<p>There are a number of professions, jobs, etc where it is a lot cheaper to replace older, more expensive employees with cheaper, younger ones. For a number of such jobs the income curve is pretty flat anyways, as those staying in the field simply do not get many high paying opportunities. The pay is often pretty good at the onset, because there is some shortage of “fresh blood” which these firms seek, but even that plateau gets expensive in time, and the companies want to lower it with younger workers.</p>
<p>This is not unusual. In a lot of low paying positions, the same occurs. When new management comes into some these situation, one of the first changes they often make is to fire most of the employees who have been around and getting paid more than what the market generally offers and replacing with cheaper help. Yes, the company suffers in quality,problems, but the bottom line is that it’s still worth it which is why it is done over and over again. Yes, the store operates better, for example, with 20 year veterans at the cash register, for example, but cutting the cost by certain amount is just too enticing. </p>
<p>Friends of ours work in Pharm, and though they are all in positions where layoffs are unlikely, and are known in their expertise and experience to the point that they can and have gotten lateral jobs, have been telling us for years now that, this has been happening. They are asked to cut their staff, even as they are hiring new employees which leads a inefficiency in the jobs at hand and higher training costs. They’ve been told, that the cost savings is worth it. The numbers are that much better to operate that way. </p>
<p>So that is what’s happening and it’s not just in Pharm. Those who get seniority raises and do not have a clear added value for their pay, if they are not Big names, have big contacts, rainmakers, they are highly likely to be chopped for someone else who costs the company less, and the efficiency lost is considered a worthwhile cost of doing business, still with an overall increase in the bottom line. Unless that is adversely affected, that’s the way it would work. These companies would understandably love to see more STEM grad so that they can then reduce entry level pay as the competition for these new employees so educated. Right now that there aren’t so many grads in the field keeps those entry level positions still high. But in a few years if the employee isn’t something special, he’ll be replaced by another new grad at a lower pay than the guy who’s been there a while.</p>