Basically the thinking is this: Cost of training * expected return on equity = Amount I should be able to extract out of the trained employee forever. Selectin

Basically the thinking is this: Cost of training * expected return on equity = Amount I should be able to extract out of the trained employee forever. Selecting arbitrary numbers to keep things simple, if it costs $1000 to train the employee, and you want a 10% ROE then you expect to earn $100 per year more on that employee, forever. If the employee leaves they take that $100 per month potential away. This leaves a few paths for employers: 1) Pay less until you have a return of capital, 2) Dont up the salary after the "asset" is upgraded, allowing you to get a much ROE as possible. 3) Dont hire untrained people, so you can capture ROI from others' training. All of the above ignores the opportunity cost of not hiring. I presume for most profitable and busy companies, the lost opportunity is greater than the cost of training.