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The "historic" and "unexpected" drop in oil prices since last September taught me a huge lesson in supply and demand elasticity. The media and analysts want a

The "historic" and "unexpected" drop in oil prices since last September taught me a huge lesson in supply and demand elasticity. The media and analysts want a smoking gun explanation, blaming it on the Saudis attacking frackers, Russian geopolitics, the strong dollar, etc. But a drop to nearly 1/3 the price cannot be explained so simply as the supply and demand difference is a small percentage on consumption. The way I see it is that both supply and demand are inelastic in this case, as the world only needs so much oil at a certain time and cannot ramp up easily. Supply is inelastic in this case because much of the production boom was generated by highly indebted frackers. That means they have to pump and sell no matter how low oil goes. These two factors completely kill price rebalancing. What does this mean for worker's pay? Simple: the effect of offshoring a few jobs has similarly an outsized effect on the negotiation power of employees. If there is always someone out there willing to take a job at breakeven (paycheck to paycheck living), worker pay will never go up. Anyone who claims it's only a few jobs or that they pay market rates for H-1B's is either ignorant or a crook.

jonawesomegreen 11y ago
I've never thought about the job market like this before, but it makes a lot of sense, and it is a good argument for the dreaded U word. I've always personally always had ambivalent feelings towards unions, even when I was represented by one as a TA. But the idea that ideas such as this make me wonder if they do actually help balance things more then I had thought in the past.
Swizec 11y ago
> If there is always someone out there willing to take a job at breakeven (paycheck to paycheck living), worker pay will never go up. Which is why you don't compete on price, but on service. If you can do for the business what other people cannot, your pay will keep going up and to the right for as long as you want. Mind you, this could be as easy as rephrasing "I know Ruby" to "I use Ruby to increase revenue". For instance, I am right now hiring a copy editor. I've spoken to plenty of people with a variety of hourly rates. Some said "I am really good at grammar and I am diligent and very detail oriented". Some people said "I can make your writing clearer". Who do you think I liked more?
- rch 11y ago
  It's not that big a deal which candidate you like, since any of them will accept a figure within 1 or 2 standard deviations of average pay for the role. Which is kinda the point...

jonawesomegreen 11y ago

I've never thought about the job market like this before, but it makes a lot of sense, and it is a good argument for the dreaded U word. I've always personally always had ambivalent feelings towards unions, even when I was represented by one as a TA. But the idea that ideas such as this make me wonder if they do actually help balance things more then I had thought in the past.

Swizec 11y ago

> If there is always someone out there willing to take a job at breakeven (paycheck to paycheck living), worker pay will never go up. Which is why you don't compete on price, but on service. If you can do for the business what other people cannot, your pay will keep going up and to the right for as long as you want. Mind you, this could be as easy as rephrasing "I know Ruby" to "I use Ruby to increase revenue". For instance, I am right now hiring a copy editor. I've spoken to plenty of people with a variety of hourly rates. Some said "I am really good at grammar and I am diligent and very detail oriented". Some people said "I can make your writing clearer". Who do you think I liked more?

rch 11y ago
It's not that big a deal which candidate you like, since any of them will accept a figure within 1 or 2 standard deviations of average pay for the role. Which is kinda the point...