Occam's Razor

There’s something going on in the labor market that’s caught my eye. Low wage workers seem to be rebelling.

It’s hard to miss the stories in the news. Despite a 6.1 percent unemployment rate nationally in the United States, workers don’t seem to be anxious to return to the workforce. As a result many employers, mostly those who pay low wages, have been squawking that they can’t find enough workers.

There may be a lot of reasons that low wage workers aren’t anxious to return to the workforce. For women, finding childcare at all, not to mention affordable care, is still a problem, particularly since children under 12 don’t yet have an approved covid-19 vaccine. Not all students are physically back in the classroom. Parents can’t leave underage kids at home to fend for themselves, at least not if they want to keep their kids.

But covid-19 has also exposed that many of these jobs offer double jeopardy: both low wages and high risk. The high risk part is new because now the unvaccinated can kill you. It’s not too surprising then that employers seem to be squawking most loudly in states with the lowest vaccination rates. If you work in Alabama or Mississippi where the vaccination rate is in the thirties or forties, chances of getting covid-19 remains very real. Even if vaccinated, it’s reasonable to be leery and want to wait to see what happens.

It’s even more reasonable to shop around for a different job, one that allows working from home if having to deal with your kids suddenly telecommuting recurs. It’s a lot safer than working behind the deli at the local Kroger. There are no commuting expenses to deal with, and knowledge workers tend to be paid decently, if not well. I’d be hunting for one of these jobs if I were in that position.

The governors in these principally red states know what playbook to follow: cut any extra unemployment benefits as soon as possible to get these lazy-assed freeloaders back to work! They are a burden on society, just not really on the state, since these extended unemployment benefits are paid by the federal government and these benefits usually get injected quickly right into their local economy. There are few things that annoy red state governors more than idle people not toiling away at multiple jobs for meager pay rates.

In any event, a lot of these employees seem to be operating from a new playbook which is: if you want me to apply, pay me what I’m worth! At least some employers are figuring it out and are paying a living wage — $15/hour or more — simply to stand up their businesses again. These employers don’t seem to be complaining about finding workers. It’s the ones offering $7.50/hour or $9/hour or $2.30/hour plus tips that are complaining. Their whole business model seems to be collapsing.

Bigger companies seem to have figured out that they don’t have much choice. Amazon may have sky high accident rates, but their warehouse workers at least make $15/hour even while rushing around trying to meet crazy productivity targets. Lots of other companies have followed suit and have even bested Amazon’s rates, including Costco. I’ve never seen a help wanted sign out at our local Costco. It’s probably because they start employees out at $16/hour.

In reality, it’s stretching it to call $15/hour or $16/hour a living wage. In case you haven’t noticed, home prices are going through the roof, and since most of these employees rent, their rents are rising much faster than the general cost of living. There’s a lot of inflation going on right now, particularly in stuff you have to have, like food. Expecting someone to take a job for $7.50/hour in inflationary times is stupid. Employees are going to shop around for the best value, which might mean two $15/hour jobs instead of the three $9/hour jobs they used to string together.

In any event, this seems to be new. The free market is acting, well, freely! The supply of workers willing to work for $9/hour is much smaller than the number of $9/hour jobs out there. We don’t expect meat prices to fall because we find it too expensive – we just start eating more vegetables instead. Why should employers expect employees to discount their wage rate if some other employer is willing to pay them more?

Cry me a bier. What’s happening is called a comeuppance. Employers need to figure out whether they want to stay in business by paying employees more money, or go out of business. It is likely that our labor force will continue to shrink with so many baby boomers like me retiring and with few immigrants coming into the country to increase the job pool. In many ways, Trump’s foolish immigration policies just made the situation worse. While crying, these employers might want to take a long and hard look in the mirror. They might discover who’s really to blame for their mess.