You’re Lucky Workers Are Only Asking for $15 an Hour
gen.medium.com
gen.medium.com
One of the things that tends to not enter these discussions is that the US has torn down about a million SROs[1] and largely zoned out of existence the ability to build other small scale homes currently being called Missing Middle Housing.
When walkable neighborhoods were more the norm and you could get just a room or small place as market rate housing without having to go through some government program with long wait lists, you could live on not much money. Now a car is practically required to make life work in the US, housing is expensive as hell and then we argue about income and I get told by random internet strangers that the high cost of rent is irrelevant to discussions of homelessness, and never mind that studies contradict such claims.
Meanwhile, housing costs and the fact that it's so hard to live without a car tends to not come up at all in discussions of this sort.
Now, with many fewer motels we have shrank our pool of ultras affordable, unsubsidized housing and prostitutes just take their johns to the alleyways to do the deed.
When you prohibit micro-units and other low-income/low-quality housing, you don't get more high quality housing. You get more homelessness.
When you prohibit low-wage work, you don't get more high-paying jobs. You get more unemployment.
The only process that actually increases the quantity of high quality housing and high paying jobs, is investment, and investment is motivated and sustained by investment profits, which left-wing populists demagogue so much about, and political leaders enact so many laws to inhibit (e.g. laws against price gouging, rent control, tax rates that progress with income, etc).
That wasn't the experience of the UK when we introduced a minimum wage.
I googled it, and seems like full time unemployment didn’t fall, but part time employment felt a little.
Additionally I don’t know (didn’t find) what was the effective minimum wage before the min wage act. If it was already almost equal to min wage, the law was effectively no op. I.e. wages didn’t went up.
There have been experiments with some buildings without any parking being put up but it's rare. And that adds a lot of expense.
Parking minimums are also proven to kill old style walkable downtowns with commercial on the first floor and residential above. You can't develop those old buildings and also meet parking minimums and preserve the dense development.
In practice, you end up tearing down some of the buildings to meet those minimums and there is abundant parking that's half empty most of the time and it becomes a lot less walkable and more spread out, increasing the need for a car. It's maddening.
I've been wondering how the nice sidewalk / walking / biking places I've enjoyed were built.. was it super cheap in the 80s and skyrocketed since?
I've gone down the rabbit hole of semi-current pricing for sidewalks being built and road expansion in this mid-size city - and it's just dumb that a sidewalk install can easily cost a million dollars for a block or two for example.
I can't imagine building neighborhoods today that mimic what I miss from the past in another state - but there's no way it cost that much to build back then either I'm fairly certain.
And as for costs of living - I don't think it is fair to say that zoning is to blame. Zoning is a choice by a community to preserve the lifestyle and neighborhood character they have built, and there's nothing wrong with that. Yes it may be inconvenient for potential new residents, but so what - local government logically should serve its current residents. I don't think that's particularly selfish, since we could just as well ask those seeking out low cost living to be realistic about their options and live within their means. Why is anyone entitled to live wherever they want at whatever cost they want? If someone can't afford to live in San Francisco or other such high demand high cost location, they are just as free to seek out a lower-cost life elsewhere. America has no shortage of places where one can make a living and thrive. Sure those locations may not have the exact job someone wants or the amenities they want or whatever else - but that's life - you don't get everything you want, and expecting otherwise feels like the dictionary definition of entitlement.
Also, if you don’t think it’s a travesty when someone is forced out of their ancestral home because gentrification raises property taxes and they have a low income, you’re kind of heartless.
A car can get you places, yes. But it also requires money to purchase, maintain, insure, and fuel. Many people are not great at driving them, killing people in the process. People get fat because they never have to walk anywhere. There is a cost for this convenience.
> Zoning is a choice by a community to preserve the lifestyle and neighborhood character they have built, and there's nothing wrong with that.
Sure, in isolation it makes sense. But then almost every city says the same thing. Then sprawl is the only choice for new people. And the “neighbor character” you have preserved is “only rich people are allowed to move in here”.
No such thing as a free lunch. You can't just inflate a persons worth without having to pay for it somehow.
y'know, even out the playing field a millimeter or two.
The point is to see past your own pile of coin and think about society as a whole. If people were up for sacrificing that second holiday house and their stupid expensive watch or whatever, so much good would come of it.
Inequality fuels crime , public services like trains suffer etc...
I think ‘giving money to free loaders’ is a bit of a straw man, as the second order effects benefit everyone. Including you. And note I’m not advocating communism.
We can sit around making up what-if hypothetical tropes till the cows come home, and nothing will change. The rich at the very top just get richer.
[1] https://upload.wikimedia.org/wikipedia/commons/thumb/3/30/Ti...
Apparently (based on the comment I was replying to), labcomputer does seem to think the maximum is an outlier, and that this false generality applies here.
Visually, 1968 sure looks like an outlier to me: https://fred.stlouisfed.org/graph/?g=EZn4
But let's check my intuition. The federal minimum wage was raised 10 times from 1960 through 1980. The raises have the following indexed values:
* 1961: 137
* 1963: 145
* 1967: 151
* 1968: 167
* 1974: 146
* 1975: 143
* 1976: 147
* 1978: 150
* 1979: 151
* 1980: 141
So mean = 148, st.dev = 8.1. That puts 1968 at 2.4 standard deviations above the mean.
If you just want to make the pedantic point that the maximum is not in general an outlier, we are in agreement. But, in this particular case, the maximum is clearly an outlier.
Furthermore, I think the data still supports janandonly's point (though not quite as starkly) even if we throw out the maximum.
It would indeed be pedantic of me to now make an issue of the maximum not in general being an outlier, but at the time I wrote that, I was replying to a post in which the only justification given for considering 1968 to be an outlier was the fact that it was the maximum.
When productivity increased, minimum wage earners do make more.
Overall productivity increases don't increase profits. They reduce prices! Workers make more because everything costs less.
If you increased minimum wage with productivity, it would eclipse the highest earners in a matter of decades. It makes no sense to do that.
That only applies in an economy without credit and where sales are constrained by the spending of the wage share. In an economy with credit you can use financialisation to give people spending power their wages don't permit, which keeps prices higher than they would otherwise be and allows more to flow to the profit share.
The dynamics then drives the path of interest rates down over the years until you get a credit crunch - at which point the lack of spending from the profit share suddenly shows up in a Minsky Moment.
There's an inductive connection between the monetary economy and the real economy, not a direct one. It works more like an iPhone charger than a 1 bar electric fire, and that means you need greater monetary 'apparent power' to get the maximum level of real economy 'true power'.
If productivity is driven by industries with no minimum wage workers, why would the benefit of that productivity pass to them?
Walmart knows and teaches employees how to apply.
What kind of free market is that? You shouldn’t be allowed to pay your employees so little that they are eligible for government benefits.
To me this issue seems like something that both political parties would take issue with.
Although a common talking point, it is not inherently a bad thing that low-wage workers can qualify for welfare [1] and it's probably less distortionary to the free market than mandating a higher wage. As an analogy, pretend that the government has decided it would be a good idea that everyone be able to eat apples. It is absolutely better to target an appropriate amount of money at the poorer population so that everyone can afford them, than to dictate that the apple seller must lower their apple prices. The latter would result in less people overall having apples (due to the seller restricting their supply or just shutting down).
[1] https://www.brookings.edu/opinions/does-the-government-subsi...
The appropriate thing to do then is for the state to use the labour that they would otherwise subsidise to produce apples.
Which makes sense since the actions of the suppliers shows that there is no more productive advantage in paying a profit share. They are incapable of using the shortage of labour market signal to innovate and automate - thereby producing more with less.
Subsidy is never good for the free market. Nor is giving a monopoly over supply to capitalists. Capitalists should know that they are only permitted to exist where they drive forward productivity. Once they cease to do that in a market segment, then they are out of business.
Free markets only work when both sides can say 'no deal'.
And why would anyone treat an established retailer like a high-growth company? That makes no sense.
You can see cap ex on their cash flow statement and create all sorts of hypothetical profit margins for them. Walmart can't actually take a hit like that because their monopoly power isn't strong enough. Their game is low prices. If they grow slower, they'll start losing market share to the dollar stores, Target, etc. If they raise their prices, the same thing happens. It's different when labor is in short supply or you want more skilled labor. Starbucks pays more and hires somewhat overqualified baristas because they see value in it and offering a premium experience.
If low pay is an ethical concern shouldn't people take aim with their own purchasing power?
Right. And other workers are hurt by it. Leading to net negative outcome, or a wash.
> Proponents never attempt to claim any positive effect or show evidence of it
Like workers being able to afford food?
Those are ethical arguments!
If your hours are cut, or you can't find work or small business goes bankrupt due to enforced minimum wage, then whether or not to implement this policy is an ethical consideration!
>Like workers being able to afford food?
Minimum wage doesn't fix that. Minimum wage does not show any measure of improvement on any metric we care about like poverty rates. And that's in the best case scenario. In many cases, it has a demonstrable negative effect.
Unless you're Lex Luthor, you can't extrapolate the inner workings of the universe from a candy wrapper.
Just give people income tax relief/credits based on their living situation (including credits that are paid out as cash) and let companies fight for workers with whatever wage they want.
States have varying conditions. Let them implement their own min-wages as they see fit.
As others have pointed out, why can't the States handle it? I feel like Americans are too quick to forget that the United States of America are a federation of States and too often conceptually envisions the country as a single political unit. Comparisons to Europe are frequently drawn even though the scales are different and even then, many European countries have more decentralized minimum wage laws, such as collective bargaining agreements within specific industries, rather than nationally mandated ones.
I would get exasperated by that, too, if it actually occurred; I mean, we’ve had a federal minimum wage since 1938, why would people be arguing for something we’ve had for close to a century?
But, since that is the case, I wonder if you’d like to clarify what it is you are ranting against, since it can't possibily really be the nonexistent and, if it did exist, utterly redundant movement to adopt a federal minimum wage.
Fixed.
We should not be raising the federal MW and should instead prefer more localized measures, such as States, counties, cities, or individual industries developing their own policies.
Why? Abstract concerns based on ideal market assumptions that (1) apply the same to more localized measures as to federal measures, and (2) haven't been born out by 83 years of experiencing having, expanding the applicability of, and raising the federal minimum wage?
Yes, we should have more localized policies—and we do—but that's no reason not to raise the federal minimum wage to roughly keep pace with the lower of productivity and national price level.
Now, sure, if you want to argue that despite the relatively benign experience of state and federal minimum wages, there's a good argument that providing a floor through something like UBI would have less risk of inhibiting employment, and do we should transition from minimim wage to UBI (say, reducing hourly minimum wages from the level thet would otherwise be set at by annual UBI ÷ $2000 as we ramp up a UBI over time), I’d agree that makes sense.
Like: cost of living is $1800 a month divided by 3 full days a week times 4 (12), times 8 hours = 1800 / (348) = 1800 / 96 = $18,75 per hour.
In the 50s US was the only big developed country that was nearly untouched by the second world war. That rent has decreased massively over time. The 50s economic situation would not hold up under any other conditions.
https://libraryguides.missouri.edu/pricesandwages/1950-1959 Seems to indicate a lot of commodities match up with this. For instance “ Milk cost an average of 41¢ per ½ gallon in 1950. Source: U.S. BLS”
So for an hour’s minimum wage in 1950 you could buy half a gallon of milk. Now in 2021 an hour of minimum wage would buy about 2 gallons of milk or more.
The main item that seems out of balance is housing cost. “ In 1950, the median home value was $7,354. Source: US Census Bureau” that’s $84,000 in 2021 dollars while the modern median house price in 2021 is actually $269,000.
A big part of this is likely due to banning smaller housing, tenement housing, manufactured housing, and other cheap housing options.
Archive link: https://archive.is/6JuaJ
Using: https://www.dol.gov/agencies/whd/minimum-wage/history/chart
I looked over the article and never saw a single justification for $15/hr. outside of "people need it". The Jacobin study included productivity which I don't know if you can even properly quantify into dollars. Certainly, minimum wage is not addressing the needs of the lowest earners in the country. But there must be a metric to go by:
If we use base minimum wage adjusted for inflation the numbers look even worse than they are today. $0.25 in 1938 is $4.74 in today's money. So that's not good. It would appear using these numbers minimum wage has beat average inflation using the BLS' own CPI calculator.
If we loosen the requirements to the last "stopping point", 2009, $7.25 becomes $7.49 according to the same calculator. Not keeping up with inflation, but I don't think even the poorest people are going to write home about coming up 24 cents short.
But this ignoring local minimum wages. Using the following data:
https://www.statista.com/statistics/238997/minimum-wage-by-u...
We arrive at an average minimum wage of $9.78 and a median of $9.45. So, neither of these really indicate a lacking in inflationary tracking even at the state level. So what's the cause?
Well, I'm not an economist but I think the issue is local and not federal. The federal government can set the minimum wage to $15, but that doesn't change the fact the wage curve is heavily skewed by ultra low CoL states and ultra high CoL states. Not being an economist I am willing to ascribe to this something I'm going to call "state-local inflation" where places like California and New York probably demand a minimum wage closer to $25/hr. whereas somewhere like Georgia might do just fine sitting at $10.
As a result I think this medium article is more of a tirade than anything and does not elucidate anything related to the problem other than the tautology that it is a problem (which I do agree with). The solution however, seems far more complicated than the "just raise the wage" protests would make it out to be.
overall productivity increase because of tech and globalization, of course a work whose productivity has stayed the same shouldn’t expect to make more just because other parts of the economy do well
No software engineers and no workers required.
The productivity is only a matter of local purchasing power. If it were any other, why would third world barber be extremely less productive than Manhattan one?
So, when higher middle and higher classes increase their productivity by tracking global population and selling ads, the productivity of people servicing them has to increase.
Who is more productive? Everyone is, even the people who use shovels to dig the earth, because the effect of their labour is magnified downstream.