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.

22 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”

    • Trade unionist says:

      A labor dispute of cartoonish proportions is playing out in Las Vegas, pitting two Trump-supporting casino billionaires against one of the largest private union drives in the country.
      https://www.thedailybeast.com/billionaires-frank-and-lorenzo-fertitta-are-in-hot-seat-over-union-busting-claims
      Brothers Frank and Lorenzo Fertitta have been ordered to testify about allegations that their gaming business, Station Casinos, egregiously tried to undercut labor organizing efforts. It is just the latest chapter in a complex saga that has played out for a decade. An administrative trial involving some of the claims is underway before a National Labor Relations Board judge.
      The Fertittas are best known for Ultimate Fighting Championship—the mixed martial arts promoter they sold for more than $4 billion in 2016—and for donating millions of dollars to Donald Trump and his dark-money machine, America First Action. Much of their wealth, however, lies in a gambling operation founded by their father, which is now the subject of the union-busting allegations.

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