I live near an area where there is a large prevalence oil and gas refineries and O&G-adjacent industries. The men and women who keep these plants running work a grueling schedule and are often involved in fairly risky activities due to the nature of the stuff they are dealing with (flammable or toxic materials). Despite this, tons of locals flock to these jobs and there there is a huge surplus of available people who are seeking these jobs. By huge, I mean people testify to applying to these jobs for literal years before they ever get an opportunity (many don’t without connection). Entry level typically requires experience or an Associates degree. I should note that experience is helpful but not critical, the job is not easy but is not rocket science either. These jobs can generally get you to 6 figures in the first year, and most top out around 150K in a MCOL area. The benefits are generally excellent, some even have pensions. Yes, these companies are extremely profitable and I’ve already mentioned that the work is hazardous and has odd hours, but with the massive surplus of willing and able labor, why do these companies still pay so highly?
In: Economics
As others have mentioned, “supply of applicants” and “supply of *suitable* applicants” can be two *very* different numbers.
From experience, a lot of people think “I have no education and I don’t mind getting dirty, sure, I’ll apply to this dirty job for six figures” and then once they find out that it’s high-stress, very dangerous, and you’re in a remote location six months at a time, they back out. Or, more likely, they are ill-suited for stressful, dangerous jobs that require isolation, but there’s no good way to find that out from a walk-in or resume.
Secondly, a lot of jobs have a *wild* training ramp. Even if they do have a good number of suitable candidates, they may want to lock in a higher salary, since the cost of training someone new is far higher than the additional salary they pay everyone–plus, there’s a premium for having a consistent crew.
Some places don’t care about high turnover. For some places it’s critical that they *don’t*. Pay is then adjusted accordingly.
So this *is* actually supply and demand working. Supply, in the sense that the pool of applicants probably isn’t as big as you expect, and demand, in that they want more than just a warm body, they’ll pay a premium for a warm body that’s gonna stick around.
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