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Comment by delusional | Hacker News Reader

This is a purely economic argument which if fine, but misses the vital non-economic side-effects. More money could lower the stress of the employees (given they now no longer have to worry about paying their bills) which may lead to higher quality products. Increased wages may attracts better talent or more exploitation conscious consumers. Hell, it may even more the owner more likely to listen to his staff, given that they become a significant expense. That could increase efficiency.

We should be careful not to make wage depression some sort of abstract "logical" natural state. Wages are low for a reason and active effort has to be expended to keep them as they are.

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The problem is that it IS a purely economic problem. It's just math - supply, demand and competition. Small business in particular is captured by these forces. It cannot increase prices because people will go to the competition. And it has no margin to absorb people's desire to earn enough to live a middle-class life doing a job that you can hire anyone to do.

All of that said, what you could reasonably hope would happen is that all businesses raise their prices because of the labor shortage (already happening around me), but then you have another problem which is that the increased wages are offset by the increased prices.

At the current click, all that's going to be left are the corporations with enough wiggle room to absorb the increase, but they will also pass on prices. I would just prefer not to live in that world. I think corporations increase inequity (Walmart could pay a living wage and full health care, but doesn't) and small business puts the power back with the individual.

It's not just amortized supply and demand.

We ask, why don't workers go on general strikes? Well small businesses refusing to even try raising wages and prices amounts to a capital general strike.

Employers and employees simply have radically different market power, and that is as fundamental a fact in all economies remotely like ours as any econ 101 supply and demand.

A lot of people just have habits or preferences for particular shops, regardless of a price premium when prices get raised

and a lot don't. this is all captured by simple supply/demand curves

Economics is the junction of mathematics and human behavior. I'm not going to travel half a mile to a different taco shop if the closest to me increases burrito prices $1-2 (in an area that reliably has at least 1 taco shop every half mile). In some sense, I'm a captive audience. I'm hungry and I don't want to walk an additional 15 minutes to save a few dollars.

People on HN tend to be way less price sensitive than average. People living paycheck-to-paycheck would totally walk an extra 0.5 mile to save $2 per meal.

Especially families with children- now we are talking $8+ a meal at a time in life when people are very price sensitive.

Yeah, I regularly do this.

My girlfriend will walk 30 minutes to save 50c on bananas. She is financially well now, but grew up without much, so those habits still stick. I would pay 5 dollars more to not move from my couch and get bananas on my doorstep.

The thing is, a lot more people are like my gf than me (I grew up middle-upper class and am 'financially' well upper class for my country).

> which may lead to higher quality products.

Or a lower quality products, because what you'd do if I slack off, fire me? No problem, I'll live off UBI for a while, then go to somebody who didn't fire me yet, there are a lot of places around.

> may attracts better talent

A lot of minimum-wage positions won't benefit from better talent - once minimal level of competency is reached, it's enough. Surely, a waiter could be a rockstar, probably - but most people, and most businesses, expect just not forgetting the orders, not dropping the food on the floor and not cursing out the customers, once it's there, there's not much monetary upside for the business from the better talent (of course, there are tips but that's different story).

> given that they become a significant expense.

Payrolls are already a very significant expense, especially in restaurant, etc. business. I don't think making them more expensive would change much.

Cost reduction is not a "state", it's a process. And it is a natural process that will always occur. In any endeavor, humans will find ways to reduce the amount of inputs needed for outputs.

> "More money could lower the stress of the employees (given they now no longer have to worry about paying their bills) which may lead to higher quality products."

Except businesses then raise their prices to cover the increased wages so the "more money" is almost instantly eaten away by having to pay those increased prices. You can't get something for nothing.

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