> the price that employers are paying new employees is literally the market rate, seeing as it's the rate in the literal market.

I want to drill this into anyone that throws the word "below market" or "above market" around.

If a company pays below-market, it won't be able to hire anyone. Either the role will remain unfilled, or the employer will have to compromise on experience.

If someone is claiming to be paid below-market but the company can hire their replacement, then they're not being truthful.

Hiring the replacement ≠ finding the same or better replacement.

Will you be able to find someone in this economy? Sure

Could you fill the shoes? Much harder. Especially in the age of bootcamps, AI to complete exercises, and what have you where people went into IT for the money and not for the love of the craft, tinkering and learning.

So this is not an oxymoron: you can have 200 applicants and not a single good one to replace someone with them.

No, we are not talking about a commodity market with a clear exchange. If an employee is bad at a negotiation or doesn't look around then they may accept a lower salary than another market participant would have offered and if neither side looks around, and is willing to pay some costs of a change then they are making a salary that is different than the current market rate.

Only in a market with perfect information. With imperfect information, the market rate is an estimate of the expected or typical rate for a similar good. Because everyone has access to a different subset of the information, everyone's estimate is different, and companies often end up paying above or below the consensus rate.

I'm not an economist but that implies the market maintains some kind of optimal equilibrium price. The reality probably is very noisy like with everything else. Plus there's asymmetric information on both sides meaning people don't get what they think they do.

Poeple are not fungible, who’s to say that the individual replacing them is of equal value.