Turning the Labor Shortage Up to 11
alhambrapartners.com
alhambrapartners.com
What fascinating to me is how history repeats itself. In the 14th century, the Black Plague devastated Europe. It's impossible to know but there's a lot of evidence to suggest that as much as HALF the population was killed.
This created a massive labour shortage after the plague passed, which ironically was a huge boon for workers rights, so much so that King Edward III tried to regulate worker wages in an effort to stop "gouging" [2]. Like pretty much all attempts at price-controls it failed.
So here we are almost 700 years later in a pandemic and we may be seeing the first increase in real wages in 40+ years.
As an aside, it's so bizarre to me how many ordinary people will jump to the defense of billionaires when it comes to estate taxes.
What I think many such people don't seem to understand is that wealth will ultimately get redistributed one way or another. The ultimate forms of wealth distribution are revolution and war and that's really in nobody's best interests. It's actually good for everyone if the masses aren't living paycheck-to-paycheck.
[1]: https://sgp.fas.org/crs/misc/R45090.pdf
[2]: https://en.wikipedia.org/wiki/Statute_of_Labourers_1351
If all the variants are to completely overwhelm all the vaccines and treatments (that did not exist then) to render them all ineffective and create this devastation over the next 100 years, time will only tell if half the world will be killed. As of now, we are pretty far from that (but most of the century from the first cases has yet to play out).
> wealth will ultimately get redistributed one way or another.
I agree with what you are saying.
> The ultimate forms of wealth distribution are revolution and war and that's really in nobody's best interests.
I don't necessarily disagree, but is there some kind of shared "best interests" concept that everyone agrees on here that would make the "nobody" true? Are we excluding those who enable war (even to varying degrees) without taking on the higher risk of such (higher share of future resources from those who no longer are around to compete for such, by getting others to take on the higher risk of not being around for such future resources instead of one themselves)?
> It's actually good for everyone if the masses aren't living paycheck-to-paycheck.
This will be largely bounded by whether any given society has enough resources at its disposal to offer an "acceptable" standard of living, the resources to allocate such standard without squandering it between its intended destination, and the choices individual actors make with the current varying resources they have their disposal (not strictly bounded by the physical, but also by those intangible like "knowledge" of cheaper resource allocation in adverse environments).
[edited] It’s not that social distancing is a problem in the short term, it’s just we kept adjusting it as he’d immunity crept up so only the most infectious strains could survive. Lucky Delta isn’t significantly more deadly than the initial strain, but that mostly comes down to luck.
It’s probably going to be ok, but assuming it stays equally as deadly over time is perhaps optimistic.
No where did I make this assumption, or was I alluding that this may be the case. Even in stats you can see cyclic patterns, with case counts and even with Empl-Pop ratio used in the article.
If the only way to actually slow transmission was the equivalent of biosafety level 4 or 5 and 1/2 of all infected die without significant medical care, everything falls apart. Even just an unusually long incubation period could be devastating.
Or maybe you should keep your doomsday theories to yourself.
COVID is already significantly more dangerous than normal Influenza so making that kind of jump is far from impossible
- If you don't have literally $1M in assets you get taxed zero
- If you live in the home it is exempted
- There can be major deductions
The idea that the state comes in and destroys your way of life through estate taxes is an amazing failure of describing how a thing works (right up there with how progressive income taxes work).
I mean the fact that everyone's assets are tied up in things like houses doesn't help things, but... yeah.
Oh it's much, much worse than that. The Trump tax "cuts" actually doubled the Federal estate tax thresholds to ~$11m for a singled person and ~$22m for married couples.
> - If you live in the home it is exempted
So I actually have a bit of a problem with this because generally real estate passes to beneficiaries of the estate on a stepped up basis. The idea is for children not to be saddled with a huge tax debt but there has to be limits to this.
> ... amazing failure of describing how a thing works
I see it from the somewhat opposite view and that is that conservatives in the US at least are so easily manipulated to the point where a seemingly large portion of them now believe democracy isn't working for them and you see this bubbling over at incidents like the attempted insurrection of Jan 6.
It's downright ironic that the reddest states are actually the most Federally dependent and the democracy that supposedly isn't working for them is a system that gives such states political power far in excess of their population such that a political party can in many places hold power with ~40% of the vote.
That $11m or $22m was already taxed and the person who earned it paid the government an unusually large sum of money for the privilege of being successful. Why should they get to double dip? The government taxes everything you earn, all the interest you earn on that money, all the property you buy, and all of the goods and services you buy. It then taxes the person selling those goods and services for the privilege of selling them. Any time a dollar hits the economy it’s probably been taxed 6 or 7 times. And for all this what do we get? Subpar infrastructure and bloated government programs that enrich bureaucrats.
The estate tax is a "government double dipping," it's a tax that's been around since the founding of the country, put there by the people who very specifically wanted to avoid generational wealth forming dynastic rulers over their newly-hatched nation.
With an exemption on $11 mil, I wouldn't shed a tear if every cent beyond that were taxed at 100%.
Why is this ironic?
The red states are basically adult children complaining about their parents interfering in their lives while living rent-free in the basement.
Could you explain why you think it is an insurrection? I tend to think of insurrections as things that involve a lot more violence, the only violent death was from police killing a protester, the rest were heart attacks from walking too much.
Why would you think that Jan 6th was not violent?
>They [the injuries] ranged from bruises and lacerations to more serious damage such as concussions, rib fractures, burns and even a mild heart attack.
Because the average football match has more injuries than that. Oddly enough the only source that cites 138 cases also cites Brian D. Sicknick as dying from injuries sustained from protestors attacking him: https://archive.is/0kUab
In more detail:
https://archive.is/YVfFk#selection-367.0-371.193
>Capitol Police Officer Dies From Injuries in Pro-Trump Rampage
>A United States Capitol Police officer died Thursday night from injuries sustained when he engaged with a pro-Trump mob that descended on the U.S. Capitol the day before.
>Mr. Sicknick was responding to the riots on Wednesday and “was injured while physically engaging with protesters,” the agency’s statement said, although officials didn’t immediately elaborate on the nature of his injuries or how he interacted with the crowd. After sustaining the injuries, Mr. Sicknick returned to his division office, collapsed, and was taken to the hospital.
Meanwhile in the real world:
>The Medical Examiner report said “Brian Sicknick, 42 years old: Cause of Death—Acute brainstem and cerebellar infarcts due to acute basilar artery thrombosis Manner of Death—Natural.”
https://www.klkntv.com/officers-death-after-insurrection-was...
I rarely see such ham-fisted outrage bait outside of the Daily Mail talking about immigrants coming to take your job and rape your daughter. So how much do you want to bet that all of the other 138 cases are due to police just being clumsy and stubbing their toes?
If there was an escrow/judge that we could both trust I'd bet ~10k USD
>As of 2021, only estates valued at $11.70 million or more are subject to federal estate tax.
No sympathy for people who think that sort of windfall from their parents should somehow be untouchable.
You can explain how things work until you're blue in the face but it's not very effective if there's someone who's perfectly happy to lie, whether implicitly or (increasingly) explicitly. An awkward fact about propaganda and publicity campaigns is that the people who are articulating them don't necessarily need to believe in them, or even have others believe in them (though that helps). Professing the belief publicly can be an effective social signal for recognizing and cooperating with peers, as wella s identifying antagonists - think of the delight some political actors have in 'triggering' those with whom they disagree. One does not need to care about the issue oneself; political currency can be made out of simply upsetting other people, for both identification and entertainment purposes.
I do acknowledge the massive PR campaign on this front making things confusing for people. I have my doubts about it being effective in itself. There feels like a baseline assumption (stuff like "well it's my stuff" or "taxes are annoying") that end up getting re-inforced through those campaigns.
Maybe the real solution is nuking every op-ed page of the face of the planet.
Didn't mean to repeat myself bthere but it's only a matter of time before we see op-eds about small content farmers being forced off their domains by the estate tax. Might have to start a satirical Twitter account to fulminate about it.
It's actually $11.7 million now.
Possibly - but only if the ruling class is very, very small. The top 1% in wealth have $10M. That's enough to draw down ~$450k per year indefinitely (before taxes). As someone who makes that much - it's certainly a lot of money - but far from "ruling".
You'll need to get into the top .1% to even remotely resemble "ruling". Quite frankly, I think we'd eat the rich before we let .1%. The top .1% makes ~$1.5M per year (before taxes), and a lot of this still comes from income.
More realistically, you need to get to the .01% to have something resembling a "ruling" class.
So you can’t really quit your day job and you’re solidly upper middle class - but it’s not like you’re aren’t still thinking about money or that you’re spending your growth (keep in mind your earning on top of realized investment income is taxed at nearly the highest marginal rates - what legacy will you even have to pass down, especially after estate taxes. Can keep you up at night if the Margeaux didn’t knock you out.
But apparently I exist in a state of permanent debt bondage, I am merely a chattel tied to a piece of land, that can be brought and sold by whoever is the master of my liberty.
Because that’s what a serfdom is, and according to the most upvoted comment ITT, our modern society significantly resembles a serfdom. Gosh, I really hope that violent revolution they’re talking about happens soon, so that my masters wealth can be fairly redistributed.
And once you are working for someone else, there are a lot of things tipping the scales of power toward the employer. If you want to switch employers it takes time to prep and interview. Both of those are hard to come by if your current employer is requiring excess work hours from you, and isn't approving vacation request. And you then need to perform well in an interview which is difficult if you are currently suffering employer-induced burnout.
You’re right that most of these pathways require some level of work, but that’s not a valid thing to complain about. Without the systems or society has established, it would require a lot more work, in return for much less reward, and the consequences of failing would actually be serious. There has never been a more prosperous time to live, and your complaint that you still have to do work and that people don’t value you as much as you think they should is frankly just whining. Our modern society doesn’t resemble a serfdom on any meaningful level, and no matter what system you think would be capable of improving things further, you’ll still have to confront the reality that there will always be people better at navigating it than you are.
Real wages haven't remained stagnant. That's one of the great intellectual frauds going in economics.
There is a rather incredible failure to account for the dramatic demographic change in the US over the last 40-50 years, which has massively debased what would otherwise be a higher median and average wage, as well as higher figures for the middle class group. How can we see that data in action? Well, other than being obvious and logical given the context, you can see it by looking at the white demographic then vs now. The white demographic that used to represent essentially all of the middle class circa 1970 or 1980, no longer does. The white demographic has moved up in income, while the hispanic demographic has rapidly taken over an ever growing share of the middle class group. You can see this by looking at the white median income vs the national median income, they have diverged, whereas in 1970 or 1980 they were far closer to being the same thing. This effect will get more and more prominent by the decade (see: the latest census). There has been a rather dramatic demographic shift, that has involved tens of millions of poor low skill immigrants from primarily Latin America moving to the US and having to start from near zero economically (very little education, very little in the way of higher value skills, and often not knowing English). It can take a long time to build higher income levels or wealth from scratch, in a country entirely foreign to you, and when you likely don't even speak the country's dominant language. This has all happened while simultaneosly the primary middle class group of the past, the white demographic, has seen a record low population expansion over the last few decades. What does that mean? It means the newer hispanic demographic is that much more impactful on the median and middle class figures that are so often referenced, than otherwise would have been the case had white demographic expansion trends continued from the 1970s or 1980s.
The clowns in economics go about pretending the US of 1970 is the same US of today, that nothing has changed demographically, that there has been no mass immigration from Latin American nations over the last four decades, and that that doesn't considerably debase the middle class income figures or the median figures.
When one talks about how wages have performed over decades, accordingly, you have to ask: for which groups? Because the demographics of the US have changed considerably in 40-50 years. You have to know the story you're inspecting.
So a white middle class family from 1970 or 1980, how are they doing now? Have they seen progress? Has their wealth and income climbed? (yes, the figures we have say it very likely has)
A poor immigrant from Latin America that arrived in the US in 1994 with $0 and little education - if they're now in the US middle class, that's a good outcome from where they started from. How about second generation Americans whose parents were from Latin America and were part of that major immigration trend? If their parents arrived with little or nothing, how is the second generation doing, how does that progress look?
You can't just say: oh but eg middle class wages haven't moved in real-terms in 40 years. That's very badly dropping context. The US hasn't been static over that time. You have to understand what the story of the people you're talking about is; who are you talking about?
If your median numbers tread water in real-terms while you bring in tens of millions of poor low skill immigrants, you're seeing a remarkably positive outcome in fact.
That's not what I see with your comment. Instead I see regurgitation of base right-wing propaganda that's basically wrong at every step with superficial Google searches.
I'll pick a few:
1. The paper I cited looks at what happened to low, median and high percentile workers over those years. You'd know that if you looked;
2. You argue what constitutes the middle class has been devalued by immigration from Latin America. There are many ways to show this to be false. I'll pick just one: the number of people with college degrees [1]. Oh, what the hell, I'll pick a second: the rise of dual-income households [2].
3. Despite your assertions around immigration from Latin America, Asian immigrants actually outnumber Hispanics [3].
[1]: https://www.statista.com/statistics/184272/educational-attai...
[2]: https://www.pewresearch.org/ft_dual-income-households-1960-2...
[3]: https://www.pewresearch.org/hispanic/2020/08/20/facts-on-u-s...
I… don’t see any evidence to believe this would be the case. Also, you’re comparing a historical pandemic that killed possibly half of the world’s (edit: Europe’s) population to the present pandemic which has killed 0.06% of the world population, at least 2/3 of whom were beyond normal working age. Sorry, I don’t see the connection.
As for the Covid-19 vs the Black Plague, the similarity isn't in raw deaths (obviously). It's more that the plague (and possibly Covid) was a massive triggering event for social change and structural changes to the labour market.
The last year and a half has taught us that going into the office is, for the most part, a fucking pointless waste of time at best and simply a means of exercising control at worst, for a huge chunk of the jobs out there.
So you're seeing now a lot of pressure on wages as a result of increased labour mobility (effectively). Whether or not this is temporary remains to be seen. The optimist in me hopes it isn't temporary and it's part of a larger shift towards worker rights and living conditions.
I think the "aristocrat" characterization is actively harmful. For one thing, it makes the FAANG drones fail to realize that if "the rich" is anyone, it's them. And for another, it makes the top seem much more distant than it really is. If a Wisconsinite in the 55th percentile spent a few days inhabiting the home and the routine of a Californian or New Yorker in the 98th percentile, I think he would primarily notice how small and shabby the house is, and how unpleasant the commute. I'm not sure he would even elect to keep it. Many of us that do get from here to there, end up turning back.
While you may as well tax inheritances, that's not really how advantages get passed down. It's things like vocabularies and school districts.
1. Those who would want to import cheaper labor from abroad or export the jobs to there.
2. Those who would want evidence they can deny social safety net claims ("oh yeah, you couldnt find a job? but there's a labor shortage")
3. Those who would want to sell all kinds of expensive and unneeded things -- like degrees .
4. companies who are shit at customer service, but now have an excuse as to why
It's hard not to be ignorant when it's so profitable.
We call it "customer shortage" now.
Suddenly corporate America forgot all about the supply and demand laws they claim should rule us.
If you increase your prices, then all the rational thinking in the world isn’t going to save you if your customers don’t think it’s worth the price you’re asking because they’re not thinking in terms of inflation versus a year or ten years ago, they’re thinking in terms of the number in front of them versus what they’ve paid in the past and what’s in their bank accounts right now.
The market won’t care, we’ll just further consolidate under fewer corporate banners and move on with our lives. I mean I like having a diverse array of businesses to choose from, but maybe you feel differently?
Even if this is true, why is it true? Why are these businesses getting so much less return per employee? Is the only solution to sacrifice wages? Is it worth sacrificing wages for everybody?
We can't just declare a thing presumably bad for smaller businesses and then say end of discussion, there's nothing else worth considering here.
You can demand higher employee compensation all you like, but customers will be the ones paying for it, as they pay for all costs that the business incurs (if the owners want to stay in business anyway).
Low margin is not no margin. As long as there is a margin, this remains true for some level of cost increases.
And your example is excessively reductive. Say the $3 company can't actually retain any workers because their pay is so bad. They will not be serving any $3 coffees, so it's not a threat to the $10 coffees. Also, your example prices sure are, uh, interesting and hard not to read in to.
> Say the $3 company can't actually retain any workers because their pay is so bad. They will not be serving any $3 coffees, so it's not a threat to the $10 coffees.
The $3/coffee company will likely still find workers who are willing to work for what the company is willing to pay. Thus there is a market-established price for the labor and the floor is a legislatively-established price-control called the minimum wage. It’s not high skill work and you can train someone in a day to operate a drip brewer and an espresso machine.
> Also, your example prices sure are, uh, interesting and hard not to read in to.
There’s nothing much to read into there. I rounded up the $3 option to be generous to the opposition and overstated with the $10 option as a point of comparison that you cannot simply arbitrarily charge more without additional value-add and expect to retain your customers. Seniors on fixed incomes will complain all day about coffee costing even $2, or a single cappuccino going from $2.25 to $3.5 over the course of a few years.
Customers do not always do what you think they will do. Besides, a lot of daytime customers are on fixed incomes.
But we all know those shareholders would quickly fall into poverty if their returns reduced.
Equally if that’s not possible, the company should fold. We shouldn’t prop up companies with cheap labor, that’s just forcing the poorest in society to provide corporate well fare, and basically the same excuse that was given for preventing the abolishment of slavery.
My opinion is that the US has an oversupply of restaurants. It’s fundamentally a luxury service. People have come to expect to eat out often at rock bottom prices. We have even bent our labor laws ($2.13) to perpetuate the current market equilibrium.
With that said the resutraunt labor rate is a bit misleading because businesses are required to pay the standard minimum wage or more in some areas. $2.13 is only what's paid if $2.13 + total tips average out to more or above what the person would earn at minimum wage. This means it's returaunt goers subsidizing business labor expenses. Now, one could argue if that's good/not or if the minimum wage is too low and I'd agree with them but the whole $2.13 or whatever figure touted around is misleading, it's absolutely not that low and if it is, it's illegal and wage theft.
Histrionic sophistry alert
Any point you may have had was lost right here.
> But we all know those shareholders would quickly fall into poverty if their returns reduced.
That isn't true. Investors will simply move their capital over to other things with better returns. So restaurants will simply close down if they aren't worth running and no one is going to fund them.
> Equally if that’s not possible, the company should fold. We shouldn’t prop up companies with cheap labor, that’s just forcing the poorest in society to provide corporate well fare, and basically the same excuse that was given for preventing the abolishment of slavery.
That is the likely result. Or the companies will invest in automation to make (automated) labor costs predictable. More likely, services that are easier to automate will survive while those that aren't will not.
This seems like the most likely thing to happen, and there will probably be many more of the later than the former.
None of this though is obvious to me that will lead to broad based wage increases wrt cost of living out side of those exposed to sectors that are going to become increasing automated and we'll continue to see downward trend in LFP from those exposed to the later.
From whom? Not from me… i welcome it and understand that the incentives are in place to drive this, just like it really always has (like you said: "It is not like technology is standing still here").
> and that eventually most jobs at the low end of the economy will be gone.
Probably true in general, eventually at least.
> (something like a UBI will really be needed.
With our current form of governance (centralized, easily corruptible, lack of provenance/accountability in the decision making chain of bureaucracy, tendency to be opaque from the public) and resource allocation, this is untenable.
> the problem is what will we do with our labor surplus after that happens
And this cannot be a top down thing, if it is, expect heavy resistance when things start to go sideways.
> or society is in deep trouble)
This likely true imo, I think things need to get worse before they get better.
FTFY, I'm personally not interested in "binning" the future into simple extremes, and the odds of it being anything else than what is encompassed by either:
> nationalize the robots, or the capitalists will use the robots eliminate the poor people whose labor they don’t need anymore
are very high imo.
When you have someone at HQ making 5 times what your lowest-earning person makes, you could let go of that person, increase wages for 25 people by 20%, and probably improve a hell of a lot of stuff. And that's cost-neutral!
A profitless venture is one that won’t sustain itself in the long run. Small business owners as it is often take home less than minimum wage for the hours they put in when you factor in what they receive at the end of the year. Medium business owners often have it rougher because they’re in that awkward place in the market where they have both a high headcount and low margins.
Big businesses can often do what they want within reason, but it’s not like every corporate out there is Apple with massive margins to work with. Big businesses also fail, or have to sell off profitless parts of their business, or get taken over by some holding company.
Also: it doesn’t matter what you or I would prefer them to do. The owners of a business are going to look at their costs, the economics of the market and make a determination for themselves. If they’re put in a position where they have to raise prices just to continue earning a small profit at all, and they lose enough customers, then they’re just going to go out of business anyway.
UBI was tried the last year and I think it mainly failed.
So we should get rid of those things first before we make the argument wages need to be lifted to incentivize people to work.
This labor shortage is really not a shortage, it's an overabundance of business that were relying on the availability of underpaid labor to make profits.
Restaurants and retail are really the poster-children for this. Everything from re-shoring of manufacturing, the rise of the gig economy, to the shift to ecommerce have created a ton of much better paying jobs. This trend started in 2016, and by 2019 was in full force. When COVID hit the extended benefits reduced the supply of labor.
I'm really happy to see working-class people start to get paid better. It's really the best for everyone. Now we just need to figure out how to get less money spent on buildings and more on teachers and we might just be on to something.
Does your company provide training for these jobs? The comment implies that your company actively moves people from lower wage to high wage. Or are you filling positions with recent college or vocational school graduates?
No. Employer supplies training, and it's all paid, full wage training. Welcome to what an employee's market looks like.
that's a funny way of spelling "wage"
We have more people at retirement age than ever before.
That isn't a complete sentence -- I am not following. Can you restate it? What argument do you disagree with?