Skills Gap? No, Wage Gap

I keep hearing about the “Skills gap.” There is no skills gap. There is a gap between what employers want to pay and what people are willing to work for. I read an article this morning that prompted this post: Talk of a skills gap in the labor market is ‘an incredible cop out’

Let me phrase this a little more elegantly:

There is a gap of cheap and skilled labor. 

If you are willing to pay for training, there are many people who would gladly work for you. If you are willing to pay a reasonable wage for people who already have the skills, there are many people who would gladly work for you. (This is one of the reasons older people have a tough time finding a job. Employers want their experience at a new person’s wage. I wrote about ageism already.)

If you want to hire people will scarce skills and pay them an insufficient wage, you might think there is a skills “gap.” It’s not a skills gap. It’s wage gap.

What is wrong with hiring for—dare I say it—cultural fit, where people can be a part of the team you want them to contribute to, and then training them.

Let me walk through a scenario I recently encountered at a client. The client wants to hire a developer with 10-12 years of experience in embedded products where they use agile approaches, and not pay more than $100k. That’s a tight wage for that much experience. The cilent can find people with embedded experience. Everyone and their brother thinks they are agile, so there are plenty of those people. However, when the client interviews candidates at that wage level, the client realizes the people don’t really have either experience.

Why? Because the people interviewing don’t have 10-12 years of experience. At that salary, he’s seeing people with much less embedded experience and much less agile experience.

What should the client do?

First, understand why there is a salary cap when the job seems to demand a higher salary. I often discover the higher managers want to hire someone cheaper because they don’t see the Cost of Delay when that person can’t deliver fast enough.

I suggested these alternatives:

  • Hire the great embedded people (at a reasonable level of experience), and train the entire team in agile. Use a buddy for the initial week or two weeks. (They work in flow.) In the training, work on their work, so they can practice working together. Encourage pairing, swarming, and mobbing, not just in the workshop, but for all the work.
  • Hire someone who has great depth of knowledge and experience in agile approaches, and teach them the ins and outs of embedded development with a buddy. I would encourage pairing, swarming, and mobbing for all the work. Maybe even do an in-house workshop or retrospective where people can discuss the risks they have seen and addressed in previous projects.
  • If the team needs one more person, can one person take on more responsibility for the team’s risks and backfill their position? I often discover that people are more capable and ready earlier than their managers believe they are.

Now that you see these three options, I bet you can see other options for yourself.

This client walked through the numbers. If he increased the wage, and paid another $20k for a one-week workshop where people worked together on the product, he thought he might be able to integrate someone with the embedded but not agile skills in a month. (One or two weeks to buddy/mob, one week of training, another week of buddy/mobbing.) The entire team would work together for a month. That would bring the Cost of Delay down for their project, and they could expect to see millions of revenue in three months, rather than nine months. Yes, by hiring the right person and providing training, the manager thought they could see revenue much faster.

The training and salary was a small percentage of anticipated revenue. I can’t report back yet because the project is still ongoing. However, they are going to a pilot with the embedded software six months early. (!!)

Consider what the right person in the role can provide your organization. Maybe think about cost of delay instead of wage cost and you might see more options. I have yet to see a skills gap. I almost always see a wage gap.

If you do think you see a skills gap, what skills are you willing to train, to get the “perfect” person and team?

5 Replies to “Skills Gap? No, Wage Gap”

  1. thank you – so much !
    Really, we’ve been subjected to the ‘skills gap’ fabulists for so long, I am made happy every time the story is pushed back.

    I’ve worked in IT for over thirty years, during all of which time we’ve been bludgeoned with the skills shortage/skills gap narrative. It has always been both false and true: true, there is a shortage of Java skills when defined as: you can’t hire someone with five years of Java experience in 1999 (when the only person who qualifies is James Gosling, the inventor of Java); false, there is no shortage of Java skills because human beings trained in software can learn a new language quite easily.

    Wages are the other argument here. Any time there is a story about a ‘skills gap’ where the wages in that field are not going up, then there cannot be an actual shortage.

    See too
    http://redmonk.com/sogrady/2011/09/13/war-for-talent/

  2. Here in the UK the media frenzy around the “skills crisis” has intensified in recent years. But a few searches in itjobswatch.co.uk strongly suggest that the trend is for developer pay – salaries and contract rates – to have fallen by 25% of the last decade in real terms. Those two things just don’t stack up. How can demand be rising while pay is falling?

    The other big paradox I see is just how little money government and employers are actually investing in education and training. For training teachers to teach the national curriculum in CS, funding worked out at about the price of an Egg McMuffin per teacher. Now we’re seeing that student enrolment for CS is falling, largely due there just not being enough teachers who can teach it. If the skills gap really was as chronic as they claimed, why so little £ being invested in addressing it?

    Friends have suggested that this is about employers waking up to the fact that offshoring doesn’t usually work, and looking for ways to force down pay at home. They want to flood the market with programming newbies who think they’re software developers. And, hey, one coder’s as good as any other, right? 😉 A lethal cocktail of greed, short-termism and Dunning-Kruger.

    1. Jason, you have articulated exactly what I see. Offshoring/outsourcing used to be a way to bring down wage costs but not necessarily project cost because of duration. I wrote about that in Wage Cost and Project Labor Cost.

      Now, companies are seeing the costs of delay, although they are not talking about it in those terms.

      What I don’t understand is this: training a team for a few days to a week is cheap, compared to a lack of knowledge. Why are companies not training people?

      I will say, that back when I was a young manager, I did not understand the value of training. I “let” people go to conferences. (I look back on me then and I sigh.) Later, at a different company, my manager brought a variety of training in, at least once every six months. I learned from that.

      We do not have a war for talent, or a skills gap. We have too many short-sighted managers who do not realize the value of training a team of people. A gazillion years ago when I was a young software developer, my manager was incented on how much training everyone got. I was expected to take classes that my company would pay for. Sometime in the 80s (??), training budgets came under HR and got cut as soon as there was not enough money. That turned into the mess we have now.

      We have a cheap-talent war, a race to the bottom. We do not have a crisis. Oh, and the reason we have so few people able to teach CS at the university level is because too many universities believe they must pay administrators more than professors. Don’t get me started on that!

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