It's not just wages - like alot of what we can do is making shitty jobs less miserable, ensuring everyone gets some amount of vacation and sick time, insuring everyone has cheap or free healthcare access, ensuring everyone has relatively fixed schedule - eliminate punitive workplace policies, on stuff like attendance and other shit that makes being there miserable. Like, you can do a hell of alot to reduce peoples day to day misery.

There used to be some sort of a tradeoff, there used to be a ton of jobs that didnt pay well, but they were not miserable places to work at, that was kinda the tradeoff, you know - you like, didnt get a ton of money, but the workplace wasnt awful. Those jobs still exist but they're rarer.

All of those reasons are valid, but not unique to hospitality industry.

I think we might be backgrounding one particular reason too much: customers are a headache. One of the subheadings of the article is "They're just yelling the entire time".

I find it interesting that this hasn't been discussed as much, maybe because we are culpable? Maybe at one point of time we were that high maintenance customer? Maybe there is a general culture problem we all have regarding how we treat strangers, especially those who are bound to serve us to an extent. And looking at that need for transformation might be hard on our ego than the transformation of structural non-industry-specific inequities.

Management culture shifted sometime ago, I've often said unions are a problem you earn. We are contributing here to the problem as a society, but management is often just outright hostile now in service sector jobs. Employees are treated as disposable fungible objects, with no inherent value.

Like, There was a cultural shift some decades ago, and as corny as it sounds, the shift in culture began when we went from having a "Personnel Department" to "Human Resources" - resources are something you often extract and use up, to the point we have a special way to call out resources that are renewable.

As much as I hate the "words matter" phrase, I think here they clearly do, as they've clearly subtly altered peoples thinking about people who work for them, and their disposability.

Changing Personnel to Human Resources was definitely the start of that process.

It was an attempt to "professionalize" the work that Personnel departments did and make it sound more important.

It meant that you could have "Vice President of Human Resources" which sounds as "impressive" as "Vice President for Manufacturing".

It also leads towards today's stupidities where these same people are called things like "Leader for People and Culture" or some other BS touchy-feely title.

Employers do what they can to commoditize and standardize their use of workers. Anything to make them more fungible makes them more replaceable and therefore easier to a) lower costs (ie wages) and b) automate.

At eery restaurant job I worked and every restaurant job anyone in my family worked, the management was poor. Their worst sin was writing the schedule last minute every damn week and wielding it like a weapon. Get on the wrong side of the boss and you get the worst shifts posted at the last possible notice.

I must say, as much as I agree with the contents of your argument, and I am not saying this was intentional, I resent the fact that you've co-opted the reply-space to plug back in managerial or organizational culture issues, which was already being discussed in the rest of the thread extensively.

I wish you would have stayed on topic with the idea of customer culture issues, or lack thereof.

Sorry for the late reply.

Who do you think allows customers to get away with this bullshit? Spineless management.

Everything goes back to this as a root problem.

Is that a cultural thing? I'm always surprised when I see American service workers complain about abusive customers, because in my region in South India I've very very rarely seen anyone abuse their servers. A few complaints, maybe, but no yelling or pressure. IME the class divide in India is wider, so it makes me even more confused.

I was shocked in the US to see an American colleague get really angry with a waitress over the quality of a steak. It's ok to complain but to think you can dump anger on someone who is on minimum wage and who had nothing to do with the problem is beyond me. I lost any respect I had for him.

Several of my single-and-dating women friends have told me they pay close attention to how their date treats the server when they first go out. If he acts like a jerk to the server, they assume he'll eventually act like a jerk to them too and thus there won't be a second date.

I believe so. When I was working in customer service, I had an English coworker. He said that the way customers treated us regularly would probably never have happened in England. Not once. Things haven’t gotten better since then.

I can only compare the USA and The UK but my experience is that the customer/server relationship in the USA often takes on a “master/subservient” tone whereas in the UK that kind of behaviour would be considered “posh” and somewhere between laughable and despicable by the majority.

This is my experience too comparing UK and USA. I worked as a cleaner for some summer schools at university and only the American students (c.f. UK and Japanese students who were also there) treated me like I was complete trash. It was very eye opening.

Could be cultural, but a data point from France is that while I, personally, don't often see abusive clients, I have friends who work in this industry, and they do complain about this.

Some of them are Americans, and they tend to find working here more of a drag than in the States. They mostly complain about people being generally rude, followed by big parties each having extremely specific requests and later quarreling about the check (as in who has to pay for what).

They also mention that they usually make less money here, because although the wages are higher, they don't usually get any tips. Also, cost of living is higher (Paris, as opposed to US cities other than NY / LA / SF).

I highly second this.

I've worked retail before (Apple Retail, Genius Bar specifically, so probably one of the more decent and better paid retail jobs in the grand scheme of things), and dealing with customers was one of the primary reasons I changed careers.

You only need so many people looking down on you because of nothing other than your job, to make you want to do something else.

I've worked in various retail jobs. Most customers range from kind to inoffensive. The negative experiences from the exceptions stand out and occupy more headspace.

If you (general - not you) think you could improve how you treat people, please work on improving, but most people here are probably fine and have nothing to feel guilty about.

A purely introspective approach is fundamentally limited to addressing the cases where the problem is within ourselves. It cannot address cases where the problem is within other customers or within business practices.

Healthcare, retirement, everything required for living should be socialized. Old people today have Medicare and Social Security, but we need to finish the progression to Star Trek and just make sure there's enough to go around and that it does go around.

The other part is that misery, fire bad customers and bad managers. It really isn't that difficult to be polite.

Socializing those things would also make basic entrepreneurship much more practical and make failures of entrepreneurship much less harmful (such as the many restaurants that fail in their first year), hugely benefiting the economy as whole.

I'd like to see data from other parts of the world, but at least for France, this argument may hold some water.

A crude comparison of business formation between France (with socialized healthcare / retirement) and the US (without those), shows that the numbers are fairly close. Data is for 2020, which saw a 4% rise for France, whereas in the US numbers were stable. France also doesn't have as much of an "entrepreneurial" culture as the US, meaning people are much more likely to "look for a job" rather than found their own business.

France: Population: 67M, 850 000 new Business, 12 700 / 1M pop.

US: Population: 331M, 3 600 000 Businesses, 11 000 / 1M pop.

---

https://www.census.gov/econ/bfs/index.html

https://www.insee.fr/en/statistiques/5359569

Interesting statistic. The one year may be a bit of an outlier for the relationship. If you look at the 2010-2020 period in the data linked above, the US had a significantly higher growth rate in business formation (75% vs. 36%). This is not explained by growth in population which were identical over the period (7.2%, wikipedia).

> Healthcare, retirement, everything required for living should be socialized.

Indeed. Many small businesses can't even afford sponsoring a sick leave directly AFAIK. At my location (in Europe) you pay a part of your monthly wage to the social security fund and once you get sick it covers your salary in the amount like if you kept working (and also pays you basic pension once you get too old).

In which country is this?

In France, the "social security" (run by the state) doesn't cover the full salary, not even close. It only covers up to 50% [0], and only after three days (if you have 10 single sick days, you lose 10 days' pay).

You have to have your own insurance ("mutuelle", usually chosen by your employer — which you cannot refuse, but can augment) to have a better deal.

---

[0] It covers 50% of the salary, but the maximum salary taken into account is 1.8 times the minimum wage, which is 2 798,24 € before tax.

https://www.ameli.fr/assure/remboursements/indemnites-journa...

You write that 50% of nearly 3k Euros is bad. I can see where it would be bad. But in the US, you would have to fight tooth and nail for YEARS to get disability coverage that "good." US Disability payments average around $1500 or so a month, and you often get rejected your first application or for several rounds of appeals.

Source: am on disability.

Thanks for saying this. I feel that a lot of the time people forget about post scarcity. People can focus on the dystopia but I feel that it's important to remember there are other options. A lot of us are already living post scarcity and helping others. We are so close to limitless energy generation it is a matter of when not if it happens. Thanks

That's the dream, hopefully it comes to pass, but for now implementation remains problematic.

How do you pay for it?

Will it be run by the same entities that are having so much trouble balancing Social Security and preventing Medicare fraud?

Is Medicare fraud really a meaningful amount compared to how much it pays out? Europeans have had the same issue for decades, you can’t give things away without some grifting. But that’s part of the cost. Usually not a very large one either.

Just a quick looks suggests it is a big issue. Hard to get firm estimates (presumably because we only know about the people who get caught) but one estimate has it at 7% of total expenditures of $700 billion which puts it at around $49 billion / year.

https://safeatlast.co/blog/medicare-fraud-statistics/

which is less than the fraud in private insurance industry, which is 10%.

https://www.propublica.org/article/we-asked-prosecutors-if-h...

How does Germany do it?

In Germany it's reverse. In the typical case the waiter verbally abuses the paying customer. Like when are not friendly enough to the waiter. Or you only can pay with credit card

I think I get 15 paid sick days a year, 15 vacation days with an extra day added each year, and 12 lieu days that I get off but no pay. This was the first year having it. What a difference it makes to my mental well being. I spread my days off out so I get lots of 3 day weekends and I feel a lot less burnt out. The sick days are a big one. If my kid is sick or I hurt myself or I have a bad tooth or just feeling down or something just call in at least half hour before my shift and it’s all good.

From a European perspective, it boggles my mind that sick days can be limited. What happens when you run out? You get fired for not coming into work, I imagine?

The Family and Medical Leave Act protects most (IANAL) employees for up to 12 weeks of unpaid time off per year at the federal level. At some point Americans with Disabilities Act protections kick in and after a few months of a serious illness temporary or permanent disability insurance comes into play.

It's not the dystopia its made out to be but even in the best states the inconsistencies between the layers of protection and myriad of rules cause a lot of people to fall through the cracks.

While this is true technically, in practice many companies will make an excuse to fire employees who take "too many" sick days. Like if there are layoffs, the sickly employee will be in the round of layoffs.

Also, if you work a service job and miss too many shifts due to illness, they'll just fire you for being unreliable.

There's a few possibilities I can think of:

* Unpaid sick days

* The limitation is the other way around, they don't want to give a single pool of 30 paid days off, you're limited to 15 vacation days

* If you have a good relationship with your manager, it's a soft limit and they'll allow you to go over as long as it's not abused

* If you're part-time/hourly, trading days/hours with a co-worker

Our HR department combined vacation days and sick days into one pool several years ago when they realized most of us were faking sick days to get more vacation time.

In Europe typically there are unlimited sick days, but the company has insurance to cover your salary after a certain number of days per year. You typically need a doctor's note after 3 consecutive days, and if you are abusing the system the insurance company (who is a pro at this) will quickly investigate and terminate / claw back their coverage.

That's a good deal. I'm in the UK and I've never had anything like that. I currently have ten paid sick days per year and after that it is Statutory Sick Pay (SSP, £96.35 pe week) for an additional 26 weeks. SSP is better than nothing but it's not great.

Looking back, all of me previous jobs have offered 10 days sick pay and I've always assumed it is a de-facto standard over here.

In my last job (Ireland) one of my team mates had a serious health issue, and was off sick on full pay for an entire year

From European perspective, yes the sick days absolutely can be limited - see Poland or Czechia. When you run out you better have acquaintances among doctors and at the appropriate public offices. Otherwise you're sick, fired, no income.

Well if I ran out of sick days I can use some vacation days and if that ran out I could get a doctors note and go off on medical leave. It is like unemployment in a sense and I would be eligible for I believe 55% my wage while off. If I just needed a few extra days and not really wanted to deal with the hassle of medical leave paperwork I am in good standing with my employer and would simply need to ask and could have some unpaid sick days for sure. So essentially the 15 days is just what you can take off and be paid my the company. Also not all companies offer these benefits I work in health care.

Sometimes, yes.

> There used to be some sort of a trade-off, there used to be a ton of jobs that didn't pay well, but they were not miserable places to work at,

I think protecting this enviroment is also important for middle class if only for selfish reasons. As if you have the fall-back of 'stuff it I'll go flip burgers for a while' then middle class jobs are more protected as employees know some people will walk out for the lower paid but stress free job as its an option, which in turn flows up the chain at each level.

> Its not just about wages … insuring everyone has cheap or free healthcare.

That is exactly the same as raising wages.

Outside the USA (or at least HN), its common for companies to negotiate remuneration on the total cost to company [1].

This includes wages, taxes (e.g. training taxes), pension, health-care, phone, etc, etc.

Its weird that commentators here somehow think that companies don't incur these freebies you want as real costs.

https://en.wikipedia.org/wiki/Cost_to_company

The problem I have with that is getting the actual number. Employers aren’t sharing that and I don’t know how much I actually cost my employer per year. I can guess by summing my salary, PTO, healthcare, taxes, etc. but that’s probably grossly inaccurate. Is also Very hard to comparison shop companies benefits packages when many are very reticent to hand out the official rate and coverage documents including their contributions.

All of that costs money. Are we as customers willing to pay for it? While a lot of us on HN can afford the price increases, not everyone else can.

I have a feeling that wage increases will come, but there will be less employees and the remaining better paid employees will be augmented with technology in order to serve more customers ie more automation

When a deli closes up shop because they can't afford to hire people - it isn't for lack of customers interested in food. Food is a basic necessity that people will consume in as many varied forms as budget and tastes allow.

The notion that a deli would simply close up shop because they couldn't hire people at a wage they deemed reasonable means they either couldn't be bothered to try higher prices/quality - or for some reason they are unable to (e.g. high debt service costs). The building sitting empty and idle costs the business money, so it's surprising they don't at least try something.

Around here, 16” cheese pizzas have gone from “around $10” just 8 months ago to “around $15”.

Pizza places that would be jammed from 6 to 8 PM with a line for pickup are now ghost towns. The one I was in last night at 8:15, workers outnumbered customers (dine-in plus pickup).

The roast beef place that I’d frequent on a particular errand went from $6.50 for a large roast beef to $9.50. What used to be a 15-deep line at lunch is now “walk straight to the register and order”.

Customers are only willing to pay so much for food. That well isn’t infinitely deep. (Maybe some of the gap is COVID, but people are out doing plenty of other things, other restaurants seem to be doing well, and these places were jammed during the pickup-only phases of COVID, so I think pricing is a significant driver of reduced volume.)

Anecdotally this is me. I work from home 3 days a week, 2 days in office. Pre-pandemic I ate breakfast, lunch, and sometimes dinner in the road...2.5 hour commute. Food prices have increased 10-40% at each one of those stops. Now I eat one lunch per week out to socialize. The other 5 meals that I used to eat out are groceries I buy at the store and carry in.

The reason I was at this second-choice (also virtually abandoned) pizza place last night was that our normal/preferred pizza place had jacked up their prices so much. This one had done the same, which ensured that parking was plentiful right in front of the joint, but also meant that the owner was forlornly leaning on the empty parking meter rather than being needed inside selling pizzas.

I suspect I'll now mostly eat out when the company is keeping me on the road (and paying for it), but will overall eat a lot more at home now.

Probably healthier anyway, but this can't be good for restaurant owners and workers.

> Food is a basic necessity that people will consume in as many varied forms as budget and tastes allow.

Food has supply and demand like anything else. People have to eat, but they don't have to eat at the delhi.

For example, if they charged $50 a sandwich it would probably not work. Maybe the business owner is just being stupid, but its also not impossible that they ran the numbers and they just didn't add up. That happens sometimes in business. I havent seen their books, i dont know what the numbers on their business look like.

The most import parts don't cost money. Fixed schedules, non-punitive work rules, flexibility, treating your employees like they have value. The shift in culture began when we went from having a "personnel department" to "Human Resources" - resources are something you often extract and use up, to the point we have a special way to call out resources that are renewable.

Businesses might ask customers to pay more. They might instead pay CEOs and investors less.

Automation is coming regardless.

Most businesses are small businesses, not ones run by mega millionaire CEOs.

In terms of registrations, sure, but what about surface area? I can only think of very small pockets of places where the heavy majority of establishments are part of some megacorp

The suburbs are especially bad....

In a lot of small business it are the land lords who get the best deal by a huge margin.

but where do most people actually work?

Still small businesses.

JP Morgan Chase don't agree with you in 2014:

"48 percent of all US employees work for small businesses, down from 52 percent in the early 2000s."

https://www.jpmorganchase.com/institute/research/small-busin...

The NYSSCPA didn't agree with you in 2017 either:

"Since 2014, the latest year for which there is census data, this is no longer the case. At this point, 39.2 percent were employed at either a large or very large company, while 26.5 percent worked at mid-sized companies and 34.3 percent worked at small companies."

https://www.nysscpa.org/news/publications/the-trusted-profes...

Atkinson & Lind ("Big is Beautiful") didn't agree with you in 2019 either, specifically taking on what they call the "myth of small business as the engine of job creation"

https://thereader.mitpress.mit.edu/small-business-job-creati...

The Small Business Administration didn't agree with you in 2020:

"According to small business statistics from SBA, small businesses make 99.9% of US businesses and employ 47.1% of US employees."

https://smallbiztrends.com/small-business-statistics

A business is not a business if it’s only profitable on exploitation.

A business is a business if it has customers. It only stops being a business if it loses those customers or it's no longer profitable. Whole Foods was one of the 1st grocery retailers to treat their workers better, yet at the same time many people nicknamed the store as "Whole Paycheck". What customers are willing to pay for or more importantly what they are able to pay for is also an important part of the conversation.

Even letting cashiers & staff sit down would be something, but apparently business owners want modern day humans with the mentality of Victorian era maids and butlers cleaning the silverware for minimum wage and working unpaid overtime as if they expect that is what the customer wants for some reason.

As a customer, I want to see that the people who provide me the goods and services I need and want to function in society are as well treated as I would treat myself and nothing less.

If they're sitting down but upbeat and attentive, I'm satisfied.

>I think some businesses are going out of businesses because they stubbornly refuse to raise their wages

I'm skeptical that a business would choose to go out of business rather that give raises. Have you considered that margins are tighter than you think? I know small businesses like that.

>I'm skeptical that a business would choose to go out of business rather that give raises. Have you considered that margins are tighter than you think? I know small businesses like that.

I run a small business. I know other small business owners. An MBA-like focus on hyperefficiency is rare. Usually people have their views about how the world should work and act in accordance with that.

Some people will come around, but plenty of others will fail to adapt, go out of business and blame "the economy".

It doesn't take a MBA-like focus to think "Gee..only if we had more margin, we'd pay more".

This entire thread is totally out of touch with reality.

>It doesn't take a MBA-like focus to think "Gee..only if we had more margin, we'd pay more".

It does take razor-sharp focus and constant innovation to work out how you can increase margin, though. You can't just arbitrarily raise prices without offering any additional value and expect your business to stay alive.

And yet that's precisely what lots of businesses do: raise the prices, cut the wages, drop the product quality. Oh no, the customers start losing the brand loyalty and go to the competitors, why on Earth, those ungrateful pigs!

It seems to be especially popular in the street food business and food industry in general over here: someone thinks that surely one can produce decent <insert whatever here> at reasonable cost and earn some good profit from it, and indeed they can, the customers are happy, the business is growing a-a-and then something happens and the market self-corrects: the price grows to the level of the competitors', and the quality drops to the competitors' level too, now the "playing field" is level again (all products are more or less equally mediocre and equally expensive), wait about a year for another entrepreneur to rinse and repeat this cycle.

There must be some objective reason why that happens though I am really not sure what it is. But whatever that reason is, it seems to have been working pretty much without exceptions for the past ten years at least.

Small businesses already have a razor sharp focus otherwise they'd disappear. Literally their margins are their bread. I find your take slighly condescending but I want to give you a benefit of the doubt - what makes you think small businesses aren't focused on optmizing their margins? Just like you, I am a small business partner and know many small business owners. If you put an MBA-educated person in charge, the opposite would happen. Reading HBR doesn't make you a qualified for optimizing a restaurant business. Neither does having an MBA degree.

>Reading HBR doesn't make you a qualified for optimizing a restaurant business. Neither does having an MBA degree.

I think I understand the miscommunication now. Sorry for that!

I didn't mean to suggest that you need an MBA to run a small business, just that you need to be constantly optimising, innovating and focusing on raw numbers. I don't have an MBA, but from what I understand this is how MBAs are taught to think.

>I find your take slighly condescending but I want to give you a benefit of the doubt - what makes you think small businesses aren't focused on optmizing their margins?

Maybe it's the people we talk to? I definitely do know guys that are creative and sharp, but for every one of them there are 3 or 4 people who stubbornly refuse to adapt to changes in the market, fail to capture even low hanging fruit in terms of margin (big one is eCommerce businesses that make no effort to minimise postage costs), spend huge amounts of time on activities that bring in minimal value to the business and make no effort to expand into new product categories/markets or make use of new technology. It's just not how many people think.

Is it possible there's multiple types of small business owners, and you're talking past each other? Because I'm sure some owners know where every dime goes, like you say. But the small business I work at currently doesn't work like that.

The small business I worked at previously was closer, but the owner worked longer hours, possibly for less pay, and absolutely had more responsibilities, than I ever did working there. And I assume that led to a divided focus, and in turn, not being able to focus solely on optimizing every dollar.

To be clear, you’re arguing that companies pay more when they increase their margin? The rest of this thread is out of touch for thinking otherwise? I don’t know, that definitely sounds like MBA-brain to me.

I read it as “in order to pay more, we’d need to find a way to create more (gross) margin” (often because net margins are already slim).

What's exceedingly common is an focus on what they think is efficiency (or really, what they see as "waste") which they think makes them a shrewd, smart, savvy business owner.

Distrust in their employees coupled with excessive monitoring on consumables and the like, I think is the most common.

I've patronized, worked at, or know people who worked at places where the employees are doing everything they can to keep a business running despite the owner....often doing what they can to keep said owner from getting their hands too deep into daily operations or in contact with customers.

>Have you considered that margins are tighter than you think?

If they can't give a decent wage [1] then they were not a viable business to begin with, regardless whether they can find some poor souls to work for them. If it takes a mandatory minimum wage to reveal that and bring their demise, so be it - let them stop putting a band-aid on part of the economy and have better businesses take their place.

[1] Which is not the same as: a wage someone will capitulate and agree to work for - there are always e.g. unregistered immigrants, single mothers working 2 jobs, people in emergecy desperately needing anything they can get, kids who just see it as a temp gig to get some pocket money but otherwise live with their parents, and so on, that are desparate for near substinence - or even below substinence...

Given they essentially shut down their business, not being a viable business (anymore) seems the obvious conclusion.

"If they can't give a decent wage [1] then they were not a viable business to begin with"

Yep. 1000%. If your workers need to be on any form of government assistance, you're being subsidized.

Mr. Factory Owner does all sorts of bullshit like paying unlivable wages, not having any employees working over the number of hours at which they'd have to pay benefits, and so on.

But guess who's always got enough money to donate to republican and libertarian campaigns, and has very strong opinions about 'pulling yourself up by your bootstraps' and how wasteful government assistance is?

Restraunts are high turnover businesses, as in most new owners don't make it more than 2 years. Many small businesses are owned by people without much knowledge or experience outside of that business. Very little classical education/degrees. The only businesses that thrive become survivor bias, they believe what worked before is what will work now, not realizing that markets do change.

I can perfectly see a dysfunctional small company draining their business away by just not changing. Happens all the time on Kitchen Nightmares.

In fact, restaurants are pretty much the pathological case of small businesses: they're a lot of work and a high percentage of them lose money. If your deli was already losing money, I can imagine a lot of owners deciding not to throw good money after bad.

> Have you considered that margins are tighter than you think

I suspect that some business owners will need to take a paycut in order to stay in business.

(I'm sure there are plenty of founders reading this article who sometimes pay their employees more than they pay themselves.)

This is a small business not a start up or megacorporation. Owners are usually the first person to get a paycut when times are tough.

You would be surprised. I've lost count of the number of small businesses I've seen where employees go unpaid or are underpaid to 'save the business' while the boss makes no such sacrifices.

Had to help a number of people applying to the local equivalent of a labour small claims court.

One could argue the move to continue unemployment payments / covid payments is a strategy to "raise minimum wage" without actually having to pass any policy to do so. Politically it's brilliant, you gain the support of your voter base in 2yrs with the assumption that "cheap employers" will simply go out of business because nobody will work for them. And your more conservative base will champion you for "resisting to raise minimum wage".

I for one support raising minimum wage, but the automation / negative outcomes of menial labor being too expensive to hire for will happen whether or not the official minimum wage is increased. UBI is another debate entirely, however I'd also argue that UBI in time harms poor people more than it really helps them and just enriches huge companies and land-lords.

>...but the automation / negative outcomes of menial labor being too expensive to hire for will happen whether or not the official minimum wage is increased.

This is true, but obviously the rate at which this happens will matter.

In 1900, 41 percent of the US workforce was employed in agriculture. Due to increasing use of technology, 70 years later only 4 percent of the labor force worked in agriculture. If that loss of jobs had happened in say 20 years instead of 70 years, it obviously would have been a much more painful transition.

https://www.ers.usda.gov/webdocs/publications/44197/13566_ei...

Perhaps depressed wages are partly to blame for the lack of automation in the current economy. If there is labor scarcity it may unlock new innovations by forcing market participants to find more productive uses of labor.

Labor force participation has been falling for a long time as labor sellers (employees) fail to find an adequate price for their labor from employers (the buyer). Many economists assumed this was the fault of the labor seller for not having skills attractive to buyers. It's also possible that in certain segments employers were using labor in-efficiently, or simply miss-pricing the value of a worker.

Which is a long winded way of saying that a higher minimum wage may bring more labor into the market, while simultaneously forcing businesses to leverage automation to improve the productivity of said labor.

"Many economists assumed this was the fault of the labor seller for not having skills attractive to buyers"

Given the massive redistribution of wealth in the US for the last half a century it's pretty clear that's not true, and that what's really been going on is businesses have been squeezing "labor sellers" to death.

Absolutely this. Wages have been depressed for a long time which has severely hampered innovation. Historically the black death labor shortage led to the renaissance.

The problem with both unemployment payments and UBI is, that someone has to pay them, and (in case of the first) they stop at some time.

If you get X money per month of unemployment and X+20% to work, then yeah, if it's not a fulfilling work (and let's be honest, what work at that price is fulfilling), you'll rather stay at home. Once the "free money" dries up, people will be forced to take the shitty jobs too, but due to many failed businesses, there will be even less jobs available, and this skews the jobs-vs-workers ratio, making wages even lower.

Making it easier (and cheaper) to start a business would create more jobs, raising the price of work, and replace the shitty jobs with better one (in terms of pay and conditions).

Yep, and in states with lots of illegal immigration the actual price of "labor" is heavily depressed since they're willing to work for basically anything.

If it's depressed it's because business owners who hire undocumented immigrants (often knowingly, even assisting with GC/visa fraud to pass I9 verification) are never, ever fined or punished.

Enforcement is a farce.

I bartended at a Mexican restaurant in USA around the Great Recession. The owners absolutely knowingly employed illegal immigrants.

Interestingly, the illegal immigrants generally got paid way more per hour (~30% higher) and also generally paid taxes via ITIN number. Eventually our restaurant got “raided” and the owners called around to find them new jobs at other places around town.

One guy lived with me for awhile. He eventually went back to Mexico because he saved a bunch of money and wanted to spend it on a real degree/career. The universities in our area told him they’d take his money and let him audit classes but wouldn’t be able to give him any proper documentation like a transcript or degree.

Enforcement isn't a farce, its just focused on workers because employers are powerful and workers aren't.

The reason republicans are so hardline on immigration is because "illegal" workers are really easy to coerce and exploit.

They don't call the health department when you make them shit in a hole in the field. They don't call OSHA when you deny them access to water out in the field. They don't call the attorney general when you pay them by what they pick, or only start counting their hours after they've walked half an hour to the field they're picking, and stop paying them the second they stop picking instead of when they get back to their vehicle...because you're too cheap to provide a truck or bus and they'll walk for free. They don't call the police when one of the supervisors smacks them around for accidentally damaging some equipment. Etc.

> Enforcement isn't a farce, its just focused on workers because employers are powerful and workers aren't.

I don't think many companies are powerful against ICE, especially small restaurants... there are probably political reasons why they choose to target employees and not employers.

Completely agree, this is why where I grew up in TX many of the business owners who are stout conservatives are basically complete hypocrites since they hire illegals! Tbh I strongly advocate to grant citizenship or work visas to people from other countries who want to work, however the democrats still benefit year after year by kicking the dreamers down the road and never actually changing the immigration system.

If we replaced every millenial deadbeat who complains about how hard it is to be a barista with a hard working immigrant our country would be better off!

That's an interesting take, but it seems like a post-hoc rationale/strategy to me.

Conservatives will block any rise in the minimum wage, but couldn't completely block additional unemployment benefits.

Progressives would back a rise in the minimum wage, but had to deliver on relief for the unemployed working class, so they did just that.

The secondary effect of rising wages was probably only something that conservatives were expecting.

Disagree, many progressives totally also expected prices to rise.

The alternative of forcing people to go to work while covid-19 sick, or being laid off and facing total abject poverty, and such... well not very attractive.

Prices & wages going up was going to be inevitable with inflation, which was on the plate, even if unemployment was never expanded and we forced the working poor to work, or eat our of dumpsters.

Yep, but at the end of the day anyone who's trying to build wealth or have anything left for retirement gets fucked by inflation. People who are spendthrift and receiving UBI or unemployment payments (long term) were never trying to do that anyways and their payments in theory would increase with inflation.

I'm a supporter of the idea of UBI but I just can't see the incentives panning out realistically.

How are the incentives panning out now? Every system has trade offs and the ones we've made seem to get worse and worse.

Great, actually. I've worked my ass off, paid-off my student loans and live in a great city. By no means making crazy developer money either.

But price inflation is the policy goal regardless of minimum wage or UBI. In fact, government spending makes for better inflation in that it is spread around the economy, rather than lending based inflation that only shows up in CPI after it sends assets through the roof.

Could you go into more detail here? My head is still slow to digest economics concepts like this, but this is something I certainly haven't read about before.

The Federal Reserve's mandate is to make sure there is a steady level of gradual price inflation. The main way they accomplish this is to lower interest rates, so that more money gets lent out into circulation. But this new money only affects the Consumer Price Index via housing assets and other big ticket items that get financed - it doesn't directly bid up the demand for consumer goods.

Whereas if the federal government creates more money (via debt) and gives it out direct aid to the people, it goes right into the consumer market. Prices rise across the board, getting the CPI to the target level without the Federal Reserve having to lower rates.

There will always be inflation as long as the monetary policy is to create inflation. But government spending at least chooses somewhere explicit for it to end up, rather than the default option of just inflating financial assets (which we've had quite enough of).

Am I the only person who thinks restaurant prices are pretty low? I'm sure they could go up quite a bit. Lunch out costs me maybe £15. Surely that could be £20 or so?

20 GBP for lunch? Even at 10 USD I'll buy lunch only once in two weeks. A 20 USD lunch is a rare treat for special occasions only.

Surely it depends on the income level? There are people for which a $20 USD lunch everyday or close, is nothing to write home about.

In fact their time can be far more valuable (into what money they can command by doing some extra work), so that the opportunity cost between cooking and buying lunch to make it not worth to cook.

I'm just pointing out that the demand for eating out is highly elastic. If the restaurant industry as a whole raises prices relative to background inflation, then overall sales will fall and some will go out of business.

The probability of the food from a restaurant being sufficiently tasty/nutritious is way too low compared to the effort required to make it at home for it to be worth spending 20GBP eating out all the time.

I also simply choose to eat out a maximum of 1 or 2 times a month. I can afford 20GBP, I just have better options.

That's pretty much the prices in Norway. To be fair Norwegians do eat out less than in other places as a result of it.

That’s about 15 minutes of labour for a software developer. So less time than you’d spend eating it.

Like with everything, all that matters is whales. The kind of person who eats lunch out every day doesn't care if it's 20 GBP or whatever, so they'll keep paying whatever it costs to eat whatever they want. What'll happen is places without enough whales, like low foot traffic, will poop out or become ghost kitchens.

No, you're not. But I guess it depends on what you call "restaurant" and "lunch out". Some people will basically eat every working day in a restaurant. So more than £/$/€10 will be seen as expensive. Some people, like me, will go to[1] a restaurant once or twice a month. In this case, £/$/€50 will be totally acceptable. And giving what is sold in places where you eat for £/$/€10, they will avoid going to those places in the first place.

So I guess restaurants that sells food are having a hard time, but restaurants that sells a service have a different story to tell.

[1] See how in the first case it's "to eat in a restaurant" and in the second it's "to go to a restaurant". To me that's the big difference : when you are here to fulfill a natural need (eating), you don't want to pay a lot for it, while you are here to have a nice time out, you will gladly pay more.

I spend maybe 40€ per week on food, not just lunch. 20 pounds for a single meal seems a bit expensive to me.

It doesn't take much to open a small business. There's a reason many small businesses fail, and often times it is the result of rather foolish decisions and ideals.

Naive question: why not raise prices?

Some people will, many will find other ways to optimize (lower inventory, lower wastage), or deal with smaller margins.

Others will change their product offerings to maintain margins.

And some will misjudge the situation, or were too close to the bone to survive in this environment and fold.

Prices are rising.

Because if everyone raises their prices, the wage increase then effectively makes no difference.

If everyone raises wages, they have to raise prices. For the restaurant, this means they have to charge more for the same service, and they have to pay more for their supply chain (because they also increased their prices).

For the worker, that means they will pay more for things and services they need/want, because every other business will suffer from the same issues and be forced to raise their prices.

All this to say, the worker's purchasing power decreases if everyone raises wages, and that is the definition of inflation.

Citation needed. I can find plenty of studies that show it doesn’t. [0] Raising wages at the bottom doesn’t increase prices across the board, and so this benefits folks at the lower end more than it hurts.

[0]: https://www.jstor.org/stable/41445397

From the Congressional Budget Office:

https://www.cbo.gov/system/files/2021-02/56975-Minimum-Wage....

The second point, in the first paragraph:

> Higher prices for goods and services—stemming from the higher wages of workers paid at or near the minimum wage, such as those providing long-term health care—would contribute to increases in federal spending.

The whole thing is an interesting read, actually

>Because if everyone raises their prices, the wage increase then effectively makes no difference.

Not really. The relative elasticity of various goods and services (including labour) will determine which parties ultimately shoulder the cost. The additional costs could cut through margins or they could be passed on.

All wages increasing is better than only the elite wages increasing and leaving service workers in the dust. They are the ones paying for the lunch.

> Because if everyone raises their prices, the wage increase then effectively makes no difference.

This only holds if a restaurant's costs are entirely wages, but actual average labor costs for restaurants (at least in the US) are only about 30%.

> Because if everyone raises their prices, the wage increase then effectively makes no difference.

That’s only if everyone makes about the same, which is less and less true due to rising wealth inequality. As it stands now, there are people making $200k/year and people making $30k/year, raising prepared food prices isn’t going to chip off everyone’s income the same way.

A rise in interest rates would have much more effect on upper income buying power than a $5 increase in the cost of lunch.

> Because if everyone raises their prices, the wage increase then effectively makes no difference.

Depends heavily on specifics. Like, which goods and services? How much of someone's purchases do they represent? Are they substitutable? Restaurants deal in the substitutable and minority part.

The relationship between per-unit price and labor cost per unit also matters quite a bit. If labor costs per unit are small, it may not take a big per-unit price bump in order to give labor a substantial raise.

Inflation is a factor, but it's not perfectly fixed to wage increases. E.g. if min wage goes up 30% we're not going to see 30% inflation rates.

It's interesting that nearly everything that might benefit the lower and lower-middle classes seems to lead, inexorably, to inflation: UBI, a living wage, decent benefits, the list goes on. One might almost conclude that inflation has become a lazy boogie man, to be trotted out for propagandist purposes whenever change is suggested.

That would only be true if labor were 100% of the input costs.

I mean this is HN where the solution to the problem is obvious to a software developer but invisible to someone with decades of experience in the restaurant industry.

>Have you considered that margins are tighter than you think?

So they need to adjust their prices.

> I'm skeptical that a business would choose to go out of business rather that give raises.

I don't think that you've met a lot of small business, owners, then.

Well, all businesses run operations dif and have dif margins, so let's not forget that. I run a recruiting company. From our data a few things have popped up. First, people want higher wages in the lower wage industries. They are asking for $15-20 per hour. Second, lot of these people don't want to go back to the same labor jobs they had - they want to do something different. the problem with this is that they want to get paid more than they were making before for jobs in which they have no exp. For those that think the worker knows they can get more money, it's not the majority. They only know if someone told them. A lot of low wage workers who risked it and stuck it out during the pandemic are upset they really didn't get wage increases. Their employers sure didn't offer it to them. And now they want to quit and get their benefits like the rest. There is a lot going on here. One group though that does want to work are the teenagers. Issue is that they want $20 per hour...this fiasco is probably going to continue for a while.

> this fiasco

Your comment is informative, but, come on. This "fiasco" is supply in demand in action. When it (occasionally) favours the workers, it doesn't deserve to be described so negatively.

Well, sure. Just keep in mind how supply chains are working right now. Fiasco / failure - well, most workers didn't even get raises yearly to keep up with annual inflation. I'd say that's negative, although the market "working". Where is the equilibrium then? The balance will be found but at what detriment to society on numerous levels? How many people don't have healthcare? How many people work three jobs? All this is catching up and to me, it's a fiasco...will we see social unrest because of it, or better yet, have we in some ways? What about people finding purpose in life and taking pride in their careers at these lower levels of labor. Compared to 100 years ago maybe we are better off, but I think there could be at least an 80% improvement in the system.

Oh yea, and although we have made "progress", we must all hail the great economy structures we currently have that leaves out environmental externalities. This wonderful society and world where almost all living systems are in decline. To stay on topic with restaurant workers. Remember how hard those people in the kitchen work, many of them who don't speak english and make a set hourly rate, while all the people in the front of the house make massive tips that they don't have to share. just sayin...

Why shouldn't a teenager make 20 an hour? At 16 your looking down the road at 2 very expensive options.

1) Go to college and earn a degree for 120-240k dollars

2) Start paying rent, owning your own car, healthcare, food, and leisure activities.

Both of these are expensive directions to take. It used to be that someone could pay for school with a summer job, why shouldn't it be now? It doesn't appear the education changed at all.

The inability to pay for college is more an artifact of the insane increase in college prices than it is the pay. Inflation hasn't been kind on minimum wage, but the effect is less drastic than the increase in college prices.

Also, as others have pointed out, teenagers tend to be less reliable employees. One part of that is that they don't need the job, at least in an "I might starve and be homeless if I get fired" sense. Another part is that if they're only working for the summer, they're unlikely to have time to become exemplary employees.

As a society, I agree it makes sense for teenagers to be able to pay for their own education with reasonable work. As a business, I don't think I would see that as my problem to solve directly, and probably not one I could even afford to fix even if I wanted to.

The average in-state tuition in the US (so sticking to the cheaper side) is $10,440/year. There's roughly 10 weeks of summer break, so 400 hours of work assuming a 40 hour work week. You need to make $26/hr after taxes and save every penny of your paycheck to afford that tuition bill. Average out of state tuition is $26,820/year; you'd need to make $67/hr after taxes to pay for that over summer break.

Again, those are after-tax numbers, so you'd have to make north of $30/hour pre-tax to be able to pay for in-state tuition. I just don't see that happening.

> Why shouldn't a teenager make 20 an hour?

It's not that he "shouldn't". Rather, many businesses cannot afford to both pay teenage employees $20/h, and also to not raise the prices. Some businesses can raise prices just fine, but others are not able to, as the customers will stop buying at higher price point. For example, if all groceries doubled their food prices, I'd still buy food (though maybe less than before), and likely spend more on it than I used to. However, if all restaurants doubled their prices, I'd pretty much stop eating out altogether, except special occasions.

However if all groceries doubled their prices then all workers would demand higher wages to compensate. Other businesses would need to become more efficient with their labor or reduce margins. In the short-term this means CEOs get paid less, and investors see higher ROI in labor efficient business models.

It's obvious that teenagers can't make 1k/hr without breaking the economy - but I don't see any reason why $20/hr would be outside of historic norms. In 1981 the minimum wage was ~$3.25/hr, translating to ~9.71/hr today. Given the advances in technology that have driven a more than 2x increase in real economic productivity over that period why shouldn't the starting wage be $20/hr for teenagers?

All workers demand higher wages at all times. Workers demanding higher wages stronger and harder won't raise aggregate wages by much, as there is only so much that is actually being produced, and aggregate wages can pretty much only be increased through increase in aggregate supply: the margins are already pretty thin, especially in retail and food service business, and the CEO pay is pretty small component in grand scheme of things (CEOs also don't actually consume much of their earnings, they invest most of it, so you can't actually transfer much of consumption from them to workers).

> Given the advances in technology that have driven a more than 2x increase in real economic productivity over that period why shouldn't the starting wage be $20/hr for teenagers?

The growth in economic productivity hasn't been uniformly distributed across industries, and it's been pretty low exactly in the industries depending on cheap, low skill labor. What are the advances in technology between now and 1981 that made restaurants 2x more productive?

Workers do not demand appropriate wages commensurate with their value at all times. I recall making $7.25/hr and having colleagues "doing well" by making $7.50/hr. At the time it was not uncommon for "good" employers in the service sector to promise something along the lines of a $.25/hr raise every 6 months to a year.

Now the problem with this is that the effect is to lower expectations for wages by taking advantage of financial literacy. Someone working for them for 4 years receiving a raise every 6 months earns $2/hr more. The employer/seasoned employees point to this and say that a starting wage $2/hr higher is unreasonable. Unfortunately the fixed rate wage increases diminish over time, and if you think that moving into management/higher level positions would entitle you to more money... then I have a bridge in Brooklyn to sell you.

When employers mirror this strategy or take other similar approaches, then you end up with wages that are depressed relative to the value of the labor being provided ( or the opportunity value if that labor was applied to other activities, or used more efficiently ).

> What are the advances in technology between now and 1981 that made restaurants 2x more productive?

Microwaves, dishwashers, steam-injection ovens, just-in-time logistics for raw ingredient deliveries, credit cards, online ordering...

Microwaves and dishwashers were popular in commercial environment before 1980, and I don’t think credit cards make a restaurant more productive.

> I don’t think credit cards make a restaurant more productive.

They certainly reduce the potential for theft/shrinkage! It used to be that you needed a trusted business manager/employee to manage the register, now anyone can do it and it's much harder for someone to siphon funds. All transactions are now viewable to management to more easily see what's selling and what's not.

That’s a good point, haven’t thought of that.

If all restaurants doubled their prices, but, at the same time, paid their employees a proper wage (and made that public) and removed tipping, they could effectively raise their prices 20% (the expected tip) without any impact on the customers.

McDonalds manages to make profits in EU/AU/NZ/CA etc while (mnostly) complying with local minimum wages and conditions. The Big Mac index shows that their actual prices are within a narrow band compared to the US.

They (and other megacorps like Walmart) exploit both their workers and their customers, who end up paying the workers via the inefficient means of tax credits and poverty relief instead of the corporations/businesses being required to pay proper wages and contribute to their local communities via taxation.

> If all restaurants doubled their prices, but, at the same time, paid their employees a proper wage (and made that public) and removed tipping, they could effectively raise their prices 20% (the expected tip) without any impact on the customers.

If they doubled they prices, they could increase them by 20%? Huh?

Or they could go to a reasonably priced college for $40k or less and get just as good of a job. $120k is a jokingly high amount of tuition.

Reasonable priced such as an in-state university?

https://www.umass.edu/financialaid/undergraduate/undergradua...

In-state: 30,656 * 4 = 122k

Out Of State: 51,181 * 4 = 205k

You picked a total outlier, a very prestigious public school in one of the most expensive states. University of Utah, for example, is a relatively good school and costs about $8k / year for in state tuition.

University of Utah costs 23k per year in-state with a total cost of 27k per year including indirect costs. Out of state is 43k/yr excluding indirect costs.

If you looked at this 5-10 years ago your numbers were probably right. But interest rates are low and borrowers can borrow far too much money.

Tuition is $9k per semester full time [1]. You're looking at costs that include housing, which someone needs regardless of their status as a student.

[1] https://financialaid.utah.edu/tuition-and-fees/cost-of-atten...

Have you ever employed a teenager? They lack life exp. They lack confidence. They really don't know much at all about anything on a professional level. Sometimes you get good ones, but the majority are not sticking around for long or are doing a poor job. Your customers wont return with bad experiences and low quality. College is a scam for most. Put these young kids in debt for most of their life to earn a degree for which they are not even into. Better off going to trade school. And by the way, the lack of labor in skilled trades is astounding right now. Making $20/hr is better than $12/hr, but it's not really going to make a big dent in your college debt.

edit: talk to any large employer and ask them about employing the younger generation. All of them will say they have no work ethic and sit on their phones the whole time. You know what else, they think they should be paid $100k/hr and be millionaires...so try managing a bunch of people with that attitude and try not to go crazy. These companies are now reaching out to the older crowd for which they used to discriminate against because the young people suck.

> talk to any large employer and ask them about employing the younger generation. All of them will say they have no work ethic and sit on their phones the whole time.

“The children now love luxury; they have bad manners, contempt for authority; they show disrespect for elders and love chatter in place of exercise. Children are now tyrants, not the servants of their households. They no longer rise when elders enter the room. They contradict their parents, chatter before company, gobble up dainties at the table, cross their legs, and tyrannize their teachers.” - Socrates

It sounds like a seller's market.

A seller's market created by a law in which if the buyer pays too low of a price, very bad things happen to them.

One would expect in that case lots of laborers with wages at the minimum, and many more looking for work. What we're seeing in the description is not that.

I reckon the jobs are not on offer because the restaurants only want to pay a small amount (they have razor thin margins and an employee costs more than just salary [workers comp, insurance, equipment, liability etc]).

Previously people accepted the small amount, but now they aren't because they're (currently still) being paid to stay home in most cases.

I do agree with you that a minimum wage potentially has unintended negative consequences for those looking to work but do not have valuable skills to offer. An employer may make do without rather than hire a day laborer for instance at an expensive rate. We might disagree on whether negative consequences are inevitable.

By your assessment, though, it seems the seller's market is not caused by the minimum wage, but by COVID relief packages?

Also, I'm sorry you're getting downvoted. I only downvote if someone goes against community guidelines, and not if I simply disagree with them

No problem, I'm used to the downvoting :)

I think it is important to distinguish a couple of things.

If there are businesses out there, like maybe McDonalds or Walmart, who are easily able to pay $20 per hour instead of $7.50, and are choosing not to do so because of a desire for even larger profits, then yes, this is evidence of a mild seller's market for labor and also a lack of market savvy on behalf of McDonalds/Walmart.

If those corps are already offering $20 an hour and benefits and still people are not showing up to work, then it is a roaring seller's market for labor, and must in theory be caused by some other external source that is causing laborers to feel $20 is too low. Where are they going, what are they doing? Are they taking the opportunity to pursue a degree? Are they staying at home playing video games? Have they all found a job making $42 an hour talking on the phone at home? We would need the data to answer these questions.

But in the exact case of restaurants, I genuinely think most of them do not have the money. I haven't ever in my life met a restaurant owner who has a stable financial situation with a paid off mortgage, nice car, and 3 kids put through college already having become cardiologists or something like that. But I've met a lot of other people who have done all that. And I've met a lot of restaurant owners too.

I think that all they can afford is $7.50-$12.50 an hour in most cases, with no benefits. And now that city centers have seen a good portion of their residents with lots of disposable income move away, I suspect that most restaurants have lost the financial base that used to support them.

I saw a video of a restaurant owner during the pandemic in NYC who cut his staff from 45 to 3 and was just barely able to pull it together and survive. Was he paying his people more than $15 an hour? Don't know.

That makes sense

So the owner who has operated a cut throat, extremely demanding, razor thin margin for years folds because they don’t understand basic labor supply and demand?

Keep in mind this person has mostly likely done in depth analysis on how to make their most popular item at the same quality but for 2% less of some expensive ingredient.

I know one phenomenal restaurant owner who spent an entire year to get the cost of their paper products from 2% of COGS to 1%. Bonuses to managers, trash audits, the whole thing.

You really think people like that couldn’t figure out raise salaries and prices?

Do you know whats going to happen here? Panera, Qdoba, and 5 Guys. Just a monoculture of terrible bland food. Only the big players with economies of scale can charge less and pay the same as smaller restaurants.

If you can't stay open while paying people a living wage, you deserve to go out of business.

I would rather have nothing but chain restaurants owned by megacorps than have people working for less than a living wage.

That's fair, but would you also rather people unemployed than working for less than a living wage as well?

Most definitely, slaving away at a dead end job not earning anything is sucking up tons of those employee's opportunities by keeping them unavailable.

The answer is yes. In a functioning modern capitalist economy, workers must be able to choose if and where they work.

A good way to think about this is to frame the question on yourself: should I be forced to work for less than a living wage? Should the state subsidise my employer in order for her to underpay me?

> workers must be able to choose if and where they work.

Then why do you want to take that away from them?

What do you think will happen when the chains beat out the smaller restaurants due to economies of scale?

They will raise prices because there are no competitors and lower wages because there are no alternatives. They will collude. They will extract the maximum economic value out of every community that they are in. Enjoy your nothing

> I would rather have nothing but chain restaurants owned by megacorps than have people working for less than a living wage.

Those megacorps do everything they can to pay as little taxes as possible and get as much money out of the country as they can in the form of off-shore corporations that hold the trademarks for said corp, the US subsidiary of which pays it massive 'licensing' fees.

They're also the worst at keeping money within a local economy. They use other large corporations as much as possible for 'efficiency', but it has the side effect of meaning that said business doesn't spend money for services anywhere in the local economy. Joe Drain Buster doesn't get business from Five Guys having a grease clog; some nation-wide plumbing services company does. Maybe they contract out Joe Drain Buster, but not before taking their cut.

It gets worse. The larger the employer the easier it is for that employer to grift the local, county, state, and federal government for freebies, tax breaks, eminent domain gimmes, friendly legislation and regulations, etc.

Witness: Amazon and Walmart. Companies that generated a handful of people with unimaginable wealth who fight tooth and nail to treat their employees like shit.

Jeff Bezos has a net worth of $200BN as of a month ago. The average network for a resident of Mississippi is slightly over $17,000. That means it would take roughly 11.5M Mississippi residents to equal his net worth.

Mississippi has 3M residents.

I think your anecdote isn't necessarily reflective of all restaurant owners:

(1) not everyone leases, some family businesses own the land and has significantly better margins at the trade-off of opportunity cost on the real estate,

(2) some businesses are explicitly there to fulfil visa or immigration obligations, so profitability isn't a priority,

(3) in less dense areas, the general laws of competition don't apply as much pressure as SF or NYC.

Don't forget lifestyle businesses. I actually know multiple high-income people (lawyers, doctors) who just let their partners run businesses for the sake of doing something during the day; they lose money every year which offsets the joint income, and is better than having their partner sit around at home and spending money on something else.

> Panera, Qdoba, and 5 Guys. Just a monoculture of terrible bland food.

Compare with the food in the US say, 40 years ago. Whatever you feel about Panera & Qdoba, they are not bland by comparison with food the way it was within my lifetime.

I don't like 5 Guys much, because I'm not much of a burger eater, but they too are generally of significantly higher quantity than most burger outlets from 40 years ago.

This is a loaded question, you presuppose that people are operating on demanding, tight, and competitive margins for years.

Not everyone is, and yes - many of them will fold because their viability was predicated on an unfeasible wage.

Sometimes an ecosystem is well past its expiry date and it reduces to a less vibrant interplay of species.

It’s tragic, but if it took one single thing to destroy it, then it is safe to presume that there were huge issues eroding its underlying harmony.

Any other advanced economy (eg EU, AU, NZ etc) proves that

"Do you know whats going to happen here? Panera, Qdoba, and 5 Guys. Just a monoculture of terrible bland food. Only the big players with economies of scale can charge less and pay the same as smaller restaurants."

is just not true.

>I think some businesses are going out of businesses because they stubbornly refuse to raise their wages.

That would mean the people running those businesses were in need of psychological help, it is pretty much crazy to close your business because you refuse to raise wages.

I propose a counter explanation - your business has a very tight margin - if you raise wages you cannot afford to continue in business unless you raise prices. If there is a competing business nearby and you raise prices you lose customers to competitor and you will have to go out of business - unless of course competitor also raises prices.

You and competitor(s) sit around waiting to see who will raise prices first, probably one of you closes up because they don't have enough workers.

The one who remains open gets customers, because of extra income from customers they might be able to raise wages. At any rate they can probably raise wages because competitor that closed can't just reopen without any down time.

By not raising wages, keeping your employees and staying open you will definitely go under. Maybe you cannot outcompete the other business but by not even trying to go open you have already lost.

There is always convenience customers, loyal customers and opportunity customers who do not care about the 2-3% difference in price.

I'm not saying you are wrong, it could definitely be this case, just that there might be more factors to consider.

>by not even trying to go open you have already lost.

sorry, I thought the store was open until it closed down and posted its reasons?

The problem with following the don't raise wages strategy and wait for your competitor to do it is if they outlast you - you reach the have to close position first.

>By not raising wages, keeping your employees and staying open you will definitely go under.

unless something changes that will make it profitable to raise wages.

>There is always convenience customers, loyal customers and opportunity customers who do not care about the 2-3% difference in price.

In a small margins business this might not be enough to keep you afloat.

This sounds like a classic prisoners dilemma. If the business owners would both raise both wages and prices, all would thrive.

exactly, but unfortunately the way to get out of a prisoner's dilemma situation is to communicate with the other prisoners and to trust each other - communication about prices is illegal and who trusts their competitor anyway?

Maybe some a-b testing could be fun. If you want service to operate on starvation wages you stand in line A or sit at the right side, if you want fast service without anyone spitting on your onion rings take line B or sit on the left.

> That would mean the people running those businesses were in need of psychological help

There are some small business owners very clearly in need of psychological help, so this tracks.

>I joked that maybe the owner was an old cahoot who remembered when a soda was $0.05 and there was no way they were going to raise their hourly wages to $15 or more.

But otherwise had no issue jacking their prices up to the heavens...

I think that for a lot of businesses, it's a question of what will happen when extended unemployment ends in September.

If employees are going to flood the market and you can keep paying the wages you were paying pre-pandemic, then it makes sense to hold out, since if you raise wages now, you can't really reduce them later. You lose out on sales now because you're short staffed, but you keep your costs low in perpetuity.

On the other hand, if that's not going to happen, then clearly you should raise wages and prices now, so you don't miss out on those sales.

At this point, though, I think the folks who raise wages/prices because they think the latter case is true are going to cause a significant enough rise in the effective minimum wage (not the legal one, but the least you can practically pay and actually get employees) that everyone's going to have to raise wages anyway.

It's an interesting game theory problem - if everyone's going to hold out on pay raises, then you should too. If a critical mass of people are going to raise wages in the next few months, though, then you should raise wages ASAP to get the best employees and not miss out on a summer of sales. Luckily this appears to be one of the rare game theory problems that'll actually work out well for the little guy.

This argument works only if the labor and jobs don't have fungible alternatives. But while in-store retail and dine-in restaurants have been suffering, online-order retail and food delivery have been taking off. Plenty of workers are turning to the gig economy. At least there the apps aren't constantly degrading you, even if they are depreciating your car.

pandemic unemployment has already ended in a bunch of states. If it's the problem, we would be seeing those states rebound.

That’s exactly what’s happening. The States that ended the extend benefits have lower unemployment rates. Ex: https://apnews.com/article/business-health-alabama-coronavir...

> The States that ended the extend benefits have lower unemployment rates.

Your “example” is of a state that had a lower unemployment than the national average before ending extended unemployment benefits seeing not significantly different than the national rate of decline in unemployment in the brief period since cutting extended benefits, not an example of more rapid drop after cutting benefits.

Of course you have lower rates of people collecting unemployment when you end unemployment extensions. You can lower it to 0% by killing the program altogether.

You'd be better looking at rates of employment.

Unemployment rates refer to the share of workers who are out of work, not the share who are receiving benefits - i.e. it’s the rate at which people are unemployed, not the rate at which they are “on unemployment”

"it's a question of what will happen when extended unemployment ends in September."

Anarchy. I don't see this happening. Getting people off those checks sounds impossible - if you want to win another election.

Not sure how it is in the US but where I live restaurant owners are wealthy entrepreneurs driving around expensive SUVs. Every sunny day the restaurants and bars are packed from morning until midnight. If they need more staff they have the money to pay better wages. That's how every other industry deals with labour shortages.

In the US restaurants are very cutthroat and what you describe only applies only to the most popular restaurants. It’s trivial to start a restaurant in the US so many people do an fail terribly after a year.

Restaurants are the worst fucking industry to invest in.

Restaurant capital costs, and low margins, guarantee owners would be wealthy and willing to take the risk.

If their risk calculations are off, that's an opportunity for competitors.

It's not that businesses stubbornly refuse to raise wages - it's that they can't afford to. A lot of local small businesses were barely staying afloat even before March 2020.

If a business can’t afford to pay its employees enough make rent and buy groceries, perhaps it shouldn’t be a business?

In high school, I worked at a fast food joint to make a little extra money. There were no expectations to pay rent or other essentials. But you'll say that it's not kids working these jobs, so we need to provide a livable wage. What about getting these people skills for better jobs? I'd rather attack that problem than make Wendy's sandwich maker a viable career.

>I'd rather attack that problem than make Wendy's sandwich maker a viable career.

Why shouldn't Sandwich Maker be a viable career? They definitely contribute more to society than HR professionals or agile coaches.

You realize wages based on supply and demand are very accurate at measuring exactly how much value to “society” a job brings? You may disagree but economic equilibrium in the price of a common good such as an agile coach is telling you exactly how much value society believes that job brings.

>You realize wages based on supply and demand are very accurate at measuring exactly how much value to “society” a job brings?

If that were true, then DMV employees would have to pay for the privilege of working there.

In all seriousness, though, there are huge swathes of people working in bullshit jobs, and many of them are well-compensated. There are power dynamics, misinformation and far too much complexity at play to simply say "society places more value on the work performed by people in higher paying jobs".

That's a nice abstraction, but actual wages are determined individuals convincing other individuals they should be paid a specific wage. That's about their power to extract value.

Value creation can be used to increase that power, but there are many organizations (picture the NCAA or your favorite employer of H-1B1s maybe?) that have put in the hard work to make sure the work of value creation doesn't give individuals too much power to extract value.

Yet we have recently had the interesting experience of many low paid workers suddenly being deemed “essential workers”. I don’t think any agile coaches were essential workers.

There are many jobs that are low paid because they are low skilled and have low barriers to entry, but otherwise very useful to society e.g. refuse collectors.

This is not a great hill to die on, but I’ll bite a bit.

If I fundamentally disagree with fast food as objects of consumption than I might think every job in this field should not be viable. There are costs to society (“externalities”) that places like Wendy’s are not held responsible for (obesity epidemic).

All said, Sandwich Maker is a viable career, to me, if its in a boutique/gourmet shop where the food is prepared from scratch and with precision care. The prices will be higher, extra skill is involved, and then the Maker can command a higher wage.

The meme of whether or not fast food is a viable/respectful career is just a manifestation of more fundamental problems with growth optimized capitalism.

>There are costs to society (“externalities”) that places like Wendy’s are not held responsible for (obesity epidemic).

This is a valid point. Western society should be making an effort to ensure that there are cheap, convenient, healthier fast food options like what you see in Asia.

My comment was more in response to the parent, who was drawing a distinction between "real jobs" and "entry level jobs". I believe we should treat people in low-skill jobs with more respect, as they actually produce things we need and want as a society. Many people in "real jobs", on the other hand, produce (or facilitate the production of) nothing.

“There is an art to the business of making sandwiches which it is given to few ever to find the time to explore in depth. It is a simple task, but the opportunities for satisfaction are many and profound: choosing the right bread for instance. The Sandwich Maker had spent many months in daily consultation and experiment with Grarp the baker and eventually they had between them created a loaf of exactly the consistency that was dense enough to slice thinly and neatly, while still being light, moist and having that fine nutty flavour which best enhanced the savour of roast Perfectly Normal Beast flesh.

There was also the geometry of the slice to be refined: the precise relationships between the width and height of the slice and also its thickness which would give the proper sense of bulk and weight to the finished sandwich: here again, lightness was a virtue, but so too were firmness, generosity and that promise of succulence and savour that is the hallmark of a truly intense sandwich experience.

The proper tools, of course, were crucial, and many were the days that the Sandwich Maker, when not engaged with the Baker at his oven, would spend with Strinder the Tool Maker, weighing and balancing knives, taking them to the forge and back again. Suppleness, strength, keenness of edge, length and balance were all enthusiastically debated, theories put forward, tested, refined, and many was the evening when the Sandwich Maker and the Tool Maker could be seen silhouetted against the light of the setting sun and the Tool Maker’s forge making slow sweeping movements through the air trying one knife after another, comparing the weight of this one with the balance of another, the suppleness of a third and the handle binding of a fourth.

Three knives altogether were required. First there was the knife for the slicing of the bread: a firm, authoritative blade which imposed a clear and defining will on a loaf. Then there was the butter-spreading knife, which was a whippy little number but still with a firm backbone to it. Early versions had been a little too whippy, but now the combination of flexibility with a core of strength was exactly right to achieve the maximum smoothness and grace of spread.

The chief amongst the knives, of course, was the carving knife. This was the knife that would not merely impose its will on the medium through which it moved, as did the bread knife; it must work with it, be guided by the grain of the meat, to achieve slices of the most exquisite consistency and translucency, that would slide away in filmy folds from the main hunk of meat. The Sandwich Maker would then flip each sheet with a smooth flick of the wrist on to the beautifully proportioned lower bread slice, trim it with four deft strokes and then at last perform the magic that the children of the village so longed to gather round and watch with rapt attention and wonder. With just four more dexterous flips of the knife he would assemble the trimmings into a perfectly fitting jigsaw of pieces on top of the primary slice. For every sandwich the size and shape of the trimmings were different, but the Sandwich Maker would always effortlessly and without hesitation assemble them into a pattern which fitted perfectly. A second layer of meat and a second layer of trimmings, and the main act of creation would be accomplished.” ― Douglas Adams, Mostly Harmless

Serving greasy heart attack patties might not be the most optimal example for an otherwise valid point.

To be fair, both "sandwich" and "Wendy's" mean completely different things in Australian English!

Sandwiches typically contain fresh ingredients (we'd call a gresy heart attack patty between two buns a burger), and Wendy's is a completely different chain that sells dairy products and hot dogs.

TIL!

What skills does a line cook at Wendy’s learn aside from “how a job works?”

Also, who staffs Wendy’s from morning until schools let out during the day? I haven’t seen seasonal fast food restaurants anywhere near me.

General multitasking, team coordination, cash handling, basic restaurant dishwashing, stock management, industrial cleaning, pacifying unhappy customers, dealing with druggies and harassers, and a whole bunch of other things I've probably forgotten from when I worked fast food as a teenager.

The simplicity of each individual job means that nobody ever has just one job at a fast food place. Stick around for any amount of time and you'll get rotated through every available position.

Any of those skills can be picked up at basically any job, further they require no foundational skills to learn.

That's why the pay is low, because the skill set is widely accessible. I'm not sure why people insist that these kind of jobs are teaching valuable skills.

All that is happening is the basic process of working. They could learn it in any context, at any point in their lives. There is no justification to pay people starvation wages.

They also reveal information.

For someone that didnt go to college, seeing a 2yr stint on a resume as a fast food worker tells me more about that persons work ethic, reliability, and general sense of getting stuff done vs your avg grad.

Its not only skills but its the information being conveyed

There are definitely a lot of summer only burger joints, ice cream shops, etc., especially in places with cold winters.

I agree (I think), we need either free college or a livable minimum wage or both to solve this problem. Disagree that we need to have any low-paying jobs at all, but I suppose your high school could run a fast food joint for the students, if we really need that sort of thing?

But that doesn’t solve the problem for the people in those situations. It’s just saying that those jobs are deserving of slave wages

Was the fast food joint closed while school was in session?

The current labor shortage is purely because of the unemployment and covid benefits and being paid out to people. Why work when you get to stay home and get money doing nothing?

Well, in that industry, companies don't have obscene amounts of money from investors that they can keep the company running for years after years with 0 profits and pay people higher than average salaries and provide free drinks and gym memberships.

Closing down grocery stores will make it a tad harder for the (now unemployed) workers to buy groceries.

Exactly. All the grocery stores and restaurants should close and we'll see how well that bodes for the local citizens.

Edit, I'm being sarcastic. It's glib to suggest that somehow all of these businesses can just magically raise prices. It's a complex situation.

Yep, and when those stores and restaurants actually close down (just watch louis rossmanns videos about NYC), this means even more workers and even less workplaces, driving wages down.

And unemployment has to be paid by someone too...

and this is a preview of what UBI would cause too.

My state gave restaurant owners a billion dollars during the pandemic. A billion dollars.

During the pandemic, restaurants lobbied hard as hell against restrictions and cheated at every opportunity what restrictions they were obliged to follow. Our governor ordered bars to be shut down around 9pm during a surge last year and everyone joked that was great because it meant apparently the 'rona only came out to infect people after 10pm.

I really wanted to meet a prospective date and we wanted to be as safe as possible. We scoured websites, google, and and social media for information about outdoor seating accommodations. Whatever information was available was exceedingly vague, despite it being a year into the pandemic when you'd think any savvy business owner would have information like that readily available. When restaurants had outdoor seating listed as available, most of them had seating fees and some insane minimum order requirements.

Fuck the restaurant industry.

> I think some businesses are going out of businesses because they stubbornly refuse to raise their wages.

I'm sure you're right. Some business owners are stubborn and don't want to offer higher pay. That said, to quote TFA:

> But in one recent survey, more than half of hospitality workers who've quit said no amount of pay would get them to return.

Paying more will get some people. But it clearly won't be enough for all, and maybe not even most.

Policy has crept business in this direction by stretching wages low while maintaining the benefits of revenue of a developed society, and while there are some successful restaurants, a large amount of them aren't exactly swimming in money because the benefits of this policy are captured by the large corporations. Nobody starts a restaurant to get rich. If there is a hard snap back like what covid did with state benefits, it isn't a stretch to say that many businesses would be scrambling to find a new equilibrium.

Restaurants in general are relatively premissionless in that anyone can start one, which is why so many fail. They can run the gamut from low margin to high margin, poorly managed to managed very well, so its no surprise that some will do better than others. In fact, I would think that the large corporate franchises will have the resources to adapt compared to the small business, family run restaurants because they have the logistical acumen to subsidize the costs.

Given that we are outside observers, is it possible that they know something we don't? What might be some charitable explanations for why they don't raise prices?

Restaurants that are not franchises have a 50% failure rate. Margins are intensely tight and the largest cost is labor, not food, spoilage, advertising, interior design, or whatever else.

The central government and state government take limited to no responsibility for healthcare, child care, retirement, sick leave, pto etc.

The central justice system has agreed that corporations have a duty to their stakeholders above their business and so growth is paramount.

As a result, restaurants, esp independent ones, struggle to find ways to make ends meet and corporations (aka McDonalds) see no incentive to raise wages. The easiest and most obvious example of this playing out is imo that McDonalds pays labor more elsewhere than in the US.

Exactly! Thanks for sharing this. Currently the demand for higher wages is suddenly slightly more weighted towards the employee and yet McDonalds can pull out a three year timeline to get to $15 an hour, by which time inflation will make the increase insufficient

It's weird how evidence opposite to the point you are making actually supports your point?

Whatever.

This “labor shortage” line makes more sense when you think of it as a capital strike, not an objective statement of reality that should be treated literally.

Same thing is happening with entire buildings in my city. They'd rather evict their entire set of renters than lower the rent.

That's a consequence of rent control laws, which limit the percent that you can raise rent by per year. Ever lowering rent in a place with such a law is penny-wise but pound-foolish.

That’s a financing thing plus if you have an old building it’s probably better to evict everyone so you can build a new one

Most small shops are struggling, being 1 bad financial decision away from bankruptcy; doing business with no type of insurance whatsoever, and here and there stiffing some suppliers to make ends meet.

So, there's no way they can afford to increase any expense, if they were to do that, they'd be out of business right away, so they continue floating away.

These business owners are unfit to do business; so what is happening is economic darwinism. RIP.

Economic darwinism for the small businesses. Economic socialism for the big companies.

The reason they're not raising their wages is because restaurants make slim to nothing profits. Additionally the people quitting is from the government continuing to provide the stimulus checks that are in excess of the minimum wage. They need to stop providing those checks when the economy needs to be recovered.