Workers Are Going Galt

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[The crapification of labour. Workers are forgoing jobs because they simply think they're worth more than the stingy wages employers are paying. But in a Trump universe this may backfire and result in more laws to 'enhance work force flexibility.' *RON*]

Daniel Gross, Slate, 11 August 2017

Heavy equipment lies idle waiting for construction of a residential building to begin on Jan 27 in Brooklyn, New York. Robert Nickelsberg/Getty Images
In the early years of the Obama administration, as new taxes on upper-income Americans were enacted as part of Obamacare and the expiry of the Bush tax cut loomed, it was common to hear libertarian types warn that businesspeople and entrepreneurs might just Go Galt. That is to say, if they determined that losing 50 cents of every dollar in taxation wasn’t worth their trouble, they’d take a cue from the hero of Ayn Rand’s Atlas Shrugged, fold up their businesses, and quit work altogether. Check out this March 2009 Michelle Malkin column for an exegesis of this, um, idea. “Enough,” she wrote. “While they take to the streets politically, untold numbers of America’s wealth producers are going on strike financially.”

The logic of protesting taxes on income above a certain threshold by forgoing all income—including the income taxed at much higher rates—always escaped me. But people don’t always behave in a rational manner, and they continually do have to weigh the utility of working for what will not be a satisfactory return against the free time or leisure they might enjoy from not working at all. Anyway, the movement fared about as well as the widely panned, hardly seen 2011 film adaptation of Rand’s book.

Fast-forward eight years, and it seems that a different group of people may be deciding to Go Galt: workers.

Earlier this week, the Department of Labor released the latest Job Opening and Labor Turnover Summary (JOLTS) report, which tallies job openings, hires, and quits. In June, the number of open positions spiked to 6.2 million, up 461,000 from May. That’s slightly more than the entire population of Missouri. It’s a record, and it’s up 11 percent from June 2016.

There are plenty of explanations for the seeming shortage of workers. Baby boomers are exiting the workforce. Many of the undocumented immigrants who fill low-paying service jobs have left the country or have been deported. The economy has been expanding for more than eight years, and the unemployment rate is 4.3 percent. Which means many of the people who can hold down jobs—or want to hold down jobs—already have them. In some areas, the need to pass drug tests is disqualifying individuals from the workforce. And in some instances, there just aren’t enough people with the relevant skills to fill the openings.

But as readers of this column have heard me say before, one of the big—perhaps the biggest—problem in the labor market today is that employers aren’t willing to pay people enough to fill their open positions. And this is happening even as they must fill a record number of openings. Hiring today means you have to convince someone to leave their job, leave school, or get off the couch. And if the incentive isn’t sufficiently large, it is hard to find a new employee.

Now, there are plenty of people without jobs in the U.S., and there are plenty of people who are working part-time but would prefer to work full-time. But the labor market isn’t always particularly efficient. People don’t always live near where the jobs are plentiful. And even if they do, they may not be willing to do the job at the going rate. Some number of people are essentially telling employers to take their crappy jobs with their crappy wages and shove it.

And so crops are rotting in the fields in Florida and California because farmers can’t find people to pick them. (Another way to think about this is that farmers were willing to invest the money to buy seeds, plow the fields, plant the crops, buy water and pesticides—but aren’t willing to bring the stuff they grow to market.) Roofers have been forgoing taking on new jobs because they can’t hire people to schlep the shingles. Bed and breakfasts and restaurants in Maine were slow to open or have operated with reduced hours this year because they can’t find housekeepers and waiters.

It’s not just happening in rural areas. At the end of June, there were 225,000 open positions in construction, up 31 percent from 171,000 in June 2016; 723,000 open positions in accommodations and food services (hotels and restaurants), up 12 percent from June 2016, and more than 1 million in trade, transportation, and utilities (which includes retail).

When you operate in a market, you have to keep raising your price until someone is willing to accept your bid. But for the last several years, American employers have steadfastly refused to raise wages. And now their stinginess is catching up with them. In many instances, employers simply aren’t offering sufficient incentives for people to apply for their jobs, show up to interviews, accept their offers, or show up to work. Some number of people would prefer the low level of income they have, or no income at all, to doing the work on offer at the wages listed. As Minneapolis Fed President Neel Kashkari told a group of businesspeople earlier this week, “If you’re not raising wages, then it just sounds like whining.”

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