Why Do Markets Never Seem to Apply to Labor?

The next time you hear someone talk about the genius of small business, you might want to remind them of these captains of industry. Every so often, there’s a story about how hard it is to hire people. But, in this story, I think some of these business people are missing something obvious. First, a complaint from the head of a tutoring company:

We start them out at $25 to $50 an hour based on location, travel time and complexity. We can’t pay more, because we do not want to charge our clients more. Our price point makes us competitive. But as demand increases, freelance tutors feel empowered and strike out on their own.

Can’t imagine why that would happen. Anyway, onto another bidnessman, who hires people to inspect items as they come out of an automated assembly process (I can’t get the image of the I Love Lucy scene where she eats all of the chocolates on the conveyer belt. But I digress):

We have about 60 employees and are looking to hire four more. The jobs are entry-level press operator jobs.

They are not difficult. The presses run on automatic, but someone needs to inspect and clean the parts when they are produced by the machine.

And we offer a competitive wage: $8.50 to $9.50 an hour. The $8.50 is just the starting wage. After 90 days we increase it to $9.50 to $10 an hour.

But many people add up their constantly renewed unemployment, food stamps and housing assistance and realize that they can make as much not working, as working.

We could raise wages to $100 an hour, fill the positions and then go out of business, taking all our jobs with us.

Or, I dunno, maybe there’s a price point between $10/hr and $100/hr that would work for everyone?

Well, someone has to vote Republican…

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3 Responses to Why Do Markets Never Seem to Apply to Labor?

  1. Art says:

    Hint: Adding just a hint of health insurance coverage, even just the opportunity for getting it after a waiting period, would markedly increase retention. It always amazes me what crap jobs people will suffer through to keep insurance that lend but a whiff of potential coveage.

  2. Julie Stahlhut says:

    There is a certain disconnect here. “$10/hr is too little and $100/hr is too much. Therefore, we can’t hire anyone.”

  3. I have an opinion on wages but I need to keep it to myself in case my employer is googling my name to make sure I don’t have any opinions of my own that may conflict with their need for positive press.

    I haven’t given them my FaceBook password, yet.

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