Or the most critical consequence: rent. Rent goes up. Landlords get richer, minimum wage earners go back to poverty.
Pretty obvious cycle. High paying employer moves somewhere? Rent goes up. Normal employer pays more? Rent goes up.
Pretty obvious cycle. High paying employer moves somewhere? Rent goes up. Normal employer pays more? Rent goes up.
I havent seen a study that connects the two. A quick google suggests a fair number of business-centric publications spreading FUD about it though.
This article suggests it was connected to lower business rents: https://anderson-review.ucla.edu/a-15-minimum-wage-may-have-...
(The mechanism being that restaurants pass on the cost of their higher wages to their landlords)
I wonder if the units made empty by closures may have reduced price pressure on the ones that survived.
* Restaurants being unwilling to raise prices (diners are notoriously intolerant, it can kill restaurants).
* Landlords being unwilling to lower rents.
* Restaurants being unwilling to tolerate < 6% profit margins.
* Landlords being unwilling to lose a good, paying tenant if there isnt another around the corner.
The pain has to be distributed somehow though.
And if people now earn more money they can pay more money to rent a house they want. This would force the people that are already renting there to also pay more, which they can afford because they now earn more money too.
It seems feasible to me that landlords could eat up most of that wage increase.
Expensive housing in many areas is a result of laws that keep would-be developers from increasing the supply, fueled by the toxic NIMBY mindset.
"Producing something on it" is a wholly subjective standard. I can just as well proclaim the opposite, that not producing anything on it is the standard that should determine ownership.
Turns out… it’s still right there!
the georgist's view is that the landowner does little to contribute to the area being nice/successful, but reap all the benefits.
> Take now... some hard-headed business man, who has no theories, but knows how to make money. Say to him: "Here is a little village; in ten years it will be a great city—in ten years the railroad will have taken the place of the stage coach, the electric light of the candle; it will abound with all the machinery and improvements that so enormously multiply the effective power of labor. Will in ten years, interest be any higher?" He will tell you, "No!" "Will the wages of the common labor be any higher...?" He will tell you, "No the wages of common labor will not be any higher..." "What, then, will be higher?" "Rent, the value of land. Go, get yourself a piece of ground, and hold possession."
> [...] without doing one stroke of work, without adding one iota of wealth to the community, in ten years you will be rich! In the new city you may have a luxurious mansion, but among its public buildings will be an almshouse.
Unless there's a Khmer rouge regime in America that forces the intellectuals to move to the countryside at gun point most of the country will remain empty.
Maybe you should be a landlord and help break the cycle?
Macroeconomic shifts seem like they would be biased towards transient transactions, and resisted by steady-state.
The question is, will those with power (money, connections, education) use it to gain more for themselves or to lift up the poor.
The idea that a homeless person’s problem is just, that they can’t afford rent or a mortgage is absurd, and would just prove that you’ve only ever dealt with homeless people at an abstract level.
Though I guess this is a little bit of the “to he who has more will be given, to he who doesn’t have, even what he does have will be taken from him”
My other rental has a negative cash flow as well.
I make good money so I can afford it.
If every single person who complained about the plight of the poor actually physically went and helped the poor, their plight would be less, instead you do nothing and go vote for the politicians to do something.
You wanna talk about a farce, how about this one - the politicians care about the poor.
Talking to immigrant Uber drivers in SF, ironically they hate the government there and it reminds them of the corrupt ones in their own country, the one the “caring progressives” keep voting for.
And the alternative is what?
Keep on hoping the oligarchs will share their wealth and it will "trickle down"?
Also I presume when you say "negative cash flow" you are leaving out the bit about your equity increasing due to mortgage payments and bubble inflation. So you can get off your performative high horse as well - you aren't describing a charity project, but rather an illiquid savings account.
It’s a violation of basic logic to allow greedy people to just indefinitely claim stake of something they had no part in creating (land) so they can indefinitely reap rewards from activity on that land which they have no part in (rent).
No it won’t change the system but a bad system shouldn’t be used to justify personal bad behavior.
Even if I hypothetically did raise rent with the market, I don’t find it compelling to say doing so is “bad” behavior. This is what a market is, and prices are very important for allocating resources. “If you’re a landlord, don’t raise rent” is not a society-level solution, let’s not waste too much time on it :)
I have a rental (family living in it) where the insurance has changed a few percent in the last 5 years but the property taxes are up 5x. Yes, 5x in 5 years between the rate and appreciation.
What started as a small net loss is getting bigger and bigger so I hope you're not in the same boat.
I propose that all landlords start offering two lease agreements. One that is let’s say $2000/month, and another that is $1600/month plus whatever property taxes are, which happen to be $300/month currently.
Then tenants might think twice before voting for higher property taxes since it will directly affect their rent instead of indirectly.
But that's not the case is it? Wages stagnate, increase or decrease all the time without changes in rent. Rent goes up without changes in wages all the time.
Sure, a local across the board increase in wages might drive up demand and might cause some portion of rent increase, but it's also just as likely to drive up housing prices as people get out of the rental market.
Throwing up your hands and saying "we can't pay them more because landlords will take it all" is disingenuous.
Do you think the hours a person needs to work to pay for housing would stay the same if the wage increase?
The answer is that land has gotten more expensive, so everything on it has gotten more expensive. The solution is not to avoid wage increases, as this “FUD” accusation assumes, but to raise wages and tax the daylights out of landowners (like myself) so society can recoup the benefits of its productivity!
Most tech workers earn far more than is necessary for just this. But we also want nice cars, nice vacations, going out to restaurants and buy nice toys. That's what keeps most of us working that much.
Even the small capitalist class benefits from the heated-up economy, because the increase in wages results in money being siphoned up from the pre-existing stockpiles of the wealthy, which is where money tends to fall when left to its own devices. When money gets siphoned out of stockpiles and up to people who have to spend it to live, the rise in effective demand makes it valuable to invest in providing more supply, instead of just sitting on the money and collecting interest.
The one major downside to wage-driven inflation is that it hits people living on fixed incomes in the shorts, since it makes pensions and government-provided supports less valuable. This is not a reason to support a heated-up, wage-driven-inflation-powered economy -- it's a reason to support government measures to increase funding for the elderly and disabled in order to match the new value of money.
Increasing the number of dollars floating around does not give more tax headroom. Taxes are strictly a percentage of the quantity of dollars pie. Making the pie bigger means everybody gets a bigger piece and everything increases in cost to match. Wages that do not increase result in the earner getting a smaller piece of the pie. So, the cost of labor increases as people refuse to work for an amount that doesn't pay the bills anymore. But, the percentage of the slices are exactly the same after the lag period of 12-18 months. The lag period is how long it takes an increase in money supply(inflation) to be reflected in the markets of goods and labor.
https://www.johnlocke.org/the-myth-of-wage-push-inflation/
https://www.lancaster.ac.uk/staff/ecajt/inflation%20lags%20m...
When wages increase, the costs of the landlord also goes up. Repairs costs increase, labor in the front office, and the landlord's personal costs increase.
What happens when you add a high-paying employer to a region (e.g. Amazon HQ2)? Whoa! Rent goes up and prices the people who live there out.
Obviously the reverse is not true. Increasing rent would not make more capital available for wages, it just puts enterprise out of business and individuals out of their homes.