Strengthening Constitutional Self-Government

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Outsourcing the drive through window

"The owner of a fast food joint in Montana�s booming oil patch found himself outsourcing the drive-thru window to a Texas telemarketing firm, not because it�s cheaper but because he can�t find workers.

Record low unemployment across parts of the West has created tough working conditions for business owners, who in places are being forced to boost wages or be creative to fill their jobs."

Discussions - 5 Comments

"Take a company that wants to expand. Where is the next worker going to come from?"


Mexico?

younger people have moved away searching for bigger paychecks as the state's wages still lag behind other areas and are slowly increasing overall. Now, the aging work force is unable to expand to meet the demands of the job market, Swanson said.

He said the problem is compounded by the fact that employers, accustomed to paying relatively low wages, have been slow to increase salaries. Montana wages have historically been among the lowest in the country, and still rank near the bottom.

Sounds like more employers under the mistaken impression that they should get to set wages. Maybe people should be taught the basic principles of free market economics in high school.

Well John, employers do set wages...then workers decide if it is worth it. If an employer can't hire the number(or quality) of workers he wants at a certain wage then he can either increase the wage or find a substitute...i.e. outsourcing the drive thru window or making a move to a more capital intensive means of production. To say that the market sets the wage rate is just to say that employers collectively set the wage rate. If I have a choice between two homogenious firms then I choose the higher paying one...the higher paying employer gets a wider range of potential employees to choose from and the lower paying employer gets what is left. Of course no two firms are perfectly homogenious...and employees are capable of doing different tasks so they may be willing to take less pay for a job they like, vs. more for a job they dislike. Barring minimun age and wage laws you are always free to set wages, you aren't free to force people to live in Montana or work for you.

Employers set wages employees vote with their feet.

On the other hand it isn't perfectly clear that young people are moving out of Montana just because the wages are lower. I would assume that the cost of living in Montana is rather low...but that it is also rather boreing and cold as hell in the winter. In other words young people don't move to California just because the wages are higher. Immigration paterns are more of a total package thing...likewise employers set wages in a sort of total package fashion by dinstinguishing themselves from the competition by reducing the homogenious factor...and creating a sort of community feel. An employer who establishes himself as agreeable and amiable is able to set wages with greater ease. The idea that the market sets wages...only holds when potential employees are not biased towards or against a particular employer...in other words the employee has to view all the firms as homogenious. But particular firms and employers distinguish themselves in the wages, perks and working conditions they offer...not to mention questions of location and commute times. In many geographic locations employers actually have short-run monopolistic power to set wages. Of course in the long run if the winters are cold and the pay is low people leave.

It is not just that young people are leaving the area in such numbers as to cause this problem. The problem for these employers is that other businesses are booming, oil, timber, construction, for example, and that raises the competition for the low priced worker, the young ones, who can work those highly physical jobs. I'll bet most of the service industry jobs up there are filled by retirees working very part-time. I wonder if some of those older workers up there are retirees from more urban areas.


Anyway, it is competition for workers that is driving the price of workers up, and the fast-food industry has to have cheap labor. My only sort-of-tongue-in-cheek remark above was to say that the rest of the country seems to be depending on immigrants, legal and often otherwise, from south of our borders to fill that role in the labor force. The resort that was importing workers from Eastern Europe - why draw from so far away? If the guy from that MacDonald's put help-wanted signs up in Brownsville, Texas, I wonder what kind of response he might get.

Barring minimun age and wage laws you are always free to set wages, you aren't free to force people to live in Montana or work for you.

I'm trying to be charitable here. No.

Setting wages has a particular meaning, and it does not mean "whatever wages large numbers of independent employers happen to be offering". Setting wages is what happens when large numbers of employers, often working with the government, decide that they know what the "correct" wage is for a particular job, and take steps to get it. For some reason large numbers of employers think in exactly this fashion.

It is no different than the consumers of America getting together with government to set the price of oil at a cost they like. The difference is that the "free market" types will defend the first practice and yelp about the second.

I read a story on Powerline recently that lawyers are now starting to charge $1000/hr. For some reason this is not a crisis demanding government intervention, even though it indicates a severe labor shortage in this guild controlled industry. Surely it is time we opened up the legal market?

The idea that rising wages for American workers is a bad thing is one I hope nobody is stupid enough to mention to the voters. Oh, wait, too late.

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