There's a simple solution for companies struggling to hire: Pay workers more(businessinsider.com)
businessinsider.com
There's a simple solution for companies struggling to hire: Pay workers more
https://www.businessinsider.com/labor-shortage-solution-pay-workers-higher-wages-2021-4
44 comments
Reminder that this article is directly referencing the fast food industry. In n Out has long proven that such places can easily afford to pay much higher wages and remain in business, but they are a pure chain without franchising. Maybe the key here is the McDonald's business model is great for McDonald's corporate and shitty for individual franchisees. In n Out has always been privately held by an extremely religious family that has higher priorities than making investors maximally rich.
It kinda reminds me of Dick's Drive In burger chain up in Seattle. They pay workers above minimum wage, and give them some pretty decent benefits. There seem to be way more people working in Dicks than any other fast food place too... yet somehow they manage to do it selling little cheap burgers, and can still afford to add new locations.
https://www.ddir.com/employment/
https://www.ddir.com/employment/
As annoying as I find their religious angle, Chick-fil-A is a franchise model who seems to treat their employees somewhat better and they don't seem to be struggling either.
Chick-fil-a is not really a franchise model. I believe all their locations are corporate owned, but they make all their managers part owners. I don't think it takes any upfront cash to become a manager/owner either. But it is difficult to be selected.
You also don't generally have the option to select locations or even manage more than one location without special approval.
You also don't generally have the option to select locations or even manage more than one location without special approval.
This is completely missing the point: it's free to whine about a "labor shortage" (at the price you are willing to pay). Best case you'll get subsidies (direct or indirect) from the government. Worst case? Nothing happens.
I know several companies that spend a lot on an endlessly failing recruitment formula. It seems they would rather continue burning money and die than merely consider paying a salary that fits the job. People who would normally accept it also leave because of side effects. New coworkers every week, extra shifts, extra stress, extra pressure and total chaos because people don't show up and the best one: Managers who blame you because the no-show coworker is assumed to be your buddy.
> It seems they would rather continue burning money and die than merely consider paying a salary that fits the job
Some businesses do that for years. Especially if it's too capital intensive to setup a competitor.
Some businesses do that for years. Especially if it's too capital intensive to setup a competitor.
It's kind of scary how many times they can write "experts say [X]" without ever once actually citing/referencing where these experts say this, or quoting those experts, or providing any sort of proof whatsoever that "experts" actually say anything they're claiming.
The article literally names and quotes them.
Uhh, the solution is not so simple. Small businesses are often on a very tight budget. That unemployment checks are currently paying a lot more than a large set of wages would has resulted in a shrinking worker pool, further complicating matters.
If you can’t run your business because you can’t afford to offer a fair wage your business is not sustainable.
So it is ok for the government, through their spending power, to make your business unsustainable where it was in fact very sustainable pre-covid? [0][1]
First they shutdown the businesses because of COVID and then they make it too expensive to reopen them. And your tax dollars and your children's tax dollars have made it all possible.
For those who do not own a business, would it be alright if the government came and took your job from you which caused you to loose your home and savings without any compensation or a way to regain the loses you incurred? It is really no different.
[0] https://www.cnbc.com/2020/05/09/it-pays-to-stay-unemployed-t...
[1]https://fivethirtyeight.com/features/many-americans-are-gett...
First they shutdown the businesses because of COVID and then they make it too expensive to reopen them. And your tax dollars and your children's tax dollars have made it all possible.
For those who do not own a business, would it be alright if the government came and took your job from you which caused you to loose your home and savings without any compensation or a way to regain the loses you incurred? It is really no different.
[0] https://www.cnbc.com/2020/05/09/it-pays-to-stay-unemployed-t...
[1]https://fivethirtyeight.com/features/many-americans-are-gett...
> So it is ok for the government, through their spending power, to make your business unsustainable where it was in fact very sustainable pre-covid?
Okay, I'll bite on this: "Yes. It is."
Was your business paying healthcare? No? Then no sympathy.
Were your employees getting public assistance? Yes? Then no sympathy.
I can go on. These are not "sustainable" businesses without external funding in the form of social benefit programs.
The lack of movement in the minimum wage has allowed FAR too many businesses to abuse employees while pocketing the profit. The restaurant sector is particularly egregious with their exceptions. Outsourcing is also particularly egregious in things like "cleaning staff" where the hired contracting company simply can't do the job without violating even the horribly low minimum wage.
If unemployment benefits pay better than your job, that says something about the employer, not the unemployment benefits.
Okay, I'll bite on this: "Yes. It is."
Was your business paying healthcare? No? Then no sympathy.
Were your employees getting public assistance? Yes? Then no sympathy.
I can go on. These are not "sustainable" businesses without external funding in the form of social benefit programs.
The lack of movement in the minimum wage has allowed FAR too many businesses to abuse employees while pocketing the profit. The restaurant sector is particularly egregious with their exceptions. Outsourcing is also particularly egregious in things like "cleaning staff" where the hired contracting company simply can't do the job without violating even the horribly low minimum wage.
If unemployment benefits pay better than your job, that says something about the employer, not the unemployment benefits.
I assume your are stating that putting businesses out of business will solve either of these issues? More competition for workers increases wages not the other way around. If you decrease the number of competitors for labor in a market the cost of labor will actually decrease since there will be less employers for workers to seek out better opportunities.
This is simple supply and demand.
What we have in this case is what happens at times in the commodities market ( before you bash me, no people are NOT commodities but the example serves ). Short sighted thinking may tell a government to for instance buy 25% of the corn from the market ( or force ethanol into gas ) to create an artificial raise in the price of corn. However, in the long term farmers will plant more corn and the price of corn will soon tank from oversupply.
What we have here is the government removing employees from the employment market to force wages higher. The problem is that it is not sustainable ( remember the businesses creating tax revenue to pay for it are now out of business ). Eventually those unemployed workers will be forced back into the labor market ( just like the extra corn ) and there won't be enough jobs for the number of workers and labor prices and benefits will tank.
Helping people through the COVID pandemic was necessary and appropriate. Using that as an excuse to restructure the market seems like bad timing.
"If unemployment benefits pay better than your job, that says something about the employer, not the unemployment benefits."
This is a rare situation. It used to be you received about 80% of your wage on unemployment. Now you can make as much as 200% your wage on unemployment. Remember unemployment benefits were intended to catch you if you experienced a crisis not sustain you for the long haul.
This is simple supply and demand.
What we have in this case is what happens at times in the commodities market ( before you bash me, no people are NOT commodities but the example serves ). Short sighted thinking may tell a government to for instance buy 25% of the corn from the market ( or force ethanol into gas ) to create an artificial raise in the price of corn. However, in the long term farmers will plant more corn and the price of corn will soon tank from oversupply.
What we have here is the government removing employees from the employment market to force wages higher. The problem is that it is not sustainable ( remember the businesses creating tax revenue to pay for it are now out of business ). Eventually those unemployed workers will be forced back into the labor market ( just like the extra corn ) and there won't be enough jobs for the number of workers and labor prices and benefits will tank.
Helping people through the COVID pandemic was necessary and appropriate. Using that as an excuse to restructure the market seems like bad timing.
"If unemployment benefits pay better than your job, that says something about the employer, not the unemployment benefits."
This is a rare situation. It used to be you received about 80% of your wage on unemployment. Now you can make as much as 200% your wage on unemployment. Remember unemployment benefits were intended to catch you if you experienced a crisis not sustain you for the long haul.
> I assume your are stating that putting businesses out of business will solve either of these issues?
We have deemed jobs that pay too little to be a nuisance to society and that they absolutely should be put out of business.
That is the whole point of the minimum wage.
The problem is that the minimum wage is so pitifully low that economically effective unemployment benefits are significantly higher. If the minimum wage were $15 (which is still below where it should be due to cost of living adjustments), unemployment benefits wouldn't look anywhere nearly so attractive.
We have deemed jobs that pay too little to be a nuisance to society and that they absolutely should be put out of business.
That is the whole point of the minimum wage.
The problem is that the minimum wage is so pitifully low that economically effective unemployment benefits are significantly higher. If the minimum wage were $15 (which is still below where it should be due to cost of living adjustments), unemployment benefits wouldn't look anywhere nearly so attractive.
Business is there to serve society, not the other way around.
Pay the wage or get out of the market so that superior businesses with better productivity can grow.
"And your tax dollars and your children's tax dollars have made it all possible."
Other way around. Payments from government are what make tax payments possible - which will always match what government pays out for any positive tax rate if everybody spends all they earn.
If they don't (ie they save - which is what causes a deficit) then that will catch up when they get around to spending those savings. [0]
" there won't be enough jobs for the number of workers"
There should always be enough jobs for the number of workers - with the state providing a job at the living wage to top up the permanent shortage that comes from relying entirely on the private sector.
All the private sector has to do then is pay the wage if they want the labour. Competition for labour then works, and private firms can replace jobs with machines without anybody getting too upset about it. All of which drives forward productivity and the overall standard of living.
Labour should always be reassuringly expensive. Then we make best use of it because it is scarce.
[0] The Deficit Myth, Stephanie Kelton. https://www.amazon.com/Deficit-Myth-Monetary-Peoples-Economy...
Pay the wage or get out of the market so that superior businesses with better productivity can grow.
"And your tax dollars and your children's tax dollars have made it all possible."
Other way around. Payments from government are what make tax payments possible - which will always match what government pays out for any positive tax rate if everybody spends all they earn.
If they don't (ie they save - which is what causes a deficit) then that will catch up when they get around to spending those savings. [0]
" there won't be enough jobs for the number of workers"
There should always be enough jobs for the number of workers - with the state providing a job at the living wage to top up the permanent shortage that comes from relying entirely on the private sector.
All the private sector has to do then is pay the wage if they want the labour. Competition for labour then works, and private firms can replace jobs with machines without anybody getting too upset about it. All of which drives forward productivity and the overall standard of living.
Labour should always be reassuringly expensive. Then we make best use of it because it is scarce.
[0] The Deficit Myth, Stephanie Kelton. https://www.amazon.com/Deficit-Myth-Monetary-Peoples-Economy...
> Payments from government are what make tax payments possible
Can you expound on this a bit? I think I am not understanding what you are stating. The way I read it at this point is that the taxes on a government payment is what makes the tax revenue possible. The math doesn't work here in the way I am understanding it. Unfortunately the link is to a book which I cannot read directly.
>Superior businesses with better productivity can grow
Businesses typically gain productivity as they scale. So that little delicatessen on the corner that makes the most amazing pastrami sandwich and is a neighborhood gathering spot is very very inefficient but is serving a great purpose. If all of these types of businesses die we are left with McDonalds which if anything isn't 'for the people'.
Can you expound on this a bit? I think I am not understanding what you are stating. The way I read it at this point is that the taxes on a government payment is what makes the tax revenue possible. The math doesn't work here in the way I am understanding it. Unfortunately the link is to a book which I cannot read directly.
>Superior businesses with better productivity can grow
Businesses typically gain productivity as they scale. So that little delicatessen on the corner that makes the most amazing pastrami sandwich and is a neighborhood gathering spot is very very inefficient but is serving a great purpose. If all of these types of businesses die we are left with McDonalds which if anything isn't 'for the people'.
"The math doesn't work here in the way I am understanding it."
The maths is very simple. Government spends $100, and that is taxed at x%. The person receiving that spending as income gets $100 - x%($100) as income. They then spend that income with somebody else, and so on like a stone skipping across a pond. Total up the deductions in the geometric series and you'll find that it matches the initial injection for any positive tax rate. All that changes is the number of hops.
All very straightforward once you realise that money is a dynamic concept and pops into being as required to ensure transactions get done before disappearing again. Loans create deposits.
"So that little delicatessen on the corner that makes the most amazing pastrami sandwich and is a neighborhood gathering spot is very very inefficient but is serving a great purpose."
It is. And if it is that great then it will be able to charge a sufficient artisan premium for its product. If it can't, and it can't raise the capital to fund its productivity curve, then it will go bust. That's how markets work.
You don't get to push the cost down onto poor people by using a system feedback that ensures there are always a lack of jobs. There should always be more jobs than people that want them, not fewer - because the harm from the lack of a job is far far greater than the harm from the lack of a profit to the undercapitalised.
Then those products that are genuinely great will come into being - having been funded by adequate capital.
The maths is very simple. Government spends $100, and that is taxed at x%. The person receiving that spending as income gets $100 - x%($100) as income. They then spend that income with somebody else, and so on like a stone skipping across a pond. Total up the deductions in the geometric series and you'll find that it matches the initial injection for any positive tax rate. All that changes is the number of hops.
All very straightforward once you realise that money is a dynamic concept and pops into being as required to ensure transactions get done before disappearing again. Loans create deposits.
"So that little delicatessen on the corner that makes the most amazing pastrami sandwich and is a neighborhood gathering spot is very very inefficient but is serving a great purpose."
It is. And if it is that great then it will be able to charge a sufficient artisan premium for its product. If it can't, and it can't raise the capital to fund its productivity curve, then it will go bust. That's how markets work.
You don't get to push the cost down onto poor people by using a system feedback that ensures there are always a lack of jobs. There should always be more jobs than people that want them, not fewer - because the harm from the lack of a job is far far greater than the harm from the lack of a profit to the undercapitalised.
Then those products that are genuinely great will come into being - having been funded by adequate capital.
The maths make sense to the point that the money stays onshore and someone does save/invest the money. Again, I may have missed something here.
>You don't get to push the cost down onto poor people by using a system feedback
The current market (system feedback) is built on top of the government programs to date. Blaming businesses for operating within this framework the government has created seems misplaced. If we believe therefore that this framework is creating harm why do we believe adding more government to it will resolve the current issues. Wouldn't it seem we should remove the programs businesses have used entirely and then they would need to compete for employees increasing wages and benefits in the process?
BTW. I grew up in a logging community where I saw everything you discuss in action. Every summer the large logging companies would "lay off" their work crews for weather. The state would then pay their employees through unemployment until the weather changed. The smaller logging operations didn't do this because they wouldn't survive if they didn't work so they chopped firewood and worked on equipment. They didn't provide the same full benefits the larger companies did but they did provide consistent employment.
In this model the state was subsidizing the large 'more efficient' companies while the smaller players were taking care of their own.
>You don't get to push the cost down onto poor people by using a system feedback
The current market (system feedback) is built on top of the government programs to date. Blaming businesses for operating within this framework the government has created seems misplaced. If we believe therefore that this framework is creating harm why do we believe adding more government to it will resolve the current issues. Wouldn't it seem we should remove the programs businesses have used entirely and then they would need to compete for employees increasing wages and benefits in the process?
BTW. I grew up in a logging community where I saw everything you discuss in action. Every summer the large logging companies would "lay off" their work crews for weather. The state would then pay their employees through unemployment until the weather changed. The smaller logging operations didn't do this because they wouldn't survive if they didn't work so they chopped firewood and worked on equipment. They didn't provide the same full benefits the larger companies did but they did provide consistent employment.
In this model the state was subsidizing the large 'more efficient' companies while the smaller players were taking care of their own.
"If your small business can't make revenue faster than the federal reserve can print new money, you shouldn't be in business"
The original commenter's point (I think) is that the government is inflating wages by giving money away for free. It's easy to tell others to pay higher wages when it's not your money or your business.
Or you need VC money ;)
Is Uber still losing money?
Is Uber still losing money?
That unemployment pay is more attractive than working says a lot about prevailing wages. If unemployment covers rent and working does not, why in the hell would any rational person want to work? And why should employers think they shouldn't have to compete with that?
Part of the problem is that the high unemployment premiums are coming from via the stimulus packages which will probably end at some point. In the meantime more businesses will go bankrupt or close doors.
So yeah, it's rational for the employee to sit things out, but the market is distorted
Remember, as Thomas Sowell has correctly pointed out, the true minimum wage is always ZERO. I'm advising a smallish manufacturer now whose goal (as a response to minimum wage and other govt regulation) is to eliminate ALL of their employees, through both automation and outsourcing. I've seen the numbers, and this takes them from barely profitable in a good economy to marginally profitable even in a fairly down economy. They will not survive another downturn if they don't do this, so all the jobs will be gone soon, anyway.
This isn't what they want to do, but what they must do, especially with no barrier to Chinese cheating in the market.
Policy has consequences, and right now, most of our government policies are actually arguing against creating (or even maintaining) jobs.
This isn't what they want to do, but what they must do, especially with no barrier to Chinese cheating in the market.
Policy has consequences, and right now, most of our government policies are actually arguing against creating (or even maintaining) jobs.
Has Thomas Sowell talked to any panhandlers lately? I'd say the floor on minimum wage is at least $3/Hr if one can sit on a curb with cardboard and earn that much.
Panhandling is way more profitable than that. I’d estimate they earn 30-50 an hour in Seattle
I was estimating the floor in 99% of the country and not just the big cities because labor costs are very regional.
> Not every business can afford to raise wages to compete with companies like Amazon and Target that already pay at least $15 per hour
Well I guess that is the problem.
Well I guess that is the problem.
Why weren't companies having hiring issues of this severity in 2019?
Because the unemployment benefits weren't so tantalizing. [0]
[0] https://fivethirtyeight.com/features/many-americans-are-gett...
[0] https://fivethirtyeight.com/features/many-americans-are-gett...
Unemployment benefits are tantalizing because they provide a “living wage” level of compensation low wage workers aren’t getting in the labor marketplace.
$600/week divided by 40 hrs = $15/hr
$600/week divided by 40 hrs = $15/hr
This doesn't really work for software.
Often the more you pay an employee, the more he (she) starts believing in their own "rockstarness". And as everybody knows, rockstars don't have to work, they get paid just for the sheer fact of being so awesome.
(This is one reason why underpaid software developers are often so much more effective - see H1B, outsourcing, etc.)
Often the more you pay an employee, the more he (she) starts believing in their own "rockstarness". And as everybody knows, rockstars don't have to work, they get paid just for the sheer fact of being so awesome.
(This is one reason why underpaid software developers are often so much more effective - see H1B, outsourcing, etc.)
This is wrong in a lot of ways. Here are the top four:
1: If you don't want entitled folks with big egos, create a hiring funnel that roots out entitled folks with big egos. Compensation has very little to do with it.
2: H1B folks often work very hard, but that's not always because they're just incredibly humble. H1B visa holders often don't have as much career choice as US citizens or green card holders, and their visa status is tied to their employer's sponsorship. They can't easily hop to a different job if the workload starts to crush them. Employers know that, and adjust workloads accordingly. Call it what it is: coercion.
3: Squeezing work out of underpaid engineers is a great way of accomplishing a subset of tasks (like staging and applying software updates to cloud VMs each week), but it's a terrible way of accomplishing other tasks (like designing and implementing an automated system to replace those manual updates). People who are underpaid and swamped with work will often go into "survival mode" and just ask for a very detailed spec and implement the spec by rote. That style of work leaves little room for ideation, autonomy, and creative thinking, which is essential for some tasks.
4: It's plain shitty to knowingly underpay engineers and think that gives you the right to squeeze more work out of them.
1: If you don't want entitled folks with big egos, create a hiring funnel that roots out entitled folks with big egos. Compensation has very little to do with it.
2: H1B folks often work very hard, but that's not always because they're just incredibly humble. H1B visa holders often don't have as much career choice as US citizens or green card holders, and their visa status is tied to their employer's sponsorship. They can't easily hop to a different job if the workload starts to crush them. Employers know that, and adjust workloads accordingly. Call it what it is: coercion.
3: Squeezing work out of underpaid engineers is a great way of accomplishing a subset of tasks (like staging and applying software updates to cloud VMs each week), but it's a terrible way of accomplishing other tasks (like designing and implementing an automated system to replace those manual updates). People who are underpaid and swamped with work will often go into "survival mode" and just ask for a very detailed spec and implement the spec by rote. That style of work leaves little room for ideation, autonomy, and creative thinking, which is essential for some tasks.
4: It's plain shitty to knowingly underpay engineers and think that gives you the right to squeeze more work out of them.
As someone who worked under horrible conditions because I couldn't leave (sponsored H1B), thank you.
I concur with the sibling post. I have had similar experience with my colleagues. Thank you.
> This is wrong in a lot of ways.
It's a factual statement. The "pay more - get more employees" relationship doesn't work with software development.
What to do with the ethics of this situation is up to you, I made no statement either way.
It's a factual statement. The "pay more - get more employees" relationship doesn't work with software development.
What to do with the ethics of this situation is up to you, I made no statement either way.