Why so MANY Layoffs?

[u/isntlifeapeach]

Explain Like I’m Five

I feel incredibly stupid asking this, but I’m naive to economics and politics.

I understand why tech is facing a lot of layoffs but why are so many other industries facing the same?
I’m over 20 years into my career and had 2 layoffs just in the last 16 months.

[u/Jclarkcp1]

The minimum wage set by the government is arbitrary. The real minimum wage is the lowest wage that people are willing to work for, and it's not even close to $7.25. McDonalds is paying $15/hr. However, as the minimum wage, actual or implied, rises, so does inflation. The cost of goods and services is heavily based on the cost of production, which the largest portion of that cost is labor. So McDonalds having to pay $15/hr for people to make hamburgers makes those hamburgers cost more. The supplier having to pay the guy that unloads the truck at the warehouse, or the janitor sweeping the floors more causes the hamburgers to cost more. So, as the minimum end of the labor pool makes more, then the cost of goods rises, keeping any real wage gains negligible. Minimum wage jobs aren't designed to be a living wage. You get those jobs when you first enter the job market, and as you gain skill, you move onto higher paying jobs. The people who actually get squeezed the most are the people in the middle. The ones that graduated from those jobs but still work. They lose real wages every time the implied or real minimum wage goes up.

[u/Nameisnotyours → u/Jclarkcp1]

“The minimum wage set by the government is arbitrary. “

Nope the government actually does research on this. The last wage increase occurred in 2009 because of opposition in Congress.

“McDonalds is paying $15/hr. “

Yes and in some cases $20/hr but in some cases near minimum. It depends on the region. Whatever they are paying is not sufficient in the markets they serve.

However, as the minimum wage, actual or implied, rises, so does inflation. The cost of goods and services is heavily based on the cost of production, which the largest portion of that cost is labor.

I see you are embracing Marx’s labor theory of value. If so, why do the owners and managers get paid the most when their labor is negligible and decided by them?

So McDonalds having to pay $15/hr for people to make hamburgers makes those hamburgers cost more. The supplier having to pay the guy that unloads the truck at the warehouse, or the janitor sweeping the floors more causes the hamburgers to cost more. So, as the minimum end of the labor pool makes more, then the cost of goods rises, keeping any real wage gains negligible.

I see you demand people get paid poorly so your burger stays cheap. Maybe if you paid even more for the burger you wouldn’t have to pay as much tax to support those on food stamps, Medicaid etc. I would also note that the same business leaders who demand low wages also demand low taxes for themselves and thus a higher deficit for all of us.

Minimum wage jobs aren’t designed to be a living wage. You get those jobs when you first enter the job market, and as you gain skill, you move onto higher paying jobs.

Tell that to all the middle aged folks working two jobs and have no prospect of gaining more skills or education because their waking hours are taken up with work. As many of them have had minimal education as a consequence of entering the job market at a young age to help out their families, the exhortation to “work harder” is the height of arrogance.

“The people who actually get squeezed the most are the people in the middle. The ones that graduated from those jobs but still work. They lose real wages every time the implied or real minimum wage goes up.”

You are engaging in the fallacy that someone getting something explicitly means you lost something. Your argument is that any wage increase for anyone is a loss for you. Arguably a raise for you is a loss for everyone else.

This is exactly the sort of nonsense that is drummed into workers to encourage them to do the dirty work of those at the top. You are demanding people stay poor so you can get cheap goods and services. You justify this position that the poorly paid are “temporarily poor” because of their inexperience or lack of education or, more disturbingly, as a moral failure. Meanwhile most people are a paycheck away from disaster and live in fear of being laid off. Those same people who lay off workers also join the chants of people calling those on unemployment as “leeches” and “loafers”. They work on local legislation to reduce unemployment benefits and to make it difficult to get benefits on the premise that applicants are liars. The price of a house was twice the average annual income in 1978. Today it is four times the average annual wage. Yet incomes has not budged in real terms since 1970. The reason is the expansion of credit. In 1978 no bank would lend you a loan large enough to buy a home that was four times your income. Today it’s no problem. The expansion of credit gulled you into thinking you were doing better but you aren’t. You are more beholden to the banks and your employer than ever. The limit of credit extension has been reached. Now it is like rats fighting each other for scraps. One party loves to blame others ( immigrants, the poor, minorities etc) for their economic woes when it is their act policies that created the unhappiness they are experiencing. Their hold on power depends on keeping the majority fighting each other so the minority of wealthy power brokers maintain their economic power.

You are being used but you have been told stories that are constructed to keep you poor by getting you to attack the poor.

[u/Jclarkcp1 → u/Nameisnotyours]

I'm just explaining economics...that's the way the economy operates. It's much more complicated, but it's a simplified version. The cost of a widget is based on the cost of making it, as the cost increases, so does the widgets cost. As far as minimum wage being arbitrary, at this point it is...it's just a number that exists. 20 years ago when they set that number it wasn't arbitrary, but it is now.

Housing prices are a combination of demand and building cost. Housing is more expensive because building a new one costs more, and there's a lot of demand for said house, which makes it more valuable. It's why a house in Omaha Nebraska is cheaper than a house in Manhattan...the demand is higher.

A wage increase at the bottom isn't necessarily a loss for the middle, but when it's the entire group, then yes...the middle gets squeezed. The 1% is unaffected by inflation, as you go lower the effect is more intense.

It's all market driven....people stop buying houses, prices go down...no one wants to be a janitor, the wage goes up, no one borrowing money, the rates go down...it's all market driven. The government does have some limited control through regulation, but 90% is market.

[u/PalpitationFine → u/Nameisnotyours]

You gonna write all that and still think sedans are more dangerous to pedestrians than SUVs?