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Is it a skills shortage or a won't-pay-market-value shortage? If more MBA's and the like start choosing silicon valley will Wall Street cry shortage or will the

Is it a skills shortage or a won't-pay-market-value shortage? If more MBA's and the like start choosing silicon valley will Wall Street cry shortage or will they just raise the rates of pay and bonuses? If someone making 100k a year couldn't find a helicopter to buy they would be laughed out of the room if they suggested it was due to a shortage of helicopters rather then them not having enough money to buy. But companies who have every incentive to keep wages down are listened to and believed whenever they proclaim that there is a skills shortage, rather than people questioning whether they're paying enough.

3pt14159 13y ago
It's supply and demand man. The reason I don't own a helicopter is precisely because there is a shortage. Anything with a free-floating price is in shortage. I would totally buy a helicopter if they were $10k or less. My point is that there isn't this magical jobs fountain that people are holding back from the masses, it's that there are large portions of the population that lack skills that are in demand in the work force. I don't see how this is a controversial opinion.
- fiesycal 13y ago
  The controversial opinion is that despite the 'shortage' (http://spectrum.ieee.org/at-work/education/the-stem-crisis-is-a-myth)companies http://spectrum.ieee.org/at-work/education/the-stem-crisis-i... don't increase their pay rates substantially and instead complain that there's no one to hire.
SiVal 13y ago
I'm not sure what you think the "market value" is that employers won't pay. I'd guess it's something reasonable like the minimum you'd have to pay to get all the skilled workers you need. Raise your pay offer slowly, gradually attracting more people, until you have the people you need, and that amount of pay is the market rate. But what if that rate of pay is more than the new employees are worth to the company, so hiring them would not benefit the company at all? Then it's not a market rate, because market rate isn't just the outer edge of what one side finds acceptable. If both sides don't find the rate acceptable, there's no market rate. If a "greedy" employer refuses to pay what it takes to hire all the people they need, while their enlightened competitor does pay what it takes to get the necessary additional labor, one of those employers will have higher profits than the other, and the one with lower profits will be pressured by their investors to become more like the other. That has been going on for centuries, and the result is a "labor shortage" in some areas, meaning companies (that always face competition from other companies) can't get all the labor they want at existing rates and wouldn't benefit from additional labor at higher rates. The problem may well be gradually driving the company out of business, but still, raising their wages would just drive them out of business faster.
- fiesycal 13y ago
  What I'm saying is if you can't find employees at the current wage you're paying and increasing the wage means the employee is no longer worth it than you have the right amount of employees and there is no shortage. Companies aren't entitled to employees or entitled to be in business. Just because you can't afford something doesn't mean there is a shortage. But companies who are in this situation complain that there is a shortage when really they just can't afford the employees. All I meant was that I was annoyed at the constant talk of 'shortages'.
  - SiVal 13y ago
    I understand your position, and I don't think your definition of "shortage" here is unreasonable. But shortage is a relative term--"short" relative to what?--and by some measures, there are real shortages in these situations. If we use corn instead of labor, for example, we might have a bad harvest one year, and the price of corn goes so high that it's not worth buying for certain products. The market still clamors for those products but isn't willing to pay what they would have to pay given the new price of corn. Your definition, if I understand it, would say that there is no shortage of corn; it's just more expensive than you can pay. I'd still call it a shortage of corn, because I'm thinking of it relative to previous years, future expectations, the causes of the price change, etc. Rent control or earthquakes cause what many would consider a housing shortage, gov't price controls or bad weather create commodity shortages, and sufficiently generous welfare programs (you have to pay a lot more to make it worth working at all) or explosive increases in customer demand (not enough time for labor to learn new skills) can create labor shortages. From the perspective of an employer, no longer being able to hire people at a wage that makes them worth hiring can be seen as a labor shortage, while from the perspective of a worker, no longer being able to get a job at a wage worth working for can be seen as a jobs shortage, but I agree with you that, especially if the changes are just the long-term evolution of the economy, there comes a point where it no longer makes sense to refer to something that will never come back as a "shortage".
    - fiesycal 13y ago
      Agreed the corn would be a shortage. But do you think there is a current shortage in STEM fields? A lot of people don't. http://spectrum.ieee.org/at-work/education/the-stem-crisis-is-a-myth http://spectrum.ieee.org/at-work/education/the-stem-crisis-i...

3pt14159 13y ago

It's supply and demand man. The reason I don't own a helicopter is precisely because there is a shortage. Anything with a free-floating price is in shortage. I would totally buy a helicopter if they were $10k or less. My point is that there isn't this magical jobs fountain that people are holding back from the masses, it's that there are large portions of the population that lack skills that are in demand in the work force. I don't see how this is a controversial opinion.

fiesycal 13y ago
The controversial opinion is that despite the 'shortage' (http://spectrum.ieee.org/at-work/education/the-stem-crisis-is-a-myth)companies http://spectrum.ieee.org/at-work/education/the-stem-crisis-i... don't increase their pay rates substantially and instead complain that there's no one to hire.

SiVal 13y ago

I'm not sure what you think the "market value" is that employers won't pay. I'd guess it's something reasonable like the minimum you'd have to pay to get all the skilled workers you need. Raise your pay offer slowly, gradually attracting more people, until you have the people you need, and that amount of pay is the market rate. But what if that rate of pay is more than the new employees are worth to the company, so hiring them would not benefit the company at all? Then it's not a market rate, because market rate isn't just the outer edge of what one side finds acceptable. If both sides don't find the rate acceptable, there's no market rate. If a "greedy" employer refuses to pay what it takes to hire all the people they need, while their enlightened competitor does pay what it takes to get the necessary additional labor, one of those employers will have higher profits than the other, and the one with lower profits will be pressured by their investors to become more like the other. That has been going on for centuries, and the result is a "labor shortage" in some areas, meaning companies (that always face competition from other companies) can't get all the labor they want at existing rates and wouldn't benefit from additional labor at higher rates. The problem may well be gradually driving the company out of business, but still, raising their wages would just drive them out of business faster.

fiesycal 13y ago
What I'm saying is if you can't find employees at the current wage you're paying and increasing the wage means the employee is no longer worth it than you have the right amount of employees and there is no shortage. Companies aren't entitled to employees or entitled to be in business. Just because you can't afford something doesn't mean there is a shortage. But companies who are in this situation complain that there is a shortage when really they just can't afford the employees. All I meant was that I was annoyed at the constant talk of 'shortages'.
- SiVal 13y ago
  I understand your position, and I don't think your definition of "shortage" here is unreasonable. But shortage is a relative term--"short" relative to what?--and by some measures, there are real shortages in these situations. If we use corn instead of labor, for example, we might have a bad harvest one year, and the price of corn goes so high that it's not worth buying for certain products. The market still clamors for those products but isn't willing to pay what they would have to pay given the new price of corn. Your definition, if I understand it, would say that there is no shortage of corn; it's just more expensive than you can pay. I'd still call it a shortage of corn, because I'm thinking of it relative to previous years, future expectations, the causes of the price change, etc. Rent control or earthquakes cause what many would consider a housing shortage, gov't price controls or bad weather create commodity shortages, and sufficiently generous welfare programs (you have to pay a lot more to make it worth working at all) or explosive increases in customer demand (not enough time for labor to learn new skills) can create labor shortages. From the perspective of an employer, no longer being able to hire people at a wage that makes them worth hiring can be seen as a labor shortage, while from the perspective of a worker, no longer being able to get a job at a wage worth working for can be seen as a jobs shortage, but I agree with you that, especially if the changes are just the long-term evolution of the economy, there comes a point where it no longer makes sense to refer to something that will never come back as a "shortage".
  - fiesycal 13y ago
    Agreed the corn would be a shortage. But do you think there is a current shortage in STEM fields? A lot of people don't. http://spectrum.ieee.org/at-work/education/the-stem-crisis-is-a-myth http://spectrum.ieee.org/at-work/education/the-stem-crisis-i...