I like how you announce the tone of your statement before making it.
You are treating jobs in a black and white fashion whereas you should be analysing them in terms of marginal utility and marginal opportunity cost. Economics is about trade-offs along slopping curves.
Prices send signals which give information and incentives regarding the relative scarcity of a good which itself reflects its utility and opportunity cost. Any floor or ceiling either has no effect (if the ceiling is above the market rate or the floor is below the market rate) or it tends to prevent the production of goods even when their utility is above their opportunity cost*.
I like the idea of giving people enough to live on, at least minimally. Even Milton Friedman agreed with that. Not by messeing with prices-signals, though. After-market solutions can be much less distorting.
I have to add a caveat for non-excludable and non-rival goods but your arguments are not linked to these goods.
Well, there are small businesses who assert that they can’t afford to pay decent wages and that if they have to pay their share of taxes, they’ll go out of business, to which I say you have no business being in business, if that’s the case.
So, if I you currently clean your own house, and I offer to do it for $.50, you’ll just say: *No, that job is not necessary, so I will continue to clean my own house. *
A direct transfer. Friedman was in favor of it in the form of a tax credit. I think a monthly check would be preferable; a check feels more real to most people than a tax credit, most people budget on a monthly basis and inflation can vary significantly from month to month. The last factor is relevant if such a direct transfer were varied for economic-stimulus reasons.
You might ask where the money would come from. Taxation and/or increasing the supply of money. The latter should only be done when there is insufficient demand until aggregate demand is a few percentage points above aggregate supply. Reasonable people can disagree on whether “a few percentage points” should be 2, 3, 4 or 5% inflation.
Not to mention the fact that the law of the jungle in social animals is largely bunk. A team of 10 individuals can overpower any 1 individual, no matter how strong that isolated individual is (as an example, most cops and correctional officers are far weaker as individuals than high risk criminals, but they still win 99% of the time) so there is massive selection pressure to have individuals cooperate together as a team/culture/nation. People generally can’t/won’t accept how dependent we are on each other since it flies in the face of all that.
Does anyone know if the stats for “who earns minimum wage?” have changed much in the recent downturn? Last I checked, only a couple percent of workers earned federal minimum wage, and >50% of minimum wage (or less) earners were under 25. “Minimum wage or less” includes folks who might actually make more than minimum wage after tips are included.
I’m often puzzled where living wage numbers come from. They often seem high. Roommates, rice and beans, and working more than a piddling 40 hours a week will get you far on very little. When I was in grad school I was expected to be in lab 72 hours/week 48 weeks/year, including holidays. That $25,000 stipend comes out to less than minimum wage. But by having roommates, eating cheap, and knowing where babies come from, I was able to stuff $5k/year into an IRA, not work on Sundays, travel 1-2 times a year, and pay for health insurance on my own.
I felt pretty well off, and when I didn’t, I just needed to look at my Uzbek friend who, on the same wage, was supporting a child and stay-at-home wife, and sending money back to his parents in Uzbekistan.
If I need that $.50 that badly then yes. I used to run a small business, a pet store. Payroll was always treated as a non negotiable overhead. I have x amount of work and y amount of employees to do it. If I have more work, then I need more employees. If the market is fluctuating then I have to make the choice of retaining my employee’s services as a guard for when I need them versus the savings of not having them. I understood that I would not always get my money out of them every hour. When I needed them though, their help was indispensable. Employee’s salaries were never up for negotiation. If things got tight, my partner and I profited less, we bought less stock, or bought locally to avoid shipping. We could adjust hours to be more efficient and looked at other non essential services we might be employing. You can negotiate with your suppliers to get a better price on goods, etc. If a business is run so tightly that increasing payroll 30% would put them under, they aren’t even solvent NOW.
So while I may not like paying an employee highly who is not always working at optimal utility, it ultimately is my decision to determine my NEED. I would suggest that business that employ a large number of non essential services consider employing those workers on a contract, commission, or other performance type basis if they do not want to employ them directly and pay them properly.
At peak, we had a large aquaria section that had roughly 80-100 tanks running. Keeping up with the cleaning and general duties could easily eat up 1 and 1/2 normal work days for one employee. Now it is arguable that I am quite capable of doing that duty myself, and I likewise could delegate it to a “floater” employee who could keep up with it when they aren’t otherwise occupied. However, aquaria is a specialized field, and a busier section of the store. An employee who is dedicated to that area is a luxury, but one that is providing a valuable service. So my scales have to weigh the ease and potential profitability of a dedicated aquariaist against the savings and additional workload upon myself and the floaters. What they make is really not relevant to the discussion of the need for their services. It is my position to set the price I’m willing to pay for those services so any overpayment is my mistake.
My position is that any employee regardless of services provided should make a living wage because those who skills are so menial they do not merit such, are arguably either non essential or luxury services anyway.
How do you define “essential” and “necessary”? You used the term “indispensable”. Did you really mean this or was it hyperbole? Do you think there are categories of goods in-between essential and luxury? Do all goods fit either in the former or the latter? Do you think luxuries should be dispensed with? Do you think anything non-essential goods ought to be dispensed with?
Essential: Those services needed for a business to function at a minimum level without loss of revenue due to inability to serve it’s customers, or meet its production commitments (different from goals or projected sales). Essential services allow a business to break even and produce that minor profit needed for emergency purposes.
Luxury: All goods and services that allow a business to maximize profits through specialization, or reduction of menial workload upon higher skilled employees or management. Examples in a retail setting might include janitorial staff, dedicated phone workers, or dock staff in a store that does not need professional warehouse services. All of these services allow for greater profit in good times but are non-essential and can be adequately performed by general staff.
I meant what I said. During busy season, we had enough customers that I had to hire additional seasonal staff to keep up with them. Having to mess around with the aquatics department would not have been feasible without that employee. We would have lost a great deal of revenue though an inability to serve all our customers, and a need to perform routine tasks necessary to ensure the health of the animals.
There is no category of goods in between essential and luxury with perhaps the lone exception of food and clothing goods which are both.
I see no reason to dispense with luxury goods or services. those that can afford them should be free to purchase or invest in whatever they like.
Why did you say “My position is that any employee regardless of services provided should make a living wage because those who skills are so menial they do not merit such, are arguably either non essential or luxury services anyway.”
What was the relevance of saying they were non-essential/luxury if not to say that it doesn’t really matter if they’re dispensed with?
You talk about how essential employees have for goal “a minimum level without loss of revenue due to inability to serve its customers”. If an employee doesn’t come in to work which makes you lose revenue due to inability to serve your customers but your business doesn’t go bust, was that employee luxury?
Also, do I understand correctly that if I hire people to make widgets and that, to break even, I need to sell 500 widgets, the employees who make the first 500 are essential whereas all others who make the same goods are luxury?
What if, to break even, I need to free up the time of my higher skilled employees by hiring someone, is that someone essential or luxury?
I’m used to thinking in terms of marginal cost and marginal gain. I’m used to asking myself if one more unit of something is worth it at a given cost. This essential/luxury dichotomy confuses me.
What do you think of the idea of a Basic Income Guarantee?
Everyone gets a check with no means testing. This cuts back on bureaucracy. You would fund it the same as you would a tax credit along with also collecting it back in taxes on the higher brackets that don’t need it.
I don’t want to defend all its details, but yes, that’s pretty much what I was thinking about. And if anyone calls you a commie for wanting this, remind them Friedman and Hayek were in favor of it : )
Something like it, along with universal health care, would solve so many problems.
There’d be plenty of work for those who wanted it; both because there’d be plenty of demand for goods and services, and because many people would choose not to work full time.
There’d be huge savings in both government and private bureaucracy. No Social Security, no unemployment insurance, no employer sponsored medical coverage.
People could move from job to job as they choose, or not work ar all if they’re happy with just the basics, or have a full time career if that makes them happy.
Which is also the exact ideology that is happening in our corrupted government and those in bed with them rotating between the public and private sector to stuff their pockets at the rest of the countries expense.
Which is why I am voting for Ron Paul for a smaller government, and end to lobbying and cutting to defense to border protection only. The gravy train for the mega corporations and financial sector needs to come to an end. They have had a free ride for a long time with Sugar Daddy Uncle Sam, where he has protected them in their business and financial dealings around the world, and reaped the most benefits and shafted everyone else at my tax dollars expense.
They need to slap on their bootstraps and quit relying on Uncle Sam to be their Big Stick and Bail Out free card, as well as law making machine to help themselves out in order to stifle competition.
No, it’s not reasonable for an employee to expect a living wage. That suggests that the purpose of a job is to provide a wage. Even from a Marxist perspective that assumes all wage earners require a living wage and are not just looking for a little extra money.
A job is worth the money consumers pay minus the profit associated with the risk of operating the business.
If the resources needed to do the job exceed the value of the wage then it doesn’t make sense for that individual to enter in to a work agreement. This varies greatly from person to person and includes transportation, child care, physical ability, etc. that also applies to the employer. If the wages and resources needed to make a product or service drive the price beyond what the public is willing to pay then it doesn’t make sense to engage in the business.
“All that a man has is his time.” If you sell chunks of your life away for cheap, you’re shortchanging yourself as well as anyone in competition for the same job.