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These "just pay more" arguments seem to assume all employers have infinite money, and only refuse to pay employees more because they're mean. Or am I missing s

These "just pay more" arguments seem to assume all employers have infinite money, and only refuse to pay employees more because they're mean. Or am I missing some more sophisticated angle?

nine_zeros 5y ago
Just as workers lose income from time to time when they lose jobs, it is ok for business owners to cut their own salaries and profits for a short period of time while they attract workers.
agrajag 5y ago
Would you feel better with “demand in other sectors has been deemed more valuable and your business model may be unfeasible in the current labor climate?” Means the same thing.
- s1artibartfast 5y ago
  That would be true if workers are getting better employment in other jobs. If people find unemployment more attractive than working, that is a different problem. The percent of the population working a job has dropped 6‰ since a peak in 2000. https://fred.stlouisfed.org/series/CIVPART https://fred.stlouisfed.org/series/CIVPART
  - 8note 5y ago
    That still sounds like a "your business model is bad" problem. If you can't pay people a wage to match how bad the job you want them to do is, your business shouldn't exist
    - s1artibartfast 5y ago
      That is a different point than the idea that everyone is moving on to higher paid jobs. I fully agree that some jobs aren't worth doing at a given price. But this is all relative to someone's next best option. You have take both sides of the decision into account and there are more factors at play. Of course some business models are unsustainable. That said, I think it is dishonest to claim people are finding better pay elsewhere. If people think they can have a better life by not working at all, I think it is relevant to discuss why that is the case and if that is problem that needs to be discussed.
    - s1artibartfast 5y ago
      Then the question becomes "why are businesses models going bad" and "do we want a business environment with fewer jobs".
- BurningFrog 5y ago
  Absolutely! But I don't think that's what the "your business should not exist if you can't pay!" people actually mean.
patrickthebold 5y ago
They might have to raise prices or cut profits, if they can't then they should go out of business.
- crashbunny 5y ago
  I imagine the CEO's renumeration is partly based on profits and share price. If that's correct then there's no incentive to cut profits or do anything to cause the share price to go down, even if temporarily.
  - nradov 5y ago
    If a company doesn't have enough employees to generate revenue then net income will decline regardless of the profit margin.
  - patrickthebold 5y ago
    I wasn't being super clear: The profits might go down compared to the past due to changes in the labor market, but paying more wages might also be the best way to maximize profits for the future. I agree you certainly wouldn't want to lower your expected profits just to have more employees.
SantalBlush 5y ago
Do they seem to assume that, or are you perhaps being uncharitable in your interpretation?
sandmank 5y ago
you can look up the financials pretty easily, it's all public. american railroads in general have been trending upwards in net profit margin and CSX in particular (quoted at the top of the article) has been over 20% since 2014, so as far as i'm concerned they've got infinite money.
durkie 5y ago
The "just pay more" arguments are fighting back at the semantic sleight-of-hand in calling it a "labor shortage" in the first place. "Labor shortage" frames the issue in a way that faults workers, not the business.
- BurningFrog 5y ago
  As a software engineer, I've heard that there is a shortage of people like me my whole career. I've never thought of that as assigning fault to either engineers or employers. More how non economists describe demand being stronger than supply. If that is how some people are actually reading it, I understand the confrontational responses more, though!
_carbyau_ 5y ago
Businesses downsize people all the time. As these employers have been doing. Why should anyone care if the market is downsizing the business?
xhrpost 5y ago
The counter argument of companies not having infinite money for what would be a finite raise doesn't really work either. Even Wal-Mart who is often seen as being in an ultra low profit margin industry, has over 2.3m employees and yet could have paid each one an additional $7,000 just from profit in a given year.
linkjuice4all 5y ago
Railroading is definitely a unique industry and in some cases is treated entirely differently than other businesses in the United States. These are large companies that can't really go anywhere and have a lot of similarities to utilities and their "granted monopoly" status. The job itself is not easy and the locations (as mentioned in a different thread) aren't in the most desirable locations. Typically you're working outside, you have to deal with seniority when getting shifts (which eventually does pay off if you stick with it), and you'll be dealing with the NSTB if anything goes wrong. This is entirely a quality of work/throw cash at it problem. If you can't make the job better ("You'll be on call all week and will have to report within 3 hours notice if we call you at any time of the day to ride around in a port-a-potty in all the weather") then you better pay up. (See also the labor shortage in the trucking industry if you were considering other modes of shipping)
antisthenes 5y ago
Well, CSX in particular has 2.77 billion in net profit and over 3 billion in cash on hand. So I think in this particular case, it's pretty fair to disregard their complaints about "labor shortages". I also doubt they're competing with Silicon Valley for IT talent, for example, so their labor costs shouldn't be anything out of the ordinary. Your criticism would be more valid when it comes to restaurant business, where margins are slim and companies are small, and less able to weather economic pitfalls.
- BurningFrog 5y ago
  I was asking more in general, not for this particular company. The numbers you cite does look like they'll find a way through this :) I do hear it a lot of "your business should not exist!" for working class enterprises like restaurants.
8note 5y ago
The employers that set the bar for low skilled pay basically do. Companies without infinite money should be making up the difference by offering other things, like flexible hours
AnimalMuppet 5y ago
Economics is about the allocation of limited resources that have alternate uses. Employees are a limited resource that have alternate uses. How do we decide which businesses get that limited number of employees, and which don't? By money. The businesses that can pay for the people get the people. Presumably those businesses get the money by producing things that people want, so it is a good outcome for those businesses to wind up with the people.

These "just pay more" arguments seem to assume all employers have infinite money, and only refuse to pay employees more because they're mean. Or am I missing some more sophisticated angle?

nine_zeros 5y ago

Just as workers lose income from time to time when they lose jobs, it is ok for business owners to cut their own salaries and profits for a short period of time while they attract workers.

agrajag 5y ago

Would you feel better with “demand in other sectors has been deemed more valuable and your business model may be unfeasible in the current labor climate?” Means the same thing.

s1artibartfast 5y ago
That would be true if workers are getting better employment in other jobs. If people find unemployment more attractive than working, that is a different problem. The percent of the population working a job has dropped 6‰ since a peak in 2000. https://fred.stlouisfed.org/series/CIVPART https://fred.stlouisfed.org/series/CIVPART
- 8note 5y ago
  That still sounds like a "your business model is bad" problem. If you can't pay people a wage to match how bad the job you want them to do is, your business shouldn't exist
  - s1artibartfast 5y ago
    That is a different point than the idea that everyone is moving on to higher paid jobs. I fully agree that some jobs aren't worth doing at a given price. But this is all relative to someone's next best option. You have take both sides of the decision into account and there are more factors at play. Of course some business models are unsustainable. That said, I think it is dishonest to claim people are finding better pay elsewhere. If people think they can have a better life by not working at all, I think it is relevant to discuss why that is the case and if that is problem that needs to be discussed.
  - s1artibartfast 5y ago
    Then the question becomes "why are businesses models going bad" and "do we want a business environment with fewer jobs".
BurningFrog 5y ago
Absolutely! But I don't think that's what the "your business should not exist if you can't pay!" people actually mean.

patrickthebold 5y ago

They might have to raise prices or cut profits, if they can't then they should go out of business.

crashbunny 5y ago
I imagine the CEO's renumeration is partly based on profits and share price. If that's correct then there's no incentive to cut profits or do anything to cause the share price to go down, even if temporarily.
- nradov 5y ago
  If a company doesn't have enough employees to generate revenue then net income will decline regardless of the profit margin.
- patrickthebold 5y ago
  I wasn't being super clear: The profits might go down compared to the past due to changes in the labor market, but paying more wages might also be the best way to maximize profits for the future. I agree you certainly wouldn't want to lower your expected profits just to have more employees.

SantalBlush 5y ago

Do they seem to assume that, or are you perhaps being uncharitable in your interpretation?

sandmank 5y ago

you can look up the financials pretty easily, it's all public. american railroads in general have been trending upwards in net profit margin and CSX in particular (quoted at the top of the article) has been over 20% since 2014, so as far as i'm concerned they've got infinite money.

durkie 5y ago

The "just pay more" arguments are fighting back at the semantic sleight-of-hand in calling it a "labor shortage" in the first place. "Labor shortage" frames the issue in a way that faults workers, not the business.

BurningFrog 5y ago
As a software engineer, I've heard that there is a shortage of people like me my whole career. I've never thought of that as assigning fault to either engineers or employers. More how non economists describe demand being stronger than supply. If that is how some people are actually reading it, I understand the confrontational responses more, though!

_carbyau_ 5y ago

Businesses downsize people all the time. As these employers have been doing. Why should anyone care if the market is downsizing the business?

xhrpost 5y ago

The counter argument of companies not having infinite money for what would be a finite raise doesn't really work either. Even Wal-Mart who is often seen as being in an ultra low profit margin industry, has over 2.3m employees and yet could have paid each one an additional $7,000 just from profit in a given year.

linkjuice4all 5y ago

Railroading is definitely a unique industry and in some cases is treated entirely differently than other businesses in the United States. These are large companies that can't really go anywhere and have a lot of similarities to utilities and their "granted monopoly" status. The job itself is not easy and the locations (as mentioned in a different thread) aren't in the most desirable locations. Typically you're working outside, you have to deal with seniority when getting shifts (which eventually does pay off if you stick with it), and you'll be dealing with the NSTB if anything goes wrong. This is entirely a quality of work/throw cash at it problem. If you can't make the job better ("You'll be on call all week and will have to report within 3 hours notice if we call you at any time of the day to ride around in a port-a-potty in all the weather") then you better pay up. (See also the labor shortage in the trucking industry if you were considering other modes of shipping)

antisthenes 5y ago

Well, CSX in particular has 2.77 billion in net profit and over 3 billion in cash on hand. So I think in this particular case, it's pretty fair to disregard their complaints about "labor shortages". I also doubt they're competing with Silicon Valley for IT talent, for example, so their labor costs shouldn't be anything out of the ordinary. Your criticism would be more valid when it comes to restaurant business, where margins are slim and companies are small, and less able to weather economic pitfalls.

BurningFrog 5y ago
I was asking more in general, not for this particular company. The numbers you cite does look like they'll find a way through this :) I do hear it a lot of "your business should not exist!" for working class enterprises like restaurants.

8note 5y ago

The employers that set the bar for low skilled pay basically do. Companies without infinite money should be making up the difference by offering other things, like flexible hours

AnimalMuppet 5y ago

Economics is about the allocation of limited resources that have alternate uses. Employees are a limited resource that have alternate uses. How do we decide which businesses get that limited number of employees, and which don't? By money. The businesses that can pay for the people get the people. Presumably those businesses get the money by producing things that people want, so it is a good outcome for those businesses to wind up with the people.