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Labor shortage or terrible jobs?

annehelen.substack.com

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Re: Labor shortage or terrible jobs?

#421

Post by fighterpilot »

dmitriid wrote: post #396
fighterpilot wrote: post #369

Earlier quoted context omitted.

I said that it would reduce demand, not that it would eliminate it.

Has it reduced demand in Europe? In general. Americans regularly have deep-rooted fears about giving fellow humans a chance at a decent life. Are any of those fears substantiated?

Economic theory says yes. If prices of A go up and B is a close substitute, some people will shift from A to B.

I doubt anyone has studied that rather specific question empirically, though, and even if they had it's not an easy question to study. So theory and common sense is our best bet when it comes to forming expectations here.

I'm sure there are empirical studies about how demand shifts from A to B for other examples of substitute goods, though. Maybe start there?

Re: Labor shortage or terrible jobs?

#422

Post by ThrustVectoring »

jschveibinz wrote: post #2

This article unfortunately doesn't address the business side of the problem. Fast food restaurants, or place like "Dale's" mentioned in the article, make very little profit. It is most likely below 10%. Here is an estimate: https://www.restaurant365.com/blog/what-is-the-average-profi... . A 10% profit is very modest. That's not the story of the "fat cats getting rich on the back of the workers" that the article is al…

> the financial model is set by the fixed or imperative costs, i.e. the cost of rent

Rent for commercial spaces is set to what the market will bear, and that is also determined by the same financial models with labor prices as input. "Restaurant owners aren't getting rich off of exploiting labor; their landlord is" just means that the haircut should be getting taken off of the landlord's profit margins.

Now, this isn't a panacea - there are some distortionary effects from squeezing the rents that landlords can charge, and it favors high-skill and low-labor businesses by competing away higher bidders on commercial real estate, but it's not like business owners will feel 100% of the incidence of a minimum wage hike. Some will go out of business, which will lower commercial rents as vacancies rise, which will save a portion of the businesses that would die based off first-order effects alone.

Re: Labor shortage or terrible jobs?

#423

Post by atoav »

rbg246 wrote: post #325
jschveibinz wrote: post #2

This article unfortunately doesn't address the business side of the problem. Fast food restaurants, or place like "Dale's" mentioned in the article, make very little profit. It is most likely below 10%. Here is an estimate: https://www.restaurant365.com/blog/what-is-the-average-profi... . A 10% profit is very modest. That's not the story of the "fat cats getting rich on the back of the workers" that the article is al…

I don't think anyone is saying that these sorts of companies have lots of money. These business have a model that relies on poverty wages changing the minimum wage will disrupt these businesses greatly and I don't see a problem with that. You can't keep a broken thing going because of the businesses that will have to change their model. But sorry I also see your point there needs to be help to business to change thei…

I don't see it. McDonalds pays minimum wages in most european nations, yet their menu isnt that much more expensive than in the US.

Maybe they have a slimmer margin over here, but they are still profitable. That implies that the model is (in principle) just alright, but there are financial flows that will have to change in the US. Of course you don't like to pay more for the labor you use to generate profit — ideally you wouldn't have to pay anyone at all!

If you can't run you business with minimum wage labor, maybe tou are not good at doing business and should change careers instead? Because many businesses in many nations have not the slightest issue doing just that.

Re: Labor shortage or terrible jobs?

#424

Post by parineum »

throwawaygh wrote: post #274
jschveibinz wrote: post #2

This article unfortunately doesn't address the business side of the problem. Fast food restaurants, or place like "Dale's" mentioned in the article, make very little profit. It is most likely below 10%. Here is an estimate: https://www.restaurant365.com/blog/what-is-the-average-profi... . A 10% profit is very modest. That's not the story of the "fat cats getting rich on the back of the workers" that the article is al…

> But they will, they will go down the street But... why? To save a couple bucks on a burger? This is a serious question. Is this really how consumer behavior works in the restaurant industry? Restaurant food isn't actually a commodity. A burger from one place can be quite different from a burger at another. Even at the low end -- I much prefer McD's to the other fast food joints. Atmospheres can be very different as…

Consider the quality of a McDonald's burger/meal. It's not hard to find something considerably better and marginally more expensive yet they are still in business.

Re: Labor shortage or terrible jobs?

#425

Post by nostromo »

rbg246 wrote: post #418
syshum wrote: post #414

Earlier quoted context omitted.

>>which force working employees into poverty I think you have a widely unorthodox defination of "force" as no one is forced to take any job at any wage. Force in the equation would come from the government using the threat of government violence to force a wage on a business owner. A person that voluntary accepts a job for X wage is not "forced" to do so.

You don't think needing to survive forces or keeping your human dignity forces you to find a job? That's the way I see it.

That job might not exist at all if the government mandates your wage to be higher than the value of your labor.

Re: Labor shortage or terrible jobs?

#426

Post by Sebb767 »

djbebs wrote: post #291
Sebb767 wrote: post #266

Earlier quoted context omitted.

> This article unfortunately doesn't address the business side of the problem. She actually addressees this in the very last paragraph: > if a business can’t pay a living wage, should it be a business?

Yes? I dont understand how this is a question. If a businesa is in operation profitably it is because it is providing more value than if it were not, otherwise it would not be able to remain in business

Usually, this question is brought up when a business is struggling; like in this case, where restaurants are struggling. So the implied context is that other actions are asked for (such as subsidies or laxer laws). The question, like in this case, is whether it should not simply be written of as not providing value, instead of trying to fix something fundamentally broken by, for example, allowing worker exploitation.

Re: Labor shortage or terrible jobs?

#427

Post by maxerickson »

jvp wrote: post #336
maxerickson wrote: post #277

Earlier quoted context omitted.

Are people doing office work for $7.25 in Houston? I agree that prices vary widely, I'm not sure it makes sense to take expensive places as typical.

It may not be office work, but I bet it's location dependent (restaurant, janitor, grocery store).

Office jobs are less interchangeable than service jobs though. I'd expect someone with a job in a grocery store or restaurant to always be looking for a position closer to where they wanted to live compared to an office worker looking for suitable, better positions in locations that that would have a shorter commute.

(the service workers would be looking for better positions too, but the pay differences between similar positions are smaller there)

Re: Labor shortage or terrible jobs?

#428

Post by WalterBright »

Frondo wrote: post #339
WalterBright wrote: post #278

Earlier quoted context omitted.

> that we could support? One of the most effective anti-poverty programs the government could do is teach basic accounting and finance as core curriculum in the public schools.

Or raise the minimum wage, raising the wage floor for all workers, and putting more money in the hands of poor people (who are generally much, much better at managing it than anyone else, due to the need to.)

Frontline (I think it was) many years ago ran an episode on 401k plans. There was a medium sized company that offered an identical 401k plan to all its employees, from the bottom to the top salary levels.

They found that the higher the income level, the better percentage returns the employee had on the plan. The lower, the worse performance.

The 401k plan offered several investment options.

Clearly, the higher income people were making better investment decisions. The conclusion was the company was going to offer seminars on basic investing, though who knows how that turned out.

There's a lot more to personal finance than balancing a checkbook, though many can't do that, either.

Re: Labor shortage or terrible jobs?

#429

Post by humanrebar »

rbg246 wrote: post #404
humanrebar wrote: post #375

Earlier quoted context omitted.

I'm more concerned that teenagers in poverty won't be able to get jobs at all.

But you have said yourself it's 'bagel' money, it doesn't seem to be coherent to be defending both teenager after school jobs and teenagers in poverty.

Teenagers getting whatever after school jobs they can contribute to incomes for households in poverty. If the McD's kiosk takes the cashier job, the family loses income. I don't want households in poverty. I'm just unconvinced by this mechanism. I'd rather see minimum incomes or policies to deflate housing costs.

Re: Labor shortage or terrible jobs?

#430

Post by enjoyyourlife »

zizee wrote: post #382

Honest question: why do discussions about minimum wage in the U.S. never propose having teenagers having a different minimum to adults? In australia we have a $12.50/hr minimum for 15 year olds. It climbs in increments until about $25/hr. This system allows teenagers to get a foot in the door for low-skilled jobs, and allows adults to get paid a livable wage. The result is that a lot of fast food jobs are performed b…

That incentivizes companies to hire teenagers instead of adults
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