Example, you have labor force of 10 people. All jobs have mandatory stay of 2 years. 6 companies have an opening each that pays 1 mil/year. The openings are staggered so 3 jobs are available on odd and 3 on even years (and last 2 years). 50 jobs are posted with a salary of 100k/year. These salaries represent value produced to company and cannot be raised. All applicants have equal chance to get a job they apply to.
The minmax solution is to not take a 100k job because of opportunity cost (you won’t get a chance at the 1 mil job next year). So you have both 40% unemployment and massive labor shortage (56 openings but only 10 viable candidates).
You might as well make an argument based on the premise that pigs can fly. Contracts like that are basically unheard of in the US, outside of top executives and a few rare industries like professional sports.
>These salaries represent value produced to company and cannot be raised.
This means the company needs one employee at minimum. If it loses that employee it will not produce value. Therefore it is in the best interest of the company to hire two people, the first position is compensated as much as possible, the second is compensated one dollar more than the lowest competing position that got filled.
Thus, the top offer becomes $899999 and the lowest offer becomes $100001. However, there is a problem. We have 12 positions but only 10 people. The companies will have to outbid each other on the lowest position until all salaries hit market rate, which is the average of the top ten original positions (6 times 1 mill 4 times 100k) that market rate is $640k for everyone.
The 100k jobs never get filled and they shouldn't get filled ever, because a lack of customer demand will never be a shortage. (the assumption in your scenario is that training costs exceed $1000k and therefore it never makes sense to increase the labor pool)
The mistake you made in your scenario is that you did not mention price controls enforced by the government. In a free market companies will negotiate and adjust their salary. The lack of training is acceptable for a thought experiment though.
Likewise, if "market rate" is above "value produced by the employee" it doesn't make any sense to pay that much.
There are lots of companies out there that need some tech and some programming, but when the company revenue is only a few million that has to span a few score employees, and costs... its not possible to pay the small handful of devs six figures and keep everything in the black.
Likewise, there are new grads that are scoffing at working for 2x per capita income for the area in the midwest when that's less than 100k (and then complaining that they can't find any jobs).
There is a mismatch of expectations - possibly on both sides of the table.
It also means that somewhere out there is a business that can actually produce enough value to pay market rate and you should work for that company instead.
> In common use, the term "shortage" may refer to a situation where most people are unable to find a desired good at an affordable price, especially where supply problems have increased the price. "Market clearing" happens when all buyers and sellers willing to transact at the prevailing price are able to find partners. There are almost always willing buyers at a lower-than-market-clearing price; the narrower technical definition doesn't consider failure to serve this demand as a "shortage", even if it would be described that way in a social or political context (which the simple model of supply and demand does not attempt to encompass).
