Hacker News Reader

Comment by 71a54xd | Hacker News Reader

One could argue the move to continue unemployment payments / covid payments is a strategy to "raise minimum wage" without actually having to pass any policy to do so. Politically it's brilliant, you gain the support of your voter base in 2yrs with the assumption that "cheap employers" will simply go out of business because nobody will work for them. And your more conservative base will champion you for "resisting to raise minimum wage".

I for one support raising minimum wage, but the automation / negative outcomes of menial labor being too expensive to hire for will happen whether or not the official minimum wage is increased. UBI is another debate entirely, however I'd also argue that UBI in time harms poor people more than it really helps them and just enriches huge companies and land-lords.

View on HN

>...but the automation / negative outcomes of menial labor being too expensive to hire for will happen whether or not the official minimum wage is increased.

This is true, but obviously the rate at which this happens will matter.

In 1900, 41 percent of the US workforce was employed in agriculture. Due to increasing use of technology, 70 years later only 4 percent of the labor force worked in agriculture. If that loss of jobs had happened in say 20 years instead of 70 years, it obviously would have been a much more painful transition.

https://www.ers.usda.gov/webdocs/publications/44197/13566_ei...

Perhaps depressed wages are partly to blame for the lack of automation in the current economy. If there is labor scarcity it may unlock new innovations by forcing market participants to find more productive uses of labor.

Labor force participation has been falling for a long time as labor sellers (employees) fail to find an adequate price for their labor from employers (the buyer). Many economists assumed this was the fault of the labor seller for not having skills attractive to buyers. It's also possible that in certain segments employers were using labor in-efficiently, or simply miss-pricing the value of a worker.

Which is a long winded way of saying that a higher minimum wage may bring more labor into the market, while simultaneously forcing businesses to leverage automation to improve the productivity of said labor.

Absolutely this. Wages have been depressed for a long time which has severely hampered innovation. Historically the black death labor shortage led to the renaissance.

"Many economists assumed this was the fault of the labor seller for not having skills attractive to buyers"

Given the massive redistribution of wealth in the US for the last half a century it's pretty clear that's not true, and that what's really been going on is businesses have been squeezing "labor sellers" to death.

The problem with both unemployment payments and UBI is, that someone has to pay them, and (in case of the first) they stop at some time.

If you get X money per month of unemployment and X+20% to work, then yeah, if it's not a fulfilling work (and let's be honest, what work at that price is fulfilling), you'll rather stay at home. Once the "free money" dries up, people will be forced to take the shitty jobs too, but due to many failed businesses, there will be even less jobs available, and this skews the jobs-vs-workers ratio, making wages even lower.

Making it easier (and cheaper) to start a business would create more jobs, raising the price of work, and replace the shitty jobs with better one (in terms of pay and conditions).

Yep, and in states with lots of illegal immigration the actual price of "labor" is heavily depressed since they're willing to work for basically anything.

If it's depressed it's because business owners who hire undocumented immigrants (often knowingly, even assisting with GC/visa fraud to pass I9 verification) are never, ever fined or punished.

Enforcement is a farce.

I bartended at a Mexican restaurant in USA around the Great Recession. The owners absolutely knowingly employed illegal immigrants.

Interestingly, the illegal immigrants generally got paid way more per hour (~30% higher) and also generally paid taxes via ITIN number. Eventually our restaurant got “raided” and the owners called around to find them new jobs at other places around town.

One guy lived with me for awhile. He eventually went back to Mexico because he saved a bunch of money and wanted to spend it on a real degree/career. The universities in our area told him they’d take his money and let him audit classes but wouldn’t be able to give him any proper documentation like a transcript or degree.

Enforcement isn't a farce, its just focused on workers because employers are powerful and workers aren't.

The reason republicans are so hardline on immigration is because "illegal" workers are really easy to coerce and exploit.

They don't call the health department when you make them shit in a hole in the field. They don't call OSHA when you deny them access to water out in the field. They don't call the attorney general when you pay them by what they pick, or only start counting their hours after they've walked half an hour to the field they're picking, and stop paying them the second they stop picking instead of when they get back to their vehicle...because you're too cheap to provide a truck or bus and they'll walk for free. They don't call the police when one of the supervisors smacks them around for accidentally damaging some equipment. Etc.

Completely agree, this is why where I grew up in TX many of the business owners who are stout conservatives are basically complete hypocrites since they hire illegals! Tbh I strongly advocate to grant citizenship or work visas to people from other countries who want to work, however the democrats still benefit year after year by kicking the dreamers down the road and never actually changing the immigration system.

If we replaced every millenial deadbeat who complains about how hard it is to be a barista with a hard working immigrant our country would be better off!

> Enforcement isn't a farce, its just focused on workers because employers are powerful and workers aren't.

I don't think many companies are powerful against ICE, especially small restaurants... there are probably political reasons why they choose to target employees and not employers.

That's an interesting take, but it seems like a post-hoc rationale/strategy to me.

Conservatives will block any rise in the minimum wage, but couldn't completely block additional unemployment benefits.

Progressives would back a rise in the minimum wage, but had to deliver on relief for the unemployed working class, so they did just that.

The secondary effect of rising wages was probably only something that conservatives were expecting.

Yep, but at the end of the day anyone who's trying to build wealth or have anything left for retirement gets fucked by inflation. People who are spendthrift and receiving UBI or unemployment payments (long term) were never trying to do that anyways and their payments in theory would increase with inflation.

I'm a supporter of the idea of UBI but I just can't see the incentives panning out realistically.

But price inflation is the policy goal regardless of minimum wage or UBI. In fact, government spending makes for better inflation in that it is spread around the economy, rather than lending based inflation that only shows up in CPI after it sends assets through the roof.

Could you go into more detail here? My head is still slow to digest economics concepts like this, but this is something I certainly haven't read about before.

The Federal Reserve's mandate is to make sure there is a steady level of gradual price inflation. The main way they accomplish this is to lower interest rates, so that more money gets lent out into circulation. But this new money only affects the Consumer Price Index via housing assets and other big ticket items that get financed - it doesn't directly bid up the demand for consumer goods.

Whereas if the federal government creates more money (via debt) and gives it out direct aid to the people, it goes right into the consumer market. Prices rise across the board, getting the CPI to the target level without the Federal Reserve having to lower rates.

There will always be inflation as long as the monetary policy is to create inflation. But government spending at least chooses somewhere explicit for it to end up, rather than the default option of just inflating financial assets (which we've had quite enough of).

How are the incentives panning out now? Every system has trade offs and the ones we've made seem to get worse and worse.

Great, actually. I've worked my ass off, paid-off my student loans and live in a great city. By no means making crazy developer money either.

Disagree, many progressives totally also expected prices to rise.

The alternative of forcing people to go to work while covid-19 sick, or being laid off and facing total abject poverty, and such... well not very attractive.

Prices & wages going up was going to be inevitable with inflation, which was on the plate, even if unemployment was never expanded and we forced the working poor to work, or eat our of dumpsters.

Reply on news.ycombinator.com