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I don’t buy it. Civil servant salaries are adjusted for cost of living, and this isn’t just the lower levels but ALL levels. Again, this is just excuse. You c

I don’t buy it. Civil servant salaries are adjusted for cost of living, and this isn’t just the lower levels but ALL levels. Again, this is just excuse. You can’t fix a lack of housing issue by keeping wages low.

nitrogen 6y ago
I don’t buy it. It's math. If f(x)=K * g(x-1), and g(x)=L * f(x-1), you need to be very careful about choosing values for K and L.
- Robotbeat 6y ago
  It's not math, it's a hypothetical, somewhat absurd model. There's actual empirical research on minimum wage, and it doesn't support these claims of exponential cost increase: https://noahpinion.substack.com/p/why-15-minimum-wage-is-pretty-safe https://noahpinion.substack.com/p/why-15-minimum-wage-is-pre...
  - akiselev 6y ago
    That's because minimum wage isn't actively pegged to a cost of living measurement, it's manually adjusted from time to time (ostensibly to be inline with cost of living). That manual adjustment is slow and decoupled enough that there's no runaway feedback loop. If you legally define the minimum wage as a formula instead of an absolute number, and that formula includes cost of living, you can create a runaway situation.
    - Robotbeat 6y ago
      The fact that the minimum wage isn’t pegged means it IS adjusted: downward over time due to inflation. That has massive societal impact as it reduces wages for folks over time, risking homelessness and other effects of poverty. It also reduces productivity growth. THAT has real risk of runaway effects due to the compounding effects of poverty. I don’t see why a simple adjustment for inflation or cost of living is bad and risky a priori but allowing it to decline over time is a priori good and not risky. There is substantial bias in that assumption.
ed312 6y ago
It would be interesting to see a breakdown of the composition of an annual raise for a civil servant. How much (and from what factors) is the raise in pay related to CoL, and how much is it related to productivity? How is that labor actually valued? I think if 80%+ of that raise is due to CoL, that's clear evidence of this feedback loop in action.
- nitrogen 6y ago
  The percentage of civil servants in the local workforce probably also has an effect. If only 2% of people are civil servants or otherwise receiving an indexed wage, then other factors may dominate. But if a large number of people are civil servants / receiving an indexed wage, then positive feedback might dominate.
  - Robotbeat 6y ago
    There isn’t a strong feedback effect, though. We know this because there are areas that have large civil servant populations. Secondly, we’re talking about minimum wage, not all wages.

nitrogen 6y ago

I don’t buy it. It's math. If f(x)=K * g(x-1), and g(x)=L * f(x-1), you need to be very careful about choosing values for K and L.

Robotbeat 6y ago
It's not math, it's a hypothetical, somewhat absurd model. There's actual empirical research on minimum wage, and it doesn't support these claims of exponential cost increase: https://noahpinion.substack.com/p/why-15-minimum-wage-is-pretty-safe https://noahpinion.substack.com/p/why-15-minimum-wage-is-pre...
- akiselev 6y ago
  That's because minimum wage isn't actively pegged to a cost of living measurement, it's manually adjusted from time to time (ostensibly to be inline with cost of living). That manual adjustment is slow and decoupled enough that there's no runaway feedback loop. If you legally define the minimum wage as a formula instead of an absolute number, and that formula includes cost of living, you can create a runaway situation.
  - Robotbeat 6y ago
    The fact that the minimum wage isn’t pegged means it IS adjusted: downward over time due to inflation. That has massive societal impact as it reduces wages for folks over time, risking homelessness and other effects of poverty. It also reduces productivity growth. THAT has real risk of runaway effects due to the compounding effects of poverty. I don’t see why a simple adjustment for inflation or cost of living is bad and risky a priori but allowing it to decline over time is a priori good and not risky. There is substantial bias in that assumption.

ed312 6y ago

It would be interesting to see a breakdown of the composition of an annual raise for a civil servant. How much (and from what factors) is the raise in pay related to CoL, and how much is it related to productivity? How is that labor actually valued? I think if 80%+ of that raise is due to CoL, that's clear evidence of this feedback loop in action.

nitrogen 6y ago
The percentage of civil servants in the local workforce probably also has an effect. If only 2% of people are civil servants or otherwise receiving an indexed wage, then other factors may dominate. But if a large number of people are civil servants / receiving an indexed wage, then positive feedback might dominate.
- Robotbeat 6y ago
  There isn’t a strong feedback effect, though. We know this because there are areas that have large civil servant populations. Secondly, we’re talking about minimum wage, not all wages.