There Is No Tech Worker Shortage And If There Is It's The Tech Companies' Fault

You may have noticed that the big tech companies are agitating for an expansion of the H1B visa system whereby foreigners with certain tech skills can come and work in the US. You know, for big tech companies and the like. Easy issuance of green cards for those with those tech skills. It’s not an unusual set of requests: the tech companies would dearly love to be able to find all the talent they think they require and obviously, just like any other business, they’d prefer to pay less rather than more for their supplies of whatever it is.

However, we ought to look rather askance at such requests. As Noah Smith points out in a nice piece for Bloomberg.

In economics, I learned that a shortage is when demand exceeds supply. People want to buy Goldfish crackers at the posted price, but the shelves go empty. I was also taught that the only way that this happens is when something stops the price from adjusting — a price-control law, perhaps, or the difficulty of printing out new prices for the shelves. Normally, I was told, the store would just raise the price until the last package of Goldfish is so expensive that no one can afford it, and there would then be no shortage.

But it looks as if I was taught the wrong definition of shortage, because everyone else in the world seems to use the word in a very different way. When normal people say, “There is a shortage,” they don’t mean, “The shelf is empty.” They mean “Please lower the price, so I don’t have to pay as much.” And when normal people say, “No, there’s no shortage,” what they mean is, “Please increase the price I get for my wares because I’d like to make more money.”

Quite so. What those big tech companies are saying isn’t that there’s a shortage of decent engineers in the US. They’re saying there’s a shortage of good engineers at the price they want to pay. The correct answer to which is that they should raise the price they’re willing to pay for good engineers. Sure, this does raise the already very high wages of Silicon Valley engineers. But as Smith points out, it starts to raise all US wages. for higher wages for engineers will lead to more training to be such engineers, leaving open the places they would have taken otherwise (say, as quants on Wall Street) and everyone in the country gets to move up a step. OK, sure, the effect of 100,000 more engineers in a society of 300 million people isn’t going to be directly measurable but it will be there.

So, Smith is entirely correct: but I would take this a stage further myself. For recall thatApple, Adobe, Google and the rest (Facebook being the odd one out, the one that refused to join in) got caught conspiring to artificially limit the wages of engineers? By having non-compete clauses in the Valley? If they hadn’t done this engineers’ salaries would be higher, this would have provided the incentive for more to train as engineers and, around and about now actually, those newly trained engineers would be hitting the job market and alleviating that “shortage” that the tech companies are complaining about.


Posted in:   Tags: ,

- Vineet Nayar, CEO, HCL Technologies

Recent Posts

Slumdog Comment Generator

Not Sure How To Respond?
Use the Slumdog Comment Generator!


«  March 2017  »
View posts in large calendar

Month List

The thoughts expressed on this blog may or may not be the author's own and are protected by the 1st Amendment. Any attempt to reveal his identity by contacting a slumdog hack at Google, or a corrupt Desi sys-admin at his ISP will be dealt with promptly and severely. Civil and criminal penalties may apply if one is found to have used private information in an attempt to get the author fired at the Hindu-only I.T. ghetto he currently works at. In addition, any Desi who attempts to burn the author's house down because they are enraged over his writing will be prosecuted to the fullest extent of the law. This isn't India.

© Copyright 2017 Life of an I.T. Grunt

View My Stats