US minimum wage has not increased since 2009 and is $7.50. How many people in the private sector are at the same job for 14 years with no pay increases. Minimum wage at a minimum should be tied to inflation and I think $15 an hour increase over 4 years is more than fair to employers. https://en.m.wikipedia.org/wiki/Minimum_wage_in_the_United_S...
What of the unemployment provoked by legally forcing the price of labor higher? Think about it: WHen the price of something goes up, do you buy more or less
of it? One might as well call the minimum wage the "ceiling employment".
Why use our imaginations to “think about it”, when we can look at the data and see what actually happens in reality?
The minimum wage has jumped up several times in the past due to government updates, and it has gradually shrunk over time due to inflation, and neither of those things has been particularly correlated with employment rates
According to the BLS, workers earning the federal minimum wage or less represented only 1.4 percent of all hourly paid workers in 2021. Taking into account all workers (not just those who are hourly paid), this small fraction would shrink even further, so I wouldn't expect them to have much affect on the overall unemployment rate.
Minimum wage changes are counterproductive in almost all instances. They consume a large amount of political capital, are rendered pointless by inflation and penalise those who produce less value than the minimum.
There are better policies to protect poor workers, like reducing taxes on the poor or allowing government welfare for those with jobs. These help workers without distorting markets and hurting workers. The only case minimum wages are useful is if all the alternatives are impossible.
Is this your opinion or can you cite some sources. My biggest mandatory expense is medical insurance and I hardly think that is driven by the minimum wage.
I don’t know of any good sources that cover this in terms of comparing policies. But most of my points (eg inflation negating minimum wages and the whole discussion consuming political capital) are self evident. The most extreme example of minimum wages failing is South Africa. I’ve seen interviews where people in poverty there want it to be removed since it just leads to more unemployment and/or black market employment below the minimum.
I don’t understand the link to medical insurance. In my country poor people get free healthcare. Low wage earners still get taxed, which I think is immoral and is exactly the kind of policy discussion that minimum wage proponents smother.
My point was in the US medical inflation far outpaces all other non discretionary expenses and it's not because of the minimum wages. Minimum wages affect business that pay minimum wage and that's more like non essentials like eating out or going to the movies. I can't speak to the economics of South Africa but I'm not sure what happened there would necessarily apply in the US. At least it's not obvious to me.
You're paid what you're known to be worth. All this stuff is about abdicating responsibility because it feels warm and fuzzy to be a victim, say it's out of your control, and those badies are responsible for your predicament.
The solution to people having low wages isn't them complaining about it, it's specialising into something with more demand or less supply, and getting better at personal marketing. But that's hard work, so they'd rather pour a bottle of whine.
Schools should do a way better job of facilitating this, but again, that's not ultimately their responsibility, but the responsibility of the parents to make sure they do.
You're paid somewhere between the minimum amount you'll accept and the maximum that the company is willing to give you (which in the case of some VC funded companies, may exceed the amount of profit you generate!)
Where you're paid on that spectrum depends on how much leverage you have vs. the company.
In other words, you're paid at the intersection of Supply and Demand curves, i.e. the Law of Supply and Demand.
How much a company is willing to give you is based on the value you create. Companies are not going to employ someone who costs more than the value they produce. If the person creates far more value than they are paid, then the person is apt to find someone else who will pay more.
Your pay is upper bounded by the value you create, but may be arbitrarily less, especially if there is monopsony, high barriers to moving/reskilling, and/or collusion among employers.
There's nothing inherently fair about the "intersection of Supply and Demand curves" because employers manipulate them both -- by lobbying for increased immigration, reducing competition through mergers&acquisitions, erecting legal barriers for competing businesses, colluding to depress wages, and reducing incentive to compete via common board membership & equity ownership.
That’s funny, the local McDonalds is paying $17 an hour when 2 years ago it was probably paying $10.
I’m with you on the immigration front. The local town’s largest employer almost exclusively employs immigrants in the plant. If they had to pay wages the rest of the town would want to do that job, it’d probably be what the hourly workers in the office next door make. They’d want more then, which would mean the salaried people would also want more. Instead the entire town’s wages are suppressed.
> How much a company is willing to give you is based on the value you create
Value in collaborative settings is extremely difficult to measure. How much is that DEI officer worth? The corp lawyer who, being honest, is not doing any high stakes work? The team lead who doesn't write code? The careful, slow IC vs the fast, sloppy IC? It's all guesswork.
The catch is that the company often knows more about your value (monetary, not personal) than you do. And they're often more experienced negotiators than you. So as a perspective employee you're normally at a disadvantage, unless you're at the tail of the bell curve or in a very in demand field.
Most companies are happy to pay you way less than you're worth if you'll accept it.
As an engineer I'm used to all the facts going on the table and then reaching a consensus. That's not how hiring works, the employer won't show you their cards. They ask how much you made in your last job, but they won't tell you how much the employee that left the position you're applying to was paid.
Employees don't show all your cards, either. Employers misjudge candidates all the time. That's how they wind up with deadwood, quiet quitters, thieves, drug addicts, etc.
I've had many, many people brag to me how they lied on their resume. Many have shameless posted here how they cheated their way through college.
Employees have the ultimate power - they can just say "no".
Supply and demand also applies to expertise, so it's hard to see how it can be any other way. There's an infinite amount of information in the universe, so there will always be someone with more 'cards', more intelligence, more cunning, etc., then you in a large enough sample size.
Well that's nice, except that organized labor has in fact improved the lives of workers time and time again. Companies generally come crawling back in a hurry, willing to make concessions they previously claimed were impossible, when the "unskilled labor" goes on strike. This wouldn't make any sense if people were already paid what they are worth.
Bargaining power exists. You cannot explain the world we live in without it.
Fictitious. They might temporarily give their in-group a little boost from time to time, but workers lose in the long run.
Rather than being simple-minded thugs looking to whoop-ass, they should be focused on guiding their members to increased individual bargaining power by upskilling them.
Historically, unions helped workers by improving working conditions in the early industrial revolution (limbs lost from unsafe equipment, deaths due to lack of fire escapes & inadequate ventilation, women paid 1/2 wages for identical work). It's hard to imagine workers "lost in the long run" by ending these.
Wiki [1] lists several studies with evidence that unions decrease worker suicide rates and occupational fatalities.
Unions have won concessions many times that workers did not win on their own. This is a simple historical fact. You cannot account for this, so your understanding is wrong.
>Rather than being simple-minded thugs looking to whoop-ass, they should be focused on guiding their members to increased individual bargaining power by upskilling them.
Why? The bosses are also simple-minded thugs looking to use their bargaining power to pay as little as possible. That's capitalism for you. We shouldn't have one set of rules for the rich and one set for the poor.
You can say that from the vantage point of being a highly paid tech worker. The world is your oyster and so on.
People who are less fortunate are well, less fortunate. They have less of everything to fight for their future.
Don't get me wrong, I am all about self education and self empowerment and being able to improve their lot in life, but system problems require system solutions.
>People who are less fortunate are well, less fortunate.
I agree. That's why I don't want the government to forbid them from taking a job that they want by setting a minimum wage. Cutting out the bottom of the labor market doesn't help poor people.
The "system problems" are fictitious and a way to distance the locus of responsibility away from the individuals actually responsible. I wasn't born a tech worker.
And the attitude that they have to "fight" for it is wrong and antisocial. They have to build it.
To be able to say that you're able to bootstrap all your way to tech worker is often determined by where you're born, or if you immigrated to a certain country.
It's never always your initiative that makes things happens.
And the attitude that they have to "fight" for it is wrong and antisocial. They have to build it.
So I misspoken.
Doing valuable and important things and getting paid well isn't necessarily the same thing. The market isn't the end all be all determining the value of your work.
Gold is priced more money than water, and gold is a useless trinket compared to water.
I don't see how you see it as bizarre. There is always some spread between what a person is paid and the marginal value they generate -- if there were not, then there is no way companies could return profits to shareholders. How much of that spread people capture necessarily depends on their ability to negotiate for it and unions can improve their negotiating position.
Unions do not change the value their members produce, which puts a ceiling on the wages they can negotiate. Companies won't hire people who cost more than they produce.
That is neither here nor there. There must be a gap between what people produce and what they are paid (or else there would be no profits) -- the size of that gap is what is up for negotiation.
the size of that gap is what is up for negotiation.
Not really. The gap is the ROI of what the compensation could otherwise be invested in. The negotiation is about convincing the employer that your work would have a higher ROI.
There is no easy way to determine "the ROI of what the compensation could otherwise be invested in", so this is not an exercise any one goes through when actually trying to sort out what wages to pay. Negotiating for a higher salary certainly involves convincing people you're "worth it" but I doubt any one actually tries to sort out what the comparable investments are and benchmark their employees against them.
In the long run, businesses that aren't able to realize comparable ROI with compensation to what they could otherwise invest in must go out of business, since capital will gradually migrate to its more productive uses; but this is assuming a kind of steady state model. It's certainly not going to be clear to managers or anyone else what the entire space of comparable investments actually is.
It's definitely not all investments. One realizes revenue from ramen shop compensation before the employees are even paid, whereas one realizes revenue from bonds only at fixed intervals of months or years, and from real estate after a period of years or decades. Yet short term bonds may actually be a fine alternative to auto manufacturing compensation, since it can take a few weeks or even a couple of months for a car to make it to the dealership from the factory.
> There is no easy way to determine "the ROI of what the compensation could otherwise be invested in",
That's exactly what cost accountants do. A large part of running a company successfully is determining the ROI of various uses of capital. The people running companies are not idiots.
It seems like you're saying that the way salary negotiation works is: the manager benchmarks the candidate's salary request against an alternative investment, like bonds, &c -- not an alternative candidate in the market place -- and then considers whether to spend that money on the candidate or on the investment.
Unions could be far more helpful. They should be focused on guiding their members towards individually increased bargaining power (by guiding them into more skilled specialties etc, and teaching them how to self-market), rather than the picket marching antagonistic crap.
We hear this all the time, but it seems largely irrelevant. There's no good reason to believe that the lowest-paid workers would lose their jobs if they had to be paid more. There are no randomized controlled trials about raising the minimum wage, but quite a few natural experiments suggest a minimal effect on unemployment with reasonable increases. Low-paid workers have won raises with collective bargaining while your theory suggests they would be laid off en masse.
There is no consensus amongst economists that raising the minimum wage as high as $15/hour would substantially increase unemployment. You are, of course, welcome to disagree with them, but you can't claim this is just Econ 101.
it might be hard to accept for the people that used to work there. right now, the labor market is pretty tight at the low end, so these hypothetical workers would likely not have much trouble getting a different minimum wage job. but it's not always like that. I remember it being surprisingly difficult to get my first minimum wage job as a teenage.
Somebody once said “Specializing is for insects” - I agree with that.
Also saying that fair wages is a problem of parenting makes you seem quite disconnected with the reality of what the masses face. I think what you say is correct but only to a certain degree. Circumstances matter a lot and most of the time one may not have control over that. People come out of that kind of hardship should not fall victim to unfettered capitalism where low cost is attained any cost. Minimum mage protects against that. Keeping the minimum wage low artificially keeps cost of everything artificially low - including your wages that you get for possessing specialized knowledge (white collar jobs). This results in the middle class having a low quality of life non materialistically speaking. This is what’s going on in America. Over the quality of life from a material goods perspective is better than third world countries but softer/finer things of life - family,relations etc people have very little time for and is objectively worse than most other developed countries as people spend their time doing multiple jobs or side hustles in the hopes to escape the rat race for good. Very few succeed.
Minimum wage protects against new workers getting on the employment ladder, and encourages outcomes like McDonalds replacing them with machines, as well as funneling them into the minimum wage circumventing "gig economy".
All of the fettering of capitalism is destructive acts done by fools, or narcissists to feel morally superior, that make economic and social problems worse, rather than being of any help.
The solution to the problems we are discussing here is to increase competition in schooling, so that kids get better equipped for their futures, so they don't fall through the cracks, and that requires schooling to move away from the socialistic publicly funded schooling and towards outcomes-focused private schooling.
Or we live in a demand starved economy and the fastest way to stimulate Gdp is getting dollars into the hands of people that will spend it.
If all the money is owned by the rich, that is only a fixed number of brain cycles to buy things
In addition, advancement in technology really comes from mass markets, and the masses having money funds those economies of scale that delivers life enhancing or saving technology to everyone.
Some might say their fair wage is their marginal product. Unfortunately, the typical output of our unionized public education system is pathetic and probably only capable of adding about $10/hr of value.
When I try to get people to apply by far the hardest part is the get them to complete a resume and come up with a couple references. That's where most give up.
This will never change. The country is too big, it needs to be dissolved into much smaller units. If Belgium can exist as an independent state, surely NY can.
If anything it can be argued that it's Belgium that should join up with other states to command more power in the whole world. And it's already the trend given that EU is literally headquartered there.
The end result of that would be that the poorer states would descend into something resembling anarchy, absolute misery. They currently depend on the richer states to support them and the way all 50 are collectively linked together by federal programs is what makes it possible for a lot of states to exist.
Of course NY and CA and some of the other states would be just fine on their own but we'd be basically abandoning millions of people to suffer and potentially die. Not a good thing to do.
States could choose to cooperate with other states and not be subject to the same laws, I assumed this much was obvious.
If you want to see meaningful change in the world, you need to make a meaningful change. Leaving much of anything up to the federal government is just a boon to political elite.
the US is certainly stronger as a whole than as a sum of its parts, but this seems like a massive exaggeration. even the poorest US states compare favorably to other first-world nations on a per capita GDP basis. it would be a major adjustment, but states like mississippi do have the raw productivity to provide a decent life for their citizens if they could get out of their own way.
Many of the "poorer" states as some define them, actually supply a fair bit of the food for those "richer" states and beyond.
It's not a simple task to figure out which states would survive as independent countries, if for no other reason than there would be, ah, "territorial disputes."
Saying that they are poorer doesn't mean they have no value, and that's part of why it's important for all of the states to be linked together federally.
From the article: "Nearly a third of the US workforce makes less than fifteen dollars an hour—40 percent of female workers, 47 percent of Black workers, and 57 percent of working single parents."
That sounds about right from the number of people who live in lower cost of living areas. People have a poor intuitive understanding of this -- they can't understand how someone could live on less than $15/hour because they live in New York City or San Francisco where that would be unreasonable. But it's much less unreasonable in Memphis or El Paso where things cost a lot less.
The real problem is that things, especially housing, still cost too much everywhere -- much worse in San Francisco, but not great no matter where you are in the US. Which requires higher wages to make a living, which puts pressure on employers to cut labor costs by making people do more with less. And then you get problems.
But employers can't just raise wages unilaterally -- if they paid more (and thereby raised prices), first of all that increases the cost of living even more, second of all the people who are already hurting because of the high cost of living are going to switch to any competitor who can offer a lower price, so the employers who do this lose to any that don't.
What we really need to do is lower the cost of living.
15/hr is about 1900/mo after taxes (assuming you get full 40 hours a week which is pretty rare in most hourly jobs where overtime for your employees is avoided like the plague.)
Well, Wichita Kansas is maybe the biggest one? You can rent a place there for 500/month.
Here's the thing though- if you raise wages, the prices for the finite quantities of housing get bid up. The goal should be bringing the cost of living down.
lots of places, if you're willing to live like a college student. for example, you can find 3BRs around baltimore for ~$2000/month. split 3-4 ways (sometimes there's an additional room with a door that doesn't technically count as a bedroom), your share is $500-700. main issues are going to be health insurance and a car if you can't find $15/hr work within walking distance.
