Where reducto ad-abusrdum goes to die.

by w3woody

Q. and A.: If Workers Are Scarce, Is It the Work or the Wages?

The labor market is stumping even the experts. The unemployment rate is near a 16-year low, and employers are fretting about their inability to find reliable workers. That shortage of workers should prompt an increase in wages. Remember that supply and demand curve: When the demand (for workers) exceeds the supply, prices should rise.

Yet wages have stubbornly resisted the pressure. As Janet L. Yellen, chairwoman of the Federal Reserve, noted in congressional testimony this week, the relationship between a tight labor market and wage pressure “has become more attenuated than we’ve been accustomed to historically.”

So why don’t employers offer more? That was a common question readers posed after an article last week about the government’s monthly jobs report quoted Sarah M. Smith, an owner of Rooforia Home Exteriors in Omaha. Ms. Smith depends on a federal program that gives temporary visas to guest workers — known as H-2B visas — because she is unable to find Americans to take a seasonal job repairing roofs that pays $17 an hour. The work is tough, she said, but “the pay is fair.”

This line–which is in my opinion the flip side of the line given as an argument for $15/hour minimum wage–is basically a moral argument disguised as an economic argument.

And in my experience, anytime you use morality to argue economics, you find perverse incentives that hurt people in the long term.

It’s why I oppose a $15/hour minimum wage: because the argument behind it is a moral one, not an economic one.

And it’s why I find employers who refuse to pay more in salary and demand the government step in and alter the law so they can hire lower-wage employees (and H-2B visas essentially create indentured servitude towards a company who hires them, as they have no right to stay if they lose their job, creating incentives not to lose their job beyond the desire to work well and the income paid) equally repugnant.

I’ve seen the argument used in the airline industry. I’ve seen it used in construction. I’ve seen it used with software development. In each case companies use the past 8 years of salary history–history gathered during one of the worst recessions in modern history to justify keeping pay low. Then they wonder why they can’t hire any qualified employees.

Well, it’s because you’re a cheap mother-fucking bastard who can’t see the writing on the wall, that’s why.

Now the article interviews a roofing contrator who is having a hard time hiring people at $17/hour.

And here’s his argument:

Q: If you can’t get workers at $17 an hour, why don’t you offer higher pay?

A: In response to the article, I got an email that said if we were to offer $35 an hour with health care benefits, we would definitely get people to apply; it said people who were highly qualified applicants with years of experience would probably line up at our door.

My response is: We would love to be able to offer $35 an hour as starting pay, but are you in turn willing to pay premium prices for your next roof replacement? A lot of customers we get through online lead services like Thumbtack are people looking for the best deal. They want to collect proposals from four to five businesses and most of the time choose the cheapest one.

First, oh, boo fucking hoo. If you cannot run a profitable business, you have no right to complain because your competitors can compete. This is the cry of the large corporation who seeks a government handout. This is the cry of the small business man seeking some sort of corporate welfare through the SBA. This is the cry of the corporate owner who finds themselves out of business, wondering how it is the business down the street “took y’r jerb!”

I’m a believer in the free market. But I believe the free market is a brutal mistress; if you cannot figure out a way to compete, you die. Our landscape is full of companies demanding handouts which should have died instead; can you imagine the world we lived in if General Motors went bankrupt and all that factory equipment was bought by Tesla Motors?

But second, look at the reducto ad-absurdem raised throughout the rest of the article: well, if we could pay $35/hour we could hire people.


But here’s a fucking question you didn’t think about: could you hire people (without the government opening the fucking indentured servant spigot a little wider for H-2B workers) at $22/hour? At $20/hour? At $18/hour?

What is so fucking magic about $17/hour that you refuse to consider paying someone an extra $8 to $16 per day so you can hire quality workers who don’t worry that if they lose their job they lose their right to stay here in whatever apartment they rented, losing whatever possessions they own that they can’t ship overseas?

And it’s not just him. Look at the stories about airlines being unable to hire pilots–neglecting the fact that for many pilots, after spending years learning how to fly and building the required number of hours they are being paid less in entry jobs than the guy who manages the hamburger flippers at the fast food restaurant you bought lunch at. Or look at the stories about how hard it is to hire software developers, despite the fact that so many software developers have gone down the freelance route. (Freelancing is one way for good developers to get paid more while having more flexibility setting your own hours.)

In both cases (and in several others) companies complain about how hard it is to hire people–but never confess in public the real problem: they’re being cheap. And it is contributing to stagnant wages all the way across the economy.

I have absolutely no fucking patience for this sort of argument.

Look, I’m a free market guy all the way down the stack. And that means if some asshole who wants to pay substandard wages for what is really hard, hot, dirty work winds up going out of business instead, well, that’s how the free market works.

If you own a small business or a large bank or General Motors–remember: you have absolutely no right to exist if you cannot run your business correctly. And as far as society is concerned, if you fail–good riddance. One less efficient player sucking down dollars that could be more efficiently spent. One less corporation getting corporate welfare from the government. One less voice demanding we alter the laws that create a category of second-class citizenship–second class citizenship that increasingly looks like early 18th century indentured servitude.