Traders Confused: Is the Jobs Market Improving or Not?

Driving them across country would not change.

As for the increased markups along the line, tell you what, if paying an extra buck twenty-five makes it so you can’t afford lettuce, you’re in the wrong line of work.

I'm guessing you've never run a business. Well lets look at what you've said here and I'll see if I can pick up on some of your wisdom.

The point is it won't be a buck 25. it will be much more. It doesn't have to be. Check the part in red below. I haven't suggested the farmer pay ten times more to harvest a head of lettuce. $4.00 an hour vs $20.00 an hour is 5 times the cost, not 10.

If My risk goes up then my reward goes up. Risk? How is your risk going up? You pay a decent wage and charge more when you sell. Risk? If everyone is paying the going rate, there's no risk. There's a level playing field. The cost goes up on the market shelf, end of story.

If a head of lettuce costs a buck at the source. and the next guy in the chain must risk a buck-plus to make a profit the costs go up exponentially. That is why pointing out that an 80 cent rise at the source shouldn't make much of a difference is an error, because it in fact makes a huge difference. If the increase were $0.80 a head, you would have a more valid claim. I still don't think it would break the bank. I did the math in my head and the actual increase per head would be $0.08 cents. I appologize for the mistake.

that is why with your example the cost of a head of lettuce at the source for picking is around 2-3 cents a head. At $4.00 an hour, the picking cost would be $0.02. At $20.00 an hour, it would be $0.10 cents per head. Once again, I appologize for the error that caused me to reference this at ten times the actual additional $0.08 increased cost per head.

Now look at the end price usually around a buck a head. Even with raised mark-ups included, this isn't going to break the bank, or anything close to it. The cost of harvesting the head would go up by $0.08 cents. Even with middle-men marking up their take, it wouldn't result in $10 or $20 dollar lettuce. It would raise overall market shelf costs by $0.25 to $0.50. And from this the picker would earn a wage that was reasoned. I don't care if they settle on $15.00 or something more like $20.00. I just used that as an example. It doesn't drive prices through the roof.

So add the same markup and what do you get if a head of lettuce that used to cost 10 cents at the source (3 cents for the picker 7 cents for the farmer to make a profit.) Now is bumped 80 more cents. Even if the Farmer stays at the same 7 cents per head cut (BTW he won't because his risks have skyrocketed) then you add the same gross markup that is now in place you get lettuce at 8.70 a head BUT that won't be accurate because costs at each phase will skew the end price even more starting with the farmer.

Look, I'm sorry I led you into that mistaken $0.80 premise. It threw things off for you, and I wish it hadn't happened. Increasing the harvest cost of a head of lettuce by $0.08 is not going to result in $8.70 heads of lettuce. I wouldn't cause lettuce to cost five times more at the grocer's shelf either. Each person along the way could survive on the same profit they always did. If they can survive on it now, they could survive on it then. Tell me if you can, why a guy making $1000 on a shipment, to earn a living, would suddenly have to make $5000 to make a living. That just isn't reasoned.

Your asking the farmer to pay a guy over 10 (actually five) times more to pick a head of lettuce then he himself will make on the transaction. Guess what, the farmer is not going to incur all that extra risk and not get a a much greater reward. And that proft is the nature of Capitalism and why your example is wrong.

Look at it like this. If the farmer has to increase his cost by $0.08 a head, he'll make just the same profit he always did if he sells the head for $0.08 more. If he could survive on $5000 profit before the wage increase, he could survive on $5000 profit after the wage increase. The next guy along the way does exactly the same thing. He ups his normal price by $0.08. And the next guy does the same thing. Even if you've got four guys in the mix, the final increased cost would be $0.32 a head at the supermarket bin.

Everyone would have made the same profit they used to, and the cosumer would pay an insignificant amount more. Then pickers would be able to support their local community with increased spending locally.

Transition these jobs to citizens instead of foreign nationals, and the city, county, state, and federal cofers would benefit. The local businesses would get more sales volume. More people could be employed there. Schools would have a better tax base.

Seriously, this isn't that big a deal. It would be easy, and U. S. Citizens and their communities would benefit.

"Look at it like this. If the farmer has to increase his cost by $0.08 a head, he'll make just the same profit he always did if he sells the head for $0.08 more."

Well see you can "look" at it like this but to do so denies reality.

And the reason is "Risk."

"Risk? How is your risk going up?"

Each dollar I have to pay out to make a profit is a dollar more I risk. Like I said I can safely bet you have never run your own business. Here is something that is going to shock you. Businesses routinely fail and the main reason they do is because they couldn't judge the "risk" involved.

now again let us look at your example of increasing the wages 5 fold from 4 to 20. Now the Farmer at 4 is paying 2-3 cents for each head of lettuce picked and 10-12 cents for each at 20 bucks an hour allowing for fluction in pick rate and damage.

at the 3 cents you can safely assume the farmer will at least be at 7 cents to cover costs and make a profit on picking. Gas and equipment involved plus foremen etc.

Now if you increase the pickers wages to 20 how much are you paying the foremen? Same for the equipment driver etc.?

So those peoples wages will go up exponentially or guess what. People won't do the job and instead want to become pickers. (Sorry but that is the way it works.) Now let us add the other bits into the equation that you have failed to see.

Paying someone at 4 bucks an hour to pick (mostly under the table) gets you under some hurdles that will pop up real fast when a so-called living wage enters the picture. First the Fed gov is going to want its vig so now you will start withholding wages to comply with federal taxes and FICA which means an additional 7.5% added to the costs for the farmer (Matching fund required for FICA) and being that he must now withhold he has to keep detailed records and do lots of reporting this requires more employees and if pickers are getting 20 bucks and hour they will be at least that expensive to hire. Then of course there is the State withholding and the City/county income tax (depending on where the business is located)

Then the Unions will descend and of course they will start the costs escalating with paid vacations and sick leave and whatever else they can dream up. And why will that happen because now its worth it to the unions to risk their time and effort because there is actual money at stake.

So now that 20 dollars an hour has been increased to 30 even though the picker will see little of that extra 10 bucks.

Now the farmers' risk has increased exponentially because no only has his pickers wage increased he now has more employees where before he didn't need them AND those employees will get even higher salaries than the pickers.

So the farmers risk per head of lettuce has increased from 2-3 cents to 15-16 cents a head BUT his overhead for the whole operation has went up exponentially also but you want him to make the same amount of profit he did before instead of maintaining his profit "MARGIN" and that is exactly how to fail at business.

Business is ran on margins also known as percentages. And when you change the bottom line it affects the end price exponentially.

If the farmers costs per head goes up 5 times he is not going to just shrink his margins. If he does he is increasing his risks for no gain whatsoever. Smart Business people don't do that. Dumb business people do and go bankrupt. if the farmer was charging an additional 7 cents a head above the pickers 2-3 cents per head then if the farmer starts paying 15 cents to the picker the farmer will need charge 35 cents a head above that to maintain the margins and to pay for the additional costs that come up. (Like everyone up the chain wanting a raise because the pickers get more) So now that head of lettuce is not 10 cents when it is delivered to the co-op its 50 cents. And the co-op tacks on their margin of X% so now the cost of the head of lettuce is 50 cents plus X% co-op. Then the distributor gets it and now the head of lettuce is 50 cents plus x% co-op AND plus x% distributor. Then the Grocer gets it and its 50 cents plus x% co-op AND plus x% distributor AND plus x% grocer.

Also there are other factors. If Pickers get 20bucks and hour this puts upward pressure on other jobs. So now will trucking companies be able to hold truck drivers IF you can go pick lettuce for 20 bucks an hour? Less people wanting to drive trucks means upward pressure of truck driver pay. Thus increasing cost of transporting thing like... lettuce!

Also if lettuce cost go up exponentially the insurance on truckloads go up exponentially and so on and so forth.

It may seem simple to you but it is far more complicated. And if you start you own business you will find it out first hand!

“when there are 40 million people out of work and there are, the labor is cheap and they can lower wages accordingly.”

Wages are just a small part of the equation; the workers comp, social security payments, etc. are another. Until you can send American workers into a deathrtap like the garment factory in Bangladesh, those jobs will always go to Bangladesh.

Thanks for your reply Mad Dawgg.

We were talking about downward pressure on wages.

“We were talking about downward pressure on wages.”

I agree with your point about the high unemployment contributing to that; the government and business will not let that correct itself naturally - they instead insist upon infusions of tens of nillions of illegal aliens thrown into the mix to ensure the wages remain low. They’ve stepped it up with white collar “scabs” as well; what started in the tech field has now spread into accounting/finance (they just import them from Asia instead of Latin America).

I wasn’t aware of the accounting finance people. Figures.

Thanks for the note of agreement.

You’re welcome.

It is frightening that neither party wants to address the import of foreign labor (legal or otherwise); they are so afraid of hurting these groups that they are quite willing to watch the American workers’ standard of living plummet through the floor. They figure we have to vote for one of them (and they’re the same thing with cosmetic differences).