Let's say you are a forward-thinking manager in a company making artisinal flowerpots. You know tech is the future and will set your company apart, and you want to build a top-tier team to take you there. You are willing to pay twice the compensation per engineer as google.
Now a deluge of engineers show up for interviews. How do you tell which ones are top-tier and which ones are third-rate? Even tech companies struggle with this problem; surely you'll have no chance.
You know you'll get mostly third-rate, because those are the ones looking for jobs. So instead of overpaying, you adjust your pay downward to compensate.
So it looks like there's a shortage to the company (because the top-tier engineers aren't appearing even though they are willing to pay), but to top-tier engineers it looks like they are underpaying.
Now a deluge of engineers show up for interviews. How do you tell which ones are top-tier and which ones are third-rate? Even tech companies struggle with this problem; surely you'll have no chance.
You know you'll get mostly third-rate, because those are the ones looking for jobs. So instead of overpaying, you adjust your pay downward to compensate.
So it looks like there's a shortage to the company (because the top-tier engineers aren't appearing even though they are willing to pay), but to top-tier engineers it looks like they are underpaying.