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This example certainly constitutes a "shortage", especially from the point of the employer. He has a demand which he can't fulfill. Due to not fulfilling it, he has problems investing his capital as productively as possible.

The idea that job applicants get offered wages which they perceive as too low does not mean that there is not a shortage of similar talent on the market, even at reasonable wages, if there even is such a thing.

The analogy with the Ferraris breaks down for developers and engineers because their qualifications are hard to quantify and their added value is hard to predict.

Employers will especially talk about talent shortages when they can't hire additional talent at the wages of their existing workforce. That may be because they got lucky and found very cheap engineers ("suckers"), but it also may be that they are running against the wall of the talent shortage, meaning they can only hire new people if they embark on a potentially ruinous wage competition with other employers...

If wages are perceived to low compared to profits, than I'd rather question the potential collusion among employers. There have been dramatic cases of such sollusion in silicon valley, as I recall. Less drastically labor market regulations and workforce protections will also play a role.




>> The idea that job applicants get offered wages which they perceive as too low does not mean that there is not a shortage of similar talent on the market, even at reasonable wages, if there even is such a thing.

In the Bay Area, I rarely hear friends complaining of wages "perceived" as too low, usually it is more absolute in terms or it wont pay rent. This isnt usually the case for entry level or medium level jobs. But I constantly hear of this so called shortage of experienced engineers. The fact about experience engineers (10yrs, 15yrs, whatever) is that experience is also correlated with age, family, children and throwing $150k at someone with family simply doesnt work. It isnt a perception issue, you literally cannot fit a family into a studio apartment and afford braces, health premiums, co-pays, etc.


So, what are the experienced engineers with families and an expensive life style doing then?

Unless they prefer to be unemployed, or work outside the industry (and Silicon Valley), their turning down a job offer because of too low compensation does not preclude a real talent shortage. Usually they are already employed at a wage that pays rent, right?

All this talk about low wages seems to assume recruiters and employers are stupid. But they aren't, for the most part. If they think they could make a higher profit by doubling the wage offer and thus hiring an additional engineer, they would do it. Stupidity or stupid greed is not a smart way to reject that basic economic imperative for an industry as a whole.


>So, what are the experienced engineers with families and an expensive life style doing then?

>or work outside the industry (and Silicon Valley)

There are plenty working in the industry outside of silicon valley there are more bootstrapped SaaS than before.

The young developers fed up of silicon valley looking for a family are a great snatch for these kinds of companies.

>All this talk about low wages seems to assume recruiters and employers are stupid

I think it's more about the combination of low wages and complaint about talent shortage, either is fine but both is pretty stupid.

>If they think they could make a higher profit by doubling the wage offer and thus hiring an additional engineer, they would do it.

Yup,which tells us that they are not really that concerned about the hiring of another engineer.


On the other hand, other tech-hubs than Silicon Valley have the same talent shortage. Even outside the US, the picture is always the same, except for maybe developing countries.

Again: Individual movements, individual market mismatches, don't disprove a talent shortage.

Your arguments only make sense if you assume the worth of an engineer to be virtually limitless, or else there is no shortage. That companies should ruin their business models by treating engineers like kings and handing them all the profits.


I cannot fully agree on this. What is your definition of "shortage"?

From a supply/demand perspective, there is no such thing as a shortage. At least not without further qualifications. Prices adjust so that the demand meets the supply. In theory that should always be possible. Concept of a shortage per se does not have a place in this theory. You can only speak about a shortage/oversupply at a certain price level but such a thing has no significant meaning because that price level is just an arbitrary number.

Thus to speak about a shortage you must add some other components to your model. Those other components will always be partially subjective (i.e., what you want to maximize?) and fairly complicated. (I believe.)

In any case, one could for example argue that there are not enough engineers to fill the roles "needed" in the economy at a sustainable price. (What is "needed", though?) But I am very sceptical about such a claim, considering the huge profits many US companies are making, even the software companies for that matter.


>This example certainly constitutes a "shortage", especially from the point of the employer. He has a demand which he can't fulfill.

There are certainly localised shortages (hence the popularity of remote work)

>they can only hire new people if they embark on a potentially ruinous wage

Or cut profits or lower CEO wages to fund it, or move the company to a lower cost of living area.

If your a software company your biggest expenses are probably staff and offices and well cheaper areas also have excellent connections to cloud services.

You can pay half as much in salary in 1/4 area and everyone is better off.




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