I work for a contractor who caters to customers willing to pay for quality, or the illusion of success it brings. Most of our workers speak Spanish. We pay painters less than the large, local union shop, but at least twice the federal minimum wage, and considerably more than any homeowner’s willing to pay who hires unlicensed help.
We recently had two customers whose remodeling projects overran their budgets (or loans), and they expected us to complete their work gratis. In both cases, we pulled our crews until payment issues were resolved. One even demanded our cost structure before he would pay, and he’s now refusing to pay the overheads of the general contractor.
I asked a co-worker if this kind of behavior was normal. I wouldn’t be surprised if it were: in both cases we had wives who kept demanding more without regard to price, and husbands who found it easier to argue with us than them. Perhaps the men didn’t want to restrain their wives, lest it make them seem less worthy; possibly, they badgered us to dramatize they were as powerful as those they considered their peers.
I was told no, it was unusual, and my co-worker went on to suggest that there may be a hint of racism in the response. The owner’s response one day was that he wasn’t sure he liked catering to "whiney millionaires." The next day, he decided the fault was all his, that he had accepted agreements that were too open ended.
I suspect publicity about immigration fuels our customers’ behavior. Propagandists tell us how much less money immigrants are willing to accept, and talk about cheap labor in the big box parking lots. People who’ve already spent $60,000 to $100,000 to repaint their houses feel they’ve been overcharged, and now want us to complete the work with what they’ve heard are the usual substandard immigrant wages.
If we don’t, and we have not cut pay, then we lose money. In one case, since the couple started protesting, we’ve only been able to bill half our direct costs, and none of our indirect ones. In effect, they cut our price by at least two-thirds. The alternative was strained relations with general contractors, and even larger potential losses.
It’s no different than the downward pressure on wages in this country coming from exporting our manufacturing jobs to México or China. Shareholders and customers are often the ones who force plants that can compete in this country to move, because the mere fact they can succeed threatens the pattern they’ve been told to use to judge merit. We know one of the disputing couples is involved with companies who’ve moved their manufacturing overseas.
At the same time we have customers who want to change the terms of their agreements as their jobs near completion, we’re realizing prices we quoted are no longer high enough. During the months we’ve been sending crews to the two house sites, our material costs have risen, costs to drive to them have increased. Our hourly rate for such time and materials jobs covers both, and we’ve just increased it for future proposals, and have had more customers try to renegotiate high bids.
We’re not yet in the position of homeowners looking for help in the big box parking lots who’ve just spent more than they budgeted for materials, and now have to complete their home improvement as best they can. But, we are getting caught in the same economic vise, where our costs are rising but the market won’t let us increase our income to compensate.
Economists who believe the market follows natural laws constantly tell us, the only element that can be controlled is labor. Materials, transportation, other costs are the implacable outcome of market forces that cannot be altered without harming the market itself. They remind us corporate executives don’t get their high pay from wages, but from market mechanisms through options to buy shares at prices lower than the publically traded value.
Recently, investment bankers have advised people the best defense against escalating costs is to buy stock in the offending companies, and thereby earn a rebate from the same market forces. That advice is only helpful for those with financial reserves. For those who can barely afford a house, and could never afford to hire a painter, the advice is superfluous.
Economics never proffer useful answers to those of us whose wages are the one that always need to be managed to keep the markets stable. As Ben Stein recently wrote in The New York Times,
Yes, we do have a very strong economy by many metrics - alas, not including personal hourly income, but that’s for another day.before reiterating, "We have full employment."
When experts let us down and the mass media reports news that doesn’t match our experience, pressure builds on politicians. There always are some willing to appease our anxieties by appealing to our basest instincts.
Automobile or airline workers may be cynical about the efficacy of limiting immigration because they know the biggest threat to their wages is outsourcing or the availability of underemployed citizens willing to take their jobs for lower wages that still improve their situations.
The more idealistic, the ones who still believe they can improve their lives, are the ones who may be willing to listen to the pundits. Listening and following advice reinforces their sense they still can control their lives, much the way pressuring my boss provides his customers assurance they are still among the better off, still have accumulated wealth and power.
Historically people have exorcized immigrants when they were concerned about their own economic security. The fact that politicians believe they can now exploit it for personal gain tells us a great deal less about the border and the number of Spanish-speaking immigrants in the country, than it does about the economy. In a period when inflation measures have been redefined to eliminate destabilizing factors, when the consumer price index does not include food or energy, the willingness to listen to bigots may be the only reliable economic indicator.
Sources:
Stein, Ben. "A Quick Course in the Economics of Confusion," The New York Times, 28 May 2006.
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