This seems very reasonable to me, but every economist-type I talk to tells me this analysis is wrong, and the "missing" workers are not immigrants, so more immigrants won't solve the problem. What am I (or they) missing?
Tangential comment on monetary policy. For the six year period from 2014 to 2019 (inclusive), the weakest growth in the employment to population ratio was 2016 (the 12 months following the Fed's increase in the rate paid as IOR and the announcement that they would make approx 4 increases). The second weakest of the six years in that period was 2015. I highlight that because it makes the decision to increase the IOR rate in Dec 2015 all the more confusing. The growth in NGDP over these years was its lowest in Q4 of 2015.
I'm wondering if this article had anything to do with one of my tweet replies to Mr. Yglesias. I mean, maybe it's just a coincidence, but that's not what I'm telling my friends.
It seems like there's a strong consensus that allowing more immigration is good but very little legislative appetite for it... obviously the right has gone fully anti-immigration and the pro-immigration corporate types are now marginalized in the party. Meanwhile on the left there's hardly any focus on increasing legal immigration... A sad state of affairs.
Once upon a time I learned that immigration has little to no impact on native-born wages while making the nation richer. Great!
But now we're in a situation where workers feel much freer to quit their jobs and look for something better and wages for lower-income workers are growing faster than inflation, and that's a perfect time to look towards increased immigration to fight this emerging threat of inflation which has allowed . . . workers to feel much freer to quit their jobs and look for something better and for wages for lower-income workers to grow faster than inflation.
If indeed we're having spot shortages in field workers and meatpackers, sure, OK.
But for me the real lesson is don't offer what is a wise *long-term* approach (One Billion Americans!) as some kind of solution for short-term challenges in the economy.
This sentence is the key to answering your comment:
"But the problem with immigration curbs as an economic development strategy is that telling unemployed former factory workers in Ohio, “don’t worry, we fixed your problems by getting rid of the immigrants, so now you can go be a berry-picker in California” doesn’t make sense."
We cut the foreign workers out who were doing the work native born Americans didn't want to do. Since we cut those workers out, these employers have raised wages to attempt to attract native born workers: and they aren't getting takers at double the original going rate. This makes this (previously profitable business) unprofitable, increases costs, AND doesn't even help the native born workers since they're not taking the jobs anyway.
As Matt said: this is not a catchall solution to our macroeconomic problems, but it can be a partial solution to short term problems which are directly hampering us economically now. Inflation is real and a lack of supply of labor is part of the reason why, and the good news is that problem is entirely fixable.
There is so much wrong with this that's it hard to know where to start. You also conveniently ignored the second sentence:
"This makes this (previously profitable business) unprofitable, increases costs, AND doesn't even help the native born workers since they're not taking the jobs anyway."
If the firm doesn't make money: then there won't be any jobs to have at all.
As for this comment: "Honestly, guys picking berries in California produce more value than the median lawyer does"
You mention meatpacking as an industry where workers are subjected to low pay, long hours, and terrible working conditions. Yet you hold it up as a case where employers have ~tried everything~ to attract workers. This is obviously wrong. Even in a tight labor supply market, employers can attract workers in one of two ways: 1) by boosting the monetary benefits of employment or 2) by boosting the non-monetary benefits of employment.
The meatpacking industry has barely tried raising wages. The article you link to references $3,000 signing bonuses being offered to new employees. This sounds great on its face, but few rational people will be enticed by this offer. A $3,000 bonus divided by 52 weeks amounts to a pre-tax pay increase of about $58 per week. The article also states that meatpackers work 72-hour weeks. So a $3,000 bonus amounts to a pay increase of about $0.80 per hour, with that bonus lapsing after one year. You'd be hard-pressed to call this a generous compensation package.
The meatpacking industry has also done little to improve working conditions since the pandemic. When your industry has an on-the-job injury rate 3 times higher than a standard American workplace, the most effective compensation is creating a safer workplace. To do that, employers could try such novel tactics as 'reducing shift lengths', 'offering more time off', and 'providing health insurance'. These non-monetary benefits would undoubtedly help entice workers to the meatpacking industry.
I have no sympathy for employers who cry 'labor supply shortage' while maintaining terrible working conditions. People shouldn't have to spend 72 hours per week risking life and limb for $15 per hour. And although we *could* import immigrants to do these jobs, it's not clear why they should be subjected to this treatment either.
If they significantly increase wages and improve working conditions then they are also going to significantly increase prices in order to pay for those changes.
But increasing prices is exactly what people are getting upset about. Increasing wages is clearly inflationary.
And we aren't "importing immigrants", immigrants are people not goods. Many people would jump at the opportunity to take these jobs. While they are much more dangerous than most jobs in America, and pay much worse, but they may be safer working conditions and pay much more than what they would get in their home countries.
If increasing the monetary benefits of employment drives the company out of business you have not succeeded in raising wages, or improving the standard of living for consumers.
I am saying that when people who are taking the jobs aren’t from the US and are trading up (as Matt implies) then they’re a net positive which makes your argument invalid
“The largest price increases were for meat categories: beef and veal prices increased by 9.6 percent, pork prices by 6.3 percent, and poultry prices by 5.6 percent.”
I wonder: Do you believe that charging higher prices for meat (the only way that producers can afford to improve working conditions) means that consumers will buy the same amount of meat? Because it doesn’t work that way.
Just to be clear ... the problem alleged here is price fixing. This has nothing to do with monopolies. Which as Ken points out ... obviously four concentrated packers is not a monopoly.
Couple of thoughts .... is the reduction of older workers a function of the excess Covid-19 deaths and fall-out from same pandemic? What is more "higher-value" to life than the production, tending to, and harvesting of food? Thus this passage "...but it also creates more opportunities for Americans to do higher-value stuff" seems condescending. Are you saying higher paying = "higher-value stuff"?
More likely fall-out like early retirements than excess deaths. The US 50-65 age group has around 65 million members and around 100-150k excess deaths, or 1 out of 500 at most. The 65-75 groups has had 150-200k excess deaths out of about 32 million, which is about 1 of every 180 or so. Labor force participation at those ages is not super high, so we're probably taking about no more than 100-150k total missing workers due to death, which isn't enough to be very noticeable in the workforce stats.
Couple of points about farm trade and productivity.
First, the US is part of NAFTA or USMCA or whatever. Mexican veg and soft fruit exports to the US are booming. Lots of investment (by US agribusiness) in Mexico and other countries. Tomato production moved to Mexico over the last few decades. Chances are good salad items will too. The avocado industry is slowly migrating to points south. This is all pretty efficient.
Second, famers can invest in capital equipment to produce more with less labor. I watch the crews harvesting the strawberry beds in Monterey, all neatly laid out on the ground. Back-breaking work and all credit to the workers who do it. But you can also grow strawberries hydroponically in greenhouses on raised tables. You'll get more strawberries. I see this done in developing economies where labor costs are ten times lower than around Salinas. Happy to be put right, but doesn't look as if anything has changed in Salinas production methods in fifty years.
Maybe take out the strawberries and plant 100% zucchini? Sorting agri production requires many variables - not least micro-climate and water availability - but I am not sure trying to perpetuate production in one place by providing cheaper than market labor is a wise intervention.
You end up with highly concentrated supply chains that undercut local businesses based on access to - and management of - cheap labor. Like the meat-packing supply chain. Which I think we can all agree is not a desirable place to end up.
I’m not putting strawberries in what should be blueberry pancakes. Also: If you ever see zucchini bread French toast with bourbon-maple-butter sauce and French vanilla ice cream on a dessert menu, have the zucchini.
There's a number of low wage countries to our south that are so lacking in jobs their people come here to take jobs that "Americans won't do", at least not at economically viable wages. Any of those industries that can relocate production further south to Central America to where the workers are, should, instead of bringing the workers here, which destabilizes our politics and gives rise to demagoguery like Trump's wall. It's a win-win. (And now we even have an integrated railroad network that runs from Mexico to Canada, to move the products.)
If industries could have relocated to where the cheap workers are, they would have already. Those "low wage countries to our south" "are so lacking in jobs" for a reason: they're governed poorly. You can't run a business if you can't enforce your contracts, you have to hedge your payment methods against hyperinflation, or you need to pay all your profit to the mob for "security."
Yes those are problems but it's not really true that if they could have moved, they already would have. As noted above, agricultural production in fact has been moving south, mostly to Mexico, but it's not an overnight process. If the post-pandemic labor shortage in the US accelerates that trend, that's a good thing, not something we should intervene to prevent.
I have a genuine question. How come wages can't raise and prices remain largely the same. We know that CEO pay in ratio to average worker pay has ballooned by a huge amount (in the hundreds of % I believe) in the last few decades, and I'm sure upper management beneath CEOs have also seen similar increases. How about these wealthy managers take pay cuts to raise wages for regular employees and then keep prices the same. Or similarly, just pay less profits into stock buybacks, or shareholders. Maybe those at the top need to take less off the backs and sweat of those at the bottom
Because CEO pay is not a significant percentage of the price of the product being sold while worker pay generally is. In other words, although "CEOs were paid 351 times as much as the typical worker," there are far more than 351 employees per CEO.
Perhaps that is a simpler way to frame it. Although for any finite number of units produced, the fixed yearly costs still contribute to the overall cost. The marginal costs remain fixed as volume ramps. The fixed costs are, instead, divided.
There's a line in the 'Greed is good' speech from Wall Street where Gordon Gekko criticizes the company he's trying to restructure for having 33 vice presidents with salaries over 200k each, and accuses management of effectively looting the company to the detriment of the shareholders. That movie was made 35 years ago. Now, the base salaries may not have gone up a lot for a broad range of upper management, but there's been a lot of innovation in bonus structure and stock options since then.
A good rule of thumb when looking at EPI claims is to remember: They’re lying to you. In this case they’re comparing CEOs at a very small number of very successful firms with workers in general. They’re also including compensation from exercising stock options.
If workers were being paid minimum wage with profit sharing, you might have a point. But that's not the case: Workers get paid whether the firm is profitable or not.
And a successful CEO of a large, successful company is more productive than a CEO of a small company, whereas a single worker's productivity is limited.
That's what's happening. Look at 1 and 3 year returns for value vs. growth equity. Value is getting smashed because the margin profile just isn't there.
Scale. Walmart is a good example. The CEO received $22.5M - mostly stock. That's just 0.09% of their operating cash flow. A CEO's salary is just 4% of their total comp. plan. If the company is performing - they'll make money, if not - then not.
Here is my thought - I’ve noticed customer service declining as the balance of power between employees and customers has changed. I think that’s a very good thing. I think a lot of the political rancor has come from people feeling weak and ignored by society. They now have more confidence and feel more respected.
I really don’t think increasing the number of people competing for jobs is a good idea. The management class should always operate terrified their employees are going to walk out.
Democrats are kind of in a bind here -- it feels like whenever whenever there are big surges in asylum seekers, it becomes really hard to push through other kinds of immigration.
(It'd help if the Chamber of Commerce or whatever would bother to push Republicans more to support increases in the number of visas we give out.)
Like most things it is the law of supply and demand. In this case, the supply is new workers. I don’t think too many voters have a problem conscientiously and systematically increasing legal immigration into our country. It is the illegal immigration, and the haphazard way immigration is controlled, that is the big problem.
I have a problem with more legal immigration. I want the labor shortage to be a permanent fixture of our society. I want 4 million people a month quitting for better higher paying jobs. I want bosses begging workers to stay.
You're modeling a closed loop world economy. In practice, when you raise wages to absurd levels.... the companies simply offshore the labor. You've raised meatpacking wages a bunch? Congrats, you've just shut every US meatpacking plant and now all of those jobs are in Brazil. You can't raise unskilled wages too high in a global economy
Less deferential customer service and fewer and more expensive personal services for the upper middle class. I don’t see either as a problem that needs to be addressed.
From a service industry - sure, I agree that it would primarily do those things. From a goods (manufacturing, food, etc.) industry I would expect it to cause production to move overseas.
I don't see how you get around the fact that if you increase wages without increasing productivity, you reduce availability broadly. The people left in those jobs will earn more, but there services will be used less so there will be fewer jobs, which will balance out the pressure to increase wages.
Now at a small level - we're rehashing the minimum wage argument and I might agree that small changes won't have much of an impact. However, the longer it lasts the more impactful it will be.
No reason we need to allow wage and environmental arbitrage via imports. We could, for example, tack a 30% import duty on products from China to level the playing field. It would also make us less susceptible to global supply chain disruption.
An import duty of that sort is effectively just a tax on U.S. purchasers accompanied by a subsidy of the local manufacturing. It is vastly preferable to pay for the subsidy instead with a broad based progressive tax.
A plan for more immigrants to ease labor shortages might help Democrats split business interests from Trumpy Republicans but isn't likely to help Democrats with more downscale Americans. So, a further step in the transformation of the Democratic Party into the party of the well-to-do, managerial and professional classes, ie., what the Republican Party used to be.
This seems very reasonable to me, but every economist-type I talk to tells me this analysis is wrong, and the "missing" workers are not immigrants, so more immigrants won't solve the problem. What am I (or they) missing?
Tangential comment on monetary policy. For the six year period from 2014 to 2019 (inclusive), the weakest growth in the employment to population ratio was 2016 (the 12 months following the Fed's increase in the rate paid as IOR and the announcement that they would make approx 4 increases). The second weakest of the six years in that period was 2015. I highlight that because it makes the decision to increase the IOR rate in Dec 2015 all the more confusing. The growth in NGDP over these years was its lowest in Q4 of 2015.
I'm wondering if this article had anything to do with one of my tweet replies to Mr. Yglesias. I mean, maybe it's just a coincidence, but that's not what I'm telling my friends.
I'm not opposed to increasing legal immigration, as long as it's paired with reforms that decrease illegal immigration.
We should have control over our borders, and be able to adjust the number and skill set of people coming here.
In addition, levels of immigration should be slow enough to allow time for assimilation.
It seems like there's a strong consensus that allowing more immigration is good but very little legislative appetite for it... obviously the right has gone fully anti-immigration and the pro-immigration corporate types are now marginalized in the party. Meanwhile on the left there's hardly any focus on increasing legal immigration... A sad state of affairs.
OK, I'm lost.
Once upon a time I learned that immigration has little to no impact on native-born wages while making the nation richer. Great!
But now we're in a situation where workers feel much freer to quit their jobs and look for something better and wages for lower-income workers are growing faster than inflation, and that's a perfect time to look towards increased immigration to fight this emerging threat of inflation which has allowed . . . workers to feel much freer to quit their jobs and look for something better and for wages for lower-income workers to grow faster than inflation.
If indeed we're having spot shortages in field workers and meatpackers, sure, OK.
But for me the real lesson is don't offer what is a wise *long-term* approach (One Billion Americans!) as some kind of solution for short-term challenges in the economy.
This sentence is the key to answering your comment:
"But the problem with immigration curbs as an economic development strategy is that telling unemployed former factory workers in Ohio, “don’t worry, we fixed your problems by getting rid of the immigrants, so now you can go be a berry-picker in California” doesn’t make sense."
We cut the foreign workers out who were doing the work native born Americans didn't want to do. Since we cut those workers out, these employers have raised wages to attempt to attract native born workers: and they aren't getting takers at double the original going rate. This makes this (previously profitable business) unprofitable, increases costs, AND doesn't even help the native born workers since they're not taking the jobs anyway.
As Matt said: this is not a catchall solution to our macroeconomic problems, but it can be a partial solution to short term problems which are directly hampering us economically now. Inflation is real and a lack of supply of labor is part of the reason why, and the good news is that problem is entirely fixable.
There is so much wrong with this that's it hard to know where to start. You also conveniently ignored the second sentence:
"This makes this (previously profitable business) unprofitable, increases costs, AND doesn't even help the native born workers since they're not taking the jobs anyway."
If the firm doesn't make money: then there won't be any jobs to have at all.
As for this comment: "Honestly, guys picking berries in California produce more value than the median lawyer does"
I find this laughable
Because regulations are necessary to have a functioning society and it takes training to be a lawyer. Anyone can pick berries
Serious question: How low does the LFP rate need to drop before you’d consider restricting immigration?
You mention meatpacking as an industry where workers are subjected to low pay, long hours, and terrible working conditions. Yet you hold it up as a case where employers have ~tried everything~ to attract workers. This is obviously wrong. Even in a tight labor supply market, employers can attract workers in one of two ways: 1) by boosting the monetary benefits of employment or 2) by boosting the non-monetary benefits of employment.
The meatpacking industry has barely tried raising wages. The article you link to references $3,000 signing bonuses being offered to new employees. This sounds great on its face, but few rational people will be enticed by this offer. A $3,000 bonus divided by 52 weeks amounts to a pre-tax pay increase of about $58 per week. The article also states that meatpackers work 72-hour weeks. So a $3,000 bonus amounts to a pay increase of about $0.80 per hour, with that bonus lapsing after one year. You'd be hard-pressed to call this a generous compensation package.
The meatpacking industry has also done little to improve working conditions since the pandemic. When your industry has an on-the-job injury rate 3 times higher than a standard American workplace, the most effective compensation is creating a safer workplace. To do that, employers could try such novel tactics as 'reducing shift lengths', 'offering more time off', and 'providing health insurance'. These non-monetary benefits would undoubtedly help entice workers to the meatpacking industry.
I have no sympathy for employers who cry 'labor supply shortage' while maintaining terrible working conditions. People shouldn't have to spend 72 hours per week risking life and limb for $15 per hour. And although we *could* import immigrants to do these jobs, it's not clear why they should be subjected to this treatment either.
If they significantly increase wages and improve working conditions then they are also going to significantly increase prices in order to pay for those changes.
But increasing prices is exactly what people are getting upset about. Increasing wages is clearly inflationary.
And we aren't "importing immigrants", immigrants are people not goods. Many people would jump at the opportunity to take these jobs. While they are much more dangerous than most jobs in America, and pay much worse, but they may be safer working conditions and pay much more than what they would get in their home countries.
overall agreed. But I don't see how providing health insurance would lower rates of injury.
Also, depending on the plan offered health insurance is a $20kish a year raise
If increasing the monetary benefits of employment drives the company out of business you have not succeeded in raising wages, or improving the standard of living for consumers.
Not when the people who were filling those roles are taking jobs outside the country
I am saying that when people who are taking the jobs aren’t from the US and are trading up (as Matt implies) then they’re a net positive which makes your argument invalid
“The largest price increases were for meat categories: beef and veal prices increased by 9.6 percent, pork prices by 6.3 percent, and poultry prices by 5.6 percent.”
https://www.ers.usda.gov/data-products/food-price-outlook/summary-findings/
I wonder: Do you believe that charging higher prices for meat (the only way that producers can afford to improve working conditions) means that consumers will buy the same amount of meat? Because it doesn’t work that way.
Just to be clear ... the problem alleged here is price fixing. This has nothing to do with monopolies. Which as Ken points out ... obviously four concentrated packers is not a monopoly.
No but it sounds like oligopoly. Which can definitely have monopolistic attributes (or not, it depends on how they compete)
It sounds more like they've shifted the market power by consolidating the demand vs. a fragmented supply base. Smart move.
LoL, monopolies.
Stop eating meat, then. And rejoice when low-income families can no longer afford food.
“Deal with it.”
I can afford to. But I am not as cavalier as you are about those who cannot.
Couple of thoughts .... is the reduction of older workers a function of the excess Covid-19 deaths and fall-out from same pandemic? What is more "higher-value" to life than the production, tending to, and harvesting of food? Thus this passage "...but it also creates more opportunities for Americans to do higher-value stuff" seems condescending. Are you saying higher paying = "higher-value stuff"?
More likely fall-out like early retirements than excess deaths. The US 50-65 age group has around 65 million members and around 100-150k excess deaths, or 1 out of 500 at most. The 65-75 groups has had 150-200k excess deaths out of about 32 million, which is about 1 of every 180 or so. Labor force participation at those ages is not super high, so we're probably taking about no more than 100-150k total missing workers due to death, which isn't enough to be very noticeable in the workforce stats.
Thanks very much for the data and insights. Very helpful.
“Are you saying higher paying = ‘higher-value stuff’?”
That is precisely what it means.
Pretty sure he meant “value” as in “market value,” not “moral value.” Also that “great economic chain of being” was meant in a wry sense.
Thanks for clarifying ....
Couple of points about farm trade and productivity.
First, the US is part of NAFTA or USMCA or whatever. Mexican veg and soft fruit exports to the US are booming. Lots of investment (by US agribusiness) in Mexico and other countries. Tomato production moved to Mexico over the last few decades. Chances are good salad items will too. The avocado industry is slowly migrating to points south. This is all pretty efficient.
Second, famers can invest in capital equipment to produce more with less labor. I watch the crews harvesting the strawberry beds in Monterey, all neatly laid out on the ground. Back-breaking work and all credit to the workers who do it. But you can also grow strawberries hydroponically in greenhouses on raised tables. You'll get more strawberries. I see this done in developing economies where labor costs are ten times lower than around Salinas. Happy to be put right, but doesn't look as if anything has changed in Salinas production methods in fifty years.
Maybe take out the strawberries and plant 100% zucchini? Sorting agri production requires many variables - not least micro-climate and water availability - but I am not sure trying to perpetuate production in one place by providing cheaper than market labor is a wise intervention.
You end up with highly concentrated supply chains that undercut local businesses based on access to - and management of - cheap labor. Like the meat-packing supply chain. Which I think we can all agree is not a desirable place to end up.
"Maybe take out the strawberries and plant 100% zucchini?"
I'm not putting zucchini on what should be strawberry pancakes
I’m not putting strawberries in what should be blueberry pancakes. Also: If you ever see zucchini bread French toast with bourbon-maple-butter sauce and French vanilla ice cream on a dessert menu, have the zucchini.
There's blueberries in the pancakes, but stawberries go on top
If you ever go to Paula's pancake house in Solvang CA, get the strawberry pancakes. Thank me latter
There's a number of low wage countries to our south that are so lacking in jobs their people come here to take jobs that "Americans won't do", at least not at economically viable wages. Any of those industries that can relocate production further south to Central America to where the workers are, should, instead of bringing the workers here, which destabilizes our politics and gives rise to demagoguery like Trump's wall. It's a win-win. (And now we even have an integrated railroad network that runs from Mexico to Canada, to move the products.)
If industries could have relocated to where the cheap workers are, they would have already. Those "low wage countries to our south" "are so lacking in jobs" for a reason: they're governed poorly. You can't run a business if you can't enforce your contracts, you have to hedge your payment methods against hyperinflation, or you need to pay all your profit to the mob for "security."
Yes those are problems but it's not really true that if they could have moved, they already would have. As noted above, agricultural production in fact has been moving south, mostly to Mexico, but it's not an overnight process. If the post-pandemic labor shortage in the US accelerates that trend, that's a good thing, not something we should intervene to prevent.
I have a genuine question. How come wages can't raise and prices remain largely the same. We know that CEO pay in ratio to average worker pay has ballooned by a huge amount (in the hundreds of % I believe) in the last few decades, and I'm sure upper management beneath CEOs have also seen similar increases. How about these wealthy managers take pay cuts to raise wages for regular employees and then keep prices the same. Or similarly, just pay less profits into stock buybacks, or shareholders. Maybe those at the top need to take less off the backs and sweat of those at the bottom
Because CEO pay is not a significant percentage of the price of the product being sold while worker pay generally is. In other words, although "CEOs were paid 351 times as much as the typical worker," there are far more than 351 employees per CEO.
Should the argument not be that worker pay enters into marginal costs and CEO pay doesn't? (also, it is partially, a residual)
Perhaps that is a simpler way to frame it. Although for any finite number of units produced, the fixed yearly costs still contribute to the overall cost. The marginal costs remain fixed as volume ramps. The fixed costs are, instead, divided.
There's a line in the 'Greed is good' speech from Wall Street where Gordon Gekko criticizes the company he's trying to restructure for having 33 vice presidents with salaries over 200k each, and accuses management of effectively looting the company to the detriment of the shareholders. That movie was made 35 years ago. Now, the base salaries may not have gone up a lot for a broad range of upper management, but there's been a lot of innovation in bonus structure and stock options since then.
It’s useful to recognize that the innovation in stock options was driven by a Clinton-era law intended to limit CEO compensation:
https://www.bloomberg.com/news/articles/2006-11-26/how-bill-clinton-helped-boost-ceo-pay
“We know that CEO pay in ratio to average worker pay has ballooned by a huge amount (in the hundreds of % I believe) in the last few decades…”
No, we do not know that.
"CEO pay has skyrocketed 1,322% since 1978: CEOs were paid 351 times as much as a typical worker in 2020 | Economic Policy Institute" https://www.epi.org/publication/ceo-pay-in-2020/
A good rule of thumb when looking at EPI claims is to remember: They’re lying to you. In this case they’re comparing CEOs at a very small number of very successful firms with workers in general. They’re also including compensation from exercising stock options.
Makes a lot of sense to include stock options, IMO, it is just like wages in another form.
And obviously you look at very large companies. "CEOs" of corner shops are not what we are talking about under the header CEOs.
If workers were being paid minimum wage with profit sharing, you might have a point. But that's not the case: Workers get paid whether the firm is profitable or not.
And a successful CEO of a large, successful company is more productive than a CEO of a small company, whereas a single worker's productivity is limited.
Wages can rise while prices remain the same if and only if the economy's output rises.
Or corporate profits and returns to capital in general decline.
That's what's happening. Look at 1 and 3 year returns for value vs. growth equity. Value is getting smashed because the margin profile just isn't there.
Scale. Walmart is a good example. The CEO received $22.5M - mostly stock. That's just 0.09% of their operating cash flow. A CEO's salary is just 4% of their total comp. plan. If the company is performing - they'll make money, if not - then not.
Can't do any of that - the whinging from CNBC would reach decibel levels that are harmful to wildlife.
Here is my thought - I’ve noticed customer service declining as the balance of power between employees and customers has changed. I think that’s a very good thing. I think a lot of the political rancor has come from people feeling weak and ignored by society. They now have more confidence and feel more respected.
I really don’t think increasing the number of people competing for jobs is a good idea. The management class should always operate terrified their employees are going to walk out.
Amen!
>>I’ve noticed customer service declining as the balance of power between employees and customers has changed. I think that’s a very good thing.<<
That's an awesome hot take.
If you want employees to fake pleasantness to belligerent customers, pay them more.
Democrats are kind of in a bind here -- it feels like whenever whenever there are big surges in asylum seekers, it becomes really hard to push through other kinds of immigration.
(It'd help if the Chamber of Commerce or whatever would bother to push Republicans more to support increases in the number of visas we give out.)
how will we build enough houses for everyone
Turn San Francisco into Kowloon Walled City 2.0
Well, for the time being, a bunch of those immigrants are probably going to live with multiple families to a house.
Like most things it is the law of supply and demand. In this case, the supply is new workers. I don’t think too many voters have a problem conscientiously and systematically increasing legal immigration into our country. It is the illegal immigration, and the haphazard way immigration is controlled, that is the big problem.
I have a problem with more legal immigration. I want the labor shortage to be a permanent fixture of our society. I want 4 million people a month quitting for better higher paying jobs. I want bosses begging workers to stay.
You're modeling a closed loop world economy. In practice, when you raise wages to absurd levels.... the companies simply offshore the labor. You've raised meatpacking wages a bunch? Congrats, you've just shut every US meatpacking plant and now all of those jobs are in Brazil. You can't raise unskilled wages too high in a global economy
What would you say are the negative side affects that will come with that approach, and how would you address them?
Less deferential customer service and fewer and more expensive personal services for the upper middle class. I don’t see either as a problem that needs to be addressed.
From a service industry - sure, I agree that it would primarily do those things. From a goods (manufacturing, food, etc.) industry I would expect it to cause production to move overseas.
I don't see how you get around the fact that if you increase wages without increasing productivity, you reduce availability broadly. The people left in those jobs will earn more, but there services will be used less so there will be fewer jobs, which will balance out the pressure to increase wages.
Now at a small level - we're rehashing the minimum wage argument and I might agree that small changes won't have much of an impact. However, the longer it lasts the more impactful it will be.
No reason we need to allow wage and environmental arbitrage via imports. We could, for example, tack a 30% import duty on products from China to level the playing field. It would also make us less susceptible to global supply chain disruption.
An import duty of that sort is effectively just a tax on U.S. purchasers accompanied by a subsidy of the local manufacturing. It is vastly preferable to pay for the subsidy instead with a broad based progressive tax.
We're doing that right now with steel production (for example) and it sucks. Why would we want to do that with the whole economy?
A plan for more immigrants to ease labor shortages might help Democrats split business interests from Trumpy Republicans but isn't likely to help Democrats with more downscale Americans. So, a further step in the transformation of the Democratic Party into the party of the well-to-do, managerial and professional classes, ie., what the Republican Party used to be.