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The other company without training could also be a nice place to work, and pay more as well. You are right that some employees might give "goodwill" to their em

The other company without training could also be a nice place to work, and pay more as well. You are right that some employees might give "goodwill" to their employer. If such goodwill effects become sufficiently large, maybe employers will start offering training again. I guess you'll be encouraging employees to hold irrational feelings of loyalty towards their employers? As for the costs to employees, that is indeed a potential concern. I encourage anyone considering investing money in education to consider the marketability of same.

anigbrowl 11y ago
I don't think it's at all irrational to have a feeling of loyalty one's employer if that employer actually supports one's economic interests to some degree. Even if one views people as pure utility maximizers, it doesn't follow that salary differential is the only measure of utility. There's a cost to quitting a job in terms of the simple disruption and effort to form new social relationships in the new workplace, not to mention the non-zero opportunity cost at the previous employer in terms of foregone promotions. I'm all in favor of using economic analysis to work out how much a firm should invest in its labor force, but what you are doing (and do in almost every conversation about economics) is arguing that we should consider only those which affect your preferred metric. As someone else pointed out, you ignored things like the probability of increased productivity to the training employer during the training period and so forth. I've actually worked freelance most of my life, and so I'm responsible for my own skills, pay both the employer and employee portions of payroll tax and so on, so the ideas you're advancing are far from being foreign concepts to me.
- yummyfajitas 11y ago
  Provided the transaction cost of shifting jobs (which can include feelings of loyalty) is lower than the cost of training, any employee has the incentive to jump ship. I.e., if transaction costs are $10k but training costs $20k, then a poacher can steal your trained employees by offering $15k more. I don't know why you think I'm disputing that transaction costs can cause markets to be inefficient - I agree completely. As a limiting case, if we punished quitting your job with death, shifting jobs would only make sense for the suicidal. What, exactly, do you disagree with me about?
  - anigbrowl 11y ago
    Your basic contention that business can't train it's own work force. Your original analysis neglected transaction costs entirely.
vectorjohn 11y ago
What incentive would an employee have to leave company A just because company B also offers the same "nice" salary and work environment. The advantage of offering the training in the first place is you GET the employees to come to you, then as long as they're compensated they will have no reason to leave after training is complete. It's a win-win for the employee and employer. You for some reason seem to hold the idea that after training, some other company can just come in and offer more money. Why?
- yummyfajitas 11y ago
  Scroll up for the arithmetic of how company B can pay more money to the employees.
  - vectorjohn 11y ago
    The arithmetic is wrong, unless it's just not fully explained. "there is nothing stopping another employer from offering $90k in salary after training is complete" Sure there is, and many people have pointed out the flaws in this comment. If $90k is the market rate, then there is nothing stopping the company that provided the training from paying that too, and there would be no more advantage to offering $90k. In addition, as others have pointed out, there will still be some ramp up time and training at any new company. If your point is that the first company can't expect to under pay their employees after providing training, well, that's obvious and nobody suggested it.
    - yummyfajitas 11y ago
      So to keep the same set of employees, a company must pay $20k for training + $90k for employees = $110k. Alternately, a company can just pay $91k and let someone else pay for training. Do you not see any reason why a company might prefer to be in the second category?
      - vectorjohn 11y ago
        No, I don't see any reason why a company would prefer to be in the second category. If you're in that category you'll be trying to hire employees for the same salary they're already being paid by an (intelligently run) company, in addition to having to retrain them for your company.

anigbrowl 11y ago

I don't think it's at all irrational to have a feeling of loyalty one's employer if that employer actually supports one's economic interests to some degree. Even if one views people as pure utility maximizers, it doesn't follow that salary differential is the only measure of utility. There's a cost to quitting a job in terms of the simple disruption and effort to form new social relationships in the new workplace, not to mention the non-zero opportunity cost at the previous employer in terms of foregone promotions. I'm all in favor of using economic analysis to work out how much a firm should invest in its labor force, but what you are doing (and do in almost every conversation about economics) is arguing that we should consider only those which affect your preferred metric. As someone else pointed out, you ignored things like the probability of increased productivity to the training employer during the training period and so forth. I've actually worked freelance most of my life, and so I'm responsible for my own skills, pay both the employer and employee portions of payroll tax and so on, so the ideas you're advancing are far from being foreign concepts to me.

yummyfajitas 11y ago
Provided the transaction cost of shifting jobs (which can include feelings of loyalty) is lower than the cost of training, any employee has the incentive to jump ship. I.e., if transaction costs are $10k but training costs $20k, then a poacher can steal your trained employees by offering $15k more. I don't know why you think I'm disputing that transaction costs can cause markets to be inefficient - I agree completely. As a limiting case, if we punished quitting your job with death, shifting jobs would only make sense for the suicidal. What, exactly, do you disagree with me about?
- anigbrowl 11y ago
  Your basic contention that business can't train it's own work force. Your original analysis neglected transaction costs entirely.

vectorjohn 11y ago

What incentive would an employee have to leave company A just because company B also offers the same "nice" salary and work environment. The advantage of offering the training in the first place is you GET the employees to come to you, then as long as they're compensated they will have no reason to leave after training is complete. It's a win-win for the employee and employer. You for some reason seem to hold the idea that after training, some other company can just come in and offer more money. Why?

yummyfajitas 11y ago
Scroll up for the arithmetic of how company B can pay more money to the employees.
- vectorjohn 11y ago
  The arithmetic is wrong, unless it's just not fully explained. "there is nothing stopping another employer from offering $90k in salary after training is complete" Sure there is, and many people have pointed out the flaws in this comment. If $90k is the market rate, then there is nothing stopping the company that provided the training from paying that too, and there would be no more advantage to offering $90k. In addition, as others have pointed out, there will still be some ramp up time and training at any new company. If your point is that the first company can't expect to under pay their employees after providing training, well, that's obvious and nobody suggested it.
  - yummyfajitas 11y ago
    So to keep the same set of employees, a company must pay $20k for training + $90k for employees = $110k. Alternately, a company can just pay $91k and let someone else pay for training. Do you not see any reason why a company might prefer to be in the second category?
    - vectorjohn 11y ago
      No, I don't see any reason why a company would prefer to be in the second category. If you're in that category you'll be trying to hire employees for the same salary they're already being paid by an (intelligently run) company, in addition to having to retrain them for your company.