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.

5 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/

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