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 jobs aren’t just hazardous and labor intensive with long, strange hours (something that a lot of people think they can do but find it they can’t maintain it long term) they’re extremely technically demanding too. So they aren’t just looking for somebody that can swing a hammer 60 hrs a week in the elements, they’re looking for a guy (with no secondary education) that can swing a hammer for 30 hours and then do a shit load of algebra, geometry and chemistry in his head for the other 30
I suspect the “able” pool is not as deep as you might think.
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Another big factor is that most of the Jobs you are referring to are unionized so the Union is able to keep salaries high.
At the heart of your question is that you perceive there to be an oversupply of labor, when there really isn’t one. Your perception of oversupply comes from anecdotal evidence “I know a lot of people who want these jobs, and people apply for years.” Of course you know a lot people trying to get into that industry, you’re in an industry town.
But if the potential labor pool is national population, ages 18-35 without a college degree, how many of those people are willing to move to your town to join this industry? Very few. Of those, how many are going to be good at the work? Even fewer. Of those who move to the area, and end up being good workers, how many are going to stay in the industry for 3 or more years? Even fewer. So from the perspective of the company, on a national scale, it is really hard to find people willing and able to do this work. At a local scale, it’s not, but the local talent pool isn’t big enough.
To attract people and keep people they can either make the work environment more comfortable (not gonna happen), make it more fulfilling (people work for nonprofits for lower pay because they believe in the mission), or to they can raise the pay.
To;dr: supply and demand is working, the supply of labor is low.
Beyond what others have pointed out, you’re also assuming everyone applying is qualified. The actual supply of qualified labor is much smaller than the overall pool of applicants.
Same as you would pay more for a fancier restaurant, a nicer house, or the option to cancel, the company may pay premium for a candidate with experience, with aspiration, or a pool of candidates to choose from.
O&G companies make a lot of money per worker. They also need competent hard workers and have generally bad conditions.
In order to hire and retain talent that is competent, hard working, and willing to work in bad conditions, they will pay a good amount. They also compete with other O&G for pay for similarly experienced employees.
They probably figure paying 1 dude 100k is better than 2 dudes paid 60k, or whatever the case is a as well.
There’s one other external factor driving high salaries/wages. Oil and gas can be dirty, noisy, and smelly industries to have near your town. If they pay above market wages, the locals will be more willing to tolerate them (or at least less likely to fight them).
If they paid lower rates more in line with market forces, there’s a higher likelihood of the locals not being supportive of their industry.
It’s sometimes called the “social license” to operate. It’s important to have all your permits, leases, etc. in place to run a mine or an oil operation. It’s also better for you if the local people want you around. Put simply, the locals can either be calling their representatives to ask for smoother regulatory processes or for more strict requirements.
A good example in my area is meat packing. These are brutal and dangerous jobs. No one WANTS to gut chickens and move beef carcasses all day in a refrigerated room. These used to be great salaries and benefits to these jobs. My grandfather was a union meat inspector for 45 years and raised a family on the single income.
The unions were busted in the 90s and now the jobs are low paying and grueling. They bring in migrant workers now to do a lot of the heavy and unpleasant stuff, as locals just won’t do the work at the pay they advertise.
So, wages are artificially depressed due to worker visa bullshit.
One factor is if these jobs are hourly, or salary.
After an employee works 40 hours in a week, an employer has to pay over time pay.
For some of them, a large portion of their pay come from overtime.
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