Lack of low-wage workers... where have they gone?

In My Humble Opinion
201

Something to keep in mind is the categorization of labor has more than one purpose, here you are focused on a specific purpose that a government might use in a visa scheme. But many economists are doing it to track the availability, wage levels, growth or contraction, etc of various jobs and it can be difficult to prepare meaningful data if you want to fight all day about “all jobs are skilled.” Well, to an economist trying to prepare a report on if a college education provides a good return on value, he needs to do some delineating.

FWIW I don’t really have a ton of issue with some of the goals of your government, I do not think the primary way that working class jobs should be filled is through cheap imported labor. I’m generally in favor of robust immigration, but I’m not in favor of immigration simply being a gift to corporations to hurt domestic working class people. This 100%, absolutely has happened in the United States, and I would be surprised if it has not happened in the UK. In fact while I have less knowledge of the UK, I absolutely know that it has happened in the UK as well, stories of Northern , West Midlands etc industrial cities that have lots of formerly employed factory workers who no longer have jobs reach the United States.

Many times the policy wonks and the elite have largely said “oh well, remember, our policies are creating more net jobs, and on net, they benefit more people.” That is usually also true, but when the people who are fucked completely and have their lives ruined during the “transition”, for far too long policymakers have assumed those people will “just adapt.” It is difficult to just adapt when you’ve worked a working class job in a specific town your whole life and that is taken away from you, and the only viable alternatives are lower paying service industry jobs or moving across country where you might lose the resources of an extended family, might have to sell the family home and be unable to afford one in the new destination etc etc.

What’s interesting in the United States is the sort of industrial jobs we have basically moved out of the Rust Belt and now staff significantly with imported labor, were quite deliberately located in places other than the Rust Belt–because the Rust Belt tends to have laws that strongly protect unions, the States the jobs were moved to do not. So even if a Rust Belt worker was willing to relocate to take a job in Tennessee or South Carolina they would almost certainly be paid a lower wage, with less safety and job protections.

It’s a complicated issue, both the US and UK have in common that our domestic populations do not satisfy all of our job needs, but at the same time we have lots of disadvantaged working class people either out of work, or who have permanently left the work force (retired early, living on benefits etc) because of poor prospects. You can find stories in the United States about counties with high unemployment that host things like chicken processing factories, where most of the jobs are held by immigrants (very often illegal.) The business owners will say that they need the immigrant labor because there are “no Americans willing to do the work.” The reality is there probably would be, but these chicken processing plants are horrific places to work that pay terribly, so for someone with roots in the community they might rather rely on the support base they have and work lower paying service jobs to avoid the hell of the chicken plants. But if the chicken plants actually paid a higher wage, it is quite likely many of those people would reconsider them. On some level the ability of the business to use the (often illegal) immigrant workforce lets them keep wages at levels that are not attractive to Americans…but that isn’t fairly considered “Americans won’t do the work”, no–it’s more that “Americans won’t do the work at a level that your shareholder driven values will support.”

203

Stay at home, sell stuff on E-bay, do a few ‘gig’ economy jobs or work part time or become ‘self employed’ in some way. Or economise and live off one salary rather than two.

The patterns of work are changing. The lockdowns have given a lot of people time to get off the treadmill and re-consider their position in the rat race.

I am pretty sure governments and the employers want everyone to get back to work ‘as normal’ as soon as possible. But there seem to be a ton of jobs out there in the ‘gig’ economy. I have never seen so many delivery drivers in vans, mopeds, electric bikes or regular bikes. These jobs are not highly paid, but they are flexible and you don’t have a nasty boss breathing down your neck. Packing parcels for Amazon is probably a better paid and has better conditions that working in a chicken processing plant.

Could it be that low wage workers have just moved on to jobs with better, more flexible hours. Having a little choice and autonomy in your work goes a long way.

However, the rest of business seems to be wedded to the idea of the factory shift or 9-5 office routine bracketed by a tedious commute to your place of work. At the low end of the wage scale there are now more and better alternatives. Some people have two or three jobs and prefer it that way.

There is a suggestion that employers may become obliged to offer flexible working hours to new starters that will include working from home or from a remote location.

I predict a lot of old school managers will be looking for surveillance technology to count your keystrokes.

204

And were made less horrendous places to work.

Money is part of the problem; but not all of it.

205

Time for Congress to get off its ass and finally revise our immigration laws permitting longer work visas and paths to citizenship for people that want to come here and actually work.

206

There’s a lot of competition for low wage workers from other companies that are still low wage, but not as low. My son is legally an adult, but not really, and has not completed any education. He went from making $10-11/hr at an automotive place to $15/hr plus tips at a casual restaurant chain. I work at a warehouse that generally pays around $15-22 and I know a lot of people who quit and went to a manufacturing job that starts around $25-26.

Then there are “gigs,” which generally pay less than entry level low-wage jobs, but offer a lot of flexibility. So if you can’t commit a specific 10-12 hour or more time block every day, have childcare needs or whatever, you can work when you want. I know some people who get by with some combination of doordash, instacart, onlyfans, etc.

My mother was able to retire via early social security and a small unexpected pension because she worked a union communications job 20-30 years ago and put in 10 years. Of course all the people I work with at my low wage job hate unions. Prior to that she had been working 2-3 food industry jobs after being let go from her management job due to age. So i’m happy for her and her health and safety. I know a few other semi-retired people who just went for full in retirement. One of my in-laws had been “retired” for a decade but still went into the office for 1/2 days and did a couple part-time jobs working at events and sports games and other things that stopped happening.

207

I have heard that delivery drivers for restaurants and such can make huge money for that type of job, depending on the location and the clientele they serve. I heard one driver say he was making over $50k per year delivering food, and he’d heard of some making as much as $75k. You do have to provide your own car, though.

What’s going on right now is that markets are fluid, but labor is sticky. Whole industries have shrunk (theaters, restaurants, rtc), and new ones have risen, but it takes a long time for the work force to transition. So you get gluts of jobs at the same time that there is a shortage of qualified workers.

Another factor is that when lots of job openings appear, people quit their crppy jobs because they feel more confident in finding another. Add in extra COVID relief that buys them time to look, and you get lots of low-paid employees leaving their jobs.

208

I’ve done gig delivery on and off for a few years now, and I can tell you there are is a bias that makes people overestimate the amount they make and underestimate their costs. I think it’s a choice-supportive bias - they want to convince themselves that choosing the gig job over a typical job is a really smart choice, so they tend to find reasons to find why downtime doesn’t count against their hours worked, and they massively underestimate their own costs from using their own vehicles. So you can take their self-reported earnings with a grain of salt. I don’t think anyone is making $75k per year for gig delivery unless they’re working 80 hours a week and even then only a few markets would support even working those hours. And of course their own costs would scale up quickly from that - you might have to get a new car every 2 or 3 years at that rate.

You may be referring to some sort of non-gig delivery jobs, like pizza delivery, but I would be skeptical about them paying that much.

Gig delivery jobs are actually looking less attractive vs conventional crappy jobs due to recent circumstances. Since you are paid per gig, rather than per hour, the fact that everything is understaffed and slow cuts into your bottom line. Gig companies have been squeezing drivers for years now. When they had billions in venture capital to blow, they threw money around, but it’s been nothing but paycuts and attempts to enact further control over drivers since then, giving them less information and less choice (which leads to less pay). Uber, for example, originally got a reputation for paying pretty decently - but since their venture capital days, they have enacted 17 pay cuts. It is both less free and less pay to do gig jobs than it was a few years ago. In contrast, the fact that crappy regular jobs are offering more pay probably means that your local McDonalds will pay you more than working for grubhub/doordash/ubereats will, which was definitely not the case 2 or 3 years ago.

Now - that’s not the whole picture. I would never work at McDonald’s under any circumstances short of absurd pay - getting abused by customers and doing taxing work under some authoritarian 32 year old assistant manager whose only little bit of power in life is make some poor workers under him miserable, but I do gig work part time (I’m a full time student). Even if McDonald’s pays more now, I’d still do the gig work because of the autonomy and freedom from the American work culture/environment. But gig work is getting less and less appealing - it’s borderline worth doing now and is only getting worse.

I am curious if the availability of gig work is part of what’s behind this shortage, even as those jobs get much worse.

209

I’ve always been skeptical that the gig economy could be large enough for a significant number of people to make a reasonably good living in 40 hours a week. And by “good”, I mean middle-class.

It seems like a great thing for supplemental income though- I could see people doing gig economy work on the side to do things like earn extra money for savings, or for various sorts of large, but foreseen expenditures (vacations, graduation/wedding presents, etc…)

Maybe it’s some combination of a different low income job that has better and/or more predictable hours along with gig economy work that’s letting people not get locked into fast food jobs.

210

No, there’s definitely no middle class living to be made there. At the rate things are progressing, I think the whole gig economy is going to be a historical fluke and basically disappear except maybe for bottom end workers who do the gig work because they simply can’t work a regular job for whatever reason.

I don’t see why the gig economy can’t exist in theory - as a flexible part time job - but the constant cutting of pay and trying to manipulate/control the contractors we see demonstrate that the current model/level of expectations is not going to work out. It gets worse for the gig contractors every few months like clockwork.

211

I assume that the reason they are making so much now is that the demand has gone up so they don’t have any ‘slack’ time, and in the covid era people seem to be in the habit of tipping delivery drivers, or tipping them more than they used to.

Also, this is Canada. We’re polite and tip well, eh.

212

There were big tips during the first few weeks of COVID as people were doing the whole “we love essential workers” things, but that dried up fast. Tips got worse, on average, because more people were using delivery services that normally wouldn’t simply because they didn’t want to go out and expose themselves. I would speculate that these people tipped less because they weren’t the people who could normally afford food delivery as a luxury. Given the greater delays now, and less tip, and the tactics doordash/grubhub have used to deliberately handicap/control their drivers, I would guess that the per-hour pay over the last year is down at least a third.

I don’t know how it might be in Canada - I thought you had less of a tipping culture than we do here.

213

At the beginning of the quarantine, my wife started tipping delivery people pretty extravagantly. We were both WFH full time, and not being able to go anywhere, we were saving a ton of money, so she figured, pay it forward. She started tipping at 100% - the tip was the full price of the meal. Which is a lot, especially if we were ordering something like sushi, but not a lot a lot, you know?

The number of people who broke down in tears over an extra $80 was deeply disturbing. One woman told us she could afford to get her teeth fixed now.

This country is incredibly fucked.

214

I find the gig economy stuff interesting. I started ordering about a once a week delivery from the food apps a couple years ago, and I was still working in my office for most of covid (I have a small office that pre-covid had a few people in it, post-covid I still have the space but I’m the only one who is regularly coming in) which is where I typically did delivery (my house has much more limited options on the delivery apps.) I remember thinking it was a pretty cool service when I had my first real restaurant meal delivered to my office middle of the work day and I didn’t have to go out and get it myself. But I’ve grown more and more skeptical of them just based on the core economics of how much they are charging and what they’re providing. I just am not sure the math can ever work without significantly jacking up the prices.

Now, like Miller I started upping my gig delivery tips a lot when covid hit, so in theory if the gig apps jacked their rates quite a bit to become stable profitable, I’d probably still use them about 1x a week. But I’m not really sure I’m typical, they need volume for their business model to work and I don’t know that they would keep it with such high rates.

I somewhat suspect the way Amazon and Kroger are delivering groceries is possibly a little more sustainable from what I can tell. There is only one origin point–their facilities, and they can pack in a ton of orders into a vehicle and then do a chained series of deliveries (groceries are typically delivered by those services in 1-3 hour “windows”, unlike restaurant meals which you need to insure arrive still warm and tasty or you have customers demand refunds.) Also grocery delivery isn’t actually too esoteric of an idea, it was actually much more common as a standard offering at local supermarkets for many years until more modern mega stores killed off a lot of the smaller grocers that used to offer it. I remember my grandmother regularly having her groceries delivered when I was really young.

I’m also not even sure Kroger and Amazon are even “gig” grocery delivery any longer. I know Amazon was, initially when they started doing it here 3-4 years ago. But since covid hit I’ve noticed Kroger and Amazon deliver groceries in like commercial vehicles branded with Kroger / Amazon logos, which make me think they’ve switched to using actual employees for it.

215

Kroger finally moved into the Chicago market a few years ago, when they bought the Mariano’s chain. At least here, while you can order grocery delivery directly on the Mariano’s website, they sub-contract the delivery to Instacart (and feature the Instacart logo on the delivery page), meaning that it’s gig shoppers/drivers who are buying at the store and delivering it with their personal cars

216

Jewel/Osco has a delivery service as well and they also switched to Instacart after using their own drivers. But, I’m pretty sure they pick up the groceries from a warehouse rather than go into a store and shop.

217

I got the impression Kroger around DC was using some distro center and not delivering from a store that I could actually walk into. This is based on how much of the produce is packaged. But it wouldn’t surprise me if there’s regional variation.

218

Kroger has built warehouses where robotic carts move items in a 3D grid to bring items to automated machines which pack up the groceries. It’s fascinating to see. Here’s a video of it in action:

One thing that this shows is how automation is getting rid of may low-wage jobs. Traditionally, this work would be done by people going around warehouses to pick the items. Now robots are doing the bulk of the work and just a handful of people are involved.

219

Some businesses are having success by offering, not just more pay, but more respect.

:

According to seasonally adjusted numbers from the Bureau of Labor Statistics, hotels, bars, and restaurants suffered a 10.2 percent staffing shortfall in August 2021—that’s 1.5 million unfilled positions. The attrition rate was 8.3 percent, the highest among industries. But 60 percent of job seekers won’t work in the field, citing low pay and lack of benefits.

Enter the new training programs. In an industry where training once came down to the first-night trail, they’re using innovative formats to impart everything from foundational skills to entrepreneurial expertise. Many aim to change the average hospitality job from a temporary gig to a vocation pursued by individuals who know their worth. With alumni bringing the confidence to seek proper compensation and upward mobility, this new wave of training could make hospitality a place people want to be. [ . . .]

“The reason we have a labor crisis is we didn’t train or pay people correctly,” says Lindsey Johnson, the founder of [Lush Life Productions [URL deleted], which runs Portland Cocktail Week. “If you train them, treat them with respect, work with them, they come to work.”

220

It seems to me that what we’re seeing is just another stage in a tug-of-war between traditional low-pay jobs like McDonalds, and the new low-pay jobs like the gig economy. Part of the reason we’re seeing the discussion of McDs raising wages is that a lot of people quit those jobs to work for the delivery companies. Now, with the delivery guys cutting pay, the employees might start switching back.

This is offset somewhat by the issues of working conditions. We’ve seen recently that a lot of people have decided to forgo at least some money in order to improve the quality of their working life. This might end up being the new front in this war.

I expect we’ll eventually find some kind of balance point. McDs will pay a bit more, and improve their working conditions a bit. The delivery guys will always be more flexible, and let you not have a boss looking over your shoulder, but you probably won’t earn as much. Then people just make a choice about what is most important to them.

Since I’ve been back to going to the pub semi-regularly lately, it seems like the delivery apps are doing steady, but maybe not spectacular, business. At my local pub, which isn’t very big, nor does it offer much in the way of fancy food, the delivery guys come in maybe every 15 minutes to pick something up, for most of the evening I’m there. If there’s that many people buying pub grub for delivery, I’m sure there’s a lot more buying better food.

221

That could well be; I only know that, when I was using the Mariano’s delivery service, the Instacart shoppers would occasionally send me a picture if they had a question about an item, and it was clear that they were in an actual store. Also, the “where is my shopper” part of their app would show them in the same location as my local store. :slight_smile: