Since that factory can and does move. Taking all wages, living, minimum, and otherwise. It’s time to be rational and implement basic income.
If you go to a developing country, you’ll see the majority of the urban poor living in squatter settlements. Like this. What do you think the rent is like in those places?
Contrast with the US, where it is against the law to live in such squalor. Where in the US can you find a legal dwelling that only costs a few dollars a month? Housing projects are cheap, but they aren’t that cheap. They are also very difficult to get into and aren’t closely situated to jobs. So right off the bat, your American worker is going to require higher wages than their foreign counterpart. Even if they are perfectly willing to live on nothing but ramen and tap water, they need a higher wage because everything, even the basics, cost more.
I don’t think most Americans really want our workers to get paid the same as foreign workers. Personally, I know I don’t want to live next door to a squalid slum where everyone’s trying to eek out a living on $5 a day.
The law supply and demand combined with global trade doesn’t care what you want aside from what you are willing to spend. Do you only buy goods and services where the whole supply chain pays American wages?
Say what?
You wanted to know why American workers should be worth10 times more than a foreign worker. I’m explaining why. They are worth more because it is more expensive to live in the US.
If you disagree with this reasoning, you should just say so. But just understand I’m not making an argument about how the economy “should” work. I’m just stating the facts.
I do disagree with that premise. A person’s cost of living is irrelevant for that person’s market value.
What do you think determines labor costs?
Supply and demand. I don’t care what your expenses are. If I’m not in the market for what you provide I’m paying you exactly 0. And anyone who can earn enough to have a surplus is a refutation of one’s worth being valued exactly at one’s arbitrary expenses.
Let’s say you have a factory.
You tell prospective employees that you will pay them $1 a day. You don’t get any takers. You tell them you will pay them $3 a day. Still no takers. You go up to $15 a day, and finally you have people lining up at the door. But if you have to offer $20 day before you can find enough people to actually keep the factory running at top production.
Externalities set the wages, just like externalities determine the cost of a piece of machinery or the cost of heating/cooling the factory floor. Consumers might be willing to only pay $1 for your thingamabob, but if your manufacturing costs are $2 for each unit, then you will NOT be selling that thing for that low. Not unless you want to go out of business. Supply and demand determine how much profit you make. Not how much your costs are.
Not correct. It’s supply and demand. Policy distorts market value. If there is a means based welfare state potential workers rationally determine not to give up benefits for less pay.
But policy isn’t stopping 1000s of giant container ships crossing the oceans every day. Policy doesn’t stop 10s of millions of economic migrants that work in the gray and black economy.
Reality proves that labor, like any other commodity, is governed by the fundamental laws of supply and demand.
On the surface your point of view proposes that someone with a Corvette and jet is worth a higher labor wage compared to the guy who owns outright a Pinto merely based on that person having higher expenses.
I thought we were talking about low-wage factory laborers. Not figments of your imagination.
But here’s the thing, if you’re looking for laborers and every single person who knocks on your door owns a Corvette and a jet and wants a wage that allows them to keep said items, guess what? You won’t have a choice but to pay them that wage if you want to run a business.
If you’re looking for laborers and every single person who knocks on your door wants to live in an intact dwelling with running water and electricity and have enough food to feed themselves and one other person, GUESS WHAT? You won’t have a choice but to pay them that wage if you want to run a business.
Supply and demand comes in only when you have enough people who are willing to take you up on your most miserly offering. But society has a vested interest in keeping you from being too stingy since people aren’t just laborers. We abolished slavery a long time ago. Laborers are also members of a community. Someone who has to work 16 hour days just so they can earn enough to eat is not a functioning member of society, and they represent a waste to society rather than a gain.
And yet those laborers are, every day, being displaced by cheaper foreign and immigrant labor and automation. Again, the facts are your worth is not determined by your expenses. And what determines the cost of these “externalities” and expenses? Supply and demand. Society can try to distort the market like Venezeual and Zimbabwe with crazy price floors and caps but black markets flourish. That’s why there is no real will for immigration control. People, by their actions, have chosen to contradict their stated support for a wage floor. Near 100% of Americans buy things made in conditions they’d not accept and at prices of labor they would not currently accept. The American consumer trumps the American idealist who wants to virtue signal. Even when the consumer and idealist share the same body.
Sorry to be a wet blanket, but there are some discussions that are getting confusingly conflated here.
Factory jobs are not about the very bottom of the income distribution. In America they have and are generally been reasonably paying gigs. Current hourly wage in United States Manufacturing is $20.33.
But for a wide variety of reasons, and not generally the ones used as scapegoats in the political cycle, there are fewer of those jobs than there have been.
More jobs in America are now in service industries. Thanks to automation each employee in manufacturing has much higher productivity and there are fewer of them needed. These manufacturing employees also now need to be more educated than in the good old days.
Standard of living continues to high in the United States. Our median (not average, which is more distorted by wage inequality) per capita income remains the 6th highest in the world, ahead of France, the UK, Germany, the Netherlands, and Canada. (Top three are Norway, Sweden, and Luxembourg.)
It is certainly a problem that in America some in some service industry jobs do not make living wages. You should not have to be on food stamps with a full time job. The floor should be solid and there are good discussions to be had whether that means a national minimum guaranteed income, playing around with the earned income tax credit, or a national minimum wage of one number or another, or locally pegged living wages. (I am biased to the last but that is neither here nor there.)
But the other problem, the one most tied to the fact that large numbers of factory jobs, especially ones open to those with little education, are never coming back, is that wherever that floor gets set more are going to be near it than before, and more wealth is going to become increasingly concentrated into the accounts of the owners of the capital, not the 1%, the 0.01%, and passed on from there intergenerationally.
Making the floor more solid is an important thing to do but it does not address that fact. The floor will never be the middle. Since apparently not in manufacturing where will the future middle class jobs in America come from? How can we create them?
Manufacturing would return without a wage floor. The US actually gets manufacturing plants from European automakers in the South because of the difference in labor costs in the South US vs the Midwest.
The reason service jobs like pushing a broom or putting a pickle on a burger aren’t outsourced is because you can’t push a broom on the floor at Hardee’s from China. But the robot picklers are coming.
The tragedy is people really think the market works the way they think it ought to.
No. They would not. The simple fact that manufacturing job wages are well above the wage floor proves that.
I know of at least one company who is not automating in Asia because people are cheaper than machines at the moment. That will change as soon as wages there rise - which they will. Plus, some factory jobs have to be automated. Some components on printed circuit boards are so small that people can’t put them on by hand, no matter how cheap their wages.
And octopus doesn’t seem to understand supply very well. As monstro said, make wages too cheap and no one wants the job, or will go someplace else. And the ones who do want the job won’t be qualified for anything else. No, sweeping floors is pretty hard to screw up, but if you hire people working on expensive machines making expensive products a few screw-ups can wipe out your profit. People falling behind and slowing up your line can wreck havoc on your production schedules. As will absenteeism.
Hmm the new auto plants in Alabama and other parts of the American South sort of prove that they would and they are labor cost sensitive. Will people give up food stamps and welfare for $5/hr? Maybe not but that’s not because of the laws of supply and demand failing.
I understand supply just fine. You guys act as if prices are set in stone. No. Prices absent government control constantly rise and fall. For example you think I have to pay a government mandated wage to have someone mow my lawn? Nile. Some dude with a lawnmower and a truck is willing to do it for $x cash. How will the government ever know what he was paid? Furthermore since he’s self-employed im not mandated to pay anything more than we agree. Say hello to the independent contractor economy.
And if wages are above a minimum floor that is further proof that market forces and the law of supply and demand work.
Remember that even with the anti-labor initiatives of the last few decades, about 10% of US manufacturing workers are still unionized. That exerts some upward pressure on wages for the entire manufacturing labor market. But it doesn’t mean that absent unionization (and most employers would strongly support and encourage absence of unionization) those wages would still remain well above the wage floor.
You mean ones like the Mercedes plant in Alabama that pays an average of $65/hr? (Highest in the country; higher than in unionized plants.)
No, Southern auto plant workers are not being paid at the lowest legal wage floor.
You are simply factually wrong.
Now mind you, some of the auto plants in the South in “right to work” states are paying less than Detroit union contracts demand. VW is the lowest, at $38/hr. The industry does not pay as well as it used to but even entry level is well above the floor. Upward pressure from unions may still have to do with it, as Kimstu opines, some.
Auto manufacturing (and manufacturing in general) is still a decent enough middle class job. Again, the problems are that there are both not going to be many of these jobs, and the jobs that exist in manufacturing are not jobs that one can come in off the street with a mediocre High School education and get or handle. These are highly automated plants and they need workers able to interface with programmable logic controllers, able to read and understand mechanical and electrical prints, who can understand variable drives, device net, ether net, and control net systems … so on. A mandated wage floor that is too high is not the problem. Not having adequate training programs and not paying well enough to attract those educated well enough to learn the specific job skills quickly, or phrased alternatively, not having a large enough pool of those so educated at their price point, inadequate supply for the demand, is the problem.
So why wouldn’t an American in the absence of the state paying for all expenses not take a job with no wage floor? Something intrinsic to Americans? Not all factory work is high payed and high skilled. Some of it’s minimum wage which usually means the worker is overpaid relative to his market worth.
Even with relatively cheap trans-oceanic shipping local factories would have some advantages. We can’t have cheap assembly in the US absence a wage floor? Are the Asian factory workers that superior?