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Home Publications Blogs Beat the Press Wall Street Journal Finds Evidence that Employers Cannot Find Qualified Staff for Top Management Positions

Wall Street Journal Finds Evidence that Employers Cannot Find Qualified Staff for Top Management Positions

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Tuesday, 08 February 2011 17:07

The Wall Street Journal ran a piece on how some companies are unable to fill positions even when more than 14 million workers are unemployed. The article indicates that the management personnel used as sources are either not competent or not being truthful.

All the people used as sources for the article complained that they were unable to find qualified workers. For example, Josh Williams, the chief executive of Gowalla, a social networking start-up, is quoted complaining that: "most people we want are employed somewhere already. We don't get a lot of applications coming in."

The way employers are supposed to deal with this situation is to offer a higher wage than their competitors in order to attract away good workers. Apparently Mr. Williams has not thought of this approach.

Later, the article comments on the experience of Toll Brothers Inc., a major builder. It cites a senior vice president of human resources, who claims that it has taken six months to find qualified applicants for some of its IT and Web developer openings. Here also, raising the offered wage likely would have reduced the search time substantially.

It will always be the case that employers will have difficulty attracting skilled workers to positions where they are offering below market wages. This seems to be the problem identified in this article, not a lack of qualified workers.

Comments (20)Add Comment
More details
written by Jonathan R, February 08, 2011 5:41
The Gowalla guy is offering $50,000 starting salary. I know Austin is not that expensive, but no wonder he can't find anyone.
Only Keynesian Socialists Believe Wages Are Sticky Downwards, Low-rated comment [Show]
Broken Business Model
written by Kaleberg, February 08, 2011 10:06
It's the fascists who see high wages and uppity servants as the root of all evil. It was high wages that got us the industrial revolution. Why innovate when you can drive down wages? I know it is politically correct to argue that industrialization was a mistake and we all need lower living standards, perhaps living on gruel in hovels as dirt farmers. There's even a recipe for gruel in the Republican Party charter. Still, most people want more, which is why the big flood of immigration is from low tax, weakly regulated areas to high tax, nanny states. Look at the reality. It's the nanny states that produce the new businesses and the great multinationals, and it's all thanks to high wages.
Higher Wages
written by Jay, February 08, 2011 11:59
If the above statement about Gowalla is true then they should give the prospective employees sweat equity to make up for the low wages. It's no surprise these companies are bellowing about a lack of talent. Most companies don't like to train, hire entry level workers, or consider lateral hires outside of their social network. Few jobs are so complex that someone cannot learn on the job but companies want pre-made talent.

Not to mention how the tech industry totally blackballed so many employees with technical skills at the turn of the century during the outsource craze. A lot of programmers and engineers have been out of work for so long they cannot get another job.
...
written by dunkelblau, February 09, 2011 9:36
Perhaps not incompetent or untruthful, more likely they're insane. Do they seriously want to hire Americans for these kind of jobs?
...
written by skeptonomist, February 09, 2011 9:37
Here's the real problem: the media can't find reporters who are arithmetically qualified and understand how to interpret data. Instead they are forced to accept English majors who can't go beyond anecdotal evidence and think they have done their job when they do a few interviews.
"politically correct"
written by RickD, February 09, 2011 11:23
Strange what this word has come to mean. Seems indistinguishable from "straw man".

"I know it is politically correct to argue that industrialization was a mistake and we all need lower living standards, perhaps living on gruel in hovels as dirt farmers"
...
written by Matt, February 09, 2011 11:26
Link in the post is wrong - I believe this is the right one:
http://online.wsj.com/article/...6882.html

In any case, the whole piece sounds like a thinly-disguised call for more H1B visas - after all, it's waaaaay easier to just import cheap labor than to raise compensation! Plus it's always possible to find an H1B with 10 years of Windows 7 experience (impossible at present), just like HR asked for...
...
written by Matt, February 09, 2011 11:27
Let's try this link:
http://on.wsj.com/esXmqj
Gowalla
written by cat, February 09, 2011 11:38
I turned down 50k to work in Austin as a coder in 1998 as it was below market then.
An Entrepreneur's Economic Ignorance
written by David S., February 09, 2011 12:29
The CEO of Gowilla has put his economic ignorance on display, if his position has been accurately stated in this post.

If he is unwilling to pay a sufficient wage to attract employees away from his competitors or from other sectors, it is because the Marginal Resoure Cost (i.e., the wage) of those prospective employees would be higher than the Marginal Revenue Product of their labor. In lay terms, his business does not generate enough revenue to justify paying this additional resource (labor) for its market value.

Thus, he needs to look elsewhere to determine why his business is not profitable enough to pay the necessary market wage. It could of course be the consequence of many factors, separate or in concert, such as a lack of specific market demand, a lack of aggregate demand, or a lack of demand for his specific company's service.

However, by refusing to acknowledge how markets work, and to instead bemoan the rationing function which is the raison d'etre of markets, he is yet another in a long list of businessmen and entrepreneurs who mouth platitudes about free markets, yet seem either to have no clue as to how they work, or would rather blame others for their misfortunes, in order shift the cost onto those third parties.
They Want Cheap & Cheaper Labor, ASAP
written by Claudius I, February 09, 2011 1:10
Come on, as several posters have already said, they want MORE CHEAP AND CHEAPER LABOR. That's it. They want to keep important hundreds of thousands of South Asians to do these jobs, but the Tea Party wing of the GOP is hysterically against this right now. (With all the harping and carping over Mexican and other Central American undocumented immigrants, I've rarely read about any uproar from the right about the hundreds of thousands of South Asians brought into New York, New Jersey, Delaware, etc., to work for the banks. And let me add that I have no problem with these workers, I just wish the corporate media and those on the right would be honest about what's been going on, especially since we've given these banks over $8 trillion now in loans and tax dollars to do as they please.)

Business types want more money in their pockets and minimal wages for their workers, so they've mau-maued Obama into bowing and scraping before them, but the reality is they don't want the millions of qualified US citizens and green card holders. They'd have to pay them money they're hoarding.
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written by libdevil, February 09, 2011 1:50
@Claudius: It may not even be that paying a fair wage would be unprofitable. In most cases, it's probably not that at all. The issue is that it's _less_ profitable than paying a substandard wage. That's money the boss can't skim off the top, and it gets the company punished in the stock market.
...
written by Tech Girl, February 09, 2011 1:57
Texas is not known for generous unemployment benefits, but while I was unemployed, I saw and declined to apply for IT jobs that would have paid less than the $417 a week I was getting.
Plus ca change, plus c'est la meme chose
written by SFAW, February 09, 2011 3:32
Back during the initial dot-com boom, upper management used to complain about all the perqs they had to offer candidates.

What they forgot, then as now, is that when hiring is not going mile-a-minute, they seem perfectly happy to cut wages/benefits/perqs, and basically tell employees and candidates to get stuffed. They also forget that the ratio of telling employees to "get stuffed" vs. sweetening the employees' deal is about 5 or 10 to 1.

As far as the "socialism" foolishness above: find another straw man to blame, dimwit. It wasn't true before, it certainly isn't true now - except in the minds of the management apologists who are unwilling to look at reality.
Only WSJ Morons believe you can live on nothing
written by Stentor, February 09, 2011 8:02
"Workers are hard to find because the unemployed are holding out for higher wages from socialist stimulus spending and unemployment compensation."

Yeah, funny how the grocery store won't accept anything less than the price that's listed. Same goes for my utility bill, gas bill, phone bill, rent, and many others, those capitalist pigs. You must want us all to live on fairy dust and unicorn farts. Tell you what, I'll accept lower wages when the price of gasoline drops below two dollars a gallon where it should be without the meddling influence of all the speculators and investment banks. Until then, keep your moronic ideas to yourself. You want to promote family values, stop pushing double-income families as the only method of survival, hypocrite.

Stupid, Cheap Conservatives!
....offer a higher wage than their competitors
written by Larry Roberts, February 10, 2011 9:34
If there are 1000 people with the requisite skills and 2000 jobs requiring those skills it's hard to see how, in the short run, luring someone from their current employer by offering more money is going to work for every employer.

In the long(er) run more money should lead to an increase in the number of people with the requisite skills. Wish I knew how long was long enough.
Couple of Corrections
written by UtahEd, February 10, 2011 11:38
First of all, here is the correct link to the WSJ article:

http://online.wsj.com/article/SB10001424052748704376104576122581603676882.html?KEYWORDS=gowalla

Secondly, the story refers mostly to developers and software engineers, not to management. Your lede is misleading.
Tech Girl...
written by Nax, February 10, 2011 5:10
You are aware, I hope, that when you take a job that pays less than unemployment, your unemployment is REDUCED, not eliminated. You end up with more $ at the end of the day working cheap than not working.

When I see this kind of comment, I get suspicious as to whether the author is actually on unemployment. The unemployment people make this point very, very clear when you apply, and then every time you get a check.
perspective
written by quidproms, February 14, 2011 7:11
If Gowalla were paying enough, or giving ownership options, I would apply.

Given that universities tend to emphasize generic problem solving and theory in computer science programs, rather than the specific skills that are needed to immediately be productive in an industrial setting, e.g. time and space complexity of algorithms rather than javascript and closures, the onus is on management to pick the best potential from the applicant pool that lacks individuals with specific experience. With the correct set of problem solving and theoretical skills, learning javascript or ASP.NET or some other industrial skill is quick and easy for the gifted albeit inexperienced applicant.

Now if I am that applicant I am going to want ownership in the company if it is not going to pay well.

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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.

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