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The comments on these types of articles always hurt my brain. Blaming minimum wage increases for McDonald's, Walmart, pretty much everybody bringing in automat

• navigatesol 7y ago
  >I'm always bemused by the arguments against minimum wages, they almost always boil down to "My business can't survive unless my employees are living in poverty." which, in reality for a lot of businesses, is "I won't be as profitable if I have to pay a living wage". There are some jobs that don't create $15/hour in value. Why is that hard to imagine? Minimum wage dictates that those jobs and the products they provide will not exist. Whether you think that's a net benefit to society is another question.
  • smudgymcscmudge 7y ago
    There are also people who aren’t capable of producing $15 of value in an hour. A $15 minimum wage means they are less likely to be employed.
  • TeMPOraL 7y ago
    "Value" in economics is somewhat arbitrary. When both you and all your competitors have to pay at least $15/hour for a necessary piece work, you'll all pass the cost onto the consumer and suddenly the work will be creating $15/hour in value.
    • barry-cotter 7y ago
      No, because all of the people who were marginal customers will just forgo your product or service. You can pass on all of an increase in costs for goods with price inelastic demand. If demand is elastic you either have to eat the margin or go out of business.
    • tanilama 7y ago
      It doesn't work that way either. Consumers are not suddenly going to have more to spend due to hike of minimum wage. If the inflation keeps low, total amount of money in the economy is relative constant, thus the cake is not getting much bigger, increasing minimum wage is going to reduce the number of jobs in the sector that is paying previous the minimum wage.
    • pzh 7y ago
      But then you’re just increasing inflation, and the people you pay $15/hour end up having the same purchasing power as before.
      • gldalmaso 7y ago
        This seems to assume that every good purchased is created by a minimum wage work force. That not being the case, the minimum wage work force purchasing power increases for everything else that is imported or produced by a higher wage work force.
  • pytester 7y ago
    >There are some jobs that don't create $15/hour in value. Why is that hard to imagine? Because those jobs don't disappear when that minimum wage is raised. This has been tested by comparing the job differences across state borders where the minimum wage has been raised on one side but not the other (Dube/Lester/Reich and Card/Krueger). >Minimum wage dictates that those jobs and the products they provide will not exist The reality is that that it tends to dictate whether cashflow is funneled into profit margins or wages.
    • navigatesol 7y ago
      >Because those jobs don't disappear when that minimum wage is raised. Yeah, input costs have no effect on whether a business can operate at the margin... >This has been tested... If we suddenly care about what the economic research says, you should do a search for papers that don't confirm your biases. How the fact that raising labour costs will reduce the demand for labour is controversial is beyond belief, truly. We have social programs here in Canada that do exactly this: subsidize wages of employees in certain industries because the value that the labour of some people doesn't cover the costs. But hey, what do we know up here... I guess this mentality comes from the new wave of socialism or comes from people who have never run a business in their lives.
      • pytester 7y ago
        >Yeah, input costs have no effect on whether a business can operate at the margin They can but that's obviously a rather different question. >If we suddenly care about what the economic research says, you should do a search for papers that don't confirm your biases. I have. >How the fact that raising labour costs will reduce the demand for labour is controversial is beyond belief Why is it so hard to believe that demand for minimum waged labor is very inelastic?
        • navigatesol 7y ago
          >They can but that's obviously a rather different question. How is this a "different question"? It's the question. If there are businesses that can be economically profitable paying $14/hour, but minimum wage rises to $15/hour, those businesses are no longer viable. We can argue about how many of those businesses there are, but it's merely a fact that they exist at the margin. If you've ever run a small business yourself, you'll understand how small changes in the cost of labour can be painful. I'm not talking about about McDonald's or Walmart here. Again, we have social programs in my country to alleviate these issues. And they work. >Why is it so hard to believe that demand for minimum waged labor is very inelastic? So businesses optimize for the number of people employed, regardless of prevailing wages? I don't buy that, sorry.
• AlexTWithBeard 7y ago
  My business can't survive unless my employees are living in poverty Another way of looking at this would be: a job in McDonalds is not supposed to be a means of supporting the family of four. It's a side gig for teenagers, not a "full-scale" job.
  • goodcharles 7y ago
    Teenagers aren't available until, what, 4PM? Who is supposed to run the restaurant the first 12 hrs of every day?
    • AlexTWithBeard 7y ago
      Stay-at-home moms?
      • SolaceQuantum 7y ago
        But mothering is a full time job. That's kind of the point of the SAHM- a human adult must be around regularly a child below a certain age. At least half a decade. Often closer to a full decade. I don't think leaving for a shift every day or even a shift multiple times a week is feasible for a parent of a child below a certain age.
      • bart_spoon 7y ago
        Then they aren't stay-at-home moms, are they?
      • ddnb 7y ago
        But once they start working they aren't stay-at-home moms anymore.
  • cooljacob204 7y ago
    That is not the reality of it unfortunately. Might be a side gig for teenage you, but not everyone has the education or network to do better.
• sokoloff 7y ago
  When businesses won't be as profitable as desired by the owners, they are less likely to be started or to choose to make that expansion. If labor was plentiful and cost $1/hr, we probably wouldn't see nearly as many automated checkout stations or ordering kiosks. If low-skilled labor costs $100/hr, you can bet there's going to be a lot more automation in place. It seems like most people can grasp the general slope of this demand curve, but seem to be unable (and I think in a lot of cases it's rather unwilling) to reason about whether the curve has a fundamentally different slope/shape in the $8-20/hr range.
  • imtringued 7y ago
    >they are less likely to be started or to choose to make that expansion. You just showed us a counter example. The structure of the market changes toward automation or away from it but the businesses are still being started as usual.
    • navigatesol 7y ago
      >The structure of the market changes toward automation or away from it but the businesses are still being started as usual. Whether this is possible will depend on the cost of capital and state of technology.
  • Spooky23 7y ago
    We don’t allow for slums like what you see in Brazil or India, so there is a high floor where wages essentially are less productive than not working. So when you push the value of labor to a leave where people cannot afford to live, folks in the US either end up on social services, social security disability, or are incarcerated. Whenever there are changes to minimum wage, the parade of chamber of commerce types bemoan the horrors that will befall them. Yet somehow burgers get flipped and shelves get stocked.
    • bufferoverflow 7y ago
      > We don’t allow for slums like what you see in Brazil or India Many on the left are supporting open borders. Which is guaranteed to attract a huge amount of low skilled labor. Which guarantees low wages (simple supply-demand). And if you artificially control wages, it will result in unemployment of the unskilled. Why do you think we have tent towns all over California?
• zaroth 7y ago
  Anyone arguing that businesses are “entitled” to cheap labor are arguing the case backwards. Some jobs that certain humans perform are not worth very much money to an employer. If the state tells the employer they can’t pay someone that meager a sum, then they simply won’t hire a person to perform just that job. They will hire someone for more money to do that job plus something additional to make it worth hiring the person, or they will find a way to automate out or contract out that portion of the work. Yes, if a business is not successful in managing around a government wage minimum then they will lose money. Companies are mismanaged all the time. But the general economic theory is based on rational actors, and at the macro level that is the effect that has been observed.
  • malpighien 7y ago
    I think you are looking at it backwards. For a business to be successful they should not have to burden themselves with the livelihood of their employees. Truly businesses should be able to have people working and living close to the working facility as well as eating there. Dorms will be owned by the businesses and employee will either pay for them or have their wages reduced for the cost of living, same for food. If they fall sick they should pay for the missing hours, no hollidays of course or breaks since those are just wasteful idle time spent. Relationships are forbidden as they put productivity at risk. In an ideal world there will no silly government regulation and the market will sort it out, if the people were unhappy with this model it should be possible to import workers from countries with lesser opportunities who would be more than happy to fill the gap. This is how it is going in most productive electronic facilities in china and why USA is falling behind with all those silly regulations killing businesses.
    • deleted 7y ago
      [deleted]
    • hobs 7y ago
      This reads as if it is comedy, but really bad comedy.
      • 7y ago
• maxerickson 7y ago
  Here Walmart added a bunch of higher capacity self checkouts because they can hardly hire anyone for the wages they pay.
  • whoopdedo 7y ago
    Are you sure it's not because customers are choosing the self checkouts more and they need to meet demand? I saw in my grocery store how, even when they had all available staff working the registers, the longest line would tend to the self checkout. This past summer they doubled the self-serve area. The interesting thing is even though all full-service registers were in use, the deepest queue in any of them was two waiters. That means shoppers' perception of too long a line has shifted because of self-serve. They were choosing self-serve based on the belief it would be quicker, even if it means standing in the longest line. And that was mostly born out, mostly because the choice also depended on how many items were being purchased. People buying many things went to full-serve, which makes waiting in the longer, which drives people with hand baskets or half-full buggies to the self-serve. The upshot being stores are installing more self-service checkouts because customers want them. It's not like adding those self-service lanes comes at no cost to the business. In the above grocery store, they had to remove part of the floor they previously used to display products. If they didn't think it was necessary they wouldn't have done away with that selling space.
    • maxerickson 7y ago
      I mean, that was what one of the managers told me, and I can see that they don't have a whole lot of staff at times that it would make sense to have more staff. Also, the lanes they added were in addition to the ~12 basket self checkouts. The new lanes are setup for people pushing carts.
    • auiya 7y ago
      This to me means they're also selling more pre-packaged items with scanable bar codes rather than they are items like fresh produce which requires a lookup and weight check at checkout.
  • Ensorceled 7y ago
• golergka 7y ago
  If a business owner decides to pay his workers considerably higher than what the market offers, without any payoff for himself (like being able to hire the best of the workers or enjoying the high loyalty and willingess to go above and beyond), he's not running a business, he's running a charity. That's a humane and moral decision to be charitable - but it's immoral to force other people to be charitable wit their own resources. And when company is publicly traded, you can't even make an argument that "owners" of the company are "better off" than the workers and therefore, "need to share": a lot of these "capitalists" are working class, with their savings and pension funds, through a series of financial institutions, invested in publicly traded companies (or even VC-backed SF startups).
  • louisswiss 7y ago
    If that's your worldview, how do you feel about income tax?
• kevin_nisbet 7y ago
  > "My business can't survive unless my employees are living in poverty." which, in reality for a lot of businesses, is "I won't be as profitable if I have to pay a living wage". I really like the way Nick Hanauer puts this particular topic. It has a certain logic to it, and appears to be supported by some historic data and trends. I won't do it justice, but in effect the message is that if my employees can afford my product, it's better for the economy and business. Using restaurants as an example, if all service workers can afford to eat at a restaurant, then restaurants as an industry do better, and the economy grows, and individual businesses do better. My take on it is, without public policy, such as a minimum wage, it's hard for a business to be an outlier. If one business pays a living wage, but non of the competitors do, that business doesn't necessarily have enough of an advantage to stay ahead of lower priced alternatives. It's only when we create rules through policy, do we create a level field for competitors to operate in, with effects such as increasing the customer base by increasing the purchasing power of a class of citizens. This of course doesn't mean the rich should be eliminated, or everything should be equal of course, but the attitude that "I won't be as profitable if I have to pay a living wage" isn't necessarily correct, and it's possible for businesses to thrive once the shocks of rapid changes work themselves out. It also depends a great deal on other elements of policy, such as international trade, but those are other topics for other days.
• twox2 7y ago
  There's a good argument against a high minimum wage, and it all boils down to spending power. I'm not an economist, so I'm sure I'll butcher the explanation, but I once read an articulate version of it that struck a chord. It's something like this: The minimum wage is what determines spending power for the middle class. Let's say the minimum wage is $10/hr - that means a "middle class" worker that makes say $1k/week has the spending power of 100 "minimum wage hours". Now let's say that is doubled to $20/hr. The spending power of the middle class person is halved. The person that was making 2x minimum wage is now making minimum wage. At first, the folks on the bottom of the rung will certainly feel the benefits of their new influx of cash, but it's inevitable that costs of goods and services will increase after the initial adjustment period and due to inflation. The end result is that the entire middle class becomes poorer. The "1%ers" feel no impact. Now, I don't know how real this phenomenon is, but increasing the minimum wage is certainly not a redistribution of wealth from the mega wealthy to the poor and the middle class, so does it really solve the problem? I don't know.
  • auiya 7y ago
    Maybe we should have a maximum wage instead?
  • Ensorceled 7y ago
    It solves the problem of the poor living in poverty. It will, of course, cause some other problems. But, the middle-class problem doesn't hold in practice. Raising minimum wage has the effect of bumping other salaries up as employers have to compete with the new minimum.
• auiya 7y ago
  > My business can't survive unless my employees are living in poverty. The corollary being "You're actually worth LESS to me and my business, but the state won't allow it"
• subject117 7y ago
  You are missing the point. Minimum wage increases don’t harm all businesses, but they harm all employees. Businesses compensate for minimum wage increases by reducing hours or staff. This in turn increases labor supply and competition for the remaining available jobs.