Only if there’s linear elasticity.
[QUOTE=YogSothoth]
And I disagree, for the reasons of a trickle up economic plan. They will adjust, sure, but suddenly they will find, as Henry Ford did, that paying people a decent wage will allow them to afford your products
[/QUOTE]
I seriously doubt it, but I guess if that’s what you think then that’s what you think. As you say, we disagree.
That does not seem to be the real world trend.
Not like welfare. It’s a stipend that everyone (or some subset of the total population) receives. Yeah, it’s being or been tried in various places, and yeah, it’s got issues, including how to get something like that past conservatives. The thing is, to me it looks like it would have a more real effect on combating poverty than trying to artificially raise minimum wage, which I think would have the exact opposite effect to the one you are wanting to achieve. If business automates all those minimum wage jobs away, what good is it going to do most people that we have a $15/hour MW (or whatever) if there aren’t any jobs for them to do? A basic living stipend, however, they get regardless of whether they have a MW job or no job at all.
There won’t be any boom by arbitrarily raising minimum wage to some arbitrary sum. All you’ll get, maybe, is a brief time for some small fraction of the population making more at their MW job before companies automate those jobs away, refine their process or use expert systems to use fewer people, outsource/offshore the job or some combination of all or some of those. At that point those people will be fucked, IMHO, because those jobs will be gone and they won’t be coming back. Granted, down the road someone is bound to exploit that unused labor resource for something, but that’s going to be cold bean for the folks caught in the gears in the interim. It will be all those buggy whip makers and switchboard operators all over again…50 years down the line no one cares, but at the time it’s going to suck to be those guys looking for something else to do and competing with all those other people who are also doing the same thing.
This is a myth. Ford did not raise wages so workers could afford his cars. For the math on that to work, the workers would have to being buying a car a month. What Ford paid was an efficiency wage. Since working on an automobile assembly line is such a crap job if you pay the same wages as everyone else then your workers only stay until they can find a job paying the same with better working conditions. Ford’s workforce was turning over three times a year and it cost him a fortune to train all those new workers just to have them leave just as they were getting good at their jobs. He raised wages so that workers could not get equivalent wages elsewhere and had to stay with Ford.
However, unless you live in Lake Wobegon, not every employer can pay above average wages which means that for most wages will be determined by supply and demand. Attempting to set a wage floor above the market rate will only cause a shortage, just as it does in every market. Unemployment is the inevitable results of minimum wages. The unemployment happens at the bottom of the market so it only effects the poor, the people who need jobs the most.
Yes, if the government wants people to be paid 15$ an hour the best way would be for a wage subsidy. That way Walmart no longer has to subsidize the welfare state, people get the money, and no unemployment hike.
Can’t we have both? The typical conservative response would be “If this stipend is more than MW, why would people work?” I think we can have both a $15 MW and the stipend, or some way of saying your basic living stipend will be $X + $15 where X is the difference between what the living wage minus a $15 MW would be. This elevates everyone to a basic level, but doesn’t answer the question of why people would work if they can just not work and get a stipend. Without more details, even I have questions on this plan as it seems too much of a giveaway as to deter people from working. I don’t want that, I want people to work but support them only because a regular job cannot allow them to afford an above poverty lifestyle.
I think the basic plan was sound. Paying people more so that they can afford things, part of that being what you make, is a good idea. I don’t mean that everyone should be able to buy cars everyday, nor does everyone have to be rich for this to work. Retaining workers that you’ve sunk money into training is, in fact, part of the benefits of having a MW. If there’s no MW, then you have almost no sunk cost to each worker. Forcing a MW ties your company to a level that you can’t easily replace
I don’t think reality bears that out. For all the talk about how MW will kill jobs, we’ve had MW for a long time. The US hasn’t suffered from crippling Greece-like depressing in that time. Clearly then, MW has some effect, but depending on what you believe, its just one variable in the economy. I don’t think that unemployment is affected at all by MW when MW is reasonable, and $15 is reasonable.
Says who?
Labor economist generally seem to agree that a $10 minimum wage won’t have much of an impact but $15 very well could. Sure its only $5 but the marginal utility of unskilled labor is not sufficiently above $15 to entice people to hire people at that price. If you want to give people the means to live then you should ask Puddleglum more about the universal basic income. Unless you want to force employers to hire people, if you create a price support for labor above the marginal value of that labor then people just don’t get jobs. So show me a study saying that unskilled labor in our economy is worth sufficiently above $15 that an employer can make money by hiring people at that wage. The best you cab probably come up with is “maybe yes, maybe no” Its not very reassuring.
So why is $15 a good number that the economy can bear? What makes you think that we can bear it or are you just picking a number that you want people to get? I want people to get $100/hour, it would lead to so much wage inflation that the economic playing field would start to level out in favor of labor at the expense of the owners of capital.
They get pay raises BECAUSE they are slashing jobs. The supply of sociopaths is much smaller than the demand for sociopaths.
Labor is not like any other factor of production. It is not governed like any other commodity. People are not commodities in an economy. They represent labor, consumption, investing, savings, and whole slew of other shit that affects the economy in ways that widgets do not.
Of course that runs counter to everything we know about countervailing power and labor economics.
If you simply let the market set the price of labor, the day laborer will eventually be paid enough to survive for that one day while the employer will reap whatever value the labor helps create.
Absent things like minimum wages, a laborer who generates $100 worth of value still only gets enough to live for one more day. The employer keeps the rest because as long as there is one more laborer than there is jobs, the marginal pay for that labor drops to what you need to live for that day. That is what happens when you subject labor to the raw forces of supply and demand.
Nobody claimed it does. The claim was that rich people hide the money they have left after taxes under their mattress, which is untrue.
The CBO says that a MW of $10.10 would raise the incomes of households earning MW, and also cost about a half million jobs for those same households. I would say that that is an impact. You can believe it’s worth it to throw a bunch of people out of work and give the rest a raise, but you can’t say it isn’t an impact.
Then why does 96% of the US earn more than MW? Answer: because the market determines the cost of labor, and most people’s labor is worth more than MW on the open market.
Yes it is - the price of labor is subject to the laws of supply and demand. So is consumption, so is investment, so are all the other factors of production.
Regards,
Shodan
So why don’t we subsidize labor the same way we subsidize investment?
If the above doesn’t make sense, recall that Fear Itself considers the removal of a government-imposed tax or barrier, thus allowing people to keep more of their own money, to be a “subsidy”.
The only thing I object to is socialism for the investment class, and rugged individualism for the labor class. Investors should pay the same rate as workers.
We already subsidize labor - haven’t you ever heard of the EITC, or standard deductions?
Regards,
Shodan
So the investor class is not eligible for those subsidies? Fair is fair.
They don’t apply to classes; they apply to income. Although I doubt a lot of venture capitalists qualify for the EITC.
Regards,
Shodan
But they do qualify for the standard deduction. Whether they choose to take it is irrelevant.
The official poverty line is about $22000. If you take the number of hours in a full time week times the number of weeks, then divide $22000 by the hours, you’d come out to be about $10 an hour. So working a job full time can still make you poor. $15 takes you to about $32000, which is the median national income for individual above 25 years old. Now I don’t know for sure if they specifically tied it to those numbers, but those milestones seem like good places to take the American worker
And besides, if we want to raise people out of poverty and change the standard of living, you don’t want to stick to $10 an hour and be stagnant, you want people to be able to move out of poverty. Or maybe you should endorse a cap on salary so the rich can’t increasingly take a bigger share of the wealth
I do support a universal basic income. I mentioned some problems with it and how it would be attacked by conservatives, but I’m in support of such a thing
Again, the problem with your thinking is that you think labor is “worth” less than $15. There’s no reason to think that at all. I want people to move out of poverty so my support of the $15 is mostly about that goal rather that what the rich have historically told the rest of us what we’re worth. There’s no reason that the MW or marginal value of labor should be at $7.25 or $9 or whatever the MW is in your city. None. What we do know is that such a wage won’t get people out of poverty and the government will have to support them so that they have their basic necessities met. You and I, as tax payers, are subsidizing the industries where they pay their workers a pittance. You should be madder about that than what you think some lazy worker is getting away with
And there should be laws against that. Because fuck those people.
Forgive me for saying so, but everything you’ve said seems to mirror the attitude that the rich are too powerful, we can’t change things, there’s nothing we can do, so we should accept it. If that is not how you want to come across, then tell me what you think should be done about the increasing gap between the rich and poor
And people could invest in the stock market, whether they do or not.
[QUOTE=YogSothoth]
The official poverty line is about $22000.
[/QUOTE]
No it isn’t.
Regards,
Shodan
The iron law of wages was proposed around 1850. The first national minimum wage law in the US was in 1938. What happened in between those two dates? The industrial revolution, which caused the greatest leap in living standards in human history. The iron law of wages has been debunked as much as it is possible to for an economic theory to be debunked.
There is real world experience in what happens when significantly increase the minimum wage. American Samoa had a much lower minimum wage then the rest of the US. This was a reflection of the fact that its isolation and lack of industrialization made its workers not as productive as the rest of the US. In 2007 that changed and Congress mandated that the minimum wage in American Samoa go up in three fifty cent increments until it was level with the rest of the country. This represented a 26% raise for workers in American Samoa who made minimum wage. What happened? If liberals are correct and mandated higher wages mean prosperity, the economy of American Samoa should have thrived as workers spent their new found windfall. Instead, just as conservatives would predict unemployment skyrocketed. The total number of jobs on the island fell 14 percent in three years with the most affected industry, tuna canning, losing 55% of jobs. Because of the thousands of newly unemployed average income fell by 11% in just three years.
The Government Accountability Office wrote a report about it. (pdf)
None of that is relevant when you are looking to buy labor. Now you make an interesting shift mid paragraph but it doesn’t change the fact that each particular pool of functionally identical labor is a commodity. And that means if a man in China can turn a wrench for $1/hr and oil and therefore shipping is cheap the job will go to the man in China. If picking an eggplant is a skill worth $2/hr a migrant worker will get that job.
Unless we build a wall around Mexico and Canada and mine the harbors and prevent international flights we participate in an international labor market. That means for tens of millions of jobs, American workers are overpriced. And guess what? We don’t need 50 million hamburger flippers. And as minimum wage increases automation will increase for jobs like hamburger flipping.
The sad thing is we are willing as a nation to exploit foreigners while thinking we are noble by having a counterproductive minimum wage. It’s so dumb.