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There are people whose labor is worth $8/hr but not $11/hr. Raising the minimum wage will not result in "giving them a pile of cash", it will result in them no

by godd2 10y ago

There are people whose labor is worth $8/hr but not $11/hr. Raising the minimum wage will not result in "giving them a pile of cash", it will result in them no longer having a job.

calibraxis 10y ago
It will stimulate the economy to promote more jobs. "There are people whose labor is worth $8/hr but not $11/hr" is a non-sequitur because this fuzzy concept of "worth" varies in time & space. (For example, demand-push inflation will change the numbers.)
- godd2 10y ago
  > It will stimulate the economy to promote more jobs. It will increase the cost of labor, and result in fewer, more expensive goods and services. We can both claim things all day.
  - lukeschlather 10y ago
    The money doesn't just vanish when you raise the minimum wage. People who make less than about $20/hour are going to be spending pretty close to 100% of any additional income they get. It's fair to suggest it might raise the price of goods and services. All real-world examples of minimum wage hikes I've seen show real wages going up even though inflation does eat some of the gain. But as far as reducing the amount of goods and services available, that isn't really backed up by anything. It's crazy that we're still relearning the lesson that we learned in the first half of the twentieth century, which is that when you raise the wage floor, consumer spending rises, which drives economic growth.
Chos89 10y ago
Like the people who clean your buildings, so I can assume companies will stop using cleaning services? If some job needs to be done it will be paid.
- MichaelBurge 10y ago
  Grocery stores have something like a 1-2% margin, and people are often price-sensitive when shopping for food. So they'd have trouble raising prices. Probably they'd try to depend on self-checkout machines more. I imagine fast food companies like Taco Bell would lose sales. High-margin software companies wouldn't care about the cost of their janitors, like you suggest.
  - drakonandor 10y ago
    > High-margin software companies wouldn't care about the cost of their janitors, like you suggest. The CEO might not, but an enterprising facilities manager would certainly try to cut expenses by replacing the pleb who vacuums the hallway with a plus-size Roomba.
- godd2 10y ago
  > If some job needs to be done it will be paid. The opportunity cost of a service is the limit for which one would be expected to pay for it. If forced to pay $1,000,000 to have someone clean your bathroom, you'd end up cleaning it yourself.
- user5994461 10y ago
  As a matter of fact yes. To have been in a country where there are "high" minimum wages, the low value added jobs are the first going away because they're too expensive for what they are. Cleaning service is one of them.
- tropo 10y ago
  Yes. The telephone sanitizers become too expensive, dooming us all: https://en.wikipedia.org/wiki/List_of_minor_The_Hitchhiker%27s_Guide_to_the_Galaxy_characters#Telephone_Sanitizer https://en.wikipedia.org/wiki/List_of_minor_The_Hitchhiker%2...
narag 10y ago
There are people whose labor is worth $8/hr but not $11/hr. You seem to think value and price are the same thing and both can be absolutely determined. Also it sounds weird to talk about people's labor as if they were potatoes, while you assert that minimum wage will result in them not having a job as if it's a nature law. I'd try to reason with you, but it seems we're not in the same world anyway.
- godd2 10y ago
  > I'd try to reason with you, but it seems we're not in the same world anyway. Claiming that I'm too unreasonable to debate with won't win you any points. > Also it sounds weird to talk about people's labor as if they were potatoes It's not weird since it's something that has a market value. People are not their labor. Someone's labor can be bought and sold, and the availability and price of labor is subject to the same economic laws as potatoes. Some potatoes are worth $0.60 but not $0.80, and if the price of potatoes were dictated to be $0.80, the $0.60 would go in the trash. I don't want potatoes or people's labor to go in the trash.
  - tcbawo 10y ago
    Some have argued that skilled labor actually benefits the most from a minimum wage increase (can't find a citation offhand). This is caused by wage inflation as employers must increase compensation to retain workers. I'm trying to understand your potato metaphor. The US government has a long history of setting a price floor beneath agricultural products.
  - inflagranti 10y ago
    >> I'd try to reason with you, but it seems we're not in the same world anyway. > Claiming that I'm too unreasonable to debate with won't win you any points. It did with me... Seriously, I think you misconstrued this statement as a personal attack, whereas IMHO its simply used to highlight the flaw in your logic: If we have a complex system where A implies B and B implies C and C implies D and so on which possibly goes back to A in subtle ways, but you're just saying "A implies B, B implies no A, hence this won't work, QED" you are assuming a very simplistic view of reality. You cannot just stop at one step and draw a definite conclusion from that. As pointed out, the wage increase can be rolled over to a price increase for instance, instead of now having to fire everyone. I'm not saying that no loss of labor could occur, but definitely it's only one of many possibilities and the economy is a highly complex system with all kind of direct and indirect effects that are at play here. All that said, I would actually argue for basic income than a minimum wage as it will completely eliminate the possibility of the labor loss resulting in a wage loss, but in absence of this, minimum wage seems still better than having an increasing amount of working poor.
crdoconnor 10y ago
There are people whose labor is worth $20/hr+ who are desperate enough to accept 8. "How much value do you bring in?" only puts a ceiling on pay negotiations. Desperation is what drives the actual number. There are many, many more people like that which is why minimum wage rises almost always come straight out of profit margins: http://www.nelp.org/content/uploads/2015/03/NELP-Big-Business-Corporate-Profits-Minimum-Wage.pdf http://www.nelp.org/content/uploads/2015/03/NELP-Big-Busines... There is, of course, the matter of the vast amount of economic propaganda saying the opposite. That's driven by what economists call "incentives".
- deleted 10y ago
  [deleted]
misterbishop 10y ago
Funny how moralistic value enters into the discussion when it comes to pricing wages. When it comes to any other commodity, the standard is supposedly "whatever the market will bear".
- sprafa 10y ago
  Morality is always there, or should be. Picketty has shown that our understandings of the Market as anything conducive to a stable society were a fiction caused by recent history.
- bko 10y ago
  It's not moralistic. It's "worth" in the sense that how much marginal revenue that person produces. If you have to pay someone to sell $9 worth of coffee an hour, they're not "worth" more than $9 an hour, regardless of morals.
  - JoeAltmaier 10y ago
    Then the store should change their prices, or perhaps close. If everybody is paying the same overhead (like staffing all day when they make money only during peak hours) then competition will operate as normal, prices may change to reflect costs etc. Staffing is more complicated than "how much they sold during their shift"?
    - bko 10y ago
      Sure, they'll try and pass off the costs to their customers. But with a higher price, there will likely be less coffee sold and less employment regardless. Yes, staffing is more complicated, but min-wage labor cost for a restaurant are a significant portion of the costs and profit margins are very thin [0]. Many won't be able to absorb a ~50% increase in labor cost. [0] http://www.sfgate.com/bayarea/article/Economics-of-running-a-restaurant-Tireless-2731527.php http://www.sfgate.com/bayarea/article/Economics-of-running-a...
      - JoeAltmaier 10y ago
alasdair_ 10y ago
This is generally why we (as a country) invest in things like education and, later, retraining programs. Eventually, of course, many things will be automated away by higher wages. At that point, basic income is a reasonable thing to consider.
grecy 10y ago
> There are people whose labor is worth $8/hr but not $11/hr. And yet, if they moved to a different country, their labor would be worth much more! Funny how that works...

by godd2 10y ago

There are people whose labor is worth $8/hr but not $11/hr. Raising the minimum wage will not result in "giving them a pile of cash", it will result in them no longer having a job.

calibraxis 10y ago

It will stimulate the economy to promote more jobs. "There are people whose labor is worth $8/hr but not $11/hr" is a non-sequitur because this fuzzy concept of "worth" varies in time & space. (For example, demand-push inflation will change the numbers.)

godd2 10y ago
> It will stimulate the economy to promote more jobs. It will increase the cost of labor, and result in fewer, more expensive goods and services. We can both claim things all day.
- lukeschlather 10y ago
  The money doesn't just vanish when you raise the minimum wage. People who make less than about $20/hour are going to be spending pretty close to 100% of any additional income they get. It's fair to suggest it might raise the price of goods and services. All real-world examples of minimum wage hikes I've seen show real wages going up even though inflation does eat some of the gain. But as far as reducing the amount of goods and services available, that isn't really backed up by anything. It's crazy that we're still relearning the lesson that we learned in the first half of the twentieth century, which is that when you raise the wage floor, consumer spending rises, which drives economic growth.

Chos89 10y ago

Like the people who clean your buildings, so I can assume companies will stop using cleaning services? If some job needs to be done it will be paid.

MichaelBurge 10y ago
Grocery stores have something like a 1-2% margin, and people are often price-sensitive when shopping for food. So they'd have trouble raising prices. Probably they'd try to depend on self-checkout machines more. I imagine fast food companies like Taco Bell would lose sales. High-margin software companies wouldn't care about the cost of their janitors, like you suggest.
- drakonandor 10y ago
  > High-margin software companies wouldn't care about the cost of their janitors, like you suggest. The CEO might not, but an enterprising facilities manager would certainly try to cut expenses by replacing the pleb who vacuums the hallway with a plus-size Roomba.
godd2 10y ago
> If some job needs to be done it will be paid. The opportunity cost of a service is the limit for which one would be expected to pay for it. If forced to pay $1,000,000 to have someone clean your bathroom, you'd end up cleaning it yourself.
user5994461 10y ago
As a matter of fact yes. To have been in a country where there are "high" minimum wages, the low value added jobs are the first going away because they're too expensive for what they are. Cleaning service is one of them.
tropo 10y ago
Yes. The telephone sanitizers become too expensive, dooming us all: https://en.wikipedia.org/wiki/List_of_minor_The_Hitchhiker%27s_Guide_to_the_Galaxy_characters#Telephone_Sanitizer https://en.wikipedia.org/wiki/List_of_minor_The_Hitchhiker%2...

narag 10y ago

There are people whose labor is worth $8/hr but not $11/hr. You seem to think value and price are the same thing and both can be absolutely determined. Also it sounds weird to talk about people's labor as if they were potatoes, while you assert that minimum wage will result in them not having a job as if it's a nature law. I'd try to reason with you, but it seems we're not in the same world anyway.

godd2 10y ago
> I'd try to reason with you, but it seems we're not in the same world anyway. Claiming that I'm too unreasonable to debate with won't win you any points. > Also it sounds weird to talk about people's labor as if they were potatoes It's not weird since it's something that has a market value. People are not their labor. Someone's labor can be bought and sold, and the availability and price of labor is subject to the same economic laws as potatoes. Some potatoes are worth $0.60 but not $0.80, and if the price of potatoes were dictated to be $0.80, the $0.60 would go in the trash. I don't want potatoes or people's labor to go in the trash.
- tcbawo 10y ago
  Some have argued that skilled labor actually benefits the most from a minimum wage increase (can't find a citation offhand). This is caused by wage inflation as employers must increase compensation to retain workers. I'm trying to understand your potato metaphor. The US government has a long history of setting a price floor beneath agricultural products.
- inflagranti 10y ago
  >> I'd try to reason with you, but it seems we're not in the same world anyway. > Claiming that I'm too unreasonable to debate with won't win you any points. It did with me... Seriously, I think you misconstrued this statement as a personal attack, whereas IMHO its simply used to highlight the flaw in your logic: If we have a complex system where A implies B and B implies C and C implies D and so on which possibly goes back to A in subtle ways, but you're just saying "A implies B, B implies no A, hence this won't work, QED" you are assuming a very simplistic view of reality. You cannot just stop at one step and draw a definite conclusion from that. As pointed out, the wage increase can be rolled over to a price increase for instance, instead of now having to fire everyone. I'm not saying that no loss of labor could occur, but definitely it's only one of many possibilities and the economy is a highly complex system with all kind of direct and indirect effects that are at play here. All that said, I would actually argue for basic income than a minimum wage as it will completely eliminate the possibility of the labor loss resulting in a wage loss, but in absence of this, minimum wage seems still better than having an increasing amount of working poor.

crdoconnor 10y ago

There are people whose labor is worth $20/hr+ who are desperate enough to accept 8. "How much value do you bring in?" only puts a ceiling on pay negotiations. Desperation is what drives the actual number. There are many, many more people like that which is why minimum wage rises almost always come straight out of profit margins: http://www.nelp.org/content/uploads/2015/03/NELP-Big-Business-Corporate-Profits-Minimum-Wage.pdf http://www.nelp.org/content/uploads/2015/03/NELP-Big-Busines... There is, of course, the matter of the vast amount of economic propaganda saying the opposite. That's driven by what economists call "incentives".

deleted 10y ago
[deleted]

misterbishop 10y ago

Funny how moralistic value enters into the discussion when it comes to pricing wages. When it comes to any other commodity, the standard is supposedly "whatever the market will bear".

sprafa 10y ago
Morality is always there, or should be. Picketty has shown that our understandings of the Market as anything conducive to a stable society were a fiction caused by recent history.
bko 10y ago
It's not moralistic. It's "worth" in the sense that how much marginal revenue that person produces. If you have to pay someone to sell $9 worth of coffee an hour, they're not "worth" more than $9 an hour, regardless of morals.
- JoeAltmaier 10y ago
  Then the store should change their prices, or perhaps close. If everybody is paying the same overhead (like staffing all day when they make money only during peak hours) then competition will operate as normal, prices may change to reflect costs etc. Staffing is more complicated than "how much they sold during their shift"?
  - bko 10y ago
    Sure, they'll try and pass off the costs to their customers. But with a higher price, there will likely be less coffee sold and less employment regardless. Yes, staffing is more complicated, but min-wage labor cost for a restaurant are a significant portion of the costs and profit margins are very thin [0]. Many won't be able to absorb a ~50% increase in labor cost. [0] http://www.sfgate.com/bayarea/article/Economics-of-running-a-restaurant-Tireless-2731527.php http://www.sfgate.com/bayarea/article/Economics-of-running-a...
    - JoeAltmaier 10y ago

alasdair_ 10y ago

This is generally why we (as a country) invest in things like education and, later, retraining programs. Eventually, of course, many things will be automated away by higher wages. At that point, basic income is a reasonable thing to consider.

grecy 10y ago

> There are people whose labor is worth $8/hr but not $11/hr. And yet, if they moved to a different country, their labor would be worth much more! Funny how that works...