I think what he was trying to say was that the value of his employees’ work is about twice what he pays them, which is something entirely different than being willing or able to pay them twice as much.
That aside, even if he thinks they’re worth twice what he’s paying them, it’s pretty clearly established that he isn’t paying them that much, so he only values them at their current rate.
And **octopus **is right; the actual trading is what sets the value. In this example, it may be that k9bfriender is willing to pay 2x what he does, but has no market forces compelling him to ante up the extra pay, as employees of that level of education, experience and competence are paid that same rate by all the other businesses competing for their labor.
TL;DR: if k9bfriender did indeed value his employees 2x what he pays them, he’d already be paying them 2x what he does today. Since he doesn’t, he clearly values them exactly what they’re paid.
Whether or not he derives 2x the value versus what they’re paid is something else entirely.
Yes, but octopus blundered by bringing in estimates of value/worth, and, as noted, k9bfriender clearly estimates the value of the employees at twice what he’s currently paying. octopus tried to use one definition to support a completely different definition.
(Also, I don’t wholly agree with your, or his, definition of value, preferring the “willing to pay” definition, over “is now paying.” Again, that would mean that Yellowstone Park has “no value.”)
So if someone offers to give me their brand new Ferrari for $1, that’s its worth to me?
A rational actor will seek to get the most “bang for their buck”: happy to purchase items at way less than they would be willing to pay if the floor price was higher.
IMO and most other people, for example, food and clothing are both cheap in the modern economy; I would pay much, much more for these things if I had to (and the only limit on my purchases is that there’s only so much food I need to eat, and so much clothing that I can store in my house).
And transactions involving labor are no different. If I’m hiring a Widget Adjustor, I might genuinely think to myself “Our business model desperately needs a Widget Adjustor, and I’d pay up to $200,000 per year if I had to. But I know in this town many WAs have been made redundant recently, so I’m confident we can find one for $30,000”.
In this scenario, why would we say the worth is only $30k?
Yeah that establishes no cause and effect. It could very well and probably is a reflection of a hot job market where the average wage is already high and that the costs to job creation caused by raising the minimum wage can’t be disentangled from other factors. Try raising the minimum wage in a labor market where the average wage is already low and see those factories move to China.
Yes indeed. Marketing has value. Being weak does not. In time the worker who has the sense to hire a negotiator and the strength to negotiate demonstrates higher value traits. If I buy a thousand apples I may get a better price than one! If I negotiate with knowledge for a car I may save $4,500 compared to a rube off the street.
When we do business for meaningful things we pay lawyers to review the contracts and add favorable contingencies. For the same property we get more value then those who don’t. Value is actualized when the exchange comes. Value has nothing to do with profit or loss. If my employer is dumb and can’t sell what I produce for my salary it doesn’t mean I’m not worth my salary if some one else is willing to pay it.
Worker a may have more unrealized value. But it does not exist until the exchange is made.
We have been doing that all along - read the thread. The CBO estimates that raising the MW to $10.10 an hour would cost about a half million jobs. Raising it to $12 would likely cost more.
Do you understand that changes to labor cost affects businesses?
But the minimum wage has been increased several times – and instituted in the first place – without the predicted loss of jobs. Every single time it has been increased, people have thought there would be job losses…and that hasn’t happened. Their model of the economy does not reflect reality.
Here’s a link, although I confess it’s just the first result in Google, and I haven’t studied it carefully. If it doesn’t actually say what I want, dummy on me.
I have been reading the thread. You were the one that brought up a $30 an hour MW out of the blue. I reminded you that that was not the sort of thing that is being discussed.
The CBO estimates have ranges to them. The half million is only an estimate. It could be from slight job loss to as much as a million. And there is the fact that many of these jobs are not lost, as in the employee is let go by the employer, but many of these jobs are no longer worked because the employee doesn’t have to work 2 jobs anymore. I know this has been explained a few times, it seems like maybe even in threads that you were in.
I do understand very well that changes to labor costs affect businesses. My labor is affected every time I give out a raise. As I am in a service industry, my labor is well over 50%, so any changes to my employee’s pay rate make a big difference to my bottom line.
Now, what you don’t understand, is that most businesses are not dominated by their labor costs. Most places I’ve worked with run labor at less than 25%, often less than 20%. If your labor cost is 25%, and your labor cost goes up by 25%, how much does that increase your costs? (Hint, it is not 25%)
No, it actually hasn’t, but now is your chance. Let’s see credible cites for this “fact”. How many MW workers are working two jobs now, and how many jobs are lost when they no longer need to?
Do you understand that a business does not have to be dominated by its labor costs to be affected by them, and by changes in them?
Or perhaps you could discuss the effect of a raise in MW in industries like child care, where labor costs can be as high as 81% of total expenditures (cite). Median hourly wage for child care workers is $9.77. So you raise MW to $10 or $12 an hour. Families already complain that the cost of child care consumes most of what they earn (average cost of child care is about 40% of income). How does raising labor costs benefit mothers who use child care?
Once again, you try to change the goalposts. I am not talking about people making the federal minimum wage, I am talking about people who make less than the new proposed minimum wage. That is a much larger number than you keep talking about. About 7 Million low wage earners had 2 jobs in 2012. I could dig and try to find more up to date cite, but I don’t really have time right now. I am sure a little google-fu could find more up to date numbers.
So, there was a cite that quite a number of people have 2 jobs because one is not enough. Do I need to cite that most people would rather not work two jobs if they didn’t have to?
To begin with, I have always thought that childcare pay was pretty low in the first place. I mean, do you really want your child to be taken care of by someone who is not able to make ends meet? I am for childcare subsidies that wold lower the cost of childcare for working families.
They would also earn more to be able to afford the higher costs.
This. Instant full employment, in the sense that everyone that wants a job could have one at some wage level (and a new tidal wave of Latin Americans trying to get to the US). Of course, a lot of people would refuse to work for the low wages, but those with a work ethic would be able to start gaining work experience right away and start moving into higher paying jobs. Economic price controls have deleterious effects and an artificially higher minimum wage will result in job loss and an acceleration of automation leading to yet more unemployment.
No, I am not moving the goalposts - I am asking for a cite for what you claimed. What percentage of those who earn less than what you propose for a MW are working two jobs, and what percentage of those jobs will be lost if the MW is increased?
If six million of those want full time jobs, it doesn’t surprise me if another two million have pieced together part time jobs.
Eta: I know guys, let’s ban part time jobs! It’s for the workers!
You simply would not see such a disparity in the free market. There are other workers in the world besides A and B. The business owner would have to determine whether worker A or worker B is the outlier. Either he is getting an excellent deal by hiring Worker A (and should probably give him a raise so he doesn’t jump to the competition) or he should fire Worker B as he is getting ripped off.
I think people understate how marketable even an unskilled worker is who will 1) show up on time, 2) sober, and 3) work hard. That is something and employer desires. It used to be expected, but more and more it is becoming a luxury to have in an employee.