5 ms·

I just heard an ad on the radio from a local grocery store chain, advertising jobs in their warehouse and saying they pay $20/hr, have benefits, insurance, etc.

I just heard an ad on the radio from a local grocery store chain, advertising jobs in their warehouse and saying they pay $20/hr, have benefits, insurance, etc. A number of businesses have signs on the doors saying they are hiring at $15/hr - I think Burger King, Home Depot... It's disappointing that when Republicans say unemployment benefits are preventing people from going back to work, that Democrats just deny it - they should say "yes of course, that's the point!" And then go on to explain why it's good for the economy and idolatry of unemployment numbers is wrong.

neither_color 5y ago
On the flip side the costs of many essentials are going up and the fewer people employed at the higher prices will be buying less with their 2021 $15 than they could've with their 2019 $15, but if people are satisfied with simply seeing a higher numerical value on their paycheck so be it. https://www.wsj.com/articles/consumers-adjust-to-higher-prices-11620552601 https://www.wsj.com/articles/consumers-adjust-to-higher-pric...
- whimsicalism 5y ago
  > 2021 $15 than they could've with their 2019 $15 Still far more than they would have been buying with the $7.25/hr of course. These wage increases are almost certainly net welfare enhancing due to diminishing marginal utility of the dollar.
  - arcticbull 5y ago
    Not to mention, the Fed has tools to counter inflation, which they will almost certainly deploy.
    - zodiakzz 5y ago
      Noob question: What does that consist of (other than halting currency printing)?
      - arcticbull 5y ago
        The Fed doesn't print currency - thats Treasury, although the Fed holds and distributes it to depository institutions! They control the money supply by reducing the fractional reserve lending rate at banks (reducing supply of loans), increasing interest rates (reducing demand for loans) and unwinding their balance sheet by selling back purchased assets (largely t-bills, reducing circulating supply directly). The money supply of centrally banked economies is mostly debt/demand driver, not supply driven. Money is created when lent, and destroyed when repaid. By tweaking parameters, the Fed is able to manage circulating supply. It's actually a really elegant system, IMO.
        temp20160423 5y ago
        The last sentence is only true if you believe the Fed will actually sell back the assets. When I look at this chart, https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL, I have very little confidence that the Fed will sell a meaningful portion back (notice the Fed already gave up BEFORE covid when we supposedly had one of the best economies in recent times). In fact, it looks to me that the assets held by the Fed are growing exponentially and definitely growing faster than our productivity growth.
        imtringued 5y ago
        2018 to 2019 was a 15% decrease of the Fed's balance sheet. That was actually quite a decent pace. At $0.6 trillion/year it would take 12 years to unwind the 2021 balance sheet. That's worrying but not impossible.
      - imtringued 5y ago
        Paradoxically, the default state of fiat currency is deflation, because the primary means of money creation is debt. If inflation is 2% every year that means future debts must overshadow past debts. If you raise interest rates people stop borrowing money because it becomes too expensive. The interest rate itself acts as a productivity gate. "You must be this productive to obtain financing." If you stop borrowing money, then the only place for the money to go is to pay off debts, which contracts the money supply and you get deflation which is strong enough to counteract past inflation. The vast majority of dollars were "printed" this way.
    - listenallyall 5y ago
      Not if Powell refuses to acknowledge inflation is happening, or will be soon. https://www.pbs.org/newshour/economy/chairman-powell-says-federal-reserve-is-in-no-hurry-to-raise-interest-rates https://www.pbs.org/newshour/economy/chairman-powell-says-fe...
      - arcticbull 5y ago
        CPI is the benchmark against which inflation is measured. It's the definition, so if CPI isn't going up, there's nothing to acknowledge. IMO it will go up, there will be a transient spike that will dissipate.
        listenallyall 5y ago
        You're at least half-right, CPI did go up... https://news.ycombinator.com/item?id=27129927 https://news.ycombinator.com/item?id=27129927
        arcticbull 5y ago
        Yup but the 2% target is over a long timeframe. Transient spikes are fine. There was a big drop last year.
        listenallyall 5y ago
        Whether the current spike is "transient" is yet to be seen
      - whimsicalism 5y ago
        Ah yes, the perennial HN "secret inflation" theory
        ajmadesc 5y ago
        Inflation has been capital's Boogeyman for the middle class since the 80s
    - sand500 5y ago
      I always found inflation to be this arbitrary intangible number. Consumer price index is probably a better metric here than inflation for majority of Americans. Basically comparing how much the price of stuff people spend money on is increasing vs how much their income is increasing.
- perl4ever 5y ago
  It seems to me that printing money must at some point cause significant inflation. I might be right or wrong. But I see no connection between that and generous unemployment benefits, since they are a drop in the bucket compared to the trillions spent on other things.
Vaslo 5y ago
How is it good for the economy? We claim we need all this help from Mexico but then we have to pay people here to? The reason why dems deny it is because they also know it’s a horrible idea.
- lotsofpulp 5y ago
  I do not know what “good for the economy” means, but reducing the income/wealth gap is good for society. The upper deciles have had a nice few decades where they have been able to reap the rewards of productivity gains and cheaper prices due to lower wages.
- lsiebert 5y ago
  We claim what now? Mexico didn't ever pay for the wall, if that's what you mean. I think the economy should be good for society, and that people should be able to prosper if they work, having enough money to pay the costs of the things they need, like food, medical care, etc. I don't feel like there should be a permanent underclass of people who can never get ahead because they are living paycheck to paycheck.
imtringued 5y ago
Consider this. The maximum possible pay Person Y can obtain in the current market is $20 per hour. However, cutting unemployment pressures this Person to get a $15 per hour job immediately. For the sake of the argument lets assume that unemployment benefits give $15 per hour. Those $15/h represent $15/h of pure waste because they have to be paid by employed people. However, someone using unemployment benefits to obtain the $20/h job implies that taking the $15/h job wastes $5/h of your potential and unemployment increases your future potential by $5/h. Those $5/h are pure waste, nobody gets them, not even your boss because an employee working in a fast food restaurant can generate less economic value than an employee in a warehouse. However, unemployment generally lasts as long as necessary. Only a handful of individuals live on unemployment benefits over the long term. If you are unemployed for 6 months you cost the state $14400 (assuming $600 in benefits per week and 4 weeks per month for simplicity). It takes $14400/$5/h = 2880 hours of the warehouse job to break even from a macro economic perspective or 1.6 years with 1800 working hours per year. Of course this is not the actual tax revenue, assuming 27% of GDP is evenly taxed it would take 6 years to break even for the government. This is just a potential benefit from the "unemployment benefits cause a worker shortage" perspective. If you go one step further there are even more situations in which unemployment benefits can help the economy. For example, what if those people will stay unemployed anyway, even if you cut benefits? They still buy products and services that generate business revenue and the business can use the additional money to hire previously unemployed people. Of course the ultimate underlying assumption behind everything I wrote is that the economy has an abundance of goods and high inequality. None of this would work in an economy with long term scarcity like a developing country. As it is right now, full employment in the US is a "bonus", the economy doesn't depend on it. Other countries are willing to do almost everything the USA can do but they do it cheaper, which negates the need for low skill jobs to be done in the US.
- canadianfella 5y ago
  Why don’t you have the revenue from the company’s taxes in your calculation?

neither_color 5y ago

On the flip side the costs of many essentials are going up and the fewer people employed at the higher prices will be buying less with their 2021 $15 than they could've with their 2019 $15, but if people are satisfied with simply seeing a higher numerical value on their paycheck so be it. https://www.wsj.com/articles/consumers-adjust-to-higher-prices-11620552601 https://www.wsj.com/articles/consumers-adjust-to-higher-pric...

whimsicalism 5y ago
> 2021 $15 than they could've with their 2019 $15 Still far more than they would have been buying with the $7.25/hr of course. These wage increases are almost certainly net welfare enhancing due to diminishing marginal utility of the dollar.
- arcticbull 5y ago
  Not to mention, the Fed has tools to counter inflation, which they will almost certainly deploy.
  - zodiakzz 5y ago
    Noob question: What does that consist of (other than halting currency printing)?
    - arcticbull 5y ago
      The Fed doesn't print currency - thats Treasury, although the Fed holds and distributes it to depository institutions! They control the money supply by reducing the fractional reserve lending rate at banks (reducing supply of loans), increasing interest rates (reducing demand for loans) and unwinding their balance sheet by selling back purchased assets (largely t-bills, reducing circulating supply directly). The money supply of centrally banked economies is mostly debt/demand driver, not supply driven. Money is created when lent, and destroyed when repaid. By tweaking parameters, the Fed is able to manage circulating supply. It's actually a really elegant system, IMO.
      - temp20160423 5y ago
        The last sentence is only true if you believe the Fed will actually sell back the assets. When I look at this chart, https://fred.stlouisfed.org/series/WALCL https://fred.stlouisfed.org/series/WALCL, I have very little confidence that the Fed will sell a meaningful portion back (notice the Fed already gave up BEFORE covid when we supposedly had one of the best economies in recent times). In fact, it looks to me that the assets held by the Fed are growing exponentially and definitely growing faster than our productivity growth.
        imtringued 5y ago
        2018 to 2019 was a 15% decrease of the Fed's balance sheet. That was actually quite a decent pace. At $0.6 trillion/year it would take 12 years to unwind the 2021 balance sheet. That's worrying but not impossible.
    - imtringued 5y ago
      Paradoxically, the default state of fiat currency is deflation, because the primary means of money creation is debt. If inflation is 2% every year that means future debts must overshadow past debts. If you raise interest rates people stop borrowing money because it becomes too expensive. The interest rate itself acts as a productivity gate. "You must be this productive to obtain financing." If you stop borrowing money, then the only place for the money to go is to pay off debts, which contracts the money supply and you get deflation which is strong enough to counteract past inflation. The vast majority of dollars were "printed" this way.
  - listenallyall 5y ago
    Not if Powell refuses to acknowledge inflation is happening, or will be soon. https://www.pbs.org/newshour/economy/chairman-powell-says-federal-reserve-is-in-no-hurry-to-raise-interest-rates https://www.pbs.org/newshour/economy/chairman-powell-says-fe...
    - arcticbull 5y ago
      CPI is the benchmark against which inflation is measured. It's the definition, so if CPI isn't going up, there's nothing to acknowledge. IMO it will go up, there will be a transient spike that will dissipate.
      - listenallyall 5y ago
        You're at least half-right, CPI did go up... https://news.ycombinator.com/item?id=27129927 https://news.ycombinator.com/item?id=27129927
        arcticbull 5y ago
        Yup but the 2% target is over a long timeframe. Transient spikes are fine. There was a big drop last year.
        listenallyall 5y ago
        Whether the current spike is "transient" is yet to be seen
    - whimsicalism 5y ago
      Ah yes, the perennial HN "secret inflation" theory
      - ajmadesc 5y ago
        Inflation has been capital's Boogeyman for the middle class since the 80s
  - sand500 5y ago
    I always found inflation to be this arbitrary intangible number. Consumer price index is probably a better metric here than inflation for majority of Americans. Basically comparing how much the price of stuff people spend money on is increasing vs how much their income is increasing.
perl4ever 5y ago
It seems to me that printing money must at some point cause significant inflation. I might be right or wrong. But I see no connection between that and generous unemployment benefits, since they are a drop in the bucket compared to the trillions spent on other things.

Vaslo 5y ago

How is it good for the economy? We claim we need all this help from Mexico but then we have to pay people here to? The reason why dems deny it is because they also know it’s a horrible idea.

lotsofpulp 5y ago
I do not know what “good for the economy” means, but reducing the income/wealth gap is good for society. The upper deciles have had a nice few decades where they have been able to reap the rewards of productivity gains and cheaper prices due to lower wages.
lsiebert 5y ago
We claim what now? Mexico didn't ever pay for the wall, if that's what you mean. I think the economy should be good for society, and that people should be able to prosper if they work, having enough money to pay the costs of the things they need, like food, medical care, etc. I don't feel like there should be a permanent underclass of people who can never get ahead because they are living paycheck to paycheck.

imtringued 5y ago

Consider this. The maximum possible pay Person Y can obtain in the current market is $20 per hour. However, cutting unemployment pressures this Person to get a $15 per hour job immediately. For the sake of the argument lets assume that unemployment benefits give $15 per hour. Those $15/h represent $15/h of pure waste because they have to be paid by employed people. However, someone using unemployment benefits to obtain the $20/h job implies that taking the $15/h job wastes $5/h of your potential and unemployment increases your future potential by $5/h. Those $5/h are pure waste, nobody gets them, not even your boss because an employee working in a fast food restaurant can generate less economic value than an employee in a warehouse. However, unemployment generally lasts as long as necessary. Only a handful of individuals live on unemployment benefits over the long term. If you are unemployed for 6 months you cost the state $14400 (assuming $600 in benefits per week and 4 weeks per month for simplicity). It takes $14400/$5/h = 2880 hours of the warehouse job to break even from a macro economic perspective or 1.6 years with 1800 working hours per year. Of course this is not the actual tax revenue, assuming 27% of GDP is evenly taxed it would take 6 years to break even for the government. This is just a potential benefit from the "unemployment benefits cause a worker shortage" perspective. If you go one step further there are even more situations in which unemployment benefits can help the economy. For example, what if those people will stay unemployed anyway, even if you cut benefits? They still buy products and services that generate business revenue and the business can use the additional money to hire previously unemployed people. Of course the ultimate underlying assumption behind everything I wrote is that the economy has an abundance of goods and high inequality. None of this would work in an economy with long term scarcity like a developing country. As it is right now, full employment in the US is a "bonus", the economy doesn't depend on it. Other countries are willing to do almost everything the USA can do but they do it cheaper, which negates the need for low skill jobs to be done in the US.

canadianfella 5y ago
Why don’t you have the revenue from the company’s taxes in your calculation?