Tuesday, May 14, 2019

Also, Too, Labor Costs

My theory about one reason firms are especially sociopathic about labor costs is it's something everyone can understand. Similar to WE ONLY PAID X% IN TAXES is something simple people can understand, even if the cost of achieving that is murky. "Nobody" knows how much some piece of equipment for the factory should cost - and even if they do they don't have much control over it - but they do know that FIFTEEN DOLLARS PER HOUR sounds like some ridiculously high amount of money to pay the proles. No one's going to lose their job (or get rewarded) for overpaying (underpaying) for things nobody understands the cost of. But labor costs and wages are something people have a good sense of.

This is especially true in franchise retail businesses, like fast food. Owners and managers control almost no part of their business except labor hours and costs. A McDonald's franchise is mostly what McDonald's says it is, except the manager/owner manages the workers.