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Comment by BoiledCabbage | Hacker News Reader

It's amazing how business seems to understand the free market when it's selling to customers, but can't seem figure out the free market when it comes to hiring labor.

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They likely do understand, but are just waiting for the extra federal unemployment benefits to end. The smart choice (from an employer's standpoint) would be to make it past September 6th without significantly increasing wages, then evaluate. If they give workers a higher wage now and it turns out to be unnecessary once the extra unemployment ends, it'll be pretty much impossible to take that back without replacing the entire staff at once.

And for evictions to restart.

Business does understand the free market. It is also strongly incentivised to exhibit perpetual exponential growth. Perpetual exponential growth is impossible even on relatively short duration spans (decades), see the parable of the rice and chessboard. Business tries to maintain the illusion of perpetual exponential growth by making cuts everywhere it can: worker compensation and product quality.

https://purposefocuscommitment.medium.com/the-rice-and-the-c...

Underrated comment. A lot of “growth” is tricks. I have seen so many software companies sacrifice the fundamental health of the product in order to hit certain “growth” numbers, on the assumption that they’ll just be able to keep doing it. But the more realistic outcome is either acquisition (pass the buck and reset the clock) or catastrophic failure.

See:

* Strongarming new user account creation even though most new users will immediately bounce.

* Removing features from the free tier to "drive conversions" to premium, whilst ruining the quality of the free tier that drew users in the first place.

* Filling the product with re-engagement nagware and notification bloat.

etc.

To be fair although, the entire existence of a free tier is to draw in people to premium, usually funded by VCs demanding an exponential growth curve. If they were bootstrapped, the free tier is pretty much non-existant in practice.

I think the vast majority of VC funded companies could make a profit if investors didn't demand exponential growth. Overfunding and shutting down companies is a choice they are willing to make. What our economy needs isn't the next billion dollar company. It needs lots of small companies to get away from corporate power.

It's actually quite strange how VCs are trying to basically create monopolies. They are trying to find the business equivalent of real estate.

This is the exact kind of behavior I criticized the other day [1] when I said that making products monetizable makes them worse.

[1] https://news.ycombinator.com/item?id=28408862

Why would mom and pop stores depend on perpetual exponential growth? I don't think that reflects reality at all.

The issue is the temporary competition from government covid benefits. Businesses understand perfectly well, but it’s kind of pointless to compete with higher benefits for not working. In my state, benefits were $16/hour. So businesses have a hard time competing with that because jobs can’t compete much with unemployment benefits.

It would be interesting to see what the trade off is for how much money it would take. But rationally, I think, I’d rather get $16/hour and study and take online courses for a year than make $25 and work.

Studies of states that extended the unemployment benefits vs ones that didn’t seem to show that the benefits accounted for a fairly small portion of the difference in employment.

https://www.wxxinews.org/post/what-unemployment-insurance-te...

From skimming the study, it looks like the study only looks at the employment rate change in 5-6 weeks after benefits were dropped? That seems like way too short of a period to draw any conclusions. I suspect many had savings built up, and that they expected the benefits to come back, therefore they didn't immediately go out looking for a job.

Good thing the researcher is continuing to track this:

https://arindube.com/2021/08/20/early-withdrawal-of-pandemic...

Per his findings, at very best the early end to ui lead to 160,000 jobs in june+july this year (6% over states that retained ui). And that’s without adding any of the complicating factors like how most of those jobs may have just been taken from new entrants to the job market. I don’t think that’s enough to explain the overall ”labour shortage” trend.

Benefits ended a few weeks ago, I don’t think these studies are very useful at this point. Let’s see how it goes in a year to see what happens.

Benefits in some states expired last year, while other states renewed them - which makes for a perfect set of comparative data. Them ending completely now is going to change the landscape but it’s near impossible to say anything about how it changes the landscape since there’s no replication

Federal benefits expired in June. So while state benefits ended, there were still federal benefits available.

Its called the invisible hand for a reason. People dont need to understand anything for the forces at play to balance things out, theres just some existing businesses as a casualty.

They totally understand but they also know that lying and propaganda work extremely well and are cheaper.

Many of those types of businesses aren’t able to stay afloat with higher labor costs, it’s that dire for them too.

the government distorting the labor market with increased unemployment benefits isn't the free market

Especially when unemployment increased due to government mandated shutdowns

data seems to show that it had a very minimal impact. The “labour crisis” is probably better explained by covid deaths and/or people changing their lifestyles/spending to endure the pandemic

Government distorting the labor market by keeping businesses open which should have closed with PPP loans (grants) isn't a free market.

Do you not remember the signs saying 'support your local restaurants'? As if they are somehow entitled to money, but the people fired from those places do not.

Or when they can't keep non-drug addicted employees who are willing to work for less than the cost of living. It boggles my mind the most when a lot of restaurants treat these employees like garbage and then get upset when they realize their worth and leave.

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