This article unfortunately doesn't address the business side of the problem. Fast food restaurants, or place like "Dale's" mentioned in the article, make very little profit. It is most likely below 10%. Here is an estimate: https://www.restaurant365.com/blog/what-is-the-average-profi....
A 10% profit is very modest. That's not the story of the "fat cats getting rich on the back of the workers" that the article is alluding to.
The problem for the business is that the financial model is set by the fixed or imperative costs, i.e. the cost of rent, the cost of maintaining the capital equipment, the cost of cleaning to meet codes, insurance, etc. The cost of labor, for cooks, wait staff, etc. is often the biggest part of the expense budget for restaurants.
With such a small profit margin, arbitrarily raising everyone's wages is likely going to kill the business. There is no room in the budget. The only choice is to either automate, which will reduce the labor requirements, or raise prices and hope that customers won't just go down the street. But they will, they will go down the street--until everyone's prices go up and there is nowhere else to go. And all of this is free market capitalism at work. It is a continuous process of reinvention.
In short, I'm not saying that higher wages aren't necessary, I'm just saying that both sides of the equation need to be examined, i.e. the plight of the worker AND the plight of the business. And we need to understand that things will probably get ugly before they get better. Because that's how capitalism and free market economies work.
But watch out for technology and automation...that is the part of the equation that has been "solving" the labor problem for some time now...
A 10% margin also often doesn't tell the whole story of how they make their money. Nearly since its inception, a substantial portion of McDonald's long term profit came from the appreciation of the real estate the stores were built on. Operating a business on it just made it cash flow positive during the holding period. So it was essentially a REIT that happened to operate a fast food chain. Even for many mom-and-pop restaurants (or other business) the real payoff often comes when it comes time to sell and cash in on the capital appreciation of the business assets.
My point isn't to say there's anything wrong with that model: more power to anyone who comes up with a creative, legal way to make a living. Mainly I just want to point out that you often can't look at it simply as making X% margin on sales in a given period of time or any other single metric for many businesses as the real gain is longer term than that.
Which is really a long-winded way of saying: if the ability of a business to make a long term profit is not my concern, their claimed inability to pay a living wage isn't either. If they honestly can't afford to pay a living wage, then as the article states, perhaps it shouldn't be in business. If there is a market for whatever product/service they were offering, someone will come up with a sustainable way to serve it that is better for all involved.
Not to forget the times where states raise their minimum wage and see the number of people in the labor force increase. The balance of power is almost always squarely weighted on the side of the employer. This can push wages below market optimum.
I’d expect minimum wage increases to be mostly off the table during recessions, so it’s not surprising to see them passed during economic expansions, which are tightly linked to rising employment figures, so this might be a "wet streets cause rain" correlation.
Then you have the reverse problem where the stores or restaurants are renting their space. As the neighborhood density increases, their customer base goes up but so does rent. And since location matters, you can’t just move if you don’t like the rent prices, so they can squeeze you pretty hard. Goodbye profit margins.
In my old neighborhood there were always a few empty places because they were pricing people out, and few wanted to pay the new prices.
“As soon as the land of any country has all become private property,” he writes, “the landlords… love to reap where they have never sowed, and demand a rent even for its natural produce.
>If they honestly can't afford to pay a living wage
It's not logical to kill businesses by arbitrarily raising the minimum wage. Do you think the people they employ are better off not working at all? These people may not have a decent enough salary, but they get to work as opposed to staying at home and degenerate (mentally and physically). I always thought the better solution is to help them financially in other ways (greater tax credits, negative taxes?).
If raising the minimum wage will do them in, they're already halfway there if things are really[1] that dire and will end up there soon enough. So yes, people are better off not working for those types of businesses. If a business can only remain solvent by paying unreasonably low wages, it puts downward wage pressure on competing businesses and traps unskilled workers in a labor pool of dead-end jobs with little hope of escaping it/them and no time to do so since they're always scrambling to make enough money pay the most urgent bill.
There are plenty of things society needs done to keep displaced workers productive (with better pay and a sense of actual accomplishment) while giving them breathing room to figure out 'what next?' I don't believe for a second that we're doing workers in the sub-basement of the economy any favors by keeping them locked down there. It isn't a binary (either they work in these crap jobs or they sit at home and deteriorate) decision... there are a variety of options between the extremes.
[1] I'm suspicious of the majority of cases where this claim is made. A rational business person would see that such a business is already marginal and that they would likely be better off shutting it down and redeploying the capital elsewhere for a better return. This happens all the time. If the owner can't see this, keeping the business on life support isn't doing anyone any favors.
> [1] I'm suspicious of the majority of cases where this claim is made. A rational business person would see that such a business is already marginal and that they would likely be better off shutting it down and redeploying the capital elsewhere for a better return. This happens all the time. If the owner can't see this, keeping the business on life support isn't doing anyone any favors.
I agree with you, I would never own a restaurant or bar personally. But profits are really ~10% for the average mom n pop restaurant. It's just how it is. So $1mm in annual sales makes you $100k, more or less. People like owning restaurants, despite their best financial interests.
10% is when the restaurant is extremely successful. Average margins are lower than that.
Arguably there are way too many restaurants, in part due to low interest rates. If there were fewer restaurants, the volume would go up and the average restaurant would do a larger gross and be able to handle low or lower margins.
Consider that if someone lived through the last time the US had significant price inflation as an adult, they are 70+ years old. Costs are going up for anything with tight supply, including for labor. Very few working age adults, or business owners, have any experience with that. The transition will be alarming and painful but there is no back peddling now. Businesses with slim margins and an inability to rapidly raise prices just will fail.
> People like owning restaurants, despite their best financial interests.
Which is fine, but then it’s silly to base minimum wage policy on whether or not it will make somebody’s already-irrational hobby business less profitable.
> People like owning restaurants, despite their best financial interests.
And part of the problem is cultural. There is social capital that exists alongside human and financial capital, and because its hard to quantify we end up with this sort of hidden value that isn't accounted for.
Plenty of small businesses, especially restaurants, appear to me to be sustenance operations. Many owners appear happy just to not go broke and pass the job to their kids.
> there are a variety of options between the extremes.
There are a variety of options completely outside of that continuum.
Like, how about a democratically planned economy where we intentionally work on things that actually help society instead of just whatever happens to make the most profit for the current owners?
I think a big part of burnout is that the work we're doing is clearly pointless. I'm stuck writing debugging shitty Android apps all day. Can I please go plant some forests or something?
> I'm stuck writing debugging shitty Android apps all day. Can I please go plant some forests or something?
If this was the status quo, there'd be just as many people thinking "I'm stuck outside doing manual labor planting trees. Can I please spent time doing something mindless sitting at a desk in a climate controlled workspace instead?"
Someone out there is deriving value from the android app you're debugging or else it would not be economically viable to keep paying you to do that job.
> Someone out there is deriving value from the android app you're debugging or else it would not be economically viable to keep paying you to do that job.
Where does this sort of axiomatic economic thinking come from?
Tons of software projects really are completely pointless and will never turn a profit or generate value. And not even in a "the bet was worth making way" -- walk into any Fortune 500 and you'll find whole armies of people doing pointless busy work. Not confined to enterprises, though -- "special projects" are a thing in startups too. I've seen 10% layoffs -- literally workforce decimation -- without a single meaningful change to the economic output of the business. And that's the private sector. Anything defense-related is at least 100x worse in terms of pointless busy-work.
I don't quite understand how these sorts of neo-classical micro-econ axioms have such huge mindshare. Business managers are not omnipotent, and many aren't even competent.
> there'd be just as many people thinking "I'm stuck outside doing manual labor planting trees
Then we could trade jobs for a while. Part of the problem (for us knowledge workers) is that we get pidgeonholed into doing one thing because that's where we have enough experience to convince someone to pay us to work on their thing. Not to mention that switching jobs or taking breaks is more annoying than it ought to be because health insurance and other benefits are tied to employment.
> Someone out there is deriving value from the android app you're debugging
The CEO. Who already has enough money that he could retire if he wanted. I don't think people in general would miss our buggy app if it disappeared tomorrow. I do miss the trees when they disappear, though.
> [1] I'm suspicious of the majority of cases where this claim is made. A rational business person would see that such a business is already marginal and that they would likely be better off shutting it down and redeploying the capital elsewhere for a better return.
> while giving them breathing room to figure out 'what next?'
I'm dubious of this claim. My experience from observing many friends in this situation at different economic levels (enough savings to take a break in US. Unemployment benefits in Europe) is that they rarely use the time to figure out what is next. Instead they most often use the time to relax and only spend time trying to figure out what is next when pressured to do so by impending financial circumstances (doing nothing depletes savings for those in America and unemployment benefits run out eventually in Europe).
Whether the amount of time afforded by savings or unemployment is 3 months or 2+ years, it's only the last 1-2 months where most people spend time figuring things out.
This is a very nice way of saying “I asked my poor friends to confirm what I want to believe.”
When all you have to look forward to your entire life is some slog of service industry jobs with little to no benefits or vacation, of course you maximize the amount of time you spend on your own life. Poor people deserve to relax, and I have never had a job in my tech career that compared to the stress or exhaustion of my minimum wage jobs.
If I get fired now, I’d be happy to go find my next career move. Back then, you would have to drag me into another restaurant.
You seem to know a lot more about his friends then would be expected. How do you know they are poor? I had a high paying job for years but couldn’t have afforded not working for two years without seriously draining retirement savings at the time.
The cost of some businesses closing because they can't afford a higher minimum wage has to be considered in the context of every business that can afford the higher wage improving the lives of their minimum wage staff.
Maybe it is worthwhile killing some businesses, and pushing some people to get new jobs or to live on benefits, if the wage increase for others is a greater benefit to society.
Its also worth noting that practically no businesses close when minimum wages have been increased in the past. People suggest its a problem,and logically it makes sense, but it doesn't seem to actually happen in practise.
This is something that is quite nuanced that isn't apparent until you really look into the numbers.
When something happens that universally makes the labor costs go up, and you expect for many businesses to go into the black, what you will instead see is that the very worst company goes out business and all of the others will put pressure on their land owner for lower rents pointing out that they are next. The landowner wants their land to be used and not be earning nothing for years, so they will lower rents. For a restaurant, if everyone is in the same boat, is agnostic to labor costs.
Higher labor costs makes real estate prices go down. Automation makes real estate prices go up. With interest rates going down bringing real estate up, we have plenty of space to rise minimum wage to balance.
> Higher labor costs makes real estate prices go down.
Well, it might by your argument make commercial rents, and thus commercial prices, go down. But it also means more money chasing the median residential unit (whether rent or purchase), so it should increase residential prices. Absent zoning constraints, that would seem to encourage shifting from commercial to residential land use
But notice how this argument is based around the margins. When labor goes up, rents go down and food costs go up slightly. Someone who used to just barely be able buy fast-food from McDonalds will suddenly not be able to, and instead be forced to buy more from the grocery store. But there might be two customers that would have otherwise bought food at Five Guys who now buy from McDonalds.
You might see a shift from commercial to residential, or you might see a shift to 4+1 mixed. The town might buy the space and put in a park. You might put in a high-rise. Anything could happen based on the situation.
Whenever the argument of raising the minimum wage comes up, we always hear these stats that 50% of businesses will go in the black, and we will destroy the economy. It's much more subtle than that. The effect that we see is tiny tiny percentages that are overwhelmed by other factors.
No, higher minimum wage shouldn't increase the labor cost "universally". Most of the cost increase would be felt by those employers who actually paid wages below the new limit. Which isn't even that great a portion of the economy.
There might be some effect diffusing upwards, but I doubt it.
Right, which is why I clarified each time I said that. Software costs don't go up as they don't rely on minimum wage labor. For restaurants, that almost universally rely on the cheapest labor, this is the case. If Burger King and McDonalds both have higher labor costs, both put pressure on their land owner, and both don't end up caring.
> Its also worth noting that practically no businesses close when minimum wages have been increased in the past.
The problem got pushed somewhere, but where?
Very rarely does the owner of the business just eat the cost except in the very short term. If the business doesn't close usually one of two things happen:
(1) there are fewer hours available because books need to be balanced. Some workers that are able to keep their hours do better at the expense of those whose hours are cut. Basically this ends up being a wealth transfer between some hourly workers and others.
(2) prices eventually go up and cause localized increases in prices. Within two to three years you end up with the situation where that new higher minimum wage has about the same purchasing power locally as the previous minimum wage had.
The government giving more to minimum wage workers instead of raising minimum wage feels like a roundabout way to subsidize businesses that don’t way living wages.
That's exactly how it works in many european countries, especially the ones without a legal minimum wage (Austria for example), so people working "slave" gig jobs (cleaners, delivery, construction and hospitality workers, etc.) where if they earn below a certain "livable' threshold, get various tax credits, subsidies and benefits from the government to reach that "livable" threshold, which, while it sounds good, it creates a perverse incentive where employees arrange with the employer to be paid as little on paper as possible to still qualify for the government subsidies and then get paid the rest under the table (tipping is expected here for this reason) which just moves the burden from the employers of paying a livable wage to the customers and to the taxpayers which are basically subsidizing their business.
This is what's happened with housing benefit in the UK[1], it's basically a subsidy to businesses in high rent areas. It was £500M a week, I shudder to think what it is now.
What strikes me as weird is that parties that call themselves left-wing opt for this kind of hand outs without realising they are in fact subsidising the rich with workers' money. How this can fly?
Well not helping people in order to stick it to the rich is neither productive nor effective. There’s a reason for these handouts and it’s not as if left-wing parties don’t advocate for higher minimum wage. A problem can always be attacked from multiple sides.
Please think about the holistic nature of your argument. The sum of it's parts essentially suggests that taxpayers should subsidize the employment costs of businesses, which is ridiculous.
Taxpayers already subsidize the employment costs, by supplementing low salaries and lack of benefits via welfare programs, tax rebates, lower tax rates, subsidized healthcare, and countless other benefits. Walmart et al have externalized almost all of the true cost of labor to taxpayers.
Which is a healthy cleanse of an exploitive economy, and America definitely has an exploitive economy, make no mistake.
A minimum wage is a decision a society makes, that says "this is the minimum market rate for a human that we consider non-exploitive", it's not an economic decision made to maximize GDP or profit. If a company can't afford to operate in a way that's non-exploitive then it needs to reconfigure or die out, because it doesn't belong in your society.
Why not have the government subsidize purchases at the business, if the goal is to have as close to 0 pricing as possible and ensure the business survives regardless of its utility?
People constantly argue for the rights of businesses which pay incredibly poorly, as if that is effecting mom and pop shops which are by and large already closed and gone, and when they were around ended up paying a bit more. Maybe a community is better when there’s a collection of local businesses moving money locally instead of a big nowhere-place off the turnpike paying slave wages and moving money back to corporate HQ? America’s business climate is pretty sick compared to so much of the world.
I think the problem may also be that mom and pop shops are taxed much more heavily than big multinational corporations, that pay very little tax and thus have huge competitive advantage over small local businesses.
I would think that any government caring about the local population would look into getting those companies to pay their fair share.
The areas where people vote for less and less government tend to be the places that have the most minimal services. I have yet to see an area that truly attracts business because of having low regulation and taxes, they all seem to have absolutey no businesses because there is no infrastructure to build upon, nor an existing business community to interact with.
The problem is that in most places the general population is absolutely fine for being fleeced. They pay 30%-40% tax for a privilege of working for a big corporation that only contribution to their society are the salaries they pay. All the rest gets siphoned out to tax havens.
So far neither the so called left nor right have a clue how to fix this.
That is a next level entitlement for corporations to expect people build infrastructure for them for free.
This isn't correct. The amount of costs passed along to the consumer depends on the supply and demand elasticities of each particular market. That's Econ 101.
First, inefficient employers like McDonald's have an entrenched position in the industry because of their massive scale and their real estate holdings. A new entrant in the market already has an uphill battle - if they don't want to rely on government subsidies (e.g., because they want to attract employees who would rather be paid directly for their work), their task is even harder.
A free market in the sense Adam Smith meant it - not a free-for-all, but free to enter - would treat it as a policy goal that new companies would have a fair shot at competing.
I'd understand the argument that government welfare and a low minimum wage are important to support new entrants, by making it possible for them to compete against the entrenched companies. But that's not what's happening; it's the entrenched companies that are effective beneficiaries of these policies (cf. https://www.cnbc.com/2020/11/19/walmart-and-mcdonalds-among-...).
Second, passing the costs along to the consumer along with raising wages has the effect of increasing the purchasing power of low-income consumers. If the minimum wage goes from X to 2X, which causes the cost of items at McDonald's or Wal-Mart to go from Y to 2Y (which it won't, because labor costs aren't the entire costs, but for the sake of argument assume they are), then people being paid the minimum wage are in basically the same position for their everyday purchases: they get twice as much money, but they spend twice as much money. But they've also got larger expenditures - renting or buying a home, buying a car, paying medical bills, etc. The cost of emergency surgery isn't going to double just because the minimum wage goes up (even though much more of the cost is labor) - surgeons are paid way above the minimum wage already.
What this means is that people being paid a high minimum wage are equally able to live their ordinary lives, because they can afford the increased cost of goods made by other minimum-wage employees, but they are more able to make expenditures that improve their lives (e.g., more able to deal with medical issues before an emergency) - and more able to make purchases that stimulate the economy. Instead of buying N hamburgers a year and a car that costs Z which they use for five years, they can now buy the same N hamburgers a year and a car that costs 1.2Z.
As long as government policy continues to enable both wages and prices remaining low, the economy is stuck.
(It does mean that the relative purchasing power of rich consumers goes down - they can buy the same number of vacation homes, but they can't buy as many McDonald's hamburgers - but that hardly seems like a concern. You can only eat so many hamburgers, and they're probably not buying very many hamburgers from McDonald's anyway.)
I think you are right in a way, but all we are doing is setting a minimum market rate for employees so that they can't be exploited. If a business can't afford that employee at that rate then it can't afford to do business without being exploitive and so it needs to reconfigure itself until it can.
I am not saying it's a net good or bad for the economy by the way, I don't think I am qualified for that. But I can tell be pretty confident that exploitive wages are bad for employees and good for employers, a balance for which we have a lever to adjust.
Whether or not someone’s being exploited isn’t determined by a wage.
For example, my wife is an administrative assistant for an NGO. She makes about average for an administrative assistant, but that makes her one of the highest paid employees.
Some of the employees are true believers and donate much of their salary back. Others are broke, and can hardly make it by.
Most are women with husbands who make the real money.
I know for a fact that the “higher ups” get paid less than the lower end. But many are retired lawyers and bankers. They also have seats on the board.
Some of the people who work there do so at great personal cost. The kids just out of college can barely eat.
Is this exploitive?
If my wife was the primary breadwinner, it sure as heck would be.
But everyone there could easily make much, much more in a heartbeat.
I think you're trying to suggest that an NGO couldn't run without a low minimum wage because it couldn't afford it, but there are ways to structure an organization that society is willing to volunteer labour for without jacking up the rest of the community. I say that as someone with a partner in a very similar position to yours.
No one is working at McDonalds out of the kindness of their heart. For my partner's work, they simply have a delineation between volunteer participation and worked hours, and it makes it very clear which hours you're paid for and which you aren't. They have "working bees" and "volunteer weekends" and so on, and people are happy to sign up for them.
Similarly, theatres (as in performance art not cinema) are often for-profit but still quite heavily volunteer reliant, because people want to support the arts and the theatres wouldn't run without them they can make it work. If a petrol station tried to do that, no one would sign up for the volunteer program, and "the market" has happily chosen which businesses can run with volunteered labour or not.
Ok, maybe a better example is being a secret agent for the CIA.
The CIA is able to recruit people for the Clandestine Service who could easily make millions at a bank. They get paid about 90k a year, for more work.
Why? Because they get to be freaking secret agents!
Are they being exploited? I know some folks who used to work for intelligence agencies. They seem to think so. The “secret agent” factor is bullshit. They have to live in high cost of living areas. And 99% of the time the job sucks.
Mostly just office work.
I certainly see something exploitive about that … offering one thing and not giving it.
The military is famous for that shit.
I’m sure there are other industries that do the same. Hollywood comes to mind. So does programming computer games. Etc.
To be clear was talking about exploitation regarding the minimum wage, I agree with you that there are many other ways exploit people.
A great example in your favour is pilots working for minimum wage because people just want to be pilots so bad. But these are really exceptions, the vast majority of people just want to eat and make rent with any job and they're not able to. Companies know they've got no choice but to work at non-livable wages, so that's the most prominent exploitation around minimum wage that we're trying to solve by raising it. Make it so people in poverty don't have to trade there lives in exchange for money that can't even sustain their position in poverty.
I'm not an economist, but isn't it bad for overall economic health to have huge swaths of your country's workforce tied up in failing firms indirectly propped up by the government?
Yes, but why do you think the government is supporting them and why do you think they’re failing?
My own experience is that failing firms pay more. They can’t offer security, and tend to lay off as many people as possible. The layoffs leave the firm top-heavy. In order to recruit new staff they have to pay more. Who wants to be VP of a failing company?
Regarding propping them up, I don’t see how making up the difference between a given wage and the amount necessary to live a decent life is propping up the company.
I’m very much in favor of minimum wage laws. But I don’t see them as government propping up failing companies.
I would say the government gets to control private businesses because it is the government. Businesses exist at governments discretion. Everything about how business is done is within scope of the government to regulate
They should enforce things like minimum wage because it's doing welfare and social support, but they have the power regardless.
This is exactly what government does in Belgium for specific types of jobs, like home cleaning aids for example.
Before the (significant) wage subsidy, they used to almost always be paid under the table. Now they earn a proper salary with all extra security that entails.
Same argument is used by Americans to justify sweatshops in SE Asia. TBF, not much you can do about working conditions in other countries, so you might as well rationalize it and wear cheap clothes. It says a lot about an individual who chooses the same strategy for their own countrymen too.
Most likely they wouldn't stay at home but either would start their own small business (which would be more competitive now since people with employees have to pay them a livable wage) or, if they can be supported by their partner and not work, do something that's important for society but doesn't pay well (e.g. caring for your family, or for people in your community, writing, creating art).
I'd call it a wrong conclusion to assume that the thing that people do to unwind after a busy workday or what people do who are unable to work due to depression is the same as what people undertake when they can sustain themselves without spending the majority of their waking hours commuting and working.
There's nothing arbitrary about paying a living wage. I could rephrase your argument as "Shouldn't businesses be able to pay poverty wages, and taxpayers can make up the difference?" If you can't stay in business without the government supporting your workers, then your business doesn't work. These businesses are effectively being subsidized by the government without giving the government a stake.
Also, I feel like this isn't even worth addressing, but no, work is not a government-sponsored day care for workers.
I think negative taxes are a great solution. Provide people with enough for the basics and incentivize them to entering the labour pool. I think even ($1/hr + training + negative taxes) is much better than people being unemployed and 100% reliant on the government.
It's also not logical to kill businesses by arbitrarily raising rent, but that happens anyway, and wouldn't you know, that squeezes the businesses on their ability to pay higher wages.
Unprofitable business paying below mininum wage distorts the market. They are in direct competition with businesses who do pay minimum wage and have advantage.
Yup, if you don't then your landlord gets all the value. You get a 10 year lease, build a successful restaurant (if you make it past the dreaded first year) and then when your lease expires your successful restaurant has helped increase the land value in the area and the margin you worked up to evaporates when you sign a new 10-year lease that is more expensive because the value of the land has gone up (partly due to your success).
My old neighborhood was full of people deciding on their third 10 year or early retirement. Had a few old guard businesses close before people noticed the pattern. Not that the residents could do much about the cause...
I imagine them thinking, “I’m 56 and this contract basically says I’ll have to work harder than I have in decades just to keep out of bankruptcy.” And just checking their finances and then the want ads for management positions.
In this case, why bothering operating a restaurant at all (it's a terribly terribly complex business to manage)? Just buy real estate and sit on it?
I always wondered how restaurants even work - how can owners be motivated to keep themselves in this endless, poorly paid grind. In my opinion, when this is not about large chains that are effectively self-reproducing machines that don't depend on any people's motivation, it's mostly either hobbies (someone runs it to keep himself busy and feel beneficial to the society during retirement, for example), or just failures (someone foolishly believes there's a massive amount amount of money to make, gets burned, and vacates the space to leave it to the next one). Yours truly have been that sort of person in my younger years (when it was a lot easier, as industry professionals say!).
And yes, i can easily understand how can one become a dick being a restaurant owner. You deal with people who are paid poverty wages (there is no choice here), who can't be motivated with anything but threat of losing their jobs, have no work ethic (or they'd be doing something better), and in general can't be trusted in anything at all. You become paranoid and you quickly learn to disrespect people. I can feel that guy, don't judge him so heavily.
This is a hellish business to do and anyone who envies them is a fool.
In some social groups you'll get massive social status signaling about being an "entrepreneur". Admittedly it mostly comes from people who profit off the pipeline, mortgage refi officers, commercial landlords, accountants, bankruptcy attorneys, etc.
As a cash business I often wonder how much laundering goes on. Not just hard core drug money, but any time cash is handled I suspect there's some rounding down going on.
That’s an excellent question, and touches many other avenues of life too. Why bother with producing anything, when asset appreciation provides bigger gains with no effort needed
Because your activity contributes to the appreciation. A good restaurant attracts a lot of people, which in turn attracts other businesses (think of bookstores next to popular cafés). This increases the worth of the property.
That's true, while that's not what i meant to say. I just pointed out that business doesn't work on appreciation alone, and restaurants nearly always rent their places anyway, and that it is extremely extremely difficult to make ends meet operating a restaurant while avoiding getting to madhouse.
"I'm just saying that both sides of the equation need to be examined, i.e. the plight of the worker AND the plight of the business."
It was examined. In 1944 in the Beverage Report "Full Employment in a Free Society". It concluded that people not earning sufficient to eat is an order of magnitude more harm than businesses not earning a profit and that the labour market should always be a sellers market, not a buyers market.
"But watch out for technology and automation...that is the part of the equation that has been "solving" the labor problem"
That's sort of the point. However micro-solving the labour problem with automation to drive forward productivity leaves you with a big problem - given wages are the primary source of demand, who are you going to sell the output of the robots to?
The underlying assumption here is always that the private sector provides the jobs. Look at the vacancies vs the number of people without work that want it. Then you'll realise that the private sector is systemically incapable of supplying sufficient jobs to go around. It always stops short. Which means that jobs have to be topped up by the public sector to ensure there are enough to go around.
If there are always 19 bones and 20 dogs, it doesn't matter how good the dogs are at bone hunting. Blaming the dogs for a bone shortage is desperately unfair.
> who are you going to sell the output of the robots to?
to other people employing, manufacturing or investing in the robots
Gains in a society goes to those that are doing something useful to contribute to increase productivity, such as providing the labor that increases the productivity or providing the capital to make that increased productivity a reality. While they won't get the gains, bystanders to this process benefit from cheaper costs due to increased productivity.
Is there enough people doing that to justify the scale of robot based manufacturing?
I've only seen costs for stuff go up with inflation, and most people don't have wages that track inflation. The owners benefit from the cheaper costs, but nobody else does
When adjusting for inflation, most things are getting cheaper. It is only a few goods that are getting much more expensive after you adjust for inflation and almost all of those things have one thing in common: government meddling and regulation.
> It was examined. In 1944 in the Beverage Report "Full Employment in a Free Society". It concluded that people not earning sufficient to eat is an order of magnitude more harm than businesses not earning a profit and that the labour market should always be a sellers market, not a buyers market
This report is completely irrelevant in today’s America, where everyone has more than enough to eat, especially if they are working.
"Food insecurity is the limited or uncertain availability of nutritionally adequate and safe foods, or limited or uncertain ability to acquire acceptable foods in socially acceptable ways."
"Food insecurity is a household-level economic and social condition of limited access to food, while hunger is an individual-level physiological condition that may result from food insecurity.
Information about the incidence of hunger is of considerable interest and potential value for policy and program design. But providing precise and useful information about hunger is hampered by the lack of a consistent meaning of the word. "Hunger" is understood variously by different people to refer to conditions across a broad range of severity, from rather mild food insecurity to prolonged clinical undernutrition."
I don't think anyone is saying that these sorts of companies have lots of money.
These business have a model that relies on poverty wages changing the minimum wage will disrupt these businesses greatly and I don't see a problem with that.
You can't keep a broken thing going because of the businesses that will have to change their model.
But sorry I also see your point there needs to be help to business to change their business.
Yeah but the job market is not a free market, because not getting a job is existential for those seeking the job, while the company can usually just survive when a position is not filled for a certain time.
This means to make this a free market many nations did the reasonable thing and introduced measures like minimum wages and unemployment benefits. This way when you loose your job the balance of power evens out a little and the job market works better for all involved (workers have a highee chance of finding a job they like, companies have a higher chance of getting people that like them, really shitty companies get an incentive to change).
In the US all shitty work places have no incentive at all to change, because everybody and their dog is struggling to make ends meet. That means no matter how slavishly they treat your people, there will always be another person desperate enough to throw themselves into the grinder. Result: No incentive to change for the company and people who feel like society ows them nothing.
I don't think that is recipe for a bright future, but who am I to judge.
So from a systemic perspective minimum wage is like a limit you can set for how desperate you allow people to get. And quite frankly. 15 USD is still less than if you had adjusted the original minimum wage for inflation, so come on.
> Yeah but the job market is not a free market, because not getting a job is existential for those seeking the job, while the company can usually just survive when a position is not filled for a certain time.
This is, to begin with, not true. It's common for small businesses to be operating at the margin. If you don't have someone making the sandwiches then you don't have revenue and you still have rent and utilities. That math puts you out of business in a hurry and then the owner (whose wages came out of the revenue they now don't have) is facing the same circumstances as the employee.
But on top of that, even if you existentially need a job, that doesn't mean you need that job. You can pick the one that pays the most.
Where this falls down is when all of your alternatives are terrible. But if all of your alternatives are terrible, prohibiting you from choosing the one that was the least terrible (e.g. because it's right across the street but pays $2/hour less instead of being a two hour commute for $2/hour more) is not actually helping you.
To do that you need something like lower housing costs (so the wage you can earn is enough to live), or some kind of free community college so you can learn a trade that pays better, or a UBI. Not a minimum wage that could take away the job you currently existentially need.
Oh sweet summer child. When you are in debt and struggle to survive on a day to day basis, time is your enemy You cannot afford not to take a job. And if you are lucky enough to be able afford it today, you might not tomorrow.
Another thing: many people need more than one job as it is now. Guess what: if you pay people a decent living wage more people can actually get jobs, because less people have to do two or more. If your business is so inefficient it can't support minimum wage labor, it was doomed to fail before. Again: even McDonalds manages to pay minimum wages in Europe and their prices are roughly comparable. You are being gaslighted by the people profiting from that modern form of slavery.
you are right in recognizing that living costs are an issue as well, and they are an issue in many big cities. The known solution for this issue is publically owned housing which you shouldn't put into their own districts (thus creating ghettos) but mix them in throughout the city (Vienna's "Gemeindebau" is a good example for this, Vienna repeatedly got the title "City most worth living in" over the past decades). Don't only put poor people into these houses, make them decent and make them something people want to live in. Make them cheaper to rent than other flats (this way the rents in the surrounding areas cannot go up so fast). But most importantly: this must be done from the public side — nobody else in control has the incentive to act in ways that lower rents.
Aside from all this, what the US really needs to do is to look at all the other countries that are comparable to the area you are living in and wonder why they are doing so well without all the doomsday scenarios your politicians make tou believe (both socially and economically). Whenever I talk to US citizens about this they are either completely delusioned ("I live in an oligarchy") or they pretend their problems are so unique the rest of the industrialized world never had to deal with comparable things. "Who knows, maybe it cannot be solved at all", they say, while it was solved literally one country over since half a century ago.
That's like wondering whether man will ever be able to move faster than a horse, while your neighbouring country has airplaines they use on a daily basis.
Housing is an issue in big cities largely due to government policies that both limit inventory (building and zoning regulations) and limit profitability (rent control) that make is extremely undesirable to create new housing.
The solution to this is NOT government housing but less government regulations about building new housing
Not who you replied to, but I believe the current popular answer is to refer to Japan. Numerous articles have been written regarding how they managed their housing crisis by deregulating zoning and building permits. You'll have to read up on it yourself, it's beyond me to summarize as it's a complex topic and the model is not perfectly exportable. Partially for "real" reasons, such as Japan has so many earthquakes that many houses are not intended to last for 100+ years which affects the home economy. Partially for social reasons, e.g. wealthier nations view homes as investments (more-so than as a place to live, like we view an apartment), and people push tons of local/state/federal rules to ensure their investment always grows in value. The easiest way to make the value grow is to ensure there are no more homes e.g. NIMBY
I live in Japan and can tell you that those conditions lead to ugly, low standard buildings that seem to me to be among the very top complaints foreigners living here have about the place. The incentives are completely skewed here and seem just as likely to be corrupt as any other place. There's plenty of discussion about it on these boards, this one comes to mind https://news.ycombinator.com/item?id=26399071
As to the earthquakes/natural disasters bit for why they build relatively disposable homes - does that happen on the west coast of the US, for instance? I'm genuinely interested, if anyone knows.
The low standard one is reasonable as that is what keeps costs low. The alternative is high standard and high cost. You can't really get high standards for low costs.
If the government dictates that all housing needs to be high standard, the collateral damage to that policy is that you can only build housing that prices people out of the market.
> You can't really get high standards for low costs.
I agree but here they're also expensive, which, in my view, is a symptom of the corruption and lack of a free market.
> ugly is subjective so I won't touch on that.
Again I agree, but if you're into industrial estates with lots of concrete and overhead wires galore, then Japan is the place for you. I'm sure someone likes it, maybe the brutalists who made the ugliest parts of my country (the UK) after the war.
Tokyo. Prices have largely remained flat for the same unit of housing for decades because there aren't nearly as many government restrictions on construction of new housing.
Please try to keep the snark out. If they were snarky to you then I say go for it but I didn't notice they were snarky to you and, regardless of whether you agree with them, their contribution to this discussion is worthwhile.
Needing only one job is a historical anomaly as a result of an industrial society. Historically, people would have to perform a variety of tasks to provide for oneself.
Furthermore, more than one job de-risks someone's situation just like a consultant with many clients can handle the loss of a single client and not see their income fall to zero.
It's the total hours of paid labor over N jobs that you should look at instead. If you do 60 hours a week at one job or three jobs for 20 hours each, you're doing the same amount of labor with less risk.
The only qualitative difference between one 60 hour job and three 20 hour jobs is the benefits received from working 40+ hours for a single employer, but this isn't an issue with how many jobs you work. It's an issue with an artificial asymptotic condition created by an act of legislation by government.
Every time legislation creates artificial asymptotic conditions, you're going to get actors that optimize around that artificial boundary condition. If you want to avoid the circumstance, you need legislative solutions that are continuous in nature instead of asymptotic.
I'll just point out: if you need 60 hours of income to survive you actually increase risk by having it split between several jobs. That is because having a portion of enough rent to not be evicted is equivalent to having not enough rent to not be evicted. You only need one of your jobs to collapse for you to only have a portion of your rent therefore the more jobs you have the more likely you are to have one fail and to be in that position.
In other words diversifying your income only decreases risk when you don't need all of it, you'd be hard pressed to argue that that group includes those earning minimum wage.
> I will never stop being amazed at how Americans argue that something decent is wrong, or untrue, or even impossible... when Europe exists.
In Europe there are zero businesses operating at the margin that would go under if unable to staff their operation? That was the thing you are responding to.
I will never stop being amazed that European's think Europe is a Utopia that the rest of the world should look to as a model.
I do not want the US to be Europe, that is nothing short of a dystopia for me a person that wants Individualism, and individual freedom. rejecting Authoritarianism and Collectivism
If people in the US like the EU model soo much then i encourage them to expatriate to that location. Stop trying to make the US into the EU
I've never known anyone here in the US (friend, coworker, family member, acquaintance etc - Internet forums don't count) who has moved to Europe permanently. I know that many do, obviously, I just don't one personally. At the same time, I personally know many Europeans living here and have seen many more coming over the years.
I can't find hard data, but probably we should not say that "those who have the means to, do". It's likely more of "a tiny percentage of those who have the means to, do".
> An American barely surviving on minimum wage is very unlikely to move to Europe.
And even if they did they would be far less likely to contribute meaningfully to the commons in Europe to support that social safety net. Therein lies the rub.
The only way to provide the productivity that funds the social safety net is when those providing the safety net far outnumber those consuming it. As this gets out of balance, those providing it start to resent those consuming it.
When it gets out of wack, you get situations like the DDR and North Korea, where the government needs to erect walls to prevent the productive people from escaping that shitty deal.
You can only achieve this balance in a high trust society where there is social pressure not to be on the consuming side for longer than is reasonable to get back on the producing side.
Guess what destroys that high trust condition? Bringing in outsiders faster than can be assimilated and/or eliminating the expectation of assimilation as the US is doing and Europe is now starting to do.
It's not that you can't bring in outsiders and maintain a high trust society. You can. But that takes work and it requires an acknowledgement that a high trust society is something that we should be trying to preserve while we do things that can hurt the current state of trust in a country.
From a trust perspective, the US is at a low probably not seen since either the Civil War or the Great Depression. We should solve the trust issue if we are to have any hope of building the social safety net features that rely on high social trust as a foundation.
Yes, the obviousness of the limited capacity of multicultural integration should have been easily deducible to anyone in a position of real power back in the 70s and 80s when the decison was made. Yet, for several decades major countries, having decided to go down the multicultural road, also decided against a sustainable rate of integration over centuries, such as a constant 0.2% annual immigration influx until 2200 CE. The key decision makers instead favoured a destructive course of short term profits within their lifespan, and immense long term costs, that has led to the current outcomes with all the eventual consequences.
Interestingly, America is one of the best places to be if you are wealthy (part of the motivation on this thread). So it's also unlikely for a wealthy American to move.
Believe it or not, a lot people, in poverty or otherwise, really like the unique things in this country and most would rather have it this way than to move to Europe (which has its own share of major problems despite being a cool place overall).
Also, poor people rarely know the reality of other countries. I have friends in the States who firmly believe that Europe is a hellhole even though they are literally a medical emergency away from a bankruptcy.
Maybe that is because they value something more than Free Healthcare. Maybe they are not willing to trade this liberty for the safety of government services.....
Hmm Actual Freedom of Speech (we are not putting people in jail for jokes on YouTube as an example), The right to Self Defense (aka 2nd Amendment), the relationship between government and the people (i.e we believe rights transcend government and are not granted by same), I could go on and on
Housing cost is directly link to wages, when wages increase then the rent goes up, sometimes more than wages. This is because housing is in very limited supply (some artificial due to zoning and regulations) and extra income will be sucked out as rent.
>>15 USD is still less than if you had adjusted the original minimum wage for inflation, so come on.
This is a myth that is often repeated, but I have yet to see it proven.
The Original Federal Min Wage was passed in 1938 and was $0.38 per hour, Adjusted to 2021 that would be $7.14
In 1981 it was raised to $3.35, in 2021 dollars that would be $9.76
In 2009 it was raise to where it is today, $7.25 ($0.66 lower than a pure inflation increase should have been) and is 9.26 in 2021 dollars
So if you want to do a pure inflation adjusted min wage it would be no more than $10 not $15
I can find at no point in the history of Federal minimum wage would have wage inflation adjusted be more than $15/hr today. I can debate the merits of minimum wage, the ethics, etc, but we have to be having a debate with actual facts not political talking points.
That is moving the goal posts, the comment I was responding to was "15 USD is still less than if you had adjusted the original minimum wage for inflation, so come on. "
Given the context this would be the standard model upon which dollars are adjusted for inflation over time, tools like usinflationcalculator.com make this easy to factor in what that would be
If you want to shift the debate to "what is inflation" that is fine, but that is not the debate I am having in this comment thread
> because not getting a job is existential for those seeking the job
Before jobs offered by others existed, not working in some form would have been existential for those people. This is the de facto state of existence. You'd have to at least do some form of hunter/gathering or subsistence farming.
This increasingly common idea that individuals no longer are obligated to provide for themselves is wild. The only way around it is to obligate others to provide for you instead of providing for yourself. The last time this was a common idea in the United States was in the in the antebellum South.
The government has much better options than mandating a living wage.
It can simply pay you the wage as an indirect subsidy to stimulate production.
It can employ you in the construction of infrastructure. The infrastructure of the US is dilapidated to the point of national disgrace.
It should still mandate living wages, the same way it should not allow employers to lash their employees or own them as chattel, or any number of other practices which are both immoral, and cannot find any temporary justification due to exigent circumstances (eg. literal struggle for national survival...)
I think something is missing from this equation, which is the balancing act. The value of labor is dynamic, it depends what people are willing to pay, and what is the price of other costs.
How I see it, labor cost have been cut, while rent has gone up and prices have gone down.
If you increased minimum wage, it would put pressure on prices to go up and rent to go down, both would increase the value of the labor itself.
I think this whole dynamic is way way harder to model and predict how it'll play out then everyone makes it out to be. None of people's simple projection account for it all. Even economists with fancy models backed by simulations, math, and all that can't figure out the real outcome and often disagree with one another on what would happen.
It's not as easy as saying, half the restaurants are going to shut down, and leave empty all those commercial space. What happens next? Maybe some customers start to be willing to pay even more to get back some of the great restaurants they lost, or their proximity to them. Maybe landlords have to lower their rent for something else to fill in the vacancy, etc. Maybe everyone is happy with only half of the restaurants remaining, and each of those restaurant is making twice as much now allowing them to hire more staff and pay even higher. There's a lot of balancing act that could happen.
I guess the question is what do you do when you find people who present with that situation: that they’re perfectly capable to hold down a job but only to create $10/hr of economic value by their labor.
If you set the minimum wage at $15/hr and do nothing else, you have made that person worse off than today. Everyone around them now has more money, so everything is becoming more expensive. They now can’t find or keep a job, because any employer who employs them is losing at least $200/week, $10K/year by employing them.
I don’t know what the optimal solution is, but it’s not clear to me that the above is it.
Generally the math works the other way. I worked in a Wendy's for a while; I made minimum wage and most of the people made a little bit more. We cleared $30,000 a month profit for the owner ($100K revenue, $70K for expenses including all of our wages). If a company is so inept they can't generate a bit of value from people, then to be frank, as a society we can afford to be without them. Look at the minimum wage as a filter to remove companies that are so unsuccessful, that they disappear before dragging down the citizens.
Pretty amazing! Way way better than any of my friends who have owned restaurants. Did that $30,000 profit include paying off the mortgage, various forms of insurance, legal fees, accounting fees, taxes, and so on?
30% profit for a fast food restaurant is not credible. It's too competitive. I worked for McDonalds (a long time ago, but...) the best store in the market made a little over 10% profit. Others made less, or even lost money at certain times of the year.
So if someone else is willing to work for those wages (they don’t really need the income or have minimal expenses) you’d tell them “tough, it’s illegal to work for that wage now”?
That question never happens in places with a minimum wage. What you can do is support your employer by showing up early and/or helping out a few extra hours after the shift. Nothing in writing or by force.
I've really had a lot of jobs. I would just do anything for a while just to see what it is like. In some places it is as if Hitler won the war, in others the boss or manager becomes a good friend. You don't demand back wages from a friend.
Since that is how the relatively uncontroversial minimum wage law (which has been around since 1938) works, yes, society has generally decided that we do want to tell people, "it is illegal to work for some very low wage." And, while not the parent poster, I agree that it is a useful policy.
That’s a very US centric point of view and appeal to authority. Just because it’s been the law for almost 100 years doesn’t mean it’s the ideal approach.
And several developed countries have no floor other that agreed by through collective bargaining.
The problem here is, most peoples' wages are defined by their leverage, not their value. For people in those situations, the benefit of minimum wage is that most people below that wage immediately get leverage in the form of legal requirement to pay them (or anyone else) min wage.
This isn't a matter of improving the situation for everyone, it's a matter of improving the situation for the majority of min-wage workers.
If someone genuinely can't provide $10/hr of value, then either 1) they need to upskill (and there are social services for that, although perhaps not in the US idk) or 2) they're like one of those literal retards who are becoming literally unemployable, and the solution is either to subsidize their employer (which is okay in this instance because you're not subsidizing a race to the bottom like you are with subsidizing normal e.g. McDonalds wages) or put them on a disability pension.
But realistically, most people are capable of upskillinng and that's what they should be doing if they're not valuable enough to an employer.
I think we as a society have put in place lots of social programs, to the tune of billions and billions of dollars a year to ensure "survival" is not at play here.
Further at the end of the day wages are not the problem, cost of living is, economic value of labor is. Waving a magic wand and proclaiming a new min wage does not resolve those root issue, it may in some limited circumstances help a few people for a limited amount of time, but you need to resolve the root issue which mandated minimum wages increases is not going to do and often harms the very people you are looking to "help"
Please, define what is a poverty wage, it is important. How much stuff one should afford to avoid being called poor.
What is the change of the model in case of the restaurant? I can see only one, automate the jobs away to reduce the costs, namely replace humans with robots.
But, if we consider these crappy jobs, what about people that are not qualified/able to do any more advanced jobs? People have vastly different cognitive abilities, it is not like we can teach everyone to code. It will not work.
> Please, define what is a poverty wage, it is important.
The ability to afford adequate housing, food, and clothing. I'm not saying we should mandate people can afford a 1500 sq. ft. home, ribeye steaks every evening, and Ralph Lauren Polo threads, but how about at least a one bedroom, one bathroom apartment; nutritious, nourishing food; Walmart clothing at a minimum.
> What is the change of the model in case of the restaurant?
Removing the "tipping" system. Increase prices such that an employee can afford the above mentioned necessities.
> I can see only one, automate the jobs away to reduce the costs, namely replace humans with robots.
I think the industry will go here no matter what changes we do or do not make to policy, business models, etc.
> But, if we consider these crappy jobs, what about people that are not qualified/able to do any more advanced jobs? People have vastly different cognitive abilities, it is not like we can teach everyone to code. It will not work.
We either decide these people are expendable, or that they are human beings worthy of a baseline of a dignified life. I define a dignified life as the ability to have at least the minimums I described above.
Do workers who receive tips want it to go away? The friends I've known who worked jobs with tips seemed to think they would be paid less if tips were replaced with wage increases on the employer end; my understanding is that they made a significant amount of money in tips. Obviously this varies by individual, job, and establishment, though.
There some restaurants that tried to go no-tipping, but I think it didn't work out for them because they had a hard time finding/retaining staff.
everyone i know who has worked tipped and untipped service models preferred the untipped model for stability and the reduced interference of sadistic/irate/careless customers. in fact these people have been pretty instrumental in wider implementation as they have moved on to other work environments and advocated for that change. this is in a state that doesn’t count tips toward minimum wage.
the largest harm of the tipping model is in states that do count tips towards minimum wage. the wage paid by employer may be under $3/h and the employee mostly survives off tips. this means that tips are only subsidizing the employer, because an increase in tips is matched by a deduction in the wage paid by the employer, to a limit.
there are some rare instances, mostly luxury dining, where tips can far outpace typical restaurant wages. in this context the employer can afford to massively increase wages. there have been arguments made that these tips pay for the quality of service, but there is no reason this incentive and expectation can’t come from the employer directly, and it would remove the uncertainty of irresponsible customers failing to tip.
in all contexts, switching from tips to a real wage has many benefits to the employee when wages are adjusted properly, no detriments to the customer, and only harms businesses that are currently exploitative and doing harm.
If that were the case, then why did restaurants that switched to no-tipping models see the departure of much of their staff? [0] I would have expected servers to flock to those, but by the sound of it, tipping is reliable enough that servers can leave and go to a restaurant with tips and earn more money.
> “Andrew was very disappointed,” says an employee of Tarlow’s restaurant group, Marlow Collective, who asked to remain anonymous. “But when we went to non-tipping, we pretty much lost our entire staff that had been there for ten years. He wanted to make it work, but it just became really difficult.”
> ...
> But, it turned out, many front-of-house staffers were more concerned with making money than with maintaining the moral high ground. This February, Meyer admitted that he had lost 30 to 40 percent of his “legacy” staffers since 2015. (One Meyer employee told Grub last year that her wages dropped from $60,000 per year to $50,000 under the new policy.)
> ...
> Without widespread buy-in from other restaurants, it’s just too easy for front-of-house workers to leave to make more money elsewhere. “About 40 percent of our servers were like, ‘Hey, this is awesome, but I’m going to go to State Bird Provisions, where I can make 10 percent more,’” Vogler says. “And who doesn’t want to make 10 percent more? They’re not freedom fighters.”
To be sure, maybe they didn't do a good job implementing it. But the cases I've read about restaurants switching to no-tipping usually seem to run into problems with servers being able to earn more money with tips than without them.
I think perhaps part of the problem is that a uniform increase in prices will make people who would have tipped poorly decide not to go, and people who would have tipped generously now pay less. So before with the tipping model, the well-tippers were in effect subsidising the poor-tippers, but now the poor-tippers are gone so there is overall less revenue for the business and servers. But another issue is that they took some of the income earned from the higher prices and gave it to the kitchen staff, which would have been money that would have been available for the waitstaff.
of course you'll see staff leave if you cut pay. that's a deliberate choice by management, and not a question about tipped or untipped work.
i doubt there is real effect on the orders that customers place, but nobody's publishing their books, so who can say. in a systemic change in which every restaurant transitions to an untipped system, there would be no concern about losing out to a restaurant that continues to lower prices by exploiting servers.
Is it a deliberate choice by management, or an economic reality? Perhaps they could have kept kitchen staff wages low and used the extra money to pay waitstaff more, but since it seems like other restaurants that adopted no-tipping eventually switched back to tips, it sounds like there just isn't the money to go around.
Sure, if every restaurant switched to no-tipping, then waitstaff couldn't simply switch to a restaurant that did tips. But I would suspect they would make less money overall.
Are restaurants without tipping losing out to a restaurant that is 'exploiting' servers if servers are choosing switch to that restaurant rather than stick with the restaurant with the 'non-exploitative' no-tipping model? I cannot see the logic in that. Are you saying servers who leave a no-tipping restaurant for a tipping restaurant are choosing to be exploited?
what? all that is required in the transition to fully-waged labor is to pay an equivalent wage to the former wage+tips. if management pays a lower wage, that is a choice, because management has full control over what they rate hourly and what they write on the check.
if the concern is that workers may be paid less, the solution is simply don't pay less.
If you can demonstrate that happens, to the exclusion of other reasons, publish it. I haven't seen that effect or known anyone to see that effect during such a transition. What I have seen is a lot of bosses cutting wages and blaming everyone but themselves for turnover, and a lot of business owners with an ideological agenda making bad-faith arguments.
The money is already there, and the current situation is that customers are literally giving most of it without obligation. It makes sense to formalize the relationship, and properly allocate responsibilities to the business owner.
The entire debate is a deflection of responsibility for employee compensation.
There don't appear to be any direct studies on revenue, but the GrubStreet article mentions a study by Lynn (2018)[0] which looks at the impact of eliminating tipping on online reviews, which have an impact on revenue (but of course it's difficult to judge, since perhaps not all declines in Yelp scores are equal; maybe in that study declines/improvements in score had more to do with the quality of the food):
> This study examines the effects of such moves away from tipping on restaurant’s online customer ratings. The results indicate that (i) restaurants receive lower online customer ratings when they eliminate tipping, (ii) online customer ratings decline more when tipping is replaced with service-charges than when it is replaced with service-inclusive-pricing, and (iii) less expensive restaurants experience greater declines in online customer ratings when replacing tipping with either alternative than do more expensive restaurants.
> ...
> Given the already ubiquitous and increasing popularity of online reviews, and the influence that such e-word of mouth has been shown to have on consumers’ purchasing/patronage behaviors (see Kim, Li, and Brymer, 2016; Ong, 2012; Zhang, Ye, Law, and Li, 2010), our results also have important implications for restaurants’ bottom-line that warrant being underscored. For instance, in a longitudinal analysis (2003- 2009) of Yelp online reviews and revenue data for every restaurant in the city of Seattle Luca (2016) recently estimated that restaurateurs can expect a 9% increase in revenue for every one-star Yelp rating improvement. Thus, if the results of our study are shown to be reliable and Luca’s (2016) estimate generalizable then it follows that low and moderately priced restaurants that decide to replace voluntary tipping with either automatic service charges or service inclusive pricing can expect to experience a nontrivial loss in profits as a function of lower online satisfaction ratings.
The paper notes that raising prices whether through services charges or what will be a price increase for a significant percentage of the clientele:
> Additionally, tipping is a form of voluntary pricing and price discrimination that results in approximately 25 percent of customers tipping less than 15 percent of bill size and 65 percent of customers tipping less than 20 percent of bill size (Lynn, 2017a), so replacing tipping with service charges or service inclusive pricing will raise dining costs for a quarter to half of restaurant customers and this is likely to reduce the overall satisfaction of those customers.
One restaurant that had switched to no-tipping before abandoning had tip averages of 21%.[1] I don't know anybody who tips that much, but apparently they exist. But if you increase prices by 21% on all clientele, then the restaurant becomes more pricey compared to restaurants that do tipping. Someone who would have tipped 15% might just go to another restaurant and tip that much, whereas a particularly generous tipper who would have paid 25% to make the average about 20% between these two is now just paying that 21% price hike - that's an overall decline in revenue. And the restaurateur said his mistake was not raising prices high enough to cover both the waitstaff wages that they had been getting from tipping ($25-40/hr) and raises for the back-of-house staff; he says he should have raised them 40%! Perhaps he could have done so, but it seems likely he would have been doing less business and had to downsize.
But OK, let's assume that somehow restaurants earn the same amount of income as before with hiked prices and no tipping, and that extra income is paid to the staff. If any money goes to the back-of-house staff, that means that the waitstaff would be making less than they did before. Do you think it's reasonable for waiters to be making $25-40/h while the kitchen staff is making $13-20?[1] I don't particularly think it is, and if tipping culture eventually ends (which, make no mistake, I am no fan of tipping), we would see waitstaff being paid less because now they can't switch to a restaurant where they can make more than tips, but we might see kitchen staff make more. However, this would necessarily mean that waitstaff are making less money.
You're still talking about administrative decisions to compensate certain workers more or less. Again, if there is concern about workers being paid less, the solution is to not lower their compensation.
I have no problem with raising back-of-house wages, they are typically undercompensated compared to front-of-house, even though the work is comparable and all of it counts towards the dining experience. Raising kitchen wages does not necessitate lowering server wages, and suggesting it does only encourages division and confuses the situation. It is worth noting that tip pooling with kitchen staff is standard practice in many restaurants despite being flat out illegal until recently, so the situation you fear already exists, and could be remedied by moving away from a tipping system to explicit wages.
Again, it is worth formalizing the relationship and clearly allocating responsibilities.
> Again, if there is concern about workers being paid less, the solution is to not lower their compensation.
Then kitchen staff will continue to be paid poorly. Just understand that's the tradeoff.
> Raising kitchen wages does not necessitate lowering server wages
How?
> It is worth noting that tip pooling with kitchen staff is standard practice in many restaurants despite being flat out illegal until recently
It's still illegal in many states. Meyer, one of the restaurateurs who switched to no-tipping and back, is in New York, where it's illegal both to add a service charge and to collect part of the tips to share with kitchen staff. Switching to no-tipping allowed him to compensate the kitchen staff more fairly, at the expense of the departure of his entire waitstaff.
>Then kitchen staff will continue to be paid poorly. Just understand that's the tradeoff.
If it’s a tradeoff it’s only a tradeoff that management chooses to make.
>How?
How what? It’s a business operating within a market. They will do something.
None of this is a binary mechanistic outcome determined by a boolean of tipped or untipped service. The restaurant has a budget and they will spend money and set prices as they think best, and succeed or fail based on that. There is no law that dictates zero-sum competition between kitchen and server wages, and all else static! Clearly in a market in which tipping is not practiced, a business will behave differently than the current market, and employees will expect appropriate wages.
>meyer etc etc
this is still another case of an employer making administrative choices about how much to pay different workers, and workers reacting to those decisions. if the waitstaff were given an equivalent or better wage to their previous wage+tip compensation, they would have had no reason to depart. this was explicitly not the case: the servers left because the transition gave them a pay cut.
it makes no sense to blame tipping or not tipping for bad budgeting and failed wage negotiations. the issue is in the allocation, not the concept.
again, this is a case of employers deflecting responsibility for compensating their employees.
the economic calculus of a restaurant does not massively change based on a switch from tipped service to untipped service. there is still money coming in and food going out.
i am advocating that employers be held responsible for paying their employees. the current tipped service regime fails to attribute that responsibility to employers, and leaves employees vulnerable.
i have seen no-tip service implemented in a way that satisfied employees. i have seen also it done in a way that drove staff to quit, and in those cases the fault lay entirely with management trying to reduce compensation.
stop asking questions about a fantasy budget. i do not care. if tipped service was abolished tomorrow, employers would figure it out.
> i have seen no-tip service implemented in a way that satisfied employees.
Have you seen no-tip service implemented with waitstaff earning as much as they did before?
> if tipped service was abolished tomorrow, employers would figure it out.
Of course they would figure it out if tipped service were abolished. But I am confident the outcome of whatever they figured out would result in lower take-home pay for waitstaff, as waitstaff would no longer be able to earn more money by switching to an establishment that allowed tips.
> how about at least a one bedroom, one bathroom apartment
to me, this part sticks out like a sore thumb. a 1BR where? I make well above the median wage for my area and I can't afford a 1BR anywhere near the place I work. literally no one would consider me to be poor. a 1BR, coming with a private kitchen and bathroom, is a luxury for a single adult. it's not at all an efficient use of housing space.
a more reasonable threshold would be a private bedroom with space for a desk.
> how about at least a one bedroom, one bathroom apartment; nutritious, nourishing food; Walmart clothing at a minimum.
It's interesting to see how standards have shifted over time. Not too long ago, it was considered sufficient if people could afford their own room in a boarding house. Those frequently had shared bathroom and dining facilities, and provided nutritious and nourishing meals. That was considered a worthy, dignified life by a great many.
Boarding houses went away in no small part because they were zoned out of existence. Often on the grounds that they were an immoral existence and it was the duty of the best of us (read: richest) to mandate a correct social order for the lower classes.
I find this interesting because it implies that we're going to continue to have this problem - a lack of dignity - no matter what we do. You can already see the ratchet turning. There are people who earnestly believe that food isn't nutritious and nourishing unless it's Organic (by some definition) and thus that universal access to Organic food is a moral requirement.
> The ability to afford adequate housing, food, and clothing. I'm not saying we should mandate people can afford a 1500 sq. ft. home, ribeye steaks every evening, and Ralph Lauren Polo threads, but how about at least a one bedroom, one bathroom apartment; nutritious, nourishing food; Walmart clothing at a minimum.
Now, what does adequate mean? I guess a place to sleep, a place to clean oneself, food and clothing seems like a reasonable bar for a wage above poverty. Are there many full time jobs in the US that do not allow that?
> Removing the "tipping" system. Increase prices such that an employee can afford the above mentioned necessities.
Removing tipping and increasing prices beyond the tipping, it reduces to just increasing prices. I guess not very smart people create these enterprises, if only they hiked prices… And seriously, they definitely increases them, it is just a necessity. But I would not call this as a change in the model.
> I think the industry will go here no matter what changes we do or do not make to policy, business models, etc.
We do not have to necessary speed it up. People are already having difficult with keeping up with the changes.
> We either decide these people are expendable, or that they are human beings worthy of a baseline of a dignified life. I define a dignified life as the ability to have at least the minimums I described above.
Are there really only two options? Is not that a bit simplistic? And what does that even mean, do you think we should provide everyone with the job that ensures they have the mentioned stuff. What if they have different needs. And what if they do not qualify for any job, should we provide them with the exact stuff that people who work 40h a week get, or the equivalent in money? How is that fair for those who do these boring jobs.
> Now, what does adequate mean? I guess a place to sleep, a place to clean oneself, food and clothing seems like a reasonable bar for a wage above poverty. Are there many full time jobs in the US that do not allow that?
I would say, a place where you don't have to share quarters with strangers, be exposed to violence, drugs, have your sleep interrupted, where the housing is stable enough that you don't need to leave work in the middle of the day to attend an emergency court petition to prevent your immediate eviction due to landlords non-payment of mortgage and interception of mailed eviction notifications, where you don't have to leave under cover of darkness with colleagues who know how to handle themselves as your bodyguards so that you can spend a month or two sleeping on a friends sofa while you try and wait for a room to open up in something resembling a half-way house for recently released prisoners.
Cos I mean, those were about the best conditions I could afford while working for a profitable multinational tech company while I was developing a key piece of the Internet infrastructure that everyone on this site uses daily (in a wealthy area of the UK).
I won't name the company, but it rhymes with "Clit Tricks"
> Are there really only two options? Is not that a bit simplistic? ... should we provide them with the exact stuff that people who work 40h a week get ... ?
Is _that_ not a bit simplistic? Is it really so difficult to imagine a world where working 40 hours a week is either a) dignified enough not to be totally demeaning and exploitative _and_ meaningful enough to carry some intrinsic reward, or b) pays noticeably more than the bare minimum required for an existence at least befitting the dignity of animals in a zoo, never mind human beings?
A lot of the issues you reasonably want to avoid seem like they could be solved more directly by other means. The argument seems to be, "America is a hell hole, so everyone needs enough money to escape it." There are poor countries where people dont live in fear of eviction and the slums arent full of violence and drugs. Maybe it's too difficult to change culture though, and we should just throw money at the problem.
The fact that it can be done in a poor country is all the more reason that it's a scandal that it is not being done in a rich country.
These poor countries don't have any special techniques or mystical cultural powers. For example, the fact that south Korea has adequate flood defences and the UK does not is not because Korean culture lends them a racial character uniquely cognizant of water management passed down from their ancestors over generations of rice cultivation or whatever... There is absolutely no reason the UK is unable to "throw money" at constructing flood defences (altering planning policy, etc.) if they were to so chose.
The idea is not to "escape the hellhole" but to transform it in to "not a hellhole", through the direct, rational application of readily available, and completely straight-forward policy mechanisms.
But maybe it's too difficult to use political policy as a tool to achieve desired outcomes and we should blame the victims, turning it in to a nebulous cultural or moral failing and then wait around for the culture to just spontaneously change itself, eh :)
>Now, what does adequate mean? I guess a place to sleep, a place to clean oneself, food and clothing seems like a reasonable bar for a wage above poverty. Are there many full time jobs in the US that do not allow that?
And as an aside: This is for a two bedroom - and it is important to afford a two bedroom. Single parents often need to keep a two bedroom even if their child or children only visit every other weekend. A one bedroom often isn't significantly cheaper, and a studio isn't always cheaper than a one bedroom.
There are definitions and I believe another commenter in this thread has defined it very solidly about poverty.
There will always be service sector jobs, this is the argument luddites were having in 1815 (I don't want to get into this as it is distracting from my main point).
We should be ensuring that anyone putting in 40 hours a week should be able to support a family. The wealth is there to be able to create this society (not saying it's easy not saying there are not problems).
Support a family? How many kids should I be able to support on my unskilled 40 hours/week?
Look, I might be convinced that minimum wage is too low, though I'm much more inclined to leave that as a matter for the employee and employer to reach agreement on.
But if you have no marketable skills and the only work you can get is entry-level minimum wage, you have no business starting a family as the sole income-earner. None.
That’s a rather eugenic standpoint. I think the argument is actual children are part of those family’s, it’s up to society how to deal with it. Currently we subsidize business and families, but perhaps we could remove the business subsidy.
What does it mean to support a family? Is getting them sheltered, clothed and well fed good enough? I think it is way easier to achieve today than in almost any other time in a human history, even for the low earners.
Restaurants are a part of the service sector. A service job does not imply that it is attractive. And they differ in requirements. The well paid ones get more and more complicated and hence, proportionally to the whole population, less and less people will be able to qualify for them.
Finding shelter is exponential Harder now than any time in my memory.
We have a homelessness problem that it unpresidented. I would bet more people are now than anytime in history. (Pioneers could camp when they were tired. Cavemen weren't ticketed for sleeping under a ledge.)
Hell--30 years ago certain states were still offering homesteads. There's not an inch of land in the USA that live for free. (BLM land requires you to move every two weeks. Only some BLM land us open to camping.)
Try taking a nap in your closest park, or open field. You will get poked by a angry cop. You will understand loitering/trespass laws innately.
People, especially in service jobs, are living on top of each other. Why was the Corona virus so prevelant in the hispanic communities?
As to your previous statement, "We all can't be Coders." I have personally know three older Programmers. Two died because they aged out of the industry, and became homeless. The other is currently being harassed in Richardson Bay by Sausalito cops, and the coast guard, over a dispute of the seaworthiness of his sailboat.
One was Jim Fox. A huge contributor to Word Star. He ended up in San Rafael wearing a fuzzy Penguin outfit begging. He died a few years ago.
You might be one of those Service applicants in a decade?
(I'm not going to debate this guy. My biggest worry post Covid is the huge increase in homelessness we are going to see. The government needs to open up any excess federal, state, and local to to free camping. We need to put up tent cities. I feel it's going to get very ugly.)
At least in the US, that's just not true. Rent and healthcare costs (which together are the majority costs for low income people) have risen way faster than inflation since the 1970s.
> I can see only one, automate the jobs away to reduce the costs, namely replace humans with robots.
This is generally not possible at twice the cost. The robots generally suck and break down a lot. Now you've replaced a bunch of low-skilled, interchangeable staff who work like dogs with a fleet of mechanics and an engineering department.
Half of the McDonald's automated kiosks I see are broken - and it's usually the store's entire system down, for weeks or months on end. I went to Home Depot today to grab some WD-40, and when I went to do the self-checkout, each of the four stations had a clerk helping the customer "self" checkout. To circle back to McDonald's - it's always been a joke how difficult some fast food clerks find their POS systems - where does this fantasy come from that customers are going to be better at it?
When it is possible to automate a job away, it is desirable. It's good that raising labor costs drives technology development. The better technology we have, the more comfortable we can all be, and the less we have to work as a species.
> This is generally not possible at twice the cost.
We get better at automation constantly. Thinking that just because today our technology sucks it will stay this way, is not reasonable in my opinion.
> When it is possible to automate a job away, it is desirable.
Yes, it reduces the cost (of the workforce). However, this change comes with a nontrivial social cost and a problem, what to do with the people that are not able to do more advanced stuff.
If you work full time as an adult and are Medicaid eligible, you’re being paid poverty wages.
> What is the change of the model in case of the restaurant?
Raise the prices.
It’s already happened anyway, the market has plenty of elasticity. Restauranteurs always whine about how impossible it is to raise prices, yet they seem to manage to do so just fine.
That’s a really excellent idea. On the off chance that you may be wrong in a few cases, what happens if you go out of business after raising your prices enough to get wages high enough to be where you think they should be?
That’s why the government has minimum wages, which help the market deal with that.
Fast service restaurants have already adapted. Five Guys or Chipotle cost more for a better product. McDonalds has to remind you on the wrapper that their burger contains beef.
This is the system we are using. I don't have to like it. Scaling is done something like: If there is room for 4 shoe stores and there are 7 its going to be difficult for all of them until 2 close.
I don't see it. McDonalds pays minimum wages in most european nations, yet their menu isnt that much more expensive than in the US.
Maybe they have a slimmer margin over here, but they are still profitable. That implies that the model is (in principle) just alright, but there are financial flows that will have to change in the US. Of course you don't like to pay more for the labor you use to generate profit — ideally you wouldn't have to pay anyone at all!
If you can't run you business with minimum wage labor, maybe tou are not good at doing business and should change careers instead? Because many businesses in many nations have not the slightest issue doing just that.
Their menu may not appear much cheaper in the US, but McDonalds is much more aggressive with price discrimination here. You won't find the same promotions, value menu, and coupons in Europe.
There is generally not a big coupon culture in Europe. Most people don't bother wasting their time. People with a money problem usually collect bottles for recycling purposes.
McDonald's here pulled way back too though (last I checked before trying to eat healthier and deleting the app). Probably not the worst thing in the world to have fast food be a little more expensive.
Well, without knowing how the Corp is setup, that’s a bad example as this could easily exist: an international company can very easily be paying for high wages in one nation (ie loss leading) by low wages in another. Or staying profitable and with open doors. And so on.
Unless you’ve done an FSA class and you can explain me your thinking more, it’s worth appreciating there are a ton of levers that impact Corp finance. Same way you have performance trade offs for one algo vs the other.
The franchise part is interesting, although McD’s owning them or not doesn’t matter as the cash flow is what’s relevant. In this case I wonder what the terms are for franchise owners in EU vs USA and if they account for higher wage laws.
There are a number of reasons corporate entities operate certain or many stores at a loss. Very well known example is flagship locations that are locally at a loss, but earn for the brand on other ways. Example being Times Square NYC locations. This still makes sense at a franchise model, but less likely I bet.
EU isn’t a flag ship obviously, but I also didn’t say loss. Loss leading is similar, but not a perfect analogy (sure).
My earlier example still holds, even with franchisees per the term, but you should expand your bad event set to loss or low profits. On the net, being in Europe is worth it despite higher operating costs, but maybe USA operating costs need to be lower as a result.
I mean this all to say, there are so many factors involved such that it’s a false premise argument without controlling for intra-market differences.
Are you seriously arguing that yhe entire EU McDonald's market is operating at a loss? That makes zero sense.
Clearly it is possible to operate McDonald's in the EU and not burn money. Thus clearly there is a fast food business model that involves paying higher wages. Does this mean that every fast food store will remain profitable with the same hours? Probably not, but it does clearly mean that some fast food stores would be able to stay open and profitable.
Yes, and then OP said this which is why I responded:
“ That implies that the model is (in principle) just alright”
It implies any number of things, but not that if the model works in EU it can also coexist with the same model in the US. The scenario I said is an easy and fairly common example of why they could not coexist.
Without breaking out a form 10k and a fair bit of financial statement analysis, it’s somewhat like saying that “well I get 1GB internet in NYC, it implies the model for fast internet works so we could do it in Montana tomorrow.”
To the extent that it’s important to know and discuss the actual factors involved such that the MBAs doing these decisions at McD will take you seriously, that implication is seriously flawed. Hence, why this hasn’t changed since Milton Friedman and the 80s. Ever wonder why that is? It’s because arguments made without any Corp fin awareness don’t work with the audiences with the power to change it.
I am not arguing that McD should take a particular policy. I am arguing that there are clearly functional business models for fast food under a higher minimum wage so that is not a valid excuse to avoid raising the minimum wage.
That when talking about a company like McD: public, multi-National...
Those functional business models are quite possibly/likely able to exist, or figure out how they exist per corporate policy, by opportunity costs other areas of the business, namely - American wages and/or American franchise terms.
I’m not sure if you’ve looked up an SEC Form 10K before, but that’s a good place to start to examine how this can look.
When McD EU, or similar, can function basically as its own corporate entity, this is even more possible.
When spanning national boundaries and regulatory space, you’re comparing an orange to an Apple by saying it works in EU, QED it should work in USA. Especially when it all flows through a choke point of SEC reporting and investor expectations/public listing in the US.
Really need to look at the financial statements to make that sort of claim, not just “it works there it can work here.”
Asserting that high minimum wage makes the fast food model untenable is a strong claim. Given that it is made in tha face of the apparant profitability of fast food in high wage minimum wage countries, then burden of proof falls on you.
So as far as I can tell, you are just trying to spread doubt without doing any work to justify that doubt.
IMHO fast food is a durable industry and while prices/locations/hours may change, it seems absolutely ridiculous to argue that there isn't a business model that will be profitable.
Yeesh… feels like a deliberately misreading of what I’m saying yet also you’re inadvertently agreeing with my point.
I have pointed out a couple known and realistic examples why wages in one country doesn’t imply they’ll work in another, under the umbrella of a single corporation.
As you say, making that implication as OP and you did is spreading a claim Without doing any work to justify that claim.
That work needed is financial statement analysis, starting with breaking open a 10K. It’s
not my job to do that, as you’re the pair that made the implication in the first place.
I’m pointing out that by you not doing the work to justify the claim, there are numerous straight forward financial accounting reasons for why the claim could be wrong.
If you don’t know much FSA, that’s fine, but from that knowledge base you should know that you’re basically saying it could rain purple and it’s my job to use standard weather data to disprove why that’s not the likely answer.
If their entire European, Australian and New Zealand operations weren't profitable, why would they run them at all? They wouldn't use American profits to support them, they'd shut them down.
Mm does this make sense: Profitable is a spectrum, end of the day it all reports back through McD USA. ebtida in EU might be a bit lower than ideal because of laws changing over time. So, to make numbers, they can juice things in USA.
You are aware that you can either use soft language, or discuss in the terms that are actually used, right?
What’s more important: sensitivities or understanding how the decisions actually work so you’re in the mix to change things with the audience to change it?
They can wait out ethics based arguments for decades, and they do.
The moment a community activist actually starts calling corps out on their sh*t from the perspective that’s actually used to build these policies, then the corps lose their main advantage which is ignoring calls to ethics like this which don’t work as they’re not at all related to the MBA’s incentive structure who makes that decision.
A lot of people who support minimum wage increases don't think that way though. They _do_ think the local McDonald's is raking in cash and not sharing the profits.
Conceptually, I agree with what you're saying (I also feel very strongly about off shore manufacturing for the same reasons) but, practically, when you increase the minimum wage, the poverty jobs will disappear and _eventually_ be replaced. The problem is the transition period. The real minimum wage is always zero.
> but, practically, when you increase the minimum wage, the poverty jobs will disappear
If we're talking about raising the minimum wage arbitrarily high, then this is true.
But this argument also gets made a lot when we're talking about a specific proposal (such as $15). For a specific proposal this argument is not always true.
It was raised a ton in Seattle when Seattle was considering a $15 minimum wage. Endlessly. The main argument was that it would devastate employment for the jobs it was supposed to improve.
Then the minimum wage increase passed and it didn't do that. Employment in those jobs actually went up slightly (probably not a casual increase, probably more coincidental). But it certainly didn't devastate the employment in minimum wage jobs.
So, the argument is one that feels compelling since it is true in the extremes. But it needs to be evaluated with the facts of each proposal.
Do you have anything to back that assertion up, that the poverty jobs will disappear?
The only articles I've ever found that say that come from the Heritage Foundation or the American Enterprise Institute, and neither of those is anywhere near an unbiased source.
All the research (excluding the pieces from those two think tanks) suggests that the job markets remain stable through minimum wage increases, and in some cases the labor markets actually gain jobs -- possibly because more money in the hands of poorer people is going to go right back out into the community, as a matter of need.
>These business have a model that relies on poverty wages changing the minimum wage will disrupt these businesses greatly and I don't see a problem with that.
Doesn't that just end with bankrupt businesses and unemployed workers?
Look at empirical studies of past minimum wage increases and you don't often see unemployment increase. The employment rate is often stable through a minimum wage increase.
A teenager making change on bagel purchases isn't working for "poverty wages". And a business that providing tennagers jobs isn't being exploitive.
I do think employers should be conscious about the kinds of lives they set their employees up for, though we can talk about that without overgeneralization.
1. According to the US Bureau of Labor Statistics, about half of people making minimum wage or less are older than 25 years old.
2. A single person working a full-time job (32 hours) at minimum wage makes $12,064. The US federal definition of poverty for this individual would be anything below $12,880. So yes, minimum wage workers are literally, by definition, working for poverty wages.
For one, even with your statistics, half of folks employed are school-age. Also, poverty is measured by household. Confusing the math isn't a good way to make a quantitative argument.
But mostly your argument is a semantic trick around the word "poverty" to rationalize weighted terminology.
Again, I have strong feelings that employers should be conscious of the lives and prospects of their employees. For instance, having policies that lead to irregular patterns of night and day shifts that have to be unhealthy long-term. But we can have rational discussion about these issues.
> Also, poverty is measured by household. Confusing the math isn't a good way to make a quantitative argument.
The figure they used was for a household of size 1, so I don't think they confused the math and I think they made a perfectly strong quantitative argument.
Be careful with this argument, it's a talking point that over-represents the amount of these jobs held by teenagers earning pocket money. Quite a lot of minimum wage jobs are held by single parents or people just trying to stay afloat.
By the way, even if it is just teenagers, I don't think that should somehow disqualify them from earning fair wages. They aren't being "provided" jobs, they work to produce value for a company, and and should be compensated fairly regardless of their financial situation.
But you have said yourself it's 'bagel' money, it doesn't seem to be coherent to be defending both teenager after school jobs and teenagers in poverty.
You seem to have read too quickly, the poster was talking about someone working a cashier in a store that sells bagels, not about someone making money to buy bagels.
Teenagers getting whatever after school jobs they can contribute to incomes for households in poverty. If the McD's kiosk takes the cashier job, the family loses income. I don't want households in poverty. I'm just unconvinced by this mechanism. I'd rather see minimum incomes or policies to deflate housing costs.
You have a good point, and I appreciate the evenhanded approach. I'm still far from sold that "poverty wage" is a useful term if we want to have a healthy discussion. It leaves too much nuance out.
So wages should be linked to the number of people in the household? Workers with more kids should earn more by law?
We do this is Europe, we pay something called 'kid allowance'. In some places people make 10 kids for the allowance, ignore them or mistreat them and live on that money.
Name one state where someone making minimum wage can afford an apartment, food, healthcare, and utilities, and some form of transportation. I think it's fair to say that if you can't, that counts as poverty.
I was a teenager working a minimum wage job. I also had to pay for housing, meals, healthcare, etc. Don't assume a teenager has a life less complex than yours.
Sure. Point stands: I was literally a teenager making change on bagel purchases. (Yes, actual bagel shoppe.) I was absolutely making poverty wages. If I did not have free meals from work as a perk I would have starved.
And I worked minimum wage and it allowed my poor household to make ends meet. And another minimum wage job helped me stay solvent enough to survive university.
Apologies, but I'd rather not reveal too much personal info. But I did get need-based financial assistance in university. And I did attend a low cost school for financial reasons.
I didn't "pay my way through school washing dishes" or anything like that.
I wasn't supported by my family so the extra income through low pay jobs was critical.
> A teenager making change on bagel purchases isn't working for "poverty wages".
Aren't they though? You don't get a discount on rent because you're not 20 yet, and being under 20 doesn't mean you have rich parents that can subsidize your lifestyle.
I'm not arguing for low wages. But it's dishonest to conflate household income and individual salary.
More specifically, having a roommate or two or living with some family unit is fairly normal at that age. So other income needs to be accounted for to make that semantic argument stick.
Of course not everyone can have employed housemates. But even in those cases, it's not clear to me that banning 16 year olds from working those jobs helps all those 16 year olds. It seems likely that many of them end up worse off.
How is paying a teenager to sweep a floor making a subclass? Seems like we're on a trajectory to replace that teenager with a vacuum drone, and I don't see as many teenagers employed in that world.
The wealthy wouldn't notice. Their teenagers are entrepreneuring and racking up unpaid volunteer hours to pad resumes. The teenagers with jobs are the ones that could use the money.
> This article unfortunately doesn't address the business side of the problem.
Good! I've been hearing about "the business side of the problem" my entire life -- lectured sternly about it, in many cases. All while few of the Adults and Experts - people with Real Power, in other words - dare even mention some of the topics laid out in the link.
> I'm just saying that both sides of the equation need to be examined, i.e. the plight of the worker AND the plight of the business.
There is no "plight of the business". There's a business that's making money, losing it, or breaking even. The people working there may feel the consequences, but a business cannot "suffer".
Imagine scenario where you have $100k and you can open a small restaurant, create jobs, maybe not best jobs but still some people will be putting food on the table with your help, some students will pay for their collage.
But you count the costs and it turns out you will break even in 50 years or if anything goes bad never, like, one bad hire will drown you.
You look at Google, Apple, Facebook stocks ... there is always a risk but no one got fired for buying IBM right? If you put your money in that stocks you don't have to worry about bad employees, sanitary inspections, paying rent, bad customers.
That is what those Adults and Experts are trying to tell you, local business is not some "magic" that makes money or loses it. Behind every local business with shitty jobs there are people, don't make every business equal to faceless Facebook, Google or Apple. Your local pizza shop has an owner who is as much an employee as his staff.
No. News sources are focusing on business instead of labor's issues, because news statistically favors business interests, not labor's.
If your hypothetical business owner is unable to start a business without paying a reasonable wage, then that business should not exist. And your hypothetical business owner should invest in Apple, Facebook, or otherwise.
If this causes less business entrepreneurship, then so be it. A business that cannot pay employees is not a business that adds value to society, and nothing of value is lost. This is a fundamental tenet of capitalism, the same way we say that businesses that cannot sell their product also deserve to fail.
But that is creating tragedy of commons that we have now. People who are having money are investing in stocks or ETFs, buying real estate because it is still better than having cash. Which inflates stocks/real estate bubble and when it bursts it will be much bigger mess than paying low wages but in constant manner, spread out over multiple people and multiple years.
I definitely did not write about business that cannot pay its employees. I wrote about business that lets people put the food on the table, which means also pay the bills.
What's a reasonable wage? Should any business in developing countries exist, given the incredibly low wages? Their wages can't be considered reasonable, right?
"A business that cannot pay employees is not a business that adds value to society, and nothing of value is lost."
Value is a tricky expression here. There is a short term value and a long term value, and they may be very different.
Let us say that a mom-and-pop restaurant that cooks fairly healthy meals is squeezed out by McDonalds and shuts down. 50 years down the line, the fast food triumph has serious consequences on health of the nation.
But immediate market interactions cannot capture this development. The short term "Yay for salty and sugary food for less money!" win does not include the fact that you are buying an invisible "Type 2 diabetes and morbid obesity at the age of 40" item, too.
"If this causes less business entrepreneurship, then so be it. A business that cannot pay employees is not a business that adds value to society, and nothing of value is lost. This is a fundamental tenet of capitalism, the same way we say that businesses that cannot sell their product also deserve to fail."
This is a false and dangerous, in that it ignores that the world isn't a free market, wage markets don't exist in a vacuum. Businesses might be able to pay higher wages if they weren't hindered by high rents, or if other restaurants raise prices in unison (e.g., in reaction to higher labor prices).
Just because a business can't pay a living wage in some setup doesn't mean it has no contribution.
'suffering' for a business is just code for being on a path towards the workers suffering the consequences of no profit. That might mean not paying shareholders dividends and the company's share price losing value, but not all companies are public or pay dividends. If the money runs out, suddenly the business can't pay rent or pay the workers and thus goes bankrupt. No, the business's feelings aren't being hurt and it's not being physically assaulted.
hmm the vast majority of people in the US work jobs that offer FAR more in wages and benefits that the smallest amount permitted by law, so clearly this statement is objectively false
> There is no "plight of the business". There's a business that's making money, losing it, or breaking even. The people working there may feel the consequences, but a business cannot "suffer"
For a small business, the business and the owner can be practically one in the same. So in some cases I think that verbiage is pretty spot on.
It was hyperbolic, yes, but only a little, I think. The point I was making is that we've drunk a lot of koolaid about corporations being legal persons, as having rights, etc., such that no one bats an eye at anthropomorphisms like "the suffering of a company". My claim is that a) those words in that context are anthropomorphisms, metaphors, and b) that I don't think we've had much of a conversation about the koolaid I'm alluding to. (Outside of wealthy educated elites like ourselves, I mean.)
Maybe we're getting a little philosophical here, but I don't believe inanimate entities can experience "difficulty" or "misfortune".
Would you say that a rock suffers "misfortune" if it topples off a cliff into the sea? Is it "difficult" for a glacier to maintain its integrity in the face of global warming? Is my car unfortunate to have been scratched in a parking lot? (OK, I do believe that last one, but I'm anthropomorphising my car to talk about my own human misfortune)
Definitely philosophical. If we can use statements like “a business had a bad quarter” and “a business had a good quarter” and understand that these mean that the financial statements were negative/positive. It isn’t a stretch to say something like “a business has had 10 straight bad quarters” is a plight considering a business can cease to exist.
If you want to get really pedantic about it, a company is not a "group of people": a company is a particular legal structure for organising a profit-making enterprise. So yes, it is an inanimate entity.
When we say things like "that Lions football team suffered a crushing defeat", we're engaging in metonymy -- referring to the suffering of the members of the team but speaking metaphorically about "the team".
We'll have to agree to disagree here. I don't think whatever arbitrary legal structure there is around a group of people somehow makes the organization not human.
For example, I think it's perfectly normalized to say "that Detroit Lions team suffered a crushing defeat", even though the Detroit Lions are a profit-making enterprise.
If a business closes, lots of people lose employment + business owners become more employment competition.
Increasing unemployment wrecks wages.
It is also not free to give unemployment benefits, it requires higher taxation which moves the sustainability bar higher and more businesses close, etc etc.
It's because the law and financial system exalt capital at the expense of everyone else. There's no reason that labor couldn't translate into equity.
Also, the current system enforces the artificial scarcity of capital available to those who need to work for a living instead of living off of their assets.
If a business goes bust, those losses can be written of at tax time. A worker losing their job faces homelessness, the inability to see a doctor or pay for their medications, and hunger.
To avail the benefit of writing off taxes, the ex-business owner requires future income. Who's to say that he/she won't be unemployed for a long while after devastating their life savings?
There will always be businesses on the margin that barely survive, and you want as many of those as possible always to increase employment and wages, even if your world vision is only pro-worker.
I think the effects of price stickiness (on goods and labor) aren’t being adequately considered in these discussions. Yes, these restaurants could raise their wages to compete with unemployment, and many have. They’ll also need to raise their prices, which they have leeway to do, because everyone is facing the same costs.
The problem occurs in a few months when the bonus unemployment runs out. Then there will be millions more people looking for work. At that point, expanding employers will be able to hire at lower wages again. They’ll also be able to offer goods at lower prices. Employers who stepped up to pay higher wages won’t be able to compete. They’ll need to cut prices and cut wages or lay people off. That will be painful, which makes holding out until wages lower more attractive.
Employers can get around this by offering signing bonuses instead of higher wages, but they need to be large to compete with unemployment checks, and it may not make sense to do that for a few months of work.
These conditions may present a unique opportunity for policymakers to increase employment by raising the minimum wage.
> The problem occurs in a few months when the bonus unemployment runs out. Then there will be millions more people looking for work.
Maybe this won't happen? Unemployment is officially at 6%. Better-capitalized firms have hired a ton of people over the last year. It's possible that marginal businesses like the weaker local restaurants mentioned in this thread will just have to adapt.
Besides, given that their jobs are apparently so crappy that they are losing employees to the likes of McDonalds, certainly they have high turnover. If a labor glut happens, they can just lower wages and deal with the resulting turnover, which they already know how to handle.
Rising the minimum wage is exactly the thing that should not be done, if one cares about the employment levels. It prices out the least qualified workforce of the market. To put it simply the less able/educated/experienced are not productive enough to cover own costs. So that no one wants to employ them and they are stuck. They start to rely on the government to provide them with resources and it means that have to vote for politicians that promise to keep the free money flowing. It creates a perverse relation between politicians and citizens, which may resemble a dealer addict situation.
Oh how I wish this was a more popular view. Minimum wages have a history of exluding a group of people from employment to protect the higher wage earners jobs.
Minimum wage absolutely prices some people out of the job market.
Realistically, GDP has grown substantially with the owners receiving nearly all the benefits.
Raising the minimum wage is unlikely to affect employment much because of just how profitable companies are today
Mind you I think a better tslternative to a specific minimum wage is to have a guaranteed government job at a specific wage. That sets a bar that all labourers have an option, while some lower paying jobs can still exist if they're otherwise competitive in other experiences
> raise prices and hope that customers won't just go down the street
I always found the idea that restaurants need to compete on price strange. A typic Mexican restaurant is always going to lose to Taco Bell on that, so raising the price of your enchiladas or margaritas probably won’t have much impact on traffic.
We read a lot here about founders not setting prices high enough (see patio11 for tons of discussion). Or comment on backblaze being very hesitant to raise prices [0], but then buy into this idea that restaurants have set their prices optimally and that business will plummet if the $15 dish is suddenly $17. The truth is very few decisions on where to eat are driven by price (except at the high end) and instead are driven by experience and location.
That $15 vs $17 difference per dish might be immaterial to you, but if you include tax and tips, it’s a difference of a full hour of wage labor for a night out of a family with 2-3 kids with parents earning average wage.
> With such a small profit margin, arbitrarily raising everyone's wages is likely going to kill the business.
There have been past minimum wage hikes, and that's not what has happened. The costs get passed onto consumers.
Of course, there's presumably some hypothetical minimum wage that would be too high and destroy the industry, but the amounts being discussed in the US are below what other countries have already tried.
Your second sentence is debatable, as it appears that many European countries have high enough minimum total compensations (including benefits and other indirect costs) that unemployment is relatively high, and it can be very tough to get on the economic ladder.
The company I work at has hired a number of employees whose only previous work was very low wage, and that (low wage) experience definitely weighed in their favor.
France and Italy have long had chronically high unemployment, particularly among young adults who struggle to gain entry into the workforce due to the high cost floor on labor.
> Many business leaders fear that any increase in the minimum wage will be passed on to consumers through price increases thereby slowing spending and economic growth, but that may not be the case. New research shows that the pass-through effect on prices is fleeting and much smaller than previously thought.
> By looking at changes in restaurant food pricing during the period of 1978–2015, MacDonald and Nilsson find that prices rose by just 0.36 percent for every 10 percent increase in the minimum wage, which is only about half the size reported in previous studies. They also observe that small minimum wage increases do not lead to higher prices and may actually reduce prices. Furthermore, it is also possible that small minimum wage increases could lead to increased employment in low-wage labor market.
But... why? To save a couple bucks on a burger? This is a serious question.
Is this really how consumer behavior works in the restaurant industry? Restaurant food isn't actually a commodity. A burger from one place can be quite different from a burger at another. Even at the low end -- I much prefer McD's to the other fast food joints. Atmospheres can be very different as well, even at the low end. Etc.
This is not at all how I behave. I have two local bars. I like both way more than all the other bars. I have one local brunch place I like way more than all the other brunch places. All 3 places can & have increased prices. In one case substantially. I go anyways.
Granted, I have more expendable income than the average American. But this is even how I behaved when I was on a pretty tight budget during grad school -- a few regular places and I went as much as I could within my budget.
Yes. The data clearly shows the vast majority of the restaurant business be a low margin, high risk venture. That must mean a majority of the customers are very price sensitive.
I can easily afford to pay double and triple what most restaurants charge today. But I’m not going to pay it because I can easily make a meal at home of better quality for less, just have to add in my time and energy.
Moreover, I don’t trust restaurants to not cut corners most of the time due to the volatility of their business.
But that’s all personal preference. I suspect most people just have limited budgets, so increased prices means less times they go out.
> The data clearly shows the vast majority of the restaurant business be a low margin, high risk venture
I think what I was suggesting was that perhaps restaurants as an industry have systematically under-estimated consumers' willingness to pay.
You see this in software pricing discussions a lot, actually: small shops that leave a lot of money on the table by not charging enough. Is it really so crazy to imagine that restaurants might be doing the same thing?
> That must mean a majority of the customers are very price sensitive.
It's this "must" that is always asserted but... I think might not be as true as we assume?
Restaurant owners aren’t leaving money on the table because they’re charitable people. There’s so many restaurant openings and closings for so many decades that I think it’s a pretty good indicator of their price dynamics.
Software is B2B many times and has efficiencies of scale that restaurants don’t.
People often open restaurants as a hobby project. They like the idea of running a restaurant, maybe because they like the idea of being sociable or cooking for other people.
But they literally have no idea how to run a profitable restaurant. Often they know next to nothing about business in general, and have no idea how to estimate costs/profits.
Plenty of other business types operate on a similar semi-amateur basis, including book shops, record stores, independent garages, hairdressers and beauty parlors, craft and art shops, realtors, and others.
Sometimes they get lucky, or they're started by people who have actual business talent and can deal with challenges creatively.
But often they don't, which is why they fail.
Many also pay very poorly. Both super-professional and super-unprofessional owners can nickel-and-dime their employees, but for different reasons.
Failure is bad because these kinds of small businesses often add life to a community. But there's little or no support or training for them. It wouldn't take much to help them avoid the more obvious mistakes, give them more stability, and turn them into more of a local and national resource.
A lot of people who open businesses aren't doing so to open a business. And most of them don't even know it. A lot of them are trying to open a clubhouse they charge people to be at.
You see it often in the board game/comic/hobby sector. Someone gets it in their head that they could open a shop and it will be great and blah blah blah. But yeah, it goes south because what they really wanted was to play games for a living.
They want to be a business owner, but they don't want to run a business. If that makes sense.
I'm not suggesting thy are charitable. I'm only suggesting that they are not omniscient.
> There’s so many restaurant openings and closings for so many decades that I think it’s a pretty good indicator of their price dynamics.
This may well be true.
But I mean, if this were the case, a common failure mode for restaurants would be full tables right up until bust, right? Low prices due to unprofitable margins would mean lots of demand. Losing money on every head, but lots of heads.
But, IME, in my area, restaurants that fail in the first year or two do not fail in that modality. They usually have some of the lowest prices, but empty seats none-the-less. Because the food isn't good, or the menu is weird, or they don't do marketing right, or the location is wrong, or a million other things. But in my area at least I basically never see restaurants will full tables fail.
>I'm not suggesting thy are charitable. I'm only suggesting that they are not omniscient.
Sorry, I was just being snarky. I meant that there's so market is so "deep", that it surely represents the true prices.
>But I mean, if this were the case, a common failure mode for restaurants would be full tables right up until bust, right? Low prices due to unprofitable margins would mean lots of demand. Losing money on every head, but lots of heads.
They're not unprofitable margins, they're low margins. Restaurants have a high fixed cost, but low marginal cost. Every day they have to have some amount of staff and food, but once they have sold enough for the day to cover those costs, each extra doesn't cost them much at all due to the relatively low price of food and water and electricity and gas (compared to the labor).
I'm not sure on the statistics of the exact failure mode, but I do know that your run of the mill restaurant can't charge people $30 per entree and get away with it. There is a cap on how much people are willing to pay most places, with the exception being a select few that cater to the rich, have a certain ambiance, reputation, quality of food, etc.
>But, IME, in my area, restaurants that fail in the first year or two do not fail in that modality. They usually have some of the lowest prices, but empty seats none-the-less. Because the food isn't good, or the menu is weird, or they don't do marketing right, or the location is wrong, or a million other things. But in my area at least I basically never see restaurants will full tables fail.
You're right that there are many reasons for them failing, but many can't work on things like marketing location, or quality food, because they can't charge enough money for those expenses in the first place. Celebrity chefs can come out swinging with high priced menus, but not the vast majority who might be doing it because it has low start up costs and they don't need credentials.
Where I live, entrees cost $15 minimum, and with tip, you can budget at least $20 per meal per person. Even with that, I doubt the cooks are making anywhere near a desirable living, and I doubt the restaurant owners are making a decent living, especially if they're paying rent.
> There’s so many restaurant openings and closings for so many decades that I think it’s a pretty good indicator of their price dynamics.
There have been many startups that have opened and gone bust in the past 15 years. I don’t think I would say that startups have terrible profit margins. In the context of tech startups the understood answer is that their product sucked. I think the same is true for most restaurants - I think running a restaurant is underrated and if the food is bad or atmosphere is terrible people just won’t go no matter how low the price is.
If restaurants were struggling solely due to low profits they would look a lot more like MoviePass or WeWork. Incredible demand but unsustainable business model. Most restaurants are more like Blockbuster. No demand while trying maintain fixed costs.
Tech startups are not very comparable to restaurants. Restaurants have limited capacity, limited ability to scale, usually pay rent (so any success can be partially sucked up by the landlord), and have limited times of the day and week to earn most of their money.
To support terrible profit margins (relative to the risk), I also would look at the financial status of restaurant owners/operators, who by and large, aren't in the higher end of the income scale. Almost no one tells their kid to grow up and aspire to be a cook or open their own restaurant (unless they already have a a trust fund).
I and my family each have price points in my head, once a restaurant charges more than that on the total line, we look for other options. $5 for good enough lunch, $10 for a great lunch, $20 for gourmet lunch, $20 for a great dinner, $40 for gourmet dinner.
Consider the quality of a McDonald's burger/meal. It's not hard to find something considerably better and marginally more expensive yet they are still in business.
What about franchise fees? Independent fast food restaurants basically don’t exist in the U.S. anymore. An individual McDonalds may be scraping the boundary of profitability, but corporate had a net income of $1.5B last quarter[0], or about $7,500 per employee per quarter[1]. That’s net income, not revenue.
Dicks, Burgerville (mostly unionized), Burgermaster, In N Out and other regional chains exist, along with a plethora of single location independent fast food restaurants.
Yes, the point of most franchised chains is to extract wealth from communities rather than invest in a stable, skilled workforce delivering a good product.
McDonalds, YUM Brands, et all charge large franchise fees and force use of particular vendors and business practices to ensure they extract as much income as possible from their franchisees.
~200,000 is number directly employed by McDonalds. They have 5-10% of stores. There doesn't seem to be a current accurate number for total including franchisees - but seems to be in the 1.5 - 2 million range.
I agree but let's continue with that story. Let's remember that the beginning of the story was the labor shortage. So not enough people to serve in all restaurants at a competitive price.
Let's suppose some restaurants decide to raise prices. Customers decide to go to a place that's cheaper but... it is packed. Shortage, remember? Free market dictates that higher demand than supply makes the prices go up.
If client CAN go to a cheaper venue then we are not in a position of shortage.
In the end, look at places like Scandinavian countries: salaries are high and going to the restaurant is very expensive. When you think about it, being served by humans is actually a luxury and as global wealth progresses, this should become less and less common.
I really hope that the future of restaurants is either fully automated fast foods or high end luxury restaurants that people work out of passion, and that you can afford maybe oncee every months.
I think a big factor is that a lot of restaurants in the US are throw-away businesses. The average life span of restaurant is five years. A lot of people enter the restaurant out of a weird desire to create something - which is to say they're shoveling money into the business 'till they're out of capital and then another "entrepreneur" takes their place. And oppositely, landlords and local government pretty expect that the sequence of failures is going to continue. Everyone else (landlords, restaurant suppliers, consultants and so-forth) makes money.
But watch out for technology and automation...that is the part of the equation that has been "solving" the labor problem for some time now...
Restaurant is a little bit convenience but mostly entertainment. If a robot is going to spit some stuff for you, why not buy an cheaper even microwave dinner, they're not that bad (or cook it yourself for something good tasting and which you can entertain yourself with).
10% profit is not necessarily very modest. 10% of $50M is a lot of money. 10% of $50K is not a lot of money. 10% only sounds 'modest' in relation to SaaS/software margins which are ridiculous. Walmart's gross margin is only ~28%. Many manufacturing companies compete across 3-5% margins. If the base number is big enough, that's a ton of money still!
%'s are a bad way to measure this, for that reason. Labor isn't even the majority of cost for restaurants (avg is apparently around 34% fully loaded [1]).
> The only choice is to either automate, which will reduce the labor requirements, or raise prices and hope that customers won't just go down the street. But they will, they will go down the street--until everyone's prices go up and there is nowhere else to go.
That's why governments created a minimum wage. If the salaries are written into law, there is no place down the street to go. That's also why environmental and hygienic regulations are so successful. Those things simply can not be done without government intervention.
There are plenty of countries who have had minimum wage for some time and have increased that minimum wage over time. So there have been lots of studies done on the impact of it. Here’s one:
> This report includes the findings from a meta-analysis of the empirical UK national minimum wage literature. Similar to a previous UK minimum wage study by de Linde Leonard et al. (2014), this study finds no statistically significant aggregate adverse employment effect of the NMW and also no publication bias in the NMW literature. However, estimates for different sub-groups suggest some relatively larger adverse employment effects for some labour market groups, such as part-time employees.
I honestly think that part of the problem is that the older people who make decisions on things like minimum wage remember their own minimum wage jobs. My first job paid $3.35/hr. $15/hr is $30K a year full-time. I barely made more than that at my first professional programming job out of college. It sounds insane to me on first hearing that $15/hr is not "decent" pay for an entry level, non-skilled position.
> the financial model is set by the fixed or imperative costs, i.e. the cost of rent
Rent for commercial spaces is set to what the market will bear, and that is also determined by the same financial models with labor prices as input. "Restaurant owners aren't getting rich off of exploiting labor; their landlord is" just means that the haircut should be getting taken off of the landlord's profit margins.
Now, this isn't a panacea - there are some distortionary effects from squeezing the rents that landlords can charge, and it favors high-skill and low-labor businesses by competing away higher bidders on commercial real estate, but it's not like business owners will feel 100% of the incidence of a minimum wage hike. Some will go out of business, which will lower commercial rents as vacancies rise, which will save a portion of the businesses that would die based off first-order effects alone.
The problem is not that the margin is small, is that big companies get to cover the losses of the uncertain(unforeseen situations) with the foreseeable profits, while at the same time (as an extra bonus from their government lobbying) maintaining a minimal labor cost.
The price of their product is unreachable to small business, small business are not failing because the labor is too demanding (I know you did not explicitly stated this, but it could be construed as if).
They are doing so because the competition is too big.
This is my cynical approach...
A right-to-center leaning person is in no position to argue "handouts are to blame", or "zoomers/millenials want it easy"... a truly right-to-center political commentary should be telling restaurant owners "Work smarter".
Firms in a competitive market are price takers. None of them individually can raise prices. But an increase of the minimum wage increase affects all of them together, and will cause a new equilibrium at higher prices.
That assumes no substitutes, but in reality this will increase the relative cost of restaurants compared to home cooking which will reduce demand for take out.
Sure. But labour is only a third of costs. And given the relative bargaining power of landlords, owners, and labour, the flow through to retail price might be less than you think.
Economic theory says yes. If prices of A go up and B is a close substitute, some people will shift from A to B.
I doubt anyone has studied that rather specific question empirically, though, and even if they had it's not an easy question to study. So theory and common sense is our best bet when it comes to forming expectations here.
I'm sure there are empirical studies about how demand shifts from A to B for other examples of substitute goods, though. Maybe start there?
2. Should theory prevent working Americans from having a decent life given that empirically restaurants and cafes are plentiful in Europe and are filled to the brim with customers?
1. Perhaps. Difficult to know the extent exactly. My guess would be yes, given theory, but we'd need a natural experiment to find that out.
2. This particular thing isn't really an argument against minimum wage, although I personally am not automatically in support of it for other reasons.
I can see an argument that it creates poverty by making unskilled workers unable to compete with lower skilled labor overseas for manufacturing jobs. Effectively it's a ban on their ability to work (if their value add is less than the minimum wage) and make a living and can possibly go some way towards explaining the black youth unemployment rate. This robs them of their ability to get a foothold in their economy from which they can stabilize and level up. Why would a manufacturer keep their operations in the US if they have to pay minimum wage? Of course they're going to be inclined to move overseas where it's cheaper, especially if it's a low margin business.
It's also rather intrusive and authoritarian, if two people want to get together and exchange one hour of X for $Y then I don't see that as any of your business, but this is more a point of personal values and it's more productive to focus on the utilitarian part of the argument.
> This robs them of their ability to get a foothold in their economy from which they can stabilize and level up.
You're kidding, right? You're sayig that minimum wage robs people of ability to get a foothold in the economy?
Please enlighten me how "getting a foothold" works for people that have to work several jobs just to barely keep afloat?
> It's also rather intrusive and authoritarian, if two people want to get together and exchange one hour of X for $Y then I don't see that as any of your business
What about if a bunch of people come together and agree this is a good thing? Oh, wait, that's called a government, and laws, and common human decency.
> this is more a point of personal values and it's more productive to focus on the utilitarian part of the argument.
Indeed. Because your personal argument basically devolves into: if you want to keep slaves or indentured servants, who am I to keep you from doing that?
> You're sayig that minimum wage robs people of ability to get a foothold in the economy? Please enlighten me how "getting a foothold" works for people that have to work several jobs just to barely keep afloat?
I explained why already.
(1) If their value to an employer is less than the miminum wage, then that's going to contribute to unemployment, because an employer would now rather pursue automation or some other solution, or simply go out of business. That's what happens when you fix prices. This robs those people of the ability to get that first job that they can leverage for better opportunities later, and pushes people to drug dealing (which pays worse than minimum wage most of the time) and so on. It is terrible for social mobility and keeps people stuck at the absolute bottom.
(2) Domestic unskilled labor is now uncompetitive with foreign unskilled labor. The government has effectively banned domestic unskilled labor from working those particular jobs which means manufacturing moves overseas and benefits foreign unskilled labor instead. This devastates communities that used to function on the back of manufacturing.
> What about if a bunch of people come together and agree this is a good thing?
Democratic != not authoritarian.
Internment of Japanese was done by democratically elected representatives, and it was authoritarian.
> keep slaves or indentured servants
You can frame it like that, and I can point to communities that have been devastated and people that are chronically unemployed because of these kind of supposedly well-intentioned laws that fix prices. Who has the real moral high ground?
1. If a business cannot pay its employees a living wage, it literally doesn't matter if you decide that "an employee's value is less than the wage".
2. If a business cannot pay a living wage, and has to cease existing or has to automate, let it cease to exist or automate.
3. "Cannot compete with third-world countries that offer shit wages and shit standards of living, and are ruthlessly exploited" really isn't an argument you want to present when advocating against minimum wage.
4. Price fixing !== setting minimum wage to a level that lets people, you know, live.
This is fairly ruthless towards the victims of this ideology - those that live in the communities left literally destroyed after manufacturers pulled out and those trapped in chronic unemployment.
You can use emotive and loaded terms all you want (slavery, indentured servitude, exploitation), but the real-world negative human consequences and rather racist outcomes of these ideals are on full display for everyone to see.
Sorry but that's moving the goalposts to safety nets. We're not talking about that.
Minimum wages still cause many of those negative human outcomes (chronic unemployment, lower mobility, rural towns full of unemployed people, and so on) even with safety nets. Safety nets + no minimum wages would provide a much better humanitarian outcome than safety nets + minimum wages.
And even if it didn't (which it does) this ideology is still responsible for significant human suffering and racist outcomes in the US right now, and is being pushed by zealots irrespective of this suffering.
This is fairly typical of ideologies, no matter the actual human toll, the ideological vision must come first. I suggest you to visit a town that has faced factory closures and see the actual human toll to make this all a little less abstract.
Something tells me though that you really don't want to be unemployed in the US... And that a huge number of those jobs in the US are indentured servitude in all but name.
They can charge what they need to be profitable, after discovering how much they need to pay workers to apply and show up.
Which will drive away many customers who have become accustomed to cheap service built on "shit jobs."
At some point an equilibrium will be reached, the customers who can't or won't pay more will drop out of participation, and we'll have the true market for service built on good jobs.
No customer deserves cheap drinks and service built on shit jobs.
"Oh, but all those jobs will be lost."
They're already lost, the difference is that it's the workers making the decision.
> But watch out for technology and automation...that is the part of the equation that has been "solving" the labor problem for some time now...
This claim in particular was examined in studies on minimum wage increases, and found that increases in the minimum wage had no impact on the adoption of automation[1].
> but the counter to all that is building new housing
I would like to see some stats on that meme.
Anecdotally, what I think happens is that people buying second homes, vacation homes, and more people living one person to a home. People without homes are not clearly advantaged.
I live in Christchurch New Zealand, with a truely massive increase in standalone houses, and significant densification in the city center. However house prices are still booming, and plenty of friends are struggling to find a first home.
There are many effects here, for start if food places start going bankrupt remaining ones can raise prices and pay some sensible wage.
And anyway, if getting unemployed means that you will die - then society has a large problems. (assuming country in XXI century, does not apply to historic situation where resources were not sufficient to feed everyone)
If a businesa is in operation profitably it is because it is providing more value than if it were not, otherwise it would not be able to remain in business
If a business is operating profitably by paying people wages below the cost of living, it is being subsidized by the government and therefore is not independently profitable in any meaningful sense.
I view the government as setting up a playing field which entrepreneurs than explore to find profit opportunities. With welfare and especially the Earned Income Tax Credit, the government created a class of people who can be profitably employed by paying $X below the cost of living. This was intentional, a way to keep people in the market economy even though they're not productive enough to survive in current conditions.
An entrepreneur who employs someone like this is like someone living in New York City in a rent-controlled apartment. You can't say they're not supporting themselves just because they couldn't afford rent in a pure market system. The actual system was purposely designed to make certain activities profitable that would ordinarily be losses. Without people taking advantage of those niches, the subsidies would be pointless.
The subsidies in this case do not exist so that businesses can exploit underpaid workers, though (and are not comparable to something like a rent-controlled apartment, where landlords are just prevented from charging so much that they'll drive out the workforce rather than actively subsidizing with things like food stamps or welfare). They exist because the US is reluctant to let people starve in the streets and die, the fact that you interpret them as an effort to "keep [unproductive] people in the market economy" notwithstanding.
The government bumping up unemployment to the point that people don't have to take certain types of jobs that rely on underpayment for profitability does not contradict that goal, which is why many people are not that sympathetic to small business owners complaining about it.
Employment is an explicit goal of the US welfare system. It's not supposed to keep you from starving if you don't work. That's why you are limited to three months of food stamps every three years unless you are working.
I do see rent control as directly comparable. Government observes a matrix of incomes and prices determined by self-interest in a market economy. Government determines some are not politically acceptable and modifies them. Now the military pays better than before, NYC rent is cheaper, and low-wage workers are more able to survive. Now people build businesses around contracting for the military, living in NYC, and hiring low-wage workers. If government later changes the payoffs to these activities, it's not the businesses' fault for relying on the prices the government set. Government set those prices to enable those businesses.
Usually, this question is brought up when a business is struggling; like in this case, where restaurants are struggling. So the implied context is that other actions are asked for (such as subsidies or laxer laws). The question, like in this case, is whether it should not simply be written of as not providing value, instead of trying to fix something fundamentally broken by, for example, allowing worker exploitation.
The need for wage controls is more apparent in the tech industry. If a hypothetical company with 100 employees registers 10 billion profit and apart from CEO and the board employees make 5 figure salaries, then there is something horribly wrong going on. I think we need a regulation that beyond a certain threshold company should redistribute 30% of profits annually among the staff on top of their salaries.
There should also be other restrictions - for example I'd vote for complete removal of dividends. Only way to get paid from a company should be by being an employee and getting a salary taxed as everyone else.
The rich have so many loopholes, it is crazy that we allow them to get even richer on the backs of the hard working no name people.
Making sure that dividends are taxed like other types of income could make sense - not sure how this currently works in the US?
Removing dividends all-together? That doesn't seem like a good idea, because why would anyone invest in a business, if there is no potential for future cash flows arising from it?
Even companies that don't generally pay dividends have value, because they could. So removing dividends would also require another mechanism to incentivise investing in businesses in the first place?
Think of the business side of the problem as a collective action problem. You want to pay your workers a living wage, but to do so, you have to raise your prices. If you raise your prices, your business will go to your competitor, so you can't exist if you increase your wages (and your competitor doesn't). Meanwhile your competitor wants to increase wages but doesn't for the same reason.
If the government mandated that when you raise your prices, everyone else had to too, then suddenly increasing wages won't put you out of business! Same story if the government mandated that you raise your wages (in this particular hypothetical).
You're right that both sides of the equation need to be examined, but it's actually a bunch of equations with a bunch of sides.
> If you raise your prices ... and your competitor doesn't
this means your business is less efficient than your competitor's, or you are asking for a higher margin than your competitor. Both means that the business deservedly fail under the raised minimum wage.
if everybody has to raise their prices to fund the higher minimum wage, then it means the original minimun wage was already at the optimal level for your business!
I'm of the opinion that if you're business model relies on paying people so little that they don't even want to work for you, maybe that business _shouldn't_ be viable. No one is forcing you to own a business, just like no one is forced to work for you.
The whole point of a minimum wage increase is that it will increase all restaurants' wage costs to the same degree, at the same time. Meaning that going "down the street", potential diner's will find that all restaurants' prices have increased equally. So the business threat isn't that American consumers will abandon "Dale's" in particular for some other restaurant. It's that they will choose to eat at home instead of eating at a restaurant, or that they will order less food when they do go to one.
"it will increase all restaurants' wage costs to the same degree"
In an ideal world full of law abiding citizens, yes.
In practice, restaurants that cheat are going to win.
I live in a country that has a lot of regulations in the hospitality sector and yet the "paid under the table, not officially employed here" phenomenon is everywhere.
> But they will, they will go down the street--until everyone's prices go up and there is nowhere else to go.
This is why higher minimum wages are so important. They force all businesses (not just the ethical ones) to increase prices to point that workers receive a living wage.
Well you're describing a situation where there needs to be general rise in the cost of labor. Its competition against competitors that don't raise wages that is the problem, right?
> But watch out for technology and automation...that is the part of the equation that has been "solving" the labor problem for some time now...
Brings to mind the growing prevalance of self serve kiosk for placing an order that so many fast food restaurants have now. Removing the need for the cashier all together. That and self checkout at a lot of big chain retail stores. I don't think the business concern is necessarily with making a profit, but making 1% more profit than not.
It's a hugely risky business, especially if you're not a national chain. Most mom-and-pop restaurants don't last long. 10% isn't that big a return for that kind of risk.
It would be somewhat a good thing that jobs/services with very little added value like fast food (or even a somewhat negative value) make little margins/profits. We are really way too much in a society of consumption, there are many intermediate and unnecessary jobs and services, and those are the first hit during a crisis
Forgive my ignorance here, but won't capitalism sort this all out?
Businesses need to raise prices. Some do and less people buy from them. Some can't make ends meet and close. Now the number of businesses is less. So, the number of open jobs is less. Potential employees now have a lower 'supply' of jobs. The wage for those jobs then falls. Somewhere in there, a new equilibrium is reached and everyone is unhappy for a while.
I'm not trying to discount the emotional pain that comes with this process. Putting your life into something that just blows up is hard. Especially when you had nothing to do with it. I feel for those owners, the situation is the opposite of fun.
But this is how capitalism works. The US is not a planned economy like China. Capitalism is core to the system (bastardized as it is). Markets change and shops close up. It sucks, but this is the process as I understand it. If I'm understanding it wrong, I would very much like to know because then I really am missing something big, and that's not good.
"The tendency of the rate of profit to fall (TRPF) is a hypothesis in the crisis theory of political economy, according to which the rate of profit—the ratio of the profit to the amount of invested capital—decreases over time. This hypothesis gained additional prominence from its discussion by Karl Marx in Chapter 13 of Capital, Volume III, but economists as diverse as Adam Smith, John Stuart Mill, David Ricardo and Stanley Jevons referred explicitly to the TRPF as an empirical phenomenon that demanded further theoretical explanation, although they differed on the reasons why the TRPF should necessarily occur."
Consider that if the rate of profit tends to fall, and shareholders require greater profits each quarter, how that affects "inputs" such as labor?
No business is entitled to be successful. This is just a case of a business with a no longer profitable business model where they can't compete for employees with other businesses.
If a business makes very little profit - why not closing it? It makes no sense to keep something alive that only works out when you pay your employees basically nothing.
Yep - which is the appeal Universal Basic Income as Andrew Yang proposes...automation is inevitable, have it work for the people rather than increasing profits.
> And all of this is free market capitalism at work. It is a continuous process of reinvention.
I agree with this sentiment. Mostly. But I can't say it freely, or with impunity - I'm on the lucky end of the spectrum partly by my own hard work, partly blind luck to be born in a middle class family, partly because my country has racial equality laws that give me the opportunity. I can negotiate my own terms for work and when I'm out of work I can freelance or build a product. But I can't swallow looking at workers as a line on an income statement. Something about it feels uncomfortable, uneasy. Like casually throwing talent and skills into the ocean when theres still so much work to do.
Sure, it's great for some. Most people in this forum are part of the economic and cognitive elite. I would expect words like automation to be thrown around freely because "optimization" and "free-market" are fantastic myths to belive in. They might even be self-fulfilling prophecies. They just never come up to help people get a leg up. Those families that could be paying taxes are going on welfare, which means we get taxed more but do we have a right to complain and try to dodge out of paying taxes to support the people we've put out of work for the sake of automation and progress? Would we be happy to automate to our hearts content if you had to pay more taxes?
meh, if the only way you can get a piece of the pie is to take it from someone who has less opportunity than you I don't really feel bad.
Cities like Seattle raised their minimum wage, there was a lot of worry that everyone would go broke and there would be no food to eat. As it turned out, a few people shut down and someone else almost immediately opens a similar business in that place.
Not everyone runs a business that is properly priced, or properly managed to make a profit, but lots of people can do it, and they tend to fill the void that is left by businesses that can't offer a product that people feel is worth paying enough to support less than poverty wage.
Even for companies that pay really well, some don't make it.
The tone of this article also sounded like she was spitting it through clenched teeth, which I found to be incredibly distracting and defeating to the point the author was attempting to make. Was the point small business owners at establishments like Dales are facing troubles because they're fat-cat capitalist Trumpian Covid deniers whose problems aren't valid as such? That's what it sounded like.
I look forward to when we can have conversations about topics like economics without hyperbolic intolerance for outsiders serving an ultimately unproductive narrative that has been driven into the ground.
I live in Missoula. I am a regular customer of Black Cat Bakery and I can see them struggling. In fact most restaurants and breweries I frequent face the same issue, a few employees desperately trying to keep an inundated ship afloat. I will tell you this article largely ignores what everyone who lives here understands is the biggest problem faced by laborers in Missoula at the moment. This city is amid a dire housing shortage, expedited by lack of new construction and a migration of buyers from more lucrative economies. The median home price increased by 57% in the last 10 years, 8.6% in the last year alone to $315k. In the meantime the median family income remains only $46k.
https://missoulian.com/news/local/missoula-housing-prices-se...
It is truly a seller's dream market and as such the availability of rentals has evaporated. You'd be lucky to find a 1 bedroom right now.
My wife and I bought a home here a little over a year ago and were fortunate to find the nut who, "didn't need a realtor, what with craigslist." Before then we had been outbid 5 times previously, during which we offered up to 30k above the asking price. Frankly, we wouldn't live here if we didn't get lucky. Our experiences weren't unique at the time and it has only gotten worse. I regularly hear of houses selling for 50K over listing price to people buying sight-unseen.
Frankly I don't care what the owners of Dales or Black Cat Bakery think about Covid or whether they voted for Trump. I really, sincerely, don't care. I only hope for the best for their business and their employees. I know what it's like to struggle in Missoula, I did for years and I still would be if not for dumb luck and a bit of privilege. The problems people face today are starting to pale in comparison to my own, and a solution is becoming truly urgent. I can only hope people will come to understand if we care about solving these problems, then we have to put down the tribalism and intolerance for those with different views and focus on the matter at hand.
To quote Vince Staples, "Ain't no money in havin' hate in your heart."
> Was the point small business owners at establishments like Dales are facing troubles because they're fat-cat capitalist Trumpian Covid deniers whose problems aren't valid as such?
You still have to understand the workers are also the one who's getting fucked here. The owner of the grill in the article is deliberately worsening working conditions because of his beliefs on Covid, and it's perfectly reasonable that the workers will leave you to get a new job where your boss doesn't spread Covid on you by not wearing masks. I understand businesses are hard right now, but business owners should care a bit about hygiene, it's not something that would cost you a lot.
> This city is amid a dire housing shortage, expedited by lack of new construction and a migration of buyers from more lucrative economies. The median home price increased by 57% in the last 10 years, 8.6% in the last year alone to $315k. In the meantime the median family income remains only $46k.
But I think you've correctly diagnosed the real issue here - skyrocketing housing costs. Everyone suffers from this, both the workers and the small businesses. And it's a shame that the Dems and Reps are making this an "us vs. them" issue. (There's a similar dynamic in my country too, where liberals try to raise the minimum wage a bit, and then the conservatives fiercely oppose it and latch onto small business owners for support. Of course both the establishment liberals and conservatives are totally incompetent at solving skyrocketing housing costs and general economic inequality, yada yada.)
I think the real issue here is not about workers or small businesses, but just plain-old economic inequality - in the sense that the minority rich at the top can invest on housing at their heart's content (numbers seem to always go UP!) but the majority can't afford those prices. So even though the majority at the bottom knows that the price is bullshit, the bubble will not burst unless the rich realizes that those prices are bullshit (And do they really have to realize? They can still afford those investments though! They can stay being delusional and still enjoy all the luxuries they have!) Market price is now not an objective measure of value, but instead becomes a power that real estate investors can collectively impose onto the poor. Ah, communism for the rich, capitalism for the poor...
Honest question: why do discussions about minimum wage in the U.S. never propose having teenagers having a different minimum to adults?
In australia we have a $12.50/hr minimum for 15 year olds. It climbs in increments until about $25/hr.
This system allows teenagers to get a foot in the door for low-skilled jobs, and allows adults to get paid a livable wage.
The result is that a lot of fast food jobs are performed by teenagers, and they are considered entry level jobs. Adults are then paid more, and take positions where they can add more value that what a teen can provide.
You don't want to create a class of people who get paid badly because their jobs are terrible (and also low-skilled.) The only reason you would want a lower minimum wage for young people is because young people are stupid, and you want to put them into a job where they can learn i.e. low-skilled, but ramping up over time, like an apprenticeship. Paying people almost nothing to work a horrible job because you can get away with it is just creating a slave class, and the primary beneficiaries are the companies that employ them.
The gap between a juvenile minimum wage and an adult minimum wage should equal the value of the on-the-job training that the juvenile is getting. And there's really no reason to tie that to youth, although demographically it will be dominated by young people; adults might accept a lower minimum wage in exchange for education in the trade.
You keep using the word class, but I don't think it's applicable here. If everyone in the country is subjected to a lower minimum wage while a teenager, there is no disadvantaged "class".
Not sure why this getting down-voted. There are issues, like to what extent having teenagers work is useful or harmful to society in the first place, but a universal things everyone enters and leaves isn't a class in the segregated and hereditary sense.
Religion is a legally protected class; everyone is free to change their religion. Pregnancy is also a legally protected class, despite being one that half the population can enter and leave. Also, short term disabilities.
I don't find this argument compelling, unless you're also arguing that employers should be able to pay people less for their religion or because they get pregnant (or choose not to get pregnant) or because they contracted a disease or injury.
That's a different use of class, but an important one too. We want people's choices around families and religion to be free from outside coercion, so we have special protections. Short term disabilities are not a choice but also non-universal, and without the protection they might worsen into long-term ones.
But being a teenager is a not a choice, and not something that happens to some people but not others. Again, there's many reasons we don't want to promote shit jobs for adolescents because of some nonsense about character building, but I think that's a rational distinct from the others.
Seems like you're reaaaally splitting hairs here. Young age is okay to discriminate against, but not old age (because you don't leave old age without dying). Anything people can enter and leave by choice is not okay to discriminate against if it's -important-, like family or religion.
What about menstruation? That's pretty universal to women (not entirely especially with non-cisgendered), not really a choice (at least, not without encroaching on the same protections you'd want with pregnancy), and all those who do menstruate enter and leave it (both monthly, and at menopause)...what's your objection to discriminating against menstruating women?
The disadvantaged class is poor people. Poor kids will have to work and will make less money while doing it than they should. So not only do these kids have to waste valuable time at low-wage jobs (rather than studying, being kids), but they get even less money while doing it. Wealthy people's kids won't work.
A fast food job isn't an apprenticeship. It's just a shitty job. Management of a fast food restaurant takes a bit of generalizable, transferable skill, but there are always going to be an order of magnitude more workers than managers. A job where only 10% of the workers can move up is a dead end job for 90% of them. Every apprentice carpenter can become a carpenter.
I disagree. While learning to operate a grill or deep fryer isn't a skill many are likely to need in the future there are dozens of generalist skills learned from your first job.
Think teamwork, following managerial directions, following a roster, how to complete timesheets, how to deal with workplace conflict, how to deal with suppliers and customers, how to dress appropriatly, even how to count money/operate a register. Fast food jobs are a great place to make mistakes as a teen as the consequences are minimal and you can get another job easily. If you've never worked in any workplace you'll find it far harder to get hired.
Agreed, I think that a number of these jobs provide a fantastic introduction to business process but the resume doesn’t necessarily translate into the opportunities that it could or should depending on a persons aptitude. As such, it becomes necessary to reconfigure resumes in a way that avoids jobs that might seem unwanted and highlights skills that appear more sought after regardless of how much they were tied to a job. I like the phrase resume driven development.
A better path would be for employers to have internal training programs for gaining skills that can help one to climb the career ladder either internally or externally knowing that if a good person leaves that the reputation will attract suitable replacements.
If you have kept a fast food job for six months you have shown that you will actually show up on time regularly, not steal (much) and do an at least adequate job. More generally most jobs don’t lead to a qualification but do teach skills. The more responsible the job you’ve had in the past the more likely you are to do a good job with a new one. McDonald’s does teach skills. If you want to go from a teenage hire to an assistant manager in under six months that’s doable, and managing a McDonald’s really does take skill and pay well. There are very few dead end jobs but there are plenty where most people hired there have no intention of getting promoted.
Not everyone working there can be promoted, because there aren’t enough of the good jobs to go around. Saying it boils down to personal responsibility ignores the fact that in many ways it is a game of musical chairs and there aren’t enough good jobs.
Granted, jobs can be created and the more skilled the labor force the better the jobs, so the number of chairs in the game can be increased, but on the other hand those aren’t the kind of skills you’re going to pick up serving burgers at mcdonalds.
Shitty jobs teaches you one thing or two too. Who's to decide there's nothing to learn from a job, for 100% of people?
I worked as a mailman between 11-13 y.o. It was a shitty job carrying ads and local newspapers weighting as much as you on a bike through hills in -10C snowy north. A shitty job, but I learned a thing or to; planning, discipline and value of money.
Problem is when you're stuck at a shitty job with no option to change/improve at all. I don't see how that's the case for teenagers at entry level job.
Do you think so? While companies are incentivized to hire kids, the kids don't get any more incentive to do these jobs though (wage stays the same), and neither would the supply of them grow.
There is, hypothetically, a market price for these jobs. It is below the minimum wage (otherwise there isn't much point in the minimum wage). It is set by the pairwise negotiations of companies, customers and employees.
If there is an avenue for the market to reach equilibrium (eg, by hiring children cheaply) then the market is going to try and take it. It will just create a class of jobs that adults can't get employed in because they cost too much to hire.
It isn't a question of what the kids would like, it is a question of what choices consumers and employers will offer them. If wages were set solely by employee's incentives then they'd all be paid much more than current market wages.
> 1) Kids are unlikely to be as effective. 2) There's not that many kids.
Neither of those even support the argument that a change from equal minimum wage would have the effect of moving jobs from adults to kids.
The first would be a good argument for a smaller displacement effect from allowing teens to work with equal minimum wage to adults conpared to not allowing them to work at all than would occur at equal effectiveness, the second semana yo be a sortear of an argument about the magnitude of effect but without a definition of what “that many” meand in context is only a sketch.
> It's all just motivated reasoning to argue against a significant minimum wage.
it's not an argument against ‘a significant minimim wage’ at all.
I know of no major corporations w/ a web application system, that do not discriminate against those w/o a job history. Pay does not seem to be a factor in this equation.
One concern is that this makes teenage employees relatively more attractive and so increases the adult unemployment rate above what it would be with a uniform minimum wage.
I had this concern until I realized teenagers have to go to school so there’s a huge chunk of the day that they cannot work. Adults have to take those shifts.
This realization also led me to determine that these jobs aren’t purely for teenagers despite hearing all my life burger-flipping was for teens.
Plus, kids from unstable homes where the parents need them to earn money will sometimes drop out of school to help their family. It's best not to incentivize that.
very specific problems have very specific solutions. if this is the main concern, make it illegal to schedule school-aged children for shifts during school hours.
And then that creates other sorts of specific problems. What of mine conventional schools? Seniors who make their own schedule ? Home school kids ? Are now drop-outs dropped from making an income ?
It's not. It really only affects those working part time jobs from 15 to the age of 18. Full time work is not allowed in most Australian states until the age of 17.
There's far fewer 15-18 year olds than there are 18-65 year olds. There's also fewer again that can work during school hours.
The idea that teenagers are being paid too much or have an advantage in Australians case and that therefore this should prevent changes to minimum wage laws is just a distraction. It keeps getting brought up by people desperate to push a position but who don't want to argue about the far bigger issue of adults trying to survive on minimum wage. Teenagers are an edge case in this discussion and they really shouldn't be the focus.
I don't know about big, but when I was at school-leaver age I would pretty regularly hear about friends getting way less shifts at their job once they hit 18.
My issues with this are it's ageist and unequal, teenagers are people too. Many teenagers work harder and are smarter then many adults. It glosses over the fact that some teenagers sadly have to support children and adult parents as well. Symbolically it tells teenagers they aren't worth as much as adults. It could reduce age diversity in some jobs which can be important.
I never understood the argument that middle class teenagers either should be given opportunities, or the opposite that they should leave those opportunities to adults. Society shouldn't be picking and choosing who gets what opportunities based on things as broad as age.
Kids are often not allowed to work full time and ARE required to go to school until 18.
You can consider anti-child-labor laws to be ageist, and maybe you'll be technically correct but that's irrelevant. Age discrimination actually is good in this case. Kids should be in school and shouldn't be forced to have to work.
I liked hanging around parking lots being a goofball. Not that it wasn't a privilege to be in that position and that teenagers shouldn't be able to support themselves through work if they need or want to, but I'm also glad I didn't want or need to trade it in for a few extra dollars.
Is that a bad thing (in the long run)? More people with work experience = more people who are enjoyable at higher rates later on. Maybe a bit of short-term pain, but everyone's better off in the long run?
If you create two wages, then adults might not be able to compete for those jobs even though they likely need them more than the teenagers do. So unless you introduce quotas (there's your slippery slope), I don't see this as a good thing. Even with quotas, you run into budget constraints.
There's also the fact that minimum wage cuts jobs. So if the budget allows for X hires at teenage wage and Y<X at adult wage, then it becomes even more difficult for adults to assume those jobs, meaning things like experience will count less in justifying the more expensive hire.
Now without the minimum wage, you could at least give the adult a job at a lower wage than what you pay teenagers. It sucks, but if the choice is between no job and some job that pays below a fair wage, it seems the latter is preferable if you don't want to starve.
"Why make things more complicated? We've always had one minimum wage; don't change what ain't broke." Nevermind the numerous fallacies, this is a typical thought pattern for Americans.
Another bad habbit Americans have: they look only to their authority for answers (whomever that may be. e.g. the president, fox news, the church, etc). Go watch some Trump rallies to see this in action.
I'm beginning to believe our education system has left us lacking even basic critical thinking skills and thus we can not have two minimum wages.
Then we should also give minors the right to vote, form unions etc.
What you propose is exploitation, since you get to decide their rights and btw you also decided that their labor is worth less, but they have no say in all of these.
Came here to agree with this, there are laws against the federal government setting discriminatory minimums like this. In the eyes of just about any federal judge the original suggestion would get the entire bill shot down. Also people in this thread talking about how they think this is fair based on experience or cause "teens are stupid" thats entirely misguided of you all to think, there are kids who start working in some states LEGALLY at 14.5 years old, example: N.C. so when they are 16 or 17 they can legally be paid the same 'juvenile' minimum wage? No fast food company or grocery store will actively pay them more if they don't have to and that means less raises and how would all these companies even be monitored and audited for the crossover on ones 18th birthday? What about kids who are emancipated for their parents/legal guardians? What about kids who drop out of school and work? Do they all deserve to make less just because of their age? Geez, the actual obliviousness of people on this site is astonishing sometimes.
> Allowing teens to willingly enter an employmemt contract is neither exploitive nor child labor.
Non-adult teens (“Teen” spans the border) are indeed children, and their labor – while in some circumstances, quantities, etc. – permitted, is regulated as part of the broader regulation of child labor (which is not a total ban, even for very young children, and is graduated by age.)
Whether it ought to be within the scope of acceptable child labor or not is a separate discussion, but it is child labor.
People learn skills by performing them. As parents we teach children life skills by having them help do the chore that daily life requires. When I have yard, mechanic, or construction work my children help. They have since they were able. I learned those skills by doing the same when I was young.
By prohibiting capable teens from work, either by pricing them out or law, we are hobbling their ability to learn valuable work skills. As a result we end up with adults that are lacking simple work skills that would make their labor more valuable.
I've long felt that many jobs paid unsustainably low wages. There are a lot of jobs where your net pay is below zero, long term, when you factor in the external costs associated with working, such as needing transportation. These jobs have been propped up by debt.
It looks like the pandemic has put and end to this. Transportation costs have skyrocketed to such a degree that it's basically impossible for a poor person to even get a car, because they are going to be outbid by a not-poor person who is willing to pay a lot more for the same crappy car because of shortages. Repair shops are having issues getting replacement parts, so even maintaining a vehicle is getting difficult.
We built our economy on exploitation, and now the exploited have been drained dry. So now we have to either pay up or do without.
There’s another aspect: there’s a horrible lack of common decency and respect by supervisors and managers of low-wage workers. Having worked menial data entry, warehouse, grocery store, fast food jobs, I’ve interacted with far too many stressed-out and abusive/abused bosses who cannot cope with the razor-thin timelines with minimal workforce (which seems to be the norm) and ultimately exhaust this irritating heat onto their subordinates and fail to show a minimal amount of respect to their employees to the degree of hostility and abuse.
This isn’t so much of an “all bosses suck” trope (I am happy and lucky to be at a healthier work environment at the moment). The sense I have is demands from the top continue to be more and more unrealistic as decisions are made to cut costs without truly thinking about it may start to rot the foundation beneath.
In my case, $18 sounds like a lot of money, but I wonder if this just means the work will be exponentially more stressful and unhealthy.
There is the additional factor that, at least in fast food, a salaried manager often makes a lower hourly rate than if they were paid at minimum wage plus overtime. It’s an industry filled with horrible bosses because the good bosses either leave or ran the math and declined the promotion in the first place.
> there’s a horrible lack of common decency and respect by supervisors and managers of low-wage workers.
Yeah, if the entire culture creating class/media/academia is agreed that people who don’t have college degrees are worthless failures or at best need other people to make their decisions for them there’s not going to be much respect going round. The Anglo West is not Japan.
Another thing: if the job pays just enough to disqualify you from state-run healthcare (medicaid, etc), but not enough to pay out-of-pocket for health insurance, the only logical step for many is to not work.
This is especially the case for part-time jobs which do not provide healthcare.
Means testing in social services is such a terrible idea. It creates nothing but perverse incentives like you describe. Programs like food stamps should be available to everyone who wants them. I don't care if a billionaire uses food stamps, they still need to eat. If too many rich people use the program, tweak tax rates until it balances out.
It's a waste of our time to go through and double check that only those that 'deserve' a handout get one. It makes everything less efficient, creates bad incentives, and builds a social stigma around the programs. ("Oh, that program is only for really poor people. I'm not really poor, so I shouldn't use it.")
that just makes the whole system inefficient - the rich pay a bunch of taxes, then try to obtain all of those benefits for having paid those taxes to try even it back out.
So why not just tax less, and let them spend the money directly?
Countless trillions stashed in offshore tax havens in Andorra, Anguilla, Antigua, Aruba, Bahamas, Barbados, Belize, Bermuda, Brunei, BVI, Cayman Islands, Cook Islands, Costa Rica, Cyprus, Denmark, Dominica, Dubai, Gibraltar, Grenada, Guernsey, Hong Kong, Isle of Man, Jersey, Labuan, Liberia, Liechtenstein, Luxembourg, Marshall Islands, Mauritius, Monaco, Montserrat, Nevis, New Zealand, Panama, Seychelles, Singapore, St. Vincent, St. Kitts, Switzerland, Turks and Caicos and Vanuatu seem to indicate that spending into the economy isn't something that the wealthy like to do.
Because not everyone has enough money to feed themselves in the US. Start from a position that everyone should have food assistance available if they want or need it.
I’d rather an inefficient system than one with holes in it. Better someone getting aid who doesn’t need it than someone not getting aid who does need it.
I do not think this is true in the absolute currently. I do think that the modern economies are imparting pressures that will make this more true over time.
The question every one asks is "What is the point?". The answer is increasingly, there is no point.
What about the answers previous generation might have had; send money home, improve life chances with an education, provide for a family, get a foot on the ladder, eat.
I think 20 years from now on one side looks like very low birth rates, mass homelessness and high suicide rates. For those that own assets now - a Parisian utopia surrounded by the former.
And for those that do continue to try, a room the size of a double bed containing an on-suite bathroom, kitchen diner, living-room and sleeping space - all in one! with no prospect of ownership.
The number of payday loan shops in the immediate surrounding area was astounding. I kept hearing word of "Don't Do Payday" financial help training for the Naval crew, who apparently were a prime target for the industry. Before working there, I had little idea such existed.
Think "worse than 'cash your cheque here'" places.
I don't know how many Naval folks I worked with took in to these places, but every time I passed one I frowned and shook my head.
Some years back, I was on a jobsite where radios were allowed, and we rotated through the crew, everyone playing deejay for a day, so everyone's taste got represented. Some guys would bring in a stack of CDs, some would just play the radio. It meant I listened to a few stations I don't normally listen to.
And the density of payday loan ads, on some stations but not others, blew my mind. I don't think I ever heard one on the classic-rock station (their stock in trade was testosterone ads, apparently), but they were at saturation density on the R&B station.
Payday loan places have always been scum, but that really opened my eyes to the deliberate exploitation aspect. This is targeted.
It's good to hear that there's financial training for the Navy. I wonder if there's anything similar out in civilian life that we could support?
One of the most effective anti-poverty programs the government could do is teach basic accounting and finance as core curriculum in the public schools.
Or raise the minimum wage, raising the wage floor for all workers, and putting more money in the hands of poor people (who are generally much, much better at managing it than anyone else, due to the need to.)
Frontline (I think it was) many years ago ran an episode on 401k plans. There was a medium sized company that offered an identical 401k plan to all its employees, from the bottom to the top salary levels.
They found that the higher the income level, the better percentage returns the employee had on the plan. The lower, the worse performance.
The 401k plan offered several investment options.
Clearly, the higher income people were making better investment decisions. The conclusion was the company was going to offer seminars on basic investing, though who knows how that turned out.
There's a lot more to personal finance than balancing a checkbook, though many can't do that, either.
I don't see how a news entertainment program you saw many years ago actually addresses how well poor people are at making the most of their very limited dollars.
I always wondered whether instantaneous payment would help solve this.
For example, our digital infrastructure could pay people per second and it could instantaneously show up in a bank account; if people were never waiting for these Delta function payments, maybe they would be less prone to being exploited by systems that seek to smooth out these Delta functions.
>I've long felt that many jobs paid unsustainably low wages.
Can you elaborate on this? $7.25 * 8 hours = $58. It's hard to imagine expenses adding up anywhere close to $58/day, especially if you factor in that in high cost of living areas the minimum wage is also higher than $7.25.
> Can you elaborate on this? $7.25 8 hours = $58. It's hard to imagine expenses adding up anywhere close to $58/day, especially if you factor in that in high cost of living areas the minimum wage is also higher than $7.25.*
Wow can you be any more out of touch? Your comment is offensively innaccurate.
$58/day = $1740 for 30 days
Unhealthy cheap carbs for a single person... $200/month (chicken, beans, rice, milk, cheese, bread)
Shitphone with basically no internet for a single person... $40/month (who needs internet anyway)
Fuel for a single person... $200/month (assume 2 tanks / week)
Rent for a single person... $1400/month far (+fuel)
Health insurance because you have two or three shit part-time jobs: $400/mo
Vehicle insurance on an old vehicle: $300/mo
It's hard to imagine someone who's so out of touch with reality that they think they can get away with claiming minimum wage is higher than $7.25 in high cost of living areas. In Houston, Texas the minimum wage is ... $7.25/hr. Cost of living here isn't approachable to minimum wage.
This doesn't even start to pay for taxes, retirement investments, medical emergencies, vacations, legal disputes, education costs, or heaven forbid having family.
I don't know where you live, but you're the one that is out of touch. 2 tanks a week? 200 bucks a month for shit tier food? Ever heard of cooking? 1400 a month rent?
I've spent time in Houston, on minimum wage, and in the past decade. It was alright. I even had the money to go out drinking every weekend, by Rice university at that. Usually when you hear arguments like this and you get down to brass tacks, you start to hear the arguments that allude to the real culprit, things like "I should be able to have extra money for fun" which usually translates to "I blow my money on things I can't afford and then blame the world for being broke."
> arguments that allude to the real culprit, things like "I should be able to have extra money for fun" which usually translates to "I blow my money on things I can't afford and then blame the world for being broke."
Should we live in a world where we are wage slaves where 100% of our earnings are spent on the bare necessities such as food and shelter?
One of my friends has $20 to spend on herself after her frugal bills and doing a body crushing job (no "fat" like retirement savings, or medical insurance). I look at it like she earns 50 cents an hour.
Surely we work to be able to spend some money on the pleasures of life? Or is that a dream only for the middle class? Work usually costs us immense amounts of time, let alone the other personal costs of work for many.
> Should we live in a world where we are wage slaves where 100% of our earnings are spent on the bare necessities such as food and shelter?
No.
> Surely we work to be able to spend some money on the pleasures of life?
Money doesn't buy happiness. The best things in life are free. And sure, if you have money to spend on fun things, have at it. If you don't and you want to, try finding a way to do it. It really is up to you. But the idea that if you do not have disposable income to engage in consumerism you're going to be unhappy, well I'll just say that's a terrible starting point for your argument, and a mindset that breeds unhappiness quicker than tight finances.
> Money doesn't buy happiness. The best things in life are free.
No. No. Happiness is extremely difficult to find if you are financially insecure.
Money has a marginal effect on happiness after a certain limit. But to say money doesn't buy happiness is an utterly stupid lie repeated for ages by those that have more than enough money.
You know something ive noticed? I've never actually heard a minimum wage worker talk about 1400 a month rent. Ive heard them say rent is too high, but I have never heard them say that rent is 1400 dollars. It always seems to be the people who "don't have to live on minimum wage, thank god."
I think what is happening is young professionals who make decent money and come from middle class backgrounds and have never lived outside of the uptown exclusive areas see their rent and say "I can't imagine how hard it would be for minimum wage workers" thinking they live with the same expenses.
Ive lived in 2 of the largest metropolitan areas in the US for 2 decades, and my rent has never been over 800 dollars. That's exorbitant to me, but that's still a far cry away from 2 grand a month. I know there are a few extremely overpriced cities in the US, but in the rest of the cities, if you're paying above 1k a month for a one bedroom you're trying to live somewhere that you chose to live precisely because it was more exclusive and you can't blame the world for making that decision.
You say $58/day for 30 days. That's working the whole month with no days off. That's not anybody's life that I know.
It's better to estimate 168 hours per month worked. That's 4 full-time work weeks of 5 days a week plus an extra day. With 12 months in the year, you're still effectively short a few days, but it's close enough.
So $7.25 * 168 is $1218
Let's ignore every other expense. Let's say you walk everywhere, use the library for internet, whatever.
Average rent is roughly that.
You are fucked from the start to just put a roof over your head. That's also assuming that job is 40 hours a week. Giving 8 hours work, 8 hours sleep, you have 72 hours left over. Some of that time will be dedicated to commuting, hygiene, eating, etc. You might be able to swing a second full time job, but that's just your life from then on.
Also 2 tanks per week, that's insane. Even when I was driving 50-ish miles each way, I was getting gas about twice every three weeks. With a daily 100 mile commute, I'd say my fuel costs were in the neighborhood of $100 per month.
Your insurance is also way out of whack. Old cars have cheaper insurance. I have a 2017 model and pay $700-ish every 6 months. And it wasn't much worse when it was new.
I'm glad I don't have to fit my expenses into a minimum wage budget, but some of your numbers are pretty high.
I buy gas once every 2 or 3 weeks and spend $45 on a phone plan with 4 GB of LTE (US; I guess that can fit the definition of basically no internet). My car insurance (with collision and unlimited medical) is less than $500 for 6 months.
I would probably balk at paying much more than $800 in rent. The rental market here is pretty thin (I think part of it is I don't know where to look), but I see a listing for $1100 for a 4 bedroom house. Electricity+water+gas would be in the range of $250 for 1 person (and less for several as heating is a major utility cost here).
Cost of living across the US varies wildly. The numbers are pulled from my most recent billing cycle for Houston and partly extrapolated to minimum wage (which I am most definitely not, but have friends who are).
My rent is $1500/mo for 920sqft inside the 610 loop. The leasing office wanted $2000/mo for new contracts in October last year.
It's really hard to find places for $800 within a 30 minute drive of any office in Houston. All of my friends have the same problem. I'm looking to buy a home for a similar reason.
Living far enough out to have rent reduced to $800 is offset by increased amount of time driving and therefore increased costs in fuel. So I bought gas twice a month before the pandemic with a 5 minute drive to the office. When I lived 30 minutes out, I bought gas twice a week.
Car insurance depends a lot on vehicle, driver age, etc. $300/mo was quoted to some younger family last summer -- they were outraged because it was half-again their car payment. I pay $600/6-mo.
Those office workers rely on a huge infrastructure of other services -- food preparation, cleaning, maintenance workers, parking lot attendants, etc. etc.
The people who work those jobs should have the same access to their worksites as anyone else. Our willingness to tell people who make less money they should just "live farther away" and have longer commutes is awful. No, we should fix our cities so that we support a range of incomes and workers in one place.
Office jobs are less interchangeable than service jobs though. I'd expect someone with a job in a grocery store or restaurant to always be looking for a position closer to where they wanted to live compared to an office worker looking for suitable, better positions in locations that that would have a shorter commute.
(the service workers would be looking for better positions too, but the pay differences between similar positions are smaller there)
Wow. In Spain you would pay between €150 to 200 per year of insurance for the typical old cheap car. 400/year for a nice, semi luxury one. I knew some things were expensive in the States, but this particular one surprised me a lot.
It's not typical in the States. I own a new vehicle, have comprehensive insurance, and pay Geico ~$60/mo. I suspect that someone paying $300 for an old vehicle has either (a) an expensive low-deductible plan, (b) a driving record with past insurance claims, or (c) an expensive old car.
A lot depends on the state, type of coverage, driving history, and which company you use. The average range in Texas is ~$45-165/month depending on coverage[1]. I personally pay a bit over $50/month for a 2010 Honda Accord in California.
I wouldn’t take the costs listed in the parent comment literally.
One side effect of the US not having universal healthcare (and overpaying massively for healthcare as one result) is that leaks into litigation on other insurance for just about everything from cars to homes to retail business etc...
Our non profit Parent teacher association and the schools themselves have to carry insurance for events in case someone happens to get injured.
Depending on the car and where you live insurance can be lower or higher. Outside of collector/classic car insurance policies (eg: this is not a daily driver car and you agree not to exceed a low number of miles yearly) or parked insurance (a few hundred miles a year), there is not $200 to $300 a year car insurance in the USA.
Tribal reservations don't require license plates or insurance usually, and you cab choose to self insure if you have sufficient cash set aside.
> Outside of collector/classic car insurance policies or parked insurance, there is not $200 to $300 a year car insurance in the USA.
Absolutely beg to differ. I was on a high-deductible, low-benefit plan for a two-year old used economy car in Louisiana with no marks on my driving record for $250/month. The insurance cost was more than the monthly cost of the car. That being said, it was more than the state mandated liability insurance, but it still wasn't anywhere near the levels of insurance I now have in Washington State on a brand new Tesla Model 3. As you mentioned, it's highly dependent on where you live, but it's absolutely feasible to be paying $200-$300/month for insurance.
Edit: Apologies to parent comment. This was a reading comprehension failure.
Louisiana is high because of the plaintiff friendly courts where even minor accidents are litigated, the trial lawyers making money off of it, and the traffic courts which bargain down speeding tickets to brake tag violations all the time (which is priced in by the insurance companies)
> and you ca[n] choose to self insure if you have sufficient cash set aside.
I think you are ignoring the third party risks - damaging an expensive car or hurting someone. In that situation, you use insurance if you want to protect your money. If you have no money, insurance make little sense, and you just suck up the risks of pranging your beater.
Self insurance is not legal if you do not meet your state's requirements for cash set aside for self insurance purposes and vehicle count. This is usually a sizable sum of money that you need to set aside to self insure.
You can get cheaper coverage, but it's barely insurance at that point. They'll sell you the bare minimum that's legally allowed to be sold as insurance even if it doesn't cover liability, medical costs, etc.
The impoverished don't spend that much on car insurance. They do spend a surprising amount on cars, though: either many repairs, or buying replacement used cars when the last one gives out.
If they're really in a bad spot, they'll be buying these cars financed. You don't want to be in a position where you're paying off a car that long since was sold for scrap steel price at a junkyard.
Also a smartphone is a must: they often don't have a traditional computer at all! An internet-capable phone might be the only way they can access email, unless they're truly destitute and using libraries for internet access.
You’re clearly out of touch and over inflating numbers. $200/month for groceries is nothing but cheap carbs? $1400/month for rent? Are they living in their own 1 bedroom in the middle of the city?
$50/week in food is doable, but it takes some careful planning. I'd be impressed at someone who could purchase fresh vegetables and fruit, balanced whole grain carbs, and a healthy protein of their choice, spices sufficient to produce a reasonable variety of meals, plus some occasional luxury food items for that budget.
Doing that could easily add an hour (or in particularly bad cases, two hours!) each way to your commute. Some people do make that tradeoff, but it seems really unpleasant.
The big issue is that transit accessibility is priced into rent, so while parts of US cities might actually be reasonable to get around with public transportation, you'd never be able to afford to live there with a low income.
If you live anywhere with public transit that's complete enough and reliable enough to get you to work on time, you're paying more in rent to make that happen. It might be cheaper but not by a lot
If you go by the numbers in the post I responded to, this isn't true, at least not where I live. The $1400 figure is pretty much exactly what I pay in rent, and I have no problems getting to work with public transport for $100/month.
To be fair, I live in Europe, but this is why I asked the question "is it really that bad?", to which the answer appears to be yes.
Minimum wage was never intended to cover all the above, and it never has. Minimum wage is for teenagers working after school or weekends, or students with no (yet) marketable skills.
>Unhealthy cheap carbs for a single person... $200/month (chicken, beans, rice, milk, cheese, bread)
>Shitphone with basically no internet for a single person... $40/month (who needs internet anyway)
>Health insurance because you have two or three shit part-time jobs: $400/mo
>Rent for a single person... $1400/month far (+fuel)
These are all sunk costs. You need them regardless of whether you have a job or not. You seem to be talking about your general finances (ie. your expenses > your income), whereas I interpreted mywittyname's comment as saying that the job itself is a net loss (ie. your cost of getting the job > your income from job).
>Wow can you be any more out of touch? Your comment is offensively innaccurate.
Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.
> These are all sunk costs. You need them regardless of whether you have a job or not
They're not sunk costs if you literally don't have money to pay for them.
> Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith.
Your argument wasn't in good faith. You're saying that minimum wage is a livable wage which is a demonstrably false statement. Then you're also claiming that the cost of living is a sunk cost.
I think a better phrasing of his argument would be "if you take that job, the additional costs will not outweigh the income you get from that job". Put in another way, your net surplus after a month will be more with the job than without, irrespective of whether it is actually positive.
> Food isn't optional. Getting a job that pays you money which you spend on food doesn't magically make the cost of food a cost of getting the job.
Most people aren't able to get food without money obtained from a job. So unless your food is provided elsewhere then getting a job that pays you money which you spend on food does magically make the cost of food a cost of getting the job.
> I made no such statement. Please point out where you think I made that statement.
> $7.25 8 hours = $58. It's hard to imagine expenses adding up anywhere close to $58/day*
>Most people aren't able to get food without money obtained from a job. So unless your food is provided elsewhere then getting a job that pays you money which you spend on food does magically make the cost of food a cost of getting the job.
That makes zero sense from an accounting point of view.
>> I made no such statement. Please point out where you think I made that statement.
>> $7.25 8 hours = $58. It's hard to imagine expenses adding up anywhere close to $58/day*
1. I'm not sure how you're getting "minimum wage is a livable wage" from that comment.
2. you seem to be fixated on "expenses" meaning living expenses (eg. rent, food, clothing, etc.), whereas I was only talking about expenses related to getting the job (eg. transport). This was pointed out several comments ago.
> $7.25 8 hours = $58. It's hard to imagine expenses adding up anywhere close to $58/day*
> I'm not sure how you're getting "minimum wage is a livable wage" from that comment.
The comment you replied to stated:
> There are a lot of jobs where your net pay is below zero, long term, when you factor in the external costs associated with working, such as needing transportation.
Transportation is just a single one of those costs. Nobody in their right mind is going to get a job that they recognize won't pay for their expenses and many people consider more expenses than just transportation.
> I was only talking about expenses related to getting the job (eg. transport).
That wasn't clear and is no doubt where our discussion went astray
>many people consider more expenses than just transportation.
You (and other people) seem to think that food, housing, and healthcare is an expense in getting a job, but that makes zero sense from an accounting point of view. This is trivially proven with a thought experiment: let's say you were unemployed and had $2000/month in "required" expenses, and a job offered you $1000/month. Are you going to turn down that job because it "won't pay for my expenses"? Of course not, even though you're still losing money from an overall cashflow perspective, taking the job still provides you a +$1000 improvement to your financial situation[2].
[1] although I suppose you would need less calories if you didn't work, but I think that's safe to ignore
[2] for simplicity we can ignore government subsidies that gets cut off when you exceed a certain amount of income, or unemployment.
> that makes zero sense from an accounting point of view
Well the world doesn't work like your armchair accounting.
> a job offered you $1000/month. Are you going to turn down that job because it "won't pay for my expenses"?
$1000/month is _less_ than that minimum wage. So I'll assume it's indeed a part time job.
Taking that job means 4 hours less time each day looking for a better job because you're busy with this part time one. Not only 4 hours less for work, but another 1 or 2 hours each day because now you're driving to and from that job. So 6 hours less each day. That's an expense.
Now that you're working it also means being less eligible for any government assistance. $1000/month to work 4 hours/day while taking $800 less government assistance comes out to... a net of $200/month. For 4 hours/day of work and an additional 2 hours/day for transportation.
If you look at the raw money, you're making more money. Homelessness is on the horizon and inching ever closer even if it's approaching slower.
Are those 6 hours to you really worth your time when you could have spent those 6 hours trying to find an even better job?
And when you do reach homelessness, is that $1000/month job going to continue employing you?
I think that's the dilemma that the commenter at the start of this thread posits. Jobs are "available" but they're not sustainable. And people are turning down $18/hr stressful part-time jobs because they can't afford them.
>Well the world doesn't work like your armchair accounting.
ah yes, just slap "armchair" in front of something to invalidate someone's position.
>Taking that job means 4 hours less time each day looking for a better job because you're busy with this part time one
>Are those 6 hours to you really worth your time when you could have spent those 6 hours trying to find an even better job?
The money you "earn" searching for a job is highly variable, and I don't see any attempts at quantifying it. If you were recently employed for $4000/month, your time might very well be spent looking for a job rather than taking the next min. wage job, but if you were unemployed for 6+ months and your previous job only barely paid better than minimum wage, the ROI is probably not there.
>Not only 4 hours less for work, but another 1 or 2 hours each day because now you're driving to and from that job. So 6 hours less each day.
Aren't part time jobs closer to "8 hours a shift but you come a few times a week" rather than "4 hours a shift but you come in 5 days a week"?.
>Now that you're working it also means being less eligible for any government assistance. $1000/month to work 4 hours/day while taking $800 less government assistance comes out to... a net of $200/month. For 4 hours/day of work and an additional 2 hours/day for transportation.
Thank you, that's the type of numbers I was looking for in the original comment.
>And when you do reach homelessness, is that $1000/month job going to continue employing you?
Would you rather be on the streets in 10 months or 5 months? The choice seems clear.
To me it looks like you two are talking past each other. In fact, I think you're both right. gruez point can be summarized as "if you're having a minimum wage job, your loss at the end of the month is smaller compared to having no income at all" [0], which is a possible interpretation of the comment that sparked this thread [1]. This is also the reason he does not account for food, while you do. Your (inetknght's) point is that "with a minimum wage job, you'll make a loss at the end of the month". As far as I read it, gruez actually doesn't try to make the point that a minimum wage job is sustainable, so there's no contradiction.
[0] Compared to, for example, driving for Uber, where at the end of the month the cost for car+fuel+maintenance might cost you more than you earned, increasing your net loss.
> There are a lot of jobs where your net pay is below zero, long term, when you factor in the external costs associated with working, such as needing transportation.
> That makes zero sense from an accounting point of view.
If your point of view prevents you from understanding that people need shelter, food, and clothing in order to not die, and must be alive in order to work, then your point of view might not be sufficient.
First off, you need transportation to work. In most of America, this means, you need a car, gas, insurance, and maintenance.
Secondly, you need uniforms. These are often paid for out of your check and come from companies that have pretty comfortable markup.
Then you have the "expensive to be poor items" Such as getting your paycheck on what amounts to a Visa gift card, because cheap employers are transitioning to payment services that offload the cost of associated with payroll onto the employees. These cards have relatively high maintenance fees, and charge for things like actually getting your money.
That's not even getting into shit like, "split shifts" where you have to work a few hours, take a multi-hour break, then work a few more hours. This means that you have to stay at work for 8 hours, but only get paid for maybe 4-6 of them. While you could leave, it would cost you money to do so.
I've gone through this with younger siblings over the years. One in particular was a delivery driver, and factoring in cost of their car, the only reason they thought they were making money was because they were hiding the depreciation on their car through very long car loans and were not paying for the insurance coverage they should have been.
Most low wage positions are only possible because they are subsidized by someone else, maybe it is a parent who lets them live rent free, or they subsist on credit card debt and payday loans to handle emergencies.
>>> That's not even getting into shit like, "split shifts" where you have to work a few hours, take a multi-hour break, then work a few more hours. This means that you have to stay at work for 8 hours, but only get paid for maybe 4-6 of them. While you could leave, it would cost you money to do so.
Split shifts is a horror story. I've seen my younger sister working at a restaurant, the main hours are 12am-2pm then 7pm-11pm.
What are you supposed to do during the massive break in the middle? It's royally screwing up your day.
To make things worse, a trip in the tube and back will cost you £3 to £5, a sizable chunk of your first hour (£8/hour pretax).
As if the night hours and pay were not terrible enough, the hours are set daily on a short notice. You constantly must adjust your schedule and if there's less hours to do you simply don't get paid.
But that has nothing to do with GP's claim? GP was talking about your "net pay is below zero", meaning that the job itself pays negative. eg. you get paid $50/day but spent $55/day to earn it. Your comment seems to be about the minimum wage not being able to sustain a given living standard, eg. you get paid $50/day but you need to spend $55/day to survive.
I read their comment differently than you did, but even if I hadn't I don't quite understand your objection. By definition if you're spending $55/day to survive, you're spending $55/day to earn your pay, if nothing more. The situation you describe is not sustainable either. Please clarify.
He is making a distinction between cost to survive (I.e. food, shelter, etc) and cost to have the job (I.e. transport).
"net pay is below zero" means (In his interpretation) that the cost of having the job is greater than the amount the job pays. This is unrelated to the cost of surviving.
First off, it's not $50 per day, because you're probably paying income tax. But let's assume it is.
Second, it's not really "per day", that's an average. Most bills recur monthly. Assuming a month of four weeks, and working 5 days per week, that's 20 * $50 = $1000 per month. Doesn't that seem like an extremely low number to pay for rent, transportation, food, health care, kids, utilities, etc? I pay more for that in rent every month.
>seem like an extremely low number to pay for rent, transportation, food, health care, kids, utilities, etc?
everything in that list except for transportation are sunk costs. In other words, you're paying for those regardless of whether you have the job or not.
>...unless you're not paying for those because you literally don't have any money.
That's not how accounting works. If you got a FAANG job that paid $300k/year, then proceeded to blow $60k on a tesla, your net pay for the job isn't $240k.
Right, but at that minimum wage job you're not going to blow that $60k on a Tesla. You're not even going to blow $10 to go look at a Tesla. You're going to blow $2k on a root canal because your food is crap and your medical coverage is worse.
Also, that $60k on a Tesla for the FAANG worker amounts to a small percent of the worker's disposable income. But that $2k amounts to over 100% of the minimum wage worker's disposable income.
> Right, but at that minimum wage job you're not going to blow that $60k on a Tesla. You're not even going to blow $10 to go look at a Tesla. You're going to blow $2k on a root canal because your food is crap and your medical coverage is worse.
Way to miss the point. Whether the item is a tesla or a can of beans is irrelevant. The point is that if previously you couldn't afford X, after getting a new job you could afford X, then you can't say that X is a cost/expense of getting the job.
What point are you trying to make? The federal minimum wage is not enough to cover people's expenses, whether those expenses come from holding the job or not is irrelevant as to whether such a situation is "sustainable." This feels like pedantry.
> The point is that if previously you couldn't afford X, after getting a new job you could afford X, then you can't say that X is a cost/expense of getting the job.
They're not "sunk costs", they're "basic necessities". They have to be paid for every month (or whatever period), so if a job doesn't provide enough money to pay for them, it is not paying a living wage.
You can't just say "they need those to live" as if that absolves you of explaining how to pay for the things they need to live.
Unlike capital equipment a business doesn’t pay for the cost of replacing labor as it ages. The cost in the US of raising a child is about $250,000 or about $3 per hour over 40 years. Businesses expect a pool of qualified and educated labor but don’t pay for childcare expenses.
Employees are expected to have reliable transportation to get to the employers place of business but they do not cover transportation expenses. The cost of $400 a month for reliable transportation works out to $2.50 per hour.
Employees are typically required to have work appropriate clothing. In the US this cost has often been pushed to employees. In some cases even tool costs have been pushed to employees.
Employees have wear and tear on joints due to repetitive movements which will eventually have to be treated. Machines need maintenance and businesses are expected to pay the costs but with labor that is pushed back to the employee.
The economics of minimum wage only work short term for people who are young, healthy and with no children where experience gained will lead to a higher paying job in the near future.
Your replies down thread indicate an extremely narrow interpretation of 'expenses' here, namely only those financial costs directly related to employment. Taking that interpretation, you're probably correct that nearly all jobs offer net-positive pay counting only the those inputs from the employee. You're right that someone with better off in immediate financial terms with basically any job than no job.
However, that's something other than the 'sustainable' wage in the GP comment, since that doesn't count costs of the labor input! Each of us has only so much labor to sell in a given month, and need to get enough in return to support, you know, continuing to live and sell our labor. Sure, being employed at wage that does not provide a basic level of dignity is less worse than being completely destitute, but it's a bit disingenuous to argue that being less-worse-off is 'sustainable'.
I think his (gruez's) interpretation is the obviously reasonable one, and I'm not sure why he's getting bashed so severely here. Note that op made the claim that "net pay" was literally negative, which seems to comport totally with the interpretation given, and not at all with an interpretation of "sustainability" referring to a living wage.
I think quoting the unsustainable part of OP instead of the net pay part led to lots of misinterpretation. Sustainability in a pay context is IMO strongly linked to a living wage, or at least a survivable wage.
For starters, you don't want to have to work every single day. If you work 5 days out of every 7, you only have $41.43 to spend per day.
The average cost of a studio apartment is over $900 a month. That's $30 per day. Even if you get roommates, that's going to cost you at least $15 per day.
That leaves you $26 a day to spend on food, clothing, hygiene, Internet access, electricity, transportation, health care (since most minimum wage jobs don't include it), and all of the other expenses of life. And then pray you don't get sick -- even with health insurance you're now losing income.
It adds up fast. There is basically nowhere in the US that this is a living wage. At best you can barely scrape by with no margin for error -- and certainly no money to spend on training for a better job.
>The average cost of a studio apartment is over $900 a month [...] That leaves you $26 a day to spend on food, clothing, hygiene, Internet access, electricity, transportation, health care
Seems like we're talking about different things. I was talking about the net gain/loss from getting a job, whereas you're talking about your overall living situation.
I've looked for about 20 minutes and haven't been able to find a reliable figure nationally, so from a quick search on apartments.com for Minneapolis (random city not known for high cost of living), the 20th percentile studio apartment is $1000. If you want to split an appartment, I'm going to check 1 bedroom, since 2 unrelated people in a studio isn't really practical. Then the 20th percentile is about $1150. (on average for these apartments, parking is an extra $100 or so which you need if you have to shop by price, not location).
So do you have a link to a reliable figure as to what 20th percentile rent is? "I'm sure you would agree with me if you knew a statistic that I'm not going to share with you" is hardly a convincing argument.
I claimed 20th percentile IN MINNEAPOLIS was $1000. That just means Minneapolis is more expensive than the national average. You're the one claiming that a 20th percentile apartment is affordable on minimum wage, so how about a source for what that figure is?
For some other random cities using the same methodology (1 bedroom)
Wichita: 500
St Louis: 650
Columbus: 800
Pittsburgh: 850
Dallas/Fort Worth: 950
Nashville: 1000
Orlando: 1200
Sacramento: 1200
What methodology would you use to find this data if Appartments.com isn't reliable?
It's not that apartments.com isn't reliable, I would assume it reliably reports the data it gets.
But most apartments don't get rented through apartments.com, and the ones that don't are skewed towards the lower end of the market.
The 4-flat where the owner is renting out the other 3 places and living in one of them doesn't show up on apartments.com.
I don't know where you find good comprehensive data, you tell me. But if you are looking at bad data because you can't find good data, you are the drunk looking for his keys underneath the street light not because he lost his keys there but because the light is good.
I think the classic example of this is the pizza delivery driver (or now the gig economy food delivery driver).
The driver might think "I made $100 today, great!", but they generally don't have a good sense for their total expenses. Sure, they know how much gas cost them this week, but they don't know how much the next auto repair will be, or how much depreciation they're incurring on their vehicle. And when their auto insurance goes up because they've been driving so many miles, that's out-of-pocket too - no employer is picking that up.
True. Of course, that only scratches the surface of why it's a terrible job. In many locales, policies that cover commercial driving are prohibitively expensive, and the majority of drivers are effectively uninsured (often without realizing it). It's not a stretch to say that insurance fraud is a core part of that industry's business model.
Occasionally, Twitter provides some nice insights in digestible forms (of course, nuance gets stripped).
I saw a post recently that said something like "We watch Star Trek and marvel at their post-scarcity world. We are living in a post-scarcity world now, but all the benefits are being funneled by wage slaves up to the 0.1%."
Paraphrased.
I was talking with a friend who mentioned that a local pizza place is offering *$18/hr* for bussers at the restaurant. To me, that is a great wage for someone to wipe down tables and sweep floors. If they're still having trouble filling that, is it because making $37k a year in Texas isn't good enough for a no-education, no-experience job? Is it because the high-schoolers who would normally do that aren't looking for jobs due to pandemic? Is it the unemployment security and not having to actually do work 40 hours a week?
I wonder if the roles of people at restaurants will have to shift, so each person does some of everything, and get paid more, instead of having dedicated low-wage cleaners. Or that profit-sharing and healthcare may be the new model for restaurants.
> Is it because the high-schoolers who would normally do that aren't looking for jobs due to pandemic?
The concept that entry-level food service is mostly staffed by high-schoolers who don't really "need" the money is the weirdest trope. Basically every restaurant is open during school hours. Who is handling the lunch rush?
Yeah, I worked in hospitality my entire 20s in a major American city, only ONCE did I work with an actual HS teenager and that was at a middle-brow Mexican place and his family knew the owners, and he only worked weekends. Great kid though.
Also, most places serve alcohol and teens can't serve.
When an objectively flimsy discourse like that circulates widely you have to ask yourself what its actual function is. Its apparent function of describing the world accurately is not being fulfilled, but the discourse persists, so what is its less apparent function (and you got it: it's to naturalize exploitation)?
it's pretty common for the second shift to start right around the time highschool gets out. or if it doesn't, the manager might be flexible. dinner rush doesn't usually start until 6:00 or so. there's also the weekend.
obviously highschoolers are not filling 100% of entry-level food service jobs, but they make up a pretty good chunk of these workers along with some college kids. it's a good option for someone who has literally no work experience.
For a lot of kids, if they don't have a job in high school, they don't have any of the things they want. When I was 14 I had a job so I could buy the things my parents couldn't afford which was almost everything. I wanted new shoes and new clothes so everyone wouldn't know how broke we were. I wanted a car when I turned 16 and I knew the only way that was going to happen was if I worked for it. I didn't like not having money in my pocket when all of my friends did.
No, someone who says “teenagers don’t need jobs in the status quo” comes from a place of privilege.
Someone can recognize the status quo and yet believe that the needs it creates ought to be changed. There was a time younger children needed jobs to. The reason they did was largely because the fact that they could be employed drove down wages for adult workers. One who said children didn’t need jobs at that time would be wrong, probably from privilege – children in working class families needed jobs. But they also shouldn’t have had them, and them as a class not having them also eliminated the need.
With teenagers the situation may not be precisely the same, but the divergence between perceiving what is needed now and what should be is the same.
Well, maybe where we disagree is that I see being employed by someone you're not related to as being a valuable life experience appropriate for a teenager, especially if you have loved ones around to teach you how to get, keep, and (if need be) leave a job.
okay, it's a good option if you want/need work and you're a highschooler. I guess we could debate whether it is a good thing for a highschooler to have a job in the first place. that's going to depend on the situation. if you're working tons of hours to support your family instead of keeping up in school, that's going to hurt your long-term prospects. if you're working a couple shifts a week so you don't have to ask your parents for $20 to go to the movies with your friends, I'd say that's an important step towards independence. you learn a lot of stuff at a shitty job that you can't learn in school.
Honestly - working crap retail and food service jobs during high school was as much (or more) valuable education than what I learned in school. Certainly motivated me in college to study and work hard. The value of working is not only in the money earned, and I will force my children to get part-time jobs during high school.
I feel similarly, but I think a big part of that is that my schooling was so bad. Ideally I'd have not had to work and actually been learning something (and that's the goal I have for everyone, as a collective political desire).
On the other hand, I notice people who didn't have to work as kids and went straight into college and respectable white collar jobs usually have absolutely no idea how the rest of their fellow citizens actually work and live, so I'm thankful for the perspective.
Why make your kids earn a profit for someone else? They should be learning and hanging with friends. You didnt learn more working fast food than in school. You hated it which motivated you. Not everyone needs to experience fast food to know its not a great career outcome.
I didn't work in food service but I did work a service job (supervising children, teaching robotics, and hosting birthday parties for kids) in high school. I did not manage to save any of the money I made, but I definitely learned a lot from the experience. Namely: most people have no respect for service workers, and some people seem to have active contempt for them. Quite unpleasant. I don't think high schoolers should have to work for a living, but then again I don't think adults should either. However, I do think the experience of working service jobs is one that more people should have.
Maybe. But I learned a lot of useful skills working that weren't taught at school. And working, along with sports and clubs, kept me out of trouble. I tell my partner all the time that when we have kids they're getting jobs in high school.
Finally someone said it. High schoolers toiling away in dead-end jobs is not necessarily 'good'. They can be learning skills that generate a higher long-term ROI.
I worked minimum wage jobs when I was 16, there were 14 year old kids working at the same jobs.
It wasn't like the kids who didn't work spent their after school time focusing on school. From what I recall, they mostly spent their time dropping by the fast food place to make fun of how stupid we looked in our fast food place uniforms.
only if they need the $ and there is no other option . the ROI from a high GPA and good grad school, makes the extra $ from a crappy part-time job insignificant.
imo this is one of those things that makes sense on paper but doesn't work out in real life. the extra lifetime earnings from a first job in hs/college are indeed insignificant. the value of a job is that, for many teenagers and young adults, it is the first time they have to navigate an environment that isn't specifically designed to cater to their needs. this is how most of life is when you finish school.
I worked in food service jobs during high school on the weekend. I graduated a semester early and worked full-time in food service for a few months, too. Not a bad option and pretty common at my school c. 2010.
To me, no education, no experience jobs are the norm.
Does that restaurant pay incoming career food service staff a wage sufficient to raise a family on?
A solid third of the households in the US take in under 50k/yr. More than half that are under 25k. I don't know about you, but 37k doesn't go far.
Assuming 30% effective tax rate that's 2158/mo.
1 bed flat in my city $1400
Cell phone bill: $100
Home internet: $100
Electricity: $50
Heating: $50
Healthcare: $230* assuming 50% sponsored
Car payment: $400
Insurance: $130
Without including food, dental insurance, deductible, OOP limits, retirement contributions, emergency savings, and anything at all for pleasure I've exceeded my budget. So, please, tell me more about how that's a good wage. How can someone go about improving ones position in life if they're kicked into a world that they'll never be able to afford? Should I go to college as an adult and get into eye watering levels of debt that'll follow me out of bankruptcy to keep bussing tables, like all the people that do just that? How can I juggle my full time job, side hustles at uber and lift (to keep the lights on), and a full course load? There are structural problems in society that no amount of blaming poor peoples bad decisions can wave away. Simple fact is some people with very large waists are going to have to tighten their belts so the millions of Americans whose only mistake was being born poor can have half of a fair chance at success and lead a modest yet dignified existence. There's no incentive for any halfway intelligent poor person to go to college unless they're a glutton for punishment, have a strong $upport network, and massive appetite for risk.
It's sad to say, but the pandemic was lifechanging for me. With the unemployment benefits I received, I was able to save up some money and had time for myself to start thinking about what I needed to do before the money disappeared into rent. I applied for the local community college and trying to get financial aid here in California, and if it works out, I'll "only" pay like $3.5k for each of the two years. If they don't give me financial aid, it's time to give up lol. I wouldn't have been able to afford even entertaining this idea before, because all the money disappears into living expenses. The pandemic saved me...the only way for someone like me to get a higher education, is for a global pandemic to happen at 24 years old haha.
These are just hypothetical numbers but I think the problem here is that people are resourceful and work to change or reduce these expenses. Everyone’s story varies, but it’s pretty common to address these with:
Rent- get a roommate or rent a room instead of a one bedroom flat. Rent is reduced from $1400.
Use a prepaid phone plan to reduce from $100.
Use a slower speed or share internet to reduce from $100.
Motorcycle or cheaper car to reduce from $530.
These aren’t impossible problems and are things that are really common to deal with. I worked with people in Manhattan who slept three to a bed. That obviously sucks but assuming that every single person should have a one bedroom flat with their own car and luxury internet and phone is not as good an assumption that people will adjust their spending.
There are a lot of inherent assumptions in your rebuttal.
>Rent- get a roommate or rent a room instead of a one bedroom flat. Rent is reduced from $1400.
While that is an option, it is not reasonable to make that assertion for the millions of people struggling without adequate housing. How can you tell people, with a straight face, that have been sexually assaulted, robbed, or battered by previous roommates that they should continue to put themselves at risk because they can't afford the market rate for a 1br apartment? Many people that are housing insecure face discrimination in their searches as well. Landlords have countless incentives and ways to refuse renting to people who they perceive as poor. Credit checks, wage statements, large cash deposits. Then there's everything they can learn during a showing. How do they dress, are they wearing Wal-Mart clothes or Patagonia? Did they bring their same sex partner? Are they BIPOC? Do they have a nice car or no car? Is everything they own in their car? I think that I've said enough to make this point but I can continue if you want.
>Use a prepaid phone plan to reduce from $100.
Phones are still several hundred dollars, and are effectively disposable items. In conversations about poor people we cannot assume they can afford to put up several hundred dollars for a used phone. $100 might be on the high end, but I am thinking more about the amortized all-in costs of phones. Stuff like cases, chargers, screen protectors, that often get sold to people at stores under high pressure sales tactics. We also need to consider access. If someone just broke their phone and need a new one ASAP or they'll lose their job they are at the mercy of what's available to them at that moment. They may not be able to shop around or know how to do a price comparison between providers. They may get coerced into signing expensive multi year contracts by dishonest sales reps of which the total cost is not apparent for weeks.
>Use a slower speed or share internet to reduce from $100.
That's not always an option. For years, the cheapest non-dsl, option available to me was cable internet, for over $100/mo without a contact. For people with housing insecurity signing multi year contracts is scary because they have no reason to believe they will live in the same place for that long.
>Motorcycle or cheaper car to reduce from $530.
Motorcycles are not a rational option for virtually everyone. They're unsafe, and at greater risk of being stolen in the areas poor people are congregated. I'm not saying the car payment is $400, but ones either paying more upfront for a reliable vehicle or on the back end in repairs. If one gets burned enough by scam repair shops and used car sales people they'll inevitably look to cars with manufacturer warranties. Poor areas have more sketchy repair shops and high pressure used car sales lots that straddle people with high interest car payments, even if they qualify for great rates.
>These aren’t impossible problems and are things that are really common to deal with. I worked with people in Manhattan who slept three to a bed. That obviously sucks but assuming that every single person should have a one bedroom flat with their own car and luxury internet and phone is not as good an assumption that people will adjust their spending.
I think you're making wide assumptions that are not reflective of the reality poor people face. It is callous to assume that poor people have the same ability and education to know how to navigate things like loans, auto repair, comparison shopping, house hunting, etc while they're possibly homeless and probably working in excess of 40 hour weeks barely scraping by. This is my lived experience, I've seen too many families that do everything right get absolutely crushed into homelessness because the company the worked for blew up, they got scammed, or were disabled by a workplace accident. These conversations are overly reductive when we cannot focus on the specific contexts under which people fall out of 'normal' society into homelessness or near homelessness. Without this context we cannot have reasoned discussions about the factors that lead to homelessness and prevent people from escaping.
I think I’m making likely assumptions. Obviously, individual experiences will vary, but when trying to estimate and model cost of living, assuming that everyone was sexually assaulted or traumatized so badly that they can never live with another is not useful. It also denigrates sexual assault victims by assuming that they are alone, without family, friendless, or without a spouse. It is possible for one to recover from sexual assault and find non-assaulter roommates and this is extremely common. Both based on personal experience and housing data (extrapolating from percent of population sexually assaulted with percent of population living in households with greater than two adults).
I’m talking about my lived experience here and find it odd how you’re finding rare, negative edge cases that don’t disprove my point.
I’m not saying that every single person can get internet for less than $100. I’m saying it’s unreasonable to assume $100 for budgeting purposes. In the rare situation where the only option for internet is $100 and one must have internet the systemic solution isn’t to pay the person an extra $100, the solution is to reduce the cost of internet. Rewarding the exploitative company charging $100/month only makes things worse within the system.
Similarly with phones. $100/month or $1200/year is a poor assumption for someone who needs their salary to go towards more important things. In 2019 I bought a new iPhone6 from Walmart for $100 with a no contract prepaid mobile plan for $20/month. Annualized costs of only $340. I cracked and scratched the screen but if I had had to replace it I would have spent an additional $100.
For “normal” society and to understand people’s experiences I think it’s valuable to model what is typical and then use that as a baseline to plan protection for edge cases. In my head I’m thinking “What should we plan to fix this?” Planning and modeling with assumptions that edge cases are most common means that our mean values will be way off and we’ll have wasted resources.
I’ve seen too many families that waste $180 on phone plans every month because they don’t know there’s a better way, corporations market expensive plans more heavily, and conventional wisdom reinforces that this is routine and acceptable.
If I’m only netting $2k/month and I’m spending $100/month on a phone, that is a problem with me that I can easily fix. If society is trying to get me to buy a new phone every year and have an expensive plan, that’s hard to struggle against and overcome. The solution isn’t to reinforce bad decisions, but to help.
>...when trying to estimate and model cost of living, assuming that everyone was sexually assaulted or traumatized so badly that they can never live with another is not useful.
I'm not assuming this of people, but that's quite an extreme projection you're making... Rather I'm stating that telling people to find roommates or rent a room is generally bad advice, if they're not first time renters then it is reasonable to assume they have valid reasons, that should be respected at face value, to not live in communal environments. Modeling the cost of living around communal living environments is ignoring the reality of how people want to live on a fundamental level. What people freely choose to do is different than what people with only bad options do. Communal environments are notorious for the factors I mentioned above, and many people refuse to deal with that, at great cost to themselves.
>find it odd how you’re finding rare, negative edge cases that don’t disprove my point.
My point is that 37k is insufficient for a single person to live independently in many, many, cities. 74k is also insufficient to raise a family, hence the growing movement of child free people.. Snide paternalistic advice like get roommates, get a cheaper phone/car/internet/etc is insulting and blaming the poor for being being poor. If you'd like to give free financial advice, and are qualified too do so, I can get you in touch with an organization offering these services in your community. If not, your arguments come across as made in bad faith. I've given you reasons why these common pieces of advice aren't always helpful, in good faith.
>I’m not saying that every single person can get internet for less than $100. I’m saying it’s unreasonable to assume $100 for budgeting purposes. In the rare situation where the only option for internet is $100 and one must have internet the systemic solution isn’t to pay the person an extra $100, the solution is to reduce the cost of internet. Rewarding the exploitative company charging $100/month only makes things worse within the system.
Okay, but hypothetical person needs internet today and telling them they shouldn't be paid more because the government should instead make internet cheaper is, absurd. It does nothing to help them and marginalizes their problem. If the government can't regulate ISPs like utilities what reason do poor people have to expect relief in the form of government aid? Just. Pay. People. More. 44% of households spend 100 and less per month on cable internet[] which in many places is the only option outside of dsl.
>Similarly with phones. $100/month or $1200/year is a poor assumption for someone who needs their salary to go towards more important things. In 2019 I bought a new iPhone6 from Walmart for $100 with a no contract prepaid mobile plan for $20/month. Annualized costs of only $340. I cracked and scratched the screen but if I had had to replace it I would have spent an additional $100.
That's great. But we can't assume people made a bad choice to lock themselves into an expensive phone contract, rather we should give them the benefit of the doubt and recognize that most people are not paid enough to live a dignified existence. What is someone who lost their job to do about their contract? What was affordable yesterday may not be tomorrow. This type precarity makes people act rashly.[0] I'm really trying to focus on the types of situations that poor people find themselves in, not the nuances of their budget. $100 less on internet and cell isn't world changing.
>For “normal” society and to understand people’s experiences I think it’s valuable to model what is typical and then use that as a baseline to plan protection for edge cases. In my head I’m thinking “What should we plan to fix this?” Planning and modeling with assumptions that edge cases are most common means that our mean values will be way off and we’ll have wasted resources.
We are already wasting resources everywhere. We should plan to fix expensive housing, healthcare, transportation, telecommunications. there's no political will from establishment politicians. In the mean time let's have some humanity and help people instead of just talking about it and sending out the occasional pittance.
[...your other comments about how much people should spend on phones here]
*You're way to focused on the phones. The point is everyone is an edge case somehow. Planning for averages forces more people to run into more edge cases. Say hypothetical person is now paying $50 for internet and $50 for their cell a month. What say you now?*
You're not putting yourself in the shoes, nor the mindset of a poor person. Try to do that. When the next meal, or bed is uncertain thinking rationally is hard. It's easy to point at a hypothetical budget and say you can do better. It's another thing to walk in the shoes of someone who's not as intelligent, gifted, connected, wealthy, or whatever as you.
I think spending $340/year on a decent phone is pretty dignified. I think it’s comical to assume that dignity requires $1200/year in phone service.
I’ve lived in poverty, I’ve worked and fought against extreme poverty and I’m not sure your basis of reality. Poor people live in group settings. I’m not sure what advice you would give to help them as me saying “get a roommate” and you saying “$37k is not livable” have very different levels of usefulness.
I used a lot of help when poor (and still do now) and the most frustrating part was people who expressed their sympathy but did nothing to help me. I didn’t want empathy, I wanted food and safety. Of course I’d rather have both empathy and food, but if I have to choose one, you know what I and most will choose.
A person that buys a 5 year old version of an iPhone, is probably either a frugal person and/or a person that does not have too much money. To me it seems like a person that is used to think about how to stretch her/his wage. I find it interesting that you can say to this person: "You're not putting yourself in the shoes, nor the mindset of a poor person". Have you walked in this HN member's shoes in different stages of her/his life?
I should have been more clear, but I didn't have coffee yet.
$18/hr being "great" was meant to compare to what I hear people tend to make in that position, not that it is objectively great as a living wage for a family.
My post was a little twist-and-turn - I was thinking about two related things, one being the tactical issue of wages in food service, and the other macro issue about the fact that this country has enough wealth in it for everyone to be well taken care of.
30% is way to high an effective tax rate at that income. Below median earners pay effectively zero taxes with the EITC and standard deductible.
$400 is way too high for a car payment. You can get a great used compact for $10k. With decent credit that’ll run you $150/month.
$100 is way too high for home Internet. I pay $40/month for 100 mbps, which is more than enough for five decides to stream simultaneously.
$1400 is too high. A low earner should be saving money by getting a roommate. I can easily find rooms for rent in my medium COL metro for $700/month. Heck, I can find one bedroom houses for sale where the PITA mortgage is well below $1400.
Federal income tax, state income tax and local property and sales tax. Social Security and Medicare taxes. I agree 30% is too high an estimate for below median incomes, but its closer 9-15%, according to this: https://thecollegeinvestor.com/34072/effective-tax-rates/
And if you include health insurance--which in other countries is provided for and paid for with taxes--then it goes up. A lot.
Okay, half the tax rate and my point still stands. I responded to your other points in another comment of mine up thread. Feel free to address my rebuttal there.
> If they're still having trouble filling that, is it because making $37k a year in Texas isn't good enough for a no-education, no-experience job?
It's most likely because somebody in the area is paying more and/or offering a better job.
Is it really $37k, or is it an $18/hr job? That is, are they offering $18/hr for 40 guaranteed hours a week for 52 weeks, or is it just a few hours a day during the dinner rush (unless they send me home early because of a light evening)? Can they tell me today what hours I will be working 2 weeks from now, or do they usually disclose the schedule a day or two in advance? Are there any benefits? In other words, is it a typical restaurant job?
I personally would prefer (say) $16/hr with a guaranteed 40 hours and predictable schedule to a typical restaurant job. Now that big employers like Target, Amazon, etc. are in the $16 range, they may offer jobs that pay a lower hourly rate but are more compelling overall. (The Amazon warehouse in Fort Worth is paying nearly $18 and they have nonzero benefits and are unlikely to run out of hours.)
But then they'd have to provide benefits (like health insurance, parental leave, etc.) and treat workers with dignity and respect. In America, that's unlikely to happen without government regulations enforcing it.
Yeah, $18/hour sounds less appealing if it comes with an unpredictable schedule and uncertain hours from week to week. I used to work retail, and it was rough trying to attend classes not knowing when I might get called in for a shift.
We aren't actually living in a post scarcity world though. We're moving in the right direction, and hopefully we get there soon, but there is still plenty of scarcity.
We would move faster towards post scarcity if businesses were economically incentivized to uptake automation faster (and then we tax businesses [1] to fund social safety nets).
If we continue to encourage an economic system through policy that is satisfied with labor making wages that provides a dystopian poverty level of life quality, it will take longer to arrive post scarcity. Economic incentives matter!
Not even close, maybe if we ignore the obscene externalities baked into everything we consume. This apparent bounty we have today will be short lived in the grand scheme.
The bottom 99.9% in America enjoy healthcare, communications, caloric intake, political freedom, public services, education and safety from violence unprecedented in human history. By almost every metric society is better off now than it was in the 1950's, 1800's, etc. The over-focus on the negative propels us toward greater collective good - up to a point. We would do better as a society to revert to a mean that expresses some recognition and gratitude for the progress made. We're sowing the seeds of our own destruction via economic, racial, ethnic and class tribalism.
Strongly disagree. The existence of smartphones has accelerated the development of social media, which negatively impacts people's mental health and children's attention spans. Their popular adoption has also driven the growth of disgusting surveillance ad-tech. Blegh. I'd gladly go back to using a Garmin GPS and carrying a Nokia if it meant that we didn't have all the accompanying garbage.
You might be interested to know that that phone also gives you access to all the worlds knowledge, all music and art, all literature and films, you can buy anything with it and have it delivered directly to you and you can instantly communicate with anyone in the world multiple ways at almost no cost. And you can play Flappy Birds.
There are millions of people who are eligible for Medicaid but can't receive it because their states never expanded Medicaid under the ACA, and there are even more people who cannot afford health insurance, but aren't eligible for Medicaid.
I think the problem may be that many companies increase their prices to whatever the traffic will handle for needed items. For example, the $600 cost of epi pens.
"$100 in 1980 is equivalent in purchasing power to about $321.45 today, an increase of $221.45 over 41 years" - Source:https://www.in2013dollars.com/us/inflation/1980
This is a 68.89% decrease in spending power.
For comparison, the minimum wage in 1980 was $3.10, and minimum wage today is $7.25, and increase of 233.87%.
By rights the minimum wage should be able to keep up, with that big of a disparity. The problem is that purchasing power figure takes into account an average over all things. The ten cheapest cars in 1980 all had a base price under $5k (source: https://blog.consumerguide.com/cheapest-american-cars-1980/). Then ten cheapest cars in 2020 were, other than 1 exception, all below $17k (source: https://www.caranddriver.com/features/g29414710/10-cheapest-...). That's a decrease in spending power for cars of ~70%.
The majority of the US is facing a huge discrepancy in the decrease of spending power amongst big ticket items, the increasing lease-economy, and unprecedented debt. There is also a sense of entitlement at avoid certain menial jobs in some. As a result a $7.25 minimum wage is not going to cut it, as that's only $14.5k per year, well below the poverty line of $26.2k for a 4 person household (2020). Double it to $15k/hr and you still are just barely above the poverty line, forcing both parents to work full time, or one parent to work two jobs.
Inflation-adjusted monthly mortgage payments (the actual price that matters when it comes to housing) has actually gone down since 1989. This is on top of houses getting bigger.
Average Income in the US is $68,703 which certainly doesn't pay a mortgage in most big cities. So I think post scarcity is a tad optimistic. If nothing else there is always going to be a shortage of non-apartment housing where people want to live.
Such signs are somewhat misleading. it does not mean the restaurant is in urgent need of work. it is more like, we have a position open, please apply. You may be hired, but likely not, as many other people applied for it, and we need someone who can meet our stringent requirements. They may not even have a position open and instead are looking for an ideal employee who meets these criteria, which means someone else may be fired.
Not sure about the US,but here in Europe,or Britain,to be more precise, many places expect you to do cleaning, serving tables, etc. All this 'joy' for minimum wage+a few pennies more.
Apparently all the hospital sector is struggling to hire because people either moved abroad or went into more stable sectors,so now newspapers are plastered with articles how poor restaurants can't hire.
Most "pizza places" will not hire someone full-time. They want part time employees so that they do not have to deal with benefits.
Now, the intelligent thing to do as a nation would be to offload those benefits to the government so that companies would be free of the extra work AND employees would be free to move to better jobs... but America is not the land of the smart.
I hear this a lot, but it's really not true. Most "pizza places" are small businesses (<50 FTE), so they aren't required to offer benefits anyway.
They want part time employees because it offers scheduling flexibility. If all you have is full time workers and someone calls out sick, you're short a person. If you have mostly part time workers, you can call everyone not scheduled that day to see if they can come in. Office jobs don't really have this because it's typically not critical that the employee is there.
In your rush to defend the actions of asshole bosses, you miss an important part: people who are trying to make a living with part time jobs are going to get another part time job. Not only are those people NOT more flexible than full time employees, but half the time they are less available than full time workers because they are stuck on a treadmill where not being at both jobs equals a loss in hours for the next week. There are tons of full time hourly employees who will JUMP at overtime.
I won’t argue your overall point but I will point out that the “sweeping and wiping down tables” are the easiest parts of that job and a small fraction of the labor that is done.
> We watch Star Trek and marvel at their post-scarcity world. We are living in a post-scarcity world now, but all the benefits are being funneled by wage slaves up to the 0.1%."
Profit sharing and healthcare are the minimum people want to keep do the same crappy jobs in hostile environments with creepy, violent, or domineering managers. The jobs have gotten harder, people have more bills, and pay hasn't budged. Some introspection by the "job providers" would be greatly appreciated as they complain about labor shortages.
The problem that is never addressed in these "terrible job" "terrible wage. wages too low" stories is:
Making dual income households the norm was the mistake that has led us to this point. The reason that a fast food job is so impossible to survive on is that at one point, a single guy living in a small apartment and driving a modest car could afford that because his purchasing power was essentially DOUBLE what it is now.
That isn't an option anymore. If you want to be single, you need to also have a high paying job to do it. The other option is poverty, and maybe social services making up some of the costs that for many households is being made up by their spouse.
But it actually is a little worse than that, since it's being burned at both ends. For instance: I'm married. My wife and I are both extremely well paid software developers. This means that we have TWICE the power to buy a house, buy a car, pay for services like cleaners, buy a couch, buy a TV, etc. So now not only is a single person's wage lower due to a flood of the supply side, he's also screwed because the people doubling up on their income have pushed the demand side into the stratosphere.
It sucks, and it breaks my heart seeing the world that my single friends have to live in. Not only are they basically living in poverty, but it makes them unattractive to potential partners who they need to get OUT of that poverty.
I honestly can't really even imagine what the solution is. We certainly aren't going to put the dual income toothpaste back in the tube. Central economic authority forcing businesses to just increase their wages also doesn't seem to be a solution either, since it obviously doesn't even try to address the underlying problem (labor economics, mostly).
Being single more workable (it’s easy to control spending) than having dependents (kids). Once you have a kid or two, your expenses become less predictable and things begin to pile up (literally, a larger house becomes a necessity rather than just a luxury).
I see many people putting off kids or just opting out completely because COL increases have just made them too risky.
I find this is true even within software. There is a large complaint about not enough engineers. There are enough engineers - it’s just that you won’t pay enough for them for the given locale! If every startup started compensating like FAANG, they’d have no trouble finding talent.
Personally, I’ve had to go through this recently where I received 5 job offers. All well below what I’d consider “market” rate. They were all lower than past offers. Basically, companies are being very cheap with equity and/or salary. If you live in SF and are a senior engineer, giving equity that only matches FAANG when the company hits an absurd valuation that will likely never come is just not going to get people to come. Why bother? Whole point of startups is that you could earn more than faang if you get lucky enough. It shouldn’t be that you just match FAANG if you get lucky.
> If every startup started compensating like FAANG, they’d have no trouble finding talent.
That can't work. Current talent is a zero-sum game. You offer more, you get someone to switch over to you, somebody else offers more still and takes that person from you.
You might attract more future talent to the industry by offering more, but since software developers already make 2-10 times the average, I doubt that people think "you just can't make money in software, I'm going to do something else".
A lot of people I know who stop being software engineers do it because they found something more profitable. (Management, executive track, founding their own company, etc.) Part of the reason is that salary progression after the first 10 years is generally flat for IC level. Yet, it continues almost indefinitely for other tracks or roles related to software.
That's a different issue though, isn't it? The money in software development is still much better than in most industries.
I don't think millions of people are thinking "well, I could make lots of money in software ... but management pays much better if I get one of those jobs ... so I better go into [unrelated, lower paying field]".
What I'm trying to say is that software is very attractive compared to other jobs, but still we don't see everyone rushing into it. I believe that's because money isn't the factor.
>>> The money in software development is still much better than in most industries.
No, it is not.
It's only FAANG and a few companies that pay well, and they are only located in the most expensive cities in the world (Silicon Valley, New York). Guess what, there's plenty of other high paying jobs in these locations.
If anything, the highest paid job is management, across all industries, because it's always better paid than the people underneath.
I agree to some extent but I find that as an IC (especially in startups) you can add even more value than random middle manager or even some executives. Yet, you still don’t get compensated like that.
Many CTO’s I’ve dealt with were a net negative in terms for the company - yet, they still get 10x the equity and much higher salary. So... :/
Meh - I see one of the benefits of working outside of FAANG and other enterprises to work on something you trule believe in. Who truly loves working on improving the returns on online advertising to extract more money out of people's pockets?
I mean, that’s nice but it doesn’t really afford a typical professional middle class lifestyle that you would see outside the SF bay area. (Unless partner is at FAANG or surgeon)
You’re mostly stuck at liquid comp of $180-220k tops. Obviously if the startup works out, hallelujah. But if it doesn’t - that salary sucks for trying to have a home in a nice school district along with some normal vacations and what not.
> You’re mostly stuck at liquid comp of $180-220k tops [...] that salary sucks for trying to have a home in a nice school district along with some normal vacations and what not.
Do you mean "in SF, where the cost of living is extremely high", or are you suggesting that you can't have a comfortable life on $180k/year?
Some people truly love problem solving and don't have to believe in the product to feel fulfilled. The 2 million dollar house with a Model S in the garage and the money to start any hobby at any time doesn't hurt either.
It's like people don't understand how their wages impact the price of the goods they are producing.
The problem is domestic producers can't compete against the actual terrible jobs with poverty wages that foreign producers pay. The trade off is binary. Either you put tariffs on cheaper foreign goods and protect your economy from predatory countries, or you tolerate downward wage pressure. There is no middle ground. It's such a simple and established reliable dynamic that even politicians can understand it.
Our democracies have chosen cheap stuff and downward wage pressure, with the spoils going to the people who manage the capital flows. It's not a right/left thing either, as both sides cynically advocate and exploit globalization to inflate those capital flows.
Imperialism is bunk and an artifact of a movement predicated on deception, so, there's that. I think the whole critical theory basically lets itself out on reasonable discourse.
Currently, US capitalists exploit workers both in the US and in poorer countries, with the later being super-exploited. Under this arrangement, the vast majority of the value created by both groups of workers is captured by a handful of capitalists.
A socialist US would cease exploiting other countries (including China) and instead pursue mutually beneficial trade (much like China does). This would likely include some amount of reparations and re-building of local industry, easily funded with the vast amount of value no longer stolen from all workers.
US trade with China is currently mutually beneficial. That's why China participates.
Give me more detail on what that means. If the US Communist party took over absolute leadership of the US tomorrow, what differences would there be in the US China trade agreement.
The amount of benefit is not equal. Imperialist countries (US, western EU, etc.) have extremely favourable terms obtained under military threat. Often onerous terms are imposed, like privatisations or deregulation.
One recent example is Bolivia’s rare earth mining. A German company was offering only ~5% of the value of extracted material in exchange for the capital required, while a Chinese SOE offered 50%. Not long after there was a US-backed fascist coup which was only recently defeated.
Has the US not invaded, coup-ed and threatened numerous countries? Is it not now occupying several? Does it not have bases encircling all countries opposed to its imperialism? I thought this was common knowledge.
The IMF, World Bank and European Central Bank do indeed offer predatory loans with strict conditions (like privatisation, deregulation, austerity) and at usury rates. Countries have a choice between this and being blockaded through military power, like Iran, Syria, Libya, DPRK, etc.
That is the official narrative, the western democracies versus us autocratic barbarians everywhere else. Even if such an absurdity were somehow true, surely at least sovereignty should count for something.
In reality, countries in your “sphere” are either allied exploiters or exploited (and not at all prosperous). Anyone that threatens profits is painted as evil, regardless of the truth. After so many sanctions, coups and wars based on what later turned out to be blatant lies, surely you could reserve some scepticism.
Rofl. It’s factual that many countries the US is at odds with are autocratic. North Korea (obvious), China (the people do not vote), Iran (the ayatollah controls everything)…
All countries in the US-sphere, they have direct voting by the people to elect the government.
So you’re completely wrong on that.
Next point. So western Europe, Eastern Europe, balkans, Japan, South Korea, Colombia, Mexico, Philippines, Canada, Australia/NZ… they are all exploited or exploiters?
I see you’re determined to just repeat imperialist propaganda. And yet it clearly keeps you uninformed, since both the DPRK and China do in fact have elections that the vast majority of citizens vote in. Their democratic systems are different from the liberal ones, but not missing.
It is certainly true that we Eastern Europeans are exploited by Western Europe and the US. We were forced to privatise healthcare, housing, trains, etc., deregulate labour protections, implement austerity measures, all to be allowed to trade with the rest of the world. And our labour is clearly exploited, since most jobs are with foreign companies that pay a pittance and extract value from our countries.
"...since both the DPRK and China do in fact have elections that the vast majority of citizens vote in"
Pretty much just lol to that one. So you're telling me the NK people elected Kim? And Chinese elected Xi? Lol.
Exploited? A country like Poland is doing many times better than it did 30 years ago. IT sector, agriculture, tourism, etc. Every Eastern European country is on the up. Ukraine as well. Because the cost of living is cheaper, the cost of labor is cheaper is as well.
As I said, first the imperialism would stop. No more military threats, no more WTO enforcing unfair rules, forgiving all IMF loans, etc.
That would allow trade to no longer be based such an extreme difference in the price of labour, so the victim countries could retain a majority of the value of their labour. By no longer losing value to profits at every step of production and distribution, consumer prices wouldn’t have to increase and could even be lowered in most cases.
Merely dismantling the US army would vastly reduce global carbon emissions. Building high density housing, public transportation, universal healthcare, public utilities, etc. would further reduce the US’s majority contributions.
Countries that were kept poor for centuries could be gifted low-carbon energy sources as part of reparations, so as to not need to emit carbon to develop.
A lot can be done once the oppressor countries stop constantly extracting value for a few individuals.
> That would allow trade to no longer be based such an extreme difference in the price of labour
That doesn't make sense. The entire reason the WTO was interested in China (and any other poor country) was because they had cheap labor. It's not like the WTO is depressing wages.
>By no longer losing value to profits at every step of production and distribution, consumer prices wouldn’t have to increase
Wait, we pay everyone more but we don't have to pay for production and distribution?
>Merely dismantling the US army would vastly reduce global carbon emissions. Building high density housing, public transportation, universal healthcare, public utilities, etc. would further reduce the US’s majority contributions.
I agree but it's completely non-sequitar.
> Countries that were kept poor for centuries could be gifted low-carbon energy sources as part of reparations, so as to not need to emit carbon to develop.
Again, non-sequitar but what are these countries going to do with some solar panels? They're dirt poor. You might as well buy them some air pods.
> A lot can be done once the oppressor countries stop constantly extracting value for a few individuals.
It's not a zero sum game. Richer countries do extract value from poorer countries but the poorer countries also extract value from the richer countries. Just because the majority of the advantage comes from the richer country doesn't mean the poorer country is losing, they just win much less.
In general, you're making a lot of points about globalism that I generally agree are problems but you're offering no solutions past stop doing the bad thing and everything will be good. I don't care about labels of imperialism, oppressors or communist, I care what actually can be done in the real world to make the world work better. Keep in mind that while China is sort if at odds with the WTO, it's not because they don't think it's ethical, they don't like it because it's not them.
WTO terms are designed specifically to extract profits and prevent independent development. Refusing such terms comes with sanctions, coups and sometimes invasions. The US army are ultimately the enforcers of this exploitation.
Solar panels are quite useful in many poor countries, actually. But indeed much more is needed in terms of means of production: agricultural equipment, infrastructure, factories, etc. Expertise and technology (which are restricted by IP laws) are also needed. All of this is what the Belt and Road Initiative does.
If you look at it over time, the poor countries only get poorer over time. It may not be a zero sum game, but development is actively prevented. The only exceptions are countries where workers have at least some control over the state.
That’s where the solution lies: ending the control of capitalists over the world. The poor countries have succeeded a few times with good results, but the rich countries doing it would have a much bigger impact.
Poverty has decreased in China in spite of US imperialism, not because of it. Most notably, poor capitalist countries have had poverty increase in the past several decades instead.
All countries that have had a successful socialist revolution so far were oppressed impoverished ones. They all then went on to develop very quickly, in spite of constant attack from the imperialist countries. An already-developed former imperialist country would face no such challenges.
You think the working class is in control of China? The working class that has nets installed in their job provided dormatories because too many of them are commiting suicide?
A certain level of exploitation is demanded by imperialists in exchange for capital investment and allowing trade. The working class of any victim nation is forced to accept deregulation like this if they wish a change at developing.
Vietnam made a similar choice in a similar position. In both countries working conditions and labour laws have been steadily improving. This change is only possible if the workers as a class are in control of the state.
> "We have four positions open," Christy Welch, the co-owner of Black Cat Bake Shop, told the Missoulian. "One is for a barista. We've gotten maybe three to four applications for that job, when we would usually get 20-25. We have three back-of-house positions and we've gotten no applications."
> Current pay for most of those positions: $10.50 an hour. Overnight shifts get $11.50. Tips are shared. (Current average rental cost for a one-bedroom in Missoula: $1010 a month, up 27% from last year
In other words, average rent is 63% of gross income. Completely unreasonable.
It's hard to sympathize with the business owners here. If they want to fill positions, the answer is simple: pay more. And more. And more. Until you hit the price that will attract applicants. If you can't find applicants at any price that keeps you in business, time to fold.
It's baffling how these stories that the article cites so often feature incredulous business owners shocked to discover they can't fill economically unviable positions. It's almost as if they think they're entitled to sub-subsistence labor.
I'm with you re: "pay more if you want more applicants" but this does not sound like a situation where the jobs are economically unviable.
When I was a student in LA in the mid-2000s I lived on basically this amount of money, inflation adjusted. I couldn't afford a one-bedroom, so I split the cost of a three-bedroom with two friends. This was a very common arrangement for people well into their late 20s, especially people in creative professions like writing.
"But what if, she writes, those benefits are actually providing a safety net to American workers so that they do not need to take terrible jobs for low wages at terrible companies under terrible management?"
Exactly this. A significant part of American business depends on cheap, low-overhead labor. America outsources a lot of that overseas (both white and blue collar), but fundamentally depends on filling shitty jobs and providing as few benefits as possible.
I'm surprised that the article Kottke links to didn't quote/acknowledge FDR. Maybe the author just came up with
>We should ask ourselves, our communities, and our government: if a business can’t pay a living wage, should it be a business?
independently, but it sounds a lot like FDR's [0]:
>It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By "business" I mean the whole of commerce as well as the whole of industry; by workers I mean all workers, the white collar class as well as the men in overalls; and by living wages I mean more than a bare subsistence level-I mean the wages of decent living.
There are no such things as “jobs americans won’t do”. It’s just you have to compensate people accordingly. With this failing stealth UBI experiment that we are currently engaged in, people aren’t willing to work when many of them are getting near 100% the same income not to work. The rest of us are being crushed by inflation.
A system where people get the same to work as not to work is not Universal Basic Income, UBI. Such a system is guaranteed basic income. There’s a huge difference.
It's unfortunately nowhere near a stealth UBI experiment and really just a classic welfare trap, in the vein of so many other government programs. There are many bad incentives in our unemployment system and it was clearly never designed to be a delivery method for long term stimulus.
This is not UBI at all. If someone starts working now, they lose those unemployment benefits they're getting. So the question becomes: should I work my ass off at this shitty job to make $X, or should I stay unemployed and make $X?
If it were real UBI, these people could work those shitty jobs while still receiving the extra income every month. It's still a shitty job, but you also get the added benefit of not having to live in poverty while you do it.
EDIT: Also, this situation is further proof of how useful UBI would be to the economy. It would be the government helping businesses by subsidizing wages, making even crappy unsustainable jobs livable and attractive to workers.
I think you vastly under estimate peoples will to advance. Would some take easy or no jobs sure, but not everyone wants to get by with a fixed income. They will always want to buy something UBI doesn't enable them to buy.
A nice vacation, nicer larger home, new car etc. UBI would just give people the cushion to take a risk and know if I fail I don't end up homeless. Or the piece of mind to relax and know they can eat a healthy meal and pay rent no need to work 2 or 3 jobs. Maybe the reinvest in their education.
This is not the experience of most Americans. In fact, if these numbers are accurate for you I might suggest you employ a financial planner to help find alternatives.
Houston, March 2019, my rent renewal was $1500/mo for a 12-month lease or $1500/mo for month-to-month or a new contract. Houston, October 2020, my rent renewal was $1500 for a 15-month lease or $2100/month for month-to-month or a new contract.
> Houston, March 2019, my rent renewal was $1500/mo for a 12-month lease or $1500/mo for month-to-month or a new contract. Houston, October 2020, my rent renewal was $1500 for a 15-month lease or $2100/month for month-to-month or a new contract.
Is there a typo here? You have to sign a longer lease but you are paying the same per month... that's a 0% increase.
And as for month-to-month, paying zero premium for a month-to-month lease is abnormal in pretty much every market...
But this isn't even the most confusing part of this thread. The most confusing is your next comment in the context of your concern about inflation.
> Signing a longer lease demonstrates that the new lease isn't like the old.
Okay. But if you earnestly believed what you're saying about inflation then locking in 2019 prices for 15 months instead of 12 months would be a GOOD thing for you! You'd be locking in a fixed price for a longer duration during a period of high inflation. I've signed a three year residential lease in markets with high housing inflation and felt like I was getting away with murder (and I was under-paying by about 500/mo toward the end of that lease). If you expect inflation, then you want longer leases at fixed-in prices!!!
The price per month of your housing has increased ZERO percent, AND your landlord is betting AGAINST rent inflation in their market.
So the rent didn't go up, the longer lease term was made longer and it was only the month to month that went up in price. The comparison is one you started making and only complain about when people call you on your made up numbers.
1. There's a giant difference between 80% and 30%.
2. That's not reflective of the rental market in Houston (I'm from there and going back for a graduation tomorrow), that's reflective of your landlord charging you for the convenience of not moving.
The top 1% are making more money than ever before. If you're holding assets impacted by inflation, you're doing quite well now.
If we take it as a given that in a modern, humane society no one should starve to death on the street and everyone should have access to the basics of survival, then the answer to the labor "shortage" is simply to shift some of the historically record breaking wealth inequality back down the org chart from the executives to the roles that need filling.
Agreed. Not long ago there was debate about a permanent structural stagnation with permanent unemployment. The argument was that workers lacked sufficient training or desire to fill current jobs. All while some economists were screaming that it was actually the result of an insufficient fiscal stimulus response to the Great Recession that could have easily been solved had the response been $1.5T instead of $700B. Given the massive fiscal response to COVID and this current situation resulting in a rebalancing as you highlighted, I think it’s clear that it was never structural and always a result of unnecessary slack due to a financial recession easily solved by government support spending.
How do you define the basics of survival? In parts of the world people live with 2 hamburgers a day, is that what you propose? Even $15/hour seems huge compared with basics of survival.
Also, there are not enough executives to take from them to give to the poor. You need 100 or 1000 times more for that, so the executives theme is a straw man.
I don't think these things are easy to achieve but they seem like obvious goals to societal progress. If not, what are we even progressing towards?
> Also, there are not enough executives to take from them to give to the poor. You need 100 or 1000 times more for that, so the executives theme is a straw man.
I said if a company wants to fill a role, that they should pull from executive pay. The average CEO gets 70-1 the pay of the average employee. There is absolutely a surplus of capital to pull from to increase worker pay (thus filling the role).
This is nowhere close to 'basics of survival'. You can survive on 2 hamburgers a day and 1 liter of drinking water, this is called survival. If you want 'basics of nice living' then call it that way, but don't redefine the dictionary. Think of 'basics of survival' what you need to continue to live if you land on a deserted island in the middle of the ocean, naked and with no tools.
Really? Tell that to Hiroo Onoda and his 29 years in the jungle. You see, people play on the subjective nature of life and honesty is not a virtue anymore.
This seems pretty simple to me since the special unemployment insurance is up to $600/week[0] through at least July 31 it’s going to be hard to convince someone to work for less than that.
So if it’s a choice between $15/hour, steady to not work and $18/hour variable to bus tables or whatnot I’m not surprised that people choose the $15.
I expect this will be different once unemployment goes back to pre-covid and people are forced to make decisions.
Many jobs are terrible, I mean no one wants to be a janitor. So when finances allow me to not have to clean toilets and I can make a similar amount not doing it, any rational person will choose not to.
I’m really surprised that any low wage jobs are able to get folks to come into work right now.
It’s odd that the article doesn’t bring this up as the opportunity cost aspect seems like the most important factor in the “labor shortage.”
> Many jobs are terrible, I mean no one wants to be a janitor.
I honestly fail to see how janitor is a terrible job -- being in charge of keeping a building in shape, doing the repairs, etc.? That seems like a great job to me.
I'd wager most people would have a problem with the pay rather than the job itself.
I don’t see how this isn’t more obvious. 18 months ago the US was pretty much at full employment the only thing different then and now is the pandemic and the bailouts.
I feel like this article and the others like it are just political opportunism.
Coming from southern Europe, I have to say that we have been there 20 years ago and it looks ugly.
In Southern Europe, the family (and not the individual) is the smallest decision making unit and it is typical to have 3 generations of people living under the same roof, all of them supporting (and applying pressure to) each other in different ways.
Parents and grandparents are helping youth financially. Youth in Southern Europe is typically highly educated, however, the job opportunities for high-skilled labor are quite limited.
Naturally, there are two options for overqualified youth: leave the family and get an underpaid job that cannot help them anyway to break even, or keep relying exclusively on their family (with the attached daily complaining from their end).
Result: Youth unemployment rates > 50%, businessess that cannot find cheap labor and close, economy that stays stagnant for decades.
It would be quite a dilemma to choose between the livelihood of my dependent family and the opportunity to make more money elsewhere. What have been the solutions to this problem in Southern Europe?
There is no solution. Significant percentage of qualified youth is migrating to Northern Europe or US where there is short supply for high skill labor (doctors, engineers etc), the rest are just coasting with their families. Weddings and birth-rates are also plummeting, which indicates that youth also have low confidence about their future.
The reason that this structure exists is that older generations accumulated wealth in an era that economy was roaring, and the state was able to provide ample support (free higher education, healthcare, high pensions). This cannot be sustained with the current stagnant economies.
Only solution that I can think of is to embrace immigration, & impose tarrifs to imports from Asia, to restart low cost manufacturing & large scale agriculture in the south. This will also make available positions for high-skilled labor (engineers, mbas etc).
The uglier possibility is that the states collapse due to their unsustainable welfare policies, and everyone goes back to their fields for digging.
I've never liked the idea we should expect businesses to provide a living wage.
If we, as a society, think there is some sort of minimum standard for living. (We should) Then we, as a society, should pay for it.
Increasing minimum wage seems like a roundabout unfair way of doing that via selective inflation. Which as far as I can tell would be largely a wealth transfer from the middle class to the lower class. Who spends a larger % of income at places people make minimum wage?
I think the government should guarantee some minimum wage and top people who don't earn that. Obviously a lot of moral hazard issues and complications with a system like that but I think it is better to have businesses worry about employing people and governments worry about welfare.
What seems to always be left out of these "if a business can’t pay a living wage, should it be a business?" discussions is what exactly are people going to do instead?
I'm ok subsidizing people's labour. I'm not ok subsidizing people's leisure.
>I think the government should guarantee some minimum wage and top people who don't earn that.
That would be horrible. The bottom of wages would drop to zero (since offering above zero but below the government guatantee would provide no benefit in highering.) This would drag down other low wages since the jump from paying zero to paying just over minmum would be a huge cost increase for a minor highering benefit.
UBI is really the only functional alternative to a minimum wage.
> Obviously a lot of moral hazard issues and complications
Yes it would be difficult to implement. You would encourage people to seek higher paying jobs by progressively phasing the wage subsidy out. Or just not phase it out at all. No real difference between the two depending on income taxes.
On the other side you could also target a certain cyclical unemployment rate and have a minimum wage employers must pay that fluctuates with that. That way there isn't an incentive to have "wink wink nudge nudge" pretend jobs.
My problem with the UBI is I think the amount needed to be meaningful (1k+ a month) gives people enough money to check out of society and not be a contributing member. Its super inexpensive to live with friends somewhere kind of crappy and just do basically nothing productive.
The problem with a minimum wage or subsidized labor is that your are dependent on the availability of work for everyone which mandates a constantly growing economy that will destroy our planet.
If you are comfortable with fluctuating minimum wage to control unemployment, you could do the same thing with UBI.
Personally, I don't think that we should to threaten our citizens with homelessness and hunger to get them to be contributing members of society.
I would personally institute UBI gradually, pairing UBI increases with reductions in the minimum wage during economic downturns to stimulate the economy.
> UBI is really the only functional alternative to a minimum wage.
i dont think that's true.
re-education and re-training into higher value work is a better investment. it's just that education of adults isn't funded well by society, and thus the debt load for that re-education is too expensive for the benefit.
I would argue that society should have a funding system where if you re-trained (may be in some category of work that society determins to be useful, like nursing), the cost of that education is only going to be placed on you if you earned above a threshold wage after graduating from training.
Education and training is solving a different issue, one that is orthogonal to the one solved by minimum wage or basic income.
I think making public colleges free (similar to germany) would be a massive benefit to our economy. But making all education free doesn't do anything to help remove the need for the minimum wage.
If you have an alternative to the minimum wage that isn't UBI, I would love to hear it.
> one that is orthogonal to the one solved by minimum wage or basic income.
no it isn't orthogonal - UBI and minimum is based on the premise that there exists people who would not be able to produce value that is enough to sustain themselves (aka, they consume more resources than they produce), and thus need the rest of society to pick up that slack (otherwise, they'd just die).
I'm saying that people would always be able to sustain themselves if they are able to get trained to do something useful. As more knowledge is required in the modern day, this training becomes more expensive, and so society should make this investment, rather than place the entire risk onto the individual.
That is not the premise on which UBI is built. If I had to pick just one it would be that we have more productive capacity than we need, so threatening people with death (your words) to be productive is no longer necessary.
i'm not convinced that this is true, except with very basic necessities like food and water, and even then, those require a lot of energy to produce, and those aren't free yet since science hasn't discovered cheap or free energy yet.
We have distribution and allocation problems, but we definitely have sufficient productive capacity to provide a reasonable standard of living.
Even if you pick a standard of living that makes this premise not true, this is still the primary motivating premise for UBI. This is why UBI is so closely linked with the rise of Automation to a point where there simply won't be enough jobs to retrain people to do.
Not going to speak to the article but want to layout that in 1997 when I was a waiter at Chili’s I made $2.50 an hour base wage, but with tips nearly always cleared $24/h. In 1999 I was a waiter for an upscale steakhouse in the city of Chicago and on average made about $40/h. Several of the waiters there were career waiters and had families. Many career waiters worked very hard to get jobs at higher and higher end restaurants and could clear 100K on the year back in 1999.
I used to live in a touristy area and there was a similar phenomenon with waitresses in the city center - the only issue was that after a few years the waitresses were let go because the employers picked prettier ones as a replacement. A colleague of mine from highschool got hit hard by that, as she thought she'll surely not be one of those that get replaced. She had to take her lifestyle a few good notches down with no higher ed and just waiting experience. She would have had no issues with getting a degree, she was smart but naive.
Well, there's a straightforward (I don't say easy) way to fix this: you require a high enough minimum wage (and healthcare, and sick leave, and etc.). It's not like the restaurant owner has the option of just deciding to pay twice or three times the labor costs, and trust that their customers will be happy to cover the difference, if their competitors don't have to do the same.
Because, those restaurant (and retail and etc.) business owners are mostly not the ones making big money. Restaurants, in particular, are horribly low margin.
The end result of getting rid of "terrible" jobs, is that everything at the restaurant costs 2-3x as much, and so on at the many other businesses (agriculture?) which rely on cheap labor. Which means all those people in professional class jobs (e.g. programmers) will find that their salary doesn't go nearly as far as it used to.
Personally, I'm ok with that, I think it's the right thing to do. But it's not like it's the small business owners that are standing in the way of it; they cannot pay higher wages if their competition is not, so it has to be mandated. What's standing in the way of it is that this would be, at least temporarily, quite inflationary, and we have a professional class that is accustomed to not having to pay much for anything except houses.
Tying healthcare insurance to employment isn't really the direction we want to be going.
When the individual market was terrible, it made sense to push employers to buy it for their workers, because you got better coverage for less money that way.
Now the state marketplaces are at least mediocre; coverage and costs are similar to what you might get as a small or mid sized employer. We should be pushing people towards marketplace plans, and not trying to continue the employer plan model.
That seems to be making quite a lot of assumptions—first, that even in the better states, costs to the employee are similar if they choose to get insurance individually rather than through their employer. Even assuming that the cost to the employer is similar to the cost I would have to pay out-of-pocket to get insurance on the state marketplace, which is not a safe assumption, just because I choose to do that doesn't mean my employer suddenly decides to give me all the extra money they would have paid for my health insurance in my paycheck.
Even if all that were true, it would only be in the better states. There is massive variation between the states on this, and some have (last I knew) truly abominable plans as the only real options.
No; what we need to be pushing towards is single-payer health care, the way nearly every other civilized nation on earth does it. The market-based system we have is a travesty that literally kills people in order to further enrich the richest among us.
> Now the state marketplaces are at least mediocre; coverage and costs are similar to what you might get as a small or mid sized employer. We should be pushing people towards marketplace plans, and not trying to continue the employer plan model.
I've priced out what a similar plan that I got from an employer would be when I went first bought insurance on the individual market. They are not even comparable.
For example, a similar family plan on the individual market would cost over $30k in premiums, with an $8k deductible and a $17k out of pocket maximum each year with co-pays.
For a similar plan for myself, I'm looking at nearly $10k in premiums, $3k deductible, and an $8k yearly out of pocket maximum, along with co-pays etc.
"According to "Papa" John Schnatter, the cost of providing health insurance for all of his pizza chain's uninsured, full-time employees comes out to about 14 cents on a large pizza."
And this is the reason he gave for not supporting ACA. $0.14 a pizza. To this day, I struggle to understand the psychology behind it.
I think we should be going that direction,where a meal in a simple place is expensive enough to support normal wages with benefits and whatnot. Because right now, whenever someone brings up an argument that people don't get paid adequately, there's always the same 'but but the customer won't pay'. We all seem to love to have cheap meals, cheap uber drivers and cheap cleaners, while at the same time expensive office workers, expensive lawyers and doctors. It doesn't need to be so extreme on either side.
>It's not like the restaurant owner has the option of just deciding to pay twice or three times the labor costs, and trust that their customers will be happy to cover the difference, if their competitors don't have to do the same.
This feels a bit backwards. We don’t know that their competitors aren’t already paying more, we only know that some people can’t seem to get labor at the price they were paying before. I think the numbers here are currently inconclusive, but I conjecture that what we’re seeing is small business owners losing labor monopsonies that they had come to rely on, and consequently a more competitive labor market. Of course competition causes upward pressure on prices, that’s the whole point.
This is tangential but I think America has been too scared of inflation for too long. There’s nothing wrong with a bit of inflation, especially if it means we can get closer to full employment. We haven’t even been meeting the fed’s (very low) target for quite a while.
Remarkably, since the tail end of the Bush administration, it's the opposite: the Fed has desperately tried to get inflation up to its 2% target level, and mostly missing.
The reasons are debatable, but I'd argue that it's mostly because the mechanisms they're using end up inflating the stock market instead of consumer goods.
There are economists terrified of any inflation, but it's an attitude that's more popular with some ideologues than with mainstream economists. You hear a lot about them on TV and the Internet, but not nearly as much in real economics talks. Those ideologues punch above their weight in Congress, but not at the Fed.
The Fed governors aim for a small, controlled level of inflation. Mostly that's to prevent people from just sitting on their money: money stuffed into a mattress doesn't grow the economy. Money in bank accounts isn't much better, since they can be withdrawn at any time. So a little inflation nudges people to either spend their money or invest it. Such is the theory.
The reason is quite clear - the Fed cannot transfer money effectively to the poor/middle class; it's fiscal policy that can do that (and labor unions to some degree, which were gutted in the 80s).
Inflation doesn't happen when you give more to the people that don't consume (and sustained inflation only happens when there is an actual shortage of some good, and arguably we have overcapacity for everything today so inflation will only happen under either a commodity price shock or complete breakdown of supply lines (transitory inflation can happen like it is now - from the COVID shock))
That's absolutely correct, but it has been remarkable the way there's been no money flowing to the poor and middle class.
Supply-side economics clearly doesn't work, but it wasn't totally insane. If money was pumped into corporations you'd expect at least some of it to turn into more conventional demand. Buy a private jet or a yacht (built by workers and maintained by more workers), or start a company that pays wages, or something.
Instead, all of the money just gets shuffled among each other. It's not just that trickle-down doesn't work; it's that it doesn't seem to trickle at all. Even to non-Chicago economists that's a little surprising. Chicago School turns out to be more than just incorrect, but utterly at odds with reality. Rich people simply don't behave the way they imagine they do.
About the closest it comes is messing with the real estate market -- mostly in the form of pricing lower-class renters out. That benefitted the existing homeowners, and maybe that's helped stem middle class decline a tiny bit, but there are too many other forces working against them. Instead, it just trickles more money back up.
It'll be interesting to see what happens as COVID eases off. That's a very unusual kind of shock, and I'm surprised it hasn't been even more economically disastrous than it is. Part of it is that the government has done a weak form of the right thing, pumping money directly to consumers. If not for that we'd have seen a deflationary spiral of truly catastrophic proportions.
Supply side economics works if you have a nation that is doing so many productive investments that it has trouble getting enough financing for everything. By cutting taxes and lowering interest rates you are making it easier for businesses to acquire enough capital to do even more investments.
The US economy is the exact opposite. It's difficult for the investment rate to catch up with the savings rate. Things like home construction are being delayed. Public infrastructure suffers from cost overruns, etc.
>It's not just that trickle-down doesn't work; it's that it doesn't seem to trickle at all.
For obvious reasons. Money doesn't trickle because consumer/worker behavior tends to lag behind business behavior. When a company has a good year, it can wait until the labor market tightens before it has to increase wages. If companies invent automation then they have a first mover advantage where they save a lot of money in the first 5 years and then once competitors join the market the margins are driven down. That delay is costing consumers money and it's costing workers money because the company doesn't employ anyone with it. Business oriented politics also tends to encourage inefficient (from a macroscopic perspective) corporations who lobby for bills that benefit them at the expense of everyone else.
>Part of it is that the government has done a weak form of the right thing, pumping money directly to consumers.
"Despite the cacophony of complaints about "ruinous" budget deficits and "excessive" monetary growth, the headline-grabbing double-digit inflations of 1974 and 1979-80 were mainly of the special-factor variety. Only a minor fraction of each inflationary acceleration can be attributed
to changes in the baseline rate; the rest came from supply shocks from the food and energy sectors, from mortgage interest rates, and from the end of price controls—a whole host of special one-shot factors. It is precisely
this aspect of the recent inflation that this paper seeks to document. Since the paper focuses on the special factors to the exclusion of the baseline rate, it is worth pointing out at the outset that the two inflations are not really independent. Inflation from special factors can "get into"
the baseline rate if it causes an acceleration of wage growth. At this point policymakers face an agonizing choice—the so-called accommodation issue. To the extent that aggregate nominal demand is not expanded to
accommodate the higher wages and prices, unemployment and slack capacity will result. There will be a recession. On the other hand, to the extent that aggregate demand is expanded (say, by raising the growth rate
of money above previous targets), inflation from the special factor will get built into the baseline rate."
This is the difference between the responses to 2008 and 2020. The first was exactly the first example from the paper, and the second is the latter (expansion of demand capacity).
I've concluded that over steer (over correction) is the norm.
My hunch is one big cause is the mismatch of time scales between tenure (employment) and policy outcomes. Meaning that most policy and decision makers have moved on to new roles and jobs before the consequences of their decisions become clear. So very little learning can happen.
Feds tried to induce inflation for the last 20 years, it’s good for them since they can just print more money. They largely failed to do so since dollar is so well propped by international demand.
>it’s good for them since they can just print more money.
That's not good because it means they failed to keep up their mandate.
>They largely failed to do so since dollar is so well propped by international demand.
Actually, the international demand is forcing deficit spending. If money leaves the US and then comes back in the form of treasury bonds then pretty much the only way to tap into the money is to let the government get into debt. If driving yields to near zero was good enough to cause inflation we wouldn't be in this mess.
> The end result of getting rid of "terrible" jobs, is that everything at the restaurant costs 2-3x as much, and so on at the many other businesses (agriculture?) which rely on cheap labor. Which means all those people in professional class jobs (e.g. programmers) will find that their salary doesn't go nearly as far as it used to.
Not 2-3x, more like 0.36% for every 10% increase[1]:
> Many business leaders fear that any increase in the minimum wage will be passed on to consumers through price increases thereby slowing spending and economic growth, but that may not be the case. New research shows that the pass-through effect on prices is fleeting and much smaller than previously thought.
> By looking at changes in restaurant food pricing during the period of 1978–2015, MacDonald and Nilsson find that prices rose by just 0.36 percent for every 10 percent increase in the minimum wage, which is only about half the size reported in previous studies. They also observe that small minimum wage increases do not lead to higher prices and may actually reduce prices. Furthermore, it is also possible that small minimum wage increases could lead to increased employment in low-wage labor market.
Maybe I'm naive, but this seems to have some significant problems:
1. Yes, everything costs 2x more for professional-class people, but also for working-class people. The numbers might get bigger, but the impact for those in the position to consider these terrible jobs is net nil.
2. For anything that doesn't require physical presence, the more you raise minimum domestic labor cost, the more attractive foreign labor looks, so you're also driving outsourcing.
You would absolutely have to back away from free-trade with low-wage countries for this, but in the restaurant/retail side of things it's not as big of a consideration, because not many people cross borders to do that in a country as big as the U.S. But for many industries it is absolutely a consideration (e.g. agriculture).
If this is happening it is truly a good thing. I have always felt that the best way to have improvements for entry-level labor is if they just refused to take the shitty jobs and the market turned on employers. What employers refer to as shortages aren't really that at all. The truth is that the labor market is just not in their favor as it typically is.
I do not think it is ideal that the alternative option being utilized is government handouts. I'd rather people have the mindset to, for example, run their own hot dog stand on the street instead working for a fast food chain. But entrepreneurship is not easy for everyone.
It's not even the shitty entry-level labor that is underpaid. There's plenty of examples of companies offering $15/hr for mid-career jobs requiring some post-secondary education.
If there are a dozen people in line to take the job who will have to return to a third world country if they dont get it, no amount of worker solidarity with other Americans will increase your wage because every single job will be filled by a foreign worker for whom minimum wage is still many times higher than what they get in their home country. There is no way around the immigration issue. Covid wont last forever.
I'm not too sure about that one! I've seen some entry level laborers getting paid $10/hr to sleep in their car. I don't think "Sleeping in your car" is a valid job description for any business.
Given the surge in online shopping and the blue-collar labor shortage (not really a shortage, just wages triplicating within 1 or 2 years), logistics automation is in overdrive right now. Many of these jobs won't be available to come back to (at any price) once the helicopter money runs out.
This is super exciting and scary- we've basically gone basic income, but with zero planning. We'll see how it turns out.
We're having some price inflation due to supply chain issues. Cost of housing is more interesting... should we go public housing like Signapore, but contract it out to a country that isn't full of morons that cant plan/lawsuit/consult/build infra for a reasonable price?
This framing can make it come off as though the wages were fair to begin with. The consensus seems to be that they were never fair. And people in the US are largely tired of the government giving handouts to businesses over people. It's time for those who reaped disproportional benefits over the past 40 years to eat some costs instead.
> This framing can make it come off as though the wages were fair to begin with.
This framing passes the buck for inflation from the government onto businesses that have no control over it whatsoever.
When the money you have buys less and less, the wages suddenly become less and less "fair" without the employer doing anything differently. Who's to say that their business has increased enough to support the higher wage?
This is, IMO, why basic income is critical because it puts the cost of dealing with inflation directly back on the government itself, rather than the small businesses that are constantly framed as paying "unfair" wages.
If the taxes to support it come from the people at the top who've reaped disproportionate benefits...GREAT. But the small businesses at the bottom struggling to keep their doors open are not the enemy here but they will absolutely be the ones that suffer the most from wage-based legislation that they can't afford.
And let's not forget that the moment such legislation passes, it just encourages more automation or exporting of jobs to other countries where a fraction of the original wage is somehow "fair".
People say "If a business can't afford to pay a living wage, then they should close". But won't that hurt consumers and distort the market?
Personally, I like having many options for food to eat. If all the marginal small businesses had to close because they can't pay someone $15/hr to wipe tables, then we might just be left with large chains like Olive Garden or Cheesecake Factory. I think people should get paid what they are worth, whatever the job. But I also like being able to get food from small restaurants from different cultures.
And if all the marginal restaurants close, won't that just give more power to the larger corporations? they'll be able to raise prices, lower wages, whatever they want because there will be less competition.
Obviously, the unemployment increase / stimulus in the US will end at some point. And then there will be a lot of people looking for jobs at once. People should figure out what they think a fair wage is for entry level jobs and take it if it's being offered.
> People say "If a business can't afford to pay a living wage, then they should close"
I have a cookie company that raised the pay after we opened our 2nd location (economies of scale, buying in bulk, etc).
Its in my interest as an employer to raise the pay since it typically raises the buy-in from employees. Companies like Netflix and Costco pay at the top of the competitive range and it allows you to run a tighter ship.
Payroll is a cost, sure, but it's also an investment if you can afford it. Raising the minimum wage removes that competitive advantage for me.
It takes time to bootstrap a company. It still only pays me half an engineering salary after 3 years.
> But I also like being able to get food from small restaurants from different cultures.
Right now, that only happens because some people aren’t lucky enough to be born in the right house. People don’t work nights and weekends for paltry wages out of their desire to serve people food.
So it would hurt consumers. But it would help those who provide to the consumers.
Imagine how expensive food would be if the people on this forum demanded to be paid “fairly” for weekend and evening work.
That would only be true if, when I went to the supermarket, there was a display of strawberries that said over it "Low Low Prices Enabled By Virtual Slavery And Other Worker Abuses!", and another display of strawberries next to it that said "Slightly Higher Prices, But Their Workers Live Well!"
You can't claim the market will resolve things when there is no meaningful opportunity for customers to "vote with their wallets". It requires not only equal access to the two products, but also full information about what the differences are.
I think it's more than slightly higher. Cherries and peaches are both stone fruit. They're grown in similar regions, and the trees are so closely related you see hybrids commonly marketed. Cherries are regularly 2x-3x the price by weight because the smaller fruit means they're more labor intensive. Raspberries are also noticeably more expensive than strawberries, and I assume it's because they're harder to pick.
These are labor-intensive produce, so labor drives the price. Staples like wheat aren't, so an extra $5 per hour for someone driving a tractor really would be "slightly higher prices."
That's very informative, thanks! I do not pretend to know much about the details of the economics of these things.
That said, even 2x the price for strawberries (at least around here) would only be another $3-5, depending on what size container you bought. That would still fall in the range of "slightly higher" in my book, at least in an absolute sense.
Chipotle is big; they can do this. Most of their costs are also in store labor and rent, not food. If you're a small farmer, the distributor will pay you $x regardless of how you produce it. There's no market for strawberries picked by well-paid workers, so they don't care.
What you're saying only works if you're Driscoll's and tell farmers to pay workers more or enough consumers demand it, but I just don't see much demand for this. The most we've seen is Fairtrade chocolate, coffee, etc., but there's only limited demand for it.
What? No. Automation doesn't need a new tax, it's just capital investment like any other. Tax the proceeds from investment (in automation and everything else) at a rate commensurate with taxes on labor...
automation is expensive. it is not like a company or franchise can just flick on a switch to automate jobs. It has taken millions of dollars and decades to make robots that walk on stirs, let alone do anything that a low-skilled human worker can do.
I disagree. Not everyone needs a livable wage (e.g. teenagers) and by removing entry level positions we eliminate the lowest rung of the ladder. This is not a good outcome.
...but imagine the economic benefits of giving teenagers a living wage. People who have loads of extra money to spend on unnecessary items (because presumably they're not paying for the bare necessities like food and housing).
<Gasp! Some might even save some of that extra money for use in the future!>
But they already get a living wage, since for almost all working teenagers, their biggest expenses are usually taken care of by their parents (rent & health insurance).
Unless they want to save money for college. Remember when you could work an entry level job and make enough money to pay for a substantial portion of college?
That's the point. Absent any competition (which there won't be, because everyone is subject to the same minimum wage), the cost is fully passed on to the customers (ie. "everyone else"). Therefore your conclusion is incorrect.
In the short term or long term? I skimmed the study and it looks like they only looked at two years? In the short term I can see it happening due to psychological effects like price stickiness, but I'm skeptical that in the long term the trend would hold. As evidence to the contrary:
>Ashenfelter says the evidence from increased food prices suggests that basically all of the "increase of labor costs gets passed right on to the customers."
I'm talking about your claim that the cost of raised wages would be inevitably passed on to consumers.
I'm sure there's a good reason why employers lobby so hard to keep wages down even when it doesn't affect them in the slightest cos they can just pass the costs on...
Personally, the pandemic has taught me how little I really need physical stores. Only a few items, like bicycles, shoes, and backpacking backpacks, do I really prefer buying them in a physical store. So for me at least, it would be okay if all these retail jobs went away, and all these retail stores just went out of business, and you just bought everything online.
It seems like it could really be a disaster for people working in retail though. Hopefully those retail jobs would end up replaced by something better, like working in an Amazon warehouse....
They (humans in Amazon warehouse) too are being replaced by robots. Not sure how many people know that Amazon has a robotics division [1]
Like any modern corporation, Amazon is continuously looking to reduce cost and warehouse automation is the next obvious place, by automating most of pick/pack work.
Even in shop experience is getting massively disrupted. At the one end of the spectrum there are self checkout kiosks that are super convenient and popular in the Netherlands and at the other end Amazon Go and similar with zero or minimal personnel running a shop.
These types of jobs are popular among middle to just below middle class youth (high school goers) in order to earn a few bucks and reduce financial burden on their parents. With these jobs getting automated, at least in the developed world, I wonder what’ll be those stepping stone type of jobs which are low on skill that need manual labor.
That's a tricky one, but it's solvable, if you're willing to give up the idea of having new and different styles regularly. Find a style & brand you like, figure out what size you wear and just buy that. You might have to send something back until you nail it.
For people with odd size requirements like me (I'm short), shopping online usually means you can find a better fit, because stores tend not to carry much outsize the most common sizes. Shoes are a great example: A size 7.5 (US) is about the biggest I can wear, sometimes a size 8 if they run small. The "standard" mens size is 9, and you can find lots of styles in size 9 to 11, but rarely anything smaller than 8. Guess what? that shoe is made in 7, but stores don't carry it.
Sometimes the maker will discontinue a line though, which means a switch. Shoemakers are notorious for this.
So yeah, re-buying clothes/brands is fine. But I spent a bunch of money on clothes online and ended up with stuff that is nice, but which feels weird (and with some too-small pockets).
I don't really know how one can solve for these kinds of issues online, even if we could CV together what clothes would look like on people (which is at least theoretically solvable with current technology).
And fwiw, clothes are like one of the things that everyone needs to buy, so online only is almost certainly not going to happen in this space.
I just buy them online like anything else, in the same size I always wear. I had already stopped buying clothes in-person before the pandemic. I guess I am normally-shaped enough that I don't run into problems with things fitting this way, but certainly this is more problematic for some people.
I think the "life is short," phenomenon that recently occurred to everybody due to COVID is also playing a part. People are thinking, something along the lines of, "I could have died and my gift of life has mostly consisted of working for this shithole company for the last 5 years."
Employers might want to consider hiring more people in smaller shifts. Maybe an extra person and put everyone on 3-4 day shifts rather than 5-6. It'll be interesting if this phenomenon holds.
Of course the US workforce has been constantly squeezed for the last 40 years, so maybe the COVID was the breaking point. No more cheap labor because people are unwilling to live with their parents / not have health insurance. People really mastered how to live cheap over the last year as well.
Make no mistake, COVID was a seismic event in the US economy that will have lasting changes.
> Employers might want to consider hiring more people in smaller shifts. Maybe an extra person and put everyone on 3-4 day shifts rather than 5-6.
I thought that doing this to avoid providing healthcare was the problem. Many jobs that can't be filled are for part time hours at terrible pay with no benefits.
The laws in the US only require companies to provide health insurance and other benefits to full-time workers, usually defined as something over 30/hours a week. If a company hires a bunch of people to work 20-25 hours, they don't have to pay benefits.
The solution, obviously, is to change the law so that any employee, regardless of hours, must get benefits. The other solution, in the US, is to get rid of the antiquated employer-provided private health insurance market and just give everyone health care, the way every other wealthy (and not-so-wealthy) country does.
Most people need full time work to survive to pay for everything. They need 40 hours of paid work per week as well as health care, a benefit that is usually only provided to full time employees.
Businesses usually don't need 40 hours per person per week, especially for things like restaurants. They also do not want to pay for health coverage. So they offer part time jobs with 20 random hours per week.
To survive, you would need to cobble together two of those jobs and hope that you don't get sick. Or you can hold out/leave immediately as soon as full time work is available.
I agree. Beyond the economic changes that have occurred, I think the social change is going to be even more dramatic. Everyone I know in my social circle has started new things, gone back to school, picked up old hobbies they neglected, or changed jobs. I don't think we are appreciating how radical a change it was for so many people to have months of free time where they had relative financial stability. You start to have time to really think about what you want.
Going forward I think people are just not going to put up with bullshit the way they did before.
I've been working professionally for 25 years now. I could take a year off financially, but I'm still shackled by health insurance being so expensive on the private market.
Think about this, when you are on your deathbed, whenever that is. Could be tomorrow, could be in 60 years. What regrets will you have?
The issue is I’m not sure if it’s something I can just dip my toe in to try. The more research I do that more apparent that the things I want to do will require an all or nothing investment.
Maybe we should think about building a society that’s less financially cutthroat. I’m not in the financial position of the potential restaurant workers discussed in the article, but I can’t imagine wanting to work in a typical chain restaurant if I was. Not because of the work itself, and I’m not trying to downplay the value provided by restaurant workers either, but because I would feel that it was limiting my potential future earnings. Most chain restaurant jobs just don’t seem to offer real opportunities for upward mobility and their unpredictable shift scheduling can make it difficult to work or study outside of them.
Obviously, I’m coming from a position of privilege here, but putting myself in the shoes of a potential restaurant worker, assuming I wanted to put myself in a better long-term financial position, I would simply choose to not be a restaurant worker and study/apprentice for something else instead. I’d imagine that actually working in a restaurant teaches plenty of useful life skills, but unfortunately I’m not sure that experience really translates into a marketable resume. Unfortunately, in a competitive job market, there’s an opportunity cost associated with time spent in jobs that don’t enhance one’s desirability to potential employers.
Now obviously not everyone has the option to simply forego low-paying work and become a student/apprentice, and I’m sure some people really like working in restaurants (even fast-food chains), so I’m not arguing that restaurants should simply disappear. Instead, I think we should work to reduce the competitive nature of our economy so that cheap, convenient food (or similar services) isn’t effectively being subsidized by the existence of a permanent economic underclass with no career options beyond low-paying, so-called “low-skill” work. Fast-food workers should be there because they want to be there, not because it’s their only option.
American society is built around work and constant competition for better-paying work - that’s certainly not unique to the US, but the high-levels of income inequality and winner-take-all job market dynamics sort of are (at least among countries with similar social + economic profiles). We should try to create a job market where people can choose full-time jobs they enjoy and excel at without worrying about whether they can afford to have children, maintain stable housing, or be able to retire some day. To do that, I’d expect that we need to reduce the power differential between the restaurant/business owners complaining about a lack of people willing to help them make money for low wages and the potential employees they’re complaining about.
Labor shortage. For my beer garden, I couldn’t find part-time workers. However, I could hire people with full-time jobs who wanted to work 1-2 standing shifts each week in a fun place with a respectful community. I think we are more the exception than a Dale’s (article reference), but this answers the labor shortage vs. terrible jobs question for me.
I don’t think it’s fair to fully blame these businesses. If they pay their workers a “living wage”, whatever that is, then they need to raise prices just to remain profitable. Customers see the price increase and go to the next restaurant down the street. Of course location, quality, etc matters but price does too, and a business trying to compete in a price-sensitive industry is going to be a bind.
What can help is government regulation that raises the wages at ALL restaurants. Then consumers don’t have a choice. I grumble more about paying an extra 4% on top but what am I going to do, never go out again?
Business should always have to compete for labour. That way there is an incentive to replace labour with machines and better processes - which is where increased standard of living comes from.
However there is a problem. The 'standard job' is now gardening leave with a wage, which any other job has to compete with. And what that leads to is a 'dead zone gap' in the wage structure between the 'standard job' and the next reasonable job (say working 9-5 Mon-Fri with full benefits, close to home). A private employer has to pay a much higher wage than the payment for the 'standard job' to get people to work for their 'reasonable job'.
(You get the same between unemployment benefit and the 'minimum wage' in many countries).
However we could have everybody earning the living wage working for a publicly provided 'reasonable job' at a living wage, which would mean the that the private employer would only have to pay a penny more per hour to get the labour they need.
The most efficient construction is when the 'standard job' and the 'reasonable job' are the same. That eliminates the 'dead zone wage gap', and allows people to smoothly move between public and private jobs, increasing the efficiency of the use of labour - all without exploitation.
And those business that can't deliver a profit with this system? Well they get to close to make room for better businesses that can.
Business is there to serve people, not the other way around.
Man I worked those kinds of jobs, and I still can’t believe I worked for so little. When you are at the bottom the world looks real different.
No one is “too lazy” the wages don’t pay enough to support even a single adult in most places!
Most impoverished adults would have a better chance of climbing out of poverty if they DID NOT work at low or minimum wage jobs at all and instead foraged for nuts and berries.
Maybe one of these days the pro-labor left and the pro-labor right are gonna figure it out, stop taking the bait, and we'll finally get a real revolution.
Think a bit harder on the problem than to simply cry revolution. Swaths of people die, families are destroyed, the economy is destroyed, the nation becomes vulnerable ( if you still have a nation ). You will have to deal with the problems you created before you ever get the opportunity to work on what you were originally revolting about.
I didn't say they don't work. However, most do fail. My point was they come with an extreme cost and in this case you may never get to the resolution you are seeking. Alternative means are much much more likely to be successful.
Greed permeates all parties as it is a human characteristic. The point is to create an environment that encourages strong businesses and discourages greed. Left or Right.
Are you talking right business owners or politicians.
If you answer both, how many conservative business owners do you actually know? I know a number of them and they have thriving businesses with well compensated and well covered employees that have worked for their businesses for decades.
By "socially conservative" do you mean opposed to reproductive choice, anti-immigration, opposed to LGBTQ+ rights, opposed to affirmative action, and those kinds of wedge issues? Kind of the the inverse of libertarian "economically conservative, socially liberal"?
I wonder how much those issues would fade from their consciousness if they weren't constantly fed the lie that their precarious economic status is the fault of immigrants, the cost of social welfare programs, the "gay agenda", the "great replacement" theory, and so forth.
Right, so a pro-labor right does exist, you just don't like a lot of their other opinions on wedge issues.
Well, guess what? The corporations are run by some pretty smart sociopaths, and they have figured that out and are happy to keep you fighting with those hated right-wingers over the wedge issues, rather than working with them to improve labor conditions in the US.
It's OK. The corporations are really good at feeding lies to folks. Heck, they might even be feeding some lies to you. Maybe you even believe some of those lies. Like, for example, there is no such thing as a right wing pro-labor movement.
I just wanted to comment on the photos of the sonic drive-thru, with the sign that basically shames their employees. "People don't want to work." No, people don't want to work for sonic, a company that pays its car hops tip wages and then leaves no mechanism to tip with a card in their unnecessary touch screen kiosks, a company that charges extra for ketchup. Imagine getting paid 2.15 an hour to hear the 10th person today complain about having to ask for ketchup with their fries, and only getting tips on cash purchases, something exceedingly rare. I've never worked for this company, I never would, nobody should, and I can't wait to hear the impending news that the company is filing bankruptcy, I will throw a party.
Beyond that, there's too much noise in this article about "capitalism" and "BIPOC" and in reality what's happening is a job market going back to normal, where people actually have options, rather than the extended "recovery" of the great recession where people had none.
I wonder if this is evidence of friction in the labor market. Maybe all this terribleness had built up, but most people won't change paths in a big way because it upends their life for a while. You're not going to learn job B if you're already in job A because, even if job B is better, the first year of B will suck more than A while you're a newbie.
But then a pandemic comes along and takes away job A, meaning that there's not extra friction to leaving job A. You've already left! All these people have gone to job B (or location B, or family arrangement B, ...) which was better all along, it's just that the change had too much additional overhead in normal times.
Now you have places which depended on that friction wondering where everybody went.
God damn right. God bless Anne peterson for writing this, I could not have said it better. For once I have nothing to add. This world could be so much more than it is.
They have fast food and other restaurants here, but there’s a shortage of good bagels. They seem crowded at the times one would expect. I think things come down to what people expect and how they set things up.
"which somehow fails to mention that the owner is a Covid hoaxer (he believes that doctors have been falsely labeling deaths as Covid-related) and has brazenly violated masking rules, and did not require employees to wear masks" - I could tell, this author strikes right where the problem is: his personal biases.
From 2008 to 2014 everyone was talking about structural stagnation and then there wouldn’t be enough jobs and chronic unemployment for a generation. Meanwhile economist like Paul Krugman and Stiglitz were saying additional government stimulus after the financial crisis would’ve solved the problem.
Pre-covid businesses which paid borderline wages are going to find it really difficult to compete with the government.
Basically, you have an administration 'silently' waging war of certain types of business or jobs without needing to pass controversial legislation for things like a minimum wage increase or universal income. If it feel subversive, it is. But the cost of controversy these days causes people to find alternative options.
It is now possible to make 130% to 200% your pre-covid salary/wage by being on unemployment. [0] It is generally human nature to do as little as possible to survive. In this case you don't have to do anything to survive. Why would you go look for a job.
This will put large swaths of businesses who could stay afloat pre-covid and were forced to close due to covid to not be able to open their doors again.
That's a terrible take. The government is not "waging war" on businesses. Businesses that were (are) paying starvation wages simply socialize the costs of doing business. When Amazon's warehouse workers and Wal*Mart retail employees are also collecting SNAP benefits, their employers are getting all the benefits of low wages but – because they don't pay their fair share of taxes – the employers are avoiding the externalities. See "Cheap: This High Cost of Discount Culture"
Note I didn't say whether it was good or bad. These are real things that are occurring.
The government has a long history of subsidizing businesses. Think seasonal businesses that 'lay off' their workforce to collect unemployment until the season opens again.
Sometimes we believe these subsidies are good other times we don't. Do I believe companies as large as Amazon and Walmart should be subsidized? Hardly.
Do I think small businesses of all sort could use a break here and there when faced with the subsidized giants? Absolutely.
Try to go to your local hardware store, it doesn't exist any more. How about the corner grocery, gone. These guys needed a break but we put the screws to them and let the Giant more 'efficient' businesses off the hook.
This is a good thing. Businesses that rely on paying people salaries that keep them under the poverty line have no right to exist. Your business is exploitative and doesn't deserve to survive.
We already do that. Many of my coworkers at Target are on medicaid and SNAP and get child care assistance and they will be, perpetually (well not so much the child care part).
We just also make them work until they're 70+ anyway.
> We just also make them work until they're 70+ anyway.
Or in other words: we make them work. If we didn't we'd still need someone to do the work, only it wouldn't be your current coworkers. And we'd have to tax that person severely, so we have enough money to fund the early retirement of your coworkers. I'm not sure that person will be happy.
This is a call for UBI that unnecessarily demonizes low skill employers. There is a great human dignity argument for UBI. Demonizing employers who won’t take a negative return by paying employees more than the value they generate isn’t a good way to get there.
The Fed flipped the trickle down economy to a trickle up economy to keep society going. The poor get poorer and the rich get richer as long as it continues, all of this liquidity ends up somewhere..
> But X workers are accustomed to being blamed for things that aren’t our fault. We’re trained to feel responsible for failures even when we ought not be
There are obviously a lot of factors that go into the decision making process of whether you should take a particular job at a particular wage. But at least two are 1) how much you're getting otherwise from other sources, and 2) competition from other sources of labor.
New entries in Q4 2020 down 78% from the year before, and that's on top of a general downward trend in net immigration to the US that's been happening for a decade. Is this temporary because of Covid? Probably. But immigration at the low end of the wage scale is a factor that drives down the wages. Anyone who has ever lived in an apartment complex in Santa Ana and seen neighbors with 14 people packed into a 3 bedroom apartment understands why. Native born Americans simply aren't willing to live like that. The expectation for what constitutes a baseline reasonable lifestyle isn't the same.
For 1, these comments about "experimenting with UBI" or freeloaders living off the government seem to miss the point that augmented benefits are a temporary pandemic relief measure. Of course the low end of the labor market is abnormally depressed right now. That is on purpose as part of a calculated, intentional public health response making it easier for people to decide not to work. Lo and behold, many are now actually making that decision.
For some reason, there seems to be this widespread notion that this is a permanent change, but it isn't. You're still not technically allowed to just quit or refuse to work because you want unemployment, but go ahead and look at the actual description of what constitutes a Covid-related reason to apply for relief: https://wdr.doleta.gov/directives/attach/UIPL/UIPL_16-20.pdf
If your place of employment was closed, if your kid's school was closed, if you were ever diagnosed, had symptoms, were quarantined, or anyone in your family was, your head of household died, you need to care for some who was diagnosed. None of those are usually reasons you're allowed to claim unemployment benefits. Now they are.
How long will this go on? Who knows, but definitely not forever. This is also the answer to why businesses don't just offer more. Prices are subject to a ratchet effect. Offer more now to overcome the inertia of people choosing to stay unemployed during an abnormally favorable time to be unemployed and you're very likely to have to permanently pay higher wages even when the enhanced benefits are gone. Businesses are getting relief, too, and are willing to gamble that they can wait long enough for wages to come back down.
This should be comments #s 1 2 and 3. There are 5 billion people living in countries with lower standards of living than the US. The reason corporations unanimously support immigration is precisely because immigrants from poorer countries will work for less. This is why immigration from Guatemala is very unpopular in Mexico, but no one calls Mexicans racist for wanting to protect their hard won wages and standard of living.
or... insufficient compensation? (Yes I know the body addresses this, but seriously, why does every single headline in labor supply only do the false dichotomy of "no workers" vs "americans don't want to do X".
Why do politicized right-wing economists pretend supply and demand pricing doesn't apply to the labor market? It's supposedly the foundational pillar of right-wing extreme laissez-faire cult economics.
Universal healthcare would go miles to making these tolerable/palatable jobs to a wide variety of workers. Often what is lost in the "americans don't want to do job X" is that "Job X DOESN'T GIVE HEALTH BENEFITS".
>"Collectively, we should be thinking of different funding models, different ownership scenarios, and different growth imperatives. Failure to do so is simply resigning ourselves to another round of this rigged game."
I don't accept the verdict that these economic hardships necessarily mean that "capitalism is broken" or "rigged" or that we need to rethink "ownership scenarios" (whatever exactly that means). The economy is a vastly complicated system of countless trades per day, and there are a lot of variables in flux that are making things very crappy for a lot of people. But I fear trying to make things better by blaming it on capitalism being "broken" or a "rigged game" is more likely to make things worse.
The solution to this problem was to not ship millions of manufacturing jobs overseas (destroying middle class employment for people who prefer to work with their hands) and to prevent illegal immigration (flooding the economy with an endless supply of unskilled labour).
But Pandora's box was opened, and destabilization seems to be the only possible outcome at this point. It won't be as rosy as this article makes it out to be.
A: "we should give everyone free money!"
B: "no, that'll make everyone lazy..."
A: "no, people will work on things they love instead!"
[everyone gets free money]
[nobody works, everyone plays video games all day]
A: "see, this proves that everyone was being exploited!"
B: [smh]
Plato's Five Regimes. We're entering the fourth regime.
Do you think that would last? I know I wouldn't be able to sit on my ass and just play video games for very long, even if I got paid or won the lotto, or whatever. My wife wouldn't either (though, we tend to marry our equal - or I hope we do). I'm generally curious as to what percentage of the population would actually sit for their entire lifetime and be stoned, play video games and make nothing for the long term. I realized that there is a percentage that would do this, but do you think it would really be that large? Are my friends group that skewed of a sample?
It depends on individual preferences. Individuals with a high preference for $ would still go to work, whereas others would play games at home. This could mean higher productivity at work and better customer and employer satisfaction, as people who hate working and hate their jobs and do their jobs poorly, would just play videos games instead.
I guess, yeah. I might do something a little more creative but similar. It's just hard for me to imagine just not creating something, anything. Lack of imagination on my part, really. I can't imagine that anymore than the argument of "people will just use their checks to buy heroin and be drug addicts". I assume there are a small percent, but it's small. I just assume people would still want to make things for the sake of making things. Just for purpose =/
It's almost like this happened in the midst of a global pandemic where most people aren't allowed to do the things they would rather do than sit inside and play games...
Ok, but at some level of automation the number of low-skill jobs will be much less than the number of candidates. When this occurs, what's a viable career path for someone without a College education? Or even someone with a College education that's no longer relevant/in demand? We already have more than enough bullshit jobs...
Perhaps the answer is to start shortening the work week.
Video games are considered e-sports in South Korea and some people do get paid to play them. Imagine a full stadium with a few guys playing games and the audience watching them on big screens.
They don't "play games" in any common meaning of the term though. It's not entertainment, it's work. It's not intended to pass the time, they train long hours to get better. Very, very, very few people do that, because it's not fun, it's work.
You're technically right in the sense that some people do play video games for a living, but you're still wrong because GP talked about "everyone" playing video games for a living. just like you can't have everyone being actors/writers/musicians, you can't have everyone be esports players. There's only so much attention to go around, and the overwhelming majority is captured by a few at the top.
There is also a nasty waiting game that is playing out right now. Employers don't really want to hire people that need a paycheck as those people, if hired, are more likely to ask for more sooner. So employers have no incentive to advertise higher wages for an open position because they will just get more applicants from people who 'need money', not necessarily better applicants.
I don't think a lot of people work in fulfillment centers, construction, fast food, or retail because they love the job. Most people are there because they "need money". If employers think otherwise they have been drinking too much of their own coolaid about "passion".
But who even wants to work for a minimum wage job for the pleasure of it?
The corporation needs labor, but the employee need money, not labor (but it happens that most common way for normal people to earn money to live is through labor).
> If neither is happening then everyone is happy and anyone complaining is a liar in the economic sense.
The complaining is an economic act in itself - employers whining about "unable to find workers" usually get political help as a result, either in the form of tax breaks/other subsidies or in the form of relaxed labor laws/enforcement (e.g. loosening the requirements to fire someone, reducing the amount of inspection for undocumented workers).
Apparently close to 30% of household income right now is from government payments. I think on average people are getting the equiv of $15/hr from gov checks. So for people to want to work it’s going to have to exceed that by some non trivial amount.
Ultimately, this is a problem with all government benefits with an strict binary income limit. The result is that, in some circumstances, earning 1 more dollar results in losing thousands of dollars. The marginal income tax system was set up this way for a reason.
If these unemployment benefits were paid out UBI-style, regardless of current employment, there wouldn't be a disincentive to find work.
> The result is that, in some circumstances, earning 1 more dollar results in losing thousands of dollars.
I think your new marginal rate only applies to anything over the limit that bumped you into a new tax bracket, so I don’t think this is right. A raise always gets you more money.
The exception being if it bumps you out of the government assisted healthcare bracket. Then, a raise could indeed be a loss.
Edit: I thought you were talking about income tax, but you might have been talking about business subsidies, which I know nothing about.
They are talking about welfare benefits. Many of these are structured so that the marginal dollar you earn results in $0.75 to $1000+ being taken away from you in benefits.
> earning 1 more dollar results in losing thousands of dollars
They might either go out of business or automate those roles if they can't afford to pay blue collar workers a living wage. I'm not a socialist, but some business do rip off low income workers. So they might as well cease to exist if they can't find workers to rip off, instead of claiming that people are lazy.
It does not include wages. These are “welfare/unemployment benefits” These are spikes. During the last recession it spiked into the teens. Before that it was lower. So, yeah, it’s a lot of money.
Ah, OK—if so then the total share of all household income from all government sources must be well over 50% right now, no? Wages, pensions, (including military, in both cases, and state and local government) Social Security, et c.
I'm a brit so I'm far from an expert but I though you kept the US covid payouts whether you worked or not? (unless you earn something like 400k a year)?
The three individual "stimulus checks" went to everyone whether they worked or not.
But in addition, unemployed people have been getting unprecedented amounts of weekly Unemployment Insurance payments. In normal times, you can only get these for a few months while proving that you are actively looking for work. During the pandemic, these have been extended and greatly increased, and the government has mostly stopped checking whether people were really looking for work. The normal rules are going to go back into effect soon, though.
I pay taxes and I'd be super happy if my money went to support people in this country without jobs. It would lower crime and increase the quality of life for everyone living here. I could also be one of those people someday.
Unfortunately many of my tax dollars go to fund a military I find ethically abhorrent instead of improving the quality of life in the US.
Well I'm not. Now there's two anecdotes to work with.
I worked a shitty job to get through college, it's a stepping stone.
These jobs aren't meant to live on. They should be used as part time jobs for people transitioning in their careers, like students.
When you give handouts to people who don't want to work you are not doing them any favors. They become reliant and trapped in that loop.
That's not to say there shouldn't be a safety net with strict qualifications. You're doing no service to the people who need it by allowing those who don't.
We should be spending money creating new, better paying jobs, not new social programs.
We hear this same diatribe every time this topic comes up.
"Fast food work is a stepping stone to a better job!"
Have you been to a McDonalds or Wendys recently? Most of the workers are in their 30s-40s+. The concept of a low-wage "stepping stone" job is a fallacy that people have subscribed to to justify paying unlivable wages.
I pay my fair share of taxes and I'm happy to support 'freeloaders' when they're unemployed and need support. Especially if it leads to a universal living wage from employers.
I'm speaking for me and those I know. My response was to GP saying everyone is happy. I am not.
Also, I'm not talking about the people who need support, I'm talking about the people taking advantage and staying on unemployment because they don't want to work.
You shouldn't be able to "choose to not be employed", someone else is picking up the slack for you and you are taking away benefits that could be used on someone that NEEDS it (disability, elderly, etc.)
When others see that you can just give up and get paid, they will also become burnouts.
Eventually you will run out of other people's money.
I wish this logic was more frequently applied to large corporations and their externalities or to the military. How much money was flushed down the drain to develop dubious weapon systems like the F-35 or to clean up messes like Deepwater Horizon. Yet when we give ordinary people some money suddenly it's a moral failing on their part and we're "picking up the slack".
Here's an idea: next time there's an oil spill, lets take the money for cleanup out of the executives' bank accounts (and investments, and properties) before we dig into the public coffers. Then we can talk about freeloaders at the bottom.
I do too, but currently the opposite logic is being applied to unemployment benefits. Maybe there will be an article about those shady defense contracts and eco projects but that's not the topic.
Why shouldn't they? The government taxes everything it possibly can, and for the past year the government has put a ton of restrictions in place that caused a lot of people to lose their jobs. It is now time for the government to start using those taxes to provide the safety net it promises us.
If the pentagon can "lose" 125 billion dollars ($125,000,000,000), I really don't care that people with the ability to "milk" the gov for cash are taking advantage of that ability. It's their own money in the first place!
Seriously. I'd rather "deadbeat Johnny" down the street milk the government for a few hundred a month than Halliburton milk them for $50,000,000,000. At least he's gonna spend a fair bit of that money locally.
I see a logical fallacy because I lived in some conditions that are very relevant.
Paying everyone a living wage (last sentence) is impossible; not because 'living wage' is relative - from a city to another, from a country to another, from a person to another (can you live without an iPhone? why not?) - but because increasing wages to that level, assuming you can determine one, will just increase the prices to fit.
My first job was paying $100 and it was about the average in the capital city of my country. 5 years later I was earning $700, but that was just double the average pay. Another 10 years later, a bit over $1000 was above average, but not by much. The salaries grew 10 times, but the prices adjusted about the same rate, at least the price of food, rent and houses: if you pay 10x more to workers, the house will cost 10 times more. If you increase the salaries of many people, you will not increase their standard of living, just create inflation because they will not produce more, it's just their cost is higher and the money value is reduced.
This is the real story of a country with 20 million people. If you increase the wages of the lowest paid, you need to increase to everyone to keep some proportions, otherwise you will pay restaurant cleaners more than teachers or doctors and that is dangerous, ~ 20% of the younger doctors in my country emigrated because at some point their salary after 20 years of tough school was sometimes lower than a driver's salary. If you increase the salary of everyone, that is very soon making all prices to increase at the same rate, changing practically nothing.
And another thing: if you have workers that you cannot pay 'living wages' because they don't produce output to pay them more, automate and leave them on the streets. Do this with all low skilled workers.
A 10% profit is very modest. That's not the story of the "fat cats getting rich on the back of the workers" that the article is alluding to.
The problem for the business is that the financial model is set by the fixed or imperative costs, i.e. the cost of rent, the cost of maintaining the capital equipment, the cost of cleaning to meet codes, insurance, etc. The cost of labor, for cooks, wait staff, etc. is often the biggest part of the expense budget for restaurants.
With such a small profit margin, arbitrarily raising everyone's wages is likely going to kill the business. There is no room in the budget. The only choice is to either automate, which will reduce the labor requirements, or raise prices and hope that customers won't just go down the street. But they will, they will go down the street--until everyone's prices go up and there is nowhere else to go. And all of this is free market capitalism at work. It is a continuous process of reinvention.
In short, I'm not saying that higher wages aren't necessary, I'm just saying that both sides of the equation need to be examined, i.e. the plight of the worker AND the plight of the business. And we need to understand that things will probably get ugly before they get better. Because that's how capitalism and free market economies work.
But watch out for technology and automation...that is the part of the equation that has been "solving" the labor problem for some time now...