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It's a function of big industry lobbying to keep wages low and block laws that protect workers plus the systematic weakening of unions. There is plenty of money

by maym86 8y ago

It's a function of big industry lobbying to keep wages low and block laws that protect workers plus the systematic weakening of unions. There is plenty of money in large corporations to pay workers more but it goes to the executives and shareholders rather than making employees lives more bearable. Inequity is increasing and migration is a useful scapegoat. Large companies are making absurd profits while paying their employees a pittance. Migration isn't causing this but it useful for rich people with vested interests to make it seem like it is.

sjg007 8y ago
Sure unionization, laws and lobbies are part of it too.
nv-vn 8y ago
Maybe to a degree, but a lot of those jobs only exist because of how low the wages are. Very few large corporations can afford to just give everyone a raise. That's a terribly short-sighted view of the economy and business administration. >Large companies are making absurd profits while paying their employees a pittance Take a look at profit margins on some big companies. You will definitely be surprised. E.g. Over the last 5 years Walmart averaged <3% profits [1], Amazon averaged <1% [2]. Some tech companies are a lot higher (Apple, NVidia, etc.) but these are not the companies you hear about when people discuss low wages. Imagine Amazon trying to give all of their workers a 10% raise. With ~566,000 employees [3] making a median salary (sorry, could not find any mean or total amount so I'll pretend like it's the mean) of $28,446 [4], a 10% raise would amount to 566,000 * $28,446/10 = $1,610,043,600. This would more than slash their net income in half [5] and would only increase the median income by a modest $2800. Obviously these numbers aren't perfect because we don't have means or an accurate list of who earns what, but I think you can see my point here: if every Amazon employee earned a true "living wage", the company would probably go out of business pretty quickly. And that's a big deal when half a million people's lives rely on it (not to mention the millions of shareholders, many of whom likely own the stock as part of their pension plans). And that's not really in anybody's control. It's not like Jeff Bezos is the wealthiest person alive because he's making some massive salary and taking cash out of the company. His personal compensation was $1.68 million last year, most of which was the cost of his personal security team [4]. What makes him wealthy is all of his shares in Amazon, which is pretty worthless if he goes ahead and dumps all of it. Not to mention that his wealth often fluctuates by 10s of billions in a matter of days because of that. >Migration isn't causing this but it useful for rich people with vested interests to make it seem like it is. I can agree with you that blaming things on migration is often incorrect and used as a red herring, but the previous commenter is somewhat correct. Immigrants (both legal and illegal) often settle for much lower paying jobs or much harder labor because of how much it pays relative to what they would earn in their home country. This doesn't really cause most people to earn less money, because for the most part few "natural-born" Americans are willing to do those jobs, but it does increase the proportion of jobs that pay these tiny wages. There are certainly many American-born workers who are getting minuscule wages, but an even bigger percentage of these people are immigrants. Of course, it doesn't change the fact that people are getting paid those jobs in general, but for a vast majority of them something as simple as raising the minimum wage is just going to make their jobs go away. [1] https://ycharts.com/companies/WMT/profit_margin https://ycharts.com/companies/WMT/profit_margin [2] https://ycharts.com/companies/AMZN/profit_margin https://ycharts.com/companies/AMZN/profit_margin [3] https://www.geekwire.com/2018/amazon-now-employs-566000-people-worldwide-66-percent-jump-year-ago/ https://www.geekwire.com/2018/amazon-now-employs-566000-peop... [4] https://www.bloomberg.com/gadfly/articles/2018-04-19/amazon-is-defined-by-billions-median-salary-is-28-446 https://www.bloomberg.com/gadfly/articles/2018-04-19/amazon-... [5] https://www.nasdaq.com/symbol/amzn/financials?query=income-statement https://www.nasdaq.com/symbol/amzn/financials?query=income-s...
- maym86 8y ago
  I appreciate your response but respectfully disagree. Companies like Amazon are notorious for hiding their profits for these reasons. http://evonomics.com/amazon-accounting-corporate-profits-rich-peoples-income-invisible-bezos/ http://evonomics.com/amazon-accounting-corporate-profits-ric...
- pedro_hab 8y ago
  I get a lot of this feeling that the rich and corporations have all the money needed to fix these problems around here. But the truth is that the US is a huge machine and the government already spends too much money. Amazon is nothing compared to $4T a year the US spends. You need 4 Amazons a year, people don't seem to understand you can't just eat the rich. Some concerned with the companies "absurd" profits while they are dwarfed by the US spending. Wow, great answer btw, with sources and all.
  - sjg007 8y ago
    You can't eat the rich but you can tax them.
    - refurb 8y ago
      You can, but there aren’t enough to make that big of a difference.
AnthonyMouse 8y ago
> There is plenty of money in large corporations to pay workers more but it goes to the executives and shareholders rather than making employees lives more bearable. The money comes from the fact that they have one well-paid manager per thousand employees instead of having one per five employees as a small business does, which makes getting that opportunity for advancement a one in a thousand shot for their employees instead of one in five. What you want isn't for big companies to pay more, it's for small companies to replace them. If you pass laws like increasing the minimum wage that disproportionately impact smaller businesses "because big companies can afford it" then you make that problem worse. If you really want better wages, make things tougher for bigger companies. Condition regulatory burdens and taxes on high total revenue. Eliminate regulations at the federal level that are typically highly complex and whose uniformity favors large interstate businesses, in favor of simpler local regulations that benefit local businesses and allow locals to carve out a profitable niche.
- maym86 8y ago
  I agree strongly with your final paragraph.
- chii 8y ago
  Large businesses are more efficient because they can hire 1 manager per thousand employees. If laws were introduced to artificially stop this sort of efficiency, the country's productivity drops. Thus will actually cause more harm than good. A much more sound way of redistribution is to close tax loop holes and aggressive hunting down of those who evade (piercing the veil and all). Recover lost tax revenue, and use it to improve social welfare or infrastructure.
  - AnthonyMouse 8y ago
    > Large businesses are more efficient because they can hire 1 manager per thousand employees. > If laws were introduced to artificially stop this sort of efficiency, the country's productivity drops. Thus will actually cause more harm than good. These are basically the talking points of big corporate lobbyists, but they don't bear out. Efficiency doesn't help real people unless it results in better products or lower prices. If the surplus is going to executive salaries, Wall St and foreign investors then it has no value -- or negative value, if those people then use that money to e.g. bid up real estate prices so that real people have to spend more of their income on housing. And having less of something isn't always more efficient to begin with. The thing may be producing more value than it costs. For example, people love to go to a store and talk to a knowledgeable person about what they need. A few minutes can save hours of research or years of using the wrong product. But what if one store has that and consequently has higher prices, and another store doesn't have it but has lower prices? Customers go to the store that can answer their questions, determine what they need to buy and then compare prices and buy it from Amazon or Walmart. That isn't more efficient, it's just free riding. And when the smaller stores go out of business, "the country's productivity drops." > A much more sound way of redistribution is to close tax loop holes and aggressive hunting down of those who evade (piercing the veil and all). Recover lost tax revenue, and use it to improve social welfare or infrastructure. But that's just an example of what I'm talking about. The tax code is highly complex federal regulation that benefits large companies at the expense of small. Replace the complicated income tax with simple no-exceptions VAT and they can't do that anymore. If you sell something in the US, VAT is collected and it doesn't matter where the rest of your operations are. It's basically corporate income tax where the jurisdiction of "profit" is the location of final sale rather than a bunch of complex rules that international corporations can game to pay less tax than local businesses. But you also have to make sure they don't absorb that revenue on the spending side. As soon as the feds have money to spend, large corporations devise corruption schemes like the one where government-funded research is patented and transferred for pennies on the dollar to big business, so the public is paying for it twice. Which is why spending should be local -- a billion dollars of corruption sticks out much more in a city budget than the federal budget.

by maym86 8y ago

sjg007 8y ago

Sure unionization, laws and lobbies are part of it too.

nv-vn 8y ago

Maybe to a degree, but a lot of those jobs only exist because of how low the wages are. Very few large corporations can afford to just give everyone a raise. That's a terribly short-sighted view of the economy and business administration. >Large companies are making absurd profits while paying their employees a pittance Take a look at profit margins on some big companies. You will definitely be surprised. E.g. Over the last 5 years Walmart averaged <3% profits [1], Amazon averaged <1% [2]. Some tech companies are a lot higher (Apple, NVidia, etc.) but these are not the companies you hear about when people discuss low wages. Imagine Amazon trying to give all of their workers a 10% raise. With ~566,000 employees [3] making a median salary (sorry, could not find any mean or total amount so I'll pretend like it's the mean) of $28,446 [4], a 10% raise would amount to 566,000 * $28,446/10 = $1,610,043,600. This would more than slash their net income in half [5] and would only increase the median income by a modest $2800. Obviously these numbers aren't perfect because we don't have means or an accurate list of who earns what, but I think you can see my point here: if every Amazon employee earned a true "living wage", the company would probably go out of business pretty quickly. And that's a big deal when half a million people's lives rely on it (not to mention the millions of shareholders, many of whom likely own the stock as part of their pension plans). And that's not really in anybody's control. It's not like Jeff Bezos is the wealthiest person alive because he's making some massive salary and taking cash out of the company. His personal compensation was $1.68 million last year, most of which was the cost of his personal security team [4]. What makes him wealthy is all of his shares in Amazon, which is pretty worthless if he goes ahead and dumps all of it. Not to mention that his wealth often fluctuates by 10s of billions in a matter of days because of that. >Migration isn't causing this but it useful for rich people with vested interests to make it seem like it is. I can agree with you that blaming things on migration is often incorrect and used as a red herring, but the previous commenter is somewhat correct. Immigrants (both legal and illegal) often settle for much lower paying jobs or much harder labor because of how much it pays relative to what they would earn in their home country. This doesn't really cause most people to earn less money, because for the most part few "natural-born" Americans are willing to do those jobs, but it does increase the proportion of jobs that pay these tiny wages. There are certainly many American-born workers who are getting minuscule wages, but an even bigger percentage of these people are immigrants. Of course, it doesn't change the fact that people are getting paid those jobs in general, but for a vast majority of them something as simple as raising the minimum wage is just going to make their jobs go away. [1] https://ycharts.com/companies/WMT/profit_margin https://ycharts.com/companies/WMT/profit_margin [2] https://ycharts.com/companies/AMZN/profit_margin https://ycharts.com/companies/AMZN/profit_margin [3] https://www.geekwire.com/2018/amazon-now-employs-566000-people-worldwide-66-percent-jump-year-ago/ https://www.geekwire.com/2018/amazon-now-employs-566000-peop... [4] https://www.bloomberg.com/gadfly/articles/2018-04-19/amazon-is-defined-by-billions-median-salary-is-28-446 https://www.bloomberg.com/gadfly/articles/2018-04-19/amazon-... [5] https://www.nasdaq.com/symbol/amzn/financials?query=income-statement https://www.nasdaq.com/symbol/amzn/financials?query=income-s...

maym86 8y ago
I appreciate your response but respectfully disagree. Companies like Amazon are notorious for hiding their profits for these reasons. http://evonomics.com/amazon-accounting-corporate-profits-rich-peoples-income-invisible-bezos/ http://evonomics.com/amazon-accounting-corporate-profits-ric...
pedro_hab 8y ago
I get a lot of this feeling that the rich and corporations have all the money needed to fix these problems around here. But the truth is that the US is a huge machine and the government already spends too much money. Amazon is nothing compared to $4T a year the US spends. You need 4 Amazons a year, people don't seem to understand you can't just eat the rich. Some concerned with the companies "absurd" profits while they are dwarfed by the US spending. Wow, great answer btw, with sources and all.
- sjg007 8y ago
  You can't eat the rich but you can tax them.
  - refurb 8y ago
    You can, but there aren’t enough to make that big of a difference.

AnthonyMouse 8y ago

> There is plenty of money in large corporations to pay workers more but it goes to the executives and shareholders rather than making employees lives more bearable. The money comes from the fact that they have one well-paid manager per thousand employees instead of having one per five employees as a small business does, which makes getting that opportunity for advancement a one in a thousand shot for their employees instead of one in five. What you want isn't for big companies to pay more, it's for small companies to replace them. If you pass laws like increasing the minimum wage that disproportionately impact smaller businesses "because big companies can afford it" then you make that problem worse. If you really want better wages, make things tougher for bigger companies. Condition regulatory burdens and taxes on high total revenue. Eliminate regulations at the federal level that are typically highly complex and whose uniformity favors large interstate businesses, in favor of simpler local regulations that benefit local businesses and allow locals to carve out a profitable niche.

maym86 8y ago
I agree strongly with your final paragraph.
chii 8y ago
Large businesses are more efficient because they can hire 1 manager per thousand employees. If laws were introduced to artificially stop this sort of efficiency, the country's productivity drops. Thus will actually cause more harm than good. A much more sound way of redistribution is to close tax loop holes and aggressive hunting down of those who evade (piercing the veil and all). Recover lost tax revenue, and use it to improve social welfare or infrastructure.
- AnthonyMouse 8y ago
  > Large businesses are more efficient because they can hire 1 manager per thousand employees. > If laws were introduced to artificially stop this sort of efficiency, the country's productivity drops. Thus will actually cause more harm than good. These are basically the talking points of big corporate lobbyists, but they don't bear out. Efficiency doesn't help real people unless it results in better products or lower prices. If the surplus is going to executive salaries, Wall St and foreign investors then it has no value -- or negative value, if those people then use that money to e.g. bid up real estate prices so that real people have to spend more of their income on housing. And having less of something isn't always more efficient to begin with. The thing may be producing more value than it costs. For example, people love to go to a store and talk to a knowledgeable person about what they need. A few minutes can save hours of research or years of using the wrong product. But what if one store has that and consequently has higher prices, and another store doesn't have it but has lower prices? Customers go to the store that can answer their questions, determine what they need to buy and then compare prices and buy it from Amazon or Walmart. That isn't more efficient, it's just free riding. And when the smaller stores go out of business, "the country's productivity drops." > A much more sound way of redistribution is to close tax loop holes and aggressive hunting down of those who evade (piercing the veil and all). Recover lost tax revenue, and use it to improve social welfare or infrastructure. But that's just an example of what I'm talking about. The tax code is highly complex federal regulation that benefits large companies at the expense of small. Replace the complicated income tax with simple no-exceptions VAT and they can't do that anymore. If you sell something in the US, VAT is collected and it doesn't matter where the rest of your operations are. It's basically corporate income tax where the jurisdiction of "profit" is the location of final sale rather than a bunch of complex rules that international corporations can game to pay less tax than local businesses. But you also have to make sure they don't absorb that revenue on the spending side. As soon as the feds have money to spend, large corporations devise corruption schemes like the one where government-funded research is patented and transferred for pennies on the dollar to big business, so the public is paying for it twice. Which is why spending should be local -- a billion dollars of corruption sticks out much more in a city budget than the federal budget.