Louisville sawmill challenges perception about wages
cdispatch.com
cdispatch.com
> What Winston Plywood is doing defies almost everything we have been told about wages in Mississippi — that raising the minimum wage would cripple profits, throw company pay structures into chaos, create inflation and ultimately wreck the economy.
Uh, no ... they didn't raise the minimum wage, they raised the wage that they pay. That's not the same thing at all. That's a market force, not a government intervention, in this particular case.
But every company has a minimum wage - that is the lowest wage paid to an employee of the company. Or it can be more broadly used to describe the minimum hourly wage paid to anyone who does work for the company (temp worker, contractor, etc.).
It seems you're really missing the point of the article. Some political forces have been pushing the argument that raising the minimum wage will have many negative side effects, especially for the businesses themselves. This one example seems to show the opposite. But it's not a market force; it's a (contrarian) business decision which was made with a long term goal in mind. It seems the company decided that retaining skilled talent was worth paying more for and would result in better long term profits.
You're just playing with words. The point of a government mandated minimum wage is that work that pays less than this wage is banned. A company can decide to set the lowest wage to $15/h and when economic conditions worsen it can set them even lower to $10/h. With a minimum wage of $15 the company would just fire the employees. Right now businesses are doing well so raising wages won't hurt the economy.
Minimum wage increase do not increase unemployment. We have almost a century of data. It's always trumpeted by the wealthy, but never happens.
Small changes in the minimum wage will have minimal changes in short term total unemployment - less productive workers will have a harder time competing as more desirable workers will now compete with them and longer term there will be a bigger incentive to switch to automation to remove workers.
Larger increases in the minimum wage though will obviously effect total unemployment as the law of supply of demand still holds. As one example, the non-partisan Congressional Budget Office estimated a national $15 minimum would cause employment to be reduced by 1.4 million workers.
https://www.cbo.gov/system/files/2021-02/56975-Minimum-Wage....
If any given minimum wage rate would have no effect on employment levels, than we would simply increase the minimum wage to 100 dollars an hour and end all poverty.
You simply wrote "Minimum wage increase do not increase unemployment."
I pointed out "Small changes in the minimum wage will have minimal changes in short term total unemployment - less productive workers will have a harder time competing as more desirable workers will now compete with them and longer term there will be a bigger incentive to switch to automation to remove workers.
Economists think larger increases in the minimum wage though will effect total unemployment as the law of supply of demand still holds. As one example, the non-partisan Congressional Budget Office estimated a national $15 minimum would cause employment to be reduced by 1.4 million workers."
You then respond with an insult and a link to the Nobel prize about the research showing that small increases in the minimum wage don't have an effect on employment levels and that sometimes higher pay would also attract more applicants, boosting labor supply. I pointed our that this was exactly what I said. Those 'more applicants' they refer to are why I said in the longer term less productive workers will have a harder time competing as more desirable workers will now compete with them - that won't be reflected in overall employment but it will hurt the most vulnerable workers. I also pointed out that "the non-partisan Congressional Budget Office estimated a national $15 minimum would cause employment to be reduced by 1.4 million workers." While small increases of the minimum age won't have a major effect on employment you are acting as if you think that it would not be possible that increasing the minimum wage by over 100% could have no effect on employment. If everyone is already earning over $15 an hour it wouldn't have an effect, but for example, the wage rates in San Francisco are much higher than rural Mississippi. If you don't think a >100% increase could have an effect, please explain why you are right and economists at the CBO are wrong.
You then falsely claim I am making a straw man argument. No, I am not - I pointed out that while small increases won't have a noticeable effect on employment level, economists think a large increase can have a direct effect on employment or otherwise economists would simply propose making a $100 minimum wage. If you don't think that a minimum wage can ever affect employment levels then say so, if you think there is some level where it would affect employment levels, then what is that level and how did you decide what that level is?
Let's further break down your post.
economists think... (conjecture) ...a large increase can have a direct effect on employment... - ( 72% used to, now only 46% do. per my link)
...or otherwise economists would simply propose making a $100 minimum wage... (the most classic case of Straw Man ever. Who is proposing this huge increase?)
They are referring to the typical small increase in minimum wage that has been done for the last few decades. You seem to hold very very strong views for someone who found a press release.
>......or otherwise economists would simply propose making a $100 minimum wage... (the most classic case of Straw Man ever. Who is proposing this huge increase?)
This is exactly my point. If economists believed that a large increase could have no effect on employment levels, they would propose raising the minimum wage to say $100 an hour. Since they haven't proposed that, that means that they do believe that a large increase would directly impact employment levels. This really shouldn't be that hard for you to understand. If you don't think that a minimum wage can ever affect employment levels then say so, if you think there is some level where it would affect employment levels, then what is that level and how did you decide what that level is?
Economists are not proposing massive changes, because economics is mostly about justifying current systems and getting paid by the wealthy.
My advice would be to take an economics class.
"What Winston Plywood is doing defies almost everything we have been told about wages in Mississippi — that raising the minimum wage would cripple profits, throw company pay structures into chaos, create inflation and ultimately wreck the economy. Besides, we are told, Mississippi’s low cost of living makes a raise in the minimum wage unnecessary.
Yet a recent study provided to Congress on hearing about raising the federal minimum wage showed half of Mississippians are ALICE (Asset Limited, Income Constrained, Employed) and that a minimum wage that would cover essential costs of living would need to be $10.94 per hour for a single person and $14 per hour for two-income families with two children.
That a sawmill in a rural Mississippi town would go far beyond that is startling — and definitely something to keep an eye on."
The key factor of the minimum wage is that, if they wanted the employer could reduce their wages back down to the actual minimum wage.
It seems obvious to me that it is referring it the minimum wage within the company's wage structure, and not a national minimum wage. I don't understand your point, "the company announced the rollout of a new wage structure, including a minimum wage of $15.25 per hour", means exactly that.
> What Winston Plywood is doing defies almost everything we have been told about wages in Mississippi — that raising the minimum wage would cripple profits, throw company pay structures into chaos, create inflation and ultimately wreck the economy.
The minimum wage of that debate is a government legislated minimum wage, obviously.
They took a story of interest and lied about it to mislead people to put a favorable spin on a political issue. I.e., modern journalism.
If you accept the premise that some work is more valuable than others, then you must also accept that having a minimum wage will rule out certain types of work as being not sufficiently valuable to actually be worth paying for. Thus, having a minimum wage law means that some jobs will disappear (or become much more expensive). Whether this trade-off is worth it or not is a political choice with arguments to be made on both sides.
Unless there happens to be a major group I've never heard of in that state which opposes legal minimum wages and also wants legislation to outlaw companies giving pay rises to their lowest paid workers.
Case studies? Economists?
Or
Vested interests? Politicians? Talk radio hosts?
Journalism should be calling out the specifics here and the ?lack? of grounding it has had, and how such ?misinformation? Is spread.
These days, paying more than required is contrarian unless you’re a big tech company.
That's also exactly what's written in the article, what are you complaining against?
> “The one thing that doesn’t change is that they want to make profits,” Hill noted. “Not to get too far into theory, but what’s happening here, I think, is basic economics. For a lot of years, there were more workers than jobs. Now, I think that’s changed. These are smart people. They realize there’s a competitive market for workers. They want to hire and retain the best workers they can find. I think that’s what they’re doing here. I think what we’re seeing is that it’s the workers who have the leverage now. It’s been the other way for a long time, and now we’re seeing a shift. Everything is cyclical, so I don’t know how long it will last. But I think what (Winston Plywood) is doing is significant.”
In the small Arkansas town I grew up in, when the Tyson plant changed what we called the “starting wage” it was a big deal. Back in 97-98 it went up to $6.05, which got me to apply there and get a job. That was almost a dollar more than the US minimum wage.
I didn’t last very long. That wasn’t for me. I instead went to a mcse boot camp and got a job offered to me by the place that ran the camp. They had a service side that hired me at $11.25/hr. I was billed out to clients at $125/hr. The rest is history.
When I returned to see some high school friends around 2000, the starting rate at the Tyson plant was up to $7/hr.
Turns out if there are fewer jobs than people wages go down. Reverse it and they go up.
Smart companies will move to preserve the employees they have instead of having to train new ones after having to raise wages anyway.
In other words, even the companies you would expect to be the smartest about this topic often are not. There is still a huge blind spot for companies when it comes to recognizing the value of retaining skilled workers.
As for your McDs, do you happen to live in a relatively wealthy area? Kids of upper middle families don't need to do crappy jobs, so they won't. And the ones who do need those jobs may find the high traffic commute (especially without a decent public transport system) not worth it.
Don’t Blame Workers for Inflation https://nyti.ms/2Xhxul7
Is lessened with the end of unemployment benefits, but saying no one partly blames workers is not true.
There is an idea of morality in living on unemployment when you're otherwise capable of working a job, but during lockdowns, a changing society, etc., can you really blame anyone for choosing the easy option? Some people call it lazy, but I think it's more that many people in society are starting to see the old way just sucks for them. Living in lockdown has forced many to reevaluate what's important to them, and flipping burgers to pay bills isn't high up there.
A bullshit idea since conveniently there is no accompanying idea of morality in living on your parents’ money when you are capable of working a near minimum wage job.
I think this is fantastic and I hope it lasts.
Minimum wage was $5.15 at the time. It was better pay than my first tech job (QA testing, $11/hr) and I seriously considered going back for a while. But I wouldn't call it "fantastic".
Inflation may be high today in the USA (as much as 5.8% this year) but it'll take a while until these numbers become as drastic as many news outlets make them appear.
[0] https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=27&year1=20210...
Yup. It's pretty basic. Labor gets a better deal in one of two ways.
1. Reduction in workforce. Historically, Black Death and wars.
2. Collective action. Guilds, unions, trades, and the like.
I honestly didn't think I'd live to see Labor doing better. I'm glad there's finally some movement. I'm sorry it took a pandemic.
[Yes, there's multiple forces. Things are never simple, there's always more to the story. Aging workforce, (mostly men) opting out, (mostly woman) stuck with child and elder care, wave of early retirement, reduction in immigration, increased disability and mortality, and probably more.]
--
Also interesting in this story:
"This week, Winston Plywood, through its investors, a Connecticut-based equity firm, announced a new wage structure."
Access to capital.
If policy makers want employers to increase wages, we need to consider how to make it happen.
I'm totally onboard with using pandemic crisis cheddar (governmental largess) to provide capital to distressed businesses. Especially locally owned. Loans, grants, debt forgiveness, whatever.
Corporations and trusts receive billions. That'll never stop. I just want some of that torrent of cash to go directly to where it will help the most. Versus waiting for it to "trickle down".
Mandatory minimum wages are most detrimental to those who the proponents are claiming to help. Low skilled workers are less likely to be hired because they have to be paid at a rate above what the market value of their labor is. This is not the case right now because the market rate of low skill labor has increased beyond the federal and state minimums.
During periods of high labor availability and low job availability, minimum wages can establish a significant barrier to employment for low skilled workers.
During times like the present when labor supply is short, minimum wage mandates are not keeping up with the market and have very little effect on hiring.
But how do we reconcile that with the ability for someone to be able to live on a certain wage, given there are only so many hours they can work? Yes the market value might be lower but their bills don’t get lower.
I’m genuinely asking how we square those two.
We should subsidize moving.
The other point to make here is that labor constraints are largely a good thing right now. We went 50 years where the power balance was on the corporate side. Now that it's shifting, labor is finally seeing the benefits of increased productivity over that time. All it took was a global pandemic to push a few million boomers into finally retiring...
Assuming it means plenty of food, shelter, healthcare, affordable children, and care for them. There is no reconciliation when it comes to minimum wage. Additionally, how do we define the expectations of a minimum wage salary when establishing it? What should the person be able to afford with the earnings? Everyone has a different answer to this question. Minimum wage will never be set high enough because human nature has us desire more. "Give a mouse a cookie..."
Unskilled labor is typically for people who are first entering the market in their teenage years and have subsidized expenses by their parents.
Everyone I've met in my life aside from some disabled people are capable of developing skills. Once The skill is developed and marketed they no longer need to depend on "minimum wage" earnings. For the sake of this conversation let us ignore disabilities.
For a healthy person, working 80 hours in a week is completely feasible. 80x7.25=$2,320 a month(decent where I live). Many people choose to work this many hours and more for financial gain.
Once they have done this for a short period of time, they can use their savings to pay for education that will give them skills.
Savings is the key to success. Wages x hours worked - expenses = savings.
Too much energy is focused on one part of that equation, considering the importantance of choices made by individuals regarding how many hours to work and what to spend savings on.
But agree its a very dangerous tool in the hands of politicians, and better not to have it than have it be abused.
https://socialeurope.eu/the-minimum-wage-in-germany-five-yea...
It also ignores whether it is sustainable long term, and economic impact should it continue. For all we know, this could put the company out of business financially. I hope not, but it could. And, should it become a trend or government mandate, the impact on inflation and other economic factors is a question.
In the end, likely pros and cons, and hard to balance: https://www.cbo.gov/publication/55681
Are the companies able to pay more because of the lumber market this year? What about other sawmills in Mississippi?
What about timberland owners? They haven’t reaped the benefits of sawmills, because there’s like 50 years worth of timber inventory in the American South (though it appears Q3 is picking up! https://www.forest2market.com/blog/southern-timber-prices-hi...)
And does this just raise the wages or is there some profit sharing going on?
When wages go up they actually go up, which, at least according to conservative economic theory, leads to inflation. In practice though it often doesn't.
And yet it is all hands on deck with both political parties when the stock market does not deliver 10% annual growth. It is pretty clear that the weight of the federal government and the federal reserve is behind making sure VOO keeps consistently going up over the timescale of decades if not a few years.
But when wages for the bottom 80% stagnated for decades, there is debate on whether or not anything needs to be done.
You're confusing ROI with interest. When lenders demand 10% interest you can bet that the interest payments are being passed onto consumers.
An increase in minimum wage means those getting the 10% increase have a 7% better quality of life. Those who already made more than the new minimum wage now have a 3% quality of life decrease.
You don't live in the cheapest slum you can find, do you?
Ultimately a bit useless, the poorest are still more fucked by CoL than they're helped by higher wages.
>> Everything is cyclical, so I don’t know how long it will last.
Right up until the bread runs out, boo.
>> The demand is for middle income and upscale housing, Hill said.
Because people with a bit of money stashed away that can are fleeing the highly populated areas due to pricing insanity.
>> Perhaps just as important is that those hard-working sawmill workers may find life a little easier and the stresses that lead to poverty and crime and all other sorts of societal ills may be relieved a bit.
This... is not generally how gaining more and more external population works.
This whole article is contrived euphoric delusion.
That higher wages == inflation is a self serving argument that only gets rolled out when those wages are blue collar wages. You don't see it applied to the ridiculous amounts of money the managerial and investor classes earn.
The 50's and 60's saw modest inflation and rapid wage increases. Workers had more leverage and the US wasn't nearly as unequal.
America is already a third world country. https://www.rollingstone.com/politics/politics-news/six-ways...
The first/second/third world distinction is pretty irrelevant these days, but the US is unalterably a first-world country in it.
South Africa and Morocco aren't exactly the wealthiest countries in the world, but they're still decidedly first world. Ireland and Sweden are third world countries, despite their relative wealth.
Now that the second world has mostly fallen or become capitalist, the term "third world" is often used to refer to developing nations (which is silly, as if not aligning with the USA inherently makes you poor) but its origins explicitly make it impossible for the USA to be part of anything other than the first world.
And let's be honest, even with its terrible labour laws, unmaintainable healthcare system, two-party political system and income inequality inequality, the USA is still far ahead of the developing nations people call "third world". Compare the poor American states to the poor European countries and the USA still comes out ahead on average. America is a country of extremes, where the rich are extremely rich and the poor are extremely poor, especially given the wealth that surrounds them. I'd much rather be homeless in Europe than be homeless in the USA, but being middle class in most of Europe leaves you more budget constrained than being middle class in much of the USA.
Conservatives have thousands of years of history to look to and see that pattern play out over and over again, and yet they think it'll be different this time if only they implement this one weird trick.
While the US may well get there, is there a reason to believe inflation will drive it, rather than any number of other idiotic foot-guns your leaders seem determined to apply?
Your hypothesis doesn't make any sense when looking at the entire history of the dollar. Most of the economic growth happened during years of moderate 3-5% inflation and people have gotten richer over the last two centuries.
But a lot of models have funny behavior when you get closer to the edges.
I think you can intuit that if you pay people some amount they actually work more efficiently because they're happier and healthier and better fed and better educated. Of course if you pay them a very large amount, the efficiency gains per dollar will likely drop off again because there's only so much a person can improve themselves (as per your intuition before) .
So it turns out you're really dealing with an optimization problem.
I think a lot of people just assume the model behavior is linear and end up picking a point far too low down on the curve.
(People have had some clue for a long time though: consider the saying "Penny wise, pound foolish")
Those two are the income and substitution effect. Unsurprisingly better compensated individuals tend to work more not less.