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Stefan_Schubert comments on On the concept of "talent-constrained" organizations - Less Wrong
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Comments (28)
I think there is a lot to #5. This is, as you hint at, connected with egalitarianism. There is a natural tendency to want to pay people who do the same job roughly the same and only under strong market pressure will the income of the talented person match the value he provides to the employer. In the academia, where I work, it is blatantly obvious that some people contribute vastly more than others but still they are paid roughly as much. Only in the more competitive American system are the wage spreads starting to reflect differences in output. No doubt is this a development that will continue.
#5 + hypocrisy. The employers may be saying "we are offering huge money and the talented people still aren't coming" when their offer actually may not seem like "huge money" to the people who have the necessary skills.
Some changes in life are not reversible. Imagine that you are a talented person and you already have a decent job and make decent money. Would you change it for another job just because it offers you 10% more? I probably wouldn't, because you never know, the new job may actually suck, and returning to the old place may no longer be an option. But for twice the salary, I would take the risk. But the employer might think that's too much, and that their +10% option already is very generous. (In such case maybe the solution would be to offer 10% more, plus a one-time huge extra bonus for staying in the new job for 6 months.)
Another possibility, a bit similar to #3, but not exactly the same -- the talented people may be motivated by other things than money; and maybe they already have all the money they need (assuming they aren't effective altruists). They now optimize for other things. To attract them, you would have to offer some of those other things, e.g. shorter working hours, more freedom, etc.
In other words, the labour market resembles an oligopsony much more than one would guess by looking at the total number of employers alone.
I think it's a point about risk aversion, not about the structure of the labour market.
I think there are multiple causes.
People are risk-averse. But even if they weren't, changes usually have transaction costs. For example if people have to move from one city to another, that costs something. Also it means that their partner could have to change their job to stay together.
If you want to make a lot of money, you have to specialize in something. That naturally reduces the number of potential employers. You can switch do doing something different, but again, there are transaction costs.
All true. And, again, all of that doesn't have much to do with whether the labour market is an oligopsony.
Seems to me that with enough specialization there are few buyers and few sellers. Which of these numbers is smaller probably depends on specific specialization, and may change over time.