Most of your readership seems to be in relatively high-salary jobs but I have a question about lower-level jobs. I hope you think it’s worth covering. I see the federal minimum wage is in the news again because the new administration is trying to push through an increase. You published a Q&A column almost exactly a year ago arguing for a national $15 minimum wage (Who really needs a $15 minimum wage?). People expressed very strong opinions. A lot has happened in the past year — COVID, the booming stock market, the change in administration, unemployment. Do you think attitudes about raising the minimum wage have changed? Has yours?
I don’t like to veer away from the main purpose of Ask The Headhunter, which is to provide advice people can use to improve their job situation. But now and then an issue comes up that’s important for us to discuss and understand. The minimum wage is important to everyone because, no matter how much most readers here earn, we all encounter workers who do the lower-paying jobs that affect our lives every day. In fact, we rely on them.
I support a $15 minimum wage
In the January 15, 2019 column you mentioned, I advocated for a national $15/hour minimum wage. My view has not changed. I wrote:
“Fair-market compensation is an amount people need for shelter, food, transportation and other basics of life. That’s more than $70 a day where most people live… If your business can’t generate enough cash to pay a living wage, your business is going to fail for lack of workers. Shut it down now and get it over with.”
Some readers insisted that not all areas of the country should have their minimum wage set as high as $15, because housing costs are much lower in some places. But in an addendum to that column I showed why that line of reasoning is a straw man.
What happens if wages are legislated up?
Many business people have tried to make the case that they would bear the costs of mandatory higher wages, with the result that they would have to lay off workers. Or, they’d have to raise prices, which means they’d lose customers and potentially go out of business altogether. Any way we slice it, these businesses claim, the outcome would be fewer jobs.
As a dyed-in-the-wool capitalist I see this as a kind of creative destruction. When businesses shut down due to economic pressures, that’s not necessarily bad for the economy. It creates opportunities for better-run companies to replace them. As the tectonics of competition shift, workers move to new employers that create new and better job opportunities.
I’m not an economist, and I don’t run a restaurant that depends on $7.85 wages and wait staff that’s paid mostly with tips. I don’t pretend I can predict what a national $15 minimum wage will really mean. But I have opinions that I think are grounded in common business sense.
Nonetheless, my opinions don’t matter in the bigger picture. You, dear readers, are the bigger picture, so I want to discuss what you think. That’s the purpose of this week’s column.
The backdrop on the minimum wage
Let’s set the stage with a report from NBC News about what the nation seems to think about raising the minimum wage:
“Despite the bitter political polarization in the United States today, public opinion polls of voters in red and blue states both show strong support for a higher minimum wage. An August survey found that 72 percent of Americans — including 62 percent of Republicans and 87 percent of Democrats — said the minimum wage should be high enough to keep full-time workers above the poverty line.”
But the same survey emphasizes that higher wages will cost a lot of people their jobs:
“The nonpartisan Congressional Budget Office determined in a 2019 report that raising the hourly minimum wage incrementally to $15 by 2025 could shave, at the median, 1.3 million jobs from the labor force, but would also lift 1.3 million people out of poverty and contribute an additional $8 billion to the aggregate household income of these families.”
One final statistic: While unemployment has held steady, job growth has stalled. Even without a higher minimum wage, in December employers cut 140,000 jobs.
What do you think about a $15 minimum wage?
So, what do you think? Regardless of how much you make today, or whether you are employed or not, do you support a national minimum $15/hour wage? Either way, what do you think the impact would be?
If you were making wage policy, what would you do?
Today in Politico: If you count in those who work part-time, but want full-time, and those who earn below the poverty rate, the unemployment in the US is not around 7%, but a staggering 25%!
Keeping wages low thus may make job numbers good on paper, but not in reality.
Another number that is left out of the bureau of labor statistics is all the people that had to QUIT looking for jobs because no body would hire them/could not find jobs. That has been a known factor for a number of years. The unemployment numbers given from BLS are ALWAYS WAY under counted.
Being Norwegian, in a country heavily unionized and with low equality and low unemployment (currently 5%, although that statistic also probably is somewhat skewed due to people “parked” on disability benefits), I know that it is possible for a country to have a high minimum wage and low unemployment. True, we have oil, but our Nordic neighbors are not much worse off.
High minimum wages (in Norway not defined by law, but by agreement between national unions and employer associations) lead to a high degree of automatization, investment in robots and efficient work processes, which increase productivity, the overall wealth – and produces an economic surplus that in turn leads to investments and new jobs. Because this process goes on all the time, only a limited number of people must bear the friction costs by being unemployed at any time. It also means that jobs that cannot be automatized (hairdressers, bus drivers etc) earn a relatively higher wage. It also means that here is an incentive to do stuff digitally; nobody in Norway has paid by check for the last 20 years or so, and tax returns for most people are simple: Employers hand in the numbers digitally to our “IRS”, which calculates the sums and the taxes. Each person and company can then verify the numbers and deliver the returns on the “IRS” website and sign with our nationwide digital signature system.
If you walk into a Norwegian Starbucks you will notice that there are fewer clerks behind the counter. Sometimes this can lead to longer waiting, true, but it also means that the employer will have incentive to streamline and automate processes.
Amazon is sometimes in the spotlight for bad working conditions in their “fulfillment centers”. In Norway, there are very few such jobs – because robots do nearly all the work, and those robot systems have now became an export article in themselves.
My point is that keeping salaries low may be tempting to stay competitive in the short term, but it reduces incentive to look at other ways to cut costs and be efficient.
I will not pretend that everything is rosy here. One problem is that employers of “non-automatizable” jobs, like hotel room cleaners, increasingly rely on temp agencies with unpredictable work hours. Another is that the construction industry increasingly have hired workers from Eastern Europe, after those countries joined the EU in the years since the fall of communism, to the degree that there are very few Norwegians building houses anymore. Actually, the productivity in the industry have bee falling during these years.
But, overall, I think the Scandinavian countries provide an example of how a not perfect, but clearly better way, can be done.
Don’t mean to be a d*ck but you made two contradictory points here:
1. You argue for higher minimum wage and that it worked in the Nordics
2. You say employers that raised minimum wages have eliminated human jobs, so people were fired / replaced by robots to reduce costs
How do these two points jive? Is it better if Amazon underpays employees in their fulfilment centers or if they do not hire anyone and automates everything?
To use Amazon or Starbucks as an example: Yes, higher minimum wage leads to fewer McJobs in each Amazon fulfilment center and fewer people behind the counter at each Starbucks. But the money does not disappear. It comes back into the economy as more purchase power for the people who still work there, and as investments from the money saved by the employers. I.e. as new jobs in new companies and new outlets.
Granted, the net effect probably still is that there are fewer McJobs than in the US, which means there are fewer jobs available for unskilled workers. Norway thus must focus very hard on training its workforce. Not sure if that is a problem – keeping low wage jobs just to keeping people employed is really a luddite argument, which runs contrary to the main driver behind the industrial revolution and the wealth of our civilization: To replace manual labor with more productive machines. (Which can bring us into a discussion on how digitalization and robots will affect us all in the future, if this time really is so different that both high and low paying jobs disappear, but that is another topic).
I do not claim that Norway has The Perfect Solution to the job market, or that it is the Pink Unicorn Paradise that Bernie Sanders believes it is. Only that it shows that a system with a high minimum wage actually works also in real life.
The reality is that all the Nordics are small countries and centrally managed. The US’ size, federal/state government system, and immigration are our major differences as well as our industry mix. Except in Sweden where you have Muslim immigration and corresponding social problems, the US has far more immigration from far more countries of low skill workers. This will do nothing but increase with this current administration. We also have industries such as farming and meatpacking which aren’t much of a factor in the Nordics but are here. These are not going to be fully robotized very soon.
Will robotizing jobs keep immigrants out of the US? More than likely they will find off the books jobs and go on welfare, as they do now. A $15 minimum wage only applies to on the books workers.
Dee, this is a valid point: The Nordic countries are small, fairly ethnically homogenous (at least until the last decades), with a distinct history and cultural background, including a high degree of confidence between people and government. Copy-pasting our system onto the big, diverse federation of 50 semi-independent states that makes up the US would not work, also because the US has a different cultural foundation. (Bernie, take note). Hence, introducing a minimum wage in the US would have to happen by another path than here, and a blanket $15 by federal fiat may not be the best or even possible. My intention was more to show that a minimum wage does not have the disastrous consequences that some opponents claim.
It is tempting to ask the rhetorical question to opponents of increased minimum wage: If a higher minimum wage is bad, would not removing the minimum wage and let people work for free, or next to nothing, be great? It would surely lead to low unemployment…and remove most incentives to invest in technology to increase productivity.
Regarding immigrants, it is true that Sweden has the most immigrants, notably from the MENA countries (Middle East-North Africa). But the same issues exist in Norway and Denmark as well, to a somewhat smaller degree, regarding integration, labor participation and crime. The concern that a minimum wage for jobs that cannot (yet) be robotized will drive workers at the bottom of the ladder out onto the black market is real, here in Norway we also see that there is a black market for e.g. cleaning, car wash, restaurant work etc. However, unless we want to go to the extreme as to basically legalize slavery to avoid such crime, the answer is better investigation and punishment of those behind.
Denmark has a big agricultural industry, mainly pork; outside cities and towns, the country is almost one big farm. Norway has our own meat industry; fisheries and salmon farming. I do not know the Danish meat industry in any detail, but here in Norway, we depend on seasonal workers that come during the fishing season, and immigrant workers for fileting farmed fish. This is partly due to the seasonal nature of a work that can still not be done by robots, but also due to the hard-work-to-salary ratio, so the work is less attractive to Norwegians. The same goes for the berry pickers ARF mentioned below. The simple solution here would be to increase the pay, but in the case of fish exports, it is sort of cornered in a situation where it is both difficult to automatize more, and increased pay would make it less competitive (fish is one of Norway’s big export industries).
ARF posted another good question below: Why are the Eastern European construction workers here? The use of Eastern European workers in construction is different than in fisheries, because those are jobs that are more permanent in nature. I am not sure of the fine print, but in general I believe that they are, formally, subject to the same laws as Norwegian workers, i.e. they cannot be paid below the minimum wage here. The reason there are so many of them here is, however, that they will demand less pay than Norwegian workers, and also will rarely unionize and fight for their rights, partly due to language barriers. Big serious construction companies will generally do things right, but there is a large underwood with layers of contractors, temp agencies and even organized crime, which means that the real situation with pay and work hours can be murky.
Admittedly, I do not have all answers on how to handle these issues. Increasing minimum wage will reduce competitiveness and may also increase labour crime, but lowering it will reduce incentive to developing technology and create a big population of working poor. My point here has rather been to point out that an increased minimum wage is not the disaster that some right-wingers will claim.
Karsten, I was not aware (but should have been as I have international marketing experience) that farming was still a major industry in Denmark (self-sufficiency–yay!) and of course fishing and fish farming in Norway. In construction and landscaping, the equivalent of your Eastern Europeans are Hispanics from all regions. It’s the same in unionized high skill functions–Americans now including AAs are the union electricians, welders etc. So it’s basically take the Nordics situation and transfer it on 50 very different states plus Puerto Rico.
In NY we are hammered as restaurants and quick service places have been nearly shut (25-35% of capacity with limited outdoor seating, ha ha) with the lockdown. In NYC, only about 10% of landlords have received rent from their restaurant tenants in the past months. Had COVID not happened, the $15 wage which was going to happen locally anyway would have worked…but not now.
Sorry for late reply, due to a 15 mnd old mini-me and some other reasons….
@G.D.: I agree with Karsten.
“keeping low wage jobs just to keeping people employed is really a luddite argument, which runs contrary to the main driver behind the industrial revolution and the wealth of our civilization: To replace manual labor with more productive machines.”
The obvious solution is education. The world is not going to suddenly stop innovating and replacing human labor with automation. But it had better keep getting better at educating the people who’ve been replaced so they can do work that machines cannot do.
Karsten – The workers you descibe as imported from Eastern Europe, in the construction industry as one example. Are they subject to Norwegian wage and employment practice laws?
In other words, are these imported workers Norway’s way to get around certain economic realities?
I suspect the “No Norwegian will do that job (construction, agriculture, etc.), means “No Norwegian will do that job for that rate of pay”. We have lots of that in the USA.
I’ve seen documentaries of berry pickers from Thailand, imported to Scandinavia as berry pickers. Seems to be the European equivalent to USA’s illegal Mexican farmworkers.
Please see the answer to Dee above.
OK, so do I understand you right, there IS a black market for e.g. cleaning, car wash, restaurant work etc., in Scandinavia? And by that, are you saying these are people who are willing to work for less than minimum wage or other benefits that might be available were that person legally employed?
Because it sure looks to me, you have the same problems in Europe as the USA in this regard. Flouting the law and exploiting people desperate to be in the USA or Europe.
I call it no different from 19th century chattel slavery, except the whip has been outsourced to the people running the hell-hole countries forcing their people to flee.
A minimum wage like this is theft. You are co-opting the resources of someone else by force – the implicit threat of government – to COMPEL someone to pay more than the market value of the labor. Thus, there will be no labor, and a heavy incentive to automate. So the real minimum wage is ZERO.
@David: I don’t see that at all. If we follow the logic of your argument, then we can say employers that pay below market value are stealing from under-paid workers. Underpaid=Unable to make ends meet so they can live. What’s market value? It’s what employers can get away with. When HR departments conspire to reject better candidates in favor of those willing — against all logic — to “take what they can get for now,” are we establishing “market value” or rewarding greedy (or poorly run) businesses?
There will always be a desperate job seeker that’s willing to take less than they need just to have some kind of wage. The job boards make it easy for employers to find them. We’ve all seen how over-automation of recruiting and hiring has resulted in lower pay. Employers do that because they can get away with it.
Keep in mind that “government” is word we use to describe a social contract we make so that we can live together successfully with others. No argument that government on the whole has become corrupt and often acts in its own interest. So let’s fix that. But agreeing under the social contract we call government to fair wages does not mean that choice is “theft.”
I’d say that the failure of government to ensure fair wages enables employers to steal resources from workers. And I’m a capitalist — so I believe that when business fails to return profits to its community in the form of higher wages, business goes out of business.
Nick, there’s plenty of evidence that employers are colluding on contract jobs, using information from the hundreds of agencies which hire contractors to reduce hourly rates. They also force these agencies to take far less margin or lose the account. Rates have crashed since early 2020. Agencies used to have some wiggle room on the basic rate to get a better person under contract. No more.
From one contract body shop, when I asked about the hourly rate for a marketing comms position, I was told that the employer was going to sort candidates by requested rate and automatically knock out anyone too high, regardless of fit for the job. My response was that I don’t work for jerks who pull stunts like this.
If a company is “robbing you” by underpaying you, you have the option to leave. Where does a company go when it loses each and every hour it is legally mandated to pay more than the value it gets from that employee?
Nick says, “There will always be a desperate job seeker that’s willing to take less than they need just to have some kind of wage.”
In his original post, he says, “When businesses shut down due to economic pressures, that’s not necessarily bad for the economy.”
Why do businesses, whose model require workers to be paid below minimum wage, deserve to survive? In many cases, employees of these companies are on food stamps because they pay so low. How does society benefit from subsidizing these businesses?
At many places, desperate workers churn in and out for a variety of reasons, making for a wasteful workplace. There’s no incentive for companies to raise wages much higher, and even if a worker wanted to leave a job, no other jobs offer living wages.
Respectfully, America is far from the libertarian ideal of meritocracy that it once was, between the 1940s and the 1970s, and only for the lucky.
I read somewhere that about 60% of low-wage workers receive some form of government assistance. In my view that means that employers are NOT paying the market value of the labor. The value is being subsidized by the government. Those employers have externalized the cost of the labor onto the rest of us in the form of the taxes that pay for those services.
A truly free market is how you get children working in coal mines for pennies a day, because employers hold most of the power, especially at the low end, and they tend to collude to make sure that Coal Mine isn’t paying more than Coal Mine Y so they can both “save” on costs. We have collectively decided as a society that that is unacceptable, thus the minimum wage and restrictions on child labor,. If you don’t like that you can’t pay an employee pennies a day, then don’t start a business, or do the work yourself. If you can’t afford to start a business without paying employees enough to survive, then you can’t afford to start a business.
I asked my Libertarian friends, “In a _free_ market the prices of goods would reflect ALL of the costs of doing business, because all of the costs would be borne by the producer. They wouldn’t be able to underprice the products, because they wouldn’t be able to externalize so much of the costs onto the rest of us _against our free will_, right?”
They backpedaled very quickly, “Oh, no! That’s not what we mean!”
My first job paid minimum wage… I worked hard and smart and after several months went to the owner and asked for a raise, He said; “No.”, so I quit and went to work for another company that paid more than minimum. You can’t legislate Ameritocracy.
Our founding Fathers believed there should be no tax on labor. The infinite wisdom of Congress gave us the 16th Amendment which has become the working stiff’s burden. First, repeal the outdated 16th Amendment, then talk about the need for raising the minimum wage.
@Paul- Good for you back in the day! My point exactly on moving elsewhere in a free market, and giving a schlub employer a poke in the eye with a sharp stick to boot. You asked for (and I’m certain had earned) a merit raise, which your then employer refused, so you voted with your feet, and found a new and apparently better job. What thick-headed employers don’t seem to get, is retention of a good employee asking for an earned merit increase is far better than the $ they’d have to spend (even in minimum wage jobs) hiring, training (if any), and trying to retain a replacement employee.
This is what Nick misses with this issue. He is consistent in saying “prove you are worth the job”, but here he is taking that measurement away from the employer. It is simple, if the minimum wage is 15, then the only jobs offered must be worth $15 an hour. If they are not the jobs will be automated or eliminated (businesses cannot pay people more than the job is worth and stay in business).
My son makes a bit more than minimum wage, he is scared that this increase would impact him greatly. Costs would increase, yet his income wouldn’t, he would fall behind. And you can’t claim this wouldn’t drive inflation. In the restaurant industry ( the big one that will get hit by this ) they will face the choice of raising prices or laying off staff. So the customers will feel the bite. People making close to minimum wage will see inflation eat their benefit of making more than minimum wage they will actually be pushed towards poverty.
This disparate impact of this cannot be waved away as easily as you are doing here. In my state a $15 minimum wage would be a 50% increase. Imagine owning a business that is labor intensive and seeing that kind of increase in costs. It swamps the margins a lot of businesses operate at right now.
I said in the previous discuss that I think this increase will kill every small diner in my state and also many small businesses.
That’s one thing you don’t address Nick. Small businesses are the lifeblood of this country and where many people get their start and where many people make their way in this world as the owners of them. They are more susceptible to cost increases and regulatory burdens that big businesses are.
If we lose them it will be a long hard fight out of the mess it creates coming right on the heels of the covid disruptions.
If this passes it will hurt low cost of living red states a lot. I think that is part of the calculus. You don’t think this might not be a way to “get back at” all those deplorable red states?
What will happen if this is passed is that jobs will be lost, many small businesses will die (they are being asked to deal with a spike in costs after experiencing the greatest small businesses disruption in the history of the nation!!, no small business has any reserve cash laying around to deal with this right now, if you could pick the worst time to do this it would be right now). Prices will increase, and people in the lower middle class will feel the brunt of that. I think that eventually when inflation catches up to where the minimum wage again makes sense for the minimum wage level work unemployment will go back down. But it will only happen after inflation eats the impact of the extra money being paid, and that may mean years of higher unemployment. Basically the legislation of the employment market would all end up being for nothing.
Another note. One size fits all national laws are AWFUL policy. The thing that makes America special is that the states are laboratories of democracy and can try different things to see what the different results are. Legislation like this kills that. People are fleeing bad (amazingly bad) governance in California for other states because of this. The solution is not to make national law just like California!!!
I do find it hard to believe that one of the things you are using to argue for this is creative destruction. We are in a time when small businesses across the land are just trying to find a way to get going again. Putting another huge regulatory hurdle in their way NOW is just plain cruel.
I would say a gradual dial increase to $15 would be far preferable to a mandated instant increase, but it seems the Democrats aren’t willing to negotiate for that. It’s the way this should be done. I have no argument against the idea that the minimum wage should be pinned to inflation increases.
One has to wonder if the big businesses want this so they can wipe out the competition now when they are are their historical weakest. That would be a very sadistic reason on their part. Big companies don’t want to control what people do and be the only thing in the market do they? Oh wait maybe they do….
If this wage hike happens it’s going to take a long time to get out of the covid caused economic problems, a lot longer that we would be able to without this disruption being piled on right now when things are opening back up.
On a closing note I want to thank you Nick for keeping this blog politics free basically from the last time you brought this question up until now. I look forward to that continuing after this week.
@J: First, thanks for your comment about keeping politics out of our discussions here. I really work hard at that and I appreciate the pause participants take to keep it so.
I think that fundamentally we agree on the outcome we want to see: anyone that wants to work ought to be able to find and hold a job and anyone that wants to be in business should be able to hire workers.
But where we part is on something that may make you laugh at me as a naive noob: faith in American workers and entrepreneurs. Today even established business people must be entrepreneurs, or real entrepreneurs will steal their markets and customers — just as they will steal their workers. And I believe workers are fully capable of learning new skills when our economy shifts and changes — and that includes learning to do things automation cannot handle alone.
Let me address a couple of specific things you say that are worth thinking about harder.
“It is simple, if the minimum wage is 15, then the only jobs offered must be worth $15 an hour. If they are not the jobs will be automated or eliminated (businesses cannot pay people more than the job is worth and stay in business).”
You’re absolutely right. But please think this through. If lower wages cannot sustain workers (rent, food, transportation, etc.) then shouldn’t those jobs be eliminated and automated? If businesses cannot pay people what they need to live, then the job by definition is not worth the labor and the business should not be in business. I know that’s harsh, but to use your example, I see restaurants and diners that contribute to a population of workers that need government assistance to eat and put a roof over their heads — who walk long distances to work and to the grocery store. Who do you think pays for that? Those eateries operate just like they did 50 years ago, subsidized by a system that shifts the true cost of labor to the government and taxpayers. Those eateries had better start to learn how to be more profitable so they can sustain themselves.
If you look at the addendum to the column I linked to above, “Who really needs a $15 minimum wage?” you will see how poorly run businesses survive while paying inadequate wages.
“We are in a time when small businesses across the land are just trying to find a way to get going again. Putting another huge regulatory hurdle in their way NOW is just plain cruel.”
It may be difficult, but please step back and look at that from the worker’s standpoint. We’re in a time when workers are just trying to find a way to pay the bills without government aid. When we/society/government allow businesses to pay workers less than it costs to live; when we allow our employment system to make workers compete for inadequate wages; then the cruelty is directed at workers.
Costs must be paid by someone. Today, when a worker cannot afford rent on $7.50/hr so that a diner can stay in business, who pays that cost?
I don’t pretend to have answers. Both business owners and workers must get a better education if they’re to survive. Pretending either of them can survive without the other being healthy is foolish. Everyone has to get smarter about producing profit, but it’s not a zero sum game. The point of capitalism is to create something new under the sun, to create value where there was none, and to find new ways to be successful. Where I live, some restaurants are managing okay because they have innovated. Others have shut down because they have not. You’re right: there must be compromise to get us to wages workers and businesses can live with. But with that compromise there must be meaningful changes that address both sides. Neither can survive if we pretend one side is going to subsidize the other forever.
I really believe American businesses and workers can figure this out. But today’s employment system has made it too easy for businesses to force job seekers to compete for inadequate wages. Just post a job for low pay, and some schmo will take it so some poorly run biz can “survive.” That’s where our social contract — our government — must step in. Before you argue that in some places $7.50/hr is adequate, please take a look at the real numbers for cost of housing, whether rents or mortgages. It just doesn’t add up.
I have been that “schmo” out of necessity. I was laid off from a good job (pay, medical benefits, etc.) at the age of 61. While I had “assets”, they were my retirement nest egg and I was loath to dip into them, just as I had decided to not use them when I was widowed. I spent 10 months job searching and was ready to withstand impossible commutes and low wages just to have a job. I was finally hired as an employee (technically) for a third party contracting firm working at a place I came the despise because I was treated as a lesser worker. While the money was pretty good, I had zilch benefits- no paid holidays, vacation, medical, disability. COBRA was comparatively cheap until my former company terminated the plan. I ended up having to spend $850+ per month for a crappy plan on the exchange with a $2400 deductible. There went the decent pay; I had enough for mortgage, utilities and food. I put up with this to keep the roof over my head until I found something better. The better job (same pay with medical benefits) turned out to be a nightmare. As soon as I was eligible for Medicare, I took my Social Security benefit. It took a while to get my head straight but, but preserving my savings has resulted in a comfortable retirement and long term care when needed.
@Norah: I used the word “schmo” affectionately to mean “ordinary person left with no other options,” not in any derogatory sense. Unfortunately, your story is too common. I wish you the best.
The $15 minimum wage at a national level will kill small businesses in my low cost of living state. That won’t help anyone.
Sure the minimum wage needs to go up, but a federal mandate one size fits all minimum wage is WRONG.
We don’t want to all have the same awful labor laws as California!!! And that’s the kind of thing these federal mandates are trying to do.
I know an owner of a firm that has employees who work remotely all over the country, they refuse to hire anyone in California because the employment law in California is a freaking nightmare.
We need to maintain states setting the rules for themselves we are not a homogeneous country that can have one size fits all laws.
The problem with strong federal laws is that it provides only one acceptable way of doing things. States don’t try to get different results with different methods. We will never see the unique solutions some states come up with because in a one size fits all nationally controlled system that won’t be allowed. The idea that the laboratory of democracy that is states all trying different things to see what works should be done away with in favor of national mandates is an awful, horrible, and damaging idea. It is tearing our nation apart right now.
Come to my statehouse and argue for an increase in the minimum wage here based on the situation here. Do not stand in the great remote national capitol (it seems more and more like a parody of the one in the Hunger Games every day) and shout orders from on high. That’s not helping or fixing anything.
@Nick, thank you so much for using that pesky little word “innovate”. Well oiled businesses should create a business model that could at least put forth an effort that would stand the test of time and business conditions. Granted a pandemic is tough but there sure are still A LOT of businesses that are still open.
My friends wife is the manager of a restaurant in a smallish town in NY, about 35 minutes south of Brooklyn. Talk about a niche market, Cantonese. They are still open and thriving, because they changed things up…innovated. People can blame whoever they want to for going out of business, how about not just throwing their hands up in the air and just giving up.
I agree J, this is the worst time for this to be done. We saw the effect prior to COVID in NYC–immediate unemployment in service jobs.
Now with COVID, all over the country except in places like Florida, businesses are shutting forever as being closed or limited for a year means they are DONE. I went to a multiplex movie theatre at one of the largest malls in NJ this weekend–yes, a few are open–and on a Sunday afternoon, there was one ticket issuer, you scanned in your ticket at the theatre entrance area–no ticket taker, and there were maybe 10 people in this multiplex for cleaning and sanitizing. (BTW, it was EMPTY.)
We’re going to get more of the same. With a stroke of a pen, this president eliminated 10K Keystone XL pipeline jobs in the US as well as thousands more in Canada. Those 10K jobs affect 3-5 others in services for those jobs.
There are two other factors–hours (your son and most in the restaurant and retail businesses work far fewer hours, if they have a job). Many of those jobs will convert over to paid under the table jobs. You don’t like it, don’t let the door hit you on the way out.
People will go to where the jobs are, and right now they are not in high-tax, high cost of living blue states like NY, NJ, MA, and CA.
What does the Keystone XL Pipeline have to do with $15/hour? Were those jobs poverty level jobs? In that case I am very much in favor of cutting the pipeline. If the project is going to generate such little revenue that it can’t even pay skilled labor $15/hour then it should have been killed.
Those jobs were pretty much all high pay high skill jobs. The problem is that those workers are all on the labor market now and are driving wage pressure back down.
The best thing for increasing wages was low unemployment like we had before covid hit. Wages were going up faster than they had in a very long time, and not just at the bottom they were going up for everyone. We need to get back to having low unemployment which actually does force employers to offer better wages. Its the best way.
Federal one size fits all national mandates are quite possibly the worst way to increase the wages of workers.
@J and @Dee, you two need to do some fact checking before posting. Here is what the company that owns the pipeline actually said:
“TC Energy Corp., the Canadian company that owns the pipeline, told PolitiFact that it estimates 1,000 people will be out of work as a direct result of Biden’s order.”
Almost all temp workers that would have jobs that lasted 4-8 months. They of course posted the 10K number on their Facebook page, HMMM, ulterior motives there??
They ONLY USED THE 10K number as an ESTIMATE. After the pipeline was to be finished there were approx. 50 people to stay on. “The State Department forecasted that no more than 50 jobs, some of which could be located in Canada, would be required to maintain the pipeline. Thirty-five of them would be permanent, while 15 would be temporary contractors.”
Refreshing to finally see a question from a reader who understands lower-wage jobs and the struggles that come from them.
I have to again concur with David Hunt’s analysis, and respectfully disagree with Karsten’s Scandinavian social democratic model.
The minimum wage in the state I reside in is $7.25 per hour, while the minimum wage in the state across the river where I work both my full-time and part-time job is $9.45 per hour. Neither states are considered progressive by most standards.
My full-time employer pays dirt cheap wages across the board for both salaried and hourly workers; starting grunts at $10.00 per hour with little to no chance of advancement. That equates to $20,000 annually. That’s .55 cents per hour above the state’s minimum wage. Add to this a very basic health/dental plan (and a 401K plan with a zero employer match) that the employee must cough up if they participate, it’s not to good. We are in the statistically 3rd most dangerous industry there is, where these workers are outside daily in the elements, doing physically intense labor, and subject to potential hazards (cranes, heavy equipment, burns, falls, etc.). We just had a man apply for EBT as he can’t support himself, let alone his family of 3, on such wages, nor can he afford to carry the health insurance. While a national $15.00 per hour minimum wage is tempting to garner my support in opposition to shylocks like my employer, my employer has openly threatened to close their doors if a $15.00 minimum wage would come to fruition, and from what I’ve seen over the past 8 years of employment, they’d follow through with this threat. While I submit that in a free market one can go elsewhere, many of these guys at my workplace come out of the urban core, and can’t afford to own cars, so they rely on public transportation, or acquaintances and family to transport them to and from work.
I’m politically an Independent, but I’d also submit that minimum wage, in most cases, is for young workers in part-time scenarios, retirees, or in additional supplemental jobs. It’s never been intended for a primary wage earner.
As one who deals with manufacturers daily, and who also works a second part-time job teaching as an evening adjunct in a welding program at a CC, I hear daily from employers crying for welders, machinists, metal fabricators, production workers, truck drivers, electricians, millwrights, plumbers, etc. One complaint is that people don’t want to work such jobs (oddly, younger folks in particular), or get dirty.
I submit that our government focus more efforts and $ (and this is about as much social welfare as I’ll go with, Karsten) on job and skills training programs to encourage people, and assist people, in getting out of minimum wage jobs, and into earn a living jobs.
If the $15.00 minimum wage came through and they shut their doors, then what?
Would the owners start a different business where they had the margins to pay $15.00 an hour (for fewer workers)? Would they invest their capital in the stock market, because they couldn’t do better running a business themselves?
Was the value they provided to customers before shutting down so little that no other company would move in or start up?
What my Shylock employer has threatened to do is shut their doors if a $15.00 per hour national minimum wage becomes the law of the land and to take the money and run. That is if there’s any money left as they’ve plundered their profits over the years and lived like kings.
@Antonio do you know if they can afford to close the business? If they lived like kings and spent lots of money wondering how they would survive cutting off their income stream.
I guess all these businesses that threaten to close the doors and cut off their income all have tons of money saved to live on.
Hi Antonio, I’ve read your comment carefully, and with complete respect, I don’t think that you are giving arguments for not raising the minimum wage. You are describing a system that currently doesn’t work.
let me give you an example, you say “I’d also submit that minimum wage, in most cases, is for young workers in part-time scenarios, retirees, or in additional supplemental jobs. It’s never been intended for a primary wage earner.” but nowhere in the minimum wage law says that that is the case, there are no policies to stop primary wage earners from applying to those jobs, but also, are you suggesting they shouldn’t apply and instead rely on benefits?
You also mention workers that rely on others or public transportation to get to work, so those others and all of us are subsidising that employer, is that not wrong?
The economic truth is though, that as labour is just a fraction of any product or service cost, a raise in minimum wage has a lower impact on price, and because this impact is similar for all producers, it doesn’t impact competition, so does NOT put businesses out of business. But it has an immediate and direct impact on quality of living (moral benefit) and income, which generates more consumption, business profits and wealth.
There are many “analysists” that will tell you something different, but they are basing their analysis on individual businesses, not on the impact on the country/society
Years ago I worked with a Manufacturing Engineer, and he told me that wages are usually a small part of the costs of any business – rent, utilities, inputs such as food, steel or timber, and all the rest of the costs that are almost entirely non-negotiable dwarf wages. He also said that employers could double the wages of their staff without having much of an effect on their overall costs, but it would have a remarkable effect on morale, quality and productivity.
And yet it is wages that cause employers to squeal. They can’t bully their landlord into lowering the rent, but they can and do bully and intimidate their staff into accepting unliveable pay with no increases, despite the steady increase in the CPI.
No society can afford to allow that to continue.
With all due respect, you’re missing my point on several levels. I’ll concede to your point that it’s unfair that we are subsidizing public transportation thereby enabling my schlub employer. But I submit why would a 50 year old who say has been in the workforce full-time for 30+ years still be working a minimum wage job? Granted, those who are mentally or physically challenged are most likely relegated to minimum wage jobs. But I can conclude unequivocally that 50 year old most likely has a motivational problem, a maturity issue in some cases, or has not received based advice and direction in their life. As I mentioned (and seems to be overlooked a lot on this site) is the demand for decent paying blue collar trades, as well as government needing to fund vocational training.
@Antonio, OMG, I cannot believe you actually wrote this on a web site for GOD and everyone to see. Maybe you were “just kidding”.
” those who are mentally or physically challenged are most likely relegated to minimum wage jobs”. “that 50 year old most likely has a motivational problem, a maturity issue in some cases, or has not received based advice and direction in their life.”
I must say I am shocked.
I dunno, I get his point. If you have a 50 year old who has been in the workforce full-time for 30+ years, why do you think they would still have a minimum wage job?
 Mental Issue
 Physical Issue
 Motivational Issue
 Maturity Issue (maybe redundant to the above)
 Did not receive good advice
Seems to cover most of the bases. Maybe a divorce and now they have to make their own money with no previous work experience (but it did say with 30+ year work experience).
@Paul and @Antonio, while I agree there are people in the US that are/have been in one/more of those situations, people that work over 30 years and have always made minimum wage their whole working life are infinitesimal. I would bet the number is so small they could not even be counted in any “data” gathered.
People that are 50+ and making minimum wage is more a “phenomenon” that occurred during/after the 2008/2009 recession. When employers did not have enough brain cells to come up with any more ideas than just firing people.
FIRE ‘EM ALL and pay anyone we hire shi&&ty wages! Employers yell this at the top of their lungs while using a megaphone.
The Fair Labor Standards Act in 1938 started raising minimum wage and has been raised 22 times by 12 different presidents. Has the US economy crashed because of this? NO! Did small businesses close their doors in waves because of this? NO! Has the economy gone up and down despite this? YES!
Seattle was the first major city to pass a bill that would increase the minimum wage to $15 an hour in 2015. Some business owners, particularly in the food industry, threatened to leave Seattle amid growing wage requirements, it doesn’t seem that many have followed through. According to data from the Federal Reserve Bank of St. Louis and the Bureau of Labor Statistics, the number of jobs in restaurants and bars had been on the upswing since Seattle’s minimum wage laws went into effect. Fewer than one in four employers reported reducing their workforce through cuts in hours or headcount as a result of the wage hikes.
The people here that say raising the wage would have negative effects are just speculating. Playing a guessing game… There are so many studies done on this subject, here is just one:
A study by Center on Wage and Employment Dynamics (CWED) at UC Berkeley “High Minimum Wages in Six Cities, Big Impact on Pay, No Employment Losses “.
The team of economists find significant pay increases and no significant employment reductions in the six cities. Chicago, the District of Columbia, Oakland, San Francisco, San Jose, and Seattle.
I have scoured the internet looking for negative impacts on cities/states that have already increased min. wages. Historical facts. They are blips on a radar screen.
I agree with Cynthia. A person after working 30 years and now (not still) making minimum wage, probably got laid off, fired or injured from a decent-paying job in the trades or white collar and can’t find anything else. Of course, 50 is still young to me (I’m early 60’s), but not to the working world. I know people in their late 40’s and 50’s who were laid off at the same time as me, and they absolutely can’t find work now. It’s probably covid for a lot of it, but with the fewer people competing for lesser jobs, they’re not going to hire older people when there are plenty of 20 to 30 to early 40 somethings out there looking at the same time. I even thought of looking for a low-paying job just to get some income coming in, but with covid, I’ll just stay home for now.
I think people are speculating too about how the minimum wage will decimate jobs. I get the reasoning and I’m a math person, but I bet it wouldn’t prove out. Businesses would adapt. There was an article about Seattle where a restaurant owner change his business model to commission-based and he was doing very well after the wage went up to $15. (The high-end tax rate was in the 90%’s once, and business was booming. Companies adapt).
I also go back to my earlier comment, what as a society do we want and are willing to sacrifice for? Do we blindly let the “free market” determine wages? It’s not doing a great job now when multi-billion dollar companies get trillions in bail outs and the average person is still waiting for their only third means-tested stimulus check of a paltry few hundred dollars. I’m not saying totally using government bailouts is the answer either, but why should the too-big-to-fail rich people (who run the country) get almost all of the money? As I’ve heard said, the tinder is there, all it will take is some event to trigger a revolt, and then maybe the people will decide how to run the country, how production is organized and what wages are paid. We’ve already seen several examples of smaller revolts over the past year.
Theft is expecting someone to do a job for less than you would accept.
Slavery is paying someone so little that they can’t afford a roof over their head, adequate food, a doctor and appropriate medicine when needed, clothing appropriate to their job, and heating when it is cold.
There is an example of an increase the minimum wage in New Zealand which did not cause any loss of employment; unfortunately I can’t find it, but a few years ago in Australia we reduced penalty rates, mainly for hospitality and retail workers. Penalty rates are paid as an additional percentage of the pay rate to compensate for working outside reasonable, family-friendly hours such as nights, weekends or public holidays. They are both compensation plus a lever to make employers think twice before being open for no good reason.
Anyway, the employers and right-wing parties insisted that the result of reducing penalty rates would be amazing, with lots more people employed.
The reality was, of course, nothing like that. There was a reduction in patronage – if your pay gets cut, you’re less likely to pick up a coffee on the way to work, or buy a nice t-shirt – and there was no increase in staff (in fact, some employers reduced staff).
Note: the pay rates are in AUD$, which is lower than USD$; and imported goods are usually more expensive here because we are largely a captive audience that importers love to exploit.
As Nick tells us, no one employs staff that they do not need; these employers simply pocketed the difference. They were never going to employ more staff.
Keeping wages low means that there are large numbers of people who cannot afford essentials, let alone a few simple extras. The more money that circulates in an economy, the better off everyone is. If the shop assistant who sold you a shirt earns a decent wage, they may be able to drop into your bookshop and buy a new book; if enough do that, you may be able to put a deposit on a new car. If the owner of the shirt shop is greedy, you may be stuck driving the same old car. This is how capitalism works.
Some random thoughts on the issue:
1) Since the minimum wage has not changed, in absolute value, over the past 10+ years, the actual purchasing power of it has declined by something like 17%. Side note: here’s an interesting looking at its value over time: https://www.businessinsider.com/how-much-us-minimum-wage-and-its-value-has-changed-over-time
Personally, I think minimum wage should be indexed to inflation. It removes the political battle over it (beyond arguing over the inflation basis, of course) and it gives businesses some pricing stability. They don’t have to worry about it being jacked up from $7.25 to $15 over, say, 5 years or some other arbitrary number.
2) While a lot of people like to claim it mainly affects teenagers working part time jobs, this is not the case. They’re about a quarter of people making minimum wage: https://www.pewresearch.org/fact-tank/2014/09/08/who-makes-minimum-wage/
Note that only a small portion of people in the workplace make minimum wage, though I imagine if you raised it to $15/hr today, that would shift as there are a percentage of people now making, say, $12-13/hr who would then suddenly become minimum wage workers simply by definition.
Interesting observation: Look at the race and geographic distribution of those most affected by minimum wage and compare to how those areas tend to vote. They appear to vote against their own economic self interest…..but that’s another discussion out of ATH’s scope, if you ask me.
3) Looking at the number of working families on government assistance, you can make a reasonable argument that companies that pay minimum wage (or less for students, employees who make tips, etc.) are essentially being subsidized by the government (i.e., taxpayers).
Study here (warning, PDF download): https://laborcenter.berkeley.edu/pdf/2015/the-high-public-cost-of-low-wages.pdf
Your point 3 is very good: If people make less than living costs on minimum wage, despite working to find better jobs, and thus depend on food stamps, government essemtially subsidizes the employers.
Minimum wages destroy career progression. For the vast majority of young people, a minimum wage job is their first step in the career ladder. It is where they learn to be productive and offer something of value to an employer.
Raising the minimum wage means that employers will hire better qualified applicants thus shutting out those who really need that first job; the unskilled. There is empirical economic proof that the minimum wage hurts the very people who you think it is supposed to help by creating artificially high unemployment among young minority job candidates. If you want to learn more about the destruction caused by a minimum wage, just read anything by the renown economist Thomas Sowell.
@Steve: So propose a carve-out for “young people.” How would it work?
I’m a Libertarian so I’m not in favor of any government intervention in the market for any group. You can’t “take care” of one group without harming another group. It becomes a never ending cycle of who is better at lobbying for government goodies.
The hidden reason why the minimum wage is an issue is due to our country’s monetary policy that inflates the dollar relative to other currencies which results in jobs going overseas. We have become a nation driven by financial manipulation/shenanigans that has resulted in the continued accrual of wealth at the top. By necessity, this has resulted in those at the bottom faring worse and worse.
To get to the root of the problem, we have to stop printing worthless money and go back to the gold or some physical standard of money. If we had dollars that actually held their value then the minimum wage issue largely goes away. Plus, jobs in manufacturing and other industries stay home.
I used to be a Libertarian. I even ran for my State legislature on the Libertarian ticket. I stopped calling myself a Libertarian, because I had some questions that neither I, nor any of the Libertarians I spoke with could answer – and some of these folks were the thought-leaders of Libertarianism.
One is the one I asked above: If businesses are allowed to externalize costs, doesn’t that mean that the rest of us are paying costs we get no benefit from, against our free will?
In a free market, how would corporations even exist?
Why should the government be involved in money at all? Shouldn’t there be a free market in money and whichever money people like best is the one they use?
“You can’t “take care” of one group without harming another group.”
That seems to be one of those assumptions that entire arguments (and sometimes policy making) are built on — without any consideration about whether it’s really true. Take social security. It takes care of people. We could suggest SS hurts younger people that pay into the system — but does it? I don’t think so because the recompense is delayed.
The reality is that our entire economy depends on government distinguishing one group from another to compensate for the way markets create selective disadvantage.
It’s why we have government. I think you can argue a particular case of intervention, but I worry when an argument is made based on a blanket assumption that ANY intervention is wrong.
I’m a capitalist. But I don’t believe policy making should be left to “markets” any more than I believe my veggie garden should be left to the weather or to groundhogs. I install protections for my tomato plants, just as I expect my government will install protections for my neighbors that need them.
“renown economist Thomas Sowell.”
But there’s a problem…
In today’s culture, most low-middle income folks don’t even know or care about Sowell or his factual proof about the multiple levels of societal damage minimum wages laws create. Same with NYC’s famous “rent control” laws that created more suffering for the very people said law was supposed to help.
Speaking of NYC, just look at all the celebration that occurred when AOC literally chased thousands of Amazon jobs out of her jurisdiction…all the while her constituents cheered and crowned her the queen of the job destroying socialist movement.
While socialist politicians LOVE minimum wage propaganda as a tool to garner more votes, economic reality always comes home to roost by punishing the poor and unskilled.
Supporting minimum wage hikes is wonderful virtue signaling and it certainly allows people to appear like “care”. Thus, I find it interesting how people conveniently ignore how much longer bread lines get due to such policies.
Minimum wage doesn’t pay for TRUE value received, it is forced pay-for-time…9-to-5 clock watchers LOVE this. Who would you rather have as a co-worker?
I’ll take Sowell and Friedman as valid sources covering decades of documented evidence on this subject over opinions/feelings any day.
Economists who argue against a higher minimum wage often make analogies to what would happen if the government mandated higher prices for consumer goods.“If the government fixes a higher price for soda than people think it’s worth, they will buy less soda.”
But employers don’t hire people because they’re nice to have. They hire them to do jobs that need to be done. A higher minimum wage does not reduce the number of jobs that need to be done.
Of course, the higher payrolls eat into profits (from where else would those funds derive?). And of course companies that are marginally profitable now will find themselves under water and forced to become ex-companies. But if there’s a demand for the goods and services those companies used to provide, new companies will step in to satisfy it, and hire the workers they need to do the jobs that need to be done.
It strikes me that the people who argue that the market alone should decide what workers at the lower end should earn are often the same ones who blame the social safety net for providing disincentives for people to look for work.
Can’t have it both ways, guys.
I could agree with your point that businesses should “find a way” to pay the higher wages.
But doing this now is asking businesses to come up with extra money for labor after seeing their cash flow disrupted, their saving burned through, and their operations massively restricted.
Maybe a $15 minimum wage will be an ok idea someday (although I still think a national law for it is worse than states doing it), but right now, it will be hitting many small businesses while they are down and it’s gonna be a death blow for too many of them.
You are being incredibly generous with OPM – other peoples’ money.
“Of course, the higher payrolls eat into profits (from where else would those funds derive?). And of course companies that are marginally profitable now will find themselves under water and forced to become ex-companies. But if there’s a demand for the goods and services those companies used to provide, new companies will step in to satisfy it, and hire the workers they need to do the jobs that need to be done.”
And then those companies will also go bankrupt.
Math is relentless. If in goods and labor the product or service is one that not enough people will buy to be sustainable, then the business dies. And when the cost of labor goes up, prices must go up as well, and then people buy less and it becomes a death spiral… and then nobody’s employed by that business.
@David Hunt, If in goods and labor the product or service is one that not enough people will buy to be sustainable, then the business dies….
I do not understand this statement at all. Why would you even open business like that in the first place?
Cannot “provide product or service is one that not enough people will buy to be sustainable”????
A company can be a perfectly viable enterprise at, say $7 an hour, but fail if it has to pay its employees $15 an hour.
So which is better for people? A job that pays $7 and has a chance to not only build self-worth but skills that can lead to advancement (and, in parallel, increases in salary) or a job that cannot possibly justify itself financially – and is thus eliminated entirely? Along with, potentially, the business itself?
@David: Why not just lower the pay from, say $7 to $4 an hour so the perfectly viable enterprise can be more profitable (good for the owner) and hire more employees (good for workers)?
It’s a circular argument either way. The national debate falls on one assumption or the other: Either employers need to pay less so they can stay in business, or workers need more pay so they can stay alive. I’ll reduce this as far as I think it can go: In the hierarchy of human needs, being able to provide shelter and food ranks higher than being able to run a viable business. A failed business owner can always find a job.
I don’t begrudge anyone the right, freedom or motivation to start and run a business. But suggesting that if workers will just buckle down and accept $7 an hour, some employers will bless them with “advancement,” greater “self-worth,” new “skills,” and — yes! — maybe “increases in salary” — that sounds great.
But you’re creating a phantom benefactor whose existence you’re asking us to believe in: The employer who is as concerned for the welfare of their employees as they are about themselves, their business and their profits. But the fact is, we live in a time when employers are shoveling growing profits into their own pockets. They’re not plowing them back into the economy. (Please spare me the rejoinder that “not all businesses do that,” because not all workers make a living wage.)
It’s too easy to advocate for, and excuse, those who embody what’s great about America — “the dream” of success and wealth. It’s un-American to suggest those that run businesses should face any constraints. And that leads to often cheap shots at workers.
So let’s try an experiment: Raise the minimum wage everywhere to at least $15 and let’s see what happens. I don’t believe economists on either side of the argument. But I do believe in American ingenuity — the ability to thrive in tough conditions.
And since shelter and food are higher in the needs hierarchy, let’s start with an easier variable: Let’s turn down profits so more workers can eat and sleep in a warm bed, because they’ve got nowhere to go but up. Any businesses that fail, well, there’s always a minimum wage job for their former owners.
So, would you support the employer provide shelter and food with a wage below the mandated minimum wage? Something like the Chinese dorms for their factories? I personally would not like it, but it is a solution.
@Paul: I don’t think building “company towns” would be wise, for a lot of reasons.
“But the fact is, we live in a time when employers are shoveling growing profits into their own pockets.”
That’s a different issue, and IMHO brought about by the MBA craze and quarterly returns uber alles. Plus, as you and I have discussed many times, a perceptual shift from employees being assets to be brought along and nurtured, to an expense to be minimized.
If a bagger’s wage goes to 15, then the cashier will need to be bumped up. And then the assistant manager’s wage will need to go up. Wages will be forced to spiral up, and then prices will need to be raised.
We are already facing food inflation:
Gas prices and associated energy costs are rising. And that affects the costs of everything.
Weimar Republic, here we come!
There wasn’t a link to reply to Paul, so –
Why on earth would there still be jobs for people to put things in bags in supermarkets? That’s entirely because companies in the US can afford to pay almost nothing, because the rest of a ‘living’ wage (which is debatable) is paid by state and federal governments and charities. Socialise the losses, indeed! We (Australia) have managed to either combine the jobs (cashier and bagging), get the customer to bag the items, or have automated checkouts since the 80s, and the world hasn’t come to an end.
You can’t tell me that the people paid to stick things in bags aren’t as smart as cashiers; cashiers, for the most, just wave things past a scanner anyway; it’s not rocket science.
We don’t need jobs just for the sake of jobs; and we certainly don’t need soul-destroying jobs that can easily be automated and pay next to nothing, and effectively make the rest of society subsidise that employer because they refuse to pay enough so that their employees can survive.
Some descriptions of the treatment of workers in the US make me wonder if the statement that the US is a third-world country doesn’t have an element of truth.
What I would like comments on is the concept that a “minimum wage job”, which I think almost no one will argue includes fast food workers, possibly wait staff (additional tip income may negate that argument) and other almost-temporary jobs such as entry-level retail positions, were primarily designed to be the first entry level job for teenagers and those entering the workforce for the first time, presumably still living at home, single with no dependents. These sorts of jobs were generally considered to be a source of discretionary income for such teenagers and the like; moreover, they also had minimal/no benefits and frequently were not even 8 hours in duration per shift nor 40 hours per week. THEY WERE NEVER SUPPOSED TO BE THE SOLE SOURCE OF INCOME TO SUPPORT A FAMILY. Why has that concept now changed to the “Living Wage” argument?
What has occurred is the gradual increase in minimum wage has made these positions “attractive” to older workers, freezing out the very teenagers that these positions are designed to employ, arguably being a main contributor to the much larger unemployment numbers in this population group.
Our Norwegian colleague above failed to include in her argument is that the price of a Big Mac in Norway is likely 50% or more expensive than the equivalent item in the U.S. – similar price hikes in the absence of any price cuts in production will have to occur in the U.S. to maintain parity should the minimum wage increase by such a vast amount, resulting in less people actually buying that Big Mac and the need for the higher paid employee being made moot.
I will not go into the exponential rise in automation innovation occurring ranging from point-of-sale kiosks to the “robot burger maker” effectively making the need for these high-paid entry level workers null and void.
No one has shown me an economically sound argument for the USD15.00 per hour benefitting anyone aside from liberal pandering for social “change”
The price of a Big Mac seems to vary a bit both here and over there, but a reasonable assumption from looking at the McDonalds website is $ 5 for a burger (no menu or fries) in the US and NOK 55 in Norway. At an exchange rate of 1 $ = 8.6 NOK, the Norwegian burger is 28% more expensive, not 50%. Some of that is attributable to labor costs, but much also to more expensive ingredients from our more protected and smaller scale agriculture (which has some benefits regarding animal welfare and use of antibiotics in livestock).
True, higher labor costs may result in more automatization, but as I argued above; keeping low wage jobs just to keeping people employed is really a luddite argument, which runs contrary to the main driver behind the industrial revolution and the wealth of our civilization: To replace manual labor with more productive machines.
(BTW, I am male :)
I will not go into the exponential rise in automation innovation occurring ranging from point-of-sale kiosks to the “robot burger maker” effectively making the need for these high-paid entry level workers null and void.
No one has shown me an economically sound argument for the USD15.00 per hour benefitting anyone aside from liberal pandering for social “change”
Correct. It is pure virtue signaling and showing off how generous people are – with other peoples’ money.
@David Hunt, IMHO and with all due respect, sir, it seems to me making the statement “No one has shown me an economically sound argument for the USD15.00 per hour benefiting anyone aside from liberal pandering for social “change”” looks as though you have not done any research whatsoever on this subject. Again, with all due respect.
“… with all due respect…” = with no respect at all. OK, fine, I can live with that.
I have done a lot of research, and what you (and clearly others) object to is not that I’ve not done research, but that I’ve done research and – shock! – come to a different conclusion than you did.
You don’t want to hear my opinion. You want to hear YOUR opinion coming out of my mouth (or keyboard as it were).
1. There are cities where $15 is needed given the cost of living. However, giving $15 an hour to someone in Boise, Idaho is probably worth a lot more there. There should be some sort of allowance for the cost of living in an area.
2. As has been pointed out, minimum wage jobs were not intended to be permanent, life sustaining jobs. They were for for seniors, part-time workers, or those getting their foot in the door (younger workers). The fact we have so many stuck in minimum wage jobs on a full-time basis tells me we have a bigger problem – a lack of educational support for those currently in school or those who fell through the cracks.
I agree that the minimum wage in many very expensive to live in cities should actually likely be well above $15. But in many rural areas, there are actual business owners and their families running small businesses where they themselves aren’t making $15/hour. And yet they love their business and doing what it entails.
The minimum wage as a one rule for all federal mandate is just NOT the way to do this. In rural areas it will harm people it means to help and in urban areas it won’t be nearly enough.
This is why we have a FEDERAL system. We need to maintain that, because I would never choose to live in California because even doubling my salary (which is a good salary). To move there would destroy my quality of life. Basically I wouldn’t be able to afford a house and would go from a negligible commute to a horrific one.
This country is not ready for one size fits all national laws for everyone. In fact I think the desire for national laws for everything is the largest driver of our fracturing of our political discourse.
I recall seeing study done a year or so ago that showed the near impossibility of even being able to put a roof over your head in pretty much the entire U.S. when your only making the local prevailing minimum wage. Oh yeah, no benefits as that minimum wage job limits your hours to just below the threshold where benefits would kick. So someone stuck in a minimum wage job is going to have to work multiple jobs just to survive. Oops! Your employer doesn’t give you a fixed work schedule, instead changing it on a weekly basis so even being able to hold down a second (or third) job is next to impossible. Don’t think that this is only the predicament of those folks who barely made it out of high school (or dropped out); recent college grads are living through this.
@Nick and @J: This idea that wages can be lower in cheaper cities needs a little fleshing out — because it doesn’t seem to wash. Have you got any data?
According to one report, the least expensive city for renters is Toledo, OH – $550/month.
It seems that best-case our $8.75 wage earner needs to come up with $550 per month to live in the lowest-rent city in the country. Most generously, at 30% of total income, our earner has $437.50 available for rent or a mortgage.
At a $15 wage, that same worker would have $750 for rent. The chart of lowest-rent cities suggests there are three affordable places: Toledo, OH, Memphis, TN, and Glendale, AZ.
As for who minimum wage jobs are “intended for”… please explain what your assumption is based on?
It makes me sad to see someone who is so thoughtful make such wrong headed statements. The reason a $15 minimum wage is bad for everyone are legion, but the most terrible effect is on people. Your proposal would legislate people who cannot generate at least $15 worth of value to a life of poverty and dependence. Study after study has shown that getting that first job, any job, is a major factor in staying out of poverty. Given the state of public schools in many parts of the country, and the tremendous amount of money that $15/hr represents in much of the country, your proposal would condemn millions of people to lives of poverty, despair, abuse, and all of the social ills that come with it. A large dependent class is exactly the desired result of the people in Washington who are putting these policies forward
I’m sorry, you are going to have to turn in your dyed in the wool Capitalist card until you can see past the empty promises and false arguments of the coastal elites.
@Brian: Thanks, I’ll hold on to my card.
“Given the…tremendous amount of money that $15/hr represents in much of the country…”
Given?? Say what??
“The reason a $15 minimum wage is bad for everyone are legion”
I haven’t encountered one reason yet. Enlighten me.
These are all interesting comments and have merit. I think, however, the issue of helping people to earn a living wage is not as simple as raising the minimum wage. Do we need to get these people above the poverty line? Is this everyone’s responsibility? YES to both! I think we are missing the main point here, though. Why are heads of household and other main wager earners working in minimum wage jobs? These are supposed to be very basic, non-skilled, low requirements jobs, hence the word minimum. The answer here is to ENABLE the heads of households and main wage earners to move up the wage scale by educating them and otherwise help them to EARN a higher wage, not by ENTITLING them to a higher wage at a lower skill level. The second fallacy here is that the government should not be forcing employers to do something (i.e. raise minimum wage), rather enticing them to provide solutions, e.g. offering tax credits for investments in skills training, further education, etc. This way the employer (and the government) is getting something back on his/her investment like a higher skilled workforce, higher efficiencies, maybe more innovation, better employee retention, or a more attractive work environment. I think we all agree on the objectives, we just need to properly understand the more realistic and effective ways to reach them.
Speaking of Sowell:
And an excellent and short takedown of criticism of “Supply Side” economics:
Trickle Down Theory and Tax Cuts for the Rich
Higher min wages mean less people below poverty line. That should be the goal. What good does it do to have more people below the poverty line, but some of them working??
To play Devil’s Advocate:
I don’t see how simply “raising the minimum wage” is going to do anything to alleviate poverty, because you’re not solving the underlying issue – that there’s a class of unskilled jobs that nearly 100% of the population can do. It’s simple supply and demand really – these jobs are always going to pay the least amount possible. This is the reason why surgeons are paid well and people who scrub toilets generally are not.
Even if we mandated $15/hr minimum wage, we’re still going to end up where we are now: $15/hr won’t be enough because we aren’t addressing other underlying issues as well.
If that were true – that jobs that pay well are skilled, and low wage jobs are not – why are train drivers paid more than teachers? Labourers more than people working in child care?
In Australia, the people who care for the elderly – apart from the registered nurses – are paid less than the people who clean the aged care facility where they work. One has a TAFE qualification, the other does not.
In Europe, working as a waiter is a respected position; this is not the case in the US.
All people deserve respect for their work. At a minimum, respect is a living wage.
I disagree with “can’t have it both ways”. I think it is a consistent principle to be against government intervention in the setting of wages or incentives not to work.
A national minimum wage makes no sense as each local market will have different economic factors determining wages. CA has 8 of the top 10 most expensive places to live in the country. You could argue that their minimum wage should be $30/hour. While in rural areas $15/hour is a decent salary.
The social safety net definitely lowers the incentive to work. Plus it encourages illegal immigration which, ironically, push down wages as employers of illegal workers ignore any government mandate.
@Steve: Like CA, the cost of living in MA is high too (we have some of the highest rents and housing prices in the country). Sure, it MIGHT (big MIGHT) be a little (maybe a tiny bit) cheaper if you live in the country/rural area, but then you will absolutely need a car because the rural areas lack any good public transportation, and having a car is expensive. Even in the rural areas here the rents are high, and then because there’s no public transportation or at best, poor/inadequate public transportation, you have the added expense of a car so you can get to work.
The local Wal-Marts in my area don’t pay a decent wage, and the local newspaper ran a story last year about the employees living in their cars (sleeping in them in the Wal-Mart parking lots and getting a break from the local cops so they’re not forced to move their cars) because they can’t afford housing AND because the waiting list to get Section 8 benefits is YEARS long. We need a stronger, better social safety net, not less. In that same article, one of the managers of these Wal-Marts was quoted as saying “I’d pay them $2.00 per day if not for that pesky minimum wage law”. Wal-Mart is no different than any other employer–they hire people because they need them to do the work, but they don’t want to pay them. Wal-Mart isn’t hurting, and they could afford to pay their employees more, but chose not to–easier to direct them to apply for government benefits (Section 8 housing, food stamps, etc.), which means the rest of us are subsidizing Wal-Mart. I’m sure that they’re one of the companies that benefited from the huge tax cut to corporations a few years ago. Why not put some of that money into the workers?
As someone who has worked up and down the economic scale, I can tell you that the employment situation for most people really sucks. A couple of jobs ago, I took on a contract job through a temp agency. It was terrible. I was making what some people would consider good money – $25/hr – but the very poor medical insurance cost more than 1/3 of my check. On top of that, the company used one of those FSA administrators that CHARGED for keeping money in the account! I usually do the kind of work where I get paid to travel, so the normal traffic that other people put up with daily was just more time when I was losing money. The final straw was when the company had a party to celebrate an achievement, one that the contractors contributed to gaining as much as the regular staff did, and the contractors were told to keep working while everyone else got to have fun.
Like others have suggested, I voted with my feet. The only reason I have that ability is due to having used taxpayers’ money to get myself educated – grants, student loans that were paid off by the taxpayers, and tuition reductions and subsidies due to being, at various times, on active duty, a veteran or changing careers. My fellow Americans paid for 100% of my education through HS and at least half since then. Thank you!
From my experience, the focus should lie on education. Jobs that CAN be done by robots SHOULD be done by robots, and the wealth generated should be used to provide education and basic medical care for us humans.
Again: Education and basic medical care are INVESTMENTS in society that pay big dividends almost immediately. They are like any other forms of infrastructure – they are necessities for keeping the whole economic machine (as Ray Dalio likes to call it) running smoothly.
I’d also like to second a comment made earlier about working in the Trades: I have taken my son around to various education fairs, and I meet lots of representatives who are trying to recruit people into apprentice programs for what are traditionally called “blue collar’ jobs. They are CRYING for people. Some of the apprentice programs pay $50K/year while a person is learning the job! And, since many of them are unionized positions, the benefits are pretty good, better than what most “white collar” people get.
I’ve mentioned in some threads here before that I have Bachelor’s degrees and Associate degrees. The career I have now requires only a two-year degree to get into the business, and of all of the careers I’ve had, it pays the most, is the most satisfying and has the least amount of workplace drama.
The career is called Biomedical Equipment Technologist, or Healthcare Technology Manager.
Wouldn’t increasing wages also increase taxes paid? Isn’t it possible that raising the minimum wage really about helping people at all but finding a way to suck more revenue to DC while enjoying widespread praise?
Wouldn’t increasing wages reduce the number of jobs? This would lower taxes paid to the Federal Government. (The District of Columbia has its own sales and income tax system like many of the cities and states that would benefit from increased resources.)
Isn’t it possible that denying the minimum wage isn’t about adhering to an ideal system of liberty at all but maintaining a way to suck more revenue to the ultra-wealthy while enjoying the favor of a militant base?
Sorry, I have to comment about the philosophy of keeping some Americans in poverty just to try to disincentivize illegal immigration. That’s what rational people call “cutting off your nose to spite your face.”
Do people really have so much hate for others who are trying to better their situation that they’d rather take away the safety nets that Americans rely on to get through hard times so they can get back to work later?
What’s ironic about this point of view is that most of the people who express it claim to be “capitalists.” But it’s actually the opposite of a capitalist perspective. This idea is based on a zero-sum-game belief that the only way some can win is if others lose. Capitalism, at least the version that has made me rich, is based on the belief that everyone gets a bigger “slice of pie” because we keep making more and bigger “pies.”
My work life, as have described, is an example of this truth. I used other people’s money to get all kinds of great education, and have paid back at least 100x into taxes and into society through the wealth that I have helped create. If that is not what investors mean by “leverage,” then what is?
Social safety nets are an investment in society. They keep people from falling so far they cannot get back up again. Every single person in America who pretends to have built themselves up through “rugged individualism” has benefitted greatly from the taxes of others.
“Social safety nets are an investment in society.”
Without taking a stance what the right amount is (it depends on the country and I don’t live in US), I am in favor of a high enough minimum wage that it allows a modest but decent living standard within a reasonable amount of work hours per week.
For me the main reason is psychological.
In Europe where I live the health care benefits and social support are generally more generous than in the US. If you don’t earn enough to live you can usually apply for extra support to get by.
However, earning your living yourself as salary is simply much better for the self worth. It avoids both the bureaucracy and the mental hurdles to apply for various kinds of support schemes. And a decent wage means less people being financially totally devastated when any small thing goes wrong – say the washing machine breaks down and you need a new one.
I think the minimum wage is an important issue, the exact number is open to debate but represent society’s value of the individual. This sets the floor and standard of respect for everyone at all wage levels to make a living through their own personal efforts. LOOK, Capitalism is self disconnecting from the issue. It does not care about people. It will work in a slave economy, it will work in a market economy and I am sure if the 14th amendment (among others) did not exist, ANYONE could (and would) be kidnapped off the streets and conscripted into slave labor if the business model supports it.
Thomas Sowell on the minimum wage:
Thomas Sowell vs Statist on Minimum Wage Laws
Thomas Sowell – Minimum Wage Exploitation
Walter E Williams – The Effects Of Minimum Wage
Walter Williams DESTROYS Myth that Minimum Wage Prevents Poverty
Walter E Williams – Minimum Wage, Maximum Damage
I could go on.
All your good intentions do harm. And like all Anointed* the mere fact that you MEAN WELL cannot sunder from reality the fact that people are harmed, and minorities disproportionately so.
Time after time after time minimum wage laws end up destroying more businesses and jobs than they create.
* Vision of the Anointed by Thomas Sowell
@David Hunt: Who anointed Thomas Sowell and Walter Williams?
@David: BTW, I admire a lot of Sowell’s work, but I find that as he has aged he has reduced himself to a one-trick ideologue more concerned with consistency in his philosophy than concern about real issues in an uncertain world.
You complain about ‘anointed’ on the other side? Who exactly? Then expect us to take the arguments of Sowell and Williams because??? Are they anointed?
Well, considering that these two men’s livelihoods involve studying economics.
And by Anointed, using Sowell’s term, I mean people who MEAN WELL – as I assume everyone here does – but whose involvement stops at the enactment of the desired policies that feel good. Nobody looks at the results.
Supply and demand is ruthless. When the cost of something – labor – goes up, it gives employers every incentive to REDUCE THAT COST. And if costs can’t be reduced enough, the wage for those workers goes to the actual minimum wage: ZERO.
An individual working full-time should be earning an income that is above the poverty level. Call it a living wage, if you like. A person working full-time BUT NOT earning above the poverty level should receive a gov’t provided wage-subsidy ensuring that his/her work ethic is properly rewarded. The federal Earned Income Tax Credit benefit is designed to address this situation. It needs to be expanded and replaced with a system that delivers the benefit in a more timely fashion. A smart, targeted wage subsidy program should be goal.
The minimum wage DOES NOT serve that purpose. It’s an antiquated and ineffective solution to the problem. First, it’s scattershot rather than targeted. As a previous commenter noted, a large portion of the beneficiaries of an increased minimum wage are part-time workers who don’t want full-time employment. Furthermore, they often live in households with substantial incomes. High school & college students working part-time are good examples of those who “win” in this scattershot approach.
Reducing poverty is a societal goal. Consequently, the cost of poverty-fighting programs should be paid for by ALL taxpayers. The minimum wage, however, places the burden on employers only. And that’s one reason why many politicians like the minimum wage; it disguises the public cost as a private one and spares individual taxpayers of higher taxes.
It is reasonable to ask, If there is a better and more effective way to help poor families, why is the focus only on the minimum wage as a means of increasing the incomes of the poor? It’s because the main proponents of minimum wage increases – – namely labor unions and their friends in state legislators and the Congress – – aren’t really concerned with reducing poverty. If they were, they would promote a true “living wage” rather than the paltry minimum wage increases they typically suggest. Their real goal is to increase wages in general. Raising the minimum wage necessarily puts upward pressures on all other wages. That’s why they don’t care that the minimum wage is an inefficient and effective mechanism to help poor families.
@Gregg: I like your focus on eliminating poverty. You make a good case for shifting the cost to all of society (govt aid). Most of the debate everywhere about minimum wage is highly focused on the costs to employers and workers. You’ve kicked the issue up a notch.
Government has no legitimate authority to set minimum prices on unskilled labor or anything else.
Furthermore, minimum wage laws do not require any employer to give anybody a raise. Minimum wages laws say that jobs paying less than the minimum are prohibited. The result is that anybody whose labor value is less than the minimum is not allowed to work. This is not helpful to unskilled people who need a place to start. No one can get to the top of the ladder if they’re not allowed to step on the bottom rung.
I’ll go back to the original article and the addendum where Nick argues $15/hour is not livable wage even in the lowest rental area (Toledo, Ohio). First, that list was for the top 100 populous cities, so, not exactly rural. Second, when I look at available apartments in Toledo, I see a 3 bedroom in ‘Boulder Creek Apartments’ for $979 ($326/bedroom) and a 2 bedroom in Ottawa Landings at $700 ($350/bedroom). This is certainly within the 25% of income for rent ($364 per Nick’s calculation).
If you are working at minimum wage, you will likely need to find room mates, get a very reduced cell phone (if at all – definitely not the latest iphone with unlimited data), use public transportation, eat frugally, limited entertainment, etc. It is not the life of Riley, but it can be done.
Where it gets difficult is minimum wage with a family (be it with one or two wage earners). I tend to side with other arguments already stated that minimum wage was not meant to be a livable wage. My sister worked at a hamburger joint for minimum wage as a teenager and it allowed her to have some spending cash. I mowed lawns (and probably made a bit more than minimum wage). I also spent some time in the UK as a teenager and worked at at a restaurant. They had (maybe the UK still does) a lower wage for those under 17(?). As a recipient of the lower wage, I certainly felt that was unfair since I was doing the same work for less money, but this is how they tried to combat the ‘teenager extra cash’ vs ‘person trying to raise a family’ dilemma.
Where I live (major US city), I don’t think a true minimum wage exists. Even the city’s life guard hourly rate is $11/hr. Dairy Queen is $12/hour. Why? Because they couldn’t get enough people at minimum wage. So, even without a government mandate, businesses are raising their wage to hire employees.
“As a recipient of the lower wage, I certainly felt that was unfair since I was doing the same work for less money, but this is how they tried to combat the ‘teenager extra cash’ vs ‘person trying to raise a family’ dilemma.”
That’s something that’s never made any sense to me. Why is the work of a teenager any less valuable than that of a person with a family? People get paid for their work, not because they have X number of mouths to feed.
@Paul: I read your comment again and can’t help pointing out another point you made that confuses me.
“minimum wage was not meant to be a livable wage”
Where does that intention appear in any minimum wage law? What’s the point of setting a minimum if not to ensure the wages are livable?
Hello Nick – thanks for calling me out, as I like to have discussions around facts. So, I did a little digging, to support (or not support) my view that minimum wage is not intended to be a livable wage.
I am not a lawyer, and I certainly did not spend hours trying to make sure what I uncovered wasn’t overruled in a court or in a state etc.
I went to https://uscode.house.gov/view.xhtml?path=/prelim@title29/chapter8&edition=prelim. In that document, it is certainly implied that they recognize the need for a wage to cover “the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.” However, it also says that the secretary of labor should “take into consideration any changes which may have occurred in the cost of living and in productivity and the level of wages in manufacturing, the ability of employers to absorb wage increases, and such other factors as he may deem pertinent.” So, I can see where the intent is there, but there is the (unfortunately typical) softening of the directive based upon other factors.
So, what I conclude is that it is not ‘legally required’ to provide a livable wage, but that was certainly the main driver.
As for what is the point if not to ensure wages are livable. Well, that is the rub, isn’t it? I don’t think a typical teenager looking for a summer job needs to earn a livable wage – they just want extra cash. And, thus, an employer should not be forced to pay a higher amount for a person easily willing to be paid less. Similarly, as my experience in the UK, it was unfair for me to be paid less just because of my age. It comes down to there are people willing to be paid less than others, based upon their circumstances. And this feeds into my view that a national minimum wage is not needed due to the various costs of living. I _might_ be convinced there should be a wage needed for people to have a livable income, but I can’t be convinced it is one amount that fits all across the nation.
I will also reiterate that a few of the articles referenced are not putting these workers in a ‘livable wage’ scenario. They are pulling data of median and mean costs in an area. To me (and I’m sure others have different thresholds) a minimum wage does not enable you to afford a single bedroom apartment at the average rate. It affords you to have minimum housing, food, etc. What is ‘minimum’? I don’t know, but I had friends out of school living 5 people in a two-bedroom (small) apartment in New York. Is that livable? I guess it is since they all survived. Was it ideal – no.
@Paul: Thank you for taking the time to review some literature, as it were, and for making a good case. It appears Congress attempted to balance competing (?) interests, and did intend for wages to cover a minimum standard of living. I guess we don’t know what that standard might be! And as your 5 friends discovered, living solutions don’t have to be desirable to be workable.
“an employer should not be forced to pay a higher amount for a person easily willing to be paid less”
Should a worker be forced to accept less because our employment system permits greed? What worker easily agrees to being paid less? What employer easily pays more? I think these questions really deserve answers, because it seems to me the reality is that our employment system favors the employer with greater leverage.
You’re highlighting — perhaps unintentionally — an issue that some other readers have referred to as an employer’s dishonesty. I view it as unfair leverage. Employers prefer to pay as little as they must. Do they care whether the wages provide a minimum standard of living for the worker? I don’t think many do.
An employer that knowingly offers less than necessary to live can certainly be rejected by the job applicant, who can then go elsewhere to find a job that pays more. But, especially in today’s labor market, I see job seekers swallow hard and take what they can get. “At least I have a job and some kind of paycheck.”
But employers know that for every job seeker that rejects low pay they can find 10 who will take what they can get on the job boards. That’s leverage.
What I mean is, employers seem to enjoy more leverage over the job market than job seekers do. It seems to me employers have more degrees of freedom as they make hiring choices (and decide what to pay). Those degrees of freedom are afforded them by digital, automated recruiting and advertising — which allows them to recruit by the gross. (Think about the proverbial group of unemployed people standing on a corner waiting for an employer to come by in a pickup and select a few for the day’s job. No one asks what they’re going to be paid. They don’t dare.) I think the nature of the employment system gives employers a huge edge when it comes to wages. They can always find someone willing to take less.
Employers will abuse the system simply because they can and because it’s an easy way to enhance profits.
At the unskilled or barely skilled job level, the worker has little choice but to accept what’s offered. S/he has little or no leverage. (We won’t get into who’s to blame for lack of education.) Minimum wage law gives the worker a fighting chance in a world designed to treat low-skilled labor as cannon fodder.
I think your instincts as a teenager were correct. Don’t discount them.
“It comes down to there are people willing to be paid less than others, based upon their circumstances.”
What that really means to me is, they have no other choice.
Now let’s get to what I really like about your post. You like to have a discussion based on facts. What facts do we really have about what constitutes an acceptable minimum living standard? About how much pay an unskilled job is worth? About where housing costs less? About whether a teenager who lives with her folks deserves the same pay as a single mom for doing the same low-level job? And since we’re talking about “how much a worker needs,” why can’t we talk about a standard metric for “how much profit an employer needs” to make?
That last one will stick in many craws. “We can’t limit a business’s profits!” So why do we allow business to limit people’s wages?
The truth is, in spite of huge federal agencies that measure jobs, wages, employment and employers, the data they gather and analyze doesn’t do squat for workers or for businesses. We need better data gathering and analysis and better reasons for doing it. Implied in your efforts to find facts is, What facts do we need to truly understand this?
I tend to get verbose when I flesh through an issue on the fly. Sorry! I don’t know any more than you do, but I don’t like what I see in our employment system.
But employers know that for every job seeker that rejects low pay they can find 10 who will take what they can get on the job boards. That’s leverage.
Exactly. And, IMHO, the solution this is unionization; to level the power in the market of labor.
I know labor unions are toxic in many American’s eyes, but they should not be any more toxic than corporate mergers. Corporations merge to increase their power in the market, e.g. when two airlines merge they do no longer compete against each other for customers or employees. So why should employees not “merge” to increase their power in the market?
@Nick: I think we both see the various conundrums and the lack of an easy answer.
“What worker easily agrees to being paid less?”
Well, we all want to be paid as much as possible, but there are different goals. Mine was to fund a backpacking trip. My sister’s was to buy a used car. We didn’t have the burden of room, board, insurance, etc., so we were willing to accept a lower pay than someone who needs to feed a family of four.
“Employers will abuse the system simply because they can and because it’s an easy way to enhance profits.”
Some will, some won’t. But where you may see greed, I see risk/reward. I have been to quite a few ‘first paycheck’ celebrations where a friend was finally able to pay himself after starting a business (after many months and usually over a year). The business owner is bearing the biggest risk and controlling labor costs is an attempt to lower risk and increase profits. Sure, the worker has the risk of losing a job, but the magnitude of monetary risk is higher for the business owner. If the risk/reward of opening a business becomes too high, then people won’t start new businesses.
When I do some math and investigating, the current minimum wage being offered for unskilled jobs in my area is about $12/hr. Assuming 40 hrs/week (which may not be a reality) and 50 weeks of work, they earn $24K/yr or $2K/month.
25% goes to rent = $500 (I can find apartments in my area in this range)
Insurance = $406 (27yr single male non smoker silver plan – source: https://www.daveramsey.com/blog/how-much-does-health-insurance-cost)
Fed Tax: $214 (no state income tax)
Other: $818 (source: https://www.numbeo.com/cost-of-living/) but realize this assumes some restaurant dining, sports club, etc., so a person on minimum wage should be able to spend less.
So, is $12/hr a livable wage in my area? Looks pretty close (and probably a bit lower if you share apartments). But what happens when the employee is a single parent with two kids? Does the employer need to raise their wage because of the employee’s personal circumstance or should they offer a wage that a single 27 year old would achieve a livable wage? Where is the line drawn? Are they being greedy in offering $12/hr to a single parent with two kids? Are they being generous when they offer $12/hr to a teenager looking for some spending cash? Are they being fair when offering $12/hr to a single 27 year old? It’s all of those – but the employer doesn’t consider themselves greedy or generous, just offering what they need to get employees. And I admit that I don’t have a simple solution for this, but I don’t think the government will get it right, nor do I think unions would, either. The free market obviously exposes the inability for a single wage to fit every scenario. However, the free market should allow people to move up the wage curve with experience and attained skills and for wages to be adjusted based upon demand (as shown in the hourly wage in my area).
@ Paul….And having children??? You are talking about a single person. Do you think you can feed a family of four on that?? Many, many spouses/significant others can’t find work, ESPECIALLY over 50. This was the case before the pandemic.
@Paul: I agree. There is no easy answer. But please consider what you’re calculating: $2,000/mo income to cover $1,979 in living expenses. I’ll even grant that you got all the numbers right. That leaves a $21/mo “margin of living error.” Or 1%.
Would a bank loan us money to start a biz if that’s the margin of error on our pro forma? Maybe, if we can put up some collateral, like our house. The $12/hour single mother with one kid doesn’t have collateral, and certainly can’t build any savings on $21.
I won’t even get into how generous you’re being with a $12/hr wage when many get a lot less, even in states where there is a state income tax.
I do get your point, and I appreciate that you researched the numbers. We both know this is cutting it too close. Not enough people under $15/hr can win.
Then again, not enough business owners can win if they have to pay $15 or even $12 or $10. So what’s the answer? This may sound harsh, but not any harsher than suggesting someone make do with a $21/mo margin of living risk: Business owners can fall back on getting a job if they must sacrifice their business because it doesn’t produce enough revenue to support $15/hr pay. Those workers making $7/hr have nothing to fall back on but public assistance.
I’d like to see all businesses succeed. But I think we have to start by protecting the link at most risk of total failure: the lowest paid workers.
Last point, about “the free market” taking care of things. The market favors the business person who has money to pay workers and thus controls employment. While I might not call it a conspiracy, the fact is that those who effectively control the jobs are getting richer and richer while the rest are not, while they do the work.
This is where the role of government is important. I think that’s where wage policy is warranted and justified. I just don’t know how to make that policy. I do believe policy better than we have now is overdue and absolutely necessary.
@Cynthia – I don’t think you fully read my post or caught my point. The point is $12/hr could be fine for some people and impossible for others (as I mentioned a single parent with two kids). What I think is unfair to the business owner is to have to pay a wage that is livable for every personal situation. Where is that line drawn? Indirectly, it also meant to show that the wage is regional. If you use the website I provided, you can see how much the cost of living varies in various cities, and thus, I would argue, so should a minimum wage.
@Nick – yeah $21 is not much of a buffer, but there were some areas even in that $818 where money could be saved and more room mates is another option. But, then you have expanded the discussion a bit. Should the minimum wage allow for savings or just a ‘livable’ wage? That’s another rat hole as one could have many arguments on a minimum savings. Are the savings to eventually ‘retire’? But that is where Social Security is the safety net. But then we can also see how that safety net is calculated to be depleted by 2035 (or so). Is it enough savings to have an emergency health fund? How much is that? Is it enough savings to have a few luxuries/vices such as cigarettes or a big tattoo? As I said, a rat hole.
@Paul: Yep, a rat hole. But one we’d better figure out as a nation. I wonder how many of our officials and decision makers discuss it at this level??
I remember this topic from a couple of years ago, and I’m glad you’ve re-visited it, given the changes in the economy.
At one time, most of the people working minimum wage jobs were kids–often high school kids but sometimes college kids who were just getting into the job market. If those kids were just earning some pocket money and mom and dad were supporting them, then I could understand the employers’ mentality regarding not paying them more. But today I see more older people (meaning adults of all ages, likely with spouses and families to support) working what are called “McJobs”. And today, nowhere in the US can you rent an apartment on a minimum wage job: https://www.businessinsider.com/full-time-minimum-wage-workers-cant-afford-rent-anywhere-us-2020-7.
I think the minimum wage needs to be higher. Many of those working these jobs can’t afford to live without assistance, meaning that they’re using taxpayer-funded social services (section 8 housing, heating fuel assistance, food stamps, etc.) in order to eke out a living. That means that businesses who don’t pay their help enough have maximized the profits by paying a non-living wage and shifted the burden to the rest of us (taxpayers). We’re subsidizing Wal-Mart, Amazon, McDonald’s, and other big companies who are earning a great deal in profits.
The thing is, if the minimum wage is increased, those who benefit from it will spend it, putting it back into the economy (rent, food, etc.), and thus will help to grow the economy. If you don’t earn enough you don’t have any “disposable income” to spend on non-necessities, and that doesn’t help the economy either. If you’re Richie Rich, you can only buy so many high end designer clothes, so many cars and boats, and the extra money you’re getting from big tax cuts is not going back into the economy (unlike the person who is at the opposite end/lower end, who will then be able to buy more than just food and pay for housing).
I think it benefits ALL of us (collectively) when those at the lower end of the wage scale make more money.
Yes, I agree that one way out of the perpetual cycle of dead-end, minimum wage jobs is education and/or training. So how do we (collective we) help people get there (so they can better their lives)?
“That means that businesses who don’t pay their help enough have maximized the profits by paying a non-living wage and shifted the burden to the rest of us (taxpayers). We’re subsidizing Wal-Mart, Amazon, McDonald’s, and other big companies who are earning a great deal in profits.”
Kinda says it.
I’d like to understand their math. For example, did they use the average price for a 1 bedroom apartment? Which, really, they should not. Even Nick’s chart from the previous post was listing the median rent prices, which a minimum wage worker should not be living in. As I pointed out in my response just above yours, the Toledo Ohio apartment rates seem to be able to support a 40 hour/week at the current minimum wage. I’m sure it is different in San Fran, but this is why I don’t believe a flat national minimum wage is appropriate.
In the article they say you need $19.56/hour for a 1-bedroom rental (needless to say, I think that is a luxury – go for a 4-bedroom with roommates to reduce your cost), but let’s use that value. 19.56*40*4 = $3129.6/month. If we assume 25% of your income is for renting, then their monthly rent is roughly $780. That’s a pretty nice apartment in my area.
I appreciate the Libertarian arguments over the minimum wage. One aspect rarely discussed, though.
Employers cheat. A lot. Not a little. A lot.
I mean, isn’t that the whole point of this Website, except that’s a different kind of cheating, and sometimes self-destructive cheating. Prepare a job-seeker to defend his/her interests when seeking a job.
I live in a seaport. The fish processing plants claim they’re paid minimum wage, but one raid after another shows they’re paying about three dollars an hour, when they pay at all. And the workers, who used to be American a couple generations ago, are all now in this country out of desperation, persecution in their own country, often not in the USA legally.
Sometimes I think Libertarian theory is like Marxist theory. Describing a world where all men are angels. We need rules like minimum wage laws because employers don’t even pay the current minimum wage in many industries, let alone fifteen dollars.
I love this answer. There are thousand of little cuts by which a worker can get their wages stolen. These little rules and tricks add up to a much larger dollar value of crime than, car jacking, burglary and all property crimes added up.
Proper enforcement of wage theft could be its own thread here on this site.
The “free market” is incapable of giving workers a market wage sufficient to meet market prices for the cost of living. Left to itself the market gets you children in coal mines and other 19th century horrors (or Amazon COVID warehouses in the 21st).
Facing this problem is itself the problem. In the last forty years it became the fashion for Americans to look at a problem and say, “no matter what you do you’ll only make it worse.”
If you made it all the way down here in the bowels of the comments let me reward you with a specific book recommendation that will help you see what’s going on: Evil Geniuses: The Unmaking of America: A Recent History, by Kurt Andersen My website here links to the introduction.
@DS: Thanks for that reward. “Don’t do anything” is the rejoinder to too many problems that are founded on the simple fact that our world progresses from one state to the next, often inexplicably (to us).
Sometimes I wonder if “Don’t do anything” really means, “We’re not smart enough or willing to do the work to come up with good solutions so we don’t want YOU trying any solutions” and “We prefer to just stand here in one place, take root, and turn into trees” and “We’re scared shitless of change and progress” and “If we do the wrong thing it’s gonna cost me money.”
“We’re scared shitless of change and progress.”
That’s it in a nutshell.
People were afraid of slaves being free, of black people getting the right to vote, of women getting the right to vote, and so on. Child labor laws?? It’ll destroy our industry! You can’t mandate lead out of gas! Sending electronic mail on a computer? No one will ever waste time doing that! Legalize weed? Preposterous!! Horseless carriages? Scandalous!! Electric vehicles? A pipe dream!
People seem to be wired to assume that things won’t get better and any change will be a detriment. The flip side is that they don’t know what they’re missing out on.
I find this rather ironic since one of the fundamental underpinnings of capitalism is someone taking a risk to make things better: a cheaper product, a higher quality service, a more convenient way of doing things, etc.
The sad part is that people in other countries are watching us, enjoying some of the things that a lot of people here say are not possible.
Someone takes a risk to do something better, faster, cheaper… voluntarily.
This is not voluntary. This is imposed.
@DS: Thanks for the recommendation. It sounds like it will be an interesting read.
IMHO, what you’ve described and what we’ve seen is kicking the can down the road, postponing the inevitable. To me, it means there’s a lack of political will to do anything about it because enough of the important people have lobbying power to ensure that nothing changes in Washington that will help the little guy/woman and/or because it is too difficult to figure out what to do about it.
As for letting the “market” solve the problem, that seems only to be the philosophy when it comes to ordinary people’s employment and wage issues. Washington rushed to bail out companies they deemed too big to fail/too important to fail. If they truly believed in letting the market solve the problem, they wouldn’t have bailed out those companies but would have let the market take care of it (meaning those companies would have gone under).
FDR once said “Okay, I agree with you/support you. Now make me do it.” I think that’s part of the key–there’s no one with enough power or money who can make them do it (fix the problem), or there’s too many who are lobbying for lower wages, less oversight, you name it (whatever will give even more power to employers and less protections for workers).
I’m not convinced that no matter what you do you’ll only make it worse, and I think this could be solved, perhaps not in a way that one or the other gets everything they want (maybe the minimum wage gets increased, but not to $30.00 per hour, e.g.). This country put a man on the moon, won WWII–so things can get done when there is the will to do it.
Portland, ME recently enacted via referendum a $15 minimum wage along with an $18 minimum during times of emergency, like now. The city has declined to enforce the $18 minimum and some companies are not paying it. There are several court cases working their way through the system about this.
I live here and voted in favor of the minimum wage. I have friends who work multiple minimum wage jobs who can barely afford a place to live. Also, I am curious about what will happen. Will prices go up? Will businesses leave? Will the housing shortage become even worse as more people move here in search of better pay? Will the chains close up shop and leave space for independent business? Will there be more jobs since people can afford to have just one (or one and a half)?
It has been interesting so far. Several businesses with multiple locations shut their Portland shops for the winter and moved their employees to their other locations to avoid paying the increased wage. Others have closed permanently. At least one of the temporarily shut businesses has a for lease sign out front which suggests their closure is permanent. A few restaurants have added surcharges and some have raised prices. Several have given up Portland spots to move to other towns, not necessarily due to the wage hike, but I imagine that was one of several motivators.
It’s hard to separate the effects of Covid vs. the effects of the wage increase. Even if the referendum did not pass here, I suspect we would have seen many restaurant closures this winter. Restaurant prices were already going up due to food inflation. Staff was already cut due to Covid. Some jobs (medical receptionists, janitors) were offering higher wages prior to the referendum, presumably because they had trouble finding people willing to take on increased Covid risk.
Anyway, this is an interesting place to watch for those interested in the $15 minimum on a local level.
WE DON’T NEED A MANDATED MINIMUM WAGE??? REALLY?? SERIOUSLY??? WOW! READ THIS! Are we surprised that this has been happening for YEARS now? US companies are SICK! Now it’s permeating the hiring process more and more! Actually makes me sick to my stomach….
I’m surprised that so many people argue against a minimum wage that puts the worker above the poverty line.
For those subscribing to the market dea, wages under the poverty line mean that we end up funding via taxes additional support to those workers, so we are in effect subsidising the business that pay those wages. And subsidising the consumers. Why do we have to subsidise via our taxes the burgers and pizzas and all those products and services built via subsidised wages? And more importantly, those business owners making money from those subsidised businesses.
Yes, there will be an impact on the prices because of labour costs going up, but the market will sort that out. And increased wages (beyond the fact that it’s morally correct) means more income and more expense.
And then our taxes can go to help whoever needs them, because they don’t have a job, not because someone is being subsidised to pay them less than they should.
Also, for an quick analysis of the actual impact of higher minimum wages in low paid jobs, read this twitter thread https://threadreaderapp.com/thread/1350313493229146115.html
Thank you for not shying away from this important issue, Nick, as the political is personal and vice versa! Job hunting doesn’t happen in a vacuum, and I agree 100% with you about the minimum wage, even though I’m in the top 10% of wage earners in this country. Not paying folks a living wage — and full time workers at WalMart needing public assistance — is outrageous, immoral, and hurts us all. I would gladly take a pay cut to see my neighbors living with dignity. Thank you!
I want to thank you, Nick, for your intellectual integrity, as reflected in the serious nature of this conversation.
In today’s United States of America (as we still like to proclaim ourselves to the world), holding such a public conversation without it devolving into grenade-throwing is is no mean feat. The people you’ve attracted to engage with you, each other and these sobering issues—what is human labor and intelligence worth—is exactly the conversation more Americans need to join.
Me—I’ve had the privilege of coaching and writing resumes for 5,300 people in one of the most competitive job markets in the country, Washington, DC. My clients work in every imaginable field and at all stages of their career journeys; they have given me a continually refreshed perspective on the US employment economy and the forces driving it, and how these impact the lives of Americans.
In 1993, I won a national RFP to open the only coaching and resume service ever granted a lease to do business in the Pentagon. I ran that office for 14 years and one on K Street for 5 years. Most of my clients have been leaders in the Defense and Intelligence worlds and soon wind up in similarly senior positions. One of my clients was the Secretary of the Army. However, my proudest professional moment came when a woman who had been a Pentagon toilet-cleaner for 15 years—working at the lowest Federal pay-grade that entire time—hired me to write her resume. I ran into her about a year later on the Main Concourse of the Pentagon. “Sadie,” I asked, “how are you doing?” “Oh, Mister Gabriel,” she told me, “I’ve been promoted twice and I’m being trained on computers.” “God bless,” I thought, “this woman will never have to clean another toilet here again.”
I tell the story to make a few points. This woman had worked at the Federal equivalent of the minimum wage for 15 years. The US Government had not seen fit to promote her or raise her pay-grade even once. Yet she was capable of working on computers. Her story illustrates the fact—and I know it as a fact, because I have seen it play out again and again—that MOST PEOPLE ARE BIGGER THAN THEIR JOBS, yet get defined by their jobs by the same employers who announce with great pride, “Our people are our most valuable asset.”
If “your” people are such assets, then why not treat them, train them and pay them as valuable assets? Too many employers refuse to do this. The evidence: more than half of all working Americans earn $15 an hour or less. Yet, like Sadie, these people are capable of contributing far more than they are asked to do by their jobs—or are permitted to do by their managers.
Politics is not about political parties. It is about power, money, and who gets to decide how they will be used. Right now, if someone needs to come up with $400 cash, roughly 65% of the people in this country would not be able to come up with $400. That is what happens when $15 an hour is considered “way too much” to pay people who are capable of doing and contributing far more than their jobs require them to do. As a country, I think we need to decide: Are people primarily a cost or an asset? And then act accordingly.
Again, thanks and kudos to you, Nick, for opening this conversation. And thanks to all who have joined it.
@Gabriel: Thanks for that eloquent expression of what we really need to be concerned about — how and why “people are our most important asset.” It’s a phrase I throw at my audiences almost any time I do a workshop or presentation for job seekers, executives and HR folks. It’s become a cheap throwaway line that’s given the lie by the way employers treat job applicants every day by judging them only after first reducing them to a bunch of keywords that can be processed by algorithms.
We need a national discussion about how we measure and pay for the skills, abilities and value of people who do work. The minimum wage is just a part of that.
Thanks also for noticing the incredibly high standard of conduct on this forum, and the amazing level of intelligence and discourse. I can’t tell you how proud I am of the people who participate here. Any fool manager could improve the quality of their “people assets” if they were to recruit from this discussion forum!
A good segue for the contents of this very interesting article. Take any political spin out of it, it hits the nail on the head.
If you’ll pardon the idiom, labor just got shafted by the Democrats on the pipeline and the thousands upon thousands of jobs that just got s-canned by the stroke of a pen. Not to mention every American as gas, oil, and electricity prices rise from this and the “Green New Deal.”
Another excellent segue! Midland/Odessa Texas and Pittsburgh, PA. Two great examples of areas with very specific industries.
Pittsburgh decimated by the steal industry and called the “rust belt”. How many jobs have been lost in the steal industry, probably too many to count. How would you like to live in the “rust belt”? Would YOU be “worth” $15/hr trying to find another job and feed a family of four?
Midland/Odessa TX, one of the largest if not the largest area in the country for the oil/gas industry. Soon to be decimated? I don’t think so.
I mention these two areas specifically because an interview was given to the mayors of these cites (Midland specifically) by the PBS News Hour. Although the mayor of Midland is a bit more cautious about green technology and jobs, he knows things, as they always do, have to change and going along and inviting this change with more jobs to come is a smart way to look at this industry. The mayor of Pittsburgh is embracing green technology and listen to his comments about how this has changed the “rust belt” (specifically JOBS that have come from him embracing this inevitable change).
@Cynthia: Thanks for that PBS link. Just as the discussion between the mayors was getting interesting, PBS cut them off! Point taken, in any case.
While I absolutely agree that corporations treat people as “expendable assets” is every job producing $15 an hour worth of value?
As to not having even $400 available – do you really need cable and internet and a new smartphone and and and? Nobody owes you a living where you can have all these things.
Yes David, people do indeed NEED an internet connection. It is now a necessity. Does this idea really need an explanation now “a days”?
Somehow I missed the “Internet access is a right” clause in the Constitution.
Who on god’s green earth said that? I have never heard anyone say that. A little off subject here.. but I’m very surprised anyone would even need any explanation as to why the people in the US (and around the world) would need an internet connection in the year 2021 and beyond. And, yes we have to pay for it, it is not free.
By the same token, there’s nothing in the Constitution about having electricity or plumbing.
Rather than a minimum wage, which coerces employers, perhaps it would be better to have a universal baseline income to get everyone up to the poverty line. Then employers are free to deal with current market conditions as necessary.
UBI has been tried in multiple locations with, shall we say, less than spectacular results.
Reply to David Hunt:
Sorry, but you are totally wrong. I have never seen any poor results, at least not yet.
Everywhere basic income has been tried, in one map.
Meet the mayors pushing for guaranteed income in 30 cities across the country:
Other miscellaneous articles:
I can keep going and going…..
@David: Lenny Bruce once recounted his experience watching a young Hispanic man facing an old white judge because he got arrested for some minor infraction. The judge told the guy he’d have to give up his driver’s license. The guy argued he needed it to go to work. The judge responded that driving was a privilege and a luxury.
Bruce commented to his audience that the judge was clearly out of touch. I paraphrase: “In today’s world, you NEED a car to do your gig! It’s not an option or a luxury!”
I agree no one needs “new.” But everyone today needs Internet and a mobile. Those are not luxuries or optional. Without them, we fall so far behind that we’ll never recover.
And we don’t need the Constitution to grant us all our rights. We do need common sense to respect others’ rights.
You may need a phone, car, etc., in today’s world. Why is someone else obligated to provide them? Everyone needs food and water, and many medicine… why is someone else obligated to provide them.
And to get technical, the Constitution grants no rights. It recognizes pre-existing rights, natural rights – rights that come from G-d. Aside from the Tenth Amendment, every single one of the Bill of Rights is a right of individuals, and is a negative right, i.e., government is prohibited from interfering with them. Not provide them.
Life is not solutions, it is trade-offs. Life has a great many good things, but to get some good things one must give up other good things.
Early in my life I had a roommate – save money on rent. I had cr*ptons of ramen noodles and other cheap food, because I couldn’t afford better. And I learned to be grateful for what I had, not complain that there were those who had more than I.
@David Hunt- “why is someone else obligated to provide them”? Spot on right! It’s this entitlement mentality of “I’m owed something” (be that a job, guaranteed doctors wages for pushing a broom or for flipping burgers, free health insurance, subsidized housing, free daycare, free medicinal marijuana, even my vet bills paid for…..yada…yada”).
One of my local television stations once aired a news story about a 56 year old man who’d worked minimum wage jobs his entire adult life while pursuing some artsy-fartsy pipe dream. He fought back tears as he told his plight of making minimum wage. But that was his free choice. No one forced this guy to be relegated to working his entire adult life at McDonalds, and as much as the theme of the news report was “more social services” are needed, I’m not on the hook to bankroll some guys bad life choices, or his experiments and fantasies.
Societies crumble when someone lacks food, water and life’s necessities. Towns empty, crime increases, people suffer. That’s why electricity and water is regulated as a utility- someone has already tried to squeeze profit out of those services and society revolted- generations ago.
No one expects guaranteed Doctors wages for custodians and food service workers, which happen to be jobs that are far from unskilled. I don’t know if you’ve met anyone you accuse of entitlement. Or perhaps you have…
See, sometimes, experiments and fantasies come true. Whenever any one of us is delighted by good writing, watches Netflix, enjoys Football, listens to music we benefit from someone’s experiments and fantasies.
Specifically, _you_ benefit from someone’s successful experiments and fantasies yet wash your hands of any generosity if they don’t work out. You must be a wizard to know whose dreams come true and whose don’t before they even get started.
In similar fashion, you benefit from clean rooms, homes and office buildings, trash pickup and cheap burgers.
It smacks of entitlement and obligation to watch people ignore the benefits they receive from someone’s passions, risks and dirty labor only to instead heap upon those same neighbors suspicion, bad faith and caricature. Rage can not hide that irony.
The idea that poor people have cable, internet and smartphones has been broken by the wave of people going to school from home (or rather the extreme number of children who can’t because they don’t have access).
Stop telling lies. Just because everyone you know has those, does not mean everyone does.
@Mark: Source of your statement? Here are some I dug up:
This is from 2017, but it says that 62% of those with a family income of <$25k have had cable (the article is about cord cutting, so some have moved off of cable and on to streaming).
This is from 2019, but 96% of adult Americans at that time had a cellphone. The official poverty rate in the US is 10.5% (https://www.census.gov/library/publications/2020/demo/p60-270.html), some do have cellphones.
So, the 'idea' that poor people have cable and cellphones (I didn't investigate internet) is plausible.
You’ve obviously never spent much time in the “hood” based on the do gooder commentary.
I’ve worked the past 14 years there with the poor, as you and others speak of.
I see numerous, and obvious, unemployed young men walking down the street at 10:00 in the morning with tattoos up and down their arms (those aren’t cheap), and talking on $1,000 IPhone 12s, while others jump in front of my truck while I’m on the clock running sales calls, brandishing tire irons and calling me out to engage in mortal combat. I see them in the grocery stores pulling up in newer vehicles, then whipping out EBT cards, and racking up $800-$900 for carts full of soda, strip steaks and T-bones, chips, bread, milk, and cheese. Or they try selling you their EBT cards for cash for tobacco, alcohol, and lottery tickets.
I was standing in front of a restaurant recently waiting for it to open for lunch. A young man approached me claiming to be homeless. He looked like he hadn’t missed any meals, had decent clothes, looked groomed, was smoking a cigarette, and had an IPhone 12 in his pocket. He didn’t ask for spare change, he asked for $5.00. He seemed to be able to have cigarettes and an IPhone 12. I pulled out one of my business cards and handed it to him telling him they’re hiring general laborers at my job. He cursed a blue streak at me, threw my card back, and hoofed it down the street. Work is work, even at minimum wage, which many of these folks have rejected in lieu of a life of poverty and social welfare.
Thanks for the link to this article, Cynthia. Among so many excellent points, one that caught my particular eye was the base salary for writers offered by The New Yorker. Shame on David Remnick and his accountants. I’ve got a friend who makes more as a school bus-driver.
Covid will change how the US employment economy works. More and people will be chasing fewer and fewer jobs. And the jobs that do exist will be less and less secure. Alan Krueger, the former head of the Council of Economic Advisors for President Obama, did a study with a colleague at Harvard a few years before he died. They found that of the 15 million new jobs created from 2005-2015, only 6% of those new jobs were what most of us would think of as “a job”—i.e., a stable rung on a secure career ladder. Instead, 94% of those 15 million new jobs were part-time, with no benefits and no future, or these jobs were contract-dependent and thus time-limited, with no benefits and no future. In short, these “jobs” were essentially short-term assignments and task orders dressed up as jobs.
One of my mentors was a $10,000/day consultant to the Board of AT&T. He pointed out that economic growth depends on how many economic actors are proactively and productively interacting with each other. Anonymous numbers on Wall St. don’t grow the economy. Proactive, mutually productive interactions at human-scale grow the economy. Right now, the rate of new business formation is at the lowest point in more than 40 years, and that was before Covid.
An economy is a life-form. It is alive, as Victor K. Hwang describes in his excellent, wide-ranging book, The Rainforest. He calls it that because, as he points out, a growing and innovative economic culture is not row upon row of agri-business predictability. Potatoes in, potatoes out. An innovative economic culture is far more like a rainforest— i.e., a wild environment of economic “creative destruction” and re-creation, generating what biologists call “hybrid vigor.”
On an individual level—perhaps because my career has engaged me in working closely with thousands of professionials one on one—I have arrived at the judgment that at a personal level, economic growth-space occurs when people trust one another enough to share their insights and ideas, which then form a basis for new business ventures.
Yet even there, referencing Cynthia’s link to the article about reviving the American labor movement, I have often scratched my head wondering why unions don’t monetize the observations and practical insights of their members. For example, when Company Q gets a new CEO who of course immediately decides to cut 8% of the payroll—since the quickest and certainly the easiest way to goose the company’s stock price and/or bottom-line is not to grow the business (since that actually takes work), many CEOs settle for firing people to cut the company’s costs and get the bottom-line numbers to add up better that way. Well, those 8% of its employees who are suddenly gone—they know a lot about what that company does right, and what it does wrong. If they are members of a union and have hands-on experience with what the company does, that knowledge and those observations and insights walk out the door with them. No one captures them. They just walk into the cold wind of being unemployed. Why doesn’t some smart union capture those practical insights and observations? Why doesn’t the union gather these hundreds upon hundreds of observations and sell these back to the company that just fired 8% of its workers? And if the company is too proud to pay to learn what practical good-sense wisdom it just axed, then why doesn’t the union market this collective perspective to that company’s competitors? In short, why doesn’t the union turn fired workers into operations consultants? At the very least, it would give the union’s members the feeling that, “Hey, this union cares about more than my dues payments. It actually wants to know what I think.”
Large organizations act like they have no time for the individual human minds they employ. They stick them in a cubicle, tell them what to do, and that’s about as much as they want to know about them. Over the years, I have asked my clients what happens if they bring a new idea to their boss about how to improve their units. Every time I have asked the question: “Does your boss say, ‘Oooh, Jennifer, that’s a wonderful idea; please remember to bring it up at our next staff meeting.’ Or, does your boss say, ‘Hey, Jennifer, you see this pile of work on my desk? Why don’t you go back to your desk and your pile and please just let me work on my pile.'” Every time I have asked this question—without exception—the answer has been the same: “Oh—it’s the latter.” What this tells me is that the most constructive, useful contributions workers want to make and bring to their managers, never get made. American management acts like it has no time for individual people and their insights. it regards interacting with actual people as “inefficient.”
Right now, the iconic corporate notion is “Talent.” Every employer wants Talent. Well—guess what? All the Talent in the world only lives in individual human beings. There’s no Talent warehouse an employer can call and order up 97 yards of Talent. It doesn’t come that way. It arrives in the people employers hire. And if they have no time to talk with and listen to the people they’ve hired, then they’re wasting a lot of people’s Talent and a lot of their own time. They literally don’t know what they are missing.
Speaking of “talent”… wrote about that:
@Gabe: You’ve delivered the rare insight, idea, suggestion that I always scan this forum to find — even when all the other comments are well worth reading.
You just created a business plan veiled as an indictment of corporate parochialism.
“If they are members of a union and have hands-on experience with what the company does, that knowledge and those observations and insights walk out the door with them. No one captures them. They just walk into the cold wind of being unemployed. Why doesn’t some smart union capture those practical insights and observations? Why doesn’t the union gather these hundreds upon hundreds of observations and sell these back to the company that just fired 8% of its workers? And if the company is too proud to pay to learn what practical good-sense wisdom it just axed, then why doesn’t the union market this collective perspective to that company’s competitors?”
Man, what an idea! What an insight. Unions institutionalizing the recycling of what corporations ignorantly throw in the garbage — and selling it back to them! Is there a union reading this? Is there a board of directors reading this???
Nick, I hope there are union leaders who reads your site regularly, as I do. As a proud, independent-minded Brooklyn-American (is there any other kind?), I feel kindred to your “Can we please cut the crap a little and talk about what’s real for real people?” approach to these very consequential issues and to your readers.
After over four decades in the DC area, I’ve come to see just how little political imagination exists in the “national dialogue” as a bunch of grey-haired white guys try to remember the latest set of tired ideas to argue about. The phrase “a failure of imagination” keeps being repeated about massive failures, from the 9/11 attacks to the pandemic. The words “imaginative” and “Washington” do not stray into the same sentences, at least not in the mouths of the DC elites, more than a few of whose resumes I have written. It is, in a word, pathetic.
Of course, unions can do this! Do they do it? No, they don’t. Why don’t they? Because everyone in Washington thinks they understand the game. Unfortunately, they do—but too often that’s about all they understand. It’s like computer-modeled weather reports that tell me its snowing, when.I can look out my window and see that it is NOT snowing. Why don’t the modeling wizards look up from their screens and out the window? The late great Gestalt therapist Fritz Perls used to chuckle about people having “insights” all the time. “They could also use some out-sight,” was his take on it.
There is another, hopefully more imaginative conversation waiting for American workers: How do I earn a living in a Covid-infected economy? And is there a way to do it that doesn’t involve battling everyone else to see who fits into a cubicle that doesn’t look like me, despite the fact that I need to earn a living?
I think that’s a place where American ingenuity needs to be focused. Remember “American ingenuity”? We don’t hear the phrase much any more. We’d better
learn how to trust our imaginations, and each other’s. Capitalist behemoths are not going to save America’s workers. Among the Fortune 500 firms, 90 of thom pay no taxes. You and I pay more than they do. I’m all for entrepreneurial capitalism, but leveraged capitalism is like a cancer, happily consuming its host body.
Thank you Gabe!
Years ago when I suggested an improvement to the processes in the small accountancy firm I worked for, I was told by a partner “we don’t pay you to think”. He had an accountancy degree, I had a BA in English and Linguistics.
As a Business Analyst, that is now exactly what my employers pay me to do – to think.
When I research the As Is processes and develop the To Be processes, I always listen to people at the coal face, as they often have insights and experience that management will never have. When we dismiss people for being mere underlings, we all lose.
At the risk of boring people, an anecdote from when I was at Ford Motor.
Every engineer, especially newbies, got their fair share of pranks. Even veteran engineers got nailed – the hourly folks were very creative.
So one day I was out on a line and walked all the way back to my desk, only to discover that someone had hung a ribbon “tail” on my back belt loop. I was mortified, but also impressed, because I tend to be paranoid and very situationally-aware of who is around me. For someone to get that close and not have me notice was an achievement!
Not long after I had one of what I call my “nitwit ideas of the month”… convinced my boss to let me try it, and I did. I had to follow the test pieces through the assembly line to avoid their being packed and shipped to the customer. Every hourly person commented on the fact they looked substantially different than the production pieces. I quickly explained, as I followed them, what the thought was and what the benefit might be if I was right.
A couple of weeks later I got the test results back. Not as much improvement as I’d calculated, but then heat transfer was never my strong suit. Regardless, I went back to the line and talked with everyone about my results. Universally the response was “No engineer has ever come back and told us what happened.” From that day forward, I never had another prank played on me. Word spread I was not like the other engineers.
More recently I sought some welding advice from the person who’ll be working on my next project. I told him “You’re the one doing the work; I want your opinion on the best way to achieve the goals I need.”
So, I see many opinions here ranging from $0 to $15. There was a study done once years ago trying to determine what the minimum wage should be in various parts of the country. To make a “living wage”, determined by some basket of expenses of the area, the minimum wage was actually a bit higher in many areas. I don’t remember the numbers exactly but some were like $17 to in the mid 20’s, I think.
I don’t know where people are getting that these McJobs are “designed” for teenagers. Huh? They are jobs still needed to be done by humans that business owners and corporations can get away with paying that low. I’m in the Chicago area and and I see plenty of these jobs filled by people older than teenagers and are usually people of color. I see this in the city and suburbs.
I think it boils down to what a society wants for most of its people. Since in America we are a mix of crony (trillions in government bailouts in 2008 and 2020) capitalism and serf labor (with a hefty upper middle class of “professionals” competing in a “free market” for those jobs), plus a little socialism (social security, medicare, welfare). We have “designed” a society that protects the interests of the very wealthy and the financial markets, and creates huge wealth and income disparity. It doesn’t have to be that way. The income and wealth inequality could be flattened out, not by taking away from the rich, but by coming up with a system that lifts more boats and doesn’t transfer huge amounts of wealth to the top while leaving crumbs for the bottom.
I also think it’s hilarious (referring to similar comments here) the fact that companies like Walmart have educational seminars on how their employees can apply for public assistance. Then, they get that assistance and guess where they spend it? Walmart!
@Dave G: Best comment I’ve read today! You nailed it.
The real problem is not the minimum wage but the lack of a social contract.When your ability to access health services is dependent on your employer then there is something, seriously, wrong with your system. I’m Australian; we have Universal health care.There are limits but, by and large, the Country looks after you. I’ve visited the US on a few occasions and I have also travelled quite a bit in Europe. When you travel to the US you take out the highest level of travel insurance because getting sick can bankrupt you. If you are propping up companies with welfare for their workers that is bad economics; it prevents better companies from getting a foothold. There is a meme going around that America is a third world country with a first world military. Given recent events it is hard to disagree with that. Overwhelmingly I’ve liked the Americans I have met but there is something really wrong under the surface. There is a “corruption” that makes it a hard country to like. Neither America, nor Australia, can compete at the low end of the market; there are, always, countries that can go lower. Both countries need to cultivate the “value add” part of the employment tree. Automate the crap jobs and boost what the rest are providing. Frankly, the western world is running out of runway. We can’t compete at the bottom we need to push for the top. Inequality might attract “companies” but are they the companies you want? America is a tinderbox just waiting for a spark. A bunch of angry, resentful, people fed lies and owning guns. What can, possibly, go wrong? The rest of the world has taken out their popcorn and is waiting to find out. Sorry if that sounds harsh but it is the view from outside.
Margaret, thank you for your intensity and your honesty. If someone has to come up with $400 cash for a sudden expense, less than half of all Americans can do this. That is alarming and disgusting. America’s economic playing-field has not been level for decades. Congress (called the Concierge by some) has been bought by the Few, who have amassed so much wealth and leverage, they no longer need to play on the economic playing-field; most of what’s on it just rolls toward them. Now the American playing field is so tilted, it’s close to vertical. Who’s going to hold it up? The Few have better things to do, and the Many are too busy trying to make ends meet to be able to think hard—and talk about it without hurling abuse at one another—and be guided to work together.
The mirror of history is merciless. You have held it up to us. More of us need to look into it and step through our favorite self-blinding assumptions about ourselves and our Country to see who actually is here. Your comment about the meme that America is a third-world country with a first-world military is right on. I ran an executive writing business in the Pentagon for 14 years; I saw how corrupted that system has become. The defense industry is now swerving US global security strategy away from Special Operations Forces and the fight against terror networks, and instead is launching a fundamental re-focusing on “near-peer” competition with Russia and China to produce massive new weapon systems—none of which are likely to ever be used. Russia and China are already defeating America in the actual digital war they conduct against us 24/7. They have no need to attack us with their new weapons. Instead, they are producing hyper-sonic aircraft and missiles as bait to bankrupt this country, and we are biting, hard. The US defense industry defines global security “solutions’ before the global situation is understood, discussed, debated and decided. “Climate refugees” are already streaming across borders in South Asia and Africa. Where will they go? Who will receive them? ISIS and al Qaeda will gladly offer them a home.
A century ago, the American journalist Randolph Bourne put it well: “War is the health of the State.” In the Pentagon and in much of Washington, the talk is of “the Nation”—i.e., the State. You have propery identified the Country as the human component in this equation. More Americans need to stand up, stand together and learn to work with and trust each other. Otherwise, your assessment of the US predicament is likely to be prophetic as we and our Country fall into an abyss of rage, guns and chaos.
Good intentions – and I have no doubt everyone here means well – meet math:
Rule 1: When you make something more expensive, you get less of it.
Rule 2: When you make something more expensive, you incentivize substitutes.
Now, let me state that on the flip side there IS the argument that unemployed people, or people scraping by, don’t buy much. Certainly not much extra.
Wow – quite an article. I consider myself a conservative and fully understand that a business will go with a lower cost option for roughly the same service. But, when the article claims “Jobs never get created. … It’s a fact of economics,” it loses some credibility. Humans have always tried to find better/cheaper/more efficient ways to do burdensome tasks – from the ox and the plow to the robot pizza makers. However, jobs _are_ created. The skills need to change.
Oe other piece I wrote, earlier than the other one:
The recent Congressional Budget Office report on Biden’s proposed increase in the federal minimum wage underscores counterproductive nature of minimum wage policy. The good news: The CBO concluded that the increase would reduce poverty. The bad news: It also would increase unemployment. I haven’t read the report, but I suspect the job loses would most affect the most-vulnerable members of the workforce, i.e., low-skilled workers who find i difficult to find “living wage-paying” jobs. In other words, the very people that minimum wage advocates claim that they’re trying to help.
The tragedy of this situation is that this good-news-bad-news effect (and it’s consistent w/ other studies on minimum wage increases) is that it’s completely unnecessary. There doesn’t need to be a “bad news” consequence. Poverty can be reduced by implementing policies that supplement wages of FULL-TIME workers whose incomes are below the poverty level. Targeted wage subsidies have the great advantage of helping those who need it, i.e., those supporting themselves and their families, but can’t easily obtain jobs that pay above poverty levels. At the same time, unlike the one-size-fits-all minimum wage program, it doesn’t force employers to adjust to arbitrary labor cost increases by eliminating jobs, reducing hours for part-time employees, and/or implement more cost-effective production measures (think kiosks at fast-food businesses).
But as noted previously, a sensible wage-support program doesn’t allow politicians to take credit for the wage increase “ripple effect” that typically results from minimum wage hikes. The dirty little secret is that the real purpose of increasing the minimum wage is to create upward pressures on wage rates in general. And it explains why politicians tolerate job loses for the low-skilled, who, not coincidentally, typically aren’t unionized. Furthermore, politicians can shift what ought to be a public or societal financial obligation on to private employers. That spares them from directly increasing public expenditures or raising taxes.
(It’s also worth noting that lawmakers often EXEMPT public employers from minimum wage increases.)
FYI (article from today):
Walmart announced pay bumps Thursday that will bring its average hourly wage to over $15 an hour. But the move still falls short of the $15 minimum wage announced by some of its largest competitors.
Walmart, America’s largest private employer, said it will raise wages for 425,000 US workers — more than a fourth of its workforce — to at least $13 an hour.
Starting March 13, hourly workers stocking shelves and fulfilling customers’ home delivery and curbside pickup orders in stores will receive a starting rate of $13 to $19 an hour, based on the store’s location and market, Walmart (WMT) said. Last year, the company raised wages for 165,000 store workers in management roles to a starting rate of $18 an hour.
This is one of the fastest growing jobs at Walmart
This is one of the fastest growing jobs at Walmart
Overall, approximately half of Walmart employees— around 730,000—will earn at least $15 an hour.
“These are investments in people that are important to our future because they provide a great pickup, delivery and in-store experience for our customers,” Walmart chief executive Doug McMillon said during a presentation to Wall Street analysts.
Walmart will still maintain its $11 minimum wage, putting it behind some other big chains.
In recent years, some rival retailers and restaurant chains have moved to a $15 an hour minimum wage. Amazon (AMZN) raised its starting wage to $15 in 2018, while Target (TGT) and Best Buy (BBY) bumped up their minimum wages to $15 last year.
Harry Holzer, professor of public policy at Georgetown University who studies the minimum wage, said in an email that Walmart is “trying to stay ahead of the curve, and not fall much behind other retailers” that have hiked wages, such as Amazon, as well as cities and states that are raising their minimum wages.
The federal minimum wage has been $7.25 an hour since 2009.
President Joe Biden included a $15 federal minimum wage in his $1.9 trillion stimulus proposal last month, and it’s part of the package working its way through the House. The legislation, which could be voted on as soon as next week, calls for hiking the hourly wage in stages until it hits $15 in 2025.
McMillon said Thursday that a $15 minimum wage was “an important target, but also think that should be paced in a way that’s good for the US economy.”
The latest pay raises are targeted at workers that “tend to have been with us for a longer period of time than someone that might be earning the entry wage,” McMillon said. “We’re trying to move that average up” and create incentives for employees to remain with Walmart.
He added that Walmart “will be sensitive to geographies. There are parts of the country where the starting wage should be lower than others.”
Nick, thanks for weighing in. Over half of all American workers earn $15 or less. And as Amazon swallows the economy, industry by industry, I’ve come increasingly to the judgment that one way for individuals to tilt the playing field toward more humane and human-scale policies and economic structure, is for individuals to learn how to earn a living without Getting A Job.
Why rent the future without a lease? That’s what Getting A Job amounts to. Job holders can be evicted at any moment. And they are designed with that in mind. The head of the Council of Economic Advisors to President Obama conducted a study and found that of the 15 million new jobs our economy generated between 2005-2015, an astonishing 94% of those jobs were either part-time, with no benefits and no implied future, or these new jobs were contract-contingent, with no benefits and no future. Think about that for a moment.
Speaking personally for a moment, I backed into a career and went from being an unemployed screen-writer and poet to an elite resume practitioner and career coach, with offices in the Pentagon and on K Street, and haven’t needed a job in almost 40 years. My sense of what people can do to protect themselves and their professional lives is to:
1. Work for a government agency, especially the Federal agency. These agencies need to be re-built after 4 years of proactive neglect by the last Administration. And jobs in a Federal agency do not disappear. The US Government is probably the most stable employer in the country right now, and will continue to be. No one’s buying-out the Department of Commerce or Justice. Americans like to bitch and moan about “the govrnment,” bt Uncle Sam is a solid employer. Job security. Ongoing training. A pension. These are harder and harder to find in the private sector. These fundamental building blocks for a long-term career exist across the Federali government. Our government. And these agencies want fresh talent as an entire generation of Boomers is retiring.
2. I think a lot of career development and entrepreneurial empowerment can be done at the local level as a kind of team sport. The standard assumption most people walk around with is that Getting A Job is a solo slog, like trying to scale a glass-sided hill, without ropes, which is howdoing this often feels to people. Well—who said anyone had to do this alone? I am developing a paper for the Biden-Harris team focusing on how both job creation and entrepreneurial empowerment can be done at the local level. Moreover, since Life is intricately inter-connected, problems are connected and solutions also can be inter-supportive. Unemployment exists in Red and Blue communities alike. Both the Covid pandemic and the new Zoom culture of work can be leveraged to bring people in Red and Blue communities into facilitated conversations, to the benefit of all who participate. This is not rocket science.
3. Personally, I am in the process of developing a set of tools and coaching tutorials to give people skills they will need to navigate a Post-Career Ladder Economy and learn to create their own employment opportunities. There’s a way to do it that is teachable and learnable. I was mentored by a $10,000/day consultant to the AT&T Board, who also coached its executives in how to construct opportunities within their existing situations. It can be done, taught, practiced and learned.
As to the question of $15/hour, if America can’t figure out how to get almost everyone in the country above the poverty-line, we are headed for a reckoning that will make January 6 look like a high school field-trip.
David, I am writing to object to your response to Cynthia speaking to you “with all due respect.” Your have a right to question other people’s opinions, as we have a right to question your sources and judgments. But you step across the line as far as I am concerned, when you question other people’s motives—or worse, assume you know our motives. My view is that human beings are living holograms of The Truth, which includes all of us and lives in each of us and of which we each are like a single tile in a vast mosaic. Everyone’s truth is an offering to the Whole Truth—but only if we tell it ss our truth, not as The Truth. The Whole Truth is too vast for one human mind to hold. That’s my 2-cents.
The sneer was obvious in my view. I replied in kind. I am polite… until someone shivs me.
Look, let’s be real: nobody wants to see people in poverty. And the “root causes” to this are far, far deeper than what the wage is set at.
Globalization and the mobility of production and services to countries that pay pennies to our dollar, never mind lax safety and environmental standards (I must admit I was proud of Ford Motor, where I worked for a while, for its insistence that all its plants meet US environmental and safety codes)…
Aside: There was a video of a plant in Indianapolis where the Carrier exec was announcing the impending closure of the plant and parallel ripple effect across the community. The anger in the crowd was palpable. If they had dragged him to the nearest lightpole and given him a “necktie” I actually would not have blamed them.
The “MBA craze” where people changed to view a company to be squeezed for every last time. In part this manifests in the “expendable assets” view of people. People, who used to be a company’s biggest asset in fact, are now only that in promotional materials. Part of that is a shift in perception from PERSONNEL to HUMAN RESOURCES – a change whose psychological effect was, I now believe, intentional.
We also have the Seagull suite – execs who fly in, crap on everything, extract their bonuses, and then leave for the next host to drain. Perhaps parasite class might be better. One used to get a job and move up in the same company, looking to build a CAREER at that company. Now, the conventional wisdom is to jump from company to company (at my last full-time employer my annual raise was insulting – 0.5%).
How to actually fix these things is beyond my pay grade or influence. The only possible way is to convince those making the decisions that it is in their best interest to keep jobs here, to keep people in the company, and to pay them well. The question is how.
Now, to the minimum wage specifically. I’ve already stated my arguments, citing sources I trust. Others have done similarly for their positions. If the wage goes through, and job losses are as catastrophic as I expect, will Cynthia and Nick and others do a mea culpa and state “OK, you were right?” Because I will if the catastrophe I anticipate doesn’t happen.
David — You said I yourself several notes back: You tend to be paranoid (your wording).
How else shall I take your first comment here, that the “sneer” was “obvious in my view.”
That’s the whole point. In your view.
Her words, but your eyes and ears.
I didn’t hear a “sneer.” I heard someone trying to disagree respectfully with you.
Will you now offer a mea culpa to Cynthia?
If she states, clearly, that her intent was not condescending, then yes.
@Gabriel, such a kind lady, thank you so very much for your words.
@David, I feel like I’m kindergarten, but OK….no disrespect was meant, as I said.
Ok… then I withdraw my snark.
Now here’s a broad question for those who are for such a raise. A thought experiment.
Let’s assume that I’m right, and a $15/hour minimum wage crashes employment.
NOW WHAT? You can’t put that genie back in the bottle.
But David, wha kind of “employment”. is it if you can’t make end meet working 40 hours a week?
Here’s a thought experiment. Imagine David Hunt, PE, is working for $13 an hour.
Are you now glad for the rest of the economy?
From an article in the online journal Counterpunch:
How then might a civilized society raise its minimum wage to provide a decent livelihood to workers and protect its small businesses? The solution is straightforward. Offset the extra labor costs for small businesses from a higher minimum wage by providing them with some combination of the following: a new and significant share of government orders, tax breaks, and government subsidies. Such supports now overwhelmingly favor big business and thereby facilitate its many efforts to destroy and replace small businesses. Those supports should be reapportioned with special consideration/targeting for small businesses. To be eligible, small businesses would need to show how raising the minimum wage increased their total wage bill. In this way, society can concretely support small business and a decent minimum wage as twin, shared social values.
In effect, this proposal changes the terrain of the minimum wage debate. It brings into stark relief that raising the minimum wage leaves open the question of which part of the employer class will bear the burden of compensating for that in the short run. An effective political coalition of low-wage workers and small businesses could require big business to pay by losing some of its government business, paying higher taxes, or obtaining lower subsidies—all to compensate small businesses for a raised minimum wage. For decades, an alternative political coalition—of big and small business—blocked or delayed minimum wage increases. Nothing requires this latter coalition to always or, indeed, ever prevail over a competing coalition of labor and small business that seeks a higher minimum wage for one plus greater state supports for the other. Likewise, nothing warrants continuing the current debate over raising the minimum wage as if only small business would always have to absorb its possible costs.
That article was written by Richard D Wolff who I’ve been following for a few years. Labeled as a Marxist economist, the main idea he pushes is that we become an mixed economy including many employee owned and operated businesses (there are many examples of successfully run businesses called worker co-opts throughout the country and the world. Unfortunately, corporate laws thwart these efforts in the US). One employee, one vote, not a few people at the top (the board and executives) deciding everything. If employees decided what to produce, where to produce it and where the profits go, the wages would probably be higher, they probably wouldn’t outsource jobs, and they might not pollute the rivers that run through their own neighborhoods.
But now, it’s socialism for the rich (ironic for the same people who preach the free market) and capitalism and the free market for the rest of us. When the Fed has been given authority to lend out in effect trillions of dollars at effectively 0% interest rates to large corporations and banks, while they let the rest of us argue about a minimum wage. Notice how they’ve got the small businesses on board because of the threat of losing jobs. And of course, that’s what the large businesses want. And of course by strick supply/demand economic mechanics, it does hold true to a point to those who follow the rules. Meanwhile many large businesses including the one I used to work at have raised their minimum wage to $15/hour just to avoid the argument. They can afford it. They get the bailouts.
It will be interesting to see what happens to small business after the fallout of the coronavirus settles down in the coming months and years. Will it go back to normal? Will they be decimated? Will something else evolve?
@Gabe: Thanks for that. Never heard of Counterpunch but I’ll look it up. This is the most interesting approach to raising the federal minimum wage that I’ve seen. Wait for it: “This would just be more government meddling and handouts in the free market!”
What free market? As the article you quote from suggests, bigger companies already benefit disproportionately from government business and subsidies. The “market” has never been free of government influence. The challenge is to balance that reasonably and fairly.
“When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.” – P. J. O’Rourke
And an Ayn Rand quote:
“When you see that in order to produce, you need to obtain permission from men who produce nothing – When you see that money is flowing to those who deal, not in goods, but in favors – When you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you – When you see corruption being rewarded and honesty becoming a self-sacrifice – You may know that your society is doomed.”
David: I do not disagree with your analysis of what’s going on in the economic ditch I see far too many Americans getting dumped into. Where I part company is how we get out of that ditch—in particular, what values and operating principles we will choose to get ourselves and each other out of the ditch. I have learned—and as an overly sheltered only child it took me a long time to learn this—that while I am a partisan of the creative talent and professional self-liberation of individuals, I also advocate the influence a culture of mutual leadership can exert. Think of the labor movement in this country. Think of the attitude across America during WWII, when millions volunteered their time in the evenings, after a day’s work, to contribute to the national war effort. My dad used to tell me how he volunteered doing mechanical drafting, a skill he had to learn. Think of the generosity that arises when a town is hit by a hurricane or natural disaster. Years later, people in the town will speak with nostalgia of the hurricane and the sense of community it triggered. I think a lot of this conversation rests on how each of us see human nature. With plenty of evidence on the other side of the human equation, my expoerience tells me most of us get more juice out of life when we feel connected to each other around a common purpose, than when we are sitting alone, counting our money. Most of us want to belong to each other, not just to ourselves. As an only child, I tried that. I’d rather belong to a growing family.
@Gabe: Certain public issues wend their way through lots of analysis and debate, both economic and political, psychological and sociological, and somewhere along the line someone realizes that while much of that might be good and useful, all of it is also specious because these issues boil down to what you bring to the fore: how we see human nature.
Who said, “I love humanity. It’s people I can’t stand!”
I had an uncle who was quite the bigot back in the 1950s and 60s. Had nothing good to say about Black people, always using the N word. One day when I was probably around 7 or 8 my dad and I arrived in the little diner my uncle owned and noticed a Black man sitting at the end of the counter, eating quietly. We didn’t say a word but my uncle felt the need to explain. “Oh, that’s John. He’s homeless but he’s a good guy, down on his luck. When he comes by I feed him. What am I gonna do? He’s one of God’s children, just like us. Hey, John! How is it? You got enough?”
That stark contrast between my uncle’s bigotry and his human kindness may have been nothing more than pity supporting a sense of superiority, but I don’t think so. It was the first time I realized that no matter how dark a person’s soul seems, you have to look deeper and you’ll probably find their real soul. I looked at my uncle differently afterwards. I saw his gruff side and his incredible capacity for warmth and love. I can’t tell you whether he was really a bigot or not. What I learned that day was that when the chips were down, he did the right thing without anyone telling him to and without any need for anyone to see his behavior.
“Most of us want to belong to each other.” Bingo. My uncle scraped by. But he fed some of his profits to a guy that didn’t even work for him. While he was explaining himself to my dad and me that day, he had on a big smile and he was laughing and quite happy to feed John. I think he was happy because he fed John. Because to my uncle the bigot, John was family, or why would he feed him? I still have my issues with my long-departed uncle, but I have no doubts about his human nature.
It’s high time we stop associating ourselves with philosophies and political ideologies and analysis that’s hypothetical at best. It’s time to look into our souls in private and decide whether we’d feed John, and to know that our answer tells us who we are.
“It’s time to look into our souls in private and decide whether we’d feed John, and to know that our answer tells us who we are.”
I agree with one caveat: It is the CHOICE to be generous, rather than having it IMPOSED on one by force, that makes it charity.
Every Friday when we light the Shabbat candles we put money into the charity “tzedekah” box, with my kids having the determining choice where that money gets donated. I tell them that even if they can only put in a penny every week, do it, for there are always those in worse shape.
But I also emphasize that it is our CHOICE to do this that matters.
David, thank you. That feels exactly right to me.
We could get into a discussion of whether our government—the one we vote into office—is “imposing” a minimum wage, since it reflects our collective judgment and we are thus “imposing” it on ourselves by our own votes. That’s an interesting and important discussion, but for now I’m glad to read about how you are parenting your children. You are teaching them that being open-hearted is a choice, exactly as you state it.
What makes it “charity” is that you feel that you are entitled to what you have and that you believe that you have the right to it. While the ones who receive it doesn’t deserve it.
I don’t see it as a choice, I know I have contributed to be were i am, but the most important factors were given to me, my race, my family, my class, my education.
Is a choice between accepting what we have as mostly have, and thus, not being entitled to it, and considering in effect that we are more worthy than those that don’t have it.
It’s shouldn’t be charity, it should be sharing what we collectively have. It’s not for us to own it, it has been given to us.
To cite one of my favorites, Walter E. Williams (to whom I referred before):
“There are people in need of help. Charity is one of the nobler human motivations. The act of reaching into one’s own pockets to help a fellow man in need is praiseworthy and laudable. Reaching into someone else’s pocket is despicable and worthy of condemnation.”
@Manuel – I don’t follow some of your sentences, but I think you are saying just about everything was ‘given’ to us (by genes, family, luck), thus we don’t own it. And, because of this, we should share it with everyone else. If that is how you feel, then feel free to share your assets as much as you like. I don’t feel that way, as I believe there is also a strong element of the choices I have made and the hard work I have done to bring me where I am. I do feel entitled to what I have earned – certainly no trust-fund kid am I.
@David – well put. I’ll also expand on it that, for me, the trick is determining who is deserving and not just taking advantage of the system. I realize that is an almost impossible task, whether it be the government, a charity, or myself. But, if I am giving my money away, I ideally want it put to good use.
I think we’re confusing assets with assets.
One asset is that part of our income (whether we get it via a job or selling our paintings) which is really discretionary.
Another asset is that part of our income we all throw into a pot to cover our collective needs. What we usually refer to as our taxes. As citizens, that’s not discretionary, whether we agree with what it’s spent on or not.
If our entire society was limited to a small valley we could have that first meeting where we make the first choices. As Lenny Bruce once fantasized the organization of society (I paraphrase but this is pretty close): “Ok, we’re all agreed. We’ll eat over here. We’ll sleep over there. And over here we’ll throw all our crap. A system that worked pretty well until one night while a guy was sleeping he got a face full of crap.”
Not to get off the subject, but Bruce claimed that last bit was the genesis of police.
So when children put money into the tzedekah, those aren’t tax dollars. That’s discretionary funds. Their parents agreed to put tax dollars into the US Treasury, to be spent by choice on what our society needs and wants. That’s not discretionary.
So while I agree with David in concept, the analogy is not a good one. Our kids also have to learn that, if not by choice then by accident of birth, they live in a society where we all fork over taxes to be used as decided. Of course, parents and kids are free to protest it, but worst case if they don’t pay they go to jail.
So I think we really need to start with what is the society? How does it work? What are the rules mutually agreed on? This is our government and our social contract. These institutions are largely inherited, but our society is designed to ensure that most aspects of government can be changed. Some cannot without throwing it all away and starting again.
So, what is our society? If the people we elect to represent our individual choices ultimately decide to spend taxes on A, B and C — even though we voted to spend them on A, X and Y — can we say we CHOOSE not to dedicate our taxes to X and Y so we’re going to withhold the agreed upon taxes so we can CHOOSE where to spend them?
Obviously, it doesn’t work if you try to do it like that.
One can CHOOSE to be generous with their own discretionary money. But when one CHOOSES to live within the society, their choice is not always the prevailing one.
Thus I think Walter E. Williams (quoted by David Hunt in another comment), to borrow from Lenny Bruce, is throwing crap in my face. Williams’ statement is a kind of fake bait; a steel lure; a logical trap. What our society decides as a whole to “give to charity” is not “reaching into someone else’s pocket.” It’s not “despicable and worthy of condemnation.” It’s the CHOICE of the society.
Today it seems every individual feels they have a right to demand that the rest of their society do what they want done — not what society chooses. The worst of it is, it tears these people up inside. It makes them angry. It gets them sick and it harms their relations with the rest of their society.
While it is our CHOICE to put our money into charity, it is not our CHOICE to decide where our taxes go — except insofar as our vote for representation is our CHOICE.
I repeat: All are free to protest the choices our society makes through its government, but to suggest government is acting as a “despicable” charitable giver is nonsense. It’s akin to throwing crap in our faces while we sleep.
A citizen putting discretionary funds into a collection plate is not equivalent to government spending tax money. The latter is a foregone conclusion because we’ve already agreed to it by virtue of our citizenship. That’s why I think Williams is wrong.
When an elected government puts our tax dollars into the hands of people it deems need it, that’s not CHARITY. It’s our social contract. It is not “IMPOSED on one by force” simply because citizenship is a choice.
I don’t think charity can be reduced to a cute, seemingly clever turn of phrase. Any smart English student or Marketing student will tell you Williams is not defending choice; he’s attacking both charity and taxes and suggesting only the individual can be charitable. It seems to me that a profound tenet of our social contract is that our government can be charitable, too.
Teaching our kids to be charitable is a good thing. But teaching them their government should behave charitably with our tax dollars is even more important.
And as I keep saying, the government is hugely disproportionate in their charity to large corporations, big banks, etc. They are who run the country and effectively decide where the “taxes” go (or don’t go .. for them to pay).
Amazon pays hardly any taxes and yet the workers have to fight to get good working conditions, decent pay and PPE in this pandemic, etc. They are probably the largest example.
Our “society” as decided to pay CEOs about 300 times the average worker’s pay, meanwhile workers fight for a pittance.
The “serving” (or serf) class is the worse (fast food, restaurants, hospitality, etc.), this is probably where the minimum wage argument has the most effect and may cost the most jobs.
Maybe even worse yet though is the manufacturing class where there are hardly any jobs, since they’re in China, Mexico, etc.
I guess my point is, why not try to even it out just a little for once? The rich will always pay themselves well, but sometimes society has to fight back and get just a little.
Nick: The thought struck me that you may want to turn this wide-ranging, multi-perspective dialogue into an article for The Atlantic or some other journal of note. It’s timely. It’s civil. And it’s not by the usual-cast-of-characters “experts,” but a group of informed professionals with diverse backgrounds and divergent views who are genuinely works to understand and express cogent commentary on one of the most contentious and significant issues in America right now. And in working to get at that, we are necessarily delving into the economic sub-structure of our national situation.
Costco will raise its starting rate for hourly store workers in the United States to $16 an hour, putting its starting wage above rivals such as Amazon, Target and Best Buy.
@Cynthia: That sounds very free-market to me. Costco is raising its hourly rate in loads of places where it doesn’t have to under the law. I’ll bet they’re doing it so they can “steal” workers from restaurants that won’t pay their workers as much.
Do we blame Costco for manipulating the free market? Do the restaurant owners file a class action suit to stop Costco? Has Costco screwed restaurant owners? What are the restaurant owners going to do?