help-wanted sign at a supermarket which said they were hiring for
"long-term jobs". Now that's a good selling point.

------
dnautics
How about the fed not make it incrementally hard for companies to do that as a
matter of policy (in order to.boost employment)?

[https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-
hi...](https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-higher-
inflation/)

------
credit_guy
Finally a respected economist who calls a spade a spade. There is no such
thing as "shortage" of anything. Just pay more, and you'll get it.

Now, here's some alternatives for companies that can't/don't want to pay more:

\- offsource (but they know this already)

\- automate (everyone is in a continuous process of automating what can be
automated)

\- hire temp workers (most likely they've been doing this for years)

\- hire illegals (well, that's illegal)

\- lobby for more immigration (probably what Kashkari was answering to)

But here's some _novel_ alternatives:

\- train people more. You hire them at lower qualifications, and educate them
in house

\- open source your tools, so people can train themselves for free, before
applying for your job openings. Tensorflow, PyTorch anyone?

\- offer training for interested outsiders. See the Udacity WorldQuant course
in AI for trading [1].

\- invest in STEM education to increase the general pool of qualified hires. I
know of the Google initiative [2]

[1] [https://www.udacity.com/course/ai-for-trading--
nd880](https://www.udacity.com/course/ai-for-trading--nd880)

[2] [https://edu.google.com](https://edu.google.com)

~~~
j1elo
The usual response to "If you can't pay more, train them!" is that, once
trained, they will leave to some competitor who can pay more.

I wonder, couldn't the training be offered as a perk, quantified in some way
such that if the worker leaves before X months (or years) some % of that
quantity must be given back?

For sure, some European companies offer a relocation package (e.g. they cover
the costs of moving all your belongings, furniture, etc. to your destination)
but if you leave before 1 or 2 years, you have to give back at least 50% of
that cost.

~~~
luma
In a prior life as a technical trainer we used to offer the following wisdom:
either train your employees and accept the risk that they may leave, or don't
train your employees and accept the risk that they may stay.

~~~
humanrebar
It tech, fantastic employees leave for reasons synonymous with "unsatisfactory
training":

\- boredom

\- lack of challenge

\- no opportunity for growth

\- repetitive work

\- bad technology

And, yes, engineers not concerned about those situations are not innovative
and probably not the people you want to hire.

The fact is that "good training" is expected as part of a tech career and
therefore is important to tech workers. To the point that they will job hop
every three years to make sure it happens.

~~~
wonderwonder
I am almost 40, and over my career have had exactly one job that I stayed at
for longer than 2 years. I stayed at that job for 5 because they provided
yearly evaluations and good raises, paid educational reimbursement and
actively promoted from within. All of the other jobs where you started was
where you essentially stayed. If you got a raise generally it was essentially
C.O.L.

If you pay people well, make them believe that there is a future for you at
the company and that hard work is noticed and rewarded, people will stay
longer. For the most part, companies don't and that's the reason a large
number of technology workers have become mercenaries when in comes to
employment. We go in, do a job and are constantly looking for the next step
up. I would love to find a long term job, but at my age, it needs to be
somewhere that I believe I will be valued and rewarded for sticking around.

On a side note, there have been many times a recruiter has called me, and
offered an insulting wage for a position that requires 5+ years of experience.
The companies offering these low wages are the ones saying we cant find anyone
to hire and complaining about the youth of today's work ethic.

~~~
hpcjoe
I'm somewhat north of 40. I stayed longest at the company I started, riding it
up, and unfortunately, down. I was the proverbial last one out, and yes, I did
turn off the lights.

 _> On a side note, there have been many times a recruiter has called me, and
offered an insulting wage for a position that requires 5+ years of experience.
The companies offering these low wages are the ones saying we cant find anyone
to hire and complaining about the youth of today's work ethic._

This. I have recruiters call me up frequently after doing a basic scan on
linkedin, looking for HPC people, or other specific things I've done. They
send me emails telling me how wonderful things are on the other side, and how
they are seeking people with lots-o-experience (&trade;). Then they talk
compensation rates that don't match the other aspects.

Or the ones wanting me to contract to hire. Sure, but if you can't afford the
salaried rate, you _really_ can't afford the contract rate, which prices in my
risk in accepting this.

------
darawk
Yep. Every time people say "Americans don't want to do these jobs" or anything
else suggesting that there is a labor shortage in some sector I always
mentally append the phrase "at the price you want to pay".

~~~
devoply
There are many usually smaller sized businesses that simply won't work because
of the nature of their economics and would cease to exist if you raise pay too
much. There are though many other businesses of larger size that earn
multiples on each employee and could afford to pay them much more and pay the
shareholders and execs much less or nothing.

~~~
CM30
Isn't the answer then that said businesses simply shouldn't be trying to hire
too many new employees yet, or should shut down? Because at the end of the
day, if your company can't function without underpaying employees, then
perhaps it's simply not a sustainable business/not sustainable to hire that
many employees yet.

If a company's business model doesn't work, then it shouldn't really stay
open/continue to exist.

~~~
devoply
Maybe. From an overall perspective of entrepreneurship and job creation no.
The reason being that many companies are bootstrapped on the backs of cheap
labor until they reach a point where they can sustain jobs. You are basically
saying that bootstrapping should never happen and you should always have
investors to create companies... unless maybe if the founder can make a
company based around a very small team work somehow who are working for next
to nothing for equity.

~~~
SimonPStevens
But where is the line? Can I import hundreds of people to manually have them
dig coal out of the ground with their bare hands because I can't afford the
machinery yet and claim I'm bootstrapping a mining business. We would
typically call this exploitation.

Many types of business can't be bootstrapped. That is not unusual.
Bootstrapping is primarily a popular approach now due to easy computer
automation that makes a small subset of companies viable with the very small
staff and no expensive hardware. It certainly isn't a default across all
industries.

The labour pool is a market. You are not entitled to cheap labour just because
you want it. If you can't find someone willing to do your work at the rate you
want to pay it's because someone else is paying more for the same work, so you
need to pay more to attract the labour.

Importing people from abroad is something that only exists as a solution
because of the imbalance of development levels around the world right now. I
expect that this is an anomaly that we are going to see correct itself in time
once all countries reach a similer level of development. Where will you import
your cheap labour from then?

In the UK we used to employ children to work in the mines and the mills. This
was eventually realised to be exploitative and made illegal. I'd bet that all
the business owners at the time complained how would they ever be profitable
without the cheap child labour. But they either adjust or die, and I'm happy
with that tradeoff. If a business is only viable with child labour I would
prefer it didn't exist at all.

~~~
thaumasiotes
> Importing people from abroad is something that only exists as a solution
> because of the imbalance of development levels around the world right now. I
> expect that this is an anomaly that we are going to see correct itself in
> time once all countries reach a similer level of development.

This has never been the case in the past; there is no reason to expect it in
the future.

~~~
ben_w
Disagree. In the past, “abroad” was physically closer and in what is now the
same country. Londoners can pay the Welsh less, but they can’t go on literal
slave-gathering raids c. 999 AD.

It’s all a matter of degree. Degree of progress, degree of wage difference,
etc.

~~~
thaumasiotes
The definition of "abroad" is of no interest. The world has always been the
same size. There has never been a time when all countries / regions /
whatever-you-like were at a similar level of development, and there is no
reason to expect that such a thing will or could happen.

~~~
sanxiyn
Less developed countries tend to have higher growth rate, so there is a reason
to expect convergence.

~~~
emiliobumachar
But there are large - sometimes huge - steps back, e.g. Venezuela. Any reason
to think they'll stop happening?

------
erikb
lol, why does anybody need to say so? This is free market 101.

Also I really believe that's how the future looks like, thanks to AI and
automation: fewer and fewer jobs with higher and higher requirements but also
higher and higher pay.

~~~
IshKebab
Because the news _never calls this out_. Here's an article in The Guardian
from just yesterday:

[https://www.theguardian.com/business/2018/nov/13/workers-
eas...](https://www.theguardian.com/business/2018/nov/13/workers-eastern-
europe-uk-eu-employment-pay-growth)

> Britain’s employers have warned that severe skills shortages are holding
> back the economy after the latest official figures showed the biggest fall
> in the number of workers from eastern Europe since modern records began. > >
> The British Chambers of Commerce and the Federation of Small Businesses
> urged the government to deliver a post-Brexit migration system to meet their
> needs amid signs that the fall in unemployment in recent years was putting
> upward pressure on wages.

Notice how an upward pressure on wages is bad (because this is from business
groups). Even the _Guardian_ doesn't point out how stupid this logic is.

------
rebrad
Interesting article from MIT Tech Review on the topic:
[https://bit.ly/2OPFjV7](https://bit.ly/2OPFjV7)

------
nova22033
Does this really apply equally to programmers and starbucks baristas? I don't
know of a single programmer who didn't make more at his/her new gig.

------
hnuser355
That’s quite an amazing theory. Is there any fundamental law of economics that
describes such a profound relationship?

~~~
mattlondon
Supply and Demand

[https://en.wikipedia.org/wiki/Supply_and_demand](https://en.wikipedia.org/wiki/Supply_and_demand)

------
Eridrus
It's common for people on HN to say "there's no such thing as a shortage, just
pay people more", but that assumes that the amount of value people provide is
infinite, and can just keep growing.

To the extent that companies are offering "good" wages already, the people who
need to hear the message about a shortage are those who would consider
changing fields for the current wages.

------
jeffrallen
Yup, that will clearly never work. _eye roll_

------
janeroe
Do you have to be a right-winger or a left-winger to believe that private
companies owe you something be it education, training, or a special level of
compensation. I mean they already pay taxes. If you don't like the conditions
and terms offered, just ignore the company. How come people on HN are praising
the free market (saying there is no shortage, it's just supply and demand, and
stuff like that) and criticising the companies who're exercising their right
for free market at the same time?

------
logfromblammo
They got rid of their training programs so that workers would have to acquire
new skills at their own expense.

Then they were surprised that a dearth of the workers wanted to acquire skills
that are only useful for employees at a tiny subset of companies, who refuse
to pay more for them, and instead most went for more portable, more universal
skills.

But they still don't want to pay more for the niche skills that they require--
the skills that no one is acquiring because the marginal benefit of acquiring
them do not pay the cost of the training. And they don't want to change their
business model to work better with the skilled employees who have the more
commonly learned skills.

This seems like all that would be required to fix it is an economic
understanding at the most basic level--supply and demand. Pay more to
employees already suitable, or pay to train those who are not, but have
sufficient aptitude to become so. Labor skills are a service product, and the
market finds a price for them just the same as every other product. If you
can't buy what you need, you got outbid.

There seems to be some flaw in business management education if managers are
ignorant of this, and some flaw in public policy education if the managers are
not ignorant, but just pretending to be, in order to get government
concessions. Somewhere along the line is a person that needs to re-take Econ
101.

For the question of "What if we train them and they leave for a competitor?"
it doesn't take much to work that out with thought experiments. The game-
theory analysis says that each individual company is better off ending its in-
house training program and poaching its trained employees from another
company, with the greatest advantage going to the company that does this
first. So the Nash equilibrium is for no companies to have their own training
programs, and therefore for no companies to have access to trained employees,
while the optimal group benefit occurs when every company has a training
program, and trains rather than poaches. The obvious solution is to cartelize
the competitors, such that they all agree to contribute to a common training
program, and give at least a minimum pay raise to every employee trained by
it. There are a variety of ways to make that happen. A union could run the
program, and force the businesses who are hiring its members to pay for it, by
threat of embargo. A government could tax the businesses, and use the tax to
fund a professorship at the public university, required to teach certain
classes. The businesses themselves could create certifications, and jointly
control the certification body, such that certain certification levels meet
some common needs of all participating companies, while those seeking
certification pay all the costs of the training program.

Or, one businesses could pay more to prospective employees that strategically
acquire niche skills, as a means of encouraging them to actually train
themselves. If you're running a business, you can't just sit on ass and expect
the world to just cater to your needs. The world wants money.

------
loourr
yay wage inflation

------
trhway
the productivity in the US has been stagnating/decreasing for more than a
decade already. Tight labor market requires to pay more to employees which in
turn requires the businesses to increase productivity and efficiency - i.e.
the more expensive the labor the less waste of that labor can the business
afford. Add to that the tax cuts which automatically made the employees even
more expensive (actual cost of employee = cost paid - tax on profit, i.e. $100
employee salary comes down to just $70 in actual cost with 30% profit tax rate
whereis it is $80 with 20% profit tax rate). Even more
automation/computerization/robotization/etc. to come.

~~~
daveFNbuck
How does giving companies more money automatically make employees more
expensive? That's extremely counter-intuitive.

~~~
dragonwriter
> How does giving companies more money automatically make employees more
> expensive?

Giving companies more money by itself (e.g., “here, have $100,000 no strings
attached”) doesn't.

OTOH, taxing retained profits at a lower rate does (it increases the after-tax
cost of any reduction in before-tax retained profits; any expense is,
considered on its own, a reduction in before-tax retained profits.)

In exactly the way deductibility of charitable donations subsidizes such
donations at the taxpayers marginal tax rate deductibility of business
expenses subsidizes such expenses at the businesses marginal tax rate, and
cutting the tax rate cuts the subsidy.

~~~
daveFNbuck
I think I get what you're saying. The savings from not paying the employee are
increased when the profits are taxed less.

This makes sense if the employee is a net negative on pre-tax profit. If
having the employee increases pre-tax profit, wouldn't lower taxes on profits
make them effectively cheaper?

~~~
trhway
>If having the employee increases pre-tax profit, wouldn't lower taxes on
profits make them effectively cheaper?

in a situation of rigid linear connection between expenses and revenues - i.e.
when adding additional work units immediately and proportionally increases
your revenue. In real life there is usually elasticity between expenses and
revenues - while increasing/decreasing expenses has immediate direct effect on
the bottom line there is no such effect on the top line. The situation is even
worse when you need to hire or do capital investment today (and thus take the
hit today) while the related revenue increase would come only some years down
the road.

~~~
daveFNbuck
So this is part of a more general effect where low taxes on profits deter
investment? It makes a little more sense to me phrased that way. You don't
need to worry about increasing your future profits as much when they're higher
now.

------
bayesian_horse
"Higher Wages" is almost never the answer for finding more candidates.

The only way higher wages lead to more candidates is by taking them away from
other companies or other industries, and sometimes from other countries. So
that is sometimes an option for certain employers, but not for an entire
industry. It's a myth that there is a pool of workers who is "underemployed"
because of low wages.

Also: In a free market, if companies can earn more profits by hiring more
people by offering higher wages, they will do so. But increasing wages also
reduces profit, and there just may not be enough room in the margins.

~~~
joekrill
> The only way higher wages lead to more candidates is by taking them away
> from other companies or other industries, and sometimes from other
> countries. So that is sometimes an option for certain employers, but not for
> an entire industry. It's a myth that there is a pool of workers who is
> "underemployed" because of low wages.

But that's only true in the short term.

> In a free market, if companies can earn more profits by hiring more people
> by offering higher wages, they will do so.

But we're not in a truly free market, are we? And we've already seen huge tech
companies band together to keep profits artificially low. And that's just the
one's that got caught.

> But increasing wages also reduces profit, and there just may not be enough
> room in the margins.

Corporate profits are at an all time high, and have been for quite some time.
We're paying C-level executives insane amounts of money. Profit margins are
surely not the issue here.

~~~
bayesian_horse
How does competition for workers decrease over time through higher wages? If
you are implying that more high school graduates would choose a particular
industry or profession because of a wage hike, it's still a situation of
taking them away from other options.

The market is free enough. There seems to be some collusion, direct or
indirect. That would change my proposition though, because companies cooperate
because defecting (by increasing wages) doesn't benefit. If one company
increases wages, others have to follow. Good for workers, but that's not
magically creating any new workers either.

It's not about "corporate profits" but about the marginal profit of an
additional worker gained through higher wage offers. On the contrary, at a
certain point workers decrease work hours when they get more pay.

