The Tech Industry Is Building a Vast Digital Underclass
nytimes.com
nytimes.com
> Today, you’re either above the API or below the API. You either tell robots what to do, or are told by robots what to do.
It seems like we're returning to a state of inequality seen for most of history, and the second half of the 20th Century was just a historical anomaly. See PG's essay: http://www.paulgraham.com/re.html
> Which in turn means the variation in the amount of wealth people can create has not only been increasing, but accelerating. The unusual conditions that prevailed in the mid 20th century masked this underlying trend.
What I’m trying to say is I can see what it means if I squint at it a bit.
I guess it depends on how strict your definition of algorithm is, but I share an office with an Architect and he seems to spend the largest portion of his time dealing with codes and rules and laws and compliance.
Edit: And to add to the sibling comment, he is paid what he is, as much of not more for his knowledge of those rules and experience navigating them as he is for his aesthetic sense.
I wouldn't say he's wrong, though, just "not yet right". Architects and construction workers, for example, are one industry that is not yet eaten by software, but IMHO will be within the next 20-30 years. I could see housing revolutionized by software that just encodes all the relevant building codes in software, then uses a WYSIWYG editor and constraint solver to let people design their own houses, then has robots build the house from the ground up. The role of the architect would be replaced by software; the role of the construction worker by robots. Instead you would have surveyors and people who load the building materials from trucks into the robots, both of whom function below the API.
That said, there are algorithms that govern our daily lives. An economy is sort of emergent behavior of all the participants.
Today's inequality means poor people have a climate controlled place to live, regular food, decent healthcare, the ability to travel across the nation if not the world, see and communicate around the world in a moments notice, easy access to knowledge at their fingertips that spans all human civilization, endless amounts of entertainment, and freedom to live as they please.
It's unclear to me why this kind of inequality is a bad thing, or how it is comparable to inequality in the past.
My hypothesis is 'deaths of despair' is due to the emptiness of materialism, not due to inequality.
Would you be content, or seek to regain your current status? If you found that impossible would you be happy with your life?
These are rhetorical questions, as the standard win-the-forum-argument response is anticipated and will not be helpful.
Empathy and introspection, however, will.
And from the perspective or liberties, power and control, today's inequality seems perhaps even worse, as all these luxuries raise the question of wether change is actually inevitable, or we're reaching a point at which people won't care.
(And for a nontrivial number of fields, talent is knowing the language of its business, more than creative output)
The problem is viewing things through a lens of equality-as-goal, because it's basically just pushing for a race to the bottom. No place more equal than everyone in the mud.
It's an improvement (they have no other source of income) and it's all voluntary; they might do enough miles/hours to leave the streets, or they might never earn enough to do so and just keep doing it until somebody devises a cheaper process to carry those who eat the extreme opposite of gruel.
Now, people who are farthest from my description in our country are those who live out in the countryside away from modern luxuries. When I lived in Texas I saw a number of these little houses that seemed to barely hang together out in the middle of nowhere. But, they all seemed to at least have power, water and transportation, which is more than I had growing up in an undeveloped country.
Take the word "evil". We used evil to mean people or organizations that would purse goals such as terrorizing, torturing, killing, imprisoning. We ended up up using "evil" to mean "corporation that is going to use more private information that I want them to, for displaying ads to me".
You may argue that language constantly changes and it's organic, and you'd be right. But I'd prefer if we introduce new words than keep reducing the gravity/meaning of existing words. Because the problem then is that while we are all stuck talking about the "evils" of modern life in our stable safe country with cheap food and constant Internet access, somewhere someone reads this and thinks we are just a bunch of wussies, disconnected from reality and real struggle and problems (and they'd be right).
Globally, income inequality is at historic lows:
https://ourworldindata.org/global-economic-inequality
Over 500M people have been lifted into the middle-class in China alone, with similar stories in India, Eastern Europe, and parts of Africa and the Middle East. It's just that this rise has largely come at the expense of the American middle class, which was the prime audience and prime producer of media for most of the late 20th century. So if you look only at the universe of people who were given a voice in the late 20th century, things are much worse than they were. If you look at the universe of all humans (or the small subset of Americans who work in industries benefitting from globalization), things are much better, both in terms of output and in inequality.
From the IMF: "China has moved from being moderately unequal in 1990 to being one of the world’s most unequal countries."
https://blogs.imf.org/2018/09/20/chart-of-the-week-inequalit...
What's happening is that the inequality within the world is moving from national boundaries to class/occupational ones. It used to be you had rich nations and poor nations. Now you have rich occupations and poor occupations. When a few million Chinese peasants become skilled electrical engineers and earn 20x more, inequality within China widens. If they displace engineers within the U.S., inequality within the U.S. widens as well. However, global inequality has fallen, because there is now a smoother distribution in income levels between "peasant" and "owner of Intel".
Income disparity is natural. Regulation to prevent people from exploiting the system into higher income is good, but we'll never be able to make it so that the delivery driver and the corporate executive have the same standard of living, unless that standard is consuming gruel in a formless concrete cube somewhere.
For starters, how about, instead of 60% of the working age population working 40 hours to make ends meet, (with the other 40% mooching off them, through welfare, family members supporting eachother, etc), how about 80% of the population working 30 hours a week?
It would create the same amount of wealth, but would distribute it a little differently.
My suspicion is that those remaining 40% are significantly less employable, and you can't just swap them in like a fungible good. I suspect also that as technical skills become more valuable - and our education system remains stagnant - that 40% number will grow.
i'd implore you to compare regular people welfare spending to corporate welfare spending if this is the view you hold
Just allow the situation to resolve itself?
I'd sooner see investment in apprenticeship programs and other efforts to reduce the "mooching" as you called it, than somehow thinking that having me work ten hours less a week is going to provide anything for anyone. How does me doing less work enable that? There's not a fixed supply of "work that can be done", by any stretch.
It's because I'm not trying to increase the amount of crap we produce. I simply postulate that we could get the same work done, by a better distribution of labour. Whether or not we need to produce more is another question entirely.
> than somehow thinking that having me work ten hours less a week is going to provide anything for anyone.
Take three people in your position, and you'll create a job for a fourth. And, after all, in our society, job creation is some holy grail that we need to bend over backwards on laws, regulations, and smart business sense for. Instead of compromising on those things, why not compromise on 'normal' working hours, instead?
It says the "working age population" which is everybody over 16, was 243 million in 2013, while the labor force was 156 million, leaving 87 million or about 36%.
Of those 87 million, - 9 million were probably in high school - 21 million were in college - 40 million were over 65 - 2+ million were incarcerated - ~20 million were disabled and cannot work (estimated 8% of the population)
That adds up to 92 million; obviously some of those older and younger people are in fact working.
See: https://www.politifact.com/truth-o-meter/statements/2013/jul...
and
https://disabilitycompendium.org/sites/default/files/user-up...
You'll also find a lot of the remaining employed people to be significantly under-employed, compared to people doing 40+ hours/week.
[1] 40% of undergraduate students, and 76% of graduate students have >30 hours of work/week. [2][3]
[2] https://www.theatlantic.com/politics/archive/2015/10/at-univ...
[3] So, instead of subtracting 20 million from the unemployed bucket, we need to subtract ~10 million from the employed bucket, and ~10 million from the unemployed bucket. Repeat this process for high school students, persons with disabilities (Some of whom do, in fact, work), and seniors, and you will get to something more resembling a 6:4 ratio.
And the 20 million disabled people figure is not the total number of disabled people; it's the fraction that don't work multiplied by the fraction who are disabled multiplied by the workforce number. The second reference is where I got the fractions.
You moved the post from "delivery drivers" should get a fair salary to "everybody should have the same salary". The question is if delivery drivers should have a fair salary that allows them to have a decent life.
Do you agree that "delivery drivers" should get a fair salary?
Why would that be? That’s a fallacy. We have the ability to produce far more than everyone would need to live a pretty abundant life.
I agree. Not my comment. I was just quoting.
Seems almost more depressing than the current dystopia to believe that we should keep it going for even longer just to ensure everyone gets an equal chance to consume their pile of fried meat.
... so long as that abundant life is location independent.
What is "fair"?
One variety of "fair" is "getting a reasonable cut of the profit made from their actions", where "reasonable" is based on what the market will bear - i.e. if your labour is undercut by someone else, then it's a race to the bottom. This is what guilds and then trade unions originally evolved to deal with.
Another variety of "fair" that seems to be gaining mindshare is the idea that you deserve a "living wage" for literally any full-time job, which is a new idea unsubstantiated by economic reality. It belies the fact that there are jobs that do have some demand, but simply aren't worth enough to the people who'd pay for them that they can supply a "living wage". And what's living? Is mung beans, rice, and a shared room in a house "living" enough or does everyone need their full maximized-carbon-footprint atomized solo lifestyle in order to "live"?
Implicit in most discussions, but frequently left unstated, is the idea that a wage-earner should be able to support several dependents. Obviously how many makes a huge difference in what kind of pay is needed.
That is the straw man fallacy. You moved the post from a discussion about fair salaries to one about everybody sharing the same house and eating only beans and rice.
The question is if delivery drivers should have a fair salary that allows them to have a decent life.
Do you agree that "delivery drivers" should get a fair salary that allows them to have a decent life?
> Another variety of "fair" that seems to be gaining mindshare is the idea that you deserve a "living wage" for literally any full-time job, which is a new idea unsubstantiated by economic reality.
I mean this one, that is why I said: " that allows them to have a decent life.".
> unsubstantiated by economic reality
The opposite is true. More equal societies have higher economic output. Reducing poverty reduces crime, reduces health care costs, etc. Even better makes people's lives better. So, it is a positive feedback loop.
Only because it was not defined what was meant by "fair". I'm not going to agree to some premise only to be hoist up by it later. Maybe I don't agree people deserve a "fair" salary by your standards, maybe I do by other standards.
> Do you agree that "delivery drivers" should get a fair salary that allows them to have a decent life?
What's a decent life? Is there something indecent about having beans, rice, and a roof? Isn't it better than what many people have had, historically? It's not what I want, I doubt it's what they want, but is it _unfair_? Why?
> More equal societies have higher economic output.
No. Societies which have higher economic output are more capable of artificially subsidizing "equality" by redistributing income. You cannot take poverty, spread it around, and make richness. You can take richness and spread it around and help abate poverty, but only to a certain extent.
My argument, for which I provide some links, is that you need to redistribute that wealth so everybody profits form it for that wealth to be sustainable:
"Economic growth provides the basis for overcoming poverty and lifting living standards. But for growth to be sustained and inclusive, its benefits must reach all people."
* https://blogs.imf.org/2017/09/20/growth-that-reaches-everyon... * https://www.oecd.org/newsroom/inequality-hurts-economic-grow...
But, maybe we have different values and that is the root cause of our disagreement. I think that giving everybody enough to cover their needs is the goal of society. To remove poverty is a goal to achieve. Higher economic output is not a goal, but a means to achieve the goal of humans well being. Improving the economy is a means for humans to live better.
Pretty much all answers I've heard to this question will have to define the salary in relation to myriad cost inputs (housing, healthcare, transportation, food).
The fact that the answer to this question is almost universally defined in terms of cost of life necessities means that the current salary could be fair if the cost inputs were cheaper. It also means that any salary that would be fair given current costs would suddenly become unfair again if the cost of those inputs grew proportionately (inflation).
This suggests to me that we're better off focusing not on policies that raise salary but instead putting our efforts towards lowering the costs of only those cost inputs we deem as necessary inputs for living circumstances that are considered fair.
Solving the cost of only basic necessities once permanently solves the fairness problem. Trying to solve the fairness problem by raising wages with no policies to protect against inflation of basic necessities means that you will only ever solve the fairness problem temporarily.
Perhaps they'll be able to save up enough money for something and quit sooner than they could now.
But perhaps the ideal should be a liveable wage and liveable job conditions.
Throughout history, raising the standard for those at the bottom usually makes the richest richer, but I'd argue that's a worthwhile tradeoff.
People can only get richer if there is productivity. Simply transferring wealth is not a panacea if it doesn't measurably result in productivity.
Has it? It's easy to recall the times it has because they make it to the history books, but there's been peaceful periods of reduction in income inequality too. Simply in the US, in the period right after WW2 income inequality fell in what is known as "The Great Compression"[1].
This was also an era of incredible progress and development of the US— everything from big developments around social issues (civil rights movement), huge cultural evolution (counterculture), big development in science and technology (moon landings, nuclear power, etc).
When people don't have to worry about wether they can afford rent the next month, they can worry less about losing their job to immigrants, they can afford to quit a bad job to find a better one, open their own business, etc. In general not things you measure as economic standard of living, as the money you make and things you own, but that translate as less time spent stressed and more time spent being productive both economically and just culturally.
The thought that to make things better for the poor we need to make them better for the rich too is awful close to trickle-down economics, which have proven again and again to be very much an unsound theory.
[1]: https://en.wikipedia.org/wiki/Income_inequality_in_the_Unite...
Not all labor is equal. As a somewhat specialized software engineer, my labor is generally valued over capital.
What makes no sense is to expect all labor to be valued over capital since much of the labor is not the labor you need and you need to apply your capital to get the labor you do need.
This doesn't have to be Russian oligarchs in charge of your bread rations. We just need worker co-ops, aka democracy in the workplace. See https://en.wikipedia.org/wiki/Mondragon_Corporation for a working example of an alternative.
Say you're an experienced developer. Maybe it would be OK if you only made twice as much as the lowest paid individual at your company? Maybe it would be OK if the CEO only made three times as much as you?
1. No more excessive corporate tax breaks.
2. No more offshore tax havens.
3. Equal footing for co-ops (subsidies, startup loans, etc.)
4. Teach alternatives to capitalism in schools, or least to think about capitalism more critically (this one's a stretch, it's already like a religion).
Other than that, I think it needs to come from the bottom. If worker co-ops really are better places to work then the word will get out once there's more of them.
Fresh paint on old tale.
There is a lot of true in what you say. But, part of the problem is the level of efficiency. Where you needed before a chain of managers doing the dirty job and creating inefficiencies. An algorithm does not sleep, does not care that you have kids or you are sick, does not have compassion or gets angry.
The root cause is the owner. Algorithms help, thou.
Life certainly isn't amazing for people in society at large. There are people on the other side of the code we're producing. Something us engineers love to forget about.
What is he referring to exactly though when he says it's better?
Infant mortality is at an all time low (among nearly every other quality of life metric): https://ourworldindata.org/child-mortality
Also, society looked very different back then. Women´s work force participation alone renders any comparison between the two ages rather difficult to make to begin with so assuming right off the bat that the 1950s were better (while disregarding all the advancements in medicine, etc.) is unfair at best.
note: I understand that you said "possibly" but this is a claim that I hear rather often and I don´t know how people can actually make that comparison so easily.
Look at the Vietnamese immigrant story in the United States after the Vietnam war.
https://money.cnn.com/2016/08/12/news/economy/thuan-pham-ref...
https://learningenglish.voanews.com/a/former-vietnamese-refu...
> Vietnamese overall have higher incomes compared to the total foreign- and native-born populations. In 2017, households headed by a Vietnamese immigrant had a median income of approximately $63,200, compared to $56,700 and $60,800 for all immigrant and U.S.-born households, respectively.
Further, in 2017, some 11 percent of Vietnamese families were living in poverty, a lower rate than for immigrant families overall (14 percent).
https://www.migrationpolicy.org/article/vietnamese-immigrant...
Perhaps we should ask why there are so many “overworked and simply miserable” Asians compared to “native” born people who are more content to be underworked and living on the public dole, relatively speaking. The ability to work very hard and ultimately create a better life is at the heart of the immigrant experience. Rather than viewing that scene as a dystopia, we should view it as inspiring. Anyone with a work ethic and could also one day own a fancy car. It happens literally every day and at least in the US, the data supports it. Look at the success of the Vietnamese in the US compared to the success of other demographics. To top it off, in the US at least, most Vietnamese arrived with nothing, not even more than a few words of English and they turned it into a success story — and they did it without whining about politics or “inequality;” they just worked their asses off without complaint. They look “overworked, tired, and simply miserable,” because they are — but they understand that nobody owes them anything; if they are to be successful, they have to earn it with their own sweat and sacrifice.
Some see misery, others see possibility. These guys on scooters don’t see themselves as victims like the more “enlightened” among us would suggest they are.
Tech companies are allowing people to make money where before they couldn't. I was poor once. It would have been freaking awesome to be able to deliver some food or drive someone somewhere to make a couple of bucks, the alternative was sitting around making zero bucks. This sentiment is shared with nearly every Uber driver I speak to about it. They are happy for the opportunity to make money in their spare time.
Technology enabled this and it's a good thing. People who say otherwise probably have never been poor and bereft of any option to make money.
This is rampant in the creative world. Hungry and desperate musicians racing to the bottom, because getting paid _anything_ over nothing is "better". What happens is that they're devaluing the whole industry, and suddenly "paid in exposure" is a thing.
I understand that being poor can be hard, and short-term fixes can be tempting; But people need to see the whole picture.
You can’t expect people to skip meals or rent because it may be helpful down the road in someone else’s labor negotiation.
Companies like GrubHub pay their delivery drivers the way you'd expect them to be paid and local pizza places and chinese restaurants have been profitably doing food delivery for decades.
There are certainly good examples of technology disrupting the current labor market in ways that take advantage of people, but DoorDash being shitty isn't really one of them.
In a newspaper there are two or three teams: news and/or opinion, and business. The teams do not tell each other what to do. Business doesn't tell news what to report on or how to write their stories. News doesn't tell opinion what to write or publish. And news doesn't tell business what ads are OK to run.
News and opinion take direct responsibility for what they publish. Every piece of content is put into the paper on purpose, usually written in-house. Their goal is to inform, enlighten, provoke, etc. -- to serve their society.
The job of the business team is to keep the lights on so more journalism can get done.
In a tech company like Facebook or YouTube, there are no such distinctions. Every decision, content or otherwise, is made for a business reason, and only for a business reason.
That's why YouTube and Facebook publish horrible, abusive, ugly content every day that no news or opinion editor would ever have cleared for publication. Facebook and YouTube don't care; they have no sense of a duty to society, and have no master other than the pageview, the click, the ad sale.
There are no "Chinese Walls" in modern ad-driven tech companies. It's worth remembering that those walls were built in journalism for a reason.
> Their goal is to inform, enlighten, provoke, etc. -- to serve their society.
No. Their goal is to get eyeballs looking at ads and turn those into conversions so that the paper can sell more ads. If tabloid content achieves that goal, then that's what you will get. If pushing a narrative accomplishes that, or is more profitable in other ways for the shareholders, then you'll get that instead.
At least you used to be able to make up for it on tips back in my day.
You then deduct that mileage. But again, that sounds like a massive hassle if you're doing these gigs 365 days a year, and need to collect all documentations.
But, to my knowledge, no one has gone after Pizza Hut and the like for creating that underclass. (If people have gone after them then I was honestly unaware of it.)
But the pizza delivery industry as a whole was operating at the same unimaginable scale. And still does today.
None of this is new.
Pizza Hut and Dominos both have revenue in the billions of dollars per year. Does DoorDash?
The kitchen and wait staff were great fun. We worked in the kitchen in dead spots, we knew that business, we were actually employees.
Now I look at uber eats drivers and see people who are disenfranchised. The flexibility inherent in these models doesn't just create financial insecurity, it also creates social insecurity.
Recently a "Glover" was killed in a traffic accident. The company is not even bound to give them a life insurance, like regular companies that employ delivery personnel.
I'd like something to point to next time I have to explain the difference between a domain name and a search query.
It'd change this title to "capitalism is building a vast digital underclass". Decisions are carried out by algorithms, but made by people. All "the tech industry" is doing is optimizing capitalism with new methodologies, but at the end of the day it's the same incentives that build the systems in the first place.
This has been studied and known for a while: economists have speculated that capitalism would invariable result in a vast underclass with concentration of capital in a small portion of the population.
Let's not blame this or focus exclusively on the tech industry: the current wave of hate towards tech isn't but the realization that tech companies are businesses too, and so will do what they need to do to grow the business as much as possible and extract capital for the gain of their investors.
What new tech did Uber/Uber-Eats, Doordash, Task-Rabbit create? They used Venture Capital to centralize industries which previously had distributed ownership/profits amongst small businesses, leveraging cheap capital to undercut their competition.
Then when you consider Walmart replacing small shops, or McDonalds replacing burger joints, you realize the problem is unregulated Capitalism, not "The Tech Industry".
I understand the sentiment, but the problem is that a rising minimum wage is guaranteed to result in rising prices for staple products, while the majority of the people purchasing them aren't earning any more.
Facile example: as a middle class guy, I can pay $5 for a box of blueberries and just have them in the house. $10 pushes it to be a treat that I would buy ten times less often. $20 makes it a luxury I buy once a year at most.
If we increase the minimum wage, and fight for people working illegally under the table for less than the minimum (which has to be part of the plan if you intend to have any honesty in your approach), the result is necessarily that the price of blueberries will rise. If this pushes the cost of blueberries to the point where normal people won't buy them anymore, the business model becomes unsustainable.
As the wage rises, during the process, we'll see worker conditions deteriorate, an increased turn to illegal labour (and a commensurate demand for illegal immigrants to do it, which furthers that problem), and eventually either farms folding, changing crops to something more profitable, or perhaps subsidies coming in. Of course, we should have learned from corn what happens when we oversubsidize crops; at the very least price discovery is somewhat removed from the market and so things are priced cheaply that shouldn't be, people overconsume while tax dollars make up the difference, etc. One can probably argue that staple crops (wheat, etc) should be subsidized, but blueberries aren't quite as critical, are they?
To make an example more germane to this particular issue: if the minimum wage increases and all of the people involved in the chain leading to these food delivery drivers costs too much, when the potential consumer sees that ordering food is simply too expensive for them, they'll just give up. Entire industries that function because intelligent people have carefully budgeted around wages and expenses to eke out a living will be negatively impacted, and parts of them will fail.
And yet, we'll survive it. But let's not kid ourselves: the standard of living for the poor isn't going to get any better by changing this number. Instead, what happens is that the middle class effectively earns less (try calculating your salary as a function of the minimum wage - if you made 3x before, maybe you make 2.5x now; if you made 1.25x before, maybe you make 1x now....) while the rich don't even notice the change. For brief periods of time while the market settles, those at the minimum wage line will have an advantage, but once the price of goods and services finishes rising to compensate, it's back to square one. The purchasing power of the dollar simply drops to match.
I could buy a house in the middle of nowhere for pennies, but it doesn't matter since there are no jobs there.
Not everyone has the right to live in the Bay Area or NYC. These are top cities. If you're not top financially, then go live somewhere else.
That's the most important thing. There is not an incentive to move to smaller, cheap towns since there are not jobs there. Until remote work becomes more commonplace, people are de-facto stuck in expensive cities.
I planted a row of blueberry bushes 10 years ago. I now have essentially infinite blueberries when they are in season. I invite all friends, coworkers, and neighbors to come and take as much as they want each year. Most of them gift me things they grow or make in return at various times.
Blueberries are highly seasonal and perishable. It's not surprising at all that they cost a lot for fresh not frozen at the supermarket.
Fortunately blueberries are close to being a weed and require virtually no care to flourish.
As the price and demand increases more will be planted in backyards.
The costs to make a burger at McDonald's include property taxes/rent, food costs, utilities, other things, and labor. Labor is only one part of it. If a burger costs $1, and labor is 50% (very generous estimate), and minimum wage doubles, the burger now costs $1.50. Now at the end of a 4 hour shift the employee now has, say minimum wage rose from $7 to $14, $56 instead of $28. If they were going to spend that all on burgers, they used to be able to buy 28/1=28 burgers, while now they can buy 56/1.5=37 burgers.
So even with extreme examples, the minimum wage worker comes out ahead here. People who made more before can buy a bit less now but it's not as drastic as it's made out to be.
Beyond this hypothetical, here's a study that says rising wages to $15 would only increase prices by 4%. https://www.marketwatch.com/story/raising-fast-food-hourly-w...
"[I]n a new research paper by Doruk Cengiz, Arindrajit Dube, Attila Lindner and Ben Zipperer that looks at data during the period from 1979 to 2016 in 138 U.S. states and regions where minimum pay was increased[, t]he conclusion is that low-wage workers had a pay gain of 7 percent after a minimum-wage law was enacted, but there was little or no change in employment."
https://www.bloomberg.com/opinion/articles/2019-01-24/u-s-ec...
Businesses can adapt, like they do when unions negotiate better pay.
If you make vastly more than minimum and are a consumer of fast food, then don't you think that you will get better service from the one person making $15/hr? Plus, they're less likely to spit on the burger.
The thing about the minimum wage is that there is a market determined wage for a minimally effective employee, but if the official minimum is lower, and it generally is these days, business owners and managers will keep trying to hire at the legal minimum instead. You'd think the invisible hand, etc. but it doesn't work that way. The rule is "the law says X, so we do Y, the minimum required".
Potential bad effects from the top of my noggin:
* You've compressed the compounding growth in prices (inflation) by two years in one stroke.
* You've instantly decreased the buying power of a lot of people; worst affected are those not affected by the bump (recipients of disability, recipients of social security)
* Fun addenda: You've set the precedent for a 100% bump from the current federal rate, and its more likely to happen again, once more compressing the inflation timeline and further pressuring people that don't work a waged job.
Oh, and the reason putting pressure on inflation like this is bad is that it discourages investment, which leads to weakened economies.
The real impact is on the smaller burger joint that does less business and has higher costs on everything already. Now their burger - which was already more than the McD's one - is even more expensive, so fewer people go there, so profits drop, and the business owner either has to drum up business, raise prices further and hit a death spiral, or fail....
(Of course, this is me pretending that people who earn minimum wage are often financially prudent; in reality they'll just buy the burgers on a credit card and worry about it later)
It's often argued that nobody can afford to, but here you seem to be assuming that it is possible, but it's important to preserve the companies that are uncompetitive.
You might want to double-check your perspective here - a lot of these assumptions are overstated or just incorrect, and the effect of raising wages is well studied, no need for guesswork.
$15 now, $20 in 2025, it won't end. Inflation has some bearing on this, but largely the effect of raising the minimum wage is simply to hurt the lower middle class who have managed to climb one or two rungs up from the bottom.
I mostly wanted to point out the incongruity in your putting down of the article/author, when your argument is based on superficial assumptions.
Not so different, in terms of how they impact purchasing power. If anything, though, inflation is more egalitarian because it impacts everyone and everything.
See: https://www.bls.gov/opub/reports/minimum-wage/2017/home.htm
Work conditions become crap? GOOD. Can't run a business without slaves in shanties tough shit. Free market right?
Product quality goes to shit because you can't afford decent employees in reasonable working conditions? GOOD. The free market in action!
Are you afraid of a free market?
Why is this good? Do you not want to have access to a wide array of foods? Isn't it nice to have blueberries? Isn't it good that someone can have a farm as their family business and make it work, agriculturally? Would it somehow be better to just let that land do nothing while we all drink Soylent?
I'm not a free market absolutist. If I was, I'd have no problem with illegal labour or buying from slave labour in some other country. Yes, I am afraid of a completely free market, because I understand the Tragedy of the Commons. It doesn't mean I'm going to flip directions and become an advocate of complete state control of industry.
Your over-the-top rhetoric serves no-one and illustrates no point.
You keep using that word. I do not think it means what you think it means.
My definition is pretty simple, but it may surprise you if you think regulations go against a free market. To me, a free market is one that is transparent and has low transaction costs. And I think this is only possible if it is well regulated by an authority or government.
Minimum wage is $7.25 so $15 would double the wage cost worst case. The price raising to $10 due to that makes two incorrect assumptions: 100% of the cost is labor and blueberry price is determined by the supply side cost. There is no world that doubling the minimum wage result results in quadrupling the blueberries to $20 in your example.
In reality labor costs from the farm to the market are at most 10% (rice in 2018 was 3%) assuming no profit margin from there to purchasing from the store you could have at most a 5% increase in prices caused directly by this rise. And that assumes everyone is paid minimum wage. BTW a random search points to the average wage of a blueberry picker being $16 which is already over the $15 mark.
> fight for people working illegally under the table for less than the minimum (which has to be part of the plan if you intend to have any honesty in your approach)
I don't know why we have to mix the two, either can be done on their own.
> If this pushes the cost of blueberries to the point where normal people won't buy them anymore, the business model becomes unsustainable.
To reiterate the price of blueberries isn't based on their costs, it is based on how much people are willing to pay for blueberries.
> As the wage rises
You do realize that 75% of US workers make more than $15/hr right? And that the bottom 25% makes the smallest impact on the economy due to making the least right?
> And yet, we'll survive it. But let's not kid ourselves: the standard of living for the poor isn't going to get any better by changing this number.
Only in your weird economic world where you have decided that the cost of everything is decided purely on the minimum wage.
You are predicting the outcome that was the start of your argument. "If everything goes up because minimum wage goes up there is no point in raising the minimum wage" however you totally failed to make any effort to prove your point beyond if people make more things cost more. While true in an absolute sense it is not at all a 1:1 relationship that you have decided it is with no references.
> try calculating your salary as a function of the minimum wage - if you made 3x before, maybe you make 2.5x now; if you made 1.25x before, maybe you make 1x now....
So if we halved the minimum wage my cost of living will go down by half?
> For brief periods of time while the market settles, those at the minimum wage line will have an advantage, but once the price of goods and services finishes rising to compensate, it's back to square one.
You have put zero effort to show that this is a true statement yet you keep repeating it.
The price of everything is based on its cost, in the sense that nobody is going to lose money in order to get them to you.
> You do realize that 75% of US workers make more than $15/hr right? And that the bottom 25% makes the smallest impact on the economy due to making the least right?
It's the group of people right above minimum wage who are harmed the most, because they won't see any proportional raise. Of course, even if they did, it'd just amplify the negative effects. If we did have some proportional wage adjustment mechanism, it'd almost be better to just scale it _down_, instead.... but a steady state at the very least allows natural price discovery to have a chance to adjust everything back to natural levels.
The continual raising of the minimum wage (among other factors, of course) contributes to distortions in pricing that will eventually resolve themselves, but once they do, advocates will get right back out there and ask for $20, $25...
> So if we halved the minimum wage my cost of living will go down by half?
Obviously not, it's a nonlinear relationship, but just because it's not a simple or well defined function presently doesn't mean the relationship is not there. It's absolutely the case that some things would get cheaper for you, yes. Probably not luxury goods, but a lot of your staples would - and these are things that all of us need.
> You have put zero effort to show that this is a true statement yet you keep repeating it.
I've put in a lot of effort commenting all around this thread. No need to result to this kind of rhetoric. If you don't understand price discovery, that's fine; it's a natural phenomenon that happens whether you do anything or even believe in it or not.
I feel this is a case where an intuitive feeling for Amdahl's law might be useful. Although maybe people in these threads aren't typical HN types.
And yet all of your rhetoric doesn't attempt to show how they would suddenly be losing money if minimum wage went up. You need to at least talk about profit margins, portions of costs that are wages as well as the relative impact of that wage cost based on how expensive they were before the minimum wage hike.
For instance if someone is making $45/hour they aren't going to suddenly go to $90/hour because minimum wage doubled. Obviously everyone above gets bumped and anyone near it is going to go up as well but the overall amount doesn't double so your wage adjustment should include that.
> It's the group of people right above minimum wage who are harmed the most, because they won't see any proportional raise.
Only if you believe the cost of everything is based exclusively on the minimum wage.
> The continual raising of the minimum wage (among other factors, of course) contributes to distortions in pricing
Feel free to point to anything that shows this is true
> but once they do, advocates will get right back out there and ask for $20, $25...
Please stop presupposing your argument and going off on tangents. My point of contention is that you cannot say that prices will linearly go up with minimum wage.
> Obviously not, it's a nonlinear relationship
But yet everything you say very explicitly says it isn't just a non-linear relationship but a 1:1 relationship.
> It's the group of people right above minimum wage who are harmed the most, because they won't see any proportional raise
To reiterate your previous point which again says "all prices are a multiple of minimum wage"
> If you don't understand price discovery
I do understand macro economic effects including price discovery but you haven't brought up any actual macro economic effects beyond the cost of things.
> No need to result to this kind of rhetoric.
I will keep using it as long as you keep failing to support your central point. Heck the only time you even acknowledge you then contradict yourself on it.
No one who is fighting for a minimum wage of $15 is saying that everyone who is making minimum wage is going to be twice as rich if we make the change. Obviously it will result in increased costs in certain areas. For instance anywhere that relies on 80% minimum wage labor and a 30% labor cost will see a price increase of approximately 24%. However that is no where near the effect you are claiming.
More like 'have surprising insights and arguments about economics that I don't wish to engage with.' I have really had it with people who know a little bit of economics lecturing everyone else, it's like listening to someone dismissing calculus because they only know about arithmetic.