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Labor shortage or terrible jobs?

annehelen.substack.com

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Re: Labor shortage or terrible jobs?

#901

Post by hinkley »

malandrew wrote: post #889
nbardy wrote: post #773

Earlier quoted context omitted.

This is why its hard to start a restaurant. You need to be rich enough to own the land.

Yup, if you don't then your landlord gets all the value. You get a 10 year lease, build a successful restaurant (if you make it past the dreaded first year) and then when your lease expires your successful restaurant has helped increase the land value in the area and the margin you worked up to evaporates when you sign a new 10-year lease that is more expensive because the value of the land has gone up (partly due to…

My old neighborhood was full of people deciding on their third 10 year or early retirement. Had a few old guard businesses close before people noticed the pattern. Not that the residents could do much about the cause...

I imagine them thinking, “I’m 56 and this contract basically says I’ll have to work harder than I have in decades just to keep out of bankruptcy.” And just checking their finances and then the want ads for management positions.

Re: Labor shortage or terrible jobs?

#902

Post by VLM »

anovikov wrote: post #845
blihp wrote: post #548

Earlier quoted context omitted.

A 10% margin also often doesn't tell the whole story of how they make their money. Nearly since its inception, a substantial portion of McDonald's long term profit came from the appreciation of the real estate the stores were built on. Operating a business on it just made it cash flow positive during the holding period. So it was essentially a REIT that happened to operate a fast food chain. Even for many mom-and-pop…

In this case, why bothering operating a restaurant at all (it's a terribly terribly complex business to manage)? Just buy real estate and sit on it? I always wondered how restaurants even work - how can owners be motivated to keep themselves in this endless, poorly paid grind. In my opinion, when this is not about large chains that are effectively self-reproducing machines that don't depend on any people's motivation…

In some social groups you'll get massive social status signaling about being an "entrepreneur". Admittedly it mostly comes from people who profit off the pipeline, mortgage refi officers, commercial landlords, accountants, bankruptcy attorneys, etc.

As a cash business I often wonder how much laundering goes on. Not just hard core drug money, but any time cash is handled I suspect there's some rounding down going on.

Re: Labor shortage or terrible jobs?

#903

Post by brigandish »

atoav wrote: post #778
AnthonyMouse wrote: post #574

Earlier quoted context omitted.

> Yeah but the job market is not a free market, because not getting a job is existential for those seeking the job, while the company can usually just survive when a position is not filled for a certain time. This is, to begin with, not true. It's common for small businesses to be operating at the margin. If you don't have someone making the sandwiches then you don't have revenue and you still have rent and utilities…

> You can pick the one that pays the most. Oh sweet summer child. When you are in debt and struggle to survive on a day to day basis, time is your enemy You cannot afford not to take a job. And if you are lucky enough to be able afford it today, you might not tomorrow. Another thing: many people need more than one job as it is now. Guess what: if you pay people a decent living wage more people can actually get jobs,…

> Oh sweet summer child.

Please try to keep the snark out. If they were snarky to you then I say go for it but I didn't notice they were snarky to you and, regardless of whether you agree with them, their contribution to this discussion is worthwhile.

Let's try and keep HN a cut above.

Re: Labor shortage or terrible jobs?

#904

Post by ruined »

mannerheim wrote: post #740
ruined wrote: post #723

Earlier quoted context omitted.

of course you'll see staff leave if you cut pay. that's a deliberate choice by management, and not a question about tipped or untipped work. i doubt there is real effect on the orders that customers place, but nobody's publishing their books, so who can say. in a systemic change in which every restaurant transitions to an untipped system, there would be no concern about losing out to a restaurant that continues to lo…

Is it a deliberate choice by management, or an economic reality? Perhaps they could have kept kitchen staff wages low and used the extra money to pay waitstaff more, but since it seems like other restaurants that adopted no-tipping eventually switched back to tips, it sounds like there just isn't the money to go around. Sure, if every restaurant switched to no-tipping, then waitstaff couldn't simply switch to a resta…

what? all that is required in the transition to fully-waged labor is to pay an equivalent wage to the former wage+tips. if management pays a lower wage, that is a choice, because management has full control over what they rate hourly and what they write on the check.

if the concern is that workers may be paid less, the solution is simply don't pay less.

Re: Labor shortage or terrible jobs?

#905

Post by dogman144 »

shkkmo wrote: post #659
dogman144 wrote: post #630

Earlier quoted context omitted.

No I said loss leading probably wasn’t a good analogy. Did you not read that? However, McD EU could be less profitable, McD picks up the slack. This is fairly straightforward financial accounting. Which is all to say: without discussing this from knowledge of a form 10k or similar details is a very weak argument approach.

Then your whole point is pointless, the OP granted the possibility of McD EU being less profitable in their original post.

Yes, and then OP said this which is why I responded:

“ That implies that the model is (in principle) just alright”

It implies any number of things, but not that if the model works in EU it can also coexist with the same model in the US. The scenario I said is an easy and fairly common example of why they could not coexist.

Without breaking out a form 10k and a fair bit of financial statement analysis, it’s somewhat like saying that “well I get 1GB internet in NYC, it implies the model for fast internet works so we could do it in Montana tomorrow.”

To the extent that it’s important to know and discuss the actual factors involved such that the MBAs doing these decisions at McD will take you seriously, that implication is seriously flawed. Hence, why this hasn’t changed since Milton Friedman and the 80s. Ever wonder why that is? It’s because arguments made without any Corp fin awareness don’t work with the audiences with the power to change it.

Re: Labor shortage or terrible jobs?

#906

Post by malandrew »

onion2k wrote: post #746
deburo wrote: post #618

Earlier quoted context omitted.

>If they honestly can't afford to pay a living wage It's not logical to kill businesses by arbitrarily raising the minimum wage. Do you think the people they employ are better off not working at all? These people may not have a decent enough salary, but they get to work as opposed to staying at home and degenerate (mentally and physically). I always thought the better solution is to help them financially in other way…

The cost of some businesses closing because they can't afford a higher minimum wage has to be considered in the context of every business that can afford the higher wage improving the lives of their minimum wage staff. Maybe it is worthwhile killing some businesses, and pushing some people to get new jobs or to live on benefits, if the wage increase for others is a greater benefit to society. Its also worth noting th…

> Its also worth noting that practically no businesses close when minimum wages have been increased in the past.

The problem got pushed somewhere, but where?

Very rarely does the owner of the business just eat the cost except in the very short term. If the business doesn't close usually one of two things happen:

(1) there are fewer hours available because books need to be balanced. Some workers that are able to keep their hours do better at the expense of those whose hours are cut. Basically this ends up being a wealth transfer between some hourly workers and others.

(2) prices eventually go up and cause localized increases in prices. Within two to three years you end up with the situation where that new higher minimum wage has about the same purchasing power locally as the previous minimum wage had.

Re: Labor shortage or terrible jobs?

#907

Post by dogman144 »

atoav wrote: post #781
dogman144 wrote: post #634

Earlier quoted context omitted.

Mm does this make sense: Profitable is a spectrum, end of the day it all reports back through McD USA. ebtida in EU might be a bit lower than ideal because of laws changing over time. So, to make numbers, they can juice things in USA.

You are aware that when you say "they can juice things in USA", "things" stands for people?

You are aware that you can either use soft language, or discuss in the terms that are actually used, right?

What’s more important: sensitivities or understanding how the decisions actually work so you’re in the mix to change things with the audience to change it?

They can wait out ethics based arguments for decades, and they do.

The moment a community activist actually starts calling corps out on their sh*t from the perspective that’s actually used to build these policies, then the corps lose their main advantage which is ignoring calls to ethics like this which don’t work as they’re not at all related to the MBA’s incentive structure who makes that decision.

Re: Labor shortage or terrible jobs?

#908

Post by malandrew »

neilwilson wrote: post #704
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'm just saying that both sides of the equation need to be examined, i.e. the plight of the worker AND the plight of the business." It was examined. In 1944 in the Beverage Report "Full Employment in a Free Society". It concluded that people not earning sufficient to eat is an order of magnitude more harm than businesses not earning a profit and that the labour market should always be a sellers market, not a buyers…

> who are you going to sell the output of the robots to?

to other people employing, manufacturing or investing in the robots

Gains in a society goes to those that are doing something useful to contribute to increase productivity, such as providing the labor that increases the productivity or providing the capital to make that increased productivity a reality. While they won't get the gains, bystanders to this process benefit from cheaper costs due to increased productivity.

Re: Labor shortage or terrible jobs?

#909

Post by brigandish »

hamiltont wrote: post #807
atoav wrote: post #796

Earlier quoted context omitted.

> The solution to this is NOT government housing but less government regulations about building new housing Where and when did this work? Have you any examples?

Not who you replied to, but I believe the current popular answer is to refer to Japan. Numerous articles have been written regarding how they managed their housing crisis by deregulating zoning and building permits. You'll have to read up on it yourself, it's beyond me to summarize as it's a complex topic and the model is not perfectly exportable. Partially for "real" reasons, such as Japan has so many earthquakes th…

I live in Japan and can tell you that those conditions lead to ugly, low standard buildings that seem to me to be among the very top complaints foreigners living here have about the place. The incentives are completely skewed here and seem just as likely to be corrupt as any other place. There's plenty of discussion about it on these boards, this one comes to mind https://news.ycombinator.com/item?id=26399071

As to the earthquakes/natural disasters bit for why they build relatively disposable homes - does that happen on the west coast of the US, for instance? I'm genuinely interested, if anyone knows.

Re: Labor shortage or terrible jobs?

#910

Post by objectivetruth »

ozim wrote: post #387
ep103 wrote: post #330

Earlier quoted context omitted.

https://academictimes.com/economic-news-reporting-suffers-fr... No. News sources are focusing on business instead of labor's issues, because news statistically favors business interests, not labor's. If your hypothetical business owner is unable to start a business without paying a reasonable wage, then that business should not exist. And your hypothetical business owner should invest in Apple, Facebook, or otherwise…

But that is creating tragedy of commons that we have now. People who are having money are investing in stocks or ETFs, buying real estate because it is still better than having cash. Which inflates stocks/real estate bubble and when it bursts it will be much bigger mess than paying low wages but in constant manner, spread out over multiple people and multiple years. I definitely did not write about business that cann…

So, society has a problem where some people are so poor that some of them die and many barely survive... and other people in that society have so much money that they're converting it into electricity.

I think eventually equilibrium will come in some fashion and it likely won't be the rich spontaneously deciding to generously share.

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