Inflation: Labor costs are about to go way, way up
“I’ve been walking the footsteps of society’s lies, sometimes I don’t like what I see no more.” – Lyrics by Bon Jovi, Richie Sambora
We’re all talking about the wrong things when it comes to inflation. It isn’t about the supply chain or the cost of goods going up. Sure, that has happened, but those issues and the related cost increases for goods are not that big, really, and the capitalist system throughout the world will iron those out, smooth them out over a fairly short period of time by doing what it does best, which is produce to meet demand, especially when prices are up.
What we should really be talking about is what the pandemic, something we at Carnivore have named “The Virus Scam of the Century,” has done to the labor force. More specifically, the serious changes that have happened in the psychology and behavior of the workforce that are a direct cause of the pandemic and how our leaders have “handled” it.
We should be talking about this because it is this thing that is not easy to fix, it is this thing that will drive prices to double or triple. It is this thing that we call the “ugly underbelly of the Virus Scam” that will have lasting fundamental implications.
The pandemic “blew out” three important groups of people that employers counted on:
- The mom who works
- The young person who was looking to enter the job market
- The older, very skilled, near retired person.
The mom who worked was told her kids had to stay home, and she did what she should do, she stayed home with them. Heck, you couldn’t find anyone to watch them and all the daycare centers were closed, what choice did she have? So she was blown out of the workforce. Millions of moms who worked but might have been lucky enough to have another wage earner in the household just got blown out of the workforce because they needed to do the number one thing in their lives, which is take care of the safety and welfare of their children. And can you blame them?
The second group that was blown out of the workforce was the young person who was willing to work, wanted to work, but there were no entry-level jobs in 2020. And then, when you told them they could go to work at the restaurant as a waiter, they got all geared up to go back to work, then our genius leaders shut them down again and said no. Then our leaders said yes you can, but only under crazy conditions. Then they shut them down again. Then they said they could, but now, you can only go to work if you’re vaccinated, forcing yet another life choice down their young throats, many of whom are young women who have not yet had kids, and they’re wondering “Is this safe?”
The madness we have put our young people through during this pandemic has made them say, “Forget it. I’m staying home. Playing games. Living with Mom and Dad for a few more years until these idiots can get their crap together and the world maybe isn’t such a messed-up place.” And can you blame them?
Finally, the third group that has been blown out of the workforce is the very skilled, experienced, near retirement man or woman who was told to go home, and in so doing, they had a chance to really think about their life. And what they discovered is that they didn’t like where they worked or who they worked for or having a boss that hassled them all day. They found they didn’t want to meet quotas and travel to Ohio 4 times a year for useless meetings. They found they liked being at home in their newly remodeled home office, they liked having the fire in the fireplace crackling while they worked, they liked having the dog at their feet and not having to fight a commute and wear a suit and work in a cubicle with some annoying idiot working in the cubicle next to them.
So this worker decides to retire early, to punch out, to say goodbye to the rat race that he or she has come to realize is actually horrible and bad for them physically and mentally, and they are breaking free to live a higher quality of life just doing something, almost anything else. And let’s not forget that the pandemic, as it rolled along, caused there to be fewer experienced workers at companies, so those who were left were given the work of those who had chosen to leave, without a raise in most cases. And so they have been told to do triple the work, deal with 3 times as many unhappy customers, and get no additional pay. Their quality of life just got very bad. They’re stressed, the workplace is understaffed, and in chaos…they punch out. They are not sticking around to train another person to fill their job. It’s not their problem. They’re just walking out. Goodbye. And can you blame them?
What we know from economics is that at some price, “the market clears.” This means at some price, just about anything will sell or be bought, or in the case of labor, jobs will be filled. If you offer a waiter $7.77/hour plus tips he’s going to stay home. If you offer him $30/hour and tips and health care and a career path, then he’s going to go to work. At some price, a restaurant can have all the waiters it needs. Walmart can have all the associates it wants. It’s just a matter of price.
And what is happening, is the labor force is voting with their feet, they are telling the restaurant that sells a steak for $39 that they aren’t working for $7.77/hour, but they will work for $30/hour and if that means the restaurant has to charge $69 for that steak, then so be it. Let that sink in.
What this pandemic has done is devolve the market into a place where prices have gone up, millions of people have gone into poverty across the world, you’ve destroyed jobs and businesses and people’s lives. And so people are making moves – and can you blame them? People still have some free will, you know? But now you’re starting to get to the enormity of the problem and we are only now just beginning to feel the implications of a labor-cost-driven inflation situation.
You can’t turn off the world and then turn it back on and not see some kind of disastrous impact. Our leaders were too stupid to understand this and thought that they could use this as a totalitarian power grab and somehow manage through the carnage it might cause. Instead, they’ve destroyed the psychology of millions of workers that they now want back, but who have simply moved on and punched out.
Turning the world off is not OK under any circumstances. It hasn’t been done in 5,000 years of human history. Now you understand why. It’s devastating to economies and to people’s lives. It causes permanent psychological scars and it changes a lot and simply sending out a few stimulus checks and enhanced unemployment checks for a couple of years doesn’t make it all OK.
Inflation isn’t going to be in the cost of goods – there will be some of that. The cost of the steak to the restaurant owner was $9 and now it’s $10.75. Not a big deal! Most people are only talking about the cost of goods inflation, but that’s not the big story. The big deal is how to pay the waiter enough to get him to actually show up for work. The big story is how do we fill 12 million jobs? Doubling the pay for all those jobs will “clear the market,” but that means your $39 steak just went to $69 and the cost of your glass of Chardonnay just went from $12 to $22.
Companies are already realizing this and giving “day one health care” and paying signing bonuses and paying higher than minimum wage for jobs that normally would have been minimum wage jobs. I’m sure they think this is temporary, but we think maybe not. And we think that even all that they are doing is not going to be enough. Certainly not enough to bring those three groups that were “blown out” of the labor market back. So this is either going to take a long time to get solved or it can be solved faster by giving workers higher pay and better work/life balance.
Either way, we can see that the work world is now totally different and workers are not making decisions the way they used to. Employers are waking up to this because they have no other choice.