The only thing I have to say is that I would expect the government to push more federally backed mortgage loans at their preferred interest rates if they sense a slowdown in private lending. Heaven forbid markets correct themselves.
Vacant Housing Estimate - https://fred.stlouisfed.org/series/EVACANTUSQ176N
So, looks like closer to ~11% as of that data.
By the time it reaches ground level nothing left but crumbs
There is no way out. Get out of debt and hoard as much as you can. Bad times are coming.
Since property prices are highly correlated with incomes, and income changes are correlated with inflation and productivity gains, the only lever that can be pulled to change real estate prices is the interest rate.
For property to become more affordable, the interest rate has to rise. Since that would cause property values to drop, many people who recently purchased property would find themselves owing more to a mortgage lender than their property is now worth, and it would likely remain that way for a decade. Many of those people were stretching to afford their purchase before, with 3% down programs and half their monthly income or more going to service a loan. We are already at a record high level of mortgages in forbearance.
So, the interest rate cannot be allowed to rise. The only people that would benefit are people with a decent income, no debt, and substantial savings, who do not yet own an asset class. Almost no-one, and mostly young people. But low interest rates push money to seek higher returns, which causes investment to become speculative instead of seeking lower-risk capital improvements. This reduces future productivity gains, which lowers growth long-term.
In other words, the future is Japanification. Society will gladly sacrifice its children and future for a few more years of fun bucks. A decade long recession is, I believe, inevitable, and will happen after the next asset crash.
The problem is that that’s not the price that matters in this particular setting. What matters are the monthly payments. If you change rates, the list price will change but monthly payments won’t.
Exactly
If the buyer can only afford $1,000 a month with a 30 yr mortgage - that sets the upper bound of the list price of the asset
If rates rise the monthly payment stays the same, but the buyer can only afford a lower priced house.
If rates go down those $1,000 can now pay for a higher list price
"The market can stay irrational longer than you can stay solvent".
"When the music plays, you have to dance."
I'm just suggesting not to speculate with borrowed money.
Simply put, the market is what determines the wage employees will stick around for. The free market doesn’t give two shits about what any employer thinks is an “appropriate wage”. If you are offering $14/hr and employees are jumping ship after their fourth day for $18/hr, no amount of complaining and bellyaching about that not being “sustainable” will change things.
Tighten that belt and make cuts elsewhere - like your own take-home, which if it’s an industry standard, is likely several multiples of that employee’s wage in order to finance a McMansion on the hilltop and a Mercedes in the garage.
Remember - if you cannot afford to pay a living wage, you cannot afford to be in business. Asking people to work below poverty wages so you can own a business is entitlement at it’s finest: you are asking human beings to use their lives to subsidize your desire to own a business. If a job is worth being done, it’s worth being paid enough to live.
Yes, it does. Someone is making easy money on the backs of people who can't afford to live.
It's not sustainable? Pfft you think anyone else is magically getting cheaper? Raise your prices and cut your overhead, welcome to the game.
Whether that is “sustainable” for your own cash flow was never the point.
How you work that into your business plan is harder, but you need employees for the business plan to work as all, so it still boils down to "pay them more".
Sure this small bar could literally pay more but if that means their business model doesn’t work then that probably means many small bars/restaurants business model won’t work in the area (unless they have old/low rent). So does that mean you’re ok with all small places being replaced with TGI Fridays?
But the 10% that succeed, are succeeding in the same environment as everyone else. They do so by offering food and an atmosphere that people want, and that you don't find in another restaurant in the area, even though the price is higher (significantly higher than TGI Fridays). Sure, there's also a good bit of luck involved, but that's hardly unique to starting and maintaining a business.
And what else would you suggest? Forcing people to work for $14? Prevent them from being sniped by other businesses for more money? They're already getting loans from the government to hire more people...
It’s even more true with little apps on the App Store. Most tiny little apps actually hurt the Apple experience because they are unworthy and don’t have the reputation but still want your data.
Small shops don’t economically make sense except for very local concerns.
I don't think these guys understand what "market rate" means.
Labor has been forced to operate under the same rules for decades now. Don't like the minimum wage? Then starve. Or figure out a way to provide more value. A dozen other people will be desperate enough to take it. I've zero sympathy for business owners being held to the same forces.
Say you pay 25$ an hour, but it's only 8 hours a week during peak ?
I think with the gig economy young people are used to only working when they want.
What I'm wrestling with is whether this is utopian or dystopian? That's why I say it's an "interesting" idea. I can see it appealing to some people and not appealing at all to others. Maybe there's room for both kinds of people in the labor market? Your "base" workers who are always there and reliable and the "peakers" who are taking care of your excess load at peak times?
https://www.snagajob.com/ I imagine it depends on your situation.
If I was 19 I'd love it. I'd hate living like this with a family to support
What do you think 'market rate' means? If you aren't able to hire for $14 but someone else is for $18... then $14 is clearly not the market rate and $18 is. That's what a market rate is - the rate things are selling for in the market.
Doesn't that maybe suggest that $18/hr is probably the current market rate then? My understanding of market rate is "amount at which the two parties are willing to negotiate", not "amount that the employer wants to lock in at, all other factors be damned"
If one can't afford to pay competitive wages, that may suggests they're not actually financially healthy enough to stay in business.
I live in a 50k poulation town, and $14 is not a living wage.
If someone can Doordash, etc, and make more( while arguably dealing with less stress) they'll rationally do that.
Or since this is HN, can you automate some of these tasks ?
Imagine if instead everyone wanted to work at your restaurant, EVERYONE, you'd fire your 6 guys and pay $2 their replacement, no ?
When I was in high school I worked as a busser/dishwasher for a diner. I'm assuming you're in a high CoL state but what you are offering is above what I was paid after adjusting for inflation.
- We have seen approximately 1/10th the amount of applicants as compared to our hiring prior to Covid.
- We have reached out to 50+ people via the hiring platforms i.e. Indeed recommended candidates, with a very limited response rate.
- Of the 6 people who a) applied for our job AND b) responded to our requests for interviews, only one has shown up for their scheduled interview. He was immediately hired.
- The single hire we made, for $14/hr as a dishwasher, did not return on day 4 as he was offered a position at a larger restaurant for $18/hr. That is not a sustainable market rate we can offer. I assume they are increasing their hourly rate due to 1) lack of talent seeking jobs or 2) large influx of cash from PPP2.
- I had three scheduled interviews, and all three were no shows, sending messages of cancellation either 10 minutes before, or not at all.
- I reached out to all three of those after their missed interview times, and two have rescheduled their interviews for. Typically, we would not entertain a no-show like that, as dependability is critical on a small team, but we are not in a position to be picky. (I'm curious if it is possible to use these scheduled interviews in fraudulent claims of seeking but not finding work. We literally hired the one person who came in.)
- We have had job postings on Indeed.com, Craigslist.org, and Facebook for the past 3 weeks - as well as leveraging our website and social media posts.
- Our current team of 6 other people are all hires from before Covid.