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(can't read the article, but I've read and thought a lot about it) I'm on the fence about the net cost/benefit of localized minimum wages. I think that a feder

(can't read the article, but I've read and thought a lot about it) I'm on the fence about the net cost/benefit of localized minimum wages. I think that a federal minimum wage (or at least, a high one), and to some extent, state minimum wages, are a bad idea. The Fight for $15 movement came from expensive cities, and it might be the right policy for those places. But it would severely distort and crush lower-cost cities and states. The right policy for San Francisco isn't necessarily right for Birmingham. It's one thing to have uniform national laws for human rights. But the nominal value of $15 means something very different in different parts of the country. It seems to me that the right policy to increased pay for low wage jobs would be to set the minimum wage so a full time job at that rate puts you at some multiple of the metropolitan/micropolitan area poverty line. Wages would automatically increase with costs in a predictable way, and local economic conditions determine the rate. State or federal minimum wages could set a floor but acknowledge that regional differences matter in economics.

eloff 6y ago
I think you're very right that this is policy best done locally, because cost of living varies wildly even in the same state.
- ghayes 6y ago
  My only fear is that wouldn't businesses constantly relocate to new areas with lower minimum wages? If the area you're located in goes from $5 to $8 (possibly due to your factory), why not relocate three counties over to an area that's still at $5? A national standard mitigates this issue.
  - pchristensen 6y ago
    Moving 3 counties means basically every employee has to be relocate or be replaced. If a business is willing and able to make that choice, they are a) not attached to their current location, and b) probably willing to consider farther moves for further cost reductions.
  - wccrawford 6y ago
    That is already what happens with factories. They find cheap land and cheap labor. They generally don't move factories unless the wages are enough different to justify all the other pain and expenses that moving would entail, including hiring almost all of their low-pay workers from scratch in the new area.
  - Sohcahtoa82 6y ago
    1. Relocating a factory is extremely expensive. 2. What about businesses where their location is critical, like restaurants?
  - Nasrudith 6y ago
    Reloction isn't free either and there are "implcit secondary standards" for the work beyond just the nominal task such as infastructure, literacy, and scale. Even if anyone can put widgets in boxes they may only need very unskilled labor for the task other aspects like "able to read the numbers to know how many to box up" are included. The labor may be technically cheaper across five towns of 200 but a larger factory in a big city could be more efficent because you can muster larger workforces quicker. A national standard would have merits but more in the sense of scale - it means less friction from adapting to 1 different standard instead of N different standards. It is simpler but has the downside of being low for expensive locales and high for cheap locales and the trade offs that apply to both.
crooked-v 6y ago
> It seems to me that the right policy to increased pay for low wage jobs would be to set the minimum wage so a full time job at that rate puts you at some multiple of the metropolitan/micropolitan area poverty line. I would be in support of that in the abstract, with the caveat that various business lobbying would immediately push for abstruse redefinitions of 'poverty' as used in the law.
clairity 6y ago
i'm generally in favor of state-level control of such things, but i'd be remiss not to point out that that's a great way to further entrench inequality across america. i mean, if $15/hour is a little more than subsistence level in rural north dakota or the hills of west virginia, so be it. maybe it means they can buy a laptop for the kids, but it won't be mansions and teslas everywhere. current labor markets are profoundly unfair, and a little imperfect leveling of the field is fine, while we work on fixing the decades of extractive policies that got us here in the first place.
- credit_guy 6y ago
  > maybe it means they can buy a laptop for the kids Or maybe it means they can't buy a laptop if they don't have a job at all.
- kenhwang 6y ago
  It's one thing to be unfair when the government is footing the bill, like basic income or tax brackets. It's a good incentive to balance out rising cost of living. It's another when it's small businesses footing the bill. There's a very painful lag time between being required to pay employees more and when employees have more spending power. Typically all that happens is local business don't have the finances to cover that lag, but national businesses do, and the latter survives and dominates.
  - Klinky 6y ago
    Then we should advocate for government footing the bill, either UBI or subsidized minimum wage. Someone is paying the cost in the end, and probably shouldn't end up on the small business owner, and definitely shouldn't end up on the laborer being unable to make ends meet.
  - dylz 6y ago
    I don't have an opinion on this in either direction, but i'm curious: how do you define a small business, and do inefficient/wasteful small businesses get selectively 'bailed out' compared to national ones? Why should small businesses not have to foot the bill while large ones do? Just because they are small, they don't have to be competitive or efficient - do not-profitable hobby businesses get propped up for no reason other than they are small? Many chains and non-small businesses have also been known to split off (for example, an incorporation per chain location, franchise location, or per physical building) - then that one national fast food chain or REIT building is now a "small business" with only a few employees?
adrr 6y ago
I am fine with localized min wage laws if the federal government based distribution of spending on a per tax revenue by each state. High min wage, means more federal tax revenue. State should get most of that money back in federal spending.
nobody9999 6y ago
>The Fight for $15 movement came from expensive cities, and it might be the right policy for those places. But it would severely distort and crush lower-cost cities and states. The right policy for San Francisco isn't necessarily right for Birmingham. Your point is a valid one. At the same time, if you look at how these numbers actually play out in reality, $15/hour (assuming 40 hours/week -- certainly not a given and 50 weeks per year) works out to $30,000/annum. Figure in the 12%[0] Federal income tax plus the 6.25% FICA (Social Security/Medicare) withholding and that $30,000/annum nets (not including state and local income taxes, which vary) to ~$25,000/annum. Assuming (a big assumption) no income tax at the state/local levels, that leaves ~25,000/annum at $15/hour, 40 hours/week. This works out to ~$2100/month for a single earner. Given that rent, food cost, transportation requirements, etc. vary widely across various localities, it's difficult to determine how well folks can get by on that amount of money. The median rent in the US[1] is ~$1000/month. That represents ~50% of net income (again, assuming zero state/local income tax. Which doesn't bode well for those making $15/hour, given that many don't get 40 hours/week. Even in the places with the least expensive rent[2], that's still ~25% of income. That's often considered an appropriate level of housing cost relative to income. What's more, given that the median income in the US is more than twice as high[3] as 40 hours/week at $15/hour, a $15 minimum wage wouldn't put any upward pressure on median income (how relevant such an eventuality might be is arguable, but is interesting to note). So yes, a national $15/hour minimum wage isn't a panacea. Those living in the poorest/cheapest places could likely live pretty well on $15/hour (again, assuming 40 hours/week, 50 weeks/year -- which doesn't apply to many). Contrariwise, those who live in places with costs around the median for the US would likely struggle with $15/hour, and those living in the most expensive places would likely not be able to live on just one full-time job. So yes, $15/hour nationally is a bad idea. In fact, it should be significantly higher in places that are more expensive. [0]https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Marginal_tax_rates_for_2019 https://en.wikipedia.org/wiki/Income_tax_in_the_United_State... [1]https://www.deptofnumbers.com/rent/us/ https://www.deptofnumbers.com/rent/us/ [2]https://dailyhive.com/mapped/10-cheapest-cities-rent-usa https://dailyhive.com/mapped/10-cheapest-cities-rent-usa [3]https://www.census.gov/library/stories/2019/09/us-median-household-income-up-in-2018-from-2017.html https://www.census.gov/library/stories/2019/09/us-median-hou... [Edit: Fix spacing typos]
- 6y ago
snarf21 6y ago
It is a very tough problem. Trying to do it all locally also pits town against each other. I think the thing is that this kind of minimum wage isn't a living wage so having it as a floor is not awful. I also think we have better tools to help the poor than minimum wage. I've also tried to think a little about this from the spend > consume > work > spend cycle. Minimum wage isn't a factor in SV tech jobs. The places that employ people at the minimum also tend to service those same people. Rich people don't shop at Wal-Mart (largely) so we are only adding costs to goods that poor people want. So wages go up but if prices go up the same or more, the poor have lost buying power. I think EITC is a much more targeted and effectively way to help the poor but it needs expanded.

eloff 6y ago

I think you're very right that this is policy best done locally, because cost of living varies wildly even in the same state.

ghayes 6y ago
My only fear is that wouldn't businesses constantly relocate to new areas with lower minimum wages? If the area you're located in goes from $5 to $8 (possibly due to your factory), why not relocate three counties over to an area that's still at $5? A national standard mitigates this issue.
- pchristensen 6y ago
  Moving 3 counties means basically every employee has to be relocate or be replaced. If a business is willing and able to make that choice, they are a) not attached to their current location, and b) probably willing to consider farther moves for further cost reductions.
- wccrawford 6y ago
  That is already what happens with factories. They find cheap land and cheap labor. They generally don't move factories unless the wages are enough different to justify all the other pain and expenses that moving would entail, including hiring almost all of their low-pay workers from scratch in the new area.
- Sohcahtoa82 6y ago
  1. Relocating a factory is extremely expensive. 2. What about businesses where their location is critical, like restaurants?
- Nasrudith 6y ago
  Reloction isn't free either and there are "implcit secondary standards" for the work beyond just the nominal task such as infastructure, literacy, and scale. Even if anyone can put widgets in boxes they may only need very unskilled labor for the task other aspects like "able to read the numbers to know how many to box up" are included. The labor may be technically cheaper across five towns of 200 but a larger factory in a big city could be more efficent because you can muster larger workforces quicker. A national standard would have merits but more in the sense of scale - it means less friction from adapting to 1 different standard instead of N different standards. It is simpler but has the downside of being low for expensive locales and high for cheap locales and the trade offs that apply to both.

crooked-v 6y ago

> It seems to me that the right policy to increased pay for low wage jobs would be to set the minimum wage so a full time job at that rate puts you at some multiple of the metropolitan/micropolitan area poverty line. I would be in support of that in the abstract, with the caveat that various business lobbying would immediately push for abstruse redefinitions of 'poverty' as used in the law.

clairity 6y ago

i'm generally in favor of state-level control of such things, but i'd be remiss not to point out that that's a great way to further entrench inequality across america. i mean, if $15/hour is a little more than subsistence level in rural north dakota or the hills of west virginia, so be it. maybe it means they can buy a laptop for the kids, but it won't be mansions and teslas everywhere. current labor markets are profoundly unfair, and a little imperfect leveling of the field is fine, while we work on fixing the decades of extractive policies that got us here in the first place.

credit_guy 6y ago
> maybe it means they can buy a laptop for the kids Or maybe it means they can't buy a laptop if they don't have a job at all.
kenhwang 6y ago
It's one thing to be unfair when the government is footing the bill, like basic income or tax brackets. It's a good incentive to balance out rising cost of living. It's another when it's small businesses footing the bill. There's a very painful lag time between being required to pay employees more and when employees have more spending power. Typically all that happens is local business don't have the finances to cover that lag, but national businesses do, and the latter survives and dominates.
- Klinky 6y ago
  Then we should advocate for government footing the bill, either UBI or subsidized minimum wage. Someone is paying the cost in the end, and probably shouldn't end up on the small business owner, and definitely shouldn't end up on the laborer being unable to make ends meet.
- dylz 6y ago
  I don't have an opinion on this in either direction, but i'm curious: how do you define a small business, and do inefficient/wasteful small businesses get selectively 'bailed out' compared to national ones? Why should small businesses not have to foot the bill while large ones do? Just because they are small, they don't have to be competitive or efficient - do not-profitable hobby businesses get propped up for no reason other than they are small? Many chains and non-small businesses have also been known to split off (for example, an incorporation per chain location, franchise location, or per physical building) - then that one national fast food chain or REIT building is now a "small business" with only a few employees?

adrr 6y ago

I am fine with localized min wage laws if the federal government based distribution of spending on a per tax revenue by each state. High min wage, means more federal tax revenue. State should get most of that money back in federal spending.

nobody9999 6y ago

>The Fight for $15 movement came from expensive cities, and it might be the right policy for those places. But it would severely distort and crush lower-cost cities and states. The right policy for San Francisco isn't necessarily right for Birmingham. Your point is a valid one. At the same time, if you look at how these numbers actually play out in reality, $15/hour (assuming 40 hours/week -- certainly not a given and 50 weeks per year) works out to $30,000/annum. Figure in the 12%[0] Federal income tax plus the 6.25% FICA (Social Security/Medicare) withholding and that $30,000/annum nets (not including state and local income taxes, which vary) to ~$25,000/annum. Assuming (a big assumption) no income tax at the state/local levels, that leaves ~25,000/annum at $15/hour, 40 hours/week. This works out to ~$2100/month for a single earner. Given that rent, food cost, transportation requirements, etc. vary widely across various localities, it's difficult to determine how well folks can get by on that amount of money. The median rent in the US[1] is ~$1000/month. That represents ~50% of net income (again, assuming zero state/local income tax. Which doesn't bode well for those making $15/hour, given that many don't get 40 hours/week. Even in the places with the least expensive rent[2], that's still ~25% of income. That's often considered an appropriate level of housing cost relative to income. What's more, given that the median income in the US is more than twice as high[3] as 40 hours/week at $15/hour, a $15 minimum wage wouldn't put any upward pressure on median income (how relevant such an eventuality might be is arguable, but is interesting to note). So yes, a national $15/hour minimum wage isn't a panacea. Those living in the poorest/cheapest places could likely live pretty well on $15/hour (again, assuming 40 hours/week, 50 weeks/year -- which doesn't apply to many). Contrariwise, those who live in places with costs around the median for the US would likely struggle with $15/hour, and those living in the most expensive places would likely not be able to live on just one full-time job. So yes, $15/hour nationally is a bad idea. In fact, it should be significantly higher in places that are more expensive. [0]https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#Marginal_tax_rates_for_2019 https://en.wikipedia.org/wiki/Income_tax_in_the_United_State... [1]https://www.deptofnumbers.com/rent/us/ https://www.deptofnumbers.com/rent/us/ [2]https://dailyhive.com/mapped/10-cheapest-cities-rent-usa https://dailyhive.com/mapped/10-cheapest-cities-rent-usa [3]https://www.census.gov/library/stories/2019/09/us-median-household-income-up-in-2018-from-2017.html https://www.census.gov/library/stories/2019/09/us-median-hou... [Edit: Fix spacing typos]

6y ago

snarf21 6y ago

It is a very tough problem. Trying to do it all locally also pits town against each other. I think the thing is that this kind of minimum wage isn't a living wage so having it as a floor is not awful. I also think we have better tools to help the poor than minimum wage. I've also tried to think a little about this from the spend > consume > work > spend cycle. Minimum wage isn't a factor in SV tech jobs. The places that employ people at the minimum also tend to service those same people. Rich people don't shop at Wal-Mart (largely) so we are only adding costs to goods that poor people want. So wages go up but if prices go up the same or more, the poor have lost buying power. I think EITC is a much more targeted and effectively way to help the poor but it needs expanded.