Also, the average real purchasing power in America has been declining for a very long time and cannot afford goods and services except through taking on debt.
If you’re hiring machinists or nurses for $2 more than fast food wages you will be continually understaffed and the local pool of skilled workers will dry up.
If this is a recent development, I would say that it's just inertia against inflation. Are you saying this has been happening more than the past couple years?
Inflation inertia seems reasonable but this is back of the envelope math most businesses do as a matter of course.
It's not staffing issues. Companies very clearly are willing to overwork their existing staff rather than hire new.
There's a store of our local grocery chain that is placed in an extremely high traffic, high income, extremely high wealth portion of the state. It pulls in over $1 million a day in sales. They have complained about "staffing" for years now, all this "nobody wants to work" BS, to the point that they most likely are losing sales to competitors. They offer $20 an hour starting. They could offer $40 an hour and have their pick of great employees and unlock more revenue, but they choose not to do that, because it's better to struggle with an understaffed store than it is to set a precedent of people making actual money for their labor.
I'm not convinced that there is any merit in this plan.
While I encourage and am delighted by your attitude that you want to see experimental results, there are some insurmountable issues:
1. I don't have any friends who want to run their multi-million-dollar-or-billion-dollar grocery businesses into the ground. 2. People of leftist bent, when seeing results they don't like tend to blame it on non-leftists and double down. 3. This is such bad budgeting that there's no need to jump off the cliff just to prove we'll splat. You're doubling payroll in an industry where profit margins are razor thin.
> My favorite example is the comparison with Denmark, where the hourly wage of the mac worker is more than double yet the big mac price is pretty much the same
Do the Danish customers trash the place like they do in every McDonald's I've ever been to in any large city in the US? Do they deal with hobos coming in with their own cups and just filling those up without purchasing anything? Or any of a thousand other issues (I guess you'd call them "social") that make operating a franchise so much more difficult and expensive in the US? Do they have to hire twice as many employees just to get 80% of the labor (oh wait, that one's rhetorical, we already know the answer). Has a Danish McDonald's employee ever had to hose down the restroom because someone projectile-diarrheaed every surface within that room, includin 8ft up the walls and so forth?
We can't have that, unless you can get everyone in the United States to behave like Danes. But then they'd also eat better (and be taxed like Danes), like Danes, and so sales would fall. And where Denmark has fewer than 100 stores, the US has 14,000... how many of those will close? Of the ones that remain open, how many would they lay off? Are the stores in Denmark franchises, or corporate and just there as loss leaders or something like that?
So some are paid more, the rest just become unemployed. Forgive me if I think that the Danish model doesn't work here.
Not me! Can someone explain this to me?
I worked in a restaurant for 5 years. It's a notoriously tight-margin industry, the poster child for late stage capitalism. We aimed for labor costs of ~30%. If we doubled wages, holding margins constant, we'd have to charge 30% more. Another ~40% goes to ingredients- I don't know what their labor percentage is, but conservatively assuming 20%, that's an additional 8% if they doubled wages too. If we let margins go to zero (they do have to be non-zero to incentivize opening a restaurant at all, but can be arbitrarily small), we're still a minimum of 28% more expensive.
But even if we ignore all of that, the US notably subsidizes beef to a large degree. If we had salary parity with Denmark, I'd still expect the US Big Macs to be cheaper. And that's all before factoring in Denmark's higher taxes.
So what gives? Does McDonald's have wider margins or a lower labor percentage than the rest of the industry? Does Denmark also subsidize beef?
The fact of the matter is most real-life business deal with razon-thin margins, particularly retail , and if you want to compete with amazon chinese subsidies, you have to literally run on fumes, all the time.
1. Everyone works less (the government mandates a 35, 30, 20... hour workweek), raising the relative value of labor.
2. We collectively do more than the bare minimum needed for survival and comfort (the government raises taxes, spending them on activities like building sports stadiums or moonbases), raising the demand for labor.
I cannot trust any company with any modicum of success not to immediately exit into the hands of megacorps. I cannot hope that companies have any type of morality/"want to make the world better" anymore.
You have no way to influence the governance of corporations.
It won’t give you much influence in isolation, but I challenge you to show more influence over your elected representatives.
How's that working out for these people who bought shares?
Oh, yeah, it's a great system if you're someone who has money. Most people don't.
Representatives, on the other hand, can't exist without votes.
Most of the money in politics is spent on convincing voters to vote for a particular rep, that's why money holds sway over politicians. But money in itself isn't actually going to get someone elected.
And isn't it weird how the people who do get elected actually tend to be of at least vaguely similar political leanings to their constituents?
If money was all it took, we'd have no issue electing hard-conservative anti-abortion fundamentalists in, say Chicago, as long as they had policies that their donors found appealing. (Or, conversely, socially progressive, economically regressive 'liberals' in the deep south.)
As it turns out, money in elections can only shift the needle so much, and won't turn black into white.
What it can do is pick a winner out of a lineup of similar candidates, where the margins are close enough that a bigger advertising war chest will move the needle... And even then, all of those campaigns are only possible by ground-canvassing volunteers, who are motivated ideologically, not financially.
Only if you see the world in black and white.
My thesis is that money is a corrupting influence in politics, but is not the main driver of it.
Meanwhile, money is the only influence in corporate ownership. Which is, incidentally, why most people with money do everything in their power to try to convince us that the solution to all the problems they cause is to move more power out of democratic institutions, and into corporate ones.
> Clearly most voters (in your opinion) want a higher minimum wage, UBI, and greater corporate taxation.
What on earth made you think this?
I said that the politicians that get elected vaguely, in aggregate, share the views of their constituents, and you're not going to tell me the deep south in aggregate wants any of these things. It does, however, want a lot of people who talk a lot about Jesus in government, and, well, their ballot results definitely deliver them.
If you believe my thesis is wrong, roughly how much money do you think will get someone like AOC elected in a district in rural Oklahoma? Or MTG in NY's 14th district?
Rich people don't want a higher minimum wage, UBI, and greater corporate taxation.
https://www.vox.com/2014/4/18/5624310/martin-gilens-testing-...
I think there's a chance you misread. Many times, I feel the conversations we have online would be better off held over a few beers and a backyard barbecue.
I feel that any concentrated center of power cannot be trusted to behave ethically. That's a fancy way of saying you can't trust the government or corporation to behave morally/ethically.
I assert that you have more control over government than you do corporations because, as someone said above, you can lobby/campaign/vote and have an impact on local, state, and federal government. As an aside, the further away from local, the less impact you have.
With corporations, you could buy shares, but given that each share is equal to one vote, the more money you have, the more influence you can exert.
I know it's been a fashion since Reagan to distrust government, but decades of neoliberalism have shown that counting on corporations usually makes things worse. Anytime one transfers a communal benefit into the pockets of a few, bad things happen.
i. Restore corporate tax rates to historically high levels
ii. Increase capital gains tax significantly
iii. Tax speculation-derived activities, especially real estate and REITs
iv. Gradually curtail subsidies on field corn, currently occupying 5% of America's land (~100 million acres)
v. Shrink defense spending by half
vi. Enact single-payer healthcare for all eliminating co-insurance and better than Medicare up to UK NHS levels but without the government delivering healthcare directly; there shouldn't be good health insurance for just a few people with good jobs
vii. Greatly expand visas for engineers and entrepreneurs
viii. Also expand visas and professional certification "homologation" for teachers, lawyers, doctors, dentists, and researchers so they don't have to start over
ix. Invest in trade schools: plumbers, electricians, machinists
x. Invest in adult education, GED, and pre-college prep courseware
xi. Earmark funds and network applied STEM courses and internships for industry-practical training, especially for fabs, robotics, and high-tech manufacturing
xii. Invest in childcare and pre-K
xiii. Revisit tariff adjustments on a more frequent and selective basis
xiv. Entrepreneur incubators should get federal subsidies because they're generating wealth
xv. UBI - Everyone gets it without requirements excepted tapering down based on income
xvi. Small businesses should have even greater incentives in banking, real estate, state and federal bid contracts, and tax treatment
I am from Europe, and in more immediate danger, but I would still hope US will defend any sort of democracy we have vs the threat of dictatorships. I know my country has helped out US with its wars.
Now is the time to increase those budgets, not decrease. Decreasing would actually increase the odds of WW3.
My gut feeling is that this would increase inflation, but I could be wrong.
> iv. Gradually curtail subsidies on field corn, currently occupying 5% of America's land (~100 million acres)
I would much rather the US spend $2.2B on corn subsidies so that we have food security in the event of a global catastrophe. I’d prefer eating nothing but corn flour/meal for years than starving to death.
> v. Shrink defense spending by half
As a (biased) US citizen, I would prefer keeping American Hegemony around, and that doesn’t happen without the massive military overspending the US does.
Are those really the only two options?
It's "tainted" by lobbyists in the same way a Superfund site is a bit "dirty".
This is of course because labor has received virtually none of the labor productivity gains since 1965.
The actual problem is artificial scarcity, not automation. A robot that can build housing cheaper than humans is great. A law that restricts new housing from being built so young people can't afford it is not.
If you want to feel richer, look on Amazon/AliExpress and try to remember what stuff like that used to cost decades ago. It's not BS, it's very real. It's amazing how cheap random knickknacks are now.
But, you're right -- it's a pyrrhic victory because I'd rather own my own home and have a tough time affording a breadmaker and blender than rent forever and easily afford having all the gadgets that I do, and I think most people feel similarly.
Edit: Also probably because I remember when the dollar had WAY more purchasing power, so my baseline is skewed already. But this "increase" in purchasing power is just a return to more normal levels. This data feels more relatable.. slightly less purchasing power since 2019 https://www.bls.gov/cpi/factsheets/purchasing-power-constant...
Housing and healthcare costs are outpacing wage increases, it's true. The CPI (which is used to determine real purchasing power) weights them at about ~44% and ~7%, respectively [1]. So together, these constitute about half of the CPI, and yet average real purchasing power is still increasing.
The big factor is where you live. If you live near a wealthy coastal city, you're getting railed by NIMBYs into far higher housing costs than the average American. You're also more likely to be in the minority of Americans who don't already live in a home they own (65% of Americans own their own home), so housing price increases are even worse for you. This group is likely over-represented on HN, but it's not exactly "average".
Cold comfort I'm sure... but migration is a potential solution.
[1]: https://www.bls.gov/cpi/tables/relative-importance/2023.htm
Correct. But we're nowhere close to it. To the extent labor is a limiting factor on growth, it's in its lack of adequate supply.
> In the real world at microeconomic and local levels, labor demand is absolutely limited to discrete job posting and people who are already employed
You're describing edge cases, e.g. mining towns and war zones. In enterprises, it's an open secret that most jobs aren't filled by asking for applications. In small businesses, it's quite common for someone to pitch a service or a role. (A lot of "small business" is indistinguishable from freelancing/contracting. For example, the person who told me at a bar that he does yard work, and whom I wound up hiring.)
In the end business output is constrained by demand and unlimited growth is a big fat lie. There are only so many goods/services that can be sold to people.
At some point you run into a situation where everyone has more stuff than they know what to do with (especially true if it is working people, because they are time constrained) and there are more services on offer that they are needs for, regardless of price/affordability.
If you do a thought experiment and give everyone infinite money you will realize that you will be constrained by real world considerations, just like the housing market is constrained by location...
Sure? How does that even remotely advance your argument?
I've seen people asking hundreds of dollars for a specialty pineapple, that doesn't mean we're running out of pineapples.
> labor demand is absolutely limited to discrete job posting
Only for a very limited definition of labor. How many children post job offers for rearing them, for example?
Whether either of these things are "correct", time will tell and likely will be nuance and vary by job role, but they're both reasonable.