These business have a model that relies on poverty wages changing the minimum wage will disrupt these businesses greatly and I don't see a problem with that.
You can't keep a broken thing going because of the businesses that will have to change their model.
But sorry I also see your point there needs to be help to business to change their business.
Maintaining laws which force working employees into poverty in order to support inadequate business models is not the solution.
Employees outnumber business owners - more people having spending power is vital for the economy.
What is the change of the model in case of the restaurant? I can see only one, automate the jobs away to reduce the costs, namely replace humans with robots.
But, if we consider these crappy jobs, what about people that are not qualified/able to do any more advanced jobs? People have vastly different cognitive abilities, it is not like we can teach everyone to code. It will not work.
There will always be service sector jobs, this is the argument luddites were having in 1815 (I don't want to get into this as it is distracting from my main point).
We should be ensuring that anyone putting in 40 hours a week should be able to support a family. The wealth is there to be able to create this society (not saying it's easy not saying there are not problems).
Restaurants are a part of the service sector. A service job does not imply that it is attractive. And they differ in requirements. The well paid ones get more and more complicated and hence, proportionally to the whole population, less and less people will be able to qualify for them.
Finding shelter is exponential Harder now than any time in my memory.
We have a homelessness problem that it unpresidented. I would bet more people are now than anytime in history. (Pioneers could camp when they were tired. Cavemen weren't ticketed for sleeping under a ledge.)
Hell--30 years ago certain states were still offering homesteads. There's not an inch of land in the USA that live for free. (BLM land requires you to move every two weeks. Only some BLM land us open to camping.)
Try taking a nap in your closest park, or open field. You will get poked by a angry cop. You will understand loitering/trespass laws innately.
People, especially in service jobs, are living on top of each other. Why was the Corona virus so prevelant in the hispanic communities?
As to your previous statement, "We all can't be Coders." I have personally know three older Programmers. Two died because they aged out of the industry, and became homeless. The other is currently being harassed in Richardson Bay by Sausalito cops, and the coast guard, over a dispute of the seaworthiness of his sailboat.
One was Jim Fox. A huge contributor to Word Star. He ended up in San Rafael wearing a fuzzy Penguin outfit begging. He died a few years ago.
You might be one of those Service applicants in a decade?
(I'm not going to debate this guy. My biggest worry post Covid is the huge increase in homelessness we are going to see. The government needs to open up any excess federal, state, and local to to free camping. We need to put up tent cities. I feel it's going to get very ugly.)
Look, I might be convinced that minimum wage is too low, though I'm much more inclined to leave that as a matter for the employee and employer to reach agreement on.
But if you have no marketable skills and the only work you can get is entry-level minimum wage, you have no business starting a family as the sole income-earner. None.
The ability to afford adequate housing, food, and clothing. I'm not saying we should mandate people can afford a 1500 sq. ft. home, ribeye steaks every evening, and Ralph Lauren Polo threads, but how about at least a one bedroom, one bathroom apartment; nutritious, nourishing food; Walmart clothing at a minimum.
> What is the change of the model in case of the restaurant?
Removing the "tipping" system. Increase prices such that an employee can afford the above mentioned necessities.
> I can see only one, automate the jobs away to reduce the costs, namely replace humans with robots.
I think the industry will go here no matter what changes we do or do not make to policy, business models, etc.
> But, if we consider these crappy jobs, what about people that are not qualified/able to do any more advanced jobs? People have vastly different cognitive abilities, it is not like we can teach everyone to code. It will not work.
We either decide these people are expendable, or that they are human beings worthy of a baseline of a dignified life. I define a dignified life as the ability to have at least the minimums I described above.
Now, what does adequate mean? I guess a place to sleep, a place to clean oneself, food and clothing seems like a reasonable bar for a wage above poverty. Are there many full time jobs in the US that do not allow that?
> Removing the "tipping" system. Increase prices such that an employee can afford the above mentioned necessities.
Removing tipping and increasing prices beyond the tipping, it reduces to just increasing prices. I guess not very smart people create these enterprises, if only they hiked prices… And seriously, they definitely increases them, it is just a necessity. But I would not call this as a change in the model.
> I think the industry will go here no matter what changes we do or do not make to policy, business models, etc.
We do not have to necessary speed it up. People are already having difficult with keeping up with the changes.
> We either decide these people are expendable, or that they are human beings worthy of a baseline of a dignified life. I define a dignified life as the ability to have at least the minimums I described above.
Are there really only two options? Is not that a bit simplistic? And what does that even mean, do you think we should provide everyone with the job that ensures they have the mentioned stuff. What if they have different needs. And what if they do not qualify for any job, should we provide them with the exact stuff that people who work 40h a week get, or the equivalent in money? How is that fair for those who do these boring jobs.
Very many.
I would say, a place where you don't have to share quarters with strangers, be exposed to violence, drugs, have your sleep interrupted, where the housing is stable enough that you don't need to leave work in the middle of the day to attend an emergency court petition to prevent your immediate eviction due to landlords non-payment of mortgage and interception of mailed eviction notifications, where you don't have to leave under cover of darkness with colleagues who know how to handle themselves as your bodyguards so that you can spend a month or two sleeping on a friends sofa while you try and wait for a room to open up in something resembling a half-way house for recently released prisoners.
Cos I mean, those were about the best conditions I could afford while working for a profitable multinational tech company while I was developing a key piece of the Internet infrastructure that everyone on this site uses daily (in a wealthy area of the UK).
I won't name the company, but it rhymes with "Clit Tricks"
> Are there really only two options? Is not that a bit simplistic? ... should we provide them with the exact stuff that people who work 40h a week get ... ?
Is _that_ not a bit simplistic? Is it really so difficult to imagine a world where working 40 hours a week is either a) dignified enough not to be totally demeaning and exploitative _and_ meaningful enough to carry some intrinsic reward, or b) pays noticeably more than the bare minimum required for an existence at least befitting the dignity of animals in a zoo, never mind human beings?
These poor countries don't have any special techniques or mystical cultural powers. For example, the fact that south Korea has adequate flood defences and the UK does not is not because Korean culture lends them a racial character uniquely cognizant of water management passed down from their ancestors over generations of rice cultivation or whatever... There is absolutely no reason the UK is unable to "throw money" at constructing flood defences (altering planning policy, etc.) if they were to so chose.
The idea is not to "escape the hellhole" but to transform it in to "not a hellhole", through the direct, rational application of readily available, and completely straight-forward policy mechanisms.
But maybe it's too difficult to use political policy as a tool to achieve desired outcomes and we should blame the victims, turning it in to a nebulous cultural or moral failing and then wait around for the culture to just spontaneously change itself, eh :)
https://www.cnbc.com/2020/07/14/minimum-wage-workers-cannot-...
There some restaurants that tried to go no-tipping, but I think it didn't work out for them because they had a hard time finding/retaining staff.
the largest harm of the tipping model is in states that do count tips towards minimum wage. the wage paid by employer may be under $3/h and the employee mostly survives off tips. this means that tips are only subsidizing the employer, because an increase in tips is matched by a deduction in the wage paid by the employer, to a limit.
there are some rare instances, mostly luxury dining, where tips can far outpace typical restaurant wages. in this context the employer can afford to massively increase wages. there have been arguments made that these tips pay for the quality of service, but there is no reason this incentive and expectation can’t come from the employer directly, and it would remove the uncertainty of irresponsible customers failing to tip.
in all contexts, switching from tips to a real wage has many benefits to the employee when wages are adjusted properly, no detriments to the customer, and only harms businesses that are currently exploitative and doing harm.
> “Andrew was very disappointed,” says an employee of Tarlow’s restaurant group, Marlow Collective, who asked to remain anonymous. “But when we went to non-tipping, we pretty much lost our entire staff that had been there for ten years. He wanted to make it work, but it just became really difficult.”
> ...
> But, it turned out, many front-of-house staffers were more concerned with making money than with maintaining the moral high ground. This February, Meyer admitted that he had lost 30 to 40 percent of his “legacy” staffers since 2015. (One Meyer employee told Grub last year that her wages dropped from $60,000 per year to $50,000 under the new policy.)
> ...
> Without widespread buy-in from other restaurants, it’s just too easy for front-of-house workers to leave to make more money elsewhere. “About 40 percent of our servers were like, ‘Hey, this is awesome, but I’m going to go to State Bird Provisions, where I can make 10 percent more,’” Vogler says. “And who doesn’t want to make 10 percent more? They’re not freedom fighters.”
To be sure, maybe they didn't do a good job implementing it. But the cases I've read about restaurants switching to no-tipping usually seem to run into problems with servers being able to earn more money with tips than without them.
I think perhaps part of the problem is that a uniform increase in prices will make people who would have tipped poorly decide not to go, and people who would have tipped generously now pay less. So before with the tipping model, the well-tippers were in effect subsidising the poor-tippers, but now the poor-tippers are gone so there is overall less revenue for the business and servers. But another issue is that they took some of the income earned from the higher prices and gave it to the kitchen staff, which would have been money that would have been available for the waitstaff.
[0]: https://www.grubstreet.com/2018/12/restaurant-tipping-return...
i doubt there is real effect on the orders that customers place, but nobody's publishing their books, so who can say. in a systemic change in which every restaurant transitions to an untipped system, there would be no concern about losing out to a restaurant that continues to lower prices by exploiting servers.
Sure, if every restaurant switched to no-tipping, then waitstaff couldn't simply switch to a restaurant that did tips. But I would suspect they would make less money overall.
Are restaurants without tipping losing out to a restaurant that is 'exploiting' servers if servers are choosing switch to that restaurant rather than stick with the restaurant with the 'non-exploitative' no-tipping model? I cannot see the logic in that. Are you saying servers who leave a no-tipping restaurant for a tipping restaurant are choosing to be exploited?
if the concern is that workers may be paid less, the solution is simply don't pay less.
The money is already there, and the current situation is that customers are literally giving most of it without obligation. It makes sense to formalize the relationship, and properly allocate responsibilities to the business owner.
The entire debate is a deflection of responsibility for employee compensation.
> This study examines the effects of such moves away from tipping on restaurant’s online customer ratings. The results indicate that (i) restaurants receive lower online customer ratings when they eliminate tipping, (ii) online customer ratings decline more when tipping is replaced with service-charges than when it is replaced with service-inclusive-pricing, and (iii) less expensive restaurants experience greater declines in online customer ratings when replacing tipping with either alternative than do more expensive restaurants.
> ...
> Given the already ubiquitous and increasing popularity of online reviews, and the influence that such e-word of mouth has been shown to have on consumers’ purchasing/patronage behaviors (see Kim, Li, and Brymer, 2016; Ong, 2012; Zhang, Ye, Law, and Li, 2010), our results also have important implications for restaurants’ bottom-line that warrant being underscored. For instance, in a longitudinal analysis (2003- 2009) of Yelp online reviews and revenue data for every restaurant in the city of Seattle Luca (2016) recently estimated that restaurateurs can expect a 9% increase in revenue for every one-star Yelp rating improvement. Thus, if the results of our study are shown to be reliable and Luca’s (2016) estimate generalizable then it follows that low and moderately priced restaurants that decide to replace voluntary tipping with either automatic service charges or service inclusive pricing can expect to experience a nontrivial loss in profits as a function of lower online satisfaction ratings.
The paper notes that raising prices whether through services charges or what will be a price increase for a significant percentage of the clientele:
> Additionally, tipping is a form of voluntary pricing and price discrimination that results in approximately 25 percent of customers tipping less than 15 percent of bill size and 65 percent of customers tipping less than 20 percent of bill size (Lynn, 2017a), so replacing tipping with service charges or service inclusive pricing will raise dining costs for a quarter to half of restaurant customers and this is likely to reduce the overall satisfaction of those customers.
One restaurant that had switched to no-tipping before abandoning had tip averages of 21%.[1] I don't know anybody who tips that much, but apparently they exist. But if you increase prices by 21% on all clientele, then the restaurant becomes more pricey compared to restaurants that do tipping. Someone who would have tipped 15% might just go to another restaurant and tip that much, whereas a particularly generous tipper who would have paid 25% to make the average about 20% between these two is now just paying that 21% price hike - that's an overall decline in revenue. And the restaurateur said his mistake was not raising prices high enough to cover both the waitstaff wages that they had been getting from tipping ($25-40/hr) and raises for the back-of-house staff; he says he should have raised them 40%! Perhaps he could have done so, but it seems likely he would have been doing less business and had to downsize.
But OK, let's assume that somehow restaurants earn the same amount of income as before with hiked prices and no tipping, and that extra income is paid to the staff. If any money goes to the back-of-house staff, that means that the waitstaff would be making less than they did before. Do you think it's reasonable for waiters to be making $25-40/h while the kitchen staff is making $13-20?[1] I don't particularly think it is, and if tipping culture eventually ends (which, make no mistake, I am no fan of tipping), we would see waitstaff being paid less because now they can't switch to a restaurant where they can make more than tips, but we might see kitchen staff make more. However, this would necessarily mean that waitstaff are making less money.
[0]: https://static.secure.website/wscfus/5261551/7004898/ijhm-ti... [1]: https://www.npr.org/sections/thesalt/2016/05/15/478096516/wh...
I have no problem with raising back-of-house wages, they are typically undercompensated compared to front-of-house, even though the work is comparable and all of it counts towards the dining experience. Raising kitchen wages does not necessitate lowering server wages, and suggesting it does only encourages division and confuses the situation. It is worth noting that tip pooling with kitchen staff is standard practice in many restaurants despite being flat out illegal until recently, so the situation you fear already exists, and could be remedied by moving away from a tipping system to explicit wages.
Again, it is worth formalizing the relationship and clearly allocating responsibilities.
Then kitchen staff will continue to be paid poorly. Just understand that's the tradeoff.
> Raising kitchen wages does not necessitate lowering server wages
How?
> It is worth noting that tip pooling with kitchen staff is standard practice in many restaurants despite being flat out illegal until recently
It's still illegal in many states. Meyer, one of the restaurateurs who switched to no-tipping and back, is in New York, where it's illegal both to add a service charge and to collect part of the tips to share with kitchen staff. Switching to no-tipping allowed him to compensate the kitchen staff more fairly, at the expense of the departure of his entire waitstaff.
If it’s a tradeoff it’s only a tradeoff that management chooses to make.
>How?
How what? It’s a business operating within a market. They will do something.
None of this is a binary mechanistic outcome determined by a boolean of tipped or untipped service. The restaurant has a budget and they will spend money and set prices as they think best, and succeed or fail based on that. There is no law that dictates zero-sum competition between kitchen and server wages, and all else static! Clearly in a market in which tipping is not practiced, a business will behave differently than the current market, and employees will expect appropriate wages.
>meyer etc etc
this is still another case of an employer making administrative choices about how much to pay different workers, and workers reacting to those decisions. if the waitstaff were given an equivalent or better wage to their previous wage+tip compensation, they would have had no reason to depart. this was explicitly not the case: the servers left because the transition gave them a pay cut.
it makes no sense to blame tipping or not tipping for bad budgeting and failed wage negotiations. the issue is in the allocation, not the concept.
again, this is a case of employers deflecting responsibility for compensating their employees.
i am advocating that employers be held responsible for paying their employees. the current tipped service regime fails to attribute that responsibility to employers, and leaves employees vulnerable.
i have seen no-tip service implemented in a way that satisfied employees. i have seen also it done in a way that drove staff to quit, and in those cases the fault lay entirely with management trying to reduce compensation.
stop asking questions about a fantasy budget. i do not care. if tipped service was abolished tomorrow, employers would figure it out.
Have you seen no-tip service implemented with waitstaff earning as much as they did before?
> if tipped service was abolished tomorrow, employers would figure it out.
Of course they would figure it out if tipped service were abolished. But I am confident the outcome of whatever they figured out would result in lower take-home pay for waitstaff, as waitstaff would no longer be able to earn more money by switching to an establishment that allowed tips.
Yes. This entire thread is just me telling you repeatedly for twenty-four hours that equivalent compensation is the only thing that works.
If the choice was $10/hr + tips or $15/hr, I’d take the tips.
It's interesting to see how standards have shifted over time. Not too long ago, it was considered sufficient if people could afford their own room in a boarding house. Those frequently had shared bathroom and dining facilities, and provided nutritious and nourishing meals. That was considered a worthy, dignified life by a great many.
Boarding houses went away in no small part because they were zoned out of existence. Often on the grounds that they were an immoral existence and it was the duty of the best of us (read: richest) to mandate a correct social order for the lower classes.
I find this interesting because it implies that we're going to continue to have this problem - a lack of dignity - no matter what we do. You can already see the ratchet turning. There are people who earnestly believe that food isn't nutritious and nourishing unless it's Organic (by some definition) and thus that universal access to Organic food is a moral requirement.
to me, this part sticks out like a sore thumb. a 1BR where? I make well above the median wage for my area and I can't afford a 1BR anywhere near the place I work. literally no one would consider me to be poor. a 1BR, coming with a private kitchen and bathroom, is a luxury for a single adult. it's not at all an efficient use of housing space.
a more reasonable threshold would be a private bedroom with space for a desk.
If you work full time as an adult and are Medicaid eligible, you’re being paid poverty wages.
> What is the change of the model in case of the restaurant?
Raise the prices.
It’s already happened anyway, the market has plenty of elasticity. Restauranteurs always whine about how impossible it is to raise prices, yet they seem to manage to do so just fine.
Fast service restaurants have already adapted. Five Guys or Chipotle cost more for a better product. McDonalds has to remind you on the wrapper that their burger contains beef.
This is generally not possible at twice the cost. The robots generally suck and break down a lot. Now you've replaced a bunch of low-skilled, interchangeable staff who work like dogs with a fleet of mechanics and an engineering department.
Half of the McDonald's automated kiosks I see are broken - and it's usually the store's entire system down, for weeks or months on end. I went to Home Depot today to grab some WD-40, and when I went to do the self-checkout, each of the four stations had a clerk helping the customer "self" checkout. To circle back to McDonald's - it's always been a joke how difficult some fast food clerks find their POS systems - where does this fantasy come from that customers are going to be better at it?
When it is possible to automate a job away, it is desirable. It's good that raising labor costs drives technology development. The better technology we have, the more comfortable we can all be, and the less we have to work as a species.
> When it is possible to automate a job away, it is desirable. Yes, it reduces the cost (of the workforce). However, this change comes with a nontrivial social cost and a problem, what to do with the people that are not able to do more advanced stuff.
I think you have a widely unorthodox defination of "force" as no one is forced to take any job at any wage.
Force in the equation would come from the government using the threat of government violence to force a wage on a business owner.
A person that voluntary accepts a job for X wage is not "forced" to do so.
That's the way I see it.
But equally is it ok for people to work hard and long hours and only barely make Or not quite make ends meet?
Sorry I should note that I am not saying you are advocating for the above(could be misread).
If you set the minimum wage at $15/hr and do nothing else, you have made that person worse off than today. Everyone around them now has more money, so everything is becoming more expensive. They now can’t find or keep a job, because any employer who employs them is losing at least $200/week, $10K/year by employing them.
I don’t know what the optimal solution is, but it’s not clear to me that the above is it.
There are many people coming up with solutions but clearly 'free market' adjustments have failed an increasing number of workers.
But I will disagree with your economic value question, I think service workers are undervalued greatly.
There is a giant disconnect between wage and economic value, the market is terrible at connecting the two.
And several developed countries have no floor other that agreed by through collective bargaining.
https://www.investopedia.com/articles/investing/080515/5-dev...
This isn't a matter of improving the situation for everyone, it's a matter of improving the situation for the majority of min-wage workers.
If someone genuinely can't provide $10/hr of value, then either 1) they need to upskill (and there are social services for that, although perhaps not in the US idk) or 2) they're like one of those literal retards who are becoming literally unemployable, and the solution is either to subsidize their employer (which is okay in this instance because you're not subsidizing a race to the bottom like you are with subsidizing normal e.g. McDonalds wages) or put them on a disability pension.
But realistically, most people are capable of upskillinng and that's what they should be doing if they're not valuable enough to an employer.
It can simply pay you the wage as an indirect subsidy to stimulate production.
It can employ you in the construction of infrastructure. The infrastructure of the US is dilapidated to the point of national disgrace.
It should still mandate living wages, the same way it should not allow employers to lash their employees or own them as chattel, or any number of other practices which are both immoral, and cannot find any temporary justification due to exigent circumstances (eg. literal struggle for national survival...)
How I see it, labor cost have been cut, while rent has gone up and prices have gone down.
If you increased minimum wage, it would put pressure on prices to go up and rent to go down, both would increase the value of the labor itself.
I think this whole dynamic is way way harder to model and predict how it'll play out then everyone makes it out to be. None of people's simple projection account for it all. Even economists with fancy models backed by simulations, math, and all that can't figure out the real outcome and often disagree with one another on what would happen.
It's not as easy as saying, half the restaurants are going to shut down, and leave empty all those commercial space. What happens next? Maybe some customers start to be willing to pay even more to get back some of the great restaurants they lost, or their proximity to them. Maybe landlords have to lower their rent for something else to fill in the vacancy, etc. Maybe everyone is happy with only half of the restaurants remaining, and each of those restaurant is making twice as much now allowing them to hire more staff and pay even higher. There's a lot of balancing act that could happen.
Further at the end of the day wages are not the problem, cost of living is, economic value of labor is. Waving a magic wand and proclaiming a new min wage does not resolve those root issue, it may in some limited circumstances help a few people for a limited amount of time, but you need to resolve the root issue which mandated minimum wages increases is not going to do and often harms the very people you are looking to "help"
This means to make this a free market many nations did the reasonable thing and introduced measures like minimum wages and unemployment benefits. This way when you loose your job the balance of power evens out a little and the job market works better for all involved (workers have a highee chance of finding a job they like, companies have a higher chance of getting people that like them, really shitty companies get an incentive to change).
In the US all shitty work places have no incentive at all to change, because everybody and their dog is struggling to make ends meet. That means no matter how slavishly they treat your people, there will always be another person desperate enough to throw themselves into the grinder. Result: No incentive to change for the company and people who feel like society ows them nothing.
I don't think that is recipe for a bright future, but who am I to judge.
So from a systemic perspective minimum wage is like a limit you can set for how desperate you allow people to get. And quite frankly. 15 USD is still less than if you had adjusted the original minimum wage for inflation, so come on.
This is, to begin with, not true. It's common for small businesses to be operating at the margin. If you don't have someone making the sandwiches then you don't have revenue and you still have rent and utilities. That math puts you out of business in a hurry and then the owner (whose wages came out of the revenue they now don't have) is facing the same circumstances as the employee.
But on top of that, even if you existentially need a job, that doesn't mean you need that job. You can pick the one that pays the most.
Where this falls down is when all of your alternatives are terrible. But if all of your alternatives are terrible, prohibiting you from choosing the one that was the least terrible (e.g. because it's right across the street but pays $2/hour less instead of being a two hour commute for $2/hour more) is not actually helping you.
To do that you need something like lower housing costs (so the wage you can earn is enough to live), or some kind of free community college so you can learn a trade that pays better, or a UBI. Not a minimum wage that could take away the job you currently existentially need.
I will never stop being amazed at how Americans argue that something decent is wrong, or untrue, or even impossible... when Europe exists.
I do not want the US to be Europe, that is nothing short of a dystopia for me a person that wants Individualism, and individual freedom. rejecting Authoritarianism and Collectivism
If people in the US like the EU model soo much then i encourage them to expatriate to that location. Stop trying to make the US into the EU
I never said Europe was Utopia. All I said was, decent living.
> that is nothing short of a dystopia for me a person that wants Individualism, and individual freedom. rejecting Authoritarianism and Collectivism
Ah yes. Says the person from a country where charities stop giving aid to poor African countries and redirect their aid to Americans.
> If people in the US like the EU model soo much then i encourage them to expatriate to that location.
Those who have the means to, do.
I can't find hard data, but probably we should not say that "those who have the means to, do". It's likely more of "a tiny percentage of those who have the means to, do".
Yes. However, the main reason I phrased it the way I did is that "if you don't like it, move to a different continent" is a very arrogant approach.
An American barely surviving on minimum wage is very unlikely to move to Europe.
Believe it or not, a lot people, in poverty or otherwise, really like the unique things in this country and most would rather have it this way than to move to Europe (which has its own share of major problems despite being a cool place overall).
Also, poor people rarely know the reality of other countries. I have friends in the States who firmly believe that Europe is a hellhole even though they are literally a medical emergency away from a bankruptcy.
And even if they did they would be far less likely to contribute meaningfully to the commons in Europe to support that social safety net. Therein lies the rub.
The only way to provide the productivity that funds the social safety net is when those providing the safety net far outnumber those consuming it. As this gets out of balance, those providing it start to resent those consuming it.
When it gets out of wack, you get situations like the DDR and North Korea, where the government needs to erect walls to prevent the productive people from escaping that shitty deal.
You can only achieve this balance in a high trust society where there is social pressure not to be on the consuming side for longer than is reasonable to get back on the producing side.
Guess what destroys that high trust condition? Bringing in outsiders faster than can be assimilated and/or eliminating the expectation of assimilation as the US is doing and Europe is now starting to do.
It's not that you can't bring in outsiders and maintain a high trust society. You can. But that takes work and it requires an acknowledgement that a high trust society is something that we should be trying to preserve while we do things that can hurt the current state of trust in a country.
From a trust perspective, the US is at a low probably not seen since either the Civil War or the Great Depression. We should solve the trust issue if we are to have any hope of building the social safety net features that rely on high social trust as a foundation.
In Europe there are zero businesses operating at the margin that would go under if unable to staff their operation? That was the thing you are responding to.
Well, Europe did raise minimum wages. Undoubtedly, some businesses did go under when that happened... So what?
Did business cease to exist in Europe?
Oh sweet summer child. When you are in debt and struggle to survive on a day to day basis, time is your enemy You cannot afford not to take a job. And if you are lucky enough to be able afford it today, you might not tomorrow.
Another thing: many people need more than one job as it is now. Guess what: if you pay people a decent living wage more people can actually get jobs, because less people have to do two or more. If your business is so inefficient it can't support minimum wage labor, it was doomed to fail before. Again: even McDonalds manages to pay minimum wages in Europe and their prices are roughly comparable. You are being gaslighted by the people profiting from that modern form of slavery.
you are right in recognizing that living costs are an issue as well, and they are an issue in many big cities. The known solution for this issue is publically owned housing which you shouldn't put into their own districts (thus creating ghettos) but mix them in throughout the city (Vienna's "Gemeindebau" is a good example for this, Vienna repeatedly got the title "City most worth living in" over the past decades). Don't only put poor people into these houses, make them decent and make them something people want to live in. Make them cheaper to rent than other flats (this way the rents in the surrounding areas cannot go up so fast). But most importantly: this must be done from the public side — nobody else in control has the incentive to act in ways that lower rents.
Aside from all this, what the US really needs to do is to look at all the other countries that are comparable to the area you are living in and wonder why they are doing so well without all the doomsday scenarios your politicians make tou believe (both socially and economically). Whenever I talk to US citizens about this they are either completely delusioned ("I live in an oligarchy") or they pretend their problems are so unique the rest of the industrialized world never had to deal with comparable things. "Who knows, maybe it cannot be solved at all", they say, while it was solved literally one country over since half a century ago.
That's like wondering whether man will ever be able to move faster than a horse, while your neighbouring country has airplaines they use on a daily basis.
Housing is an issue in big cities largely due to government policies that both limit inventory (building and zoning regulations) and limit profitability (rent control) that make is extremely undesirable to create new housing.
The solution to this is NOT government housing but less government regulations about building new housing
Where and when did this work? Have you any examples?
One article to get you started (nothing special about this one, it's just the first I saw from google): https://www.wsj.com/articles/what-housing-crisis-in-japan-ho...
As to the earthquakes/natural disasters bit for why they build relatively disposable homes - does that happen on the west coast of the US, for instance? I'm genuinely interested, if anyone knows.
ugly is subjective so I won't touch on that.
The low standard one is reasonable as that is what keeps costs low. The alternative is high standard and high cost. You can't really get high standards for low costs.
If the government dictates that all housing needs to be high standard, the collateral damage to that policy is that you can only build housing that prices people out of the market.
I agree but here they're also expensive, which, in my view, is a symptom of the corruption and lack of a free market.
> ugly is subjective so I won't touch on that.
Again I agree, but if you're into industrial estates with lots of concrete and overhead wires galore, then Japan is the place for you. I'm sure someone likes it, maybe the brutalists who made the ugliest parts of my country (the UK) after the war.
Please try to keep the snark out. If they were snarky to you then I say go for it but I didn't notice they were snarky to you and, regardless of whether you agree with them, their contribution to this discussion is worthwhile.
Let's try and keep HN a cut above.
Needing only one job is a historical anomaly as a result of an industrial society. Historically, people would have to perform a variety of tasks to provide for oneself.
Furthermore, more than one job de-risks someone's situation just like a consultant with many clients can handle the loss of a single client and not see their income fall to zero.
It's the total hours of paid labor over N jobs that you should look at instead. If you do 60 hours a week at one job or three jobs for 20 hours each, you're doing the same amount of labor with less risk.
The only qualitative difference between one 60 hour job and three 20 hour jobs is the benefits received from working 40+ hours for a single employer, but this isn't an issue with how many jobs you work. It's an issue with an artificial asymptotic condition created by an act of legislation by government.
Every time legislation creates artificial asymptotic conditions, you're going to get actors that optimize around that artificial boundary condition. If you want to avoid the circumstance, you need legislative solutions that are continuous in nature instead of asymptotic.
In other words diversifying your income only decreases risk when you don't need all of it, you'd be hard pressed to argue that that group includes those earning minimum wage.
This is a myth that is often repeated, but I have yet to see it proven.
The Original Federal Min Wage was passed in 1938 and was $0.38 per hour, Adjusted to 2021 that would be $7.14
In 1981 it was raised to $3.35, in 2021 dollars that would be $9.76
In 2009 it was raise to where it is today, $7.25 ($0.66 lower than a pure inflation increase should have been) and is 9.26 in 2021 dollars
So if you want to do a pure inflation adjusted min wage it would be no more than $10 not $15
I can find at no point in the history of Federal minimum wage would have wage inflation adjusted be more than $15/hr today. I can debate the merits of minimum wage, the ethics, etc, but we have to be having a debate with actual facts not political talking points.
If computer processing power becomes cheaper an cheaper, but real estate housing value double in a decade, we have 2% inflation?
Given the context this would be the standard model upon which dollars are adjusted for inflation over time, tools like usinflationcalculator.com make this easy to factor in what that would be
If you want to shift the debate to "what is inflation" that is fine, but that is not the debate I am having in this comment thread
Before jobs offered by others existed, not working in some form would have been existential for those people. This is the de facto state of existence. You'd have to at least do some form of hunter/gathering or subsistence farming.
This increasingly common idea that individuals no longer are obligated to provide for themselves is wild. The only way around it is to obligate others to provide for you instead of providing for yourself. The last time this was a common idea in the United States was in the in the antebellum South.
It wouldn't be by force if people did not need to pay for the basic necessities
You know this and are making a bad faith argument.
What is your goal?
Maybe they have a slimmer margin over here, but they are still profitable. That implies that the model is (in principle) just alright, but there are financial flows that will have to change in the US. Of course you don't like to pay more for the labor you use to generate profit — ideally you wouldn't have to pay anyone at all!
If you can't run you business with minimum wage labor, maybe tou are not good at doing business and should change careers instead? Because many businesses in many nations have not the slightest issue doing just that.
Unless you’ve done an FSA class and you can explain me your thinking more, it’s worth appreciating there are a ton of levers that impact Corp finance. Same way you have performance trade offs for one algo vs the other.
Furthermore, 82% of McDonald restaurants are franchises i.e. not owned by McDonald. https://www.fool.com/investing/general/2016/04/03/what-perce...
There are a number of reasons corporate entities operate certain or many stores at a loss. Very well known example is flagship locations that are locally at a loss, but earn for the brand on other ways. Example being Times Square NYC locations. This still makes sense at a franchise model, but less likely I bet.
EU isn’t a flag ship obviously, but I also didn’t say loss. Loss leading is similar, but not a perfect analogy (sure).
My earlier example still holds, even with franchisees per the term, but you should expand your bad event set to loss or low profits. On the net, being in Europe is worth it despite higher operating costs, but maybe USA operating costs need to be lower as a result.
I mean this all to say, there are so many factors involved such that it’s a false premise argument without controlling for intra-market differences.
Clearly it is possible to operate McDonald's in the EU and not burn money. Thus clearly there is a fast food business model that involves paying higher wages. Does this mean that every fast food store will remain profitable with the same hours? Probably not, but it does clearly mean that some fast food stores would be able to stay open and profitable.
However, McD EU could be less profitable, McD picks up the slack.
This is fairly straightforward financial accounting.
Which is all to say: without discussing this from knowledge of a form 10k or similar details is a very weak argument approach.
“ That implies that the model is (in principle) just alright”
It implies any number of things, but not that if the model works in EU it can also coexist with the same model in the US. The scenario I said is an easy and fairly common example of why they could not coexist.
Without breaking out a form 10k and a fair bit of financial statement analysis, it’s somewhat like saying that “well I get 1GB internet in NYC, it implies the model for fast internet works so we could do it in Montana tomorrow.”
To the extent that it’s important to know and discuss the actual factors involved such that the MBAs doing these decisions at McD will take you seriously, that implication is seriously flawed. Hence, why this hasn’t changed since Milton Friedman and the 80s. Ever wonder why that is? It’s because arguments made without any Corp fin awareness don’t work with the audiences with the power to change it.
What are you trying to argue?
Those functional business models are quite possibly/likely able to exist, or figure out how they exist per corporate policy, by opportunity costs other areas of the business, namely - American wages and/or American franchise terms.
I’m not sure if you’ve looked up an SEC Form 10K before, but that’s a good place to start to examine how this can look.
When McD EU, or similar, can function basically as its own corporate entity, this is even more possible.
When spanning national boundaries and regulatory space, you’re comparing an orange to an Apple by saying it works in EU, QED it should work in USA. Especially when it all flows through a choke point of SEC reporting and investor expectations/public listing in the US.
Really need to look at the financial statements to make that sort of claim, not just “it works there it can work here.”
So as far as I can tell, you are just trying to spread doubt without doing any work to justify that doubt.
IMHO fast food is a durable industry and while prices/locations/hours may change, it seems absolutely ridiculous to argue that there isn't a business model that will be profitable.
I have pointed out a couple known and realistic examples why wages in one country doesn’t imply they’ll work in another, under the umbrella of a single corporation.
As you say, making that implication as OP and you did is spreading a claim Without doing any work to justify that claim.
That work needed is financial statement analysis, starting with breaking open a 10K. It’s not my job to do that, as you’re the pair that made the implication in the first place.
I’m pointing out that by you not doing the work to justify the claim, there are numerous straight forward financial accounting reasons for why the claim could be wrong.
If you don’t know much FSA, that’s fine, but from that knowledge base you should know that you’re basically saying it could rain purple and it’s my job to use standard weather data to disprove why that’s not the likely answer.
What’s more important: sensitivities or understanding how the decisions actually work so you’re in the mix to change things with the audience to change it?
They can wait out ethics based arguments for decades, and they do.
The moment a community activist actually starts calling corps out on their sh*t from the perspective that’s actually used to build these policies, then the corps lose their main advantage which is ignoring calls to ethics like this which don’t work as they’re not at all related to the MBA’s incentive structure who makes that decision.
Conceptually, I agree with what you're saying (I also feel very strongly about off shore manufacturing for the same reasons) but, practically, when you increase the minimum wage, the poverty jobs will disappear and _eventually_ be replaced. The problem is the transition period. The real minimum wage is always zero.
The only articles I've ever found that say that come from the Heritage Foundation or the American Enterprise Institute, and neither of those is anywhere near an unbiased source.
All the research (excluding the pieces from those two think tanks) suggests that the job markets remain stable through minimum wage increases, and in some cases the labor markets actually gain jobs -- possibly because more money in the hands of poorer people is going to go right back out into the community, as a matter of need.
If we're talking about raising the minimum wage arbitrarily high, then this is true.
But this argument also gets made a lot when we're talking about a specific proposal (such as $15). For a specific proposal this argument is not always true.
It was raised a ton in Seattle when Seattle was considering a $15 minimum wage. Endlessly. The main argument was that it would devastate employment for the jobs it was supposed to improve.
Then the minimum wage increase passed and it didn't do that. Employment in those jobs actually went up slightly (probably not a casual increase, probably more coincidental). But it certainly didn't devastate the employment in minimum wage jobs.
So, the argument is one that feels compelling since it is true in the extremes. But it needs to be evaluated with the facts of each proposal.
Labor is typically 20-30% of a restaurants costs, doubling that from say $9 to $18 would add another $2-3 to the price of a meal.
Doesn't that just end with bankrupt businesses and unemployed workers?
Look at empirical studies of past minimum wage increases and you don't often see unemployment increase. The employment rate is often stable through a minimum wage increase.
I do think employers should be conscious about the kinds of lives they set their employees up for, though we can talk about that without overgeneralization.
1. According to the US Bureau of Labor Statistics, about half of people making minimum wage or less are older than 25 years old.
2. A single person working a full-time job (32 hours) at minimum wage makes $12,064. The US federal definition of poverty for this individual would be anything below $12,880. So yes, minimum wage workers are literally, by definition, working for poverty wages.
For one, even with your statistics, half of folks employed are school-age. Also, poverty is measured by household. Confusing the math isn't a good way to make a quantitative argument.
But mostly your argument is a semantic trick around the word "poverty" to rationalize weighted terminology.
Again, I have strong feelings that employers should be conscious of the lives and prospects of their employees. For instance, having policies that lead to irregular patterns of night and day shifts that have to be unhealthy long-term. But we can have rational discussion about these issues.
The figure they used was for a household of size 1, so I don't think they confused the math and I think they made a perfectly strong quantitative argument.
By the way, even if it is just teenagers, I don't think that should somehow disqualify them from earning fair wages. They aren't being "provided" jobs, they work to produce value for a company, and and should be compensated fairly regardless of their financial situation.
88 percent of people making the federal minimum wage are older than 20. A third are older than 40. Median age is 31. More than half work full time.
We do this is Europe, we pay something called 'kid allowance'. In some places people make 10 kids for the allowance, ignore them or mistreat them and live on that money.
I didn't "pay my way through school washing dishes" or anything like that.
I wasn't supported by my family so the extra income through low pay jobs was critical.
Aren't they though? You don't get a discount on rent because you're not 20 yet, and being under 20 doesn't mean you have rich parents that can subsidize your lifestyle.
More specifically, having a roommate or two or living with some family unit is fairly normal at that age. So other income needs to be accounted for to make that semantic argument stick.
Of course not everyone can have employed housemates. But even in those cases, it's not clear to me that banning 16 year olds from working those jobs helps all those 16 year olds. It seems likely that many of them end up worse off.
The wealthy wouldn't notice. Their teenagers are entrepreneuring and racking up unpaid volunteer hours to pad resumes. The teenagers with jobs are the ones that could use the money.
The kids that are hard-working and poor will find something else to do. You don't have a right to exploit kids.
Besides I found really distasteful when I was in my 20s being told that I didn't need the additional money because I didn't have a mortgage.
I don't think we need to rely on employer moralism, so Dickensian.