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."

Comments

Whodathunkit?

[RightwingNutjob]

Capitalism and the free market actually work.

Re:Whodathunkit?

[SQLGuru]

I'm much more in favor of them opening satellite offices in locales where there are skilled workers in dead-end jobs than claiming a shortage of skilled workers and shipping them overseas. We (those in the industry) have been saying for a while that there isn't a skill shortage but corporations have used it as a way to cut costs.....in reality, moving to cheaper regions of the country instead of Silicon Valley or New York City mean you can pay less and still be a top paying employer.....plus, the rent/property costs are much lower, too. You can probably even get some nice incentives from the local government because they see it as an opportunity for growth.

Re:Whodathunkit?

[alvinrod]

Well there is a skill shortage for the rates that companies would like to pay. However, from a market perspective the best way to get more skilled employees is to increase wages as it will increase the number of talented people who could work as programmers but make other career choices because they do not find the salary good enough to dissuade them from making other career choices. Trying to drive down wages is just going to result in more people who could be talent programmers choosing other career paths for much the same reasons.

Re:Whodathunkit?

[knightghost]

Satellite offices aren't new, they are something that have been being shut down for the last 10-15 years as employers pull everyone into their hives. I'm watching one do it now in my city while another bought out a local company and is using it to triple employees and expand.

I've been to a couple dozen cities with better average talent than SV and willing to work for half the salary. Perfect english, same or similar time zones, and a short flight away if you need them in person.

Re:Whodathunkit?

[ShanghaiBill]

Well there is a skill shortage for the rates that companies would like to pay.

My company has a hard time finding people before we even discuss salary. Once we find someone qualified, the salary offered is almost never a problem. I have seen zero evidence that there is a vast pool of qualified techs sitting on the sidelines, waiting for salaries to go up.

the number of talented people who could work as programmers but make other career choices because they do not find the salary good enough

We pay fresh grads with a BS in CS an average of $90k to start. What other career choice offers a starting salary anywhere near that for a 4 year degree?

Re:Whodathunkit?

[alvinrod]

I have seen zero evidence that there is a vast pool of qualified techs sitting on the sidelines, waiting for salaries to go up.

It's not that people are sitting on the sidelines who are already in tech, it's that there are people who are capable of doing programming jobs but are choosing to go into a different career path, perhaps electrical engineering, physics, math, or plenty of other disciplines. You can't argue that if the salary for tech jobs rose $20k across the board that none of those young people would reconsider and choose to study computer science instead.

We pay fresh grads with a BS in CS an average of $90k to start.

That sounds really, really good if your company is in the midwest, but absolute shit if you're in silicon valley. It's not always just a question of money either. People place a certain amount of value on where a job enables them to live, what kind of hours they are expected to work, or even the nature of the work. For example, I could make a lot more money if I were working in the medical field, but I wouldn't do that work for the prevailing wage because I really don't want to deal with sick people all day long. There are other people who find a lot of fulfillment in jobs that work with people despite low pay. I can't imagine there are many social workers who are doing it to get rich.

I suspect that there are a sizable number of programmers that are in the profession not because they have a strong passion for it, but precisely because the field generally does pay better. There's probably a pretty wide pool of people that can do code-monkey work, but there are a lot of programming jobs that require strong problem solving abilities and that kind of work may be outside of the capabilities of a large part of the labor pool and there are probably many who are capable, but have no interest in that kind of work. The problem is that employers want more programmers still and that means even higher wages are necessary to sway groups of people who were not previously swayed by the allure of better pay. I don't see the H1B program expanding much under Trump, so there isn't much ability to continue to hold down wages through cheaper foreign labor. I think enough companies have been burned by outsourcing that they're more willing to increase local wages than offshore anything that isn't viewed as low level work.

I am surprised it's young people

[Baron_Yam]

> 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

Honestly, my reluctance to relocate (which I've overcome a couple of times) is more related to how far I'd have to move from my ageing parents or how far I'd be pulling my kids from their social network.

When I was younger (and my parents were too!) and unmarried, I frequently considered moving elsewhere in the Empire for a good job. Now though? These roots aren't pulling up again until my parents have died and my kids have moved out, at a minimum.

There's no real shortage of nice places to live, but there's a massive shortage of places to live near my folks and my kids' friends.

Re:I am surprised it's young people

[Proudrooster]

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.

Re: Promise vacation time...

[reanjr]

I work about 36-40 hours a week, and have no problem taking time off. Sounds like you all are doing something very wrong.

It beats offshoring

[ErichTheRed]

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.

Re:Promise vacation time...

[mjwx]

I negotiated three weeks off per year, non-contiguous. Then as soon as I turned 30, I was laid off permanently, and never worked again. I miss food.

I work in a country that protects the rights of its workers. I have 20 weeks holiday as standard. My employer gives me an additional 5 as part of my salary package, I can purchase another 5 by sacrificing my salary and there are 8 bank holidays (public holidays). I'm 35 and still gainfully employed, many of my colleagues are even older. I also earn more than my US colleagues.

I also miss food, but that's because I live in England and the closest place for a decent meal is across the channel.

Re:Promise vacation time...

[mjwx]

I negotiated three weeks off per year, non-contiguous. Then as soon as I turned 30, I was laid off permanently, and never worked again. I miss food.

I work in a country that protects the rights of its workers. I have 20 days holiday as standard. My employer gives me an additional 5 as part of my salary package, I can purchase another 5 by sacrificing my salary and there are 8 bank holidays (public holidays). I'm 35 and still gainfully employed, many of my colleagues are even older. I also earn more than my US colleagues. I also miss food, but that's because I live in England and the closest place for a decent meal is across the channel.

Sigh, that's meant to be 20 days (4 working weeks).