Since 2010, the highest year-over-year wage increase in any month for production and nonsupervisory employees is near 2.6%.
For a two-year stretch between summer of 2011 and summer of 2013 wage increases less than 2% were the norm.
Yet, firms complain about labor costs while simultaneously complaining about the lack of workers.
Bloomberg reports Firms Under Pressure as Labor Drought Grows, U.S. Survey Shows.
A growing number of companies are finding it difficult to recruit skilled workers, which threatens to curtail profits and growth, according to a quarterly survey conducted by the Washington-based National Association for Business Economics.
The results of NABE’s July Business Conditions Survey published on Monday showed that 34 percent of respondents have had trouble hiring skilled employees over the last three months, up from 27 percent in January. The Washington-based association polled 101 panelists, who are economists from companies and industry associations.
In response, companies are sponsoring foreign workers, expanding their search and hiring more independent contractors, according to the survey. They’re also boosting automation, stepping up internal training and in some cases improving pay, Jankowski said.
Perhaps at least partially as a result, more than a third of respondents cited labor costs as having the largest negative impact on their profits so far this year.
Year-Over-Year Wage Growth
Year-Over-Year Wage Growth
Is 2.6% wage growth too hefty even as corporations complain about a lack of workers?
What’s Going On?
- It’s not just salaries. Obamacare and benefits are hurting many companies.
- Cheap money from the Fed keeps zombie companies alive.
- Cheap money from the Fed induced (and still does) overexpansion fast of food restaurants and retail stores of all sorts.
- Workers really are not worth benefit costs plus an extra 3% so companies seek to automate.
- Are McDonald’s workers worth $15? Please be serious.
- Amazon and online shopping are weakening retail profits.
Finally, I suspect the survey is deeply flawed. Does some random small to medium-sized company have the same weight as Walmart?
The regional Fed manufacturing and ISM surveys seem to have that defect.
Yet for now, enough stores are still expanding which adds to job growth despite automation. Apparently, the goal is a McDonald’s or a Walmart on every corner.
We will not quite get that far. Rampant expansion will turn on a dime at some point, most likely globally.
Mike “Mish” Shedlock
Agree with your comments. In addition, companies refuse to pay higher wages as they prefer to collude to keep wages down (Google, Apple, etc). For noon essential roles, they will higher crappy employees in numbers and let managers deal with making up productivity losses.
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#1. hire more full time employees at a decent wage and release the army of part timers.
#2. cut the top 20% of the executive class pay and redistribute to the lower 80%. The disparity between boss and worker just begs for unrest and planned unproductively.
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“#2. cut the top 20% of the executive class pay and redistribute to the lower 80%. The disparity between boss and worker just begs for unrest and planned unproductively.”
First off, 20% of these big companies are not at the executive level. Actually it is unlikely that 20% are even at a managerial level. But even if they are/were that is not the same thing as an executive. Below the exec level one quickly gets into middle-class pay territory. Are you proposing to cut that pay as well?
Have you ever run the numbers on a large company and the impact of a meaningful increase in pay or the impact of, say, donating the **entire** C-suite compensation (most of which actually isn’t even cash that can be distributed) to all the other workers?
Wal-Mart is a favorite target. They have 2.3 million employees. Assuming a 30 hour workweek and 50 workweeks in a year a $1 per hour raise to just 1 million of those employees will cost Wal-Mart $2.25 billion in profits and operating expense. Small changes of this type add up very quickly. This also does not include the extra taxes WMT will have to pay along with the higher wages.
According to the data at Morningstar, this year Wal-Mart exec compensation is extremely (and unusually) high, over $296 million. Almost $244 million went to Marc Lore, which is most likely related to Wal-Mart buying Jet.com and will almost certainly be a 1-year thing. Over $274 million of that $296.7 million in compensation is restricted stock, not cash that WMT can use to pay workers.
But let’s assume it is all cash and that the $296.7 million is normal. Let’s make the C-suite give it all up and provide it to the workers. Over just those 1 million employees one gets a $296.70 one-time permanent annual bump in employee compensation. With 1500 worker hours (30 hours x 50 weeks) that becomes a raise of about 20 cents an hour. And that’s assuming none of the remaining 1.3 million are paid to the standards some folks think they should be.
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“will cost Wal-Mart $2.25 billion in profits and operating expense”
“operating expense” was intended to be “cash flow.”
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“Assuming a 30 hour workweek and 50 workweeks in a year a $1 per hour raise to just 1 million of those employees will cost Wal-Mart $2.25 billion in profits and operating expense.”
I wish this blog had some limited “edit” capability. $2.25 billion is for 1.5 million employees. For 1 million it is obviously $1.5 billion. But the point remains – these numbers get large fast.
Another way to put this in perspective: Last year WMT’s Cost of Goods Sold + other operating expenses averaged $1.27 billion per DAY. Exec compensation expense is a drop in the bucket.
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Or since you mention Google, FaceBuck and so on, maybe just raved up their propaganda apparatus to get more H1B visas. Nothing is as it seems, i.e. fake news.
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Let me see if I understand Trump’s appeal.
Deport illegals.
Restrict unlimited immigration.
Restrict the sham work visa programs.
Jobs for the locals then happen…at higher wages!
It is unpossible!
++++++
Shortage Of Foreign Labor Forces Maine Businesses To Hire Local Workers
7/13/2017
http://dailycaller.com/2017/07/13/shortage-of-foreign-labor-forces-maine-businesses-to-hire-local-workers/
Businesses in Bar Harbor, Maine are turning to locals to make up for a shortage of foreign guest workers that normally fill summer jobs in the bustling seaside resort town.
Because the H-2B visa program has already reached its annual quota, Bar Harbor’s hotels, restaurants and shops can’t bring in any more foreign workers for the rest of the busy summer tourist season. Like hundreds of similar coastal resort towns, Bar Harbor has for many years depended on the H-2B visas for temporary workers.
The Bar Harbor Chamber of Commerce will hold a job fair Saturday in an effort to recruit significant numbers of workers from the region. Just about every kind of business in the town is looking for help, says chamber executive director Martha Searchfield.
“All types of businesses — retail, restaurants, the tour boats, all the trips, everything. All types of workers are needed,” she told the Daily News.
The shortage is so acute that companies are sweetening incentives for local workers. Searchfield says some businesses are offering flexible schedules that might appeal to older workers who might be interested in working only a day or two each week. And other companies have gone so far as to offer higher wages to entice locals.
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High demand for employees and record government entitlement expenditure. What could be the problem?
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There is a limit to how much a business can pay for labor and still be viable. If it costs me $25 for someone else to mow my yard then I pay it, but if it’s $75 I just do it myself. If it costs $250/day to stay in Bar Harbor then maybe I go, but if it’s $500 I do not.
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One of the main issues with Bar Harbor (I lived and worked there for a couple of years) is that like much of coastal Maine housing is a major issue for workers. Some larger businesses provide room and board for summer help but smaller shops can’t afford it and Mainers can’t afford to move into the area to take advantage of summer jobs. Once everyone that already lives there has a job help gets hard to get quick.
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Corporate profits as a percentage of GDP is already excessive. What we have here is a case of extreme entitlement; the boomers and the elderly who own the corporations (through their investment portfolios or directly) desire an excess return on their investments. Meanwhile, workers expect a return on their investment in education.
Normally wages would inflate, but the elites have managed to use immigration to suppress wage growth. Particularly in the tech sector.
I have a feeling it will end badly.
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Agree that retirees and near-retirees are an issue. They need big dividends and growth to fund their retirements because they can’t get more than 2% on CDs. What little savings they have at least. Of course if the FED would stop their horrible inflationist policies maybe they wouldn’t have to be concerned that they aren’t getting interest on their savings, but we all know that can’t possibly work, right?
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Who are you to tell the business owner what a “fair” amount of profit might be? I’m building a company, currently 23 employees. YOU don’t pay the bills. I DO. For the first 2 years of start up, my wife cried herself to sleep worried about losing the house. It took 4 years of sacrifice making sure the employees got every penny of wages due to them while my family sacrificed & struggled. NOW that the business is thriving, YOU think its OK to tell me what level of profit I”m allowed to keep? With all due respect, go to hell.
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Workers are the one to tell business owners what fair is, and that’s why they’re not willing to work for low wages. It’s simple, if you have a labor shortage, you need to pay better.
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Are you a major corporation with thousands or tens of thousands of employees?
No?
You want to grow with employees that will make you money? Is your situation such that skilled employees make you more money with less overall cost?
No?
You pay whatever the heck you want. Don’t whine that you can’t find people. Don’t whine about the MARKET telling you what wages should be. If an additional $5,000 in wages produces $25,000 or whatever number that is a positive NPV, it’s a freakin’ positive NPV and you should do it. Otherwise you’re punishing yourself with your own penny pinching.
Muzzling the ox, and all that.
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Operating profit, narrowly defined, is fine.
But return on investment, since Nixon went ful retard, stem increasingly from ever expanding credit driving up stock and bond valuations, not narrowly defined operating profits. And certainly not operating profits that would be there sans inflation. And those returns, are nothing but pure theft from those who do the work. For the benefit of the leeching classes.
As a secondary effect; because more and more of the value add created by workers every year, is being distributed in the form of “asset appreciation” to those who didn’t do the work; the latter are given increasing sway over legislation (only the most hopeless idiots are still indoctrinated enough to believe political influence is somehow not a perfectly normal economic good, sold to those who can pay the most.) So, increasingly over time, you get more and more perverted “interpretations” of IP laws, zoning laws, regulations driving up the costs for new entrants etc. All aimed at using the totalitarian state, to rob those who work, or aspire to do so, for the benefit of those who already “own.”
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I don’t see Mish’s point. With inflation is near 0, as reports show, and wages going up at 2.5% a year, wages are rising fairly quickly on a historical basis. Mish should present the exact same data, only this time subtract CPI from the wage increase to show the real wage increase. The graph would look much different.
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Inflation is about 1.6% y-o-y not exactly zero.
I suspect but cannot prove wage gains are concentrated at the top of the scale. Averages come into play.
Then of course inflation is seriously understated if one factors in home prices and medical costs. Things are terrible for those who have no health care benefits.
And benefits cost to employers who do provide benefits is massive.
This is all so distorted one could present a case for nearly any view.
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Businesses can’t find skilled native workers to work for the slave wages they want to pay. Most workers want a living wage in return for their skilled labor. This is a ploy to hire slaves from other nations who are willing to live 8 to a 2 bedroom apartment. Americans are accustomed to that style of life.
Unskilled labor is easy to find with all the illiterate illegals in the sanctuary cities.
Labor laws aren’t even being enforced. Jerry Brown told the nation during his last gubernatorial reelection debate that illegal foreigners needed drivers licenses so they had a way to get to work in the morning. Honest to God. That’s what he said. The Governor openly condoned aiding and abetting illegal aliens to violate both State and Federal labor laws. lol. How much more blatant could he get than that. And the media didn’t even raise an eyebrow!
Civilization is slowly coming to an end in America. Hope you enjoyed it while we had it.
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Businesses are always looking for skilled people willing to work for nothing (literally, they will serially abuse any kind of training or apprenticeship program). It’s a free market. What these businesses never think of:
1. Society will not pay to train excess people with just the matching skills you need in numbers great enough to quash any wage demands. Select your personnel for potential, train them yourself, and make sure you hold on to them. Many skill sets are useless outside of temporary and narrow contexts.
2. Wages can never be too low for a business. When they say they can’t find anybody, they always mean they can’t find anybody at a certain price. Welcome to the free market. Everybody wants stuff they can’t get for the price they would like.
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Amazing how we want free markets until they tell us our labor and skills are worthless…..then comes government, law and redistribution.
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Yep.
A bright spot about the upcoming debtsplosion is that capital is going to be harder to get and result in more demand and supply of human labor.
Yes, wages will fall, but costs will fall alongside of it. Hopefully a huge number of zombies will be crushed, and massive losses of fake capital will occur. Avoid that rotation into debt, go with dividend stocks or other non-debt investments.
You know that there’s a massive feeding frenzy coming up on all the clueless Boomer portfolios rotating out of stocks at the highest levels into debt at near record valuations…all while the Fed is raising interest rates!
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They won’t be happy until wage growth has a minus-sign in front of it … and even then ….
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When you pay peanuts, you get monkey workers!
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How many here actually have employees? How many here must reconcile the actual productive output of their employees to what the market will bear?
What we have is a society that believes it is entitled to more for doing less. Our mentors are sports and entertainment heroes earning hundreds of millions for very little productive effort, or bankers and traders skimming from the financial scheme we have playing.
How many here actually WORK. You know, sweat, struggle, and have to show actual productive output hourly and daily?
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I guess being self employed allows for complete detachment from reality…
When the CEO says he needs your division to produce .17 a share for the quarter up from .15 the previous, then throws you a high-watermark of .16 just to get bonuses, or when the senior partner of the law firm says they need you to bill 90+ hours a week, or the floor of accountants I always saw basically sleeping in the office come quarterlies or year ends… or the person that’s required to bring in new accounts, or the worthless investment bankers that have to red eye it on a moments notice for some M+A deal in Singapore that they’ve been working 20 hour days on…and on and on….
As for sweat – my first job I wasn’t allowed to stop for 7 to 8 hour stretches across a 20 workday, no bathroom no food… when i finally got my break i would run to the bathroom and wipe my swamp ass from all the sweat of running all day.
The $$$$ jobs… you better bust your ass and produce ’cause there is always someone after your job.
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I think in the first 3 years my sister was married, I spoke to my cardiologist brother-in-law 3 times for 5 minutes each between his 36 hour shifts at the hospital.
…but only you work….
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Starts to get ethical… plenty of people I would prefer not work. Real slave labour, no pay… everyone has their story. Worst of mine was 4/7 12hr with half hour lunch (small cup of soup) working machinery continuously ( i.e. not supervising, but physically working)
But wrld, you choose your path (or you forget that), so everyone is self employed to that extent, even your commitment to your employer was own venture. Some prefer the pack, others own direction, others minimalist and no work, and as people you will never prove one is right and one is wrong. Plenty of people don’t like someone else’s attitudes forced on them, but there is hypocrisy everywhere as there are few that don’t expect something from others.
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+ 100
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I wasn’t speaking for myself. No need to do that. Was speaking for the MILLIONS of people that DO bust their ass every day.
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Granted, but Madash might say they are paying for others to do little, and that it seems unright to have opportunity and cohesion offshored, or influence imported…my view is the amount of legislative and financial distortion makes it near impossible to figure wtf is going on at a wider level, and easier for certain people to make fast profit with complete disregard (as easily socialist, globalist or whatever).
Obviously where people stand on that depends on their ‘world view’, their morals, etc. , so there is no straight answer, just people making their observations as pertains.Clearly the amount of confrontation is increasing – that alone says as much as I need to know… not a happy reality for many.
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Maybe in a slow growth economy the opportunity the companies are looking at doesnt justify hiking salaries across the board in order to add one or two marginal employees so instead they just pass on the business.
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there are millions of workers seeking employment. instead companies claim that there are insufficent skills in the labor pool.
that can be explained as the fault of the snowflake-enabling “safe space” education system and the rules and regulations on hiring from having to be “politically correct”.
the issue can be solved by cancelling all H1B visas and, instead, enabling companies to hire people and give them on the job, desk training, rather than corporates treating employees as part of a global labor pool, where, in fact, global educational standards in places like India are well below snowflake standards in the US.
another measure of success would be when the U6 unemployment rate is much closer to the U3 rate, say within the same ranges that prevailed from when the number of illegal immigrants was not at around 11 million, as it is today.
https://www.thoughtco.com/how-many-immigrants-in-us-illegally-3320996
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It’s not about wages, it’s about productive output, about attitude and willingness to actually TRY. Instead, those factors are considered abusive. Oppressive employment.
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+1
Many of the socailist comments to this post typify the reason why employers complain. A lot of “workers” really need a babysitter, and babysitters expect to get paid for their time, babysitters do not pay $15/hr for the privilege of supervising children — especially when those children have completed 21 laps around the sun (legally adults, but in terms of maturity not so much)
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Mish,
I take issue with your statement “Are McDonald’s workers worth $15? Please be serious.”
Let’s take a closer look at Mcdonald’s.
http://corporate.mcdonalds.com/content/dam/AboutMcDonalds/Investors/2016%20Annual%20Report.pdf
Mcdonald’s had 375,000 employees in 2016 and owned 5,669 restaurants. They had revenue of $24,622,000,000. They made a before tax profit of $6,866,000,000. That is a per employee profit of $18,309.
The company also has $26 Billion in debt costing it $888 Million to service that debt. $10 Billion of this debt was sold between 2014 and 2015 to do extensive share buybacks……..
If Mcdonald’s profit was held to 10% of revenue there would be an additional $4.4 Billion to pay higher wages of $11,733 per employee.
Should a company with the bulk of it’s employees living below the poverty line make a 28% profit margin?
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1. The McDonald’s employees have almost no skills.
2. If McDonald’s employees are worth $15 what is the rest of the world worth? $30? $50?
3. How much are you willing to pay for a terrible hamburger?
The problem as I have stated is not what people make, it’s how far money goes.
Blame the Fed. Blame the Fed for cheap financing. And that cheap financing will lead to more self-service as well.
Mandate $15, and many of these employees will vanish. And by the way, McDonalds keeps its best location restaurants for itself. Many of the 30,000 franchises struggle.
The corporation itself makes a ton of money not by selling burgers
Mish
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1. What does this have to do with skills? Per employee profit. The employees have value.
2. Go through some annual reports. As an example, Apple employees are worth $750,000 each.
3. Where did I say to increase the price?
S
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@s — you clearly are a socialist, which is why you lost the election and we have a bad hair piece as president.
McDonalds is a for profit corporation. Its not one of your stupid welfare organizations. It doesn’t have to hire anyone or pay them anything at all. And because of greedy people like yourself demanding $15/hr for work that isn’t worth even $5/hr… most of your useless kind will be replaced with auto-cookers and robots. Good riddance to you.
If you think you are actually worth $5/hr (from your comments, doubt it), then please go start your own restaurant and try to make the money you think you are worth. A lot of people much smarter than you have tried to start restaurants, worked 100 hours a week at their own place, and ended up losing everything. Feel free to try your hand at it instead of whining. The world doesn’t owe you success or anything else.
McDonalds customers (the people who are actually “in charge”, not the restaurant manager or MCD’s CEO) are simply not going to pay $15 for a hamburger. You whining about lack of free sh!t isn’t going to make the real boss pay $15 for a hamburger.
The world doesn’t owe you a damn thing.
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I show with Mcdonald’s own annual report that they could lower their profit margin, still make a 10% profit, and pay their employees more and I am a socialist?
Your idea is much better. Pay them $5 an hour and force them to get public assistance. Corporate welfare for Mcdonald’s, public welfare for the workers. Brilliant! Sounds like you are the socialist and don’t even know it.
S
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“Cheap money from the Fed keeps zombie companies alive.”
Another reason to raise interest rates, yet they remain at a suppressed level.
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Reblogged this on John Barleycorn and commented:
Some people have gotten to lazy to work. For the first time in eight years help wanted signs are posted almost everywhere.
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JBar: “For the first time in eight years help wanted signs are posted almost everywhere.”
True where I live too.
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Say you own a company with $20 million in annual revenues and you expect $5 million in profits. All other costs are running $10 million, so you only have $5 million for labor. Raising labor costs is going to cut into YOUR income. So obviously you don’t increase wages.
Ways around the problem: illegals, H1-Bs, H2-Bs, have the government provide training in the fields you need to increase supply, off-shore, automate (not nearly as simple as it sounds), or gig the jobs so you don’t have to pay bennies.
The worst part is you have to keep pumping YOUR money into the politicians to keep them looking the other way. Which is pure extortion. The system works, but we definitely need to relax regulations, increase interest rates and let the free market work to keep wages down.
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+1
In a free market, those producing the value, will get to take home most of it. All and any regulation, is nothing more than attempts by those who don’t produce, to instead get their grubby hands on ever more of it.
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The problem is what companies can charge and still sell products. We want it all- high wages, full employment, and cheap products. I could see this day coming 30 years ago when off shoring started to really ramp up. Did you really think it would not matter if you bought cheap import stuff? Did you think everyone else would pay the higher prices so you could have a well paid job? Denial, delusions, and foolishness. The first company that off shored gained such a market advantage that the others had to follow or die.
No wage and hour laws, no environmental rules, what US company can compete with that?
You sold yourself down the river, time to grow up.
Pick only one- high wages OR cheap products.
Do you ever really think about why you might feel poorer? (Hint: The higher your wages and the more you pay for products the more you get to pay in taxes).
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Employers really don’t want to employ older workers and the law is on employers side. Young white male workers are the last hired, first fired. Employers need to have white and asian employees to back up young minority employees who are employed with worthless education credentials but can’t pay the back ups more because that would be unfair.
Walk into any McDonalds and you’ll understand why employers have trouble staffing high value added positions in our brave new world.
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Employers at Walmart, McDonald’s prefer workers over 65. Health care costs are low. Employees are on Medicare
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It isn’t that workers are expensive, it’s that computing power and network bandwidth are so cheap. Companies see their capital expenditures dropping like a stone YOY and their labor costs increasing. And they take up a lot of expensive office space. And getting good employees means you have to set up shop in the hot cities like Denver. I would guess that wages are going up much faster in some markets than others, and that’s where people are hiring too.
The other thing that this is leading to is more workforce automation and employee tracking. My employer has been rolling out ticketing systems and tracking employees’ activity over the past few years, with the idea that it will lead to higher productivity and dynamic routing of work. Of course it really is there because supervisor-level management doesn’t know what their employees are doing day to day and this lets the department heads crow about how overworked we all are and why we need more headcount. Every all-employee meeting starts out with “last quarter we closed (ginormous number) of tickets” speeches and lots of graphs. You know that gets rolled up to the CEO, with suitable inflation, to justify more hiring. But then the CEO want to see more data, which leads to more granular tracking, which leads to more people to massage the data…
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Gee, the Washington-based National Association for Business Economics did a survey, and, surprise! the businesses surveyed think workers get paid too much. And, surprise! Bloomberg published the results of that survey. I wonder if one of the questions on the survey was about executive compensation being too high? No, I don’t think so. So other industries want to be able to import cheap labor, just like all the uncompetitive tech companies do, so they can keep wages down. And some industry funded association does a study that says how necessary it is to import cheap labor because Americans are so darn unqualified and lazy. I guess they saw how Trump chickened out on his pledge to stop tech from importing cheap labor, and now they want to be able to do the same.
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And how many do YOU employ?
People take jobs because they do not want the responsibility of self employment. They accept dependency in exchange for perceived security.
Ask a self employed person what is their “fair” wage. Employees live in delusion, much as most people today….in the belief that they are owed something because they are TOLD this….that they tell themselves this.
Some are entitled because of their race or sex or nationality. Some are entitled because they have achieved some level of education.
NONE of us deserve ANYTHING that we cannot induce another to give. Life is unfair that way. So instead we empower government to TAKE what we cannot induce others to give voluntarily.
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So it’s alright if cheap labor is imported because workers aren’t manly enough to start their own businesses? Isnt importing cheap labor an entitlement for business and enabled by government? Or is something an entitlement only when it benefits someone else and not you?
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Choosing who you employ is not an entitlement, it is a trade with another – your capital for their time. Government enables nothing, its job is to ensure that trade does not become disabled, firstly within its dominion and then with that outside.
The phase of that whole is at the border. Domestic economy and society / foreign economy and influence.
There are litterally billions of people surviving off a dollar or two a day in the world , there are others qualified who will work for a pittance, for an opportunity.
The question is :
What model is most suitable? You cannot allow all the cheap labour to move to the US without the country becoming something else.
There is no ‘answer’.
Society, politics, business, will beat out the direction it does with regards. One thing though, you grant to much ‘rights’ to the nation to outsiders, to recent arrivals, and you will find the country gets commanded differently, which some obviously would like, and others not so much.
That is the endless battle of power and identity, of conservation and progress, that has not paused since it first started however many millenia ago, probably from when the first creature became territorial.
Today it is played out with ‘different themes’, but the root sense is very much the same.
One world government?
People will still be at it, just under a new guise that invents itself.
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LOL!
The ongoing shortage of low cost high skilled workers.
Gee whiz. What could be the solution?
The suicide of western civilization rolls on.
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You see, Mission, as an employer I need a candidate that simultaneously meets two requirements. I think that’s the tricky part that makes all of this so complicated.
The prospective employee must be both :
i.) competent and skilled enough to deliver productivity to my company
ii.) ignorant and dim witted enough to misunderstand the market value of said productivity
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As I have mentioned before the labor shortage will spill over into the fake CPI numbers at some point. The reason we have worker shortages is because parasites are paid not to work and are also incentivized to reproduce. This eventually will become a problem but who knows when. Politicians are to scared to reform the welfare system. Trump doesn’t look like he wants to fix it either.
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That’s just a dumb comment. First, unless you make a very large income and taxed fully, you are a parasite. Very few actually pay their fair share of what we spend on military and infrastructure.
2nd, think of how many workers could be employed based on the ridiculous salaries of highest level management, not so rarely of under performing companies. Pay livable wages and people will want to work. Do you have any idea what it costs to have a small family and buy your own medical insurance on 15 or 20 per hour. Totally takes away any reason to do it.
Own up to corporate welfare also as a part of the problem. Own up to paying illegals. Own up to the rip off of the 08 stock market on pensions. Own up to corporatism and what politicians are really afraid of. Maybe they aren’t actually afraid,but they sure are influenced. Own up to offshoring jobs.
Much of what you say has a ring of truth. You forget the other parts. Dumb.
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Corporate welfare lie doesn’t cut it. If Walmart salaries were as high as Costco would there be as many Walmart stores?
Walmart is a godsend actually.
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But it is still a big picture not explained away in totality by lazy workers, which is what I was responding to. Walmart also doesn’t really fit the definition that much of corporate welfare.
You may have heard of the lawsuits stemming from a prisoner holding hospital personnel hostage near Chicago. I know a number of people who are quite upset that victims are suing the hospital. I don’t know exactly how much the hospital administrator is making but I have a decent idea. Cut the admin salary by 300k and you can easily afford a second security guard for such situations when the police didn’t provide enough protection.
Corporate welfare can have a broad base of definitions.
I know that you understand that corporate welfare (and admin corruption in business and govt) does exist.
I basically agree with much of your article. However, there is a big…but…. the issue is that we have a systemic demographics problem resulting from many things including Roe v Wade and people not having kids in general.
In review:
What’s Going On?
It’s not just salaries. Obamacare and benefits are hurting many companies.
“Totally agree, but we still need to find a way to deal with pre-existing conditions. That I’m sure you know very well”.
Cheap money from the Fed keeps zombie companies alive. “That is a huge problem and a part of corporate welfare”.
Cheap money from the Fed induced (and still does) overexpansion fast of food restaurants and retail stores of all sorts. “not sure in relationship to other businesses. One of the huge changes in our nation is what we accept and will eat as food. That is changing rapidly. McD’s doesn’t have much in the way of real food. Cure for hunger pains temporarily…yesssss”
Workers really are not worth benefit costs plus an extra 3% so companies seek to automate.
Are McDonald’s workers worth $15? Please be serious. “Good one’s are and maybe more”
Amazon and online shopping are weakening retail profits. “Yes, but the savings should be building wealth in other ways including more money left over for spending. Amazon doesn’t explain about 1/2 of the retail slowdown. Some of course is in your point about cheap money”.
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I am sorry did you resemble that remark? Spoken like a true socialist libtard parasite.
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For many applicants work is something they will do when they have nothing better to do. I don’t think the shortage is as much applicants as it is people willing to come to work.
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I used to work for a large corporation. They hired a bunch of programmers in India. The reason was they couldn’t find people in the US. Shortly after, they laid off some US programmers.
Companies will never come out and say we don’t want to hire US workers because we can hire overseas workers for less.
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It’s certainly odd, isn’t it?
We insist on buying the cheapest production from foreign producers yet lament our domestic producers doing the same.
We should be free to do as we wish, whereas business owners…not so much.
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If you want to hire cheap foreign workers, go to a country with cheap foreign workers. You want the benefits of the American economy, but you don’t want to make the sacrifices other businesses have to make. America doesn’t owe you a living.
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Benefits…..like cheap foreign goods importation. What’s good for the consumer should be good for employers. If you can buy cheap imports, so should they.
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Maybe they should stop looking in the waste paper bins, rarely do you find a good employee there.
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“finding it difficult to recruit skilled workers”
Perhaps difficult at what they’re willing (or able) to pay for them? Thus the clamor for H1B visas and the unwillingness to actually and FULLY enforce immigration laws despite the campaign rhetoric?
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I have an inside track to Amazon and WFM so I cannot identify a source. It doesn’t really matter as it will seem obvious to many here. Amazon does not like middle management. That is known. WFM department managers are the middle management sergeants. There is a purge going on. WFM knows they cannot do without department managers but they are in the process of replacing them with lower paid ones. I will have more on how this process is being accomplished later.
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I find it very short-sighted for companies to want to hire highly qualifieed employee, yet are unwilling to invest in developing those skills in their own employees. Might the employee leave after receiving expensive trinig? Certainly! But if the entire industry is upgrading employees’ skills, there will be a pool of qualified workers. It will then be a contest to provide a good working environment and compensation package to recruit and retain the best of them.
I ran into the same mind-set in 1976, just out of highschool. Everybody wanted someone with experience. What’s a highschool grad with no work experience (other than fast food) to do?_aleph_
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Maybe they should pay for 1-12 education too?
Unless job skills are exclusive to that employer, training becomes a gift that will enable that employee to go out and shop their new “found” skills to the highest bidder.
And they do it every day. Why don’t we hold ourselves to the same standards we seem to hold employers to?
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Try paying people more and not keeping every penny for yourselves, baby-boomer-owners- who-were-the-youngest-kids-in-their-families-and-were-the-artists/musicians/change-the-worlders who didnt save enough for retirement and now expect everyone to work for nothing while they accumulate their required retirement millions. Hard to believe rich and poor once occupied the same foxholes and were willing to share. No more it appears.
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There is no labour shortage. There is just a labour shortage at third world wages to sell to first world people.
That’s the issue.
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Young American Men Are Choosing Video Games Over Work in Staggering Numbers
http://fortune.com/2017/07/16/video-games-users-men/
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Seems like a highly rational choice to me when companies are unwilling to pay living wages.
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My 10,000 foot view is that businesses are being squeezed in political/financial vises and thus make short term, irrational decisions to ‘make it’ and survive. No one vise fits all, different size businesses have different size and shaped vises with varying amounts of pressure being applied. We need social, tax, and other regulatory policies that loosen these constraints so that smart businesses can then kick the behind of business that don’t see the light. Today we have no evolutionary adaption going on that benefits our people, only the monied interests! The shake up we need requires strong, trusted, thoughtful political leadership which needs to be supported by highly visible popular support. Some folks thought Trump might provide this. I remain skeptical, but opened minded, that some progress is possible. Some may say that Trump isn’t getting the support he needs to facilitate change. Perhaps. But I defer to the previously mentioned prescription: “This requires strong, trusted, thoughtful political leadership which needs to be supported by highly visible popular support”! Don’t count on any chickens moving forward until you see that golden egg forming…..
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This is a topic I appreciate discussing as my charitable work is all about helping people acquire the necessary skills to get one of the many unfilled, high skilled jobs just waiting for the right candidate.
Also, as a parent, one of my main goals for my children was to make sure they had as many Skills as possible, to ensure a better chance at having successful careers. Another goal was to instill a good work ethic.
So why is it that wage increases are so low while so many jobs are unfilled?
1. The number one reason is a lack of skills.
There are plenty of lower skilled workers available to fill the lower skilled, lower paid jobs. These jobs will not see wage increases because anyone can do them. So businesses (which need to make a profit) have no reason to pay more. And since currently, the number of low skilled jobs dwarfs the number of high skilled jobs, this skews the statistics on wages. Since so many jobs require low Skills, and since these people can’t get a wage increase, this affects the statistics on wage growth.
2. Conversely, there are not enough high skilled workers.
If there were more high skilled workers then there wouldn’t be so many unfilled jobs. If these jobs were being filled at the higher wages they offer, this would bring wage statistics to higher levels, though probably not as big an increase as some expect, since the overall number of high skilled jobs is still a smaller portion of the overall job market.
I realize that these are not the only factors involved in answering the question, but I also believe that they are a significant part of the answer.
Other contributing factors include:
3. Technology and automation becoming more cost effective than human labour (ie one skilled guy with a backhoe, replacing 100 unskilled guys with shovels).
This tends to replace the low skilled jobs first. It takes longer to automate the high skilled jobs. (though countries like Japan are trying hard due to extreme labour shortages there). This helps keep the low skilled wages down. As is often mentioned by our host, a $15 minimum wage will only promote more automation of low skilled jobs.
4. Businesses desire to get the high skilled productive worker for the lowest possible wage (which is only in their best interest)
5. Reduced numbers and strength of unions, which used to be able to negotiate better wages for workers.
6. Increased competition between businesses worldwide. This forces businesses to lower costs in order to compete.
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There won’t be a McDonald’s or WalMart on every corner.
But I do see two Mattress Firms and two Starbucks on a lot of corners.
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Notice that too. How much money can their be in mattresses?
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Hastens – I swear by them – worth staying at a four seasons just for ’em. Mine must be 10 years old by now and not the slightest indent.
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Another thing to consider is that many companies operate on razor thin profit margins and have no wiggle room to pass on wage increases through higher prices (e.g. because foreign competitors have lower costs, etc).
Thus, a business with super low margins may be eager to hire more people but ONLY at a wage level that would still allow them to be profitable.
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Whatever your margin, hiring people that lower profits isn’t exactly the sharpest thing to do…..
Salary “policies,” “levels” laws regarding who you are allowed to pay what blah, blah, certainly doesn’t help. If you need to fill a key position in a hard field, chances are you have to pay lots and lots more than what some corporation’s “salary levels” allow for. For smaller companies, more than most executives get paid. As it’s not as if most executives are all that hard to replace.
Because companies aren’t allowed, or at least find it difficult, to remunerate the way sports teams do, what often ends up happening, is the prospective employee “does a startup” instead, then gets paid by being bought out. Inefficient and silly as all heck. As well as utterly destructive in the long run; as no teams stay together and focused long enough to really get anywhere when everyone spends half their day planning “their startup”. But given today’s reality, often the only option out there to get key workers.
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When institutions get into trouble they go Nazi. You have seen it in militaries losing the war. When the major in charge didn’t follow instructions exactly he gets executed in front of the troops. When he follows the rules exactly but failed to reach the objective he gets executed in front of the troops.
WFM has instituted and recently strictly enforcing a detail rules system. It used to be when the department heads would get new policy they would attempt in their own way to achieve the goal of the policy. Upper management would look away at how it was achieved and only was concerned that it was being achieved. That is now old school. Old school managers know that every department has different personalities among their rank and file. And that as a group each department has different personalities. And, each department head has a different approach to dealing with his/her employees (privates).
No longer. The institution of WFM is under great stress of non-performance. The top down rules system is what you would except from a failing army. The generals and colonels create detailed rules and enforce them. If a failure happens the major is shot. So majors will shoot their lieutenants first if there is a failure. And the lieutenants will shoot their sergeants first if there is a failure. No evaluation of the rule involved takes place even if the rule is impossible to execute.
What I now say remains anecdotal as I will not provide a source. A department manager at an unnamed location told his store manager that he felt he was not going to be able to achieve the goal he was given because of the rules he was given to do so. That he would resign and leave when the store manage had found his replacement. The department head was instantly terminated.
My take away is that the store manager was prepared for this response. That WFM is trying to get rid of the old school managers and replace them with lower paid managers. Managers they hope will follow the rules exactly. And hope they will be able to achieve the goals. If not, the store manager will just have to shoot that new manager too.
Many new store managers and assistant store managers are being hired from outside the food industry. A cosmetic department manager in one instance was hired as an assistant store manager. Amazon has no idea what it takes to run a full service perishable food operation.
All this internal turmoil will cease when Amazon changes the nature of WFM into Amazon’s image and that will result in lower labor costs in a different WFM brand.
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If your company Drug Tests new applicants perhaps you might find that there is a shortage of both skilled and unskilled employees. At least that’s the view here in Ohio, Indiana & Michigan. I know of several manufacturers that experience a > 50% exclusion of applicants because they can’t pass a drug test. Add in a certain percentage of workers who are only interested in working to cover the next months rent or car payment before they leave at lunch or who are only looking for dayshift work and most of the manufacturers here are raising wages with little to show for it.
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Marijuana needs to be completely legalized and normalized. If a company is excluding people who choose to smoke pot in the evening instead of wrecking their liver and getting fat drinking, they deserve to have labor problems.
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J. Ellison of Oracle (96.2 million) no man/woman can possibly be worth that much!
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At least he runs a company. There are entertainers (actors, actresses, musicians) who make more than that per year.
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96 million is chump change to him. Good for him!
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Its the after inflation wage that matters for workers. Bankers are confiscating workers’ wages by printing inflation. A gold standard would result in better real wages over time. Workers would be able to buy additional goods at the store with their pay, instead of bankers confiscating those goods.
The bank is printing health insurance inflation way beyond the CPI. Every dollar a company spends on benefits is a dollar that can’t be given to employees as wages. Even before the ACA health insurance inflation was to the moon. A substantial cause is those bankers printing outrageous service inflation. A gold standard would help here too, along with making more meds OTC and importable from Canada. Many Americans can’t afford to pay several times as much as the rest of the world for EpiPens and such. EpiPen prices help move employer insurance costs to the moon.
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Gold standards don’t solve that problem. The USA often had runaway inflation while still on a gold standard, because banks printed far more bank notes than they had gold to back them up. The USA see-sawed between wild inflation and deflation. All because of bank printing.
Just require 100% reserves for banks, regardless of gold or fiat. But that’s the solution that must never be discussed.
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100% reserves are a good idea. They complement a gold standard nicely.
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Nothing wrong with inflation printed by banks, as long as the only dollars they can print, are backed by the Full Faith and Credit of the bank itself. Then, it’s up to whomever, to accept those promises. Or not, and demand pay in specie.
The problem arises once you have a central bank, that can, hence will, step in to bail out banks that print once they blow up. Which is just another way of saying, a central bank that bails out those who misbehave, by stealing from those who don’t.
So, simply get rid of the Fed completely. And replace it with absolutely nothing whatsoever. Or, at most, replace it with a nuclear crater. Problem solved.
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It’s probably relative to how much pricing power the companies themselves have.
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If people have enough food on the table they will tolerate all kinds of inequality,if times get rough (depression) then the pitch forks come out.
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I’ve worked in the tech industry for about thirty years now, and what I’ve seen is that for the last seventeen years, pay for engineering positions has been pretty much stagnant. Up until the last few years, ALL the positions were offering about the same money they were paying in 2000. The single biggest tool that companies have used to suppress wages are the H1B visas, as well as outright outsourcing to India, China and Eastern Europe.
Now, salaries are (slowly) starting to creep upwards. The demand has driven offshore wages to the point where it’s no longer cheaper to hire offshore, and the higher wages at home has drastically cut the supply of people willing to come to the United States on an H1B and work for small money.
In the last 17 years, MY costs have all gone up between 50% and 400%, but my income is barely 30% higher. It’s been a battle to achieve THAT increase, and that’s only happened because I have a relatively rare skill set that’s in high demand.
I’ve made it work by cutting where I can….I don’t take vacations, I don’t buy new cars (I buy deeply used cars and drive them until they fall apart). I buy as many things used as I can. Thrift shops, Ebay, yard sales and flea markets are the main reason I’ve been able to make it work. This isn’t great news for the overall economy, but I can’t afford to worry about that.
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It has been my first-hand experience for decades that the root of the recruitment/hiring process problem are the human resources/HR people. It continues to be stunning to me how abjectly incompetent they are across the board. Or, if not incompetent, they are lying, game players that convey nothing that would make an applicant want to work for the company they represent.
If mid-sized to large to mega companies whacked their HR staff and went back to the ‘old days’ of having the position supervisor and then the department manager interview the applicants/candidates, the success rate of their hires would skyrocket, retention would grow, productivity would grow and the bottom line would reflect that.
Supervisors and managers know what they need in an employee because they know the job being advertised/interviewed for. HR people don’t know anything about that job in the vast majority of cases nor do they care. It is amazing how little they actually know about the company that they work for and are representing. And they certainly do not have a clue when it comes to reading an applicant’s resume and understanding it.
HR is a contrived ‘profession’ that has proven for the past 35 years to be nothing but a haven for incompetence yet senior management continues to allow them to exist because ‘everybody else does it that way’.
Eliminate HR and eliminate the so-called lack of qualified employees. The qualified employees are out there and applying for work but the HR people are not able to recognize that.
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I missed the usual comment from Medex Man that Obamacare was responsible for all of it – whatever it is. He must be on vacation.
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Or out kicking puppies
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Mish —
Over the weekend this Soros troll “Wrldtrst” went off about another commenter’s wife, and now he accuses me of kicking puppies.
Is that the kind of commenter you want on your blog?
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I do not necessarily read every comment – especially weekends
If you do not like a comment send me an email in real time
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Awww.. da baby no likey when someone else say something not nice ’bout him… his wittle feelins hurt. Aww.. wittle baby….
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As said below, by Realist:
“There’s only one person spewing insults, hate and violence here.”
That’s in reference to you!
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@John Smith
Whether you like it or not, US healthcare COSTS (not insurance overlay, the COSTS) were 2-3x everywhere else in the world before the ghetto ex-president decided he wanted central government controlled insurance. Once his moronic plan went into law (by rather unethical means including flagrant bribery) — US health premiums started skyrocketing 15x faster than CPI and at least 10x faster than GDP.
No matter what you socialists want or think, that is not sustainable. Even your pot smoking (recovering?) CA governor has admitted that California cannot afford universal care.
Go ahead and threaten your political violence like the national socialist party in Germany. You aren’t any better or different from them.
The fact is: US workers are not any more productive than last year, but they now cost at least 5% more just because of health insurance premiums. Revenue is up only 2%.
Anyway you cut it, the cost of having you on the payroll — not to mention babysitting your whining all day long — is climbing many many times faster than your skillset.
You aren’t worth enough to cover the Obamacare increases. That is a big part of it. But the worthless college indoctrination that made you into an infant doesn’t help your case either — you have no useful skills (whining doesn’t count). And you cost too much.
Go ahead loser. Go assault people at a Trump rally like your nazi brethren. That will show the country your true colors.
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There’s only one person spewing insults, hate and violence here.
Having said that, US companies and workers are at a disadvantage because the US spends way more than anyone else on healthcare, with poorer outcomes, all while covering fewer people. If you want to be competitive you need to copy the single payer systems that work so much better in many other countries.
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Those single payer systems don’t work better — they have accounting that conceals subsidies, they have waiting times, they have “death squads” (that is media hype, but a committee does decide who does/doesn’t get care), and they don’t cover half the things Americans take for granted.
Also, other countries have functioning train systems — the US has Amtrak. YOUR government may or may not be able to run a heavily subsidized health system, but the US government is not able to.
Threatening and assaulting everyone who voted for Trump isn’t going to make single payer work in extremist liberal California, much less the US in total.
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“Work so much better” than the USA, while mostly true, is still an unsustainable low bar. It still means: Works poorly enough to be only a generation or two away, from being replaced by whatever system they have in Syria, or wherever outsiders with less inefficient systems dragging them down, stem from.
There is no “system” that works. If there were, the Soviets would still be around and dominant. The extent to which anything works, is due to individual flexibility. Aka, lack of “systems.” As all a “system” is; whether that be “financial”, “healthcare”, “education”, or heck even “legal;” is newspeak for someone anointed and connected making decisions for others against their will. While stealing the fruits of their labor to prop the whole charade up, instead of having to do the hard work of doing something productive and useful themselves.
In the beginning, nascent “systems,” by initially regulating and standardizing interaction in a somewhat chaotic free world, may well give the illusion of working. But as they take on lives of their own, they inevitably become vehicles for those with influence over them, to further their own causes. To the detriment of those they were ostensibly created to serve.
The only way around this, is to allow unrestricted ability for all affected, to simply, and without cost, disengage. Then, you could conceivably have a “system” forced to provide actual value.
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Reblogged this on World4Justice : NOW! Lobby Forum..
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Has there even been a labor surplus or even a labor balance? The chronic labor shortage is one of our media’s evergreen stories. The purpose is to convince the public to acquiese or to even support increases in foreign labor imports. The dream would be totally open borders, which would dramatically increase the supply of labor and lower the cost of labor.
The news media is not to inform, but to persuade. Though a 2.6% increase in wages is small, it should be recognized that upwards to 70% of business costs in many industries are labor-related. So, anything that reduces or increases labor costs will have a big impact on profits. Hence, the constant shortage shouting.
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