There are also benefits to paying more salary than your competitors (no hiring shortages, best employees, low turnover, etc), so I'm not going to blindly accept that it's now in Amazon's interest to drag the rest of the industry along with them.
But even if I did, there's absolutely no guarantee that this kind of lobbying would ever work. And if it did, it could be decades from now, $0.50, or both. In the meantime, Amazon has already put their money where their lobby is.
They did the exact same thing with sales taxes for online purchases: When they were up-and-coming they fought it. Once they had warehouses in the states where most of their business comes from, they supported legislation to force online sales tax since they had to do it already anyway.
Like others said though, at least this move will benefit workers.
Let’s also not forget that while Repubs have traditionally been pro business, Dems, since the 80s have also got cozy with business and get humongous donations from corps —something which was not the case pre 1980s.
> Let’s also not forget that while Repubs have traditionally been pro business, Dems, since the 80s have also got cozy with business and get humongous donations from corps —something which was not the case pre 1980s.
I don't intend to engage on "x is better than y." or whataboutism comparing political parties. It is simply a valid observation that republicans are more likely to be against raising the minimum wage, so it would follow that if Amazon is only doing this in the hopes that the government will raise it anyway and other companies would have to pay more, it would be an absurd risk to take.
Higher compensation is done out of the desire to attract and retain better workers.
If Amazon started paying unemployed people or giving them gift cards to buy things on Amazon, then it would be charity.
Is this cynical, or good move on the part of Amazon? A little of both. It is a smart long-term profit move for Amazon. But I would also say that overall would be great to spark a trend where companies compete via both smart capital investments to raise productivity, and being willing the share the benefit of rising productivity to employees as a tool against competitors.
Middlebrow dismissals are a hacker news staple.
http://www.byrnehobart.com/blog/why-are-middlebrow-dismissal...
My guess is that from Amazon's point of view, they are winning political points by not just raising their own minimum wage to $15, they are also using their standing in the industry to increase quality of life for non-Amazon minimum wage workers. If they succeed, I am happy to grant them the credit they are due.
If a big corporation doing the right thing results in more profits for them, I don't see that as grounds for criticism. Did we criticize Starbucks when they offered a competitive wage and free college education? Or any of the other companies that chose to pay above the minimum?
Remember that the velocity of money makes it a non-zero-sum game.
EDIT: Ends up that Wikipedia covers this nicely:
https://en.wikipedia.org/wiki/Minimum_wage_in_the_United_Sta...
"The interconnection of price levels, central bank policy, wage agreements, and total aggregate demand creates a situation in which conclusions drawn from macroeconomic analysis are highly influenced by the underlying assumptions of the interpreter."
Also has a nice side-bar quote from Henry Ford, who was partially known for higher wages, and which I think addresses the point I was trying to make (emphasis mine):
"The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One's own employees ought to be one's own best customers."
Worst case for Amazon is they maintain status quo by forcing competitors cost up. Best case for Amazon is that they drive some of their competition out of business, or take some of that business because super giant Amazon is better able to absorb the increased wage cost than smaller businesses.
It is very much like their state sales tax collection strategy. Oppose it for as long as possible, accept it, then lobby for everyone else to have to do it.
There's no doubt labour is better of in the short run with double wages. I would not doubt the effects in the long-run but that's part belief. The market structure will change, less capital intensive firms will drop out. That might be brick and mortar stores (note: bricks are capital but bricks are not really productive in the sense meant above).
Want to give low wage people an actual pay raise? Cut federal payroll taxes since those affect workers equally as they are percentage based.
A $10 wage in Alabama is far more valuable than a $15 wage in Sunnyvale. And conversely, a $15 minimum in Alabama would be more catastrophic to a business than the same minimum in Seattle.
"For most firms, a threshold of $500,000 in annual dollar volume of business applies to be covered (i.e., the Act does not cover enterprises with less than this amount of business)."
I'd also argue that definition of "small shop" $500k threshold should change between California and Alabama.
Of course, if that's a significant general problem rather than a narrow edge case, the entire idea of market economics is a sad joke.
The argument that their relative competitive positions changes by first-moving on wages seems not in doubt? Obviously when the wages double for everyone the most capital intensive gain competitive power.
And CMIIW, I think increased minimum wage will increase goods price and higher skilled worker's wage overall, making those changes useless again.
It's just my 2 cents, with source limited from following recent news.
If they are doing it to look good that means they are doing because they value looking good in terms of ethics, if that is true then they are essentially acting in the right. They could have easily went to $9 or $10 to avoid government penalties.
It's easy to mistake cynicism for wisdom.
Because no matter how cynical or self interested, there's still the enlightened part. Doing the right thing for the wrong reasons is still doing the right thing, fwiw.
You really need to get out of your bubble.
A lot of us who understand economics genuinely think minimum wages hurt the poor, and think this can bring a lot of unemployment.
Skepticism of concentrated power is the ur-American political belief. We seem to have forgotten that lately.
Humans can be motivated by many things, profit and looking good included. I'm vaguely aware of a philosophical branch that postulates that all actions are selfish, but that ain't science and so I disagree. People will sacrifice their pyramid of needs towards s greater good, I've never heard of a company utterly scuttling profits over the greater good though.
On that note, in this case Amazon obviously is shedding profit for a greater good here, especially if they actually lobby, so in this case I believe they (particularly the people that made this decision) deserve praise.
(0)https://en.wikipedia.org/wiki/Vince_Coleman_%28train_dispatc...?
Reverse, Do you think that a company such as amazon should be paying their fulltime and part time employee a wage that requires government subsidies (that you and I pay for) to survive while enjoying the amount of revenue and profit they are receiving?
Yes, I do. I think most people misunderstand government subsidies when they make this argument. The idea that the company you work for is responsible for maintaining your standard of living is a weird one, that doesn't really come from any obvious moral principle. We, as a society, have decided that we don't want people to have a standard of living below a certain level. Therefore we, as a society, should provide the resources to ensure that that happens. If Amazon wants to come to those people and say "we'll give you $X/hour to do this task for us", and those people say "Yes", then I don't see any good reason for that to change the moral calculus of society at large, or for Amazon to suddenly become responsible for that person's general welfare.
On that basis, is the implication here that hearing anonymous and vague internet praise actually tips the utility calculus of the company in some way?
Because if not it's hard to know why anyone should praise them -- as opposed to acknowledging the decision, or silently mentally updating one's assessment, or not engaging with the news at all, or criticizing them for not doing more.
In aggregate, yes. You seem to be trying to reduce this to "who cares about silly comments on the internet", but of course, that isn't the point. The point is about where our moral sentiments ought lie, collectively. And yes, the rollup of all the individuals making throwaway comments on the internet actually do synthesize much of our collective worldview. So yes, I do think that anonymous and vague internet praise actually tips the utility calculus of all companies. If you don't, then you haven't been paying much attention for the last decade.
Motives matter.
They're obviously caving into pressure - from unions, social activists and Bernie Sanders.
>especially if they actually lobby
Which they'll do especially because they don't want to be put at a competitive disadvantage by companies who pay minimum wage.
You could say that and you would be right. Why should anyone praise you if your underlying motivations are self-centered? You seem to be asserting that this is fundamental human nature, however, which is a belief which has been refuted plenty of times throughout history.
You had as an unstated axiom that self-interested action are not praiseworthy. You still have not made an argument for that, though you have pointed out that a world composed only of self-interested action would be an unpleasant one (I agree).
However, using a more realistic understanding, where actions come from a multitude of motivations, why do you consider a given action's being self-interested to exclude it from praiseworthiness?
That's not actually true.. it's a caricatured straw-man argument, usually employed by people who want to attack Capitalism in the general sense.
Of course companies have to make a profit to survive; but not all companies ruthlessly optimize every single variable to squeeze out the last $0.0000001 of profit, regardless of the side effects. At the end of the day companies are made up of people, and even if big-shot CEO's tend to have more pyschopathic tendencies than average, they're still human beings. And they usually answer to boards, and are advised by other managers, who are also human beings.
Not saying all companies are noble, virtuous, and pure or anything. But hyperbole in the other direction is just as inaccurate.
I agree with you, though. The idea that companies have to be like zombies, mindlessly shambling toward revenue, is false. If a company acts that way, it was a choice on somebody's part, not an immutable law of nature. If somebody in charge decides they want it to act differently, they have that option too.
To say corporations are all bad all the time is bullshit. Likewise to say corporations are all good all the time is also bullshit. Like everything, there are pros and cons. Overall I think our capitalist economy does more good than bad. If it didn't, none of us would be able to be having this debate because we would be too worried about the next meal.
Clean water access? Paid for my government. Cheap and healthy food? Government subsidies. Energy? Government funds majority of research. Infrastructure was mostly inlaid by Government implemented New Deal/other job creation programs.
Corporations had little to no involvement in 'doing the work' here. Access to cheap/healthy food was before corporations were the majority of agriculture due to government subsidy. Energy is largely built on research which is largely funded by the government. The majority of interstate groundwork as it's been laid out today was started by the government's roadbuilding job-creation programs.
While large legal entities may have their benefits, one shouldn't subscribe undue merit to them in the pursuit of attempting to dissuade undue chagrin.
There is no such thing as altruism: everyone has their agenda.
FFS -- it was shaming of amazon's pay rate for their employees that caused the change in behavior in the first place.
I think it is rational to look at what and why actions were taken. Do you believe that the raise of the minimum wage at Amazon was out of good nature? Was it a decision to mitigate brand perception costs against labor costs after a bunch of national stories reported that they were paying so little in markets that their workers were forced to also take government subsidies while they have had their most profitable quarters ever? As far as the push to get the minimum wage raised -- is it not a reasonable view that it is in amazons best interest to further reduce the reoccurring labor costs effectively by ensuring their competitors are also forced to match their labor cost?
The bottom line is if Amazon (or any company for that matter) wants to treat their employees better than the minimum wage -- they were and still are able to do so. Amazon happened to be in a state where because of the publicity pressure (showing their full time employees unable to live on their wage) it was more cost effective to make a change than not.
Does it matter what the rationale was? I know if I was an Amazon minimum wage employee I could care less what the rationale was. I'd just be thrilled to be getting a pay raise. Where I live the minimum wage is only $11.25/hour. Getting a bump to $15 will be a big deal for those people.
If you're Amazon, yes, it matters a ridiculous amount.
The last thing you'll want is for people to realize that the union drives actually worked. That would mean more union drives and more pay rises on the horizon. Can't have that!
Count the number of mentions of the reason for their decision in their press releases:
https://press.aboutamazon.com/news-releases/news-release-det...
He wanted people to have free time so they could appreciate the stuff they buy. Capitalism at its finest.
Which is why a tory chancellor wanted a higher minimum wage - to cut the social security bill
For publicly traded companies, there is: https://www.litigationandtrial.com/2010/09/articles/series/s...
> Having chosen a for-profit corporate form, the craigslist directors are bound by the fiduciary duties and standards that accompany that form. Those standards include acting to promote the value of the corporation for the benefit of its stockholders.
"Value" yes, but again says nothing about "profit". The court acknowledged different stockholders can and do have different and even conflicting definitions for value, and that a contract (not a law) should be used to resolve those differences. In the end the only thing that the judge ruled against were actions specifically designed to destroy the value of the company's stock by making it harder to buy and sell. He didn't order e.g. that Craigslist raise ad prices even though it's widely believed they hold a ton of pricing power and are deliberately avoiding maximizing profit because they prioritize community.
I am not nit-picking, asking in good faith: is that enacted into a law ? Or is that part of a contract between shareholders and the board of executives ?
I have heard about that walmart competitor run like a family business and that gives every employees a voice (a cooperative ?).
according to this ny times article [2] it states:
`There is a common belief that corporate directors have a legal duty to maximize corporate profits and “shareholder value” — even if this means skirting ethical rules, damaging the environment or harming employees. But this belief is utterly false. To quote the U.S. Supreme Court opinion in the recent Hobby Lobby case: “Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.”`
the ny times article also cites some sources such as supreme court case; it’s well worth a read
[1] https://www.sandiegobusinesslawyerblog.com/fiduciary-duties-...
[2] https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...
It is true that companies are not required to "pursue profit at the expense of everything else".
But it is also true that companies are held to legal standards that "include acting to promote the value of the corporation for the benefit of its stockholders" (Ebay v Newmark). This was famously weaponized against Craigslist several years ago, who were successfully sued over their refusal to let shareholders change corporate culture.
That certainly bucks the trend and is praiseworthy.
https://www.theverge.com/2018/10/3/17934194/amazon-minimum-w...
Was our skepticism perhaps reasonable?
Amazon (and all companies) spend most of their time/resources figuring out how to make more money and gain more power; I think it's appropriate that we as consumers, in turn, spend our time demanding more of them in terms of both value delivered and net benefit to society.
I don’t think Amazon deserves much sympathy. They're one of the most powerful companies in the world, have made a small group of people very rich while continuing to treat employees poorly. It's great that they're making this move but I don’t think we as consumers/citizens should be merely satisfied with it.
If good behavior isn't rewarded, how do you think companies might act in the future.
People, as well as companies, respond to incentives.
Cynicism is lazy. And generally, it has the effect of disheartening anyone from even trying to do the right thing. That people are cynical is of course understandable, but it's nothing to strive for.
The top comment is the most popular one.
That's deeply cynical. In the process, they're actually paying real people more money. Which is sort of critically important if you care about this issue and not just taking pot shots at Amazon on HN.
Against it, until their growth created a nexus in most states and required it.
Now they have been one of the most forceful lobbyists advocating for it. They call it, "Main Street Fairness."
Except the OP was talking specifically about the company's plan to lobby. Yes, they're actually paying people more money, but if everyone has that same amount of money then you get wage push inflation. Then everyone loses. This is also why minimum wage discussions always spiral out of control...there really is no good long term solution for setting minimum wages.
If you want to maintain your relative wealth, feudal times are great. The rest of us would rather increase absolute wealth.
I (and baldfast) had interpreted throwaway080383's comment as implying that he will be worse off from this legislation, as the increase in minimum wage will result in inflation, leading to no effective change in inflation-adjusted minimum wage, but a strong decrease in his own inflation-adjusted minimum wage. This is the standard conservative viewpoint that I've seen, which is repeated frequently, and is why I reacted so strongly to it.
To be clear, what I meant to get across was that the wage increase was not going to be a no-op due to inflation or whatever; it will make those people's lives measurably better in the short-to-medium term because not everyone's wages will be doubled at the same time.
Yeah, technically, I will be slightly worse off in the short term because Amazon will cost a little more or my dollar will go slightly less far, but I'm perfectly fine with that if it means tens of thousands of families can now feed their kids or go to the hospital. In the long run, my hope is that those kids will be more productive/innovative, which is good for everyone.
Some of us would be happy to just have enough money to do work we find productive for society, as opposed to what the market demands of us. Not everybody wants to ride the absolute wealth treadmill.
But some of MY customers may end up more able to pay me. I have repeatedly seen a tight correlation betweeen how well I do, and labor share of the economy. If this is real then it'll benefit me, all the more so if it becomes a trend.
If you were working at Amazon for $15/hr before this change and the other guy was working at $12/hr, but now makes $15/hr, wouldn't you want a raise?
When people make $15 an hour they will need less government assistance. This will take away from corporate's profits, which has gone through the roof without an salary bumps the last 40 years.
Edit: After submitting for 1 minute The number one weapon against doing anything to help the working poor is that it will cause inflation. It's a hollow baseless argument.
I think the poster didn't think of what it meant besides what only affects himself. I have noticed that is where all discussion ends, but it really is implementing that his bottom line is negatively affected if the working poor get higher wages.
Even if minimum wage growth hits its practical max and creates inflation, (1) that's easy enough to detect and correct, (2) it's not a big deal if all the numbers go up together; the main loss is in reprinted menus.
There is nowhere near the level of consensus on this issue that you're implying.
> which reduces the risk of things like crime, Great Depression, and violent revolution.
Which has nothing to do with the point I made...
> (1) that's easy enough to detect and correct, (2) it's not a big deal if all the numbers go up together
Inflation is easy to detect and correct? Japan would like to have a word with you: https://en.wikipedia.org/wiki/Lost_Decade_(Japan)
Inflation certainly counteracts some of the wage growth, but it's a much stronger claim that it will result in a net lose.
Any evidence for that claim?
This starts at $20.72 (14.92 USD) for fulltime, and $25.90 (18.64 USD) for casual work.
There's higher wages based on experience and responsibilities, as well as penalty rates. Public holiday pay starts at $56.98 (41.01 USD).
As someone who has recently moved from Melbourne to Boston; if anything I feel like Australia has a lower cost of living. According to the one source I found, prices including rent in Boston, MA are 36.53% higher than in Melbourne
https://www.fairwork.gov.au/ArticleDocuments/872/storage-ser...
https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...
Bumping the minimum wage by law seems like an arbitrary temporary fix, that will need to be adjusted in another 25 years.
But a temporary somewhat arbitrary fix, might be better than nothing. Don't let perfect get in the way of good enough for now.
This balances the scale of products developed and resources spent more towards low income people and away from aristocratic goods and services.
However, in the case of Amazon, a company already very low on margins and on theory of low incomes, this would result in higher costs from the market behemoth
So remain cynical but recognize that good politics can lead to bad companies doing good things.
A higher Minimum Wage is coming and possibly be a priority for Liberals and Progressives after the November Election. Amazon has been receiving a lot of negative press recently for labor conditions and wages. Regardless of the benefits to others, there is a direct benefit to Amazon.
Now if you want cynical... I think it's borderline delusional to think that a publicly traded multi-national corporation would do anything that isn't in it's business interest.
Lol no it's still not like that unless you have a high salary career, and most people don't have those.
Meaning more reliable candidates will come back in and those who dismissed fast food, warehouse, and retail, jobs as not paying enough will now accept those jobs. You will get some retirees, stay at homes, college kids, and even some recent graduates, coming in.
Don't get me wrong -- workers are grossly underpaid in most of the US, and wage gains are good. But those wage gains do have to be relative. In NYC/SF, a $15 minimum wage is just enough to scrape by with a couple of 20-30 hour a week jobs. In a poorer part of the US, a $10 min wage is plenty... but anything more might be enough to kill what few businesses currently survive there.
The small mom and pop stores have been closing at record paces due to things like Walmart and Amazon. A higher minimum wage might speed that up, but it just moves things faster in the direction they've been moving for decades already.
The thing that blows my mind is what the federal government (by the definition of the IRS) considers the poverty level is based on the cost of food plus inflation, while entirely negating the cost of living. Minimum wage is made based on the poverty level, but the poverty level is wildly inaccurate due to not taking into account housing.
On the subject of Dollar General: I imagine the corporation as a whole is profitable, but I'm curious about their franchisees. If it's something like the McDonald's setup, then I imagine that their franchisees could be seriously hurting while the name Dollar General remains lucrative. Unfortunately I don't know much about their structure -- maybe they don't have franchises?
They might raise prices a bit, and be slightly less profitable to shareholders, but they won't close up shop.
We're talking about doubling the national minimum wage. That's a hefty increase, especially for areas where cost of living is quite a bit different than say, California.
I don't believe that. People aren't going to dig the ditches and flip the burgers themselves just because it costs them a few $ per hour more now. These people aren't taking part in "charity" jobs that will dissapear if the wages go up, they're still going to stack shelves, they're just going to do it for more $.
Additionally, paying people an actual livable wage I'd suggest makes it more likely they will be reliable. When you're not juggling poverty related health problems with more jobs than it's sensible to have I'd suggest you will perform better at whatever job you do.
> The other effect of a much higher starting wage is you will have people enter the market who did not think the wage was worth their time. The people who cannot be relied on to show up on schedule, quit and want to come back, have some issues in their credit or criminal backgrounds, and more.
I'm not sure I follow you there. It seems that you're saying that there's a band of workers that are unreliable (credit/crimial issues) that are just waiting for wages to go up before they jump into the labor pool, but that the lower paid workers don't have these problems?
> Meaning more reliable candidates will come back in and those who dismissed fast food, warehouse, and retail, jobs as not paying enough will now accept those jobs. You will get some retirees, stay at homes, college kids, and even some recent graduates, coming in.
This seems to contradict what you said in the last paragraph so I might have misunderstood something somewhere. Regardless, I doubt there's a pool of workers who are well enough off that they don't have to currently work who on discovering that the lowest paid jobs in the country now pay a bit more will suddenly want to start work.
The problem is not the cost; the money exists in the economic system, clearly. It's simply an allocation issue.
But pessimists can keep carrying on with "the sky is falling" while progressive economic policies continue to march forward, bringing the US to parity with the living standards of other first world countries.
March forward? If anything there has been a dismantling of "progressive" economic policies over the last few decades. To the benefit of the economy.
My point was this is not the last win for Sanders and those who align with his progressive policies. Efforts will continue to drive up the minimum wage in all 50 states.
Yeah I really agree with this statement a lot
Consumers like you and I are responsible for this.
A "better product", in my view, is radically different from a "cheaper/cheapest product". The same goes for professionals.
On the other hand, isn't it illogical in a free market economy that wages do not increase at a rate at least equal to the inflation? How do you keep the economy running if people have less and less purchase power as time goes by? (These are genuine questions, I'm not an economist at all.)
I don't even want to get into the real debt traps targeted at the least fortunate among us like payday/title loans, buy-here-pay-here car dealerships, etc.
So, no, the economy not being on a survivable path is not really all that unusual of a situation for humanity in general. You'd be amazed what extracting and burning or otherwise disposing of an impossible to replace resource can do to boost a declining economy. "cheap oil" or "cheap fertilizer" masks a lot of problems... for awhile...
Henry Ford was one of the people to point this out; in the general case, you need to pay your workers enough (and keep prices low enough) that they can afford your products; else who can? (other threads have quoted him as well )
Or maybe it will just force employers to pay better wages to those they employ already.
$7.50 / hour is what they pay kids here to stock grocery chains.
Most companies I’ve worked at have had mailrooms. Very few have had people actually working in them. Which tells me that when the buildings were designed, the mailroom was considered valuable enough to include in the floor plan, but before I was hired, it stopped being valuable enough to staff. It’s worth something, but many companies apparently think it isn’t worth $7.25/hour.
But those companies still send and receive a lot of paper and packages. It’s just that there isn’t any staff dedicated to doing the sending and receiving; instead it’s included in everyone’s job description.
Who cares? If markets are allowed to compete freely, unskilled labor rates trend towards zero. Most of the people currently working at $7.50 probably would be paid even less if the law didn't forbid it now.
We live in a capitalist society where people are expected to work for a living. Saying that someone doesn't deserve to be paid a living wage is the same as saying they don't deserve to live.
I’m not saying anything about what anyone deserves.
I happen to know a general contractor who is incredibly charitable and willing to hire just about anyone who can swing a hammer. He mentioned that one year, he hired so many people that the per-employee costs and taxes ate all of the company’s profit. He had to live on savings that year. Obviously that isn’t sustainable, even if many independent coffee shops and bookstores try it.
Companies that pay more for labor than the value they get from that labor go out of business the same as companies that sell items at a loss and try to make it up on volume.
I think there’s a disconnect between the phrase “what someone deserves” and “what someone is worth [to a company].” Yes, because you are human, you have intrinsic value and can even claim you deserve certain things. Whether there’s some cosmic guarantee that you will get what you deserve is beside my point.
But your value to a company as their employee can be given a measurable number. It probably has more to do with my age than with the job itself, but I actually enjoyed the minimum wage jobs that I took when I was younger. Even today, when I see a “help wanted” sign at the kind of place I would have worked as a teenager or young adult, I reminisce about those jobs. But I never apply, because my value to them has a hard limit: they aren’t going to pay me more than the market price to keep the store clean, count back change, and provide good customer service. I’m not significantly better at those jobs than the average teenager. My knowledge of C++, C#, web services, databases, UI design, etc. has no value to them, although it has value to many other companies. I would never expect them to pay me more than my value to them.
I’m happy that Amazon has changed its pay scales. But this change will involve laying off people who are profitable at, say, $8/hour or $10/hour but not $15/hour. That’s how the world works. Today, those employees can find other jobs at $8/hour or $10/hour. They may even get a raise. But if minimum wage is increased to $15/hour, they could find themselves priced out of the market.
But it's not true that rising the minimum wage would immediately be cancelled out by inflation. That would be true only if everybody was earning minimum wage.
Increasing the minimum wage from 5 to 50 dollars is unlikely to cause a 10x inflation, it more likely would cause a 3x or 5x inflation.
The poor would have more and the rich would have less.
It would likely reduce the spread of wealth in the society, improve social cohesion and in general may turn out to be a good thing.
The "rich" are rich enough that it's just a drop in the bucket.
Edit: I don't mean to say that minimum wage isn't worthwhile, just that framing it in terms of a rich to poor wealth transfer is somewhat dishonest.
Really, some of the stuff you read on HN is just mind-boggling.
In spite of the gig economy trying hard to erase decades of stability for millions of people even the smallest attempt at reductio-ad-absurdum would show that there is an optimimum somewhere and that there is absolutely no law of nature that dictates that that optimum lies at $2.75, $7, $15 or anywhere in particular.
Whatever you make the minimum, there will always be people who earn just a bit more and of course it will lead to some inflation but the end result will be a higher standard of living for those for whom the change is the most important.
For all the laughter about the EU from the US when it comes to social security I'd like to point out that Amazon already operates here and has to pay the local minimum wage and that consumers are still buying their products.
Minimum wage + unemployment insurance is basically UBI anyway, except very poorly implemented - with ridiculous overhead, and, most crucially, subsidized through what is, essentially, a regressive tax.
Consider: when you raise minimum wage, the employer will try to put as much as they can into the price of the produced goods. They might be forced to eat some of it by shrinking their profit margin, but ultimately most of it will be passed to the consumer.
Now, who consumes goods and services produced by minimum-wage workers? Everyone, of course - but, generally speaking, the less you earn, the more you have to rely on that. So as the prices on such goods and services go up, poor are the ones that see the biggest increases as a proportion of their overall spending (and hence, their overall income). It's the ultimate con - you get one mark to pay for the other, and the best part is that they don't even notice.
UBI wouldn't have this problem, because the tax would be explicit, applied to income, and (ideally) progressive. So you actually redistribute from the top of the ladder all the way down to the bottom. Better yet if you also tax capital gains for this purpose.
Obviously, everyone not being starved or dead from lack of medical care means everyone gets food and medical care. That is not negotiable at this time.
Some methods of payment for those universal services have extremely low transaction cost like the employer hands money to employee who buys the service or product for cash. Some methods have extremely expensive transaction costs with government departments taxing people and another department full of people paying partial or full payment for people's food and medical care, none of those people work for free and they all need HR and benefits and management and auditors, all very expensive. Of course give/force the employers to hand out too much cash and you get inflation that exceeds the cost of government.
For example everyone at Google eats and has medical care and having the well compensated employees pay for it is extremely low transaction cost. However no one at walmart can eat and obtain medical care so the government provides it at enormous transaction expense. Its believed to be better for the entire economy to slightly tax google employees to pay for government services for walmart employees than just have walmart pay their fair share of the expenses of employees.
At some point in the middle there's a optimum that minimizes the total cost of government programs plus the economic damage wrought by inflation. A lot of people put a lot of time and money into figuring out this optimal ratio, which is probably extremely close to where we are today, and many more in the general public say "eh we should just wing it and +1 one side or the other, because like, what could possibly go wrong?".
There ARE problems such that those highly paid government clerks with fabulous benefits compared to the private sector are not likely to suggest losing their welfare program administrator jobs any time soon, so there are rational human self interest reasons why the minwage is always going to be around the lower bound of optimum. If the general public is not always of the opinion that its somewhat on the low side, then the central regulators and planners are messing up. There should always be this low level of turmoil about it being somewhat too low.
Keep in mind that 'flexible contracts' and 'zero hour contracts' already existed before the Gig economy, and that they still came with all the good stuff that comes with employment.
For the US, where a lot of people were already under the perpetual Sword of Damocles waiting to be told they are no longer required the situation is maybe not all that different. But not all of the world is like that.
The better way to run a life that is free and where you get plenty of time to arrange as you wish is to have a consultancy company where you hire yourself out at a high rate during a few months of the year to take it easy during the remainder.
Nearly 2/3rd of the federal budget is for social programs. What do you mean a "complete lack of a safety net"?
I've done my bit of social security for the United States all the way from where I'm sitting, it's that good.
Not all social programs are safety net programs; notably age- and work-related public healthcare isn't, and neither is work-qualified public pension.
And also a lot of the social spending (safety net or not) is the public portion of the US’s stupendously inefficient hybrid public/private health care system, so even the safety net portions of that (mainly Medicaid) give very little safety net for the money.
By the standards of the developed West, the US has a very weak safety net, however much money it might spend on public social programs.
Care to source that definition? Social-security, Medicare and Medicaid were all developed as "safety nets".
I' guessing it would rather create massive unemployment, and subsequently be cancelled. Think about it - middle-class people are ok with paying $4 for their Starbucks coffee, but if they were to pay say $10 (because the baristas salaries just tripled), probably a lot of them would cut back on them. Maybe even Starbucks would disappear altogether. Multiply that effect across all industries hiring minimum-wage workers. It would be a train wreck.
Here's some real world evidence:
https://www.washington.edu/news/2016/04/18/early-analysis-of...
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5615576/
https://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies
That will hurt the current middle class the most, those earning close to $50/hr. These are skilled professionals who will get equalized with someone who dropped out of high school. It's actually a good example of why socialism is such a dumb idea.
A couple of billionaires less and a higher standard of living for the masses is a good thing.
That works out to $2400 gross per month (so before taxes) which if you can't recoup it from the work input says more about the company you are working for and their inability to capture value. Keep in mind that raising the wage across the bar will increase inflation but will level the wage disparity between 'smart' work and 'dumb' work.
What is it, then? Small family or individual?
(Edit: sorry for the annoyance. I just tried to understand how did you work out that the right number is $2400 with such precision. Surely that's the right number everywhere in the US, as well...)
So that the employers do not have to take the family situation of the people they employ into account.
Np. As for the $2400, $15/hour * 40 * 4 is close enough, and that seems to work based on the salaries of a number of people that I am familiar with.
Working two jobs at $7/hour should not be a requirement to make ends meet. And that's another way in which the low minimum wage hurts employment: people working two shifts because they have to.
Large enough to stimulate people to learn, small enough that those working hard do not end up wearing out their bodies before their pension, end up on the streets or dead.
> If someone spent their youth doing drugs and having children out of wedlock do they really deserve to earn a salary within say 10% of someone that spent their youth working to gain the skills and experience necessary to be a doctor or lawyer?
Do you mean to imply that there are no doctors or lawyers with children out of wedlock or on drugs?
> Just because the outcomes need to be more equal?
I would avoid the word equal, I would use the word fair.
Not sure how you got that impression. If you thought that the 'large enough to stimulate people to learn' is a factor in that: I was thinking of kids looking around them seeing zero advantage of having an education might not be incentivized enough to acquire one.
I'm quite certain one can survive on zero dollars, so I assume you're talking about something else. But I don't get what.
The $2400 number is completely made up, it's not even geography-specific. It's a lot in Indiana suburbs and it's barely anything in SF.
You started this thread in bad faith ('and no dancing around') and went to worse from there.
In the UK there's a foundation that exists to work out what would a fair living wage, to promote this idea to businesses (getting them to commit to pay this to all workers even though the legal minimum is lower) and to make sure that when media people have your question they've got somebody who can confidently provide quotes/ appear on TV/ whatever to explain.
This was sufficiently successful that the government tried to rebrand their arbitrarily chosen (55% of median earnings) minimum wage as a "National Living Wage" but to their annoyance people continue to refer to the foundation's numbers which you know, are based on evidence.
The Living Wage Foundation uses a "basket" system like economists measuring inflation. For example they imagine that a person should rent somewhere to live, so they go find out how much it would typically cost to rent somewhere a person could live in various parts of the country. They figure you will want food, so they work out a set of groceries you might buy, and so on.
Is it possible to live on less? Yes, and it so happens that I do even though I'm fairly wealthy. But it's very obvious that even small changes in my lifestyle would significantly increase my spending, and many of my choices just aren't open to people who aren't wealthy. For example I spend very little on housing, because I own my home outright. But obviously people trying to get a minimum wage cleaning job don't own a house!
It's the amount one would spend on groceries, rent, utilities, transportation, childcare, and sometimes healthcare.
It does not include luxuries such as meals at restaurants, entertainment, savings accounts, retirement funds, investments, or vacations.
MIT has a great living wage calculator for the US. Their definition of living wage is in the about section.
Also some jobs will just go away, like grocery baggers (mostly) did. Which customers liked and was a good entry level job for teenagers.
There are a lot of factors to consider and have to be careful about unintended consequences.
Amazon could easily survive in a $15 minimum wage environment, but it'd be a much larger blow to Walmart (which employs many times more low wage workers), which would have to increase prices or reduce profitability.
"Your margin is my opportunity" - Jeff Bezos. This quote also works when thinking about raising your competitors' expenses.
This also helps create a moat around amazon - if they can get the costs of everyone to go up, when they unleash better picking/warehouse automation no one will be able to compete with them.
Sure, there's an element of "this job is only worth $7.5/hour, so if we have to pay someone $15/hour we won't do it", but I'd suggest that those jobs are actually not that common.
I'd instead suggest that most jobs need doing, and they will just cost more. Ditches still need digging, burgers still need flipping, and it will just cost a bit more now.
I am not enamored by the concept of minimum wage, and to this day its a fight among economists.
That makes sense, there's going to be jobs that just aren't profitable when the wages go up. If I can make $4 on a box of shleem, and the kid who packs the shleem's wages go up $5 I have to pack the shleem myself, or stop selling it.
One thing that the report mentioned, and is maybe a possible cause of this negative increase, was that kids will leave school sooner when the minimum wage is higher. Perhaps to counter the issue there could be some sort of means-tested grant system to help keep kids in school?
* Total US Retail sales in 2018: ~$5.4 Trillion
* Amazon trailing 12 months revenue as of June 30, 2018: $208B.
This is a little less than 4% (and that's assuming all Amazon revenue is US-based and retail sales, rather than AWS or other...)
You may be thinking of share of growth of US eCommerce.
If I'm mistaken - I'm sorry that I've misunderstand you. But I do think that I'm not alone in this, and that a clarification for tone-defa people like me would be welcome.
If I'm not mistaken, and you indeed imply this, can you elaborate further on why do you think so?
I can understand that its fair to be cynical of their motivations, but they are doing exactly what people have been demanding of them.
Did you not get the same thing out of Amazon's words, or are you saying that they're not telling the truth and will push for $15 despite saying otherwise?
Feels like AMZN is becoming a political power, a king of production, transporation and sale... Is it too big ?
Any risk Trump answers with a New Deal à la Roosevelt ?
I'm going to take a wild guess and assume it will be $15/hour. That way they'll get to look progressive for adopting this wage early, while mitigating their competitive disadvantage by forcing every other company to raise their wages too eventually.