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It also means that anyone that can provide only $18/hour of economic value is now banned from working at a fast food restaurant.

aaomidi 3y ago
So, how are you gauging if someone is offering $18 or $20?
- hellojesus 3y ago
  Maybe you measure how many burgers they can make in an hour. Each burger sells for $x dollars. You've now quantified how much revenue that employee generates.
  - aaomidi 3y ago
    It is not common for these places to be running at maximum capacity constantly, so no that’s not really relevant here.
    - hellojesus 3y ago
      But it is. Because at some point I will have my labor at maximum capacity. And in all cases they need to produce enough over the duration of their shift to offset the cost of hiring them. Why would I employee two people to work at 50% capacity when I could just hire one? Why hire someone for two hours when I could hire someone else for one. Yes, there are some positions wherein I need someone there whether they're doing work or sitting around. But a business that can minimize costs can win customers so there will always be the need to measure widget output to justify the hire.
woodruffw 3y ago
That's not how wages work. Hourly wages aren't based on actual economic value; they're based on a complex of factors that make someone accept or leave a job (convenience, opportunity cost, bargaining power, prior experience, etc.). Fast food restaurants clearly realize more than $20/hr in economic value from their hourly employees in California, much like they do in Europe.
- hellojesus 3y ago
  Of course there are multiple dimensions to the employees decision of how much they are willing to trade their time for, but they are always boiled down to a singular financial value. This value is what they are paid. I reject your assertion that an employee clearly realizes more than $20/hr in value to their employer. But even if they did: why should the employer be forced to pay them more, when the job itself is unskilled and therefore has a surplus of folks demanding the position, even at their current rates of pay?
  - deleted 3y ago
    [deleted]
  - woodruffw 3y ago
    > I reject your assertion that an employee clearly realizes more than $20/hr in value to their employer. It's visible in the business practices: California has more McDonald's restaurants than any other state[1], and franchisees aren't running a charity. This law is the result of a compromise, as much as individual franchise owners may wish to portray otherwise[2]. If they're currently profitable and feel as though they can compromise at $20/hr, then I feel confident in claiming that they're realizing more than $20/hr in average employee labor value. > But even if they did: why should the employer be forced to pay them more, when the job itself is unskilled and therefore has a surplus of folks demanding the position, even at their current rates of pay? One good reason is to close an implicit subsidy: in states with high living costs, employees who require social services while continuing to work amount to an implicit labor subsidy on the government's part. I don't know about you, but I don't think the government should artificially depress wages like that. [1]: https://www.scrapehero.com/location-reports/McDonalds-USA/ https://www.scrapehero.com/location-reports/McDonalds-USA/ [2]: https://www.restaurantbusinessonline.com/financing/mcdonalds-franchisees-are-angry-over-california-compromise https://www.restaurantbusinessonline.com/financing/mcdonalds...
    - hellojesus 3y ago
      > I don't know about you, but I don't think the government should artificially depress wages like that. I agree. I don't think the government should provide any welfare services. Just as I don't think they should artificially skew market equilibrium through minimum wage or rent controls.
nwah1 3y ago
"Legal Minimum Wage positively increases the productivity of the nation’s industry, by ensuring that the surplus of unemployed workmen shall be exclusively the least efficient workmen; or, to put it in another way, by ensuring that all the situations shall be filled by the most efficient operatives who are available... What would be the result of a Legal Minimum Wage on the employer’s persistent desire to use boy labor, girl labor, married women’s labor, the labor of old men, of the feeble-minded, of the decrepit and broken-down invalids and all the other alternatives to the engagement of competent male adult workers at a full Standard Rate? … To put it shortly, all such labor is parasitic on other classes of the community, and is at present employed in this way only because it is parasitic... The unemployable, to put it bluntly, do not and cannot under any circumstances earn their keep. What we have to do with them is to see that as few as possible of them are produced." - Sidney Webb, “The Economic Theory of the Minimum Wage”
leothecool 3y ago
It would only mean that if wages were based on economic value. Which, I guess could be true if hourly wage and economic value mean the same thing.
- hellojesus 3y ago
  Basic economics can be reduced to: Operate while marginal_revenue >= marginal_cost (mr >= mc). In this example, marginal cost just increased by some delta, d, to get to $20. This means that anyone currently working in such fashion that d > (mr - mc) now provides negative value to their employer. Furthermore, in any future venture, people will only be hired if they can provide >= $20 in hourly revenue. Likely fast food restaurants will raise prices to cover the increased mc, so this ultimately gets passed on to the consumer. I don't understand why this is controversial.
  - aaomidi 3y ago
    Because you’re not changing the service you’re providing and a “worse” worker doesn’t decrease the throughput of the store in any measurable fashion. This increase will get passed onto the consumer, and it will also create more competition in who can maintain the constraint of $20/hr for pay while decreasing the rest of their costs to compete with the McDonald’s and KFCs. For example, reducing the profit margin.
    - hellojesus 3y ago
      > Because you’re not changing the service you’re providing and a “worse” worker doesn’t decrease the throughput of the store in any measurable fashion. I dont think either assertion is true. Maybe a business finds ways to cut costs to offset the wage increases leading to a worse product for the consumer. If I have a worker that is able to produce 150% of the tacos per hour compared to another worker, there is definitely a difference in throughput and therefore a difference in value. > This increase will get passed onto the consumer... reducing the profit margin I agree. There are three outcomes: 1. Pass the costs to the consumer 2. Reduce profit margins 3. Go out of business (this happens when 1 and 2 fail) The policy now has forcably changed the market equilibrium for labor by reducing supply in jobs comparable to fast food. The government has now mandated the consumer must pay more than the market equilibrium price. It has mandated that entrepreneurs reduce their income.
KennyBlanken 3y ago
Aside from that not being how labor economics work: no, it reduces the business model of profiting off public and NPO social assistance programs that enable corporations to employ people at starvation wages. If a business model relies upon paying people wages so low they can't afford to live without government assistance, then that business model is government subsidized. The best example of this would be Walmart, who rake in massive profits year after year while having employees whose sole duty is to help employees with finding and filing for public assistance programs, which the employees need because they're paid so little. No person in the US working a full-time job should be paid so little that they cannot afford at a minimum the essentials for living a healthy and happy life (ie, not just food/shelter but for things like enough to be able to do something in celebration of life's events, raise a child if they wish, put money away for when they are at retirement, etc.) Among other things, this would substantially free up money and administration resources to provide for those who are not working and need help getting their life back together enough to be employable again.
- hellojesus 3y ago
  The government could easily solve this by not offering welfare or social assistance programs. In such cases, workers would simply be unwilling to work somewhere that cannot provide an income to meet their needs. You describe a problem generated through moral hazard.
  - gadflyinyoureye 3y ago
    Those employees need to survive long enough to find better employment. While I agree with the moral hazard, we’d have to allow lynching of corporate officials by those same poor as a means to counter power imbalance on the corporate side.
    - hellojesus 3y ago
      It seems unreasonable to demand that person A gets to murder person B unless person B gives person A their property while simultaneously saying person B isn't allowed to murder person A for theirs. We have private charity to help fill the gap between a skills/resource deficiency and a paying job.

aaomidi 3y ago

So, how are you gauging if someone is offering $18 or $20?

hellojesus 3y ago
Maybe you measure how many burgers they can make in an hour. Each burger sells for $x dollars. You've now quantified how much revenue that employee generates.
- aaomidi 3y ago
  It is not common for these places to be running at maximum capacity constantly, so no that’s not really relevant here.
  - hellojesus 3y ago
    But it is. Because at some point I will have my labor at maximum capacity. And in all cases they need to produce enough over the duration of their shift to offset the cost of hiring them. Why would I employee two people to work at 50% capacity when I could just hire one? Why hire someone for two hours when I could hire someone else for one. Yes, there are some positions wherein I need someone there whether they're doing work or sitting around. But a business that can minimize costs can win customers so there will always be the need to measure widget output to justify the hire.

woodruffw 3y ago

That's not how wages work. Hourly wages aren't based on actual economic value; they're based on a complex of factors that make someone accept or leave a job (convenience, opportunity cost, bargaining power, prior experience, etc.). Fast food restaurants clearly realize more than $20/hr in economic value from their hourly employees in California, much like they do in Europe.

hellojesus 3y ago
Of course there are multiple dimensions to the employees decision of how much they are willing to trade their time for, but they are always boiled down to a singular financial value. This value is what they are paid. I reject your assertion that an employee clearly realizes more than $20/hr in value to their employer. But even if they did: why should the employer be forced to pay them more, when the job itself is unskilled and therefore has a surplus of folks demanding the position, even at their current rates of pay?
- deleted 3y ago
  [deleted]
- woodruffw 3y ago
  > I reject your assertion that an employee clearly realizes more than $20/hr in value to their employer. It's visible in the business practices: California has more McDonald's restaurants than any other state[1], and franchisees aren't running a charity. This law is the result of a compromise, as much as individual franchise owners may wish to portray otherwise[2]. If they're currently profitable and feel as though they can compromise at $20/hr, then I feel confident in claiming that they're realizing more than $20/hr in average employee labor value. > But even if they did: why should the employer be forced to pay them more, when the job itself is unskilled and therefore has a surplus of folks demanding the position, even at their current rates of pay? One good reason is to close an implicit subsidy: in states with high living costs, employees who require social services while continuing to work amount to an implicit labor subsidy on the government's part. I don't know about you, but I don't think the government should artificially depress wages like that. [1]: https://www.scrapehero.com/location-reports/McDonalds-USA/ https://www.scrapehero.com/location-reports/McDonalds-USA/ [2]: https://www.restaurantbusinessonline.com/financing/mcdonalds-franchisees-are-angry-over-california-compromise https://www.restaurantbusinessonline.com/financing/mcdonalds...
  - hellojesus 3y ago
    > I don't know about you, but I don't think the government should artificially depress wages like that. I agree. I don't think the government should provide any welfare services. Just as I don't think they should artificially skew market equilibrium through minimum wage or rent controls.

nwah1 3y ago

"Legal Minimum Wage positively increases the productivity of the nation’s industry, by ensuring that the surplus of unemployed workmen shall be exclusively the least efficient workmen; or, to put it in another way, by ensuring that all the situations shall be filled by the most efficient operatives who are available... What would be the result of a Legal Minimum Wage on the employer’s persistent desire to use boy labor, girl labor, married women’s labor, the labor of old men, of the feeble-minded, of the decrepit and broken-down invalids and all the other alternatives to the engagement of competent male adult workers at a full Standard Rate? … To put it shortly, all such labor is parasitic on other classes of the community, and is at present employed in this way only because it is parasitic... The unemployable, to put it bluntly, do not and cannot under any circumstances earn their keep. What we have to do with them is to see that as few as possible of them are produced." - Sidney Webb, “The Economic Theory of the Minimum Wage”

leothecool 3y ago

It would only mean that if wages were based on economic value. Which, I guess could be true if hourly wage and economic value mean the same thing.

hellojesus 3y ago
Basic economics can be reduced to: Operate while marginal_revenue >= marginal_cost (mr >= mc). In this example, marginal cost just increased by some delta, d, to get to $20. This means that anyone currently working in such fashion that d > (mr - mc) now provides negative value to their employer. Furthermore, in any future venture, people will only be hired if they can provide >= $20 in hourly revenue. Likely fast food restaurants will raise prices to cover the increased mc, so this ultimately gets passed on to the consumer. I don't understand why this is controversial.
- aaomidi 3y ago
  Because you’re not changing the service you’re providing and a “worse” worker doesn’t decrease the throughput of the store in any measurable fashion. This increase will get passed onto the consumer, and it will also create more competition in who can maintain the constraint of $20/hr for pay while decreasing the rest of their costs to compete with the McDonald’s and KFCs. For example, reducing the profit margin.
  - hellojesus 3y ago
    > Because you’re not changing the service you’re providing and a “worse” worker doesn’t decrease the throughput of the store in any measurable fashion. I dont think either assertion is true. Maybe a business finds ways to cut costs to offset the wage increases leading to a worse product for the consumer. If I have a worker that is able to produce 150% of the tacos per hour compared to another worker, there is definitely a difference in throughput and therefore a difference in value. > This increase will get passed onto the consumer... reducing the profit margin I agree. There are three outcomes: 1. Pass the costs to the consumer 2. Reduce profit margins 3. Go out of business (this happens when 1 and 2 fail) The policy now has forcably changed the market equilibrium for labor by reducing supply in jobs comparable to fast food. The government has now mandated the consumer must pay more than the market equilibrium price. It has mandated that entrepreneurs reduce their income.

KennyBlanken 3y ago

Aside from that not being how labor economics work: no, it reduces the business model of profiting off public and NPO social assistance programs that enable corporations to employ people at starvation wages. If a business model relies upon paying people wages so low they can't afford to live without government assistance, then that business model is government subsidized. The best example of this would be Walmart, who rake in massive profits year after year while having employees whose sole duty is to help employees with finding and filing for public assistance programs, which the employees need because they're paid so little. No person in the US working a full-time job should be paid so little that they cannot afford at a minimum the essentials for living a healthy and happy life (ie, not just food/shelter but for things like enough to be able to do something in celebration of life's events, raise a child if they wish, put money away for when they are at retirement, etc.) Among other things, this would substantially free up money and administration resources to provide for those who are not working and need help getting their life back together enough to be employable again.

hellojesus 3y ago
The government could easily solve this by not offering welfare or social assistance programs. In such cases, workers would simply be unwilling to work somewhere that cannot provide an income to meet their needs. You describe a problem generated through moral hazard.
- gadflyinyoureye 3y ago
  Those employees need to survive long enough to find better employment. While I agree with the moral hazard, we’d have to allow lynching of corporate officials by those same poor as a means to counter power imbalance on the corporate side.
  - hellojesus 3y ago
    It seems unreasonable to demand that person A gets to murder person B unless person B gives person A their property while simultaneously saying person B isn't allowed to murder person A for theirs. We have private charity to help fill the gap between a skills/resource deficiency and a paying job.