>labor shortage
Suddenly corporate America forgot all about the supply and demand laws they claim should rule us.
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.
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.
> 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.
Histrionic sophistry alert
Any point you may have had was lost right here.
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.
Customers do not always do what you think they will do. Besides, a lot of daytime customers are on fixed incomes.
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.