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Minimum wage isn't just flat for a decade, it's not being adjusted for inflation. This means minimum wage workers have been getting a pay cut over time. The de

Minimum wage isn't just flat for a decade, it's not being adjusted for inflation. This means minimum wage workers have been getting a pay cut over time. The debate isn't just whether we should raise minimum wage, it's whether we should be cutting it. By allowing it to remain stagnant we're making the default decision to cut.

JMTQp8lwXL 7y ago
We inflation-adjust social security benefits annually, we could also do the same for minimum wage.
- noja 7y ago
  Would that defeat the point of inflation?
  - smileysteve 7y ago
    If anything, that would enforce it more. Where the point of inflation is to force people to spend or invest their money today over keeping it as a store of value.
  - learc83 7y ago
    No because 1. It only impacts a small percentage of workers. 2. It's a wealth transfer--money isn't created to pay it.
  - wffurr 7y ago
    No, prices could still go down in real terms by remaining constant. The same for above minimum wage rates. But by continually raising the floor, we make sure it doesn't get too far below the median or mean. That should be in everyone's best interest, both in terms of keeping the economy going by consumer spending and in terms of fairness and not having a desperately poor underclass.
  - donatj 7y ago
    I would think if anything it would accelerate inflation, as it raises the price floor on what stores can ask for basic items.
  - pbhjpbhj 7y ago
    The point of inflation is to reduce the wages paid to poor people?
  - clairity 7y ago
    inflation is used to drive economic activity by keeping people from sitting on money (because it devalues over time). so do you think putting more money in the hands of minimum-wage workers will cause them to hoard money? what do you think is the point of inflation?
helpPeople 7y ago
Not sure your area, but unskilled labor goes for 15$/hr in metro Detroit. You cannot get people to show up for less than that. Source, wife owns a business and that's going rate to answer phones.
- roflchoppa2 7y ago
  is it difficult for your wifes business to make money, and pay your employees at $15 (or more)? Serious question.
  - xinsight 7y ago
    If it is difficult, then it's not a very good business. Serious question: Why would you want to run a business that can only survive by paying people poverty wages?
    - gl00pp 7y ago
      This is America.
      - Romanulus 7y ago
        Amen. Imagine having to pay people to answer phones _more_ money.
    - throwaway5752 7y ago
      Every business tries to pay people as little as possible. They are essentially obligated to do so by corporate structure, but just from competing in a free market this is usually the outcome outside of regulation (minimum wage) or collective bargaining. Right now there is a high demand for top end tech talent, but that too will pass, and we'll all see how our employers view us in a lower returns world. Stock options and grant comp is just a question of best outcomes and alignment.
    - tyri_kai_psomi 7y ago
      I don't mean this offensively, but I had to roll my eyes at this one. This is the exact type of question I would expect from a tech startup focused board.
sobhaobnONJ 7y ago
I don't understand why this isn't a red herring. Minimum wage may be remaining stagnant but total employee compensation has been rising steadily, it's just that most of that compensation is in the form of spending on employee benefits like insurance. If people quit expecting employers to provide them with anything except for cold hard cash then you'd likely see wages increasing with time. To expand a bit more on this, large companies in America can negotiate rates with the insurance companies they interact with (assuming they don't own one in house). This creates a scenario where a dollar into the insurance budget yields more than a dollar worth of value and so it makes much more sense to invest heavily in the insurance than in outright wages because a dollar paid to an employee only ever yields a dollar with of value to the employee.
- bart_spoon 7y ago
  Increased spending on employee insurance is due to increasing healthcare costs. Even if companies are spending more on their employees healthcare, employees are still paying more on healthcare than ever before. So, that still means less money available for everything that isn't healthcare, and is functionally equivalent to a pay cut.
  - sobhaobnONJ 7y ago
    An increase in spending is an increase in spending, it is still a part of the total compensation an employee has received. My point was purely that lensing the issue through minimum wage by itself seems like a distraction in terms of understanding employee wealth, I'm not arguing that employees should stop wanting more because they're getting enough.
- hinkley 7y ago
  It's rare for a company to offer health insurance to employees who are pegged to minimum wage. If salaries are going down due to inflation, then you may have a point but it's a perverse one; medical costs are going up way faster than anything else. Both are reasons to support socialized medical coverage, but they don't really enter into this particular line of discussion.
hinkley 7y ago
I'm old enough to remember this conversation happening three times, and wise enough to know that this conversation happens every ten years or so probably since the first wage was paid in currency instead of goods. A certain pay rate creates supply. Conditions make it hard to switch jobs. And every year you ever so slowly reduce the effective pay to those employees and they slowly give up little luxuries to make ends meet. And when demand outstrips supply, you raise the minimum wage, pulling in a new group of people. If you're paranoid or cynical, you might call this class warfare instead of unintended consequences.
- bb88 7y ago
  I'm cynical. I think it's frankly worse than that. When we talk about economic and market forces, we don't talk about "greed" as a major economic force. We know it's the creation of capitalism, but economists seem to do everything in their power to ignore it. Standard economic models breaks down when people are powerful enough to create their own supply/demand curves. We've had the term "working poor" for a while. I suspect that we'll have "working homeless" in the decades to come.
  - SideburnsOfDoom 7y ago
    > I suspect that we'll have "working homeless" in the decades to come. "A 2010 longitudinal study of homeless men conducted in Birmingham, Alabama, found that most earned an average of ninety dollars per week while working an average of thirty hours per week[192]" https://en.m.wikipedia.org/wiki/Homelessness_in_the_United_States https://en.m.wikipedia.org/wiki/Homelessness_in_the_United_S... "Employees at Amazon's base in Dunfermline, Fife, were apparently so worried they’d lose their jobs if they were late they decided to sleep rough in the woods nearby." https://metro.co.uk/2016/12/10/desperate-amazon-workers-forced-to-sleep-in-tents-so-they-can-be-at-work-on-time-6314899/ https://metro.co.uk/2016/12/10/desperate-amazon-workers-forc...
    - Sohcahtoa82 7y ago
      And it's highly disturbing to me that people will defend these situations on this site. An alarming amount of HN commenters seem to believe that the cost of labor is a function of the money created by the labor. In other words, a job will only pay $X/hr because it creates $Y/hr in revenue where Y > X + some margin. They pretend that if Y goes up, then it brings X up and if X is low, then it means Y MUST be low as well. It has nothing to do with the greed of shareholders. This line of thinking is what leads to managers firing the entire IT team because they don't generate revenue, and then panicking when the email server crashes.
ikeboy 7y ago
Which is great. Wages are sticky, making it difficult to reduce nominal wages. Inflation helps prevent layoffs by allowing for some real reduction in wages in a weak economy without having to reduce nominal wages. Getting rid of this mechanism would be bad. Perhaps minimum wage should be indexed to median wage or something, but it should absolutely not be indexed to inflation.
donatj 7y ago
> This means minimum wage workers have been getting a pay cut over time. This here is the strawman of the argument. Very few employed continuously for ten years continue to make minimum wage / don't move on to better jobs.
- heylook 7y ago
  No, you are making the straw man argument. The argument is not that the exact same people have been holding the exact same jobs with exactly the same pay the whole time. There's a reason you found it so simple to lampoon. That reason is you chose to view the argument as naively as possible. The argument is that any minimum wage earner is worse off than a minimum wage earner the year prior, and the year prior, and the year prior, etc. By holding the minimum wage fixed, we are making the default decision that a minimum wage earner tomorrow should have less effective purchasing power than a minimum wage earner today.
- cheriot 7y ago
  There's always a segment of society trying to make ends meet on minimum wage. It doesn't matter how long one person is doing it.
- Sohcahtoa82 7y ago
  You're not thinking your argument through. A quick Google search says that a dollar in the year 2000 is worth half as much as a 1980 dollar. Yet, during that time, federal minimum wage went from $3.10 to $5.15, an increase of only about 66%. That means my parents had an easier time surviving off of minimum wage than I did. How is that fair at all?
downerending 7y ago
Some would say that the debate is whether raising minimum wage even has a net beneficial effect for those at the bottom of society. The fact that we still have no clarity after looking at this closely for decades suggests that it's probably close to a wash, randomly benefiting some of the poor at the expense of others.
- ajross 7y ago
  Sorry, can you cite some of the "Some" who would say that? I'm not aware of any serious research showing that minimum wage laws actually hurt "some of the poor" (I mean, like all regulation, they aren't perfectly targetted), but would be curious to see it.
  - downerending 7y ago
    I meant some of us here in the peanut gallery. (As to whether there are losers as well as winners when the minimum wage is implemented, this seems obvious, and I doubt anyone on any side would seriously try to dispute it. The question is the relative effect.)
  - larnmar 7y ago
    In the US, for instance, you have a massive (and very deliberately created) population of illegal aliens who can’t legally work anyway, so are unaffected by minimum wage laws. Raising minimum wage has the effect of making legal employees even less competitive with illegal ones, and since the authorities have no interest in enforcing their own laws, legal employment at the unskilled end is a sucker’s game. This, I suspect, accounts for much of the backsliding in the last few decades among black and poor white populations in the US.
    - ajross 7y ago
      Right, but what's the evidence for that? I get the argument you're making (and the nativist agenda behind it), but... it's literally disputed by the linked article. I mean, at some point one has to give up and just admit that maybe the analysis was wrong, right? Political facts still have to be facts in the real world, eventually, and thus subject to reason, right?
TrackerFF 7y ago
> Minimum wage isn't just flat for a decade, it's not being adjusted for inflation. This means minimum wage workers have been getting a pay cut over time. All while necessities like rent / housing has increased faster than inflation. No wonder lots of minimum wage people have multiple jobs. Pay stays the same, but rent goes up $50/month every year - without any changes.

JMTQp8lwXL 7y ago

We inflation-adjust social security benefits annually, we could also do the same for minimum wage.

noja 7y ago
Would that defeat the point of inflation?
- smileysteve 7y ago
  If anything, that would enforce it more. Where the point of inflation is to force people to spend or invest their money today over keeping it as a store of value.
- learc83 7y ago
  No because 1. It only impacts a small percentage of workers. 2. It's a wealth transfer--money isn't created to pay it.
- wffurr 7y ago
  No, prices could still go down in real terms by remaining constant. The same for above minimum wage rates. But by continually raising the floor, we make sure it doesn't get too far below the median or mean. That should be in everyone's best interest, both in terms of keeping the economy going by consumer spending and in terms of fairness and not having a desperately poor underclass.
- donatj 7y ago
  I would think if anything it would accelerate inflation, as it raises the price floor on what stores can ask for basic items.
- pbhjpbhj 7y ago
  The point of inflation is to reduce the wages paid to poor people?
- clairity 7y ago
  inflation is used to drive economic activity by keeping people from sitting on money (because it devalues over time). so do you think putting more money in the hands of minimum-wage workers will cause them to hoard money? what do you think is the point of inflation?

helpPeople 7y ago

Not sure your area, but unskilled labor goes for 15$/hr in metro Detroit. You cannot get people to show up for less than that. Source, wife owns a business and that's going rate to answer phones.

roflchoppa2 7y ago
is it difficult for your wifes business to make money, and pay your employees at $15 (or more)? Serious question.
- xinsight 7y ago
  If it is difficult, then it's not a very good business. Serious question: Why would you want to run a business that can only survive by paying people poverty wages?
  - gl00pp 7y ago
    This is America.
    - Romanulus 7y ago
      Amen. Imagine having to pay people to answer phones _more_ money.
  - throwaway5752 7y ago
    Every business tries to pay people as little as possible. They are essentially obligated to do so by corporate structure, but just from competing in a free market this is usually the outcome outside of regulation (minimum wage) or collective bargaining. Right now there is a high demand for top end tech talent, but that too will pass, and we'll all see how our employers view us in a lower returns world. Stock options and grant comp is just a question of best outcomes and alignment.
  - tyri_kai_psomi 7y ago
    I don't mean this offensively, but I had to roll my eyes at this one. This is the exact type of question I would expect from a tech startup focused board.

sobhaobnONJ 7y ago

I don't understand why this isn't a red herring. Minimum wage may be remaining stagnant but total employee compensation has been rising steadily, it's just that most of that compensation is in the form of spending on employee benefits like insurance. If people quit expecting employers to provide them with anything except for cold hard cash then you'd likely see wages increasing with time. To expand a bit more on this, large companies in America can negotiate rates with the insurance companies they interact with (assuming they don't own one in house). This creates a scenario where a dollar into the insurance budget yields more than a dollar worth of value and so it makes much more sense to invest heavily in the insurance than in outright wages because a dollar paid to an employee only ever yields a dollar with of value to the employee.

bart_spoon 7y ago
Increased spending on employee insurance is due to increasing healthcare costs. Even if companies are spending more on their employees healthcare, employees are still paying more on healthcare than ever before. So, that still means less money available for everything that isn't healthcare, and is functionally equivalent to a pay cut.
- sobhaobnONJ 7y ago
  An increase in spending is an increase in spending, it is still a part of the total compensation an employee has received. My point was purely that lensing the issue through minimum wage by itself seems like a distraction in terms of understanding employee wealth, I'm not arguing that employees should stop wanting more because they're getting enough.
hinkley 7y ago
It's rare for a company to offer health insurance to employees who are pegged to minimum wage. If salaries are going down due to inflation, then you may have a point but it's a perverse one; medical costs are going up way faster than anything else. Both are reasons to support socialized medical coverage, but they don't really enter into this particular line of discussion.

hinkley 7y ago

I'm old enough to remember this conversation happening three times, and wise enough to know that this conversation happens every ten years or so probably since the first wage was paid in currency instead of goods. A certain pay rate creates supply. Conditions make it hard to switch jobs. And every year you ever so slowly reduce the effective pay to those employees and they slowly give up little luxuries to make ends meet. And when demand outstrips supply, you raise the minimum wage, pulling in a new group of people. If you're paranoid or cynical, you might call this class warfare instead of unintended consequences.

bb88 7y ago
I'm cynical. I think it's frankly worse than that. When we talk about economic and market forces, we don't talk about "greed" as a major economic force. We know it's the creation of capitalism, but economists seem to do everything in their power to ignore it. Standard economic models breaks down when people are powerful enough to create their own supply/demand curves. We've had the term "working poor" for a while. I suspect that we'll have "working homeless" in the decades to come.
- SideburnsOfDoom 7y ago
  > I suspect that we'll have "working homeless" in the decades to come. "A 2010 longitudinal study of homeless men conducted in Birmingham, Alabama, found that most earned an average of ninety dollars per week while working an average of thirty hours per week[192]" https://en.m.wikipedia.org/wiki/Homelessness_in_the_United_States https://en.m.wikipedia.org/wiki/Homelessness_in_the_United_S... "Employees at Amazon's base in Dunfermline, Fife, were apparently so worried they’d lose their jobs if they were late they decided to sleep rough in the woods nearby." https://metro.co.uk/2016/12/10/desperate-amazon-workers-forced-to-sleep-in-tents-so-they-can-be-at-work-on-time-6314899/ https://metro.co.uk/2016/12/10/desperate-amazon-workers-forc...
  - Sohcahtoa82 7y ago
    And it's highly disturbing to me that people will defend these situations on this site. An alarming amount of HN commenters seem to believe that the cost of labor is a function of the money created by the labor. In other words, a job will only pay $X/hr because it creates $Y/hr in revenue where Y > X + some margin. They pretend that if Y goes up, then it brings X up and if X is low, then it means Y MUST be low as well. It has nothing to do with the greed of shareholders. This line of thinking is what leads to managers firing the entire IT team because they don't generate revenue, and then panicking when the email server crashes.

ikeboy 7y ago

Which is great. Wages are sticky, making it difficult to reduce nominal wages. Inflation helps prevent layoffs by allowing for some real reduction in wages in a weak economy without having to reduce nominal wages. Getting rid of this mechanism would be bad. Perhaps minimum wage should be indexed to median wage or something, but it should absolutely not be indexed to inflation.

donatj 7y ago

> This means minimum wage workers have been getting a pay cut over time. This here is the strawman of the argument. Very few employed continuously for ten years continue to make minimum wage / don't move on to better jobs.

heylook 7y ago
No, you are making the straw man argument. The argument is not that the exact same people have been holding the exact same jobs with exactly the same pay the whole time. There's a reason you found it so simple to lampoon. That reason is you chose to view the argument as naively as possible. The argument is that any minimum wage earner is worse off than a minimum wage earner the year prior, and the year prior, and the year prior, etc. By holding the minimum wage fixed, we are making the default decision that a minimum wage earner tomorrow should have less effective purchasing power than a minimum wage earner today.
cheriot 7y ago
There's always a segment of society trying to make ends meet on minimum wage. It doesn't matter how long one person is doing it.
Sohcahtoa82 7y ago
You're not thinking your argument through. A quick Google search says that a dollar in the year 2000 is worth half as much as a 1980 dollar. Yet, during that time, federal minimum wage went from $3.10 to $5.15, an increase of only about 66%. That means my parents had an easier time surviving off of minimum wage than I did. How is that fair at all?

downerending 7y ago

Some would say that the debate is whether raising minimum wage even has a net beneficial effect for those at the bottom of society. The fact that we still have no clarity after looking at this closely for decades suggests that it's probably close to a wash, randomly benefiting some of the poor at the expense of others.

ajross 7y ago
Sorry, can you cite some of the "Some" who would say that? I'm not aware of any serious research showing that minimum wage laws actually hurt "some of the poor" (I mean, like all regulation, they aren't perfectly targetted), but would be curious to see it.
- downerending 7y ago
  I meant some of us here in the peanut gallery. (As to whether there are losers as well as winners when the minimum wage is implemented, this seems obvious, and I doubt anyone on any side would seriously try to dispute it. The question is the relative effect.)
- larnmar 7y ago
  In the US, for instance, you have a massive (and very deliberately created) population of illegal aliens who can’t legally work anyway, so are unaffected by minimum wage laws. Raising minimum wage has the effect of making legal employees even less competitive with illegal ones, and since the authorities have no interest in enforcing their own laws, legal employment at the unskilled end is a sucker’s game. This, I suspect, accounts for much of the backsliding in the last few decades among black and poor white populations in the US.
  - ajross 7y ago
    Right, but what's the evidence for that? I get the argument you're making (and the nativist agenda behind it), but... it's literally disputed by the linked article. I mean, at some point one has to give up and just admit that maybe the analysis was wrong, right? Political facts still have to be facts in the real world, eventually, and thus subject to reason, right?

TrackerFF 7y ago

> Minimum wage isn't just flat for a decade, it's not being adjusted for inflation. This means minimum wage workers have been getting a pay cut over time. All while necessities like rent / housing has increased faster than inflation. No wonder lots of minimum wage people have multiple jobs. Pay stays the same, but rent goes up $50/month every year - without any changes.