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> "Well, if there were actually shortages, then wages would increase until the "shortages" disappear." This is a common thought I see a lot on HN, but it's com

> "Well, if there were actually shortages, then wages would increase until the "shortages" disappear." This is a common thought I see a lot on HN, but it's completely bollocks. The elasticity of salary is not infinitely scalable, and is heavily based on the costs and profitability of the business. Say we took away all the taxi cab drivers in the world, demand would be immense and supply would be next to nil - in your fantasy world cab drivers would start making hojillions. But of course, there is an upper bound to the value of a cab ride - cab fares would rise, but it won't not rise to astronomical levels simply because the cost will start exceeding the utility of the ride itself. So yeah, in a shortage situation developer pay would rise - and rise they have, particularly in hotly-contested areas like the Bay, but this entitled attitude where "there's no shortage! I'm not making a million bucks a year yet!" is complete horseshit.

barrkel 15y ago
Cab rides have substitutes: your feet, mass transit, your own car (including the costs of parking), up to being carried around on a litter[1], which would be a very expensive. This limits the "hojillions" available to single cab drivers. If there was 10x the supply of programmers, we could have 10x the number of jobs for them to do: they could be coming around to your house and offering to automate various bits and pieces of your life, they could be hanging around at traffic lights helping people stopped in cars optimize their phone usage, etc. The profitability of the business is in part a function of its costs. That the business exists at all is based on an assumption of a certain level of costs, where at different costs other options may be more viable. What I'm getting at is that there is a circularity in your objection. You assume things about the current state of supply and demand based on the current market mix of businesses, but the current market mix of businesses is the way it is in part because of the current state of supply and demand. Yes, there is certainly a lack of elasticity in salary. The market isn't perfect. People aren't fungible. But the market is efficient enough to value e.g. doctors and lawyers quite highly. It simply doesn't value software engineers in the same way. That's just the way it is; I'm not saying it's right or wrong, and nor am I moaning about my wages (actually, I deliberately choose lower wages in return for more interesting work and flexibility in where I live). What I am moaning about is people talking about an excess of supply or demand, like it's a plain fact. [1] http://en.wikipedia.org/wiki/Litter_%28vehicle%29 http://en.wikipedia.org/wiki/Litter_%28vehicle%29
randomdata 15y ago
In your example, the demand for cabs would decline. People would find other modes of transportation or not travel at all. You are right that an engineer's pay can only go so high. However, when the rate exceeds what you can afford, you simply bow out and do something different. Hire someone who does not have talent or refrain from doing the work. Ferraris exceed what I am willing to pay for an automobile, but you won't hear me complaining that there is a shortage of Ferraris. Instead, I will buy a lesser car (an unskilled worker) and make do, or forego car ownership altogether. A shortage implies that all the money in the world can still not allow you to fulfill your needs. If the fulfillment is out there, but you are not willing to pay the prices, that is not a shortage.

barrkel 15y ago

Cab rides have substitutes: your feet, mass transit, your own car (including the costs of parking), up to being carried around on a litter[1], which would be a very expensive. This limits the "hojillions" available to single cab drivers. If there was 10x the supply of programmers, we could have 10x the number of jobs for them to do: they could be coming around to your house and offering to automate various bits and pieces of your life, they could be hanging around at traffic lights helping people stopped in cars optimize their phone usage, etc. The profitability of the business is in part a function of its costs. That the business exists at all is based on an assumption of a certain level of costs, where at different costs other options may be more viable. What I'm getting at is that there is a circularity in your objection. You assume things about the current state of supply and demand based on the current market mix of businesses, but the current market mix of businesses is the way it is in part because of the current state of supply and demand. Yes, there is certainly a lack of elasticity in salary. The market isn't perfect. People aren't fungible. But the market is efficient enough to value e.g. doctors and lawyers quite highly. It simply doesn't value software engineers in the same way. That's just the way it is; I'm not saying it's right or wrong, and nor am I moaning about my wages (actually, I deliberately choose lower wages in return for more interesting work and flexibility in where I live). What I am moaning about is people talking about an excess of supply or demand, like it's a plain fact. [1] http://en.wikipedia.org/wiki/Litter_%28vehicle%29 http://en.wikipedia.org/wiki/Litter_%28vehicle%29

randomdata 15y ago

In your example, the demand for cabs would decline. People would find other modes of transportation or not travel at all. You are right that an engineer's pay can only go so high. However, when the rate exceeds what you can afford, you simply bow out and do something different. Hire someone who does not have talent or refrain from doing the work. Ferraris exceed what I am willing to pay for an automobile, but you won't hear me complaining that there is a shortage of Ferraris. Instead, I will buy a lesser car (an unskilled worker) and make do, or forego car ownership altogether. A shortage implies that all the money in the world can still not allow you to fulfill your needs. If the fulfillment is out there, but you are not willing to pay the prices, that is not a shortage.