There is an axiom in business related to pricing. You can only charge what the market will bear. That means if you set a price point for a product too high, not enough people will buy it for you to profit.
There’s another aspect of that too, though. You can only get people to work for your company if you pay them enough. A time always comes when someone will walk off a job because they feel like you’re not giving them adequate compensation for the work they do.
That brings us to what’s happening today, that some in the business world call “The Great Resignation.” Let’s explore that concept for a moment.
Worker concessions must exist for someone to agree to work for a company. Often, that includes various perks or benefits. Worker’s compensation is one example. In Florida, for instance, an injured worker gets up to $1,011 per week in compensation if they qualify.
Most workers also want healthcare since it’s privatized in this country, and they would have to pay for it on their own if their company didn’t offer it. Depending on an employee’s job, they might also want a 401K, paid vacation days, and paid parental leave if they’re pregnant or have a pregnant spouse or partner.
Many countries guarantee their citizens most of these things. America does not seem eager to follow suit. However, while things like healthcare and paid vacation time matter, the starting salary and room for advancement always attract a potential worker before anything else.
The Minimum Wage
In America, the minimum wage is $7.25 per hour. It has stayed there since 2009. Some states have higher minimum wage amounts now. For instance, the District of Columbia, though not technically a state, has raised the minimum wage to $15.20 per hour. Washington is close behind, with $14.49 per hour. In Massachusetts, the minimum wage is $14.25 per hour.
The problem is, though, none of those, even the highest minimum wages in the nation, are enough for the average American to live when you take rising inflation costs into account. If you work 40 hours per week in almost any part of the country, you can’t survive on $7.25 per hour. You can barely survive on $15.20 per hour, for that matter.
Living costs keep going up, which is simply how inflation works. Goods and services cost more right now than they did a hundred years ago, but they also cost substantially more than they did back in 2009, the last time the federal government approved a minimum wage hike.
Apart from goods and services, apartment and house rental costs keep going up. That is one of the reasons why so many former students clamor for loan forgiveness from the federal government. They finished college and got a degree, but now they can’t get jobs that pay them enough in their chosen field to afford to pay their student loans while also covering the bare essentials.
Most of those in this situation feel like they can never afford to buy a house like their parents did. A bank won’t give them a loan because they don’t make enough money, and they don’t have enough ready cash for a substantial down payment on a house in most parts of the country. Many feel like the only way they’ll afford a home is if their parents die and leave them an inheritance.
The Great Resignation
The Great Resignation started within the last couple of years when many employees working low-paying jobs simply couldn’t take it anymore. They demanded more money if they worked a position where they made $9 per hour, or $12, or even $15 per hour, and their employers seldom gave it to them.
Like a product set at too high a price, capitalism starts to falter if the workers feel underappreciated. Inflation has skyrocketed to a point where the “Fight for $15,” as those who created it a few years ago named it, is nowhere near sufficient.
What’s fascinating about the Great Resignation is that you’d think a person who couldn’t find another job wouldn’t dare to quit because having a little money coming in is better than no money. Many workers, though, don’t feel that way.
They feel that if they all quit in large enough numbers, fast food restaurants and other companies offering low wages must eventually pay them more. That means some fast-food places are cutting hours rather than acquiescing to worker demands.
Who Will Win?
What the Great Resignation seems to come down to is who will blink first. Someone who quits a fast-food job because they’re demanding $20 or $25 per hour might move back in with their parents. They might even live on the streets before they go back to a job where they’re not making what they feel they deserve.
Many American companies are digging in their heels as well. It’s not likely they will pay their workers any more than they have to unless the federal government forces them. However, there’s political gridlock in Washington that makes a national minimum wage hike unlikely.
One other thing might happen. Company heads, the ones at the top of fast-food chains, grocery stores, big-box stores, and similar entities, might agree to raise employee starting salaries across the board if they need workers badly enough. They don’t want to do it, but if they can’t hire someone for a rate that used to work, they may have little choice.
There’s a wild card in all this, though, and it’s automation. The Great Resignation will only work for a fast-food worker, for instance, if the restaurant owners can’t develop a burger-flipping robot. Automation has rendered many jobs obsolete over the years, and that trend will undoubtedly continue.
No one can tell how the Great Resignation will conclude and whether it will bring about significant change. For now, both sides seem ready to settle in for the long haul.