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I am so sick of this perpetual fallacy about labor shortages. If you can't find enough workers it means you need to raise the price you're offering. (But yasp t

• maxxxxx 8y ago
  Our economy has split into areas where in some areas "talent" can get almost infinite amounts of money and in other areas it's simply not conceivable to pay people more. I wonder how free market people explain this. Based on the market theories I have heard it doesn't make sense.
  • yasp 8y ago
    I don't know much about the trucking industry but I imagine that it is competitive enough where employers don't feel like they have much latitude to pass higher wages along to their customers.
    • lotsofpulp 8y ago
      The only reasons that would be is if other trucking companies are not having driver shortages and can continue to deliver without raising prices, or the the end users of the items they are delivering are not willing to pay for the increase in cost. I doubt both are true.
  • lotsofpulp 8y ago
    It does make sense, you don’t need “infinite” amount of money. Pay a driver $200k a year. Or give them an 8 hour workday, and week off week on schedules so they can see their family. There’s many solutions, all of them involve incentivizing people to become drivers. If people want their Amazon orders so bad, they’ll end up paying. And if they don’t, then they have to re-prioritize what they want.
    • StudentStuff 8y ago
      Part of the problem is with BNSF, UP & the other major long haul rail lines, there is no good aggregator for those looking to ship a few pallets of goods from California to Seattle, and the railroad is happy to set high minimums which make long distance trucking viable. Its ultimately quite silly, I really do think an Uber for Railroad shipping which partnered with the local railroads (that are desperate for revenue & work for cheap) and long haul railroads could effectively shrink the need for long haul trucking.
      • HarryHirsch 8y ago
        Uber for railroad shipping? LCL (Less-than-container-load) freight forwarding has been an industry since God-knows-when, and you'd think this includes intermodal. You learn all this when you've done a few international moves.
        • deleted 8y ago
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        • shiftpgdn 8y ago
          If you've done an international move surely you saw how horribly the industry is run. It's ripe for "disruption." Most of the pages of companies doing the work look straight out of 2004.
          • HarryHirsch 8y ago
            To be honest, I can't complain about the state of the industry. You find someone (through recommendations), they give you a quote, you drop off the goods, and the stuff arrives 6 weeks later. It's miraculous, there must be so much informal knowledge to make it all work. The disruption is these "moving pods". They are more expensive, but they are well advertised, and one fears that the established small players will be driven out of business.
          • toasterlovin 8y ago
            There is a YC company doing this: Flexport.
  • dkasper 8y ago
    As you pay truckers more at some point it doesn’t make economic sense to hire them. Some jobs are cost centers others are profit centers is one way of looking at it. Another factor is industries like trucking have very little differentiation so it’s a race to the bottom.
    • lev99 8y ago
      As you increase driver pay delivery costs increase. If the shortage was real it would mean deliveries are not being made that would have happened at an increase in delivery cost.
    • gaius 8y ago
      The goods being in location A rather than location B is the value add. Logistics is a profit centre, not a cost.
      • mi100hael 8y ago
        Of course the actual act of shipping the goods is a profit center. But payroll is a cost center in every industry I'm aware of. You can't just 10x your shipping costs in order to pay your truckers 10x the salary and expect to remain in business.
        • gaius 8y ago
          The payroll costs are usually included in each “centre”
        • ryguytilidie 8y ago
          Why does debate always turn into this? No one suggested much more than a ~1.5xish pay increase yet the response is "you expect them to pay 10x the salary and remain in business??"? What is the goal of just exaggerating and debating a thing no one says versus just debating what people are actually saying?
  • maxerickson 8y ago
    Prices are sticky. Prices at the store, prices for shipping, prices for labor, etc. So where people don't have much leverage (or are perceived to not have much leverage), they move slowly. Trucking is low leverage (the training is a couple months and a large proportion of people will be able to obtain a CDL). Around here they've moved to offer paid training, which wasn't the case a year or two ago.
  • merpnderp 8y ago
    The US and most of the world's free market countries are actually highly regulated markets where supply and demand are strongly influenced by government influence. As for this particular case, truck driving is a crappy job, with its long term prospects darkened by self driving technology, and equal paying professional jobs in decent supply. If you're motivated enough to be a professional, you can usually find a better career. And there's a fairly hard cap on how much long haul trucker drivers can be paid before rail becomes more economic.
  • deleted 8y ago
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  • Karishma1234 8y ago
    Free market people understand these things pretty easily. I do not see why you are finding it hard. One obvious fallacy in your statement is that someone getting paid infinite money for talent. I have not seen any such examples so far beside Pentagon who get paid more and more irrespective of their incompetence.
    • maxxxxx 8y ago
      For example CEO salaries have been increasing rapidly for several decades. Are they so much better now than 40 or more years ago?
      • 5DFractalTetris 8y ago
        Their business intelligence practice has gotten so much faster that they're probably planning 100 years out.
        • Applejinx 8y ago
          To people following the way market whims have affected corporate planning, this is an extremely humorous hypothesis. No, I don't think that they are.
          • 5DFractalTetris 8y ago
            Interesting. I notice I have been downvoted as well. Thanks for the slap on the back, everybody.
            • Applejinx 8y ago
              That part wasn't me, and I'm not in the least mad :) It's just that the subject is extremely important, though it's seemingly not related to 'truck driver shortage'. Part of the problem with seeking to first justify the way our economics are structured, and then explain the outcomes, is that it ignores externalities that can be important. You could take the opposite tack and begin from 'wealthy people are inherently evil' and probably be almost as wrong, but then you'd be arguing a deeply anarchic position where leadership is only dominance and subjugation. That ignores things like Elon Musk's elaborate, sci-fi goals which are clearly that of a nerd writ large, and not simply a pointy-hair CEO guy wanting only wealth. The truth is a lot simpler: value is what you're able to make happen, but compensation is sheer social engineering. CEO pay has absolutely nothing to do with whether they're more useful as a class than truck drivers. I think some of them are more useful than truck drivers, and some are not.
  • deleted 8y ago
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  • Applejinx 8y ago
    The people getting almost infinite amounts of money are making the rules and setting the terms of the dialogue. Because to do so is a tactic for maximizing the amount of money they get, that being their self interest. When you see this sort of 'workers are fussy and childish even though they're treated and paid incredibly well!' business, it's safe to read it as 'reality has come knocking, and the reports of wonderful conditions and pay are greatly exaggerated'. It's like asking what's wrong with millenials that they're not buying enough diamonds.
• jbob2000 8y ago
  They are increasing compensation, but the job is so shit, and so demanding on time, that it's still not worth it. I'd want to see $500,000 a year before I put long-haul trucking demands on my body. The industry has labour problems that aren't related to pay. Nobody wants to sit outside a business for 6-8 hours, earning 0 dollars. Solution: Fine deliverees by the minute. Over-policing of truckers. Solution: Lower fines for commercial truckers, thus removing the incentive for police interaction. Long time away from family. Solution: Truckers have a maximum distance they may travel in a day, which includes the return trip.
  • rectang 8y ago
    Yes, the "everybody has their price" analysis bothers me as well because it only takes into account monetary compensation. There are lots of other factors which make a job more or less appealing: time away from home, job security, personal risk, physical demands. Maybe try to attract more talent by improving working conditions?
  • ams6110 8y ago
    Yes but there are people who don't have the same point of view as you. There are people who like spending a lot of time by themselves, for which trucking has an appeal. I know people in the trades who say things like "you couldn't pay me enough money to work in an office."
    • mcguire 8y ago
      The people to whom truck driving is attractive are probably already driving trucks.
• Karishma1234 8y ago
  By your logic entire concept of labour shortage is outrageous because any shortage will clear with high enough price. But for any job such as that of Truck drive the market value of that job is only X. Paying more than X would mean you should look for alternatives and get out of that business. As the truck diver salaries go up cost of everything that relies on transportation also goes up marginally. Suddenly the struggling pistachio farmer will now find it even less economical to continue, Wallmart will have to raise prices of their goods and so on. All eventually leading up to poor people paying even more for their daily consumption items such as diapers and baby food. The brighter side of this is that the Truck driving as an occupation would be pretty much extinct in next 20 years as self driving trucks, hyperloops, cargo drones etc. will replace them or make them really low skill jobs.
  • yasp 8y ago
    Yes. This is how a well functioning economy works.
    • platz 8y ago
      exactly - if they truly have a trucking shortage, the prices of all the intermediaries will have to rise, including the end shelf-price. More short-term, Wallmart will either just discontinue that product or offer it elsewhere due to free movement of capital. We'll get just a couple brands of cereal at the supermarket, instead of 25.
      • Karishma1234 8y ago
        Yes. That is point I have been making.
        • platz 8y ago
          But you seem to think the price going up is a bad thing, when in fact it is simply supply and demand, and necessary for markets to function.
• scarface74 8y ago
  That doesn't always work as is the case for farm work once you make immigration harder. How many Americans if given a choice would rather make $40K a year doing nice and comfortable office work than make $120K a year (yes I'm making up a number to make a point) to do back breaking manual labor in the hot sun? Not quite to that extreme, but I'm giving up money now by choosing not to go into management and stay a senior developer because I don't want to be a manager and not to get a better paying job as a consultant who would have to travel more and be away from my family. My wife took a pay cut when we got married to work at a job she enjoys. Some jobs are not worth the extra money to a number of people no matter how much money you throw at them.
  • rgbrenner 8y ago
    Why is 120k the right number? Have you taken some implicit biases of your own, and decided that's the worth of farm work? The correct price of farm labor is whatever it costs to obtain it. There is no cap. It's whatever it costs to persuade people to move from their comfy office to the farm.
    • scarface74 8y ago
      At a certain point, the marginal value of a dollar to anyone isn't worth the work it would take to make that dollar. That value is different for different people based on the opportunity but it does add up in aggregate. If someone can choose to make $30K a year and adjust thier lifestyle accordingly instead of making $90K a year doing a job that they don't want to do, many people will choose the former. I would go so far as to say the vast majority of public school teachers make the choice between less pay and being able to do a job that they enjoy as opposed to doing a job that they don't enjoy. Anecdotally, every person I know that decided to work in the school system (including my mom and my wife) chose to do it because of stability, being off for the summer, and being able to work with kids when they both could have made more money doing something else. I doubt you could offer them 10x the amount of money to be willing to work in the fields. But more to the point of the article, many people would not take the trade off of the dangers and long hours away from thier families, for any amount of money.
• ams6110 8y ago
  Conversely, maybe there really isn't a shortage, and trucking companies want to get more drivers so that they can pay less. So they push a narrative of being able to make 80 to $100,000, but don't disclose that it's only a tiny fraction of experienced or specially qualified drivers who actually earn that much
  • lopmotr 8y ago
    There's never a shortage. Shortage just means somebody wants to pay less than they're having to. Even if half the truck drivers vanished, there still wouldn't be a shortage. The price would simply go up and some people who would have shipped things by truck would produce those things closer to their destination or otherwise not need a truck afterall.
    • joshuamorton 8y ago
      This isn't necessarily true. The can be shortages of resources (food, water) independently of price. Labor is just another resource, why cant there be a shortage of it?
      • rileymat2 8y ago
        I agree with your point, but I wonder if there has been a shortage of food or water in the last 30 years that more money could not have solved quickly. It seems these happen in poor/war torn areas.
        • joshuamorton 8y ago
          Offhand IDK, I was more thinking in terms of a theoretical resource constrained environment where the population is beyond the carrying capacity. You have a shortage that money cannot solve.
          • winstonewert 8y ago
            Even there, the situation isn't fundamentally different. We are constantly in a situation where we do not have enough resources to do everything we'd like to do, we have decide which are the best uses of the resources. If we don't even have enough resources to keep everyone alive, then we are still in that exact same situation of not having enough resources to do everything we'd like to do. We are going to have to decide how to expend those resources (i.e. which people are going to live)
• antidaily 8y ago
  The margins on this type of business are very low. I had a client who couldn't afford to process more than 20% of the invoices online (even though customers demanded it) because of 1.5% cc processing fee.
  • deleted 8y ago
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• shams93 8y ago
  The reason this hasn't happened in decades is every time there are labor gains the fed steps in to thrust us into a recession to destroy any labor gains thus salaries remain frozen in 1979, you salary is still wearing huge sideburns and a leisure suit while a sandwich and a soda from the market are $18. The fed plays a big role in suppressing wage income. Ultimately we create a society that punished hard work and rewards sloth on the part of the rentier class.
• perl4ever 8y ago
  I think a so-called labor shortage can be defined as an inelastic supply under given circumstances. There are always limits to how markets can be idealized - if you offered me $100K, $1M, or $1B to drive a truck across the country tomorrow, it wouldn't make any difference, I still couldn't qualify. There is likely a gap between the salary a current truck driver will take and the one a potential truck driver will take, because the people who are not already doing it not only need some training but are likely to view it as a dying industry due to publicity about self-driving vehicles. So it seems like there could be substantial inelasticity just above the typical wage.
  • randomdata 8y ago
    You might not qualify, but a sufficient amount might attract those who are. I personally know quite a few people who are legally qualified to drive truck, but have jobs that pay more doing something else. But there are also existing truck drivers from whom you can poach from another company. If that other company cannot afford the new rate that you've offered, they're no longer in the market for a truck driver, and are no longer counted. It's like of like software developers. At, let's say, $150,000 per year, there are only so many companies who can afford them. A place that can only afford $30,000 per year for a developer isn't in the market for developers in the first place, no matter how much they claim they are. So as price rises, the need for drivers also declines. Technically speaking, the definition of shortage is a situation where an external mechanism, such as government intervention, prevents price from rising. That does not seem to be the case here.
• meritt 8y ago
  Labor shortages absolutely exist. If there are 100 jobs requiring a specific skill and only 97 people exist who have that skill, that's a labor shortage. Those companies can compete for those workers all they want, but it doesn't magically create 3 new workers. Those shortages create opportunities and more people train to fill those gaps but it takes some amount of time before 3 new workers are available.
  • stevenwoo 8y ago
    There are some alternatives that do not increase the labor supply - for farmers they might switch to a crop that requires less manual labor or is mechanizable so they do not need as many workers, and demand for that crop might be filled by imports from another country. It seems like something weird is going on with farm labor because we hear about a shortage of workers every couple of years but farm worker pay have not gone up that much ( up to half the average California workers salary). Here's one example of the guy in Stockton paying about 16000(?) versus the people in Napa paying 40000 for the same crop/work (the grapes in Napa are worth more), and Napa farm workers are commuting from the Central Valley. http://www.latimes.com/projects/la-fi-farms-immigration/ http://www.latimes.com/projects/la-fi-farms-immigration/
  • lopmotr 8y ago
    In that case, 3 companies will realize they don't actually need those workers afterall, not for the salary they're demanding. They'll find another way to do business without hiring them, or they might even go out of business, which is fine and normal in a well functioning economy. There's actually no need for truck drivers. People could carry loads on their backs. The reason companies don't hire people for this is because they're much more expensive (ignoring speed/etc.) than truck drivers. So if you're saying there can be labor shortages (in a free market), you could also say there's a severe shortage of human thing-carriers, which is ridiculous.
    • meritt 8y ago
      > In that case, 3 companies will realize they don't actually need those workers afterall, not for the salary they're demanding. They'll find another way to do business without hiring them, or they might even go out of business, which is fine and normal in a well functioning economy. Absolutely that could happen. But it's funny how you refuse to acknowledge that there may be a "labor shortage" and instead you present it as a "abundance of jobs", as if they aren't two sides of the same coin. Your second point is just ridiculous, I agree.
• jandrewrogers 8y ago
  This mischaracterizes a more complex situation and conflates several things. While simple unwillingness to pay a market clearing price is the cause in some cases, I would assert it is a small minority of cases in practice. Some other important causes of labor shortages: - Labor intensive, low margin industries typically have long-term financial structures that don't allow for high wage volatility. Most workers also dislike wage volatility, so this arrangement works. However, this means that there is limited ability by the business to address labor shortages by increasing wages. - There is an actual labor shortage. If the market needs 1,000 neurosurgeons and there are only 800 in the world, no wage level will make that shortage disappear and it may be many years before the market can adapt. This is painfully evident at the high-end of the software engineering market. Paying higher wages doesn't eliminate the shortage, it just moves it around. - Individual wages are capped by value produced. Companies that can pay the highest wages are those where employees produce the most value. The value produced by employees is finite so at some wage they are effectively unemployable; the market has to clear in the other direction as well. - Spatiotemporal latency and distribution i.e. the required skills are trainable but do not exist when and where you need them. This is increasingly challenging as businesses are required to adapt on shorter timeframes; human populations change and migrate at relatively slow rates. - Local monopsony for labor sets an economically optimal clearing price for the buyer. This creates a synthetic "labor shortage" of sorts in company towns and similar; market clearing, but in a skewed market. This is not the situation for the vast majority of Americans. Most labor markets are some combination of all these, and the first four reasons are common in most American labor markets. None of those real labor shortages can be reasonably addressed simply by "paying more". That isn't how markets work.