Imagine you are a tech company that makes widgets. You've gotten a factory in China to make the parts for the widgets for a tiny amount. You've got laborers working for minimum wage assembling the widgets. You've got salespeople making minimum wage selling the widgets.
How can you possibly make the widgets cheaper?
Perhaps the most obvious way is to pay the people doing R&D on the widgets minimum wage. Think about it: the R&D folks are still demanding $50-60k or more for their time. That's really expensive compared to a minimum wage assembler who makes $16k.
But you can't just cut these people's pay by 75%, because they'd leave and go work somewhere else, obviously! There's lots of high paying jobs for widget R&D specialists!
Unless, of course:
1) Foreign nations over-produce huge quantities of just-good-enough R&D laborers to drive down the cost, coupled with a strong domestic immigration policy to get those low-cost R&D laborers to the U.S. to replace their high-priced counterparts.
2) Domestic colleges create a surplus of scientists and engineers to make the R&D labor supply pool crowded, and drive down wages. This is coupled with an aggressive domestic student loan policy to maximize the number of humans economically (but not necessarily otherwise) qualified to go to college.
Look folks, there's no law requiring companies to pay engineers and scientists lots of money. And if demand were really high for these people, then wages would be going up. Instead, engineering salaries have been decreasing since the 1990's (Scroll down to Figure R. Engineering salaries are up 25% since 1998, while over that time inflation is up roughly 43%).
Which indicates to me that the labor pool is moving from demand driven to supply driven. Now, I'd never try to pitch this as a giant global program to drive down wages...because that's never happened before. No one has ever done that. Right?
I've written more on the STEM "shortage" here and here.
_
How can you possibly make the widgets cheaper?
Perhaps the most obvious way is to pay the people doing R&D on the widgets minimum wage. Think about it: the R&D folks are still demanding $50-60k or more for their time. That's really expensive compared to a minimum wage assembler who makes $16k.
But you can't just cut these people's pay by 75%, because they'd leave and go work somewhere else, obviously! There's lots of high paying jobs for widget R&D specialists!
Unless, of course:
1) Foreign nations over-produce huge quantities of just-good-enough R&D laborers to drive down the cost, coupled with a strong domestic immigration policy to get those low-cost R&D laborers to the U.S. to replace their high-priced counterparts.
2) Domestic colleges create a surplus of scientists and engineers to make the R&D labor supply pool crowded, and drive down wages. This is coupled with an aggressive domestic student loan policy to maximize the number of humans economically (but not necessarily otherwise) qualified to go to college.
Look folks, there's no law requiring companies to pay engineers and scientists lots of money. And if demand were really high for these people, then wages would be going up. Instead, engineering salaries have been decreasing since the 1990's (Scroll down to Figure R. Engineering salaries are up 25% since 1998, while over that time inflation is up roughly 43%).
Which indicates to me that the labor pool is moving from demand driven to supply driven. Now, I'd never try to pitch this as a giant global program to drive down wages...because that's never happened before. No one has ever done that. Right?
I've written more on the STEM "shortage" here and here.
_
