29 ms·

It's not a labor shortage – it's a wage and workers rights shortage

• atrus 5y ago
  Painfully obvious too. My little local Mexcian place will be closing down because of a lack of cooks. Talking to the owner, he was complaining about government benefits, and how they all want $20 an hour. I don't understand it, that you'd either a) be willing to drive your business into the ground serving a limited menu because you won't hire a couple cooks at $20 an hour, or b) have a business so close to the brink of shutting down that an additional $20-50 an hour will shutter you. He chose option A I guess...
  • toomuchtodo 5y ago
    Same with a bundle of Great Clips a friend manages for a franchisee. Can’t find staff, doesn’t believe staff are worth what the current effective minimum wage is. “Have you tried offering more?” “That’s too much for cosmetology work.” Getting slapped by the invisible hand of the market.
    • pope_meat 5y ago
      The owner class has gotten really used to having the upper hand in the negotiations, they're not coping well at all. And to that I say: welcome to the club.
      • FredPret 5y ago
        The small biz owners here described here aren’t the Masters-of-the-Universe “owner class” types. They don’t even really own businesses, they own lower management jobs.
        • Ericson2314 5y ago
          Sure. And slave overseers are not plantation owners. We have this bipartisan love affair with small business, and the fact is many of them are unproductive institutions abusing tons of poor immigrants to stay afloat. They also provide ideological cover for the more labor-intensive actual big corps. It's about time the rose-collard glasses came off.
          • jodrellblank 5y ago
            > "rose-collard glasses" glasses made of red cabbage? :) (Rose-coloured, looking through them makes everything look rosy (cheerful, promising, pleasant))
            • Ericson2314 5y ago
              Ooops, I guess my stomach was typing. Better go eat some veggies.
    • holler 5y ago
      The barber shop I went to for years used to charge $35 for a haircut pre-pandemic, which with a ~$10 tip ($45) already felt real high. Now a haircut is $50 and I no longer go, opting instead to cut my own hair w help from my girlfriend. Maybe people don’t want $50 haircuts.
      • toomuchtodo 5y ago
        The salons in question are still charging $18 for a haircut.
        • Larrikin 5y ago
          Is this a complaint about an extremely cheap haircut?
          • toomuchtodo 5y ago
            Not at all, it’s an observation of a business model breaking down.
      • birdyrooster 5y ago
        Maybe people never needed to pay for haircuts in the first place
      • Ericson2314 5y ago
        That's fine, then. We shouldn't assume a certain service or job is productive enough to exist because it used to be in the past. If barbershops need to go the way of horse liveries, that's OK.
        • pengaru 5y ago
          > We shouldn't assume a certain service or job is productive enough to exist because it used to be in the past. If barbershops need to go the way of horse liveries, that's OK Automobiles replaced horses, did I miss the memo on something replacing hair growth?
    • rvense 5y ago
      > “That’s too much for cosmetology work.” So it's not even an economic argument, "If I pay that I'll go out of business"? It's just a moral one, "They don't deserve that amount of money"? I can't say I'm surprised, TBH.
      • toomuchtodo 5y ago
        Yep, exactly.
      • lordnacho 5y ago
        The economic argument in this case would be sticky prices in reverse. But a reluctance to change prices at an existing business does not mean we won't get changed prices.
      • pengaru 5y ago
        > It's just a moral one, "They don't deserve that amount of money"? It's a denial/delayed acceptance of inflation/cost-of-living increases. These people are struggling to accept that money is worth sufficiently less than it was before to make the status quo untenable. Or if they have accepted it, they're determined to make the underlings eat the loss.
      • jzb 5y ago
        That's the crux of it in a lot of cases. People have come to view a certain class of work as "not worth" paying a living wage. What's worse, the jobs they view as "not worth" a living wage are the ones that do the work we need (or at least really really want) done. If all the cooks, servers, cosmetologists, janitors, lawn care / landscaping, delivery drivers, warehouse workers and so forth stopped doing their jobs... everything would suck real quickly. But somehow we're not willing to pay them a living wage.
        • mananaysiempre 5y ago
          > If all the cooks, servers, cosmetologists, janitors, lawn care / landscaping, delivery drivers, warehouse workers and so forth stopped doing their jobs... everything would suck real quickly. That’s the idea behind a general strike I believe, but coordination is hard (and figuring out a set of demands that is effective long term may be harder). /me once stayed in Athens during a garbage collectors’ strike; didn’t suck as much as you’d think, but was undeniably spectacular
    • mynameishere 5y ago
      The government paying people to not work has nothing to do with this oft-misunderstood "invisible hand" metaphor. I'm not sure why people think that a barber is somehow able to compete with the infinite resources of the government hellbent on idling labor capacity. Very few rational people will work for 25/hour if they can sit and watch TV for 20/hour. Saying "pay more" is not helpful in that situation. The labor pool is basically limited to those who have enough foresight to realize the gravy train might end.
      • ineedasername 5y ago
        Another way to put the same observation is that, given the choice, people will sacrifice a little bit of income in order to avoid working a crappy job.
    • Viliam1234 5y ago
      If bread costs more than I would like, it's not a shortage of bread, it's just the bread being more expensive than I would like it to be. Exactly the same thing about labor. There are many people looking for a new job, and if you make it known that you pay more than they have now, some of them will run to you. I have seen software companies making a similar mistake. Of course, the salaries there are way above the minimum wage, but still the same logic. They complain: "We wanted to start this new project, but we can't find developers; we have been posting job announcements online for five years already!" I look at the job announcement, it offers about 2/3 of the market salary. "Have you tried offering more?" Blank stares. I guess, how could that possibly be relevant? Maybe the problem is that the employers see employees as "the ones who obey", which is generally true... except for the job interviews. There, you cannot simply give orders and expect them to be obeyed. The candidate will only take the offer if they like the proposed deal. Also, for the ones who accept, you can gradually make the deal worse, by increasing the workload and keeping salary the same regardless of inflation... until the surprising moment when the employee decides to walk away, because they got a better deal somewhere else.
  • prepend 5y ago
    It’s easy to understand. If your customers won’t buy Mexican food at a high enough price to pay $20/hour, it’s better to close than to stay open and lose money. Labor is the highest cost for a restaurant (higher than rent) so bumping wages from $15 to $20 may not be possible if you can’t also raise prices by 30%. This may be hard to understand for us rich programmers. But it’s quite simple for companies that have really stiff price competition.
    • varjag 5y ago
      The competition recruits from the same labor pool, I don't think we misunderstand anything.
      • mananaysiempre 5y ago
        The demand may just go elsewhere, like “screw it, I’ll just go to the supermarket”—not sure how plausible that is in a US context specifically, but surely there’s a possible world where the majority of people just stop eating Mexican or even most street food.
        • tarr11 5y ago
          We stopped eating out nearly as much during the pandemic and replaced it with higher quality groceries and prepared foods from delivery services.
          • mananaysiempre 5y ago
            I’m sure a lower-quality segment will emerge once the whole thing has time to equilibrize :) And in some places the social aspect is not insignificant. (In others you’re better off without it, true.)
    • pnutjam 5y ago
      Honestly, it's better for these shoddy underpaid and low value places to close. They just undercut the good guys and slowly burn money.
  • MeinBlutIstBlau 5y ago
    Most restaurants operate on very slim margins. That's why many smaller financial institutions do not risk commercial loans on them unless they've been established for a while or it's guaranteed by an SBA loan which heavily minimizes the financials risk. Honestly I feel like most people would pay it. It seems to me that everybody just accepts you pay like 10x the price of what you could make something yourself as reasonable. I don't get it and it irks me that we even need to participate in this facade that we're all some sort of royalty class that are entitled this.
    • bluedino 5y ago
      It does seem like we're in a good bubble. People eat out probably 10x more a month than they did 30 years ago. Now with delivery on top of that...
    • mananaysiempre 5y ago
      Something inexpensive that enables people to pay for not going to the effort to cook relatively tasty food exists everywhere that’s large enough to support the overhead, since before the modern times. It doesn’t have to be particularly good or healthy, but it does exist. In some European cities supermarkets just sell packaged premade salads and pasta, for example. Personal service might be more expensive overall, but I’m not ready to immediately declare that obvious just because the people behind it are visible to the buyer.
  • saas_sam 5y ago
    The only way to avoid shutting down would be to raise prices, right? What if the owner knew customers wouldn't pay higher prices because he has tried to raise prices many times before and knows that it turns customers away?
  • chaostheory 5y ago
    The margins tend to already be razor thin. It is strange that they weren’t willing to try experimenting with higher wages and less employees. Maybe they’re already too overwhelmed from the pandemic to continue? The perception that not a lot of people are willing to pay for higher priced Chinese and Mexican foods factored into the decision?
  • pnutjam 5y ago
    I heard a hotel guy being interviewed on NPR afew weeks ago and he basically said raising wages was not an option because other places will just raise their wages too and it won't let them stand out. So he'd rather encourage tipping from customers. Almost bent my steering wheel in rage....
  • mananaysiempre 5y ago
    Prices can be very, very sticky? In my city it appears (to my uninvolved eye) that several levels of floor space sublessors need to run out of lessees by raising prices in order to pay (possibly their debt to) the higher levels, with a couple months’ latency for each, until retail can reasonably exist again.
    • hanniabu 5y ago
      If they start raising prices then CPI will start reflecting true inflation, and we can't be having that!
      • mananaysiempre 5y ago
        I doubt it’s that advanced, honestly, the commercial real estate market here is pretty thuggish. And everybody’s prices are sticky, it’s seemingly part of how we define fairness. (See the haircut comment two levels up for an example from the consumer side.) I’m certain economists have loads and loads of strong words to say to all of us about this behaviour.
      • gruez 5y ago
        Inflation would look bad for politicians, but I doubt small business owners are ruining their business just so BLS can put out slightly better inflation numbers.
  • AnthonyMouse 5y ago
    > b) have a business so close to the brink of shutting down that an additional $20-50 an hour will shutter you. This is the default state of businesses in competitive markets. If you could do with less then you could charge less, and one of your competitors will start doing that to take your customers, so you have to do the same. Of course, the alternative is to pay more and then raise prices. Which you might not be able to do if the additional cost is imposed only on you, but when your competitors have to pay it too, you all raise prices without losing business to each other. But the overall industry would still lose some business to customers not being able to afford its products, and some of the suppliers still go out of business. Unless the labor costs increase generally instead of only for that industry. Because then your customers can afford the higher prices. If labor becomes a higher percentage of operating costs overall, they may even be able to afford more than before. This is why a UBI is good for businesses -- customers have more money in their pockets.
    • delusional 5y ago
      This is a purely economic argument which if fine, but misses the vital non-economic side-effects. More money could lower the stress of the employees (given they now no longer have to worry about paying their bills) which may lead to higher quality products. Increased wages may attracts better talent or more exploitation conscious consumers. Hell, it may even more the owner more likely to listen to his staff, given that they become a significant expense. That could increase efficiency. We should be careful not to make wage depression some sort of abstract "logical" natural state. Wages are low for a reason and active effort has to be expended to keep them as they are.
      • arcbyte 5y ago
        Cost reduction is not a "state", it's a process. And it is a natural process that will always occur. In any endeavor, humans will find ways to reduce the amount of inputs needed for outputs.
      • listless 5y ago
        The problem is that it IS a purely economic problem. It's just math - supply, demand and competition. Small business in particular is captured by these forces. It cannot increase prices because people will go to the competition. And it has no margin to absorb people's desire to earn enough to live a middle-class life doing a job that you can hire anyone to do. All of that said, what you could reasonably hope would happen is that all businesses raise their prices because of the labor shortage (already happening around me), but then you have another problem which is that the increased wages are offset by the increased prices. At the current click, all that's going to be left are the corporations with enough wiggle room to absorb the increase, but they will also pass on prices. I would just prefer not to live in that world. I think corporations increase inequity (Walmart could pay a living wage and full health care, but doesn't) and small business puts the power back with the individual.
  • jdavis703 5y ago
    There are a lot of businesses on the brink. My regular Italian spot went out of business in the depths of the pandemic. They re-capitalized and opened again but with higher prices. Their clientele is upper middle class (i.e. relatively price insensitive). But they still wrote a long letter explaining why prices increased (more benefits, more salary) and asking that people support their increased overhead by becoming regular patrons. I think operators are really scared people will judge them on value if the price goes up.
    • lordnacho 5y ago
      Is it working for them? I get the feeling that it might, depending on the price level they were at previously. Perhaps the thing to do would have been to rebrand completely, make the place look a bit more fancy.
      • jdavis703 5y ago
        The place doesn’t seem quite as busy as before. But I’m not sure if that’s because of price changes or some general post-pandemic change (e.g. they also added outdoor dining, which might make the place feel less busy.)
    • 88913527 5y ago
      It's one approach. A bit carrot-and-stick, but what I have seen in restaurants in upper class neighborhoods is chastising changes to public policy. Each menu page has a footnote mentioning there's a X% charge (that isn't the tip) applied to each menu item due to a rise in minimum wage. Since they re-printed the menus anyways to add the footnote, they could have simply been more transparent and increased each menu item's cost. Most people regularly dining at fancy ocean-view restaurants (which I rarely frequent) can afford the higher cost.
  • angelzen 5y ago
    The owner won't hire a couple of cooks at $20 an hour because he won't be able to pay off his mortgages anymore. The banker sits behind all this and collects his fat percentage cut while laughing at the plebs fighting with each other over scraps. We have a 3 tier system: minimum wage workers condemned to a perpetual state of precarity, middle class professional and small business types that toil away paying hefty mortgages one medical emergency from bankruptcy and capital owners that lend around money at extortionate rates and run to the nanny state to print money and save their skin whenever their bets go sour. Guess which strata gets most of the flak. Tip: it's not those at the top.
    • Ericson2314 5y ago
      > capital owners that lend around money at extortionate rates and run to the nanny state to print money and save their skin whenever their bets go sour. Guess which strata gets most of the flak. Your heart is in the right place, but you are doing the devil's work by accident. "extortionate rates" and "printing money" do not happen at once! We have low interest rates, which are good for debtors. The banks now will get very little interest on those mortgages, so that can't be the sole piece of they are making a killing. What also happens is low interest loans allow the value of land to go up, and land speculation works too well. Worse, there are laws and other things preventing density so the desire to have as many tenants as possible doesn't actually reduce the cost of floor area.
      • imtringued 5y ago
        It's actually quite interesting. Keynes figured out that government stimulus works but it only solves the money problem. When you solve the money problem people simply flee into a different asset that maintains its value. That asset is land. So the business cycle also results in a real estate cycle. "Solving" the dot com bubble encouraged land speculation and ultimately ended in 2008. The problem isn't the stimulus although there are alternative proposals to reduce the amount of government intervention. Land is simply unique in the fact that it is already there and private land ownership is merely the right to exclude people from the land. There simply isn't any good argument for why money earned off the land itself should go to a private individual. It should go to the government because it is protecting the land with its army and building infrastructure to maintain its value.
  • smsm42 5y ago
    You're presenting it as he has an infinite money supply and just of pure stupidity and greed doesn't want to pay $20 or $50 per hour. Maybe his supply is not unlimited, and maybe nobody would buy a taco for $50 and he knows it, and he made the calculation and decided there's no way to pay all his costs, charge the price that people would be willing to pay, and make a profit. Now, if you know how to do it, there's a big opportunity for you just opened up. You could buy the place (probably for cheap), hire the cooks for $20 or for $50 (they would be ecstatic to work for you, I am sure, you're not that previous greedy owner and would pay them lavishly) and become the model of a businessman. People love good Mexican food. I know I do. I know many people that do. You can't lose, really - it's a mystery why there aren't more Mexican food billionaires... It's so simple, after all. Somehow most of such attempts I've heard of never turned a profit and shut down soon. Maybe those restaurant owners know something about their business that is not obvious to a random person only reading newspaper headlines...
    • belltaco 5y ago
      >Maybe his supply is not unlimited, and maybe nobody would buy a taco for $50 and he knows it Not true. >While Chipotle raised wages from $13 to $15 an hour, or 15.4%, menu prices, on the other hand, were hiked between 3.5% and 4%. Price increases are generally quite small relative to the increase in workers' wages. >he knows it, and he made the calculation and decided there's no way to pay all his costs, charge the price that people would be willing to pay, and make a profit. How does he know for certain? He never even tried raising prices.
      • smsm42 5y ago
        We're not talking about a multinational chain spanning continents with billions of dollars in revenue, tens of thosands of employees and a NYSE stock ticker - and not just any ticker but a part of S&P 500! Such a corporation has a lot of means to raise salaries a little without going under, they could borrow millions, they could issue stock, they could sell assets (which they have in millions), could restructure business, etc. etc. We were talking about a single shop owner which usually doesn't measure revenues in billions and runs everything out of his own pocket and bank loans usually backed by the same pocket. If you don't understand the difference, maybe giving advice to businesses shouldn't be your primary pastime. > How does he know for certain? He never even tried raising prices. Sure, such a thought would never come to his mind without your help. And surely, a business owner would never know a thing about his own business and his own pricing without you instructing him on it with such a sage advice as "just try it!". Maybe tons of people would line up for $50 tacos and only the stupidity of business owners - which, as one, for some reason, choose to ignore your advice to just try it, which would make them billionaires - prevent it from happening. Seriously. How much disdain one must have for people actually living the thing...
  • maxlybbert 5y ago
    > I don't understand it, that you'd either > > a) be willing to drive your business into the ground serving a limited menu because you won't hire a couple cooks at $20 an hour, or > > b) have a business so close to the brink of shutting down that an additional $20-50 an hour will shutter you. Restaurants run on notoriously thin margins ( https://upserve.com/restaurant-insider/profit-margins/ https://upserve.com/restaurant-insider/profit-margins/ ). There's a reason restaurants often fail even in good economic times: even small miscalculations or mistakes can put a good restaurant out of business.
    • Ericson2314 5y ago
      Maybe we need buffet-style restaurants that serve nutritious perishable food without all the extra plating, waters, and other frivolities so people can bask in being served and pretend they are aristocracy. Everyone cooking is a massive inefficiency, and yet paying for conventional restaurants is also uneconomical. Eating shelf-stable food is cheaper than cooking for most people, but only until the bad health effects catch up. Just like global warming, the market can only optimize over small time horizons without politically pricing in externalities.
      • pooper 5y ago
        I tried to look into that. I think problem is two fold: 1. options 2. audience 1. options: I need to be able to serve two or three meal options tops depending on what is available / inexpensive. People really like having options but that drives costs up which will drive me up a wall. 2. audience: I need a captive audience such as prisoners in a prison or resident college students who pay for the whole semester at a cafeteria.
        • Ericson2314 5y ago
          Well, 1) I personally hate choosing things from menus as as I truly like all the food "that isn't bad" (for all dishes there exists a pareto equal or better dish which I like. Something like that?) That fact that a single dish du jour can get more attention an planning re seasonal ingredients and other inputs due diligence is a huge plus too. 2) I am also fine committing to eating at the same restaurant once, twice, maybe even 3 times a week, and do that anyways. Count me in!
  • aynyc 5y ago
    You forgot option c) raise the price of the menu to cover the cost.
    • YLYvYkHeB2NRNT 5y ago
      As a health care service provider, this means I'm dropping your insurance plan and you pay my fees directly. Are you okay with that?
      • aynyc 5y ago
        If the choice is between no health care or pay a higher price? Then yes, I'm OK with that. That's what people do without health care.
  • csomar 5y ago
    Restaurants, Fast-foods and bars are already quite expensive. That's why they are competitive: customers are very sensitive to price, and have limited budgets. It's like airlines. Raising the prices would not work. If it did, some of them would have already done it.
  • ChrisMarshallNY 5y ago
    The thing about being a business owner, is that you are the last one on the payroll (if you are a good owner). All the bills get paid (including wages), then you get what's left over. If you had a good week, then you get a nice stack of Benjamins. If you had a bad week; maybe not so much. In fact, you may even need to chip in, to keep the lights on. I have seen, many, many SMB owners start living "high on the hog," as soon as they start doing well. They buy a 5-bedroom house in a marqée neighborhood, a C-class Merc., LV bags, etc. I know, for a fact, that most of them make far less than I ever did. Frequently, they get the company to pay for a lot of it (put one bullet in the chamber, and give it a spin). They have gotten used to living large, and it's damn difficult to downsize, after that. So that means they need to do everything they can, to make sure the last pile is as big as possible; regardless of how the corporation is performing. If they banked on hiring undocumented workers, or skilled artisans at rock-bottom prices, and that pool dries up, they are left with the choice of leasing a Subaru, and selling the Jag, or trying to make whoever has been loyal enough to stick around, fill in the gaps.
    • delusional 5y ago
      You might say the business owners feel entitled to live off other peoples work.
      • ChrisMarshallNY 5y ago
        Yeah, it's not really that simple. A business owner is the last one on the payroll, so they get the extra, if things go well, but they also assume pretty substantial risk. If things go badly, the buck stops at their front door; possibly on an eviction notice. I have also watched many of these same SMB owners, hit the skids, and they fall hard. Many wreck their credit for decades, destroy any retirement savings, and, worst of all, suffer terrible self-respect damage. I'm not being snarky, there. That demolished self-confidence can be bad. I have known folks that have become suicidal, after losing a business. Makes being smug, kinda hard. They may have been jerks, when they were doing well, but it's quite sobering, to see what happens, when things go pear-shaped. Doubly so, if they have a family.
      • 5y ago
  • zthrowaway 5y ago
    Yeah because you clearly understand his entire financial situation and profit margin to justify that cost right? How are you so sure customers pay the higher food prices? People think small business owners are swimming in money, and that’s just not true.
  • lordnacho 5y ago
    That rock-and-a-hard-place choice is often what happens when a business dies, right? You live between your costs and your income. This may just be the business version of the 9/11 falling man. It may well be that the market for food places in your area cannot support the current set of outlets, and some of them will have to die, and this is how they die. The way I think about it is there's a metastability in the economy that's not often discussed. Basically, unviable business models can survive small disturbances. One chef gets fed up, no problem. One customer think it's too expensive for what he gets, no problem. When there's a big shakeup, it all comes crashing down.
  • matchagaucho 5y ago
    That same owner could be paying themselves $25 per hour. The average small restaurant owner makes ~$50K per year and has very little line of credit. So unfortunately it's a zero-sum game. Increasing cooks to $20hr means reducing their own comp to $20hr.
    • antisthenes 5y ago
      It could very well be worse than that. A cultural shift may mean that people collectively decided that they will, for example, spend 8% of their income on eating out rather than 12%. That represents an aggregate decrease in demand and would indicate a negative sum game (something most of HN seems incapable of comprehending)
      • imtringued 5y ago
        >That represents an aggregate decrease in demand and would indicate a negative sum game (something most of HN seems incapable of comprehending) No, it represents a positive sum game because the job being offered is unsustainable and therefore should be replaced by a more sustainable job.
    • kevinventullo 5y ago
      Does that $50k per year include the equity they are presumably building with that line of credit?
      • matchagaucho 5y ago
        There's no equity in the LOC. The bank is first in line to reclaim that in the event of a chapter event. The equity is almost always in the real estate. McDonalds basically just keeps the cash flowing while the land increases in value. Small restaurant owners are more likely to rent.
  • notanzaiiswear 5y ago
    I am not in the Restaurant business, so I don't know how many meals they typically sell, or how much they charge. Let's say he pays his cooks 30$ more. How long are they open, how many people work in the kitchen? Two people, 12 hours? So that would be 720$ more per day. How much do they earn per meal? In my country in most restaurants charge around 10$ for a meal. Even assuming no costs for the food resources, that would mean 72 more meals to sell, per day. To me that sounds like quite a challenge.
  • prirun 5y ago
    I've read that food margins have been extremely thin for many years - well before the pandemic. Maybe the owner is just tired of working his ass off for not much in return, and staffing problem is just the straw that broke the camel's back. Maybe the owner would be better off with unemployment!
  • anonuser123456 5y ago
    Restaurant margins are very thin. The extra 20-50$/hr is literally the owners salary for running the business. Why do you think they will continue to run the business making 0$ ?
  • effingwewt 5y ago
    Amazing is the cognitive dissonance on display. The business owners one and all took the PPP loans which were essentially grants, and that was OK, but when it's for the workers it's destroying their predatory businesses. And they would rather close than make less profit to pay a living wage. We already get no healthcare and no retirement. How much further down can we be pushed?
    • hungryforcodes 5y ago
      Only in the US. In Canada and Europe of course you get retirement and healthcare.
  • jwommack 5y ago
    It’s not an additional $20-50 an hour it’s the doubling of their single biggest expense in a sector known for extremely thin margins at a time where all of their supplies are also shooting up drastically in price.
  • throwawaysea 5y ago
    What makes it obvious that this is a worker’s rights or wage gap? Aren’t people able to demand higher than normal wages or simply not work because they are propped up by a host of COVID measures like stimulus payments and eviction moratoriums? That is skewing the market and being used to push for higher compensation. It’s not much different from cheap money supply at low interest rates increasing the price of assets.
  • thatfrenchguy 5y ago
    When you’re used to pay little amounts of money for things, it takes time to rewire your mind. I remember being upset at chocolate or cheese prices when I moved to California for at least one or two years.
  • robomartin 5y ago
    One has to have a rudimentary understanding of business in order to understand the realities of a forced high minimum wage. Restaurants and manufacturing operations can’t do not operate in a distortion field where external realities do not matter. In the case of the restaurant, what they are able to charge for their product is governed by myriad variables, some of which are: location, competitive landscape (how many, distance, kind, etc.), audience dynamics (breakfast and lunch crowd or spread across the day and evening), etc. Competition drives both prices and margins down. Once an area has reached price stability, it is very hard to raise prices. So, you are selling a burger for $10 and, if you are lucky, you make $2 to $3 on it. Depending on the nature of the organization, delivering burgers might require 5 to 10 people. Along come politicians pandering for votes and push for a 50% increase in minimum wage. This increase causes a chain reaction through the entire wage structure. The guy making $10/hr now makes $15. Someone making $15 makes $20, and so on. Most people don’t stop to do a bit of math and understand reality before accusing business people of being evil, greedy, or both. What ends up happening is that the thin margins and realities of the market can’t support the delta in cost structure. The business either controls costs or shuts down. How do you control costs? Less people doing more or less people and automation. A few more options, but that’s the basic idea. In other words, the politicians get the votes and continue on their sweet power ride. Those who voted for them lose their jobs. A bunch of the businesses who created jobs shutter. Fantastic deal, isn’t it? I am in the process of setting-up a manufacturing operation to produce up to 100K of our products per month. We want to manufacture in the US. The ONLY WAY this is even remotely possible is through automation. We are explicitly designing both the product and the manufacturing process for as close as we can get to lights-out manufacturing. We cannot afford hordes of people at $15/hr. The only alternative is to go to China, Taiwan, Mexico or other shores. That’s the reality we have created for ourselves through what I can only describe as ignorant voting decisions that only benefit politicians. Everything we use in manufacturing comes from China. We can either understand this reality and think of creative way not to lose even more job-generating industries or we can continue to be led by the nose by politicians with no skin in the game and one day wake up and think “What happened?” without realizing we did it to ourselves.
• BoiledCabbage 5y ago
  It's amazing how business seems to understand the free market when it's selling to customers, but can't seem figure out the free market when it comes to hiring labor.
  • spaetzleesser 5y ago
    They totally understand but they also know that lying and propaganda work extremely well and are cheaper.
  • goodells 5y ago
    They likely do understand, but are just waiting for the extra federal unemployment benefits to end. The smart choice (from an employer's standpoint) would be to make it past September 6th without significantly increasing wages, then evaluate. If they give workers a higher wage now and it turns out to be unnecessary once the extra unemployment ends, it'll be pretty much impossible to take that back without replacing the entire staff at once.
    • Animats 5y ago
      And for evictions to restart.
  • angelzen 5y ago
    Business does understand the free market. It is also strongly incentivised to exhibit perpetual exponential growth. Perpetual exponential growth is impossible even on relatively short duration spans (decades), see the parable of the rice and chessboard. Business tries to maintain the illusion of perpetual exponential growth by making cuts everywhere it can: worker compensation and product quality. https://purposefocuscommitment.medium.com/the-rice-and-the-chess-board-story-the-power-of-exponential-growth-b1f7bd70aaca https://purposefocuscommitment.medium.com/the-rice-and-the-c...
    • erikpukinskis 5y ago
      Underrated comment. A lot of “growth” is tricks. I have seen so many software companies sacrifice the fundamental health of the product in order to hit certain “growth” numbers, on the assumption that they’ll just be able to keep doing it. But the more realistic outcome is either acquisition (pass the buck and reset the clock) or catastrophic failure.
• n8cpdx 5y ago
  It's surprising businesses haven't turned to automation. At the very least, most of a restaurant's and a coffee shop's labor can be replaced with automated ordering, having the customer collect food themselves when it's ready, and using robots to prepare more of the food. they can do lattes with art all by themselves now. A lot of these businesses just can't survive if they meet the wage demands of people who have benefitted from substantial stimulus over the last 2 years. Automation would increase the quality of their service and reduce costs in the long run. I keep hearing about how much workers hate these jobs, so they should be happy to see them go away. Edit: every example I gave above has been observed successfully in action. They just haven't been widely deployed enough to become a norm. Other jobs that can be replaced: - host -> seat yourself sign - server -> pager, bus your table, ordering tablet (with just ordering, don't put ads and games like they did 5 years ago) - barista -> robot/dispenser tech can manage several facilities simultaneously - retail/grocery -> see what Amazon is doing - cleaning/janitorial -> robots and more innovative cleaning apprpaches could save a lot more effort. Japan has self-cleaning public toilets.
  • skybrian 5y ago
    Might this be happening already? It seems like ordering at the counter is becoming more popular compared to full service, even for somewhat upscale food. Also, food trucks are popular.
    • rebuilder 5y ago
      As a parent of small kids, I really appreciate being able to pay while ordering as opposed to waiting for the waiter ( hmmm… ) while the children get antsy. Of course, Now that I think about it, I’ve never asked if I could just pay after ordering. The force of habit, huh!
  • ianbicking 5y ago
    I'm afraid I can't find the graph, but I saw something showing that food service revenue has fully rebounded since the pandemic while food service employment has not. That would imply that labor saving is already in effect. It would also be unsurprising that not every restaurant would handle it equally well.
• beervirus 5y ago
  Or maybe it’s a government-benefits surplus. That’s the only thing that’s actually changed.
  • elliekelly 5y ago
    The economy has undergone a massive and fundamental shift because of the pandemic. It is disingenuous, at best, to say the increased unemployment insurance is “the only thing that’s actually changed.” Everything has changed. The demand for in-person services. Transportation and how (and even how often) we travel. Childcare. Education. Entertainment. Everything.
    • beervirus 5y ago
      Ok. But people still need money. The people who were working fast food jobs a couple years ago and are now choosing not to work… how are they paying rent and eating? Government handouts are the one thing that has changed for those folks.
      • imtringued 5y ago
        > how are they paying rent Do you count an eviction moratorium as a handout?
        • beervirus 5y ago
          Absolutely I do.
          • effingwewt 5y ago
            What about the PPP loans every company took and used it to pay the owners while laying off/firing their workforce, was that not a handout?
            • beervirus 5y ago
• nine_zeros 5y ago
  This is so visible even in the tech industry. If your company has trouble hiring, it's a signal that something is wrong with the hiring process and the company needs to change it. Maybe stop leetcode nonsense, maybe offer more equity. Your managers should spend time to figure out the root cause and fix the problem. If your management cannot figure it out, fire them first. If your company has trouble retaining engineers, it's a signal that something is wrong with the work environment. It could be pay. It could be lack of promotions. It could be a lack of recognition for the amount of work they are putting in. Once again, it is the management's job to figure out the root cause and fix it. If they can't, fire your management first. Hire/promote people who can do something different. It is quite clear that in a hot economy, a lot of employers will need to reevaluate if they have the right decision makers in the first place.
  • someelephant 5y ago
    If there are a lot of interviewers like that FB guy on teamblind who just searches for the hardest question and fails everyone for the tiniest error because he's fed up with the interview process, then yeah, there are problems.
  • endemic 5y ago
    It’s been fun to see this play out at my current (self-destructing) company. A large percentage of senior engineers have left; rather than make changes, management is going about business as usual.
    • nine_zeros 5y ago
      This is one of the reasons why management in tech is hated so much. The repercussions for them are lower even when things are crumbling. This is also the reason why the best leverage for engineers is to switch regularly. Why wait for the company to take action when management shows no interest or is not incentivized to promote their own team?
• rufusroflpunch 5y ago
  After doing absolutely anything and everything possible for the past 18 months to create a dysfunctional economy, it is laughable to contribute the current five-alarm fire in the US labor market to bad pay and shifting worker expectations.
  • MattGaiser 5y ago
    What you call a "five-alarm fire" is people getting nice large raises.
    • rufusroflpunch 5y ago
      I went to get lunch with my brother. We had to go to four restaurants before we found one with an open dining room. I went to the grocery store a couple of days ago. They one register and a bank of self-checkout open at 5 PM. The lines were 20 carts deep. My daughters school is doing rotating classroom closings, not because of covid but because they can’t hire teachers. My Amazon shipments have ballooned from 1-2 to 5 days. These are just some personal stories. We haven’t talked about global supply chain issues, container gluts, price inflation, food shortages, etc. This is a level of dysfunction I have not seen in my 37 years on earth.
      • bobbytit 5y ago
        >My Amazon shipments have ballooned from 1-2 to 5 days. The horror
      • effingwewt 5y ago
        I hate to be the bearer of bad news, but all of those problems could be alleviated by gasp paying workers a living wage, with schedules that allow one to have a life outside of work. What's laughable is the absolute privilege of treating the worker class like the slaves they are and demanding they take what is offered. Coincidentally the income inequality is the highest ever as well- but of course that couldn't be part of the problem.
• MattGaiser 5y ago
  I want a news organisation to look at 10 jobs that cannot be filled and compare them to the broader market. As most of the unfillable jobs in my area seem to be manufacturing/outdoor labour that pay as much as retail (which seems a lot nicer) or jobs seeking experienced people at entry level pay.
  • deleted 5y ago
    [deleted]
  • chaircher 5y ago
    Here in the UK we had supervisor/management positions trying it on for 0 hour contracts and minimum wage for months, although they seem to have gotten the message now they're having to literally shut their doors because they can't get staff. Worst one I saw was night manager of a massive central hotel for minimum wage. I wonder if it's that people have wisened up to the "take on extra responsibilities for no pay because it will look good on your CV" bullshit. Bearing in mind it's only really the last generation or so in the UK who have gotten used to not expecting things like double pay for a night shift, workers expecting to be paid about £10p/h for a bar shift finishing at 4am still isn't a bad deal at all
    • nicoburns 5y ago
      > I wonder if it's that people have wisened up to the "take on extra responsibilities for no pay because it will look good on your CV" bullshit. My hypothesis is that a bunch of people in low-paid service jobs like this had their jobs cut under them by the pandemic and were forced to find alternative income streams. That was painful at the time, but now many of those people find themselves in a much stronger position to refuse the work.
  • MeinBlutIstBlau 5y ago
    The biggest joke about those manufacturing jobs is a lot of HR will filter you out if you don't have experience. Meanwhile no school trains or teaches you about how to operate a CNC milling machine. Technical colleges offer apprenticeship programs if you can find a place that will sponsor you. But then that circles back to not being able to find a company without experience. The blue collar labor market is just a magnificent joke. I tried it for about 7 years of my life and they will literally only employ you if they somehow know you or you know someone else. If you're just a stranger, they won't even look at your resume. They don't even want to train on shit that in the 1960-1990's, they would take you if you weren't a total moron and could pass a drug test (if that even). Modern HR has become a joke in this situation as well. Not only do they pretend like they add value to a company, but they filter out people who could easily be exploited for cheap simply because they don't have experience. Seriously, just hire a rando who seems vetted, make them do some bitch work and occasionally the main job duties. If they catch on, give them more, if not, get rid of them. It's like employers have become more risk averse than someone investing in CD's...
• WannaFly 5y ago
  Because businesses can't print money...
• solarkraft 5y ago
  What are the effects on the average consumer? As catastrophic as opponents of higher wages are publicly afraid of?
• SV_BubbleTime 5y ago
  I’m a little confused, wouldn’t this mean that there are people sitting around who seemingly prefer no job than a lower than they would like paying job? I don’t understand how all these unemployed people are surviving.
  • BenjiWiebe 5y ago
    They are drawing unemployment benefits.
    • lordnacho 5y ago
      What are the rules in the US? When does it end?
      • aninteger 5y ago
        Federal will end on Monday, Sept 6th, but certain states may have longer term benefits.
  • maxk42 5y ago
    I think what we're seeing is the large proportion of the workforce that can get by on one income rather than two doing so. Many, many workers are working for non-economic reasons. Retired people work for exercise and social interactions. Married couples who can get by on one income no longer need to have both spouses working. And forcing students into attending classes from home has further forced more and more working couples to take a break to supervise their kids who are learning at home since most children (particularly young children) cannot be trusted to attend their classes without direct supervision. Many teenagers, also, who would have been in the workforce to have some spending money have decided the risks of the pandemic aren't worth it. And then there's the unemployment benefits. In short: Many people who can get by without working suddenly are. It only takes a few percent of the population choosing to no longer work to create a massive labor shortage.
  • AngryData 5y ago
    Food is cheap, it doesn't take a lot of work to not starve to death. Many of them can survive on odd jobs and hustles that aren't counted as employment. And many of them left their expensive city apartments and moved into friends of family's places where the entire mortgage payment is less than single room apartment rent. They severely reduced their expenses which means their pocket change turned into a sizable fund to live on. And now if they do want to move back, rent prices have in many places doubled, so now they are demanding even higher wages to make up for it.
• imglorp 5y ago
  This is also about healthcare, which is trickle-up economics. If workers and employers alike are not concerned about paying thousands a year for premiums, that would be a double benefit that would appear as jobs. If the US can spend billions on fossil subsidies and trillions on military and foreign wars, it should be a no brainer to stimulate domestic the economy with universal healthcare.
  • Aerroon 5y ago
    >If the US can spend billions on fossil subsidies and trillions on military and foreign wars, it should be a no brainer to stimulate domestic the economy with universal healthcare. The numbers you're looking at are too small. The war on terror cost $8 trillion in 20 years.[0] That's $500 billion a year. Divide this by US population (330M) and you get $1,515. How much healthcare could you buy for that per year? And don't forget that even without the wars a lot of this money would've been spent on modernizing the military anyway. [0] https://www.brown.edu/news/2021-09-01/costsofwar https://www.brown.edu/news/2021-09-01/costsofwar
    • imglorp 5y ago
      ... And the war on drugs. And the Senate Launch System. And the tanks we buy for direct to mothball. Etc. We have plenty of resources but not the will to direct them. https://posey.house.gov/wasteful-spending https://posey.house.gov/wasteful-spending
    • fallingfrog 5y ago
      Universal healthcare actually saves money. It’s a mistaken assumption that conservatives always pick the cheapest or most efficient option. They pick the one that’s cheapest for people with a lot of assets. Individual insurance is paid for mostly by the middle class; universal healthcare is paid by taxes, which means rich people contribute more than they benefit.
      • fallingfrog 5y ago
        Of course, if you want to explain why middle class conservatives support this position, it’s because the ideology of conservatism revolves around material success being equivalent to godliness. And as god’s chosen people and his representatives on earth it is their job to punish the iniquitous, therefore it is not only the privilege but also the duty of the powerful to trample on the weak. They couch this in rhetoric involving “personal responsibility” and so forth but this is what it really boils down to. So maintaining a moral order means punishing the unworthy. This means poor people, who are assumed to be slothful, and immigrants and brown people for other reasons. They are willing to pay money to make sure that the people they have contempt for, suffer. Once you understand this all sorts of things start to make sense.
• tootie 5y ago
  I really don't want to see The Hill invade HN with it's clickbait journalism the way it invaded reddit.
• specialist 5y ago
  Everyone talks about wages, no one talks about profit sharing. So much of our current drama would be mooted by sharing those record corporate profits with labor, by dialing back executive compensation, by returning to dividends vs buybacks (closing some more tax dodging schemes). -- Curious to see if Labor, agriculture, small businesses, and credit unions in the USA return to their roots: Cooperatives and collectivism. A lot of progress in governance these last 60 years. Innovations like worker-directed social enterprises and class-B corporations. New orgs using modern bylaws could be far more resilient to vulture capitalists. There's SO MUCH work that needs doing, needs begging to be fulfilled. And yet. Wall St and SPACs can't seem to figure out how to capitalize anything smaller than a unicorn.
  • n-exploit 5y ago
    There are many people in the co-op space, in the U.S. and abroad, working leverage technology to promote a more collectivist economy. Co-op start-ups have a surprisingly low rate of failure, relative to traditional corporate structures.
• tlogan 5y ago
  I believe majority of businesses are just waiting for extended unemployment benefits to end and eviction moratorium to be lifted. I think that unemployment benefits ends today. The eviction moratorium ends in Oct. So we will see… if they still cannot hire they will try to increase wages + increase prices.
  • jpindar 5y ago
    The eviction moratorium ended already in most of the country, and Covid-based unemployment benefits ended already in some states.
• docflabby 5y ago
  The real problem is inflation and excessive rent seeking. Rents are currently at the highest level on record in the US. Hard to get someone to take a job that won't even pay the rent. The wealth trickle up has changed into a torrent since covid, something is going to break.
  • MattGaiser 5y ago
    Rents are that high as people are willing to pay extra for residential space. I had colleagues go from studio apartments to single family homes during the pandemic.
  • missedthecue 5y ago
    What are you saying? That someone would rather earn $0 to pay their rent than earn $15/hr to pay their rent?
    • totony 5y ago
      It really does not matter if neither can afford the rent
      • missedthecue 5y ago
        So the millions of unemployed are living under bridges right now or what?
  • antisthenes 5y ago
    Rent-seeking and regular rent in a landlord-tenant relationship are not the same thing. Rents did go up as a result of general inflation and the eviction moratorium, but that is not the same as rent-seeking.
    • mavelikara 5y ago
      Why is this comment is downvoted?
• deleted 5y ago
  [deleted]
• mrosett 5y ago
  Just a reminder to people like me: if you chose to read the comments on a post like this, you got what was coming to you.
• notanzaiiswear 5y ago
  I am so tired of this attitude. If you don't like the conditions of a job, don't take it. But don't accuse the person offering the job of greed or whatever. A simple example: suppose you are an old person who has trouble keeping their apartment clean as of late. Say you could offer somebody else 5$ to clean your room, because your pension is so low. By the standards of modern activists, you have now become an evil exploiter of wage slaves. In reality, you have created a new job. If nobody needs it, fine. If somebody needs it, great.
  • MattGaiser 5y ago
    The problem is when said person whines that people are too lazy to work for them for that wage.
    • notanzaiiswear 5y ago
      Obviously for that kind of person it would be a problem if nobody wants to work for that wage. He has to live with his unclean apartment. In any case, here we have an article whining about unfair employers. Are there really that many articles whining about lazy workers?
      • aynyc 5y ago
        The entire foxnews channel is bitching about lazy people.
        • notanzaiiswear 5y ago
          I don't have US TV. It sounds rather funny to me, though. The bitching about lazy people won't change anything. In contrast, bitching about greedy businesses may lead to harmful legislation.
          • mavelikara 5y ago
            > The bitching about lazy people won't change anything. This is wrong. A Presidential candidate going on a crusade against "welfare queens" changed LOT in the US.
• matchagaucho 5y ago
  McDonald's "best first job" campaign a few years ago spelled it out. They don't expect their Franchisees to hire and support career workers. 80%-90% employee turnover is built into the business model.
• NaOH 5y ago
  As someone who makes their living owning a food business, nearly all the food industry-related comments here are off the mark. Rather than rebut any of them, I'd say the way to think about that particular set of industry challenges is to think of them like a chronic condition. It's never a "just do this" answer. Never. You don't tell your friend with depression to plow through this down phase he's in. And the other friend with Crohn's disease and a colostomy bag doesn't benefit from someone suggesting she try a gluten-free diet. It's the same in the food industry. The issues at hand are complex, the ripple effects of any change are significant and multifaceted, and the foremost issue today may be superseded tomorrow while nonetheless remaining an area for concern and attention. The better move from the outside is to provide the support that's needed today by the business (or the friend) and within your means. Can't afford to go out for food regularly? I get it, just like your job may not allow you to be available as often as your friend with Crohn's disease needs a ride home from the hospital after some procedure.
  • danaris 5y ago
    But also, unlike having a friend with a chronic disease, it is no one's obligation to support particular local businesses with their time and money. Yes, supporting local businesses in general is good, no question—but I feel like framing it as "just give the support you can to your local restaurants" implies a greater onus than can realistically be placed on regular people.
• Overtonwindow 5y ago
  This is really a test of who will win out first: workers have to pay bills, businesses have to have workers to stay in business. Eventually the rent comes due for both, and that will force the option. I predict by Christmas people will be back to work, raises in pay or not.
• nsxwolf 5y ago
  If you can’t compete with a government that operates a fiat printing press you don’t deserve to be in business.
• JakeAl 5y ago
  Go to the top of the food chain -- put a cap on property taxes, rent and utility prices. When the cost of living is $42K a year, that doesn't leave people much room to prepare for long term living expenses let alone retirement.
• mchusma 5y ago
  That magically coincided with the a huge government program to pay people only if they decline to work? That other countries without similar programs are not seeing? The examples they give are insane. People were paid $15/hr to not work, so of course they were demanding $20/hr to work. This program was the most bipartisan predictably bad program ever created, and almost certainly created more economic damage than the disease.
• chrisbennet 5y ago
  Auto play!
• foxyv 5y ago
  I think a major source of the loss of wages and benefits despite a higher than ever per-capita GDP is an insane increase in rent seeking by government and land owners. When taxes, fees, fines, and rent all go up, small business owners are forced to cut into something to make the books balance. You can see spaces looking like Golem's cave renting for $15k a month. It's tempting to say they should just raise prices, however they are competing with massive organizations that can run at a loss for decades and have capital to burn. There is just no way anyone will pay $30 a plate for hole in the wall Mexican food when they have to pay rent on their $2000 a month 1 BR apartment. Especially when Chipotle down the street is offering comparable food for $10 a plate.