Laying Low Leads To Low-Balling

By Ted Dieck | Recruiter’s View - Business Climate - Employment Scene - Reviewed | Aug 11, 2010

The Wall Street Journal doesn’t understand why companies can’t hire people for minimal pay. I’ve said before, “Tough Times” is an excuse that has outlived its justification. Wage pressures are headed our way.

This morning, I saw my first reference to a Wall Street Journal article that you have probably seen by now:

Some Firms Struggle To Hire Despite High Unemployment

By afternoon, I saw an interview about it. Then I saw another write-up. Coverage is racing across the web.

I Disagree

For once, maybe I can be concise. Maybe I can also be optimistic.

This is hogwash. I’m just thankful the unemployed are pushing back. I’m excited about what this means.

The normal responses I run into: Confusion that the unemployed wouldn’t be desperate enough to welcome shabby treatment. And I also hear recommendations for additional training for these tragically incompetent people.

Here’s my take: The government has trashed our economy in so many ways I don’t even want to get into it. Every time an employer gets headed in the right direction, there’s some politician actively looking to upset an entire industry.

Companies, quite reasonably, fear what our government may do to them next. Employers, as a group, avoid hiring under any circumstances. They are laying off as many people as possible, automating processes to make up the difference, and putting record profits in their bank accounts. At last report, U.S. nonfinancial companies collectively hold over $1.8 trillion in cash and liquid assets.

Rather than adding staff, it’s much more profitable to work existing employees to their limit and even risk missing production goals. Again and again, I hear companies reporting lower sales with higher overall profits.

Instead of hiring full time, employers first opt for contract and temp workers. As a rule, everybody gets low-balled. The cover story is, “Times are tough. We all have to make sacrifices.”

The reality is, times WERE tough, and your sacrifice is my good fortune.


Here’s where low-balling starts to go amuck. In my August 9 Candidate Advisory blog, I talked about some weird behavior in the wonderful world of interviewing. Here’s part of what I said…

“Last week, I heard about an Indian candidate who had finished a high end IT contract. While with the U.S. recruiter, he had gotten his green card, and then he became a U.S. citizen. With his contract complete, this in-demand specialist returned to India, where the pay is better.”

Here’s a link to that article:

Crazy Talk

WSJ Examples

Let’s take a look at some of the detail in the Wall Street Journal article. In one Illinois company, it just seems impossible to hire machinists for $13/hour. Isn’t that a mystery?

In another example, Emirates airline is mystified that Americans wouldn’t want to relocate to Dubai and work for $30,000. The airline representative thought Americans had simply lost their sense of adventure.

Payroll Pressure Predictions

Now quickly flip back to my June 11 blog in the Employers Intelligence section:

Payroll Pressure

Here’s what we said in June, encouraging employers to pay their employees properly…

“The rising Chinese middle class will no longer tolerate toiling like peasants. Not only is their pay going up, but the value of their currency is rising. Further, this culture likes to save. They exchange their currency for gold. Which is also increasing in value.

“Meanwhile, Americans are struggling with higher taxes, potentially lower pay, and inevitable inflation.

“Better buy your iPhone quick, while you can still afford one.

Short term savings from low-balling candidates may backfire.

“U.S. employees who feel unappreciated will not hesitate to move on. Current employees may well follow.

Other, better solutions may develop later this year.”

A Final Point

There are suggestions that unemployed people are acting irrationally. The most common statements intimate that lazy people won’t go back to work while they’re still on the dole.

I need to address that. Being something of an expert on unemployed people, I’d like to point out what is obvious to those on the ropes:

Anyone with unemployment benefits will lose them if they get a job. Wait… wait… wait, let me finish. And if that job turns out to be a complete fraud, it doesn’t matter. You’re on your own.

So, let’s review the options many people are faced with. They can stay put with a steady employment check. Or they can run up their own costs as they go back to work for a huge cut in pay, perhaps to be laid off with no prayer of paying their bills.

Last in, first out, you know.

Recruiter’s View

Costs are sneaking up, most recently for food. Taxes and healthcare costs are poised to skyrocket. There is no way the currently employed are going to be satisfied with their existing pay. They won’t be able to pay their bills.

In the same way that companies are stashing all the cash they can, Americans are saving at unusually high rates. There is very little trust or optimism in our country.

Low-balling candidates on the grounds that they should be grateful for work is a gross misunderstanding of conditions. These people are not in a negotiable situation.

I see massive churning coming to the U.S. workforce. People will change jobs, scrambling to break even. It has already started.

Companies known for low-balling will be hit the hardest, as existing employees leave and nobody applies to replace them.

Employers, even in these times, I encourage you to offer the most stable employment environment you can.