3 ms·

> Why shouldn't a teenager make 20 an hour? It's not that he "shouldn't". Rather, many businesses cannot afford to both pay teenage employees $20/h, and also t

by xyzzyz 5y ago

> Why shouldn't a teenager make 20 an hour? It's not that he "shouldn't". Rather, many businesses cannot afford to both pay teenage employees $20/h, and also to not raise the prices. Some businesses can raise prices just fine, but others are not able to, as the customers will stop buying at higher price point. For example, if all groceries doubled their food prices, I'd still buy food (though maybe less than before), and likely spend more on it than I used to. However, if all restaurants doubled their prices, I'd pretty much stop eating out altogether, except special occasions.

lumost 5y ago
However if all groceries doubled their prices then all workers would demand higher wages to compensate. Other businesses would need to become more efficient with their labor or reduce margins. In the short-term this means CEOs get paid less, and investors see higher ROI in labor efficient business models. It's obvious that teenagers can't make 1k/hr without breaking the economy - but I don't see any reason why $20/hr would be outside of historic norms. In 1981 the minimum wage was ~$3.25/hr, translating to ~9.71/hr today. Given the advances in technology that have driven a more than 2x increase in real economic productivity over that period why shouldn't the starting wage be $20/hr for teenagers?
- xyzzyz 5y ago
  All workers demand higher wages at all times. Workers demanding higher wages stronger and harder won't raise aggregate wages by much, as there is only so much that is actually being produced, and aggregate wages can pretty much only be increased through increase in aggregate supply: the margins are already pretty thin, especially in retail and food service business, and the CEO pay is pretty small component in grand scheme of things (CEOs also don't actually consume much of their earnings, they invest most of it, so you can't actually transfer much of consumption from them to workers). > Given the advances in technology that have driven a more than 2x increase in real economic productivity over that period why shouldn't the starting wage be $20/hr for teenagers? The growth in economic productivity hasn't been uniformly distributed across industries, and it's been pretty low exactly in the industries depending on cheap, low skill labor. What are the advances in technology between now and 1981 that made restaurants 2x more productive?
  - rswail 5y ago
    > What are the advances in technology between now and 1981 that made restaurants 2x more productive? Microwaves, dishwashers, steam-injection ovens, just-in-time logistics for raw ingredient deliveries, credit cards, online ordering...
    - xyzzyz 5y ago
      Microwaves and dishwashers were popular in commercial environment before 1980, and I don’t think credit cards make a restaurant more productive.
      - lumost 5y ago
        > I don’t think credit cards make a restaurant more productive. They certainly reduce the potential for theft/shrinkage! It used to be that you needed a trusted business manager/employee to manage the register, now anyone can do it and it's much harder for someone to siphon funds. All transactions are now viewable to management to more easily see what's selling and what's not.
        xyzzyz 5y ago
        That’s a good point, haven’t thought of that.
  - lumost 5y ago
    Workers do not demand appropriate wages commensurate with their value at all times. I recall making $7.25/hr and having colleagues "doing well" by making $7.50/hr. At the time it was not uncommon for "good" employers in the service sector to promise something along the lines of a $.25/hr raise every 6 months to a year. Now the problem with this is that the effect is to lower expectations for wages by taking advantage of financial literacy. Someone working for them for 4 years receiving a raise every 6 months earns $2/hr more. The employer/seasoned employees point to this and say that a starting wage $2/hr higher is unreasonable. Unfortunately the fixed rate wage increases diminish over time, and if you think that moving into management/higher level positions would entitle you to more money... then I have a bridge in Brooklyn to sell you. When employers mirror this strategy or take other similar approaches, then you end up with wages that are depressed relative to the value of the labor being provided ( or the opportunity value if that labor was applied to other activities, or used more efficiently ).
rswail 5y ago
If all restaurants doubled their prices, but, at the same time, paid their employees a proper wage (and made that public) and removed tipping, they could effectively raise their prices 20% (the expected tip) without any impact on the customers. McDonalds manages to make profits in EU/AU/NZ/CA etc while (mnostly) complying with local minimum wages and conditions. The Big Mac index shows that their actual prices are within a narrow band compared to the US. They (and other megacorps like Walmart) exploit both their workers and their customers, who end up paying the workers via the inefficient means of tax credits and poverty relief instead of the corporations/businesses being required to pay proper wages and contribute to their local communities via taxation.
- xyzzyz 5y ago
  > If all restaurants doubled their prices, but, at the same time, paid their employees a proper wage (and made that public) and removed tipping, they could effectively raise their prices 20% (the expected tip) without any impact on the customers. If they doubled they prices, they could increase them by 20%? Huh?

by xyzzyz 5y ago

lumost 5y ago

However if all groceries doubled their prices then all workers would demand higher wages to compensate. Other businesses would need to become more efficient with their labor or reduce margins. In the short-term this means CEOs get paid less, and investors see higher ROI in labor efficient business models. It's obvious that teenagers can't make 1k/hr without breaking the economy - but I don't see any reason why $20/hr would be outside of historic norms. In 1981 the minimum wage was ~$3.25/hr, translating to ~9.71/hr today. Given the advances in technology that have driven a more than 2x increase in real economic productivity over that period why shouldn't the starting wage be $20/hr for teenagers?

xyzzyz 5y ago
All workers demand higher wages at all times. Workers demanding higher wages stronger and harder won't raise aggregate wages by much, as there is only so much that is actually being produced, and aggregate wages can pretty much only be increased through increase in aggregate supply: the margins are already pretty thin, especially in retail and food service business, and the CEO pay is pretty small component in grand scheme of things (CEOs also don't actually consume much of their earnings, they invest most of it, so you can't actually transfer much of consumption from them to workers). > Given the advances in technology that have driven a more than 2x increase in real economic productivity over that period why shouldn't the starting wage be $20/hr for teenagers? The growth in economic productivity hasn't been uniformly distributed across industries, and it's been pretty low exactly in the industries depending on cheap, low skill labor. What are the advances in technology between now and 1981 that made restaurants 2x more productive?
- rswail 5y ago
  > What are the advances in technology between now and 1981 that made restaurants 2x more productive? Microwaves, dishwashers, steam-injection ovens, just-in-time logistics for raw ingredient deliveries, credit cards, online ordering...
  - xyzzyz 5y ago
    Microwaves and dishwashers were popular in commercial environment before 1980, and I don’t think credit cards make a restaurant more productive.
    - lumost 5y ago
      > I don’t think credit cards make a restaurant more productive. They certainly reduce the potential for theft/shrinkage! It used to be that you needed a trusted business manager/employee to manage the register, now anyone can do it and it's much harder for someone to siphon funds. All transactions are now viewable to management to more easily see what's selling and what's not.
      - xyzzyz 5y ago
        That’s a good point, haven’t thought of that.
- lumost 5y ago
  Workers do not demand appropriate wages commensurate with their value at all times. I recall making $7.25/hr and having colleagues "doing well" by making $7.50/hr. At the time it was not uncommon for "good" employers in the service sector to promise something along the lines of a $.25/hr raise every 6 months to a year. Now the problem with this is that the effect is to lower expectations for wages by taking advantage of financial literacy. Someone working for them for 4 years receiving a raise every 6 months earns $2/hr more. The employer/seasoned employees point to this and say that a starting wage $2/hr higher is unreasonable. Unfortunately the fixed rate wage increases diminish over time, and if you think that moving into management/higher level positions would entitle you to more money... then I have a bridge in Brooklyn to sell you. When employers mirror this strategy or take other similar approaches, then you end up with wages that are depressed relative to the value of the labor being provided ( or the opportunity value if that labor was applied to other activities, or used more efficiently ).

rswail 5y ago

If all restaurants doubled their prices, but, at the same time, paid their employees a proper wage (and made that public) and removed tipping, they could effectively raise their prices 20% (the expected tip) without any impact on the customers. McDonalds manages to make profits in EU/AU/NZ/CA etc while (mnostly) complying with local minimum wages and conditions. The Big Mac index shows that their actual prices are within a narrow band compared to the US. They (and other megacorps like Walmart) exploit both their workers and their customers, who end up paying the workers via the inefficient means of tax credits and poverty relief instead of the corporations/businesses being required to pay proper wages and contribute to their local communities via taxation.

xyzzyz 5y ago
> If all restaurants doubled their prices, but, at the same time, paid their employees a proper wage (and made that public) and removed tipping, they could effectively raise their prices 20% (the expected tip) without any impact on the customers. If they doubled they prices, they could increase them by 20%? Huh?