Summary

The article argues that the perceived labor shortage in the U.S. is actually a shortage of jobs offering good pay and benefits, with workers increasingly rejecting poor working conditions and low wages.

Abstract

The article on the undefined website discusses the misconception of a labor shortage in America, suggesting instead that there is a lack of well-paying jobs with decent benefits. It highlights that the issue is not one of workers being unwilling to work due to enhanced unemployment benefits, but rather a response to intolerable working conditions and inadequate compensation. The piece points out that the restaurant industry, notorious for low wages and lack of benefits, is a prime example of sectors facing staffing challenges due to these reasons. Surveys indicate that restaurant workers are seeking better wages, health insurance, paid time off, and a positive work culture. The article also criticizes the federal minimum wage, which has remained stagnant since 2009, failing to keep pace with inflation and productivity growth, thus reducing the purchasing power of workers. It emphasizes that companies exploit government social safety nets to maintain profit margins, as many minimum wage employees rely on public assistance. The author concludes that the current situation reflects a long-term trend of companies prioritizing profits over employee welfare, leading to a breakdown of loyalty between employers and workers.

Opinions

The narrative of workers being lazy and living off unemployment benefits is a red herring, used by companies to deflect responsibility and keep wages low.
The unemployment system is broken, providing only a fraction of the intended wage replacement, and the enhanced benefits have allowed workers more time to find better jobs.
Workers, particularly in the restaurant industry, are no longer tolerating poor wages, lack of benefits, and inflexible schedules, leading to staffing shortages.
The federal minimum wage is outdated and has not kept pace with inflation or productivity, effectively reducing workers' purchasing power over time.
Companies are indirectly benefiting from government assistance programs as they allow employers to pay lower wages without providing health insurance or other benefits.
The historical trend of companies using employees as disposable resources has eroded trust and loyalty, with workers now prioritizing their own well-being over company interests.
The author suggests that businesses that fail to pay a living wage without government assistance are operating with a flawed business model.

There Is No Labor Shortage

Intolerable working conditions are finally not being tolerated.

If you’ve been following any economic news lately, you will have hear about the so-called labor shortage being faced by America’s companies the past few months.

Story after story shows owner after owner bemoaning the lack of workers available for their open positions.

What’s funny is that they should have seen this coming for months, as labor issues were set to persist for much longer than anything related to the pandemic.

What many companies are starting to realize is that the shortage is not in labor, but rather jobs with good pay and decent benefits.

What the Labor Shortage Isn’t

The labor shortage is not a demand for free money, so let’s dismiss all the bullshit about people not wanting to work because of enhanced unemployment benefits.

It’s a red herring.

It’s click bait.

It’s informational junk food.

This is the media giving their audience exactly what they want.

Companies want to hear it because it gives them a reason to keep wages depressed and blame others, deflecting any responsibility, and labeling those who own’t accept their jobs as lazy and greedy.

Current employees don’t want to hear it because that means they are accepting the type of crap that these other workers aren’t putting up with, and it’s a combination of embarrassing, maddening, and depressing.

The truth is that our unemployment system is broken, only providing a fraction of wages it was originally intended to provide, and the enhanced benefits are just now starting to see that reality come true.

Because of this, extra money only extends unemployment by a couple of weeks, allowing people more time to find better, more suitable jobs, which ultimately they do.

The image of the lazy-ass millennial sitting on the couch playing video games and eating bon-bons while collecting unemployment is the same kind of myth wielded by conservatives, much the same as their Reagan-era counterparts used the “welfare queen” imagery to pass welfare reform.

So what’s really going on?

What the Labor Shortage Is

There are many industries that have shit pay and no benefits, but let’s take a look at one of the most egregious: restaurants.

Restaurants are notorious for taking advantage of a loophole, allowing them to pay far less than minimum wage, claiming that tips make up for it.

However, it looks like restaurant workers, especially wait staff, have finally had enough.

While many people blame unemployment benefits for the lack of workers, our survey of 190 people in the restaurant industry found that lack of benefits, low wages, and inflexible schedules are the primary reasons why eateries are short staffed.

Eighty-one percent of survey respondents say health insurance, paid-time off, and child care are among the benefits that would make restaurant work more appealing. Furthermore, 73% of respondents say employers could offer wages and a positive culture as incentives to stay in the industry.

This is absolutely true, and it is a microcosm of the economy in general.

During a summer off from college, I worked as a waiter for a Bennigan’s restaurant on the east side of Indianapolis.

Even as a college student, I thought the hours sucked and the pay was horrendous. Looking back 20 years later as a white-collar, middle-aged husband and father, I can’t imagine living on $2.19/hour (plus tips!), much less raising a family.

One company realized that years ago and is currently reaping the benefits.

Michael Lastoria is co-founder of &pizza, a pizza chain with locations up and down the northeastern seaboard. The average pay for their employees is $16, with other benefits, to boot.

Here are some excerpts from a recent interview.

Talking about the legacy of shareholder supremacy,

We are living proof that the claims that business owners are making about the impossibility of paying people enough money to live on are false. Those claims were designed to protect the old corporate mindset that permits shockingly high executive pay and staff exploitation.

Defining the real shortage,

The fact that the average minimum wage worker has to work 79 hours a week to afford rent for a one-bedroom apartment is the real crisis. There isn’t a labor shortage, there is a shortage of business owners willing to pay a living wage. (emphasis added)

This company is doing well because they’re doing well by their employees, but even they are behind of what is a “good wage”.

The Minimum Wage Problem

My guess is that most of the labor issues stem around the federal minimum wage, which currently stands at a measly $7.25/hour, unchanged since the Great Recession triggered an increase in July 2009.

Every year that passes reduces the purchasing power of our money, so each year without a raise means you’re actually losing money.

When the $7.25/hour rate was instituted, it had the purchasing power of $8.70 in 2019 dollars.

The minimum wage purchasing power peaked in 1968, and, depending on how you calculate it, was equal to $10.54/hour to $11.53/hour

And that’s just using baseline inflation, which has its own problems to deal with.

If we were to use productivity growth, which would roughly give back to employees the increased benefits that they gave to the company, minimum wage would be over $24/hour.

That’s more than 3x the current rate.

Furthermore, minimum wage jobs were historically at entry-level positions or at summer jobs, mostly filled by teenagers or college students.

More and more, these jobs are the primary source of income for adults. Or as a secondary source of income to supplement either their primary job or their Social Security payments.

Either way, the original target audience is being forced out, resulting in less experience for them, which means reduced salaries at their first job due to lack of experience, which means lower lifetime earnings, etc.

Lastly, companies are using government social safety nets as subsidies to increase their profit margins.

Many minimum wage employees use Medicaid, food stamps, housing assistance, or other programs to supplement their income, so they can be healthy enough to work for minimum wage.

This state of affairs is an indirect benefit to companies, who don’t have to for living wages and good benefits, and instead line their pockets with that “extra” money.

It’s ironic that companies complain about a lack of employees, claiming they are “on the government dole”, when they are the ones who are receiving the lion’s share of federal assistance, albeit indirectly.

Bottom line: If you can’t get your business past the startup years without government assistance, then your business model is no good.

The Takeaway

It’s a shit time for workers right now, but what else is new?

It’s been a shit time for workers for the past 40 years.

Boomers, and to a lesser extent Gen X, often ask why Millennials and Gen Z only work for a few years before taking off for another job. They find is disloyal and selfish.

My response is that companies broke that trust first, but using humans to balance the numbers. (That quote is from Simon Sinek, I just can’t find the link.)

As an employee, you should feel absolutely no remorse about leaving for a better situation. Because you better believe that if the company falls on hard times, they will have no remorse about firing you.

No man is an island, and you can’t get through life alone. But never make the mistake of thinking your employer is a friend and will provide that assistance.

They think of us just something to be used up, hence the name Human Resources. We’re just another raw material to them, able to be discarded once our usefulness has been completely extracted.

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