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
These are the types of jobs that get tons of applicants *because* of the salary. They want a large pool of candidates to be able to select the best ones, and when hired to retain their employees, as the cost of them rotating through employees going in and out may be substantial, and there may be seasonality in their jobs, which means they need consistency as they can’t have people coming and going during peak season, or it could take months to years to train employees well enough to be very productive. There can be a large gap, in both time and efficiency, between starting, trained, and actually good or great at your job.
This pool also gives them the ability to ‘plus up’ more employees as needed without much effort. You find a lot of these types of positions in physically demanding intense industries, often in more rural areas, where acquiring talent can be complicated. Especially in things like oil & gas, and other natural resource extraction, like mining.
It seems like this might be a moral issue. You should Pay people taking high risk well.
I would also note, this job is high in demand because it pays well for the education level.
If they didn’t pay well, no one would want it.
If they could offer a lower salary and still get the same quality of candidates, they would. They’ve done the math and figured out what it costs to attract candidates with the desired skills. Plenty of industries have tried to get away with lower compensation and discovered they can’t get any good people. Then they walk around say shit like “nobody wants to work anymore”.
Oil and gas goes boom and bust.
Basically the job is hard work from what I’ve seen 60 hour weeks usually in nowheresville and the money is good for a while then it disappears. Also it’s a dangerous job and oftentimes can be physically strenuous.
How many oil and gas jobs disappeared when oil went negative in 2020?
>with the massive surplus of willing and able labor,
The “able” part is the question. Just because there are many people applying doesn’t mean that there’s a surplus of qualified, reliable, and experienced workers.
It’s the same in tech, even though there’s a ton of applicants, there’s still a shortage of high quality devs.
Plus, if you drop the salary for oil rig work too much, that applicant pool will quickly shrink. Moreover, you may lose your best workers. The smaller pool may skew more towards the lower quality applicants.
Nobody would be willing to work those jobs if they didn’t pay those salaries. Those jobs have so many applicants BECAUSE of the high salaries, not in spite of them
In the case of employment, “supply” is not the total supply of all candidates but the supply of *suitable* candidates; *that* is what the employer is looking to procure. From that point-of-view, the actual supply can be fairly low even when there are thousands of applicants.
I used to work at a huge tech company who bragged that their pass rate was lower than Harvard; though this was facetious because a significant amount of applicants for any given position were entirely unsuitable for it. Thousands of ill-suited candidates would “have a go” whenever any role came up.
OG are skilled jobs.
The company spends a lot of time and money on training people how to operate their very expensive machinery and any mistakes/interruption in the supply chain can cost them millions per day. New people are prone to mistakes and the stakes are high.
Two factors:
1) Offering high salaries means you often get the “best of the bunch” applying. The people who are both willing AND ABLE to handle the dangerous and difficult jobs. This gives a better pool to select from. Most of the people in industry have a good sense what it takes.
2) Retention and training. Quite often companies look to the future (sometimes they don’t, another story). Paying 100 people high entry salaries today, gives them the ability to find the 10 who will be really good 3 years from now, then it helps them find that 1 in a 100 who is really good. And that 1 in 10,000 who will make significant change to the company far in the future. This is a price paid ahead of time to guarantee that pipeline.
Those companies are very profitable, so there is a high demand for labor. That labor is hard to do, so there is a limited supply of it. So the price (salary) goes up.
This doesn’t contradict the theory of supply and demand, it confirms it.
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