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by mcculley 1052 days ago
There are specific labor categories that cannot be filled just by paying more. They require more training and experience. So I don’t believe your assertion about “EVER”.

I have been running a tugboat company for a few years now and there is definitely a labor shortage. Licensed tugboat captains are retiring/dying faster than new licenses are being granted. The very fastest we could theoretically turn an unlicensed deckhand into a licensed captain is three years of sea time. We are experiencing a shortage of labor.

14 comments

> There are specific labor categories that cannot be filled just by paying more. They require more training and experience.

This is not exactly true. It's not at all true when talking about training, because paying people is what motivates them to take the risk of paying for their own training (and if you're training people yourself, you don't require trained people.) Experience is created by paying people enough not to leave the profession.

> Licensed tugboat captains are retiring/dying faster than new licenses are being granted.

Why weren't people trying to become tugboat captains for the past X years? Is it because the job paid too much?

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edit: I think you could say this is a collective action problem; nobody is willing to raise pay because it will make them uncompetitive against those who don't, but if they all raised pay they would all make more money and be more secure in the future. It's the kind of thing where an active government would step in and manage hiring and/or dictate pay. Instead, since our politicians are only concerned with what individuals are willing to pay them to do, they get lobbied to weaken labor regulations and immigration laws.

There are lots of unemployed black people desperate for work if one wants to fill up tugboats and construction sites. Just tell them where to show up.

> It's the kind of thing where an active government would step in and manage hiring and/or dictate pay.

That's where things start to go wrong - because it may be that some industry is in decline because it's being eclipsed by something else entirely, and artificially propping up that industry causes a market distortion that results in lower efficiency. The free market can still sort it out - ultimately as supply goes down, either prices will rise, or we'll find that there is insufficient demand because buyers far away in the supply chain are finding another, more efficient way.

I agree though that "labour shortage" is partly a misnomer. It's more accurately described as a market labour upwards price adjustment in progress!

It is both. The pay has increased. But that doesn't make licenses magically appear now. They still require training and seatime.
Obviously, there are strategies to handle the shortage in the long term.

Right now, there is a shortage. If there is a shortage of hammers, one cannot just claim that the shortage does not exist because we can eventually make more hammers.

> Why weren't people trying to become tugboat captains for the past X years? Is it because the job paid too much?

The recent rollout of USCG Subchapter M has created significant demand while not increasing the available supply. I agree that industry and government should have realized this would happen.

I think there is a semantic game being played because increased prices depresses demand. So in some views a shortage is almost always a fiction.

Think of it this way, gold has a high price, so I only use it in valuable ways, I don’t gold plate my house. If gold was significantly cheaper maybe I would, is there a shortage? Clearly there is a shortage at the price I would pay to gold plate my house. But I am fine using it for jewelry, no shortage at that price.

Your hammer example is the same, there are insufficient hammers at a certain price. Raising price will decrease demand and eliminate the shortage. This increase makes its way through the supply chain increasing prices along the way until demand goes down.

Of course this semantic argument is pointless because what people really want is access to the products they are accustomed to at a price they are accustomed to.

At this point, there are insufficient captains/hammers at any price. Lots of projects are blocked on lack of captains. I am selling tugboats because we cannot crew them. This is a direct result of USCG Subchapter M.

edit to add: This whole thread now feels like defense of the Efficient Market Hypothesis. We have an entire industry facing a stricter regulatory framework that increased demand for captains while fewer humans are being born in the U.S. This is a shortage.

I get that one can just increase wages and immediately get more cashiers or burger flippers. Other problems have more complicated dependencies.

edit more to add: I realize now I did not fully appreciating your argument, which is that there is never a shortage of anything?

How much can I expect to earn with you after I successfully spend 3 years training to be a tugboat captain? How much would I make in the meantime while I was an unlicensed deckhand? Asking very seriously.
I don’t know what you would make as a captain three years from now. Note that it would very likely take longer for one to become a captain. Three years is the fastest theoretically, which would require continuous time at sea.

Right now, captains with Master of Towing endorsement are getting $800-$1,200 per day, depending on the region and type of work.

Deckhands on a track to become captains are getting $300-$500 per day. I would pay more for the right candidates.

> At this point, there are insufficient captains/hammers at any price.

I bet you could bring captains out of retirement at the eight price. You're just not there (yet).

Most of the captains who are retired will not be able to get their annual medical certificate.

Not every job is like a desk job where we can just add more money and get more COBOL programmers back out of retirement.

I would hazard a guess that the replacement rate has fallen below the attrition rate precisely because pay has not kept up with inflation, which would fall exactly in line with the parent poster’s argument.
Your guess is partly correct. Jones Act and USCG Subchapter M are bigger parts of the problem.

It is not just pay rate. Where I can match pay rates, I cannot match lifestyle. U.S. citizens and green card holders have more attractive jobs available to them that do not require being away from family for weeks at a time. (e.g., software development)

> It is not just pay rate. Where I can match pay rates, I cannot match lifestyle.

Acceptance of that lifestyle is partially contingent on the pay. I am sure that plenty of people would be willing to spend long stretches away from home at work if they were being paid $1m.

Certainly, I could poach a license if I could pay a $1M.
Right, so we agree that fundamentally, this is a pay shortage.

That's exactly the point everyone is trying to make to you. That ultimately most labor shortages, unless caused by extremely rapid change in conditions (such as a law being introduced with only weeks notice that dramatically changes the regulatory landscape with no time to adapt) are usually pay shortages.

Labor shortage has long been used as a weasel phrase to imply that it's the fault of the workers/labor that companies can't fill positions. That's what the pushback is on. If your business can't find enough workers, you or your industry aren't offering enough financial incentive to have people work for you. You need to offer more money. And if you can't because it's not financially viable? Well...seems the free market has spoken and said that your business is not viable anymore. As the kids say these days, 'sucks to suck'.

I fully agree that the industry does not price the labor correctly. This is one reason why I am selling the company and reallocating the capital.

There are many funded projects not executing for lack of captains today. The captains I manage to hire leave other companies wanting. How is that not a shortage?

> Where I can match pay rates, I cannot match lifestyle.

Pay is short for “pay to quality of life at work ratio”.

If alternatives with better pay to QoL ratios become available, the then either a business can increase the pay to QoL ratio, or it may no longer be viable.

I did not write "quality of life". I wrote "lifestyle". I find that many young candidates do not want to be on a boat for a week or more away from family. Some do. Most do not. I, personally, enjoyed long voyages when I was young. They added quality to my life.
Yeah, I'm with other commenters.. it's about what you're paying them (and other perks).

Pay people at all levels a minimum of $5000 for each week away at sea, then they might do 4 months of work (which includes free board but is essentially a 24hr job) and 8 months of other things they enjoy while still living a near middle-class life.

Still having a hard time finding people? Give them more comfortable beds. Get an on-board chef. Ensure they have starlink access when they're not on active duty. Give them appropriate bonuses, dental, medical, RRSP matching

I'd be very surprised if you don't find a number of people eager to do this if their compensation is good enough.

Sure, if 80% of your workforce is only on deck 3-4 months out of the year then of course you have to hire more people too, but you'll find those people. You'll be flooded with people who want to do this. Maybe my calculus is off? Maybe you need to pay $6000/week? $10000/week? I guarantee you there is a salary incentive where people won't refuse. People will leave software engineering jobs to go work on a boat 3 months out of a year (I would at around $7000/week). Doctors will quit, etc.

When people say better pay won't solve the "shortage", I wonder how they so deeply misunderstood free market economics.

"most young candidates" don't want to be slaving away at a factory for most of their life either. They want to be able to buy a house. Maybe even 4 months of rent relief will massively change their lives. Maybe they want to buy a house one day or be able to responsibly have a kid.

There's not a labor shortage, there are just industries that don't pay enough

Yes, we do lure people with more money. They still won’t be licensed and legal to work as captains for years.
>I find that many young candidates do not want to be on a boat for a week or more away from family.

I think it would be helpful to this discussion if you were to add "for the amount that I am paying them" to the end of that sentence. Then, you would be addressing the point.

Before I decided that this industry was a poor place to deploy capital, I was open to paying whatever was necessary to fix the pipeline.
It is the same thing, for the purposes of this conversation. The point is $100k for a desk job and $100k for a captain on a bot is not the same “pay”.
No, you're on a boat 24 hrs a day, you're at a desk (usually) 8 hrs/day.

$100K for a desk job is comparable to $300K on a boat

Indeed. And many candidates will not deal with what they see as a bad lifestyle no matter the pay.
I don't understand how this is distinct from the issue of pay.
The percentage of U.S. Citizens with the education and temperment to become software engineers is way smaller than you are assuming here.
I have been a software engineer for 30 years before falling into running a tugboat company. I am not assuming anything.
Ok, now I am really interested in your story.

If you don’t mind sharing. How did you find yourself in a second career as the owner/operator of a tugboat company?

tell me more. there are days when IT ain't fun and I miss the ocean...
What is that percentage exactly?

There are no particular education requirements for writing software. Some of the best developers have no formal education in the field.

how much does this job pay?
Licensed captains with Master of Towing endorsement are currently getting $800-$1,200 per day in regions I am familiar with.
thats actually not to bad. is the work really inconsistent then, so yearly your not making that much
There is more work than there are licensed captains available. A good captain can work 365 days per year.
While this is true in the short term, it usually means the roles didn’t pay enough to keep the “funnel” open, so it’s an aspect of the same problem.
There is still a shortage now, regardless of failures to predict the future.
The best time to plant a tree is 20 years ago…

At the end of the day, industries are principally responsible for the health of their workforce overall. If there is a shortage, it is a failure of leadership.

That is why “labor shortage” is such a mealy-mouthed term. It treats labor as external to the process, something someone else is supposed to “provide”

The failures of industry and government in this case are obvious. That doesn’t change the fact that there is a shortage. I agree the shortage is due to myopia.
Another good example of this is airline captains. There's a big shortage right now, and simply paying more doesn't give a junior pilots 5,000 more hours in their logbook. They actually have to fly those hours first before they can become a captain. Also, pilots have a hard retirement cutoff for obvious reasons, so you can't even lure them back into work with dollars.

Airlines are paying more and more for captains, but it's not solving the shortage. They're just poaching them from each other, the total vacancies stays the same.

Junior pilots also don't come from nowhere. Just to get to flying an airliner, you need many hundreds of hours of training and studying, and that's not cheap either. And from what I recall, when you look at how much your average pilot is paid when they just start out, and the harshness of the schedule, and it's not a very attractive job for people.

So I think with airlines, it is still very much a case of a pay shortage.

I looked into it as a career path a many moons ago; I’d probably just now be making captain at a major if I’d gone that route and did everything right. I was definitely turned off by the pay.

Regional pilots, where you do your time if you didn’t join the military, get paid absolute peanuts. You’re looking at a career that pays well under average for most of your younger years, for very skilled labor, then tops out at about the pay of a mid-level software engineer. And you have a terrible schedule and are on call pretty much all the time, so good luck with a family. Oh and if you screw up, you get a mark on your record you have to justify at every interview for the rest of your career—if you’re lucky and nobody died. Not to mention all the layoffs over the years, where you have to keep current when nobody is hiring.

Airline pilots are a good example of pay shortage. Making newbies have a shit pay to quality of life ratio in the hopes that you get picked up by a big airliner and finally earn decent pay.

Why make that kind of investment and take that risk and spend your 20s with a shit quality of life if you have better options?

This is true on the supply side, but an airline can raise ticket prices until they have the right amount of pilots for the number of tickets they are selling leaving no shortage. These excess profits can be funneled back into to training programs to increase future capacity.
The boom & bust cycles of the airline industry is the fatal problem. Entry level pilots are paid dirt wages while having to self fund massive training expenses. The last time I looked, the training ran far in excess of $100k with entry level jobs at regional airlines paying around $20k/year. Since then, the FAA has required much more hours of flying time before qualifying to fly passengers.

Changing jobs as a pilot sets you back to square one with seniority and pay. There's no way to change companies and get raises - like one can do as a software developer.

Yes, if you force demand levels off a cliff, you can cure a labor shortage. But it's still a labor shortage. I'm not sure why HN is saying there is no such thing as a labor shortage.
If you lower the incentives to the point that nobody wants to do what you are incentivising anymore, that isn't a people shortage its a incentive shortage. That is true even if the thing you want people to do takes years to accomplish.
I'm surprised there's a shortage, I picture being a pilot as a very desirable career that would lead to an oversupply. Is it because learning to fly is too expensive for many of the people who want to do it?
That's part of it. The US airline industry expects pilot candidates to apply when they already have the necessary FAA licenses and flight hours. To reach that point, pilots have to either serve in the military for 7+ years or take on a huge amount of student debt. If the airlines had instead maintained a pipeline by hiring trainees and then paying them to get certified then they wouldn't have such a severe shortage now.

Airlines have also laid off pilots during several industry downturns since 2001. Every time that happens, some switch careers and never return to flying.

Then add in the large amount of away-from-home time, non-trivial danger, and post 9/11 rules, and it's easy to see why a lot of folks are profoundly 'meh' about it.

Know a few former Naval Aviators who hit their 8-10 year commit and decided to get a Masters in something not aviation related -- work-life balance was a definite draw.

Lots of people on HN have range, but you might be the winner. Pretty sure that of millions of Hacker News readers only you can say “I have been running a tugboat company for a number of years..”
This is an accidental outcome. I was doing software work for 30 years. My father was building a tugboat company. He passed away. I have stepped in for now.
Thank you so much for answering. I was curious as hell but it felt rude to ask. It’s almost the most obvious answer, but I didn’t think of it once.
My pleasure. Once I sell the tugboat company, I intend to write up some lessons learned about the ways in which building my software consultancy did not prepare me for managing pirates.
I, for one, would love to read that.
It already sounds epic
Weird how that happens.

I was trained as a unlimited Third Mate (Any Oceans, Any Gross tons), but decided not to sit for license and became an engineer instead. Every so often I wonder if I made the right choice, esp. since some of my classmates now own or are running shipping companies.

WHAT? I can sort of imagine one classmate doing it, but I am fascinated that there seem to be multiple ones? To what do you attribute this amazing incidence of entrepreneurialism?

I worked at Microsoft a few decades ago, and just sort of assumed that virtually everyone was there so that they could do their own start up. I was sorely wrong, and only one other than myself did so.

First, I realized that I'm using "classmates" loosely. Not specifically only the people in my graduating class (although that cohort has had some impressive achievements), but graduates from my school in general.

It may be industry dependent in a similar fashion to how many truckers are (used to be?) often owner-operators. You realize that you can only make so much money working for someone else and after a while the lifestyle gets tiring. Hard to settle down when you're away for 6 months out of the year. Or at some point you realize that your odds of being seriously injured at sea are going to catch up to you and you see an opportunity to buy a couple of harbor tugs or the like while managing them shoreside, and go for it.

I honestly never thought about it until you brought that up, but it could be personality types. When my High School History teacher heard that I was going to nautical school, she thought it would be a good fit for me since I was a loner and sailors were basically "cowboys who went to sea instead" in her words. And she understood me very well.

I really don't know the reason but it certainly merits thinking about. Especially since I've had some kind of side-hustle/consulting/business venture during every job I've ever had.

Owner-operator concept brings it into focus for me. Thanks for sharing a very interesting bio. BTW you HN profile lists skills but somehow leaves sailor out. Update that thang ;)
This is an industry where a combination of tenacity and intelligence goes a long way. Since I had to take over the company I currently run, I have been looking for someone to take over my position. All of the suitable candidates are happily employed by bigger companies and would not consider a smaller company (rightfully so, in my opinion).
I’ll do my best to plumb my vast personal network for experts in PMS (pirate management software)
Agile methodology in action
> There are specific labor categories that cannot be filled just by paying more.

Maybe, but...

> They require more training and experience.

Well, sure, those have more lag (all market signals in the real, non-ideal, world have some), and to cut through noise and make sure the signal gets to the labor force, you may need to pay for the training and the work that provides the experience, as well as the target job itself.

> Licensed tugboat captains are retiring/dying faster than new licenses are being granted

Dying you can't avoid, but sufficient pay can affect the choice to retire. So, to the extent voluntary retirement is an issue, that suggests pay is also an issue.

Retirement is not very voluntary in this industry, in my experience. The majority of the tugboat captains I have encountered are not in good health and lose their annual USCG medical approval before 65.
You're not really selling the job very well. I often hear about how people used to jump at job opportunities like this or working on pipelines or other infrastructure that required them to work remotely, and I wonder if there's some nostalgia colored glasses there, or if these jobs used to pay a lot better in inflation adjusted terms. Or if maybe there are just better employment options these days.
> or if these jobs used to pay a lot better in inflation adjusted terms.

If not inflation-adjusted, possibly in compared-to-best-alternative terms.

There are definitely better employment options these days.
Tell me I can make 120k a year while training and 200k a year after, with four weeks vacation and top tier health insurance, then tell me where you're located.
That is a good way for a company to be better prepared three years from now. Right now, there is a shortage.
So not paying enough 3 years ago caused a shortage now. Yes, there is a pay problem that eventually caused a shortage, got it.
Yes. When USCG rolled out Subchapter M and increased demand, one solution would have been for companies to hire three years previously people that they did not need and find a way to get them the necessary seatime. Maybe they could have installed more bunks on the boats.
When did they roll it out? From what I can tell, this was in 2016? Why is there a shortage now then if it takes 3 years to get to captain?
Got interested, found this:

> Although the Coast Guard released Subchapter M on July 20, 2016, vessels had two years to meet the majority of the requirements — the deadline falling on July 20, 2018. The Coast Guard is trying to work with the tug and towing companies to make for a smooth transition into the new regulations with minimal downtime. The entirety of the law will be phased in over a six-year period.

> The next deadline for obtaining a certificate of inspection (COI) is in 2019. By July 22nd, 25 percent of towing and tugboat companies’ vessels must have a COI onboard. The percentage increases by 25 percent each year after until all vessels in the fleet have their COI onboard.

- https://www.mitags.org/subchapter-m-training/

I wrote that three years is theoretically the fastest one could get enough seatime. This would mean three years constantly at sea. Most take at least double that.
I wonder if there were any unusual events happening in global markets 3 years ago?

A lack of prescience is not unique to tugboats.

Indeed. A lot of the captains retired early when things slowed down.
Interesting, out of curiosity is this a regional thing or a nationwide issue? What were businesses doing for the last X years to buildup qualified people to promote? Has anything changed to speed up the rate of retiring/dying or just a new limit on the rate of granting licenses?

A friend of mine moved from construction to working on a tugboat ~1.5 years ago and I spent a bunch of time talking about it this winter. Some parts of the business sound interesting but I'm not sure it is a good fit due to family health and relationships.

There are a few trends working together. The two biggest are the demographic decline in the U.S. and the rollout of USCG Subchapter M, which increases demand. For example, some boats now require two captains on board for voyages over 12 hours where previously they would have used one captain.
You could pay to license someone, making the cost to you more but the position attractive: even with a 3 year lag. It’s not a labor shortage, it’s a business decision.

Sometimes they’re tough.

We have paid to license captains. It is a shortage and a business decision and a government decision. USCG Subchapter M increased demand for captains while we are producing fewer humans overall.
Just to be clear, we have deckhands in the pipeline to become captains now. We understand the need to invest for the future. That does not make it any less of a shortage today.
Uh, Pay people to train then? That sounds like a "people won't do a free/low paid 'internship' for years" problem... Pay the trainee positions more = more trainees? "Learn x career and get paid decent money" really, really wouldn't work in your mind? I find that very hard to believe
Paying people to train them does work. We do that. We have always done that. That is how we are addressing the shortage. In a few years, we will have more licensed captains.

I am replying to the assertions that there is no such thing as a labor shortage. It takes years of seatime to become a licensed captain. It takes more than money to make one. Our tugboats have berths for 4-6 crew. There are physical and regulatory limits on how many deckhands can be in the pipeline to becoming captains.

Fair enough, you know the field better than me, I just interpreted it as more there's never really a labor shortage due to people not wanting to work, it's pretty much always a lack of good incentives.

The regulations on how many "trainees" can exist at any one time is an interesting point of contention. Honestly, sorry I commented if that's the hold back for you guys.

I still struggle to imagine there is any job a six digit (or local comparative equivalent) salary with a fully paid training won't spur an abundance of candidates for. If your career is one, I'm sorry I so confidently doubted you

No worries. I agree that “nobody wants to work” is a thought-terminating cliche. I think it is a dumb oversimplification, like “there is no such thing as a labor shortage”.

The process is that one generally comes on as an uncredentialed deckhand or mechanic and accrues necessary seatime, then takes courses and passes tests. One must pass an annual physical and be subject to random drug tests. The deckhand must be able to get a TWIC card and a passport if doing anything international. Candidates with previous problems with DUIs, child support, etc. have trouble with this. Then you have to be willing to live in cramped quarters with 3-5 other men 24 hours a day. All of these requirements cut down the pool of likely candidates.

One has to work at this job for a few years to be able to have accrued the seatime and learn on the job and take some courses and then take a test.

So even if I could pay a deckhand $500k per year, that doesn't fix the problem we have today. That deckhand will not be a captain for years.

And most deckhands don't have the aptitude to become captains.

You don't have to take my word for it. You could talk to anybody in the industry.

See, e.g.,: https://www.google.com/search?q=tugboat+labor+shortage

Have you considered offering non-monetary perks to tip the scale ?

One example : Software engineers often get the "Work From Home" perk. Not sure if the industry offers software to remotely operate a tugboat, similar to a drone operator ? If it didn't exist, what if you developed such software ?

I have considered perks and implemented as many as I can. The biggest lever I have found so far is flexible schedule. We are willing to fly the captains out to the boat and fly them back home on whatever schedule they want. All companies in the industry are doing this now. This has limits, of course, some voyages are simply longer than some crew want to do (and have no stops near an airport).

As for remote control, no, this will be one of the last industries to allow remote control. In port and at many points during the voyage, captain and crew make quick decisions that require situational awareness. The deckhands have to wrangle lines and physically interact with the tow.

How did you get into this business?
Paying more means spending more cash for the same or less output. I would include on the job training in that category.

Also paying people who are good at training extra money would be good. They are creating competition for themselves later on.

Yes. These are good strategies for addressing the shortage. I was replying to the assertion that there is no such thing as a labor shortage (“EVER”).
Very few labor shortages are real though. There's a lot of feudal toxicity out there and people want to work with someone passive and cheap, not an expert who is 'uppity' and expects their opinions to be objectively evaluated instead of being told to shut up and work (monkey).

There's a shortage of people willing to put up with being treated like shit and not even being paid hazard pay for dealing with management.

And then there's the habit of trying to keep the absolute bare minimum of employees in order to boost quarterly profits, which means there's no float of extra people you can poach if you get a giant project landing in your lap. It's Prisoner's Dilemma and everyone has been defecting since the 1970's.

I agree that in many cases, one can just apply money and get more labor. But I find that a lot of the value created is in the cases where this is not possible.
no, you just offer pay for training and apprenticeship for experience (instead of making people pay to be trained).
Yes, that is how companies like mine are addressing the shortage. That does not change the fact that there is a shortage now and that licenses require training, tests, and seatime.