[1] https://en.wikipedia.org/wiki/Minimum_wage_in_the_United_Sta...
[2] https://www.cbo.gov/system/files/2021-02/56975-Minimum-Wage....
[3] https://www.npr.org/2021/02/08/965483266/-15-minimum-wage-wo...
This isn't really a criticism of your comment, but I've always felt that this is a convenient supporting argument that obscures so much nuance that it is actually harmful to the broader goal of more fair wages. There are three huge assumptions that a statement like "an hourly wage should be enough income for basic needs" obscures:
1. that the person is employable (I don't think it's necessarily good to economically guarantee that severely disabled people are forced out of the workplace, even if they have other support systems to guarantee their needs)
2. that the person works a certain number of hours. ($100/hr is not livable if you work one hour per week.)
3. that a person has an assumed set of needs and an assumed support system (different life circumstances require different incomes to meet basic needs)
Everyone deserves to afford their basic needs, regardless of any of these confounding factors. Much of our worst poverty is because of one of these factors, not a variable as simplistic as hourly wage. Wages should be fair, but basic needs should be for everyone regardless of their ability to work a 9-to-5. While I do think we need some upwards pressure on wages, I also think social safety nets are a more equitable way to ensure basic needs are met. And we don't need to let employers off the hook for paying the bill, we can tax them to do this.
But a minimum wage is useful to the extent that there are jobs for your lowest skill, least desirable workers. And ensuring that may take reducing the work week.
Paying some a lower wage because it delays another machine purchase is not a long term solutiom
Living off of redistributed hand outs sounds like a horrible way to live. How do you improve your life? How do you find meaning?
I live in a country that has 3rd generation beneficiaries. Their lives don't appear enjoyable. Once in that mind set it's so hard to get out. They often turn to drugs and mindless entertainment.
Most of us also probably live in countries where a significant fraction of the population would choose Playstation/Netflix/heroin instead. That's their choice, but you're probably right that much of it is learned behavior. Perhaps some significant resources (government funded or volunteered) should be applied toward teaching people how to make better use of their free time, if that's what they want.
It's certainly a better vision than making widgets 40 hours a week for a company with dubious social impact.
And those companies will calculate the ROI for moving into a lower tax burdensome area. After the company leaves the people wont have a job or the tax revenue.
Self checkout came regardless of whether the state had a minimum wage increase or not. As soon as the technology was mature enough it was rolled out.
Why do the workers have the lowest negotiating power in these jobs? It's because they are the most easily replaced and the net benefit from employing them is smallest.
[There are some edge cases, where a field is swamped from people doing the job for the love of it... But this is not the typical case.]
I.e. people with minimum wage jobs would be paid even less, but for the government using its power to negotiate for them
Yes. And it's a necessary thing to have.
On the other hand... if someone is doing work that returns $15.50/hour on average to the business, and is employed at $10/hour, raising the minimum wage to $15/hour doesn't get that person a raise: it gets them laid off.
The things that IMO really help the fundamentals are:
* Raising the demand for low-skill labor (e.g. economic growth above productivity improvements)
* Raising the average skill level of the workforce, and/or
* Reducing the supply of labor.
No, what it does is it causes prices to go up, which are amortized across all of society - between both people who are paid $15/hour, and people who are paid $150/hour.
On average, it is a small wealth transfer from the average person to the working poor.
Do people who are paid 10x necessarily consume 10x over a person paid minimum wage? If raising the minimum wage causes across the board price increases (aka inflation), then those whose income is lower are affected more since a higher percentage of their income is spent on essential consumption (food, water, shelter).
If the operational concept is "small wealth transfer" to the folks earning the lowest income using inflation as a stealth tax then it is a highly regressive tax.
Using polling data for 31,869 households in thirty-eight countries and allowing for country effects, we show that the poor are more likely than the rich to mention inflation as a top national concern.
Even if their consumption was 1x, my point would still stand. Most people aren't earning minimum wage, nor are their salaries affected by minimum wage increases. This means that the cost of most products does not increase as minimum wages increase.
Minimum wage increase money comes from somewhere, and since ~everyone relies on minimum wage workers, that means that ~everyone pays for that wage increase.
If you take a dollar away from 100 people, and split half the resulting money between the 10 poorest in that group, and the other half between the next 20, it's a regressive tax, with a progressive benefit that has a net benefit for the poorest. Minimum wage increases work the same way. The rich lose very little, the middle class lose some, the poor win.
Are there better ways of structuring this sort of thing? Theretically yes, but practically, the rich are really, really good at protecting themselves from wealth redistribution. If you're going to hold the poor hostage to them, you're never going to get anything done.
“It isn’t the sum you get, it's how much you can buy with it, that's the important thing; and it's that that tells whether your wages are high in fact or only high in name.”
Mark Twain A Connecticut Yankee in King Arthur's Court (1889)[0]
0. https://www.sciencedirect.com/science/article/pii/S221480431...
U.S. households with higher incomes spend more money on food, but the amount spent represents a smaller overall portion of their budgets. In 2020, households in the lowest income quintile spent an average of $4,099 on food (representing 27 percent of income), while households in the highest income quintile spent an average of $12,245 on food (representing 7 percent of income).
https://www.ers.usda.gov/data-products/ag-and-food-statistic...
That seems to support my point that raising the minimum wage disproportionately helps the working poor.
It’s akin to the company town giving a buck more in wages but charging 2 more in groceries. Sure you make “more,” but since you can buy less of what you need, you are effectively making less.
https://www.econlib.org/library/Topics/HighSchool/RealvsNomi...
It does both of these things. Some jobs are lost and some prices go up.
Some tasks are better off outsourced, automated, or not even done at all as the floor price on labor increases. Raising minimum wages here hurts. Shortening the work week helps.
The demand for some tasks is inelastic but easily performed by many different people. The price of these tasks increases in proportion to minimum wage. Raising minimum wages here helps the employees, and shortening the work week is a small hurt.
Some tasks already have an equilibrium price well above minimum wage due to a supply limitation of the capable labor. Raising minimum wages here is relatively neutral. Shortening the work week should increase compensation here and increase the motivation for employers to find ways to bring more lower skill people into the field.
Most things are somewhere between these extremes.
I think the instability this would cause i the lower class would be devastating. The very people that don't have savings and that can't easily weather large financial events would have once forced on them all at the same time.
> just staffed up more for low skilled positions (and eventually for skilled positions),
There's not an infinite supply of bodies out there. It's not clear where you'd just "find 10% more people"-- at least not without raising comp. And, of course, getting closer to full employment is a good thing in itself...
> but are only making 80% of ...
36/40 = 90%, even in this worst case where someone has their hours reduced from 40 to 36 to avoid overtime pay. I think there's a lot more poor people that are getting 30-35 hours from their job who would be nowhere close to the overtime threshold before, but now that their normal workweek is closer to the max get it sometimes.
Any policy change will hit some people negatively, but I think this would be a net positive for the vast majority of lower earners.
As another commenter noted, maybe from all those people that are no longer making enough to make ends meet. Now you have someone working two jobs, maybe at like 16-24 hours each, and if one of those needs more hours, well, now you're working more than 40 hours a week overall but less than 32 per job and not getting overtime for any of it.
I could easily see something like this being one of those well intentioned policies with major negative outcomes.
> 36/40 = 90%,
My mistake, I missed where you defined it as just dropping four hours off, and "shorter work week" sounds like cutting a day off to me, so I assumed the wrong thing.
Even so, 10% is not an amount a lot of people can sustain. You posit that there's a lot more people getting 30-35 hours, but I'm not so sure of that, so would definitely want to see some numbers before endorsing anything like this. Additionally, I think a lot of people that are working less hours are doing so because in some cases employers can get around some laws about sick time and paid time off if employees aren't "full time".
The bottom line is that if people have more money, they can choose to work less. Just make sure people are paid more and they'll choose to work less if that's actually important to them, and they'll seek out jobs that offer things they care about (such as less work hours) if that's important to them. Reducing the expected working hours is nice, but I doubt most the people that would actually need it (those working demanding or demeaning jobs) would trade that for less pay given the realities. The only people that can really make use of that are the middle and upper class, and they can already choose to prioritize that and look for work that allows it given their financial stability.
Well, you just gave millions of low-income workers 10% less money and 10% more time, so my guess is that more people would be forced to get a second job.
* Some other people will be content working less.
* Other people who already get overtime every week will be getting more overtime.
* Exempt employees are likely to slowly evolve to working less as the 36 hour workweek becomes the norm.
* Employers faced with paying more overtime or getting less hours will need to pay more and work harder to train up lower skilled workers to fill positions.
And in the end, everyone shifts up a bit from this reallocation.
> Everyone's quality of life goes up
Ideally, yes. But for those who struggle in various ways the extra free time could be dangerous. I'm definitely in favor of a shorter work week. But there are always unintended consequences.
For example I live in NJ. As the pandemic lockdown kicked off so did the adverts for gambling via your mobile device. I'm not in favor of the Nanny State but I can't help but wonder how many ppl are nursing an addiction and associated debt from this intersection.
Otherwise, businesses will continue to label employees managers with no actual management responsibilities with the sole goal of paying someone a lower hourly rate in exchange for a more certain periodic payment.
Once you remove this loophole, hourly pay will naturally rise as businesses will opt to hire more hourly workers. The biggest reason hourly workers lack negotiating power is businesses can lean in the salaried “managers” to fill in at no extra cost.
And how far does this extend? Can I not pay a contractor a fixed rate for a project? Or a fixed rate to handle _____ for me for a week? It would seem to encourage arm's-length contracting arrangement for services and coverage, which isn't ideal.
I don’t see what it would have to do with contractors. Minimum wage laws apply to employer employer relationships. Independent contractors can charge whatever they want.
So you want to pay someone for every hour they might get called, too? Even if that is a very rare responsibility?
> I don’t see what it would have to do with contractors.
It would further encourage contractor relationships, as I said. I don't see this as a good thing.
It will not encourage contractor relationships anymore than now, it will simply require businesses to pay the hourly workers more and give them steady schedules, benefits, etc.
Doubtful
> it will simply require businesses to pay the hourly workers more
Why? It seems like this is a lever you're hoping to use to get the exempt workers paid more and/or a slightly greater allocation of work away from what had formerly been exempt workers.
> benefits
Why?
The whole concept of hourly minimum wage is undercut by the ability of businesses to pay a meager salary.
The mechanism of action for increases prices paid to workers is by decreasing supply of man hours from one individual at a low price (i.e. increasing salaries minimum).
I think this is absolute rounding error on the number of additional hourly workers needed.
Yes, a reasonable percentage of salaried workers in low wage industries are exploited as you describe. In turn, with an hourly wage, they'll work a small percentage fewer hours.
The government being involved is the most likely answer as to why a 40 hour work week is standard and why there are so many "minimum wage" jobs. A funny thing happens when you set floors or ceilings in markets, you hit them. There should be no minimum wage. People excepting jobs will set the minimum wage because people act in their own self interest. If the pay is too low, no one will take the job. This is how labor markets are set everywhere else in the economy, I don't understand how the bottom is different.
The government shouldn't have anything to do with the work week, the market should decide because what works in one sector in one region may not work in another. The government isn't as smart as the entire labor market making decisions for themselves.
But note also that there are people one might be willing to gamble on employing at $12/hour but that don't offer a positive return at capital at $15/hour.
I think minimum wage laws are important, but that reducing the supply of labor will do more to push up the wages of the lowest earners.
Right now the problem is in the power dynamic between companies and employees - the dynamic is very unbalanced in the companies favor. In "Bullshit Jobs" Graeber compares the current system to a Dom-Sub relationship with no safeword for the "fake-competitive" industries that are not unionized.
UBI is the safeword.
This is not some ideal spherical cow world, this is how literally the entire labor market works except for the mystical bottom that the government feels they have to be involved in. Why else do you think FAANG's pay so much money? Its because they want to attract the best talent.
All of this bullshit free market fundamentalism relies on many nice assumptions - one being that there is plenty of good, high-paying work to go around. The actual fact spelled out in a hundred different ways, from wages to market conditions to books like Bullshit Jobs, is that the economy doesn't need nearly as many workers as we have people particularly in low wage jobs that don't require much training. There is much more supply than demand. Its perfectly possible that if McDonalds paid $1/hr, their competitors would ALSO pay $1/hr. In that situation someone with little skills would have a choice of 1. making $1/hr 2. making $0 and starving. These are the conditions 50-60% of the world works in. We've already seen collusion to keep wages low in technology, not to mention other industries and times in the past, no doubt it happens and can happen again.
As is usual, every time someone points out a bad situation, you say its "not really a free market". So its not, most markets aren't ideal "free markets". Employers can collude, information asymmetries do exist, power imbalances are real. There are literally zero "free markets" in the world. They don't just arise naturally. Even with all the intervention we have, I have yet to see any market where there is no information asymmetry or imbalances. Its a fucking idealized model from Econ 101, not the state of reality.
This kind of thinking is fundamentally un-empirical. It starts with a theory and insists that the world conform to it rather than looking at the world and examining which theory really does explain it best. In this world I would simply refuse to acknowledge the existence of non-spherical objects as a non-spherical boulder rolled down a hill and killed me.
lol - then you go on to complain about free markets? China is NOT a free market!
I don't care how many fast food joints colluded, no one is going to work for $1 an hour. Heck with all the COVID bucks floating around I see fast food joints advertising $15 an hour jobs and STILL not getting any takers.
Your position is utterly nonsensical. This isn't the turn of the century. Workers have never had more mobility or information. If anyone tried to set up a "Company town" in todays economy it would be empty from day one.
When we are talking about minimum wage, you need to consider the people with the worst talent. Think sweatshops in China, construction camps in Dubai, prostitutes in the US. Not Google or Facebook employees.
As for sweatshops in China, these are the growing pains of a developing economy. The work conditions there suck but I bet they are better than being bent over in a rice field all day. You are also rapidly seeing this change as the economy becomes more developed there, even in the face of an oppressive government.
https://www.wsj.com/articles/china-is-working-its-way-up-fro...
The construction camps in Dubai is about government corruption. They lure in overseas workers then take away their passports so they can't leave. Not exactly a free labor market.
Again prostitution in the US is not a free labor market because of government interference. If you go to places where prostitution is legal, the girls there make pretty good money.
Most of the areas where you can point to the worst employment situations is because of government interference in a market place.
Several replies are addressing your wrong points but I had to bring this up: https://www.npr.org/sections/alltechconsidered/2015/01/16/37...
The usual argument for this is that while there is some efficiency gained in trying for a pure labor market here, the externalities can be brutal. So the reason that the government gets involved in the lower end is that typically they are the ones that have to deal with the fallout when things aren't working well. There are other approaches, but for whatever reasons many places find min wage more politically acceptable/expedient.
No, they would cooperate and set an informal maximum wage to replace the minimum one (or more accurately, they would lower the already informally established maximum wage.) This would be a win-win for both businesses.
It's not a coincidence that all low-wage jobs pay between 0% and 25% over the minimum wage, and it has nothing to do with labor demand. It's because a bidding war is no good for anyone, and because having the best low wage employees will not improve net revenue more than always paying as little as possible. The idea that the Burger King paying $22/hr is going to drive the McDonald's paying $14/hr out of business is a libertarian fantasy never borne out by reality.
> and it has nothing to do with labor demand.
If not having an employee costs you $30/hour in revenue-- your desire to avoid a bidding war won't prevent you from making an offer at $22/hr if it's necessary to fill the slot.
It has everything to do with labor demand (and supply). Collusion (formal or informal) between loosely coupled, adversarial entities breaks down under pressure.
And not just immigrants. Anyone with an abusive parent or partner or any situation where one person holds power over another.
Hence "this is how you get slavery".
If there were no minimum wage, you could put the person on payroll and be completely legal in your actions, allowing the employer to exploit unknowledgeable employees.
In some areas an Amazon warehouse job is an exceptionally good job. I grew up in a place where one of the best job you could get was working at a Walmart distribution center. Basically like an Amazon warehouse but the whole this is a freezer.
Also the government can't and shouldn't try to govern bad choices away from people. This would lead to a very authoritarian society.
https://www.nlrb.gov/about-nlrb/rights-we-protect/the-law/em...
> Unions are not allowed to negotiate benefits and wages exclusively for their members.
Parent is talking about "closed shops" where a union uses its bargaining power to ensure the employer will only employ people represented by the union. On the one hand this prevents the free-rider problem you mention. On the other, this is coercive and can erode employees' ability to negotiate about things important to them.
It can also be inefficient-- I've been in workplaces where I got in trouble for moving a desk in my office a few feet, because moving furniture was a closed-shop union job, and I wasn't a member.
I'm very capitalistic and libertarian, but reality is all systems need to manage edge cases. Minimum wage is a part of that. To believe that the market can figure everything out requires serious tunnel vision.
It's not the only way though. We have no legally defined or mandated minimum wage here in Norway (nor elsewhere in the Nordic region I think). But the effective minimum is probably higher than the mandated minimum in any other country.
Broadly speaking the way it is done here is that the national association of employers and the principal unions negotiate a tariff for each industry and type of work each year. The state is involved to the extent that it provides an official who acts as referee in the negotiations and tries to chivvy the parties to an agreement.
Employers are free to ignore the rules but risk losing employees to companies that pay according to the tariff.
Of course the difference between here and the US is that solidarity is stronger here so the negotiations are less hostile here.
It's not perfect but it seems to work quite well
Spoken like a true capitalist! The young, dumb and disadvantaged should be thankful for the pennies that trickle their way. It's not like they're gonna sue if they get ripped off, they're broke. Besides, they can always move into high paying career ladders just as soon as they can afford to stop taking the bus everywhere. /s
We have disability safety nets (that could be better). And FLSA and state regs all allow paying these groups under minimum wage (and this is a good thing).
My wife's brother is severely mentally handicapped. He lives in a nice, well-run group home (I'm aware this is not universal). He also has the option of going to "dayhab" where there's educational content and the option of working making crafts for a couple of dollars per hour of spending money.
I am not sure his labor output is worth the $2-3/hour he gets paid: a lot of this is probably charity, but it makes a difference to him to be able to earn something and work towards goals, and not just spend his entire day watching TV instead.
You don't fix these things with a minimum wage and you possibly make them worse. They've got different solutions.
> The young, ... the convicted
These are harder problems.
* How do we provide a good on-ramp to productive work and independent life for at-risk youth?
* How do we allow those who have broken the norms of society in the past to rejoin in an orderly way, with hope and better prospects from compliance than reoffending?
Note that I think we should have a minimum wage. I just think it's also a band-aid at best, and often causes a fair degree of problems as well. It's better than nothing, but one would be better off addressing the problems it's targeted at in any other available way.
That's basically what Walmart abuses anyways via the welfare system; it's almost a subsidy to make their model kind of glue-together in the end. Let's just make it explicit. Pass UBI, repeal minimum wage laws.
That anyone has the guts to still be pushing UBI when we can see how a limited UBI with the current government handouts are utterly destroying the current labor market is beyond reprehensible.
(Same source)
It's not destroying anything, it's giving labor bargaining power back versus capital. Yes, it's harder to hire workers at $X/hour when they have alternatives. That's the whole point of UBI.
Also note that pre-handouts, the companies were hiring workers for $10/hour, now they're willing to pay $15/hour with bonus (and can't find anyone). What that means is that companies actually had room to pay much higher than they were actually paying (and still make sufficient profit) - so the previous wage was not a fair market wage, but was rather exploitation; which the article goes into below:
"Labor markets in capitalist economies are fundamentally tilted against individual workers’ ability to bargain effectively with employers. Policy does not have to be rigged for employers to give them particular clout in labor markets; instead, the very nature of these labor markets gives them clout. In the past, when economic growth was broadly shared across the population, it was because policymakers understood this basic asymmetry and used policy levers to bolster the leverage and bargaining power of workers. Conversely, recent decades’ rise of inequality and anemic wage growth has resulted from a stripping away of these policy bulwarks to workers’ labor market power."
https://www.epi.org/publication/what-labor-market-changes-ha...
Instead, I get a bunch of strawmen that have nothing to do with what I said.
What you have not addressed is the extreme imbalance in power for many employers at the expense of employees. If there is no floor on what someone can get away with paying, then it is reasonable to expect the marginalized or powerless to be fully taken advantage of. Even today, some employers try to get away with not paying by having employees work "off the clock". At least with the minimum wage, litigious employees can eventually expect something for their lost time.
???? I have stated throughout this entire conversation that I believe there should be a minimum wage. I do not know why you continue to argue with me as if I have not. Your messages have nothing to do with what I am saying. I have pointed this out to you now three times.
You haven't confused me with trcarney who said far above that there shouldn't be one, have you?
I just don't think the minimum wage is a solution to many of the problems you cite. It will not generate more employment income for the severely disabled, etc.
No one is going to hire a 12 year old for a part time job if the minimum wage is $15. It just increases the minimum skill level to be hireable. But hire them for $7.50 and they might have skills worth $15 by the time they're 18.
We've already had history in the U.S. where the inflation-adjusted minimum wage was way higher than it is today and yet the labor participation rate was also higher than it is today.
But my personal preference is for UBI coupled with a repeal of the minimum wage.
You're arguing from an ideal situation, without taking into account that reality's average is very much less than ideal.
Fortunately that wasn't particularly laborious, so I still had the energy to do school too. Many people are not as lucky, and these days often have to work 2 or more jobs to get by. Worse, the kind of schooling I took advantage of is increasingly turning from vocation-oriented education to cheap-university-transfer education.
Nah. He sounds like someone with class and privilege who's worked a minimum wage job.
See, a minimum wage job for someone who is a privileged youth-- is a good way to learn the last little bit of organization, focus, "eye on the ball", working with a supervisor, attention to detail skills-- that will serve them the rest of their life. It's a great skill building opportunity.
For someone who's been stuck in it 3 years--- well, it's exhausted all of its value in those respects by this point.
People who are scared of the minimum wage going up are often worried that it's going to squeeze out kids from getting these first work experiences. And it's a valid concern. But the people who spend their lives stuck in those jobs are invisible to them.
I personally favor shortening the work week because I think it will increase the compensation associated with low skill labor; provide additional incentives for employers to ramp people into higher skill positions; and leave room for kids in low skill jobs.
What skills would they be? Surely the only skill you build while flipping burgers is that of flipping burgers. Is it applicable to any other job?
If we shorten the nominal workweek to 36 hours before overtime is required (and encourage this to be in the form of 4x9 or 9/2 * 8):
* Supply of labor will fall, increasing equilibrium pay for everyone
* Everyone's quality of life goes up
* Traffic and environmental impacts from commuting should improve (a little).
* It's a better hedge against automation and outsourcing than artificially increasing the minimum price of labor.