The Economics of the Job Market
>> Saturday, January 22, 2011
The Supply and Demand of the Job MarketOwning an executive search firm for the past few years, I have seen that compensation packages for any professional at any level follows the basic economic principals - the inverse relationship between supply and demand.
However, in this scenario, supply must be defined. The supply of candidates is the actual number of people whom you are seriously competing with when sending in your resume and actively pursuing a particular job or group of similar jobs.
These actual contenders are intelligent, proven professionals that are being actively recruited by multiple companies for similar roles within a similar industry. They have good, stable resumes and worked at good companies where they were successful and highly respected.
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For instance, somebody who is on the job market and has been working at big banks is not considered "Supply" if you are in software and wish to work for a start-up.
Who Are the Most Sought After Candidates?
The candidates who are consistently learning, energetic and have true career aspirations are the highest paid professionals as the supply of them is quite low while the demand for people who don't need to be trained for months is exceedingly high.
Sometimes, demand gets too high because companies always want what other companies want. It's an insecure, indirect professional reference check of sorts.
What Are The Most Effective Ways To Increase Your Demand and Compensation?
Increasing your demand on the job market to get a higher offer at your next company, there are certain implementations that work and some that do not.
Getting An MBA? More likely than not, getting a MBA will not increase your value or worth. It is what you learn at the university that is helpful. The degree can not be used to justify higher pay. Employers decide what you are worth.
I have seen MBAs from the best universities not even get past the resume screening process. Taking the highest offer because it's the highest offer is one of the worst things one can do to their future demand.
It is a surefire way to set yourself up to become bored with a job and a company, thus leaving and creating a bad mark on your resume.
Instead of giving a few years of your life to the company with the highest offer, consider the firm, their products and your interest in the people whom you will call your new team members.
If you like your job, you're eventually going to make the money that you forfeited by declining the leading offer. Happy employees make money because they work hard and keep learning.
Unchallenging and repetitive work, regardless of the monetary sum wired to your bank account bi-weekly, is painful.
Can You Kill Your Demand During Negotiations?
The answer is absolutely. Future companies will base your demand or what you are worth via what former companies paid you in the past.
"I was making $110,000, but I'm willing to go lower for the right job."
This is a big mistake as employers see this as a cry for help. It appears to be a willingness to settle because you just want a job. Who ever wanted to actively date the person sitting on the bleachers at each high school dance that you attended.
Companies want employees who are desired by other companies. To give another analogy: would you buy from a salesman who dropped the price of a product before you even said a word?
A high base salary at your previous job is impressive. For the time being, use those numbers to your advantage.
After the interviewing process, let the company come in with a lower offer or go higher because they budgeted correctly.
Your actions and thoughts when seeking a new job, should revolve around the aforementioned principals.
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