It's not the skills gap: why so many jobs are going unfilled
thefiscaltimes.com
thefiscaltimes.com
$3.8 million * 12 months = $45.6 million per year in lost revenue.
Being conservative and assuming a 10% margin on their revenue figures this is a loss of $4.56 million for the firm for the year.
$4.56 million divided by their labour need (40) means each worker brings in $114,000 of margin. So as long as they pay below that they are ahead. If they paid $25/hour for 2000 hours a year ($50,000) plus a 1.4 gross up for benefits they could hire people at $70,000 ($50,000 * 1.4) and still earn a positive margin of $44,000 ($114,00 - $70,000) leaving them $1.76 million of income. ($44,000 * 40).
What do they expect when they pay $36,000 per year (18*2000), plus any benefits?
I’ve heard this stated before as there doesn’t seem to be a labour shortage just a shortage of labour that you want to pay very little for. We don’t say there are too little lawyers or investment bankers or management consultants. Those jobs are or used to be the highest paid bringing in lots of supply from eager graduates.
My hypothesis is that working class wages are more sticky than white collar wages for reasons not strictly based on rationality.
I believe that Moravec's paradox explains why working class wages should be higher and white collar wages should be lower than at present.
https://en.wikipedia.org/wiki/Moravec's_paradox
Presently this is stalled because it is too counterintutive. People can't get their heads around the possibility of paying their gardeners and window cleaners more than their accountants or lawyers. That's the middle class version of The End of the World As We Know It.
This to me explains the existence of firms like Home Depot and the increasing popularity of prefabs.
No, it's supply and demand. Plenty of humans can physically rearrange stuff but only a few can (or are authorized) to perform legal services. I also wouldn't bet against the white collar incumbent's ability to make it illegal to replace them.
Yea, some people can't cut it in jobs like that, but that doesn't really say anything. Some of my friends that are physicians would struggle tremendously to do the programming and statistics in my line of work, but they will likely always earn more money than me.
Most jobs aren't as difficult as people love to pretend they are. The vast discrepancies in pay across America are probably not warranted in many cases.
Ah but physicians prove my point - the state typically requires many years of education and licensing to be a physician - whether you use the skills learned or not.
>but they will likely always earn more money than me.
Probably so. In the US I think this is because physicians have been very good at getting the state to drastically limit who can practice medicine. There are nearly zero limitations who who can practice programming, and barely any limitations on engineering.
Think about it - if you needed a to pass an examination, get a license, and spend years on post-undergrad schooling & forced unpaid internships programmers would have very high salaries.
I think that's just a terrible idea all around. You should be able to earn a great wage without suppressing the market to justify it. Or rather, people should not be rewarded for building/propagating high entry points to their careers. I get WHY it works out the way it does (bc capitalism), but it seems that in the end we all lose out.
A great many people in our society place higher value on their status than on realizing rational market moves. And to rub salt into the wound, many middle class can't afford a $200-500 dollar callout because their wages have been stagnant as well.
I'll say it again: the existence of Home Depot and other home improvement stores is evidence for wage stagnation.
> Plenty of humans can physically rearrange stuff
It might seem that way but I believe we presently have a building labour shortage. Anecdotally I don't know many master craftsmen, that species seems to be rarer today.
> white collar incumbent's ability to make it illegal to replace them
That is true but that's a problem with government.
There's a limit to how far that can go as well. I see a lot of young entrepreneurs undercutting legal and accounting online.
“We always have difficulties filling this position because we require
specific experience in test engineering in the electronics industry. There
might be total of 150 qualified people in the Midwest!” said one employer of
industrial engineers.
To Hine, the focus on work experience suggested that employers were being
too picky. They wanted to hire someone who could be fully productive on day
one. But at the same time they weren’t willing or able to pay enough to
attract that perfect candidate.
Programmer: I have a really solid base in OOP and functional langs so I can pick up a language pretty quickly.
HR: Right Right, but what languages are you most experienced in.
Programmer: Do you ask a carpenter which brand of saw he uses or doctor which type of mri machine he prefers? Give me a few weeks, I'll have whatever language you want down.
HR: We want someone who can provide value from day 1.
Programmer: There's your tech shortage.
This is particulalrly bad, because no one can honestly promise that without knowing more about what their walking into. If the codebase is spaghetti and it takes a week to checkout and setup a project (alarmingly common). They're rewarding the liars.
Well, I think that's a perfect summary. Employers either need to pay up, or pony up taxes to local governments to pay up. A competent, polite, punctual workforce doesn't happen all on its own, and trying to dragoon people into one through poverty mostly just leaves you with unusable, crappy labor and low productivity growth.
So it sounds to me like, they can't hire people because they're stingy assholes. Am I missing something? Seems like if they set out to share their success with their employees instead of keeping it to themselves, they would have better luck. So pay an attractive wage, like $24/hr, and treat people well (and listen to them), and then if an employee has an attendance problem you fire them, because you're not paying that kind of money for crappy employees either.
Maybe someone can explain why I'm full of it, but from what I read here I have a hard time feeling very sympathetic.
I don't think you're missing anything. I think that almost 40 years of nigh-state-enforced labor glut have made employers very, very entitled about hiring. Now that demographics are running the other way (as the article notes), with the total workforce actually shrinking slightly, they're being bitten on the ass by that sense of entitlement.
A trained, punctual, polite, healthy, functional labor force does not spring from nowhere! It springs from years to decades of cooperation between employers, communities, and organized labor.
Or from sufficient graft to hire prison labor... which is still only mostly going to work in the "slave states" and only for extremely low-skilled labor.
You can't have a shrinking total labor force, degradation of workers' communities, and easy hiring.
An employer like those described in the article wouldn't necessarily need to offer a significantly better wage than what was indicated if they provided a higher quality health care plan and payed a greater portion of the premium. And, offer fully paid dental insurance.
In the end I guess it comes down to money one way or another for the employer.
During or possibly after WW2, wages were frozen in the US. Employers started offering health insurance as a perk to get around the freeze and compete for labor. At least that's what I remember reading.