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The New Corporate Recruitment Pool: Workers In Dead-End Jobs (msn.com)
New submitter cdreimer writes: According a report from The Wall Street Journal (Warning: source may be paywalled, alternative source), corporations looking to hire new employees are opening offices in cities with high concentration of workers in dead-end jobs who are reluctant to locate but are cheaper to hire than competing locally in tight labor markets. From the report: "Pressed for workers, a New Jersey-based software company went hunting for a U.S. city with a surplus of talented employees stuck in dead-end jobs. Brian Brown, chief operating officer at AvePoint, Inc., struck gold in Richmond. Despite the city's low unemployment rate, the company had no trouble filling 70 jobs there, some at 20% below what it paid in New Jersey. New hires, meanwhile, got more interesting work and healthy raises. Irvine, Calif.-based mortgage lender Network Capital Funding Corp. opened an office in Miami to scoop up an attractive subset of college graduates -- those who settled for tolerable jobs in exchange for living in a city they loved. 'They were not in real careers,' said Tri Nguyen, Network Capital chief executive. He now plans a similar expansion in Philadelphia. Americans have traditionally moved to find jobs. But with a growing reluctance by workers to relocate, some companies have decided to move closer to potential hires. Firms are expanding to cities with a bounty of underemployed, retrieving men and women from freelance gigs, manual labor and part-time jobs with duties that, one worker said, required only a heartbeat to perform. With the national jobless rate near a 16-year low, these pockets of underemployment are a wellspring for companies that recognize most new hires already have jobs but can be poached with better pay and room for advancement. That's preferable to competing for higher-priced workers at home in a tight labor market."
Capitalism and the free market actually work.
Yes, relocation from aging parents just adds stress. Furthermore, unless the new company is paying relocation costs and selling your house for you, renegotiating your low mortgage rate then relocation can be expensive, painful, and exhausting.
I did a relocation and between 6% sales commission on the old house, closing costs, moving costs, and costs to fix up the new house it all adds up really quickly to the tune of more than you are going to be getting in terms of a raise over the course of the year.
I like this novel approach. If you can't move the people to the jobs, move the jobs to the people. If only there were some sort of technologies to make satellite offices a possibility in this modern age. I am looking at you Silicon Valley and your $5,000/month single-bedroom, rat infested, apartment over a Chinese restaurant.
I'd be happy if more companies went this route than playing the H-1B visa scheme or sending every scrap of work to Tata or Infosys because their competitors are doing it. And this is coming from someone who lives near a high cost city. HR departments, don't do anything their competitors don't do, and they will only listen to management consultants as a source of new ideas. It explains why nearly every company suddenly jumped on the outsourcing bandwagon at the same time, adopted the Google open office stuff, and enacted all sorts of other management fads. Maybe we have a mole inside of McKinsey who's starting to plant employee-friendly ideas in client's heads!
Satellite offices in cheaper parts of the country aren't new. Even IBM (before they went nuts and moved everyone to India) and other deep-pocketed companies had them back in the day, and that was when it was harder to stay in touch. The only difference was that the office was in Pittsburgh and not Pune, or Moline and not Mumbai. I remember reading something some time back that mentioned IBM would strategically locate big engineering facilities just far enough away from large business centers to be a short flight or medium length drive. They'd import the workers or hire from local university talent pools, and the execs would be mollified because they still felt like they had control. IBM used to have big facilities in Burlington, VT and Rochester, MN that fit that description perfectly. They probably didn't have to pay anything near what they'd have to pay for people in Westchester or Dutchess County, NY.
Spreading out the wealth of a big company over a bigger area is a good thing. Silicon Valley/SF and California in general are out of control in terms of housing prices and cost of living. Metro New York (where I live) isn't far behind at all. If enough employees could be convinced to move to a low cost city, sell the house and save 2/3 of its value while buying a mansion with the other 1/3, that would definitely lower housing prices. You can get over $1M for a total dump in SV, over $400K in outer NYC suburbs and way more when you get closer to the city. That's lots of peoples' retirement fallback plan from what I can tell.
I just think it's funny that companies are "rediscovering" that it's cheaper to employ people who don't have million-dollar houses to maintain. Expectations do need to come down on both sides. Companies have to be willing to invest in people, and employees can't demand unreasonable salaries or else they're just going to continue with the offshoring. The market can't sustain conditions where everyone who can fog a mirror and write Rust or Node.js gets over $200K, nor can it maintain a world with only super-rich executives and massive unemployment in every other class.