Yup.
I know. I was using the part I quoted of your post for a jump off point, not for a disagreement on that bit. Sorry that that wasn’t clear.
When we need to hire someone, I don’t make final hiring decisions, but I do schedule and occasionally conduct interviews. I also post and review some of the job applications.
In my experience, the pool is already too big. We put out an ad this morning, and now all of next week is scheduled with interviews. This isn’t even the pandemic, it was like this before. Every time we go through this process my inbox just explodes with resumes, and there are so many qualified people.
On the other hand, I think you’re wrong about employers only selecting the creme of the crop. We could hire doctors who apply for our nursing positions, or nurses who apply for our receptionist ads, but uh, they tend to ask for more money. I also have to worry about bad habits that more experienced candidates might bring with them. (For example, do the originals go in the front or the back of the folder? You won’t believe how uncompromising people are on that one in this industry.) But seriously, I was told early on, and I agree in practice, sometimes it’s better to grab someone right out of school and mold them to your liking, especially at entry-level.
So the threshold is “qualified”, not necessarily “best qualified”. I like to give people a fair chance. But look, there are only so many interviews we can do in a week or two, and every day that position isn’t filled means somebody has to work double. All too often that person is me. So as far as getting your foot in the door (without references), a lot of it comes down to first-come-first-serve.
~Max
What events in your history form the premises of your inference?
~Max
The Century Foundation piece linked yesterday touches on this. As with any supposed inflation, pinning down an actual number is hard, but the concept isn’t the least bit outrageous. We were discussing MPC and APC before; this money should move.
The market has already outpaced the government here. Most large companies already pay at least $15/hr. The major exception is the fast food industry but it’s quickly getting to a point where they are raising wages every year in order to be able to staff their day shifts at all - when teenagers are in school you need someone to work. The big flaw in theories about min wage driving unemployment or inflation is the idea that a huge number of people are working for $7.25/hr. Almost no one is. Companies need to compete with the total package that the government offers to people who choose not work, and they are far more interested in that than the minimum wage floor.
The energy spent on anti-minimum wage fallacies might be better directed towards fixing the burdensome Obamacare requirement to offer health insurance that most hourly employees refuse to purchase anyway - this has caused many entry-level employers to eliminate full-time positions and forces people to work two jobs to get 40 hours of pay per week.
The OP asks about the effects of raising the minimum wage. Anyone making making $7.26/h will also be affected. Anyone making $7.27/h. Etc. So your objection is irrelevant. And we’ve been over this already, literally just yesterday.
Maybe some would understand. If labor in your business is half the product cost and your labor costs doubled that would mean you would need to charge around 80 for a small dog. I bet at those prices alot more people would think they could do their small dog themselves. That same calculation would be going on throughout the economy, as prices rose in response to the minimum wage increase people would use less of those services. The same thing happens to labor demand. As the price goes up, the demand goes down. The [Seattle minimum wage experiment](https://evans.uw.edu/sites/default/files/NBER%20Working%20Paper.pdf) is a great example of what happens. When the minimum wage went up, workers in the minimum range saw their hours cut. So they were making a higher wage and working fewer hours. It was not homogeneous, some workers worked the same hours and some lost their jobs. On average low wage workers made 125 a month less than they made before the change.
Since Seattle has come up again, Here’s the top level page for the UW MW team:
https://evans.uw.edu/policy-impact/minimum-wage-study
Lots of studies thus far, and no doubt more to come.
And that’s the thing. We have inflation either way. My costs have been rising, my rent, my utilities, and my personal needs, so I need to increase my prices anyway.
There’s not much I can do to increase productivity, other than having employees that are better at their jobs, which I already reward with higher pay.
I am in a labor heavy industry, where well over 50% of my revenue goes right back out the door in labor, so a wage increase would have to go to my clients.
I have been eating the increases in my costs over the last 8 years, with only one small price increase in that time.
Maybe, probably not that much. Plus, I would not need to double my wages, as very few of my employees are making less than $15 an hour.
I figure I’d probably have to go to somewhere mid $60’s.
Plus, and here’s the key, so does Petsmart, so do all my competitors. If I raise my prices, they may try going somewhere else. If we all have to raise our prices, they may as well stay.
Same with all industries. At first people will balk at the increased prices, but then realize that they don’t want to make their own cheeseburger.
they’d try. It’s funny when they do. Sometimes I get to charge them more to fix what they messed up.
Anyway, as I said, I lost come clients. But I also gained clients. I get new clients everyday. I was just interrupted while typing this to take a phonecall from a new client.
Most industries have much lower labor costs. Fast food is usually closer to 15%.
You hire based on what you need to provide the goods and services that customers demand from you. If you are hiring based on how many people you can afford to employ, then you are doing it wrong.
I have my questions on the applicability of that study, as it being a local thing, it is not that hard for industries to move a little bit. Much easier than moving out of the country entirely.
Anyway, for the sake of argument taking their conclusions as gospel, it means that people are making more per hour. If they work fewer hours, then they have more free time. If they don’t work at all, then they have time to learn and train and find a new job.
I’ve been trapped in the MW game. Where you have to either be working or preparing for work every minute of your waking life just to keep ends meeting up. You don’t have time to learn anything, you don’t have any time to look around for a better job, much less interview. You barely have time to maintain your own sanity, much less your health or your household. Always running, and always falling behind.
And that’s with owning a relatively reliable car. I don’t think that there is any way I could have made it had I not been fortunate enough to drive a stick, and therefore get a great deal on a car that would have been well outside my price range had anyone else actually wanted it. (5 speed station wagon, anyone?)
It wasn’t until I found myself unable to get a job during the 2009 recession that I actually broke out of that cycle of low wage jobs, or at least, found some breathing room to start to work out of it.
So, in the end, no job is better than a job that doesn’t pay your bills, IMHO, and IME.
Yeah, I’ve always wondered about those arguments that raising the minimum wage will cause businesses to have fewer workers. Why did they have excess workers in the first place? If demand only requires 8 workers, why have 10 (assuming 8 can cover all shifts, etc.)?
If demand requires 10 workers, and the price of those workers increases, then costs go up, but that doesn’t change demand. Maybe second order stuff? Costs go up for the whole industry, so prices go up, which causes demand to go down, which means fewer employees because lower demand? If you’re going to make long chain arguments like that, then why not say demand will go up because wages have gone up, and the business will have to hire more workers to keep up. Seems just as sensible to say that raising minimum wage will increase employment.
I do understand that some business may be barely getting by, and aren’t able to absorb any additional costs. In that case though, a change in rent, material costs, interest rates, utilities, etc. or minimum wage would also be enough to put them out of business.
I also wonder about the arguments of higher minimum wage pushing businesses to automate. I guess it can happen, that a company doesn’t bother to automate at $7.25, but at $8 it’s robot time. If the jobs can be automated, then why aren’t they doing it now?
Yep, almost always. The question is whether changing some input will move that from the baseline one way or another. There are some reasons it might, but I couldn’t tell you they’re actually significant or not.
When do I open/close? Slow business early or late in the day may be sufficient to stay open at those times, but not with higher labor costs. So I change the hours I’m open and reduce employee hours. If I raise prices to cover the higher costs, I may lose customers and not need as many staff at peak times, so I don’t schedule as much overlap. The UW group saw just that at restaurants; total payrolls remained constant but hours were reduced. Some people still came out ahead. Some did not.
If I run a daycare, I need one worker per X kids. If I raise prices and lose kids, I don’t need as many people. Or, if drop-off/pick-up is distributed, I can reduce hours by having some employees come in later and others leave early.
The key here is marginal profit per employee or per employee hour.
That’s not to say that everyone will raise prices. Child care is something like 80% payroll and benefits. Not so with grocery stores. And the same group found no increase in grocery prices (beyond baseline inflation that we’re all seeing.)
Short run costs v long run costs. The decision to substitute capital for labor as the labor supply curve shifts outward versus your budget constraint.
It’s generally expensive to buy the robot up front but once you have bought it the costs to keep it running are negligible. The employees have now gone up in price per hour plus their other costs.
Two of what the Buddhists call the “Three Poisons” (the third being anger):
In his early teachings, the Buddha identified “three poisons,” or three negative qualities of the mind that cause most of our problems—and most of the problems in the world.
Hard to argue with that.
I think the real damage is not so much the inflation but we are squeezing people out of the job market who are slightly less marketable. Higher paying jobs will attract more attractive workers.
Since it is impossible to calculate anyone’s actual contribution to the production of any good or service, we can simplify this by paying everyone, including CEOs, the same wage. This of course would mean no one would be a CEO, which would be good, and the rest of us could just get on with producing goods and services for need rather than profit. It’s not like we aren’t already producing more than we need.
The funny thing is that when I was making tons of money in computer design, I’d have been hard pressed to compute exactly how my efforts helped the bottom line. Especially when I was a manager. It’s much easier for a MW worker.
The problem has been not that we couldn’t compute their contribution, but that their lack of power (the dismantling of unions) has meant that productivity increases went to their bosses, not them. It wasn’t always like that.
So the chicken McNuggets cost another 50cents. Big deal. Low paid workers who get paid a decent minimum wage have more to spend thereby making rich business owners richer. Win/win, IMHO
I think it’s just about always been like that. Roughly 1946-1975 looked a little different for some workers in some countries, but that was a historical blip, like the better conditions some peasants won during the Black Death. And some sectors are better sometimes, of course. My point was made to suggest there is no justification for inequality of remuneration, only power to exact it, and on that, we are entirely agreed.
There are tradeoffs. If minimum wage workers get paid more, prices inevitably get passed on to the consumer at some point - maybe not initially, but eventually. The short-term stimulus fades over time. Moreover, it compels management to find ways to increase productivity of single workers, which can, over time, lead to less stable employment. Minimum wage workers, unfortunately, fall into a trap in which their spending power increases in the short-term but isn’t sustained. This is not a reason to oppose minimum/livable wages, but the pandemic is already showing why we would want to be careful about not raising wages too much too quickly.