7 ms·

I can't believe this actually needs to be said, but a single employer raising its wages is not the same thing as a government raising a legally mandated minimum

I can't believe this actually needs to be said, but a single employer raising its wages is not the same thing as a government raising a legally mandated minimum wage. It's so much not the same thing, that the very fact the article tries to conflate them by comparing Ford's decision with the proposal from the Obama administration makes me doubt the voracity of the entire piece. For one thing, Ford's logic is quite sound precisely because he's the only one raising wages. If his aim is to remain competitive and retain workers, that only works if he's the only one doing it -- competition, by definition, is relative. Furthermore, the idea that people become richer because the number on the bottom of their check goes up, rather than the buying power of that number, is easily debunked by looking at the entire history of inflation. I'm easily making more money, in nominal dollars, than an average CEO in 1919, but I'm not running wild in Saint-Tropez every summer either. The one thing the article does get right is Ford's attempt to fight the stock market crash in 1929 by raising wages further backfiring. The reason is because his higher wages were not the actual reason why Detroit was richer -- the opposite was true: he was able to pay higher wages because Detroit was richer; or, more precisely, because he made the best cars in the world and capital flowed into his company and his city at high rates. But when the economy contracted, Detroit was going to feel the pinch, also. Nothing in this article makes a case for raising a federally mandated minimum wage, and actually undermines the argument quite a bit.

zeropnc 7y ago
Baffling really. One of the most obnoxiously well differentiated and profitable enterprises in history raising their minimum pay can’t possible be an analogue for the entire business world
louisswiss 7y ago
> I'm easily making more money, in nominal dollars, than an average CEO in 1919, but I'm not running wild in Saint-Tropez every summer either. Not arguing with your general point. But on this count, I think you're vastly better off than the average CEO in 1919. You have luxury they couldn't have even imagined. - quality of medical care - entertainment - air travel - cars - food regardless of season - etc
- bmmayer1 7y ago
  That's a good point, and also speaks to the futility of trying to define wealth in dollar terms, even when adjusting for inflation. An inflation-adjusted dollar in 2019 buys more than an inflation-adjusted dollar in 2000, even (iPhones alone!)
  - paulddraper 7y ago
    > An inflation-adjusted dollar in 2019 buys more than an inflation-adjusted dollar in 2000, even Depends. Does it buy more concrete? Does it buy more rocket ships? Does it buy more childcare? Does it buy more iPhones? Just depends on what you're talking about.
- folli 7y ago
  This is actually a really interesting point. In some ways even moderatly poor people in a Western country are better of than the Caesars of Ancient Rome, especially the availability of medical care is something I would never want to trade. In other ways even the richest and most powerful people today will never be able to have comparable power, in terms of political and cultural influence. It would be an interesting excercise to come up with a definition of wealth that somehow accounts for this.
  - benjohnson 7y ago
    It is strange! One of the problems some moderately poor people have is eating too much food.
    - vokep 7y ago
      For the first time in history, it is now possible to be obese and malnourished simultaneously.
      - folli 7y ago
        malnourishment != undernourishment I'm pretty sure this is not specific for the modern age, but perhaps the shift from undernourishment to malnourishment is.
roenxi 7y ago
The frame of the article is that Ford, a dashing socialist in disguise, woke up and decided one day that all would be well and good in the world if workers were paid $5/hr. That isn't going to be what happened. He would have thought about it carefully and moved deliberately because he thought it would benefit his business. I'll draw an analogue with, say, Google and their 20% time back in the day. It might be quirky and costly to the company (losing 20% of your workers productivity!!) - but it isn't happening because the bosses are just lovely people. It happens because the boss thinks that there might be a payoff. It is circumstance-specific whether such bold plays work out. I'll reiterate what some others are saying; capitalism is all about allowing selfish motivations to power great outcomes. The moral people tend to be the wizened monks sitting on mountains rather than the egos that power the machinery of society. Something external to the Ford company would have driven the rise in wages, and that something was likely to be competition or economic opportunity.
- Aloha 7y ago
  5 dollars a day for an 8 hour day, vs 2.34 a day for a 9 hour day - a better than 100% increase. Consider that 5 dollars for an 8 hour day in 1914 dollars works out to almost 16 dollars an hour in 2019 dollars.
srfilipek 7y ago
> For one thing, Ford's logic is quite sound precisely because he's the only one raising wages. Except that the rest of the industry followed suit as well, which, by your logic, should have nullified any advantage. But it didn't. There are other points to the article that naysayers completely miss (because it disagrees with their set-in-stone world view, it seems). Well paid workers, even if common across the entire industry, have multiple benefits. They are more motivated, more productive, and at a larger economic scale they have more buying power to actually purchase things being produced.
- 50656E6973 7y ago
  >Except that the rest of the industry followed suit as well How long did it take for the rest of them to follow suit, and was it just the automotive industry, or the entire market that did so?
  - deleted 7y ago
    [deleted]
  - srfilipek 7y ago
    > was it just the automotive industry, or the entire market that did so? Ford basically started the trend that would create the middle class in the US at large (somewhat arguable, but commonly attributed to him and this decision).
naveen99 7y ago
> voracity —> veracity Probably a typo, but in case it wasn’t : https://grammarist.com/usage/veracity-voracity/ https://grammarist.com/usage/veracity-voracity/
colanderman 7y ago
> Furthermore, the idea that people become richer because the number on the bottom of their check goes up, rather than the buying power of that number, is easily debunked by looking at the entire history of inflation. I'm easily making more money, in nominal dollars, than an average CEO in 1919, but I'm not running wild in Saint-Tropez every summer either. This argument makes no sense. Raising the minimum wage doesn't affect everyone equally like inflation does. It affects only those with the lowest income, with maybe a trickle-up effect to those making somewhat more.
- defertoreptar 7y ago
  It affects everyone equally who would get minimum wage. If when Ford increased their minimum, every other company Ford competed for workers against also raised their minimum, then it wouldn't have the same retention effect.
  - ashelmire 7y ago
    Disagree. The alternative is people leaving the company, industry, or workforce as laborers entirely. If all companies offered $.02 per hour, with little change in purchasing power, basically everyone would elect not to work and instead steal from and destroy businesses. And you can't look at economics in a vacuum; economics are intimately related to politics. An angry, poor population is a violent population, and fear of reprisal can only contain them for so long. Our minimum wage being so low puts great strain on our social services (and if they didn't exist, the situation would be even worse - it would just be a reversion to what we saw before and during the great depression). Noone should be fully employed and still require food stamps and public housing vouchers, but that's the reality of today.
    - defertoreptar 7y ago
      > If all companies offered $.02 per hour, with little change in purchasing power, basically everyone would elect not to work Yes, this seems obvious. > And you can't look at economics in a vacuum Agreed, as long as we acknowledge that we shouldn't use this truism as an excuse to sweep away every argument about economics. Overall, I don't see how you've contradicted my point, which was that when Ford increased bottom wages, it worked as long as other competitors for its labor market did not increase their bottom wage in kind. It seems like you're just making a case against low minimum wage in general.
dreamache 7y ago
100% agree. In Ford's case, it was a voluntary decision to attract and keep the best workers. In the case of federally mandated minimum wage, it's a threat of force against business owners who are otherwise acting peacefully and quite literally, minding their own business. Raising the minimum wage results in: - A raise in the price of products (hurting the poor the most) - Firing employees - Reducing hours - Going out of business - Outsourcing I'm a business owner, and I'm not going to sit here eating up the cost of a higher minimum wage. The central planners don't seem to understand this -- or they do, and they ultimately want more people dependent on them. If that's the case, raising the minimum wage is a great idea.
- icebraining 7y ago
  This[1] discussion on the minimum wage (specifically centered on Seattle's recent laws) provides a more nuanced goal than just "helping workers" or "getting them dependent"; essentially he's saying there are two types of minimum wage workers - teenagers looking for summer money, and adults making a living -, and you can help the latter if you don't mind screwing the former. [1] http://www.econtalk.org/jacob-vigdor-on-the-seattle-minimum-wage/ http://www.econtalk.org/jacob-vigdor-on-the-seattle-minimum-...
  - leetcrew 7y ago
    > there are two types of minimum wage workers - teenagers looking for summer money, and adults making a living -, and you can help the latter if you don't mind screwing the former. when you put it like this, it seems obvious to say that the right move is to screw over the teenagers who are much less likely to be supporting a family or themselves. I'm not sure this is great in the long run though. imo, having some kind of part time job is very important in highschool. for a lot of teens, it might be the first time they are exposed to an environment that has no inherent reason to make things work for them. until we finally get luxury space communism, this is a really important experience to have early in life.
    - jlokier 7y ago
      I don't know about other countries, but in the UK the approach is to set the minimum wage significantly lower for teenagers. Which sucks if you're an adult making a living who happens to be young, but that's what we do. There's also a dirty hack: We call some young people "apprentices"(1), which sometimes means the same job as before and not having to pay the minimum wage, with a veneer of marketing. See also "unpaid interns". (1) I don't want to disparage proper apprenticeships, which from reports can be excellent, e.g. at engineering firms like Rolls-Royce.
ptah 7y ago
>makes me doubt the voracity of the entire piece. the piece does not seem especially hungry to me

zeropnc 7y ago

Baffling really. One of the most obnoxiously well differentiated and profitable enterprises in history raising their minimum pay can’t possible be an analogue for the entire business world

louisswiss 7y ago

> I'm easily making more money, in nominal dollars, than an average CEO in 1919, but I'm not running wild in Saint-Tropez every summer either. Not arguing with your general point. But on this count, I think you're vastly better off than the average CEO in 1919. You have luxury they couldn't have even imagined. - quality of medical care - entertainment - air travel - cars - food regardless of season - etc

bmmayer1 7y ago
That's a good point, and also speaks to the futility of trying to define wealth in dollar terms, even when adjusting for inflation. An inflation-adjusted dollar in 2019 buys more than an inflation-adjusted dollar in 2000, even (iPhones alone!)
- paulddraper 7y ago
  > An inflation-adjusted dollar in 2019 buys more than an inflation-adjusted dollar in 2000, even Depends. Does it buy more concrete? Does it buy more rocket ships? Does it buy more childcare? Does it buy more iPhones? Just depends on what you're talking about.
folli 7y ago
This is actually a really interesting point. In some ways even moderatly poor people in a Western country are better of than the Caesars of Ancient Rome, especially the availability of medical care is something I would never want to trade. In other ways even the richest and most powerful people today will never be able to have comparable power, in terms of political and cultural influence. It would be an interesting excercise to come up with a definition of wealth that somehow accounts for this.
- benjohnson 7y ago
  It is strange! One of the problems some moderately poor people have is eating too much food.
  - vokep 7y ago
    For the first time in history, it is now possible to be obese and malnourished simultaneously.
    - folli 7y ago
      malnourishment != undernourishment I'm pretty sure this is not specific for the modern age, but perhaps the shift from undernourishment to malnourishment is.

roenxi 7y ago

The frame of the article is that Ford, a dashing socialist in disguise, woke up and decided one day that all would be well and good in the world if workers were paid $5/hr. That isn't going to be what happened. He would have thought about it carefully and moved deliberately because he thought it would benefit his business. I'll draw an analogue with, say, Google and their 20% time back in the day. It might be quirky and costly to the company (losing 20% of your workers productivity!!) - but it isn't happening because the bosses are just lovely people. It happens because the boss thinks that there might be a payoff. It is circumstance-specific whether such bold plays work out. I'll reiterate what some others are saying; capitalism is all about allowing selfish motivations to power great outcomes. The moral people tend to be the wizened monks sitting on mountains rather than the egos that power the machinery of society. Something external to the Ford company would have driven the rise in wages, and that something was likely to be competition or economic opportunity.

Aloha 7y ago
5 dollars a day for an 8 hour day, vs 2.34 a day for a 9 hour day - a better than 100% increase. Consider that 5 dollars for an 8 hour day in 1914 dollars works out to almost 16 dollars an hour in 2019 dollars.

srfilipek 7y ago

> For one thing, Ford's logic is quite sound precisely because he's the only one raising wages. Except that the rest of the industry followed suit as well, which, by your logic, should have nullified any advantage. But it didn't. There are other points to the article that naysayers completely miss (because it disagrees with their set-in-stone world view, it seems). Well paid workers, even if common across the entire industry, have multiple benefits. They are more motivated, more productive, and at a larger economic scale they have more buying power to actually purchase things being produced.

50656E6973 7y ago
>Except that the rest of the industry followed suit as well How long did it take for the rest of them to follow suit, and was it just the automotive industry, or the entire market that did so?
- deleted 7y ago
  [deleted]
- srfilipek 7y ago
  > was it just the automotive industry, or the entire market that did so? Ford basically started the trend that would create the middle class in the US at large (somewhat arguable, but commonly attributed to him and this decision).

naveen99 7y ago

> voracity —> veracity Probably a typo, but in case it wasn’t : https://grammarist.com/usage/veracity-voracity/ https://grammarist.com/usage/veracity-voracity/

colanderman 7y ago

> Furthermore, the idea that people become richer because the number on the bottom of their check goes up, rather than the buying power of that number, is easily debunked by looking at the entire history of inflation. I'm easily making more money, in nominal dollars, than an average CEO in 1919, but I'm not running wild in Saint-Tropez every summer either. This argument makes no sense. Raising the minimum wage doesn't affect everyone equally like inflation does. It affects only those with the lowest income, with maybe a trickle-up effect to those making somewhat more.

defertoreptar 7y ago
It affects everyone equally who would get minimum wage. If when Ford increased their minimum, every other company Ford competed for workers against also raised their minimum, then it wouldn't have the same retention effect.
- ashelmire 7y ago
  Disagree. The alternative is people leaving the company, industry, or workforce as laborers entirely. If all companies offered $.02 per hour, with little change in purchasing power, basically everyone would elect not to work and instead steal from and destroy businesses. And you can't look at economics in a vacuum; economics are intimately related to politics. An angry, poor population is a violent population, and fear of reprisal can only contain them for so long. Our minimum wage being so low puts great strain on our social services (and if they didn't exist, the situation would be even worse - it would just be a reversion to what we saw before and during the great depression). Noone should be fully employed and still require food stamps and public housing vouchers, but that's the reality of today.
  - defertoreptar 7y ago
    > If all companies offered $.02 per hour, with little change in purchasing power, basically everyone would elect not to work Yes, this seems obvious. > And you can't look at economics in a vacuum Agreed, as long as we acknowledge that we shouldn't use this truism as an excuse to sweep away every argument about economics. Overall, I don't see how you've contradicted my point, which was that when Ford increased bottom wages, it worked as long as other competitors for its labor market did not increase their bottom wage in kind. It seems like you're just making a case against low minimum wage in general.

dreamache 7y ago

100% agree. In Ford's case, it was a voluntary decision to attract and keep the best workers. In the case of federally mandated minimum wage, it's a threat of force against business owners who are otherwise acting peacefully and quite literally, minding their own business. Raising the minimum wage results in: - A raise in the price of products (hurting the poor the most) - Firing employees - Reducing hours - Going out of business - Outsourcing I'm a business owner, and I'm not going to sit here eating up the cost of a higher minimum wage. The central planners don't seem to understand this -- or they do, and they ultimately want more people dependent on them. If that's the case, raising the minimum wage is a great idea.

icebraining 7y ago
This[1] discussion on the minimum wage (specifically centered on Seattle's recent laws) provides a more nuanced goal than just "helping workers" or "getting them dependent"; essentially he's saying there are two types of minimum wage workers - teenagers looking for summer money, and adults making a living -, and you can help the latter if you don't mind screwing the former. [1] http://www.econtalk.org/jacob-vigdor-on-the-seattle-minimum-wage/ http://www.econtalk.org/jacob-vigdor-on-the-seattle-minimum-...
- leetcrew 7y ago
  > there are two types of minimum wage workers - teenagers looking for summer money, and adults making a living -, and you can help the latter if you don't mind screwing the former. when you put it like this, it seems obvious to say that the right move is to screw over the teenagers who are much less likely to be supporting a family or themselves. I'm not sure this is great in the long run though. imo, having some kind of part time job is very important in highschool. for a lot of teens, it might be the first time they are exposed to an environment that has no inherent reason to make things work for them. until we finally get luxury space communism, this is a really important experience to have early in life.
  - jlokier 7y ago
    I don't know about other countries, but in the UK the approach is to set the minimum wage significantly lower for teenagers. Which sucks if you're an adult making a living who happens to be young, but that's what we do. There's also a dirty hack: We call some young people "apprentices"(1), which sometimes means the same job as before and not having to pay the minimum wage, with a veneer of marketing. See also "unpaid interns". (1) I don't want to disparage proper apprenticeships, which from reports can be excellent, e.g. at engineering firms like Rolls-Royce.

ptah 7y ago

>makes me doubt the voracity of the entire piece. the piece does not seem especially hungry to me