I did some quick calculations to understand their stated problem of needing to higher 40 more people since it is costing them millions in lost revenue each month. "The labor shortage is costing the company some $3.8 million per month, said Marty Davis, the company’s president and CEO."
$3.8 million * 12 months = $45.6 million per year in lost revenue.
Being conservative and assuming a 10% margin on their revenue figures this is a loss of $4.56 million for the firm for the year.
$4.56 million divided by their labour need (40) means each worker brings in $114,000 of margin. So as long as they pay below that they are ahead. If they paid $25/hour for 2000 hours a year ($50,000) plus a 1.4 gross up for benefits they could hire people at $70,000 ($50,000 * 1.4) and still earn a positive margin of $44,000 ($114,00 - $70,000) leaving them $1.76 million of income. ($44,000 * 40).
What do they expect when they pay $36,000 per year (18*2000), plus any benefits?
I’ve heard this stated before as there doesn’t seem to be a labour shortage just a shortage of labour that you want to pay very little for. We don’t say there are too little lawyers or investment bankers or management consultants. Those jobs are or used to be the highest paid bringing in lots of supply from eager graduates.
Presently this is stalled because it is too counterintutive. People can't get their heads around the possibility of paying their gardeners and window cleaners more than their accountants or lawyers. That's the middle class version of The End of the World As We Know It.
This to me explains the existence of firms like Home Depot and the increasing popularity of prefabs.
Yes but then they have to increase pay for all the workers not just the 40 new hires. It might not pay off at that scale. That lost revenue is probably not indicative of per worker revenues.
“We always have difficulties filling this position because we require
specific experience in test engineering in the electronics industry. There
might be total of 150 qualified people in the Midwest!” said one employer of
industrial engineers.
To Hine, the focus on work experience suggested that employers were being
too picky. They wanted to hire someone who could be fully productive on day
one. But at the same time they weren’t willing or able to pay enough to
attract that perfect candidate.
I'll leave the similarities between this and our industry to the reader...
Programmer: I have a really solid base in OOP and functional langs so I can pick up a language pretty quickly.
HR: Right Right, but what languages are you most experienced in.
Programmer: Do you ask a carpenter which brand of saw he uses or doctor which type of mri machine he prefers? Give me a few weeks, I'll have whatever language you want down.
HR: We want someone who can provide value from day 1.
>In many places, employers are also setting wages too low, defining qualifications too narrowly, or not recruiting widely enough. Many people who are eager to work can’t because they lack transportation, or don’t have anybody to watch their children during the workday.
Well, I think that's a perfect summary. Employers either need to pay up, or pony up taxes to local governments to pay up. A competent, polite, punctual workforce doesn't happen all on its own, and trying to dragoon people into one through poverty mostly just leaves you with unusable, crappy labor and low productivity growth.
Yeah, this picture seems really odd to me. Cambria is seeing soaring demand for their products; they're having trouble keeping up, to the point that they're actually losing sales and profit, because they can't staff up their factory; for the most part they don't require skilled labor; so they recently raised wages from $16.66 to a whopping $18/hr. Also their employees complain of poor morale and not being listened to. And on the other hand, they have an attendance problem.
So it sounds to me like, they can't hire people because they're stingy assholes. Am I missing something? Seems like if they set out to share their success with their employees instead of keeping it to themselves, they would have better luck. So pay an attractive wage, like $24/hr, and treat people well (and listen to them), and then if an employee has an attendance problem you fire them, because you're not paying that kind of money for crappy employees either.
Maybe someone can explain why I'm full of it, but from what I read here I have a hard time feeling very sympathetic.
I was also curious that there was no mention of health insurance. I have observed that my own family is paying considerably more for health insurance while actually getting significantly poorer coverage when compared to a decade ago.
An employer like those described in the article wouldn't necessarily need to offer a significantly better wage than what was indicated if they provided a higher quality health care plan and payed a greater portion of the premium. And, offer fully paid dental insurance.
In the end I guess it comes down to money one way or another for the employer.
Going a little off-topic here but I have never understood the model of having health care provided by an employer. In Australia we all pay for our own private health care (or choose not to). For one, I just can't understand how health care is in any way related to employment. More importantly, what happens if you get sick and then change jobs (and hence change health care providers)? How do pre-existing conditions work in this model? Is this just a way to de-incentivise job changing?
[+] [-] dchmiel|9 years ago|reply
$3.8 million * 12 months = $45.6 million per year in lost revenue.
Being conservative and assuming a 10% margin on their revenue figures this is a loss of $4.56 million for the firm for the year.
$4.56 million divided by their labour need (40) means each worker brings in $114,000 of margin. So as long as they pay below that they are ahead. If they paid $25/hour for 2000 hours a year ($50,000) plus a 1.4 gross up for benefits they could hire people at $70,000 ($50,000 * 1.4) and still earn a positive margin of $44,000 ($114,00 - $70,000) leaving them $1.76 million of income. ($44,000 * 40).
What do they expect when they pay $36,000 per year (18*2000), plus any benefits?
I’ve heard this stated before as there doesn’t seem to be a labour shortage just a shortage of labour that you want to pay very little for. We don’t say there are too little lawyers or investment bankers or management consultants. Those jobs are or used to be the highest paid bringing in lots of supply from eager graduates.
[+] [-] internaut|9 years ago|reply
My hypothesis is that working class wages are more sticky than white collar wages for reasons not strictly based on rationality.
I believe that Moravec's paradox explains why working class wages should be higher and white collar wages should be lower than at present.
https://en.wikipedia.org/wiki/Moravec's_paradox
Presently this is stalled because it is too counterintutive. People can't get their heads around the possibility of paying their gardeners and window cleaners more than their accountants or lawyers. That's the middle class version of The End of the World As We Know It.
This to me explains the existence of firms like Home Depot and the increasing popularity of prefabs.
[+] [-] xupybd|9 years ago|reply
[+] [-] x0x0|9 years ago|reply
[+] [-] nickthemagicman|9 years ago|reply
Programmer: I have a really solid base in OOP and functional langs so I can pick up a language pretty quickly.
HR: Right Right, but what languages are you most experienced in.
Programmer: Do you ask a carpenter which brand of saw he uses or doctor which type of mri machine he prefers? Give me a few weeks, I'll have whatever language you want down.
HR: We want someone who can provide value from day 1.
Programmer: There's your tech shortage.
[+] [-] eli_gottlieb|9 years ago|reply
Well, I think that's a perfect summary. Employers either need to pay up, or pony up taxes to local governments to pay up. A competent, polite, punctual workforce doesn't happen all on its own, and trying to dragoon people into one through poverty mostly just leaves you with unusable, crappy labor and low productivity growth.
[+] [-] ScottBurson|9 years ago|reply
So it sounds to me like, they can't hire people because they're stingy assholes. Am I missing something? Seems like if they set out to share their success with their employees instead of keeping it to themselves, they would have better luck. So pay an attractive wage, like $24/hr, and treat people well (and listen to them), and then if an employee has an attendance problem you fire them, because you're not paying that kind of money for crappy employees either.
Maybe someone can explain why I'm full of it, but from what I read here I have a hard time feeling very sympathetic.
[+] [-] mswen|9 years ago|reply
An employer like those described in the article wouldn't necessarily need to offer a significantly better wage than what was indicated if they provided a higher quality health care plan and payed a greater portion of the premium. And, offer fully paid dental insurance.
In the end I guess it comes down to money one way or another for the employer.
[+] [-] clusmore|9 years ago|reply