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Comment by bayesian_horse | Hacker News Reader

"Higher Wages" is almost never the answer for finding more candidates.

The only way higher wages lead to more candidates is by taking them away from other companies or other industries, and sometimes from other countries. So that is sometimes an option for certain employers, but not for an entire industry. It's a myth that there is a pool of workers who is "underemployed" because of low wages.

Also: In a free market, if companies can earn more profits by hiring more people by offering higher wages, they will do so. But increasing wages also reduces profit, and there just may not be enough room in the margins.

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> The only way higher wages lead to more candidates is by taking them away from other companies or other industries, and sometimes from other countries. So that is sometimes an option for certain employers, but not for an entire industry. It's a myth that there is a pool of workers who is "underemployed" because of low wages.

But that's only true in the short term.

> In a free market, if companies can earn more profits by hiring more people by offering higher wages, they will do so.

But we're not in a truly free market, are we? And we've already seen huge tech companies band together to keep profits artificially low. And that's just the one's that got caught.

> But increasing wages also reduces profit, and there just may not be enough room in the margins.

Corporate profits are at an all time high, and have been for quite some time. We're paying C-level executives insane amounts of money. Profit margins are surely not the issue here.

How does competition for workers decrease over time through higher wages? If you are implying that more high school graduates would choose a particular industry or profession because of a wage hike, it's still a situation of taking them away from other options.

The market is free enough. There seems to be some collusion, direct or indirect. That would change my proposition though, because companies cooperate because defecting (by increasing wages) doesn't benefit. If one company increases wages, others have to follow. Good for workers, but that's not magically creating any new workers either.

It's not about "corporate profits" but about the marginal profit of an additional worker gained through higher wage offers. On the contrary, at a certain point workers decrease work hours when they get more pay.

> by taking them away from other companies or other industries

> So that is sometimes an option for certain employers, but not for an entire industry.

It is not so simple. Higher wages drives automation which then reduces the need for labor.

For example in my home country it is still common to have a maid because it’s so cheap - but because of this there is much less household automation.

On the other hand in the US with my robo-vacuum, dishwasher, microwave, and weekly meal delivery it takes me under 1 hour a week to do the cooking and cleaning.

The problem with that argument, as with many others, is that it is focusing on a small part of the entire system, while ignoring the reactions of other parts.

In this case the driving factor for automation is the same as the driving factor for higher wages: The prospect of higher profits through more work getting done. A wage increase is only possible when it increases profits over the alternative, including automation. Automation will only increase if that is more profitable than the alternative, including higher automation.

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