Trying to hire high-skilled workers at rock-bottom rates is not a skills gap.

[CountDeMoney]

Somebody wake me up when we're finally back in 1894, please.

[Neil]

Somebody wake me up when we're finally back in 1894, please.

Ide really doesn't have much of a political ideology or belief structure.  It's 100% greed with him.

[CountDeMoney]

It's 100% greed with him.

You going to try to say that it isn't?

[Neil]

It's 100% greed with him.

You going to try to say that it isn't?

No, I just said that it was.

[Ed Anger]

98% Greed
1% Bad Movies
1% Evil

[dps]

"Keeping the employee happy" typically means paying the higher productivity wage and losing the return on investment.

With regards to highly-skilled workers, it does not.  In software development, for instance, people frequently choose lower-paying jobs that have better fringe benefits, work environments, locations, and company name recognition.  Presuming all your employees care about is money in their pocket breeds mercenary attitudes in both employers and employees.

I don't think that valuing other forms of compensation besides higher cash wages is unique to highly-skilled workers.  Highly-skilled workers may have more leverage to demand those other things, but unskilled workers like them, too.

[Sheilbh]

The two obvious alternatives are public financing and indentured servitude.  Of these two, I prefer the second.  A model already exists in the military.  They give you a free college education, you give them X years of your life.  JD, Y years, MD, Z years.

That exists over here for the NHS, education and in a way with post grad law qualifications.

[The Minsky Moment]

I'm having a tough time figuring out the main theme of your post Ide. 

I think it's something like this:

Your elegant model of employer incentives not to train has hidden premises which may be at odds with reality: namely, that changing jobs is relatively frictionless and costless to the employee, and that all training is perfectly universal is equally valuable to any employer.  In a real world where changing jobs carries costs and job-specific training is only partially portable, skilled labor will be more sticky, and it may even be that the more sophisticated the training, the more sticky it will be.

At the same time, the company that chooses not to train and relies on the labor market to supply its skilled labor needs faces the risk that the market will not supply the skills that it needs exactly when it needs it, or that there will be significant time lags to bring on labor that will complicate investment planning, or that the skilled labor it hires from the market will not be perfectly matched to its own needs since some skills will be employer-specific.  A rough analogy would be a baseball team that relies entirely on the free agent market to fill its starting lineup - you save the up front costs of scouting and farm teams, but have to pay top dollar for talent - and the year you happen to need a new second basement just happens to be a year when the free agent pickings are slim at that position (but there are 3 centerfielders).

Bottom line is that it may be rational for a firm to spend significant resources training workers even if it knows there will be some leakage.

[dps]

I'm having a tough time figuring out the main theme of your post Ide. 

I think it's something like this:

Your elegant model of employer incentives not to train has hidden premises which may be at odds with reality: namely, that changing jobs is relatively frictionless and costless to the employee, and that all training is perfectly universal is equally valuable to any employer.  In a real world where changing jobs carries costs and job-specific training is only partially portable, skilled labor will be more sticky, and it may even be that the more sophisticated the training, the more sticky it will be.

At the same time, the company that chooses not to train and relies on the labor market to supply its skilled labor needs faces the risk that the market will not supply the skills that it needs exactly when it needs it, or that there will be significant time lags to bring on labor that will complicate investment planning, or that the skilled labor it hires from the market will not be perfectly matched to its own needs since some skills will be employer-specific.  A rough analogy would be a baseball team that relies entirely on the free agent market to fill its starting lineup - you save the up front costs of scouting and farm teams, but have to pay top dollar for talent - and the year you happen to need a new second basement just happens to be a year when the free agent pickings are slim at that position (but there are 3 centerfielders).

Bottom line is that it may be rational for a firm to spend significant resources training workers even if it knows there will be some leakage.

Beyond that, the idea that there are companies that don't train I find questionable.  Every company has to do some training, even if it doesn't have a formal training program.  Companies that think that they're saving on training may actually be paying higher training costs, but those costs are the ones involved in fixing mistakes and re-doing work, not paying for a formal training program.

[The Larch]

The two obvious alternatives are public financing and indentured servitude.  Of these two, I prefer the second.  A model already exists in the military.  They give you a free college education, you give them X years of your life.  JD, Y years, MD, Z years.

That exists over here for the NHS, education and in a way with post grad law qualifications.

I guess that private companies in highly sophisticated fields will do the same. The brother of one of my best friends, who studied Geology, got hooked up in a program with Repsol, Spain's big oil company, upon graduation. He was offered a fancy master's degree in oil and gas exploration, wholly paid by the company, with a commitment to hiring him after being done with it. For the first couple of years he'd be destined to somewhere in the ass of the world (in his case the Argentinian boondonks) and then he could get the opportunity to work in the Madrid HQ. If he bailed out before finishing his assignment he'd have to pay back the cost of his masters to the company.

[Ideologue]

98% Greed
1% Bad Movies
1% Evil

Comics, too.  I like comics.

Yi: I guess the main theme is that firms, by abdicating responsibility to train, to whatever other actor--whether it be the educational complex or other firms--are not likely to reap much of a windfall, because 1)those who have developed human capital have an advantage in keeping them, due to labor market frictions like homes, friends, and families and 2)because, all things being equal, they will continually face staff shortage if they do not develop their own people instead of relying on whatever they can get.  Of course, if they're able to outspend rivals by huge amounts, they can buy what mercenaries they need.  But their attempt to free ride--and that is not a fucking "buzz word"--and reap all the rewards of others' investment does have trade-offs.

I think it's something like this:

Your elegant model of employer incentives not to train has hidden premises which may be at odds with reality: namely, that changing jobs is relatively frictionless and costless to the employee, and that all training is perfectly universal is equally valuable to any employer.  In a real world where changing jobs carries costs and job-specific training is only partially portable, skilled labor will be more sticky, and it may even be that the more sophisticated the training, the more sticky it will be.

At the same time, the company that chooses not to train and relies on the labor market to supply its skilled labor needs faces the risk that the market will not supply the skills that it needs exactly when it needs it, or that there will be significant time lags to bring on labor that will complicate investment planning, or that the skilled labor it hires from the market will not be perfectly matched to its own needs since some skills will be employer-specific.  A rough analogy would be a baseball team that relies entirely on the free agent market to fill its starting lineup - you save the up front costs of scouting and farm teams, but have to pay top dollar for talent - and the year you happen to need a new second basement just happens to be a year when the free agent pickings are slim at that position (but there are 3 centerfielders).

Bottom line is that it may be rational for a firm to spend significant resources training workers even if it knows there will be some leakage.

P.S.: Dunno what's greedy about suggesting beneficial changes to the economy.  You guys are way cynical.

[Admiral Yi]

I think it's something like this:

Your elegant model of employer incentives not to train has hidden premises which may be at odds with reality: namely, that changing jobs is relatively frictionless and costless to the employee, and that all training is perfectly universal is equally valuable to any employer.  In a real world where changing jobs carries costs and job-specific training is only partially portable, skilled labor will be more sticky, and it may even be that the more sophisticated the training, the more sticky it will be.

At the same time, the company that chooses not to train and relies on the labor market to supply its skilled labor needs faces the risk that the market will not supply the skills that it needs exactly when it needs it, or that there will be significant time lags to bring on labor that will complicate investment planning, or that the skilled labor it hires from the market will not be perfectly matched to its own needs since some skills will be employer-specific.  A rough analogy would be a baseball team that relies entirely on the free agent market to fill its starting lineup - you save the up front costs of scouting and farm teams, but have to pay top dollar for talent - and the year you happen to need a new second basement just happens to be a year when the free agent pickings are slim at that position (but there are 3 centerfielders).

Bottom line is that it may be rational for a firm to spend significant resources training workers even if it knows there will be some leakage.

I think some people may have gotten the misconception that I am claiming companies have *zero* incentive to train in all cases and never do.  Obviously that is not true.  Everybody here has probably had some amount of on the job training.

DGuller did a good job of enunciating the point I was trying to make: that companies conduct a suboptimal amount of training (from a societal POV) because of the externality.  A suboptimal amount can be and usually is more than zero.

[katmai]

I guess that private companies in highly sophisticated fields will do the same. The brother of one of my best friends, who studied Geology, got hooked up in a program with Repsol, Spain's big oil company, upon graduation. He was offered a fancy master's degree in oil and gas exploration, wholly paid by the company, with a commitment to hiring him after being done with it. For the first couple of years he'd be destined to somewhere in the ass of the world (in his case the Argentinian boondonks) and then he could get the opportunity to work in the Madrid HQ. If he bailed out before finishing his assignment he'd have to pay back the cost of his masters to the company.

hey watch it!

[The Minsky Moment]

DGuller did a good job of enunciating the point I was trying to make: that companies conduct a suboptimal amount of training (from a societal POV) because of the externality.  A suboptimal amount can be and usually is more than zero.

That's an empirical question - you would need data on the amount expended on training and a calculation of an optimal amount. 
If you got that - then you could conclude that training is suboptimally low, but that wouldn't prove the externality was the cause.

[Iormlund]

Yi, what makes you think talented workers will stay at your firm if you don't train them?

Pay.

Maybe in that side of the Pond. My experience says talented workers that are deprived of ways of advancing their careers will soon look for greener pastures.