Re:Unemployment in the U.S. Is Falling, So Why Isn’t Pay Ris...
by losteric on Saturday May 20, 2017 @05:45PM
(#14384519)
You are saying shortages do not exist in a perfect market. I agree with that, no persuasion required.
However, I am saying that shortages exist because our market is imperfect. Given the axioms of a perfect market, ours is absurdly inefficient:
* Homogeneous supply of products: No. there are huge disparities in skill and personalities. Evaluating quality is very challenging.
* Perfect Information: No(ish). glassdoor/blind are improving transparency but pricing / performance information is still suppressed.
* Low barriers of entry: No. People cannot enter this market without large personal investments (which many lack).
* Minimal externalities: No, all of my posts here were focused on externalities... especially ones that raise the barrier of entry.
* Zero transaction costs: No, it's expensive to change jobs and businesses expend lots of money searching for quality candidates.
* Rational profit-motivated sellers: No, candidates do not seek to maximize profit. Less profitable offers are accepted based on location, ethics, social status, peer network, business domain, tools, or even just not caring to negotiate.
* Rational buyers: ehhh ... employers have rational intent, but do make unprofitable decisions due to low and inconsistent quality (less of a concern for those that pay the highest rates).
As I described earlier, these imperfections harm related systems and markets. My suggested path back to an ideal market was public education and infrastructure investments.
However, I am saying that shortages exist because our market is imperfect. Given the axioms of a perfect market, ours is absurdly inefficient:
* Homogeneous supply of products: No. there are huge disparities in skill and personalities. Evaluating quality is very challenging.
* Perfect Information: No(ish). glassdoor/blind are improving transparency but pricing / performance information is still suppressed.
* Low barriers of entry: No. People cannot enter this market without large personal investments (which many lack).
* Minimal externalities: No, all of my posts here were focused on externalities... especially ones that raise the barrier of entry.
* Zero transaction costs: No, it's expensive to change jobs and businesses expend lots of money searching for quality candidates.
* Rational profit-motivated sellers: No, candidates do not seek to maximize profit. Less profitable offers are accepted based on location, ethics, social status, peer network, business domain, tools, or even just not caring to negotiate.
* Rational buyers: ehhh ... employers have rational intent, but do make unprofitable decisions due to low and inconsistent quality (less of a concern for those that pay the highest rates).
As I described earlier, these imperfections harm related systems and markets. My suggested path back to an ideal market was public education and infrastructure investments.