As has been pointed out in probably every single discussion about wages on this board, most people earning federal minimum wage are not living in poverty, and most people living in poverty do not work full time if they even work at all. Of course “poverty” and “living wage”, whatever that means, are not the same. But we’re talking about jobs in parts of the country where living is cheap. I’m a living example that $10 is far above a living wage. But if you want to look at that level, the median age bumps from 24/25 to 30 (no surprise; people earn more as they gain experience), and the number of workers bumps from 2.5MM to 17MM, out of labor force of over 150MM.
That all said, I think the evidence is weak for much price elasticity of demand for labor at the current federal minimum, which you would need in order for elimination of wage floors to increase labor substantially. I am eager to read papers showing otherwise. But until then, I don’t think dropping the MW has much use.
Which is why it’s only one part of a package. The other ideas include continuing adult education throughout life and a basic income.
Well, if that’s the case you made my point about eliminating minimum wage for me but in another manner. People just won’t do it. So why make an unnecessary law? But anecdotally I labored as a teen in the logging industry for just over $2/hr. Family business and under the table but still I did it and I was thrilled for the opportunity.
People volunteer. That’s for free.
You got to look at the total package. You want benefits like ACA, continuing adult education with a voucher targeted to in demand skills, basic income, more generous need based safety net? Than you need to demonstrate that you are willing to contribute to society a fair proportion of your time for productive purposes. And if that is picking up litter for 30-40 hrs/week at $3.75 an hour then I think that’s fair. This sounds very socialistic. I guess it is.
As an individual what do you get? More people producing goods and services means there is more stuff to buy. Which means prices should drop somewhat. Additionally, with basic income, earned income, and need based assistance for the disabled a decent lifestyle can be lived. The trick is packaging and selling socialism. To do that like LSLGuy mentioned requires addressing moral hazard. Rational policy addresses human nature and humans don’t like freeloaders.
The last bit is really “humans like to freeload for themselves but resent the heck out of it when other people do it to them.”
Other than that quibble I agree with your whole post.
Recognizing that all forms of economic rent-seeking are freeloading by another name. Cartels, monopolies, and cronyism are all forms of freeloading. As is a non-trivial fraction of financial engineering. Where indeed are the customers’ yachts?
Somehow that freeloading is good. Or is perceived as some “necessary evil” that has to be tolerated to run a capitalist system. No matter how large the freeloading fraction gets to be vs. the total economy.
That’s all well and fine for you. People also work unpaid internships. But the people we need to get to work are not the folks moving into the family business, volunteers, or educated people for whom an internship is a natural step. You’re dealing with two completely different groups of people.
You’re asking some being paid a basic annual income - let’s say it’s $20,000 - to go to work forty hours a week to raise their income from $20,000 to about $24,000. The number of people who will do that is not zero, but it’s very, very close to it.
Now, if you’re throwing in health care and education, well, you’re effectively raising the wage, and now we’re talking. I’m a bit concerned about the bureaucratic weight of all this, though, and let me ask an honest question; rather than paying people a pittance but throwing in a bunch of administration to also give them education credits, why not just pay them a better wage and let the market sort things out? You can still have a basic income. Why complicate things? This reminds me of the old Dave Barry joke; “The problem with poor people is they don’t have any money. They can’t afford food, housing, and medical care. The logical solution would be to give them money so they can buy those things. So of course that is not how the government does it.” Youve got me intrigued with basic income but you’re losing me when we’re making people work for education vouchers, because what that really sounds like to me, based on my long experience watching government work, is a way to create $75,000/year jobs at the Department of Education Vouchers.
If your plan is to tie the whole caboodle into required labor, you will, I think, be very surprised, in very short order, how badly that’s going to work out. Your cheap labor is now competing with free market labor. Your employment of people will - almost inevitably - be hideously inefficient, with gluts of labor in places you don’t need anything done and in other places WelfareWork <TM> driving private firms out of business.
Guaranteed incomes will put more cash into circulation, which has an upwards push on prices. I’m being contrarian, but if we’re going to solve our problems we need to talk about this stuff.
I would suggest simplifying a little; just try the basic income. Forget forcing people to work or to show up to a warehouse. Try a basic income and see what happens, and adjust from there.
Minimum wage would be more workable if we didn’t have global competition. If we had a global minimum wage than fine. But we don’t. And it’s very easy for a 100 billion dollar corporation to close a factory in America and open one somewhere else. So you aren’t constraining Apple or Ford or GE. You are constraining marginal small business that either has to rely on illegal labor for cash or something, abusing the salary law, or not being able to expand. The freedom to pay less enables more people to hire more workers. And guess what?
Perhaps the inefficiency and corruption of the government makes these sort of policies irrelevant. But correct me if I’m wrong, don’t the vast majority of workers make more than the federal minimum wage? If this is this true why is minimum wage needed? The market seems to work. I also feel that purchasing power also increases if everybody is engaged in production as the ratio of goods to money supply increases. Which seems slightly deflationary to me.
Now another thing is, if you are doing absolutely nothing productive you have little chance of increasing your economic value. Doing something for $4.75 an hour teaches the minimum skills necessary to start earning more. Such as showing up on time, dressing appropriately, etc.
The minimum wage is needed to provide a wage floor. Labor markets are not ideal perfectly competitive markets in the theoretical free-market sense. If the federal minimum wage were reduced, wage levels wouldn’t stay where they are now. Many employers who were paying exactly the minimum wage legally required would reduce that amount to the new legal minimum. And other employers who were paying a few dollars above the old minimum wage would now pay a few dollars above the new minimum wage, and so forth in a cascading wage slump.
So Wal-mart and Starbucks are “marginal small business” now?
I’ve always thought it’s a matter of perception in the US. That minimum wage gives people more than they’re “worth”.
How about put it like this: companies can pay employees whatever they like, but companies paying below a certain amount must pay a Low-Salaried Employee Tax, out of recognition that such employees depend on government assistance programs like food stamps, are more likely to commit crimes, or have children that commit crimes, or need emergency healthcare etc than people better paid.
:dubious: Of the nine Presidential elections between 1984 and 2016, Democratic candidates won four of them. (Six, if you’re counting popular-vote victories.) So no, I don’t think that the recent electoral outcome is as simple as violating some imaginary taboo about “don’t ever mention race”.
Serious political discussions really shouldn’t be steered away from “taboo” subjects because of that sort of folklore shibboleths, anyway. The reality is that rural white voters were a decisive demographic in awarding the Electoral College majority to Trump. Nothing is to be gained by tiptoeing around that subject, except perhaps by some conservative voters who would rather not look too hard at the role of racial prejudice in American politics.
That’s why the idea is no minimum wage and a basic income and expanded spending on adult education/training. Cheaper labor is also cheaper goods. What you earn is sort of irrelevant. It’s what you earn relative to the prices of goods and services that matter.
I’m excluding debt from this to keep it relatively simple. Obviously, deflation sucks for debt and for buying today with saved dollars. But look, no minimum wage with a basic income is superior to minimum wage.
Yeah. Minimum wage workers are getting paid more than they are worth. Absolutely.
I disagree. Furthermore, don’t look at proposals that are multi-factored and judge them by one factor. The pieces of economic policy work together. Where is all this desperate policy in a plan that includes basic income AND need based aid? At that point one would have to be mentally ill or an addict or comparable to be living in destitution.
We are always socializing those costs in some way. Either higher taxes or higher priced goods and services.
Demand stimulates production in economies that have idle capacity. Therefore increase demand by rational forms of redistribution.
Popular vote is 100% irrelevant. Yards gained in a football game don’t decide the game. Points do. You play to win the game as the rules are written. Now whining about the rules is the meta game, I suppose, but it’s transparent
Of course, the same side that’s insisting on the rules now is the one that decided the rules about a President getting to make Supreme Court appointments didn’t apply.
Yes, I know it’s irrelevant to the issue of who actually gets inaugurated, but it’s quite relevant to bomberswarm2’s attempted point about “getting people to support you”.
When a majority of the people who vote cast their votes for you, you must have done something right in terms of inspiring support, even if it didn’t translate into an Electoral College victory.
[shrug] Okay. Toss in universal single-payer health care, proactive housing policies to make sure that the “basic income” actually does enable people to live a decent basic lifestyle, universal K-12 education and affordable higher education, and support for workers’ collective bargaining rights, and I’m with you all the way.
A minimum wage is admittedly an intrinsically inefficient way of making sure that nobody has to live in crushing poverty. Not only is it a market distortion, but it doesn’t do anything for the many people who can’t find or can’t perform a full-time job in the first place, so it has to be supplemented with all sorts of social safety nets anyway.
It would make a lot more sense just to extend a comprehensive basic safety net to everyone irrespective of employment status, and let markets handle labor pricing for paid work on top of that. (Possibly in parallel with a legally regulated pay structure for public sector jobs, to counteract the downward pressure on private sector wages once the feds aren’t officially requiring you to pay a minimum rate.)
But unless and until that happens, I sure as hell am not supporting elimination of the minimum wage requirement.
Which proves my point about what this is really about.
But the reality is there is no “worth” when it comes to salaries of course; it’s supply and demand.
The only thing we can say for sure is an employee must generate more value than their salary – even with a mandated minimum wage (since no-one is forcing companies to hire).
…if we assume that the difference in sub-minimum wage vs minimum wage is such a significant factor in how a company prices its goods and services, that they’d risk changing the price point of their goods or service away from its current optimal value.
Or put it another way: where I live the cost of a coffee at starbucks is approximately the same as the barista’s hourly wage. Also where I live they sell a lot more than 1 coffee per hour.
Now you might say they have a lot of costs to account for beyond the barista and that’s exactly the point: the barista is a relatively small proportion of the costs, and in any case Starbucks charge what they consider the optimum price point. The most they can charge before the number of customers they put off starts to lose them money.
Not necessarily. More productive workers subsidize less productive workers all the time. Even workers who aren’t making their salary or wage.
We getting into Labor Theory of Value territory? Optimal pricing is unknowable. I think people should have the freedom to negotiate without the government constraining them for irrational motives. The motive is to ensure that a particular party can garner votes by appearing compassionate and generous. That’s the only point of the minimum wage.
It’s a shame the right doesn’t take a page from Bismark and out flank the left and solidify the poaching of the working class.
What do you think Democrats and Republicans have both done to the pro labor left? They’ve said a few things and enacted a few things but look what really happens. Manufacturing goes to Asia and corporations fund both parties with the billions saved with the cheaper labor. The cheaper labor that in no way shape or form costs jobs in the USA.
Yep. The cost of labor was such a non factor, corporations built massive industrial parks in other nations and helped build roads and other infrastructure where there were only primitive facilities on a whim.
Sure, but that’s rather irrelevant: there are slackers at all pay grades, and you were distinctly talking about minimum wage employees.
You said people earning mandated minimum wage are getting more than they’re “worth”. I’m saying companies wouldn’t employ those people if they thought they were making a net loss.
Sure but it’s what organizations are shooting for (and the market is directing them towards).
So the point is simply that, no, it doesn’t necessarily follow that increasing a particular fixed cost will translate to higher prices, as you asserted.
I’m not sure what your point is, given that you already conceded that a race to the bottom for manufacturing jobs is just not possible. Costs of living are higher in the US, and in any case if Xiao Wang doesn’t out-compete you for work today, ED-209B will tomorrow.
I find it interesting whenever people associate job loss with personal responsibility.
Look, if you can’t simply:
grow up with parents with economic and social stability;
live in a part of the country not devastated by poverty;
attend a safe, well funded school system;
demonstrate the skills, motivation and aptitude to graduate with high enough grades and impressive enough extracurricular activities to get into a top college;
find some way to pay for four years of college that might cost more than the average American family earns in the same time period;
pick a suitable major that will provide you the relevant skills in 4 years in a rapidly changing economy;
find a good job with a decent company that won’t downside, offshore, insource, upsource or whatevershore your position;
do every inane, vague task your manager, company owner or faceless corporate bureaucratic machine asks of you, without complaint, doing not just what was asked, but what you should have anticipated was really meant;
work every weekend, holiday or late night asked of you;
not get “counselled out” as part of a ruthless “up or out” corporate policy;
not get pregnant;
not get sick or injured;
avoid being driven out of business by a “disruptive” new technology, company or industry;
avoid being regulated out of business;
demonstrate a Machiavellian ability to avoid getting fucked by coworkers, bosses and competing departments;
not turn 50;
constantly keep your “skills” up to date so you can compete with a recent college grad with no experience; and
just be willing to take any job offered, not matter how tedious, demeaning, stupid, or unable to support a reasonable standard of living
Why would cheaper labor necessarily change the market value of a particular item?
If the market clearing price for a pair of jeans is $30, they will be sold for $30. If I as the jeans company CEO can get cheaper labor, why the hell would I give you the money I save?
You’re proposing lowering the wage floor specifically to make it more comparable to wage floors overseas in order to bring the jobs back. The wages paid to the jeans workers aren’t going to be LOWER, they’re just going to be in the USA. If I’m running Levis, no way I give you a break on the price of a pair of blue jeans.
Trump Still Pushing Apple to Manufacture in the U.S.
"Analysts have said that bringing Apple manufacturing to the U.S. could raise costs, ultimately leading to higher prices for consumers.
But Trump said he told Cook that he was planning a big tax cut and the elimination of many regulations that raise costs for companies operating in the United States."
Not once have I heard of Obama doing anything like this to create or protect American jobs. If Tim Cook wasn’t liberal and gay, the leftists would be condemning Apple for not pay its taxes and the working conditions of its factory employees. He’s gotten a total pass.
