Stop Blaming Labor Costs, Wages & Workers. It’s The Economic System, Stupid!

Most people have a better chance of winning the lottery than landing a dream job that pulls them out of the tar pits of today’s dinosaur of an economic system.

“The Greatest Trick The Rich Ever Pulled Was Convincing The World The Poor Was To Blame” — Unknown

There’s a persistent misunderstanding between employers and employees that they should be at odds with each other. It’s the antiquated concept of the Haves and the Have-nots. It goes something like this: those who have achieved relative economic stability often claim that those who have not yet achieved that same level of success are somehow not suffering enough if they can’t conform to society’s standards of wealth. Moreover, the have-nots are not sacrificing as much or for as long as the haves did “back in the day”.

There’s so much to unpack with this that it’s difficult to know where to start.

I guess the best way to dig into this misunderstanding is to address the elephant in the room. The reason the established folks feel they struggled earlier in their life is because at some time in the past they felt like they were struggling. And over time, they were able to overcome their struggles and now enjoy some level of economic comfort that buffers them from today’s economic woes. They imagine (wrongly) that the difficulties and challenges of today’s economy and markets are the same as way back when they were struggling. In their minds, they worked hard and got through it, “so why can’t that effort just be duplicated today?”

Well, today is a far different beast than 40 or even 20 years ago.

Many business owners and most successful people of today have long since turned their main focus away from the minutiae of mundane financial problems and have gone on to bigger and far different economic decisions of a more entrepreneurial nature.

Which means many may have lost touch with what it feels like to be strapped with unsurmountable debt and lackluster earnings despite hard work and endless hours of toiling away for far less compensation than is needed to survive. This makes them less qualified to give advice to younger people who are facing a completely different economy, contrasting job market, and a society that’s poles apart from what it used to be.

I know many business owners who are not so out of touch with reality, but every now and then I’m reminded that a large portion of business owners are so deeply out of touch with the plight of employees that it seems intentionally ignorant or even apathetic.

It’s important to point out at this juncture that not all business owners have lost touch. Not all employees are poor. Many people start reading and assume their specific circumstances are being assaulted because they apparently can’t see that I am talking in generalities about society and the economy. It’s best not to take things personally if you’re doing the best you can in your situation.

I’m describing the big picture.

More than just Boomers vs Millennials

Although there are similarities between what the Boomers went through compared to the current circumstances affecting Millennials, overall they come from two completely different worlds.

For the most part, successful financially independent people today tend to be older, with a few anomalies; rich YouTubers, Rappers and App creators. The reason for this general rule is because the circumstances Boomers dealt with in their prime were wholly less economically burdensome. Many conversations have proven that they don’t think so, but the data proves them wrong.

40 years ago, compared to today in terms of how far a dollar went, and the much lower cost of living, makes the comparison significant. Simply put, most people could find a decent job and afford a dignified living prior to the 90s without the enormous challenges facing people entering the job market today. And that’s just part of the equation.

Today, the picture is grim. In the US, more than 37 million people live in a constant state of poverty. The Federal poverty line is about $13,500 per year for a single person, or $27,700 for a family of four. Imagine trying to survive on that.

About 23 million people pay more than half their income just to pay rent. The cost of food, energy, transportation, insurance, and healthcare have more than doubled since the 90s. Wages and incomes have not doubled, and in fact, have been stagnant with only minor increases over the decades.

“Paying good wages is not charity at all — it is the best kind of business.” — Henry Ford

Keep Your Condescending Suggestions to Yourself!

This issue doesn’t comes up in every conversation, but when it does it’s usually in the form of someone admitting they’re struggling financially. Then, some well-intentioned person suggests they should “do what they did back in the day and scrimp and save”. Or a person who is financially stable might suggest others “invest in the market”, “turn off your cell phone service” or “stop having a Starbucks coffee”.

When I hear that I get enraged and want to physically slap the shit out of that person because of how ignorant and insulting those insensitive and asinine suggestions are. Because I don’t condone violence, I, of course, restrain myself. But the damage is done.

I asked a business owner recently what advice they’d give to employees who were struggling to survive on low wages, and they said:

“Spend less, Live within your means. Have the discipline to stay the course. Increase your wealth by investing what you save. Give up cigarettes and fast food; eat at home. Get a flip phone. Buy food in bulk and share the cost with your family or friends. Barter goods and services to avoid taxes. Carpool to work when ever possible.”

Ugh! There it goes again. Another Boomer telling a Millennial to breathe through a straw if the ocean level floods coastal towns under 6 feet of water. My inner nice guy was banging his head against a wall and it was all I could do not to speak the words, “At my signal, unleash hell” out loud.

My first impression is they apparently don’t understand that people are already doing all that, or that many can’t. For example, quit cigarettes. Are employers so out of touch they don’t know about addiction? I’m sure this isn’t as serious a problem today as it was 20 years ago, but I just heard this advice from a business owner recently.

And seriously, who the fuck says “spend less”. No shit. I’ll get right on that. Brilliant, all my problems are solved.

Makes me wonder how many people are so lame they don’t get it that most people are struggling and can’t afford rent and no amount of scrimping is going to change that. No amount of cutting back on little things is going to pay the extra 40% in food costs this year, nor the added 20% in rent either.

Imagine is an employee gave this advice to a struggling employer:

“Dude, you can sell the yacht, sell the airplane, stop taking vacations to Mexico, sell that vacation home in Tahoe. Get rid of the 4th luxury car. Tell your kids in college you’re going to stop paying their tuition.”

Let me spell it out for those who don’t get it. Advice, no matter how well-intentioned it might be, from people who struggled during their past but now enjoy financial freedom may or may not be relevant today. What worked 20 or 40 years ago probably doesn’t work today. The economy, technology and society moves way too fast for old ideas to be useful for long.

For example, cutting off smartphone service is a very bad idea, and may actually make matters worse for some people. 40 years ago the person giving advice to shut off their phone most likely didn’t have a cell phone. Cell phones came out in 1983 and very few had them then. Cell phones didn’t become popular until well into the 90s. In the late 2000s, smart phones became an important tool for many reasons including job searches, hiring, etc. Now they are a critical component of our economy. Turning them off would be a bad idea. But that’s just one example.

Another unhelpful slice of advice that’s often given goes like this; “invest in the market” or “put away money in savings” which are both completely ignorant of the reality struggling workers live with every day these days.

If they’re broke, they don’t have any money to invest or save. It seems ridiculous that I have to point that out. But I often do. Pretending the investing in the market or putting non-existing money into a savings account is somehow going to give someone the edge in modern society is laughable at best. 40 years ago that might have been something some people did successfully, but that was back when wages went further than they do today. The cost of living has changed so significantly that most people have no money left to put any money into savings, retirement, or investing even if they wanted to.

Today, most people have a better chance of winning the lottery than landing a dream job that pulls them out of the tar pits of today’s dinosaur of an economic system.

Again, it seems completely ridiculous to me that I have to spell all that out to some people. When people complain of not having any money don’t give them suggestions that require money. And don’t tell them to “Pull yourself up by your bootstraps” because that’s figurative nonsense. It’s much like the old saying, “tighten your belt during tough times” which is akin to accepting harsh realities and learning how to starve peacefully. That advice is unacceptable.

“Make every penny count” is another example of bad advice. They already are. Privileged, financially stable people who give this kind of advice think people in general are lazy freeloaders running around spending $50 every day at McDonald’s and drinking themselves silly at Starbucks. Most people can’t afford rent and enough food.

The absolute worst advice for someone who is struggling to survive today is “go get a better job”. The person hearing that, if they are nice, will not tell the person off. But in their head they’ll be thinking how little the person giving advice knows about their situation. Most people who are struggling financially have been in a constant state of a job search for their entire adult life. So when someone says they should just get a better job they are usually astonished and the lack of understanding. Most people are exhausted and deflated completely because the job market seriously sucks.

The mindset of some of the Haves is that jobs are a gift to job applicants, and the reward for dedicated hard work is a paycheck. Unfortunately, employers have notoriously not given wage increases that matched the cost of living increases every year. And over many years that unsustainable situation causes that employee to have diminishing returns. They end up constantly looking for a better job, not being 100% dedicated, and the will to continue working hard is greatly damaged by the lack of employer investment in the employee.

On the other hand, many employers see their costs increase all the time. They suffer endless commercial real estate rent increases, energy and supply costs, higher insurance, etc. They’re squeezed for every ounce of their energy, time and money from every angle. In their heads they see hiring employees as a cost of doing business. Labor is a cost, not an investment. Thus, it is something they must limit, control, efficiently manage, and keep that spreadsheet entry as low as possible.

The time of telling people to cut back, live with less, spend less, tighten your belt, is long gone. The people can’t cut back anymore. Not small businesses, and not employees either.

If you want to help — instead of offering suggestions on cutting back — ask the struggling person how you can help them.

The Façade of the Employer vs Employee Relationship

The divide between employee and employer is amplified by media talkingheads, online pundits, and self-proclaimed economic experts who all claim that shareholder profits and the businesses themselves are hurt by higher wages and employee benefits. This send the message to employees that they are under-appreciated, and that owners are selfish.

Meanwhile, big corporations, banks, and investment firms are laughing their asses off at both small business owners and workers while they count their massive quarterly profits.

You see, somehow corporate interests in the US have fooled the rest of us into believing small business owners are selfish and workers are paid too much. Employees and employers have been duped into fighting each other when we should be working together to find solutions that help both segments of society.

The bottom line is that LONG AGO the rich convinced the middle class (business owners) that the poor were cutting in on their profits. When really it’s been the wealthy corporations eating into their profits through massive commercial rents, insurance, lobbying congress to get employers to cover worker healthcare and other social services that address the lack of wage increases.

Those in power pit business owners against workers to fight over the scraps the wealthy corporations leave behind for the peasants (employers and employees).

Some business owners still don’t get it and think there’s a war between the poor and the middle class. When the reality is that workers and small businesses should be working together to cut the cost of living, increase wages, subsidize small businesses, lower small business tax, cut commercial costs, and inject money into programs that help small businesses compete.

We may not have much time left, because right now our economy has reached peak prosperity. People are falling off the economic cliff into despair, poverty, and worse. Many employers and employees have done everything they can to survive but the higher costs keep coming. It’s unsustainable.

It’s not only happening to you. It’s happening to everyone.

“They never pay the slaves enough so they can get free, just enough so they can stay alive and come back to work.” — Charles Bukowski

All Businesses Should Pay Living Wages

I often say all businesses should pay living wages. I say that because I want all businesses to thrive and make enough money so that paying livable wages to easy for them. I’m not suggesting that all business owners don’t want to increase wages. If owners weren’t strapped with high commercial rents, high energy costs, high insurance costs, they could pay higher wages.

But we can’t just drop the fight for businesses to be able to afford paying higher wages because it’s a difficult ask. Enabling businesses to earn more money and be able to pay living wages should be a significant effort for the government in partnership with the small business community.

At the same time we need to change the economy so that regular people can afford the cost of living. We do that by reducing their costs. Offering universal healthcare, for example, is one way to reduce the cost of living and to get corporate taxes to pay a large portion of that.

Paying employees less than livable wages contributes to poverty. It’s also unsustainable because employees are consumers. The continued stagnation of wages will destroy all businesses because their customers will not be able to afford to buy anything if they aren’t paid livable wages.

If business owners don’t like paying living wages they should stand with employees fighting for a better economic system. Employers should not complain about high wages and expect the government to cover all the costs that low wages doesn’t cover.

The costs keep going up but the incomes do not keep up. That’s been incrementally happening since 1980. It’s reached the peak now where people are falling off the edge into poverty, suicide, addiction, homelessness, and crime in historically high numbers. And it’s getting worse every day. But it’s not the fault of wage increases or small business profits. It’s the economic system. Capitalism without regulation, and bad government policy is what’s happened.

This quote by Reagan is important because the economy includes people.

“Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.” — Ronald Reagan

People are employees and consumers. If the system isn’t working taxes should be used to subsidize the people and small businesses. Fix the problem.

We can do better, but only if we can change the economic system to work for the people — employees and employers.

That means standing up to corporate interests together.