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Home Publications Blogs Beat the Press Managers of San Diego Tech Firms Don't Know How to Run Their Business

Managers of San Diego Tech Firms Don't Know How to Run Their Business

Sunday, 13 February 2011 13:52

That would have been a better headline for an article in the San Diego Union Tribune than the actual headline: "San Diego tech companies can't fill thousands of jobs." The article begins by telling readers:

"Even though the jobless rate continues to hover in the double digits, there are literally thousands of high-paid job openings in San Diego County just waiting for the applicants with the right skills, according to the leaders of the local high-tech community.

But they say that finding those applicants can be a challenge, partly because of the area’s high cost of living and the lingering perception that San Diego’s more of a beach town than a Silicon Valley South."

There actually is a chart accompanying the article that tells readers why tech firms in San Diego may be having trouble getting workers. Of 14 cities listed on the chart, the pay for tech workers in San Diego, adjusted for living costs, ranks 8th. It is more than 30 percent below the pay in Durham, North Carolina, the top paying city on the list.

If firms in San Diego really want to attract more workers then the trick is paying higher wages. Managers of tech companies should understand the way markets work. If they want to attract workers from other cities then they will have to pay more money, if they are unwilling to pay more money, then there is really no shortage. These firms are simply unwilling to hire people at the prevailing wage.

It is also worth noting that the unfilled tech jobs have little to do with the problem of unemployment in San Diego. According to the Bureau of Labor Statistics, there are more than 160,000 unemployed people in San Diego. The article reports that there are 6,000 unfilled tech jobs. This means that if every last tech job was filled (there would always be some vacancies due to turnover), it would reduce the number of unemployed by less than 4 percent.

(Thanks to Mark Paul for the tip.)

Comments (3)Add Comment
The (usual) setup for demanding higher ceiling for # of worker visas?
written by sharl, February 13, 2011 7:00
This sounds like the usual PR campaign that precedes a regional (or even the national) IT sector asking Washington to increase the ceiling on the number of visas for imported foreign workers, under what is (or at least used to be) the H-1B visa program.

It would be instructive to see what the lobbying organizations representing San Diego area IT firms are up to. It wouldn't surprise me to see them start calling for permitting more foreign hires based on a manufactured perception of need, if they haven't already started doing so.
That would be great if SD weren't competing nationally
written by Bill H, February 14, 2011 8:15
Note that the chart is "adjusted for living costs" and is not raw data. Raleigh actually pays a slightly lower wage, but since the cost of living is so much lower there when that wage is "adjusted for the cost of living" it appears to be higher. The cost factored into the selling price cannot be adjusted for anything, it is merely cost, and raising it raises the price of the product.

Firms in San Diego are having to compete with the firms in Raleigh, who are able to pay lower wages because of the lower cost of living in that area. People buying the products do not pay based on "adjusted for living costs" prices. They pay based on the actual price at the point of sale, that is the Internet, which is essentially a locationless market.

If San Diego were selling its product only in San Diego, you would be correct; it could raise its wages, and its prices as much as needed to attract workers. But when it is selling against firms in Raleigh which pay its workers wages which are actually lower in raw dollars that the wages being offered here, raising wages is not a viable option if those San Diego firms want to continue selling in a national market.
To complete, my ending was premature
written by Bill H, February 14, 2011 8:30
The problem is not that San Diego firms are paying below prevailing wage, they are not, but that the cost of living in San Diego is very high. To get people to take jobs here at prevailing wage is uncommon, because that prevailing wage does not go as far as it does in Raleigh. One has to find people who "really, really want to live here." Otherwise the firm has to pay well above prevailing wage, in which case the firm cannot be competetive in a national market.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.