7 ms·

>Lots of people are leaving the island, which just compounds the problem (less revenue). This is one of the effects of Puerto Rico being subject to US minimum

>Lots of people are leaving the island, which just compounds the problem (less revenue). This is one of the effects of Puerto Rico being subject to US minimum wages. Since it's illegal for large portions of the population to receive pay commensurate to the value they're able to produce, and it is legal to move to the US, guess what folks do?

leesalminen 10y ago
I've heard this a few times and think I agree. Anyone in disagreement on this? Would love to hear an opposing view.
dragonwriter 10y ago
> Since it's illegal for large portions of the population to receive pay commensurate to the value they're able to produce, and it is legal to move to the US, guess what folks do? If they can't produce enough value to justify minimum wages, why would they move to places with a higher cost of living? They move to the States because the States are better able to attract businesses that will pay them what they are capable of producing (even though the States still have at least the Federal minimum wage, and offlten higher minimums), because the States face more favorable federal policy because Congress and the President need their votes, whereas they don't need PR's because PR doesn't get any in the Federal government.
- ThrustVectoring 10y ago
  >If they can't produce enough value to justify minimum wages, why would they move to places with a higher cost of living? Mopping a floor produces economic value because there's a difference in how much a dirty store sells versus a clean one. If all you can do is mop floors for this thought experiment, this difference in how much the store sells directly effects the economic value of your labor. In Puerto Rico, this difference is less than in the mainland US, which is why the value of their labor (and the natural price of it) is lower. In other words, since the US is more intensely capitalized, there are more opportunities to provide $7.25/hr worth of value.
  - anigbrowl 10y ago
    Exactly. If you'll excuse me highlighting the obvious, the floor-mopper in Puerto Rico is having to work just as hard as in some other place where the economy is better, so there is a transfer of wealth from that person that's generally not accounted for.
    - Camillo 10y ago
      That assumes that the person's work has an inherent value, and further that this inherent value is equal to the highest amount it can be paid in any market. That hardly seems reasonable. Consider two countries, A and B. A has limited economic development, low technology, poor infrastructure, low education. B is far more advanced. A and B lie on opposite sides of the globe and have essentially never had trade or direct contact. (This is an accurate scenario before the Age of Exploration, where travel was far more limited than now, and there were already large differences in the relative level of development of various lands.) Person Pa mops the floors in country A and gets paid $0.25/hr. Person Pb mops the floors in country B and gets paid $5.00/hr. (You may wonder how we can define both of their incomes in dollars if the two countries have no contact; you can define a virtual exchange rate based on respective purchasing power, for instance). Your interpretation states that there is a transfer of wealth from person Pa to... person Pb? Everyone in country B? Everyone in country A? It's not clear, but any of those conclusions seems unreasonable. There is no causal connection between country A and country B, so there can be no wealth transfer between them. And how can the existence of country B, at the unknown and unreachable recesses of the earth, cause a wealth transfer within country A? The more reasonable interpretation is the opposite: it is person Pb who is receiving a transfer of extra wealth. From whom? From the past and present inhabitants of country B, who have created the wealth, technology, infrastructure and knowledge that allows Pb to receive more for the same amount of work. This interpretation, unlike yours, is backed by clear causal connections. I do agree, however, that people often fail to account for this transfer of wealth.
      - anigbrowl 10y ago
        I'm looking at it from a different perspective: to stick with your terminology, Pa and Pb must both expend the same time and effort to mop the floor, so their costs (in terms of physical energy expenditure) are identical. You are correct about the greater transfer of wealth going to Pb, in that if Pb visits country A, s/he will have vastly greater purchasing power and thus economic opportunity (is s/he wants to settle down there) than the reverse situation of Pa going to country B. Consider the possibility, in these days of globalization and corporate reach, that both are employed by the same firm, such as Walmart of 7-11 (let's forget about franchising and other specific details and consider only the obvious labor cost variations). So now we have two employees, working for the same entity in different contexts, doing the same amount of work, and enjoying the same amount of purchasing power in their local economies - but very different levels of purchasing power if they wish to visit each other, which asymmetry will inevitably be compounded over time. My basic point is that it's a matter of luck whether you are born in country A or B, but ceteris paribus there will be a significant and increasing opportunity gap through no fault or merit of the individuals involved. This is in my view a Bad Thing. I am sorry for not laying this out more clearly, and by using the phrase 'transfer of wealth' I may have obscured my point. I agree that Pb primarily benefits from the whole economy of country B, but invite you to consider the low and inevitably worsening bargaining position of Pa (and by extension, the whole of A) in any kind of international transaction. Is A a worse country because of some moral deficiency? Absent a specific and obvious cause, that conclusion might be the result of a 'just world fallacy.' Regardless, this is of little comfort to Pa, who can hardly be held morally responsible for the past failings of the society in which s/he originates.
- ue_ 10y ago
  >If they can't produce enough value to justify minimum wages There are alternative views on this. Marx's theory for example says that workers are not paid according to the value they create, or what their labour creates, rather they are paid at the rate which is required to sustain them. The commodity which the worker produces and sells is termed 'labour power', requiring among other things food, enough to support a family if he has one and some amount in accordance with the moral character of society, varying with supply and demand accordingly. This is the minimum that needs paying. So Marx would say that wage has nothing to do with value created. It only has to do with the value of labour power, which is equal to the value needed for the worker to sustain himself.
  - EpicEng 10y ago
    Yet Puerto Ricans don't live in a Marxist society, so I'm not sure how his ideas apply here.
    - ue_ 10y ago
      Marx was describing capitalism in his critique of political economy, Capital. Puerto Ricans definitely live in capitalism. A Marxist society (or, Communist) does not have wage labour at all.
      - dragonwriter 10y ago
        > Puerto Ricans definitely live in capitalism. Puerto Ricans definitely live in a mixed economy, not the system that Marx described as capitalism, but it arguably shares the salient features of capitalism that Marx was addressing in the excerpt under discussion.
        ue_ 10y ago
        What is a mixed economy? The definition of capitalism I use is based on the capitalist mode of production, that is, how goods are made within a capitalist economy, viz. production to maximise exchange value over use value, the primacy of wage labour, private (and yes, this can include the state's) ownership of social means of production, and most social production is for the goal of capital accumulation. In my opinion this is enough to say that a particular society is 'capitalist', though like all words there are variety of nuances and exceptions and additions that can be attached. Capitalism in my view neither necessitates nor excludes government controls on production, social democratic policies, taxes, the state (except for defense of private property) etc. A good example of a capitalist (state capitalist) country is the Soviet Union.
zeteo 10y ago
Minimum wage only causes unemployment if the labor market is competitive. This is not currently the case in the US as a few big companies (Walmart, McDonald's) have disproportionate market power, and most economic sectors are becoming even more concentrated. Under such oligopsony conditions, increases in minimum wage will generally come out of profits (which are at historically high levels of the GDP [1]). Since wages are spent locally, but profits not as much, minimum wage regulations should generally help the local economy. [1] https://fred.stlouisfed.org/graph/?g=1Pik https://fred.stlouisfed.org/graph/?g=1Pik
- Shivetya 10y ago
  but they don't. studies have shown that increases in minimum wage laws tend to benefit those who are in not poor families and a 10% increase in minimum wage can cause prices in the local area to increase four percent. throw in that even as recently as 2011 President Obama had to sign into law a bill postponing minimum wage laws and increases in America Samoa because it was literally destroying their economy after being force to accept such in 2007 and 2009. It isn't just competitive labor markets but mobility of those who can fill the jobs that exist. then throw a likelihood of employers to increase work loads to compensate, penalties for tardiness, and such, it does not always turn out to be a boon. with regards to Puerto Rico, this is simply an example of politicians selling out their populace to retain power and actually being around to be there when the hammer falls. it has happened in a few American cities and there are some states with very excessive and dangerous pension obligations that will be forced to vacate them or seriously reduce them . Puerto Rico should stand as a warning to anyone who sees politicians promising the moon.
  - zeteo 10y ago
    I'm not familiar with American Samoa, but generally states and countries with high minimum wages are doing pretty well economically, see e.g. [1]. States that have recently increased the minimum wage have seen higher economic growth than those that haven't [2]. [1] http://www.scholarsstrategynetwork.org/brief/evidence-higher-minimum-wages-improve-economic-wellbeing http://www.scholarsstrategynetwork.org/brief/evidence-higher... [2] http://www.npr.org/sections/thetwo-way/2014/07/19/332879409/states-that-raised-minimum-wage-see-faster-job-growth-report-says http://www.npr.org/sections/thetwo-way/2014/07/19/332879409/...
deleted 10y ago
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leesalminen 10y ago

I've heard this a few times and think I agree. Anyone in disagreement on this? Would love to hear an opposing view.

dragonwriter 10y ago

> Since it's illegal for large portions of the population to receive pay commensurate to the value they're able to produce, and it is legal to move to the US, guess what folks do? If they can't produce enough value to justify minimum wages, why would they move to places with a higher cost of living? They move to the States because the States are better able to attract businesses that will pay them what they are capable of producing (even though the States still have at least the Federal minimum wage, and offlten higher minimums), because the States face more favorable federal policy because Congress and the President need their votes, whereas they don't need PR's because PR doesn't get any in the Federal government.

ThrustVectoring 10y ago
>If they can't produce enough value to justify minimum wages, why would they move to places with a higher cost of living? Mopping a floor produces economic value because there's a difference in how much a dirty store sells versus a clean one. If all you can do is mop floors for this thought experiment, this difference in how much the store sells directly effects the economic value of your labor. In Puerto Rico, this difference is less than in the mainland US, which is why the value of their labor (and the natural price of it) is lower. In other words, since the US is more intensely capitalized, there are more opportunities to provide $7.25/hr worth of value.
- anigbrowl 10y ago
  Exactly. If you'll excuse me highlighting the obvious, the floor-mopper in Puerto Rico is having to work just as hard as in some other place where the economy is better, so there is a transfer of wealth from that person that's generally not accounted for.
  - Camillo 10y ago
    That assumes that the person's work has an inherent value, and further that this inherent value is equal to the highest amount it can be paid in any market. That hardly seems reasonable. Consider two countries, A and B. A has limited economic development, low technology, poor infrastructure, low education. B is far more advanced. A and B lie on opposite sides of the globe and have essentially never had trade or direct contact. (This is an accurate scenario before the Age of Exploration, where travel was far more limited than now, and there were already large differences in the relative level of development of various lands.) Person Pa mops the floors in country A and gets paid $0.25/hr. Person Pb mops the floors in country B and gets paid $5.00/hr. (You may wonder how we can define both of their incomes in dollars if the two countries have no contact; you can define a virtual exchange rate based on respective purchasing power, for instance). Your interpretation states that there is a transfer of wealth from person Pa to... person Pb? Everyone in country B? Everyone in country A? It's not clear, but any of those conclusions seems unreasonable. There is no causal connection between country A and country B, so there can be no wealth transfer between them. And how can the existence of country B, at the unknown and unreachable recesses of the earth, cause a wealth transfer within country A? The more reasonable interpretation is the opposite: it is person Pb who is receiving a transfer of extra wealth. From whom? From the past and present inhabitants of country B, who have created the wealth, technology, infrastructure and knowledge that allows Pb to receive more for the same amount of work. This interpretation, unlike yours, is backed by clear causal connections. I do agree, however, that people often fail to account for this transfer of wealth.
    - anigbrowl 10y ago
      I'm looking at it from a different perspective: to stick with your terminology, Pa and Pb must both expend the same time and effort to mop the floor, so their costs (in terms of physical energy expenditure) are identical. You are correct about the greater transfer of wealth going to Pb, in that if Pb visits country A, s/he will have vastly greater purchasing power and thus economic opportunity (is s/he wants to settle down there) than the reverse situation of Pa going to country B. Consider the possibility, in these days of globalization and corporate reach, that both are employed by the same firm, such as Walmart of 7-11 (let's forget about franchising and other specific details and consider only the obvious labor cost variations). So now we have two employees, working for the same entity in different contexts, doing the same amount of work, and enjoying the same amount of purchasing power in their local economies - but very different levels of purchasing power if they wish to visit each other, which asymmetry will inevitably be compounded over time. My basic point is that it's a matter of luck whether you are born in country A or B, but ceteris paribus there will be a significant and increasing opportunity gap through no fault or merit of the individuals involved. This is in my view a Bad Thing. I am sorry for not laying this out more clearly, and by using the phrase 'transfer of wealth' I may have obscured my point. I agree that Pb primarily benefits from the whole economy of country B, but invite you to consider the low and inevitably worsening bargaining position of Pa (and by extension, the whole of A) in any kind of international transaction. Is A a worse country because of some moral deficiency? Absent a specific and obvious cause, that conclusion might be the result of a 'just world fallacy.' Regardless, this is of little comfort to Pa, who can hardly be held morally responsible for the past failings of the society in which s/he originates.
ue_ 10y ago
>If they can't produce enough value to justify minimum wages There are alternative views on this. Marx's theory for example says that workers are not paid according to the value they create, or what their labour creates, rather they are paid at the rate which is required to sustain them. The commodity which the worker produces and sells is termed 'labour power', requiring among other things food, enough to support a family if he has one and some amount in accordance with the moral character of society, varying with supply and demand accordingly. This is the minimum that needs paying. So Marx would say that wage has nothing to do with value created. It only has to do with the value of labour power, which is equal to the value needed for the worker to sustain himself.
- EpicEng 10y ago
  Yet Puerto Ricans don't live in a Marxist society, so I'm not sure how his ideas apply here.
  - ue_ 10y ago
    Marx was describing capitalism in his critique of political economy, Capital. Puerto Ricans definitely live in capitalism. A Marxist society (or, Communist) does not have wage labour at all.
    - dragonwriter 10y ago
      > Puerto Ricans definitely live in capitalism. Puerto Ricans definitely live in a mixed economy, not the system that Marx described as capitalism, but it arguably shares the salient features of capitalism that Marx was addressing in the excerpt under discussion.
      - ue_ 10y ago
        What is a mixed economy? The definition of capitalism I use is based on the capitalist mode of production, that is, how goods are made within a capitalist economy, viz. production to maximise exchange value over use value, the primacy of wage labour, private (and yes, this can include the state's) ownership of social means of production, and most social production is for the goal of capital accumulation. In my opinion this is enough to say that a particular society is 'capitalist', though like all words there are variety of nuances and exceptions and additions that can be attached. Capitalism in my view neither necessitates nor excludes government controls on production, social democratic policies, taxes, the state (except for defense of private property) etc. A good example of a capitalist (state capitalist) country is the Soviet Union.

zeteo 10y ago

Minimum wage only causes unemployment if the labor market is competitive. This is not currently the case in the US as a few big companies (Walmart, McDonald's) have disproportionate market power, and most economic sectors are becoming even more concentrated. Under such oligopsony conditions, increases in minimum wage will generally come out of profits (which are at historically high levels of the GDP [1]). Since wages are spent locally, but profits not as much, minimum wage regulations should generally help the local economy. [1] https://fred.stlouisfed.org/graph/?g=1Pik https://fred.stlouisfed.org/graph/?g=1Pik

Shivetya 10y ago
but they don't. studies have shown that increases in minimum wage laws tend to benefit those who are in not poor families and a 10% increase in minimum wage can cause prices in the local area to increase four percent. throw in that even as recently as 2011 President Obama had to sign into law a bill postponing minimum wage laws and increases in America Samoa because it was literally destroying their economy after being force to accept such in 2007 and 2009. It isn't just competitive labor markets but mobility of those who can fill the jobs that exist. then throw a likelihood of employers to increase work loads to compensate, penalties for tardiness, and such, it does not always turn out to be a boon. with regards to Puerto Rico, this is simply an example of politicians selling out their populace to retain power and actually being around to be there when the hammer falls. it has happened in a few American cities and there are some states with very excessive and dangerous pension obligations that will be forced to vacate them or seriously reduce them . Puerto Rico should stand as a warning to anyone who sees politicians promising the moon.
- zeteo 10y ago
  I'm not familiar with American Samoa, but generally states and countries with high minimum wages are doing pretty well economically, see e.g. [1]. States that have recently increased the minimum wage have seen higher economic growth than those that haven't [2]. [1] http://www.scholarsstrategynetwork.org/brief/evidence-higher-minimum-wages-improve-economic-wellbeing http://www.scholarsstrategynetwork.org/brief/evidence-higher... [2] http://www.npr.org/sections/thetwo-way/2014/07/19/332879409/states-that-raised-minimum-wage-see-faster-job-growth-report-says http://www.npr.org/sections/thetwo-way/2014/07/19/332879409/...

deleted 10y ago

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