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.
If its easy for them to hire, then it's not the same situation at all.
The owner wants a 10% increase in labour. How much will it cost? Let's assume they can only find new labour at 110, but if they pay this they must pay existing labour 110 as well.
110 * 110 = 12100. A 21% salary increase for a 10% labour increase.
Also it probably won't be a straight 10% labour increase, as some % will have to go to admin and the organizational costs associated with size.
So, that's why. It's also potentially zero sum, as if one employer raises wages, then others will follow, and there may not be a 10% gain in employees. Just increased costs all around. (There will be some gain in employees of course, as workers are pulled in from less efficient sectors)
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.
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.
This. It's a free option (pay if you use it, free if you don't - or, more precisely, it's the candidates who pay, with time and hope.
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.)
As an example cars are produced everywhere around the world but the same product costs roughly the same regardless of geography.
This way in rich countries people can afford domestically manufactured cars, while in poor countries they can't.
The starting salary of a supermarket worker is 2x that of the UK. But a software developer's salary is only a fraction more than in the UK.
The effect is that the range of inequality across the population is reduced. It's a social democracy, so in general the population like this arrangement.
What makes more of a difference is the feeling of social and fiscal responsibility that led to the fund's creation. Planning for the future and helping people through hard times sounds like communism to some people but in Europe is generally considered common sense.
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.
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).
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).
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.
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.
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.
that doesn't change the fact that a race to the bottom i.e. lower prices is surely a bad thing.
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...
Cash tips are usually tax frauded away.
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].
But the farming lobby is powerful.
No, they should disinstitute by themselves.
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!
> 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.
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?
Maybe they should study how trash men, sewer cleaners and other “undesirable” jobs are staffed?
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.
I agree, talent isn't infinite, but, workforce participation rates are low and part of that is that for a given job there are those qualified to do it that won't do it for the prices on offer. There are also those who would be highly qualified and would switch into different jobs if the salaries were competitive.
That's a good point, and I know exactly the kind of people you mean, but that's not because those people lack the drive to struggle for more money. It's because they really have no interest in programming whatsoever but become convinced that they can overcome that lack of interest long enough to learn how to do it. But they all underestimate how freaking boring programming can be and how it really takes a certain personality type to do it. Honestly, I think if programmers all got $500,000 a year and our own private jets, it wouldn't increase the pool of competent programmers by all that much.
This is a phenomenon that's pretty unique to programming, so I don't think that's what Kashkari was talking about. I feel like he's talking more about people who want a better job in their same field but perhaps all the better jobs are a little bit too far away from them, or maybe the better jobs contain more responsibility than they can handle at their pay rate, etc. So if you just bump the salary up a little bit, you expand your circle of applicants just enough to include a few more qualified people.
Specifically, such a move would likely deepen the pool of programmers who want a W-2 job with a company that is the ultimate target of their work (as opposed to services firms). I would guess a lot of contractors would sign up for steady work at salaries in the range you mentioned. This applies across the experience spectrum, but more especially to more experienced people, who are less valued by current employment structures.
A lot of contractors basically act like employees now, and are only contractors for exogenous labor market reasons. For example, independent contractors can easily make more than the prevailing total W-2 comp for their level of experience. Closer to entry level, large system integrators (think: Accenture, IBM, etc.) pay marginally more with better benefits than most entry level jobs at F500 companies, where programmers usually do not make $150k to start. A $150k entry level salary would draw this talent directly into the F500 and away from the middlemen. (This is all to the extent that there are even entry level programming jobs at those firms anymore, since so many have been shifted to consulting firms).
Overall, it could end up being cheaper in both short and long terms for many of those roles to be filled by W-2 employees than by system integrators. I'd bet good money that these salary levels would make it relatively easy to hire formerly independent consultants and/or out of the big system integrators.
There is also a decent number of mid-career software people who have switched into other fields (law, project management) for potential financial upside. Programming can be a demanding field, and by mid-career for many people the compensation doesn't balance against the relatively low social status, being on call, etc. Many of these people might prefer to be programmers at a F500 making $400k with benefits, but in the main that job doesn't exist.
And that's before we look at people running small businesses that are semi-successful. The bar for continuing to run those goes up substantially if the alternative is make $40k/month at a +/-40 hour/week job.
To answer your question: yes, a senior development comp of $500k would increase the number of senior development employees.
As you pointed out, when you go the middle of your career, you expect recognition and appreciation -- and appropriate payment. And truth is, most senior programmer roles I've interviewed for use the title as a masked coded language for "we need a battle-hardened veteran to fix our mess for sub-market compensation". As simple as that... and of course they will never admit it -- who would? This is made even worse by the fact that most would throw away the senior programmer the moment they feel their code and business are in a better shape, because at this moment the person usually finally comes to their senses and starts demanding a fair wage.
I might be a hopeless cynic but from my interactions with business people I have the impression that they fear and sometimes even despise programmers and they do their very best to keep them under control by any means, including emotional manipulation, guilt-tripping and conditioning that they deserve the lower pay.
But leaving my cynicism aside, you are very correct. Most exit the programming career because we're basically used up and tossed away -- and you get tired by it eventually. Programmers are often kept far away from where the money are made and eventually some of them grow smarter and start going exactly there. Which is very often at odds with continuing to be a wage worker.
It's a natural evolution. And it's very ironic how the most brilliant of programmers are not for hire.
If that's the actual advice you're giving, I wouldn't expect anyone to follow through.
I've read elsewhere that even if people want something and have someone in reach that has it, 2% will ask for advice and 2% of those asking will follow through with it. I've also seen 10% and 10% of that, i.e. 1% total.
Whatever actual number may be, it's very small.
In fairness, it's a free country, and these people could have found someone to recommend a textbook or some classes easily enough.
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.
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".
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.
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.
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.
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.
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%.
Factor in inflation and you effectively take a pay cut every year until you 'hop' to your next job.
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.
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.
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.
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 .
- invest in STEM education to increase the general pool of qualified hires. I know of the Google initiative 
I was in Kitsilano a couple weeks ago and stayed in an AirBnB; liked the neighborhood and decided to check out some of the for Sale Signs. Modest 3-bedrooms were going for $1.7-$2.4MM CAD, while average Dev salary was something like 90k CAD. Even if that doubled they'd be hard pressed to pay for housing that high.
If you’re a two income family with kids home ownership is basically out of reach.
There is. We didn't create the word to have no meaning. However, it is not defined the way many people seem to think it is or the way you are suggesting. The formal definition of shortage is a situation where an external mechanism prevents price from rising. External mechanisms can include government intervention, which is not completely unheard of. Medical doctors, for example, have a government-mandated price ceiling in the jurisdiction in which I reside. You legally cannot pay more to take the services of a doctor away from someone else. However, such circumstances are indeed rare, especially when it comes to the price of labour-based activities.
To put it another way: A shortage is a situation where you cannot pay more, even if you had all the money in the world to spend on what you seek.
A shortage is a market failure where you have willing parties who want to transact (a guy wants to sell at $10 and someone wants to buy at that price) but for whatever reason they can't.
For shortages in particular, there are more buyers than sellers (surplus is the reverse condition). The price might normally rise but it can't.
The failure to transact is the first-order condition. That prices can't rise are sometimes a cause or effect, depending on the situation. But the main thing is that you have people who want to transact who can't.
Shortages often happen due to price controls. Say I want to sell my house. I won't take $100K for it but I will take $200K. You are fine paying $200K. A rule is made that no houses can be sold for more than $150K. We both are fine with $200K but I can't sell my house because I won't accept $150K for it. So we don't transact. The sale doesn't happen, even though we both want it to.
In the long run, producers don't bother producing because their upside is capped. That usually makes things worse: not only can the price not rise, but the market becomes systematically undersupplied. But that's a follow-on effect, not the "shortage" per se.
You are completely correct that this (a shortage) is a highly technical condition that doesn't correspond to the common use of this term, something like "it costs more than I want to pay".
No, it's not usually "CAN afford", it's more like "beyond what I WANT to pay".
Eg Apple has $245 billion in cash. Instead of offshoring the production AND the cash and then gaming the H-1B supply , they could be exploring education, infrastructure, and training, per credit_guy's observation above. We also need to discourage offshore tax havens.
Now, I don't think we are in that situation, but it absolutely can occur. Usually in artificially constructed scenarios these days, e.g. taxi medallions, but in the past you certainly could be limited by the number of people in your village as well.
I suppose you could put it that way, but it is important to remember that as price rises, demand wanes. As long as price is able to rise, then the demand will keep offering higher and higher prices until the supply presents itself. In the meantime, as offers go higher and higher many will drop out of the market. A shortage occurs when that price is unable to rise, leaving a situation where nobody exits the market. This is the only time that demand exceeds supply.
> In that scenario there will always be some companies lacking no matter how much they pay.
Everyone has a limit. I know of a lot of businesses who cannot afford to pay more than $10,000 per year for a developer. Needless to say they are developer-less. This does not mean that the supply of developers is lacking, it simply means those businesses were never in the market for a developer in the first place.
I don't have the money to pay the hundreds of thousands of dollars for a new Ferrari. That doesn't mean the supply of Ferraris is lacking – they are more than abundant for those who are truly in the market for one – it simply means I don't have enough money, and thus I'm not really in the market for one. We, for obvious reasons, don't count people who simply have dreams of buying something. Every 10 year old kid dreaming about owning a Ferrari is meaningless just every business dreaming about hiring an employee is equally meaningless. Demand is far more nuanced.
> but in the past you certainly could be limited by the number of people in your village as well.
If we take it to the logical extreme and assume there is only one person available for hire, the business which offers the best deal will hire that person, and if nobody can offer a better deal, they're just dreaming. Supply doesn't exceed demand in this scenario. The price rose to the point where all other demand vanished.
A shortage occurs when price cannot rise. Suppose our village with one worker has a law that says the worker cannot be paid more than $30,000 per year. Every business in town is quite willing to pay $30,000 for this worker, and now there's no market solution to determine where the worker should go. This is when demand is able to exceed supply, and when you have a shortage, relying on some other method, like a lottery, to determine where the worker ends up. Such scenarios aren't completely unheard of, but rare. Especially when it comes to labour as most people aren't in favour of placing limits on one's earning potential.
Medical doctors are an interesting exception as we don't feel (where I live, other parts of the world may be different) that the rich should be able to pay a doctor more money to incentivize looking at their stubbed toe while someone of lesser means is having a heart attack without a care provider. Instead, both people are obligated to pay the same amount, and the doctor will judge based on severity who gets the service and who has to wait or be left out.
It also counter the interests of powerful special interest groups, which has placed economists outside of the political consensus on numerous issues.
We're not living in some free market paradise. Our economy is highly controlled from the top down, with major government interventions limiting contracting and private property rights. Just to give one especially stark example, if you offer stock in your small business to the public, without going through an arduous registration process and getting approval from the securities regulator, you will be fined and potentially imprisoned.
Better for whom?
The most problematic parts of the economy, like housing, are that way due to govermment intervention. In the case of housing, zoning restrictions create artificial scarcity in the most productive economic regions, leading to rising rent, which limits economic opportunity and contributes to greater income inequality.
The majority of the US can't financially bear an emergency $1000 expense without going into debt, joblessness, or homelessness.
Productivity isn't connected positively individual quality of life, otherwise this wouldn't be the case.
A free market depends on an entire class of people maintained in poverty. That is not efficient except for a minor plurality.
As I said in your parent comment, the base assumptions that markets efficiently distribute resources is a lie.
The number of hospital administrators increased 3,200% between 1975 and 2010, compared to a 150% increase in physicians, and this increasing inefficiency is due to an increasing number of regulations:
>>Productivity isn't connected positively individual quality of life, otherwise this wouldn't be the case.
Quality of life is vastly better in high-productivity countries than low-productivity ones. Only someone who has been totally sheltered from the extreme poverty characteristic of many countries of the world could even make a comment as detached from reality as yours.
>>A free market depends on an entire class of people maintained in poverty. That is not efficient except for a minor plurality.
That's demonstrably false. The global poverty rate has been decreasing at the fastest in history over the last 30 years, concurrent with the spread of marker institutions. The rate of extreme poverty has halved in the last 20 years.
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.
- 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.
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.
>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 (™). 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.
If you're working on your internal crud enterprise app, no amount of training's going to magically change what needs to be done, or the almost certain fact that it's better to stick with the existing tech it's built on.
I think may of us go freelance/job hop because ultimately we get bored of a code base and the basic challenges, the fundamental requirements of an app simply don't change much.
You might need to pay more to price in the pay cut they'll need to switch gears or the year off they'll need to retrain themselves on related open source side projects.
That being said, there are lots of engineers who get comfortable and shy. You can fill up all your desk chairs in your office eventually. You just won't have a well trained workforce, which is bad for everyone involved.
What exactly does 'retraining on related open source projects' even mean?
I'm 38, I really do want to settle into someplace and stop hopping around, but I'm also not willing to allow myself to stagnate and become unemployable after you decide to "green" your workforce 5-10 years down the line.
Provide me with growth opportunities, challenging problems, creative freedom, reasonable pay increases, and I'll stick around. But alas, I haven't found a company willing/able to do that yet.
> [...] once trained, they will leave to some competitor who can pay more.
> [...] couldn't the training be offered
> [...] such as if the worker leaves before
> X months (or years) some % of that quantity
> must be given back?
The policy was quietly dropped.
Then settle with a poorly trained workforce.
A company in this situation either needs new talent or needs to train its current workforce to match the level of their desired new talent. There's no free lunch here.
I'd argue it almost costs more money to NOT train your workforce, since you're settling for a less efficient process for the same amount of money that will only get worse when attrition (naturally) happens and you refuse to hire at a market rate.
This happens fairly often, especially when it comes to things like the company paying for an outside degree or similar.
That's how a previous employer of mine did it.
They wanted to expand the scope of my work to include some stuff I didn't know, so they spent about $10,000 to send me to a couple training courses and made me sign a contract that said I had to pay some or all of the training/travel costs back if I left the company for any reason within 12 months. They also gave me about a 10% raise at the time as well.
I ended up leaving about 18 months later when someone else offered me nearly 50% more. I'm still friends with a few people that work at the previous company. It's been two years and they still haven't found an adequate replacement for me. Apparently, their offers have been at a salary even lower than what I started at over there, yet still include the larger scope.
They have a well defined training/progression system where you study IT materials they provide, take a few in-person courses, and pass some tests in order to get a new title, more responsibilities, and a raise.
She's one of the fastest people to progress from 1 to 2 (~4 months), her manager is scheduling the in-person courses for 3 ahead of time.
There's an office closer to where we live that does support for business class customers, they're looking at maybe bending the rules on how long you have to wait between internal transfers since she'd probably be more valuable there and it would be closer to home.
If you take the path of hiring employees that you train, you should work with them and give them raises as they're trained to get them closer to market rate. A lot of them will want to stay. At least for long enough to recoup the cost of training them. Also consider how many of those people don't have the right qualifications on paper but could pick up the necessary skills quickly. They'd be underpaid for a while, offsetting the cost of the people who need more training or are slower to learn.
Tangentially related, my job gave me relocation for both of us. If I leave my job before a full year, I'll owe all of it back. It makes sense for relocation since that's generally money the company gives you up front (that counts as a bonus, and is taxed as such). The only way I can see this applied to training would be if the employer covered the cost of taking courses at a local college or something like that. If you have your own in-house training staff, I'd count it more as a benefit of the job than a conditional bonus.
For myself, things always have gone better when there’s a little bit of turnover. The training gets better. The obtuse decisions get removed. The sharp corners sanded down.
With no turnover, people tend to memorize the system and eventually nothing material ever changes. I find it soul sucking and so I give a slightly negative score to highly stable teams now, whereas I used to count it as a pro (wow people like working here!).
Some things take time. If there is a shortage of babies, you need to wait nine months to get more of them, regardless of how much you pay (!).
If there are only 1000 doses of a life-saving drug and there are 2000 patients that need it TODAY or they will die, no amount of money can make new doses quickly enough.
Labor markets mostly work the way you are describing, but sometimes (especially in cases where training can take a long time, like, say, for doctors), simply offering more money isn't enough of a solution to meet short-term needs.
... they learn and then leave, because if you were able to pay them the market rate you would've not been training them in the first place (considering the context of your comment).
Another advantage of training them yourself is that you shape them into precisely what you need. They know your systems, your work culture, your priorities, and are continuously adding to their institutional knowledge.
Imagine you were hired at a company, trained and mentored in a whole new skill set, given work you enjoy and find meaningful, working with people who encourage your further development, and were shown appreciation for your efforts and abilities.
Would you leave at the first opportunity to get a raise? Unless I really needed the money or was severely underpaid, I probably wouldn't.
> Two managers are talking about training their employees. The first asks, "Yeah, but what if we train them, and they just leave?" The second responds, "What if we don't train them, and they stay?"
And the military
Just like you can't sell jewellery for less than the cost of the gold you had to purchase to make it.
That's exactly why "hire people at lower qualifications, and educate them in house" is not a viable option in this case either.
> ... they learn and then leave, because if you were able to pay them the market rate you would've not been training them in the first place (considering the context of your comment).
As an employer, you're going to have to pay market rate for the skills you need, one way or another.
If you do that and your employees still want to quit after their training, then your organization has more dysfunctions that you need to fix.
He never suggests that the job should be offshored, because that would be bad for Tropico's economy, and he's a Tropican loyalist.
For some reason, you can't force a Tropican citizen to cycle between multiple part-time, low-paying jobs to take advantage of fractional-employee building capacity. Perhaps they are programmed to not like that. Can't imagine why.~
I get the feeling that when they say they're struggling to fill jobs, what they really mean is "our current employees are overworked, and it would be nice to hire more and eek out some productivity, but no one wants the salaries we're offering so oh well".
If their struggle to hire was truly affecting their ability to produce, they would quickly offer more money, just as tech companies do to attract engineers.
Also the guy who ran the bank/AIG bailout program.
I know there are startups hoping to disrupt hiring (and the LinkedIn fueled swamp that is the recruitment industry), but now is the time for companies to rethink how they vet their candidates (and I don't mean lowering standards).
Educating in-house is costly and inefficient end of the day too.
Leaving it all to some of the big tech probably not the most risk free option either.
That’s why the trend of income sharing schools exists I think they make sense - low risk, low barriers and high incentive.
Sufficient money/effort can create and do a lot of amazing things. But probably not anything
Is it incorrect to describe a crop failure which leads to widespread famine as a "food shortage"? Perhaps there is a more correct term?
Companies are understandably reluctant to quickly increase wages when the supply/demand forces for labor shift out of their favor.
This is economics 101 - supply and demand. What everyone learns in their first course in economics. But most economists are paid to espouse a political perspective, so most choose to ignore it. Paraphrasing sinclair : When your salary depends on you not knowing something, you magically don't know something.
> - train people more. You hire them at lower qualifications, and educate them in house
When you prevent out sourcing, h1b visas, hiring illegals, etc, it forces local companies to invest in the local population. And it's not just at the company level. The reason we have a public education system, highways, public transportation is because the private sector needed literate workers and the ability to transport workers and goods. So companies put pressure on the government to provide education for the masses, build highways, public transportation, etc. Amazing what can be accomplished when private+public interests are aligned. When they aren't aligned, you get the rust belt, increasing wealth inequality and continued societal breakdown ( opioid crisis, late family creation, distrust between people and distrust of government, etc ).
Labour can be similar, depending on how the economy is organised. If you need a job in order to eat, then you can't freely reject a job offer. Only for fairly wealthy people is the labour a free market. Unless you get a good social security system (welfare, UBI, etc). Then people may be able to walk away from a bad job offer.
Low unemployment is also making the labour market behave more like a free market; there are other jobs available, and employers can't rely anymore on job seekers being desperate for a job.
For routine primary care like regular checkups or an appointment for some symptom bothering you, you absolutely are not under duress. You won't die because you took 5 minutes to choose a doctor on ZocDoc. With more transparency in costs of service, this could definitely become a market, ie "for $XX per month, get unlimited visits to our partner doctors' offices".
For emergency situations, surgeries, and things that require expensive ongoing care like cancer, you're correct in that you're under duress and can't really shop around. This is the market in which the usage of insurance makes sense, as it's a rare occurrence that would be catastrophic to pay for out of pocket for the majority of people.
I think we can do a great deal to lower cost of healthcare to Americans if we think of it in this two market approach, and handle each accordingly.
I'm ready to vote for forced transparency at all levels. I'm tired of this opaque negotiated pricing with insurance companies that manages to maximize my out-of-pocket costs.
You are correct that non-emergent care is a WAY bigger market than emergent. Most people completely ignore this. Chronic conditions like diabetes and Crohn's, end-of-life care (hospice, assisted living), dialysis, smoking cessation and weight loss, blood transfusions, most flavors of oncology (cancer treatment), knee replacements, etc.
We need way more cost discipline in non-emergent situations. Changing the perception that all care is emergent might be the single biggest thing we could do to lower healthcare costs. It would let people see that there should indeed be a market in everything from X-rays to MRIs and we could finally have a sensible conversation about cost.
My optometrist wants me to try a new kind of contact lens. She cannot (or will not) tell me what they will cost. She can't tell me what they would cost me personally because she just doesn't know - all they can do is send a bill to my insurance company and find out how much they pass on to me. Which is essentially asking me to write a blank check. Nor can she tell me the sticker price on these contacts so that I can at least know the upper bound, because she simply does not have (easy?) access to that information - the billing department does. Probably I'll stick with the same brand I've been using for years, because at least there I can safely assume they'll cost about the same now as they did last year.
Similar story for my doctor offering me a flu shot while I was getting a checkup. She couldn't tell me the price, she didn't know the price, she couldn't get access to the price, etc. I usually go to the pharmacy, where they bill $30 and insurance covers it all. So I figured, "How bad can it be? And it'll save me some time," and let her give me the flu shot. Big mistake - the doctor's office billed $300, insurance (quite reasonably, TBH) only agreed to cover a portion of it, and I got stuck with a $200 bill.
There's two problems there. One is the lack of price transparency. The other, though, is the prevailing attitude - in both cases, the doctor's opinion, which I think is most everyone else's opinion, too, was, "Who cares what it costs? If the insurance covers it, it's basically free to you." Which just ain't true, especially for routine care stuff like this. The insurance company isn't getting their funds from some magical fountain of money. From a "see the forest not the trees" perspective, they will have to pass every cent of these costs (and more) on to me.
Both of these problems are solvable.
At the end of the checkup, a front-office staffer went on to Delta Dental’s web site, pulled up my record, and requested a treatment estimate. The answer was returned within a minute.
A few days later, I got a copy of the estimate in the mail for my records. I didn’t have any other dental events (which might’ve affected the estimate), so on the day of the filling, I paid the amount as part of the office visit. A few days later, I got the Explanation of Benefits for the procedure, confirming the amount paid was correct.
If I had chosen to, then I would’ve gotten all that over the web instead of on paper.
As far as I’m concerned, the dentist’s office is where I want them to be, in terms of billing processes. My eye doctor is able to do something similar, looking up lens & frame benefits etc. on computer, no I don’t have to be billed after the fact.
Charging 200$ for you to be healthy and able to work the full season while also avoiding being a carrier of a disease is absolutely terrible.
Springing costs on you that you never agreed to and aren't covered, should be illegal. you're literally being forced into a transaction you never agreed to.
My optometrist wanted me to as well. When I wasn't sure, he was nice enough to offer a prescription for both, so I could make the choice later.
That obviously doesn't work in every case of unknown cost, and doesn't really change your point, but I thought it was worth pointing out as a nice tip for anyone in the same situation in the future.
It's something I've seen in other comments here in the past, too.
In the US, only about 5% of healthcare expenditures are for emergency care. That means there is huge opportunity for people to shop around. The problem in the US is that there's no actual healthcare market, so shopping is impossible. No prices are displayed so customers can't make informed decisions, most areas are operating under healthcare monopolies, and most areas enforce a perverse set of laws that make it difficult for competition to enter the market.
Emergency care and care for the truly poor is handled with a different process.
It's like a restaurant that doesn't tell you the prices until after you've eaten, except it's the only way to get food.
Yes, there will remain distortions in the healthcare market, but at least there would be a way for people to make informed decisions.
Yet somehow in the US there is a market in food. And it is gigantic with way more options than most other places.
The food market is obviously not free because you need to eat. The car market is not free because a lot of people need to drive to work. The plumbing market is not free because sanitation is essential.
I won’t comment on the relative effectiveness of free vs centrally planned economies, just pointing out the logical fallacy above.
Healthcare isn't a "free market" because of massive information asymmetry (detailed prices for services, consumer education needed to evaluate information), high barrier to competition, and of course the literal product being your life.
Whereas cars are much closer to a free market. Sure, you might need to drive to work, or you can take a bus or other public transportation, ride a bike, walk, move closer or to another area somewhere this is easier to do, find a job that lets you work from home, etc.
If you choose to buy a car you can gather tons of information, pick a product to fit your specific budget, and end up with something that works everywhere. You can sell the product in the future. Contrast this with healthcare where you can't generally evaluate the information, have minimal to no pricing choices (especially in certain time sensitive situations), etc.
How do they seek out the "best place" if they don't have complete information on what it will cost? It would be like buying cars with no price-tags or MRSPs - yes, there will be good/prestigious dealerships with excellent staff who can tell you the technical details about the car that's right for you, but you won't know how much it will cost you until each component manufacturer sends you their separate itemized bills for months after taking possession of the car, and you can't take the car back (5x tires, 2x wipers, 1x engine, dealership charges, factory charges, line-assembly person 30 minutes @union rates, 1x battery, 348x bolts,1x suspension platform, transmission, etc). That is not a free market.
I am sure I could find a better deal on many medical purchases, but the cost to find them is significant. Purchasing the default/readily-available option is often the best bet because of the hours or days required to find a better solution. Spending a few hours to save $100 or a few days to save $1000 is a clear loss to me.
Cars are another extremely complicated product. Society has self-organized to create reputable sources of information on the quality of different models.
We don't need government restrictions and monopolization of spending to manage the complexity of the economy. Healthcare faces severe problems because of governemnt intervention, not despite of it.
With jobs, people with ample financial reserves can afford to shop around, but people who live paycheck to paycheck can't.
With food, well, it depends on how many different places sell food. Fortunately, there's usually no shortage of shops selling food. The market for expensive food is absolutely free, because I can say no and eat something cheap instead. But the market for cheap food does indeed not behave like a normal free market, as any economist can tell you: when prices for the cheapest foods go up, people will actually buy more, because they won't be able to afford more expensive food. And if one company had a monopoly on all food and set prices for all food high, it would not be a free market anymore, though that's true for any monopoly. Still, if it were a monopoly on something non-essential, people could still say no.
A free market requires competition. When no competition is possible, there's no free market. When there's an army of unemployed people desperately hunting for jobs, companies can afford to be picky and underpay them; there's no meaningful competition to hire those people, who can't afford to say no, because the only alternative for them is to be unemployed. This can lead to a situation where even people with a job have trouble making ends meet.
Yes, that’s a principle that’s important. It’s not the sole determinant of all economic systems. They are more complex than that.
This doesn't apply to things like healthcare as others have mentioned, but also education (people are told their whole lives that they need to go to a good college, so people often make the poor financial choice to attend the better school), and in many cases housing (not wanting or able to leave the community they have only known, so they are willing to rent burden themselves in order to live somewhere).
Add on the fact that many of these things aren't as standard and transferable and you notice why these are the major markets that experience serious distortions in both a free market and a highly regulated one.
Do you have any links to books or articles that go into this idea in more depth? It definitely feels true, especially in how oversimplified economic theories are presented to laymen.
You get the rust belt because there has been a massive change of the American economy from manufacturing to high end service (finance, law, management, design). People can and should move to where opportunity is, America is and always should by a dynamic country of immigrants that move to where the economic opportunity is at the moment.
You are also ignoring the contributions such immigrants make to the broader economy by inventing, building, and hell, just using their salaries to buy things. We are stronger when we take the labor of or competition and put it to efficient use.
If you’re really concerned about wage increases for employees you need to focus on the imbalance of power we have as employers. I make hiring decisions every month, and I can tell you, as much as this is the best job market in a generation, and employees have the best bargaining position they’ve had in a long time, our company has way more power than any one employee.
And that is trivially easy to game atm as the government isn't enforcing it. We've all seen the job postings where companies are asking for X number of years of experience in a technology that has only existed for X-n years, or a combination of skills that would command high salary but they are only offering market rate or below.
>Further, H1B sponsorship costs money and commitment to the applicant and government, so hiring an H1B is actually more expensive than domestic candidates.
More expensive to the employer != increased wages. Why didn't the company just add that cost to the salary instead and hire locally? Because having captive workers is worth something to them.
The problem with H1bs isn't that they are immigrants, the problem is that they are not free to easily move around employers due to the terms of the visa, and the path to the green card that would give them freedom is also constrained. Personally I think that if a company has successfully argued that the American population can't supply someone to do the job and we need to import someone. That immigrant should be free to work at any company in the US since apparently the whole country could use them, and adding people to the country affects us all. Tieing them to one company is just indentured servitude with extra steps and let's a single company capture the value while putting a ton of the costs on to the nation
Anyway my main point was that you can be talking in a thread about supply and demand and say that increasing supply doesn't put a downward pressure on price, in this case salary. It may not be enough to move the needle if there's enough unmet demand and a price ceiling for whatever reason, but it is a downward pressure
Companies don’t push the cost of H1B processing to other candidates because those candidates aren’t suitable for the job. My point is that it’s hard to argue that employers are hiring H1B immigrants to depress wages when they cost more than the equivalent domestic employee would; assuming there were such a candidate.
Your argument that more people coming to an area puts downward pressure on wages isn’t consistent with domestic migration. Americans move internally all the time. If you look at the fastest growing cities or states, their wages aren’t dropping as more people move in. In fact the increasing population drives inflation as more people bid for housing and food etc, and that inflation flows through to wages as employees demand higher salaries to cover the cost of living.
I don’t see anyone arguing that people from Ohio or Alabama shouldn’t be allowed to move to NYC because they will lower wages for New Yorkers.
We live in an economy that is based on growth; a growing population (even if through immigration) can in fact drive economic growth.
To be clear I am not saying immigration always promotes growth or is always good. There are challenges. But I thing the gut reaction that it costs locals jobs and lowers wages is nonsense when you look at the evidence, and accurately model the economy.
No one is arguing that people from Ohio or Alabama shouldn't be allowed to move to NYC because those people are still allowed to move around. The H1b visa ties workers to companies and gets rid of the free part of the free market. I don't care that immigrants come in and work if we don't have the people to do the job here. I care that companies are lying about how hard they looked or the wage they pay, and then getting indentured servants.
The companies are extracting value from society without giving back.
In the case of H1B, we are talking about Highly Skilled individuals that are scarce by global standards. Basically the supply of highly skilled employees is less than the demand, even with current levels of immigration.
A similar thought experiment: if you build more apartments in NYC, the price won’t necessarily go down because the demand is massive and increasing; it would take a lot of apartments to lower prices in NYC.
While I agree that employers should raise wages, I disagree that things are that simple or that economists are generally being paid to lie to people about it.
It's a question of how much the supply of the thing we are talking about will go up when people are willing to pay more for it. If you choose the example of housing in San Francisco, it is clear that it takes more than just people being willing to pay more for something in order for the supply to increase.
Barring physical constraints and local laws, that would also likely spur more building to increase actual units. That isn't likely to happen to any large degree because there are physical constraints and laws, and that's probably what you were thinking of.
I don't think this is true unless you really contort what the definition of an economist is. Most economists either aren't working on issues that are particularly political at the moment or aren't in a position of influence if they are. Economists have political opinions, sure, but I don't see much evidence that this has a strong effect on their views about how the economy functions.
As long as the worldwide financial markets will only fund startups in SV staffed by young Stanford grads, Stanford will never be able to produce enough grads to staff the result of a world wide financial bubble. Imagine if the housing bubble last decade would only hire house framing carpenters born in Boise ID.
Eventually the idea of doing a startup in Chicago, Berlin, Paris, Prague, will change from "impossible" to "insanely rebellious and financially reckless" to "thats a great idea" and at that point the candidate pool being too small will disappear.
There are other exogenous forces such as companies that want to hire H1Bs, for whatever reason, must in public declare a labor shortage for legal reasons regardless if one exists or not. I'm not trying to debate H1B program but to state authoritatively that it legally requires corporate statements about the labor market to a pre-defined value of 'shortage' regardless of actual market conditions. As if in a thought experiment federal regulators required CNBC to report false numbers for todays Dow Jones index and people actually debated policy based on the legally required fake numbers. Any corporate statement by any company hiring, or planning to hire H1Bs in the future, is inherently legally required to be a false, fixed statement of 'shortage'.
If it would be considered shockingly newsworthy that a company hires old female programmers in India for the same pay as young white guys in SV, that in itself seems evidence there is no shortage at all.
The inability to hire given a "fish in the barrel" hiring target, might indicate a shortage of quality management, especially HR management, but clearly not a shortage of software development professionals. Suggesting companies need to pay more to get better management, given income disparities that already exist... The real story is no matter how much more management is paid, for various workplace or cultural or demographic or educational issues the management product produced even at ridiculous pay rates is shockingly deficient.
Companies are tripping over each other trying to hire women. My wife is blindly offered jobs entirely because she is a woman. Not secretly or anything, they literally say "we are looking for women for our team".
>If it would be considered shockingly newsworthy that a company hires old female programmers in India for the same pay as young white guys in SV, that in itself seems evidence there is no shortage at all
No it isn't. There is no reason to believe old Indian women are as qualified as young white men. There's actually huge reasons to believe they are not. And why are you so fixated on white men? Considering the demographics of the USA, white men are under-represented in US tech jobs, Asian and Indian men are over-represented.
What I think is happening is that companies are offering less than the market-clearing price for talent, and then complaining that they can't find talent (at that price). Well, yeah, that's usually the way it goes when you offer less-than-market prices for anything.
But it also implies that there’s a natural scarcity to the best talent, in which case you will always run out, no matter what you do to expand the field (barring creepy eugenics or cloning programs).
In which case, paying more money makes sense. In fact a pay scale more on par with pro sports salaries would be the most likely outcome.
Trivially counter-exampled, right? There's a shortage of manned space launch systems at the moment. If we had a launch system today we'd use it immediately. We can pay infinity dollars and there still wouldn't be one available for use for quite some time.
What you’re describing is correct but different.
Couple of years ago, I traveled to US for the first time. And the most startling thing for me was - the relative price of stuff in US. Let's take for example - McDonalds. In US, they use the cheapest ingredients and pay workers minimum wage to keep food costs low and accessible. Sure, you might say the food is shit but cheap and accessible nonetheless. In contrast, my native country (a developing one) they use same cheap ingredients and "decent pay" to employees. The end result is that 95% of the population cannot afford their burgers. McDonald's burgers are considered luxury items.
So, I think people should also think along those line. Why are companies actually not willing to pay more? It is easy for everyone to be cynical and say cheap labor benefits few millionaires/billionaires but that is not the full story.
@coredog64: I agree that Starbucks would be a better example.
I believe Starbucks is a better example as they don’t use the franchise model.