4 ms·

I did some quick calculations to understand their stated problem of needing to higher 40 more people since it is costing them millions in lost revenue each mont

by dchmiel 10y ago

I did some quick calculations to understand their stated problem of needing to higher 40 more people since it is costing them millions in lost revenue each month. "The labor shortage is costing the company some $3.8 million per month, said Marty Davis, the company’s president and CEO." $3.8 million * 12 months = $45.6 million per year in lost revenue. Being conservative and assuming a 10% margin on their revenue figures this is a loss of $4.56 million for the firm for the year. $4.56 million divided by their labour need (40) means each worker brings in $114,000 of margin. So as long as they pay below that they are ahead. If they paid $25/hour for 2000 hours a year ($50,000) plus a 1.4 gross up for benefits they could hire people at $70,000 ($50,000 * 1.4) and still earn a positive margin of $44,000 ($114,00 - $70,000) leaving them $1.76 million of income. ($44,000 * 40). What do they expect when they pay $36,000 per year (18*2000), plus any benefits? I’ve heard this stated before as there doesn’t seem to be a labour shortage just a shortage of labour that you want to pay very little for. We don’t say there are too little lawyers or investment bankers or management consultants. Those jobs are or used to be the highest paid bringing in lots of supply from eager graduates.

xupybd 10y ago
Yes but then they have to increase pay for all the workers not just the 40 new hires. It might not pay off at that scale. That lost revenue is probably not indicative of per worker revenues.
- flukus 10y ago
  If they're paying below market wages then the current employees might not be the most efficient bunch in the first place.
internaut 10y ago
I've seen the same thing. My hypothesis is that working class wages are more sticky than white collar wages for reasons not strictly based on rationality. I believe that Moravec's paradox explains why working class wages should be higher and white collar wages should be lower than at present. https://en.wikipedia.org/wiki/Moravec's_paradox https://en.wikipedia.org/wiki/Moravec's_paradox Presently this is stalled because it is too counterintutive. People can't get their heads around the possibility of paying their gardeners and window cleaners more than their accountants or lawyers. That's the middle class version of The End of the World As We Know It. This to me explains the existence of firms like Home Depot and the increasing popularity of prefabs.
- someguydave 10y ago
  "Presently this is stalled because it is too counterintutive." No, it's supply and demand. Plenty of humans can physically rearrange stuff but only a few can (or are authorized) to perform legal services. I also wouldn't bet against the white collar incumbent's ability to make it illegal to replace them.
  - dikdik 10y ago
    I don't know. Lots of people in consulting and other white collar gigs will admit (over a few beers) that their job is peddling bullshit, putting together spreadsheets, and really isn't that difficult. Yea, some people can't cut it in jobs like that, but that doesn't really say anything. Some of my friends that are physicians would struggle tremendously to do the programming and statistics in my line of work, but they will likely always earn more money than me. Most jobs aren't as difficult as people love to pretend they are. The vast discrepancies in pay across America are probably not warranted in many cases.
    - someguydave 10y ago
      >probably not warranted in many cases. Ah but physicians prove my point - the state typically requires many years of education and licensing to be a physician - whether you use the skills learned or not. >but they will likely always earn more money than me. Probably so. In the US I think this is because physicians have been very good at getting the state to drastically limit who can practice medicine. There are nearly zero limitations who who can practice programming, and barely any limitations on engineering. Think about it - if you needed a to pass an examination, get a license, and spend years on post-undergrad schooling & forced unpaid internships programmers would have very high salaries.
      - dikdik 10y ago
        I absolutely agree, but if much of the "value" you provide is via protectionist legislation then all we are saying here is that blue collar workers should lobby for extremely high entry points and credentials for their jobs so they "have the right" to earn decent salaries. I think that's just a terrible idea all around. You should be able to earn a great wage without suppressing the market to justify it. Or rather, people should not be rewarded for building/propagating high entry points to their careers. I get WHY it works out the way it does (bc capitalism), but it seems that in the end we all lose out.

by dchmiel 10y ago

xupybd 10y ago

Yes but then they have to increase pay for all the workers not just the 40 new hires. It might not pay off at that scale. That lost revenue is probably not indicative of per worker revenues.

flukus 10y ago
If they're paying below market wages then the current employees might not be the most efficient bunch in the first place.

internaut 10y ago

I've seen the same thing. My hypothesis is that working class wages are more sticky than white collar wages for reasons not strictly based on rationality. I believe that Moravec's paradox explains why working class wages should be higher and white collar wages should be lower than at present. https://en.wikipedia.org/wiki/Moravec's_paradox https://en.wikipedia.org/wiki/Moravec's_paradox Presently this is stalled because it is too counterintutive. People can't get their heads around the possibility of paying their gardeners and window cleaners more than their accountants or lawyers. That's the middle class version of The End of the World As We Know It. This to me explains the existence of firms like Home Depot and the increasing popularity of prefabs.

someguydave 10y ago
"Presently this is stalled because it is too counterintutive." No, it's supply and demand. Plenty of humans can physically rearrange stuff but only a few can (or are authorized) to perform legal services. I also wouldn't bet against the white collar incumbent's ability to make it illegal to replace them.
- dikdik 10y ago
  I don't know. Lots of people in consulting and other white collar gigs will admit (over a few beers) that their job is peddling bullshit, putting together spreadsheets, and really isn't that difficult. Yea, some people can't cut it in jobs like that, but that doesn't really say anything. Some of my friends that are physicians would struggle tremendously to do the programming and statistics in my line of work, but they will likely always earn more money than me. Most jobs aren't as difficult as people love to pretend they are. The vast discrepancies in pay across America are probably not warranted in many cases.
  - someguydave 10y ago
    >probably not warranted in many cases. Ah but physicians prove my point - the state typically requires many years of education and licensing to be a physician - whether you use the skills learned or not. >but they will likely always earn more money than me. Probably so. In the US I think this is because physicians have been very good at getting the state to drastically limit who can practice medicine. There are nearly zero limitations who who can practice programming, and barely any limitations on engineering. Think about it - if you needed a to pass an examination, get a license, and spend years on post-undergrad schooling & forced unpaid internships programmers would have very high salaries.
    - dikdik 10y ago
      I absolutely agree, but if much of the "value" you provide is via protectionist legislation then all we are saying here is that blue collar workers should lobby for extremely high entry points and credentials for their jobs so they "have the right" to earn decent salaries. I think that's just a terrible idea all around. You should be able to earn a great wage without suppressing the market to justify it. Or rather, people should not be rewarded for building/propagating high entry points to their careers. I get WHY it works out the way it does (bc capitalism), but it seems that in the end we all lose out.