January 2, 2019
When the global recession hit back in 2008/2009, many economists thought that the job market would recover rapidly, as it had done in previous crises. But because of the nature of the financial crisis and deep structural issues in the banking sector, the recovery in the job market took much longer than many expected - almost a decade.
Today, though, the sector is finally hotting up. For the first time since the recession, the low unemployment rate is forcing firms to bid up the wages of workers to attract them and stave off competition from other firms. The technology sector, in particular, is seeing massive growth and huge demand for people with the right skills and talents. Anybody with experience in data science, artificial intelligence, or cloud-management, can expect to do very well indeed.
Right now, the world’s tech giants are battling it out to attract the best talent in the industry. Some of the biggest companies in the space, like Amazon and Oracle, are offering salaries paying between $300,000 and $1 million a year for people with data and cloud skills, nearly double what was on offer five years ago in the space. What’s more, the battle to hire these engineers and specialists is much higher in certain metro areas near company headquarters, like San Francisco, Portland, and Seattle - all global tech hubs.
Although some top tech companies can afford to pay astronomical wages, there’s a growing movement away from paying the big bucks and towards hiring skilled people as and when they are needed. More and more companies are starting to realize that they don’t have to hire a person full-time to extract benefits from them: they can use their talents “on-demand” when they’re required, and then let them sell their skills to other companies while not in use.
With wages as high as they are, it shouldn’t come as any surprise that we see this kind of labor market innovation. Firms simply don’t want to have to pay individuals up to a million dollars a year - they’d rather pay a fee when they do require their specialist skills, and then save money the rest of the time.
Although the story might sound bleak for mid-size and small firms, changes in the labor market haven’t been entirely unfavorable. In fact, with the growth of the freelance and gig economies, many employers are finding that they can get great rates even for work that would usually cost a lot of money. Platforms, like Field Engineer, for instance, bring both freelancers and employers together, allowing firms to select among a range of potential candidates to get the person they need.
What’s great about this digital labor marketplace is that it forces the market to equilibrate: freelancers are incentivized to undercut one another to get business, and prices come down. Not only that, but firms don’t have to go to the administrative and legal hassle of employing an individual full-time: they just pay for the labor they need, and then the freelancer goes on their merry way.
It’s fair to say that if you decide to attract talent the same way as big tech does - with huge salaries - then you’re probably going to lose. Average wages at Facebook are $117,000. At Apple, it’s over $120,000, and these figures do not include bonuses. If they did, then salaries would be more like $250,000.
When you consider that the internet of things, artificial intelligence, and the cloud are likely to create more than 4.5 million new jobs over the next five years, it quickly becomes clear that the problem of fierce competition in the tech sector is not going to go away. You need to choose another way to compete.
Smart companies now realize that they can only compete with big tech by using a range of other strategies. Offering flexible working and a “hassle-free” environment - one in which workers are not expected to respond to emails 24/7 - appears to be gaining a lot of traction. But the most important innovation is the on-demand worker platform provided by Field Engineer which allows firms to use certain specialist contractors only when they need them, rather like they would an accountant. Hiring in this manner helps to keep costs down and for a firm to stay competitive in what is fast becoming a difficult labor market for employers.
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