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A new research paper that may help unlock the mystery of why Americans can't seem to get a decent raise. Economists have struggled over that question for years now, as wage growth has stagnated and more of the nation's income has shifted from the pockets of workers into the bank accounts of business owners. Since 1979, inflation-adjusted hourly pay is up just 3.41 percent for the middle 20 percent of Americans while labor's overall share of national income has declined sharply since the early 2000s. There are lots of possible explanations for why this is, from long-term factors like the rise of automation and decline of organized labor, to short-term ones, such as the lingering weakness in the job market left over from the great recession. But a recent study by a group of labor economists introduces an interesting theory into the mix: Workers' pay may be lagging because the U.S. is suffering from a shortage of employers.
[...] argues that, across different cities and different fields, hiring is concentrated among a relatively small number of businesses, which may have given managers the ability to keep wages lower than if there were more companies vying for talent. This is not the same as saying there are simply too many job hunters chasing too few openings—the paper, which is still in an early draft form, is designed to rule out that possibility. Instead, its authors argue that the labor market may be plagued by what economists call a monopsony problem, where a lack of competition among employers gives businesses outsize power over workers, including the ability to tamp down on pay. If the researchers are right, it could have important implications for how we think about antitrust, unions, and the minimum wage.
Monopsony is essentially monopoly's quieter, less appreciated twin sibling. A monopolist can fix prices because it's the only seller in the market. The one hospital in a sprawling rural county can charge insurers whatever it likes for emergency room services, for instance, because patients can't go elsewhere. A monopsonist, on the other hand, can pay whatever it likes for labor or supplies, because it's the only company buying or hiring. That remote hospital I just mentioned? It can probably get away with lowballing its nurses on salary, because nobody is out there trying to poach them.
[...] Harvard University labor economist Lawrence Katz told me that he suspected the findings about market concentration and wages were directionally correct but that they may be a bit "overstated," because it's simply hard to control for the health of the labor market.
"They are getting at what is an important and underexplored topic ... using a creative approach of using really rich data," he said. "I don't know if I would take perfectly seriously the exact quantitative estimates."
Still, even if the study is only gesturing in the direction of a real problem, it's a deeply worrisome one. We're living in an era of industry consolidation. That's not going away in the foreseeable future. And workers can't ask for fair pay if there aren't enough businesses out there competing to hire.
Article summarizing study:
Why Is It So Hard for Americans to Get a Decent Raise?
Actual study (limited access): http://www.nber.org/papers/w24147
FYI: Number of companies on America's stock exchanges has decreased by 50% since 1998
(Score: 3, Interesting) by meustrus on Friday January 19 2018, @03:16PM (8 children)
That's not necessarily an attempt to keep wages down. It starts with a fundamental misunderstanding of what makes a good programmer. And they're not basing their hires on that misunderstanding; they know they don't know shit. They know that they can't really control the probability of a good hire vs an empty paycheck.
The best way they know to control their risk is to make sure that if they hire an empty paycheck, that programmer at least has enough of a passing familiarity with the technology to make an occasional bug fix. That this strategy keeps wages down is just a bonus that helps them control their risk even better.
The real solution is to get people to really understand what makes a good programmer. Good luck.
If there isn't at least one reference or primary source, it's not +1 Informative. Maybe the underused +1 Interesting?
(Score: 2, Interesting) by Anonymous Coward on Friday January 19 2018, @03:44PM (5 children)
The only way we can do it is by organizing. I've been saying it forever. We need an AMA. We need a Bar Association.
We in IT think we're all slick shit and just better than everybody else. Everybody else in IT is incompetent, except for me, who is Wile E. Coyote Super Genius. That's what I hear in IT left and right. We all have this arrogant, unrealistic attitude, and we do not see how we create the very environment that allows incompetence, low wages, perennial misunderstandings and abuses such as open offices, and a complete lack of respect for our hard-earned skills and education to flourish in our field.
We take in anti-union propaganda and obediently regurgitate it against the idea of a professional association or accreditation body. We all know how to weed-out jokers: we regularly complain about how some people who get hired cannot even write a fizz-buzz program. Add insult to injury if that person is an H1B.
Ok, fizz-buzz is something. If one cannot write a fizz-buzz program, then one has no business being in IT. When are we going to organize and collectively say that as long as companies are hiring people who cannot implement fizz-buzz, we are all going to let our keyboards go idle until we start being taken a bit more seriously.
Of course we will need to work towards more rigorous standards for our profession than fizz-buzz. Fizz-buzz is the first step of a thousand mile journey to make IT a respectable profession in which a man or woman can become established, settle down to start a family, enjoy an honest and fulfilling career, and eventually aim for retirement.
(Score: 2) by meustrus on Friday January 19 2018, @03:55PM (2 children)
The problem is that the hot shots like doing speculative work, but speculative work is almost never the right work to be doing. If we introduce professional standards into IT, we'll be reduced to housing developments and office parks like building engineers have been. Far fewer of us will get to work on anything interesting, because we would no longer have the opportunity to build this office park with an experimental hand-rolled dependency injection framework.
Therefore, the people that would benefit most from professional standards don't want them. Obviously those that can't fizz-buzz don't want them either. Who is left to make programming a truly professional discipline?
If there isn't at least one reference or primary source, it's not +1 Informative. Maybe the underused +1 Interesting?
(Score: 1, Interesting) by Anonymous Coward on Friday January 19 2018, @04:16PM (1 child)
Yet don't many of us maintain code on a daily basis, code that's sometimes 10 or 20 years old? How many of us are actually working on cutting-edge projects? How many of us are even working on interesting projects? I feel that the vast majority of us are working on TPS reports day-in, day-out. Much of what we do are solved problems. There are commonalities, however, that we can all agree on. There are fundamental design principles that we can identify that any worthwhile information system in any given industry may have.
Truly cutting edge work would likely not fall within the scope of a professional association. Free software can also be a source of innovation that would not fall strictly within the scope of a professional association. However, a professional association could, for example, endorse various free software projects on an annual basis that the rest of us would want to consider for our TPS reports and CRUD/CRM/ERP systems.
If we are creating production software, should we really be using the latest gee-wiz dependency injection auto-wiring meta-programming paradigm? What will that gee-wiz paradigm look like in 10 years when somebody else is maintaining our code? We should value software that is written with well-understood principles while retaining flexibility that our field is still a fast-moving field. I've been a programmer for a couple decades now. For every gee-wiz paradigm that was going to solve all of my problems I've encountered, I've only found a couple new techniques that have withstood the test of time. Otherwise, everything I do has been a best practice since the 80s or early 90s.
Who wants to get stuck with an ERP nightmare that's held together with duct tape and chicken wire? That ERP nightmare was made by other IT people, perhaps even some very talented people, though certainly mediocrity and lack of care for quality against unrealistic deadlines set by salespeople show themselves.
I hope I am not suggesting following the path of "We must to do something. $xyz is something. Therefore $xyz needs to be done." I hope I am suggesting that those of us with decades of experience in IT are the experts and the exact people who must hash out the kinds of quality standards we want in our profession.
In addition to that, the other side of the coin is that currently, we allow suits and PHBs to dictate quality and even which technologies we use. Even if I wanted to use some gee-wiz autowired batteries-included paradigm on my new project, a PHB may very well veto it and dictate technical decision to me.
Our primary goal must be to make a stand and tell PHBs what our decades of experience demonstrate. You're correct that if all organizing does is create more PHBs dictating technical decisions and abusive work environments, then we have not met our goal. However, if we do not organize, we will continue being at the mercy of PHBs.
I can think of no other way to create the change that so many of us feel we need.
(Score: 3, Insightful) by meustrus on Friday January 19 2018, @05:57PM
Your argument is sound. I fully agree with you! But people like you tend to get laid off because you're getting paid more than everybody else. It's insane, but with the limited information available to non-technical upper management it makes perverse business sense to cull the most experienced engineers. Doubly so if you're a contractor.
Meanwhile, the hot shots take less paycheck and work more hours, and they want to re-invent everything because Not Invented Here.
If there isn't at least one reference or primary source, it's not +1 Informative. Maybe the underused +1 Interesting?
(Score: 0) by Anonymous Coward on Friday January 19 2018, @04:06PM
That probably won't happen unless there's an Enron or MCI Worldcom sized crater that results directly from incompetent coding or technical design. After those two firms went belly up due in large part to 3rd party accounting firms covering it up with fraudulent book keeping there were a slew of rules about how firms like that operate as well as an increased awareness that cooking the books could lead to huge companies going under.
It's always going to be a problem as companies try to maintain the image of growth even when it's lackluster or flat, but there are degrees of that.
But, as long as the government allows software companies to completely disclaim their own incompetence and be on the hook for little or nothing, there's just not the incentive to do much better. It's not like anybody making those decisions ever goes to prison.
(Score: 2, Interesting) by Anonymous Coward on Friday January 19 2018, @06:40PM
I would like to point out that this "we" you are talking about is definitely a generalization. Where I work there is very little of that. Anecdotally I can add that conservative techies / engineers seem to be the ones that most often have the know-it-all attitude where you can see them dismissing an idea immediately because it goes against some of their basic presumptions about the world. This ties in nicely with the anti-union propaganda, so apparently political divisions are truly having a real impact on my career! Thank god I've got a decent employer and not one of the corporate park TPS report pushing motherfuckers.
(Score: 4, Insightful) by Thexalon on Friday January 19 2018, @05:37PM (1 child)
You're right that they can't completely control that risk.
What they can do, and what your thinking leaves out, is fire the empty paycheck as soon as it becomes clear they're an empty paycheck. Yes, I realize that's a pain in the butt, but failing to fire bad employees is part of how a good department turns into a bad department. And if asked to justify it, answers like "This person has written 10 lines of code in the last month, and completed zero change requests" is a pretty compelling answer.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 3, Insightful) by meustrus on Friday January 19 2018, @05:51PM
That requires managers to have even a basic idea of what is going on in their engineering department. Unless the manager is technically oriented (in which case the hiring problem is greatly reduced), getting involved even at the level of trying to fire non-performers tends to hit the wrong people or otherwise damage the quality of the team.
Besides which, managers are doing well when they have more people working for them, not less. When their managers don't understand engineering, which is even more likely than the lower manager not understanding it, paying for a bunch of non-performers really just looks like the work is difficult. The manager will find ways to justify why he needs a larger budget.
If there isn't at least one reference or primary source, it's not +1 Informative. Maybe the underused +1 Interesting?