Finding it Hard to Hire? Try Raising Your Wages

By Barry Ritholtz

…The obvious question “Why are Job Openings so hard to fill?”…

If the Demand for workers is there, why hasn’t the supply caught up yet? The short answer is Price. Employers have been reluctant to raise wages. This is classic problem where buyers and sellers get anchored on some past level, failing to keep up with the realities of markets.

The old trader cliché “More Buyers than Sellers” often omits the phrase “at this price level.” For any trade to occur there must always be at least one seller for each buyer (and vice versa); once there are no more sellers at a specific price level, if you want to find more stock for sale, you must look at higher price levels.

After several decades of lagging prices for low wage labor, I believe what we are witnessing is something very similar. THERE IS NO MORE LABOR FOR SALE AT $7/HOUR; so the price moves up. Once it moves up high enough so that supply matches with demand, you get a stabilization at that level…

Want to hire qualified candidates who will fill jobs, generate revenue, create profits, and lower your overall cost structure? Perhaps you should consider offering higher starting wages.

Barry Ritholtz doesn’t waste time or space on any of the penny-ante analyses offered up all over mass media. A fair piece of the crap reasoning offered up online and in print isn’t so cheap, either.

Just RTFA. This was the lead in his newsletter, today. Barry maintains his dedication to telling the truth as he sees it.

70 thoughts on “Finding it Hard to Hire? Try Raising Your Wages

  1. Working stiff says:

    “GOP governors slash jobless aid to try to force more Americans to return to work” https://www.washingtonpost.com/us-policy/2021/05/08/republicans-unemployment-worker-shortage/
    “Why Adam Smith & Karl Marx Would Both Think $15 Isn’t Enough” https://publicseminar.org/essays/why-adam-smith-karl-marx-would-both-think-15-isnt-enough/
    “An Inquiry into the Nature and Causes of the Wealth of Nations” by Adam Smith 1776
    Book 1, Chapter 8 Of the Wages of Labour https://geolib.com/smith.adam/won1-08.html
    Karl Marx. “Capital” Volume One. Chapter Six: The Buying and Selling of Labour-Power https://www.marxists.org/archive/marx/works/1867-c1/ch06.htm

  2. Welfare queen™️ says:

    McDonald’s cashiers and cooks in 15 U.S. cities will strike on May 19—a day before the fast-food behemoth’s annual shareholder meeting—to demand McDonald’s pay all of its workers at least $15 an hour amid a national labor shortage in the fast food industry. https://www.vice.com/en/article/k7885a/mcdonalds-workers-will-strike-for-dollar15-an-hour-in-15-cities
    A labor shortage is forcing chains like Subway and Dunkin’ to cut hours, close dining rooms, and push employees to work harder than ever https://www.businessinsider.com/mcdonalds-subway-struggle-to-find-workers-forcing-changes-2021-4
    See U.S. Federal Poverty Guidelines (2021) https://aspe.hhs.gov/2021-poverty-guidelines

  3. Prole says:

    “U.S. restaurants and stores are rapidly raising pay in an urgent effort to attract more applicants and keep up with a flood of customers as the pandemic eases.” (AP May 13, 2021) https://apnews.com/article/health-coronavirus-pandemic-business-5eb1432c117e217fea65bfaa138002e9
    “…the pay increases could contribute to higher inflation if companies raise prices to cover the additional labor costs. Some businesses, however, could absorb the costs or invest over time in automation to offset higher wages.
    Worries about higher inflation have dominated financial markets after consumer prices jumped 4.2% in April compared with a year earlier, the biggest gain in 13 years. But the rise was driven largely by soaring used car prices and more expensive airline tickets, not higher labor costs.”

    Re: inflation, “This Isn’t the 1980s” https://www.dcreport.org/2021/05/13/inflation-rate-dont-worry-about-it-this-isnt-the-1980s/

  4. Wage slave says:

    “What McDonald’s minimum wage raise says about fast-food franchise future” https://www.cnbc.com/2021/07/10/mcdonalds-minimum-wage-raise-and-the-fast-food-franchise-future-.html
    While he didn’t want to comment on a raised federal minimum wage, In a recent interview McDonald’s CEO Chris Kempczinski said “there’s no doubt that $7.25 in this day and age is not what you should be paying or need to be paying to be competitive in the marketplace. … wages are going up because the economy is strong.”

  5. p/s says:

    Burger King Staff Put Up ‘We All Quit’ Sign, Condemn Management https://www.newsweek.com/burger-king-staff-put-we-all-quit-sign-condemn-management-nebraska-1608916
    Burger King seems to be falling out of favor with consumers. It is attracting fewer new customers each year and losing customer loyalty to other brands. In just the last year, Wendy’s has dethroned Burger King from its #2 spot, taking its place as the second-largest fast-food chain in America in terms of sales, according to Forbes. Wendy’s success seems even more staggering when its footprint is compared to Burger King’s—the new second-place chain has thousands of locations fewer. https://www.eatthis.com/news-burger-king-decline/

  6. Supply & Demand says:

    There are more than 10 million open jobs in the U.S., the highest level ever, and over one million more jobs than unemployed people.
    Almost one-third of small business owners say they have had open positions they are unable to fill for at least three months, double the level from a year ago, according to the Q3 2021 CNBC | Momentive Small Business Survey.
    Over 40 percent are experiencing a rising cost of worker wages.
    “That hypergrowth in the hiring rate means that workers have the bargaining power to hold out for better wages before returning to work, or to leave their current jobs for higher-paying opportunities. That’s especially tough for small businesses, who likely don’t have the same resources as their bigger competitors” (Laura Wronski, research science manager at Momentive)

  7. Update says:

    Fox News host Laura Ingraham and “Bar Rescue” host Jon Taffer aren’t happy that millions of Americans are using pandemic unemployment checks to avoid taking low-paying jobs out of desperation.
    On Thursday night, the two criticized people who are using those checks as leverage to get better jobs and better salaries.
    In the process of griping about the possibility of ― yikes! ― paying living wages to workers whose real wages have been stagnant for decades, Ingraham cruelly suggested, “What if we just cut off the unemployment?” before noting, “Hunger is a pretty powerful thing.”
    Taffer was down with cutting off the cash flow to his fellow citizens, even though he personally had no problem accepting two PPP loans totaling $60,858 from the Small Business Association, according to FederalPay.org. https://www.huffpost.com/entry/laura-ingraham-jon-taffer-workers-hungry-dogs_n_6116a206e4b07c140314a6a2
    26 mostly GOP-led states have already cut off federal unemployment benefits in a bid to press people back to work. The results of that step may not be having the intended results.
    Three different analyses from UKG, Homebase, and Indeed indicated that cutting off jobless benefits didn’t lead to a substantial increase in employment or job growth.
    The Homebase analysis also indicated employment grew faster in states that kept the jobless benefits compared to those that ended them early. https://www.yahoo.com/lifestyle/fox-news-laura-ingraham-suggests-212149256.html
    “Laura Ingraham Confronts the Core Problem for Capitalists
    And workers should thank her for that.” https://theintercept.com/2021/08/14/laura-ingraham-capitalists-labor/ https://theintercept.com/2021/08/14/laura-ingraham-capitalists-labor/

    • Lett'em eat cake says:

      Florida has “made no effort” to apply for $820 million in pandemic SNAP benefits intended to help more than 2 million low-income children have enough to eat during the summer, making it one of only a handful of states ignoring the program, advocates said Tuesday.
      The funds, made available under the American Rescue Plan Act of 2021, would cover up to 90 days of summer break between school years — a one-time bonus of $375 in benefits per child under SNAP, the Supplemental Food Assistance Program, or food stamps. The benefit can be awarded retroactively.
      The Florida Department of Children and Families, which administers SNAP within the state, has not yet applied for the program, though it has had since April to do so. https://www.orlandosentinel.com/news/os-ne-florida-missing-out-on-millions-for-childhood-snap-benefits-20210824-drdik44j5zd6pfp34ymcx3id5e-story.html

  8. Karoshi says:

    “Hidden in the fantastic otherworldly narrative of Hayao Miyazaki’s Spirited Away is an allegory about society’s toxic obsession with work. The Studio Ghibli classic was released in 2001 and commented on Japan’s losing its soul to capitalism in the context of the country’s “lost decade.” Yet the film is eerily relevant to our contemporary idea of hustle culture.” https://www.youtube.com/watch?v=tkxR1TcG4n4

    • Workers' Paradise™️ says:

      “China is putting companies that overwork their employees on notice.” https://www.cnn.com/2021/08/27/tech/china-supreme-court-996-intl-hnk/index.html
      “The country’s top court on Thursday issued a lengthy condemnation of what’s commonly known in China as “996,” the practice of working from 9 a.m. to 9 p.m. six days a week that is said to be common among the country’s big technology companies, startups and other private businesses.
      “Recently, extreme overtime work in some industries has received widespread attention,” the Supreme People’s Court wrote in its statement, which it issued with the Ministry of Human Resources and Social Security. Workers deserve rights for “rest and vacation,” adding that “adhering to the national working hour system is the legal obligation of employers,” the court wrote.
      It cited several examples of companies across a range of industries it said violated labor rules, including an unnamed courier company that it said told employees to work 996 hours. Telling employees to work that much “has seriously violated the law on extending the upper limit of working hours and should be deemed invalid,” the court said.”

  9. p/s says:

    Walmart’s wage bump signals pressure to raise pay in industry battle for labor https://www.reuters.com/business/retail-consumer/walmart-bumps-up-hourly-wages-565000-workers-by-1-ahead-holidays-2021-09-02/
    Worth nearly $800 billion last year in the United States alone, the holidays mark the busiest time of the year for stores, making up a majority of their annual sales as people shop on and around Black Friday, Cyber Monday and Christmas.
    “The biggest challenge for retailers going into the holiday season is going to be how do they get the sales associates and the warehouse workers in position to fulfill demand”

  10. Huelga says:

    A grainy photo of a lone Kellogg’s factory worker holding a picket sign in a torrential downpour has gone viral on social media, amid a 1,400-worker strike that has shut down all of Kellogg’s ready-to-eat cereal factories in the United States.
    Thousands of people are sharing the picture on Twitter, Reddit, and Facebook groups as a wave of striking workers, galvanized by stagnating wages, extreme hours, and the pandemic, is emerging across the country. https://www.vice.com/en/article/jg8y3p/the-kelloggs-worker-in-this-viral-photo-told-us-why-hes-braving-the-storm

  11. Update says:

    Donations pour in from community for John Deere union workers on strike in Ankeny (Iowa)” https://www.kcci.com/article/donations-pour-in-from-community-for-john-deere-union-workers-on-strike-in-ankeny/37981333
    “Labor flexes its muscle as leverage tips from employers to workers” https://www.cnn.com/2021/10/16/economy/workers-strike-john-deere-iatse-kellogg/index.html
    LOS ANGELES, Oct 16 (Reuters) – “A union that represents about 60,000 behind-the-scenes workers in film and television reached a tentative deal with producers on Saturday, averting a strike that threatened to cause widespread disruption in Hollywood, negotiators said.
    The new labor agreement is subject to approval by IATSE’s membership.” https://www.reuters.com/world/us/hollywood-film-crew-union-reaches-tentative-deal-averting-strike-2021-10-17/

  12. Monetarist says:

    “Lift the minimum wage and employment still rises? How to anger the establishment and win a Nobel Prize” https://www.abc.net.au/news/2021-10-13/nobel-prize-in-economics-2021-david-card-minimum-wage/100531994
    “Scientists Didn’t Believe in Meteorites Until 1803 : The l’Aigle meteorite fall involved more than 3,000 pieces of rock and numerous witnesses, and it changed everything” https://www.smithsonianmag.com/smart-news/1803-rain-rocks-helped-establish-existence-meteorites-180963017/

  13. Working stiff says:

    ‘A slap in the face’: nurses’ strike signals Kaiser’s end as union haven : The management’s initial offer of 1%-a-year raise and 26% cut in salary for new hires seen as a wage squeeze during pandemic https://www.theguardian.com/us-news/2021/nov/13/kaiser-permanente-nurses-unions-strike
    John Deere and the United Auto Workers may have come to a contract agreement.
    In a statement, the UAW union said that John Deere has made a last, best and final offer to the UAW negotiation team.
    The union said the offer includes modest modifications to the last tentative agreement.
    The details of the deal won’t be released until it goes to all the UAW members.
    For almost a month, 10,000 union members working at John Deere have been on strike. They will remain on strike until they all agree on a deal. [article includes link to UAW statement] https://www.kcci.com/article/john-deere-union-united-auto-workers-strike-contract-deal-best-offer/38240612
    Film Crews Begin Voting On New Contract That Would Avert Strike : Voting will take place all weekend amid rumblings that International Alliance of Theatrical Stage Employees members are divided. https://patch.com/california/hollywood/film-crews-begin-voting-new-contract-would-avert-strike

  14. Old gaffer says:

    “IATSE members have ratified their new film and TV contracts, averting a showdown with the Alliance of Motion Picture and Television Producers after contentious negotiations that began six months ago. However, union leadership suffered a harsh rebuke as LA locals rejected the deal in the popular vote.” https://deadline.com/2021/11/iatse-film-tv-contracts-ratified-1234873770/
    “The agreement was struck just hours before a strike deadline that would have shut most of Hollywood down.”

  15. Janky says:

    ‘Workers are very afraid’: HelloFresh employees aim to unionize amid claims of abuse and safety issues https://www.theguardian.com/us-news/2021/nov/11/hellofresh-employees-union-claims-abuse
    HelloFresh is the largest meal-kit delivery service in the world with operations in 14 countries that employ over 11,800 people.
    The company’s profits soared during the pandemic and it had the largest market share of meal kit providers, with 2020 sales of $1.1 billion. HelloFreshexpects sales to rise by 62% this year https://www.pymnts.com/earnings/2021/meal-kit-company-hellofresh-expects-sales-to-rise-by-62-percent-this-year/

  16. Solidarity says:

    “On Black Friday, a group of unions and grassroots organizations, known as the Make Amazon Pay Coalition, will stage coordinated protests and strikes in at least 20 countries to demand Amazon pay workers a living wage, respect their right to join unions, pay its fair share of taxes, and commit to meaningful environmental sustainability.” https://www.vice.com/en/article/m7vebb/amazon-will-face-black-friday-strikes-and-protests-in-20-countries

    • Ante up says:

      Starbucks Workers Just Unionized. Now The Real Fight Begins. https://www.huffpost.com/entry/starbucks-workers-just-unionized-now-the-real-fight-begins_n_61b37898e4b068effec9eec2
      Finalizing a first contract can be notoriously difficult, in large part because companies often drag out negotiations and hope union support will weaken over time. Starbucks has roughly 9,000 corporate-owned stores in the U.S., with 220,000 workers in them. Now that the union has a toehold, there is little incentive for the company to offer the Buffalo workers an attractive deal that could encourage other shops to unionize.
      Most employers in Starbucks’ position would rather send a message to employees that a union gains nothing and organizing is futile; they want to reach a contract with only weak gains for the workers or, ideally, no contract at all. The most aggressive companies react to unionization at a single store or two by simply shutting those locations down and prompting a legal fight over the closures.

      • Brewing says:

        Starbucks waged ‘shock and awe’ campaign on workers, union claims
        https://www.aljazeera.com/economy/2021/12/17/starbucks-waged-shock-and-awe-campaign-on-workers-union-claims
        The union that won a landmark vote at a Starbucks Corp. location in Buffalo, N.Y, last week is trying to overturn an unsuccessful vote at another area store.
        The labor group, Workers United, urged the National Labor Relations Board in a filing late Thursday to reject the results of the failed union vote, saying that Starbucks waged a “shock and awe” campaign to intimidate workers. It filed an identical complaint for a store where the election results are still in question.
        Workers United, an affiliate of the Service Employees International Union, is trying to expand its foothold among the thousands of corporate-run Starbucks restaurants in the U.S. after last week’s win. The union petitioned in August for store-by-store union votes at three restaurants in the Buffalo region.

  17. Pony Up says:

    A group of Activision Blizzard workers calling itself A Better ABK Workers Alliance announced that its members are taking part in an open-ended strike “until demands are met and worker representation is finally given a place within the company.”
    “We encourage our peers in the Game Industry to stand with us in creating lasting change,” the worker group tweeted Thursday morning. https://arstechnica.com/gaming/2021/12/activision-blizzard-workers-announce-open-ended-strike-and-union-drive/
    This week’s strike is a more open-ended work stoppage in direct response to the dismissal of 12 quality assurance contractors at subsidiary Raven Software late last week. The Washington Post reports [link] at least 200 employees across the wider company joined that walkout starting Monday, including “all of Treyarch’s central QA.” Those strikers promised not to return until “every member of the QA team, including those terminated on Friday, [are] offered full-time positions,” as the group put it.
    A GoFundMe Strike Fund raised over $100,000 of its $1 million goal in roughly 12 hours. See statement by employee organizer Jessica Gonzalez https://www.gofundme.com/f/abk-strike-fund

  18. p/s says:

    Sanitation Workers’ Strike In Anaheim, Huntington Beach Could Delay Trash Pickup Across Orange County https://losangeles.cbslocal.com/2021/12/10/sanitation-workers-strike-anaheim-huntington-beach-delay-trash-pickup-fullerton/
    5-day strike at McKenzie-Willamette Medical Center ends Saturday https://nbc16.com/news/local/5-day-strike-at-mckenzie-willamette-medical-center-ends-saturday
    Columbia University threatens graduate workers with replacement if they continue strike
    The students are striking over better pay, healthcare and third-party arbitration for harassment and discrimination complaints https://www.theguardian.com/us-news/2021/dec/09/columbia-university-student-worker-strike

  19. Underdog says:

    “The worker revolt comes to a Dollar General in Connecticut : A call to a union triggers one of the most lopsided battles of the ongoing low-wage-worker revolt (Washington Post) https://www.washingtonpost.com/nation/interactive/2021/worker-revolt-comes-dollar-general-connecticut/
    “On one side: six Dollar General employees, most of whom were making the minimum wage or just slightly above it. The group included a community college student, a struggling musician who had recently moved back home and two single moms, one of whom was Parsons. On the other: a company with yearly revenue approaching $34 billion, more than 157,000 employees and 17,683 stores, not one of which was unionized.”

  20. 働く権利 says:

    A federal labor board is reviewing a decision by one of its regional officials to deny a union from trying to organize fewer than 100 of the thousands of employees at Nissan s auto assembly plant in Tennessee.
    A 3-2 decision Tuesday by the National Labor Relations Board — now with a Democratic majority under President Joe Biden — ordered a review of the June ruling that prevented a vote limited to 87 tool and die technicians at Nissan’s Smyrna plant, about 25 miles (40 kilometers) outside Nashville
    The NLRB’s new order says the decision by an acting regional director “raises substantial issues warranting review.” https://www.independent.co.uk/news/world/americas/joe-biden-nissan-nashville-chattanooga-united-auto-workers-b1980952.html

  21. Wage theft says:

    US government sues Georgia auto-repair shop that dumped more than 91,000 pennies in a former employee’s driveway https://www.businessinsider.com/us-sues-company-dumped-91000-pennies-in-ex-employees-driveway-2022-1
    In a complaint filed with a federal court in Georgia, the Department of Labor claims the auto-repair shop bilked its workers out of money they were owed. The lawsuit accuses the company of “repeatedly and willfully” failing to pay time and a half for overtime, instead relying on a flat rate of pay regardless of whether someone worked more than 40 hours in a week.
    …”I honestly didn’t think anything would be done,” Flaten, 27, said . He didn’t expect much when he first argued his wages had been stolen. What’s happened since has restored some of his faith in government, and he thinks it should be a lesson to other workers who find themselves in a similar position.
    “They definitely should not be scared to reach out,” he said. “Speak up. Don’t be quiet about it. Because if you’re quiet about it, it’s just going to continue to happen to you and everybody else.”
    Department of Labor complaint https://www.documentcloud.org/documents/21174082-us-department-of-labor-legal-complaint?responsive=1&title=1

  22. Penciller says:

    Today the workers of Image Comics voted 7-2 in favor of unionizing with the Communications Workers of America. Previously, management refused to voluntarily recognize what is now, officially, the first union in comics. Comic Book Workers United is the union of Image Comics workers https://www.vice.com/en/article/y3v355/image-comics-workers-win-union-election-in-historic-first-for-comics-industry
    “…Image was founded in 1992 as a response to the predatory relationship between publishers and creators. Superstar artists working for the traditional publishing duopoly of Marvel and DC, inspired in part by the creators’ rights and self-publishing movements of the two immediately preceding generations—which included, at one point, a union drive led by legendary artist Neal Adams—wanted more control over their working conditions and intellectual property. When they didn’t get it, they left and founded Image.” https://www.vice.com/en/article/y3vdbx/the-image-union-is-the-future-of-comics

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