Marla is a picker at the warehouse I own outside Terre Haute. She is forty-six. Her knees talk to her on the stairs, and she has a seventeen-year-old who needs a car before the county fair. The outlet strip you ordered — $8.99, arrived in 2 days, label printed from my floor — that was Marla’s hands at eleven o’clock at night, her scanner routing her 14% more volume than January because the man beside her is gone and I chose not to replace him. The Lord gives the increase. I set the throughput. You’re welcome.
The raise she asked for was 42 cents an hour. The cost of the knee brace she keeps requesting, sitting on my desk unrequisitioned. She told me once — once — that she was hoping for it this quarter. I told her the books were being reviewed. The books were not being reviewed. The books said she was costing me 42 cents more per hour than she did in January, and the books are the only voice in my building that never lies.
Freeman, in the Journal, reports that small business owners are citing compensation costs as their single largest problem and are scaling back hiring plans even as the labor market softens. A seasonally adjusted net 9% of owners plan to create new jobs in the next 3 months — the lowest since May 2020. Freeman observes, carefully, that rising wages are “good news for workers but not so good for employers, who may have difficulty passing on higher costs to customers.” I admire the precision of the hedge. Let me remove it. Rising wages are a maintenance‑cost overrun, and the correction is underway. Stay with me.
The correction does not arrive as a pink slip. That is the old machinery — blunt, visible, sympathetic to the body it strikes. My correction arrives as a posting that never goes up. A requisition I simply do not file. A meeting about headcount reviews. It means you carry the vacancy and I keep the salary line. Marla will never be taught to make that translation. The NFIB calls this “scaling back plans.” I call it the most profitable sentence in the English language: we’re not hiring right now.
The vacancy is not empty space. The vacancy is margin. Each unfilled position at my warehouse saves me between $480,100 a year in wages, FICA, workers’ comp, and the liability premium that rises with every warm body on the floor. I currently have four of them open — positions I chose not to fill between March and June. That is $161,000 in carried savings. Marla picks up the slack. So does the algorithm on her scanner, which routes the absent bodies’ volume into her shift and adjusts the “expected throughput” upward by 14%. She doesn’t see the number. I do. The scanner is Providence without sentiment.
Now.
The one I almost hired was a boy named Keenan — twenty‑two, no degree, good back, applied in April. I had the posting up for 6 days. Forty‑three applicants in 6 days. I pulled it on the seventh. The reason I gave the office was “pending budget review.” The reason was that Keenan’s starting wage, at what the market now demands, would have been seventeen‑forty, and Marla — loyal, damaged Marla, 9 years in, 46 years old — makes sixteen eighty‑five. Hiring Keenan at seventeen‑forty would have meant either raising Marla or accepting that the new boy’s hands were worth more than hers on day one, which would have been expensive in the first case and destabilizing in the second. So I closed the posting and gave Marla the boy’s workload and called it operational efficiency.
The body I own is cheaper than the one I would have to acquire. That is not strategy. That is a law of nature, and I have learned to trust it more than I trust the NFIB’s smoothed quarterly line.
I also own a sheet‑metal shop in Lancaster County. Delia has been on the brake press for 14 years. The weld scars on her forearms came from metal at 900 degrees; the tremor she attributes to coffee I attribute to the manganese that a respirator cartridge would have filtered. I do not buy the cartridges. $22 a month — 72 cents a day — and I want you to hold that number. A fume extractor that would have pulled the manganese away before it reached her line of sight costs $2,500 plus 500 a year in cartridges. I did not install it. I kept the 72 cents a day. I kept the gap between her fourteen‑fifty and the $19 an hour a younger hire would demand with a health plan and a floor where she could see through the air at two in the afternoon. The railing on your porch this morning — the one you touched coming back from the car — Delia cut, bent, and welded every scroll of it, and she did it without a respirator, and she does not know what her lungs look like.
“Has the potter no right over the clay, to make out of the same lump one vessel for honorable use and another for dishonorable use?”
— Romans 9:21
The apostle was describing a potter. The potter does not ask the clay what it prefers to become. He makes one vessel for honor and another for dishonor, and the clay receives the shape without objection because objection is not in the nature of clay. When the market is tight, the dishonorable vessel gets a marginally glossier glaze — a signing bonus, a three‑percent raise the employer calls “competitive.” When the wheel presses harder — and it always does — the glaze is the first thing the accountant removes. The NFIB is documenting, in quarterly increments, the precise moment the shine comes off.
The apostle Peter wrote, “Slaves, be subject to your masters with all respect, not only to the good and gentle but also to the unjust.” That is 1 Peter 2:18. He was pricing a different kind of service in a different kind of household, but he understood the structure: the master’s character is not the worker’s concern. The worker’s concern is the work. $22 a month is a respirator. I chose the money, and the apostle did not forbid it.
The households will adjust. They always adjust. Marla will skip the tire rotation. The boy will wait another summer for the car. The seventeen‑year‑old will take a shift at the gas station, which I also own through a holding company, and which will pay him eight seventy‑five because that is the state minimum and the state minimum is the floor the market would lower if the state permitted it. The household will cover the gap by spending less on everything that is not a bill, and the economy that depends on households spending on things that are not bills will contract by exactly the amount I did not hire, and I will call that contraction “headwinds” on the next quarterly call and my investors will nod, because “headwinds” is the word we use when the demand I starved stops showing up.
I have not traced where the demand goes. The scanner reports throughput. It does not report what Marla stopped buying. The quarterly number is the best it has been in 3 years, and I am, on the whole, content.
You bought an outlet strip from my warehouse. It arrived in 2 days. The speed cost me nothing, because Marla’s missing coworker was not replaced by a machine or a robot or even a better algorithm. The coworker was replaced by Marla’s willingness to carry another route for the same wage. That willingness is the margin. That willingness is what the NFIB index measures, when you read it the way I do — not as a survey of plans, but as a confirmation that the correction is landing.
Thank you for your business. Marla thanks you too, or would, if she had a moment between picks. Delia will clock in tomorrow. Her lungs will not be on the ledger. The railing will hold.
Sterling A. Varice holds the Hayek-Friedman Chair and serves as Dean of Instruction at Warden University’s College of Business and Economics in Richmond, Virginia. He is the author of three textbooks: Divine Mandates for Labor Utilization, Social Obligations for Profit Maximization, and Calibrated Deprivation: A Manager’s Guide to Employee Motivation.