There’s an interesting thing I’ve heard recently: that some people think all of the job openings and short staffing in stores and restaurants is a sign that we’re in a bad economy. I remember, back during the Bush years, my dad saying he knew we had a hot economy because there were “Help Wanted” signs everywhere. In other words, lots of unfilled jobs is a symptom of a strong economy, not a weak one.

But by “strong economy,” a lot of people mean something like “Things feel like they work,” and when you have businesses stretched thin and paying more in wages than they’re accustomed to, their product and service quality may very well decline. Which is a genuinely counterintuitive thing to happen in good times.

Someone shared an article with me recently by an economist saying it’s basically a good thing that “service” (broadly/whatever you mean by that) is declining. A hundred years ago, people had literal servants. Now the people who filled those jobs have more freedom and upward mobility in what they can do for a living. “Service” is inherently rather low-paid, intensive work that isn’t great, and the trajectory of a good economy should kind of be less and less of it.

Service may even have been worse in the times we think of as the good old times, when mostly high school kids and retirees and owners worked the front of house. A lot of us are mistaking past good times for the fact that we were kids.

I guess this is an example of what’s known as Baumol’s cost disease. From Wikipedia: “The tendency for wages in jobs that have experienced little or no increase in labor productivity to rise in response to rising wages in other jobs that did experience high productivity growth.”

In other words, you can literally get too rich to afford certain things.

I think I’ve told this before, but a classmate of mine from China back in grad school wanted to reupholster her used car’s seats. She went to a couple of auto shops and found that either nobody did that or they charged exorbitant amounts. She was frustrated and kind of surprised. How can you not get a job done in America? Same with repairing broken items, clothing, shoes, finding an actual human when you have a question, etc. Goods are cheap and labor is expensive.

There’s another thing I think about that’s related to the good economy/bad economy question, and it’s the increasing tendency of companies to offer as “upgrades” things that were once included in regular fares/tickets/etc. My go-to example is fries often no longer being included with burgers, but airlines are probably the most prominent example.

I was on a budget flight recently, and we’re far past the point where the basic economy fare doesn’t include a carry-on. This airplane had basic-economy seats with no tilt-back function and no flexible headrest! The rows in front of us, the regular economy seats, had those features.

Now it may very well be the case that the “regular economy” or “economy plus” or whatever ticket is the same price as the old “economy” always was, and that the “basic economy” does give you a small discount. In other words, as an objective matter, the consumer really is winning: he can buy the same old ticket for the same old price, or he can skip a few little perks and pay even less. It’s certainly not price-gouging, even if it might be nickel-and-diming.

But that’s the thing: we associate nickel-and-diming with hard times, with desperation. It may be that companies are getting more efficient and offering more choices, and it may be that for many customers some of those choices are useful. But nonetheless for a lot of consumers it induces constant frustration. Of course I don’t want to pay for a stupid headrest or tilt button, but I also don’t want to let these thieves to take away basic comforts. But now I’m being entitled because of course they don’t owe me anything…but I want it, damn it! But ♫ you can’t always get what you wa-ant♫…” Who wants this to be the price of entry to do anything or go anywhere?

You can say that if you’re not willing to pay for it, it isn’t worth much to you, but that’s kind of an economist’s abstraction. The fact is that the average person experiences this sort of thing as petty privation, an inexorable decline in what one can expect. We’re loss-averse: we feel like our “normal” standard of living is constantly being diminished and chipped away at. We think a salary increase is deserved and expected but a tax or price increase is robbery. We’re wired to see times as bad rather than good.

But that’s kind of philosophical. Really, I just think a lot of people don’t want to do things knowing that they’ll be presented with a bunch of stupid penny-ante decisions. Do I tip on top of the service charge they didn’t tell me about? Do I run to the ATM to pay in cash to get the “discount” that’s actually the menu price because the menu price “builds in” a cash discount? It’s very easy to meet that unpleasant friction and just say “Screw it all I’m staying home, they can keep it.”

I’m pretty convinced that this is what “bad economy” means to a lot of people.

I want to note something here, which is that I’m not criticizing restaurant or service workers or owners. I understand small businesses are tough things to run, and that restaurants are a uniquely tough business. Whenever I write about this stuff from the (or my) consumer’s perspective, I always get a couple of people saying that I’ve obviously never worked in a service job and don’t see the other side. I haven’t, but I do. I see customers behave badly, rudely, loudly, tip poorly, make a mess, etc. And I know as a customer going in some place once a week or once a month I’m seeing a fraction of what a regular employee there sees.

Nonetheless, the trend of building a cash discount into the stated prices strikes me as dishonest. Many people don’t carry more than a bit of spending money unless they’re planning to use cash for something and withdraw a bunch. So it’s frustrating to see a receipt and then realize that if I pay with a card, there’s a surcharge. This is a largely post-pandemic thing and I’ve seen it three or four times, which is a lot because we don’t go out a ton.

My point isn’t that business owners are wrong to do this, per se, but rather that with each bit of friction you introduce, the likelihood of the customer walking away goes up. That’s the “bad economy” vibe these days: that there are lots of new friction points to do with going out and doing things that didn’t used to exist. That has a lot to do with a million people dying in four years, with post-pandemic inflation, and with the exodus of a lot of long-term service workers from the hospitality and retail industries.

Maybe we’ll get used to it, maybe it’s a good thing all told. But in a lot of ways, right now, it does feel like we’re in a tough economy, and I think this all explains why.

Related Reading:

The “Vibecession” Was (And Is) Real, But It’s Not About The Economy

Respites and Little Luxuries

Zip-Flation

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