What good is new tech if you cannot afford to buy a house or a new'ish car for the minimum wage, even if you live frugal and save?
I’m not saying there aren’t problems but even someone with a very low income who is forced (by American life) to run a car for a lot of their money is unlikely to be using a car from the 70s (50 years old) and more likely to use something from the 90s or 00s less safe and efficient than cars of today but still better than cars of the 70s.
Some people are probably blowing $1,200 a month on stuff they don't need... but it certainly isn't the source of widespread income inequality.
I also had the same thought - it's the one luxury they can actually afford if they save up.
I dont really get how people can look at that and think that these people are better off than a middle class 1950s US family. It's insane.
Heck, with the SD card slot I can film terabytes worth of videos and not worry about storage ever, and it lasts 2 days on a single charge.
That said, the extra $400 worth of difference between that and an iPhone 12 won't exactly turn a millionaire into a pauper. If $200 is the cost of necessity, then $400 expense on top of it to feel good for whatever reason is pretty damn low as far as spending goes.
It's less than furniture, less than expensive watches, less than anything close to luxury clothing (or even solid quality winter gear). $400 is a decent bicycle.
I don't get why people care so much about other people buying expensive things that they themselves wouldn't buy.
Why should the minimum wage not provide a sufficiently secure life for the worker?
I say this all the time: if you can't afford to pay your workers a living wage you can't afford to be in business.
There's no hard rules about what wages should or should not be, as with any other market price. A business will pay however much they need to attract and keep the labor they need. If no one wants to work for them they need to increase the wages they offer, which may in turn result in higher prices for customers which is also an undesirable outcome. If what they provide is of enough value that customers will continue to pay for it then the higher costs can be absorbed, if they don't, they will fail. If they can't attract workers they will likely also fail. Delivering value at prices people are willing to pay while still covering costs is ultimately what keeps a business in business.
I sometimes wonder if minimum wages are a net benefit at all as it creates several distortions. Some laborers aren't worth paying a minimum wage, they wind up earning nothing from not having work instead of what their true worth is and being able to build up skills. I think it could also remove some negotiating power from laborers. Businesses can peg their wages at the minimum and balk at those asking for raises, they pay the legally mandated price for that tier of work after all. Try to find a new job and you would also find other businesses doing the same, not paying an iota more than legally necessary instead of a more fluid labor market with people switching jobs for marginal gains, driving wages up. What may more naturally be a range of prices, both higher and lower, gets compressed to the minimum, unless that minimum is so low as to not have any effect on wages at all because no one would willingly work at that price.
And with that, you create a drop in the standard of living, where even having your own bedroom is considered a luxury.
> Some laborers aren't worth paying a minimum wage, they wind up earning nothing from not having work instead of what their true worth is and being able to build up skills.
No, what happens then is they work 3 jobs to survive and die an early death.
> I think it could also remove some negotiating power from laborers. Businesses can peg their wages at the minimum and balk at those asking for raises, they pay the legally mandated price for that tier of work after all.
That makes absolutely zero sense whatsoever, that someone would make MORE money if there wasn't a legal minimum? What?
Laborers don't have negotiating power in the bottom end. As I said above, there are enough desperate people to create a race to the bottom. If you eliminate the minimum wage, then you're not giving them leverage, you're just creating more desperate people.
Yeah, I think it's a tragedy that we have constructed a society where everyone doesn't have basic needs met. I think it's a bigger tragedy that the alternative to the current system is considered idealistic. You don't have to agree with me, but if nobody talks about the ways that things could be, not the way that they are, then things will never change.
I'm not sure I follow your last paragraph. Are you suggesting that minimum wages are bad because it sets a minimum for employers to pay as though without a minimum wage they would pay a rate more in line with value? If folks earning a minimum wage today, in a world with a minimum wage, can't afford basic living expenses, would you expect more people to afford basic living expenses without a minimum wage? If so, can you justify that? If not, what are you optimizing for?
I think substantial increases in the minimum wages force those people into a lottery where some are made better off and others are made worse off, but where the ones made worse off are made much worse off (out of work, higher barrier than today to finding work, everyone around them has more money and everything is more expensive than today).
Monetary value has no bearing on actual value. For example, a smartphone is only $1000 because some people were paid $0 to produce it. Did those people not produce value? Take a fast food hamburger, it only costs $1 because it's not real meat (mostly), and the person who heated it up is being paid a wage with which they cannot afford reasonable housing and healthy food.
> Are you suggesting that minimum wages are bad because it sets a minimum for employers to pay as though without a minimum wage they would pay a rate more in line with value?
Yes, that's basically what I'm saying. Most literature focuses on people being priced out of the labor market (see https://www.cato.org/policy-analysis/negative-effects-minimu..., for one such analysis).
I'm also suggesting there could be other effects due to loss of agency over one's labor price, similar to how collusion of employers to fix wages harms employees. Maybe someone has studied it, maybe not.
>If folks earning a minimum wage today, in a world with a minimum wage, can't afford basic living expenses, would you expect more people to afford basic living expenses without a minimum wage?
Ultimately prices are fluid based on what people can afford, especially so for local markets like housing. If minimum wages increase one would expect increased housing prices as those prices were set in line with what people could afford. If they make more, now they can afford to pay more. If you were making marginally above minimum wage you now also want an increase to protect your increased buying power.
W.E. Upjohn Institute for Employment Research found that modest minimum wage increases have minimal affect on prices increases while larger ones can create price increases. This makes intuitive sense, based on market theory. https://research.upjohn.org/cgi/viewcontent.cgi?referer=&htt...
Source: Economic Policy Institute
https://www.epi.org/publication/wage-workers-older-88-percen...
Historically, this is flat-out wrong. It's a lie. It's just a new talking point invented by corporations to convince the population to vote against minimum wage increases.
My grandmother only started working part-time ~1980 as things started getting harder to afford on a single salary.
I think about this a lot because even with two people working full time we couldn't afford a house (in the same city) until we were in our late 20s, without a child. Still have never owned a new car.
The house that seemed affordable with no car payment was a little over $9K (down payment of $1800). Adding in a $50/mo car payment took the affordable house down to a little over $8K, less than half the price of the median home in 1970.
Was there a minimum wage worker sometime in 1970 who bought a house and a newish car? I'm sure there was. Was it typical to do so? I don't think so.
Refs: http://www.freddiemac.com/pmms/pmms30.html , https://news.ycombinator.com/item?id=29590190 , https://www.bankrate.com/calculators/mortgages/new-house-cal... (I used a 10x multiplier, so I modeled in the calculator someone making $14.50/hr, a median house of $170K rather than $17K, etc, and then divided them by 10 to cite the figures above.)
Wage: $7.25/h
per-month affordable: $362.50
median home price: $374,900
3.519% fixed, 30-yr
20% down
required monthly payment -> $1,350
In fairness, the comment chain you're responding to is talking about the thing you're responding to in your comment, but I think the increase in unaffordability at the minimum wage still speaks to the problem: while it wasn't likely to allow home ownership in the past, but it's even less possible now, and that translates up into the higher wages where people then might have afforded a home, but cannot now.
Plenty of maps have been drawn to show that minimum wage can't even afford to rent median 1-bed apartments.
You can look at these retired 70-something boomers driving nice cars, owning a house, and taking a couple trips a year and assume they lived on Easy Street their whole lives when in fact they were probably struggling to pay bills 40 and 50 years ago as well.
Also it allows you to learn and raise your earning potential.
Finally modern transportation options less expensive than cars like e-bikes and e-scooters allow you to commute easier.
Sure, some people can benefit from remote work. But remote work is also not typically minimum wage. And to access those higher wage jobs, you’ll certainly need access to capital to invest in education.
Have you considered using an e-bike in the US? This could only be feasible in a minority of situations…
It sounds like a techie meme of what life could be, but is certainly not.
I share those believes and am living proof they work.
Plenty of people lost their homes, renters had far less rights and although when looking at things through averages seems to indicate a better off middle class, the wages of the top 10% middle class (Mostly Unionized) were propping up a huge amount of the middle class that were grinding it out living paycheck to paycheck with none of the social safety nets currently in place.
I find it incredulous that so many people are blind to what is coming in the next few years, there is a huge sense of entitlement and victimhood based on some idea that the world was easier back then. We are coming out of what I consider almost 35 years of prosperity resultant from "Winning" the cold war but a reconning is right around the corner.
I don't expect many to take my advise but if I was in debt, renting a home and unemployed, I would stop bitching about minimum wage and would be finding a job real fast, the days of help wanted signs in every window are about to end.
There’s no maybe about it. In the 70s, average house sale price was 4x the average salary. Today it’s 8x.
How many lattes would you need to have skipped to have bought two homes at the time you bought your first? How many holidays would you have needed to skip to pay two mortgages while you were paying one?
That is the scenario - well except todays generation would only have one house at the end of the day, not two.
BTW in the 70s we didn't have lattes, it was just plain old coffee and what is this holiday's thing You are talking about? It sounds like something the privileged think they are entitled to.
The difference is those who managed to get on the property ladder in between the 70s and 90s saw falling rates and their LTV ratios being crushed as property prices sawed. Today many of those people live in 7 figure homes in the middle of prime city centers, or bought second properties and became landlords, intentionally or accidentally.
Young people today face the opposite. Just like stock market multiples, housing is at the highest the market can bare. Either we embrace inflation and wages rise, or interest rates rise, the market crashes, and millions upon millions of people end up underwater.
But then, probably, so would assets (stocks and real estate). I don't see an easy way out of this mess...
Many of those people live in their same homes, the city grew up around them. At risk of making a generalization, too many young people feel they should get to start at the top. People who bought homes in the 70s spent a lifetime accumulating their wealth, many of them have supported two generations of children and are still working to support the next generation. It is much easier to just throw up your hands and cry out "The World is Unfair". A choice is made to just give up rather put in the hard work required to succeed, that choice is about to go away along with the opportunities that todays youth have squandered.
Hard times are right around the corner, the good news is that housing prices are going to come down. The bad news is it won't make a difference to the people complaining about not being able to afford them as the cost/wage ratio means nothing when You don't have a job.
I wouldn't call a dual income couple in their mid 30s paying >40% of take-home pay for a 2 bedroom flat "the top", but ok.
I guess my parents who started with a 3 bed family home on a single blue-collar income started at the fucking apex.
IDK your situation but have heard the same excuses for a long time. You have the ability to make changes before You get tied down with responsibilities like kids and debt, make the choice to change your lifestyle now before that choice is made for You.
And we're not DINKs by choice. We want kids.
I put 50% of my personal take-home salary in to savings/investments and have been doing so for 3 years. We have decided not go give more than token gifts this Christmas as we really want to reach our spring savings goal.
Meanwhile house prices have gone up 10-15% over the last year. I earn good money but if it's this tough for me then believe me when I say it's fucking hopeless for most people my age.
I've also heard this bullshit before from older generations, including my parents. Sure they faced hardships. Different kinds of hardships. Unemployment. Inflation. High interest rates...but don't think people have it any easier today because they're they spend $30/mo on a phone contract. Spending $30/mo on Netflix and Disney+ today is like spending $4/mo on whatever crap people wasted money on in the 1970s. They did it too.
Mark those words my friend...There is truth in them and one day not too long from now that same BS will be coming out of your mouth, I guarantee it!
On a side note, put some of your savings into physical precious metals it may very well be the only thing that will allow You to prosper in the next decade.
But when you can't accrue wealth or assets (for all of the reasons other posters have listed above), you probably don't end up becoming more conservative as you get older. Quite the opposite.
You're trying to tell us the rules for a game that no longer exists in the way you played it
When prices are lower, so are deposits. When they're consistently increasing for long periods (with low/no wage growth to boot), deposits become impossible to achieve because price growth outstrips the ability to save.
What you end up with is a large class of renters who can clearly service a mortgage (they service their landlords) but cannot save for a deposit.
Was it a walk in the park in the 70s and 80s? No. But it was possible for a great majority of people. These days, without help for a deposit, you're screwed as an "average" worker in a population centre.