Share good ideas and conversation.   Login, Join Us, or Take a Tour!
comment by am_Unition
am_Unition  ·  1146 days ago  ·  link  ·    ·  parent  ·  post: Salary Subsidy Quiz

Score, I have some time for thinking! Pretty tired of doing.

    Government-provided welfare services like food, medical and housing assistance enable employers to pay lower wages.

True, I say. I would argue the same points that I'm sure you've heard elsewhere, but that's beating a dead horse.

    ...people need to pay for housing and health and food, "the money has to come from somewhere," if some of it comes from the government, it doesn't have to come so much from work, so people are less inclined to work, so employers have to make working more attractive, ergo higher wages.

No, I think employers aren't at all compelled to raise wages.

From a simple supply and demand standpoint, we still have fewer jobs than workers looking for hire. This, in tandem with the federally-mandated minimum wage offered to labor by a large number of huge corporations, effectively cripples any competition in the unskilled labor market. I think that almost all of these businesses would immediately offer lower wages the day that federal law permitted, continuing the lack of competition.

Costco and other notable U.S. examples aside, there are tens of millions (vague number, sorry) of positions where people are making either exactly the minimum wage or one to two dollars more. Some smaller business contribute with minimum/low wage positions, but I'm claiming that the huge corporations are steering the market. You also have the highest turnover of positions at the minimum wage level from workers who are unfit for labor (or aren't "meeting expectations", for whatever reason) and thus cannot hold a job. So there is a relatively large pool of workers looking for any job they can find, and I definitely think that this translates into pushing the wages offered for the vast majority of unskilled labor positions right into the minimum wage floor.

This entire process is somewhat economically ironic, because from a bookkeeping viewpoint, corporations have spent a lot of money to support the liquidity of their workforce. But many applicants that pass screening aren't fit for labor, which couples back into the original turnover issue.

Now for the welfare part...

I'm taking a pessimistic view of humanity as a whole, once again, and this may be perceived as a cop out. There are a lot of people unfit for the grand pinnacle of Western civilization; the 40 (or more) hour work week. All have their various reasons, be it physical health, mental health, lack of education, lack of motivation, etc., and I'm not going to speculate on any numbers. No one likes to talk about this, ever.

I know I'm probably preaching to the choir, but I'll hammer this out anyway. The current minimum wage isn't quite a "living" wage, if you ask me. $7.50/hr. at 40 hours/week works out to be $15,600 annually, and unpaid leave takes the annual earnings down even further. In 2015 $'s, I would say that a living wage is somewhere around $25k/year, which translates back to around $12.25/hr., and those definitely aren't the same dollars in my town vs. Silicon Valley. Yet another obstacle for a federally mandated minimum wage standard; scaling for local cost of living, if we decide to go down that route.

Oh, did I mention healthcare? No, because I pretended that we were all fairly efficient machines in the eyes capital. So that's another can of worms.

The inequality of income that we are perpetuating with political policy could help solve all of these problems, but that's not uncomplicated either.

OK, time to go to bed, because I'm actually human sometimes.




wasoxygen  ·  1145 days ago  ·  link  ·  

Thanks! I must respond a paragraph at a time.

    From a simple supply and demand standpoint, we still have fewer jobs than workers looking for hire.

I disagree: you ignore price, one axis of a supply or demand chart.

From a worker's perspective, income opportunities exhibit scarcity: you can't just collect as much income as you want while sitting around. And you only have so much time and energy you can offer to employers.

From an employer's perspective, employees exhibit scarcity: you can't just employ as much labor as you want to use; you are limited by your salary budget.

The supply and demand curves should intersect at a market equilibrium which establishes the price, just as they do for coffee or gasoline.

(Aside: I often see the idea expressed that one party can set prices, such as greedy airlines charging baggage fees, or airport bars setting high prices for drinks. People can ask any price they like, but the market price is determined by completed sales, which require agreement from both sides.)

I think of a job as a person selling their time, energy and talent. The employer is a customer of the worker. There are differences between being a customer of an airline, of a coffee shop, of a cell phone carrier, of a piano tutor, and of an engineer, but not differences that I see changing the economic fundamentals.

If prices (in the job market: wages) go down, there will be increased demand from employers, meaning a greater number of paid hours worked: more jobs. If prices (wages) go up, there will be reduced demand for labor, meaning fewer paid hours, and more demand for labor substitutes, like automation. This is the adverse outcome of higher minimum wage. [Edit: on reflection, this paragraph is sloppy. A change in price is the result of a change in demand, supply, or both. Lower prices could reflect greater supply (leading to greater volume) or reduced demand (and reduced volume).]

    This, in tandem with the federally-mandated minimum wage offered to labor by a large number of huge corporations, effectively cripples any competition in the unskilled labor market.

I agree that minimum wage distorts the labor market. It creates a surplus of workers who cannot sell their labor because it is overpriced. Workers cannot "compete on price" so there is always a line at the door.

It may be unpleasant to imagine sellers of labor competing in a "salary war" though we love nothing more than a price war among sellers of mattresses or laptops. But it is far from obvious to me that one worker getting a high salary is better than two workers splitting that same salary.

flagamuffin  ·  1146 days ago  ·  link  ·  

I still browse this thread because it's one of my favorites to think about; you can imagine my astonishment at 'comment 47 minutes ago'.

    Costco and other notable U.S. examples aside, there are tens of millions (vague number, sorry) of positions where people are making either exactly the minimum wage or one to two dollars more.

I'll turn your vague number into a real one, like magic -- 35 million. "29.4 percent of workers are paid wages that are below or equal to 150 percent of the minimum wage in their state." That is, under 12 to 15 dollars. Whether that number is an argument for or against the minimum wage increase is an open question.

This little paper is a must-read, if only to inject some facts into a generally fact-free debate topic.

wasoxygen  ·  1145 days ago  ·  link  ·  

Thanks for the data points. Maybe I should reconsider my belief that "A minimum hourly wage of $7 or 8 is too low to do much harm."

I do agree that the minimum wage has an anchoring effect, creating a sort of baseline from which negotiation begins for work at the lower end of the legal wage range, so a bump could affect wages a little above the minimum too.

The map suggests (logically enough) that the 35 million workers included in the 101% to 150% range are more concentrated in states that have a higher minimum than the federal $7.25 standard, so a hike in the federal minimum wouldn't necessarily affect them if those states do not also raise their rates.

And it's worth emphasizing that the authors of that little paper "set aside the important issue of potential employment effects, which is another crucial element in the debate." The standard economic objection to minimum wage is precisely the employment effects.

flagamuffin  ·  1145 days ago  ·  link  ·  

    Thanks for the data points. Maybe I should reconsider my belief that "A minimum hourly wage of $7 or 8 is too low to do much harm."

That's definitely one interpretation.

forwardslash, I didn't get a notification here, been happening a lot lately. Hellllllllllp

forwardslash  ·  1145 days ago  ·  link  ·  

Are you getting them now? I did corrupt user data for most of the day today, so user profiles weren't saving.

flagamuffin  ·  1145 days ago  ·  link  ·  

It's just been on and off for a few weeks. More on than off, though. Got this one.