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Comment by a_c | Hacker News Reader

Strike always fascinate me. I wonde if there is any material that examine the dynamics of striking? E.g. The impact of striking, short term and long term, and its competitiveness relative to region without striking. One aspect I find intriguing is that the "trigger" of strike is often salary falls behind inflation. On the other hand, some portion of inflation is caused by increased labour cost. So by the time the strike demand is fulfilled, the next strike is in theory in the brewing. What material would you suggest to read upon?

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This is something I thought about recently. Say you are managing a fast food restaurant that pays employees $15 / hour. If you are selling $10 of food every 5 minutes, then that's $120 of food per hour.

If you give your cashier a 10% raise, then you have to recover another $1.50 / hour so you have to sell $121.50 / hour or $10.13 every 5 minutes. So a 10% wage increase for one employee translates to raising prices by 1.3%.

I don't know what the economics look like for a warehouse worker, but Amazon can afford it and the community Amazon is a part of will be better off.

It's incredibly naive of you to forget important business expenses that NEEDS to follow any price raise: exec bonuses, stock buybacks, etc. After all of that is done, maybe there is room for a 1% infreas in the cashier wage? Obviously, if the cashier isn't happy with that, that's because the new generations don't want to work and just want to TikTok all day. /s

I'd posit the majority restaurants in your /s example don't have executives, bonuses, or stock buybacks. They're tiny little operations with tiny little profit margins.

You're looking at it backwards I'll pay exactly what the market will bear, or I'll risk going out of business. My sales is irrelevant to the question of how much I need to pay workers. It's the same reason why iPhone costs $200 to build and sold for $1000. Because the market is willing to bear that price, everything considered.

It’s always fascinating to see how the simplest solution of all is never even considered.

Reduce profit.

Why would I invest in a company that returns less than just sticking it in the bank?

Raising prices by 1.3% also has some impact on sales. In theory it should be greater than 1.3% (or else why hasn't the restaurant greedily raised its prices already). To get higher wages for the workers you need one of two things.

1. Go upmarket in some way, either sell nicer food with a better margin or higher more oroductive employees.

2. Through collective action of some kind get all competitors to raise their prices and pass the cartel profits to the worker (for instance a minimum wage law could accomplish this).

I don't think that those are the only two solutions. Off the top of my head you could

1. Reduce expenses in other areas

2. Accept the reduced profit

3. Find that the cost is offset by more productive employees either through morale increase or improved recruiting

Profit in most industries is a few percent, esp. retail/food which are often c. 1%.

The markets are highly competitive, and consumers will compare two stores: A, B and choose the cheaper.

I think there's a lot more that goes into where someone chooses to eat than price, otherwise Taco Bell would be putting Chipotle out of business.

As explained above, I don't take it as a given that increased employee wages require increased prices.

Then have a look into how much a taco bell franchise makes: https://sharpsheets.io/blog/taco-bell-franchise-costs-profit...

It's 15% "profit" on paper, but a franchiser is typically in debt for the first 12 years of the store before they make any "net profit".

So we're talking an industry where most of the so-called "capitalists" are in debt.

This is a hyper-competitive market place, and one play only adding on %s to their products will be a hit to their competitiveness.

They dont decided prices, the market does.

> some portion of inflation is caused by increased labour cost. So by the time the strike demand is fulfilled, the next strike is in theory in the brewing

The word 'some' is doing heavy lifting. If they get a 10% rise, and that causes a 1% increase in inflation (assuming labour costs are not necessarily the biggest proportion of the cost of goods, and assuming companies eat some of the increased labour costs via less money to shareholders rather than raising prices for consumers), then there is not necessarily a reason for a second strike. I've pulled these numbers for illustrative purposes.

A vicious cycle can happen, but it also theoretically doesn't need to happen.

> E.g. The impact of striking, short term and long term, and its competitiveness relative to region without striking.

That one is simple. The US for example has at-will employment, no mandatory paid time off, not even a right for mothers for paid time off post-birth [1]. In contrast, the entire EU has minimum four weeks paid time off, mandatory minimum time advance before a firing (exceptions apply for cases of gross misconduct), and plans to have a mandatory minimum of six weeks PTO post-birth and 20 weeks in total for the parents.

Additionally, even in Europe one can clearly see the difference between riot-happy nations such as France, which has a pension age of 62, and Germany which has 65-67 (depending on how old you are). France's Macron is trying to reform this and raise the limit, he has already tried once and got burned by a massive strike and riot wave and right now is on his second attempt, and again massive strikes.

> On the other hand, some portion of inflation is caused by increased labour cost.

Only minimally. The worst contributor to inflation is simply corporate and CEO greed - wages in Europe have stagnated over the last decades [2].

[1] https://en.wikipedia.org/wiki/Parental_leave_in_the_United_S...

[2] https://www.boeckler.de/de/boeckler-impuls-die-wirtschaft-wa...

> That one is simple. The US for example has at-will employment, no mandatory paid time off...

I think they were more talking about the impact on strikes in terms of foreign direct investment - where there is definetly a link (albeit i'm not sure how strong).

If you are choosing where to locate an international manufacturing plant within Europe for instance, the strength of unions in each country is 100% a factor which will be considered in determining where to locate the factory (not the sole factor - but it's absolutely a consideration).

Germany has the strongest unions there are (at least in automotive), and yet Tesla set up shop here. France has a sizable amount of industry as well, as does Italy. When setting up plants in Europe, unions aren't much of a factor - wage costs and infrastructure are more.

Agree that it's not the strongest factor, but disagree that it can be discounted as much as you are saying.

I've personally worked on projects for two completely different companies (as a consulting role) where the client has discounted the option to locate in France outright because of industrial relations strength (my day job is supply chain & logistics consulting).

> On the other hand, some portion of inflation is caused by increased labour cost. So by the time the strike demand is fulfilled, the next strike is in theory in the brewing.

I think the strikes at Amazon have more to do with working conditions than pay. That being said, at already organized unions I'd say it's the opposite. No one was looking for big pay raises when inflation was low, they look for it when inflation is stripping away their salary.

"On the other hand, some portion of inflation is caused by increased labour cost. So by the time the strike demand is fulfilled, the next strike is in theory in the brewing."

It depends on both "technology" (the inputs required to produce each output in the consumption bundle for workers) and purely distributive variables (how revenues are split between labor and capital). Generally speaking, widespread strike activity will tend to shift revenue from capital to labor.

Countries where labor is organized and thus has a credible strike threat generally have a much more equal distribution of income, and most workers work fewer hours per year.

In my experience, the worker treatment is generally as much a trigger of strikes as the salary. Here too: [...] long working hours, high injury rates, and the unrelenting pace of work, as well as aggressive, tech-enhanced monitoring of employees.

Me too. I think too the unions work best when its just a small part of the population that has the power to get what they want. Its like a prisoners dilemma, yhe wider economy can support this group being relatively overpaid to keep them quiet. However not everyone can be overpaid, and when everyone is striking the economy just falls apart.

So you're saying the only thing keeping the economy together is the fact that not too many people have decided to strike? Considering that strikes are acts of desperation, I guess that means we should hope, for the sake of the system, that we don't come across too much desperation any time soon.

Speaking of prisoner"s dilemmas, I wonder how employers manage to agree on how much employee desperation they can get away with...

No strike acts are not acts of desperation. I understand right now there are some workplaces where wages are low and not keeping up with inflation, but in general the people who strike belong to powerful unions and earn good wages. People on minimum wage rarely strike.

a whole field of sociology and industrial relations study just that, there is a tsunami of literature on the subject

I'm extremely ignorant on this subject matter. Any pointer, like an author or a book will be highly appreciated!

it's not an easy read for non sociologists, but I would start here: https://journals.sagepub.com/doi/abs/10.1177/003232920203000...

Korpi (https://en.wikipedia.org/wiki/Walter_Korpi) is one of the big figures of Scandinavian social democracy, and a researcher that studied for years the connections between social class, welfare, strikes, etc.

But again, I just pick one text, among a tsunami of them.

Check also those journals: https://journals.sagepub.com/home/EJD and https://onlinelibrary.wiley.com/journal/1468232x and basically all the journals in this list: https://www.scimagojr.com/journalrank.php?category=1410

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