https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_...

An enterprise which cannot pay the full cost of its inputs isn't an economically viable activity. It's a charity benefiting its owner.

    (1) insufficient wages (per Adam Smith) as set by private enterprise

    (2) private enterprise usage of services/infrastructure as provided by government above and beyond their share of taxes

So, between Walmart (or MacDonald's, etc.) and such employees, who is the beneficiary of charity here (at least in the Adam Smith sense)?

Now, if they were directly contributing to an increase in public funding, then we might wish to discourage that. But if they wouldn't hire the worker, they would necessarily be paid less or not at all (else they would quit; abstracting away from inefficiencies which may make this inaccurate). So Walmart's decision to offer a wage that's the best the worker will get, yet is not livable by itself, still benefits the government, because otherwise the entire cost falls on the government. Mandating a minimum wage, and letting those workers become unemployed, just makes things worse.

Of course, this assumes that increasing the minimum wage leads to a decrease in jobs, which is itself controversial.

I'm not sure what you mean by "My point was the reverse" - "public good" is not charity I guess?

I'm trying to wrap my head around how a less-than-living wage is a necessity for certain kinds of industry to function profitably, and that, furthermore, indirect government subsidies to them via handouts are essential enablers. Is it that consumers perpetually undervalue the products of retailers and restaurants? Or is it that without the subsidies many retailers and restaurants would face much "pent-up demand" (as economists may call it)?

Frankly, for money to have any meaning to it, this situation must somehow have a cash-flow that at minimum breaks even. I.e., if these industries are gainful, that gain should somehow be reflected in the tax revenue back to government, the compensations to executives, the dividends to shareholders, etc. Which means if this is a good deal for the government, does it at least breakeven on the handouts it has made? Not sure if that is happening - there's certainly plenty of think-tank whitepapers available that declare social programs as unsustainable (e.g. http://budget.house.gov/uploadedfiles/rectortestimony0417201...).

But here are some fun factoids: From http://www.marketwatch.com, I get for McDonald's a net income about $5 billion on revenue over $25 billion; for Walmart it's a net of $15 billion on revenue over $480 billion. marketwatch.com also shows revenue per employee of $60,507 for McDonald's, and $209,622 for Walmart. So there's money to be made in cheap food and cheap goods. So, let's see, a $5/hr increase for a 35 hr workweek and 50 workweeks in a year comes to a $8,750 hit to the revenue per employee amount. So maybe a 14% increase in the price of fast-food burgers and 4% increase in white socks?

So in light of growing government deficits, growing corporate profits (well, we'll see about 2016 - http://www.bea.gov/newsreleases/national/gdp/2016/gdp4q15_3r...), and reasonable (whitepaper-ishly anyway) suggestions on the unsustainability of the "public goods" collectively known as the "Welfare State", in this discussion on whether wages need to have some sort of mandatory minimum - well, what are we to make of this? Too many economically useless people?

And of course, doubling prices makes less sales, so doesn't double revenue, it might even reduce revenue.

Re reverse: you said "above taxes paid" for roads, which I didn't mean to imply.

Regarding your "break even" idea: suppose the most someone's labor is worth is $22500 a year. Suppose the minimum required to live is $30000. The government has decided that nobody should starve, and so any outcomes where this person starves are not to be considered. There are two options: allow them to work for $22500 or less, whatever the market will pay, and pay $7500 from welfare, or forbid them from working, and pay them $30000. I don't see how the second is preferable to the first.

So if you believe that raising minimum wage hurts jobs (an empirical question that has economists on both sides), then you shouldn't support.

The other model you could have is:

Value of labor is $30000, but there's so much labor available that the market will only pay $22500. Then, mandating a minimum wage does raise the amount paid, although it can still have negative effects elsewhere.

Probably both models are correct for different jobs, and the question is which one is more often correct. I'm also neglecting inflation, part time, disincentives to work, and so on.

As I understand it deficits have been shrinking. Where are you getting the growing stat from?

I wonder if we're starting to talk past one another. I'm just a layperson here, but I believe I got the meaning of revenue (http://www.investopedia.com/terms/r/revenue.asp) and net income (http://www.investopedia.com/terms/n/netincome.asp) right. So, revenue is all the money coming in, and revenue per employee really is all money coming in divided by the number of employees. If more money is needed to cover a wage increase, one needs an increase in revenue. Apparently, profit is sometimes synonymous with net income, and sometimes it means what's left of net income after taxes and dividends are paid. In any case, it is not impossible for profit to stay about the same while revenue is increased; that all is dependent on where you're at on your supply-and-demand curve on whether sales are terribly affected by a price increase. E.g., remember when gasoline approached $3.50/gal (http://www.statista.com/statistics/204740/retail-price-of-ga... didn't effect sales by much (http://www.statista.com/statistics/189424/us-alternative-and...). I'm willing to bet that burgers and white socks will move about the same.

>As I understand it deficits have been shrinking

I get where you're coming from, in the past few years deficits have decreased, and considering the mess that revealed itself months before President Obama's inauguration, one would certainly hope dramatic decreases would come and soon. However, I've been around long enough (ok, alive in the 1970's) to remember when deficits began to be so on the minds of people generally and be a general concern. Check out https://www.whitehouse.gov/omb/budget/Historicals, and http://mediamatters.org/research/2015/10/19/new-data-debunks.... Aside from several good years in the Clinton administration, it's been mostly deficits at substantial or significant levels. Pick a reasonable window of time between now and 10 years or 20 years or 30 years ago, and fit a trend line. You'll find the trend is still highly suggestive of increasing deficits (no matter if Obamacare makes these future increases smaller, https://www.cbo.gov/publication/50252 and https://www.cbo.gov/publication/49892 and https://www.cbo.gov/sites/default/files/51118-2016-03-Budget...).

>Regarding your "break even" idea

Yep, it's just my conjecture. But your counterpoint conveniently side steps on just how the government produces the $7500 in your example. Raising taxes? Issuing more Treasury bonds? Perhaps you could elaborate on this?

If that's the case, then Walmart could double their profit now by raising prices. I doubt this.

If you assume revenue goes up without an increase in costs, then yes, but there's little reason to assume that. Walmart carries millions of products, and to assume they can raise the price and not lose sales is wrong.

> But your counterpoint conveniently side steps on just how the government produces the $7500 in your example. Raising taxes?

I had in mind using taxes. I didn't discuss a shift in policy which requires a change in revenue, I was describing the end result. Government raises funds and spends it.

T-bonds are just spending future tax money.

>If you assume revenue goes up without an increase in costs, then yes, but there's little reason to assume that.

Well, let's review, and please check out my math below. I did some more googling and copy-pasted what I found.

(copy-paste:) Revenue is calculated by multiplying the price at which goods or services are sold by the number of units or amount sold.

Hence revenue is an amount independent of costs. Two ways to raise revenue, by definition, is to raise prices or increase sales.

(copy-paste:) Profit is a financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs and taxes needed to sustain the activity. Any profit that is gained goes to the business's owners, who may or may not decide to spend it on the business.

Hence profit (and not revenue) is the amount that is dependent on costs. Note that net income is often considered the same as profit.

Raising wages raises costs. Without a respective increase in revenue, profit is impacted.

(copy-paste:) Profit margin represents the percentage of revenue that a company keeps as profit after accounting for fixed and variable costs. It is calculated by dividing net income by revenue. The profit margin is mainly used for internal comparisons, because acceptable profit margins vary between industries.

For Walmart, quarterly profit margin is about 3.5% (https://ycharts.com/companies/MCD/profit_margin).

For McDonalds, about 19% (https://ycharts.com/companies/MCD/profit_margin).

So I was suggesting that increased labor costs could be balanced with increased revenue brought about by increased prices. For example, a 4% increase on a 10-pack of white socks that was $7.50 at Walmart is now $7.80. A 14% increase on a Big Mac that was $4.00 (http://www.fastfoodmenuprices.com/mcdonalds-prices/) is now $4.56. With some market research maybe we can figure out how many fewer socks and burgers get sold. But hey, at $4.56 a Big Mac it's still cheaper in the US than in Sweden and Norway (http://www.economist.com/content/big-mac-index).

An alternative to price increases is to accept a lower profit margin. Let M=Profit Margin, R=Revenue, C=Costs; hence M = (R - C)/R, straight from the definition of Profit Margin. We can show with some algebra that we can take R and C on a per-employee basis and M = (R - C)/R still works with per-employee numbers. Also, M = 1 - C/R. Via algebra, we can find the per-employee costs: C = R(1 - M).

Let W be whatever increase in labor costs to be considered (per employee).

Let C1 = C + W, the new cost from the increase in costs from labor.

Let M1 be the new profit margin after the more expensive labor takes it hit. Again via algebra, M1 = M - (W/R).

To keep the math easy, we'll consider a W where the hourly cost of labor increases $1 for the year (per employee): $1/hr 35 hr/wk * 50 wk = $1750. Now, a $5/hr increase to the employee would mean $5 plus FICA taxes etc. to the employer. So let's then consider a total increase of $6/hr of labor costs too.

For Walmart, then, every dollar to labor is a $1750/$209,622 hit to the profit margin, or barely one basis point (0.835 bps).

For McDonalds, it's $1750/$60,507, or 2.89 bps.

So if Walmart doesn't want to budge from their spot on their supply-and-demand curve (whatever that may be), i.e. doesn't change prices, then in absorbing an additional $6/hr labor cost would mean settling for a profit margin of 3.45% (=3.5 - 6 * 0.835 / 100).

And now McDonalds, for them it would be 18.8% (=19 - 6 * 2.89 / 100).

So how'd I do?

209k is revenue. Profit per employee is that times profit margin, which is around 7k. 6 times that $1750 figure is well above profit.

Or just take the 2 million employees they have, multiply by 8 thousand, and get 16 billion, more than their profit.

Redoing the math: Walmart, PM = -1.51% (=3.5 - 6 * 0.835); McDonalds, PM = 1.66% (=19 - 6 * 2.89). Clearly not tenable.

For the giggles, I then went I calc'd on price increases (putting aside supply-and-demand considerations) to cover $6/hr increase. PM and Markups came to 3.3% and 5% for Walmart; 16.2% and 17.4% for McDonalds. These are gross overestimations to be sure, since the approach is akin to giving every employee a huge wage boost, but really we need to know what proportion of employees would get the increase to meet some minimum wage level. Study at https://www.purdue.edu/newsroom/releases/2015/Q3/study-raisi... puts it around 4.3% for restaurants.

Anyway, plenty of good opinions on what we might see: http://www.usnews.com/news/articles/2015-12-22/minimum-wage-..., http://www.frbsf.org/economic-research/publications/economic..., http://evans.uw.edu/centers-and-projects/minimum-wage-study.

OK, this horse has been flogged pretty good.

And yes, this will automatically be around as much as the average company pays in taxes. If the total spent is equal to the total collected in taxes, then the average company has as much spent on it as it pays in taxes. The differentiation among companies/individuals is government picking winners and losers. Just like the fact that the wealthy pay more in taxes and the poor receive more means the government is picking certain individuals to have more spent on them. There's nothing wrong with that, of course, it's just what society decides.

"Taxes" is just the revenue column for society's ledger.

You're missing the point.

I also didn't make my point very well:

For the last 40 years, society's tax burden had steadily shifted from corporate profits to labor. In other words, people now subsidize business.

Now that corporations are people (too), it's unfair to exclude them from the opportunity to subsidize business.

Yes, and if the societal benefit to sociatal spending was less than the cost of revenue, then it's a net loss to society to have such a thing.

Meanwhile, I'm still chewing on two other notions.

"Taxes" is the government's way to stimulate demand for money. Kinda flips the model on its head, reversing the flow of information, which is not yet intuitive for me.

Taxes and procurement are just means to transfer wealth.

<quote>

Of the Expense of Public Works and Public Institutions

The third and last duty of the sovereign or commonwealth is that of erecting and maintaining those public institutions and those public works, which, though they may be in the highest degree advantageous to a great society, are, however, of such a nature that the profit could never repay the expense to any individual or small number of individuals, and which it therefore cannot be expected that any individual or small number of individuals should erect or maintain. The performance of this duty requires, too, very different degrees of expense in the different periods of society.

After the public institutions and public works necessary for the defence of the society, and for the administration of justice, both of which have already been mentioned, the other works and institutions of this kind are chiefly those for facilitating the commerce of the society, and those for promoting the instruction of the people. The institutions for instruction are of two kinds: those for the education of youth, and those for the instruction of people of all ages. The consideration of the manner in which the expense of those different sorts of public, works and institutions may be most properly defrayed will divide this third part of the present chapter into three different articles.

...

That the erection and maintenance of the public works which facilitate the commerce of any country, such as good roads, bridges, navigable canals, harbours, etc., must require very different degrees of expense in the different periods of society is evident without any proof.

</quote>

Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Book V, Of the Revenue of the Sovereign or Commonwealth. Chapter 1: Of the Expences of the Sovereign or Commonwealth

https://en.m.wikisource.org/wiki/The_Wealth_of_Nations/Book_...

I'm kind of a big fan of people reading Smith, actually reading and reading him, not simply seeing someone else's interpretation (my own included). It's a bit of a big deal.

https://www.reddit.com/r/dredmorbius/comments/4cyroa/adam_sm...

What is the difference between roads and welfare, in your understanding?

I'd suggest reconsidering your scheduling priorities.

Think about high school kids trying to get a summer job. They don't need to survive on this wage, they simply need something productive to do over the summer.

Should my business be required to shell out $15/hr for a high school kid, when the value of his/her labor is way less than that?

[0] http://mobile.nytimes.com/2014/06/10/upshot/minimum-wage.htm...

Also alarming is that the unemployment rate for young black men (16-17) is 45% right now.

[1] http://www.bls.gov/web/empsit/cpsee_e16.htm

"People at or below the federal minimum are:

Disproportionately young: 50.4% are ages 16 to 24;

24% are teenagers (ages 16 to 19).

Mostly (77%) white; nearly half are white women.

Largely part-time workers (64% of the total)."

http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-mi...

The teens most likely to work are not in school, and thus they actually need a living wage.

Youth enrolled in high school had an employment rate of 18 percent. This is down from 36 percent in 1995: http://www.childtrends.org/?indicators=youth-employment#stha...

And, again, the youth working while in school are more likely to come from lower socio-economic strata. They may in fact need that money.

And is that a good thing or something we should try to reverse? Employment has a ramp-up like anything else.

Trying to create a total order by comparing the two alternatives goes down a bad road. There's always someone in need, but if you try to optimize the entire economy around that one story, you will have a disaster.

Maybe it's best to just have more jobs, period, even with low pay? And then make up for needy cases some other way?

Why should that be anyone's responsibility but the company? Why should my tax dollars be used to subsidize some greedy business guy who can't be arsed to pay their employees enough to live on?

HTH

http://www.dir.ca.gov/dlse/faq_minimumwage.htm

A high school kid making money regardless of his family's wealth is making money as a supplement to what the parents or guardians should already be receiving from the government or otherwise, assuming they aren't emancipated but that is a very special case. If the parents can't afford to meet the basic needs of their child despite how ever much welfare they receive then why should the state allow for a child to remain in that home?

There are frequently waiting lists, restrictions (my favorite is disability, where you are not allowed to work, but are given barely enough money for yourself to live on), and miles of red tape associated with government subsidies. There's also the very real cost to the pride of the entire family associated with these subsidies.

> why should the state allow for a child to remain in that home

Because moving a child is incredibly traumatic for the child and expensive for the state?

I pulled my (small) suburban cities budget which is a many hundred page long PDF and parks and rec runs 40-something neighborhood city playground type parks and 2 pools on 2.3 million total per year. Of which staggeringly only 1.5 mil are wages (we live in a rough climate, maintenance costs are high, over $100K spend on electric bills alone, etc).

On the revenue side the two public pools combined pulled in about 1/3 of a million from fees collected at the door. Its pretty cheap compared to commercial entertainment (movie, restaurant, etc), they could certainly charge more without excluding too many people, given how much it costs to live here.

I know from experience that they have a couple kid lifeguards at each pool all the time so lets say 10 total staff at all instants (LOL no) at $15/hr for 10 or so hours per day (LOL no not open that much), open about 100 days a year (LOL no they'd be ice skating in the spring on the pool if that were the case), if I multiplied this out correctly in my head, at $15/hr, the kid lifeguards cost $150K/yr while bringing in $340K of revenue. Note that I don't have the misfortune of living in CA, so the actual cost of a seasons lifeguards at the two pools is more like $80K.

The cities very gross profit margin if by a miracle pools were free to build and maintain, just revenue divided by kid labor, is roughly $340K/$80K right now and if the min wage were $15 it would "collapse" to $340K/$150K which still ain't bad.

Honestly I suspect the pool spends more on chlorine and electricity than on the kids labor.

The capital cost is no laughing matter. The most recent ADA compliant complete remodel was something like $2M which for that one pool is roughly a decades revenue.

This quick analysis leads to the conclusion that open hours for the pool are insanely profitable, and the "pool biz" is overall dominated by capital costs. The kids pay is irrelevant.

Yes. Otherwise why would you hire the someone who actually does need to live on that wage?

Minimum wage is stupid - if you need people to get a higher income than the value they can output, you need to supply that additional income through social grants. Forcing them out of work by allowing robots to undercut them is idiotic when they are willing to work.

Just so I can understand your argument better, can you elaborate this a bit more? How do you measure their output? How do you arrive at the dollar value?

This is what it means to run a business, to ask and answer that question and act upon the answer. If you answer correctly in a sufficient number of instances, your business succeeds and you are profitable. If you answer incorrectly in too many instances, your business fails.

A minimum wage puts a floor on labor costs and that will be an added constraint in the business model. For some business models, that added constraint may make the business unworkable. For others it may mean that prices need to be adjusted, or the number of workers and/or the type of worker hired needs to be changed. Perhaps it means changing the hours the business is open to manage staff costs. Maybe it means purchasing a machine to eliminate a worker because now the machine is cheaper than the worker whereas before that wasn't the case.

If you have an opportunity to talk to a small business owner that employees part-time, close to minimum wage workers, ask them what they have already done to adjust and what they intend to do. The affordable care act has already forced many employers to cut hours to their part-time workers to avoid the extra fees that kick in at 30 hours. Many employers will implement changes to their staffing long before the actual minimum wage change kicks in. This is called "running a business", which means planning ahead.

Empirically, it seems like the same is true at the bottom of the income distribution ([1], [2]): if you give someone food stamps or cash assistance, they're less likely to work for the same wage. Means-testing the benefits makes the effect stronger, since the phase-out of benefits is equivalent to an additional tax and high taxes also discourage work.

[1] https://www.economy.com/dismal/analysis/datapoints/253947/Go...

[2] https://www.cbo.gov/sites/default/files/112th-congress-2011-...

This would be the perfect system, but the current system is that the difference between the maximum employment wage (low) and minimum wage (high) is paid by the company, not the gov, causing unemployment.

A negative income tax is the preferable system here.

I don't agree, and I'm not sure why people would see employment for its own sake would be a good thing. I want to increase some of the things that employments brings (purchasing power, a sense of purpose, etc...) and not others (loss of time, feeling trapped, etc...).

Mostly bringing people outside of productive society inside it. Homeless, unemployed, addicts etc.

This is not about making middle class college graduate parents work more.

Going daily to a workplace, helping out as part of a team and being useful are essential to becoming a productive member of society.

This is hard for us college educated middle class people to grasp, but many people have grown up without knowing anyone with a regular job and need to get eased into the basics.

I feel[1] like lowering minimum wage below livable levels would require some type of basic income anyway. Am i wrong?

[1] I say feel, because i'm uneducated in these areas

In terms of social benefits, not all employment is equal. We could hire all un-employed people to move rocks back and forth, but that won't contribute to society anything that simply giving those people cash for nothing wouldn't solve just as well.

There are two separate goals we are trying to accomplish, and traditionally they have both been solved through employment - the need for productivity and the need for resource allocation. If you want to keep trying to meet both goals through employment (instead of meeting the second one through something like basic income), then we need to make sure we continue to address both needs.

I absolutely want to see basic income tried and tested in all its various forms and iterations. I think it could be the solution to the convoluted social benefit policies which are too complicated to be navigated and too specific to generalise well.

And of course I agree that unproductive employment is worthless to society in the long.

Realistically, for people with disabilities that aren't being able to be in the regular labor market, there are some societal useful things to do, like volunteering(say in a soup kitchen), helping their community,etc. Those are probably activities that wouldn't be done otherwise, carry a real sense of value, and usually in a custom fit environment.

That is the situation at least in enlightened places with decent government services. I'm not sure about the US.

I wouldn't want that to be replaced with people at the margin being exploited at a shitty factory , where the work is meaningless and often depression inducing, sometimes risky, etc.

And it's not necessary a factory. It's not hard to create awful work environments.

Back in the 70's and prior, mental health facilities were barbaric. "One Flew Over the Cuckoo's Nest" brought to light these travesties, and many were shut down.

Later, republicans then shut down more by defunding as well. What effectively happens is people are shunted to other communities where better services are offered. Lookup "Greyhound therapy", where city govt's pay for bus service to 'somewhere else'.

Now, the primary caregiver is the penal system. And remember, we still do not have single-payer medical, so unemployed/homeless are still without.

Robert Kennedy even spoke spoke out in public against the facility (his sister suffered a bad lobotomy requiring full time care). Many kinds of institutions closed in the 1970's, and for good reasons.

With that said though, mentally ill homeless can be a challenging problem. Many of these ill "fell through the cracks", and even if a program was offered for them, they don't have the capability to seek out said program.

Mental health is a definite dark spot in America.

When they aren't able to work, it's usually because they're extremely disruptive, unable to cope in a work environment, and/or profoundly disabled, and volunteering in a soup kitchen/helping the community in lieu of "a job" probably isn't going to work out so well. It would be more of a burden and resource cost to have them monitored and supported than the benefit received by the organization. Instead, they go to day programs that have job training (if possible), therapy, and more one-on-one support in a dedicated environment. Volunteering is definitely available if they want to do that, and are able to, but it's not really a "oh, if they can't make money, we'll have them work for free" type of situation.

And, you know, of they are doing useful work, maybe they aren't relevantly "disabled" to deserve a lower wage

"Increase employment" is targeting the wrong measure.

It's true to a certain extent in current society (speaking from the US anyway) due to our relationship with work: one's job is seen as their value to society, while meanwhile it's very common (I daresay normal) for people to spend their time doing jobs they don't like and don't inherently care about, working just to keep employed. In such a system if someone no longer needs to work, they've "won" the rat race. They no longer have a debt to pay society and they can lie on the beach until they rot. I would not call this a healthy attitude, but it's my sense of how our society feels about work and "leisure". Other systems are possible.

Basic income is one way we could change the equilibrium; a BI high enough to provide a decent quality of life would alter our relationship with work in several ways:

- jobs no one wants to do would have to be made worthwhile. If people had the option of not working in Walmart, you'd have to pay them a whole lot more to keep doing so. On the other hand, you can attack it from the other side and make the low-skill jobs less soul-sucking: even mopping the floors in a huge supermarket wouldn't be so bad if say, the employees own the store, they know each other, and have a sense of community; they are not jumping through the require hoops to receive a paycheck but doing something that needs to be done for an organization that matters to them. I've met a lot of people who could be satisfied washing dishes their whole working lives, if they had a sense of financial security and employers that treated them respectfully. One thing these people have all had in common was they were involved in their workplace as a community. So I don't think unskilled labor is inherently abhorrent to the human psyche, I think a lot of people, given the choice not to, would still do jobs currently considered menial if the other things about doing that kind of work environment didn't suck.

- it tames the specter of Unemployment. To put this in a HN perspective, think of the holy grail for tech startups: Venture Capital. Speculative funding enables people to work on creating something, yet still be Employed while the project is not yet earning significant revenue. There's a cost of course: a lot of the project's profits go to rewarding people whose main role was having the money (and knowing what a potential good idea looks like, to be fair). It's a great system, it really is; what we've created in it is impressive. But I think BI would make things simpler for many startups; bootstrapping becomes potentially much easier than spending half your time chasing funding, when the members of the project already have a secure income and can focus on making something. Of course, it's much more general than tech startups; there are many things not being created (some of which could actually sell very well) because the would-be creators are "earning their livings" (what a concept!).

- more generally, it reduces the need for an employer. Businesses have been becoming increasing agile and fluid as employees become freelancers due to massively decreased friction in the business-to-business markets thanks to the ability to collaborate online, from anywhere in the world. The largest barrier remaining keeping many people from working for themselves is risk; an employer offers steady wages. Even if finding one's own contracts would pay more than doing the company work, volatility is rightfully frightening in our economy.

So yes, having a sense of purpose is very important. But the necessity that that purpose be "following the commands handed down from The Man" is only an artifact of traditional thinking about Life vs Work. I think we would tend to find more, not less, meaning in all the time we spend working under a BI system, since it gives people the power to do work they care about and employers the mandate to make their jobs jobs worth caring about.

What is the correct measure? Sounds like you are arguing for wealth per capita or total wealth.

Even still, wealth per captia is (productivity) * (employment) / (population). Ignoring time.

So even if I agreed with you, more employment is still a good thing even under your 'correct' measure.

Making things, having some purpose, giving back to society, ect are all very rewarding things.

Tying this in to our own economy, this is what Bernie and the Unions miss (or perhaps they don't). A min wage increase of 50% will entice low skills Americans who were on Snap to enter the workforce, driving out foreign low skills workers.

And I agree with the increase. Too many of our workers possess too few marketable skills that jobs once the province of teenagers and part times have become the jobs for many adult household earning Americans.

So I guess you're arguing that your "low skills Americans who were on Snap" are a) higher skilled than foreign low skills workers, b) unable to find work that pays what they feel they are worth, which is at least 1.5 x $MIN_WAGE? I also don't follow this; if they can't get hired at 1.5 x $MIN_WAGE now, what will make them hireable at that wage in the future?

Two low skilled Americans have an advantage in English language skills and for a significant portion of foreign workers, work eligibility.

Therefore, either we raise wages for our low skills workers, or we provide a sliding scale of basic income dependent on work history, self-improvement aptitude, volunteering, etc.

And? Why is that artificial increase a problem. Every law on the books is an artificial act.

I don't see many people wringing their hands over the mortgage interest deduction, another of those artificial changes to the economy.

Laws do have to take into account things like physics and economics. The latter is the study of scarce resources that have alternative uses and specifically addresses things like the cost of labor and the affect of artificially manipulating it.

From a practical standpoint, it feels like for a time that capitalism seeking local-optima was perfectly ok in that the efficiencies gained were lifting society all around - and it still seems that way in the world at large.

However, in more mature economies it seems like a different discussion needs to be made because the business actions seem to be divergent from the interests of society - optimizing on the same financial metrics seems merely a shell game of keeping a larger share of the production -- to the point that there is little to no growth in value to most of society.

Economics is not even remotely similar to physics in any respect.

Whether or not you agree with that answer, shouldn't that answer be the part you respond to, instead of deliberately misrepresenting what the poster you were responding to was saying?

A basic income provides the opportunity for people to find healthy, fulfilling things that do not pay money.

I'm absolutely OK with some types of paid work going away entirely. Our society leans too heavily on the ability to pay someone else to do something at a rate that is usually more than we would like to pay and less than we would like to make. It is essentially a way of saying that we are more important than other people and that's lame.

Food delivery, for instance, is convenient, I take advantage of it, but I tip far more heavily than most people, and I could live without it. Some people who deliver for a pay service today may end up, with basic income, volunteering for meals on wheels. That's a better allocation of society's potential energy than to bring me a burrito when I don't feel like leaving the house.

That doesn't mean the work (the individual is capable of) is valuable enough to justify the position, in the locality.

These are all tradeoffs that we decide to make.

The difference in popular discourse is threefold: the mortgage interest deduction is less of a blue/red team tribal marker; it isn't as morally charged an issue (the arguments against it are more economic in nature than moralistic); a disproportionate number of the people who would be complaining about it are homeowners themselves and therefore heavily incentivized to keep it around, regardless of its economic effect.

I actually prefer zero deductions for anything, for all people and entities. Here's the rate: pay it. If you're below the line we draw, you don't have to pay.

What if your business worked in such a way that a single employee wouldn't even produce $15 of revenue in an hour? You can't lose money on every sale and make up for it in volume.

The artificial increase is a problem because it goes against supply and demand, which is a natural law of economics.

The difference between renting and owning is income, savings rate, and lifestyle. If you can't afford to buy, you either don't make enough or don't save enough. It's the down payment that separates a lot of renters and buyers. If you are arguing homes are expensive, I'd argue that $15 minimum wage isn't helping.

Mortgage interest deductions may be bad policy, but it doesn't "tax renting." That's asinine.

That those other buyers are willing to pay a higher price affects the comparable sales, the appraisal, the "Zestimate [haha]", the willingness of the seller to select your offer, etc.

Then, assuming you did have a mortgage and qualified for the deduction (most people with one home do), you paid less (net) for the loan than you would have otherwise.

A quick google search doesn't produce results that suggest that removing the deduction would reduce housing prices to the point that people in this thread are saying. Here is just one example that states it would reduce prices by 0.3%: http://www.taxpolicycenter.org/taxvox/what-changes-mortgage-...

Reading two sentences further from that same article you linked: "completely eliminating the mortgage interest and property tax deduction—a drastic change that probably would only happen if accompanied by a new tax preference for housing—would cause housing prices to fall by an average of 11.8 percent in the 23 cities studied. Estimated price declines would range from 10.3 percent in Seattle to 13.8 percent in Milwaukee."

I'm not using the tax deduction as a "strategy for paying my mortgage". I did figure the savings from the tax deduction in modeling my budget, the effective cost of housing, all of which influenced my bid(s).

I'll try a different tactic for the explanation: What effect do you think the mortgage deduction has? Does it increase your disposable income?

Also, if a self-employed business traveler knows one can deduct the cost of hotel, flight, and meals (partially) spent during a business trip from income for calculating income tax, does that affect how much that traveller is willing to pay versus similar categories while not traveling for work?

If you are suggesting that mortgage interest rate deductions are fueling another housing bubble, then we are about to witness another amazing sub-prime real-estate crash.

Considering I just purchased a new home under the new underwriting rules / regulations, I can assure you that this marginal deduction is not qualifying a huge number of home buyers to the point it makes a difference on the price in comparison to the rest of the home market environment.

I am merely pointing out that a subsidy that applies to everyone in a market naturally drives up the price by a similar amount. It wouldn't fuel runaway growth, but neither does it help 'affordability'.

I suppose that means I don't trust you?

It's very, very, very, very simple. You could afford $500k without the interest deduction. Let's say the deduction helps you afford a monthly payment on a $550k mortgage. Now you can afford $550k. The same is true of all other potential buyers of the same property. Guess what, a $500k property just became a $550k property.

I didn't ask you to trust me, I didn't say anything about "more recent trends," I didn't cite it as a cause of the bubble, I didn't mention dinosaurs.

I merely said I don't see how the mortgage interest tax deduction actually helps anybody, because it causes prices to rise accordingly.

You would prefer $7/hr instead of $3/hr, but you would prefer $3/hr instead of $0/hr.

I would prefer that my employer met the minimum (non-US) legal requirements for salaried employees, but the literal threats of violence and permanent unemployment should I complain to the government, have kept me on up to $5/hour less than minimum wage - without meal breaks, public holidays, and weekends - all in breach of the law.

Unethical law-breaking employers abound in my country, and many of the wealthiest have political contacts that mean they can get away with a lot. Having a minimum wage gives them something to dance around but if that disappeared things would get a lot worse: I would most likely find myself working for something nearer to $5 an hour.

This (small) city alone has a median wage that sits about 25% under minimum wage on paper, but if you started really looking into it you'd find that the paid hours don't match the hours worked.

No matter what your theories about minimum wage and the market say, you'll find that pragmatic side of having a minimum wage has a major positive impact on employees by providing some restriction to what employers can get away with.

If your situation is so extreme as to involve threats of violence, then it is non-negotiable that you need to remove yourself from it, even if it means facing grave and dire financial hardship. The psychological damage of an employer threatening you is worse than the damage of financial ruin or uncertainty.

Also, on one hand you are claiming that minimum wage laws are beneficial, but then you're also saying that the political favoritism of your country allows those laws to be basically ignored (as in your case) with no consequence.

To me, your comment is much more about ensuring legitimacy of government and enforcement of laws overall, and is very much unrelated to minimum wage at this point. Only after the enforcement of those laws is legitimized can you then begin to ask questions about what is the actual human effect of the law.

Finally, I'd like to point out that I already said this type of reasoning (the argument that minimum wage denies opportunity to those who would agree to work for less) is overstated. I understand the economic rationale in the ideal case, and I was explaining that case just to clarify for the OP that I commented on ... not positing it as a robust defense or anything.

Here's my other comment if interested: < https://news.ycombinator.com/item?id=11424743 >.

Conditional welfare perpetuates it also because people are afraid to take a job and then lose it.

I'm ambivalent about a minimum wage. I think the arguments about the imbalance in negotiating power have some merits, but the GP answered your question about why it is a problem with their next sentence, it likely makes some productive tasks uneconomic.

I think it's important to try to characterize the actual economic impact of a minimum wage though, just pointing to the expected negative marginal effect isn't a very useful argument.

I feel like a lot of the people who think economics is all terrible nonsense start off with macroeconomics (and maybe never get to microeconomics because of it).

Same with the availability of cheap loans and grants for colleges - it only really serves to increase the price of an education.

>it's no longer worth it to an employer to hire a low-output employee

I don't think we do. Employment is not a good in and of itself, and a person who is working is not necessarily in a better position than a person who is not. People working for a wage that doesn't support their needs (which then has to be subsidized by the government) are just vehicles for transfer payments from government to garbage business.

> because there are huge benefits to being productively employed.

To make your assumptions explicit here, if you value employment for employment's sake, anything that maximizes the number of people employed is good. Why not negative wages? I suppose a full time job that pays less than it takes to feed and house a person and has to be supplemented with welfare in order to do so is a sort of negative wage...

That's the point. A floor. Through which people should not have to work below at.

If you want to avoid bad bosses you need to learn a skill that makes you highly sought after or be self employed.

Usually the people who need worker protections the most are the ones being abused the most, for the same reason: they are poor and have no other choice. They have no union and their cases are usually too small-fry to be worth it.

>If you want to avoid bad bosses you need to learn a skill that makes you highly sought after or be self employed.

Ha! Good one. Now let's all gather around a campfire and talk about how our tech giant/startup employer had us working insane hours because "crunch time" or "demonstrate culture fit". You can even add your own! Don't forget to mention prohibitive cost of living in tech hubs and the mountain of student debt you accumulated so you could have a "skill that makes you highly sought after." :)

Not everyone needs a 100k CS degree and to move straight out to San Fran to be useful or productive and there are plenty of things someone can do (plumber, electrician, skilled trades of whatever kind) without shelling out 100k for a degree.

If workers leave walmart to live off of basic income, all walmart has to do is increase prices and workers would again be forced to work for basic sustenance, as they would no longer afford walmart's monopolized goods. If they live in a left-leaning or urban area, they may be lucky to have a food co-op, but those are already unlikely to be paying bare minimum wage, and are generally located in more expensive areas.

At best, UBI will totally ineffective. At worst, few will capitalize on it early on to reach some success before the market adjusts, and the Koch/Cato ilk will use that success to further push an anti-labor agenda until the system implodes again.

I was all for UBI when I first heard of it, but more and more I realize it's just another neoliberal economic policy that fails to address the root causes of class division. Perhaps it will be our decade's "microloan" scam.

Walmart is not the only retailer in the United States. You're positing widespread collusion on the part of everyone who sells goods and services. That or you're just describing the effects of inflation in a roundabout way.

What are the root causes?

I'd imagine that companies would make MORE profit in a world with UBI because more individuals have more disposable income to use on their products.

Would they raise prices? If so, how do we make it work?

And employers should focus on automating those low productivity tasks.

I'm not going to consider the case of people with disabilities - that's fine to have an exception for them. But that's not really what's being discussed in these debates.

I actually think the market wage is socially inefficient because it encourages people to take the short term gain of immediate cash over the long term investment of training/education. It also encourages employers to forego efficiency-enhancing improvements.

Now if humans were rational, 100% responsible, and conscientious, then they would forego low wages, focus on training to achieve higher levels of productivity and enhance the economy by doing so. Instead, there are many people who either through their own lack of judgment or unfortunate circumstances do not seek to optimize their marginal productivity of labor.

That's a market failure and minimum wage is one attempt to solve it.

Nope. Increasing good employment is a good goal; jobs which pay near minimum wage are not that.

Bloomberg don't talk about land value tax. They are happy to talk about basic income because it's not real change.

But overall, many types of business have an inefficient profit surplus right now that should rightfully be eaten into by workers claiming more share as wage.

I also think there is a genuine moral argument to be made that society, in some cases, should intervene when a person believes they are willing to sell their labor at an unsustainably low price. It's not quite right to characterize a minimum wage as "denying" them that "opportunity" as much as it is saying that the "opportunity" itself is unhealthy, unrealistic, and a person's reasons for choosing it almost always involve forms of coercion that cannot be dealt with as effectively if the person gets locked into believing they actually must provide their labor so cheaply.

Incidentally, this is perhaps the most common thing I hear about the minimum wage (that it hurts employment due to marginal employment reduction on behalf of employers). A lot of people seem to think it's counter-intuitive and that it somehow shines real economic theory on everyone's pie-in-the-sky dreams of egalitarian wages or something. But really that's not true, this argument is extremely common and is brought up in almost every forum or discussion about minimum wage, whether it's just a bunch of nonsense troll comments on a YouTube video or in a place with a higher signal-to-noise like HN.

It always makes me do a double take because I don't want to end up regurgitating what is effectively "sponsored content" from wealthy libertarian types who spam out this message to ensure it trickles down to all the conversations about minimum wage. Like I said, I mostly agree with this, but with some reservations.