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US Employers will do almost anything to find workers to fill jobs — except pay them more


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http://www.latimes.com/business/hiltzik/la-fi-hiltzik-employment-20180710-story.html

 

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“America’s labor shortage is approaching epidemic proportions,” reported CNBC, “and it could be employers who end up paying.” Well, yes. That’s how things are supposed to work: Businesses pay more to attract workers in a tighter, more competitive market for labor

 

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The rhetoric coming out of the employer lobby would leave one to believe that workers are somehow the guilty party in this — they simply won’t accept jobs that pay them less than they’re worth.


The underlying cause of the “labor shortage” is hiding in plain sight. It’s the long-term trend of funneling the gains from labor productivity not to the workforce, but to shareholders. As with any addiction, this process produces short-term euphoria, reflected in share prices, but long-term pathology, reflected in income inequality, poverty and social unrest.

 

Well duh.

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My company raised its minimum wage to $15 an hour this month.  The factory my brother works for refuses to start people above $14 an hour and he says they have meetings where management complains that people out there are deadbeats because they won't work a shitty hard labor job for $14 an hour.

 

Good news is I'm the belle of the ball on LinkedIn, bad news is no one wants to pay me more than I'm making.

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I sat in a town hall meeting at a previous job where the CEO was telling us how well the company was growing and all the areas we were spending more money to be more competitive in the industry. A person asked if they were going to look at increasing wages to be more competitive or bringing anual merit increases to the levels they were a year prior.

 

The head of HR our "Chief People Officer" replied by saying that you never want to be the company paying the most for labor, nor the company paying the least. That they had done a survey of the industry and found we were not at the bottom in pay so there was no need to adjust at this time. 

 

Not a great answer, but at least they were honest. But obviously there are companies that are perfectly fine paying the lowest in an industry. Those companies on the lower end of the curve are the ones seeing trouble finding people. These companies forget that people do  not get jobs just for disposable income. They need money to live, and some companies barely, if they even do pay their employees enough for that. 

 

I get that shareholders are important, but they have to find a balance. Share holders won't stick around if nobody is staffed to produce/service anything. 

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13 hours ago, Spawn_of_Apathy said:

The head of HR our "Chief People Officer" replied by saying that you never want to be the company paying the most for labor, nor the company paying the least.

 

Maybe I'm wrong. But at first glance this seems like bad application of the winner's curse.

 

For those unfamiliar, the winner's curse refers to a property of the bidder who wins an auction for which the item has a true value that is roughly equal to every bidder, but isn't known upfront and must be independently estimated by each bidder. In this case, if the average bid of bidders is an accurate representation of the true value of the item, then the winner was someone who incorrectly overestimated the value and is paying more than they should.

 

In that context, a rule of thumb for never being the top or bottom payer makes sense and the HR officer was correct.

 

Except there is a significant failure mode in that. The winner's curse only exists if the average estimate is an accurate reflection of the true value. For a huge number of reasons that are probably obvious to people here, for employee wages, it's entirely possible that the pay wage is a pessimistic reflection of the true value of the worker. And if all bidders are systemically bidding under the true value, the winner won't be cursed. They'll actually be doing the best, because they'll still be underpaying its true value: they'll have a positive net gain, while the competitors gain nothing. That is, the higher payer will get the best workers and still be paying less than their value.

 

What companies should be doing is not assuming the average wage is an accurate estimate. They should actually look at what production they expect to get from a worker and estimate what their value is from there.

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