I usually voice my support for business issues and call BS on pandering politicians shaking down businesses for more tax money, regulations and general class warfare. However, I’ve also got to call BS when I see it when the mainstream media keeps purporting that businesses just can’t get enough high skilled workers to run their businesses. That is a lie. Read what you hear in the media and then the next line which is the truth:
Media/Business Message: “There are not enough highly skilled workers to run our business.”
Truth: “There are not enough highly skilled workers to run our business at the wages we want to pay them.“
While you can find a regurgitation of the same article practically daily, the latest anecdote-filled article from CNBC portrays a bunch of tech companies that just can’t get enough skilled workers to run their everyday operations. Just as there’s no such thing as 0% unemployment (wage rates would always continue to rise asymptotically to prevent total unemployment in a tight job market), there is no such thing as a shortage of any particular skill set if you’re willing to pay the market rate. See how that works? While it’s not always like flipping a switch overnight, if wages rise high enough, talent will flock to particular sectors chasing high wages. We’ve seen this in virtually every field. This is why non-degreed trades can make 6-figures on oil rigs, contractors were getting 6 figures to work in Iraq and Facebook has no trouble hiring talent.
If the package is sweet enough, the candidates will fill the roles. The problem with many businesses today is that they find they can’t fill these roles at the “typical” wage rates they want to. Well, that’s life! Just like a business can lay off as many workers as they want when business is lean, they must also pay up when talent is in demand, no?
Enter the Immigrants
No, this is not a xenophobic knock on immigration. In fact, I’m a huge proponent of LEGAL immigration, especially with high skill sets (there used to actually be a time in America where you needed a skill to enter our country). Innovation and leading edge product development and services is what sets America apart from the rest of the world despite our best efforts to cripple ourselves (criticism). Given our country’s runaway debt obligations and slow economy elsewhere, immigration is going to help drive GDP, help pay for the unsustainable commitments we’ve made through Social Security, and many other untold benefits. However, what business wants is the ability to import as many immigrants as they like on various work visas to essentially artificially suppress the wage rates. Again, while I can empathize with a business looking to keep costs down, let’s just call it what it is – this is a wage issue, not a skills issue. There are a few very easy solutions to this problem which businesses don’t appear to be pursuing:
- Increase Compensation – This is the obvious solution that companies don’t seem willing to undertake. Let’s say the starting salary for a Java programmer is $90,000. That sounds shockingly high. As such, there are more kids now pursuing that kind of curriculum (or switching from other tech skills into Java) than perhaps their prior trajectory. Well, if the average starting salary were $150,000 (which may well be the true market rate to supply all open positions), then a heck of a lot MORE people would be flocking to that skill set. Companies shoot themselves in the foot. They artificially suppress the wage rates of in-demand skill sets hoping to manipulate immigration laws and then complain about the pain they’re enduring rather than doing something about it!
- Stop Hiring in California – Sure, California is the hub for all things tech, but if you wanna play, you gotta pay! If you want to keep someone in the hottest job market in the highest cost of living area around from leaving your company, you have to pay them a ton (or import immigrants to do the work). How about just having some sites in the midwest or even overseas where the wage rates are lower, local universities can supply a constant flow of graduates and you’re not competing with any other companies? The CNBC article sited a few companies doing that, but it’s obviously not happening for the vast majority of companies in Bubble, CA.
- Allow Remote Work – Similar to putting sites outside California, more companies should just let people work out of their homes anywhere in the country. I find it to be hard to believe that in IT, social media, software engineering, etc., that you MUST be in the office all the time. I have a family member who works for Oracle and they have virtually nobody working in an office; practically the whole company works remote. Why the heck do you need a guy in front of a computer with headphones in San Francisco everyday instead of out of his basement in Texas? This would greatly increase the number of willing candidates and entice people to leave other professions to pursue areas of high demand.
- Outsource More – I also find it ironic that companies want to import millions of immigrants into the US to write code but they can’t just outsource the same work to the same countries they’re importing labor from. This makes no sense. Security? You have the same risk here as you do anywhere else. Reputable firms overseas have the same measures in place the US does and I’d argue US companies face just as high a risk due to complacency. Anyone here in the US could easily upload info off a thumb drive, laptop, server or whatever other info they can access compared to outsourcing. Why not just outsource some of this work?
- Train Your Own Workers – This one takes a little foresight and effort as well, but companies could solve many of their worker shortages by simply cross-training or even starting apprenticeships and schooling for some of their existing workers – even interns that go full-time with an intense training session.
The bottom line is that fast growing businesses want to have their cake and eat it too. They want to enjoy above-average growth rates while paying below average wage rates to workers. Now I’m starting to sound like a union organizer LOL. But seriously, the sooner we start calling it what it is, the more quickly we can focus on an efficient market.