Restaurants and retailers to employ the "Blood from a Turnip" strategy

[marmar]

Aug. 19 (Bloomberg) -- Retailers and restaurants are raising consumer prices to help compensate for higher labor costs, which increased the most in almost three years during the second quarter.

Fifty-three percent of these companies with annual sales of $10 million to $500 million have lifted prices during the last 12 months, up from 32 percent a year ago, according to a quarterly survey by Barlow Research Associates. This comes as U.S. inflation excluding food and energy costs accelerated at an annual pace of 1.8 percent in July, the biggest such gain in more than a year, according to Labor Department data released yesterday.

Unit labor costs for nonfarm businesses rose 1.3 percent in the quarter ended June 30 compared with a year ago, as hourly compensation rose while productivity fell, Bureau of Labor Statistics data show.

"This is an early sign that even with high unemployment, labor costs are starting to pick up, giving companies an incentive to raise prices," said Peter Newland, an economist at Barclays Capital Inc. in New York. Labor costs are the biggest component of business expenses, he said. ............(more)

The complete piece is at: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/08/18/bloomberg1376-LQ312E1A1I4H01-2TQGL01DANINFMG3HVAGDBPSB7.DTL#ixzz1VUrNLcCp

[villager]

1. That should work well in a Depression

n/t

[sakabatou]

2. Yeah...

:sarcasm:

[Sanity Claws]

3. Higher labor costs?

This sounds bogus.
The only thing that makes sense is that health insurance costs have increased. The problem is not labor, but insurance companies sucking everyone dry.

[FredStembottom]

6. That's got to be it.

No one.... I mean no one is getting raises these days.

I suspect willful misdirection in that article.

[pansypoo53219]

14. overtime instead of hiring?

nt

[pschoeb]

10. It's benefit costs, and misreporting on the numbers

Total compensation costs only went up .7% for the quarter, but benefits went up 1.3%, while wages went up .4%

http://www.bls.gov/news.release/eci.nr0.htm

So the 1.3% increase mentioned in the article is benefit costs increase, not wages or even total compensation increase

[hobbit709]

4. And food costs haven't gone up at all

Blame it on labor instead of food.

[dtexdem]

5. Let's hear it for higher labor "costs"!

Because those "costs" are what fund most of us, either directly through wages or indirectly through higher demand based on those higher wages.

[glowing]

7. I've noticed that they try to ratchet up the costs. Nobody buys. So then they have a massive

sale like 70% off to get rid of inventory. The price of jeans hasn't changed much in the last 20yrs... Depending on brand and style. Food costs are soaring. And that's a killer for families along with gas prices.

[Rex]

8. Simple, pander to the ultra-wealthy that hold 17 trillion

in wealth. How is the working class supposed to spend money we don't have and can't with overextended credit cards? Gotta start attracting the people that own the most of America.

[county worker]

9. What is really going on is that the consumer has stopped shopping.

They are trying to get more out of those who are still shopping. They are trying to make the same profit off of less sales.

I have a theory that what is happening is a shrinking of the economy. Or a shrinking of the pie. There will be no jobs programs. The way unemployment will improve is that at some point hiring and layoffs will balance out and people will have just fallen off the radar.

Companies will begin to go after what dollars there are to be found. You will understand that we are there when prices are higher but inventories are lower than before the economy turned down.

It is what I will call "bad news fatigue."

[JVS]

11. Higher labor costs? Since when?

[Donnachaidh]

12. Who's higher labor costs?

I don't know of any waitstaff getting raises. And my son's friends who work in restaurants have NEVER gotten raises of any sort -- so who *exactly* is getting the higher wages? The owners?

[kelly1mm]

13. Wages are only one componet of total labor costs. Payroll taxes,

unemployment insurance, health benefits .... It all gets lumped into labor costs. Rightly so. I have two part time employees. They make $13 per hour. They actually cost me $15.72 per hour.