Ill respond to this.
My answer to your question is simply 'It depnds'. Many factors come into play when confronted with a 30% increase.
Before I get started I need to point out one major flaw in your question. 99.9999% of the time, a 30% increase in labor costs does not equate to a 30% increase in business cost. This could only be possible if labor was your ONLY business cost. So Ill split it with you, and assume that a 30% increase in labor costs equates to a 15% increase in my overall business costs.
My answer is, as I said earilier, 'it depends'. But option 4 is the most likely way I would deal with it. I would also add more scenarios to option 3. I would include attempting to renegotiate with my suppliers and vendors.
Another issue I take with your question is that you seem to forget that the sole propietor/businesses in this very industry deal with this scenario just about every year.For example, MSO requires contractors use the latest and greatest tester. Tester costs $2000. For many cable contractors $2000 can end up being about 15% of their net profits. So you seem to be trying to say companies cant stay in business if they take a 15% hit, and I think thats not true.
Now I have a question for you. Why shouldnt companies be expected to take the 15% with pride like so many of the cabldawgs? Why shouldnt it be expected for the suits to LOVE their industry so much, that they will be willing to CONSTANTLY take 15% hits and just deal with it just like they expect their workers to do. If the suits want to be labled as 'job creators' then why should they worry about eating 15% hits, as long as they keep people working. Trim 15% from the top and everybody keeps a job is an option.
Am I lying when I say jobs, hours, and pay are cut even when profits go up? Have you noticed that when companies move over seas and get a 80% discount on labor, that the consumer never sees a 80% reduction price. Don't you feel these are the questions that need to be answered, instead of trying to figure how companies will deal with the things that everyday Americans deal with on a constant basis.
If its not too difficult for HS educated installers and linemen to constantly deal with, you would think companies ran by MBAs and such could figure this out, and figure it out in a way that has minimal impact on the workfore. Thats is, if they wanted to....hence another reason my answer to your original question is 'it depends'. Because a lot depneds on the mind set of the company in question.
But to imply that the only way to deal with this would be to cut jobs, is simply not true.
Re: Answer For the Tree Man
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