Sometimes small and medium businesses simply don't have the money to pay the big bucks that we think we are worth.
I've worked with a number of companies turning over in the low £millions, and it's very rare that the founder is taking lots of money off the table whilst low balling the staff on salaries.
These businesses simply don't have the margins and the runways to let salaries get out of hand.
As most of the economy is made up of these kinds of businesses, many of which have IT as the cost centre providing some non-remarkable CRUD development, this is probably a big factor that holds down average salaries.
Turn it around a little and image you are the small-medium sized business owner. You need a person, but can can only sensibly offer a salary of 75% of the market rate.
Are you best just not to offer the job for fear of exploiting someone or looking like a cheapskate, or do you put it out there and hope to find someone who is happy to work for that price?
[I'm a developer who agrees with the OP so I'm playing devils advocate slightly, but there are two sides to this.]
can can only sensibly offer a salary of 75% of the market rate
I'd happily consider working for 75% of market rate, if I could work a 60% week. Add to that the ability to work remotely and things can start to look really enticing. If on the other hand you expect someone to work 100%, plus unpaid over time, plus be in the office every morning by 8 am, plus being on call, plus an absolute minimum of vacation days, and still only want to pay them 75%, then hiring will be almost impossible.
If you really can only afford 75% of market rate, you can probably still get good people if you're willing to be flexible on all the other non-salary aspects of the job.
Oh how I wish this would be considered more! I'd be willing to take quite a beating on the rate for even a 4 day work week (4 8 hour days, not dressed up 40 hour weeks).
>and still only want to pay them 75%, then hiring will be almost impossible.
Oh hiring will still be possible, you're just going to get really crap people.
Everyone is probably better off if the contracted out to freelancers in those cases. Hrmm... probably any way. It's harder to find people who can get up to speed on the business specifics quickly, but... it's also easier to augment on an as-needed basis. It requires companies to be better/faster at documenting their processes/operations, or at least being able to communicate them to a new person faster, and this part people aren't very good at. Therefore it takes a long time to get contractors up to speed, and therefore it's viewed as excessive, vs. just hiring someone. Problem is, that hired someone goes through the same process. It's just that they don't do that as often, so the problem isn't as apparent (or seems 'normal' for employees to have to endure). I'm simplifying, but, I think more companies would do better outsourcing more of their stuff to freelancers. But, to outweigh the negatives, it requires more discipline on a company's part, and most don't have it (or even recognize they need it).
This is spot on. Most businesses, the Fortune 5000 if you will, are not operating with hefty profit margins and most as you say, have people who are not taking lots of money off the table.
you need something you can't 'sensibly' afford, what you think are your options ? You have to settle for something less which is in your price range or if you are lucky you can get 25% discount and get real thing either/or it is mutual agreement so if it works for both of you ...
I've worked with a number of companies turning over in the low £millions, and it's very rare that the founder is taking lots of money off the table whilst low balling the staff on salaries.
These businesses simply don't have the margins and the runways to let salaries get out of hand.
As most of the economy is made up of these kinds of businesses, many of which have IT as the cost centre providing some non-remarkable CRUD development, this is probably a big factor that holds down average salaries.
Turn it around a little and image you are the small-medium sized business owner. You need a person, but can can only sensibly offer a salary of 75% of the market rate.
Are you best just not to offer the job for fear of exploiting someone or looking like a cheapskate, or do you put it out there and hope to find someone who is happy to work for that price?
[I'm a developer who agrees with the OP so I'm playing devils advocate slightly, but there are two sides to this.]