What workers want: raises that beat inflation
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I get that some companies have slim profit margins and can't do this easily, but others can clearly choose to pay their employees more. They just choose not to. This is an ideological thing and not an impossibility. See Gravity Payments.
In the public version of that you can already see how that's working out, as their stocks have routinely collapsed by 70-90% over the past year. Those companies will either have to sell themselves off for a fraction of what they were formerly worth, slash expenditures heavily (ie fire employees and cut expansion plans), or heavily dilute to raise some funds and pray the beating stops before they run out of money.
The crash that the pandemic should have brought forth (and nearly did), is here now. They temporarily papered over the disaster, and the bill has arrived regardless as it always does.
Some examples:
Snowflake: $715m operating loss on $1.2b in sales (lol) | Unity Software: $591m operating loss on $1.2b in sales | Roblox: $511m operating loss on $2b in sales | Palantir: $336m operating loss on $1.6b in sales | Robinhood: $2b operating loss on $1.6b in sales (lol) | Affirm: $632m operating loss on $1.2b in sales | SoFi: $411m pre-tax loss on $1.1b in sales | Twilio: $936m operating loss on $3b in sales | Uber: $2.7b op loss on $21b sales | Lyft: $865m op loss on $3.4b sales | UiPath: $500m op loss on $892m sales | Asana: $265m op loss on $378m in sales (lol) | Lemonade: $258m pre-tax loss on $149m sales (lol) | Fastly: $232m op loss on $371m in sales
And so on.
Some of these loss vs sales ratios very much resemble the excesses of the dotcom bubble. When the music stops (as it has), the losses become a lot more difficult to manage, the market smashes the stocks, customers pull back in recessionary environments, losses get even worse, companies have to slash and burn, and a lot of things go sideways in that hurricane.
Companies like Twilio have seen their stocks implode by 80% for good reason, they're bleeding very badly, their businesses are unsustainable as is. Lyft is a dead company walking, they have to sell themselves off if things don't promptly turn around in the economy and market (which appears unlikely); they're 75% below the IPO levels, it's a disaster for nearly all the shareholders (including employees) that have held.
How much is eg Asana really worth when their business consists of $265m in op losses vs $378m in sales? It's a joke. Discount it by 90-95% from the top and that's probably a reasonable start to the grinddown ($145 to $18 so far).
How about Fastly? They're dead. They probably have no choice other than to sell themselves off. For fiscal 2021 they added $64m in sales and $112m in operating losses to get that. Aggressively slam the brakes and their stronger competitors will just eat their business, don't slam the brakes and they're dead. $64 to $10 so far on the stock. They're dinner for Cloudflare, Amazon, IBM, someone.
These guys are all seriously fucked in one way or another. Those op losses vs sales are comical. Be sure to say hello to the brick wall you're about to slam into. They have several bad options to choose from to start dealing with their epic scale losses (and if they don't, the market will just smash their stocks that much more), including praying that the bad things just pretty please stop happening.
But yeah, these are nuts and almost all these companies were dependent on "stock go up" and now the chickens have come home to roost. They'll all be acquired for pennies on the dollar by big players (though the really big ones like Uber might survive by massive purges).
Roblox and Robinhood are the most amusing, how can you screw up a money spigot so badly?
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The current type environment is not kind to my type of company and it definitely will cause a lot of companies to fail. We have an amazing product with great demand and i think that’s what has saved us, but please imagine a company that is similar to mine. We try everything we can do to retain our employees, pretty much every dollar we make goes into employees since our product is software. When we had bad years I set my salary at $40k since i wanted the company to survive and we were still small and it made a difference. A ‘normal’ company like mine is totally restrained by cash flow, its a pretty simple equation. When you start having costs increase (i.e. salary) you have to balance it out somehow with more revenue somehow or reduced costs. A gradual increase is always better so we can start planning for it, get loans, get investment, gradually increase our price. Price shocks and huge changes are never easy to handle. I believe companies like mine are doing something good - innovating and creating good products and providing a much better service to our customers than Google and others can do by the virtue of us still being small and nimble and customer focused.
If you can afford to risk your income on your company's fortunes, start your own or join a startup with a founder who seems trustworthy.
For me and most people, predictable income is much better than risky equity.
Of course that, like equity, doesn't substitute a decent salary, it just complements in a way that gives positive incentives.
Source: Have worked for profit sharing companies before.
He isn't saying: We want a profit sharing agreement instead of salary.
He's saying: Extra salary that is immediately covered by the company raising the cost of their goods (rather than say - reducing executive pay, removing middle managers, or making less money for shareholders) doesn't get us where we need to go.
Because if the cost of buying all your goods is going up in direct relation to the raise in salary, (and this is happening across the market: inflation) - you aren't really getting a fucking raise at all. You're just floating.
The answer instead (at least in my opinion) is to change tact on how companies prioritize.
1. Workers need to be valued above shareholders (drive long term growth rather than sacrificing the golden duck for next quarter's profit)
2. Discrepancy between CEO and average pay needs to be curtailed - the current balance is driving a huge wedge into the relationship between a company and its employees.
3. Remove the inappropriate leverage that companies wield by controlling your healthcare/medical insurance costs
4. Remove pools of labor that are self-defeating: Jobs that pay so little the employee must be subsidized by government programs to live (think walmart/uber/etc) The best course of action here is likely labor movements (unions)
As for the "valuing workers over shareholders" stuff ... Well, maybe? To be perfectly honest this isn't really what a Betriebsrat is about. I mean sure, they do have some influence, but in general their territory is more in terms of company operations, less in terms of how much is paid out to shareholders.
To be perfectly honest the Betriebsräte are facing much of the same problems that most other elected bodies are facing in the western world (or at least Germany). Sinking voting share, less and less people caring about it and as they kind of loose some soft power.
They still have the hard power guaranteed by law of course, but their soft power is essentially waning.
I'm not sure the best way to do, but I would love to see it happen.
We here on HN are the ones who need to do this most of all because we work in the industries and companies that have for the last 10 years actually made enough money that the division results in something significant. This is not the norm. You can easily end up with values in the hundreds of dollars of profit/employee for a more normal industry. Even if the profits were 100% shared, we aren't necessarily talking about pulling people out of poverty or something.
The parasite class in society is smaller than you think, percentage-wise. Quite a lot of us go to supporting just one of them. I think getting rid of them would be a great boon... but not because simply redistributing their wealth would solve very much. The real problem they create is that they steal $X dollars and end up creating second-order effects that mean $X·Y dollars of wealth are never created in the first place, where Y is pretty significant.
33,3 billion USD profits/1,622,000 employees = 20k USD/employee
The median employee made 29k in 2020.
https://www.businessinsider.com/amazon-employee-salary-pay-m...
2021 profit # employees profit/employee
DISH Network Corporation $ 6.143B 16,000 383,937
FOX Corporation $12.909B 9,000 1,433,333
Wynn Resorts Limited $ 1.205B 30,200 39,735
American Airlines Group $ 2.046B 123,400 16,580
Bath & Body Works Inc $ 3.096B 92,300 33,542
Hasbro Inc $ 6.42B 5,600 1,146,428
Advance Auto Parts Inc $ 4.929B 68,000 72,485
MGM Resorts International $ 9.68B 74,500 129,932
Hormel Foods Corporation $ 1.928B 20,000 96,400
Paycom Software Inc $ 0.89B 5,385 165,273I just spot-checked 1 randomly, and didn't cherry pick.
If you are interested in this kind of topic, look into microeconomics, then macroeconomics.
The flip side is like you said, companies raking in record profits with massive cash on hand. They could easily afford to share more with employees and would probably benefit from a happier and more invested work force. The stratification between C-level and everyone else is higher than it’s ever been.
Similarly for McDonalds corporate often takes the surplus value & is increasingly the landlord too.
So McDonalds franchisees cant easily afford a payrise from profit margins but McDonalds as a whole most certainly can.
This is also why the restaurant industry minimum wage hikes havent meant any fewer restaurants anywhere.
Hm - interesting theory. The landlord does have some expenses, though: upkeep on the property and taxes, as well as some bit of "float" for times when the property is vacant. There's a definable "margin" there, too, but I wouldn't know where to look to find out what.
Not enough of one to make becoming a landlord a guaranteed way to earn an easy profit, or everyone would do it. Lack of startup capital wouldn't be an issue either—banks would be happy to front the cost if you can prove the venture will succeed well enough to pay them back with interest.
First data point: "Share of Labour Compensation in GDP at Current National Prices for United States" (1950 -) https://fred.stlouisfed.org/series/LABSHPUSA156NRUG
Second data point: "Employment Cost Index: Total compensation: All Civilian" (2001- ) https://fred.stlouisfed.org/series/ECIALLCIV
Discuss.
https://www.payscale.com/research/US/Employer=Gravity_Paymen...
The average at Gravity Payments is $91k/year and the average across the US is around $88k? https://www.payscale.com/research/US/Job=Software_Engineer/S...
Only as long as you're willing to have the same share of the losses, too, but most aren't.
Of course everyone wants to get max(salary, share of profits, commission) when the company registers losses, and sum(salary, share of profits, commision) only when the company registers profits, but I just don't see such a thing ever working.
Remember it’s common for executives to get bonuses when they lay off the workers.
If someone at the company identifies a set of inefficiencies in producing value for customers, and remedying that involves laying off a bunch of people, but ends in providing that value more successfully, that person has been responsible for a lot of value creation.
Judgment isn't about having been right -- it's about making the best decisions given the information you have at the time, and that means that some good decisions turn out not to work out in practice. Companies have to try things out to innovate and find new, better ways of creating as much value for customers as possible. You might hire 50 people to develop a new product line or offering, because it seems like it's going to work. If it then almost works, but the margins aren't good enough and it looks like there's untapped market, you might hire 100 more to scale it up because it looks like it will work at greater scale. But ultimately, if you end up not being able to make it work, you have to shut it down. Maybe some of those people fit elsewhere in the company, but usually that's very few. So layoffs are needed there, and it doesn't mean someone needs to be fired.
In many cases of layoffs, the employees were profitable... until they became unprofitable because circumstances changed. That's often the case at big companies. You find success with a product, but then consumer tastes change, or someone innovates better than you do (or gets luckier). You can't just keep that unprofitable product going to keep people employed -- someone has to make the hard call to hard pivot or exit that market. It doesn't mean the people who set that product line up made a mistake and need to be fired.
the issue is wealth inequality. that a CEO can earn tens, if not hundreds of times more than a line worker without so much effort as to even show up to the office, that is the issue. that a cloistered elite of leadership exists seemingly immune to even the worst outcomes of business, only to arrive in yet further opulence after they retire in golden parachutes flush with shares of the company the excess capital of the workers themselves built in the first place.
if you want people to show up after the pandemic to swing hammers and build products, you need to give them more than the cost of the gas to get to work and a half hour lunch.
"It used to be that in the 1950s, 60s, and 70s, CEOs made 3.3 times what a top 0.1% earner made. Now, it's more than six times," says Mishel. "CEOs now are making 351 times that of a typical worker, but back in 1978, it was only 31 times. In 1989, it was 61 times."
And it's not just CEOs. IMO there should be federal guidelines that total compensation in public companies should be more fairly distributed, ie, executive staff can only make X times more than average worker pay. But you know what companies would do, right? They'd fire all the employees, setup mini companies to employ the workers, and bypass the regulations.
The gap in wealth is real, it’s increasing, and it absolutely does not (in fact, it cannot) need to be this way.
None of which is to say that I disagree with the goal, just that one should never underestimate the greed and psychopathy of the typical C-suite individual. These are people who will have employment contracts that guarantee them a multi-million payout if they get fired because they’re shit at their job.
It's in the same vein of "criminals will just find a way to get guns if you make guns illegal". Some will, certainly, but the argument itself is an argument against the rule of law entirely. Some criminals will speed on highways, some criminals will steal, etc. But laws are still effective in curtailing this behavior on the macro level.
I see there is a market value that the company has to pay for labor. The additional profits are generated due to the performance of the employees, they should get a share in the profits for their contribution, the investors putting in the capital are currently taking 100% of the profits. There should be a share in this for those putting in their sweat and brains.
All of that only affects future earnings. The employees' wealth (savings) is not tied up in the success of the company—they can quit at any time and go work somewhere else. Everything they've earned up to that point is theirs to keep, along with intangibles like training and job experience they've received along the way. This is their share for "putting in their sweat and brains".
For the shareholders, on the other hand, a company taking losses doesn't just impact future income. Their entire investment is at stake.
If an employee prefers equity rather than income they are free to purchase shares in the company with their earnings; as a rule, though, employees just want to put in their hours and get a steady paycheck which they can spend or invest as they please. They don't want to be forced to invest in their employer such that the prospect of their employer going bankrupt threatens both their paycheck and their savings.
>For the shareholders, on the other hand, a company taking losses doesn't just impact future income. Their entire investment is at stake.
Investors who do not get more returns in the companies compared to a debt instrument will take their investments to companies which can offer better returns, that is how they should manage their risk without getting bankrupt.
There is a chart above where some companies have profit/employee close to a million dollars, intellectual property of the employees is not valued enough, value is only attributed to the capital invested , which if you look at companies which are overvalued is not the rarest commodity; employees are not a rare commodity but good employees are.
Of course, but to do that you first have to find another investor willing to take your place by buying your shares. An individual shareholder might leave but the shareholders, as a group, are just as invested in the fate of the company as before.
Employees can get another job , investors can diversify and manage their portfolio better, there usually higher risk inherent when higher growth and dividends are expected.
What I am saying is everyone is affected when a business shuts down, its not something which affects only investors, employees are also affected, but when the company has record profits in most cases it is provided exclusively to investors and no portion on the profits are shared with employees. I see salary as a way of booking the employees time, a share in profits is what they should get for how productive they are in the booked time.
Employees can get another job after the fact. Their skills and experience are mostly transferable. I'm not saying it isn't disruptive, but they haven't lost any principal or equity, just the opportunity to sell more labor to that particular employer in the future.
For the shareholders at the time to business goes bankrupt it's too late to try to diversify. Their shares are worthless and they are out whatever they paid for them. (BTW, telling them to diversify ahead of time is equivalent to telling them not to invest as much into this company... which isn't great for the company or its employees.)
> ... no portion on the profits are shared with employees.
The employees' fair share of the profits is their salary or wages (plus performance bonuses where applicable). If they want equity they can buy it with their earnings, but in general it's a bad idea to hold too much equity in your employer. The trade-off for sharing in "record profits" is sharing in the losses when the company doesn't do as well.
So consumers lose. Workers lose. Everybody is stressed out and pissed off. The upper class is oblivious or doesn't care.
Another economic dynamic outside of major cities is that housing might be more affordable, but goods and services (mostly) cost the same as anywhere else in a global economy where prices are controlled by the biggest players.
Oh, and he pretty much unambiguously abused his wife (Chris Brown style, i.e., pretty violently), but was also super dodgy and aggressive about it with the interviewer. I found that Bloomberg investigation and interview to be pretty in-depth and well done.
0. https://www.bloomberg.com/features/2015-gravity-ceo-dan-pric...
After all, a company that needs to pay its workforce more will (a) fire some people to cut cost, or, (b) raise prices.
Inflation is not something that "happens" to us, it is something that we cause.
It is like complaining about the traffic jam you're in... you are literally part of the traffic jam, you are part of the problem...
The parent comment here amounts to "if working people get more money they will cause inflation"
Inflation (in the US) is caused in Washington DC. Printing more money to spend, subtly taxing everyone by that increased percentage, and by policy.
Uh-huh.
If people feel comfortable paying even slightly more for goods, then the massive efforts to keep prices down can relax ever so slightly, and they can make more money in other areas (e.g. putting the money into decor or other nonessential feelgood factors that consumers will prioritise over prices).
What is happening since half a century is that wealth gets shoveled to the top, with the above mechanism plus many others, while "peasants" can't afford their own place and education for themselves and their children anymore. They get cut off from sustainable spending and get turned back into pre-war wage slaves.
What will happen is either owners getting to their senses and stop extracting so much god damn stuff for themselves for no reason, or workers rising up. Hiding behind political BS and pseudo science is a short term strategy that always ends in tears.
What that did was vacuum a lot of money off the market, additionally causing compensatory raised prices because there's an excuse.
The market never works on supply and demand, not even money, it works on increasing prices every other excuse to the maximum level unless it's forced not to.
Fiscal policy is far more powerful, monetarily speaking, than monetary policy. It's not 10x more powerful. But a dollar the Treasury creates is minted. A dollar the Fed creates is lent against an asset. It's a small difference with massive multiplier implications. (It's why, in a crisis, fiscal responses are so pleadingly called for by economists and central bankers.)
If you want to call this something other than money printing -- "lending," for instance -- I'm going to ask you to put money where your mouth is and bet that the Fed actually reduces its balance sheet to zero in some time frame.
I have a sneaking suspicion that you will not be keen on taking this bet.
It seems obvious that the $4T deployed into the imaginary playground of the asset markets wouldn't cause near as much inflation as $0.4T+ in the hands of peasants with their needs for tangible goods. If traders attempted to move $4T en masse into purchases at retail, the system would have crashed immediately.
For increasing the money supply my understanding is nothing to do with Congress - QE is the central bank purchasing (with new money) longer-term securities, and the other main process (I don't know the name of it) is where the central bank lends money (new money) to a commercial bank, which agrees to set some of it aside, and they can re-lend the rest out to other commercial banks. But neither process is borrowing.
Those processes increase the money supply, which requires prices to go up, which requires wages to go up (or vice versa). Asset inflation is totally different, which was my original point.
Anyone paying attention in 2017 saw inflation coming but it became problem number 1 once the Muslim ban was reversed. Eat the rich.
In any event, it's blindingly obvious to the rest of us that today's inflation is caused by profiteering on the part of large corporations and Private Equity, etc. The Haves are having more of the pie. I just want to reiterate this in case anyone's feeling gaslighted by the relentless propaganda ("If we pay you more we have to charge you more, silly workers." BS.)
There's some complaints about this by employer organisations, but nothing serious for now. Neither the unions nor the main political parties want the indexation system to change.
I expect the public sector to have to skip one or more 2% indexation steps in the medium term. The private sector will probably have to mostly sort this out on its own.
Inflation isn't homogenous [1]. Geographically, but also across different income brackets.
In a stable price environment, it makes sense for both workers and employers to negotiate wages market to market. America has historically had stable prices across the relevant time periods. We don't, presently, which is causing wage negotiations to start paying attention to a new data source. That the data wasn't considered before isn't some grand scheme or conspiracy; it's just that it wasn't the most relevant component.
[1] https://www.bea.gov/news/2021/real-personal-consumption-expe...
Many people might have been able to afford fast food at 11PM, but maybe they cannot now. I see that as an improvement for the person that no longer has to work a fast food job at 11PM for the lowest wages.
Dominos in podunk town X where there's the franchise owner and his wife running the whole show sells two pizzas for $5.99 each, and Dominos in New York sells the same.
Sometimes you have "at participating locations" but rarely have I seen that actually used.
The universal pricing might have been more pervasive when land and labor prices were not as different across the country, but there is only so much of a hit sellers can take from higher cost of goods sold.
But the nationally advertised things will be at the "fixed" price whatever that is, usually.
Grocery stores have been pretty good about having local flyers, we don't really have national grocery store chain ads, and I suspect we'll eventually stop having many ads that mention price directly.
However, in 2017 to 2018 or so, I noticed that online prices were higher than the in store prices, but they did not have online order and in store pickup back then.
Made be a bit annoyed, as it broke my assumption that the online price was the in store pice.
Maybe I need to start comparing prices again.
Now that inflation is hitting, the choice is: Give those people on the bottom more money or start incurring costs in other ways. If people can't feed themselves and their families on their wages, they aren't going to slink away and die to serve the Economy: They're going to start doing things like robbing grocery stores. Which means said grocery stores have to invest in security, lose more of their (now hard to get) stock, etc.
The problem is that you give the people at the bottom more money, then people in the middle wonder why they're busting their asses for only a little more than they'd get at Wal-Mart, then THEY start leaving or demanding more, and so it goes.
It's almost like running a society with no resilience is a bad idea. Go figure.
Likewise, a lot of businesses (especially in large cities) rely on being able to pay low wages because people commute from long distances; once energy prices get high enough, that won't work.
Low wages have basically been subsidized by the government since at least 2008 and now that it's ending it's a shitshow.
I'm not anti-market; the closest thing to my economic position is market socialism, but treating housing and water the same way as video games is moronic.
This is only true iff 1) there is no profit margin on the employee and 2) productivity is flat or falling.
1) Remember that each dollar a customer spends only requires < $1 to employ. So as employee costs go up there is a cushion before an employer must raise prices.
2) If productivity rises then they can pay more, _and_ there ought to be price deflation as supply increase (or some mix of the two) .
This logic is broken. Of course there's a margin in there, but to keep the business profitable, this margin must stay. So there's not necessarily a cushion to fall back on.
Cost of labour, Capital, market forces these all will ebb and flow their profit margins.
--
I still agree with your general point; in a lot of industries, there's a lot of cushion right now. But there are also companies operating on razor thin margins (especially when competing with cheap labor overseas). At some point, companies will either raise the price (if they can get away with charging more) or shelf the product. They might also do so if they think the margin is to small; they usually don't create stuff for net zero just to keep employees happy. We simply can't deduce from a general argument how close they are to taking either measure.
Really? I can't raise prices on anything. I'm just some plebe.
People who opportunistically raise prices (blaming Russia or COVID or the weather or whatever else) cause inflation.
Yes, we plebes allow it. We could all pressure our politicians to put a stop to that. We don't. Sadly, we don't even know how to pressure our politicians if we wanted to.
This is like corporations reminding us about _our_ carbon footprint.
Yes, we may be part of the problem. But for the past several decades, wages have stagnated while profits and sometimes inflation, have grown. Thus we are an infinitesimal part of it.
Let me have a higher salary at the expense of corporations profits.
Conclusion is correct, but you're missing initial driving factors:
1. Supply-side price shocks in oil, gas, food, manufactures (China zero-COVID policy)
2. Reduced financial subsidies to US: less world appetite for U.S. treasury bonds
3. Fed easing revealed now as pushed too far, given the world's run of very bad luck: COVID followed by war in Ukraine.
So, the world has gotten poorer, the "pie" smaller, and most of us are going to be getting smaller slices for some time.
As much as I'd like to see all the world pie's assets now held in the form of say, mega yachts seized and converted to floating medical clinics run by Medecin San Frontiere, I wouldn't be scanning the news for such a headline.
If it were a supply side shock, you'd see profit rates also falling or staying the same, after profiteering is done.
2. US literally tanked every currency of every economy due to fiscal manipulation, economies which were unable to compensate. China and EU mostly managed. (Where Euro is used, that is.) Everyone else got extra smashed.
3. Fed only defrauded other economies, but USA is also pretty hit by the greed.
Even so, such a spiral could be straightforwardly prevented if the policy intended to bring high wages was coupled with a policy requiring forced savings.
There is no fundamental reason why high dividends does not cause CPI inflation. However, because of concentration in company ownership a larger fraction of dividends are reinvested than the fraction of wages that are invested-- i.e. those with large holdings have a lower propensity to spend. However, we can reduce the propensity to spend of those who work with laws.
Such a policy would also permit reducing the extreme taxes on wages in some countries-- without a policy like this if we set taxes on income from wages equal to income from dividends, investment will drop and we will get CPI inflation-- a very undesirable situation. With this kind of policy, one wouldn't.
This is not a case of if, this is the truth. It's just a modern spin on feudalism.
You can make things more or less equal, but inflation by itself doesn't cause this to happen.
Now, not switching jobs, they don't care much if their next raise will be 2% or 8%, but more if they're considered the 20% of their company that might get fired in the next couple of months
This article is a bit late to the game. When most companies announced 2021 raises and bonuses we were at the very end of 'The Great Resignation' where employees felt the world is their oyster. Looking towards the end of 2022, the reality is very different
I do wonder whether layoffs and the threat of layoffs are being over-reported deliberately to create a sense of fear in order to quell resignations, requests for pay raises and unionization. A quick look at data [1] doesn't seen to show resignations (as of Apr data).
The graph you were showing is about layoffs, involuntarily losing your job.
I am not sure what the numbers would be like for typical HN visitors/tech workers though.
But hey at least the politicians in Brussels are happy
But that's just for games, gas prices rose exponentially as well as price of used vehicles. The EU also imposed these emission regulations and now our vehicles will be banned from entering specific places unless it has a higher emission standard, which does not correspond to the EURO numbering. This forces you to look for newer cars, which are either more expensive or not as big to fit your needs. Even I will be buying a not so cheap car that is 2008 model, rather than say 2014.
Higher wages can only be clawed back from the shareholders.
We need to bridge the gap in the dialog between the lived experience of the individual worker and the statistical experience of the nation's workers.
Corporations using credit to pay higher wages isn't going to be a stable system. There has to be underlying value in all those higher wages (read that twice because it's the most salient point). People so often confuse value coupons with actual value that we get lines like "Raise minimum wage in order to give people more value".
But the end result is using credit to pay higher wages. Credit just being future value that doesn't exist yet. So eventually there will be a reckoning at some point in the future. Just look at the start-up space. Sky high wages and benefits paid for entirely with credit. Now the reckoning has come and they're in shambles.
A better fix is rebalancing how value is distributed. But this is hard too because people immediately jump to C-level compensation, but their base pay divided among the company is peanuts and their equity pay is ridden with risk (and currently in the dumpster).
It's a very difficult problem overall, and it's why there is always such little policy movement despite everyone saying "You just have to do this one simple thing!"
Edit: I understand if people don't like hearing this, but at least provide a rebuttal.
But nobody von nobodypants wants to suggest that we enact policies that are designed to lower housing costs, increase supply, and drop the value of single family homes.
In the current system, low-wage workers can bounce immediately as there is no loyalty to their firm in either direction. Workers can very quickly jump to whoever is paying the inflation-adjusted wages, and the government can't keep a lid on income rises by negotiating with a small group of union and corporate leaders.
And yet wages aren't rising with inflation, so there must be a bit more to the story than that.
You can't pay beyond productivity gains, broadly across society, without inflation.
History of wage/productivity isn't relevant to current price/wage dynamics. Just forward rates.
Those past productivity gains were likely captured in lower cost of goods (in real terms), rather than wages. If margins are constant, and wages don't rise, and productivity gains, then cost of goods are lower, which also benefits society.
With massive levels of consumer debt and personal savings at an all-time low, a lot of inflation would be a good thing for the middle class right now. Which is why it's scary to the upper class. Not that they can't afford it. But they didn't get where they were without being greedy bastards who can't let a single penny slip through their grasp.
IF you do this, you can pay back debt with tomorrow dollars that were earned easier.
> The CPI represents all goods and services purchased for consumption by the reference population (U or W). BLS has classified all expenditure items into more than 200 categories, arranged into eight major groups (food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other goods and services). Included within these major groups are various government-charged user fees, such as water and sewerage charges, auto registration fees, and vehicle tolls.
This outlines the breakdown: https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
Owner imputed rent is basically what an owner thinks they would receive if they rented out their primary residence. IMO it's a flawed metric, but it is a necessary adjustment upward from current cost of ownership since most owners are paying mortgages on home prices from when they bought, so asking them what they currently pay does not accurately reflect the cost of someone newly moving into a housing situation.
To your broader point though, yes, higher earners will be less impacted by inflation in certain areas because there's only so many dollars you can spend on food per year. Would be interesting to see a statistical breakdown of this.
Say what you want about the process, but he did lose the nomination. If you think that's just because the establishment was being unfair, think of how unfair the opposition would have been in the general election.
https://www.pewresearch.org/fact-tank/2020/09/29/increasing-...
36% of the population and 54% of Democrats are in favor of single-payer, but...
https://thehill.com/hilltv/what-americas-thinking/494602-pol...
This poll says 69% support M4A.
What I worry is that talk about "Medicare For All" and "Single Payer" and other phrases might run into a similar problem the Affordable Care Act had where a lot of people didn't know that ObamaCare was just a nickname for the ACA, and there was a slew of people that said they didn't like ObamaCare but they liked the ACA.
Why do people think inflation is magic ?
Edit: Or reduce employee count. Give more money to less people.
https://www.theglobeandmail.com/business/article-loblaw-prof...
"For the general retail sector, the average profit margin is only 2.3% and for the grocery and food retail industry, it’s even lower at only 1.6%."
They will only raise wages and prices if that is the only way to have enough labor to handle their business. Even then, higher prices means lower demand. No free lunch.
https://en.wikipedia.org/wiki/Rainbow_Grocery_Cooperative
Rainbow Grocery Cooperative is a worker-owned and run food cooperative located in San Francisco, California. Founded in 1975
The point is that without investors expecting a return there's no ROI. Grocery stores can pay a living wage without gouging customers and without investors. It seemed to me that you might have been implying that without investors there couldn't be grocery stores.
Another factor to consider is that wages and profit returned to the workers will tend to stay in the local economy longer, contrasted with ROI which typically would be stored in other investments?
Once somebody earns somewhat more than their subsistence wage, they want to invest it into something that brings a return. That won't be these worker-owned businesses. And the market capacity for such companies seems to be quite small.
Like what? You'll have to forgive me but I'm not very sophisticated when it comes to economics.
> ... that is earning at best a modest return
So what? Rainbow Grocery isn't an investment vehicle, it's just people coming together to make a grocery store. That's my point: not everything has to be an investment. We can have grocery stores w/o ROI, that charge reasonable prices and pay a living wage.
> Once somebody earns somewhat more than their subsistence wage, they want to invest it into something that brings a return.
Sure! That's the beauty of the capitalist system (I'm pro-capitalist FWIW, I just don't think it is necessarily the best economic modality for every business. The way I put it is, "Capitalism as a tool, an economic API, not an ideology.")
> That won't be these worker-owned businesses.
Exactly!
> And the market capacity for such companies seems to be quite small.
Again, so what? These kinds of businesses generally are not trying to aggressively expand (although some do, like REI, the outdoor equipment stores.)
Just to reiterate, it sounded to me like you were saying that without ROI we wouldn't have grocery stores, and I just wanted to point out that we can have grocery stores with good prices and good wages and no investors or appreciable ROI.
In any case, joining a coop usually means you have to buy some shares in the "company". This may be disguised in some form or another, maybe through withholding some wage initially. But in order to get a share of the profit you need to own a share in the coop. This is what "employee-owned" means. So the employees do have their own capital involved in the company with all the implications: A risk of the shares devaluing and loss of opportunity to do something else with that capital. And if the wages are higher than somewhere else, than they are part of the return on investment. If none of that is the case, it's not a coop but rather a not-for-profit.
What do you expect them to reduce that to?
With margins that low, don't you think they are already very focused on operating with the absolute minimum number of employees they need?
A friend of mine managed a very busy grocery store for years. It's an extraordinarily difficult business.
Many grocery store chains treat their employees very well, they provide good salaries and training programs. It's one of the few businesses left where you can start out as a bagger and work your way up to senior manager, with all costs paid by the store.
Other than inventory cost, this is their highest cost.
Would you have them change it?
[1] https://thegrocerystoreguy.com/what-is-the-profit-margin-for...
https://www.ncr.com/blogs/retail/supermarkets-turn-to-techno...
So, when a company like BP or Shell raises fuel price by 33%, they're forced to match it or maybe try to get more things sourced locally, cut out middlemen - rather hard.
Usually they'll raise the price a bit more further.
Then what's the point of inflation? So people deploy their spare cash in productive ways. That's it. Mundane, no drama, money moves around.