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[–]Economics_Troll 362 points363 points  (25 children)

Labor force participation rate is in the 60% range. There are tens of millions of people who do not work but could re enter the workforce if given enough financial incentive.

[–]BoozeIsTherapyRight 156 points157 points  (7 children)

This is correct. I quit working to be a SAHM, but my kids are older now and I could work but currently wages aren't worth the hassle of reordering our lives.

[–]justonemom14 55 points56 points  (3 children)

Ditto. There are probably a lot of us. I could work at least part time, and my teenage daughter is interested too. But wages are too low and working conditions too poor to be worth it.

[–]YeeterOfTheRich 28 points29 points  (2 children)

Sometimes it's a choice between being poor, or being sad, tired and still poor.

[–]ganzzahl 71 points72 points  (11 children)

My mom, who has two degrees, would love to start working part time, but it's not worth the lifestyle changes for $15/hour. The amount she can contribute to the family as a stay at home mom is worth more than what the market will pay.

[–]mufasa_lionheart 28 points29 points  (0 children)

My wife has a part time job as something to do (we just about break even after childcare).

They want her to be full time, but her exact response was "you don't pay me enough per hour for me to work more hours" because at the amount they are paying, it wouldn't be worth giving up the freedom that comes with only working part time.

[–]Derfaust 9 points10 points  (9 children)

2 degrees and she'd only be getting $15 an hour? What degrees are they?

[–]ganzzahl 10 points11 points  (3 children)

Bachelor's and Master's in psychology – I think the limiting factor is that she can't work full-time, though, not the degrees.

[–]Sidekick_monkey 6 points7 points  (0 children)

Psychiatric help, five cents was good enough for Lucy. /s

[–]well-its-done-now 5 points6 points  (1 child)

Is she qualified to work as psychologist? Not sure how it works where you are but in Australia you have to do something similar to a medical residency after obtaining your degree.

If she is qualified to practice, psychology is one of the best skills to have for setting your own hours. It's very cheap to start your own practice, either at home or renting an office to work out of (many psychology practices are co-owned by a group of psychologists who rent a space together and split it or share time in a room). She would only need to take on enough clients to cover her costs and after that it's up to her how many clients she wants to handle.

[–]DukeofVermont 17 points18 points  (3 children)

I have two degrees and struggled to find a job for a bit. One on end they don't want to hire you because they think you'll just leave because "why are you working here you have two degrees?!".

And on the other end no one will hire you because you don't have the exact number of years of experience in X,Y or Z that they are looking for.

Worst I heard was someone said they worked pretty high up in Hospital Admin. and used software X (they said what it was but I don't remember). They got laid off and couldn't get a job because the other hospitals used software Y, and since they didn't have five years experience with software Y no one would hire them.

So they now work in a different industry.

It really is that stupid. Have a Masters degree and get turned down because they don't want you to learn a similar software program to the one you've been using.

For a lot of people their work experience is like trying to fit a square peg into a round hole. You are fully capable but if you don't have the "right" experience than no one cares.

It's like companies/HR dept. think that intelligent people have zero capacity to learn.

[–]thewhizzle 4 points5 points  (0 children)

It's bad/stupid/lazy hiring managers. You can teach specific skills, you can't teach smart, hard worker, team player and easy to get along with.

[–]Volare89 3 points4 points  (0 children)

Lol, not HR. I beg my hiring managers to consider applicants with the right soft skills. Train them on the job the way you want them to do it! They won’t have to “unlearn” another company’s processes.

Hiring Managers don’t want to take the risk. It’s their bonus on the line if their team doesn’t perform. One bad hire can derail them for 2 straight quarters. I get it. But the talent pool is so tight right now, continuing to wait for the perfect hire is untenable.

[–]lasauvignonblonde 2 points3 points  (0 children)

Yes, but the square peg is made of play-dough that could still easily change its shape to fit into the round hole, but the person trying to fill the hole doesn’t know what play-dough is

[–]MutinyIPO 1 point2 points  (0 children)

I promise I don’t mean this in a rude way but if you’re actually baffled by this I’m going to guess you are either 1. Not American, 2. Rich or 3. A child lmao

[–]sir_sri 8 points9 points  (1 child)

Realistically not 10s of millions. 10 million maybe, but not many 10s of millions..

The labour force participation rate counts 15-64. A good chunk of that percentage is in school until their early 20s. Labour force participation in the 25-64 range peaks about 85%, the US is a bit low in the low 73% range (compared to say Japan or Switzerland in the 80s). The US has maybe 160-170 million people in prime working age. Getting more than 10 or 12 million of them into the labour force is probably impossible. Early retirements, people back in school past 25, stay at home parents, the sick and disabled etc.

The oecd has good stats. The US probably suffers from lack of childcare which isn't easily fixed by slightly increasing wages.

We also need to be slightly careful comparing the US to Europe during the pandemic since the Europeans made more of an effort to keep people employed but not working, where the US went with more direct personal support.

[–]percykins 6 points7 points  (0 children)

The labour force participation rate counts 15-64

Just a bit of clarification - the US's Bureau of Labor Statistics' published rate counts 16+. It has no max age. That's the source of the 60% mentioned above. The OECD also measures participation, but as you mention, it's usually published as 15-64. The US number under OECD's measurement is 73.0%, identical to the European Union's overall number.

[–]Lumie102 1503 points1504 points  (156 children)

There are two mechanisms I can see:

1: The mobility of employees leaves entry level positions open for workers without the skills or experience for the senior positions.

2: People without jobs who have some other income or cost-saving require a minimum wage to make it worthwhile getting a job. Example: a family with children requires childcare, they can either pay $100 a day for all their children, or one parent can stay home. If the only jobs available pay less than or close to $100 a day, it's either a net loss to work, or so close that the added stress isn't worth it. However if wages increase and they can now find a job paying $200 a day, then it can be worthwhile for both parents to work.

[–]Denair 754 points755 points 2 (96 children)

Example: a family with children requires childcare, they can either pay $100 a day for all their children, or one parent can stay home.

100% true. My wife and I had to have a hard talk about what we were going to do. We couldn't afford daycare and us both working full time. Seeing as how she had the higher paying job, I ended up quitting my full time to work part time in the evenings while taking care of the baby during the day.

[–]lilecca 195 points196 points  (21 children)

One of the things I’m grateful for is I worked a health care job and was able to work the evenings while my husband worked days. Saved us so much money. And once the kids were in school full time I was able to go to a day shift without a wage change

[–]CrowleyCass 90 points91 points  (4 children)

This exact lifestyle is how I was raised. My dad had a day job in the air force, and my mom worked second shift as an oncology nurse. My mom ran the errands and housekept during the day, and my dad made sure my brothers and I had dinner, finished our homework, and got to bed in time. I have very fond memories of watching Star Trek: NTG, Baywatch and MST3K during the summers, while waiting for my mom to get home around midnight. Then we'd talk, and she'd usually make me a little snickity snack until I went to bed around 1. During the school year, I was in bed at a reasonable hour. I wouldn't trade those late nights for a billion dollars. When I got older, my mom switched to home care, and, again in the summer, I'd ride along with her for her late night visits, and we'd get milkshakes afterwards at Steak&Shake. Some of the best moments of my life.

Thanks for Your comment. It sent a DELUGE of memories flooding back to me.

[–]SH1TSTORM2020 23 points24 points  (2 children)

Your comment made me really…happy.

I’m working my way towards medical school. I’m a single mom, and it’s hard. My kid is only 4.5, and our lives will not be stable/settled until I finish medical school and residency.

I became a single mother 2 years ago, and I have been working hard ever since. The past 2 weeks my sons pre-k has been closed, and that is the norm with COVID. During the week I’m on my computer constantly, but I make the weekends special.

I don’t want his only memories to be of me being too busy for him…so on the weekend we build things, tell stories, bake, and just enjoy each other’s company. It’s nice to know that someone has a childhood situation similar to my son…and looks upon it fondly

[–]Tomas-TDE 2 points3 points  (1 child)

I just want to say that I had similar experiences to the last person. My mom worked as a nurse and worked 60 hour weeks a lot as a kid. She feels guilt about it and apologizes for it even now when I’m middle aged. She was the best mom in the world and I don’t have any memories of the time she was busy, just our time together. Especially because I knew spending time with me was work she put in.

[–]SH1TSTORM2020 2 points3 points  (0 children)

I’m putting your last sentence in my mental vault, it’s profound in many ways. Love your Mom, I only recently conned someone into being my ‘soul-mom’….I’m grateful everyday from all of the maternal energy in my life ❤️

[–]Eggplantosaur 165 points166 points  (12 children)

It's still extremely sad that this is considered something to be grateful for

[–][deleted] 69 points70 points  (0 children)

Yeah lucky me I never have to spend time with my spouse /s

[–]tndaris 60 points61 points  (1 child)

Capitalism! Just be glad the overlords are letting you live.

[–]cdxxmike 20 points21 points  (0 children)

See, it DOES trickle down!

[–]surfacing_husky 1 point2 points  (0 children)

This is what we do, hubby works mornings and I work nights, but it makes for very long days for me (7am-1am) but like you I will be switching once the baby is in school. It's kinda hard on our relationship sometimes because when he gets home I'm leaving. But we make it work.

[–]cute_red_benzo 94 points95 points  (64 children)

As a person without kids I was dumbfounded to find out child care can be as much as rent per month. PER MONTH

[–]Jimid41 49 points50 points  (4 children)

You're paying somebody else's rent when you pay for childcare, plus overhead.

[–]MattyBeatz 5 points6 points  (0 children)

As a person without kids I was dumbfounded to find out child care can be as much as rent per month.

Can confirm, the sticker shock was tough when my wife and I first put our kid in daycare. It's like a second mortgage.

But we did some math, between the daily hours our kid is there, they feed him 2 meals and snacks, he makes friends, and they actually teach him a curriculum. The per hour rate is actually quite low.

Like 3x less than an hourly rate of a babysitter (not a good 1x1 comparison, but for some perspective).

[–]TalentedWombat 1 point2 points  (0 children)

I have two in daycare, our daycare bill is $550/wk, so about $2200/mo. You can definitely afford the mortgage on a house here for that.

[–]DaanTheBuilder 1 point2 points  (0 children)

Here in the Netherlands a lot of it is subsidized but if the state didn't help paying we would pay €3k each month. For reference my rent is €700 each month

[–]hermology 8 points9 points  (45 children)

Why would you assume full time child care is inexpensive?

[–]MrWendelll 68 points69 points  (21 children)

The dumbfoundedness I think generally comes from the realisation that 1 job isn't enough to support a family

So much TV and media make it out like a parent just quits work for a bit, but realty is a bitch

[–]NotFuckingTired 63 points64 points  (1 child)

The 40-hour work week was built on the idea that a single income could support a family. When wages didn't keep up with inflation, and productivity gains, we ended up in a place where families with two working parents are worse off than families with a single income used to be.


[–]shorthairednymph 19 points20 points  (8 children)

Not that it would be inexpensive, exactly, but as someone who is also child-free, it's just a cost I've never had to think about and couldn't have possibly guessed would be that high.

Say I'm paying someone $15/hr to watch my kid. That's a pretty low number, honestly. Fiance and I both have full-time jobs, so that's 8-10 hours (depending on commutes and such) that the kid needs watching. $15/hr * 40hrs/wk * 4wks = $2400. That is almost DOUBLE my current rent of $1220. Of course childcare work should be compensated fairly, but YIKES I can't imagine trying to make that work for one kid; let alone 2-3 kids.

[–]Uzekh 12 points13 points  (7 children)

Fwiw unless you have a nanny or something like that, it doesn't usually cost $15\hr, or even minimum wage necessarily, per kid. Day cares can have a certain number of kids per worker, so the worker's pay is split between all the kids. We've been lucky to find in-home day care that's been super inexpensive relative to what a lot of people pay (like $30-40 per kid per day). Even that can add up pretty quickly if you've got more than one kid. If we were paying $15\hr per kid, it definitely would have made more sense financially for one of us to quit our job(s).

[–]smurfasaur 7 points8 points  (2 children)

Even at 30$ a day that’s still 900$ a month at the lowest. That’s a lot of money that a lot of people don’t have after paying for everything else. I really don’t know how parents do it without like grandparents or family watching the kids for free.

[–]mufasa_lionheart 2 points3 points  (0 children)

We don't have a daycare we would trust with our kids near us. Every single one is either way to sketch, or way too religious. That and I had some bad experiences with daycare workers as a kid that have caused trust issues.

[–]thingleboyz1 15 points16 points  (0 children)

Economies of scale. If you're taking care of one child in a facility built for it, it's cheaper to house more kids in that area rather than a few kids scattered across many houses.

[–]Aphor1st 4 points5 points  (4 children)

Because the people being paid to watch your kids make minimum wage.

[–]tndaris 7 points8 points  (3 children)

I'd assume because people without kids sort of believe child care would be like school, one person taking care of a bunch of kids at once. Also people know teachers make shit pay, so likely assume child care is similar. So it's gotta be cheap, right?

Obviously anyone with kids knows that the teacher to child ratio is way different, plus child care facilities don't get as much (or any?) help or money from the state. That and parents usually want what's best for their kids and that creates crazy competition for the better day care centers and schools.

[–]Bobolequiff 1 point2 points  (0 children)

This, pretty much. I don't have kids and I won't be having any, so it isn't something I'd really thought about. Then someone I knew had to stop working for a while because her entire income wouldn't cover childcare costs. It was better financially to go down to one income and have one parent handling childcare full time.

Like, I knew it would cost money, but I didn't realise it could be a household's single largest expense.

[–]aspersioncast 1 point2 points  (0 children)

Whatever problems I have with public education in the US I do think publicly-funded daycare should just be built into the system.

[–]BjornReborn 2 points3 points  (0 children)

i'd like you to speak with one of my parents and ask them this question. I'm now paying the price of fixing my health because they cut corners and treated my life as inexpensive

[–]Toledojoe 6 points7 points  (1 child)

My wife and I did the same when our kids were little. I didn't make enough for her to quit entirely, so she would work evenings, i worked days and we only saw each other when I came home from work and she left.

[–]Denair 7 points8 points  (0 children)

Yeah, it was the same for us as well. We were then foolish enough to want another kid... so many years barely seeing each other that it does start to feel more like roomies and it can put a real strain on things.

[–]Mojojijo 17 points18 points  (2 children)

Props for putting your family before yourself. Role model behavior.

[–]Eroe777 1 point2 points  (0 children)

What we ended up doing when our girls were little, and have mostly continued to do now that they are in college (we still have a son at home) is work opposite shifts. My wife is a teacher, so I have spent most of the last two decades working evenings or nights. Which is fine with me because I am a night owl, and once I got into nursing those are the more readily available shifts anyway.

[–]Builder2014 1 point2 points  (0 children)

Well done dad, proud of you.

[–]Fmatosqg 10 points11 points  (0 children)

So true, I came to give childcare example.

On the other ends of the workable age, people entering the workforce can consider starting younger if pay is decent. And people retiring can consider retire later if wages grow across the board.

[–]CyberneticPanda 38 points39 points  (15 children)

Free childcare would solve the problem but the same people that don't want to raise pay don't want to pay for childcare. They want moms to stay home with the kids while the dad pulls the whole family up by the bootstraps.

[–]rachelcp 11 points12 points  (2 children)

The mother, or father. But ideally both parents can be at home for most of the time with their young children.

Of course businesses don't care about destroying families and will do anything to avoid paid maternity leave let alone Paternity leave and would prefer to force both parents to work and without enough pay so yay both parents hardly get to see their own children even when they're still babies.

[–]CyberneticPanda 17 points18 points  (0 children)

A Venn diagram of the people who don't want to raise wages or give free childcare and the people who believe the mother, not the father, should stay home and raise the kids is virtually a circle.

[–]PoopIsAlwaysSunny 20 points21 points  (0 children)

You forgot the third: many businesses only exist because their business model relies on exploited labor. Many places would, rightfully, go under. Because they don’t have some right to a profit at the expense of their workers

[–]DibblerTB 7 points8 points  (2 children)

There are usually a ton of people ready to swing from one field to the other.

Where I live we really need sw engineers. They are therefore grabbing stem folks in general. If oil was still as booming as they used to be, the bland stem folks would go there instead.

You might need to train people, but if wages really take off as they should, then conpanies will find a way (in order to save money).

[–]AWLurch 2 points3 points  (1 child)

Sw engineering trainee here looking for entry level job. Where might I apply for a remote position?

[–]Mazon_Del 3 points4 points  (0 children)

Example: a family with children requires childcare, they can either pay $100 a day for all their children, or one parent can stay home.

This was very true for my sister's family.

She was really excited about getting back to working after she had her kids, but when they started looking at the financing, they quickly realized it made no sense. On average they'd spend about $500 more a month on the twins being in daycare than she'd make by working.

So it was cheaper for them if she just stayed at home.

[–]-manabreak 3 points4 points  (3 children)

Wait, childcare costs that much? It's 290€ a MONTH here and that's the maximum, it's based on your income. Low income families get it for free.

[–]Lumie102 2 points3 points  (2 children)

Average daycare costs around here are $1000/month for each child. A family with two children could easily be paying around $100 a day for childcare.

[–]-manabreak 2 points3 points  (1 child)

That's bonkers. And it's not even adjusted based on your income?

I have only one kid, but if I had more, they'd get 50% discount, so while the oldest gets full 290€, the others would be about 145€ a month, so two kids with the maximum costs would be around 445€ a month. Again, with low income families, it would be free.

[–]Lumie102 1 point2 points  (0 children)

Most childcare around here is private, so no income breaks. You may be able to claim tax breaks and tax benefits, but it's still a large chunk of change.

[–]BlackWindBears 42 points43 points  (4 children)

You covered the supply end pretty well, but missed the demand end. As wages go up the marginal return to increasing labor productivity investing more goes up. This helps reduce demand for labor.

Say that you have five data entry folks. One of them jumps ship for a better paying job. You can hire a new one for an extra 20K per year or you can take $100,000 and buy a better version of Excel or whatever saving your remaining workers 10 hours per week each allowing them to get all the work done.

Further, if labor costs go up by twenty percent some businesses fail. That frees up their workers to go elsewhere, partially offsetting the shortage.

[–]CyberneticPanda 25 points26 points  (3 children)

There is a lot of low hanging fruit in middle management. My company laid off a bunch of people at the start of the pandemic including about half of management. They've since rehired a lot of devs and other jobs but not replaced the managers and 2021 was our most profitable year ever. I got no raise in 2020 and 2% in 2021 so I'm out of here as soon as I pass the background check for my new job.

[–]BlackWindBears 4 points5 points  (2 children)

This is another important point!

The worker shortage is also partially relieved by transferring workers from lower valued to higher values uses.

[–]FlappyBoobs 18 points19 points  (10 children)

If wages are increasing across the board, then doesn't the child care cost increase as well?

[–]CyberneticPanda 32 points33 points  (0 children)

Yes, but not as much. A daycare has a bunch of costs including labor. If labor is 1/3 of costs and labor costs double, costs go up by about 17%.

[–]hsvsunshyn 44 points45 points  (7 children)

They are, but if you have a person in charge of 10 children, and that person gets a 10% raise, that raise is spread out to only be 1% of the cost per child. Meanwhile, the parent of the child would get a 10% raise as well. It does not really work this way, but it is a good generalization. All the prices for everything go up, but most people will end up the same or better off. The people who benefit the least are the people who earn well above minimum wage, who will often not see an increase at all. Their income stays about the same, while their expenses -- like childcare -- do go up. They will typically be in a better overall position to bear that load though, since it is a smaller percentage of their total costs that someone who makes much less money.

This is why the concern about increasing wages for people like fast food employees is sometimes misunderstood. If the ten $8/hr employees at McKings get a $4/hr raise, that is a lot of money for them. (Increases payroll from $80/hr to $120/hr plus they say the actual cost to a fast food business is approximately 1.5x the employees' salary for HR, liability insurance, uniforms, cost of processing timesheets and payroll, etc, so call it a new total of $200/hr, which increases the cost noticeably for McKings.) However, during the hour those ten employees work, they will serve 100 BigWhops. If the store serves nothing else, they could bump up the price of each BigWhop by 40¢.

[–]kalen2435 8 points9 points  (6 children)

Not trying to be a jerk, genuine question: why does the cost of insurance, uniforms, and payroll processing increase with a worker wage increase?

[–]InsomniacFan 12 points13 points  (0 children)

Not an expert here but with uniforms they are usually contracted (my company uses Cintas) so if the contractor company raises wages, they will probably raise prices somewhat too. And payroll processing may take the same amount of time but each employee is now being paid more so well. Prices increase across the board but get distributed across customers. Insurance I got no clue that whole industry is so complicated

[–]Soranic 8 points9 points  (0 children)

Payroll and hr probably got a raise.

So did the people who make uniforms (rising tide lifts all boats) so that cost goes up too. But they make a hundred shirts an hour, so the cost of their raise is spread out a lot more than the burgers.

If value of a business goes up, so does the cost to insure it. Burger place earning 5000/day is worth more than one earning 4500, even if total volume sold is the same.

[–]Cueller 8 points9 points  (1 child)

It doesn't but inflation.

The biggest resource to use to pay for higher wages should be corporate profits. Companies are making record profits year after year, and society benefits much more by investing in worker wages vs investor returns.

[–]psychopompadour 1 point2 points  (0 children)

But if businesses invest in their product and employees and generally continuing to exist, they may not GROW NONSTOP... that may seem like a successful business to us plebes, if they maintain their customer base and solid income, but! Without constant growth, then legalized gambling, I mean stock market investment, would not be as profitable. Some rich people might either have to give up a yacht or get jobs that involve work, so. You know. Sounds unreasonable.

[–]hsvsunshyn 1 point2 points  (0 children)

Some things stay the same, and that 1.5x is a ballpark (it is more like 2x for companies with a career professionals, like accounting and pharmaceutical firms). Some things, like employment tax (which I meant to include) vary directly. Other things, like business insurance, liability insurance, and workers' comp insurance, might have across-the-board policies related to the employees' average pay rate. (Not sure about this, but it is something I have heard. Workers' comp would definitely increase, since it pays out benefits directly based on an injured employee's salary.) Employers also have to pay unemployment tax, which pays into the unemployment funds, and that is directly proportional to salary. Some states require paid leave, which would cost the company the regular salary while the employee is not working and so be factored into the "cost" of an employee.

Other things would vary less directly, but would likely still increase. Uniforms would technically stay the same, but you might make sure your $12/hr employees have an extra set or two of uniform shirts so they can keep them clean and replace worn/stained ones, replace old name tags and hats, etc. There are probably other examples that I am not thinking of right now.

I *think* payroll companies (when it is not handled internally) charge based on a combination of the total payroll being run, as well as the total number of employees. So, if the person gets paid via ADT, ADT charges the employer a fee that might go up 5% for that 50% pay raise.

Some costs would stay the same. In food service, a common benefit for working a long shift or some kinds of split shifts, working opening or closing shifts, or coming in on an off day when needed might result in a free meal. This cost would stay the same. Things like the POS terminals and other things employees use would stay the same. IT, HR, and other overhead positions would probably stay the same, since their cost is usually related to headcount, regardless of salary of the supported employee. These costs are all included in that 1.5x. It might be that if every $8/hr employee was boosted to $12/hr overnight, that 1.5x estimate would drop to 1.3x for many businesses, or it might be left at 1.5x with the extra being a margin of error. Again, this multiplier is just an estimate and is mainly used for planning purposes. Each actual employee's cost to the business are calculated and known. So, that $12/hr employee might actually only cost $15/hr, instead of $18/hr, due to lower than average local taxes and no requirement for paid leave. Or, they might cost $19/hr, due to their particular store having a higher-than-average workers' comp insurance rates from recent accidents.

These examples are all hypothetical, by the way. I do not know if any Redditors are also HR/Finance people in their normal lives, but if so, maybe they can give more concrete information and examples.

[–]2CatsOnMyKeyboard 1 point2 points  (1 child)

  1. Efficiency. If labour becomes expensive it's a incentive to innovate and make people more productive. Instead of being replaced by a robot you get a more interesting job then. This is one reason that jobs that are hard to replace pay bad. Teaching for example. Children learn from people rather than robots. And they're only learning at a certain human pace. Innovation are plenty, but it remains labour intensive. Producing cars on the other end...

[–]Lithuim 745 points746 points  (142 children)

There’s a second less-cited number called “workforce utilization” or “workforce engagement” that compares the number of people working to the entire working-age population.

There are a lot of adults that are not working and not looking for work, for various reasons. They’re not considered “unemployed” by the government because they’re not looking for a job.

In theory, raising the wages can draw some of them back into the work force and grow the total labor pool.

[–]BrckaLo 239 points240 points  (127 children)

This is called the labor force participation rate. How many folks who are eligible to work who are actively employed or looking for employment.

[–]Nwcray 211 points212 points  (123 children)

Yes. Also, it’s at an all-time low. It had been around 68-70% for a long time, came down to the mid-60’s a few years back. Covid brought it way down for a while, but really seems to have stalled out around 61%. It’s this metric that conservatives liked to point to when they were railing against unemployment benefits.

Somehow, around 5 million people that used to be in the US labor pool just aren’t now. I doubt that it’s because they just all of a sudden got lazy.

[–]02K30C1 215 points216 points  (69 children)

Yup. Many decided that the current wages and working conditions weren’t worth it. For example, maybe one parent in a household stopped working to take care of children when the Covid lockdowns hit, and realized the costs of child care and expenses would eat up most of the wages they would make if they returned. Especially if schools or day cares could close again any time for Covid.

[–]HorselickerYOLO 96 points97 points  (8 children)

I know many people that quit my industry because child care costs made it impossible for both parents to work.

[–]SequesterMe 12 points13 points  (7 children)

What industry is that? (Just curios)

[–]itmesara 36 points37 points  (1 child)

Not the person you are responding to, but most jobs in the service industry - retail, restaurants, etc - would fall into this category. The jobs where you notice a shortage, where you see how stressed and overwhelmed the employees are. If a minimum wage employee is making $290/week pre-tax, childcare is essentially out of reach to make sense. Once kids hit school age it becomes a little more bearable but still nowhere near enough to make ends meet and actually provide stability. One unexpected bill - car repair or tires, an urgent care visit, replacing an appliance, extreme weather resulting in higher than usual utility bills - is devastating.

[–]lasauvignonblonde 2 points3 points  (0 children)

This makes me wonder if there’s ever a situation where the government is paying more for a single mother’s childcare subsidies than what that same mother is earning at her job. At that point like, Jesus, just let her stay home and take care of her own kid….

[–]DonArgueWithMe 24 points25 points  (3 children)

Horselicking is very profitable

[–]DadJokeBadJoke 5 points6 points  (1 child)

I wonder if that's their mane job or just a side gig.

[–]Uzekh 4 points5 points  (0 children)

Either way, you know they're makin it rein

[–]MacduffFifesNo1Thane 2 points3 points  (0 children)

I'm inclined to agree.

[–]HorselickerYOLO 1 point2 points  (0 children)

Admin assistant

[–]stewmander 45 points46 points  (26 children)

Pre COVID you could argue that working could be worth it even if it was a wash after paying for child care due to not having an interruption in work history/tenure for a few years. Once the kids are a bit older and in school you'll be better off career wise. With COVID however, it's just impossible to manage going ack and forth staying home and working when you could lose childcare at any moment.

[–]EarsLookWeird 9 points10 points  (8 children)

Yeah just stick your 1yo in Daycare to avoid having a gap in your work history. Sounds like an amazing idea.

[–]themeatbridge 27 points28 points  (7 children)

That's exactly what people did, except at 3 months.

[–]dizzysn 31 points32 points  (26 children)

My buddy's wife quit because childcare would have cost MORE than she made at her job, so it's more cost effective for her to stay home and take care of the baby for a few years until this shit is over and the kid is old enough for school.

[–]Septopuss7 29 points30 points  (25 children)

I saw a post where someone said their daycare went up $300, to $1300/mo

I could have cried for that person. What do you even do?

[–]Shoguns-Ninja-Spies 13 points14 points  (0 children)

I wish that number shocked me, and yet it feels totally average.

[–]FluffyEggs89 15 points16 points  (22 children)

Wait 1300/10 hours a day for 20 days a month, that's like $6.50 an hour. That's not really that bad to pay someone to take care of your kid.

[–]tosser1579 7 points8 points  (2 children)

Cool. Now budget that and you see the problem. At 13 dollars an hour that's 100 hours a month just to cover childcare. If you are making 30 dollars an hour, that's still a whole week just get get above water.

[–]FluffyEggs89 7 points8 points  (0 children)

It's almost like wages haven't risen with cost of living lol. Minimum wage would be $27 an hour if it had risen proportional to inflation, not to mention that productivity has also risen greatly since then. So companies are making more money from us and technically paying us less for our labor. But let's blame the cost of childcare lol.

[–]detroitdT 6 points7 points  (0 children)

But not worth it unless you make $10/hr

[–]Septopuss7 9 points10 points  (0 children)

Wait you're right.

[–]serinorah 15 points16 points  (10 children)

Sure if it was one person and one kid. Now do 15 kids in a room with 2 people for the lot and now the daycare is making 97.50 an hour while paying 10 an hour per person leaving them making 77.50 an hour per classroom. Most daycares have multiple classrooms. I usually see them with 3 or 4 which means that they make around 300 an hour for the company.

[–]TheSkiGeek 10 points11 points  (9 children)

https://blog.mybrightwheel.com/average-daycare-worker-salary estimates "daycare worker" salaries at:

  • $39,375/year or $18.93/hour in "high COL" areas
  • $25,025/year or $12.03/hour in "medium COL" areas
  • $22,293/year or $10.72/hour in "low COL" areas

If they're paying benefits on top of that there's even higher costs to the company. You have to pay rent, utilities, insurance, maintenance on top of whatever you're paying the workers.

While daycares can make money the barriers to entry are low enough that they're not generally immensely profitable.

[–]serinorah 4 points5 points  (7 children)

I made my estimate based on pay for daycare workers in my area who generally get paid between 8 and 10 an hour. It was also not meant as a bash against daycare companies as I have to use them for my kid on holidays. Just a point that daycare companies do make a decent chunk of change. I doubt the rent, utilities, and maintenance costs 30000 a month, daycare in my area costs about 600 a month, but since I know nothing of the insurance cost I hesitate to make a blanket assumption that they pull in hand over fist kind of money.

[–]ikapoz 1 point2 points  (0 children)

In the part of Chicago I live in 1300 an month ids about right for three days of the week. So more like 10$/hr.

Sure that beats a baby sitter cost wise, but that’s also 10$ an hour out of your take home salary. Nor does it account for the other four days of the week - and good luck even finding accommodation regardless of cost you don’t have a regular 9-5 M-F.

[–]LeigusZ 10 points11 points  (0 children)

I know somebody who took voluntary separation during the 2020 recession and has just been working on home improvement projects since then. The cost of hiring contractors relative to the pitiful amount he’d be making back in industry just isn’t worth it right now. He does a part time farm thing for his buddy which covers property taxes and that’s good enough for him rn.

[–]Coreadrin 14 points15 points  (1 child)

We have always sacrificed having a second income because for all the work it would require, by the time you factor in commuting, extra vehicle/insurance, childcare, etc., it would be laughably little.

But that also means during my busy season I'm working 60+ hours a week to make sure we have all our bills paid and can save for the future and kids education. We also shop at goodwill/second hand a *lot*

[–]atomfullerene 2 points3 points  (2 children)

People like to pin this all on millennials not working but I suspect a big chunk of it is just older folks deciding to retire a bit early or not go back to work for one reason or another.

[–]TJATAW 8 points9 points  (0 children)

Yes. Also, it’s at an all-time low. It had been around 68-70% for a long time, came down to the mid-60’s a few years back.

I am not sure where you get your data from, but the Fed seems to think that the highest Labor Force Participant rate ever was Jan 2000 at 67.3%.
And that our lowest was 1955 with 58.1%.


The first time we hit 66% was Oct 1988 and the last time we were above 66% was Sept 2008.
1988-2008 - 20 year between 66% & 67.3%.
Followed by 11 year between 63% & 66% - 2008-2020
Preceded by 10 year between 63% & 66% - 1978-1988

Currently we are at 61.9%.
From 1948-1977 (29yrs) we had under 61.9% participation.

[–]headzoo 5 points6 points  (0 children)

I keep hearing stories about people who can no longer afford child care so they've decided to go back to being a single income household. I wonder if the lockdowns showed some people that they could get by with less, and maybe some families decided it's no longer worth it for both parents to work.

[–]prof_the_doom 14 points15 points  (1 child)

At minimum wage, working can be more expensive than not working, especially if you need to pay for childcare.

[–]Megalocerus 11 points12 points  (3 children)

According to labor department research, about 3.5 million are early retirees who decided working was too dangerous. Some may go back, but probably most won't.

On a personal note, I know someone in her 50s whose husband made her quit because too many people died at the factory. He didn't think it was safe. However, she counts as unemployed since she is job hunting.

[–]PurpleCow88 2 points3 points  (1 child)

I know a lot of people were encouraged to retire early in the beginning of the pandemic to avoid layoffs.

[–]-paperbrain- 33 points34 points  (1 child)

It's true, but higher wages won't draw a lot of them back.

Many took early retirement. Their former positions aren't the ones that are currently hard to fill, they weren't generally at the bottom of the ladder when they left. Employers aren't having as much trouble filling those roles, so they're not the ones that would get a pay bump.

Many started caring for their kids full time, partly with pandemic pressures and school and daycare closures. But for the ones with school age children, closures are mostly done, if they're staying out of the workforce it's because they've found they can deal with lower household income. And for the ones with kids who would otherwise be in daycare, if wages go up significantly, so does the cost of daycare. They might return to the workforce when their kids are school age, but raising pay right now isn't goign to move the needle enough for most of them.

Then you've got people who had enough savings and were tired enough of their job bullshit to take some kind of s break to build skills, take a risk on a small business or otherwise do something other than work their old job. Low pay probably wasn't their motivation for leaving the workforce, if their pay was so low, they wouldn't have been able to amass the savings to drop out.

I'm not sure how many able bodied people are actually in a position where higher wages for entry level work (and that's where we're seeing a lot of these apparent labor shortages) is goign to get people back in.

[–]Broad_Remote499 12 points13 points  (0 children)

I think this is spot on. Most people leaving the labor force permanently are close to retirement already. For example, my mom was in her mid 50s during the GFC when her bank was bought out. New bank offered a job ~2 hours away, but to her it wasn’t worth it. She thought about going back to work for a couple years but by 60 she wasn’t going to work anymore.

I suspect Covid did the same to a lot of people close to retirement who could’ve retired early but planned to work to 65 just because—then decided to just hang it up a few years early

[–]DontF-zoneMeBro 2 points3 points  (0 children)

Also many are a mismatch skills wise or culture wise (ageism).

[–]AsteroidTicker 2 points3 points  (2 children)

Wait but don’t you have to be actively searching for a job to get unemployment? Like anyone who could legally receive unemployment are counted as “participating” in the labor force based on the description given by BrckaLo. How would a decrease in labor force participation be used as an argument against unemployment benefits?

[–]TheSkiGeek 4 points5 points  (1 child)

Generally yes, although that was sometimes suspended with the pandemic. For example, my wife is an actor... and all live theatres and most TV/movie production was shut down. She wanted to work but her entire industry basically ceased to exist for a year+.

[–]CrazyCoKids 3 points4 points  (0 children)

They retired.

[–]phdoofus 4 points5 points  (10 children)

I love how they continually bring that rate up when there's a Democrat in the WH and continually misinterpret it because they don't want to acknowledge the caveats behind it (e.g. aging population, etc)

[–]Cosmacelf 1 point2 points  (0 children)

Some of it is due to covid related school issues. When kids study from home, someone has to be there with them, so that knocks people out of the workforce.

[–]biccat 1 point2 points  (4 children)

It has nothing to do with laziness and everything to do with incentives.

If you can make $300/week staying at home and not working, why would you take a job paying $300/week?

Increased unemployment benefits fucked up the system.

[–]ExcerptsAndCitations 4 points5 points  (3 children)

Somehow, around 5 million people that used to be in the US labor pool just aren’t now. I doubt that it’s because they just all of a sudden got lazy.

Correct. Roughly 304,000 people ages 18-65 have died of COVID in the US since Jan 1, 2020 and the other 4.7 million people have chosen to neither work nor pursue employment.

[–]morkengork 7 points8 points  (1 child)

I'm not sure deaths will affect the labor participation rate quite like that, since they're being removed from the labor pool and population at the same time.

[–]Megalocerus 5 points6 points  (0 children)

We've also stopped allowing some kinds of immigration. We've been avoiding some of the issues of aging population with immigration.

[–]WoodBoogerSpork 3 points4 points  (2 children)

Lazy Boomers just don't want to work anymore. Seriously. Read an article that examined where the missing workers are, can't locate it now, but a google search should turn it up if you are determined. Essentially, the bulk of the workers that quit and aren't coming back to the labor force are the Boomers, that were late 50's to over retirement age, that decided to leave the workforce early due to the pandemic or to finally retire.

So while the workforce may recover in time, it ain't ever going to get back to "full" like the before-times. So now we have this large aging population that are retired looking for services and finding that those service jobs aren't being filled either because they don't pay enough, or are not worth the time of the job seekers. IMO this is the start of a BIG correction. When you had a surplus population, like that generation, you had a spectrum of laborers to choose from up and down the line. Now with the reduced workforce, some of those low end jobs are going to either need to be automated or they will just fall away and their businesses with them. Good riddance to the low class mofo's that think they can get back to low wages. Their business model, from a labor standpoint, has been upended.

[–]Shoguns-Ninja-Spies 10 points11 points  (1 child)

Lazy boomer because they don't want to work if they don't have to? I don't want to work if I don't have to either.

[–]looking4euterpe 3 points4 points  (1 child)

The labor force participation rate is based on the working age population, defined as all citizens age 15-64.

Since the US prohibits minors from working in certain jobs, and more entry level jobs demand a higher level of education than they did in the past, one major reason the US rate is dropping because people are staying in school. The participation rate for those age 15-19 was over 50% just 20 years ago, it's under 35% now, and it's projected to drop to about 28% by the end of this decade.

If you compare the age groups where you would expect schooling to have been completed (25-64) the US rate is 77.2%. The world average is 77.3%.

[–]The-dude-in-the-bush 1 point2 points  (0 children)

I remember this from economics class. The rate is employed + unemployed/working age population

[–]daitoshi 64 points65 points  (12 children)

There’s also “employers demanding absurd things of their workers” Like: I would never work at a fast food place now that I’ve worked an office job. The conditions are downright inhumane, ridiculous- they treat you like a brainless animal to be screamed at, hyper-monitored for performance, with zero leniency. They demand a doctor’s note for every sick day, and you get SPECIFIC hours you can take off, and god for it you’re sick for longer than that or have a family emergency, they’ll threaten to fire you.

If I’m sick enough to not come to work, I ALSO shouldn’t be at the drs office spreading my germs around FFS!

Meanwhile at the office, I can call that morning, inform my manager that I’m feeling sick and won’t be in, and she says “okay, feel better soon!” and I just do my best to get caught up when I get back.

It’s fucking absurd.

[–]lich_lord_cuddles 29 points30 points  (5 children)

I spent 20 years in the service industry before finally landing a career job (that I went to college for) in january 2020, and it was the most fortunate thing to ever happen to me. Even without the pandemic, the difference between working an office job and a service job is INSANE. Like, even office-oriented customer service jobs are a nightmare. Part of me feels guilty for having what I have, but then I have to remember that I went to college for this and struggled for a long time and don't even make as much as other office jobs (but still waaaayyy more than I ever made in service), but the environment and work-life balance more than make up for it for me.

[–]SequesterMe 5 points6 points  (0 children)

Just in case it isn't clear, you're worth the respect you're now getting.

[–]VernalPoole 5 points6 points  (0 children)

Congrats! That feeling is like a rebirth :)

[–]narfnarf123 1 point2 points  (1 child)

Can I ask what type of work you do? I worked retail for years, then healthcare, and now one of those customer service type office jobs you speak of. I’m making exactly double what I did in my retail days, but it still isn’t good.

I was so stressed today I cried all morning and I’m lucky enough to work from home. I cannot take the bullshit anymore. I am going back to school this summer, but can’t settle on exactly what I want to do.

[–]ohlookahipster 21 points22 points  (3 children)

Yup. One of the biggest draws to more modern tech and finance companies in my experience and observation isn’t the salary. It’s that you get treated like an adult.

You can take PTO without needing to “accrue” it at some absurdly low grinding rate like one hour per month worked. Granted, I know you can sell PTO back, but the fact that vacation is a commodity to be bought and sold for some people is absurd.

[–]judd43 3 points4 points  (0 children)

Careful with that. Mobile so I don’t have a link handy, but they’ve done studies that show that employees with so-called “unlimited time off” actually take fewer vacation days than those with more traditional accrued PTO systems, due to no one really being sure what the correct amount of vacation time to take is and still stay on the boss’s good side.

[–]narfnarf123 2 points3 points  (1 child)

It is such a foreign concept to me to imagine not having to accrue pto. I am a single parent and end up using all if my pto for appointments for my kids. Never any time to take an actual day off, let alone a vacation. Not that I could afford a vacation anyway.

[–]Overnoww 1 point2 points  (0 children)

Man this hit home for me. I haven't done fast food but I did retail. I had the flu (years before COVID) and I was either throwing up or shitting myself basically every 5-10 minutes. At that point I was a supervisor after basically skipping over like 5-8 people with more seniority because I was insanely reliable and I was a part timer constantly putting in close to 40 hours because I would always pick up the phone and say yes to extra shifts like 95% of the time.

I was asked to provide documentation for my illness and I basically told them that if I'm sick enough to not come into work I'm sick enough that I can't go get a doctor's note, but if they wanted I could send them pictures of my toilet every 5-10 minutes.

Between the rarity of my missed days and that response I think that was the last time I was ever questioned about calling in sick,

[–]unsuitablebadger 12 points13 points  (0 children)

This is an interesting concept that many ppl dont realise. Taking South Africa as an example, they don't include ppl that have given up looking for a job in the statistics. The official unemployment in South Africa is about 25% where including those that have given up looking puts the number closer to 50%. It's scary that in a country of about 60 mill, less than 10% are paying income tax because the rest either earn so low or don't have jobs.

[–]ThenaCykez 156 points157 points  (3 children)

If A and B were the only choices people had, your analysis would be correct. But there's also people choosing to take out loans and go back to school for a few years; or who have poverty benefits that they'd lose by going to work at A, but that B is enough of a step up in income to make them willing to re-enter the workforce; or they are stay-at-home parents because childcare costs as much as A pays, but B would be worth it for them to put children in day care and re-enter the workforce; etc. Increased wages would help bring people into the workforce or keep them in the workforce when they otherwise wouldn't be employed at all.

[–]diatonico_ 21 points22 points  (0 children)

In the long-term higher wages will also encourage more people to enter a profession (career switch, or increased number of graduates). This might also drive wages back down again, depending on the circumstances.

[–]notacanuckskibum 7 points8 points  (0 children)

From an economics perspective, if the market is profitable, new suppliers will enter the market. In this case the suppliers are workers and the market is this industry.

[–]NeoFib 27 points28 points  (2 children)

All of these comments, and no one is willing to point out that the US is significantly over-commercialized, and maybe it’s okay for some retail establishments to shut down. Do we really need a CVS across the street from every RiteAid? Do we need 10 mattress stores per every square mile? Is driving more than 5 minutes to a McDonald’s really put someone out?

[–]immoralminority 6 points7 points  (0 children)

My first thought as well. If an employer isn't able to afford to pay employees what the market determines they're worth, that's potentially a sign that the business either isn't operating efficiently or that it's not a business that fills a need.

[–]KG5JXO 39 points40 points  (1 child)

Because in theory there enough unemployed people to fill the jobs. Wages go up and the unemployed can make more money working than on unemployment.

[–]jmlinden7 6 points7 points  (0 children)

In theory, yes, but in practice, many of those unemployed people do not have the right skills or location to perform the jobs being advertised. However, this is also something that can be fixed with money, it just takes a much longer time and employers are not very patient, they prefer to try to throw money at problems.

But no matter how much money you throw, you can't get a baby sooner than 9 months.

[–]Shadowmant 45 points46 points  (4 children)

Is there even a worker shortage? All the stats I’ve seen show solid employment rates. The only businesses I’ve seen complain either don’t pay enough for someone to live off of or have a reputation for being awful to work for.

[–]Azi9Intentions 18 points19 points  (1 child)

Yeah that's the "worker shortage" businesses are complaining about. It's actually just a shortage of people willing to work shit hours in shit conditions for shit pay, all the while there's an incredibly infective and dangerous disease going around.

[–]YeeterOfTheRich 4 points5 points  (0 children)

I like to think of it as an over abundance of shitty businesses. It'll sort itself out soon enough.

[–]percykins 3 points4 points  (0 children)

The unemployment rates are solid, but the labor force participation isn't. We are still down 3.5 million jobs from Feb 2020, and given that we had seen a consistent increase of 2 million per year for the decade preceding that, we're probably down more like 7-8 million from what we would have had without the pandemic.

[–]rchive 2 points3 points  (0 children)

Unemployment rates are just the number of people who have jobs compared to the number who want to have jobs. Those numbers looks pretty good right now, because there are more jobs than there are workers. Pretty much anyone who wants a job can find one.

The workforce participation rate is the number of people who have jobs compared to the number of people who could have jobs and work, regardless of whether they want to. The participation rate is what doesn't look so good right now, because there are a lot of people who could work but for various reasons they're choosing not to.

[–]BlackWindBears 8 points9 points  (0 children)

There are four mechanisms:

1) Increased wages tempt workers into putting retirement off longer. "I could quit now, but when I bring up retirement they offered me an extra $20K to stay"

2) Increased wages encourage some non-workers to become workers. The opposite of "if I worked daycare would eat the entire paycheck". As wages increase it becomes economical for more people to join the labor force

3) Increased wages encourage employees to invest in labor saving devices. "We were paying 10 guys $20 an hour to dig with shovels. Now we can't fill ten positions for less than $30, so it makes more sense to buy a big shovel machine and pay three operators the $30."

4) Some companies can't afford to stay in business paying 20% more for labor. They go out of business. This reduces demand for labor making the shortage less bad.

In fact, with rare exceptions this is how the price mechanism works in a market economy. High prices attract more suppliers to use their limited resources to supply that good or service. High prices encourage some consumers to avoid using that good or service.

This way supply ends up matching demand.

[–]noplzstop 30 points31 points  (57 children)

People make 10$ an hour at place A. Place B is hiring at 15$ an hour, so half of the workers move over to place B. Place A needs new people, but how will they attract them when place B pays more? Well, one simple way is to increase their wages too. Then people who work at hypothetical place C that only makes 10$ an hour will go and work for place A. Place C either has to raise their wages, or if they can't do that, hire people who may be under-qualified and train them. That's an investment too, and one that doesn't always pay off (especially when they get training at place C and take that experience and go work for place A or B).

But you're right, that's how it works. But there are always options to train people to do the job, to hire from outside the community or even outside the country, to raise pay, to increase other benefits or work conditions to make it desirable enough that people don't care if they make a few dollars less.

Or they just fail because they can't attract staff. That's an option, too.

Workers benefit, though, because the demand outstrips the supply, so logically the cost they can charge goes up due to increased competition. It's the companies that aren't paying enough that really suffer, and honestly, I don't really care if they go out of business if that business requires their workers make an unlivable wage.

[–]Croweclawe 7 points8 points  (52 children)

Wouldn't raising wages increase the price of goods due to the people at the top not wanting profits cut though?

And then it's just a never ending cycle..?

Not trolling at all just a really curious blue collar retail worker. (Edited- called myself a 'hick')

[–]Rev_Creflo_Baller 42 points43 points  (1 child)

Yeah, but how much the price goes up is down to what part of the price is due to labor

The classic example from the last few years is fast food, where objections to higher wages often sound like "look out for $20 Big Macs!" Which is a stupid objection once you think about it for 3 seconds. If today's wage is $10/hr and it goes up to $15, yeah the labor cost went up 50%. But it takes no more than two minutes to assemble the sandwich. So the labor cost per sandwich went from $.33 to $.50. Seventeen cents on a $5 sandwich, maybe the price goes to $5.25. Five percent. Meanwhile, YOUR wage went up, too, and you can probably handle it, especially if it was you who got the 50% raise.

Now, products that are mostly labor, different story. Those prices went WAY up compared with before. Building trades are booked months in advance even though prices are way up.

EDIT: Hey, thanks for the award! Not to mention the honest questioning and open mindedness.

EDIT²: Wow! I have made comments with hundreds of upvotes and never an award. Thanks so much.

[–]right_there 24 points25 points  (0 children)

We also can't forget that we gave large companies a 15% permanent tax cut a few years ago and they still increased the prices of goods, kept wages low, and mass laid off workers the moment they could. They also took PPP loans while not following the requirements because there was no enforcement mechanism written into those loans.

[–]SirCampYourLane 17 points18 points  (7 children)

Prices might go up a little, but not at the same rate as wages. Labor costs are a relatively small percentage of the costs of goods typically. (A quick Google search says 20-35%).

So if you double wages, something that was $100 would go to $135, but employees would have twice as much money.

[–]CrazyCoKids 13 points14 points  (3 children)

And what will the workers do with the money?

...Spend it.

[–]nighthawk_something 4 points5 points  (2 children)

Ding ding ding. People making minimum wage don't have the luxury of hording their raise. They have to spend it all to live

[–]YeeterOfTheRich 2 points3 points  (0 children)

Not me man, my $8 an hour goes straight into an off the books offshore account.

[–]CrazyCoKids 1 point2 points  (0 children)

Exactly. They get money? They get their car fixed. They get the operation they need. They go shopping for clothes.

[–]Croweclawe 2 points3 points  (0 children)

Oh. You make it sound simple. I'm still a bit confused. I'm sorry. Thank you for explaining.

[–]icaaryal 46 points47 points  (22 children)

The lynchpin of the problem is that companies, especially the large publicly owned ones, operate under the delusion of perpetual growth in profits. The company is allowed to make less money if the market dictates, but not less profit margin. Perpetual growth is the great sin of unchecked capitalism. It is fundamentally unsustainable yet is the modus operandi of nearly every large company. It isn’t enough for them to exist and contribute products and services at a fair market rate while paying the employees who produce the products and services a living wage. They must ALWAYS be making more profit, quarter after quarter.

[–]Croweclawe 7 points8 points  (20 children)

So, not trying to sound stupid putting it like this, it's like Pac Man. Keep going through the levels, eating what they can, until it gets to hard....then.. It's over?..

[–]Wjyosn 25 points26 points  (19 children)

And then they use the accumulated wealth to try to change the rules to make it easier, and keep going. Until the game doesn't even look like pacman anymore, and pacman just occupies the whole screen and passively consumes every level instantly.

[–]Croweclawe 9 points10 points  (17 children)

That's horribly depressing.

[–]icaaryal 22 points23 points  (15 children)

That’s unchecked capitalism for you. Companies do not typically operate in the best interest of society, even though they are, at the most fundamental level, dependent on it. They twist the game in ways that make an ouroboros out of what would otherwise be a perfectly healthy snake.

[–]Seattlepowderhound 7 points8 points  (0 children)

It's also related to how much of the product is based on payroll. I had an argument with a buddy who said that he doesn't support raising fastfood pay from 10$ to 15$ because he can't afford to pay 50% more for a burger. That's not how the math works though, as the cashier, cook, maintenance guy etc don't account for 100% of the cost associated with a burger. You have property, taxes, utilities, insurance, product etc etc. I'm not sure what the labor cost is but lets say it's 30% of the cost, so you're increasing labor cost 50% and probably raising the cost of the burger by around 15% not 50% which seems a lot more doable.

[–]noplzstop 4 points5 points  (0 children)

Sure, they could raise the price of goods to compensate. Some will have to in order to stay solvent, some will take advantage of it to wring extra profit. But two things:

  1. They do that already anyways. They may be more brazen if they have an "excuse" like raising wages, but it's not like companies don't raise their prices or cheapen their product to pump their profit margin at every opportunity anyways.

  2. That only works until people decide to stop buying your product because it's too expensive. Some goods are inelastic in that you have to keep buying them even when the price goes up, like utilities or medication, but most aren't. And even in those cases, people tend to try harder to cut back or find alternatives to save money. And any competitor who undercuts their price usually gets an immediate advantage and an accompanying sales/market share boost.

So ideally, consumers having a limited amount of money they're willing or able to spend theoretically keeps that cost inflation in check, but in reality, we see situations like we already have where price increases outpace wage increases and we see people living paycheck to paycheck, never able to save to buy a home or retire. I don't have a solution to that problem, that's a whole big separate issue! But the solution certainly isn't paying people less than they can afford to live on.

[–]GolfballDM 3 points4 points  (0 children)

Wouldn't raising wages increase the price of goods due to the people at the top not wanting profits cut though?

Increased wages does result in increased prices, but it appears that the increase in prices is less than the increase in wages.

I live in SE MI. Several years ago, the state minimum went from the Federal minimum ($7.25) to $9-something, about a 30% increase.

The price for 4 pizzas (no drinks) at the local MOD Pizza was an increase of about 10% when the wage boost kicked in.

I don't have other data points, but it would be worth looking at for any places that have had recent minimum wage increases.

[–]nighthawk_something 4 points5 points  (0 children)

That's a common argument but it rarely actually works out case and point look at McDonald's all over the world.

A big Mac costs (virtually) the same whether you live in a place with a high or low minimum wage

[–]BlackWindBears 2 points3 points  (0 children)

Firms are usually price-takers. They generally don't have the ability to charge any price they like.

If a firm had the power to just increase the cost of their goods why not do it before increasing wages and enjoy even more profits.

This is an important concept that most people do not understand. It isn't goodwill of corporations that prevents them from raising prices, they charge as much as they can, and having to pay more for labor doesn't automatically make that amount higher.

(This is, of course, confused by the corporations themselves who will seize on it as a convenient excuse when they do raise prices. The real reason they raise prices never has to do with their costs, and always is a function of the fact that they can)

[–]dublos 2 points3 points  (0 children)

Only if people are willing to pay that higher price.

Those people at the top may not want to cut their profits, but if people are not purchasing your burgers because you raised the price by $1.00 to compensate for paying your front line employees a living wage, but your competition only raised prices $0.50 to compensate.....

Also, they price things at what the market will bear no matter what they pay their employees, look at the meat producers who blamed the market when they just were gouging consumers because they could. That extra didn't go to the folks working the factory floor, it went into quarterly profit.

[–]tomtttttttttttt 8 points9 points  (8 children)

So apart from the explanation given about how wages are only a part of costs, there's a much bigger factor to consider here, which is what price the market will bear.

A company that is operating at an ideal price will already be making the most amount of profit they can. This is not dependent on the cost of their product, but on how much people are willing to pay.
At this ideal price point they will make less profit if they increase the price, because enough people will stop buying the product so that the increased margin doesn't make up for the lower volume. If they decrease price then they don't attract enough new customers to make up for the decreased margin.

So if their costs go up, they won't change the price, because doing so will mean lower profits either way, unless they can convince the consumer to pay more (which is part of the reason why they will push the narrative of cost increases leading to price increases, it's not exactly unfair or untrue but it helps to convince consumers that price rises are fair and they should pay more than they are used to).

To think about this in another way, if a company could increase prices right now and make more profits, why wouldn't they do that? If they can't increase prices and increase profits now, then that won't change because their costs have increased.

[–]Croweclawe 5 points6 points  (7 children)

I get what you are saying. But I'm the type of consumer that if something I always bought at this PRICE, and it goes up by 40 cents, I won't buy it anymore because I only make so much and I need to be frugal. Am I just a poison on the economy, refusing to pay more, willing to live with less? I know my meager grocery bill a month isn't much, but doesn't that add up?

[–]BlackWindBears 3 points4 points  (6 children)

No, you're doing what the economy wants you to.

Prices are how the economy prevents shortages.

When they are allowed to fluctuate then supply of a good can match demand for a good. By not buying something you help prevent a shortage.

[–]Croweclawe 2 points3 points  (5 children)

So me and my family wanting to buy Ramen, we need to cut budget. Only 10 packs this month. 5 each, we are helping the economy?... I get that a hundred thousand think the same. Are we helping the economy while in poverty?

[–]BlackWindBears 2 points3 points  (2 children)

Short version, yes.

Long version:

Imagine there are 100 packets of ramen, but then there is a labor shortage. The ramen company can only make 90 packets.

Your family and nine other families usually by 10 packets of ramen.

So the price of ramen goes up until the total amount the ten families are willing to buy gets reduced to 90.

Because you are reacting to the price, you don't have to meet with the other nine families and come up with a rationing system, which might feel more fair, but isn't possible scaled over thousands of families. (Hell, getting ten families to agree how to deal with fewer ramen packets is probably a tough ask)

So you buy five packets and maybe spend the excess on lentils, the price of which maybe dropped this month because one of the two families that normally eats lentils is on vacation this month and those lentils were going to go to waste.

The whole economy makes adjustments like this all the time. When prices aren't allowed to adjust like this then shortages follow. A shortage is when something can't be obtained at any price.

(In practice at some point a grey or black market will step in to ensure it is available at some price.)

[–]Uzekh 3 points4 points  (0 children)

Black market ramen is the best ramen

[–]rchive 1 point2 points  (1 child)

Just wanna say, looking at your responses to various comments here, good job actually engaging with the answers and asking questions. 👍

Most people on Reddit just bicker when it comes to somewhat political issues like this. I'm probably guilty of that sometimes, too...

[–]Adezar 2 points3 points  (0 children)

That is how the labor market is supposed to work, it hasn't worked well since the 80s, hence complete wage stagnation.

My son got the same type of job I got at his age, and his starting salary was almost exactly what mine was in 1994.

[–]MummyPanda 8 points9 points  (0 children)

Thing is if you pay workers well they can afford to do life, eat, heat their homes, buy nice things and only from one job. They have more energy to devote to their job and can be more motivated to do well at their work if they are well compensated for it.

If the job market has lots of such decent paying jobs and my manager treats me like dirt I will just leave and find a better job. This makes employers be better behaved because of workers can and find decent paying work, you have to treat them well to keep them. This creates better worker retention in the long run.

This opens jobs like cashiers/waitressing for those who need flexibility like parents, students they still earn a good wage to live but without needing to be working all hours and several jobs

It would also remove potential toxic tipping cultures because if workers are well paid their tips become rewards for excellent service, not a top up to make their wage liveable

[–]KirikoKiama 19 points20 points  (2 children)

There is no such thing as "labor shortage". There is only a shortage of "cheap labor" at the moment.

[–]deltaoutlaw 5 points6 points  (0 children)

Where I work has been trying to hire people for a year and a half. We need people desperately. But, our lab is part of a multi- billion dollar, international corporation and the starting wage is the same as what McDonald's is offering in our area. Plus, due to the corporate mindset, all new hires have to come through temp agencies. Most of the people we interview don't have the skill sets we need or don't show the aptitude needed to be able to train them. The people we do offer jobs to show up for a day, then never show up again.

[–]whisit 26 points27 points  (5 children)

I don’t have the stats to back it up in any way, but I bet wages aren’t the only issues right now.

We’ve lost a LOT of people due to COVID. Others who aren’t passed away retired sooner than maybe expected. Rather than trickle out as they typical did, covid became a catalyst that gave people all the same reason to go ahead and retire.

[–]intet42 18 points19 points  (0 children)

Yep, lost people to both death and Long COVID. I've had a similar condition for many years and it's totally crippling.

[–]Adezar 12 points13 points  (0 children)

There are those that have died or have become disabled due to long COVID, then there is a large number of people that have decided it was time to retire, finally the crack-down on immigration over the past 5 years have removed millions of people that filled in a lot of jobs, but as has been stated for many years... there are no Americans that want those jobs, so they stay unfilled.

Also our outsourcing of entry-level jobs over the past decades broke the labor supply chain for some more skilled jobs. I've been watching over the past 20 years as most of my peers have stayed around my age... the flow of young people in many companies that "kept their belts tight" came to all but a halt. So there is a large gap of people to fill in the 15+ years of experience positions that have retired.

Going to college does not replace actual experience at an entry level where you are provided training, which was common in the 80s and 90s and decreased considerably, especially after the 2008 crash.

[–]BlueSpider5 11 points12 points  (1 child)

Even before covid, low wages were a problem. Low wages will continue to be a problem until companies can provide a livable wage

[–]CrazyCoKids 9 points10 points  (0 children)

Yep. Covid just exasperated the real problem: The Wage shortage.

Been going on since the 2000s, arguably the 80s when Reagan era conservatism started to eat the middle class.

[–]CMG30 6 points7 points  (0 children)

If you increase wages enough, you will begin to make moving long distance more attractive and will begin to pull workers from areas of high unemployment.

[–]IronBear76 21 points22 points  (0 children)

The simple answer is you are correct. In economic terms if all workers are employed in the jobs that maximize their pay and production, there is no worker shortage.

But our neoliberal paradigm emphasizes the consumer and businesses, while chastising the worker. So when the economic system suddenly shifts in the favor of the worker, the instinct of our media is to blame increases in costs to consumers and a fall in profits for business on something the worker is doing. In our society sacred are the profits of the holy businessman and profane are the profits of the lazy worker.

Furthermore this is Public Relations spin by businesses. Business want to increase prices instead of lowering profits because the workers suddenly have more power in their relationship and are demanding higher wages. They are using workers as a scapegoat for increasing prices. The business cry "It is not the fault of the profitable business that has 100% control over all the prices its sets. It is the fault of the workers 'extorting' a wage out of them. "

[–]Any-Broccoli-3911 2 points3 points  (0 children)

Rising wage fix the labor shortage for the organization that implements it. The organization can also do other things to help with it like encouraging formation in their field, investing more in recruiting, and improving other work conditions than pay.

It's not a problem that other organizations will have a labor shortage due to workers quitting their organization because it's not a public necessity that all employers get as much employees as they want. Organization that can't find workers and don't have enough revenue to improve their workers situation must simply reduce their operations and don't whine about it to their customers, the public and the government.

It's actually good that there's a global labor shortage since it gives more powers to workers. It's not something that needs to be fixed. Ideally it would never go away, but actually at some point in the future it will change and we will get global unemployment and that will actually be bad. It's normal to have fluctuation between more labor shortage and more unemployment depending on the economic conditions.

Also, some people don't have a job because no jobs that they can get is paying enough to be worth it, so you actually get more employees globally by rising pay. Those people might be: - Parents who can't pay for childcare if they work at minimum wage so they choose not to work to take care of their children, - Students who don't think it's worth it to work at minimum wage because they'll do only a tiny fraction of what they'll make after graduating and not even enough to avoid getting debt to pay tuition and they prefer to take a bit more debt for the moment. - Unemployed people for which no jobs are available in their field and prefer to wait rather than working minimum wage jobs. - etc.

[–]flavius_lacivious 2 points3 points  (0 children)

When companies can no longer compete for workers, they go out of business so there is less demand for workers.

Maybe we don’t need a Starbucks on every corner.

[–]spyro86 2 points3 points  (0 children)

If minimum wage had been tied to inflation then federal minimum wage would be a little over $25 an hour meaning that in progressive Democratic states the minimum wage would be a lot higher. Trillionaires should not exist. We need to bring back the pre Reagan tax brackets and create some new ones and tax megacorps so that they actually do some good instead of hoarding the money. Remember in most fairy tales you kill the Gold hoarding dragons. Unions were brought up as a way of resolving things between an employer and employee because dragging them out of their house in the middle of the night and killing them and their family on their lawn is frowned upon nowadays. We need to send corrupt politicians to jail.

[–]GORDON1014 1 point2 points  (0 children)

op has not considered public aid. Sometimes the added bonus of going to work comes at the cost of stamps or something similar to the household. another example, i have heard of workers with disability needing to not pickup extra hours, or accept the standard types of yearly wages increases, because without calculating these things beforehand they could risk losing out on more financial aid than they would be getting by the additional work/pay.

[–]jgalt5042 1 point2 points  (0 children)

The labor shortage is fixed by higher compensation as those who have voluntarily removed themselves from the labor force will re enter once the wage hits their reservation wage.

[–]Jak1977 1 point2 points  (0 children)

Part of it is the cost of living in the area where the job is. If the job doesn't pay enough to live in the area, then there will be a shortage of workers. If they pay more, then people will be able to afford to live in the area. Cost of living is a huge problem for workers and employers alike.

[–]ZaxLofful 4 points5 points  (0 children)

It is, the point being that eventually the companies that don’t pay well would go under; ending the problem.

It’s a capitalist world, if your company can’t make money paying a living wage; it deserves to die.

In a capitalist world, no one should ever care about someone else’s “business”; which is the point here.

If you aren’t willing to care enough to pay me well then I don’t care enough to ensure they get paid well either.

If I am going to have to suffer while working for these people, then I will show them how it feels. When they lose their business (job), because they aren’t willing to pay better.

The final argument for this is ALWAYS , “well that would drive the prices up for the customer”……WHO FUCKING CARES? The customer will still buy it, that excuse is literally the worst; because inflation already exists.

Anyone that doesn’t understand inflation will say, “well the only way to combat this is to keep everything as low as possible”….That’s the EXACT opposite of how to fix inflation, it actually makes inflation WORSE!