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I think there's an underestimated resistance to changing the labor rate. If a company quotes a typical job at 80 man-hours with $15/hr welders, and a year later

I think there's an underestimated resistance to changing the labor rate. If a company quotes a typical job at 80 man-hours with $15/hr welders, and a year later you want to hire welders and can only find them at $20, they're more likely to complain there's a welder shortage and decline jobs because they don't have enough welders to complete them than increase their labor rate. Plus, if you increase the rate for a new guy, and your $12/hr hire from a decade ago hears the new hire is making $20, he's going to be pissed, so you'd have to increase costs across the board or suppress discussion of salaries.

triceratops 6y ago
This explanation doesn't really hold water. Some company is going to eventually win the contract by bidding with $20/hr welders right? It's not like the client is just going to give up on their project.
- throw0101a 6y ago
  > This explanation doesn't really hold water. During the 2010-2019 US recovery wage stickiness was noticed, even with everyone complaining about not being able to find qualified workers. Companies were very reticent about increasing wages, often preferring to go with signing bonuses. It is suggested that this reticence/stickiness was because after 2008-2009 GFC many places were stuck with high wages (from the previous boom), and getting people to cut their salaries was almost impossible. * https://www.investopedia.com/terms/s/sticky-wage-theory.asp https://www.investopedia.com/terms/s/sticky-wage-theory.asp * https://en.wikipedia.org/wiki/Nominal_rigidity https://en.wikipedia.org/wiki/Nominal_rigidity
- spenczar5 6y ago
  No, I think you do see clients give up. There are certainly more infrastructure maintenance projects in the US than governments are willing/able to pay for. I’m not sure the market can bear much higher costs for construction.
- freeone3000 6y ago
  There was a rather famous story about Aceribo being abandoned due to lack of upkeep and high cost of repairs.
Kye 6y ago
I see this with those profiles of factory owners complaining about Those Dang Kids not wanting to work, while omitting the fact that they offer too little relative to other options. A lot of people running places like this don't want to accept they're also in competition with retail now. People look at the small difference between pay at the factory or mine (dangerous) and pay at Walmart (not quite as dangerous + employee discounts) and make the rational choice.

triceratops 6y ago

This explanation doesn't really hold water. Some company is going to eventually win the contract by bidding with $20/hr welders right? It's not like the client is just going to give up on their project.

throw0101a 6y ago
> This explanation doesn't really hold water. During the 2010-2019 US recovery wage stickiness was noticed, even with everyone complaining about not being able to find qualified workers. Companies were very reticent about increasing wages, often preferring to go with signing bonuses. It is suggested that this reticence/stickiness was because after 2008-2009 GFC many places were stuck with high wages (from the previous boom), and getting people to cut their salaries was almost impossible. * https://www.investopedia.com/terms/s/sticky-wage-theory.asp https://www.investopedia.com/terms/s/sticky-wage-theory.asp * https://en.wikipedia.org/wiki/Nominal_rigidity https://en.wikipedia.org/wiki/Nominal_rigidity
spenczar5 6y ago
No, I think you do see clients give up. There are certainly more infrastructure maintenance projects in the US than governments are willing/able to pay for. I’m not sure the market can bear much higher costs for construction.
freeone3000 6y ago
There was a rather famous story about Aceribo being abandoned due to lack of upkeep and high cost of repairs.

Kye 6y ago

I see this with those profiles of factory owners complaining about Those Dang Kids not wanting to work, while omitting the fact that they offer too little relative to other options. A lot of people running places like this don't want to accept they're also in competition with retail now. People look at the small difference between pay at the factory or mine (dangerous) and pay at Walmart (not quite as dangerous + employee discounts) and make the rational choice.