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Minimum-wage worker needs 2.5 full-time jobs to afford a one-bedroom apartment (businessinsider.com)
78 points by pseudolus 38 days ago | hide | past | web | favorite | 120 comments



If you believe that labor is not an exception to the law of supply and demand, then it follows that raising the minimum wage will reduce the demand for labor, and increase unemployment among those with the least productivity. The net affect of that could well increase poverty, working against the good intentions of minimum wage advocates.

If so, if we raise the minimum wage 2.5 times, so that every full time worker can afford a one-bedroom apartment, there would be a greater number of unemployed workers than before who cannot afford housing.

If, again, the law of supply and demand applies here, a better approach would be to increase the supply of both jobs and housing by reducing the regulatory burden on each. Less regulation on business means more and more profitable businesses competing for an inelastic supply of labor, raising labor prices. Less regulation on housing means more of it at lower prices. Lower quality housing that would otherwise be illegal is made available to people who could otherwise afford none at all.

If you're an unemployed person living in an illegal shanty town, subject to continual law enforcement harassment, even becoming a poorly employed person living in a legal shanty town is an improvement, where an increased minimum wage is not if you can't get a minimum wage job.


>If you believe that labor is not an exception to the law of supply and demand

You seem to imply that it's obvious that labor is subject to the law of supply and demand, but I think the reality is much more complicated than that - especially in rural america.

Ask the following questions:

- How many people could be making more money by working another job somewhere else, but do not, for non-money related reasons?

- How many people could be making more money by moving somewhere else, but do not, again for non-money related reasons.

I know people who have stayed in really shitty jobs, only because a side benefit of that job meant that their kid can go to college much more cheaply.

I know people who have stayed in really shitty jobs, because that's the only job they can find in their small town, and they need to stay in that town in order to care for family members.

I know people who have stayed in really shitty jobs because they have health problems and cannot risk a change to their health insurance.

I could go on and on.

Labor only works by supply and demand if workers have perfect freedom to move between jobs. That is rarely true. Wages are as likely to be mandated by the hierarchy in the organization than they are to be dictated by fair negotiation between the employer and employee.

I'm sure your theory for how this all works makes perfect sense in your head, but when looking at real world examples, I don't see it at all.


You are allowing anecdotal evidence to replace statistical analysis. There are lots of people who stay in a job when they could theoretically move up. But overall the labor market is subject to the law of supply and demand.

If what you say is true, and they aren't strongly correlated with supply and demand and the health of the economy, then why do we even report labor statistics?


>they aren't strongly correlated with supply and demand and the health of the economy, then why do we even report labor statistics

You're making the assumption that the only reason labor statistics would be useful is if employment is subject complete to supply and demand.

Consider the possibility that labor statistics could be useful simply because they are an aspect of the health of the economy, and it doesn't necessarily matter if they are a result of supply and demand, or has a more complex causality.

Trying to reduce labor to supply and demand only makes things very nice for theoretical considerations, but it doesn't force reality to match theory. Supply and Demand is the same thing as a spherical cow in physics. A useful simplification sometimes, but if you take it literally, you're going to go wrong.


Straw man. I never remotely suggested that employment is only based on supply and demand. You're suggesting that it's not.


No, I'm suggesting that it's a lot more complicated than supply and demand. I don't think it's even the dominating force. People do not try to optimize money earned. Supply and Demand is a factor. My point is if you try to understand the employment market based only on supply and demand, your models are crap because they are leaving out lots and lots of other factors.

Making assertions about the labor market based solely on an analysis of supply and demand is not useful at all unless your goal is to argue ideology and not reality.


We have seen demonstrable evidence throughout history that "regulation" alone does not constitute the competitiveness of the market or the cost of housing. It is in large part a straw man formulated by the GoP to deregulate megacorps for increased quarterlies wearing the shawl of improving the market for the everman. It is why, in large part, almost all regulation that would be decried as noncompetitive is propped up by special interest lobbies because it enables regulatory capture by monopolists.

Not to say there is no bad regulation, or that we are in a good state of regulation today, but thinking sliding this "regulation" bar up or down does anything but make the rich richer is naive as all hell. The first people to capitalize on new markets opened up by deregulation will be those with the most resources to exploit it, and there are infinite scenarios and influencers that impact business or housing that can drive prices up or down way more dramatically than contemporary regulation:

* The availability of credit to start business * The demand for whatever your new business would provide * The variables burdened upon employers to provide for their workers in the US that aren't levied upon them elsewhere (mostly healthcare) * The culture and climate of the area in regards to new business. Some parts of the country are so startup / business hostile local NIMBYs would protest a non-accredited business startup. * For real estate, its not just the draconian zoning and NIMBYism that drives prices, its the rampant use of it as an investment by the rich. * That is in large part caused by gross wealth inequality giving the rich so much money they cannot reasonably invest it in productive business so they hoard it in housing. * Developers will cater to the largest market of capital for housing, and right now - and for the better part of a decade, and to lesser degrees more further back than that - that has been the ultrarich who want properties that accrue value.

And infinite numbers more than that. Nothing, especially the equilibrium of necessities and the general labor market, is as one dimensional as "we need less regulation and everything would be better!"


> For real estate, its not just the draconian zoning and NIMBYism that drives prices, its the rampant use of it as an investment by the rich.

These go together though. The reason we have draconian zoning is to keep real estate prices high, because the rich want them that way when their money is invested in real estate. And the reason the rich speculate on real estate is that we have restrictive zoning that keeps the price going up.

If we fixed the zoning so that it was easier to build smaller units with more density and less parking etc. then construction companies would build those. Then the rich would have to buy twice as many units. But they don't suddenly have twice as much money, so the cost per housing unit comes down. The units would be smaller, but at least people could afford them. And then the fact that people don't have to buy more than they need would reduce the demand for larger units and generally make housing less of a worthwhile investment vehicle, deterring continued speculation.

> That is in large part caused by gross wealth inequality giving the rich so much money they cannot reasonably invest it in productive business so they hoard it in housing.

This is caused by the combination of low interest rates and low inflation. Money is cheap, so borrowing it to speculate with is profitable. But we can't raise interest rates because that's deflationary and there is already less than the optimal amount of inflation.

In principle we could fix this rather quickly by just printing a giant pile of money and giving it out to everybody at the same time as we raise interest rates. People would use the new money to pay back their loans and avoid the new higher interest rates, so you get neither inflation nor deflation (since the two forces cancel), just a return to sane interest rates and a major reduction in total outstanding debt.

> Nothing, especially the equilibrium of necessities and the general labor market, is as one dimensional as "we need less regulation and everything would be better!"

No, but there is a hierarchy. Good regulation > no regulation > bad regulation.

And good regulation is really hard, and bad regulation is a lot of what we have right now.

It would be great to have some real geniuses at the helm who can make everything better, but given that we don't, we're still better off to at least stop having the things that are actively making it worse.


Agreed. Two things can be true:

1. Regulation generally causes inefficiencies.

2. Markets tend towards market failure in the absence of regulation.


Supply and demand are not linearly correlated even if you do subscribe to this "law", so increasing the minimum wage may have a disproportionately small impact on overall job numbers, meaning greater total wealth held by minimum wage workers in aggregate. Do you really think Subway franchises are running on such razor thin margins that they'd be forced to shutter stores if they had to pay their workforce marginally more?


Most retail and fast food businesses are running on razor thin margins, especially when the economy starts to weaken. There are a few exceptions.

There was a lawsuit in the last few years between Burger King and its franchisees because Burger King required them to sell the double cheeseburger for $1. The franchisees could not afford the extra slice of cheese on the burger or they would lose money on it. This was the reason McDonald's created the McDouble which was two patties and one slice of cheese.

McDouble Story: https://abcnews.go.com/Business/Economy/story?id=6803935


> Supply and demand are not linearly correlated even if you do subscribe to this "law", so increasing the minimum wage may have a disproportionately small impact on overall job numbers, meaning greater total wealth held by minimum wage workers in aggregate.

The effect of not ever getting into the workforce at all is devastating to those few that don't make the cut. Meanwhile, the effect of a couple of dollars extra to those already in the workforce is comparably small.

Consider that minimum wage could be raised arbitrarily. If 10$ is too low and 15$ is better why isn't 20$ even better? Why not 30$? The argument for which cutoff to choose can't be based on some basket on what people need to live a certain standard (i.e. a one-bedroom apartment in some urban area).

> Do you really think Subway franchises are running on such razor thin margins that they'd be forced to shutter stores if they had to pay their workforce marginally more?

Some of them certainly do. Subway is in decline:

https://www.businessinsider.de/subway-closes-over-900-us-loc...

Lots of low to minimum wage employers indeed do have razor thin margins. For example, Wal-Mart only has about 4000$ of profit per employee. Companies like Amazon only lose money on their fulfillment centers.


> The effect of not ever getting into the workforce at all is devastating to those few that don't make the cut.

This devistation is a societal choice made by having a non-existent social safety net in the US. In other countries it's less devastating due to government programs and universal healthcare that protect people while still incentivising them to search for work.

You are using the lack of protections and support for the poorest in our society as an argument against paying them more.


> This devistation is a societal choice made by having a non-existent social safety net in the US. In other countries it's less devastating due to government programs and universal healthcare that protect people while still incentivising them to search for work.

First of all, I agree that raising minimum wage without a proper social safety net is completely irresponsible.

However, if you look at countries like France with "free" education, relatively high minimum wage, lots of labor protection and a strong social safety net, you will find massive youth unemployment. The social safety net is supposed to catch you from falling off the rope. If you're never allowed to get on that rope because you're not employable even at minimum wage, you're likely to stay in the net forever. Soon enough most people around you rely on the safety net and it becomes the social norm.


The US is so far away from that I wouldn't worry too much. See original article. People often seem to hypothesise and focus on bad things that could happen at the expense of bad things that are happening. The is plenty of room in between the two extremes of US and France.


> Do you really think Subway franchises are running on such razor thin margins that they'd be forced to shutter stores if they had to pay their workforce marginally more?

No.

However, individuals are not entitled to a job. Take it the low hourly wage, or leave it.

Same thing: not everyone is entitled to live in the bay area. Pay the rent, or move elsewhere.


Your theories about cheap housing being a boon for everyone is hardly a thorough, long-term analysis. Plenty of history shows that constructors will cut corners for profit and build unsafe and/or unattractive housing that is ultimately a negative impact on an area. There are also other problems with lack of restrictions, like how it is easier to tear up and build over virgin land than pave over old developments. This is the reason the industry is regulated. There’s no need to prove that to ourselves here on once more - has that theory worked recently in other countries?

Do you have any evidence or logic to demonstrate that people are inadequately houses currently due to over-regulation and not one of the other dozen factors? Such as (germane to the topic...) low wages relative to high prices, which can result from many economic causes such as interest rates, immigration and income disparity. For example, there’s plenty of housing being built in Denver right now, for people who can afford $2000 a month for a small apartment. The only factor stopping them from building apartments for $1000 a month is a profit motive, in that upscale developments have a higher margin. How would you propose to change that by deregulation?


> The only factor stopping them from building apartments for $1000 a month is a profit motive

At least in the Bay Area the high cost of housing is partially caused by construction labor costs, that are driven by the high cost of housing. There’s also a problem where an entire region generally has the same construction costs, but certain areas can command higher rents... Of course the developers are going to build where the most profits are.

While I don’t believe deregulation is a panacea, reducing regulations to make lower cost areas more competitive with the higher profit areas could be beneficial. For example development impact fees could be reduced, smaller unit sizes could be legalized and the legal process could be streamlined to reduce legal costs and uncertainty. That could in theory make projects in cheaper areas more competive with “upscale” neighborhoods.

Of course my analysis ignores the impacts that building in cheaper areas can have on the existing residents in terms of displacement, which is why deregulation is only part of the solution. Tenant rights and subsidized housing are equally important.


The main problem with regulation is zoning and NIMBY-driven development. Building codes drive up costs but zoning makes building impossible.

I agree that interest rates have a huge impact on overpriced houses, but it's not such a direct correlation to rent prices. In SF there basically is no construction but there is huge demand for rent. In other areas there is demand for expensive construction for "investment", but nobody actually rents there. In China this has led to entire ghost cities full of empty highrises. Investors are speculating that rising prices will take care of the missing rent income - and they will, at least until the next bust comes.

The situation where rent competition exists alongside building investment can only exist when both of these factors are eliminated. Interests rates need to rates. Zoning and NIMBY must go.


If you believe in supply and demand, minimum wage increases increase spending power in a group of people that tend to spend all of their money. This increases aggregate demand, leading to more jobs.

I'm not saying you can increase minimum wage as high as you like with no downsides, but it's more complicated than you're making it out to be.


That's the thing I hate about trickle down. Proponents argue that the increased savings will mean they'll hire more people, but they're not going to hire if there's no reason to. Instead, we just have less tax revenue overall. If you want more people hired, give tax cuts solely to the middle and lower classes. Give them more money to spend, and they'll spend it, unlike the rich. This then drives a need for more workers, creating a nice positive feedback loop.


If you treat people as commodity then I guess this kind of reasoning might work.


We've had multiple minimum wage increases throughout history. Many states are going through increases now of up to $5 over 4 years. So rather than hypotheticals there is ample evidence that you could use to prove your theories. Can you do that?


> If you believe that labor is not an exception to the law of supply and demand...

It's not an exception, but there are other concepts in economics that apply as well, like the multiplier effect.


This.

If we just look at supply and demand, it's a model where a business has one pool of humans for labour, and another pool for customers.

In reality, it's an incredibly complicated web where the labour associated with one business are the customers of another.

Changing the way the money is distributed within that web does not necessarily follow simple laws of supply and demand.

---

Update: I actually explain this to my kids. The money a barista earns making me a coffee goes to Netflix, or Uber, or Apple. They in turn buy PagerDuty. PagerDuty pays me. And they pay taxes. Which pays for our education.

Raising their income doesn't mean that the money just disappears from the economy, to everyone's detriment. That's actually the great thing about giving more money to labour. The amount of that money that goes to offshore tax havens is negligible.

Compare and contrast to Corporate Welfare.


The idea that regulation is the primary constraint on housing supply seems at odds with the fundamental assumption regarding real-estate markets: land owners seek the 'highest and best' use of their holdings. In the US, housing is generally a 'lower and worser' use. Usually above agriculture and often below transportation infrastructure. Hence, housing was never on the table for the HP campus that became Apple's spaceship.

Even where housing is the highest and best use, affordable housing is a 'lower and worser' use when 'affordable' means below market rate. 300 units of luxury housing requires about the same resources as 300 units of 'affordable' housing. And more work to secure financing (e.g. tax credit syndication and competitive application processes), more entitlement work in NIMBY local politics, and results in lower gross revenue with which developer fees are often correlated.

To put it another way, the rational economic model dictates that a 0.10 probability/year of selling a parcel for $10 million based on commercial use trumps a 0.13 probability/year for $5 million sale based on residential use. Of course the model needs to be more nuanced. With commercial uses the sky is the limit. There's some probability of a commercial sale at $50 million, e.g. when part of a multi-parcel acquisition or in other circumstances where the value of the parcel is determined by economic activity rather than resale.

The rational actor economic model implies that converting undeveloped or obsolescent commercial property to residential use is always unlikely. It's only a no-brainer the extreme obsolescence and high residential prices of lower Manhattan that industrial buildings get downgraded to residential lofts. At the other end, money parked in agricultural land is likely to have higher returns when the land use is upgraded to a commercial or industrial use than to a residential use. Even land upgraded to a residential use, is likely to provide higher returns from an upgrade to high end dwellings than affordable housing.


Since we’re theorizing here I’ll take a stab. A 2.5X increase will hit a lot of jobs that we don’t think of as minimum wage today. That will cause more automation in many professions, which in theory should drive down costs. This could mean it becomes cheaper to do things like construct housing, making it easier for the government to build affordable housing.


The alternative to automation is to just eliminate jobs and shut down shop. For instance, if it's unprofitable to pay someone to bag customer's items, you're not going to invest into building some advanced bagging machine. You're going to have the customer do it themselves. Now the guy that used to be able to earn at least some income bagging items is out of a job.


If by "law of supply and demand" you mean the postulate that supply is monotonically increasing and demand is monotonically decreasing with price, then you'll have a hard time finding any product that strictly adheres to it.

What economists call by that name is just a notation that carries no predictive power.


If minimum wage gets raised by 2.5 and it creates job loss wouldn’t that have to potential to still not effect people because they would only need one job instead of 2.5?


It's a bullshit calculation. It's putting federal minimum wage against the latest rents in urban areas, while maintaining the "you should only spend 30% of your income on rent" mantra.

In reality, people in urban areas earn more than federal minimum wage, they spend more than 30% of their income on rent and they don't necessarily live alone in one-bedroom apartments, which is always disproportionately expensive. They're also not working 2.5 jobs, unless it's part time jobs.


Currently inequality is high, companies are making huge profits and more and more money is going to the executives and shareholders of companies. If a company is making large profits and the minimum wage is increasd to a point where they are making a more modest profit it is still in their interest to employ the workers to keep making money.

Also, read about labour monopsony power. There are other factors at play than just supply and demand that effect the price paid for labour.


This article seems to _repeatedly_ misuse the metric 'per hour', or assume that the posited worker was able to work two jobs as the same time. Example:

> If a worker holds two full-time minimum wage jobs, they'd be earning $14.50 an hour total

No. They'd be making $7.25 per hour, and working 80 hours per week. Unless again they're able to work both jobs simultaneously, which very, very few people are (I've seen parking garage attendants manage this).

I wish the author would rewrite the article in terms of monthly income / hours worked per month.


Measuring income as a multiple of a minimum wage job is something most of us can understand, and it brings into relief the inadequacy of the minimum wage.

It's like reporting distance in football fields.


The purpose of a minimum wage job should not be to live on your own and support a family. Some jobs aren’t worth $17/hour

Instead of increasing the minimum wage, why not offer job training, universal health care, have reasonable zoning laws that make affordable housing possible, get rid of regulatory capture that forces undue licensing to do things like braid hair, make the Earned Income Tax Credit easier for employers to distribute during the year, make child care more affordable?

Why put the burden of social policy on private businesses instead of society through the government where it belongs?


> Why put the burden of social policy on private businesses instead of society through the government where it belongs?

Because 1) Businesses just like people benefit from the conditions created through government spending, and therefore have some degree of obligation to support that spending via taxation, 2) businesses are in some way a part of society, and 3) I'm not sure how you're distinguishing 'through the government' vs something else.


I never said that business shouldn’t pay taxes. But what do you think is going to happen to the local pizza shop that my 16 year old son and his two friends work at that probably is only making his owner $50K a year once they have to pay them a “livable wage” of $17/hour?

https://www.entrepreneur.com/article/228698

It’s amazing that HN posters, many working at unprofitable companies funded by VCs are more than willing to tell other companies how much they should be paying their employees when they actually have to do the unheard of business move of running a profitable business instead of losing money year after year hoping for an “exit strategy”.


> I never said that business shouldn’t pay taxes. But what do you think is going to happen to the local pizza shop that my 16 year old son and his two friends work at that probably is only making his owner $50K a year once they have to pay them a “livable wage” of $17/hour

I dunno, the same thing that happens in other countries with significantly higher minimum wages? Some prices go up, some people in the economy make a little less, and overall the floor rises.

I would note that there is more than one way of looking at the problem than just "raise the min wage to $17". Another way would be that we need to lower the price of entry level apartment rentals; or a mix of raising wages by some amount and lower rental prices till we achieve a middle ground that we as a society find ethical.

> It’s amazing that HN posters, many working at unprofitable companies funded by VCs are more than willing to tell other companies how much they should be paying their employees when they actually have to do the unheard of business move of running a profitable business instead of losing money year after year hoping for an “exit strategy”.

Please don't make assumptions. None of that describes me.


Please don't make assumptions. None of that describes me.

Seeing that HN is completely supported by a VC and serves an advertisement for YC, I think it is relevant.


Your 16 year old son isn't really representative of the sort of folks depending on minimum wage incomes.

https://www.nytimes.com/2014/06/10/upshot/minimum-wage.html


You saw the part of my post where I advocated for the EITC? From the article:

About 12 percent of those who would gain from an increase to $10.10 live in households with incomes above $100,000. This group highlights the fact that the minimum wage is not nearly as well targeted toward poverty reduction as the earned-income tax credit, a wage subsidy whose receipt, unlike the minimum wage, is predicated on family income.


And it's less that the rich receive some benefit than that the burdens and benefits are widely uneven. If the rich pay taxes and then receive some percentage of them back in benefits, well, BFD. It doesn't make much difference whether you pay $30,000 in taxes by paying $30,000 directly or by paying $40,000 with a $10,000 credit.

On the other hand, if you say that people who had been making $10 have to make $17, that's a real kick in the teeth to the person who had been making $20 and is still making $20 only now things cost more because on the supply side it's more expensive to hire and on the demand side there is more competition for goods and services.

Meanwhile the money isn't actually coming from the rich, it's coming from people who hire the poor, which isn't the same thing. The burden it puts on small shops is larger than the burden it puts on Apple.


> Businesses just like people benefit from the conditions created through government spending, and therefore have some degree of obligation to support that spending via taxation

The issue is that a minimum wage isn't a general tax on businesses that benefit from the conditions created through government spending, it's a tax on only those businesses that hire unskilled workers.

If you want a wage subsidy then why put the burden on the small shops that were keeping people out of unemployment instead of spreading the burden evenly by instituting a UBI?


I think it's helpful sometimes to think of the minimum wage not as a prescribed payment, but as a ban on employment below some level. We've decided that it's better to be unemployed than to be paid less than X.

That's OK, we ban lots of other things people might otherwise voluntarily agree to -- like overly dangerous jobs, where we as a community take a longer-term view than the guy desperate to make the rent. Partly because we'll be on the hook when he lands himself in hospital.

But banning more and more jobs doesn't obviously improve matters. It seems that we've already banned many starter-jobs, the sort teenagers used to work.


> I think it's helpful sometimes to think of the minimum wage not as a prescribed payment, but as a ban on employment below some level. We've decided that it's better to be unemployed than to be paid less than X.

Which is kind of the point. You help people by giving them options, not by taking them away.

Comparisons to workplace safety rules are inapt because the worthwhile ones are anti-stupidity rules. It doesn't help anybody to have unsafe working conditions, which means every instance of it is a mistake. When someone gets hurt they're harmed and the company is liable, which is worse for all parties than preventing the harm to begin with. When designed properly, the law is only prohibiting something that nobody has any legitimate reason to ever do.

Whereas there are legitimate reasons to pay someone $10/hour -- you derive $11/hour worth of value from it and their second best alternative was to make $9/hour (or, when that's prohibited too, to be unemployed).


Whether you think it should be higher or lower, my main point is that I think you should flip things around (banning instead of prescribing) and see whether you agree with yourself.

I'm not sure workplace safety is so different -- I think of most of these regulations as implicitly putting a price on a a life (or a price on a "nanomort" which seems less crude). The price has risen over time because we got richer (which is great!).

If we applied today's standards to (say) a steel mill in 1900 Pittsburgh, the cost of complying would be more than the total wage bill, so it should clearly not exist... but these were great jobs, people moved thousands of miles (and took the 1/10 chance of an early death) because it was better than trying to grow barley in Quebec.

That said, there are lots of other regulations besides safety, which (like the minimum wage) ban activities between consenting adults. Like cutting their hair for money, need a state license in how many states? Or offering legal advice, needs a license in every state. These all reduce opportunities, and some are insane, and some aren't.


> Whether you think it should be higher or lower, my main point is that I think you should flip things around (banning instead of prescribing) and see whether you agree with yourself.

Fair enough.

> I'm not sure workplace safety is so different -- I think of most of these regulations as implicitly putting a price on a a life (or a price on a "nanomort" which seems less crude). The price has risen over time because we got richer (which is great!).

Sure, but that's the first order rule. If you kill someone, you're liable, and then we set a value on human life, e.g. a million dollars. That's not prohibiting something, it's pricing an externality. If you can spend $1 to prevent a 25% chance of death and you don't, you're an idiot, because that has an expected value relative to the alternative of about negative a quarter of a million dollars. On the other hand, if you have to spend a billion dollars to prevent a 0.1% chance of one death, you're not really expected to do that.

The second order rule is, OK, if you don't spend the dollar in the first case then we fine you even if nobody has died yet. The second rule is basically harmless because due to the first rule, nobody who was paying attention would be violating it even if it didn't exist. It only prohibits stupidity. (Assuming it isn't imposing a burdensome compliance cost in the process, in which case it could get back to being a bad rule as the costs rise to exceed the benefit.)

> If we applied today's standards to (say) a steel mill in 1900 Pittsburgh, the cost of complying would be more than the total wage bill, so it should clearly not exist... but these were great jobs, people moved thousands of miles (and took the 1/10 chance of an early death) because it was better than trying to grow barley in Quebec.

But this is just a consequence of placing a higher value on a life to begin with. If a life is worth a million dollars today but only $5000 in 1900, then spending $8000 to reduce the probability of death from 10% to 0.1% is well worth it today but not in 1900. On the other hand, spending $1 to reduce the probability from 25% to 10% is still worth it in 1900, so requiring at least that much would still have only been an anti-stupidity rule even in 1900.

The cost of a law against doing something inherently irrational is only the bureaucratic overhead cost, assuming it really is only prohibiting something inherently irrational. The cost of a law against doing something that people may have a legitimate reason to do is necessarily more than that.

> That said, there are lots of other regulations besides safety, which (like the minimum wage) ban activities between consenting adults. Like cutting their hair for money, need a state license in how many states? Or offering legal advice, needs a license in every state. These all reduce opportunities, and some are insane, and some aren't.

I'm inclined to think that nearly all of them are insane and most of the justifications are bunkum or could be resolved in more efficient ways.

For example, you say lawyers. There are good reasons to expect high standards from people like prosecutors and public defenders and the attorney general. But all of those people work for the state. A requirement that they be members of the bar then isn't a prohibition on private transactions, it's a job requirement by the state-as-employer.

On the other hand, if you have a lawyer who is writing contracts or filing trademark applications, the case for licensing is dramatically weaker. The argument is essentially that they might be incompetent or malicious. But when isn't that the case? Should we start licensing florists and retail clerks? They could poison someone, after all, or steal from the register, or make change inaccurately and come up thousands of dollars short, or create liability or loss of goodwill by shortchanging customers.

And you could still have a bar association without a legal requirement of membership to practice. Then customers that find enough of a benefit to pay the premium for an accredited attorney will do so. But if the benefit turns out to be so small that nobody even cares to demand it then how is it so large that we need the law to require it?


I totally agree that almost all of these job licensing regimes should be weaker, including doctors. But I'm not sure they should be non-existent. The world in which you have to spend half an hour googling which taxi companies aren't death-traps before you can leave the airport is really less efficient.

Re workplace rules, I don't mean literal payouts to widows, I mean rules about this kind of machine needing that kind of guard, and this inspection schedule, and safety gear that withstands this much impact... there are millions of highly detailed rules, and they are all adapted to the trade-offs and costs we face today.

Any one of these rules you could say "of course it's a good thing that guys on scaffold must have safety clips". But the sum of all of them encodes, implicitly, that a nanomort is worth X dollars. And imposing all of them in 1900 would have made any factory completely impossible.


> The world in which you have to spend half an hour googling which taxi companies aren't death-traps before you can leave the airport is really less efficient.

The existence of Uber seems to be evidence to the contrary. All of their customers had the option of hiring a taxi and yet they don't. If the unregulated alternative is worse on net then why do people choose it when given the option?

> Re workplace rules, I don't mean literal payouts to widows, I mean rules about this kind of machine needing that kind of guard, and this inspection schedule, and safety gear that withstands this much impact... there are millions of highly detailed rules, and they are all adapted to the trade-offs and costs we face today.

What I'm saying is that the existence of payments to widows already implies the individual details. If having a guard on your saw costs $2 and reduces the probability of a $50K payout by 5%, a rational business installs the guard whether there is a specific regulation requiring it or not. So passing the regulation doesn't prohibit anything that anyone was still doing, unless they were acting against their own self interest to begin with. The prohibition shouldn't hurt anyone because anyone who had been doing the thing being prohibited was only doing so in error. (Assuming the regulation is actually efficient and not creating unnecessary rigidity or imposing requirements whose costs exceed their benefits.)

Whereas taking a job for $10/hour when no $20/hour job is available to you is hardly an error.


So it’s better to not have any money than some money? That seems very paternalistic.


And in that case increasing minimum wage makes the problem worse. Investments will go even more toward businesses that are not labor intensive like tech and less toward businesses that rely on unskilled and semi skilled labor - increasing income inequality.


And of course all jobs are worth some minimum. If somebody wants somebody to invest their time to do something for them it costs money. No matter how easy or simple it seems to be. And ALL time of ALL people should have a minimum monetary value associated with it to ensure ALL people can be members of society that don't have to sleep on the street or in cars, no matter what job they choose.

The companies CAN decide NOT to hire people, if it is not worth to them of course.


Like I said above, that’s easy to say for people in the tech industry many of whom work for companies that don’t have to worry about being run in a manner to be profitable....

How many people could YC funded companies hire if they had to bootstrap businesses using their own money?


If a company cannot afford to pay a living wage for its full time employees, is it "profitable" in any meaningful sense? The owners of that company are pushing the burden onto the rest of society.


So it’s bad for a mom and pop franchisor to have to operate profitably and pay minimum wage but not for Silicon Valley companies that don’t have to operate profitably and who can afford to pay their workers six figures because of VC funding?


The mom and pop are pushing their costs onto the rest of society, ie public money. We at least try not to let people starve in the street, and so provide government services for the poor. The VCs, for all of the faults of that system, aren't.


And what happens when the VC funds lose money that they got from government run pension funds and the taxpayers have to make up the difference?


What you're pointing out is definitely an important contradiction. Talking about "mom and pop" shops is a bit of a distraction -- a minimum wage gives even large companies an excuse to become some of the worst offenders, which, in part, contributes to the VC-style sytem.

Take a company like Amazon. Up until recently, they were known for paying their own warehouse workers low or minimum wage and working them like dogs. This is a highly profitable company. What have highly profitable companies done with their profits, by and large, since 2009? Stock buybacks and other types of security investments. This increases the pool of money that can be used for speculation by the wealthy -- and VCs, who can then "speculate" and keep otherwise "non-viable" businesses afloat.

So while I don't necessarily agree with what you say about the small shops, you do have a valid point. These are structural problems.


> Instead of increasing the minimum wage, why not [bunch of reasonable ideas...]

Because wealth is roughly correlated with political power, and the people who hold the vast majority of the wealth in the US don't agree with your priorities.


That depends on what the purpose of the goverment in that said country, if the purpose is to take care its citizen well being then yes all of those you mentioned need to be done by the government.


> The purpose of a minimum wage job should not be to live on your own and support a family.

It's pretty clear it was intended to be. "By living wages, I mean more than a bare subsistence level — I mean the wages of a decent living." - FDR

> Some jobs aren’t worth $17/hour

The value of the minimum wage has been eroded since the 50s/60s by inflation. Businesses clearly survived (and thrived!) then; its purchasing power now is 1/3 lower than the peak in 1968. It should, at least, be safe to adjust it for inflation.


"it's pretty clear it was intended to be."

During FDRs time, we didn't have the looming threat of automation or competition from countries like China, where they can pay workers a fraction of our minimum wage and productions are priced equally as low.

"Businesses clearly survived (and thrived!) then; its purchasing power now is 1/3 lower than the peak in 1968."

This may be true, but raising minimum wage will result in an overall increase in prices for everyone, including the recipients of that wage increase.

It's really just a shell game anyway. You increase minimum wage, prices eventually catch up (IE: inflation), and those people that had minimum wage increased are now back in nearly the same position because their value has been increased artificially. This may take 5-10 years, but it will happen.

The correct (and more difficult) solution is to educate/train those workers so they can provide more value to companies.

Politicians don't want to even talk about it because giving free money to people sounds so much better to most people and wins you votes.

Other reasons for high cost of rent is regulation:

San Francisco also has one of the highest percentage of homelessness and one of the highest cost to rent. One of the reasons? Housing regulations prevents many new building projects from completion. The supply is low and the demand is always high. This could be solved by simply decreasing regulations. Why isn't it being done?


Why not all of the above plus increase the minimum wage? Many of the ideas you listed would actually help small businesses also, because it's not like small business owners don't have kids, face housing scarcity, etc.


How is the small business owner that only makes $50K a year (see citation on another post) going to stay in business?


If needed, you could easily create exceptions for very small business with few employees, or businesses where employees are family, or receive other forms of compensation (i.e. housing). We already do this for all kinds of labor laws.


Just following a thought... they raise prices. Since its the whole (unskilled labor) economy that has this issue, they all simultaneously raise prices. By definition it should be (in general) proportional to the wage increases, and if its for food or services consumed by the poor, they would be right back where they started.

But if _some_ of the customers from unskilled labor shops are not minimum wage employees, it gets a bit more interesting. Then its a bit more like a tax. But now only on consumers of said services. That could theoretically mean a relatively higher standard of living for the poor. Personally I"d rather see a general tax targeted towards something beneficial to everyone (but the poor) especially, like universal health care. Then it would at least be directly targeted at the problem, instead of... whatever the actual outcomes of economy wide minimum wage increase would be (I'd bet it would mostly benefit the slightly better off poor and be a detriment to the slightly worse off poor, who companies would probably just let go).


Quite normal everywhere in the world. It almost sounds like a contradiction in terms: “minimum wage” and “own apartment”. Here in Switzerland, I probably won’t be able to ever afford my own apartment, despite earning about $100k/year (and with “minimum wage”, it is solidly in a realm of fantasy). Were things different in the United States at some point?


"Were things different in the United States at some point?"

Anecdotal, but when I was a kid in the 80s, minimum wage jobs were mostly part-time, and meant for teenagers living at home, bored retirees, etc.

Unskilled workers with any sort of ambition could fairly easily get 2 to 3x minimum wage and afford a very modest studio apartment.

Once manufacturing jobs went away, it seemed to kill that off. Before that, even if you didn't work in a factory, other employers had to compete for that wage level.


Exactly. The expectation that any and every job should be a path to complete financial independence is ridiculous.


True, though ambition and work ethic isn't always enough for basic financial independence now. It used to be.


It's afford to rent not afford to own. There are people with full time jobs living out of cars.

I'm sure at 100k you can afford to rent a one room apartment.


Yes, of course. OK, renting is another story.


Americans use the word apartment as something that is rented. You don't buy an apartment, well unless you're a landlord. It's owned by somebody else.

I think the way you are using the word is our "condo", perhaps.


They're talking about renting I believe. In American English apartment generally means rent, and condo generally means own.

The article really should have made this clear though.


US here: I'm baffled by the assumption that every single job must pay enough for a 1BR apt. When I was 14, I worked in fast food, and never expected to be able to afford anything other than hobby dollars.

We have a shortage of totally-unskilled jobs that can support a family if both parents work, and that has translated into calls for things like increased minimum wage.

But there is not a shortage of jobs for those willing to put a year or two into trade training, and those often pay well enough to buy a home in a small town.

Many of the fastest growing jobs (bls.gov)[1] pay well over $10/hr and require little a priori skills.

Here you can make 2-4 times that with no education [2]

And here you can take 2 years of school to get a job that pays quite well[3]. Well enough to easily buy your own home and remain employed in a fast-growing sector for life. In some communities, those two years are paid for as long as you go to tech school in the same district you went to high-school in.

This minimum wage argument hides the real opportunities. Re-training and education is the key.

1. https://www.bls.gov/ooh/most-new-jobs.htm 2. https://www.bls.gov/ooh/occupation-finder.htm?pay=%2455%2C00... 3. https://www.bls.gov/ooh/occupation-finder.htm?pay=&education...


Are you talking about "owning" an apartment? In that case I would agree, else I would have to highly doubt your statement.

(Source: Similar income, living on my own and in Switzerland, within 30min of a major city)


Yes, owning.


> . Were things different in the United States at some point?

No, at no point in the history of the US, even when the minimum wage was first created, would the minimum wage have been enough to afford the median 1BR.


Back in the 1950s, minimum wage and CoL were based on a metric of a single woman living very frugally and sharing a 2-bedroom apartment.


> Were things different in the United States at some point?

No, but there is a political movement in the United States toward a universal income upon which anyone can live comfortably and this is a symptom of that. Jobs that were previously considered in the realm of "teenager jobs" are now perceived as actual career tracks and a means toward a living. I'm not sure how flipping burgers is a career, but to each his own. On the other side, those same jobs are also being heavily assaulted by automation.


It's not a matter of perception. Since the recession, most of the new jobs created have been of the low/minimum and part time variety.


> Jobs that were previously considered in the realm of "teenager jobs" are now perceived as actual career tracks and a means toward a living.

This is a funny way of writing "previously lucrative careers available to blue-collar workers have largely evaporated".


> "previously lucrative careers available to blue-collar workers have largely evaporated".

This is a funny way of writing "citizens should just accept any scraps they get"


Trades are as strong as ever. Only manufacturing jobs evaporated, but this is not about automation, this is because of a certain country starting with “C” (not Canada).


I don't think they stopped being teenager jobs, I think the education system across America failed to keep up with the world. Some schools can't even do 5 day school weeks anymore, and the switch to standardized testing may have been in good faith but it just led to less time for practical skills to be taught.

Imagine if every high school had the budget to run a modern, staffed programming lab, garage, chemistry lab, hell astronomy lab? If kids could get hands on, across America, at age 13? I desperately wish I had Musk levels of wealth if nothing else so I could just start plopping labs across middle America, where as a child my own craving for a hands on education was never delivered by my public schools.


> Imagine if every high school had the budget to run a modern, staffed programming lab

I don't need to imagine. If you work that minimum wage job for ONE DAY, you'll have 100 bucks in your pocket. You know what you can do with that money? You can buy a ten year old enterprise grade server that's been decommissioned and is for sale on eBay, with free shipping. Now you go on /r/homelab and get free help to get it up and running. All the software is free.

There are always excuses, but let's not sit here and pretend like things are more difficult now than they were before. They've never been easier and we've never had as much opportunity.

When I was growing up, any capable computer, used or new, was $3k and there was no internet, no help, and no free software.


This is really getting delusional as far as the average person's abilities. It's also clear that you have been poor. Besides, if you are working minimum wage jobs, you don't have $100 bucks in your pocket because you need that money to pay rent and repair your shitty car so you can keep your job.


As a kid, if you’re working a minimum wage job, it’s not to pay rent or to repair a shitty car you don’t have.


We're talking about adults, not kids.


Interesting, do you have more resources I can share with people?

Generally, I think you're right that a lot of the information is available. I think maybe there's a misunderstanding with just how little "money availability" there is for someone in rural America working a minimum wage job, hence why my dream is to target people while they're still in school.


A few decades ago, you could support a family and buy a house on one income, with only a high school education. That is not remotely true anymore.


Not true. You can go into the trades and make a very good living with just high school as formal education. There are plenty of software devs that never went to college. Plenty of people across the country do just fine on one income without college. The difference now is that somehow people started considering “fast-food cashier” as an actual “career.” Somehow every single job in America is supposed to support a family. That ridiculous. Some jobs are and should be “teenager jobs” or “extra money” jobs — not “support a family of four and rent an apartment” job. Minimum wage makes up such a small percentage of workers that it seems strange to expect those jobs to be able to support families and housing.


But, when your union contracts use minimum wage as the base for their calculations, it's far easier to advocate for raising the minimum wage than it is to negotiate a higher multiple, etc.

The contract for the cleaners in my office[1], for example, starts its base wage calculations by adding $0.50 to the minimum wage. All the increases and adjustments begin at that number.

[1] http://www.seiu32bj.org/wp-content/uploads/2017/11/2015-CAD-...


There's nowhere near the number of highly-paid manufacturing jobs anymore. You can make an argument that it's possible for someone to make a good living with a HS education if they play their cards right, but it certainly isn't as probable.

There just is nowhere near the amount of well-paid blue collar jobs, so there are not as many people getting those jobs. Simple as that. This is a big part of why income inequality has become bad. You seem to think that people have suddenly become much more lazy and shiftless than in the past, which is


It wasn't normal at all anywhere in the world until very recently. The world has changed so much in just 50 years that people often just flat out don't believe me when I tell them what it used to be like. Even when I'm willing to present evidence, they just don't believe it.

I'm not sure how to overcome that.


Article didn’t seem to spell out the math on the methodology being reported on.

Essentially they’re saying someone would need to earn $17.90 per hour to afford a one bedroom apartment. This is apparently calculated by taking the number $930.80 (presumably the average one bedroom monthly rental) and dividing it by .30 (the article states this is a common measure of affordability to spend 30% of your income on housing costs) which equates to $3,102.67 monthly income. They then multiply this by 12 to get a yearly income of $37,232 which works out to $17.90 per hours for 40 hours per week.

So the most important number seems to be they’re saying a 1 bedroom apartment costs $930.80 and they don’t take into account the fact that people often live with either a significant other or a roommate and that multi-bedroom apartments cost less per resident on average.


> they don’t take into account the fact that people often live with either a significant other or a roommate and that multi-bedroom apartments cost less per resident on average

If the wage:rent ratio is so that you need 2.5x full-time jobs for one-bedroom apartment, then it naturally follows that even two persons doing full-time jobs will not afford even a one-bedroom apartment, never mind a two-bedroom one.


It is misleading to compare the minimum wage to the 40th percentile rent. Who do they thinking is renting places below the 40th percentile? The 40th percentile income is $30k.

When I was poor, I wasn't renting at the 40th percentile. And I split the rent with others as is common when you are poor. Trying to survive on minimum wage sucks but this study is exaggerating the reality to make their point.


The minimum wage dominates so much of our discourse considering it is such a small ~1% of total US labor with the bulk of actual minimum wage earners being people who are likely in college or still living with their parents.

Sorry, but even high income earners in expensive cities generally go the route of having roommates. Those are the breaks until we can build more housing stock, and even then it wouldn't likely be wise even if you could squeeze by.

Articles like this are pointless, the fact of the matter is that a 1BR is not some kind of entitlement and most people earning minimum wage don't tend to stay there all that long.


One thing usually absent from these threads is the idea that there should be more variation in the housing options available.

So while we could argue over raising the minimum wage 2.5 times... I think it'd be much more useful to consider the thought exercise of creating a wider set of housing options. Perhaps full time minimum wage work could reliably afford a single person some sort of minimum viable apartment or room - small, no frills shelter. But this would require more alternatives than lots of "luxury" apartments and a constrained supply of existing "normal" apartments.


Many well-intended regulations push against the creation of small apartments. Changing the plan to have two 300 sq.ft. units instead of one 600 sq. would cost nothing in building material, but both those flats need two exits (for good fire reasons!) so you add another staircase, and both may need parking (by local law) so you add another 200 sq. ft. outside (per floor), and maybe they all need to be wheelchair accessible (ADA) so maybe you need a second lift, or extra corridors... and suddenly the small units aren't 50% the rent, but 80%, and so they don't get built.


Sure, there is a wage problem. My issue with the way the cost of one-bedroom apartment is calculated. It is based on the HUD fair market rents (FMRs) at the "40th percentile of rents that a family can be expected to pay". That means that 39% of one-bedroom apartments are cheaper than the rate given. If minimum wage people are supposed to have a 40% apartment, who is supposed to live in the 1-39% apartments, middle class?

I expect the lowest 10% of wage earners to live in the lowest 10% apartments. I'd like to see what these numbers would show then.


The are many well paying jobs available that are not getting filled. Go learn to weld, operate heavy equipment, plumb, etc... The real question is why anyone older than a teenager works for minimum wage (at least more than temporarily).

https://mrwf.jobboard.io


All of these discussions ignore a reality: In a global economy both capital and industries are mobile.

If the business equation is made unsolvable at location A and a solution can be had at location B, both capital and, eventually, industries, will migrate. And people will lose their jobs.

I am surprised this is even an argument today. How much more evidence does anyone need than China? Try to buy a bath tub or a computer made in the US or Europe and see how well that goes.

Those jobs evaporated along with the corresponding industries and the ecosystems that supported them.

It’s a combination of labor, regulatory and tax policies that continue to drive nail after nail into more and more coffins. I say this as a manufacturer with over thirty years of entrepreneurial experience in the US and Europe.

Those who support these policies love the poor so much that they make more of them every day.


Minimum wage jobs are not intended to be full time permanent work.

The problem is that a ton of people end up treating them as such because they don't feel they can do any better.

That's what needs to be fixed, really. The idea that stuff like cycling about doing food delivery is going to pay for a nice flat in city like London is absurd.

It's a job for kids to do whilst they learn how employment works.

In smaller towns in the UK you can buy a small terraced house with two min wage earners.


It’s not that they don’t feel they can do any better, it’s that they actually cannot get any better paying job.


The real question to my mind is why people need multiple part time jobs instead of a single full time job.

My assumption is that the fixed cost for a full time job is high enough that paying someone less then some amount doesn't make financial sense. Further there's a group of people out there getting part time jobs because the pay they'd get is less then that amount.


We mandated expensive benefits (healthcare for example) for full-time workers.

Now those workers must take multiple part-time jobs, with extra commute costs, and of course they still don't get those expensive benefits.


How is it possible that rents are rising while incomes aren't? Is the housing stock shrinking, or growing slower than population? OK there maybe some banking/Fed/investment related trickery moving housing prices (to buy) irrespective of "organic" demand, but not rents, right?


Business is innovating through extraction of ever greater wealth from its workforce. Commercial entities are organisms evolving in a savage environment, doing what it ever takes to survive. Labor, in contrast, does not innovate as quickly in response and is being eaten.


Come on, it is supply and demand. Rents can't be raised unless demand is rising or supply is falling. Neither seems to be the case.


There's a housing shortage in many/most metro areas, so rents go up as demand exceeds supply.

So far, the demand for minimum wage type labor has not been severe enough to raise those wages.

My guess is that minimum wage jobs are high turnover, and employers at that level are just used to constantly being in hiring mode. The job of a manager, and a writer of procedure manuals, has probably taken on more of "how to quickly onboard someone into acceptable productivity, and make their hiring worthwhile until they inevitably quit."

It may even be cheaper to churn, rather than pay longevity raises and benefits.


How does the demand exceed supply? It would mean that the increase in number of people is higher than increase in amount of available housing. It doesn't seem to be the case.

If this is about everyone flocking to areas with best economy then well, it could be a problem for highly paid professionals but hardly for minimum wage workers.


Iron Law of Wages:

The iron law of wages is a proposed law of economics that asserts that real wages always tend, in the long run, toward the minimum wage necessary to sustain the life of the worker. The theory was first named by Ferdinand Lassalle in the mid-nineteenth century. Karl Marx and Friedrich Engels attribute the doctrine to Lassalle (notably in Marx's 1875 Critique of the Gotha Programme), the idea to Thomas Malthus's An Essay on the Principle of Population, and the terminology to Goethe's "great, eternal iron laws" in Das Göttliche.[1][2][3]

https://en.wikipedia.org/wiki/Iron_law_of_wages

Law of Rent:

the rent of a land site is equal to the economic advantage obtained by using the site in its most productive use, relative to the advantage obtained by using marginal (i.e., the best rent-free) land for the same purpose, given the same inputs of labor and capital.

https://en.wikipedia.org/wiki/Law_of_rent

Wages tend to subsistence. Rent tends to full surplus value.


How is this compatible with the dramatic improvement of living standards worldwide we observe over last 150+ years? Vast majority of people don't earn anything except wages.



Too many people exist compared to the past. Optimization has made it where less employees can cater compared to the past. People used to die earlier in life and inheritance was more of an impact upon spending. I doubt we're even seeing the worst situations from people living off minimum wage. Give it 20 more years and people will riot (if not already) or universal income will have rolled out by then.

I live close to my employer and take Uber when I rarely need to go somewhere far. A good amount of the drivers I've spoken to, have a middle class job and they're driving on the side. They do it for a few hours after work or on weekends and typically are raising a family. Minimum & even middle wage isn't what it used to be. A stay at home parent used to be possible for middle class and not only if you're in the upper range is when it can be feasible. Unless the stay at home parent can do work at home on the side it's not possible anymore for the low tiers.


It bugs me a lot that humanity cannot make shelter a basic human right, rather it's something you have to work for and most likely work for a lender to pay of your debt while juice running with excessive rates.


Why are people entitled to many things just because they are born?


Is it their fault that they are born?




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