The Nahployment 'Crisis'

In My Humble Opinion
402

It can mean these things:

  • Whoppers go up in price by the percentage of increased labor cost that makes up the chain’s operating costs. On average, labor makes up about 30% of the cost of fast food, so if $1.00 of a $3 whopper is labor, increasing labor costs by 50% will raise the price of a Whopper from $3.00 to $3.50. A $10 food order becomes $11.50. This assumes that demand for fast food from the same place is perfectly elastic.

  • Rising labor costs punish high-labor goods vs low-labor goods. The food places that require less labor grab market share from the ones who use more manual labor. So you not only get a race to automate, but people on the margins who would otherwise have gone out tomeat now staty home and cook. So the industry overall shrinks, and jobs are lost with it.

  • Businesses respond to higher minimum wages by making the employees work harder, but getting rid of so-called ZMP (zero marginal productivity) employees who are now negative, and by keeping only the hardest working. The job market gets much harder for the very people you are trying to help, such as marginalized applicants with no work record.

  • Business respond by eliminating their least profitable hours, going to skeleton staffs overnight, etc. Restaurants that were previously 24 hrs now close overnight, etc. Those jobs are lost.

  • Businesses try to compensate for higher labor costs by cutting elsewhere. Portion sizes, food quality, etc. Tim Hortons lowered food quality, and it’s hurting them badly. Or, they cut employee benefits.

There is no scenario under which the workers just get paid more, and things go on as before. That’s a fantasy.

403

This has been said about EVERY increase in the MW in EVERY city, county, state, and country that has a MW, literally hundreds and thousands of increases, yet things seem to go on mostly like before.

Where does this scenario fit in?

404

Things do not go on as before. You just don’t see the changes. With small changes you get small effects. Maybe no one gets fired, but some owners who were planning on hiring staff change their mind. Or, a planned benefit for workers never gets implemented, or employers find other ways to eake out a tiny bit of extra productivity from the work force to compensate.

And in the past, minimum wage increases have been very gradual. Raising the minimum wage from $6.75 to $7.25 will result in probably a combination of small price increases, some job losses on the margin, or reductions in pay increases in the future. Or the cost will be offset some other way. Maybe you get .25/hr more, but you now have to pay more for your uniform and free employee coffee is cut out. Whatever. Businesses find a way to recalculate.

A fundmental principal of economics is that change happens on the margin, and that any increase in input costs has to be accounted for somewhere, somehow. There are no free lunches.

Also, minimum wage increases often lag behind actual wages. You have places where the minimum wage is $7.25, but due to market conditions the actual market minimum is maybe $9. In those cases, raising the minimum wage from $7.25 to $8 will not result in anyone making more money, so it won’t have any negative OR positive effects.

But raise it from $7.25 to $15, and you will see large changes in labor. In low cost of living states where people are actually working for $7.25, I would expect a lot of economic disruption. In a city where people already make $14 or something, not so much.

One other effect is that currently low cost of living states have a comparative advantage in labor costs, offsetting other costs such as getting product to market or access to business services. Make them pay the same labor rate as more expensive places, and the effect may well be to cause their state’s overall economy to decline as the equation for being in the state shifts and businesses pack up and leave. And even if they don’t, their now-higher cost of production raises the price of their product and lowers their market share, causing business failures.

All of these effects can be very difficult to tease out through economic study, especially when they happen at a time when other shocks are changing the economy. That doesn’t mean they don’t exist. They always have.

405

Eh, again Sam, like no one is guaranteed health insurance in the United States, you’re not guaranteed a successful business.

The world will go on if undercapitalized businesses get swept aside by the winds of change. Been there, done that, your argument is moot over the long run.

406

Gradual as in nonexistent at the federal level. If MW had been indexed for inflation there would not be the drive for a relatively large increase today, so you can blame conservative MW opponents on this.

In fact the MW has decreased on an inflation adjusted basis, so the owners of businesses depending on MW workers should be doing very well if your analysis is correct, and doing well from reduced costs of labor. Is it so terrible to restore workers to a reasonably consistent wage?

And here we might see some interesting second order affects. If people do start staying home they will most likely eat healthier foods, save money, and suffer less from obesity and diabetes. That will be an economic benefit. I’m not betting many people will change their habits though. And since a burger will be a smaller part of a MW worker’s wage, they might eat more, and worsen their health.

BTW besides local effective minimums being above MW, many localities (like mine) have MWs way above that at the federal level. None of the terrible effects have happened around here, and if we are suffering from nahployment it hasn’t been on the news or in the papers.

407

Of course universal Medicaid would free up the gig economy, but the insurance companies do not want to be gored.
A gig economy would also free up capitalism to benefit society.
But we are fucked by our own stupidity.

408

I read something like this:

and it really makes me go “hmmmmm.” I don’t know why in the world we act like we’re powerless in our billions if we decide we’re not going to put up with this bullshit any more. When it comes down to it, cops are mercenaries and if we get to the point where the proles can crowdsource a better salary for them and the military tell me just what use would those piles of money BE? Can’t fly off to the Caymans if the pilot says “fuck you,” can you? Go hide in a bunker, see where the welders live, inside with you or outside making sure you never leave. I don’t see any reason not to get pissed off and demand this fucking country be run like a proper government would do. We have the power to make their money worthless and it’s just removing our attention from it. Money is the ultimate American God, take away its worshippers and it dwindles away to nothing.

409

There’s talk all over the Chipotle subreddit that across the board raises are being announced on Monday. It’ll be interesting to see how they spin it.

410

I loved Beverly Cleary as a kid, the tales of Henry, Beezus, and Ramona still in my mind.

In the book, Ramona and her Father (1977) …

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… Ramona’s dad lost his job. Mom didn’t work, so the family was thrown in disarray. Money was tight. Mom had to find work to support the family. :scream: Dad got depressed. Things were getting desperate until, Yay! Ramona’s father finally gets a job! Mom can quit her low paying job! The family is saved!

And his new job, the one which paid enough to support his family on one income?

He bagged groceries at the local grocery store.

411

Of course, there’s also the simple fact that of the 600,000 dead in this country due to Trump’s malignant response to the COVID crisis that, well, perhaps this labor shortage is a result of Trump’s pandemic killing off large swaths of this specific labor classification as shown in this study of CA pandemic deaths (up to October 2020):

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Cite:

412

That won’t be necessary. Pissed off customers spend their money elsewhere.

413

IIRC, and I’ve read this book to my kids several times, he was taking classes to become an art teacher, and he was also on a management track at the grocery, so the bagging job wasn’t long term.
The thing that struck me about this book was that real world problems intruded, which they never did in the earlier books.

415

Where my mother lives, an independent living place, they pay well above minimum wage plus benefits after probation. But they still get more on not working . That is a problem.

416

I just watched a repeat of Three’s Company where Mrs Roper is convinced by the girls to get a job and not rely on an allowance from Mr Roper. She becomes a cashier at cafeteria and at end of her first day she is frazzled and wants to go back to stay at home wife relying on Mr Roper’s money.
Incidentally, they were landlords at the apartment. What did they do mainly in the week?

417

Roper may have been his own maintenance man - at any rate it is within the realm of possibility that he did some of that work. Don’t know how big the complex was, but that could easily keep you busy (broken toilets, mowing, painting, pool cleaning, etc).

And if it was big enough that he had all that work hired out, he would have a lot paper work and scheduling issues to work on.

418

One of the primary characteristics of Mr. Roper, as a character, was that he was cheap, so I agree, it’s entirely possible that he did a lot of the maintenance himself.

Beyond that, creeping on your tenants, and avoiding your wife’s sexual advances, can take up a lot of your day. :smiley:

419

Speaking as a cashier… that sounds pretty plausible to me. I sure as hell don’t run a cash register for the fun of it, I do it because I need income. If I could sit home and be supported by a spouse I’d probably do that.

420

I’m hearing there may be a general strike @ McD’s on the 19th, but the main source of this seems to be this vice.com article and, to be honest, I don’t know their editorial standards, so reader beware:

421

The headline should read, “Workers fight to have their jobs replaced by kiosks and cooking robots”. The real minimum wage is always zero.

In Canada, some fast foods have already begun pricing themselves out of the market because of high labor costs. Tim Horton’s has been cutting food quality to compensate for high labor, and losing customers.

A Wendy’s single burger combo where I live is now $13. A family of four is going to drop at least $50-$70 or so on a fast food meal with tip. That’s becoming unaffordable for a lot of lower income families. And it’s going to get worse as salaries and energy prices are pushed even higher.

422

Yup, and Sam (unknowingly) puts his finger on the issue, yet somehow still blames the workers:

Wendy’s expects you to spend $300 for 23 meals, the equivalent of 6 meals for a family of four.

Wendy’s also expects that same $300 to purchase 40 hours of your life. So you work 40 hours to earn the equivalent of 6 meals for your family? At Wendy’s?

Nah.