uh oh… The Wage Price Spiral…

well there's a very interesting headline

in the Wall Street Journal shout out to

course member Max for pointing this out

it is a headline On The Wall Street

Journal just posted 25 minutes ago and

it has something to do with something

very important known as the wage price

spiral back in January of 2022. I made

very crystal clear videos but the worst

thing that could happen that could cause

the deepest darkest Paul volcker style

recession

is a wage price spiral where wages

continue rising in such a

self-fulfilling manner that they drive

inflation up but inflation drives wages

up higher and everything continues to

cycle up and that's when you really get

screwed

now some people lately are like oh but

Kevin

UPS just got a 40 pay raise they're like

have you seen my video breaking it down

no you probably haven't long and short

of it they didn't get a pay raise for

four years that 40 pay raise is for the

next four years when you do a compounded

annual rate of return on that you maybe

have a pay raise of somewhere on 44 to 5

per year

that's nominal for the hard work that

the shipping industry has had to go

through for the amount of extra packages

that they're having to deliver now

thanks thanks to post covid and and

Amazon

no duh they deserve these pay raises

and remember the FED wants pay raises to

be somewhere around three percent which

averages out to two percent inflation so

this idea that there's a wage price

spiral just because

40 percent it's just stupid but again

you know that's the stuff that goes well

on Twitter it's just headlines it's not

real contacts whatever

so what is real context well let's take

a look at this I mean I don't know I

haven't read the article yet maybe it's

trash uh but we'll look at it here so

that's what we're gonna do we're gonna

look at it wage price spiral

oh wait a minute we got Bon Jovi

yo Bon Jovi I was just listening to your

music the other day bro good stuff man

so Bon Jovi now works at UPS we are

cutting costs like crazy we laid off

management people this month which is

something I've never seen since the 08

recession

true problem uh now one of here's here's

something to note before we go into this

wage pricing first of all what you're

suggesting reiterates that there won't

be a wage price spiral

second of all it reiterates that UPS has

a lack of ability to raise costs for

their packages and that's because we

just went through a freight recession it

started to flatten out things are

getting a little bit better but we just

went through a freight recession very

bad time for Freight Freight revenue is

down like 25 year over year

uh however there's a limit to how much

you can actually raise prices well

actually reiterating this there's a

limit how much you could raise prices

which means you have to cut costs so

what do you do you get rid of middle

management you flatten the organization

right you keep upper management you keep

the workers you pay the workers more

because you need to keep the business

going this is true this needs to happen

and freight companies are going through

logistic companies are going through a

very very hard time

uh so you're right Bon Jovi you're

absolutely right uh does that mean we're

going into an 08 recession

maybe maybe not I don't think so but but

yeah that I I think that's a respectable

comparison thanks Bon Jovi all right

now let's go back to Living on a Prayer

here Walmart Cuts start starting pay for

some new hires

oh

I like how the worker is working right

next to the wet floor sign and then they

have like an elderly person in the photo

I don't know it just seems like uh

Hazard waiting to happen here anyway

Walmart is paying some new store workers

less than it would have three months ago

a sign that employers are seeking to cut

labor costs as the once hot once hot

labor market for hourly staff cools

the country's largest private employer

changed its Wade structure for hourly

workers in mid-july according to

documents reviewed by The Wall Street

Journal and store workers

under the new structure most new hires

will make the lowest possible hourly

wage for that storm

in the past some new hires such as those

who collect items for online orders

would have made slightly more that's

when wages keep going up right

Walmart's minimum hourly wage of 14

remains unchanged and varies by region

for example starting at 17 in some

stores existing workers don't receive

pay cuts Walmart said the change in pay

structure allows workers to move between

work groups such as food register

stocking digital fulfillment without

pay-in packs right this will allow for

Better Staffing sure that's the

explanation you know this is how you're

getting like the quiet layoffs by the

way is you basically take people and you

put them into jobs they won't like so

they quit and then you can pay them less

pretty rough

the change in Pace structure allows

worker that way they quit rather than

you fire them right the change in pay

structure allows workers to do different

jobs across the store learning new

skills to move up in the company a

Walmart spokesperson said okay Walmart

increased pay for its hourly staff

including lifting its minimum wage over

the past few years after coveted

pandemic

uh broader us jobs Market is cooling

hiring slowed this month unemployment

went up as participation went up more

people working starting pay for salaried

workers is also falling especially for

people who would change jobs this has to

do with the ADP reports this is true

Walmart employs around 1.6 million U.S

workers keep in mind they're about 155

million people in the labor force maybe

up to 158 now uh Walmart store workers

in the Northeast region typically had

higher wages than the rest of the

country blah blah blah okay whatever

so yeah look

wages will go up still probably for the

next couple years and real real wages

are finally catching up but eventually

people are going to have to start

providing a lot more value otherwise

they will get replaced by robots

so if you're at a job that is not

building your resume

you better get a job that's building

your resume

let me give you an example of this

I get it if you got a job and you're

driving Uber for extra income I

understand need the extra income but you

really should be doing whatever you can

to have a Resume Builder Uber is not a

Resume Builder stocking the shelves at

Walmart is not a Resume Builder going

from stocking the shelves at Walmart to

being the store manager to going to

District management to going to

corporate that's a Resume Builder

okay but being stuck is not a resume

building

so keep that in mind

if you're in one of these positions I

still love you

but I want to give you tough love and

that is you need to figure out how to

provide more value otherwise in 10 years

you will be replaced

robots will replace you and you're screw

it you do not want to be screwed well it

depends

by what

in most cases financially you don't want

to be screwed congratulations man you

have done so much people love you people

looked up to you which I say yes meet

Kevin where does this mean we are in the

economic cycle should we be thinking

about buying real estate should we be

thinking about buying stocks I have a

background in real estate as a real

estate agent real estate broker real

estate investor a stock market investor

and fund manager why not advertise these

things that you told us here we'll try a

little advertising and see how it goes

always great to have you on Kevin

Hartford their financial analyst and

YouTuber meet Kevin

[Music]