I just got back from lunch with a friend who insisted that a big part of the rise in grocery prices was due to higher wages for grocery workers. I promised to look this up when I got home, promising him that the BLS "tracks everything." Sure enough, here it is:
Both hourly and weekly earnings jumped at the start of the pandemic, but then settled back down and haven't changed much throughout 2021. There's a spike at the end of the year of about 4%, which may or may not stick. We'll have to wait and see.
My son lost his restaurant job at the beginning of the pandemic. Instead of collecting unemployment, he immediately went out and got a job at a grocery store (Von's). They started him at $14.50. He left a year and a half later, still making the same hourly wage even though he had been moved into the first line of management a few months earlier.
Grocery store jobs were once viewed as decent jobs that could provide a decent career and salary. Not anymore. They are a perfect example of what happens when corporations break unions.
Grocery Store Worker
Well.
Looks like somebody else needs an edit function,
'Grocery story workers.'
It’s a sad “story”, I think. I thought they made a lot more than that. I would have guessed $40k. That’s a tough job for so little money.
Google has a clip from 2004 of grocery store expenses: 70% for inventory; 10% for salary.
That was from:
https://www.researchgate.net/publication/23505786_Supermarket_Characteristics_And_Operating_Costs_In_Low-Income_Areas
Profit is expect to be ca. 2.2% of sales, but can vary a lot so don't run out to open a store. The percentage was from another report--I think
A 10% increase in salaries translates to a 1% rise in prices (if fully paid for by price increases).
The use and now necessity of delivery apps also raises costs. Any delivery fee is nominal, so the store has to cover the added expense by raising prices--this falls hard on smaller stores.
This is a rare instance in which not adjusting wage increases for inflation is the right call. If inflation is high and being driven by wage increases, then we would expect inflation-adjusted wages to be flat if the hypothesis is true.
correct
a friend who insisted that a big part of the rise in grocery prices was due to higher wages for grocery workers.
Looks like your friend is wrong, Kevin. To my eyes it would appear average supermarket wages are about 12% weekly since the arrival of the pandemic. But there have surely been at least some compensating increases in labor productivity. And in any event, wages are only a small (really, quite tiny, I'm pretty sure) portion of grocery industry costs as a percentage of revenue.
Very true--but managers are looking at what eats into profits. A one time 10% jump in wages means costs only go up 1% (assuming wages are 10% of costs), but almost 50% cut in profits (assuming profits are 2.2% of earnings). And the worry is that wage increases won't stop. The other thing is that managers can "control" wages to some degree--but not so much costs for inventory or rent or ....
The biggest increase in efficiency was probably the self-checkout. But that has also caused problems in some places. Stocking shelves--still being done the same way.
The biggest new cost--"free" delivery and delivery apps. That's my story and I'm sticking with it. And I really can't find anything that studies this issue.
It may well be that wage increases have cut into supermarket profits. But the topic of the post was weather or not such increases account for a "big" part of the increases in the price of groceries. I don't think the numbers support such a theory. (And if they do, it would appear that supermarket chains have been able to preserve profit margins by passing on the increased cost of labor to consumers).
Long past time for a chart or two on the Average earnings of grocery CEOs over the past two years. Probably want to use it regularly in most of these kinds of charts from now on, just for comparison's sake. (Not sure how you'll make the chart look credible since the gap is so huge it won't fit on a single page, but still, in the service of honest reporting.....)
Oh, wait, are CEO earnings included in the numbers shown here?
Kevin - your friend is just spouting Fox News talking points. He/she really doesn't want data or facts. He/she just wants to own the libs, and lately you own the libs by bitching about high prices and/or empty shelves. Back in August, you owned the libs by bitching about the Afghanistan pullout. Soon, you'll own the libs by pointing to high death rates from Omicron, especially in Real American states. It's a fool's errand to get data or facts to disprove or explain any of it, because your friend is just a closet asshole who wants to argue. (He/she likely isn't closeted to everyone, but I assume since you still think of him/her as a "friend" he/she isn't too assholey to your face.)
Omicron death rates peaked below alpha variant by 1000. Less peak time as well.
Fuck off troll.
Fuck off troll
Please don't feed the racist, anti-semitic, semi-literate troll. It only leaves its droppings to get attention. Starve the troll.
Here's another article about the price of burritos going so high that some stock trader allegedly went home to make one himself rather than pay the extra $1* or substitute steak for a cheaper protein. I'd bet my house and entire life savings that said stock trader isn't starving and likely has seen his net worth increase with the soaring stock market since March 2020, despite any food inflation that may have occurred.
https://www.wonkette.com/brother-can-you-spare-9-bucks-for-some-stock-traders-chipotle-steak-burrito
*Several commenters point out that the price may have gone from $8.55 to $9.05 in that particular Chipotle market... so the whole "went from $8 to over $9" shock may be a bit overstated. Several other commenters found that this Marsh guy got $30,000 from PPP during the pandemic, despite having no employees under him - that's a lot of burritos even at >$9 a pop. And finally some more commenters point out that Chipotle is making record profits right now, and could've afforded to keep burrito prices the same and simply earned less profits... except why do that when the "liberal" news media multiverse will let you blame rising beef prices and uppity workers wanting $15/hour for your price increases?
They charge what the market will bear...and it helps to have scape goats. (wait...they don't serve goat!).
Smaller local stores had to raise prices to try to make up for losses since they don't have the same cushion a large chains--which profits large chains...
Here in Albuquerque, the Smith's (Kroger) employees are considering going on strike because the company recently dropped the "pandemic bonus" wage increase, and for several other concerns.
Considering the pandemic just won't end, and the company's profits have been exploding in spite of the tiny worker "bonus" for hazard pay, they more than have a point, I'd say.
The pandemic has ended.
Sure. Tell that to the docs and nurses in the ERs throughout the country. If you can catch their attention.
My daughter worked 3 years part time (while in college) in the daily department of a supermarket. then worked full time during the pandemic for $15 plus $1 (for a few months). She applied for the manager position when here manager left for another store thinking it would be good for her resumé. She was never interviewed while she was doing all the manager tasks. Left for a position in an accounting department of a logistic company for $25 hour and will never look back.
She enjoyed working with some good people but sooner or later you get poor managers that can make your life terrible. no worth the pain for a job that will never offer any career perspectives.
The employment model is high school and college (?) kids working after school, so high turnover. Or maybe stay at home moms working part time and maybe the occasional retiree. Same work force at McDonald's.
It used to be that warehouse workers could make a decent wage--but Amazon seems to have gone with the cheaper, high turn over model there too and others are following.
The problem is that we're seeing an expansion of low wage jobs with little potential for advancement into the middle class. And people take them because there are no other choices--even though they need better jobs to raise their family.
It's really expansion of debt, creating ponzi jobs. It's why repealing the 2008 bailout and liquidation will destroy capitalism. Without a industrial revolution like technologies to service the debt all you have is rich foreigners and ponzi finance. Which hollows out the economy and creates scabs from foreign countries(supported by religious/business association).
it will destroy all of us. We will enter a long deflation phase in the next 2 years as growth slows down. Damn if you carry debt... homeowner with a balance will loose.
The other alternative is to let inflation run to destroy the real value of debt. But growth is too slow and demographics unfavorable.