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If I leave for a new job making 30% more, and my company pays my replacement 30% more, he has to be replaced for 30% more... Nobody new is entering the job mar

If I leave for a new job making 30% more, and my company pays my replacement 30% more, he has to be replaced for 30% more... Nobody new is entering the job market. Nobody's leaving. Just shuffling around. We're still all doing the same work. These companies are paying 30% more for labor. Aren't prices just going to go up and we're basically in the exact same spot?

pantulis 5y ago
Looking at the demand side, I feel that there are not that many new jobs created, not even by a long shot. So mostly everyone is shuffling their chairs, and getting a raise. Employers lose here. If I am right, I'm curious to know why this is happening now. The pandemic should have something to say: people would prefer remote jobs now that most companies have been forced to allow for that job model. But is this enough?
- lotsofpulp 5y ago
  >If I am right, I'm curious to know why this is happening now. Sometimes, you need a shock to the system to precipitate change. In the US, I was seeing labor supply was getting tight throughout the 2010s, and labor prices were rising for years, but the pandemic shutdown and benefits provided a great catalyst to spur the change that needed to happen to force a change in the price negotiations of labor sellers and labor buyers. I can only hope this change continues and we see more labor price transparency, and more movement in labor markets eventually resulting in reduction of income/wealth gaps.
- medvezhenok 5y ago
  Part of it might be transfer payments, part of it might be the wealth effect (stocks, house prices etc and everything bubble might have pushed people into retirement earlier). Probably affects behavior on the margin and has people pull away from the work force (and I think the Federal Reserve might be starting to realize that). Also about half of the boomers have / are hitting retirement age and are retiring en masse, which will shrink the available labor supply quite drastically (especially since they were very productive workers in late career stage)
ravedave5 5y ago
If a company has a 40% profit margin and employees ask for raises they have two choices. Lower profit margin or raise prices. If they are in a competitive market then raising prices is a risk because their competitor may chose not to.
kevinventullo 5y ago
No, a bunch of people are going to stay put making ~25% less than their peers because they don’t have the ability or inclination to change jobs.

pantulis 5y ago

Looking at the demand side, I feel that there are not that many new jobs created, not even by a long shot. So mostly everyone is shuffling their chairs, and getting a raise. Employers lose here. If I am right, I'm curious to know why this is happening now. The pandemic should have something to say: people would prefer remote jobs now that most companies have been forced to allow for that job model. But is this enough?

lotsofpulp 5y ago
>If I am right, I'm curious to know why this is happening now. Sometimes, you need a shock to the system to precipitate change. In the US, I was seeing labor supply was getting tight throughout the 2010s, and labor prices were rising for years, but the pandemic shutdown and benefits provided a great catalyst to spur the change that needed to happen to force a change in the price negotiations of labor sellers and labor buyers. I can only hope this change continues and we see more labor price transparency, and more movement in labor markets eventually resulting in reduction of income/wealth gaps.
medvezhenok 5y ago
Part of it might be transfer payments, part of it might be the wealth effect (stocks, house prices etc and everything bubble might have pushed people into retirement earlier). Probably affects behavior on the margin and has people pull away from the work force (and I think the Federal Reserve might be starting to realize that). Also about half of the boomers have / are hitting retirement age and are retiring en masse, which will shrink the available labor supply quite drastically (especially since they were very productive workers in late career stage)

ravedave5 5y ago

If a company has a 40% profit margin and employees ask for raises they have two choices. Lower profit margin or raise prices. If they are in a competitive market then raising prices is a risk because their competitor may chose not to.

kevinventullo 5y ago

No, a bunch of people are going to stay put making ~25% less than their peers because they don’t have the ability or inclination to change jobs.