I looked into this a bit more, because I wanted to understand how much the Ford CEO's posited solution rested on "you can earn a living if you do a different job!" vs. "You can earn a living at any full-time job at my company".
In 2023, the new agreement Ford made with UAW:
- Increased starting wages by 68%, from $17 to $28 an hour.
- New workers reach the top pay rate in three years, a significant improvement from the previous eight-year progression.
- Top wage increased to over $40 an hour.
Good school districts are likely to be less affordable though, but cost of raising children is a whole other can of worms.
https://www.saturdayeveningpost.com/2014/01/ford-doubles-min...
[1] https://www.epi.org/productivity-pay-gap/
[2] https://digitalcommons.pace.edu/cgi/viewcontent.cgi?article=...
> The growing wedge between productivity and typical workers’ pay is income going everywhere but the paychecks of the bottom 80% of workers. If it didn’t end up in paychecks of typical workers, where did all the income growth implied by the rising productivity line go? Two places, basically. It went into the salaries of highly paid corporate and professional employees. And it went into higher profits (returns to shareholders and other wealth owners). This concentration of wage income at the top (growing wage inequality) and the shift of income from labor overall and toward capital owners (the loss in labor’s share of income) are two of the key drivers of economic inequality overall since the late 1970s.
This part:
> returns to shareholders and other wealth owners
My understanding is that "other wealth owners" include... pensioners (through pension funds), is that correct ?
Beside the sheer greed of shareholders, how much does the curve boil down to "companies have to use revenues to pay current workers and previous workers, and we make new 'previous workers' every year" ?
Quality might have some small piece there, but there's other factors like:
- large trucks & SUVs are more profitable
- there's import restrictions on that category so it has a certain insulation from foreign competition
- US car companies are really just banks that happen to make cars -- "cash is king" was for our dads, now if you want a deal it's "take our corporate 20-year financing on an asset that will be fully depreciated in 8"
There is no such thing as a labor shortage. There may very well be a shortage of qualified people willing to work under the conditions and for the compensation a company would like to provide.
When stated that way you can see that there are several levers to pull, the most obvious being compensation.
But hypothetically, what would you call a situation where 20 companies would all be willing to pay salaries of $1 million/year to fill 10,000 open positions that required 5 years of training, but there are only 5,000 people who have that training? Would that be a "labor shortage"?
It seems your solution works for companies willing to pay more to poach from other companies, but might not work in situations where all of them need more skilled labor now.
Also, the $1M/year illustrates a point...why not $10 million or $100 million/year? At some point, the salaries are indeed "high enough" but the skills still just aren't available to hire.
But the incentive to develop the skills should sort this out, no?
There is absolutely no scenario in which you could convince me to train as e.g. an underwater welder, no matter how much cash you’re offering.
So I created a hypothetical situation to illustrate what, to me, is a clear example of a temporary labor shortage. As you say, "the incentive to develop the skills should sort this out" ... and I'd say that's true, but until it gets sorted out, the situation can reasonably be described as a "labor shortage".
Because people have to a) take the years to learn/develop those skills, and will only do so if b) they know those jobs are still going to be around for a while after that.
Also in the real world the wages are sticky enough that they take time to adjust, and then it takes time for people to realize that X field is becoming well paid and then start pursuing it, so realistically the 5 year period is more like 7 to 10. Plus as long as the industry is growing/expanding, demand can continue to outstrip supply due to that stickiness.
Even rapid moving stuff like AI has bee illustrative of this. The AI leaders are all primarily poaching, and wages are astronomical. This is undoubtedly fueling a massive number of people to study/specialize in AI, but it takes years (maybe even a decade) to complete that path (depending on your starting point).
So, in the automotive industry they've been paying too little to attract people. Meaning they now have a shortage. That's still on them.
Sounds to me like they made some really nice profits for a couple of years and are now feeling the pain of that.
Funny that you mention AI where people are saying there's no need for Juniors anymore. Exactly the same, you'll make some money now and will then likely have to pay for that later.
If enough money is on the table people can skill up fast.
When GM realized they needed more mechanical engineers than existed, they built a whole university. These days, capital just whines. If you can spend $100 BILLION on data centers, you have the budget to stand up a proper school.
I'm guessing we see a lot more of the latter than the former. Cutting edge knowledge industries might be an outlier here, but certainly for anything related to "factory work", it's probably true.
By framing it as a shortage of labor rather than a shorting of those looking to pay for labor, the employers hope to encourage more labor to flood the market [1] and lower prices further. This is a continuation of how we've gotten to the current predicament with most jobs being de-skilled commodities that don't pay enough to support their workers.
[0] another insidious framing is that by assuming instantaneous response, this downplays the importance of causality. But in the real world markets are not supercomputational.
[1] both private individuals choosing an educational path, and by government policy
> is totally represented by a shortage of qualified people for the given compensation.
Sounds like "I want to pay X, there's not enough willing to work for X, therefore there is a labor shortage." I know plenty of people who only want to pay $30 an hour for web development work. It might feel like a labor shortage to these people since they can't find many people willing to work for that wage, but in reality where the price they've chosen lands on the supply/demand curve there is almost no supply, but if they increased the wage, amazingly supply goes up too. If 30 seems high enough, imagine $5 an hour instead of $30. The actual number doesn't matter, it's where it falls on the spectrum that is relevant for this example.
If by "given compensation" you meant "market rate" then I think we're largely in agreement.
It can however occur that a company requires skill x, cannot find a person for this position, and HR still refuses to increase salary for this position.
There is a mismatch in supply & demand of compensation. Not position.
It would make sense to say something like, "There is a shortage of skilled workers willing to work for $1 per hour", and no-one would be likely to argue with that - there certainly is a terrible shortage of such workers! But that makes it clear that the problem is the compensation, not the available workers.
If you just say "There is a shortage of skilled workers" without that context, it becomes a incomplete statement from an economics perspective, and the GP is essentially objecting to that and pointing out that once you take the necessary context into account, the problem is not some sort of more general shortage of workers.
Of course there isn't. This is out of touch employers saying "Nobody wants to work for $1 an hour, so must mean there's a shortage."
It's wild, that same in the service industry, restaraunts for example paying 1/2 dollars an hour and then putting the onus onto the customers to pay in tips.
https://www.businessinsider.com/what-its-like-to-work-at-waf...
It's ridiculous, GenZ has just realized they don't want to participate in the racket and I don't blame them.
But some places are worst then rackets the town nearby.
I do appreciate that, but seems to me that the path towards change (CEO epiphanies) is for as many people as possible boycott the job.. It's a mentality change and I'm glad to see GenZ and others pushing to change it.
It's not that they don't want to participate in the racket, it's that the racket literally can not sustain them. Older gens participate in the racket because most of them locked in housing or rents from an era where the racket could support those prices. Gen Z has much higher housing costs that make "the racket" untenable, despite the racket still working fine for older millenials just fine. Housing costs exploding, among other things, has ruined the ability of an entire generation to really thrive or ever have a chance of doing better than their parents.
"would like to" is usually "can justify, financially". Most companies don't have a bunch of extra money laying around.
> When stated that way you can see that there are several levers to pull, the most obvious being compensation.
I know the way you mean that (companies pay more) and that's an option that does happen but it also goes the other way, employees can accept less (unless minimum wage makes it illegal for people to accept work).
Ford's profit margin was 1.7%. Lots of innovative/productive American companies since 1970 for workers to aspire to = the enterprise can't continue.
It's amazing how there can be labour shortages, yet companies still don't pay people a living wage. I thought the market was supposed to be all based around supply and demand. This just shows how out of touch these CEO's are.
They should work a year on the lowest salaried employee of their company for a while.
American (and European) automotive companies will never be able to compete long term in any market which allows competition between Chinese and American (or European) cars.
The labor of an auto worker is not worth that much and only by banning competition can American auto manufacturing survive short term.
Chinese workers are much closer to earning what you would expect the globally average worker to earn.
However, to someone for whom rent is an onerous expense, vans and box trucks are prohibitively expensive, especially when you consider 10 year TCO.
Follow the money.
Now that I see other peoples idealized lives 24/7, I want THAT.
In the meantime I will work a 3 times/week 4 hour shift at Starbies.
——- Related: ——-
“Whop’s 2024 survey gathered insights from 910 U.S. Gen Alpha across the U.S. aged between 12-15 years old. Participants selected all careers they were aspiring towards.
1.YouTuber (32%) 2.TikTok creator (21%) 3.Doctor/nurse (20%) 4.Mobile app/video game developer (19%) 5.Entrepreneur (17%) 6.Artist (16%) 7.Sports athlete (15%) 8.Professional online streamer (15%) 9.Musician (14%) 10.Teacher (14%)”
he was especially struck by stories from young factory employees. Many of them said they could not support themselves by working at Ford alone. “When I met with my entry factory workers, they were saying [they] had to have three jobs.”
Farley described a revelation about the erosion of what blue-collar work used to represent—stability, pride, and a single income that could support a family.
Dimon called America the “bastion of freedom, arsenal of democracy,” and argued that the country had “gotten bogged down and made a lot of mistakes in how to grow our economy for the benefit of all Americans.” He urged Farley to keep fighting against what he called America becoming a “nation of compliance and box-checking.”
He warned that millions of well-paid jobs are going unfilled because they require specialized skills. Putting the salaries for these jobs at $100,000 and above, Farley argued that they require training.
He said there’s a general attitude of frustration, a sense of “How the hell do we fix this?”
colechristensen•1h ago
There's no "shortage" of workers. Corporations are expecting other people to train their employees past entry level and pay these people with midlevel experience like badly paid unskilled laborers.
Nobody is investing years of their time and large sums of money to get trained up for a shitty job? SURPRISE SURPRISE
If you won't take an average person with no knowledge of your industry and train them to be an expert while on the job, the problem is you, not everybody else.
freedomben•58m ago
At a previous company we hired a lot of junior engineers with the idea that our relatively high pay and reasonably good work would help us build a strong generation of seniors a few years down the road. What we mostly found was that we spent a ton of money and our sr eng time training and sharpening them, only for the vast majority of them to leave after 1 to 3 years. As I've gotten more into hiring, it's not at all surprising to me now as this is just clearly in the culture.
To be clear I'm not blaming the employees, in fact I blame ridiculously stupid HR practices for the last 20 years because they built a structure in which the only way to get a raise was to leave the company, and that was also often the best way to get promoted too.
asimovfan•54m ago
freedomben•37m ago
Yes that's what I mean, though I was making the argument from the perspective of the employer. Didn't mean mean any shade with "company hopping" (I've done that in the past because it was the best thing for me and my career, and I stand by those decisions, so I don't mean them with any negative connotations from the employee perspective at least, and from the employer perspective it's their own damn fault though they rarely ever recognize it).
> when you say "ridiculously stupid HR practices" don't you mean not paying them as much?
Yes, not paying them as much as another company would offer, plus being stingy with promotion opportunities (like from jr to mid, mid to sr, etc).
> do you really think it's a "cultural" thing to change jobs?
Yes absolutely, a culture born out of changing realities/incentives. That's not to say it wouldn't switch back if companies started rewarding loyalty again, but it won't spin on a dime.
nerdsniper•52m ago
- "We'll train you, and if you stay the full 8 years you get a $500,000 bonus"?
- "Here's a $200,000 signing bonus, which you have to pay back if you leave before 8 years"
I'd be hesitant to rely on these as a candidate, because I'd have to assume I'd get fired at year 6-7 or something so that the company could save money.
floatrock•45m ago
> ridiculously stupid HR practices... a structure in which the only way to get a raise was to leave the company, and that was also often the best way to get promoted too
Until that culture changes, of course you're gonna assume you get fired or issued a surprise RTO order at year 7.5.
When the social contract becomes penny-pinching every opportunity, of course the employees are gonna start playing that game too.
nerdsniper•34m ago
- Companies that pay in the top 1% of compensation already don't have a retention problem.
- Only 1% of companies can pay the top 1% of compensation.
- The other 99% have issues with retention.
- Companies only have $X to allocate for 10 years of employment compensation.
- Any 99% company that structures $X of compensation to provide bonus $Y for staying a long time will necessarily offer salary $(X-Y) until the reward is granted.
- Any 99% company that does not provide a reward for staying a long time can offer salary $X, which is higher than $(X-Y).
- A rational employee cannot depend on bonus $Y, and rationally should take competing offers of Salary $X over offers of Salary $X-Y.
freedomben•31m ago
colechristensen•40m ago
Be a good place to work with competitive pay so your employees want to stay.
Consider training a part of the compensation instead of an investment you expect returns on.
freedomben•33m ago
I don't know a long-term structural solution, for exactly the reason you mention:
> I'd be hesitant to rely on these as a candidate, because I'd have to assume I'd get fired at year 6-7 or something so that the company could save money.
Trust is at an all-time low right now, and for good reason. It very well might take years to turn the ship around. I think it will have to start with the big companies as a small company trying to do this will only put themselves at a disadvantage, but any exec at a big company proposing this would probably be dismissed as they heavily favor short-term over the long-term (by their actions, not necessarily words, but IMHO actions are all that really matters). Basically it's a Tragedy of the Commons problem.
rockercoaster•38m ago
Zero people are doing this for the fun of it. This is entirely driven by incentives, not "culture".
Or, rather, not by "culture" of the people doing the hopping—C-suite and MBA culture, yes, very much so, this is one of many bad outcomes from having companies run entirely by "professional managers" and finance dudes rather than people who were, at the start of their career, close to the actual productive work of the company, with the latter scenario once being far more common than it is now.
freedomben•27m ago
rockercoaster•15m ago
I don't think there'd be any waiting for worker "culture" to catch up to fill roles with comp packages and working conditions that addressed those core issues.
freedomben•11m ago
tamimio•53m ago
Exactly this, I have seen the issue too in mid or senior levels, not just fresh, because even if you're senior, most likely your expertise is on a very specific topic, not necessarily the job specific one, could be something very close to it. It's like learning on the job either through training or self-taught is an alien topic to them. I remember one time I had an interview for a job that needed some knowledge on navigating a Linux environment, and I have personally been using Linux at work or personally since ~2004 or so, only to find out during the interview the expectations were Linus Torvalds rock star level in developing kernels, for a pay of ~90k, and the job itself isn't even about Linux, it was some automation/robotics so the OS is just your environment, haha!
throw__away7391•51m ago
Of course increasingly it's hard even to train at all, I'm getting absolute garbage AI slop from our most junior developers and they don't seem to be learning any more. I sit and try to explain why their solution to some task won't work and they are not engaged with the actual solution they are implementing at all. I've tried to get them to engage more with the AI as a learning and exploration tool, but I'm not having much luck, they're completely focused on inputing the task, really at the mercy of the direction of the tools.
I really hope AI comes through for us in the end because it seems we're at the end-game for human learning.
DrPimienta•40m ago
I'm a programmer and have far less buying power than a Kmart cashier from the 70s had. I don't get a pension. They did.
There's no loyalty because we're all poor compared to every previous generation besides those literally living in log cabins.