Competition is ill defined in the labor market because people aren’t fungible. So it’s hard to really point to hard evidence, so and so practice leads to so and so change in salaries or increase in retention.

Aside, nobody said this guy was looking for a low paying job. High paying ones want leetcode.

Google will pay a higher salary to a 21 year old than a Miami firm will pay to someone with 10 years of experience. Nobody will ask you these puzzles outside of ~5 markets in the US. They also pay way less.

It is a game of cat and mouse between candidates and companies. The candidates want high pay and interesting work, and the companies want only the top n% of candidates for their work, for some metric of their choosing. However many candidates a company has to choose from, they will devise some way of choosing the best among them. The methods for determining the best become (in my opinion) increasingly pathological as the surplus of candidates increases. In tech, the result is that the past decade has seen a supermajority of the most lucrative, mainstream jobs moving to a local maximum: whiteboard interviews based on data structures and algorithms. In response, candidates have gamified the process of studying for these metrics using Leetcode, and so a cottage industry of adult test prep was born.

Other industries use extreme credentialism or other methods to cut down on the vast majority of resumes they see, and there likewise emerges a cottage industry of professional preparation to break into these careers at the highest level. The companies use these methods because they see an absolute glut of candidates and become risk averse to bad hires - because after all, if they can attract so much talent with high pay and prestige, why should they suffer possible duds? This is how we end up with the, "Google is okay with passing on false negatives but can't tolerate a false positive in their hiring process" reasoning.