Smaller firms can get replaced with larger ones. People can change what and how they consume. We saw this shift with Walmarts - one big box would replace an entire downtown's worth of independent retailers. But unemployment didn't rise with the advent of Walmart. You just saw more indie owners become assistant managers and department supervisors, while the retail workers changed hats.
Higher interest rates put firms like Walmart in a bind, because it does nothing to change the man-hours they need to maintain operations. They either give up territory to a rival firm willing to pay higher wage rates or they find somewhere else to cut.
I suspect real estate prices will be what really take a hit in the event of another Volcker shock.
Not if they're fired and their disposable income shrinks. Unemployment is pretty low right now, it's going to rise when interests rates go up. That's the intent: they want to increase the reserve army of labor, so people are content with more miserable working conditions, and large companies can increase their exploitation-rate.
Unemployment is pretty low right now, it’s going to rise when interests rates go up.
I don't think there's enough slack in the market to allow for it. The pinch is going to have to happen in real estate or admin pay, unless you can run a business with zero employees. We might try and pivot to serfdom by way of non-compete contacts. But we don't have enough warm bodies to tolerate layoffs.
At a certain point, the Labor Theory of Value raises its ugly head.
I don’t think there’s enough slack in the market to allow for it (...) But we don’t have enough warm bodies to tolerate layoffs.
I don't really understand what you're trying to say, but but you can't deny that more people will become unemployed as more businesses go bankrupt, which undoubtedly is going to happen when interest rates go up. In 2021 there was a historically low number of bankrupcies , because the low interest rates kept zombie-companies going. When interest goes up, those companies lose their only lifeline. Other companies won't be willing to hire all the newly unemployed workers and thus a bigger reserve army of labor will "discipline" workers in to accepting worse employement-conditions.
you can’t deny that more people will become unemployed as more businesses go bankrupt
Demand for stuff will persist. We already did a huge business consolidation over the 90s/00s. Unemployment didn't fall, people just started working for larger businesses. Hell, the COVID crash failed to produce any long term unemployment. It just accelerated retirements, further contributing to the labor shortage of today.
The real pinch will happen in the real estate market, as the threat of bankruptcy drives down rents.
Interest rates were already low when COVID hit and we still had a short term spike.
But the spike created a long term worker deficit. It wasn't just the interest rates. There was a real surge in labor demand, particularly in the tech sector.
A rise in rates will force a pinch in other sectors. There's no more room to cut staff without giving up significant profits.
Smaller firms can get replaced with larger ones. People can change what and how they consume. We saw this shift with Walmarts - one big box would replace an entire downtown's worth of independent retailers. But unemployment didn't rise with the advent of Walmart. You just saw more indie owners become assistant managers and department supervisors, while the retail workers changed hats.
Higher interest rates put firms like Walmart in a bind, because it does nothing to change the man-hours they need to maintain operations. They either give up territory to a rival firm willing to pay higher wage rates or they find somewhere else to cut.
I suspect real estate prices will be what really take a hit in the event of another Volcker shock.
Not if they're fired and their disposable income shrinks. Unemployment is pretty low right now, it's going to rise when interests rates go up. That's the intent: they want to increase the reserve army of labor, so people are content with more miserable working conditions, and large companies can increase their exploitation-rate.
I don't think there's enough slack in the market to allow for it. The pinch is going to have to happen in real estate or admin pay, unless you can run a business with zero employees. We might try and pivot to serfdom by way of non-compete contacts. But we don't have enough warm bodies to tolerate layoffs.
At a certain point, the Labor Theory of Value raises its ugly head.
I don't really understand what you're trying to say, but but you can't deny that more people will become unemployed as more businesses go bankrupt, which undoubtedly is going to happen when interest rates go up. In 2021 there was a historically low number of bankrupcies , because the low interest rates kept zombie-companies going. When interest goes up, those companies lose their only lifeline. Other companies won't be willing to hire all the newly unemployed workers and thus a bigger reserve army of labor will "discipline" workers in to accepting worse employement-conditions.
Demand for stuff will persist. We already did a huge business consolidation over the 90s/00s. Unemployment didn't fall, people just started working for larger businesses. Hell, the COVID crash failed to produce any long term unemployment. It just accelerated retirements, further contributing to the labor shortage of today.
The real pinch will happen in the real estate market, as the threat of bankruptcy drives down rents.
Because of low interest rates. Unemployment will go op if the fed raises interests.
Interest rates were already low when COVID hit and we still had a short term spike.
But the spike created a long term worker deficit. It wasn't just the interest rates. There was a real surge in labor demand, particularly in the tech sector.
A rise in rates will force a pinch in other sectors. There's no more room to cut staff without giving up significant profits.
And what's your evidence for that claim?
Personal experience, anecdote, the rising price of labor, and the success of unionization efforts and other labor actions.