In the January 23, 2018 Ask The Headhunter Newsletter, we take a look at the job monopoly that keeps a lid on pay.


job monopolyYou’ve probably already read this on Slate. Three economists conducted a study that asks, Why Is It So Hard for Americans to Get a Decent Raise? (The paper is only in draft form so Slate includes no link to it.) I think your readers might have some interesting things to say about whether there’s a job monopoly that controls their pay.

Here are the key points:

  • “Workers’ pay may be lagging because the U.S. is suffering from a shortage of employers.”
  • “A lack of competition among employers gives businesses outsize power over workers, including the ability to tamp down on pay.”

In other words, in areas where there are only one or two companies posting a certain kind of job (e.g., delivery van drivers in Selma, Alabama), pay for those jobs has stagnated or declined. They call this monopsony. Like a monopolist that controls prices because it controls supply of a product or service, a monopsonist company controls pay unfairly because it controls the supply of certain jobs.

But I think it’s far worse. (You’ve already touched on this before in your article Consulting: Welcome to the cluster-f*ck economy.) I wonder if those economists are taking into account all those “consulting firms” — middlemen who provide, say, most of the computer programmers to several employers in an area — that create further aggregation of hiring entities who would otherwise be competitive.

What do you say about this? What does everyone on Ask The Headhunter think about it?

Nick’s Reply

Wow, that’s one cool new word for our vocabulary: Monopsonist. It opens up a whole new world of worry!

Consulting firms and the job monopoly

I don’t think there’s any question that a handful of “consulting firms” that funnel workers to lots of companies in a particular industry, field or discipline constitute a job monopoly that kills competitive pay. I suspect your insightful guess is correct: The consulting industry is aggregating jobs and labor, thereby controlling — and depressing — pay. It wouldn’t surprise me if those economists totally miss the consulting-firm factor. (See Will a consulting firm pay me what I’m worth?)

The economists should ask workers who get their jobs via these aggregators, what is the difference between what a consulting firms pays them, and what the firm charges an employer for them. That’s never disclosed, and that’s the dirty little secret of the corporate world — and our economy. (We’ve looked at another topic that economists seem to view with blinders on: What the Federal Reserve doesn’t know about recruiters.)

But there are other issues and questions, too.

While I could ruminate for pages about what this means to workers and job seekers, and to our economy, I’m going to respect your request and roll this out to our community, in the form of a bunch of questions the article raises for me. Let’s see how everyone views this — and what questions and answers they’ve got.

I strongly suggest that everyone reading this column stop right here, and please read the Slate article before proceeding. It’s a worthy read — and I think it’ll get up your ire after it raises your eyebrows!

Are the data legit?

The Slate article by Jordan Weissmann raises a lot of questions, and not least of them is one about methodology.

  • The economists’ data set comes from CareerBuilder, “which publishes about one-third of all online job ads in the country.” Talk about an aggregator! What assumptions are those economists making about the validity and reliability of a major job board’s data, which comprises job listings that we all know are corrupt in more ways than we can count? (E.g., duplicate jobs, out of date jobs, fake jobs, composite jobs, inaccurate job descriptions, and so on.)

Questions about monopolistic pay practices

Nonetheless, the study raises provocative questions whether or not the data are legit.

  • In what other ways do employers monopolize a job market?
  • How do employers that are rolling in new-found profits explain this quote from the article?

“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.”

  • What other employment practices “[cut] into labor’s share of the economy?”

Questions about anti-trust

  • Should the Department of Justice and the Federal Trade Commission investigate monopsony like it routinely investigates monopoly?

“Then there’s antitrust… This paper’s findings suggest that Washington needs to think more carefully about how mergers can impact the job market.”

Questions about minimum wage policy

  • Does the following assertion turn our entire political debate about wages on its ear?

“Take the minimum wage. The classic argument against increasing the pay floor is that it will kill jobs by making hiring more costly than it’s worth. But in a monopsony-afflicted world where companies can artificially depress wages, a higher minimum shouldn’t hurt employment, because it will just force employers to pay workers more in line with the value they produce.”

Is hiring no longer competitive?

Weissmann closes on this point:

“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.”

I’ll bring it back around to the insight (offered by the reader who kindly brought all this to our attention) about “consulting firms.” (I put that in quotation marks because most of these firms don’t consult at all — they merely rent workers for profit.)

  • To what extent does consolidation of hiring by a relatively small number of body shops (I think body shops is the more accurate moniker) result in manipulation of pay?

And who’s going to do anything about it?

Okay, folks: Have at it! Is there a growing monopoly on jobs that affects pay? How does it work? What do you think about all this? What questions do you have that we can all try to tackle?

: :

  1. The last thing we need to spur on competition within sectors of the economy is regulation! We need less regulation so that more business startups will be able to compete.

    Another problem I have is that the indexing of wages may be problematic in some industries. The resturant business is singled out a lot in minimum wage discussions, but their costs for ingredients have outpaced general inflation as well.

    • Less regulation? the startups are funded by the venture capital firms which is where the surplus capital from the captains of industry is invested. They (venture capital firms) call the shots as far as how they will conduct themselves in the labor marketplace.

    • “We need less regulation” has been the battle cry of the rapacious greedy classes for centuries now. But it is as false as any other propaganda inciting class warfare.

      No, from quite early on, Capitalism depended on regulation to guarantee a level playing field so that Adam Smith’s style of atomistic businesses really could compete in a fair, free market. Without regulation, we have never had a true free market. Instead, we got monopolies far worse than the monopsony Nick and the Slate article justly complain about.

      If you study real economists such as Heilbronner and Keynes, you get a very different picture than you get from the ideologically motivated Austrian School, which has been cravenly writing propaganda for the upper classes for decades.

      From them you would learn, for example, why pandering to startups can never provide enough fuel for economic recovery, you need a genuine inducement to invest for a much wider spectrum of industries than that.

  2. A few thoughts:
    I hate the wall street view of workers that has taken hold in corporations.
    By paying consulting firms the same or even higher costs then employing the employee themselves their books look better to wall street and the investors. The prevailing thought is that it is way easier to get rid of your contract than to lay off workers. The firms often charge more than the cost would be for the business to employ the worker themselves.
    The main question is this: Do corporations have a moral obligation to maximize their shareholder value or do they have a moral obligation to support the system and workers that make their corporations possible in the first place. I for one believe we have a moral obligation to improve the lives of those around us as much as possible. That when we focus purely on maximizing profits and ROI’s then we lose what makes us great as human beings. I believe that the best companies will change how they view their workers and create outcomes that show great ROI to investors, great job opportunity to their employees and great service to their customers.

    • @Todd: Henry Ford raised wages because he realized that more profits reinvested in the economy — people’s buying power — the more successful his enterprise would be. That insight seems missing in most companies today.

      Perhaps the two most striking notes in Weissmann’s article are these:

      “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.”

      “…a higher minimum shouldn’t hurt employment, because it will just force employers to pay workers more in line with the value they produce.”

    • @Todd: I think you’re conflating two similar but distinct ethical issues.
      . 1) “Do corporations have a moral obligation to maximize their shareholder value or do they have a moral obligation to support the system and workers that make their corporations possible in the first place.”
      . Corporate officers have a fiduciary responsibility to maximize investors’ returns, by some mix of increasing overall corporate value and increasing dividends through higher profitability. Failure to do so will cost them their jobs and could land them in jail.
      . Investors, being human, find it easier to recognize improved returns in the form of dividends AND know that a dividend that has been paid is immune to unexpected market fluctuations that can reverse an increased share price.
      . It takes a rare corporate board to take the long view under these pressures.

      . 2) “I for one believe we have a moral obligation to improve the lives of those around us as much as possible.”
      . I share this belief, but I view it as an individual obligation. No one should be able to hijack someone else’s investment money (their pension fund, perhaps?) and use it to satisfy his personal feelings of compassion towards the community.

      . That said, a corporation that wisely invests in its community will almost certainly see greater capitalization over the decades.

      • Paying living wage isn’t “hijack”ing someone else’s money. It’s called “earned income” for a reason, they earn it.
        If a company can’t pay a living wage, they aren’t producing something the public considers valuable enough to bear the cost, and they should close their doors.
        I take it you are unfamiliar with the basic tenets of capitalism.

    • @Todd – You are 100% on target!!

  3. For a wonderful and enlightening take on the current state of the job market read David Weil’s “The Fissured Workplace: Why Work Became So Bad for So Many and What Can Be Done to Improve It.” ( Large employers are increasingly “shedding” their workforce and rehiring them via “third party vendors” who are then forced to compete based on “price”, which in turn leads to the death of the middle-man. In the end it is family wage earner that loses the most. This corrupt global supply chain extends from the large corporations; e.g., Microsoft, LinkedIn, “staffing” companies, all the way to Indian outbound call centers, to wit:

  4. Todd, to pick up on your question on the moral obligation of corporations/employers. Many of these corporations use contractors and consultants like an American Express card, easy on/easy off. As you said, this is ideal for finance and making Wall Street happy.,

    At what point though should the Government step in an update FLSA? A lot has changed since 1938!
    Much of this abuse is fueled by trying to avoid health care expenses as well. At some point employers realized it was cheaper to pay many employees time and a half and/or contractors a higher hourly wage than provide a full time position with benefits. If FLSA was updated with time and a half changed to double time, or even triple time for hours above 55 per week, employers might have more incentive to create full time positions.

    As the Slate article demonstrates, much of what has gone on the past 30-40 years is not in the employees favor. At what point should policy be updated to address modern employment abuses and realities?

    • What concerns me is, what value do “consulting firms” add to the economy by buying labor for up to 1/2 less than they charge companies for the same labor?

      That’s a huge value hole. One could argue that labor does the work while the consulting firm scrapes off the profit — for what?

      • “…add to the economy” as in, buying a house/car, plan for a vacation, etc., which help the economy grow…? How does a temp/contractor commit to long-term spending like a mortgage or car loan when the “employer” (for lack of a better term) won’t commit to the temp for more than six months at a time? I can confirm that, unless you’ve got a second source of income via an employed spouse/partner (I’m guilty of being single), when you can’t make plans for your life beyond six months, your life gets pretty stagnant…

        • @Sighmaster: I don’t know about your industry, but in engineering, the advertised contract lengths are merely wishes.
          . Last month, I was early in the second year of a four-year contract when I and another contractor were given three days’ notice because ‘they didn’t need [us] any more’. I choose to believe that the reason was that the boss didn’t like us adhering to professional ethics over blind obedience, but where’s the proof?

        • That’s very true, Sighmaster. And that’s the point–you can’t plan for the future, short-term or long-term. But I suppose the same can be said of “permanent” jobs as well, since employment in most/all states is at-will and there are no guarantees. But I agree–it is worse when you’re a temp/contractor.

          My sister-in-law’s cousin worked as a contractor for Akamai for a while–a couple/few years at the very least. He was in computers, and I remember him telling me how he hoped that he would be hired as a permanent employee so every six months he wasn’t worrying about whether the job would go away or go to someone younger, cheaper, foreign, etc. Akamai did hire him full time, and he felt fortunate because he was in his 60’s. But I think he was the exception rather than the rule.

      • This is the $64,000 question.

        Todd above brings up the point that sometimes it can cost more to hire a contractor/temp than it is to hire an FTE.

        I could see that as the body shop probably has to pay something approaching “market rate” (plus all the other crap that goes along with it) to the actual contractor, plus a markup to make it worth their while.

        I don’t really buy that “contractors are easier to get rid of.” Many jobs are at-will, so a company can get rid of an FTE for any non-protected reason or no reason at all.

        So, I don’t really see a benefit for the employer or contractor. It begs the question: why can’t the employer go to potential contractors directly and either pocket the markup that the body shop would charge them or pay it to the contractor?

      • Precisely, Nick. They have to make the margin to support those huge India call centers and bad algorithms that blast out inappropriate emails and now texts! It certainly doesn’t go to their contractors.

      • “One could argue that labor does the work while the consulting firm scrapes off the profit — for what?”
        To offload legal responsibilities to workers. In legal speak, “plausible deniability”, OSHA violations for example. Company offloads can include safety costs, legal wage, etc. etc.

  5. First of all, I think we are mis-using the term “consultants” at least in the context and content of this article. REAL Consultants work for consulting companies who then provide services to client companies in a variety of areas. These consultants are, in theory SMEs.

    In the context of this discussion, I believe we should be using the term contractors, something I know about since I am one. In this context, I agree with the article’s premise that there are monopolistic activities taking place. Here in NJ, where I live and work, and where Big Pharma still has a noticeable footprint (despite several well publicized departures over the last 10 years, there is an extensive use of Contractors by J & J, Merck, Bristol Meyers Squibb, Novartis, et al.

    In my career field which is IT Sourcing, there seems to be a concerted effort to hold down stable, if not actually drive down hourly rates for contractors doing this type of work. J & J is NOTORIOUS for how long they hold a rate for a labor category without any consideration whatsoever to increasing it due to increases in COL, inflation, etc. Currently, that rate is $60 per hour MAX and only arrived at that level in the late Spring/early summer of 2016. It has NOT been adjusted since.

    Many of the other pharma companies in NJ pay the exact same rate and in some cases even less.

    Part of the problem has been the deluge of staffing firms on the market chasing a less than growing number of openings. Before I obtained my last contract assignment, it was not unusual for me to get anywhere between 8 and 15 calls every Monday and Tuesday of every week for the same single opening at J & J. The usual suspects were all too often the same shady, lying, cheating Indian owned firms located both in India and here in the States. These same Indian owned firms had all too frequently signed RATE CARD agreements with clients that deliberately held down for lengthy periods hourly rates for the contractors. This is further amplified by periodic demands by the client companies Vendor Management Offices (VMOs) like Kelly, Manpower, Beeline, Agile1, et al that the staffing firms systematically reduce their bill rates for the respective contractor over time.

    In my current assignment, I’ve been on board for 19 months in the same role and at the same rate without a raise. I successfully negotiated a $3 MILLION reduction in costs for a global AT&T contract for telecom services, the elimination in software maintenance fees of $500K after IBM licensed software maintenance contracts slipped through the cracks and were not renewed in a timely fashion.

    Most contractors I know do in fact bring real value to client companies. Despite this, the client companies where we work take advantage of the situation and the staffing agencies are MORE THAN COMPLICIT in that they agree to repeated long term rate reductions or stagnation, provide few if any meaningful benefits and rarely, if ever, allow a contractor to make more money via raises.

    Given the ability to control the rates paid into the labor markets here in NJ, the large(r) employers already know that contractors have little real ability to vote with their feet because all of the larger firms collude to hold down rates by dealing from the bottom of the deck in their interactions with the staffing firms that are too numerous and too hungry themselves to do what’s right by candidates.

    Don’t get me wrong; I believe in free enterprise. The article is right in so many ways that I find I am glad to be nearer the end of my working career than at the beginning or mid-point.

    Labor has become disposable and interchangeable and has for years been commoditized and demeaned through the use of rate cards and monopolistic manipulation of local market areas. As we enter what may again be a labor shortage, wealthy hypocrites like BILL GATES, WARREN BUFFETT, the heads of APPLE, IBM, and others argue there is a talent shortage that requires them to DEMAND to be able to import tech labor from Third World XXXXX like India to displace native born American workers.

    I sincerely believe that the only way to stop this and possibly reverse this deleterious practice is to eliminate or severely curtail H1B visas, deny spousal relocations with the imported labor to eliminate anchor babies born on US soil, end Chain Migration and ensure that companies that operate here hire native born citizens FIRST before they EVER seek to hire CHEAP labor form overseas.

    We do have a shortage here in the US, but it’s not in talent. It’s in companies that believe shareholder value is the HOLY GRAIL and the workers are just grist for the mill. Until the exportation of US jobs is ended, these slimy agencies will continue to feed off the companies that do not care about the communities in which they are located, the local labor force and marketplace and the overall economic well being of the USA.

    • Paul C. is saying it all here. As we know each other and share our experiences as contractors, consultants (in my case) and FTEs, he is saying the ABSOLUTE TRUTH. Yes, his language is strong. If you are living in the US and trying to work with high skills (like him I’m far closer to the end), you know this is real. (I pity all these STEM grads who were promised the earth but can’t get a leg up.)

      I’m a marketer (as in marketing director not sales) on the strategic/brand building/comms (writing, journalism) side, and from what I see in both marketing and sales, the situation is just as bad as it is in IT strategic sourcing. Include in here writers/copywriters, PR, graphic designers, and even ‘digital marketers’ because programmatic buying is beginning to make inroads on their jobs. Even the English language is degraded.

      Big companies like Pfizer and Siemens in other areas of the NY Metro (Paul’s named a bunch), and Big Financial are also complicit in holding down rates in many cases to ‘dog food’ levels and, I will add, paid hours per week by cutting down weeks to 35 hours and in finance, the ‘professional day’ which means you’re paid for 7 or 8 but there for 10 or 12 (unpaid) to keep your job. Ultimately, these affect FTE salaries as HR and financial staff in smaller companies look to these large companies to set rates–and professionally they all talk to each other.

      I will add to Paul’s solution list a tax on companies like IBM and Pfizer that outsource to other countries, e.g. India, China, Cyprus (bet you didn’t know this one) plus tax breaks if they choose to in-source to US companies that are predominately staffed by US citizens or those with green cards on the road to citizenship. (High-skill immigration is beneficial, not call centers) There’s also a huge dodge by high-tech companies that source offshore through Australia, Thailand, Ireland, Vietnam, and Cyprus pass-throughs. Corporate inversion (re-domiciling of US companies to overseas, like Medtronic), should be discouraged–that’s only started.

      The PMPs with their expensive certificates and CE ought to jump in here because they have been absolutely hammered between Indian agencies and H1-Bs, to the point where many I know have left for other careers like real estate.

      • Yes, pity the kids who fall for the STEM lie.

    • @Paul C: The monikers used by these firms — consulting firms, contractors, talent services, etc. — only cloud the problem and the business. I think we agree there’s a problem.

      But when we look at the total number of H1-B visas issued, and compare that to the number of ALL workers who get abused by the “contracting” system, it’s pretty clear that H1-B is only a small part of it. I see no justification to eliminate H1-B when not enough is being done to police how it is being misused — and it’s clearly being misused. When is the last time we read about a serious action against an H1-B abuser?

      I think the first challenge is the investigation and exposure of the companies that feed off the consulting/contracting industry — avoiding actually hiring FT employees, treating employees as a disposable expense rather than an investment, and tacitly supporting an entire arm’s-length industry — consulting and contracting firms — that adds costs without adding value, while depressing pay.

      • Nick: In the absence of the policing of the abuse of H1Bs, there is NO recourse other than to eliminate them completely.

        I believe we need to NOT feed the lions named Zuckerberg, Gates, Soros, Buffett, Apple, IBM, MicroXXXX, Oracle, et al.

      • Nick: Apple, MicroXXXX, Oracle have all demanded increased numbers for H1Bs, continuing to claim there just aren’t enough US citizens with the skills.

        What I like about Trump in this regard is his emphasis on American workers first. I am at the point in my career where I believe we need a policing agency for the H1B program and that the minute one expires, that the holder has 72 hours to leave US soil or face immediate deportation. No constitutional rights or hearings, be gone!

        Where I currently work, we recently re-negotiated the Master Services Agreement w/HCL. During that process, we aloso negotiated downward many of the rates for the labor categories they provided to the company I am contracted to for IT Sourcing.

        The newly appointed Indian Customer Relationship Manager between HCL and the client actually suggested to us that we hurry up and finish the process because he had about 8 of his people whose visas were set to expire and they would have to leave the US or not be allowed back as they were back in XXXXSVILLE, India.

        While I wasn’t completely surprised by his comments, as the Lead negotiator I said: “HCL’s visa problems are your problems, don’t make them ours.” “Oh, and another thing, HCL is NOT ENTITLED to our business, you are eligible to BID ON IT as well as the renewal. Don’t EVER come in here again with the attitude that somehow, because you did business here in the past, that you are entitled to continue to do so.”

        [Ethnic epithets deleted]

  6. Jason, entrepreneurship will only continue its historic 40-year decline unless the feds step in and start breaking up these monopolies. The prevailing belief seems to be that, to preserve a free market, two or three competitors in any given sector is enough. It isn’t.

    Not all “regulation” is the same.

    • @Susan: I agree with you. When we see corporate profits growing astronomically while the workers who deliver that success are not sharing in those profits, it’s time for regulation.

      Some will argue I’m sounding like a socialist trying to “spread the wealth of those who ‘earn’ it.” But those earning it are not being paid for what they are contributing to: massive corporate profits.

      The monopolies are also something else — a racket.

  7. “A shortage of employers” means there aren’t enough jobs. There are plenty of employers in the city of Boston. They just don’t want to hire. Back in 2014 I worked a two-week temp assignment at some company in downtown Boston, they were in one of the bigger buildings (One Financial Place), I couldn’t believe how *empty* the place was, just one unoccupied cubicle after another. The office rooms with the nice views of the city, however, were all occupied with the usual bigwigs. A few weeks later I did a two-day gig at a company in another of those big buildings and I saw the same thing, a big empty floor with rows of empty cubicles (but lots of bigwigs occupying the offices with the views). I observed the “empty office” scenario on a number of other times when I had been blessed with an in-person interview, so now when I look at the Boston skyline I wonder exactly how many of those floors are completely devoid of workers…Saw the same thing in the suburbs during my 6mo gig at Fidelity in 2015 at their Smithfield campus, I was surrounded by row upon row of empty cubicles save for one permanent dude two seats over and of course all the private offices were occupied with SVPs, at the start of the gig there were a handful of other contractors who one by one disappeared over the months. I often sat there expecting to see tumbleweeds roll by. I remember twenty years ago showing up for a temp assignment and the people there scrambling to find me an empty workstation to use. Pretty sure those days aren’t coming back. (During my earlier contract at Fido I witnessed them outsourcing everything to India to save money which is why killing H1B ain’t gonna help much, the company will just open a location in India and hire locally.)

    And re: stagnant salaries, back in 1992 I was hired as a medical secretary in Boston for $12/hr. My main duties were typing, answering phones, opening mail, etc. — not exactly brain surgery. Yesterday, I saw an ad for a nearby UPS Store looking for one of those “graphic design plus do everything else” jobs, the list of skills far outweighed the skills needed for that secretarial job I had. The salary: $11/hr. One dollar LESS than what I earned for a lower job in 1992. It made me cry (and no doubt they were inundated with applicants eager to earn that 1992 salary).

    • Sighmaster, your tale about your job as a medical sec’y 25 years ago reminded me of a temp job that I took in 1998 at an insurance company. It wasn’t hard, but the work was steady, and like your contract job at Fido, people at Phoenix had to scramble to find me an empty workstation so I could do that job. And we were busy! I was lucky–though the job wasn’t mentally challenging, I liked my colleagues and they liked me. When a different job opened up elsewhere, I had already proved myself and my both my direct boss and her boss recommended me for it and encouraged me to apply. I did and was hired full time. That job was never advertised. I stayed until our site’s operations were moved to the Albany area in 2001 and the brokerage part of the business was closed. The jobs that went to Albany were eventually outsourced to India because the labor there was dirt cheap. The thing is, my colleagues and I cared about what we did and our products (our site handled new business in annuities and death benefits), and another colleague who trained the Indians who took those jobs told me what pure hell it was. He said that they didn’t understand or care, and even worse, the bigwigs didn’t care either. The sole focus was profit for the owners and if that meant outsourcing every single job to India or Bangladesh, that was best thing, the right thing to do, even if it meant that the company lost clients (which they did).

      Today, the building in which I used to work at the old site is mostly empty–and like you, I don’t see another big business going in there. That’s too bad–Phoenix was a good employer and helped drive the local economy.

      • Lots of see-through buildings in Westchester and Bergen County–in the prosperous NYC metro area–as well.

        • Saw the same thing in IBM’s Herndon Virginia facility some years back. IBM’s also hollowing out US presence.

    • Yes and no. The ones far enough along with H1B could just outsource. However, what is actually going with the H1B is a process called, even by the crooked corps themselves, “knowledge transfer”. What they do is have Americans train their H1Bs, then can the Americans. Then rinse and repeat. Once enough of the staff is foreign, then they send the whole operation overseas.

      If they were near the beginning stage and suddenly their H1B supply was cut off, they’d have to spend a bundle going overseas versus if they had the American workforce train themselves out of a job.

      A big part of the gig isn’t pay, actually, though it is less than for Americans in many places, but other things. Since you are more tied to a job, you’d be more likely to put up with 80-hour weeks, little vacation, and fewer benefits if you were an H1B. That would be a plus to a greedy corporate executive even if they WERE paying the same rate as to an American worker.

      Shutting down the H1B program (as well as the L1 program) would throw a huge monkey wrench in the offshoring operation in the IT world.

      • The H1B visa workers here in the USA are indentured servants whether they are sponsored by a job shop or the large Indian BPOs like INFOSYS, WIPRO, COGNIZANT, et al. They don’t do what they’re told, whoops, sponsorship evaporates and they are on the next AIR INDIA flight back to SHITSVILLE, India.

        • That and $2M in reported wage theft by H1Bs, in 1998/1999 alone.

  8. From what I see, staffing companies provide primarily IT resources to firms. It does make sense for a firm to rely on temporary IT staff because the technical skills they bring decline rapidly. They don’t want to carry an expert in an older technology on their books. If the firm continues to rely on an aging technology, they will try to lower their costs by offshoring. For most firms, IT is a cost center and the CFO will move mountains to lower that cost.

    • Jonathan, it’s bled from IT to marketing, analytics, engineering, and other formerly competitive wage areas.

      Try this one I just got. Indian recruiter, Advent Global Solutions. Marketing Manager job, downtown NYC, 7+ years of experience, 0-3 months. Asked rate and hours per week. $24/hour. This is for TIME Inc., not some struggling fashion startup. That is less than half of what used to be the going rate. This is the nadir of what I’ve seen…and this is January! And yes, Sighmaster, it’s tough to plan your life when these jobs are now weeks, not even months.

    • @Jonathan: “the technical skills they bring decline rapidly”

      I think that’s nonsense. In any field, there’s a fundamental skill set that enables a worker to quickly learn, adapt, and do new work. It’s certainly true in IT.

      As Wharton labor market researcher Peter Cappelli points out, the problem is no lack of skills or changing skills. It’s employers that view workers as finite task-doers. Employers have stopped providing ongoing training and a learning curve. They stupidly want an IT worker who has already used a certain computer language or performed a certain task — when any good IT worker can learn to do either probably faster than the employer can find one that’s already done it.

      • @Nick, the lack of onboarding and in-employer continuing education has fed into this myth of ‘skills declining rapidly’. If you’re not a fool, you’re always learning as you work. It’s also been used as a weapon to eliminate older, more expensive, and less tractable (perhaps more creative) workers who can’t possibly stay current (sarcasm off).

        So we have the spectacle of marketers going to coding schools to try to ‘repot’. Also I now see the overfocus on ‘digital marketing’ which is putting the tool (digital/social) ahead of the toolbox (marketing). You wonder how American business survives.

        • I will also add the sheer arrogance that is bred into graduates of the top B schools to be rude to anyone who is Not Them. Interviewed on phone recently with a Harvard/Wharton grad with a struggling early stage healthcare company financed by a post-exit sugar daddy. I got 10 minutes, mostly filled with her blathering and attitude about how revolutionary her tech is. (It isn’t, and has serious drawbacks including a crowded market of same.) Having heard this song before, I let her go on…for 10 minutes I lost and will never get back. It didn’t even rate a proforma thank you note.

        • @Dee and Nick: I wonder how business and even the public sector survive with these philosophies. I work in the public sector (education, a community college). Last week I gave a ride home to an older part time IT employee here who was just hired full time. She has been here several years, is responsible, professional, and even went back to school to get a second Associate’s degree in IT. She told me that she almost WASN’T hired, despite doing the job for 18 months (since a retirement forced that department to give her those tasks) because she doesn’t have a Bachelor’s degree. I was puzzled because I always thought that in IT matters more that you can do the job than a piece of paper attesting that you have a degree. She told me that they told her that the one who retired had a Bachelor’s degree, as did two other people doing the same job in that department (but two did not and it was not an impediment for them). It made no sense–she said that they had interviewed others and they couldn’t do the job, but they tried to push them forward because they had Bachelors’ degrees. She is now taking one online course at UMass, and will chip away at a Bachelor’s degree because they made her keeping her job contingent upon her getting a Bachelor’s degree. I asked her if it has to be in Comp.Sci., and she said no, they told her that it doesn’t matter what the degree is in (it can be in Medieval French poetry or in Biology for all they care) so long as she earns a Bachelor’s degree. This too makes no sense–if you’re going to require a Bachelor’s degree, presumably because what you learn will help you in your field, then why not require a degree in Comp.Sci.? She also told me that they low-balled her on the salary (though she’s been doing the job and doing it more than competently for going on 2 years) because she doesn’t have a Bachelor’s degree. And yes, she told me that the acting supervisor in that IT dept. whined because they couldn’t get good applicants (got lots of applicants with no degrees at all or Associates’ degrees in IT at most). It isn’t just marketing/business/finance/IT that is choosing to arbitrary requirements while ignoring good workers right in front of them.

          • It’s ridiculous. In my area, the box to be checked is working for a digital marketing agency. You may not know how to make marketing resonate and motivate a buyer, but you know your Google Analytics and CPC!

            Your friend should get most of the way towards that degree, get it, and get another job!

      • Nick,

        “they are not so blind as those who refuse to see.”

  9. What you see out there in the world is what the “steering committee” wants. This group is NOT your government. As soon as one goes down this path, the naysayers react with “conspiracy theory.”

    I’ve read plenty of details in this thread outlining a very conspiratorial agenda that is aimed at producing the results desired. The goal is not “money.” The goal is to destroy the spirit of the individual so life becomes what you see on Shameless TV series.

    Notice how everything on TV, Hollywood has a theme of “you lose unless you stab your buddy in the back, the musical chairs have less seats to sit on.”

    people want to blame this on the president of the time period but it’s been going on for a hundred years.

    So what can you do about it? You can’t vote in anyone that will work for you. You can’t change the laws. You can protest as long as you’re quiet about it and don’t make a noise.

    This ain’t the land of the free.

    It’s getting worse. The middle class is being destroyed by what’s discussed in this thread and by other moves on the chess board.

  10. Read the Slate article. Good. It poses reasonable questions. Good. So do you, Nick. And the comments are similarly reasonable. But my sense is article’s subject starts the whole shebang at the wrong level of analysis.

    In the beginning, it was capital vs labor, with capital starting with and increasing its decisive advantage over labor, which now plays like the Minnesota Vikings did last Sunday. Weak. Ineffective. And capital plays like Philadelphia did. Dominant. One Eagle was quoted as saying he didn’t think the game was gonna be as easy as it turned out. (The same kind of comment a hedge-fund owner, or a ruling class elitist, or a mega-bank CEO would probably make, chuckling on the way to their one-tenth of one percenter meet n’ greet)

    Game over. Capital won. Labor lost. No single tweak’s gonna reverse that outcome. The new game is gonna have to be a post-capitalism gig of some sort (achieved hopefully by non-violent means). Seems daunting, but not necessarily impossible.

    • And capital may be realizing that the ground game has changed and ordinary people may realize that we are the Philadelphia Eagles–uncouth but unbowed and tired of the BS. There’s unease at the Davos party around Facebook, Twitter, Google, and yes, Amazon. Part of it is behavioral, the other is the sheer size of all these companies. One article about this here:

      Amazon has become this big Scary Monster with a wildly inflated valuation of $500bn, but when you add up the numbers, their **cumulative profit** is dwarfed by a single year of Walmart’s–$5.7 bn over 20 years for Amazon, versus $14 bn for WallyWorld in 2016. You’ll have to read down in this article to dig up that nugget:

    • @John Demma: Ah, labor is blowing it. I hate to refer to labor because it implies we might be commies ;-). But I do think labor, workers, employees, job seekers — what’s the right word??? — these folks have succumbed to the idea that they can’t do anything to fix this problem.

      I don’t think that’s true at all. But where is everyone going to start?

      I think with “NO.”

      • Nick, worker wages are falling while corp profits are climbing. It’s that way because the ruling regime wants it that way. It doesn’t much care about main street’s well being (including fair wages for its working class). To a large degree, the financial underpinnings of the U.S. economy (till the next crash) rely on a Ponzi Scheme of continuously renewing and increasing debt. Global (non-financial) debt is reportedly at 152 trillion dollars, the highest in history, at 225% of global GDP. The golden rule is: (no, not that one, the other one) He who has the gold makes the rules all the rest of us have to live under. With increasing concentration of wealth, comes political power. That power regime is what’s in control at the moment and for the foreseeable future. The working class is under the dominance of that regime, which is steadily taking our republic toward a tyranny of a minority faction. That subjugation is at the core of the majority’s anger and disaffection from each other across all classes (excluding the ruling class). You suggest the fix can start with the working class saying “no”. But you don’t elaborate. So I’m uncertain what “no” means.

    • Paul C: I’ll say this once. I understand you are frustrated and you have strong opinions. But I just wasted a bunch of my time cleaning up your gratuitous use of a 4-letter word. Please stop. In the 20 years I’ve been running Ask The Headhunter, I’ve never had to clean up anyone’s language across multiple posts.

      Likewise with the political rants and derogatory ethic epithets. Please step. This is not the forum for them. People of all political persuasions are welcome here to discuss the topics of the website. I’m going to start removing posts when they turn into specific political advocacy and political, social, personal or ethnic attacks. I can count on one hand the number of people whose comments I’ve had to delete all these years. Please don’t join them. You offer interesting comments — but please put a lid on it, okay? Thanks.

  11. On the subject of consolidation: It seems an even bigger problem is the automation within the consolidated businesses. Once they become a monopoly to the market space, the companies look for ways to reduce the labor force inside. That creates a new competition for good wages and wage increases. Amazon is now testing the walkthrough checkout approach for brick and mortar store sales. Cannot stocking of shelves be completely automated? The unskilled workforce will continue to diminish. Henry Ford had a different need than most of our industry does today. Many IT problems can be solved remotely and soon will be diagnosed by robots.

    The medical field is a prime example of depressed wages. Doctors have difficulty setting up their own practices and have to join organizations in order to work. Highly skilled nurses are forced to work for low wages and half-time in some cases. Hospitals are all about the bottom line (get the patients out as fast as possible). There are a lot of less-than-half-time workers so companies can avoid the insurance burden. But they need the job. Many wanna-be-workers can’t work because the relatively unskilled child-care industry charges more than they can make. But sometimes they take what they can get.

    Finally, bringing the of-shore back into the USA will help. But that will be a short-term solution.

    If the answer is that more companies are required to create competition for the “skilled workforce” then much more entrepreneurship and innovation is required to develop new products and industries, quickly. Perhaps the tax relief will facilitate that.

    • @Rick, it isn’t just the healthcare profession that is all about the bottom line (profits for the shareholders, everyone and everything else be damned) but that attitude has been seeping into many industries for some time.

      Back in the 90’s I took a business/corporate law class. The first thing the professor told us was that the only purpose of a business, any business, is to make money (profits) for the owners (shareholders). Not for the employees, not for management. Nothing else matters. If that means paying people peanuts, then that is good for business. If that means moving to a state (this was before the major outsourcing to India and other 3rd world countries took place), then that was to be not only considered but encouraged. If that meant firing as many of the workers as possible to keep down “expenses”, this too was to be done. None of this warm and fuzzy do-gooder nonsense such as paying employees a living wage, providing benefits, or doing good in the community. His comments, though more true today, were the Powell Memo on steroids, and I think that is what we have today. Things have become so skewed in the favor of big business that people who have to work for a living can’t make a difference. I don’t know what, if anything, will change it. I hope things do not get to the point they did in France in 1789 or in Russia in 1917…because then there will be revolutions.

      • Edited to read “If that means moving to a state where labor and costs are cheaper….”

      • “the only purpose of a business, any business, is to make money”
        The breaks on that used to be labor supply/demand, which meant the really nasty businesses would go without employees, and die.
        That entire mechanism is subverted with importing a labor glut. Which historically has been for most of US’ existence, and has returned to that.
        However (be careful what you ask for, you just might get it) the outcomes have included the Civil War, and 1929.

        JFK, regarding The Cold War origin, said if only Marx’s employer gave him a raise… because the philosophy of communism came from Marx’s complaint of non-living wage.

  12. One thing that caught my attention is that the “draft” is using data that is roughly 5+ years old. Have things changed in the 8 years since 2010 or 5 years since 2013? Maybe I am being naive, but it seems that we are bickering over an old argument. The 3 years covered by this study includes a time when the labor participation rate was as low as we had seen since the Carter administration. From the news I am reading we are seeing a surge of new jobs across the nation here in the US. How does that play into this study? I have no doubt that the readers have opinions, but are there facts and data points to support these opinions?

    • Ah, Todd – someone questions the CareerBuilder “data!” Good for you. I think what the economists are doing is on the right track, asking good, new questions. But the data? Urgh.

  13. This is a real and important issue, but a very complicated one. Employer abuses are a major part of it, but only a part. Ignoring the others means taking an unrealistic attitude toward the problem as a whole.

    I am indeed convinced that many employers, especially those of the “professional management” type (the ones who aren’t competent to manage any business in particular) do wake up every day and think “What can I do to trick these monkeys into working for nothing?” This attitude is encouraged by the state of affairs in the glamor industries (especially the various media and entertainment industries) where the monkeys do in fact work literally for nothing to start, and then for dog food, while exercising various debasing “people skills” every day to curry favor with managers who would fire them otherwise, and then get laid off when they are no longer young enough to be cute. (And God forbid they should start families that require real money to support.) Or in the finance industry, where the pattern is somewhat different: low pay to start, big money until you hit your forties, then laid off (after, in many cases, having blown the big money up your nose to maintain the lifestyle).

    However, it is still true that employers–including (and perhaps especially) the competent productive ones in industries that actually contribute to the economy–are subjected by politicians to wildly unrealistic burdens and risks that directly bear on employment. Worst of these is affirmative action regulations, which are really just a wholesale form of the political patronage jobs that were supposedly eliminated a century ago by civil service reform. Almost as bad is the fact that employers have somehow been saddled with key roles in supporting healthcare–and the most expensive and wasteful healthcare system in the world. The fact that employers also act as unpaid tax collectors for the IRS doesn’t help either–people take it for granted now, but a fairer, simpler, and more realistic tax system would largely eliminate the need for this. And there are many smaller things as well–a death of a thousand cuts.

    For those reasons, outsourcing the burdens of formal employer status to contracting firms is an inevitable move for many employers, especially smaller ones that would be ruined by a discrimination lawsuit and can’t afford to pay a back office staff whose only contribution is to ensure regulatory compliance–compliance which is not an issue for offshore competitors, or for onshore competitors hiring illegals and working in a grey market that depends on social networks close enough to flout laws and regulations. Contracting firms can offer considerable economies of scale in the matter of compliance bureaucracy.

    There’s also the fact that many employers, with their brainless HR departments, and often equally brainless “professional managers” as hiring managers, are totally incompetent to hire people with real skills. A half-competent contracting firm can provide real value to such clients.

    A major, but generally ignored, factor in relations between employers and employment contractors is kickbacks. This can vary in importance from industry to industry, and regions. In the graphic arts and design industry in New York City, in which I worked for many years, kickbacks seem to have been the rule. In Minnesota, where I live now, not so much, maybe not much at all. But for general purposes, when you think of employment contractors, think of kickbacks.

    Unions, especially American-style unions, are by no means necessarily the answer, though Slate would never let this thought get through. A major purpose of such unions is to restrict availability of jobs, for the benefit of union members. Big unions, with their influence in state and federal government, can write this objective into law, often in less-than obvious ways, such as laws designed to keep young people out of the labor market (which also, incidentally, keeps them from growing up). Further, where the union rank and file marches in lockstep at the orders of their leaders, union bosses become able to make “sweetheart” deals with employers, for the benefit of boss and employer, at the cost of the rank and file. Some unions have been careful to provide value added in the form of union training and apprenticeship programs, but a union big enough to dictate to employers is free to add to the risks and costs of employment without providing any value in return, and many unions have done so, sometimes destroying whole industries or driving them elsewhere.

    Moving to another aspect of the problem, one major factor in depressing wages is accidents of visibility. Employees who face other companies can be visible and sought-after, and their work acknowledged by trade media, general media, and government (and HR and headhunters). But government and media (and headhunters) may not even know of the existence of people with other skill sets whose work does not give them exposure. In large corporations, even the upper management, especially if it is “professional management,” may hardly know of their existence, and are apt to grossly undervalue them. To some extent, freelancing or contracting, despite their other drawbacks, can offer a means of exposure that helps employees escape this trap. (This worked very well for me in the 80s and 90s, when I could have had my choice of staff jobs, but long refused any gig longer than two weeks.)

    To some extent, I’m sure that employers deliberately try to keep their most valuable people hidden where this is possible, while not worrying about the visibility of those they can easily replace. Thus for example, in media industries, graphic designers and account people get lots of attention from media, trade literature, and management in related business. Indeed, they’re the spokespeople from whom media and government—and HR–get their information. But when they leave a job, their absence is hardly noticed (with the exception of a few really good account people), and a replacement, no different from the previous staffer, steps in the next day from the long line outside the door. Meanwhile, the loss of a key technical production person may be a lasting setback for the organization.

    Finally, a salute to Paul C for noting that we should be talking about “contractors” in this context, rather than “consultants.” This confusion is not solely due to employment contractors trying to put a loftier and more positive face on what they’re providing. It’s also one of the unrealities imposed on the job market by the tax system, which tries to make everyone an employee working solely under direct orders from an employer, because it’s simpler–for the IRS, not for the employer or employee–to collect taxes that way. Calling them consultants can help make the case that they are working independently–a case that often corresponds with reality, since temp employees may indeed have expertise, including the ability to direct their own work, that an employer is quite incapable of providing on its own. By current custom, if the contracted worker is, say, a lawyer, he’s a legitimate consultant presumed to provide his own direction, but not if he does some less exalted, less acknowledged, variety of work. That doesn’t correspond to reality, especially now that companies are being run by professional managers whose only “skill” is delegating work involving real skills which they are quite incapable of directing.

    Another factor in the “contractor”/”consultant” confusion is the gig employees themselves. When you’re out of work, it’s very tempting to call yourself a consultant, since this implies that you’re in business even if you don’t have a job to go to on that particular day. Such a pretense may even be necessary when presenting yourself to prospective employers whose hiring staff doesn’t acknowledge the realities of a job market that can leave desirable employees out of work.

  14. Nick,

    Very interesting and different topic this week!

    Great insights by a lot of angry and disgusted workers. Some have stated they are older, and the rules have changed; and not to their liking. (Count me in that demographic.) But notice that they’ve adapted and are finding jobs, despite the challenges. Well done. I’d be interested in hearing from those who are mid-career; their experiences and their thoughts for the future. I think early career folks are adapting easier because they don’t have historical expectations. And of course your pay is lower when you start. But would love to hear their expectations and plans for adapting for the next forty years.

    I’d like to push this up one more level, and John Demma has already touched on the topic. I believe we are seeing the limits of Capitalism as a system. There are historical limits to how much power, money, influence, etc. a handful of individuals can hold before riots in the street break out. We are also seeing the glimmer of a barter or non-monetary economy which is another path. As others have stated, Business has neutered Unions, which leaves the average American few options to have their voice heard.

    I think at this point in the discussion, we agree that aggregate employers in any form, especially from outside the country, aren’t doing anyone good. Many, many examples cited, and they all match my experience and those of my peers. I’m an optimist, but it’s difficult to see things changing (at least for the better) without some form of economic pressure. If there is a widespread discrediting of job boards, and genuine attempts to hire good candidates comes into vogue, we might see positive changes.

    Thanks to everyone for sharing their thoughts and experiences, and for some really insightful comments.

  15. I’m glad to have read all the comments here. I had no idea how prevalent staffing agencies were outside my industry (advertising). All I knew was that in the last 10 years of so they’ve grown like weeds. Many company I try to approach as a freelancer, I’m told that the creative department is being staffed by one of these places. Are the internal recruiters too lazy to find their own talent? They have unemployed creatives banging down their doors and they have to engage a staffing agency? It’s infuriating that some staffing agency wants to hire me out at my day rate or more, and and then pay me 50% or less than I could make without them. I thought I’d finally capitulate in order to get into one specific company that I wanted to work for, but the staffing recruiter wouldn’t agree to speak over the phone first (I had some basic questions like how much I could expect to be paid and what kind of positions were open). I canceled the interview, thinking I’d reschedule, and then she scolded me that I was only allowed one cancelation. Go jump in a lake. I will sell matches on the street corner before I sign up with a staffing agency.

    • I was watching the Sunday Morning news magazine produced by a local TV station (thanks to DVR) and yet again saw some person making her mark who “was formerly in the corporate world”. Now she has a couple hundred square feet of space and an increasing customer base.

      I guess if nothing else being in the corporate world teaches you how not to do it.

    • KR, you’re finding out as I did is that HR internal recruiters are unfortunately for us, too few, unmotivated, too junior/inexperienced, or corporately restricted to find their own people. Advertising changed fairly recently but it’s far easier for the monster holding companies to outsource to Indian agencies and use a VMO to manage the staff.

      We are all temps now.

  16. Take heart all of you white guys with a good haircut. Seems the nut job in SoCal who chained his 13 kids to their beds and starved them is an employee of Northrup as an “engineer”. Maybe a Dutch boy haircut will help your cause as being competent has lost its attraction by “legit” employers.

    • Hi Marilyn, small correction here. Formerly with Northrop Grumman and Lockheed Martin. Must have been all that code….

      • Correction–you’re right. New article out was that he got a job with Northrop Grumman and was set to move them all to Oklahoma–thus the 17 year old broke out before it happened.

  17. I was having a conversation with a neighbor who is a local county judge who had come up through the legal ranks the hard way. He made an interesting point about career advice he gave to his five children. Simply stated it was, never invest your career efforts in a position than can be outsourced to a third world country. The more I think about it, the more I see the value of this advice. The situation described in the Slate article is the logical end point of free trade with regards to the transfer of jobs from first world to third world countries. It will only stop when wages equilibrate.

    • His advice isn’t good enough, because though a job may not be able to be outsourced, third world workers are being insourced. Not only has insourcing not let up, it’s accelerated.

  18. Monopsony

    I have two problems with the word monopsony:
    1. I can’t say the word out loud without hurting myself
    2. As much as I would like to make up my own word, I think the word the authors of the paper being discussed are looking for is totalitarianism

    It’s been 55 years since I’ve read 1984, but a couple of movies over the years have reminded me of some of the core principles.

    One movie was The Book Thief (2013).

    In this story, the father of the young heroine is unable to find employment because he refused to join the Nazi Party.

    No party membership, no job.

    When I got tossed out of my Very Nice Long Time Job circa 2010, I quickly fell into clinical depression because I had envisioned exactly what we are discussing now. I fully believed that I would never find employment again without some kind of party membership. Of course, I had no idea of what party I would have to join. I let my shrink treat me for “normal” depression due to job loss. I never mentioned my true fears to my shrink because I didn’t want him to think that I was really crazy and have me tossed into a psychiatric hospital.

    Having been a huge fan of Lucas’s THX 1138 (1971), after losing my long-term job, I fully appreciated the scene where a guy was sitting in a glass booth while the crowds rushed by. One hand pressed against the glass, looking like a forlorn puppy in the window, the sign on his booth said, simply, “Unassigned.”

    Now let’s go back to my favorite bookstore, circa 1970.

    Being young and unmarried at that time, most of my extra dollars would go for books, with at least a third of the books being science fiction. I cannot remember the author or title, but one book in the revolving paperback rack caught my attention. The artwork and the premise are still firm in my mind.

    The artwork was of super-futuristic metropolises, dotting the vista, the one in the forefront with many aircraft about it. The premise was that the United States of America had dissolved, and that the country had been replaced by city-states, all at continual war with each other.

    Having about 20 pounds of books under my arm already, I didn’t think that I could squeeze one more book into that week’s budget.

    And because the author was unknown to me, I thought that the premise was too far-fetched to be explored by a newbie. I never looked for that book again.

    Guess I should have.


    I’ve done something on this thread that I’ve never had to do in 20 years of publishing Ask The Headhunter: Edit posts to remove angry, gratuitous use of offensive terms, ethnic slurs, and attacks against ethnic and national groups, and political attacks. That includes X-ing out words, deleting paragraphs and entire posts.

    This forum is not for attacking people and groups one doesn’t like, and it never will be. Strong opinions are different from disparaging attacks.

    How do you or I know the difference? Marcus Aurelius said something we all have always understood in our hearts: “Look things in the face and know them for what they are.” It’s that easy, it’s that clear.

    Thanks to all who post respectfully. Posts that aren’t respectful will be removed, one warning issued, and the poster will be banned.

    Interesting ideas clothed in bad behavior are always naked and stand alone.

    I got to believing I’d never have to say or do this. I’m dismayed.

    – Nick

    • Thanks for your efforts in clean up. It’s been tough wading through venting posts, on other sites.

  20. The monopsonist view is narrow and probably pretty wrong by most accounts. Perhaps true in a region where there is one large employer who employs basically everybody but where is that true in this country? Even in a small town there are likely to be multiple employers requiring the same or similar skills. It’s even less true when you account that most people do not work in jobs so specialized or are so married to a specific job that they would not or could not change jobs if necessary. For example, your potential Selma delivery driver might find other companies that need a driver, a school that needs a bus driver, etc. or that person could likely work for similar pay in retail, warehouse, construction, etc.

    But the small town labor market has little to no impact on larger cities where wages are also depressed.

    The greater problem is that the economy has been structured over the past several decades to make workers vulnerable so they do not have effective tools to negotiate up wages to levels in line with productivity and profits. E.g. suppressing union participation, outsourcing (both domestically and internationally), hiring part time employees to fill full time jobs, increased use of temp and contract labor, consolidation of industries, etc.

  21. Here’s another gambit (swindle?) that Fortune 100 companies and their outsourced recruiters are trying to keep pay low: pay for part of a week, but the JD is written for FTE and the responsibilities can’t be accomplished part-time. Either low hours/low pay or very low hours/higher pay. Latest examples: Pfizer had a comms manager for a specialized non-pharma program, onsite, 35 hours a week, $40 per hour. J&J is putting out a 15 hour/week long term contract for an internal comms manager with heavy writing and deliverables at a far higher rate, but way down in terms of hours. As a marketer and communicator, I can assess the way the job is lined out. It’s impossible to do with meetings and ONLY work 15 hours a week. So what they get is FREE WORK offsite.