The haystack of unqualified applicants (people lacking the skills needed for the job, people who can't even program, people who aren't a good cultural fit, people who don't take pride in their work, etc). You'd be surprised at the crazy shit that comes in via the jobs@mycompany address, or the sheer amount of obviously poorly matched resumes that come in via recruiting companies. It's enough to make you tear your hair out in frustration, and that's just at the initial resume scan phase! The general scarcity of engineers only exacerbates the problem by lowering the needle ratio.

It's hard to grok how difficult and complex hiring good people is until you find yourself on the hiring side of the equation. The leaked Valve manual does offer some insight, but even that's barely scratching the surface.

I've got two things to say on this.

1) I'm not that surprised. For example, I know that half the recruiters who call me are asking about positions for which I'm blatantly unqualified and which simply don't appeal to me. When I've carried through to an interview, this often becomes abundantly clear to both sides.

2) If you're only even interviewing such a tiny fraction of the many, many applicants you hear from, you simply don't get to claim there's an engineer shortage. There's a shortage of engineers you like.

If you only hire the top 1% of applicants, you will never hire more than 1% of the applicant pool... no matter how large it is. You'll just get the vast majority of the engineering population pissed-off at your hiring practices because you reject 99 resumes for every 1 you offer to while complaining of a shortage.