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> and the employer can hire a new senior engineer at below market rates to accommodate the specific learning they have to do It sounds like what you're saying
by SR2Z 6mo ago
> and the employer can hire a new senior engineer at below market rates to accommodate the specific learning they have to do
It sounds like what you're saying is actually that the last engineer was being paid above-market, because the price that employers are paying new employees is literally the market rate, seeing as it's the rate in the literal market.
- lukeify 6mo agoThis is pretty much what's occurring in New Zealand right now, yes. 2020–2023 had pretty much zero international movement due to closed borders with COVID-19, with a low official cash rate which caused business to be in desperate need of development resource; so salaries were high. Market rate for developers has either stagnated generally or depending on the role dropped as hundreds of applicants are willing to undercut each other on what constitutes an acceptable pay check. But most employers don't go around reducing previously-hired people's salaries for a variety of reasons.
- Negitivefrags 6mo ago> But most employers don't go around reducing previously-hired people's salaries for a variety of reasons. The main reason being that it's illegal in NZ. The employee would have to agree.
- SR2Z 6mo agoThe main reason is that employees will quit. It's not illegal in the US, but it still almost never happens. Companies would rather lay off than risk alienating employees like that.
- jjmarr 6mo ago> the price that employers are paying new employees is literally the market rate, seeing as it's the rate in the literal market. I want to drill this into anyone that throws the word "below market" or "above market" around. If a company pays below-market, it won't be able to hire anyone. Either the role will remain unfilled, or the employer will have to compromise on experience. If someone is claiming to be paid below-market but the company can hire their replacement, then they're not being truthful.
- cjbgkagh 6mo agoPoeple are not fungible, who’s to say that the individual replacing them is of equal value.
- jjmarr 6mo agoPeople are not fungible but the role frequently is. You could be an AI infra genius, but if you're in a cookie-cutter consultancy role, that's the salary you're getting.
- cjbgkagh 6mo agoThe role is only ostensively fungible because the org acts like it is, to its detriment. Staff turnover is crazy expensive. It’s a lemon market with a power play dynamic, one of the main reasons I’m self employed.
- dublinstats 6mo agoI'm not an economist but that implies the market maintains some kind of optimal equilibrium price. The reality probably is very noisy like with everything else. Plus there's asymmetric information on both sides meaning people don't get what they think they do.
- jltsiren 6mo agoOnly in a market with perfect information. With imperfect information, the market rate is an estimate of the expected or typical rate for a similar good. Because everyone has access to a different subset of the information, everyone's estimate is different, and companies often end up paying above or below the consensus rate.
- SR2Z 6mo agoYes, this is how markets work. You don't need perfect information to have a market. The price of risk is factored in.
- Ferdinandpferd 6mo ago