Category Archives: Employment

The Web and the Decline of the Middle Man

At one time, it was pretty standard for a real estate agent to be involved with every sale of real property in the US.  When the market boomed a few years back, more people than ever jumped in to grab their share of this easy money.  You can’t sell your house, building or lot without an agent and when it sells, that agent is entitled to 6-10% of the sale price.  How did this system evolve?  Is selling your property really that complicated as to require a consultant who ends up “earning” 10k, 20k, 50k or more.  How much could this person actually be worth when to become an agent all that is required is reading one little book or taking a short course over a few weekends and then passing a basic competency exam?  Apparently the public has finally given these questions the attention they deserve and the market has changed.  For decades, the real estate business has thrived based on it’s control of information.  While most of the actual complexity of handling a real estate transaction is dealt with by a lawyer, the brokers and agents have maintained their position in this deal by the guarding their information.  In every state, an agency would maintain a book containing property listings, the MLS.  This book was only available to licensed brokers.  Furthermore, rules and regulations were lobbied in to place by this and other agent supported associations to secure their role in property transactions with the argument that they somehow protected the consumer.  While not all of reasons agents and their strict code of ethics were imposed upon this market were bad, the price paid for such services and protection was clearly outlandish.  Now, access to lists of property for sale are easy to come by, thanks to the internet.  So is information on how to manage a real estate transaction.  The real estate industry now finds itself on shaky ground and commissions have fallen drastically.

The same has happened in the car business.  Web sites such as truecar are working to provide consumers with the information they need to make better buying choices.  The car salesman used to play an important role in the typical new or used car purchase.  Now, anyone with the internet can walk in to this type of transaction knowing almost everything needed to make a good choice without the help of a highly paid car consultant.

Quite a few other industries are experiencing similar evolutions.  Almost any job with the title of agent, salesman or broker is either going away or adapting to much higher expectations and lower margins.  Some are going away all together.  When was the last time you called your stock broker?  Personally I think this is great.  Not only am I fond of economic efficiency and perfecting markets, but in times like these, it is becoming critical for the nations economic survival.

In all of this, one would expect the business of staffing, recruitment, job placement to be dwindling to nothing.  Of all of the “agent” style businesses, this is arguably the most questionable in terms of value to the consumer.  How does someone secure an income of 100k, 200k or more simply by running a few searches and making a few calls?  Why has internet availability of information on the job market not totally eradicated this line of work?  Clearly this industry is hanging on some how as year after year tech search firms, staffing firms and the like report 10s of millions in revenue with no end in site.  The current job market is arguably in worse shape than the housing market.  Why does this tax on employment still exist at all?  Are recruiters providing value that other agents and brokers in other industries were not?  Either the answer to this question is yes, or something else, something far less palatable, far less redeeming, far less defendable is happening.

The Rich Recruiter? Things Have Gone Terribly Wrong!

I just ran across this book out on Amazon Unlimited.

The Rich Recruiter

When you check it out, you will also find lots of other books on how to get rich in the placement business.  In particular, this occupation has risen up take its share of the money being thrown around in the information technology field.  What money?  Exactly.  Back in the late nineties, lots of things emerged from the shortage of IT guys most companies were facing.  The web was taking off, the Y2K disaster was looming and the nasdaq was soaring.  There just were not enough computer geeks to go around.  In response, lots of barriers to foreign workers were brought down, contracting rates went through the roof and the staffing business grew in to a monster.  Of course, like all bubbles, this one burst.  Nothing much came of Y2K, all of the workers brought in to fill IT positions stayed on to depress contracting rates and we have more people out there than ever looking to get rich off  of the poor, socially inept, cubical dwelling computer guy.  IT wages are not nearly what they were 15 years ago though.  In 1998, it was nothing for a database programmer to make $150/hr.  Just for locating one, a recruiter could often charge another 25-50$ on top of that.  Well, times have changed, yet the recruiter has stayed on.  It’s a lot harder to get rich in the placement game than it used to be, but, as this book describes, if you are persistent in your efforts to wedge yourself in between employers and employees, you can still extract quite a hefty economic inefficiency for yourself in today’s market.  As a developer, you are likely familiar with how this business effects our business.  Say you are finishing up a contract and would like another one.  It would seem reasonable that you would put your resume out for potential employers to see.  You might even look for a job listing and submit your paper via email.  But wait…the listings you see are not for jobs, well, at least not directly.  They are recruiters.  They may have a job in mind, or they may just be trying to build up their list of contacts.  They live and die by this database of people that can actually do work.  Matching on keywords that they really do not understand or even much care to, they laboriously filter and sort resumes against listings looking for opportunities.  When a match is found, they call the developer, call the employer, arrange a meeting and then, if all goes well and employment results, they sit back and collect 20k, 30k, maybe even 50k each year that the employment lasts.  Yes, you can still get rich in the recruitment game.  Very rich in fact.  While not as lucrative as in the past, the big players still report 10’s of millions in annual income, all based on matching people to jobs.  My question is, given that wages are no longer inflated and the market is no longer experiencing a shortage of workers, do we still need to be bringing in new people from other countries to fill our tech jobs?  Marco Rubio thinks so.  He believes the number of h1visas approved each year should be increased 4 times to somewhere around 240 thousand a year.  What will this do to the wages of American citizens who work in IT?  Will it make them go up?  Seriously, Rubio is running for president.  Who is he planning on working for?  Why would I vote for anyone who wants to use the Presidency to depress American wages further?  And while information technology wages are 1/2 to 1/3 of their past glory, have staffing company margins declined likewise?  Even if the answer is yes, should there even be any margin in the first place?  Recently, a job for a MongoDB dev/admin position opened up some where in Georgia.  Within 2 days, I had been contacted by no less than 10 different recruiters, all with very personal form letters, none residing in Georgia themselves (mostly New Jersey residents), asking me if I would be interested in moving 1000 miles to take the position.  Funny thing is, very often the same thing happens when a .NET position opens up in St. Louis.  I am not a .NET programmer.  These guys aren’t even reading the resumes any more.   It is a numbers game for them and that’s about it.  It is actually kindof insulting.  You can press the spam button in gmail but does this really do anything?   For fun, call them all back.  One will insist that he can offer no more than 60/hr while another will offer 70 right off the bat.  You are not negotiating with a potential employer, you are negotiating with a person who has imposed himself between you and the employer and he/she is deciding how much they want to make next year off of your labor.  Whether it be 10k, 20k or 30k, I believe it is 100% too much.  What does that come out to by the time you have moved in to your Atlanta based cubicle?  5 thousand dollars a phone call?  100 bucks per spoken word?  Are you really so frightened by the job search process that you are willing to give up half your pay next year to have someone hold your hand?  Is getting a job in a field you know really such a revolutionary idea that you should pay someone 10’s of thousands of dollars for suggesting it?  No, No, NO!  If I want to move to Georgia to work on a Mongo database, I will look for the employer myself and split the difference with them.  In today’s economy, that is how we should all do things.  After all, isn’t this the way other jobs work?  So how do we fix this?  You really should not be able to Get Rich recruiting in today’s economy.  Actually, the solution is simple.  Managers, do your jobs.  When you need an employee, post the position.  Add the line “Please No Recruiters, Only Applicants” to the bottom of your listing.  When responding to ads for employment, do your best to only respond to those from real employers.  Keep your spam folder empty and don’t make the mistake of posting your resume out there on the boards.  If you do, add the same type of line to it.  And be adamant about this policy.  You do not, i repeat :), You do not need to pay someone 30k a year for the opportunity to make 100k a year doing your job.  Job boards, clean up your act too.  I know you get paid for listings, but isn’t the quality of the listing part of your value proposition?

Anyone else out there tired of giving away half their pay check?  Employers, doesn’t it make you ill having to pay 2 people for every 1 programmer you hire?  It is high time we put an end to all of this.