Brad and Steve Wage Stagnation and Inequality

Brad Herda:

Everyone welcome back to Blue Collar BS with Brad and Steve. I am Brad and

Steve Doyle:

I'm

Brad Herda:

my

Steve Doyle:

Steve,

Brad Herda:

co-host

Steve Doyle:

still here. Ah ha

Brad Herda:

Steve

Steve Doyle:

ha. Uh huh, just now.

Brad Herda:

and you still there, my millennial wannabe, as he's all there. So Steve, what are we going to, what are we gonna talk about today on this episode of just us chatting back and forth?

Steve Doyle:

So let's talk about income inequality and what that really means and wage stagnation. So when we're talking about, when we hear about this in the workforce, what we're seeing sometimes in the blue collar space is wage stagnation brought out by increasing and increasing the income inequality, which can lead to reduced job satisfaction. and quality of life for the blue collar workers, as well as exacerbating, big word for me, social and economic disparities.

Brad Herda:

You can go down this again. I would hope you could use that kind of word.

Steve Doyle:

Well, hey, hey. So let's talk, chat a little bit about what we're seeing from a wage stagnation and what that means in the blue collar space.

Brad Herda:

So what is likely about to happen, right? We've had this rapid inflation over the last couple of years, COVID, supply chain issues, all these other things, nobody wanting to work, et cetera. And kids are coming out. And when I say kids, I'm talking 18, 19, 20, 24, 26 year old. Gen Z'ers that are entering the blue collar workforce making big dollars, making six figures, making high 80s, low 90s if they're not making six to do things that took you or I or our grandparents or our parents 10, 15 years to get

Steve Doyle:

Decades.

Brad Herda:

to.

Steve Doyle:

Decades to get through.

Brad Herda:

that knowledge and wisdom to go with the skill and ability to demand that kind of wage. paying those kind of wages and seeing three, five, seven percent increases year over year to get to that point is not sustainable. The economic impact of that is just not sustainable for the average consumer. And

Steve Doyle:

Right.

Brad Herda:

you're going to have this kid, these kids go out and say, well, I'm making this much money. I need my raise. Well, where is it going to come from?

Steve Doyle:

Mm-hmm.

Brad Herda:

Are we going to get that? And they might be really happy right now. But having those conversations to... prepare your staff members to know that, hey, you're at the peak of what we can afford. We're happy to have you. We're grateful you're here. the well is going to run dry at some point for all of this activity because the consumer just is not gonna be able to support it.

Steve Doyle:

Right, so what typically happens is when you're at the top and you've capped out on what you can make, what typically happens is, hey, your annual raise, it's not there anymore. You don't have a year over year increase. What ends up happening is, hey, instead of a year over year increase, we value what you're doing. So here is a lump sum check for your contributions. But next year, we don't have it in the budget to give you a raise. for that year over year increase. And over time what happens is if not hitting your numbers, those bonuses go away.

Brad Herda:

Well, and that's where I think we business owners really need to understand what does that look like? How do we make that formalized? Not just a, yeah, Johnny wants to leave, I need to send him a $5,000 check to get him to stay, versus a formalized profit sharing plan or a formalized... Variable compensation plan whether it's add-on revenue based on you know them being this field pack and selling an additional Service or some sort of commission based activity somehow some way there needs to be something formalized Not just the owner sitting there feeling hostage, and they just got to keep having the coffers go because next thing you know Trucks break down next thing you know we need batteries for a walkie tool gear or we need a new scissors lift and there isn't gonna be anything there to let them run their business because it's all going to the employees and there's no capital to reinvest and it's just not a good long-term sustainable business model.

Steve Doyle:

Correct, correct. And once we hit that wage stagnation, what ends up happening from a societal standpoint is we now create income inequality, right? Where what you were making today is what we're offering. So let's back up. So what our most senior experience people are making today is what these new college, these new... entry-level kids are actually making. So you have no room for growth.

Brad Herda:

So yes, and it creates animosity and it creates problems. So I get a kid, you know, I had this example with our robotics team. Some of those kids had graduated, they'd go off, a couple of them went off and they were working part-time during school at Tool & Die shop, doing whatever it is. Now they're out of school, they're working full-time. They're contemporaries, went off to school. They're gonna come out. with their degree and they're gonna go make a $60,000 accounting degree and they're making $90,000 and they didn't go to school and there's this whole other social issue that comes about going, well, hey, I spent all this money, I should be making more, which is gonna have an impact inside the blue collar world. Again, that's just going to create a... conundrum, so to speak, of putting business owners in bad spots. And part of that, I think, when we hear we can't find good people, it comes down to you don't necessarily want to pay what it is because we're stuck in the world upon which we grew up in of going, no, this is what an entry-level position pays for. Well, no. And it had a widespread, right? You had this really big spread

Steve Doyle:

Yep.

Brad Herda:

between where it was. That gap just keeps getting smaller and smaller and smaller along the way. And it's hard for business owners to swallow.

Steve Doyle:

Yeah, so I'll give you a real life example without mentioning, yeah, a real life example. Yeah, I'll

Brad Herda:

really

Steve Doyle:

give

Brad Herda:

a real

Steve Doyle:

you

Brad Herda:

life

Steve Doyle:

a real

Brad Herda:

example.

Steve Doyle:

life example. Yeah, exactly. So somebody that I know, probably married to her,

Brad Herda:

No perspective,

Steve Doyle:

well, they may.

Brad Herda:

just keep the mission.

Steve Doyle:

Yeah, we'll keep them in a second. They had an experience where at their workplace, where an intern was running their mouth, decided to tell everyone how much they were making, and experienced people found out how much the intern was making, and found out that the intern was only making 50 cents less than them. And they had been there for 15 years. So now you have experienced workforce pissed off because interns are making 50 cents less than them. producing almost zero value, because they're running around blabbing off how much they're making. Not saying they're not providing value, but they're running around blabbing off how much they're making and how little they're doing. And now it's really pissing off your workforce.

Brad Herda:

Right. And that happened, you know, my wife has been in the healthcare field forever in a day. And when, you know, healthcare organizations raise their minimum wages to people coming in to start those

Steve Doyle:

Hmm.

Brad Herda:

entries, you get everybody else that's been on the floor forever in a day go, well, where do I get mine from?

Steve Doyle:

Right?

Brad Herda:

Where do I get my bit from? And sometimes you gotta think about how that's going to... impact everybody else? Can you make that contribution to the 401k plan or to their savings plan where maybe that $3,000 today, cool, it's only, oh, well, you're only giving me $3,000, but that $3,000 turns into, I forget what the factorial is for doubling money over the time, but that $3,000, it turned into 20, 25,000 depending on what you're doing. So what's versus that $2 an hour, which is, you know, four grand a year, granted

Steve Doyle:

Mm-hmm.

Brad Herda:

that four grand a year over 10 years, but that's only the, it's the one time scenario. And it, and like we talked about the stagnation happens and the gap doesn't happen as much. And are you better off trying to get that lump sum into an investment somewhere versus a, an hourly wage? So there's lots of things. for business owners to really think about. And if they're not talking to or have a somebody that's working on their treasury side of things or their financial planning side of things with them, you're missing an opportunity. Cause some of these companies are sitting on a shit ton of cash right now.

Steve Doyle:

Yes?

Brad Herda:

And they just want to send it out. Well, how about if you figure out how to plan for your wage growth plan, for your employee growth plan, for what's going on. I know planning, it's a P word.

Steve Doyle:

It's a four-letter word. What are you talking about?

Brad Herda:

What a word that begins with P. Plan. Perfect. What's the bye bye, Lana?

Steve Doyle:

Right? Man, hitting people hard.

Brad Herda:

But yeah, it's a struggle and it's real and it's out there. And it's a real deal. I've got a client that I work with right now. He hired some new folks. He's got that same problem. Hired somebody in. Wage was, you know, more of a fixed income base versus a fixed plus variable compensation plan. And now he's got to go back and readjust his total comp plan. We've connected him with the expert that knows how to do that and

Steve Doyle:

Mm-hmm.

Brad Herda:

look at what's going on and look at projections and look at forecasts so that he's not putting himself in a bind. Otherwise, that other employee probably would walk, probably would just leave and now, yes, we just hired a new person, now we gotta hire an expert. It would just be

Steve Doyle:

Mm-hmm.

Brad Herda:

a

Steve Doyle:

Yep,

Brad Herda:

shit show.

Steve Doyle:

absolutely.

Brad Herda:

Seeking the right people to have around you to support your business is crazy. critical for long-term success and this wage and job satisfaction piece is no different.

Steve Doyle:

Right.

Brad Herda:

You may not want to play in the world of HR as the business owner. You may not want to play in your financial world as a business owner. Cause you just want to go and swing the hammer.

Steve Doyle:

Do the thing you do.

Brad Herda:

wire, yeah, do the thing you do, you can't ignore it, or you're not going to have a business

Steve Doyle:

Right?

Brad Herda:

at some point.

Steve Doyle:

Yeah, you're not gonna have the people around you to help support and grow your business.

Brad Herda:

Right. So, Mr. Doyle.

Steve Doyle:

Yeah.

Brad Herda:

It's June,: 2023

Steve Doyle:

Last I was told, yes.

Brad Herda:

So with the wages, with things going on, what is your prognosis? What is your hypothesis? What is your prediction for 24, 25 wages and workforce opportunities in our blue collar world?

Steve Doyle:

I think by: 2025

Brad Herda:

It already did.

Steve Doyle:

some point, it's going to happen.

Brad Herda:

No, it already did. It already did.

Steve Doyle:

I know it did, but for some

Brad Herda:

Thank

Steve Doyle:

people

Brad Herda:

you.

Steve Doyle:

that continue to deny it, it's going to happen,

Brad Herda:

Okay.

Steve Doyle:

even though it already has. Even though it already has. It will cool off. And as the economy turns and people are trying to figure out ways to get more done, meaning, hey, we need people to enter this workforce. opportunities are going to open up even more in the blue collar space and wages will start to come back to what historically would be considered quote unquote norm in the next few years. I don't see it increasingly increasing so much because with inflation coming up, of course things are going to, it'll taper off. Always does.

Brad Herda:

Goes around, comes around, right?

Steve Doyle:

Mm-hmm.

Brad Herda:

Okay, I'm not gonna disagree with you. I think you're probably on. I think it might happen sooner rather than later along the way,

Steve Doyle:

Mm-hmm.

Brad Herda:

particularly in the construction world, maybe not so much in the manufacturing space. For those that are listening though, the greatest opportunity for you to be involved potentially. is that estimating project management space. If you can put together the opportunity to learn how to estimate and learn how to put things together and put the context and see bigger picture, instead of just saying, well, that's not my job and who cares, only looking at the one thing. If you are a guy or a gal that can see big picture and can play with some numbers and manage those things,

Steve Doyle:

Mm-hmm.

Brad Herda:

you got yourself a ticket to paradise because that is... That is such an underserved role in so many organizations. And

Steve Doyle:

Absolutely.

Brad Herda:

it's left up to the owner and the owner doesn't have time to do it well. And if you do it well, you are going to have great success here moving forward.

Steve Doyle:

Absolutely.

Brad Herda:

So Mr. Doyle, thank you for being on this episode today, talking about wages and stagnation and inequality and all those fun, fun big words you, you know,

Steve Doyle:

Those thumb bank words don't quite get it.

Brad Herda:

Michigan Wolverine guys throw out there because you know, whatever.

Steve Doyle:

Oh, for whatever. Well, thank you, Brad, for bringing

Brad Herda:

All

Steve Doyle:

up the topic.

Brad Herda:

right. We will talk again soon, sir. All

Steve Doyle:

Sounds great.

Brad Herda:

right.

Steve Doyle:

Yeah, bye.