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> ...or their ability to make some simple improvements in their situation.
I think it's almost impossible to understand if you've never been completely destitu
> ...or their ability to make some simple improvements in their situation.
I think it's almost impossible to understand if you've never been completely destitute, but, ironically, for most people as their situation worsens their ability to cope becomes overwhelmed and their ability to make rational decisions disappears.
This is probably the number one problem of poverty, and it applies to the poor and homeless in developed countries, as well as to the populations of completely broken nations. For example, as they become poorer and poorer, many people become more and more irrationally attached to their "stuff" and refuse to part with it, even if leaving it behind and moving on would dramatically improve their situation. They become extremely reluctant to try anything new. I think their psychology is such that they've been overwhelmed by the failures of everything they have tried, and they don't feel like they can handle a whole new failure; they seem more comfortable repeating the same mistakes over and over again. Malnutrition and stress also do a really nice job of exacerbating any latent mental issues they have, and those won't go away after a year of comfort, which frustrates those people that would try to help them.
So, I don't know what the answer to all that is, but I am convinced that the earlier it is addressed, the better, and that it's unreasonable to expect most people to resolve their own situation.
Old but good HN discussion on homelessness
http://news.ycombinator.com/item?id=116079 http://news.ycombinator.com/item?id=116079
> 2) The existence of the minimum wage hurts the homeless. The people I worked with were incapable of producing $6 an hour of value for an employer. If there was no minimum wage, they could work $2 an hour of value and then gradually work their way up.
It wouldn't work though. Employers would take advantage of the situation, market rates would drop to the point where the homeless person would no longer be able to create $2 of value per hour either...
I don't think the supply of human time is that large that the market would adjust that significantly to a lower minimum wage. Lowering the minimum wage would generally raise supply of human time, yes, which drops the price, but the additional human time is by the terms of this discussion already relatively low-grade stuff.
$2/hr of value is a low bar. Anyone who can't do that can't be saved by any job. Based on previous discussions, that statement covers a lot of homeless people anyhow. ISTM that the ones who would be helped by lower minimum wage are high schoolers and younger workers trying to get their first part time jobs, not the homeless.
Minimum wage was created specifically to stop abuse of large numbers of people. I don't think it is realistic to expect that dropping the minimum wage will have just a beneficial effect on the few homeless people that we're talking about, it will have a huge impact on everybody that now earns minimum wage (and you'd be surprised how many people earn 'just' the minimum wage).
Employers as a rule extract a multiple of value from their employees time, not just a little bit over.
You could make the opposite argument: raise the minimum wage to $30 per hour. Suddenly all the homeless people are worth $7 per hour at a minimum.
Free markets are rarely really free, there usually is someone that benefits from the market being free, and in the case of employer employee relationships there always is someone to be found that will do the job for less. That's why we have minimum wage.
"Minimum wage was created specifically to stop abuse of large numbers of people."
Yes, but A: goals and effects are two very different things and B: it was created in an increasingly foreign world and every year it is less obvious that the original logic holds. (I mean that in a very general sense, not in an immediate "discard minimum wage and return to a libertarian paradise" sense; as robots become more and more capable and really start eating into the low wage jobs we may have to consider things like guaranteed minimum incomes or other radical proposals.)
"Employers as a rule extract a multiple of value from their employees time, not just a little bit over."
In my opinion, not if you do a full accounting. Profit margins for established, successful companies in the vast majority of industries tend to run in the single digits percentages, bursting up to 10% or the low teens for some rare cases. And then there's the tech industry, which is another story altogether. It may be true in some abstract sense that companies extract multiples of value over what they pay but it isn't true in a useful sense.
Generally speaking, I deny that there's a huge amount of room for people to cut minimum wages, because employers do not make radical profits on their employees. The job market isn't perfectly efficient, but it's more efficient than that. A person/task that can't justify minimum wage in the modern economy is a person not hired and a position not created, not a person generating 2$/hr of value but forcibly paid minimum wage.
Now, if the economy was grotesquely inefficient and the average company made 200% profit and the only way to pry money out of their hands was with a minimum wage, I'd agree, but that's not the world we live in. It's certainly a world we hear about a lot in propaganda but it doesn't correspond to reality.
There's been research either side of a county line in catering and related service jobs (short order, waiter, barmaid, etc.) USA indicating that min wage lead to more employment ...
I couldn't find it but there's this one from 2007:
"For cross-state metro counties and cross-state contiguous counties, we find strong
earnings effects and no employment effects of minimum wage increases. The large
negative elasticities in fixed-effects panel regressions are generated primarily by regional
and local differences in employment trends that are unrelated to minimum wage policies.
This point is supported by our finding that division-level placebo minimum wages are
negatively associated with employment in counties with identical minimum wage
profiles."
Dube, Arindrajit, Lester, T. William and Reich, Michael, Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties (August 1, 2007). Institute for Research on Labor and Employment Working Paper Series No. iirwps-157-07. Available at SSRN: http://ssrn.com/abstract=1005523 http://ssrn.com/abstract=1005523
All first world countries (and probably most developing countries) have a minimum wage, yet all the "homeless person found dead from ..." are from the US. In Western Europe most of the the "homeless" I see are actually bussed in from eastern Europe to pan handle.
> If there was no minimum wage, they could work $2 an hour of value and then gradually work their way up.
Wouldn't panhandling itself be far more lucrative than this? Based on walking by many beggars every day in a downtown area and seeing people giving them money, I'd estimate most of them make more than minimum wage anyway.
This was my question.
I used to live in London and there were a lot of panhandlers there. It was clear that for some this was their job. Moreso, you just need one little old lady to give em a fiver to beat busting your hump at MacDonalds for an hour (for less, even before taxes).
A lot of panhandlers were (clearly) illegal immigrants. Some had mental health problems.
Whatever the reason there seemed to be a code for the homeless, like not crowding certain areas (basically "territory").
I don't know the details but from an anthropological point of view it's interesting that even the desperate, destitute, mentally ill, drug addicts and illegal immigrants seem to have an innate capacity to self-organize.
This applies to more than the truly destitute. Have you ever seen (or been) a reasonably well-off college student who suddenly has a whole semester's worth of work to do in the last week of classes, then goes out partying all night before finals?
>Minimum wage was created specifically to stop abuse of large numbers of people.
Fifty years ago, the politicians who pushed for the increased minimum wage did not hide their motives. Nor, in an era of state-sanctioned segregation, did they feel the need to hide their knowledge of who the intended victims of minimum-wage increases would be. In a 1957 Senate hearing, minimum-wage advocate Senator (and future President) John F. Kennedy of Massachusetts said:
"Having on the market a rather large source of cheap labor [hundreds of thousands of black workers] depresses wages outside of that group, the wages of the white worker who has to compete.
When an employer can substitute a colored worker at a lower wage, it affects the whole wage structure of an area, doesn't it? There are, as you pointed out, hundreds of thousands of colored workers looking for decent work."
So, yes, the minimum wage was meant to stop the "abuse" of whites by blacks willing to work for a lower wage. It's sad when the racists have a better grasp of basic economics than the enlightened liberals.
Truth. The whole point of the minimum wage is to convert a labor structure into a voting structure. Abolish the minimum wage and the new workers would start thinking about business, school boards, zoning laws, the tax structure, and so forth. And that simply would not do.
Minimum wage just outlaws all jobs that are worth less than $6 per hour. Suppose the unemployment rate is 5%, if minimum wage were raised, unemployment would increase. If it were lowered, unemployment would decrease.
There is a widespread misperception that businesses naively overpay employees for work that is actually worth less than minimum wage. This is not the case, which is why there is litter on sidewalks and beaches (for example) and why there has been a rise in the use of robotics (mechanical car washes, street sweepers, assembly line robots, grain harvesters, etc.)
Maybe in the short term some workers were overpaid, but it is generally very brief and does nothing to equip those overpaid workers for the future since industry is striving to correct the inefficiency and develop a robot, etc.
I think the point you are missing is that it's not just about the wage someone is paid, it's also about the training the job provides. Minimum wage prevents people unable to add $6/hour of value from having a job at all, which makes them helpless wards of the state. Great accomplishment.
http://news.ycombinator.com/item?id=1644264 http://news.ycombinator.com/item?id=1644264
You're assuming that those working for $2 an hour were being paid fairly and that what they were doing wasn't worth $6.
Also I've read at least 2 studies showing that min wage in the US didn't decrease employment but did increase earnings (ie people weren't sacked nor even underemployed because min wage increased).
> ...if minimum wage were raised, unemployment would increase. If it were lowered, unemployment would decrease.
And yet, there are so many stories from wait staff about how important tips are to their ability to survive. Lowering unemployment at the expense of a much larger group's ability to survive is not a good idea IMO.
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Waitstaff are often paid below minimum and only "caught up" to minimum if their tips failed to exceed it, so not sure what exactly you mean.
I'm not arguing that people shouldn't be able to earn a living wage, I just don't think minimum wage laws help the situation.
You keep making this point over and over, but I don't think you understand the reality of the situation from a business owners perspective.
I'll talk from the perspective of someone who has both earned minimum wage at McDonalds and designed manufacturing robots to replace people.
When I was working for minimum wage, I worked my ass off. We'd retunely serve >$1,000 an hour in business with 10 employees making minimum wage. 10x7 = $70. There is plenty of overhead but when your payroll expense is less than 1/10th of your revenue, would lowering the minimum wage really do much? In our case the limiting factor on how many people were working was literally how many jobs there were. Add in some more poeple, what do they do? Nothing. So all the minimum wage does is set a floor on what they paid us. I was horribly overqualified, so was everyone else, anyone who walks in the door can handle the job, so they would just pay the cheapest people to do that job required by law.
Now fast forward to when I had graduated college and was designing robots, I was working on a system for a production line where the parts cost >$50,000 each. The person it was moving aside (they weren't actually fired) made >$40,000 a year. Much more than minimum wage. The reason for the replacement was that the robot could do it more precisesly and thus waste fewer compononets. The value was not the cost of labor, but the ability of the robot to do something better than what a human can do.
The robot cost a lot of money, hundreds of thousands of dollars, and the person it was replacing only made about 1/5th of that. This was a relatively long pay off project just looking at labor vs robot costs. The real savings was in reducing wasted procduct. So the robot was replacing high skilled labor that was far above minimum wage anyway.
If your argument ever relies on McDonalds replacing people with robots, you're just wrong. Robots are not that cheap and people are not that expensive. Minimum wage is peanuts already, lowering it won't add more workers. Would you really replace the person handing cups out of the window for $5 an hour? What kind of robot would you need with the articulation to pick up a cop, hand it out the window and find the person sitting in their car. Would it really be worth the tens of thousands of dollars to replace a $7 an hour worker? Hell no! That's why we don't have robots at McDonalds. But if the minimum wage was $2 an hour, the guy at the window would be making $2 an hour, and there wouldn't be 2 workers just becuase the minimum wage was that much lower, becuase you only need one guy at the window handing out cups no matter what he costs.
Another example: my uncle owns a gas station in New Jersey, he is required to have paid pump attendants 24/7 by law. He pays them miminimum wage. This barely even factors into his bottom line at all, he believes it lowers the insurance more than it costs him in wages. Yet he has to do it by law, and he has to pay them by law. If minimum wage was lower, he would just hire exactly the same number of people and pay them less. There is no extra work for the extra people. There is no reason for him to pay any more becuase there is no skill required for the job.
It is relatively simple and established economics, but more importantly it is something that you can feel as a business owner (if you are one). For a lot of this stuff there is a set number of people you need to get the job done and price of labor does nothing but affect how much profit you have. Lower prices of labor doesn't change how many people you need at a restaurent or a gas station. There is a minimum and maximum number of people that is effective regardless of cost. Thus minimum wage is helping those people in no skill jobs to have a realistic wage instead of just a race to the bottom.
With all respect due him, I regard pg's essays as I do Malcolm Gladwell's books: they are often entertaining, occasionally insightful, and never something that I would cite in an argument. (And for all the same reasons.)
So, I predicted this response. In fact, I even said,
> There is a counter-argument that this also leads to better living conditions for the poor, and it's true, but that doesn't resolve the much greater economic divide between the various socio-economic classes.
I've been waiting almost all day for someone to come along and say, "but the poor are so much better off!" So, I apologize in advance ...
What do you think of slavery? I have a somewhat unconventional view of it. I think it was a necessary component of human progress for a long time, until technology could gradually supplant it. I don't think it was inherently evil (except of course in abusive conditions, which it usually was).
What was truly awful about slavery was that there was usually no way for a slave to have any chance at all of improving their class. There were exceptions, sure, but as a rule, once a slave, always a slave. That is where slavery is really bad, IMO.
Similarly, as the class divide becomes progressively wider in modern society, there are more and more people who will find it impossible to markedly improve their socio-economic status. As a rule of thumb, if you're homeless in the U.S. today, you're not likely to be sending your kids to college 20 years from now.
Part of the reason that I'm so passionate about the problem of poverty is because I've lived a small bit of it. I've made the transition from being quite poor to being -- at the moment -- less poor, and with a chance of being in pretty good shape in a few years. It takes a long time, and it takes vast amounts of energy. And, I had good luck on my side: I got to play with computers when I was very young, so I have useful skills.
While I gratefully concede that a poor person today has much better chances of being able to eat cooked food and enjoy the basic comforts of cheap entertainment and toys, I do not agree that having really really poor people and really really rich people is an indicator of a healthy society. Rockefeller, Carnegie, Gates, and others have chosen to do good things with their amassed fortunes, but I'd still rather see larger numbers of people attending secondary schools and learning trades -- things which are much harder to do when they're extremely poor.