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.
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.