Money For Nothing: Inflation Is Not Free
Featured image is “Macy’s Thanksgiving Parade Balloon Inflation” by kowarski and is licensed under CC BY 2.0
This one is certainly in the news hard these days. I have previously mentioned my view of democracy: The people deserve what they want, good and hard. What does this mean? Well, quite simply, it means that the people deserve all the consequences of their votes, both the good and the bad. As a man who has never voted for the winner of a presidential election, I am so free. I never have to defend my vote for a guy who ends up being terrible. Because every president of my lifetime was middling to terrible, depending on the subject.
Biden, being a foolish man being led by the hand by even more foolish people, thinks that inflation is nothing, for some reason. But what is inflation? Inflation is the same amount of money being worth less. This means the same stuff requires more cash money to purchase. Your per unit cost for the same thing goes up. This almost always happens when gasoline shoots up. Since Biden was elected President, the price of a gallon of gasoline has shot up impressively. In PA, where I live, it’s gone up about $0.70 or more a gallon. Considering gasoline was about $2.30 a gallon last November, that’s a lot. If the price of gasoline continues to climb with no real relief in sight, everything that needs gasoline (as in basically all physical goods) will continue to increase in price. Most goods fix this problem by reducing the amount you get for the same price.
Biden is not blameless. He has, using executive orders, cancelled the Keystone XL pipeline and tried to rein in natural gas, the very energy source that led to America becoming nearly energy independent under Trump. The stock market has taken notice, and the price for a barrel of crude has been climbing for months, which will inevitably increase the price of a gallon of gasoline. Which is why we have had the greatest spike in inflation last month that we have had on a year-to-year basis since about 2008. That’s really not good. It’s the economy, stupid.
But beyond oil, Biden (and Trump and Obama and Dubya before him) has spent like a drunken sailor. There is a point where deficit spending has negative effects, inflation being the most obvious example. You can’t run up debt forever. China holds a large amount of our debt for a reason, and it’s not benevolent. Eventually, the bill comes due. And ya don’t want to be the president holding the bag when it does. Biden, or whoever wins in 2024 if it’s not him, will almost surely be that person. Mostly because Medicare is set to implode by the end of this decade. Bad things are on the horizon, and plenty of Cassandras have been warning about these very things for decades now.
The big problem right now is the expanded unemployment benefit set to expire in the next couple of months, which needs to end sooner rather than later. Entry-level service employers cannot compete with being paid more to sit on one’s ass. Most humans take the path of least resistance pretty much always, so being paid more to not work will be intimately more attractive than running the Taco Bell drive thru. Pay people more! Yeah, because raising the minimum wage doesn’t also have inflationary effects. If labor is artificially more expensive, everything else that depends on labor becomes more expensive, washing out any gains those same employees might see with a higher wage. Artificially? Yes. When employers are forced to pay more due to government influence, that is artificially increasing the cost of labor.
But cost isn’t value, which is why unemployment follows any increase in the federal minimum wage. $15 an hour is approximately $30,000 a year. Some college-educated work pays less than that as a starting salary. Because only spoiled rich kids can afford to make such peanuts, who do you think continues to run major corporations due to “paying their dues” in those same low-paying jobs? It’s a vicious cycle. The kids of rich parents will always win; there’s no way to correct for winning the lottery of being born into wealth or even good parenting. Envy is a poison for the soul, after all. Greed is too, but greed isn’t illegal, no matter what Bernie “I own three homes” Sanders, man of the people he is, says. Want to waste your time being jealous of those who have it better than you? Knock yourself out.
Just because the cost to employ you increases, doesn’t mean your value to your current or potential future employer went up. The average minimum wage job can be done by virtually anyone. You’d be hard pressed to find a minimum wage job (or nearly any college educated office job, to be fair,) that you couldn’t train almost anyone to do in a couple of weeks. Commission-based jobs have the highest churn rate of any job, but zero skill minimum wage work ain’t far behind. If you’re taking such a job in the first place, you’re either a student or you’ve made some terrible life choices. Own up to that. Trust me, I’ve been there. Life insurance sales sucks.
There’s a reason automation is going up for entry-level service jobs: Because paying for one computer that lasts five years is better than paying an ever-increasing wage to someone who will likely wash out and be replaced with another short-term cog. Especially since employers have to provide health insurance to these same employees due to the employer mandate in Obamacare (which the government keeps threatening to finally enforce with fines and such.) You might hate the glorified Roombas and touch screens, but they’re easier to handle than the average human. Because they’re programmed to be compliant and not complain. Humans are not. And going for that union ain’t really gonna help you at the end of the day. Not for a job that basically anyone can do.
Wrong. Congress holds the power of the purse. And they have made things far worse by also dropping revenue through 40 plus years of tax cuts that have not “trickled down.”Report
At this point, these essays from 1979 National Review are sort of like unfunny Claire Briggs cartoons.Report
I mean correct me if I’m wrong, but didn’t Obama halve the deficit he inherited? And Clinton eliminated it? And I know Obama actually brought the Iraq and Afghanistan expenditures on book, instead of holding it off budget like Bush did as “emergency expenditures” for 8 years.
I’m sure somehow that was all magically Republicans.Report
you are correct sir.Report
Divided government (it’s hard to stand up to your own faction) with the GOP as Congress (they like preventing Dem spending and see issues with budget debt when they’re out of power).Report
Ah, there it is.Report
Let me see if I follow your chain of logic: Inflation is always bad. One of the major contributing factors to inflation is an artificially high minimum wage. The minimum wage can be raised by government actions either directly or indirectly. Only students and those who have made “terrible life choices” work minimum wage jobs.
Therefore: Expanded unemployment benefits need to end now. My fast and cheap taco is more important than the lives of those making it because they have made “terrible life choices” and need to “own up to it”.
That seems… mean. It feels like you are jealous of those who have it worse than you.Report
I wouldn’t say that inflation is *ALWAYS* bad.
But having perpetual 2% inflation as a hedge against deflation is one thing.
Inflation, managed well, can work indefinitely.
But you don’t want this weird situation where fewer and fewer people can afford to purchase a house (or pay rent), fewer and fewer people can afford college loan repayments, fewer and fewer people can afford health care… even as stuff in the basket of goods remains somewhere around 2%.
Because that’s a recipe for disaster.Report
There’s the rub. If we have a constant inflation of, say, 2%, then as costs go up, so should wages. They should keep pace.Report
More importantly, the central theory advanced in this essay is that wages should increase due to a rise in value, not an artificial fiat.
Which would mean that wages should rise along with increased productivity.
Yet 40 years of empirical data says this is flatly not true.
Worker productivity has been rising steadily but wages have not kept pace.Report
Also true – and IIRC, a lot of that is due to a certain class constantly re-normalizing what is the baseline of worker productivity.Report
The final paragraph actually negates the point better than I could; That the real factor suppressing wages is automation.
No matter how hard someone works or how clever they are, somewhere out there is their true competitor, a machine or software that will perform their tasks better.Report
Yes & No.
Automation makes people more productive. The problem is that once automation is implemented, productivity is re-normalized to account for automation.Report
Yes, but is the value re-normalized? No, it accrues. That’s the 20th/21st century lesson we haven’t adjusted to.Report
Right, but who does it accrue to?Report
Not to the folks that produced the capital to enable the productivity investments/gains… at least not at a proportional level.Report
This is why I am onboard with your thought that employee compensation should include a lot more in the way of ownership shares &/or profit sharing, rather than simply wages.Report
libertarians & Distributists: Saving Capitalism from Capitalists.Armwrestle.gifReport
Well, if Capitalists actually practiced Capitalism…Report
This seems unlikely. Productivity is stuff produced / people.Report
Remember what I do for a living. I automate processes. I literally increase the productivity of others. I guarantee that those who use my software and become more productive are not seeing their wages rise proportionally.
Your corporate accountants of old switched from having entire floors full of people filling out spreadsheets by hand to having a small office of people using Excel. The savings realized by not employing that floor full of people did not accrue to the handful of people who learned how to use Excel. Even after you factor int he cost of hardware and software.Report
Well, at the lowest part of the job market, the wages have consistently been pushed down by a lax undocumented migrants who just want better lives for themselves and their children policy.
If the supply of “unskilled” outstrips demand, you’re going to find yourself with a buyer’s market.Report
For this umpteenth iteration of this issue, let’s try something new.
Rather than regurgitate my stock of arguments, I am genuinely curious to hear your imagined scenario of how an alternate path might look like.
Like, you ascribe immigrant labor as the reason low wage jobs are low wage.
Lets imagine an alternate history, where , lets say, your preferred immigration policies had been in effect since 1965.
What might our current labor world look like? What would be the outcomes?
I’m honestly curious because I suspect that you and I are imagining different outcomes.Report
Do we agree about the issue of “why the price is so low of something incredibly abundant”?
If we do, then we’re good. If you want to argue that “there are other things that are oh so much more important than that!”, then, okay. Sure.
But if we’re discussing how come the so-called “unskilled” jobs haven’t seen the benefits of higher prices of their work?
Well, we’ve hammered that out. Quite flat.
It shouldn’t be a surprise anymore that wages have not risen along with increased productivity.
No matter how loudly we shout the word “SHOULD”.Report
I agree that access to cheap labor suppresses wages, absolutely.
But I’m not sure that’s actually what you’re saying.Report
I’m saying that you keep being surprised that wages of the so-called “unskilled” stay flat.
I’m saying that that’s because of a huge influx of so-called “unskilled laborers”.
This, to me, is a trivial observation. One that is uncontroversial.
Which is why it is always surprising that you keep hammering on how wages should follow productivity rather than the whole issue of how undocumented dreamers who just want to make better lives for themselves and their families are part of the supply that keeps wages low.
And the people who call for more of the so-called “unskilled” laborers to show up while, at the same time, wipe away tears from their eyes about how wages remain low remind me more of the Walrus from the poem than anything else.
You have a choice. You’ve chosen more and more of the so-called “unskilled” labor force to show up.
Congratulations. Now you have a buyer’s market.
I have to assume that that’s what you wanted.Report
If you’re saying you want the government to block access to a pool of cheap unskilled labor, I can get on board with that.
I’m curious what the outcome of that would be, though.Report
I assure you, I am one of the people a lot closer to “open borders” than others. (I’m also against zoning for a handful of similar reasons.)
But I also think that if we add more and more and more of the so-called “unskilled” labor force in far greater numbers than, say, the “skilled” labor force, we’re going to find out that the “lump of labor fallacy” assumes a lot and we’re going to see a lot of downward pressure on the price of “unskilled labor”.
And wages won’t follow productivity in that market.
Wages will, instead, follow demand.
As night follows day.Report
So, what might an alternate path be?Report
Do you want me to play “In a Utopia, everybody could move anywhere and they’d have an affordable apartment available and free healthcare” or would you rather I say something like “Given the facts on the ground, I’d say that the government has more of an obligation to citizens than non-citizens and should, therefore, require the use of systems like E-Verify”?Report
What would be the outcome of limiting importation of labor but allowing unrestricted outsourcing of labor?Report
Do you want me to assume a Utopia or do you want me to assume stuff about the cold facts on the ground and go for what’s achievable?
If it’s the latter, I’d say that we ought to be able to get away with something like “you need to follow OSHA rules in foreign countries if you’re outsourcing” or something like that.
“Your workers cannot be forced to pee in bottles because they don’t have enough time to meet quota otherwise!”Report
Oooh! A law that says “workers in foreign countries will be assumed to have standing to sue American corporations for how those corporations treated them on foreign soil”.
Something like that.Report
I can actually agree with something like this, where we both restrict immigration and implement global standards for wages and working conditions.Report
RE: Global standards for wages
Sounds a lot like a way to tell the very very poor that they can’t have jobs. The min wage was originally created to prevent poor blacks from competing with rich whites.
RE: global standards for working conditions
If you mean, no slavery and no child labor, then we already have that. If you mean “no sweat shops”, then that’s just a way to destroy jobs in other countries.
Local people should be able to decide what kinds of jobs they’re willing to do. That breaks down when they can’t decide, i.e. slavery and child labor.Report
If you mean, no slavery and no child labor, then we already have that.
It’s very likely that the keyboard you used to type that message was made by child labor or slaves.Report
Source? And btw when I check “child labor wiki” I get such a loose definition that my kids qualify.Report
You must be trying very hard not to find anything.
https://www.ilo.org/ipec/Regionsandcountries/Africa/lang–en/index.htm
https://www.ecotextile.com/2021072328121/social-compliance-csr-news/modern-slavery-concerns-overlooked-report-suggests.html
So as not to trip the moderation filter, search “rare earth minerals child labor”
then search “El Monte Sweatshop”
For that matter, search also using China as a keyword, along with “prison labor” and “Uighur”
Slavery is booming today, in almost all our supply chains.Report
I just wanted to see where your head was at.
Yes and no. China is doing ugly things, I think “slow motion genocide” is a good phrase. And yes, they’re also being forced to work…
But as far as I can tell, this is 27 factories out of the 3(ish) million factories in China. That rounds to zero economically. Odds are very good that my keyboard, even if it comes from China, had nothing to do with slave labor. For that matter, the bulk of the millions of people China is repressing aren’t working in those factories. Slavery is almost by definition unskilled labor and the tech supply chain is almost by definition the opposite.
A one off sweat shop using slavery in LA broken up on August 2, 1995. If you’re trying to make the case that slavery is widespread in our supply chains, i.e. exists as something other than extremely rare corner cases, this isn’t doing it.
We have 250-300 million child workers… if “children aged 5-17 involved in any economic activity are counted” (so my kids are child workers). ILO thinks about 150 million ages 5-14. The vast bulk are employed by their parents. Less than 3% of child labor aged 5-14 across the world work outside their household or away from their parents. So something like 4 million world wide, Africa included. Which doesn’t mean we can’t have the parents doing dangerous work and the kids doing the same with them. Same source says Africa by itself has 65 million child workers ages 5-17.
Big picture there is disagreement over what is child labor, but imho it clearly exists as a problem in poverty areas of the world (I refuse to call my kids’ joke jobs problems). Note China has given the issue top-secret security so it’s probably a lot worse there than is being admitted.
If we go back to the whole “global standards” thing, I’m fine with it being used against slavery (to the extend this even exists) and child labor… but way too often this is pushed by groups that just don’t want free trade.Report
I’m just pointing out that slavery and child labor are widespread.
And as we can see from China’s use of prison and Uighur labor, this is a political choice made by government, not some intractable artifact of nature.
So to Jaybirds point, we can and should use our market and geopolitical power to get them to change their behavior.Report
One thing I’ve noticed is that there is a huge agitation for “a living wage” when it comes to American soil but when it comes to impoverished countries, the discussion turns away from “living wages” to something closer to “can you believe that these poor people are only paid a pittance?”
That said, I think that working conditions ought to be our business. And even if we can’t demand that China have a particular standard for Chinese businesses in China, we can say that foreign workers have standing for how they’re treated in American corporations.Report
With other countries I don’t expect my (or other people’s) intuition to work correctly. The real world alternative to a dollar a day job may be sex-work with aids as the expected outcome.
Don’t expect much from this.
They already have standing to sue in their own countries. If that’s not enough and there are problems you actually expect to be fixed, then Apples sub-contractors are not Apple.Report
“I’m saying that you keep being surprised that wages of the so-called “unskilled” stay flat.”
He wants you to say that you’re racist, Jaybird. He thinks that the only reason you’re complaining about immigration is that you’re racist, and he thinks that he’s got you dancing on a hook refusing to admit it, and he’s doing this wide-eyed-innocent just-asking-questions thing because he thinks he’s smart, and he thinks that your posts are just showing how badly you’ve twisted yourself up in your effort to justify racist bigotry.Report
While I appreciate that calling other people racist is a great way for employers to get others to not notice that wages are being kept flat, eventually it’s going to stop working.
You’re going to need to switch from opium to morphine to heroin to get the old high.Report
“he’s doing this wide-eyed-innocent just-asking-questions thing because he thinks he’s smart”
He is indeed doing a FANTASTIC impression of another regular poster here.Report
Not directed at me but I want it. 🙂
Starting in 1965 we go with serious brain drain immigration policies and guest worker programs. We staple a green card to everyone who graduates from an American 4 year college (or has an advanced degree, or who serves in the millitary).
We’re not educating the world’s best and brightest and sending them home to create jobs, we’re keeping them. More high level jobs are created in the US. More high level industries are created here.
Result: Full employment happens eariler and more often. There is a lot of pressure of industry to raise wages because they’re fighting for workers.
We have an extra [something %] growth over the long term. The economy has more money to spend on whatever.Report
No, because increased productivity isn’t always caused by the humans doing the work. You think a toothpaste machine making it easier to fill tubes of toothpaste is the result of the human labor? No.Report
So the toothpaste filler of days yonder is unemployed by the toothpaste machine. They were making (for arguments sake) $10/hr, now they make $0. However, machines need maintenance, so the company hires a toothpaste machine technician for $11/hr. That technician allows the company to be more productive, by keeping the machines humming along filling toothpaste tubes, but is barely paid more than the other employees.
Obviously, there are a lot of variables (productivity increase, capital outlays, depreciation, etc.) that go into the calculation of how much actual value the technician adds alongside the machines he services, but the fact is, that value can actually be calculated, and I’m betting that value is probably significantly less than the compensation given to the technician.
But absent the technician, those machines will soon be little more than very expensive paperweights.Report
“absent the technician, those machines will soon be little more than very expensive paperweights.”
You don’t need one technician per tube-filler.Report
What part of technician (singular) and machines (plural) leads you to think I was suggesting that you need one tech per machine?Report
I once paraphrased the whole Ford “I want to pay my workers well enough to buy my cars” and got told that if I knew anything about economics, I’d know that’s impossible and would run someone out of business.
He elaborated on his point, which apparently involved the unshakeable assumption that an auto worker would labor their entire lifetime to produce one car.
I asked him it that meant cobblers went barefoot. He called me an idiot and flounced out.
To this day, I wonder how he thinks autoworkers get to work. I mean most actually have a discount program for employees buying their cars…
In short, sometimes your base assumptions and theirs conflict, and you have to spell out the [to you at least] obvious.Report
That’s a myth, or VERY happy spin on him solving a different problem.
Ford had something like 300% turnover with his workforce.
His genius was to realize skill mattered and turnover mattered. The entire line’s speed would increase if he could get people to stay on the line for more than a few months.
So he increase their pay to reflect that they have a semi-skilled job (as opposed to skilled or not skilled), and his turnover dropped to zero and his linespeed increased drastically.
This was economics, not social engineering.Report
Of course the actual story is a myth — the point isn’t. Well paid workers work harder, and are less likely to jump ship. And the more money out there among the masses to spend, the more you can sell them. If you gave 100m out to the public they’d end up spending more of it than if you gave it to Bill Gates.
The point is, well, a well paid workforce actually has money to spend. Including on the business they work for (assuming it’s a direct to consumer sort of thing).
And that’s a good thing. Serfdom and starvation wages kill consumer spending, but of course right there you have the usual collective action problem — either everyone pays a decent wage or there’s a race to the bottom.
The latter is short-term more profitable, long-term much less so.
There’s stabilizing factors that can prevent it — from minimum wages to unions to, well, the sort of post-COVID realization that you’re just not paid enough for that crap.Report
True, but they need to be “well paid” because their productivity makes them worth that and not because some politician wants to make other people spend their money in defiance of the market.Report
um, those toothpaste machines don’t design or manufacture themselves. Sure, they displace the human tube stuffer (!) once created, but they are all human “solutions” to perceived problems.Report
No, it is increased efficiency. More output, less work to make it.Report
I agree, actually, that increased productivity isn’t always caused by the human.
In fact, I submit that it rarely is, at the macro level.
Meaning, an individual can become more productive simply through experience and education.
But an entire class of workers, how do they become more productive, and therefore increase their wages?Report
Unions.Report
Which makes no sense. Value is the problem here, not cost or price.Report
Value is usually subjective, not objective. You can sometimes apply a cost v productivity calculation to see if a given employee is worth the price you are paying, but I highly doubt small businesses are doing that. They are looking at P & L and deciding what they can pay from that, rather than looking at each individual employee in an objective manner.
But let’s face it, there are a lot of people who get paid to be useless because they are connected, or attractive, or just really good at spinning BS to stay in the game, so their value is almost entirely subjective.
I was reading this over the weekend, and it has a really good quote:
Report
That’s an awesome quotation.
Gotta say, during the height of Stay-At-Home, my meetings and status reports TRIPLED.Report
Cost and price are collective, value is individual.Report
That’s not a refutation.Report
So you are content with “Markets” undervaluing labor so long as government doesn’t intervene?Report
Better question, if markets are undervaluing labor, why?Report
because they think its the easiest thing to cut long term of the things contributing to total costs.
Take this article on railroad employment
(https://wolfstreet.com/2021/07/22/after-slashing-33-of-their-workers-in-six-years-railroads-complain-about-labor-shortages-amid-uproar-from-shippers-over-slow-shipments/)
It makes the clear case that railroads are not facing a “surprise” labor shortage, but the result of steady determined cuts to the labor force that began long before the pandemic. A couple of professional railroaders i know also say the cut backs in overall employment have been accompanied by decreased starting salaries, loss of pensions, and a whole host of other compensations that make railroading LESS attractive then other industry sectors. Yet if you look at railroad share prices they keep going up as do profits.
I believe you can make similar arguments about most economic sectors, especially the sectors that rely on minimally paid people to stay in business.Report
Right before the virus we were basically at Full Employment. So no, everyone wasn’t cutting labor.
The real issue was bottom of the barrel employers were finding they needed to raise labor prices in order to attract workers, or make due with fewer workers, or pass on their prices to their consumers… and they can’t always do that last.
This is a good thing, it’s what we want. And yes, it’s expected some of these companies go under.
So Amazon increased it’s “min wage”, and some companies competing with them for that sliver of the workforce will go under.Report
Serious question: When was the last time a railroad company went under?
Like, not just some bankruptcy restructuring, but actually kaput, rail lines and engines/cars purchased or scrapped?Report
Railroads are hardly immune to this kind of pressure.
If you want to claim they’re unlikely to be the guys who actually go under, that’s fine. However that doesn’t change that they’re clearly trying to make things happen with fewer people.
Also: https://en.wikipedia.org/wiki/List_of_railroad_bankruptcies_in_North_America
Very clearly it happens in waves. Maybe we’re due.Report
I wasn’t suggesting that they were, just curious if they go under for real, or are part of the Too Big To Fail class of companies.
I mean, as much as I criticize Boeing, I honestly don’t think that the company would be allowed to fail. The US would find a way to prop it up, since there is no local competition to step into the void.Report
If coal use finishes collapsing quickly, both the UP and BNFS are going to be under a lot of revenue pressure. Until recently, coal was on the order of half their total tonnage.Report
Cutting labor has always been a hilarious management move.
The best parts are when they outsource everyone to another country, then end up spending MORE money trying to get the job done to the same standards.
Sometimes it’s more than just “it ended up costing more and taking more time for a sub-par product” (which is what happens when you toss all your experts and their institutional knowledge. Just onboarding a new hire INTO an established workforce takes a long time to pay for itself, but creating a whole new workforce?) — sometimes you end up having to crawl back, hat in hand, to the folks you fired for help fixing your mess.
I understand the standard contract rate for “You fired me and you want my help now?” is minimum twice your normal contract rate, depending on how pissed you are.Report
Markets work on “cost of labor”, what we are complaining about and measuring is “income”.
If the gov mandates that “the employer pay” social security taxes, that comes out of your pay check even if you can’t see it.
Ditto other employment taxes (medicare, medicaid, unemployment insurance), regulations, healthcare, compliance costs, all benefits, etc.
We should also check and see if we’re measuring inflation correctly.Report
Markets work on both halves of that equation, cost & compensation (better than income, even if income is easier to quantify).
Agree with your point about withholdings. I have no idea re: how we compute inflation.
Although, Phil has a point regarding how businesses treat labor a bit too much like an replaceable supply, which can lead to under-valuing.
For example, Boeing. It’s one thing when you can spin up a new employee in a week, something else when it’s easily 6 months before they are productive.Report
RE: cost & compensation
Add those together and you have cost of labor.
RE: under-valuing labor
I think it’s more doing stupid things.
Upper management gives an order, cut all project costs 10%. Middle management sees it’s July and needs a 20% cut RIGHT NOW.
This is where we get diseconomies of scale. In reality some managers should have their entire area eliminated and others should be totally spared.
Re: how we compute inflation.
https://www.investopedia.com/articles/07/consumerpriceindex.asp
Also: https://www.investopedia.com/terms/c/chain-linked-cpi.asp
There’s an argument inflation has been seriously over measured when we get to large timescales. So we spend more on HC but we get more as well. Also the power of computers has gone up.
If Inflation has been seriously overcounted then the workforce is being paid a lot more than those inflation-adjusted graphs reflect.
Now there are other factors that also suggest family income is being understated. Women are much more free to get divorced so there has been a huge shift in family mix. Similarly there are also fewer children per family.
Big picture the workforce may be doing a LOT better than our graphs are measuring.Report
From your lips to gods ear, my friend. Doesn’t mean the effects of stupid don’t have impacts far and wide that generally never bounce back to parties being stupid.Report
Not the first time Boeing has done this dance.
An old hand I worked with many years ago used to work for Boeing. They closed up a whole development shop — fired everyone, including their senior engineers and designers — because they were “too expensive”.
I can’t recall if they outsourced to another company, or just tried to move the shop to another state and hire a bunch of cheap recent grads.
Per him, they were…not doing great and had to crawl back to most of the senior engineers, and hire them as very expensive contractors. I wouldn’t be surprised if their “cost saving move” quadrupled the costs involved.Report
Oh, I know, I used to work for them, so did my wife. Neither of us want to go back.
SpaceX and Blue Origin are sucking up all the young talent (because it’s exciting stuff, and Boeing can teach a master class on killing the enthusiasm of your new grads), and the old guard are all retiring or dying, and massive amounts of institutional knowledge is going with them, because Boeing never established a KM system (and they fired the one executive who was trying to put one together).Report
I work for NASA contractors, and their feelings on SpaceX and Blue Origin are a bit mixed.
But they very much understand how big a draw it is to work for a company that won’t have it’s project be changed, canceled, resurrected, rebid, cancelled again, etc, with every election.
Mind you the biggest complaints I’ve heard about SpaceX are likely very much moot now that they’ve moved past prototypes into active use. (I work with fracture and materials guys, and they had some raised eyebrows on the sorts of things SpaceX would fly with, but admittedly these are guys used to working on man-rated stuff — and at the time, SpaceX had yet to launch it’s first real cargo. I would hope the corner cutting was more ‘rapid prototyping’ than ‘company culture’. OTOH, NASA is institutionally very risk-adverse, mostly because they get the crap hammered out of them by Congress when they aren’t. And also when they are.)Report
I mean, SpaceX blew up two payloads* and they’re still being given payloads to launch; meanwhile, ULA had some unexpected fluctuations in a booster nozzle and they’ve shut down launches of that booster entirely for the forseeable future.
* and they burned their first Crew Dragon to cinders as a result of a similar failureReport
Man-rated versus unmanned is a whole different kettle of fish, safety wise.
I suspect if SpaceX or Blue Origin ever loses a manned launch, they’ll get real risk adverse too.
As NASA learned, astronauts and space are simply too high profile for the public to accept “Look, it’s a dangerous sort of job” as an answer. (Which it is, very much so).
And there will always be a mistake, an oversight, a bad call. Rockets are too complex, the tolerances too fine. A part won’t have the tolerances it’s supposed to, a design didn’t take into account extreme weather, or simply that some base assumptions that worked fine for years turned out to have some edge cases that caused an explosion.Report
and they burned their first Crew Dragon to cinders as a result of a similar failure
And except for Boeing conducting source code review during a live flight because of one error, another error would have caused the first Starliner to tumble and burn up on reentry without a real-time patch.
So this week, 19 months later, when the next launch was scrubbed, Boeing felt obligated to make loud public statements to the effect of “But this time it wasn’t software.”Report
The problem with Boeing wasn’t the lack of exciting projects, it was the fact that the engineers had a seniority system and that weighed heavily on which projects you got to work on.Report
I can only speak for the NASA guys, but it was demoralizing as all hell to put a year or three into a design and then have it cancelled.
Then a very similar, but not close enough to reuse much of the work, design would be green-lit two years later under a different company. Just long enough to ensure everyone had found new jobs.
NASA’s started gaming it these days. Moon-Mars-Moon-Mars-Moon-Mars goals had NASA just going “Screw it, the first step to ANYTHING is the Moon” and just kept claiming their Moon return plans were critical to either going to the Moon (duh) if that was this year’s goal or Mars if that one (which to be fair, they’ve got a good argument).
They can’t really do that with rockets, because Congress absolutely shuts them down, and then when they’re re-authorized there’s not enough overlap to game and claim their previous design would work. Plus their designers are gone, it’s unlikely the same company will win the bid so the IP isn’t even NASA’s, etc.
At least Moon-Mars-Moon-Mars means NASA can sort of focus on heavy lift capacity and try to get around the flip-flopping appropriations.
One of my first jobs out of college was working for a NASA contractor that was updating some really, really, REALLY old systems. It was a really big project. About halfway to a delivery milestone, multiple requirements were changed by NASA (it was pretty clear a new administrator for NASA wanted to put his stamp on it, and nobody could make him understand what his desires meant in real life). So we ended up delivering 10 months late and double the budget, because that’s what happens when you radically change the deliverables midway through a cycle. We had to start pretty much over on a man-rated system.
Said new administrator got pissy, there was some fun high level arguments about contractual obligations (my company won), so the admin canceled the whole thing.
Eventually they modernized those systems. But they wasted about four years and millions of dollars first.Report
I really hate that NASA and ULA have become synonymous in so many people’s minds.
ULA would be in a much better position today, I think, if they had spent more effort in the last decade doing innovation — reusable boosters, fuel other than NASA’s darling H2, non-Russian engines — and forcing NASA to admit they were payload people, not launch people.Report
ULA can only bid on the contracts they’re offered, and NASA can only offer the contracts Congress tells them to.
ISS is a freaking miracle, given how many changes were made over the lifetime of that thing.
Not little ones. Massive changes on size, longevity, crew size, partner nations, etc.
ISS flies in spite of everything Congress could do to kill it with stupidity. It’s like NASA’s giant middle finger to Congressional stupidity.Report
I don’t pay enough attention, so am prepared to believe that Congress forced NASA to offer a contract for a reproduction of Apollo — LH2 fueled, single launch to the moon, $2B per launch. That doesn’t mean that ULA had to be dumb enough to bid on an obvious dead-end.Report
Cost plus contracts. (With an award fee for stellar performance, which tends to be required to be distributed among all the workers)
They’re actually fairly good for everyone in most circumstances. Government keeps a heavy eye on what you’re spending and hour, so it’s hard to cook the books — you have to account for all costs, starting with labor, with a fixed overhead cost for admin and basic IT (and a small profit), then account for every penny of additional spending.
You don’t make a ton of extra money, but the contract covers labor, your building and basic IT costs, and materials/equipment/manufacturing as needed. Government gets to eyeball everything you do and spend, and regular contract renewals and competition keeps you from sneakily inflating labor or overhead costs.
the downside, of course, is if someone wants to spend money to do something stupid, plenty of people will be happy to do it. They won’t get rich off it, but it makes the same money as something clever.
The other downside is, of course, there’s a lot of oversight on the government level. But it’s flexible, handles stuff like Congress deciding to change requirements in the middle of a task, and is especially good for things where the final cost is uncertain (like, say, developing a new launch vehicle) or ongoing development is part of the process (such as, say, commissioning software that they expect to be updated regularly with new features or requirements from government users).
There are disadvantages (quite a few), but the auditing isn’t that onerous compared to some other methods, and in the end it’s similar in cost to developing in house, but without needing to hire and retain the workforce and their equipment (plus competition to help drive innovation and lower costs)Report
I have two min-wage children. They don’t deserve or need a living wage.
They get min-wage because they have the serious problem that they have no experience at all. Time will fix this.
My older children who don’t suffer from that flaw make a lot more than min wage.
The gov can destroy bad jobs, but here I don’t see why it should. IMHO my younger kids are better off with those jobs existing. Destroying bad jobs is NOT the same thing as creating good jobs.Report
If your children’s only experience or training is working those minimum wage jobs, then they have a hard time getting away from those min wage jobs as they age.
What opportunity does a person have to get the experience and/or training to not be working the min wage job? How long does it take for that opportunity to manifest? I have a childhood friend who had 4 kids* by the age of 20. Took her another 20 years before she had a chance to go to school and get out of the min wage cycle.
*The 1st from rape, the rest from teenage (read: stupid) love.Report
Varies wildly depending on the person and the job.
If you insist on being 20 years old with children and want to climb the ladder starting with no-skills (lots of mistakes even getting to this point but whatever), then I’d suggest either the post office or (if you must) Wal-Mart.
The local Walmart has a 20 something female who I’ve watched repeatedly change jobs inside the store (she stands out enough that I notice her and WalMart is very close to me). She’s currently working inside the pharmacy but I’ve seen her do basically everything inside that store.
Now if you’re in a dead-end min-wage job which mostly gives pocket change to teenagers, and you insist on staying in that job for decades rather than transfer to some other min-wage job, then that’s a poor life choice.Report
Poor life choice always assumes that there is a choice, or that the available choices are not artificially constrained by others.
Obama’s “You didn’t build that” isn’t just a way to say we all owe our personal success in part to others; often times, our failures are a shared state as well.
My friend had the luck of getting pregnant at 14 (the rape), with parents who were hard core Catholic, would not let her abort, and would offer only the barest of assistance (she had to pay for all her own baby supplies). Some kind of twisted tough love. The guy she ended up having three other kids with (& marrying) paid for a lot of things for her baby, hence the affection, but he was a deadbeat in the end that she finally divorced. Took her a long time to get out from under him.
All this to say, she was not being set up for making the most of opportunities, and she was being artificially limited in the opportunities she had access to.
We can not paint with a brush that says people make bad life choices. Certainly some do, they have all manner of help and chances and they turn them all down (her husband, for one, preferred laying about drinking and smoking, until it killed him a few years ago). But more have those choices made for them, or constrained by others, in ways that are not obvious.Report
There are parents who make terrible choices for their kids. It’s generally viewed, with good reason, that letting the gov have that power would be worse.
Your example is one of rape, child abuse, and then perhaps spouse abuse. The economic/labor/min-wage system(s) probably shouldn’t be upended to deal with that, society should have and use other tools.Report
Oh, agreed.
My point is less about the solution, than the brush.
If every bottom wage worker is the product of their own poor life choices, then it’s too easy to avoid crafting and implementing those tools society should have.Report
How? Almost no one actually makes the minimum wage.Report
Waiters of the world would like to have a word…
Still, if no one actually makes as little as the minimum, why is raising it a problem? If every adult in the work force is making more than $15/hr, resetting the floor to $15 is just shifting the baseline, which, hey, we have a nominal inflation every year, the baseline should be shifting right along with it.Report
Because of the value and cost problem.Report
Exactly. Sometimes the cost of X does not align to the value a person has for X. When that happens, the person can either do without, or suck it up and pay it.
What they can not do is demand the cost be reduced (or increased) until it matches their individual value judgement.Report
And when the government sets the price, that’s a problem.Report
And what price has the government set? Currently, it’s at $7.50/hr. The fact that the government has granted an entitlement equal to that to a class of employees is not setting a price. It’s merely providing competition.Report
Actually $7.25 an hour. Which has been the law of the land since July 24, 2009.
Meanwhile consumer prices have grown every year since.Report
OK, according to my handy inflation calculator, the min wage should be about $9.25/hr, if it was keyed to inflation.Report
You’re reading this as if it’s one article. Read it through the expanded unemployment benefit paragraph and it’s an article about one thing. Read that paragraph and what follows and it’s an article about a different thing. You can’t apply a “chain of logic” across it.
As near as I can tell, he never says that artificially high minimum wage causes inflation. He just appears to by proximity.Report
Inflation is not bad. Inflation is natural and normal. Small to moderate inflation is a sign of a healthy economy.
Excessive or runaway inflation is bad.
The current spike in inflation has a very clear, very well defined cause that you don’t even bother to mention – the pandemic. Everybody stays home, businesses close, inflation flat lines (I believe we had some localized deflation). Economists have been telling everybody for months that we should expect a spike in inflation once things start to open back up and the economy starts humming along again.
As for wages, meh. Being a proponent of UBI, I think we should make such benefits permanent. Businesses will adjust their finances to stay afloat. Or they will embrace automation. They can do it now, they just don’t want to.Report
Inflation is natural and normal like murder is. There’d be something wrong with a society in which there was none, and you don’t want it excessive. But I wouldn’t say it’s “not bad”.Report
I was thinking about the standard business axiom that the value of capital must rise over time.
That if interest rates were zero, this would be a Bad Thing. Not just unusual, but actually Bad.
And I’m sure plenty of economists would explain to me why this is so, so I accept the proposition.
But I see this used as a justification for why business plans assume that prices will rise inexorably, ever upward into infinity.
The logic explained to me is that if the capital markets will give you a 5% increase then an investment must match that, or you are actually losing money.
Notice that I’m not quoting econ textbooks here, not theory, but street level how-businesspeople-actually-think, that rents and prices are always in a race with capital markets, and prices must rise to match.
Can we imagine a world in which capital returns a certain percentage increase each year, while rents and prices remain flat, in some consistent equilibrium continuing indefinitely?
Maybe! But I’ve never seen anyone make the pitch.Report
An interest rate could be greater than zero on the basis of risk alone.
As for indefinite price increases, it can happen without any damage as long as everyone puts that into their calculations.
Both those propositions are a bit theoretical though (the first moreso). But any deviation from a universally-expected inflation rate causes disruption.Report
When everything is all about how much you can grow your numbers, inflation is a natural part of it. Add in things that normally cause prices to increase (supply reductions/ increases in demand), and the need to offer more pay to retain good employees, and you have most of the rest.Report
“The current spike in inflation has a very clear, very well defined cause that you don’t even bother to mention – the pandemic. ”
Ignoring, glossing over, or simply pretending inconvenient facts or concepts don’t exist is sadly becoming a bit of a pattern here.
Then there’s this: “Biden, being a foolish man being led by the hand by even more foolish people”, which indicates he’s a firm believer in the “Biden is a senile old man controlled by those around him”.
Conspiracy theories and generalized nutiness are a bad look for a regular front pager, you know?Report
I don’t think it’s bad for a front pager at all. Whatever the merits they represent a significant strain of thought in our polity and I think it might be salutary for them to be aired here and then beaten to death in comments.Report
Well he does say his mind is a silly place.Report
I’m with North, a front pager I agree with is someone I can’t hone arguments against.Report
There’s a difference between “I disagree with” and people making bad faith posts and arguments based mostly on simply omitting inconvenient facts.
What’s the point of honing yourself against a strawman?
What did you gain from tilting against this windmill? The understanding that important facts are important? Didn’t you already know that?Report
Not to speak for Oscar but only for myself, I find many of the points in the essay to be variants of ones that I, myself, would have made a decade ago.
There is a great deal of benefit to arguing against an argument that is similar to one that one once held.Report
Notice I dug that one out straight away (the fact that there is a very big, very good reason for inflation that has feck all to do with the current POTUS). It’s nice, because then I can ignore all the inflation whining and get into something meatier.Report
“Excessive or runaway inflation is bad.”
Yet another thing Boomers maximized to their benefit. ‘Excessive’ inflation that *doesn’t* turn into runaway inflation and returns to ‘Normal’ inflation is tough in the short term, good in the medium term, and awesome in the long term – for them that had debts during it.
Most of us are debtors…Report
“‘Normal’ inflation” does most of the work here. What level of inflation — persistent over time, not occasional spikes — do you see as “normal”? For the last several years, we have been below two percent and the Fed has been happy with that.Report
Yes? That’s the point. Inflation is deemed normal to stabilize debt markets on behalf of the creditors. Which is why ‘runs’ of inflation are great for debtors, bad for wanna-be debtors, and perplexing for creditors. Which isn’t to overlook the danger of runaway or extended inflation, just to note that we privilege low inflation for various reasons, some of which are very good.Report
FWIW, the Fed’s old target was three percent.
After a decade or two of failing to hit it, they gave up and made it 2%. Even that has rarely been hit, which means frankly we could run many years over target and STILL average out to 2%.Report
So at what persistent number is inflation a problem? I lived through double-digit inflation and what it took to break it. I’d say 2-3% is a walk in the park.Report
It depends on a lot of things, but if you just want a sort of gut check “when should you panic”, it’s when a wage-price spiral sets in.
Raising the minimum wage once after a VERY long period of stagnation (and not even to an inflation adjusted historic high) is not a wage-price spiral.Report
Actually 15 might be an inflation adjusted high. I think 12 or 13 an hour (in today’s dollars) was the previous high.
Not that it matters much, it’s about a 10-15% difference AND we’re talking 60 years of productivity gains from that.Report
This is another fantastic throwback. I think it feels like a *smacks lips thoughtfully* circa 2009-2010 (pre election) vintage to me. Hyper inflation looms; we’re going to be hauling greenbacks in wheelbarrows; an inept Democratic President is to blame; libertarian howls at the passing clouds- imagines great effect.
If employers don’t want to wait for the jobless benefits to expire they could always… ya know… raise the wage they’re offering? Supply? Demand? Those twin Gods libertarians genuflect to eagerly? As far as I’ve seen a small bump in offered wages quickly resolves labor supply problems. Go figure.
As to inflation; it certainly remains something that we should be keeping an eye on. This base stealing about gas prices is just sad though- I’d say even the Aughts brand of libertarians would feel sheepish about trying to compare price changes on gas from the midst of a historic pandemic to now and use it to declare the arrival of hyper inflation. And they Keystone nonsense? Pff… it’s a proposed pipeline that’d mainly carry oil from the tar sands that is currently uneconomical to extract because fracking has brought oil prices too low. The idea that Keystone has any significant impact on current oil prices is knee slapping hilarious.
Over all, though, this is a good effort. I definitely felt like I was in my late 20’s again reading your post and that’s a fine gift to receive on an overly dry Tuesday morning.Report
You fool, you know very well it’s not the free market if it isn’t working to the benefit of employers.Report
What on earth was I thinking??Report
Tar Sands are plenty economical to extract with oil at $50. This a very common error out there so its worth explaining. Existing Athabasca area projects don’t have particularly very high operating costs and last for a long time so can get by even in $30 dollar range. What happens when the price dips below $60-$70 is that it becomes uneconomical to do the very capital and labour intensive bit which is to greenfield new production. This is why you hear so much about the economic pain in Western Canada oilfields with low oil prices, it shuts down expansion which does bad things for employment, not that the existing oil producers are getting squeezed that bad.
That said, the price of oil in the United States is pretty much set at on a global or continental level and whether pipeline capacity expands or not had relatively little to do with the movement of a much much larger market. The point of the pipeline expansion is that existing pipelines are massively oversubscribed and as a consequence its going to market much less efficiently by rail. This has big economic effects in the Western Canadian oil patch because it expands the differential from the price they get and the price of oil at tidewater, but small ones for the American driver.Report
This is a very cogent point, well done.Report
Artificially increased wages. Explain how government influence makes the same employee worth more to the employer. Because it won’t.Report
Explain how the employer has any real clue as to the actual value of an employee as it relates to price. Price is a signal, nothing more, nothing less. Sometimes that signal aligns nicely with the value a buyer has for X, sometimes it doesn’t.
If the employer really feels that their employees are not worth the current price, they can look for better employees. There is no rule that you have to pay the crap employee $15/hr. You can just fire them and find someone better that is worth $15/hr.
But oh, that takes work, and good employees are the ones who won’t put up with your crap managers, or crap owners, or etc., because they have options, because they are good employees.
It’s always funny how we are sympathetic to the complaints of managers/owners regarding bad employees, without ever asking, “Are these good managers/owners?”. There is always this assumption that bad managers/owners will be forced out of the market, except there is an awful lot of evidence that the market is very forgiving to bad owners/managers because of good employees who prop them up because of self-interest (until it isn’t, obviously, but it can take a long time for the market to finally enable Karma to have her day).Report
Yeah, occasionally there are funny pictures that make the rounds of signs taped to drive-through microphones or glass doors saying “sorry, we’re closed, nobody showed up today”.
The response from some people is “GET RID OF THE UBI!”
The response from others is “that employer needs to pay people more.”
Well. Something has got to give. And Delta doesn’t strike me as likely to result in the UBI going away anytime soon.Report
I am deeply deeply dubious that, Delta or no, the enhanced unemployment assistance will be extended past when it’s currently expected to run out.
I could be wrong but the Admin hasn’t been sending those signals and they haven’t been making any appeals on that matter to congress either which they would need to do.Report
Either Delta is as bad as they say or it ain’t.
If it is, both the Legislative and the Executive can’t change back to pre-pandemic policies.
If it ain’t, that’ll be apparent by the end of August.Report
It’s quite bad for the unvaccinated and hospitals in areas with large proportions of unvaccinated people. For vaccinated people it’s either nothing or a mild cold.
We’re at 70% having had their initial jab now. So I would be shocked if Delta, by itself, is presenting a massive menace to the overall economy or populace by the end of August.Report
Price signals is what we have to work with. If it’s sucky to deal with them, it’s way more sucky to not have them.
It’s fine to say “we should ignore price signals for desired policy ‘X'”. If and when we enact policies built on that, we’ll discover the market doesn’t ignore them.
The govs ability to destroy bad jobs is not the same thing as transforming those jobs into good jobs much less transforming the workers. If you mandate that people flipping burgers make $50 an hour then you’re also mandating that they have a degree in robotic control and will be “managing” a crew of robots.Report
Yes. Exactly. Alternatively, your burgers cost $15/ea. That $50 isn’t free (unless we really want runaway inflation).
The point is, employers adjust. If labor goes up, they adjust. If the cost of beef goes up, they adjust. If the price of rent or land goes up, they adjust.
It’s funny how everyone complains about the cost of labor going up, but nary a word about the cost of materials/inputs, or commercial rents/real estate, etc.Report
Adjust. Or go out of business. Or do less with fewer workers.
Thing is, my kids have the serious flaw of being young and inexperienced. Adults with those jobs don’t have that flaw… so what is their flaw? Bad luck would count, but is that the way to bet?
If you-an-employer need to fire half your workforce, do keep my kids who are functional but ignorant and fire people who have other problems?
The min-wage seems a poor tool for whatever we’re trying to do.
This reminds me a lot of the sneaker sweatshop workers that got everyone spun up a few decades ago. We put a lot of pressure on the company because of ethics. The workers were there volentarily because their other options were worse. Eventually the company closed the plants to move to another country.Report
I’m not saying it’s without cost, or drawbacks. But the cost of labor isn’t special in that we should be overly concerned with how much it rises, and ignore all the other business costs that rise.
That said, this isn’t a case of the government resetting the minimum wage to some crazy big number. Even if they raised it to $15 next week, most employers would not be impacted, because they already pay that or more.
What we have here is the government offering minimum wage entitlement to that class of employees, and they are deciding that the risk and/or hassle of going back to work is not worth the extra money they would make.
Remember, most of the jobs in question are your service jobs, the ones notorious for really bad/abusive management and really bad/abusive customers, alongside significant wage theft.
I don’t blame them for staying home.Report
“Even if they raised it to $15 next week, most employers would not be impacted, because they already pay that or more.”
uhhhhhhhh
if there’s actually a Huge Crisis Of People Not Having Living Wages and raising the minimum wage to $15 would fix it then I think that shows most employers aren’t already paying that much or more
and if most employers actually are paying that much or more but there’s still a Huge Crisis Of People Etc. then maybe $15 is still too low and it has to be raised further, which will impact most employersReport
Yes.
I mean, IMHO, a federal Min Wage is dumb. At most, we should have a set of federal guidelines for how to set the local min wage and key it to inflation, because $15 is probably a crisis in NYC or SF, but is doing alright in BFE.
But “$15 For All” is easier to put on a sign than “Set locally via CPI/GDP and key to inflation.”Report
“Yes.”
Yes to “most employers would be affected”, or yes to “the minimum wage should actually be a lot higher, which would affect most employers”?
(Either way you’re wrong. Feel free to not reply.)Report
We’re talking about artificially raising a cost of business because of ethics. That’s pretty rare, doubly so for affecting every business that uses labor.
Further, what problem are we trying to solve here?
Typically the big issue that comes up in terms of the lower class is the cost of housing. That’s not fixable with any level of wage increase because we’re simply not letting enough housing be created. Then we’re just shocked that it’s the upper X% of the market that can find housing and the bottom Y% that gets priced out.
The other problem that has come up in this talk is bad choices(*) leading to bad outcomes. The flip side of that is good choices leading to good outcomes.
That’s a feature, not a bug.
(*) For some definition of “bad choices”.Report
But are we? Isn’t the topic one of entitlement versus wage, rather than raising the minimum wage?
Re: min wage, see my reply to DD above.
For everything else, I put a comment at the bottom of the page.Report
There’s also the fact that eating wage increases isn’t actually THAT expensive.
Remember when the CEO of Papa John’s defended not giving his employees health care because it’s raise the cost of pizza like 30 cents? (And indeed seemed to think this was an argument that would resonate with the public)
Push then to 15 and hour AND given them health care and your pizza price might go up a dollar.
people tend to vastly, VASTLY overestimate how much labor is a cost of most final products.
FWIW, my plumber and mechanic both make a crap-ton more than 15 an hour, and the bill is STILL mostly parts/supplies, and that’s skilled and hard labor.Report
The irony is, big companies can most easily eat a hike in costs, but if they do, they are punished for it by Wall Street.Report
Stock price is everything, which is why companies are sociopathic and upper management penny-wise, pound foolish.
We have some really perverse incentives in corporations right now.Report
My experience is that employers are always looking for purple unicorns. Uncommonly skilled people who will work for lower wages. The worst of them think of themselves as little kings or queens who want your subservience for employment.
To a certain extent, I get that “wages are sticky” and employers might not want a situation where Pauline discovers Josephine is getting paid more for the same job just because of when she was hired. But it never ceases to amaze me how many places really want to do anything but offer more pay, no matter the circumstances.
Recently, a recruiter reached out to me for a firm that wanted to build its trial team. The firm operates on a contingency model and comp would have been “base plus percentage of settlement/trial verdicts.” This is fair enough as models go but the base was very low for people who were willing and able to try cases and the ceiling on cut of contingency fees was kind of low as well. Anyone with the experience they wanted would probably hear the comp and think “I can just set up shop on my own.”Report
They had a CEILING???Report
The recruiter explained to me that I could earn “up to $250,000.00” and I took that to be a ceiling. The firm was apparently on the new side and good at settlements but the founders were looking for people who could try cases and apparently wanted rock bottom rates.Report
I’m down with “rock bottom rates”.
But I’m assuming that the lawyer gets 1/3rd of the settlement.
And I’m cool with the office taking a slice of that for providing books and tables and conference rooms and a fridge and paralegals to yell at.
But if you get a case that has a payout of $X where $X gets you to $250,000 in January… is the expectation that you work for free for the rest of the year and every cent you bring in goes to the partners?
That’s bullshit.
It’s like putting a ceiling on the bonuses that your sales people get.Report
I think the proper term is purple squirrel but I generally agree with this. The idea employee for many people is somebody who is high skilled and dedicated but willing to work for as little money as possible. The only exception to this rule is for people that manage to get into big law, high finance, consulting, and upper level tech off the bat. There a culture of being your own exists.Report
You can see it in the artistic world as “your payment would be in exposure”.
I’ve always loved that one. Because they can pay rent in “10 friends of this guy saw my art once”Report
The employer knows how much money said employee makes for them or will likely make for them. Those are usually snap judgements, but they are done every minute of every day in loads of scenarios by almost everyone.Report
If it’s a snap judgement, then they don’t know. They are making a guess. Maybe they are really good at making that guess, but I suspect most of them suck at it, and either wildly under- or over- value any given employee.Report
Isn’t the whole point of the labor market to make it so that individual employers don’t need to make continuous, precise (as opposed to say, categorical, e.g., Susan produces at Clerk IV level while John produces at Clerk III level) judgments about the production value of workers, because that’s already reflected in the supply and demand equation?
Granted, there are all sorts of, er, inefficiencies in any existing labor markets that distort that, making things a bit more difficult for employers (and a whole lot more difficult for workers), but that’s the way it’s supposed to work, right?Report
Yes.Report
You’d think a dude writing a whole series on Hayek would know this.Report
I’ve seen plenty of people claim to be Biblical experts and talk deeply about the Bible, who have also clearly never read the thing.
Just leafed through it and read what other people said about it, other people that were curated to fit their prior beliefs.Report
Oscar, I’m sorry, but you are willfully ignoring the points I’m making.Report
If you were making an actual point instead of just ranting about how X offends thee, I might not ignore them your supposed points.Report
There is a market for labor, which determines wages. Maybe snap judgement is not the phrase to use.Report
“Everything is worth what the purchaser will pay for it.”
Whining about “artificial wage inflation” isn’t typically a libertarian MO. If the employee isn’t worth more to the employer than the employer can simply wait those tables or clean those hotel rooms themselves. What is happening here is that the employer needs those employees but doesn’t want to pay more for them. To which my response is “cry me a river: raise your offered wages or do it yourself.”
Now if the employer can only stay in business by increasing their prices to pay for the higher labor costs then and only then are we getting into a more systemic inflation concern.Report
“Whining about “artificial wage inflation” isn’t typically a libertarian MO.”
Defined here as governmental involvement, of course it is. There’s no bigger foe to a libertarian.Report
Governmental involvement?
WHEN DID THIS HAPPEN
(Merely pointing out that we may be in a “locking the barn door after the horse escaped and was beaten to death in another country entirely and, oh, by the way, the barn burned down” situation.)Report
I’ve seen it plenty on minimum wage which is more understandable since that price floor is by state fiat. In this case, though, the state is, at worst (and questionably), an alleged competitor for labor so whining about employees not being willing to work for lower wages than are necessary to attract them seems very un-libertarian to me (though classically republitarian).Report
If Russell was making this point I didn’t notice it. He seems to be talking exclusively about government involvement. If this is what you and Jay think the conversation is about, it’d explain why everyone is talking past each other.
So, a request: what do we all think this article is talking about? Russell, you’re welcome to weigh in.Report
Oh, I think I got it. Maybe people misread the part about employers competing against unemployment checks and thought it was employers competing against each other. But whatever’s going on, I’m willing to bet that most of the comments on this thread don’t match the article’s subjects.Report
Yeah, they are competing against unemployment checks.
Some people say that the solution is to get rid of unemployment.
Some people say that the solution is to raise wages.
Keep using the word “should” in one hand, poop in the other, etc.Report
If you are an employer and you can not compete with an unemployment check, then how are you actually providing employment that has value?
I think the max is $790/wk, so $3160/mo. The average is $300/wk, or $1200/mo (before taxes, IIRC).
Man, if $1200/mo is enough to keep you sitting comfortable enough to not look for work, I can understand why. Especially if you aren’t interested in dealing with unvaccinated/unmasked individuals at work.Report
I can conceive of a level of unemployment payments above which it becomes harder to encourage people to work. I don’t know if we’re generally at that point. (Of course, that point is going to vary by person.) I don’t understand why we’d have an obligation to provide that level of income across the board, though. Definitely not from the perspective of encouraging economic growth. I don’t see a moral obligation either. There may come a point where society has the income to do so, and we could argue about that, but I don’t think the determination of a moral level of minimum income would be related to any individual’s indifference point for employment / nonemployment. I really don’t see how the level of aid from an emergency program during a health crisis should be a factor in those determinations.Report
If it helps, my wife has absolutely been discouraged from work by unemployment. She got more from unemployment than she normally gets from work.Report
What we have now isn’t enough money to stop most able bodied adults from seeking work, but it probably is enough to make them not seek certain kinds of work, or work for certain employers.Report
Let me add, that the government telling everyone they must pay a wage that is much higher than the average bottom quintile wage is artificially inflating wages.
The government providing a generous entitlement is not. One could argue that it’s creating some artificial competition for labor and wages, but no more so than a big company moving into a market and sucking up a bunch of the labor pool.
What irks folks is not the wage competition, it’s the ‘money for nothing’, that simply gets dressed up as a weak economic argument.Report
This.Report
When I am feeling generous, I think that libertarian types would like people to see how they benefit from low prices even if their wages are lower. When I am feeling more critical, I think the libertarians just want people to accept their positions as serfs with more gratitude.Report
Leaving people alone is what we want. You think government should do something. We caution against it, almost every time. The seen and the unseen. The Law of Unintended Consequences.Report
This though is the weird libertarian/economist blind spot:
Assume a game with rules.
Altering the rules can have unintended consequences.
Theoretically there should be no rules
But for the rules we’ve assumed in the game.
The premise I agree with is that the rules of the game are so unimaginably complex that thinking we could order them to our whim is fraught with unintended consequences.
Where I part ways is the idea that the rules are sui-generis and that we aren’t already laboring under anything *other* than unintended consequences.Report
The libertarian argument is that market forces are like natural forces that humans temper with at their own peril. The Far Left believe that the market is an entirely human creation that we can shape to meet our needs. Most people are in between this.Report
I don’t think it is just that the game rules are so complex (but they can be) but humans are humans and have a “hey no fair!” reaction when the rules can be used against them or are suddenly not to their advantage.Report
You’re absolutely right how much this sounds like 2010.
“We can’t find anyone to do these jobs!”
“Have you tried offering more money?”
“We can’t find anyone to do these jobs!”
“So that’s a no?”
“We offer competitive rates?”
“Do your competitors have the same problem?”
“Yes, they also can’t find anyone to fill these roles.”
I’ve seen them suggest all sorts of solutions — from visas to demanding government assistance, but it seems the mere idea of offering more money is just a mental blindspot.
It’s like the whole “free market” thing doesn’t apply to wages in their heads.
A curious but HIGHLY convenient blind spot for employers, and it’s weird to see it echoed occasionally by employees. Perhaps they hope to be the employers someday, or perhaps they have a very zero-sum view of wages, or perhaps they’re just conditioned to be utterly blind to their own worth.
A few decades of union busting has paid off to the point where employees themselves will refuse to ask for higher wages in a tight labor market, as if that were taboo.
Worth comparing to 2009 and the hysteria over jingle mail. Any business that legally and according to contract cut an underwater asset would be applauded. But a homeowner dumping their underwater house on the bank? HERESY.
One thing I keenly remember is how quite a few Very Important People on TV went straight to moral language about jingle mail. It was unethical, it was unfair, it was immoral, it was a bad thing to do, it made the Baby Jesus cry…..Report
LOL I had completely forgotten the Jinglemail fooferaw! Those homeowners who determined that the disparity between what they owed and what the house was worth was worth the powerful blow to their credit rating were entirely in their rights to walk away. The morality nonsense was incredible. I think McMeagan actually had the audacity to peddle that one which was rich.Report
I wanna know what people had been paying mortgage insurance for.
If mortgage insurance wasn’t for EXACTLY WHAT FRIGGIN’ HAPPENED, what is it for?Report
If it’s private mortgage insurance (“PMI”), which is usually required when your down payment is under 20%, it’s to protect the lender , not you. After foreclosure, if the foreclosure sale doesn’t cover the debt, the lender collects. You, on the other hand, are out on the street. If it’s mortgage protection insurance (“MPI”), it’s something you can buy for yourself. It isn’t required. It covers your mortgage payments for a limited time if you have an income shock. Sort of like AFFLAC. But unless things get better for you and you can resume paying your mortgage, eventually you’re on the street.
That’s what they’re for. That may not be what the people who bought them thought they were for, but that’s another issue.Report
No, I specifically was thinking about the situation where a guy buys a house for $250,000, the market crashes and it’s now worth $184,900, and he defaults and walks away. Presumably on the sunny side of the street.
I’m not thinking about the borrower at all. He was protected, for lack of a better word, by defaulting.Report
Well, figuring out what you were thinking based on what you were saying is always tricky. So what is your question again? Are you under the impression that someone who defaults on his mortgage and walks away is on the sunny side of the street? Try getting another loan. And what does insurance have to do with all this?Report
My question was about the “morality” issue of sticking with paying payments for a house that was underwater.
It strikes me that those morality arguments didn’t take into account the fact that those people had been paying mortgage insurance.
Not for themselves, but to protect the lenders.
Walking away from the (severely) underwater mortgage was protection for those who took out the loans.
The mortgage insurance was protection for the lenders.
Everybody’s protected.Report
Well, if that’s what you say your question was, I suppose everyone else’s inability to see it is on us. Or maybe not.
Still can’t quite figure out how walking away from an underwater house (which, incidentally, could easily get above water over the generally long life of a mortgage) and ruining your credit counts as being “protected.”Report
I apologize for being unclear. I saw North’s comment finish up with “The morality nonsense was incredible. I think McMeagan actually had the audacity to peddle that one which was rich” and I went from there directly into my frustrated question.
I regret not being clear enough. I will endeavor to do a better job providing context in the future.
Still can’t quite figure out how walking away from an underwater house (which, incidentally, could easily get above water over the generally long life of a mortgage) and ruining your credit counts as being “protected.”
Well, imagine buying a house for $X.
Then, immediately, the crash happens and you have a house that you owe $X for and, even if you sold it, you’d still be behind by six figures.
Walking away would protect you from that six figure loss.
Now, sure, bad other things would happen! But a six figure loss is a six figure loss.Report
Or, if not six figures, more than you’d make in a year. You could work for two years and have every penny go into your house and you’d *STILL* owe money.
Protected from *THAT*.Report
If I bought a house for $X, I’d have a mortgage payment of $Y. If I can manage the mortgage payment, I can still live in the house. If the house is currently worth $Z, where Z is less than X, my net worth calculations may be affected, but unless, for some reason, I have to sell the house, I haven’t taken a loss. And if I stay in the house long-term, which is what most people plan on doing when they take out a 15 or 30 year mortgage, and ride things out, it’s likely I’ll be fine. If I walk away, I’ll be “protected” from borrowing large amounts of money in the future. Which might not be so bad for some folks, but most of us would not like it.Report
Golly, you should have been around in 2008. You could have given really good advice to all of the people freaking out about the housing crash.
Do you agree with McArdle about the moral obligations of making the mortgage payments since you signed for the mortgage?Report
If you are still living in the house, and have no compelling reason to sell the house, and can continue to afford the mortgage payments, then yes, you are morally obligated to make those payments, even if the mortgage is currently underwater.
Jingle Mail was only justified if you could not afford the house or you had a compelling reason to move (new job, family emergency, etc.) and could not reasonably rent the place out.
I had a house that was underwater, and we rented it out for 3 years until things recovered enough to break even on the sale. It was a PITA, but we could buy another house straight away.
Not everyone could do that, and in the right circumstances, defaulting was absolutely justified.Report
“and can continue to afford the mortgage payments, then yes, you are morally obligated to make those payments”
Nope. There is no “moral” in contracts. There is simply contractually allowed or not.
If it’s more expensive to stay than it is to let the bank foreclose and take the credit hit, you should leave.
Just like any business in America would. In a heartbeat.
Morality is a funny argument to burden individuals and given them extra obligations to businesses that are nor reciprocated.
If you want morality in your contracts, add them in. Good luck with THAT.Report
Fair point.
It’s smart to pay the mortgage if you can, because foreclosure hurts.Report
Worst case I know of: (read about it, don’t know anyone in this boat):
You buy a brand-new house in a brand-new development. It’s nice. Turns out most of the other buyers had NINJA loans. They send jingle mail, which is fine for them, because they had little or no down-payment to lose and their credit already stunk. But you’re now living in a ghost town, with some houses empty, some occupied by squatters, and many stripped of fixtures and copper wiring. Your house will never regain its value unless every nearby one is bulldozed and rebuilt. What do you do?
Note: The builders are fine. The original lenders are fine, because they sold 100% of their mortgages immediately. The people who bought the mortgages, packaged them into CDOs, and sold them as blue-chip investments are fine. AIG, who sold fake insurance on the value of the CDOs, is not happy with the size of their bailout, and will later sue because it’s no fairs. (The lost, so there is some small amount of justice in the world.
But you? You are screwed.Report
Absolutely it does. Jingle mail was not cost free for the previous homeowners. The credit hit alone would be savage. They’d have no real chance of owning a home for almost a decade, unless they actually had the cash up front.
But if it made economic sense to take that hit and walk away — if it cost you less in the long run — you should.
If you lived in the home and could afford the mortgage, being upside down wasn’t worth walking away.
If you couldn’t afford it (ARM’s for instance) then the choice was made for you.
if you could afford it, but it was an investment and not a home — that’s when you do the math and mail in your keys or not.
But in the end, I found the hypocrisy appalling as hard-eyed “businessmen” on TV went on and on using the language of morality to try to shame people from…doing what is, in the end, exactly the calculation any business does a thousand times a day.
If you weren’t aware of what the housing market scam was before, that should have made it clear.
It sounded very much like the top of a ponzi scheme screaming his investors were morally obligated to keep finding more investors…Report
What is good for me (making money) is moral.
What is bad for me (losing money) is immoral.Report
I was around in 2008, and that is exactly the advice I gave. It’s also the advice I followed. And it worked out.
Now some people couldn’t do that. They may have been planning to profit from a quick flip, figuring, wrongly, that home prices always rose even in the short term, or took on more debt than they could safely handle. Or they suffered an economic shock that prevented them from holding on and riding things out. Greed, stupidity, or bad luck can hit anyone.
As for McArdle, I don’t know what she said and have no interest in finding out just so I can formulate an opinion on something I don’t need to have an opinion about. I did once defend her against someone who thought she was mourning her recently deceased dog too much for his taste, but I rarely read her and don’t think it’s a good use of my time to find out what she says about things so I can agree or disagree with her.
Generally, however, I think that there is a good case for doing what you promised to do if you can. Though as my esteemed Contracts professor used to say, the law shows a curious solicitude for people who don’t keep their promises. If you can’t keep your promise, then do what you have to do. The inevitable hit on your creditworthiness is sanction enough. If you can, but walk away anyway, you still take a hit on your creditworthiness, and if you walked away just because you could you take a reputational hit as well. These things have a way of working out.Report
Now some people couldn’t do that. They may have been planning to profit from a quick flip, figuring, wrongly, that home prices always rose even in the short term, or took on more debt than they could safely handle. Or they suffered an economic shock that prevented them from holding on and riding things out. Greed, stupidity, or bad luck can hit anyone.
I agree with this!
But when we swap out “some people” with “some corporate entities”, I quickly move to “caring exactly as much” and yet, for some reason, the government thinks that it is very, very important that these corporate entities do not get treated the same as, you know, some people.
And that turns into arguments about how people ought to do the moral thing and not walk away from an underwater house but, GOOD GOD!!! WE NEED TO SHOVEL MONEY INTO THESE CORPORATE ENTITIES! WAIT A SHOVEL ISN’T BIG ENOUGH GET THE BULLDOZER!
At which point I suddenly become a lot cooler with people walking away from underwater mortgages.
“But what about the lenders?”
“Meh. What is mortgage insurance for?”Report
This. My wife and I bought our first house in 1981 during the peak of the inflation thing. We were paying 14.5% on the mortgage, but salaries were appreciating nearly as fast and the payment was fixed for 30 years. We rode the benefit of decreasing interest rates for 15 years and paid the sucker off. Over the last decade we advanced our children moneys against their probable inheritance in order to (a) lock in fixed payments and (b) get them onto the insane regional real estate escalator.Report
Problem is you probably have 6 houses and was intending to sell them all, which you now would have to do at a loss (a loss which will bankrupt you).
Ergo your credit rating is going to tank no matter what you do. The issue now is who loses money and how much.Report
Mortgage Insurance is not insurance for the borrowers, it’s insurance for the lender. Mortgage Insurance, or PMI, is basically a fee borrowers pay so they don’t have to put as much money down up front. It’s a door opener to let them get the loan in the first place and doesn’t serve to protect them in the event of defaults.
It does protect the lender from certain costs when a borrower defaults, but not all costs and back in 08 the costs and losses involved when borrowers defaulted were astronomical and any MI payouts were modest in comparison to the losses.Report
It does protect the lender from certain costs when a borrower defaults, but not all costs and back in 08 the costs and losses involved when borrowers defaulted were astronomical and any MI payouts were modest in comparison to the losses.
Shoulda bought better insurance.Report
Most people go into business to make money for themselves. Some might have some sort of vision but it’s mainly because they want to be rich. Paying market rate wages can be detrimental to this, so they try to get as much work for as little money as possible. Many market economists recognize that this is really hypocritical but some tend to be hacks.Report
Markets don’t care about hypocrisy.
Ideally, employers want as much productivity for as little cost, and employees want as much income for as little effort. Ideally, the market should find the happy middle.
The problem is that the market assumes equal information / power. Employees are more likely to be desperate for income than employers are desperate for labor.
When the script flips, the caterwauling can be heard on the ISS.Report
First, that’s hardly true.
2nd, worker knowledge has gone up, a LOT, with the internet. All companies can advertise for workers everywhere. All employees can interview everywhere.Report
Heh, have a couple employees talking to each other about what they’re being paid anywhere management can hear it and the flop sweat and frantic screeching from management starts instantaneously. That is true both for the local muffin shop and the multinational campus.Report
You look it up on glassdoor.comReport
Glassdoor gives a range, which is an estimate as reported by current and former employees. It gives you an idea if a given company can/will offer what you want. That’s all.Report
Yep. I will say there’s been some mild progress.
Since the late 90s, my industry has gone from lying to employees (telling them discussing salary is a firing offense, which is not only a lie but I believe illegal) to merely discouraging it as heavily as possible, usually by claiming it’s for ‘morale’ reasons.
The morale reasons being, of course, finding out that the lazy ass in a similar job is making 40% more than you.
Someone quitting over that really would gut management’s morale. You know how much money it costs to find, hire, train, and suffer through their learning period, a new hire?Report
Information asymmetry is a thing. Employers generally have more information than employees, especially at the low end (you do this a lot, where you appear to assume your personal mid to high end situation is analogous to the low end, when it very much isn’t).
I have a less severe asymmetry than I did as a kid, and I imagine anyone in upper management has even less asymmetry, if not parity.
As for worker knowledge, yes, it’s better, especially for the professional and para-professional class. But we aren’t talking about those, are we?Report
I can tell you that even people at the high end or at least more educated end can have a hard time determining what is a fair market salary for their skills. The very big law firms tend of to have pretty easy to find rates for their associates but despite their size, they only represent about 5 percent of lawyers in the United States. Even government positions tend to come with salaries with a range and sometimes that range can be wide (30K-50K difference)Report
Every career Federal Civil Servant has his or her exact salary published annually by OPM. The only exceptions are SOME of the folks doing national security work. But for the rest of us its out there.Report
Baseball players too. In the old days, before free agency, keeping salaries secret was one of the chief tactics used to keep them down. There are lots of stories about a player asking for X and being told he was crazy, the team’s best player didn’t even make X. (Narrator: He actually made 2X.)Report
It’s an amazing fact: with all the effort employers go to to depress wages, people are still paid *exactly* the marginal value of their labor.
Or so I’ve been told.Report
It’s like how an adversarial justice system supposedly produces justice. Further this behaviour by employers presumably predates the study of economics. It’s baked into the cake.Report
Another example of not going beyond Econ 101.Report
To my perspective, here is what we have going on.
Covid happened. The government, for better or worse, shutdown a significant portion of the economy, displacing a large number of low end employees from the market. Because government is not a complete monster (only a partial monster), they provided an entitlement to get people through the shutdown.
Of course, what jobs are in that low end? The bulk of the front line service work. Housekeeping, counter service, wait staff, etc. The people who tend to make crap money and work for horrible / incompetent people while dealing with horrible / incompetent customers.
You know that old saying, people will quit a boss a lot faster than they will quit a job?
Every time I hear an employer complain about how they have to compete with the entitlement, what I see is an employer who can not offer a workplace that employees want to work at. Maybe they steal tips/wages? Maybe they are abusive? Maybe they let customers abuse employees? Who knows, but if you can’t get your workforce back, then it’s because they really don’t want to work for you anymore at that price, and for the moment, they have another option.
So, in a sense, this is all an a$$hole tax on employers. Because not every employer is having this problem. Many got their people back easy peasy. Probably because they pay well, or have a solid reputation for being decent and backing their people. The ones who struggle, they have to pay the tax, at least until folks are desperate enough to have no choice.
Also, from what I hear, a lot of people used the time off to go back to school, or have plans to go back to school, or otherwise learn new skills, so they don’t have to go back to crap work, and are working that angle.Report
No.Report
Well, that certainly cleared things up.Report
It’s really kind of putting a dent in Oscar trying to hone his argument for certain.Report
It’s a chip, man. Stick with the knife sharpening analogy!
Or a nick.Report
You hone a knife, right?
I mean I’m not ruling out that I either invented a word, or totally misunderstood it.Report
Well, alrighty then.
I’m used to the whole, “If you can’t blind ’em with yer brilliance, baffle ’em with bull$hit”, schtick.
But a concise ‘No’? I admit, I’m stumped. I just don’t know where to begin…Report
Accept the win and move on.Report
Anecdotally, I’ve seen a few Twitter rants about “We’re closed despite offer 20 bucks an hour we can’t find people” (generally then launching into some fun screeds) that got fact checked.
Turns out they were offer 10 bucks an hour, and were notoriously a crap place to work.
Much easier to blame the big bad government.
hell, my own company tried that back when the ACA was being worked on. They switched us ALL over to HDHP’s on zero notice (which, btw, sucks in your 40s with a diabetic on your plan — it’s not like you have an HSA, nor did they front-load your HSA with your yearly payment) and blamed the ACA for it.
Officially. There was an email from HR claiming it was “to comply with the new law”.
The new law that had not, in fact, even been voted on.Report
Great summary.Report
COVID for better for worse has exposed a lot of things about what is horrible with our jobs market/society at all levels.
I-banking is a career known for brutally long hours and working more than five days a week. The pay off for these young twenty somethings is that they will get paid more money than most people (especially after bonuses), get lots of fancy food comped as a business expense, and also get to blow of steam by partying with the energy of 24 year olds and the budgets exceeding 24 year old typical budgets.
What happened during COVID? Work from home so they still had the long hours, maybe longer, and the pay (hopefully) but the networking and ability to blow off steam was taken away and then a lot of them decided “working 14 hours a day, seven days a week really sucks.”
Ordinary white-collar workers decided commuting sucks but working from home is pretty nice.
Service workers? They decided getting yelled at for subservience wages is not worth it.Report
Most people are creatures of habit and highly reluctant to change.
A friend with an engineering degree took a job with sucky pay and hours. That’s fine, he took a terrible job… but 5 years later he still had it. He was a smart guy, he could do other things, if his plant closed because of covid he’d look for other work.
A lot of people could do better and should do better. Put together a resume and see what’s out there.Report
Yes. Agency. Having someone else to blame for your problems doesn’t solve your problems, does it?Report
If Agency is a thing, then employers who have trouble attracting people have agency over their situation as well.Report
That’s the thing, a lot of people did put their resume together, and put it out there (because, hey, as you said, folks aren’t stuck in the local labor market anymore, remote work is doable). So they aren’t ready yet to go work a crap job for crap wages. They are still looking for that something better.
This whole “People are lazy and living off the dole because…” is largely a nice story crap employers are telling because admitting that you are a crap employer is not a fun thing to do. I mean, the story is probably is true for some percentage, but I doubt it’s a high enough percentage to matter. People have been given a chance to take time to think and re-align and many of them are taking that chance. The schools they couldn’t go to because relocation is expensive are now offering a wide range of classes and programs online. Work they couldn’t find locally is now open to them remotely.
I mean, for all of this, I assume there are numbers out there, right? We should have some idea how many previous employees from a given sector have found work in a different, higher paying sector? Or how many have just decided that they don’t really need to work (such as your wife)? Maybe the problem isn’t lazy workers on the dole, maybe the problem is a year of UBI allowed a large percentage of the workforce to go find something better, and the available workforce for the low end is just depleted.
On the flip side, those employers who complain, as JS notes, how many are telling the whole, unvarnished truth? Are the really offering $20/hr? Have they altered their hiring practices (one would hope that given Covid, a gap in employment history isn’t being held against anyone, but stupid policies are stupid…)? Are they really offering a ‘generous health plan’, or is it a HDHP? What about the businesses in similar markets that were easily able to fill out a workforce? Are they just noise in the data we should ignore?
I mean, everyone is taking these employers at their word, when they have powerful incentives to paint themselves as sympathetic.Report
“This whole “People are lazy and living off the dole because…” ”
A quick gander around the United States, where various states cut off unemployment earlier than others, should get you some rough approximations.
Last I checked, it appeared ending unemployment early has not actually resulted in a flood of lazy people forced back to work.
(And speaking anecdotally, I know a guy right now actively trying to find work where they ARE holding his COVID-19 unemployment against him. His company outright folded, and nobody was hiring new people. Apparently he should have taken his degree and his experience and become a day laborer or something, rather than collecting on the unemployment he spent 3 decades paying into)Report
Yes, when they cut off the extended unemployment benefits, jobs quickly rose almost overnight.Report
No, they didn’t.
From those noted socialists Commies at *blinks* CNBC
https://www.cnbc.com/2021/07/22/cuts-to-unemployment-benefits-didnt-get-people-back-to-work-study-finds.htmlReport
That study was poorly formulated. It wasn’t even targeting to specific industries.Report
“I reject your reality and substitute my own! Complete with no evidence beyond my terse rejection!”Report
Jesse beat me to it.
Did you actually CHECK, or did you just assume you were right?Report
How can you tell a Democrat was elected president?
Conservatives discover the downsides to budget deficits.Report