I was listening to a great podcast about this. They said they asked owners of businesses, "If you're having trouble hiring, why don't you offer more money?". Their response was all a variation on, "because then I'd have to pay all my other workers more when they found out, and it's cheaper to just pay the current folks overtime at their lower rate than give everyone a raise".

I dont have much sympathy for companies that turn down highly qualified intelligent workers by the truckload. There are so many people with MBAs who, for years struggle to get any kind of job at all.

I mean sure, paying more can help alot, but first of all, just fix your Hiring process. The hiring process at these some of the companies I've heard about are absolutely abysmal. I've heard first hand: They get great candidates who pass the phone screen and all the in person interviews: then at the last minute change their mind about hiring.

I've seen this at software companies when I was on the hiring side of the equation. HR told us we had an extra slot open. We don't wanna waste the slot so decide to hire somone. we wasted months turning down excellent candidates because engineers don't know how to interview a candidate because there's never time to train someone when teams are changing every year. Then we finally find a perfect one that everyone likes, and the manager above us decides to cancel the position and use the slot to hire a college buddy of his for a completely different role.

My theory is, a lot of these so called job openings are for jobs that aren't really needed. And the stake holders don't realize that the jobs aren't needed until the final hiring decision sign off is needed.

Related to this: customers need to pay more.

Many businesses have very small profit margins, so paying staff more or training staff could turn them unprofitable.

When you're buying products cheaply it's likely that somebody (or someone's environment) is paying a price for it. Once you bear that in mind there is such a thing as products being uncomfortably cheap.

(I live in Norway where nothing is cheap but almost everyone earns a good wage. The result is that people don't buy so much stuff but lead good lives.)

Is it the case that companies are actually struggling to fill positions, or are statements to that effect just an aspect of the metagame?

There's a ton of stuff that goes on outside of the actual mechanics of 'company hires for job and person applies for job'.

Unless you've been pretty lucky you've almost certainly dealt with euphemisms at work when it comes to discussions around pay, for example.

It's kind of annoying that we can't just speak frankly about these things, but such is life.

My last job that I quit I had worked for a "growth stage" startup. Our valuation was probably in the 500~M range and we had a real shot at making it to unicorn status. The entire time I worked there, every couple months the CEO would give this inspiring talk at the company all hands about how we're doubling down on recruiting and we're about to grow like you've never seen and change the world, etc.

When I left after two years, the number of engineers was about the same as when I joined, but they were almost all different engineers. The company both struggled to hire and retain because the salaries were just ok, the options pitiful, and the management downright awful.

We talked about getting the best and brightest from top universities, but at one point I learned our recruitment strategy was to look for "bargain" hires, which we defined as really bright & competitive new grads coming out of top schools, willing to work long hours, but willing to accept low salaries.

(Yes, I was one of those bargain hires, minus the long hours. I quit after suspecting that my lack of long hours was holding me back from getting promotions in spite of the significant responsibilities I had as one of the more tenured engineers).

"Pay more" works fine for companies that are at the top of the pyramid: google, amazon, facebook, etc. For the rest of the employers there's a hard stop at some point well below what the top 5 are paying.

The next thing to consider is training.

Unfortunately, it is now fashionable for medium-sized businesses to be over-run with project management types that hold everyone nose to the "deliverables" grindstone and enforce performance measures that are hostile to anyone who needs to pick up new skills on job and anyone that deigns to mentor colleagues (god forbid, they slip on a trite deliverable because they were cultivating the next generation of grindstone-licker).

The article is kind of saying the opposite of what the headline implies. It says that Kashkari had previously been making the argument about paying more, but that, with unemployment falling to its lowest level in 49 years, we might now be getting to a point where there might actually be truth to the notion that there are just not enough bodies out there.

I see a solution to the problem: Remote work. Put people who are on site into jobs that actually require people to be on site, and fill jobs that don't have that requirement remotely. That way you can get around the absence of bodies in the U.S. (coupled with the tight immigration regime) and the skills shortage.

There is so much demand for non-mindless consumption these days, and in some areas certainly also the money for it, that I wonder why American companies don't start to signal.

Like, put a huge sign in front of the door: "America needs higher wages, but someone needs to start! Our prices include fair wages to our workers, 25% above industry average". Or something more clever. Building this into the company ethos has the advantage, in the current economy, to not only take higher prices for hopefully little drop in demand, but also to attract better workers.

Since there are almost no labor related laws in the US, the only way to afford above average wages is to generate demand by differentiation. And that might be done, after all, Americans are willing to tip ridiculous amounts (like 25%) just so that waiters or delivery drivers get to make a living.

Has this ever been attempted? I have no prior on whether it actually works, people might care too much about the price...

Two thoughts:

1) I've been saying this for years, but nobody wants to hear it. In particular, an oft-repeated maxim from the immigration debate is “these are jobs Americans will not do!”. This statement is plainly and obviously false. Most Americans will not do these jobs FOR THE WAGE YOU ARE WILLING TO PAY.

Picking tomatoes is backbreaking soul-killing work. I won't do it for minimum wage. I will do it for $10,000/hr. Somewhere between these extremes is the optimal wage (from the employer's point of view) which will attract a field full of pickers. Perhaps that wage is $100/hr. Now, I hear the grower growling “$100/hr is not a reasonable wage for a tomato picker”. To which I reply, “define ‘reasonable’ ”. Is it not a tenet of Republican free-market orthodoxy that the fair value of a commodity is that which is determined by market forces? Why is this orthodoxy so quickly extinguished when applied to wages, and especially when its application argues for better wages for low-status people?

2) I've referred to products and labor as commodities with prices set by market forces. However, I caution against viewing the employer-employee relationship as being exactly analogous with the manufacturer-customer relationship. Both business and labor make money by selling something -- the manufacturer sells his goods to a customer; the laborer sells her labor to an employer. But the two are very different in one regard: companies (mostly) have a multitude of customers, while a worker generally has ONE customer: her employer.

Most companies strive to avoid overreliance on a single customer. They diversify their offerings and try to establish a large customer base. The IT company selling its software to Walmart, and only Walmart, is surely aware of the inherent peril.

Laborers can't do this. An employee is selling his time; he cannot slice his day into 5-minute segments and sell each 5-minute labor period to a different buyer. He may even be contractually constrained from trying this (“no moonlighting”).

A laborer selling her time is not really in the same boat as a producer selling a product. [There are exceptions, generally to the benefit of the laborer. For example, self-employed physicians and lawyers really do have many customers who purchase small segments of their time].

What, there is a shortage of workers willing to work for low pay? The Answer. Create competition in the labour sector by relaxing border controls and let in immigrants. Keep there status as illegal, so that you don’t need to pay all the costs that legally protected employees are entitled to

The alternative is trying to get cheap workers from abroad, which worked quite well in the past and still seems to do well to some extent - if you can accept all the challenges this way of doing business carries along on social/security/national level.

Times are changing, though, and absolute poverty is thankfully not everywhere an issue anymore, which leaves it to relative poverty: I can't afford Netflix => I am poor. In such cases, people are much less likely to do that "shitty not-well-paid job" for long. Selling drugs is much more convenient and profitable, for example. Also, more and more countries are restricting their borders, making it harder for cheap workers from abroad to come and do such jobs.

So, yes, the other alternative is: raise the salary!

I’m pretty convinced that as the realization that most work is meaningless, combined with concepts like basic income, employers will need to provide more-and-more incentives to get motivated workers.

Maybe they should study how trash men, sewer cleaners and other “undesirable” jobs are staffed?

Ugggghhhhh, there is absolutely no data to back up the proposition that throwing more money at the problem is a magical fix. This is a guess based on vapor out of convenience and desire.

As a software developer in the Dallas metro I make over 6 figures, twice the average income. The work isn't that hard and the perks are amazing. At EVERY software development job I have ever held I have worked with a huge number of immigrants.

If the pay is so damn good (already) and the benefits are so damn fantastic why aren't more Americans writing software? Why aren't so many of those people who are writing software so incompetent?

I get asked all the damn time by young people in my side job how they can become software developers so they too can make the big bucks. Simple, put fingers on keyboard, struggle, and figure it out through practice. None of them follow through. None. Some of these guys make far less than the national average and they still aren't motivated.

So let's propose a hypothetical. Let's say entry level were $150,000 and senior were $500,000. A ridiculous increase. Would more people be interested in programming: absolutely. Would there would be a substantial increase in senior developers? I suspect there would be a minor increase, because it takes effort. Competence isn't a gift and gifting additional income won't work.

Now, I could be wrong, but as it stands all the objective evidence is on my side on this.

> There is no such thing as "shortage" of anything. Just pay more, and you'll get it.

Businesses are also limited by how much their customers are willing to pay for the item/service their workforce produces.

If a company's labour costs are higher than the price their customers are willing to pay for the product they are selling, then that product won't be produced.

e.g. if the labour that goes into making raspberries means the customer has to pay $6.99 for a tiny little package of raspberries at the grocery store, and no one in the world is willing to pay that, then raspberries will no longer be sold.

I'm not saying that there currently isn't room to pay higher wages, I'm just saying there is a practical limit to "just pay more".

I think that's an oversimplification.

I'd love to move back to Silicon Valley and work for an early stage startup. But, now that I'm a bit more established and have kids, that means that I want something more than a budget 2-bedroom apartment. (And, I also want a reasonable commute.)

The cost of living is just too darn high for many businesses to afford to "pay more."

So, part of the problem isn't just paying more. Part of the problem is ensuring that areas with job openings are affordable for employees at what the employers can afford to pay.

These things always remind me of two things.

Only wanting young employees with many years of experience, and that time the Dutch government tried to get unemployed people to work in the green houses. They got hundreds of people on buses, drove them to the green houses "look how wonderful it is to work here", a few million investment later, two people started working there. Both because this was a good way to meet others, and they didn't mind getting a lot less money if they took the job over government payment.

Paying more could work for certain kinds of jobs, but others are simply not productive enough to justify paying more. I recently went to a country without a minimum wage and it was amazing what they were paying people (presumably very little) to do, such as sell napkins and straws in a market. Without a regulatory requirement to do so, it's simply impossible for an employer to extract a U.S. minimum wage's worth of productivity doing that kind of activity.

That's not to say that every low paying job is like this. We in the U.S. have gotten used to certain blue collar jobs paying very little because of massive numbers of new immigrants, legal and illegal. Now that the spigot is being turned off, there's a labor shortage at the low end. Maybe, e.g., food and construction ought to cost more to compensate, which will certainly change the type of offerings of each, but we might get more efficient usage as a result.

I agree that increasing wages is definitely a good way to get more folks in the door!

That said, a very real problem here is the fact that health care and basic benefits costs have been increasing significantly over the past 10 years but it's much harder to convince an employee of that value vs. dollars in the door on a salary number.

Just keeping your health care premiums steady year over year as an employer could be the equivalent of a huge wage increase, but your employees won't see it that way because nobody understands the true costs of care.

Nobody says "Thanks for the 10% raise" when they get to keep their benefits. This is only part of the problem with "you should try paying more." as an argument.

That said - for jobs without benefits especially, paying more should be the first reaction to this, 100%.

The companies appear to be complaining that they can't hire skilled people.

Paying more is one solution - hire the skilled people away from their current job.

But so is training. Training could be considered a benefit, but at one time it was the standard assumption - all jobs include training, particularly jobs that are in any way skilled. And not just training at the beginning, but ongoing. Every year. Like a salary, vacation and sick time. As part of the standard budget. Not the first thing to be cut - because it is just as necessary as salary, vacation and sick time.

Unless of course, the job isn't really skilled, and companies doesn't actually need skilled people.

One missed point is that companies should also fill jobs with people who are willing to do the work. Most of the time, their economics and hiring processes are blurred by trying to get what they perceive the best and those who usually have a lot of clout based off some social media information they have gathered.

It is far easier to train and make an expert of someone who wants to work with you than getting someone who has all the nice credentials that pretends their expertise. People who embrace what you are providing are generally more inclined to stay and contribute.

My company wants to hire around 50 new people, but their pay is only decent and their facilities meh... And they wonder why they're having issues filling the different positions.

That can well be true for one particular company, but what does it mean for employment as a whole? Say you increase the comp and you find a person for the position. It's not like they have been sitting twiddling their thumbs, you hire them away from some other company. Now a different company has this problem.

Without some external contribution, like willingness to invest into on-job training, availability of online and brick-and-mortar education, this is a zero-sum game.

I just saw a help-wanted sign at a supermarket which said they were hiring for "long-term jobs". Now that's a good selling point.

How about the fed not make it incrementally hard for companies to do that as a matter of policy (in order to.boost employment)?

https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi...

Finally a respected economist who calls a spade a spade. There is no such thing as "shortage" of anything. Just pay more, and you'll get it.

Now, here's some alternatives for companies that can't/don't want to pay more:

- offsource (but they know this already)

- automate (everyone is in a continuous process of automating what can be automated)

- hire temp workers (most likely they've been doing this for years)

- hire illegals (well, that's illegal)

- lobby for more immigration (probably what Kashkari was answering to)

But here's some novel alternatives:

- train people more. You hire them at lower qualifications, and educate them in house

- open source your tools, so people can train themselves for free, before applying for your job openings. Tensorflow, PyTorch anyone?

- offer training for interested outsiders. See the Udacity WorldQuant course in AI for trading [1].

- invest in STEM education to increase the general pool of qualified hires. I know of the Google initiative [2]

[1] https://www.udacity.com/course/ai-for-trading--nd880

[2] https://edu.google.com

Yep. Every time people say "Americans don't want to do these jobs" or anything else suggesting that there is a labor shortage in some sector I always mentally append the phrase "at the price you want to pay".

lol, why does anybody need to say so? This is free market 101.

Also I really believe that's how the future looks like, thanks to AI and automation: fewer and fewer jobs with higher and higher requirements but also higher and higher pay.

Does this really apply equally to programmers and starbucks baristas? I don't know of a single programmer who didn't make more at his/her new gig.

That’s quite an amazing theory. Is there any fundamental law of economics that describes such a profound relationship?

It's common for people on HN to say "there's no such thing as a shortage, just pay people more", but that assumes that the amount of value people provide is infinite, and can just keep growing.

To the extent that companies are offering "good" wages already, the people who need to hear the message about a shortage are those who would consider changing fields for the current wages.

Yup, that will clearly never work. eye roll

Do you have to be a right-winger or a left-winger to believe that private companies owe you something be it education, training, or a special level of compensation. I mean they already pay taxes. If you don't like the conditions and terms offered, just ignore the company. How come people on HN are praising the free market (saying there is no shortage, it's just supply and demand, and stuff like that) and criticising the companies who're exercising their right for free market at the same time?

They got rid of their training programs so that workers would have to acquire new skills at their own expense.

Then they were surprised that a dearth of the workers wanted to acquire skills that are only useful for employees at a tiny subset of companies, who refuse to pay more for them, and instead most went for more portable, more universal skills.

But they still don't want to pay more for the niche skills that they require--the skills that no one is acquiring because the marginal benefit of acquiring them do not pay the cost of the training. And they don't want to change their business model to work better with the skilled employees who have the more commonly learned skills.

This seems like all that would be required to fix it is an economic understanding at the most basic level--supply and demand. Pay more to employees already suitable, or pay to train those who are not, but have sufficient aptitude to become so. Labor skills are a service product, and the market finds a price for them just the same as every other product. If you can't buy what you need, you got outbid.

There seems to be some flaw in business management education if managers are ignorant of this, and some flaw in public policy education if the managers are not ignorant, but just pretending to be, in order to get government concessions. Somewhere along the line is a person that needs to re-take Econ 101.

For the question of "What if we train them and they leave for a competitor?" it doesn't take much to work that out with thought experiments. The game-theory analysis says that each individual company is better off ending its in-house training program and poaching its trained employees from another company, with the greatest advantage going to the company that does this first. So the Nash equilibrium is for no companies to have their own training programs, and therefore for no companies to have access to trained employees, while the optimal group benefit occurs when every company has a training program, and trains rather than poaches. The obvious solution is to cartelize the competitors, such that they all agree to contribute to a common training program, and give at least a minimum pay raise to every employee trained by it. There are a variety of ways to make that happen. A union could run the program, and force the businesses who are hiring its members to pay for it, by threat of embargo. A government could tax the businesses, and use the tax to fund a professorship at the public university, required to teach certain classes. The businesses themselves could create certifications, and jointly control the certification body, such that certain certification levels meet some common needs of all participating companies, while those seeking certification pay all the costs of the training program.

Or, one businesses could pay more to prospective employees that strategically acquire niche skills, as a means of encouraging them to actually train themselves. If you're running a business, you can't just sit on ass and expect the world to just cater to your needs. The world wants money.

yay wage inflation

I guess I'm not very clever because I don't understand how encouraging inward immigration in search of cheap labour isn't akin to a ponzi scheme. Another thing I never see discussed is: what is the top limit to the population a country can carry without things becoming miserable? Surely at some point inward migration will have to stop unless we aim to have every single citizen of the world living in a single country, and what then?

Also, how is it morally or economically justifiable to let existing citizens languish on unemployment benefit whilst solving the problem of their lack of participation in the labour market by opening doors to cheap migrants?

It seems to me like if we care about our fellow citizens we should all get used to paying higher prices in support of them, which might enable them to obtain the necessities of life in a more fulfilling manner.

the productivity in the US has been stagnating/decreasing for more than a decade already. Tight labor market requires to pay more to employees which in turn requires the businesses to increase productivity and efficiency - i.e. the more expensive the labor the less waste of that labor can the business afford. Add to that the tax cuts which automatically made the employees even more expensive (actual cost of employee = cost paid - tax on profit, i.e. $100 employee salary comes down to just $70 in actual cost with 30% profit tax rate whereis it is $80 with 20% profit tax rate). Even more automation/computerization/robotization/etc. to come.

"Higher Wages" is almost never the answer for finding more candidates.

The only way higher wages lead to more candidates is by taking them away from other companies or other industries, and sometimes from other countries. So that is sometimes an option for certain employers, but not for an entire industry. It's a myth that there is a pool of workers who is "underemployed" because of low wages.

Also: In a free market, if companies can earn more profits by hiring more people by offering higher wages, they will do so. But increasing wages also reduces profit, and there just may not be enough room in the margins.