I think that for a lot of businesses, it's a question of what will happen when extended unemployment ends in September.
If employees are going to flood the market and you can keep paying the wages you were paying pre-pandemic, then it makes sense to hold out, since if you raise wages now, you can't really reduce them later. You lose out on sales now because you're short staffed, but you keep your costs low in perpetuity.
On the other hand, if that's not going to happen, then clearly you should raise wages and prices now, so you don't miss out on those sales.
At this point, though, I think the folks who raise wages/prices because they think the latter case is true are going to cause a significant enough rise in the effective minimum wage (not the legal one, but the least you can practically pay and actually get employees) that everyone's going to have to raise wages anyway.
It's an interesting game theory problem - if everyone's going to hold out on pay raises, then you should too. If a critical mass of people are going to raise wages in the next few months, though, then you should raise wages ASAP to get the best employees and not miss out on a summer of sales. Luckily this appears to be one of the rare game theory problems that'll actually work out well for the little guy.
This argument works only if the labor and jobs don't have fungible alternatives. But while in-store retail and dine-in restaurants have been suffering, online-order retail and food delivery have been taking off. Plenty of workers are turning to the gig economy. At least there the apps aren't constantly degrading you, even if they are depreciating your car.
> The States that ended the extend benefits have lower unemployment rates.
Your “example” is of a state that had a lower unemployment than the national average before ending extended unemployment benefits seeing not significantly different than the national rate of decline in unemployment in the brief period since cutting extended benefits, not an example of more rapid drop after cutting benefits.
Of course you have lower rates of people collecting unemployment when you end unemployment extensions. You can lower it to 0% by killing the program altogether.
Unemployment rates refer to the share of workers who are out of work, not the share who are receiving benefits - i.e. it’s the rate at which people are unemployed, not the rate at which they are “on unemployment”
If employees are going to flood the market and you can keep paying the wages you were paying pre-pandemic, then it makes sense to hold out, since if you raise wages now, you can't really reduce them later. You lose out on sales now because you're short staffed, but you keep your costs low in perpetuity.
On the other hand, if that's not going to happen, then clearly you should raise wages and prices now, so you don't miss out on those sales.
At this point, though, I think the folks who raise wages/prices because they think the latter case is true are going to cause a significant enough rise in the effective minimum wage (not the legal one, but the least you can practically pay and actually get employees) that everyone's going to have to raise wages anyway.
It's an interesting game theory problem - if everyone's going to hold out on pay raises, then you should too. If a critical mass of people are going to raise wages in the next few months, though, then you should raise wages ASAP to get the best employees and not miss out on a summer of sales. Luckily this appears to be one of the rare game theory problems that'll actually work out well for the little guy.