this is a dumb question, so talk to me like I am not really bright

[Reefgazer]

8 hours ago, Hilltopmom said:

Our county just asked the National Guard to come help staff the nursing homes. 

Are you in NY. by any chance?  I thought Gov. Hochul was supposed to send Guardsmen to nursing homes to alleviate the shortage, but the one my sister works in upstate has not seen any assistance yet.

[KungFuPanda]

14 minutes ago, Reefgazer said:

My son applied for his first job that had a "Help Wanted" ad and got hired in 3 days.  But he went in to the store and personally asked if they were hiring before he filled out the application.  I was in a PetSmart with a "Now Hiring" sign in the window and I asked if they were hiring and they said "not right now, we're full, but we'll take your application".  I think going into the specific store and asking is important to weed out wasting time with resume-collectors.

A lot of people who "applied to jobs and heard nothing back" mean that they hit the submit button on Indeed several times and that's it.  People are hesitant to make phone calls or approach an employer in person these days.

[historically accurate]

6 hours ago, Reefgazer said:

My son applied for his first job that had a "Help Wanted" ad and got hired in 3 days.  But he went in to the store and personally asked if they were hiring before he filled out the application.  I was in a PetSmart with a "Now Hiring" sign in the window and I asked if they were hiring and they said "not right now, we're full, but we'll take your application".  I think going into the specific store and asking is important to weed out wasting time with resume-collectors.

She did, everyone said they were hiring (except Icing, who referred her to Claire's) - from Walgreens to McDonalds to Claire's, she was simply told to apply online - they don't talk to anyone or accept applications in person. I don't know - she has pretty open availability, and has done volunteer work for years. 

My brother has been unable to get any low level job, and he has a masters. I'm beginning to think it's the area. Although people in the area complain about all the unemployed who aren't working because "there are help wanted signs everywhere".

Edited December 5, 2021 by historically accurate

[Hilltopmom]

6 hours ago, Reefgazer said:

Are you in NY. by any chance?  I thought Gov. Hochul was supposed to send Guardsmen to nursing homes to alleviate the shortage, but the one my sister works in upstate has not seen any assistance yet.

Yep. We are way upstate. It was in our paper this weekend that the county asked for NG assistance.

[DawnM]

All this talk of nursing homes not having staff makes me glad I have my dad in our home.   We may not have a lot of time to devote to spending with him, but he is here and if he needs something, we are available.

I am not sure what we will do when he needs more care, and maybe he won't get to that point, but for now, I am glad.

[Pam in CT]

6 minutes ago, DawnM said:

All this talk of nursing homes not having staff makes me glad I have my dad in our home.   We may not have a lot of time to devote to spending with him, but he is here and if he needs something, we are available.

I am not sure what we will do when he needs more care, and maybe he won't get to that point, but for now, I am glad.

Another factor impeding women's return to the workforce that came out of that survey I linked upthread was that women either left the workforce to pull elderly parents out of congregant facilities into their homes to reduce the risk of contracting COVID; or women have delayed putting elderly parents into nursing care under circumstances where pre-COVID they would have done so.  It's not that Nana was ever directly providing childcare; it's that the sandwich-generation Mom has too many/ too unpredictable responsibilities caretaking for Nana that she is unable to juggle re-entry... whereas pre-COVID the decision to go to nursing care would be a different calcuation.

There are a LOT of ripple effects. COVID has shifted a LOT of risk/benefit tradeoffs.

[DawnM]

4 minutes ago, Pam in CT said:

Another factor impeding women's return to the workforce that came out of that survey I linked upthread was that women either left the workforce to pull elderly parents out of congregant facilities into their homes to reduce the risk of contracting COVID; or women have delayed putting elderly parents into nursing care under circumstances where pre-COVID they would have done so.  It's not that Nana was ever directly providing childcare; it's that the sandwich-generation Mom has too many/ too unpredictable responsibilities caretaking for Nana that she is unable to juggle re-entry... whereas pre-COVID the decision to go to nursing care would be a different calcuation.

There are a LOT of ripple effects. COVID has shifted a LOT of risk/benefit tradeoffs.

That makes sense.   

We have been told we will be allowed to work from home 3 days per week after the holidays, but nothing has been said definitively.   I am praying it is going to happen.   It will help.

[Bootsie]

13 hours ago, HS Mom in NC said:

That's where retirements come in.  When people retire, jobs open up higher on the employment ladder, and people in the middle move up, leaving people at the very bottom available to apply for lower-mid jobs.  Childcare has historically been entry level work for people with no job experience.  People who used to work in daycare now have experience and can apply one rung up for higher pay in non-childcare work.  

With the cost of living skyrocketing, more people are opting to look into adult education options in hopes of earning more who might not have considered it before.  The consequences of staying at unskilled labor positions (like childcare weirdly is in the US) are more dire than ever before. Anyone with the opportunity to get some form of skills training or useful degree is going so, avoiding being in entry level work for long or by passing it completely. When people have better choices, they don't choose the crappy paying option like childcare, fast food, meat packing plants, etc.  

And fewer people live near grandparents who can offer free childcare, so they're looking for paid daycare options.  Gen X is in early grandparenting stage and the majority can't afford to retire like Boomers and Silent Gen could. Many will work full time until they can't due to mental and/or physical reasons. Childcare slots are harder to come by because demand is up for parents who don't have free Granny care.  People who can't afford one parent at home have to keep looking to keep their jobs and feed themselves and their kids. Student loan debt, healthcare, and housing costs are at historic highs, so the people feeling the pinch on that need childcare and full time employment to keep from sinking deeper in debt. Single parenthood is at an all time high, so childcare is essential for them.  There's no option of a parent staying home because separated parents (divorced and never married) are maintaining 2 separate households.

Some of what we are seeing is a continuation of some pre-Covid trends.  Unemployment was extremely low (and some employers were having difficulty finding workers) in 2019-early 2020.  Some low-skilled workers decided to get more education over the past year to develop more skills and are not currently in the labor force.  However, the decline in the labor force participation of 16-19 year olds has been declining since 1980--it is now 66.4% of what it was in 2000.  (It was already down to 67.9% before Covid hit).  The labor force participation of those who are 25 and older with no college has also been declining and is now less than 87% of what it was 20 years ago.  

At the same time there was a significant increase in the labor force participation of those who are over 55.  It is now about 121% of what it was in 2000.   Not only have a larger percentage of people aged 55 or over participated in the workforce; this is the baby boomer generation.  This means you have had a larger percentage of a larger group working in the past decade.  The first group of baby boomers have now reached retirement and some have retired earlier because of COVID, intensifying the impact of the exict of those workers.  

 

[Frances]

11 hours ago, ***** said:

Gardenmom, sorry, my bad. It was just easier to grab it from the bottom than to go look for it further up.  I deleted from my post, thanks for letting me know.

Frances, I get this, it is true. I am using my own experience from living in the midwest and currently seeing housing prices there compared to the PNW where I currently live.  I am very surprised at the difference. True, wages are higher here.  BTW, I have young relatives living in the Portland area and we have visited Portland often over the last 20 years, so I have some background knowledge of the situation in Portland and surrounding areas. I was simply giving a warning that she may be surprised at the cost of living in the midwest compared to Portland and what you may get for your money. Nm

I understand. My husband and I both grew up in the Midwest and all of my family and some of his family is still there. So we are quite attuned to the difference in housing costs. And my in-laws were both public school teachers and my dad was President of the local school board, plus many of my high school friends are now public school teachers, so I’m familiar with the differences in teacher compensation and benefits between OR and some Midwest states.

Portland would not personally be my top choice of a place to live, but it continues to attract a very high number of young people despite the relatively high cost of living. So they must see the trade offs as worth it. And while still likely more expensive than many (but not all) areas of the Midwest, there are more affordable places to live in OR outside of Portland.

When my husband and I bought in our city in OR more than twenty years ago, it was rated in the top 25 least affordable places to buy nationally due to the difference between median wages and median housing prices. So the current differential between OR and much of the Midwest is not surprising to me. But we love the friendly, casual vibe, temperate weather, natural beauty, and proximity to the mountains and ocean for outdoor recreation, and can’t imagine ever moving back to the Midwest. Plus, at the time, his very specialized job offer was here, not there. That’s no longer true and we are now both in careers where we could live anywhere, but have no desire to ever leave.

[Carol in Cal.]

On 12/4/2021 at 12:51 AM, Frances said:

Plus, because he could speak Spanish, he found out management was only allowing the dining staff to clock eight hours, but required them to finish certain work before they could leave, no matter how long they were there.

 

 

I have not read past this post yet, so my apologies if this has already been addressed, but this is massively illegal per federal (and probably also state/local) law.  Those folks should be tracking their actual hours worked and recording them concurrently—that is considered evidentiary for this.  If they sue they would get back pay and significant punitive pay as well.  

[Carol in Cal.]

On 12/4/2021 at 5:22 AM, DawnM said:

I thought most of the unemployment was no longer a thing.   Several of those I knew who were getting it has it run out.

The landlord thing is a MESS.   I feel so bad for landlords right now.   

And inevitably it will be small, merciful, generally good landlords who will sell out, leaving big corporate deep pockets landlords as the only game in town.  That happened decades ago in Berkeley when they implemented a really tough rent control law, and it was NOT consumer friendly.

[Mrs Tiggywinkle]

6 hours ago, Hilltopmom said:

Yep. We are way upstate. It was in our paper this weekend that the county asked for NG assistance.

We are also waiting. Nursing homes are a disaster.

However, what I don’t understand is are they pulling the national guard from their normal healthcare jobs? One of my coworkers is in nursing school and the guard, as well as being a paramedic. so when she’s working as a nurse, can she be pulled away to staff a nursing home elsewhere in the state, thus leaving the hospital she works at shortstaffed? I’m confused how that helps but I may not understand.

[Hilltopmom]

4 hours ago, Mrs Tiggywinkle said:

We are also waiting. Nursing homes are a disaster.

However, what I don’t understand is are they pulling the national guard from their normal healthcare jobs? One of my coworkers is in nursing school and the guard, as well as being a paramedic. so when she’s working as a nurse, can she be pulled away to staff a nursing home elsewhere in the state, thus leaving the hospital she works at shortstaffed? I’m confused how that helps but I may not understand.

I’m not sure of the logistics, but there are a lot of non- healthcare trained jobs in nursing homes too… cooks, cleaners, food service, aides, transporters, etc. I think they need all staff, not just actual nurses.

Edited December 6, 2021 by Hilltopmom

[Mrs Tiggywinkle]

5 hours ago, Pam in CT said:

Another factor impeding women's return to the workforce that came out of that survey I linked upthread was that women either left the workforce to pull elderly parents out of congregant facilities into their homes to reduce the risk of contracting COVID; or women have delayed putting elderly parents into nursing care under circumstances where pre-COVID they would have done so.  It's not that Nana was ever directly providing childcare; it's that the sandwich-generation Mom has too many/ too unpredictable responsibilities caretaking for Nana that she is unable to juggle re-entry... whereas pre-COVID the decision to go to nursing care would be a different calcuation.

There are a LOT of ripple effects. COVID has shifted a LOT of risk/benefit tradeoffs.

Personally—My grandmother needs a nursing home.  There are none with openings. She’s been on waiting lists for six months now.  So my mom is living with her providing 24/7 care.   My mom previously watched my kids one night a week while I was working.  I finally found overnight care now, but previously I cut back to part time.  No nursing home care available rippled down to me going part time for almost two years, which did leave my ambulance company short staffed a couple shifts that I’d been working, because we are short paramedics anyway like everyone else, and even one going to part time makes a difference. The butterfly effect is huge. 

[mom2scouts]

10 hours ago, Pam in CT said:

Another factor impeding women's return to the workforce that came out of that survey I linked upthread was that women either left the workforce to pull elderly parents out of congregant facilities into their homes to reduce the risk of contracting COVID; or women have delayed putting elderly parents into nursing care under circumstances where pre-COVID they would have done so.  It's not that Nana was ever directly providing childcare; it's that the sandwich-generation Mom has too many/ too unpredictable responsibilities caretaking for Nana that she is unable to juggle re-entry... whereas pre-COVID the decision to go to nursing care would be a different calcuation.

There are a LOT of ripple effects. COVID has shifted a LOT of risk/benefit tradeoffs.

Yes. A friend of mine became so concerned about her mother's isolation in a nursing home that she remodeled her garage into an apartment and moved her mother out of the nursing home and into her house. She also still has teens at home and it would be difficult for her to have a full time job.

[DawnM]

1 hour ago, mom2scouts said:

Yes. A friend of mine became so concerned about her mother's isolation in a nursing home that she remodeled her garage into an apartment and moved her mother out of the nursing home and into her house. She also still has teens at home and it would be difficult for her to have a full time job.

I did the same thing for my dad, and added a foster child, and have 3 teens/young adults, and kept my full time job.

However, DH works from home and dad isn't quite at the level of needing nursing level care yet.   I do provide all of his food, laundry, cleaning, etc.....but he is able to shower and toilet himself.

[Frances]

9 hours ago, Carol in Cal. said:

I have not read past this post yet, so my apologies if this has already been addressed, but this is massively illegal per federal (and probably also state/local) law.  Those folks should be tracking their actual hours worked and recording them concurrently—that is considered evidentiary for this.  If they sue they would get back pay and significant punitive pay as well.  

My son reported the nursing home for various things, including this. Nothing was done. Five years later the director and nursing director were both indicted on felony abuse and neglect charges due to some severe issues at the place. The nursing director took a plea deal and became a witness against the director. 
 

I think one of the reasons they were able to get away with the wage theft for so long was because most of the kitchen staff was not legally cleared to work in the US, so weren’t willing to say anything to anyone official. Once they figured out my son knew Spanish, they stopped talking about the problem in front of him.

At age 18, all of this was a very eye opening experience for my son. The director figure out who reported them and was very verbally aggressive with my son when he went to pick up his last paycheck. The experience was the main reason he decided to become a long term care ombudsman and why he is willing to be assigned to a dementia facility, generally the hardest positions to fill. Unfortunately, as most of the volunteers are retired and not young adults like my son, the pandemic has decimated their ranks and there is a more urgent need then ever for new volunteers.

Edited December 6, 2021 by Frances

[DawnM]

Interesting OPINION piece:

https://www.cnn.com/2021/11/04/perspectives/labor-shortage-us-economy/index.html

Edited December 6, 2021 by DawnM

[TechWife]

2 hours ago, DawnM said:

Interesting OPINION piece:

https://www.cnn.com/2021/11/04/perspectives/labor-shortage-us-economy/index.html

While I understand the points this piece is making, I feel like I’d need to do much more research into economics than I have time for to decide if he’s right to be concerned. 

Things I’m not sure about-

1) does the economy have to “grow” to be healthy? 
2) wage acceleration seems necessary at this point- continuing to pay people less $ just to appease the bottom line isn’t sustainable from a cultural perspective
3) how can we get the focus away from the stock market/corporate bottom line and on to real people? Money is a tool. The economy is more than the stock market.
4) I’m theoretically ok with luxury goods being more expensive in order to provide better wages. But I don’t know how that theory plays out in real time, nor do think anyone else does, either. It’s all speculation. For example: The price difference between a Lexus and a Honda could be larger and it wouldn’t bother me; the price of grocery store bakery “artisanal”  bread could be significantly higher than the cost of off the shelf bread from the production bakery and it wouldn’t bother me. 
5) we need to have honest discussions with people about things like higher gas prices. Frankly, they can be good from an environmental perspective. Why not tell people that they need to be looking more carefully at EV’s & solar panels? Auto makers are actively working on expanding the range of EV’s in both the distance and price point arenas. It’s time for demand to push supply up - from the grassroots, so to speak. 
6) We do not talk about the moral/ethical implications of economic decisions enough, maybe not at all. The concept of  “common good” has disappeared from the decision making process entirely. Perhaps this is the most important thing of all. 

[Pam in CT]

re what you see depends on where you stand

2 hours ago, DawnM said:

Interesting OPINION piece:

https://www.cnn.com/2021/11/04/perspectives/labor-shortage-us-economy/index.html

This is the traditional take since the late 1970s -- that pressure for wage increases are bad for the economy because when employers are forced to increase wages, that decreases profitability, which in turn leads companies to charge higher prices, which in turn leads to inflation.  Which ultimately leads to a policy pressure on the Federal Reserve to increase interest rates as the only tool available to fight inflation.  The rising wage/rising inflation cycle that caused substantial economic disruption in the late 1970s-early 1980s.

All of which is true/ grounded in economic data of that difficult time; but it also isn't the only way to look at the drivers of the economy. The argument is founded on a value judgment that economic measurements at the center of employers' interests (sustained profitability, low interest rates) > measurements at the center of employees' interests (real wages, benefits, predictability of hours, working conditions).  Which is a reasonable premise for the core of economic analysis but it is not the only reasonable premise.  Forty years of national faith in trickle-down ideology has delivered us here:

and that measured inequality does not even get to elements of declining quality of a rising segment of services jobs -- unpredictable shifts, no time off for illness, no vacation, etc.

 

The inflationary spiral of the late 1970s-early 1980s began with what economists call an "exogenous shock," the sudden OPEC oil price spikes.  That was the initial shock to input prices, operating costs, transport costs and etc+++-- not labor shortages -- that functioned as the original butterfly wing flutter that brought the global economy into many rippled-disruption.

COVID is a similarly central global disruption to supply chains and transport links around the globe, as well as to labor shortages (not just hear, but throughout the world, which is why supply chains are also disrupted.  There are *some* lessons to be learned from applying OPEC lessons to today's circumstances to be sure. But I expect we'll need to look beyond that precedent to get anywhere to help us through this one.

[Bootsie]

1 hour ago, Pam in CT said:

re what you see depends on where you stand

This is the traditional take since the late 1970s -- that pressure for wage increases are bad for the economy because when employers are forced to increase wages, that decreases profitability, which in turn leads companies to charge higher prices, which in turn leads to inflation.  Which ultimately leads to a policy pressure on the Federal Reserve to increase interest rates as the only tool available to fight inflation.  The rising wage/rising inflation cycle that caused substantial economic disruption in the late 1970s-early 1980s.

All of which is true/ grounded in economic data of that difficult time; but it also isn't the only way to look at the drivers of the economy. The argument is founded on a value judgment that economic measurements at the center of employers' interests (sustained profitability, low interest rates) > measurements at the center of employees' interests (real wages, benefits, predictability of hours, working conditions).  Which is a reasonable premise for the core of economic analysis but it is not the only reasonable premise.  Forty years of national faith in trickle-down ideology has delivered us here:

and that measured inequality does not even get to elements of declining quality of a rising segment of services jobs -- unpredictable shifts, no time off for illness, no vacation, etc.

 

The inflationary spiral of the late 1970s-early 1980s began with what economists call an "exogenous shock," the sudden OPEC oil price spikes.  That was the initial shock to input prices, operating costs, transport costs and etc+++-- not labor shortages -- that functioned as the original butterfly wing flutter that brought the global economy into many rippled-disruption.

COVID is a similarly central global disruption to supply chains and transport links around the globe, as well as to labor shortages (not just hear, but throughout the world, which is why supply chains are also disrupted.  There are *some* lessons to be learned from applying OPEC lessons to today's circumstances to be sure. But I expect we'll need to look beyond that precedent to get anywhere to help us through this one.

I am not understanding the bolded.  The first paragraph is a description of what happens.  It is not a description of what someone thinks should happen.  I do not see that there is someone making a value judgment than one economic measurement is greater than another.  

[Bootsie]

2 hours ago, TechWife said:

While I understand the points this piece is making, I feel like I’d need to do much more research into economics than I have time for to decide if he’s right to be concerned. 

Things I’m not sure about-

1) does the economy have to “grow” to be healthy? 
2) wage acceleration seems necessary at this point- continuing to pay people less $ just to appease the bottom line isn’t sustainable from a cultural perspective
3) how can we get the focus away from the stock market/corporate bottom line and on to real people? Money is a tool. The economy is more than the stock market.
4) I’m theoretically ok with luxury goods being more expensive in order to provide better wages. But I don’t know how that theory plays out in real time, nor do think anyone else does, either. It’s all speculation. For example: The price difference between a Lexus and a Honda could be larger and it wouldn’t bother me; the price of grocery store bakery “artisanal”  bread could be significantly higher than the cost of off the shelf bread from the production bakery and it wouldn’t bother me. 
5) we need to have honest discussions with people about things like higher gas prices. Frankly, they can be good from an environmental perspective. Why not tell people that they need to be looking more carefully at EV’s & solar panels? Auto makers are actively working on expanding the range of EV’s in both the distance and price point arenas. It’s time for demand to push supply up - from the grassroots, so to speak. 
6) We do not talk about the moral/ethical implications of economic decisions enough, maybe not at all. The concept of  “common good” has disappeared from the decision making process entirely. Perhaps this is the most important thing of all. 

How would the bolded work?  Why would the price of a Lexus being greater mean higher wages for a Honda worker?  Why would the price of artisanal bread at the grocery store bakery mean higher wages for the Rainbow Bread employee?  I am not seeing the connection between a larger price differential between luxury goods and normal goods resulting in higher wages.

[Pam in CT]

re value judgments

27 minutes ago, Bootsie said:

I am not understanding the bolded.  The first paragraph is a description of what happens.  It is not a description of what someone thinks should happen.  I do not see that there is someone making a value judgment than one economic measurement is greater than another.  

Sure.  (All else remaining equal) higher labor costs => lower profit margins, that is causality.

The value judgment comes in around which is more important -- that employee living standards improve, or company profit margins are sustained.

Either answer is REASONABLE, but the answer we've glommed onto as a societal premise since the 1970s-- sustained profitability is more important than real wages-- is, nonetheless, a value judgement. 

As a society we justify putting profits > living standards through an ideology that company investments "trickle down" to everyone, that what's good for Ford is good for the nation. But the lived experience of food processing & restaurant & Walmart & Amazon workers maybe belies that confidence in "trickle down" at the micro level; and steadily rising wealth & income inequality corrodes confidence at the macro level.  Perhaps out national confidence that what's good for corporations is good for us all, might usefully be reconsidered. 

 

The Black Plague knocked out ~1/3 of the labor force, precipitated massive shifts in how whole sectors were organized, and is often credited as driving the collapse of the feudal serf system. COVID has not yet delivered us to that level of disruption, and God willing it won't. But the disruption to labor markets is real, is systemic, is multi-factor, and is DIFFERENT in multiple and meaningful ways from the OPEC price shocks of 1979+.  Those shocks were, comparatively, analytically simple. There are limits to what we can glean today from how they played out then.

[Bootsie]

2 minutes ago, Pam in CT said:

re value judgments

Sure.  (All else remaining equal) higher labor costs => lower profit margins, that is causality.

The value judgment comes in around which is more important -- that employee living standards improve, or company profit margins are sustained.

Either answer is REASONABLE, but the answer we've glommed onto as a societal premise since the 1970s-- sustained profitability is more important than real wages-- is, nonetheless, a value judgement. 

As a society we justify putting profits > living standards through an ideology that company investments "trickle down" to everyone, that what's good for Ford is good for the nation. But the lived experience of food processing & restaurant & Walmart & Amazon workers maybe belies that confidence in "trickle down" at the micro level; and steadily rising wealth & income inequality corrodes confidence at the macro level.  Perhaps out national confidence that what's good for corporations is good for us all, might usefully be reconsidered. 

 

The Black Plague knocked out ~1/3 of the labor force, precipitated massive shifts in how whole sectors were organized, and is often credited as driving the collapse of the feudal serf system. COVID has not yet delivered us to that level of disruption, and God willing it won't. But the disruption to labor markets is real, is systemic, is multi-factor, and is DIFFERENT in multiple and meaningful ways from the OPEC price shocks of 1979+.  Those shocks were, comparatively, analytically simple. There are limits to what we can glean today from how they played out then.

I do not see how you are jumping to a determination of what is more important.  Because something happens does not mean that a value judgment by society is being made that it should happen or that it is more important.  Workers make their decision based upon their own self interest.  Owners of capital make their decisions based upon their own self interest.  Who is making the value judgment that sustained profitability is more important than real wages?  

[Pam in CT]

re who is making value judgments

28 minutes ago, Bootsie said:

I do not see how you are jumping to a determination of what is more important.  Because something happens does not mean that a value judgment by society is being made that it should happen or that it is more important.  Workers make their decision based upon their own self interest.  Owners of capital make their decisions based upon their own self interest.  Who is making the value judgment that sustained profitability is more important than real wages?  

 

Federal Reserve policy based on objectives for (low) inflation and interest rates are centered around value judgments.

Federal income tax policies that have steadily redistributed away from the marginal tax structures of the 1950-1960s are centered around value judgments.

Federal and state policy treatment of capital gains and multi-million estates are centered around value judgments.

Federal and state policies around labor unions are centered around value judgments.

Public opinion about unions is centered around value judgments.

Even the language of the bolded in your post -- which suggests a symmetry in the encounter between employer self interest and worker self interest -- suggests a value judgment that the encounter is  among rough equals, which rather glosses over the real power differential when one "side" of the encounter has rent to pay and kids to feed while the other has considerably better capacity to wait out the storm. Whether the storm is a one-off effort to improve wages/benefits through organization, or a storm like the current COVID-precipitated labor market contraction.

 

I'm not using the term "value judgment" in the judgy-judgy-judgy hectoring sense it sometimes has on SM, or even (FWIW) am I defending or arguing against the above economic policies.

I'm using the term "value judgment" to mean "premises on which those policies are based."  . For going on 50 years our economic policy has been premised on the shared idea that corporate profitability trickles down to ordinary citizens.

And COVID may already have revealed the fault lines, and over time may meaningfully disrupt, that premise.  Is all I'm saying. 

 

(Much as Black Death disrupted the premise that feudal lords provided their serfs protection and stability that was as essential to their self-interest as to their lords'.)

[Bootsie]

7 minutes ago, Pam in CT said:

re who is making value judgments

 

Federal Reserve policy based on objectives for (low) inflation and interest rates are centered around value judgments.

Federal income tax policies that have steadily redistributed away from the marginal tax structures of the 1950-1960s are centered around value judgments.

Federal and state policy treatment of capital gains and multi-million estates are centered around value judgments.

Federal and state policies around labor unions are centered around value judgments.

Public opinion about unions is centered around value judgments.

Even the language of the bolded in your post -- which suggests a symmetry in the encounter between employer self interest and worker self interest -- suggests a value judgment that the encounter is  among rough equals, which rather glosses over the real power differential when one "side" of the encounter has rent to pay and kids to feed while the other has considerably better capacity to wait out the storm. Whether the storm is a one-off effort to improve wages/benefits through organization, or a storm like the current COVID-precipitated labor market contraction.

 

I'm not using the term "value judgment" in the judgy-judgy-judgy hectoring sense it sometimes has on SM, or even (FWIW) am I defending or arguing against the above economic policies.

I'm using the term "value judgment" to mean "premises on which those policies are based."  . For going on 50 years our economic policy has been premised on the shared idea that corporate profitability trickles down to ordinary citizens.

And COVID may already have revealed the fault lines, and over time may meaningfully disrupt, that premise.  Is all I'm saying. 

 

(Much as Black Death disrupted the premise that feudal lords provided their serfs protection and stability that was as essential to their self-interest as to their lords'.)

I agree that tax policies are based upon value judgments (as well as political motivations).  That is a decision on how to tax wealth and income.  That is, in my mind, separate from any value judgment regarding the importance of wage levels and profit margins.  

The Federal Reserve's objective for low inflation is based upon economic data.  Countries with higher (especially unexpected) inflation have weaker economies (often at the expense of lower wage and income workers).  I do not know of any evidence that higher inflation is associated with relative wage gains for lower income workers and decreasing profitability for companies.  

[Pam in CT]

11 minutes ago, Bootsie said:

...The Federal Reserve's objective for low inflation is based upon economic data.  Countries with higher (especially unexpected) inflation have weaker economies (often at the expense of lower wage and income workers).  I do not know of any evidence that higher inflation is associated with relative wage gains for lower income workers and decreasing profitability for companies.  

Right; that well-documented "inflationary spiral" is where I started three posts ago

 

3 hours ago, Pam in CT said:

re what you see depends on where you stand

This is the traditional take since the late 1970s -- that pressure for wage increases are bad for the economy because when employers are forced to increase wages, that decreases profitability, which in turn leads companies to charge higher prices, which in turn leads to inflation.  Which ultimately leads to a policy pressure on the Federal Reserve to increase interest rates as the only tool available to fight inflation.  The rising wage/rising inflation cycle that caused substantial economic disruption in the late 1970s-early 1980s.

All of which is true/ grounded in economic data of that difficult time; but it also isn't the only way to look at the drivers of the economy. The argument is founded on a value judgment that economic measurements at the center of employers' interests (sustained profitability, low interest rates) > measurements at the center of employees' interests (real wages, benefits, predictability of hours, working conditions).  Which is a reasonable premise for the core of economic analysis but it is not the only reasonable premise.  Forty years of national faith in trickle-down ideology has delivered us here:

and that measured inequality does not even get to elements of declining quality of a rising segment of services jobs -- unpredictable shifts, no time off for illness, no vacation, etc.

 

The inflationary spiral of the late 1970s-early 1980s began with what economists call an "exogenous shock," the sudden OPEC oil price spikes.  That was the initial shock to input prices, operating costs, transport costs and etc+++-- not labor shortages -- that functioned as the original butterfly wing flutter that brought the global economy into many rippled-disruption.

COVID is a similarly central global disruption to supply chains and transport links around the globe, as well as to labor shortages (not just hear, but throughout the world, which is why supply chains are also disrupted.  There are *some* lessons to be learned from applying OPEC lessons to today's circumstances to be sure. But I expect we'll need to look beyond that precedent to get anywhere to help us through this one.

There is plenty of OECD data to suggest that virtually all of our peer nations have done "better" on the various metrics of inequality; or that virtually all of our peer nations have better aggregate health outcomes on a pretty wide range of measures; or in addressing poverty-related metrics on housing and food security.  Our safety net is mighty thin compared to that of our peers, in multiple ways, some of them well-measured.

Whether those better outcomes for the poorest segment of society is worth the respective tradeoffs is a value judgment.

I don't argue that the tradeoffs exist.  Just that where we've set the marker, on pure Darwinian robber baron capitalism vs the various (and different) ways our peer nations have sought to mitigate its worst excesses, is based on that trickle-down premise. 

And that COVID has pulled the curtain on that premise.

[DreamerGirl]

Did some googling based on the subject of this thread and found this article

https://www.rollingstone.com/politics/politics-features/kelloggs-strike-labor-wages-overtime-1261994/

This is a very interesting and eye opening read particularly about the overtime.

 

[Lisa]

We were short staffed before covid at our hospital and now its much worse. We not only are short nurses, but CNAs, dietary, housekeeping, laundry, etc. I don't know where all these people are going. Its not just our hospital but the whole area and state. I live in MN, but work in a large hospital across the border in WI. Mayo is only an hour and half away and they have the same problems.  

I know of many nurses and CNAs who became burnt out/stressed out because of so many covid patients and have moved on to other jobs at clinics and other areas that aren't quite so stressful as hospital nursing. 

[Bootsie]

11 minutes ago, Pam in CT said:

Right; that well-documented "inflationary spiral" is where I started three posts ago

 

There is plenty of OECD data to suggest that virtually all of our peer nations have done "better" on the various metrics of inequality; or that virtually all of our peer nations have better aggregate health outcomes on a pretty wide range of measures; or in addressing poverty-related metrics on housing and food security.  Our safety net is mighty thin compared to that of our peers, in multiple ways, some of them well-measured.

Whether those better outcomes for the poorest segment of society is worth the respective tradeoffs is a value judgment.

I don't argue that the tradeoffs exist.  Just that where we've set the marker, on pure Darwinian robber baron capitalism vs the various (and different) ways our peer nations have sought to mitigate its worst excesses, is based on that trickle-down premise. 

And that COVID has pulled the curtain on that premise.

But the policy issues in other countries are not directly tied to wage inreases and measures of inlfation.  The Federal Reserve policy, for example, is based upon the mandate of the Federal Reserve for price stability.  No one at the Federal Reserve is making a value judgment that corporate profits are more or less important than wages--the Federal Reserve is tasked with the job of monitoring the money supply to maintain price stability and full employment.  If you look at other central banks, such as the German Bundesbank historically, you find that they have had even a greater focus on inflation control than the Federal Reserve has had.  If a country like Germany has done better on the metrics of health care and equality, while being even MORE concerned than the US about inflation, it can't be that the US is doing relatively worse on those measures because the Federal Reserve is prioritizing fighting inflation.

[Carol in Cal.]

One thing that has driven changes in labor patterns in areas roughly local to me is the rise of short term rentals and the accompanying loss of reasonably or at least barely affordable priced long term rental housing.  High rents had already gradually driven out a ton of workers in long term care facilities or for home care agencies, and now that process is being accelerated by the shift in rental stock to short term use.  Another factor in that shift is CA’s increasingly landlord-unfriendly rental laws, which are pushing some, especially small private owners, out of the landlord business completely.  The resultant demographic shift is is significant and accelerating.  

[TechWife]

3 hours ago, Bootsie said:

How would the bolded work?  Why would the price of a Lexus being greater mean higher wages for a Honda worker?  Why would the price of artisanal bread at the grocery store bakery mean higher wages for the Rainbow Bread employee?  I am not seeing the connection between a larger price differential between luxury goods and normal goods resulting in higher wages.

 

I don't necessarily think they do. Like I said, I am not sure how it would all work in reality.

However, my thoughts are:

If the markup is greater on the luxury goods, they can take some of the profit from the luxury goods and use it to increase wages. The owners/stockholders don't have to keep all of the increased profit. Theoretically, raising the prices on luxury goods and then churning that profit back into employee wages wouldn't impact the bottom line to the degree that simply raising wages would. I've seen it argued that increased wages will result in increases in cost of goods/services. I don't necessarily think the cost of all goods has to increase. People need to eat - so bread. People want to eat a higher quality/more prestigious diet - so artisanal bread. If you need it, it will be affordable. If you want it, it's a luxury and the company/shareholder is free to price at will. Now, I'm not advocating for price controls in any way, don't get me wrong. I'm just saying that price increases that might be a result of wage increases don't have to be across the board - they can be targeted to a population that will not be adversely affected. There may be those that are priced out of the luxury market, but they still have the normal goods available to them at a price they can afford. They are not being economically deprived, for lack of a better way to put it. There would likely be fewer luxury goods on the market and what is there will be more expensive. Yes, this may profoundly change the way companies operate and see their bottom line. That's when my last point comes into play - the moral & ethical implications of economic decisions. The economy is complicated. Sometimes capitalism works, sometimes it doesn't, as we've all seen over the past couple of years when we've seen some abject failures (availability of PPE, rising health insurance costs). Where does the common good come into play? The US Constitution calls the common good the "general welfare," with welfare meaning well-being. So where does it play a part? I'll reiterate what I said in the post where I initially address this - I'm not sure how this would play out. It's an idea, that's all.

ETA: comparing Honda to Acura would have been clearer since they are the same company. As for the bread, the grocery store is the one that sells both of them. I wouldn't be surprised, however, if the dough starters for those artisanal loaves of bread come from the same production bakery that the off the shelf bread comes from. I don't know that, though & that might vary by location.

Edited December 6, 2021 by TechWife

[Bootsie]

41 minutes ago, TechWife said:

 

I don't necessarily think they do. Like I said, I am not sure how it would all work in reality.

However, my thoughts are:

If the markup is greater on the luxury goods, they can take some of the profit from the luxury goods and use it to increase wages. The owners/stockholders don't have to keep all of the increased profit. Theoretically, raising the prices on luxury goods and then churning that profit back into employee wages wouldn't impact the bottom line to the degree that simply raising wages would. I've seen it argued that increased wages will result in increases in cost of goods/services. I don't necessarily think the cost of all goods has to increase. People need to eat - so bread. People want to eat a higher quality/more prestigious diet - so artisanal bread. If you need it, it will be affordable. If you want it, it's a luxury and the company/shareholder is free to price at will. Now, I'm not advocating for price controls in any way, don't get me wrong. I'm just saying that price increases that might be a result of wage increases don't have to be across the board - they can be targeted to a population that will not be adversely affected. There may be those that are priced out of the luxury market, but they still have the normal goods available to them at a price they can afford. They are not being economically deprived, for lack of a better way to put it. There would likely be fewer luxury goods on the market and what is there will be more expensive. Yes, this may profoundly change the way companies operate and see their bottom line. That's when my last point comes into play - the moral & ethical implications of economic decisions. The economy is complicated. Sometimes capitalism works, sometimes it doesn't, as we've all seen over the past couple of years when we've seen some abject failures (availability of PPE, rising health insurance costs). Where does the common good come into play? The US Constitution calls the common good the "general welfare," with welfare meaning well-being. So where does it play a part? I'll reiterate what I said in the post where I initially address this - I'm not sure how this would play out. It's an idea, that's all.

ETA: comparing Honda to Acura would have been clearer since they are the same company. As for the bread, the grocery store is the one that sells both of them. I wouldn't be surprised, however, if the dough starters for those artisanal loaves of bread come from the same production bakery that the off the shelf bread comes from. I don't know that, though & that might vary by location.

One of the major problems with this idea is that, by definition, luxury goods are goods for which consumers are extremely price sensitive.  Raising prices for these goods tends to lower the quantity of the goods purchased by a larger percentage than the raising of prices.  So, if the company raises the price of its luxury bread by 10%, it loses more than 10% of its sales; so, there is no additional money (in fact, there is less) to pay higher wages.  The margin may be higher.  But, the margin is on a lower quantity, so the pool of money available is less.  This is somewhat counterintuitive, but it is consistent with economic theory (regarding income and substitution effects) and is borne out in economic data when we look at results of the luxury tax that was placed on boats and cars a few decades ago.

[Faith-manor]

Since 2010, 5000 daycares in Michigan have closed. A huge number of them during the covid shutdown and never reopened. The average wait time in our area for daycare or preschool that is not run by the school district is over one year. That is very problematic for working parents.

I think covid accelerated an already radical change in our economic structure and labor treatment. It is not possible to sustain an ever growing economy with a shrinking population since Milennials and GenZ are smaller generations, and they aren't having many kids. No immigration? One can simply not have a McD's and Starbucks on every street corner. Plus, I am noticing that as Millenials get into their thirties, they seem to be less inclined to eat inside restaurants. Take out some, but many of them have different eating patterns than GenX, and less money for eating out. Business plans have to shift for cultural changes between the generations. But often they do not and then there is a sudden whammo of reality.

Edited December 7, 2021 by Faith-manor

[prairiewindmomma]

7 hours ago, DreamerGirl said:

Did some googling based on the subject of this thread and found this article

https://www.rollingstone.com/politics/politics-features/kelloggs-strike-labor-wages-overtime-1261994/

This is a very interesting and eye opening read particularly about the overtime.

 

Yes, Frito Lay went through similar strikes this summer based on similar practices (mandatory overtime, being required to work 7 days a week, etc.). 

[prairiewindmomma]

5 hours ago, Bootsie said:

One of the major problems with this idea is that, by definition, luxury goods are goods for which consumers are extremely price sensitive.  Raising prices for these goods tends to lower the quantity of the goods purchased by a larger percentage than the raising of prices.  So, if the company raises the price of its luxury bread by 10%, it loses more than 10% of its sales; so, there is no additional money (in fact, there is less) to pay higher wages.  The margin may be higher.  But, the margin is on a lower quantity, so the pool of money available is less.  This is somewhat counterintuitive, but it is consistent with economic theory (regarding income and substitution effects) and is borne out in economic data when we look at results of the luxury tax that was placed on boats and cars a few decades ago.

Do you have supporting documentation for this for luxury clothing and other items? My understanding has been that they have been able to raise prices because those able to pay them to begin with have remained more financially secure. In addition, they have been cutting off outlet stores and third party retailers in order to limit access to discounted goods to buyers and have found that this is not hurting their margin. I am digging for links…but not finding exactly what I am looking for. Look at what Louis Vuitton, Nike, and Chanel have done over the last five years. The articles I am finding this year are about how they jumped prices in China due to restricted travel—but the trend has been going on for years, and it’s been happening in all countries.

[Bootsie]

1 hour ago, prairiewindmomma said:

Do you have supporting documentation for this for luxury clothing and other items? My understanding has been that they have been able to raise prices because those able to pay them to begin with have remained more financially secure. In addition, they have been cutting off outlet stores and third party retailers in order to limit access to discounted goods to buyers and have found that this is not hurting their margin. I am digging for links…but not finding exactly what I am looking for. Look at what Louis Vuitton, Nike, and Chanel have done over the last five years. The articles I am finding this year are about how they jumped prices in China due to restricted travel—but the trend has been going on for years, and it’s been happening in all countries.

Here is some brief information about the luxury tax that was implemented in the US in 1991. Good Riddance to the Luxury Tax - WSJ

The basic definition for a luxury good (or superior good) in economics is that it is a good for which demand increases by a larger portion than an increase in income.  So, if income increases by 10% the demand for the good increases by more than 10%.   But, the corollary of that is that if income decreases by 10%, demand for the good decreases by more than 10%.  Thus, if the price of the good rises (which could be due to higher taxes), less of the good is bought because of the substition effect (consumers substitute away from higher priced goods to lower priced goods) AND because of the income effect (rising prices represent a decrease in real income).  These two impacts reinforce each other, meaning that an increase in tax on these goods will substantially decrease the consumption of them.  This is the basic description in any principles of economics textbook.

There is a difference in what happens at Time 1 if the price is $10 or the price is $15 and what happens over time, as price, and other factors change.  I am not following exactly what you are suggesting.  There is a difference in margin (profit per item) and profit.  As incomes rise, yes producers can raise prices on luxury goods--but that is because incomes are rising.  

[Arcadia]

3 hours ago, prairiewindmomma said:

Do you have supporting documentation for this for luxury clothing and other items? My understanding has been that they have been able to raise prices because those able to pay them to begin with have remained more financially secure. In addition, they have been cutting off outlet stores and third party retailers in order to limit access to discounted goods to buyers and have found that this is not hurting their margin. I am digging for links…but not finding exactly what I am looking for. Look at what Louis Vuitton, Nike, and Chanel have done over the last five years.

Are they cutting off outlet stores and second hand stores? Locally, bedsides the premium outlets which have long lines for Nike, there are TheRealReal, Vestiaire Collective, Jomashop for online shopping.

1 hour ago, Bootsie said:

The basic definition for a luxury good (or superior good) in economics is that it is a good for which demand increases by a larger portion than an increase in income.  So, if income increases by 10% the demand for the good increases by more than 10%.   But, the corollary of that is that if income decreases by 10%, demand for the good decreases by more than 10%.  Thus, if the price of the good rises (which could be due to higher taxes), less of the good is bought because of the substition effect (consumers substitute away from higher priced goods to lower priced goods) AND because of the income effect (rising prices represent a decrease in real income).  These two impacts reinforce each other, meaning that an increase in tax on these goods will substantially decrease the consumption of them.  

Is there a definition for luxury goods? I tend to agree with @prairiewindmomma that people who could afford luxury goods such as  Birkin or any Hermès bag would be able to pay more for such goods.

However, I did encounter while out shopping a lady who is a Gucci fan. She was eyeing a past season Gucci bag for $1.2k and was willing to buy if it went down below $1k for Black Friday. She did buy the Gucci bag. It was at Saks off 5th

[Bootsie]

6 minutes ago, Arcadia said:

Are they cutting off outlet stores and second hand stores? Locally, bedsides the premium outlets which have long lines for Nike, there are TheRealReal, Vestiaire Collective, Jomashop for online shopping.

Is there a definition for luxury goods? I tend to agree with @prairiewindmomma that people who could afford luxury goods such as  Birkin or any Hermès bag would be able to pay more for such goods.

However, I did encounter while out shopping a lady who is a Gucci fan. She was eyeing a past season Gucci bag for $1.2k and was willing to buy if it went down below $1k for Black Friday. She did buy the Gucci bag. It was at Saks off 5th

Yes, in economics a luxury good is a good for which the income elasticity of demand is greater than 1. Income elasticity of demand - Wikipedia

There is a difference in saying that someone "would be able to pay more for such goods" and that people "will pay more for the goods" and that they will purchase the same number of them.  It doesn't matter if someone COULD pay $8 for a loaf of specialty bread; it doesn't mean that the person will choose to do so if the price goes up to $8.  Economic theory suggest that these consumers are still price sensitive and the sensitivity for the goods that you and I generally consider to "luxuries" are actually some of the goods for which consumers are the MOST price sensitive.  In economics terms luxury goods tend to have much more elastic demands than goods we classify as necessities (food, pharmaceuticals, etc.)

This is a real dilemma for tax policy.  It would be great if it were not the case.  But, repeatedly we have found that taxing optional, luxury goods leads to a large reduction in the consumption of those goods, while taxing necessities does not lead to a large reduction in the consumption of those goods (and thus greater tax revenues).  

[Resilient]

@DawnMI haven't read the thread...but I wanted to pipe up to tell you that this is not a stupid question.  We are dealing with so many things that haven't happened before that it is not "stupid" to ask questions about this.  I mean seriously...what happens with negative interest in a bank account?  Even the big brains don't know that answer...and yet, it is something we look at...as we also look at stuffing cash into the mattresses, which has always (until now) been stoopid.  

[Carrie12345]

4 hours ago, Bootsie said:

here is a difference in saying that someone "would be able to pay more for such goods" and that people "will pay more for the goods" and that they will purchase the same number of them.  It doesn't matter if someone COULD pay $8 for a loaf of specialty bread; it doesn't mean that the person will choose to do so if the price goes up to $8.  Economic theory suggest that these consumers are still price sensitive and the sensitivity for the goods that you and I generally consider to "luxuries" are actually some of the goods for which consumers are the MOST price sensitive.  In economics terms luxury goods tend to have much more elastic demands than goods we classify as necessities (food, pharmaceuticals, etc.)

This.
(Says someone who’s main source for trying to understand economics has been this board for years, so… lol.)

As an example, I can say that I have been hoping to purchase a new vehicle, and looking at ones that are more expensive than any I’ve ever owned before. Not to the definition of luxury, I don’t think, but definitely up a price notch or two for me.  With the current hikes in car prices, I’m not going to do it. And, if there isn’t a correction by the end of next year, I will be looking at different,lower priced vehicles.

Looking at other people I know have fared well (economically) through the pandemic, so many have chosen to learn new skills and put their own labor into upgrading their surroundings rather than buying items or services, and have found great meaning in that. Including my family. We already have a list of new house projects that only involve outsourcing very specific things we’re not comfortable learning.

And my experiences with GenZ tell me they’ll pay a pretty penny for makeup, phones, and streaming services, but few are going to be out buying precious gem jewelry, high end vehicles (perhaps with exceptions for electric,) grand homes (except for preserving historic ones, with their own hands,) or store bought fancy home decor.  I do believe the demand for luxury goods is going to plummet even without any other circumstances tossed into the mix.

[TechWife]

17 hours ago, Bootsie said:

One of the major problems with this idea is that, by definition, luxury goods are goods for which consumers are extremely price sensitive.  Raising prices for these goods tends to lower the quantity of the goods purchased by a larger percentage than the raising of prices.  So, if the company raises the price of its luxury bread by 10%, it loses more than 10% of its sales; so, there is no additional money (in fact, there is less) to pay higher wages.  The margin may be higher.  But, the margin is on a lower quantity, so the pool of money available is less.  This is somewhat counterintuitive, but it is consistent with economic theory (regarding income and substitution effects) and is borne out in economic data when we look at results of the luxury tax that was placed on boats and cars a few decades ago.

Yes, but it isn’t like people aren’t going to keep buying bread or cars. They will buy different bread and different cars. Consumers are going to move on to get what they need. Corporations will come up with the next idea to separate people from their money unless their ethical/moral direction changes. Economics doesn’t exist without ethics/morals. Money isn’t the most important thing in the economy, ethics is. 

 

[TechWife]

3 hours ago, Carrie12345 said:

…

And my experiences with GenZ tell me they’ll pay a pretty penny for makeup, phones, and streaming services, but few are going to be out buying precious gem jewelry, high end vehicles (perhaps with exceptions for electric,) grand homes (except for preserving historic ones, with their own hands,) or store bought fancy home decor.  I do believe the demand for luxury goods is going to plummet even without any other circumstances tossed into the mix.

I think this signals a different ethical/moral approach to the economy. Times, they are a changin’.

[Bootsie]

11 minutes ago, TechWife said:

Yes, but it isn’t like people aren’t going to keep buying bread or cars. They will buy different bread and different cars. Consumers are going to move on to get what they need. Corporations will come up with the next idea to separate people from their money unless their ethical/moral direction changes. Economics doesn’t exist without ethics/morals. Money isn’t the most important thing in the economy, ethics is. 

 

Yes, and if you go back to the Adam Smith and The Wealth of Nations, the philosophy behind capitalism and the free market is the common good and the ethics forms the basis for exchange.  

Some people will still buy some bread or cars as price rises.  But, not as many people will buy as much as they did before.  Demand curves are downward sloping--there is an inverse relationship between price and quantity demanded.  That is the basic Law of Demand in economics.  For luxury goods, that response of the quantity demanded falling when price rises is greater than it is for other goods.  

[prairiewindmomma]

@Arcadiahttps://www.google.com/amp/s/amp.cnn.com/cnn/2021/03/22/business/nike-independent-shoe-stores/index.html

Essentially part of the thought is that brand equity is destroyed when goods are priced too low and are too available. There’s also a higher margin of profit on the more premium goods so it does matter if they are selling less volume on the basic stuff because the margin on the more premium goods is still the more % of revenue. For most of this niche, revenue growth is happening in China where luxury goods are valued higher and where people have money to spend. 
 

Louis Vuitton led the way in 2012. It decided it’s niche customers were not price sensitive. Fwiw, LV raised prices again significantly this year.

[Bootsie]

12 minutes ago, prairiewindmomma said:

@Arcadiahttps://www.google.com/amp/s/amp.cnn.com/cnn/2021/03/22/business/nike-independent-shoe-stores/index.html

Essentially part of the thought is that brand equity is destroyed when goods are priced too low and are too available. There’s also a higher margin of profit on the more premium goods so it does matter if they are selling less volume on the basic stuff because the margin on the more premium goods is still the more % of revenue. For most of this niche, revenue growth is happening in China where luxury goods are valued higher and where people have money to spend. 
 

Louis Vuitton led the way in 2012. It decided it’s niche customers were not price sensitive. Fwiw, LV raised prices again significantly this year.

Why are you assuming that the profit margin is higher on what you consier premium goods?  Or, anything about the percent of revenue that comes from premium goods?  Yes, firms want to choose the price/quantity combination that makes profit the highest.  And to increase quantity means that price must be lower (Law of Demand).  So, the firm may choose a higher price/lower quantity combination.  But that does not imply anything about profit margin on an item or the percent of revenue on a particular product line.

[TechWife]

9 hours ago, Arcadia said:

Are they cutting off outlet stores and second hand stores? Locally, bedsides the premium outlets which have long lines for Nike, there are TheRealReal, Vestiaire Collective, Jomashop for online shopping.

Is there a definition for luxury goods? I tend to agree with @prairiewindmomma that people who could afford luxury goods such as  Birkin or any Hermès bag would be able to pay more for such goods.

However, I did encounter while out shopping a lady who is a Gucci fan. She was eyeing a past season Gucci bag for $1.2k and was willing to buy if it went down below $1k for Black Friday. She did buy the Gucci bag. It was at Saks off 5th

Able & willing are two different things, though.

For example: A few years ago,  I was able to pay for play tickets to a Broadway touring show. I wasn't willing to. This year, I am able and willing to pay for 2022 Broadway tour tickets, so I did. 

I'm always learning practical applications of "theories."

[prairiewindmomma]

Under the section pricing power, there is a bit of discussion about the premium good pricing strategy: https://www.fool.com/investing/general/2015/10/29/4-reasons-nike-inc-has-such-a-high-profit-margin.aspx

With direct to consumer sales, the amount Nike gets per shoe is also higher: https://solecollector.com/news/2014/12/how-much-it-costs-nike-to-make-a-100-shoe

https://www.lvmh.com/news-documents/press-releases/lvmh-delivers-record-first-half-performance/

LVMH is also focusing on direct to consumer. This is a general report on all of their operations. Look at their bag and hand good numbers.

What I am trying to say, apparently badly, is that there is a portion of the luxury market that is not very price sensitive. I think this is a new trend, over the last ten years, and it’s turning some conventional wisdom on its ear. People aren’t buying a good in the traditional sense. They are buying brand equity.

 

[Faith-manor]

1 hour ago, TechWife said:

I think this signals a different ethical/moral approach to the economy. Times, they are a changin’.

Yes, agreed. What was valued as a sign of life success 1950-2000, is not valued so much now. More and more I see younger generations valuing experience and mobility. They are not as inclined to jump into homeownership and then acquiring the things that have been associated with that middle class lifestyle in America. They also see a lot of their paychecks going to social security which they will probably never get, and so being in debt for a lot of furniture, appliances, luxury cars, etc. is not an option for them because they have to make up for that utter loss of retirement money by saving more, earlier in life than GenX and Boomers did. They see wanton consumerism as bad for the planet. I am amazed at how thrift store oriented many of them are not to mention the whole crowd of tech job ones that have work remote and are living Vanlife until they can pay off student loans. Then there is another very serious among some to emigrate elsewhere as soon as they can carve out the opportunity to do so. Two of my four sons do not plan on living in the US post-graduate school, and they have a LOT of friends planning the same. Many developing nations are wooing their talent.

Everything is changing rapidly. Both large and small business has dragged their feet getting ready for this. Add a pandemic, and that change is accelerated exponentially.

[Pam in CT]

re ethics of the Hidden Hand

31 minutes ago, Bootsie said:

Yes, and if you go back to the Adam Smith and The Wealth of Nations, the philosophy behind capitalism and the free market is the common good and the ethics forms the basis for exchange.  

Some people will still buy some bread or cars as price rises.  But, not as many people will buy as much as they did before.  Demand curves are downward sloping--there is an inverse relationship between price and quantity demanded.  That is the basic Law of Demand in economics.  For luxury goods, that response of the quantity demanded falling when price rises is greater than it is for other goods.  

According to Adam Smith, if labor markets contract, employers will pay more.  Workers have withdrawn from the labor force: that is, COVID disruptions have precipitated a shift in the supply curve for labor.  Ergo: the "price of labor" -- what we call wages -- should go up.  A *lot* more if necessary, as much as it takes for the markets to come back into equilibrium. 

Yet that is not what we're seeing -- we're seeing a whole lot of handwringing about "shortages," and some amount of kvetching about how emergency COVID benefits reduce "motivation" even 5-3 months after those benefits have expired, and some amount of employer bonuses - which are not wages, and in Smith's world would not bring the market to a sustained equilibrium, only another just-temporary shift in labor supply.

In fact: the Hidden Hand solution to the labor shortage problem is really not even part of the discussions we're having about it. What Smith would tell us is THE solution, THE mechanism to resolve the labor shortage problem - THE mechanism to lure folks on the COVID-cautious fence back in, or to enable formerly-working mothers with new COVID-precipitated childcare responsiblities/unpredictabilities to pay someone else to manage those responsiblities, or to enable Sandwich-squeezed women suddenly caring for elderly parents to pay someone else to do so, and etc, rising wages rippling throughout the economy until the market clears like Smith would say is supposed to happen.

That's not on the table. Employers are very very very loathe to increase real wages (or make other more structural changes to part-time/full time hours, or predictable schedules, or benefits or other aspects of labor compensation that is outside Smith's microeconomic model).  At at the macro level, the US economy has evolved to the point that many, many jobs are of a contingent, part time, provisional nature that would (to my reading of Smith) be unrecognizable to him. And US policymakers of both parties have *accepted* that transformation of the labor market, such that the solution that would be *absolutely obvious* to Smith -- if real wages aren't sufficient to lure workers in, it's time for real wages to rise -- is not even a meaningful part of the debate.