ELI5, what exactly does “competitive wages/pay” mean?

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ELI5, what exactly does “competitive wages/pay” mean?

In: Economics

Let’s say I’m a worker looking for a job. There are two companies that want to hire me for identical positions. So obviously I’m going to go with the job that pays better. Those companies would then compete with each other by offering better wages/ employment packages. It’s the same thing as supply and demand, just reversed. I’m the product, going to the highest bidder.

The alternative is companies offering a set wage, then just waiting until someone is willing to take it. And that works when there are more people than jobs. But when there are more jobs than people, companies need to try harder to bring them on board. Or just complain about a “worker shortage.”

Answer: it means pay that is in the same ballpark as pay for similar jobs/companies.

For instance if a normal pay is $15/hour for a restaurant job and your restaurant is offering $9/hour, your pay is considered uncompetitive.

Not much. It’s marketing BS, they all say that. It’s supposed to attract you by saying that for the same job, you will have similar or slightly better pay/benefits than if you worked for another company. As if you weren’t going to compare the wages between your potential offers anyway.

Honestly, it probably means ever so sightly more than minimum wage. Jobs with reasonable salaries/hourly wage and good benefits don’t usually have to market themselves as such.

Supposedly, it means the salary is typical for the type of job and location. It means that they pay a similar amount to what other companies pay, for the same work in the same location.

In reality, it often means the salary is quite low. Companies might say the pay is “competitive” when they don’t want you to know how much it is, because you might not bother applying if you knew what they paid. Their plan is that you apply without knowing the pay, and by the time you find out the salary (often only when they actually offer you the job), you’ll just take it even if it’s not a good amount, because you’ve already invested so much time and effort into the interview process.

Popular opinion is that if the pay is good, the company will have no problem telling you what it is, in the job advert.