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It's not a worker deficit, it's just the market finally catching up with the huge discrepancy between knowledge worker productivity (in real physical terms) and

by taneq 5y ago

It's not a worker deficit, it's just the market finally catching up with the huge discrepancy between knowledge worker productivity (in real physical terms) and traditional knowledge worker pay levels. We've only had "knowledge workers" in the current high tech industrial sense for a couple of hundred years and our understanding of the value of one person's labour is still firmly based in the trades. It's still a relatively new idea that a single person working in the right way (eg. designing automated equipment) could produce hundreds or thousands of times as much as a person trying to directly produce the same thing. We've barely started to process the idea that a single person working in the right breakthrough technology could be almost infinitely productive.

adam_arthur 5y ago
It's definitely true that an individual can be many times more productive than another. However, the end state of software/SaaS is likely low margins, as regulations will be put into place to foster competition. SaaS has high margins due to the low marginal cost to produce additional units, which is close to free, in many cases. But it's also 0 marginal cost for any competitior. So in theory, in a perfectly competitive market, margins should be low, as two companies can produce roughly similar software. The problem comes in when you consider network effect and other factors that lead to a sort of natural Monopoly for a software company. Likely these factors will begin to get regulated over the coming years. For example, you could require that all SaaS companies provide an API that's sufficient to allow you to switch to a competitor at a click of a button. Circling back to your comment. My point is that pay in software is unlikely to remain abnormally high in the decades to come. Eventually supply of labor will increase, and business margins will decrease... Which effectively caps how much you can pay employees. Somewhat related; China has realized that fostering competition rather than allowing monopolies to form is likely to produce better long term outcomes for society... which is why they are enacting all of these new regulations. The logic makes sense, but it remains to be seen in the long run. I believe the US will follow, but it's a story that will take decades to play out fully.

by taneq 5y ago

adam_arthur 5y ago

It's definitely true that an individual can be many times more productive than another. However, the end state of software/SaaS is likely low margins, as regulations will be put into place to foster competition. SaaS has high margins due to the low marginal cost to produce additional units, which is close to free, in many cases. But it's also 0 marginal cost for any competitior. So in theory, in a perfectly competitive market, margins should be low, as two companies can produce roughly similar software. The problem comes in when you consider network effect and other factors that lead to a sort of natural Monopoly for a software company. Likely these factors will begin to get regulated over the coming years. For example, you could require that all SaaS companies provide an API that's sufficient to allow you to switch to a competitor at a click of a button. Circling back to your comment. My point is that pay in software is unlikely to remain abnormally high in the decades to come. Eventually supply of labor will increase, and business margins will decrease... Which effectively caps how much you can pay employees. Somewhat related; China has realized that fostering competition rather than allowing monopolies to form is likely to produce better long term outcomes for society... which is why they are enacting all of these new regulations. The logic makes sense, but it remains to be seen in the long run. I believe the US will follow, but it's a story that will take decades to play out fully.