In contrast, if you simply pay $100k to trained employees, and employees can pay for training out of pocket, you preserve the cost structure (big caveat: I'm ignoring taxes) but without the risk of losing your investment.
Assuming 1) you can find trained employees, and 2) they are willing to work for $100k. If the value of the trained employee is $111k, then why would they work for $100k except for ignorance of their value?
This is my big problem with STEM shortage parrots and with labor as a market in general: ideal candidates are rare, and, in general, willingness to spend more or train up is pretty low. On the other hand, anecdotally businesses seem willing to wait months or years for that ideal candidate to come along and fail to balance the gigantic opportunity cost lost with the cost to train.
It's economically not as simple as what I'm describing, but that's sorta my point. I rarely see anyone in labor market discussions (especially around STEM or highly skilled workers) include the opportunity cost of an unfilled position.
The (IMO very weak) counterargument here is "well, budgets are set to blah blah blah" - but in that case, you're allowing a difference of a few dozen thousand dollars dictate whether or not you get someone, which can be the difference between shipping, getting out a new version, or whatever and not doing so. If your budgeting is that inflexible, maybe your organization has other problems it should address first.
When it comes to software, cost-based pricing should not be anywhere near the discussion. Software developers and their output should judged on value. It's crazy that anyone is still in this mindset after nearly two decades of software eating the world. We may be getting paid a lot relative to the median, but it's still just a fraction of the value it creates - otherwise, why would anyone bother? Hire a dev for 135k for example (includes benefits), and have them only generate 150k worth of value? Come on.
Competitor does not pay $111k because competitor does not pay for training. Which was the entire point of the exchanges above
You could of course question why a company would train their employee at all if the market rate for an already trained member of staff was about $90k. Because retaining an existing member of staff at an $80k salary after paying $20k for their training happens to pay for itself after 2 years. Its quite sad I feel I have to post the calculation to avoid further downvotes, but its: (($80k * 2) + 20k)/2 = $90k
I honestly thought this was high school stuff....
Whatever a competitor is willing to pay, the company that provided the training can just pay that and not risk their employees being poached. Additionally, it isn't free to poach employees, they will have training costs no matter what. In other words, after training you raise their salary.
Yes they can, if they want to go out of business.
If I spend $20k to train a new employee, I can afford to pay them their value to me - $20k (less than that if I want to make a profit, but this is the maximum that allows me to stay in business). Meanwhile, my competitor waits 4 weeks for me to do the training and offers their full value. Now I can either let them go, or match the offer - but either way I'm down $20k, while my competitor comes out even.
So you can imagine why I might not want to spend money on training.
Given your other points, this is only a problem is the cost of the portion of the training that is transferable is more than the extra cost of poaching (over that of hiring a fresh employee). As the job market becomes more liquid (decreasing that poaching cost), this becomes the case more and more.
And hence, in the original example, the company providing the training ending up spending $111k on their member of staff over the course of the year to head off a competitor's $90k offer, even if the employee isn't worth $111k (Considering your original contribution to the thread was to argue the competitor wouldn't pay $111k, I think accusing me of missing the point is a bit rich...)