This doesn't actually bear out. Minimum wage increases really don't have a history of making minimum wage employees unemployable, or destroying the companies affected. In fact, the opposite tends to happen, as these businesses tend to be frequented by other minimum wage employees as customers, so it ends up being a rising tide that lifts all boats.
> Do you want Big Tech to be American companies, or foreign companies?
I'd argue that you can't just airdrop these companies into another country and have them be as successful as they are. Even with much stricter monopoly laws, there is a LOT about America that incentivizes these companies to locate there, and frankly I'm not convinced they'd move.
And as a Canadian, I don't even want Big Tech to be American. =) The US is only part of the world, as you said, but your lax and corrupt legal system is polluting the world with these dangerous megacorps.
Don't get me wrong, we're none better, our system would allow for nearly the same abuse, were it not for the fact that our whole country is smaller in population that California. But the point remains that there's a lot of the world that is looking on in horror at these rampaging monster companies and is not in any way assured by the "at least they're American" defense.
It's not nearly that settled
It's "debated" because raising the minimum wage hikes usually come out of profit margins: https://cepr.net/documents/publications/min-wage-2013-02.pdf
If there's one thing the business community and the econ think tanks it funds can all agree upon it's that any policy that involves sacrificing profits is Bad. Global warming denial and this both come from the same source.
Same for your water example. At some point, water stops being healthy, without knowing at what point, you can't just ask people to just drink more water, otherwise they may die. In fact people have died for that reason.
At some point, increasing minimum wage will cause unemployment and destroy companies. Maybe we are at that point, or maybe not, without a bound, there is no way to tell.
It is a curve, and price discovery is definitely a thing that the government can’t ignore. In Seattle they are in the awkward phase where the politicians admit the problem but walking back the minimum wage policy, which ratchets upward every year, is not something they want to consider politically.
I have close friends in the food service industry in Seattle that have become quite against the minimum wage increases (which they earn as base pay) because it is costing them a lot of money in real terms and they foresee future reductions in employability, which puts them at risk economically.
This coming from an era when competent service employees were so in demand that employers would make concessions that even tech employees don’t get. They weren’t paid as much but they were given flexibility that most people would envy.
When lending costs were near-zero, housing was doing "great". That doesn't mean it's a smart or sustainable policy, even if we had gotten used to that as the norm.
I sometimes wonder if the same applies to restaurants. Consumers got used to lower prices predicated on lower labor costs. Many got used to eating out very often and to a certain extent the economy responds with more restauranteurs. But it couldn't sustain that once the service cost "bubble" popped. Maybe those low labor rates are not the norms we should accustom ourselves to.
Also, holding up restaurant workers as the token reason for opposing living wages for all workers is a bit disingenious. Like using family farms to argue against inheritence taxes.
That’s ridiculous on its face because there isn’t any higher level of productivity so someone in the economy is eating that loss.
Because Dube, Lester, Reich says that they don't exist. Businesses pay for almost all hikes by dipping into their profit margins. A small % raise prices. A negligible number let people go.
> The biggest expense Rubio’s has been facing is debt — a burden that has grown since the chain was acquired in 2010 by the private equity firm Mill Road Capital
There’s an argument to be made that maybe the number of jobs in the fast food sector has decreased. But that’s also a myopic view since we need to know the labor situation statewide. Someone not in a fast food job might have found employment elsewhere which isn’t a bad thing, especially since the workers who do have those jobs are being paid a livable wage.
https://www.latimes.com/business/story/2024-06-12/the-fast-f...
Then why not just make minimum wage $100/hour?
There are tons of things people will just immediately stop doing if the prices go up to support labor that expensive.
Companies are not bound by morals, national identity, or any interest other than self-perpetuation. They are a virus that we harness to do good. When the virus overwhelms its host, its time for medicine.
Good, a job that cannot support biological needs should not exist. It’s not a viable business.
Why should I pay a stealth subsidy to whatever business it is.
> Do you want Big Tech to be American companies, or foreign companies?
This excuse was used to start wars, trample civil rights and employment rights. It basically means we must become like China to beat China. What would be the point?
There was a time in the not so distant past, that close to 100% of those "Minimum Wage" jobs were held by teenagers and youths with close to zero market value as employees, who needed their first few jobs to develop the skills, knowledge, resume and references so they could get an actual job.
Places like McDonalds and Summer Resorts and Amusement parks - were great places for youth to learn these skills. The real distortion is when you started having adults working in McDonalds. It was never a job to support a family - it was a minimum-wage job for kids to get started.
Those "minimum wage" jobs that you had a teenager in the 1950-1986 time period? They paid more than minimum wage does now, on an inflation adjusted basis. That $2/hr job in 1962 would be paying $21/hr if it had kept up with CPI.
That's the whole reason why adults started working in them.
Over time, federal minimum wage did not keep up even with national inflation rates, let alone regional cost of living changes. The result is that these employers, who were once forced to pay even their lowest level employees a living wage, can avoid paying even that.
What's gone awry in the last 40 or so years is that the labor market hasn't created enough new employment in what I could call "career" or "occupation" work - for adults, and as a result, they've started working in jobs that were never really meant for them, certainly not for doing things like paying rent, utilities, etc... and as a result - the working poor as a class has grown.
And $21/hour is not near enough to survive on in my region - (and is also a bit less than what most people in my area make at McDonalds (bay area)) - So you are in a round-about way proving my point.
Let me be as clear as I can be - "Increasing the minimum wage to be a living salary of $40-$50/hour would eliminate many opportunities for people entering the workforce who can't justify that kind of investment currently".
Leave it at the market-clearing level of $20-$25/hour, and ideally return to having teenagers/young adults working those jobs while grown-adults move onto other opportunities that our economy should be creating.
Jobs that that cannot support biological needs should exist as they are great for developing job-skills and experience in youth.
Do I think there should be jobs that would only be done in the context of parentally- or other-provided housing, food and clothing? I'm not sure. I lean towards the answer being no, but could be convinced otherwise.
I still don't agree with your 40 year take on this. When "fully grown adults" started flipping burgers, it was because you could live on the income that provided. Now you cannot (and ditto for lots of other minimum wage jobs). It was not the case that these jobs were "teenager only" and people took them even though they were impossible to live on, 60 years ago. They took them (slowly, over a period of time) and they gradually changed from teenager only work into "real jobs", and over a slightly longer period of time no longer acted as viable living wage work.
That said ... sure, the income levels for the lower 4 deciles of the population haven't kept up with things (until very, very recently at least), and this means in part that new jobs at appropriate (lower, but still livable) wages have not been created at sufficiently high rates.
> "Increasing the minimum wage to be a living salary of $40-$50/hour would eliminate many opportunities for people entering the workforce who can't justify that kind of investment currently".
Firstly, as I indicated above, I don't think it has to be that high. Secondly, I think that if there are "opportunities" that cannot afford to pay a living wage, I'm not sure anyone is foregoing much by them not existing. To be clear, what is meant here by a living wage is something that a full time job pays roughly 3x the local rental rate for an appropriately sized studio (perhaps 1BR) apartment in reasonable quality.
> Leave it at the market-clearing level of $20-$25/hour
"Currently, 34 states, territories and districts have minimum wages above the federal minimum wage of $7.25 per hour. Five states have not adopted a state minimum wage: Alabama, Louisiana, Mississippi, South Carolina and Tennessee. Two states, Georgia and Wyoming, have a minimum wage below $7.25 per hour."
There is not a single state that has the "market-clearing level" you mention, so "leaving it" there seems impossible. Tukwila, WA is the only city in the country with a minimum wage above $20.
I had a roommate when I started out and could not afford an apartment. At the time one could also rent someone's spare bedroom. Government zoning also got rid of boarding houses.
> haven't kept up with things
The increasing share of the economy that the government vacuums up comes from somewhere.
I also started out with a roommate when I had my first computing job, which was with a massive multinational. I could not have afforded my own apartment in Cambridge (UK), though that was caused by post-grad student debt than the salary level. I went on to rent a house with someone else until I emigrated to the US.
The fact that there are actually multiple pathways through life doesn't mean that we can't, as a society, draw up our own guidelines for what working for 40hrs a week ought to make possible, even if some people choose to (a) not work 40hrs a week (b) live differently.
Total government revenue as a percentage of GDP has been remarkably flat since the end of WWII (actually distressing to my preferred narrative in which it has declined and should not have).
I think you made that point. The other posters point was that this point is patently untrue. And it's very obviously untrue just by thinking about it for a few minutes. Peak hours for fast food restaurants (and most restaurants) are lunch hours where most teenagers would be in school.
They also tended to be open late night. The hours that teenagers can work are and have been heavily regulated for a very long time. No highschooler is working the 11pm - 4am shift at wendy's.
They were very obviously mostly employing adults.
And if you want a little anecdotal evidence, my father supported my family for a number of years working in fast food in the early to mid 80s during the oil crash
if you want further anecdotal stories, when in high school I worked retail. There were other highschoolers that worked there, but the vast majority of my coworkers were in their 30s.
When in college I worked graveyards at a certain 24 hour breakfast establishment. I was by far the youngest. Everyone else on that shift was in their 40s and had kids and families they were supporting.
We also literally have tropes about the old lady who's been working at the diner for 1000 years... "what do ya want hon?"
That trope didn't just come out of no where.
It's also the CPI-adjusted equivalent of 1960s minimum wage numbers.
giving me $1.25 * (304.702/30.6) = $12.44 or $1 * (304.702/28.1) = $10.84
my sources: https://www.dir.ca.gov/iwc/minimumwagehistory.htm https://www.usinflationcalculator.com/inflation/consumer-pri...
January 1962 $2 => Nov 2024 $21.03
Using $1.25 in Jan 1963 gives me $12.97 ...
I used $2 in 1962 because in the 2016 Republican primaries one of the candidates made a reference to their job working in a burger store using these numbers.
This is an excellent way to tell everyone you’re comment is just political garbage and can readily be dismissed. It completely drowns any possible signal out with a huge red flag.
You’re either making a statement about conservatives or you’re talking about actual ideas. You can’t have a meaningful conversation about ideas if you’re doing tribalism.
i am talking about an actual idea. an actual idea that happens to fit much more nicely into one political worldview than another. an idea that is repeated much more often by people who hold that worldview than by people who do not. an idea that is more or less demonstrably false.
so i am talking about both the (false) idea and the fact the it is an idea that continues to be talked about (despite its falsehood) by a particular group of people. that can be a meaningful conversation even if you don't like it.
It has nothing to do with feeling uncomfortable, it’s a statement about held beliefs being associated with a particular group and there is no evidence to back it up.
It doesn’t matter who he thinks holds that view. Discuss the idea and refute it directly or shut up. Drop the appeals to tribalism
At this point, it is more interesting that one political worldview still seems quite attached to the idea than the idea itself, which has been clearly shown to be false.
It's quite analogous to trickle-down theory aka the laffer curve. Shown to be false multiple times over the last few decades. Still promoted by people of one particular political worldview and not others.
That's the story here. The idea has been refuted, why are people still talking about it?
Nonsense: Fast-food chains never had a business model of closing during school hours! They remain open, and that shows each role has always required some adult employees with adult budgetary needs.
One can argue minimum-wage jobs are only for kids in school, or one can argue that a regular-businesses-hours company can have min-wage positions, but both together is incoherent.
It's not better to have people have no jobs and require 100% assistance.
> subsidy
Regardless of how you define terms, you'll being paying much more to help them when they are jobless.
> become like China
China has a largely state run economy, with the resulting problems.
It is actually. Former employees are free to learn new skills or do charity instead of being busy surviving a game they can’t win.
You are also subsidising an economically wasteful activity that cannot cover its own true costs - if fast food joint can’t pay a wage, it does not cover the negative externalities from extra traffic on the road, carbon emissions and people getting fat.
Business will be forced to innovate and invest in automation
>>Why should I pay a stealth subsidy to whatever business it is.
I think a lot of the argument around minimum wage is a disagreement (or misunderstanding?) about minimum wage workers.
Let's say you have a $10/hr minimum wage, and some company BigCo hires people and pays them $10/hr. Now, the disagreement: is BigCo actually getting $10/hr of value out of those workers? Or is it $20/hr, or $50/hr, or $5/hr, or $2/hr? Because I think that's a critical question both in terms of "should we subsidize those workers/BigCo" and "should we raise the minimum wage".
Some people do not currently, and may never, have skills that are worth $25/hr in terms of value produced in our economy. I think we need to make sure those people still have an acceptable standard of living, but I don't think setting the minimum wage to $25/hr is likely to do that.
I think this is the wrong question and it’s not our job to solve that.
Example - suppose I have a diamond mine, I can hire anyone with zero skill - homeless, drug addicts, criminals - pay them $5 an hour and they will dig up $1,000 of diamonds a day. What is the answer your own question - how much value is the business getting?
What we should consider instead is this - there is a certain cost for civilisation to continue. Workers must be born, educated, and then create the new generation. If they are not paid enough to continue the cycle, we will not let the country collapse, will we?
I as a taxpayer will end up picking up the tab in one way or another - whether it’s through food stamps, or in immigration or something else.
These jobs could be a total net loss once you account for carbon emissions and other externalities.
I would rather get these people to do charity work or plant trees instead.
And "biological needs" are an ever-increasing target, just beyond minimum wage. When minimum wage increases so does the target. Why? Because it's not about biological needs. It's about relative wealth dressed up as "basic needs".
I do think the US should have a minimum wage increase, but the discussion around it seems so disingenuous.
They more or less are, for those who pay for their own health insurance.
Why would have the same rule for those who receive health insurance as part of an overall W2/labor-based compensation contract?
https://www.irs.gov/instructions/i1040gi#en_US_2024_publink1...
"You may be able to deduct the amount you paid for health insurance (which includes medical, dental, and vision insurance and qualified long-term care insurance) for yourself, your spouse, and your dependents. "
"One of the following statements must be true.
You were self-employed and had a net profit for the year reported on Schedule C or F.
You were a partner with net earnings from self-employment.
You used one of the optional methods to figure your net earnings from self-employment on Schedule SE.
You received wages in 2024 from an S corporation in which you were a more-than-2% shareholder. Health insurance premiums paid or reimbursed by the S corporation are shown as wages on Form W-2.I.e. it's deductible for your business.
My point stands.
On the one hand: health insurance premiums are entirely deductible if you have schedule C income that exceeds their value. This covers more or less all self-employed people, who are the largest group paying for their own insurance.
On the other hand: health insurance premiums are not deductible if you do not have schedule C income that exceeds their value (and/or are eligible for an employer subsidized insurance policy), which means there is still a sizable and significant group of people paying for their own insurance and not able to deduct it.
I am sure you know my own preferred answer: convert all health insurance premiums into taxes that fund a single payer system, so that there is no difference between self-employed "self payers" and non-self-employed "self payers".
Given that we're unlikely to see that before I'm pushing up daisies, I would agree that either any health insurance premium paid by the insured should be tax deductible or none of it should be, to level the playing field. I think I slightly prefer the none solution, but I'm not actively against the all version.
It's clear you know what I meant.
The vast majority of employed people have a single reasonable choice: to take their employers insurance. Anything else would be much more expensive because of lack of deduction. When they change jobs, they are again at the mercy of their (new) employer. Sure there are self-employed folks, and it's different for them, but this thread is not about them. And of course most people with their own insurance choice are self employed precisely because everybody else doesn't really have a choice, which is the whole point.
So, can we please stop with this smoke screen? My popcorn reserves are running low.
Here in the US, FDR had a wage freeze as part of his policies [1] to deal with the continuing Great Depression that WWII had not stopped yet by 1942. Because of that, companies needed to get inventive about ways to increase benefits but not illegally increase wages. Companies started offering insurance plans.
That's where the employment/insurance coupling started.
Also the ACA Employer Mandate[1]. Get rid of that and maybe figure out some sort of "nutrition label" style thing to make it easier to compare offers that are more cash vs more benefits.
[1] https://www.irs.gov/affordable-care-act/employers/employer-s...
...or alternatively, removing deductions for medical insurance.
I worked at an entity with 300+ thousand employees and Probably another 200k retirees… I was able to pay full cost to retain my health insurance from them.
The benefits and out of pocket costs are incredible - my current CEO asked me why I do that rather that use the company insurance and I walked through it with him. It’s not possible to buy that coverage, between the legacy insurance plan and huge risk pool, only the largest entities can have the best insurance.
The “simple answer” is pretty easy. Put a 10% payroll tax with a $5M income cap, and build out Medicare with whatever benefits are doable under that cost structure. Let the market compete for extended benefits, which would work like a traditional insurance market.
The doctors and medical industries would be happy. People would gain newfound job mobility and freedom. Most people would save money vs the payments they make today. Rich people would be sad because taxes.
Something tells me the people in charge most definitely do not want this at all…
> For classical economists such as Adam Smith, the term free market refers to a market free from all forms of economic privilege, monopolies and artificial scarcities.
Employer-defined healthcare creates troughs of economic privilege, builds monopolies with respect to laborers, and enforces artificial scarcity in the supply of labor. It removes liquidity in the labor market if laborers aren't free to bid their labor to the highest bidder at any time simply because they can't risk their own health care. It's not a "free market" determined "solely" by supply and demand when the supply is artificially limited by the rent seeking inherent to employer-defined healthcare, no matter whether or not you think the solution is fairer labor regulations or how much you claim to hate government oversight. That's a market failure.
Shareholder return is not a free market function, in fact for most businesses it’s in the interest of the shareholder to have zero competition, as competitive forces require expenditure in labor and dollars to improve the product at lower margin.
Apple is the best consumer example of this. In segments where there are no competitive forces, say Mac displays, they ship high margin, mediocre products for an extended lifecycle. You can buy a shitty LG for half the price of a mediocre Apple model. The same thing happened in the pre-retina cheap MacBook Air - that thing lived 3 years too long because where else are you gonna go?
A free and liquid market in labor has some overlap with what people concerned with fairer labor market regulations want, but in other areas is diameteically opposed to what they want.
Free markets are unrealizable abstractions that lots of people like to appeal to vaguely, but very few consistently favor as more than a rhetorical device.
Something tells me the people in charge most definitely do not want this at all…
Exactly. The bigger the better.
I'm still baffled why local and state govts aren't easing into a public option.
Ditto the largest (self-insured) employers. It'd be so easy to extend benefits to their partners, local supporting businesses (eg daycares), and so forth.
That's easy enough to answer: lobbying efforts by major insurance companies (and insurance company adjacent companies) prevented it. In many states such lobbying efforts prevented it entirely in the legislature adding direct laws and some state constitutional amendments that states explicitly weren't allowed to build a public option as a part of their healthcare exchanges. It was a big part of the uproar when the ACA was passed at the federal level, a big part of why many states' healthcare exchanges were sabotaged and broken on Day One, and a large part of why the ACA itself made too many compromises in how it established the state-driven healthcare exchanges.
[1] https://en.wikipedia.org/wiki/Campaign_finance_reform_in_the...
Because socialism is well known for unsustainable costs and poor service.
Businesses like Walmart and McDonald's should pay their own costs without relying on the crutch of the public purse.
If these businesses are so inefficient that they can't survive without handouts then it is good and proper and correct that they die off and be replaced by more efficient businesses.
h/t economist Kevin Phillips.
But let's put that aside. What we have now isn't amarket distortion caused by using pre-tax dollars for employer insurance. It's that an employer can collectively bargain for insurance in a way that an individual never can.
If you have 100,000 people in a group then statistical norms come into play of how often you'll need to do a transplant or [insert expensive procedure here]. Plus you have the negotiating power to get better coverage at a lower price than an individual ever can.
So individual insurance can never work regardless of tax policy. Tying insurance to employment is bad for pretty obvious reasons. And this is how we return to "private insurance shouldn't exist".
Some other countries have private insurance as an option. For example, you can buy private insurance in the UK and some provinces of Canada if you want. Some people obviously feel it is worth it to them to do so (faster time to treatment, private versus shared hospital rooms, etc.). The difference from the US system is that there is a public system available without this expense.
It can work, but it needs to be very carefully regulated.
[1] https://www.pewresearch.org/short-reads/2020/09/29/increasin...
You're subsidizing those wages with your tax dollars. You're paying billions per year to make those low incomes livable. In the end it's just corporate welfare:
https://www.forbes.com/sites/clareoconnor/2014/04/15/report-...
https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-...
https://laborcenter.berkeley.edu/a-downward-push-the-impact-...
It's not the case that they wouldn't employ people. They're not employing people now out of the goodness of their heart.
If they paid living wages (as they should) you'd pay less. Good businesses pay their costs.
But as it is, the likes of Walmart and McDonald's are privatizing their profits and socializing their costs.
Under your proposal I'd be paying even more tax dollars to those rendered unemployable.
> It's not the case that they wouldn't employ people.
People who produce less value than they cost become unemployed.
You probably don't think of yourself as a socialist but socialism is what you're wholeheartedly advocating for here.
And the welfare state you're supporting the worst kind of socialism: corporate handouts for privatized profits and socialized costs.
Or, put differently, it makes the profits of the companies who hire them unsustainable. IMO allowing an non-livable wage in order to subsidize profits isn't a great policy.
(To add some nuance, I think it’s ok in some cases for short duration, like subsidizing new industries or those related to national emergencies, if it doesn’t become a long-term strategy. In general, those that pay extremely low wages are not part of those categories)
Walmart and McDonald's are good examples of this.
So true - imagine an iPhone made in China - the horror.
Attaching medical insurance to one's job is a market distortion caused by government tax policy. I.e. it enables one to buy insurance with pre-tax dollars rather than after-tax dollars. Making medical insurance premiums fully tax-deductible would fix that.
> A minimum wage high enough that people making it don't need food stamps.
That just makes those people unemployable, and will need food stamps even more. Nobody is going to hire people who cost more than the value they produce.
> Google should be broken up into Search, Browsers, Mobile Devices, Ads, and Services, and the units prohibited from contracting with each other.
Google is already in trouble because AI is disrupting their search/advertisement business model.
I'd be careful about destroying big business. The US is only part of the world. Destroying US big business means other countries will have those companies, and it's lose lose for the US. Do you want Big Tech to be American companies, or foreign companies?