It's the same in logistics and increasingly also everywhere else. That's why our butcher keeps reducing store hours.
Wage prices are sticky because non-wage prices are inflationary, and wages are easier to negotiate because it's a purely local market, while being harder to offload because of employment contract law.
So, there's a shortage of labor and declining real wages, simultaneously. 😬
Companies are folding under the pressure.
It's really bad, in the hotel and restaurant business. Potential customers are broke, not enough staff to maintain normal business operations, can't afford to pay more because of thin margins...
I figured normal supply/demand logic would apply but boy am I wrong. I know it has to settle somewhere but I wasn't expecting it. I'm seeing all sized businesses fold left and right, but I know some (the ones my friends work at) expanding at huge rates, apparently a very high profit margins, usually around 45-50% on parts, and If I had to guess around 30% on labor.
Financed one-day bathroom installs/remodels apparently is where the money is. People will finance $8k on average (so I'm told) in some of the poorest areas to have a bathroom remodeled in a day. They can go up to $25-30k for a 2-day job. I'm told just about every job is financed.
In the auto parts resale business we went from about 30% margins to less than 10% after pricing increases, credit card fees, shipping problems, marketing budget increases and so on. Wholesalers started standing up eCommerce stores and vertical integration competition tactics. Reducing margin and selling below MAP pricing to force customers to their stores. While even if we could reduce pricing, wed lose all margin trying to compete.
Pricing changed so rapidly, one of my first software deployments was fetching realtime pricing from Shopify and other APIs.
I read a German article, recently, that said new building was down and remodeling was up, as people couldn't afford to move "up". Fits with your description.
>Wage prices are sticky because non-wage prices are inflationary, and wages are easier to negotiate because it's a purely local market, while being harder to offload because of employment contract law.
That makes sense. Hmmm
