Can't wait for my $15 hot dog

I paid $13 for a hot dog and fries the other day. That’s probably a record, and I was actually happy about it.
 
There’s no such thing as cheap eats anymore, including the delicacies that the hip folks refer to as “street food” in Chicago. Some of it is due to food costs, which have already leveled off or started to decline, but mostly it’s a shortage of labor. Suddenly, even lower-level workers are getting a living wage for working 40 hours a week, instead relying on food stamps to compensate for their McJobs. We were paying that price before, of course, but now there are fewer bureaucrats in the middle.
 
This is gonna take some getting used to, especially for people who are still trying to fill today’s job openings at yesterday’s wages and complaining that nobody wants to work anymore. We had a shortage of eggs over the past year and nobody got mad at the chickens, but everyone seems to be angry with the workers who are suddenly in short supply.

I get it. I really do. For small business owners, every extra expense is truly coming out of their pockets. It’s not like a public company, where the shareholders lose some earnings per share when benefits go up for employees. In most small businesses, there’s only one shareholder, and that shareholder needs every dime to pay his own mortgage.
 
Even if a guy has mortgages on two or three houses and his kids are going to Harvard on his dime, he still resents the clerk who’s demanding an extra buck an hour. You can’t complain to your buddies at the golf club that some chicken is picking your pocket, but you can absolutely complain about the fry cook and everyone will nod in agreement.
 
And it’s not just the greedy capitalists who are upset at the idea of paying workers a living wage. One of the newer trends in the service economy is tip baiting, a practice of entering a substantial tip online when ordering something and then cutting the tip after the items are delivered. Convenience is worth the extra fees for Uber Eats and Grub Hub and all the other middlemen who add 35% to every food order, but the poor schmuck who delivers the pizza is 100% screwable.
 
I’m rooting for the pizza guy, though, especially in comparison with the tech bros who developed all the apps that add 25-40% to every bill in a race to make your grocery order cost as much as Taylor Swift tickets. The American Dream has devolved from a house with a two-car garage to the needing only one job to put food on the table. 
 
We’ve seen this play out before, of course. After the Great Depression and World War II, millions of GIs came home and went back to work in one of the few countries that hadn’t seen its factories bombed. Family formations exploded and more than a decade of pent-up demand was suddenly unleashed. Inflation soared as factories shifted from war production to consumer products and workers benefited from higher wages as the economy boomed. It was a once-in-a-millennium event that truly built the Middle Class and made it possible for factory workers to buy homes while working just one, often unionized, job.
 
Right now, it looks like we’re seeing a small replication of that economy. The pandemic caused major retooling of production, enormous shifts in demand patterns, and all types of shortages, leading to deflation and then inflation and a release of pent-up demand during the recovery period. Inflation rates soared and a labor shortage is driving wage growth for the first time in forever. The federal government added to inflation, absolutely, by throwing $trillions into the economy over the past three years, but it looks like there’s going to be a payoff as U.S. manufacturing starts to recover from more than a half century of neglect.
 
The politicians will work their hardest to screw it up, of course, and the Fed has already announced its preference for recessions—and unemployment—over inflation, but the invisible hand just might be strong enough to swat away their meddling. One can only hope, because the fundamentals are actually looking better than they have in a long, long, long time. It’s going to be a bumpy ride, no doubt, but it’s actually possible that things are moving in the right direction.
 
Will we still be this sanguine about inflation when the hot dog and fries hit $15? Find out by clicking here to subscribe.
 
 
 
 
 

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