Edit: Check out https://livingwage.mit.edu/ for examples based on real-world data.
Also, I have an employee Al who lives with his parents, so he doesn't need to pay anything for housing.
Bob is single but has to pay for his own apartment.
Carol is a single mom of 4 who needs to pay for her housing and everything for her kids.
So should I pay Carol the most, Bob the 2nd most, and then Al the least, even though they're all doing the same job?
Because they are afraid of being homeless?
- commuting from a lower cost area >60m away
- using food banks or not paying less critical bills (like utilities you usually have a few months before they start shutting things off)
- begging or selling themselves on the internet
- negotiating with their landlord who is often happy to have less money than an onerous eviction
None of these are positive things - they all have nasty negative externalities. Jobs that give money but not enough at all to live on leave desperate people in a terrible limbo.
Not having public bathrooms, but clean up shit from the streets. Not having preventative health care, but still providing legally mandated ambulance rides and critical care. Letting poor people who get an unexpected expense (say medical or car breaks down) fall into unemployment, homelessness and crime or – costliest of all – the prison industrial complex.
Paying the bill isn’t the problem. People are happy to overspend public funds, so this isn’t related to small government or just general tax aversion. The problem is simply that someone might get something they didn’t deserve. So in a perverted way, it’s a kind of a moralistic obsession with fairness.
I'll accept that inflation is a fact of modern economies, but rent and the cost of housing has gone up faster than inflation, and income has not kept pace with inflation: the US minimum wage has been stuck at $7.25 since 2009, while inflation never stopped. And minimum wage itself as it is today is broken; on the one side, it seems to be more of a suggestion anyway, given that the service industry does not need to conform to it (because the assumption is that wage is stipended by tips).
And the other thing to consider is that if an employer pays you minimum wage, they would pay you less if they were legally allowed to.
“Wouldn’t it be nice” is no way to live a life…FWIW…
A small, individual landlord has no pricing power. They’re competing in a market against all others. You’d have to control a substantial fraction of a local market to be able to raise prices above the going rates and still rent your units.
I think the most likely answer is a combination of several factors.
1) Not enough new housing being built in desirable areas (supply), cause by some combination of drastic increase in cost of labor and materials, and NIMBY regulations.
2) Actual collusion to fix prices. There have been a few recent court cases about collusion mediated by price setting software (RealPage Yield Star).
3) The appearance of “mega landlords” that control a meaningful share of supply in a metro.
At the end of the day, having the option to rent instead of own is one I think we want to have in our society, for reasons of mobility, risk aversion, etc. That necessitates the existence of either public housing, or landlords.
We can argue about the lesser of two evils, but in my mind it’s probably landlords, hopefully with some substantial regulation reform to eliminate opportunities for price fixing.
Unless there is a deficit of housing, then they don't have to compete because you pay their price or you live on the street.
With a housing crisis as in the UK the cost of housing rises to soak up everyone's income after other essentials (food, water, energy). Rents are higher than mortgages because you pay the landlord's mortgage, then pay the costs of leasing (such as the landlord's insurance and their property managers fees) and the landlord's profits. Very few want to rent, but most can't afford a mortgage (because 'I'm paying way more than that in rent' isn't proof you can pay a mortgage, apparently).
Because when there are 15 people wanting to live somewhere and only 10 places, then the lowest the price will go is higher than 5 people are able/willing to pay.
If not, then you need to ration the housing in some other means. What would you prefer? Nepotism? Lottery? Sexual Favours?
Not due to landlords, it's because the amount that people can pay for housing has increased -- higher wages, more multiple-earner households, easier credit, secondary income sources, investment gains. Plus there are more "households" competing for the limited number of available housing units.
I mean this is one of the few spaces that every economist agrees on the biggest factors in causing housing to become unaffordable are rent control and construction bureaucracy (zoning, environmental reviews, etc).
That said, in my country (Netherlands), a lot of service industry jobs (waiting, dishwashing, store restocking, etc) are jobs that people have temporarily or part-time during their studies. But it's a crooked comparison as tipping culture is still very much optional over here and staff gets paid more.
As for your update, in a free capitalist economy, no, you don't need to pay Carol more than the others, you pay her a fair wage according to laws, hours paid, etc; if that is not enough for her to cover the cost of living + raising kids, the government needs to compensate. As an employer you can support her private life by offering flexible hours, of course.
That said, in an idealized, socialist country, people can choose whether they work or stay home raising a family, and nobody has to work to make ends meet. Unfortunately, this is often not compatible with capitalism or government policies / expenditure.
Which means that other people who do go to work support those who sit around and do nothing. As someone who works, I have no desire to support people who don't work because they don't have to.
> people can choose whether they work or stay home raising a family, and nobody _has_ to work to make ends meet.
Parents who leave paid employment to raise children are far from "sit[ing] around and do[ing] nothing". If we value future conditions (even restricting that calculation only to economic productivity, though I'd argue other considerations also matter) then investing resources in raising and educating children is rational, even for those of us who don't have them ourselves.
I'm the breadwinner for someone who stays at home and she's immensely valuable. A fact I'm quite aware of as she just left for a few weeks on a trip and now I'm working and doing what she does. She does all the house chores, picks up medications/runs errands, is trying to get a business of her own off the ground (is making ~500/mo with potential to scale if she's allowed time to actually do it), etc. She also contributes a lot to making sure our household is embedded in our community, which in turn enables us to both more efficiently help others (when we can) and to receive help when we need it without relying more on the government/taxpayers. She does the work required to do things like help our parents when needed (we're siblings), which would otherwise be paid caregiving paid by, you guessed it, the taxpayers! She also makes me a way better worker because I'm the one person on my team who actually can focus on work all day and doesn't have to frequently step out for life things.
And this is without children in the home.
Not to mention students, people with disabilities (some of whom may end up being a greater boon to society if they're allowed to reskill or be pickier about jobs rather than being forced to work themselves to the bone until they can contribute nothing + their medical needs end up being worse than they would have been if they were accommodated in the beginning), etc.
The idea that the only way people can contribute to society is via paid employment is a sign of a lack of creativity.
The idea that socialism or whatever government system would mean that nobody has to do any work is only appealing to downwardly-mobile elite children, which America has a lot of, and who mainly like to live in Brooklyn, start political podcasts and do drugs.
People really actually have to grow food and clean the bathroom - the point of economic systems is to get them to do it, not to get them to not do it.
They all get the same wage. The minimum is set to be enough for a chosen living situation, and everyone gets at least that much.
(Though some subsidies to help with kids would be reasonable.)
Because renting a room is cheaper than renting an apartment, because ramen for 2 meals a day will cause medical problems that show up later than hunger, because some medicine is better than no medicine, because there’s an entire gradation of misery between “paid a living wage” and dying tomorrow.
Food is based off https://www.fns.usda.gov/cnpp/low-moderate-liberal-food-plan...
Housing 40th percentile is a pretty good metric for living wage. What would your metric be, 20th percentile, 10th percentile, something else?
Transportation is the true cost of mobility, including insurance, gas, motor oil, basic maintenance of vehicle.
Civic Engagement category isn't what you think it is and the methodology spells it out:
U.S. Bureau of Labor Statistics Consumer Expenditure Survey, Table 1400 (Entertainment: fees and admissions; Audio and visual equipment and services; Pets; Toys, hobbies, and playground equipment; Entertainment: other supplies, equip., & services; Reading; and Education)
I mean sure, cross that category out completely, but humans can't live on bread alone and this is exactly what this is measuring: living wage, not depression wage.
You can argue about whether median is a good measure, but the fact that this living wage allocates 0 dollars towards retirement and holidays, for me, is still not truly living wage. Any adjustment to the categories you take umbrage to is washed out by a basic savings plan for retirement.
It is just like the price of the meal. If it costs more than people are willing to pay, then it is too expensive; regardless of what you personally think it should cost.
Works great for the upper classes - keeps the price down for those fancy Michelin dinners.
The problem is the US economic system is so backwards it values the ad pixel pusher more than the trash collector. At least until there’s a communicable disease going around and suddenly the trash collector is recognized as an essential worker and forced to come to work while the ad pixel pusher “works” from home.
I heard rumours that trash collectors in the US earn pretty good money, in part due to being unionized. I've experienced what happens if binmen go on strike firsthand and / or seen it on the news, it's not pretty.
Whereas industries where there's plenty of supply, like the service industry, cannot get a union off the ground because for every unionized employee, there's plenty of un-unionized people waiting to get a job that doesn't pay them enough, but it's a job and that's good enough.
If the person doing it (and the role can make or break the business) quits on short notice, then the current wage is clearly not enough.
Enough for whom and for what?
For a society with slavery, absolutely. Also for a GULAG.
If that's the environment you want to live in, North Korea is the best country! Everyone is getting wages that are enough.
>It is just like the price of the meal. If it costs more than people are willing to pay, then it is too expensive; regardless of what you personally think it should cost
Yes, meals that people can't afford are too expensive regardless of what you personally think it should cost.
And wages that don't support living are too low regardless of what you personally think is enough.
I say human dignity is non-negotiable. So there should be a legal minimum wage which is automatically adjusted to the living prices of wherever the person you hire is expected to work.
If you are unable (or worse: unwilling) to pay people enough to survive of your work, you are irresponsible and a leech on society that should be out of business anyways.
I understand that some have been brain-washed into believing that leveraging your education, inherited wealth or position of power to exploit others is a sign of being smart or some sort other conclusion that coincidentally justifies the desirable outcome — but that doesn't change the self serving nature of anybody discussing for that kind of exploitation. And as markets have shown to suck at respecting any externalities, be it nature, culture, the rights of future generations or human dignity, they have to be regulated to do so.
If your business is unable to survive that, it wasn't for the benefit of society anyways.
If we want a society without exploitation the simple fix is to lift the minimum wage beyond any value that could be considered exploitation within the given context. Not being able to live off your full time job is certainly exploitation.
If you don't need that much e.g. because you have the luck of having your parents support, don't work the full job then. Easy. Less hours worked, more time to study.
Basically think of it as banning wasting people's time by offering them really bad jobs. (This is the "search theory" explanation, but there's also the "monopsony theory" explanation, which is that they can increase employment!)
Of course, wage boards and sectoral bargaining systems are probably better since they're more flexible.
And if people have a guaranteed level of support, then yes, there is a downside to saying "you're not allowed to exchange sub-self-supporting amounts of work for money". You don't need to ban wasting people's time; if people don't have to work to live, the uninteresting or unpleasant jobs will be having to raise pay to get people to work them, or figuring out how to automate them when previously it was cheaper to pay minimum wage.
Meanwhile, there are plenty of things people might want to do that aren't valued enough by society to pay even subsistence wages for. In a minimum wage world, those things either don't happen or they happen as side hobbies for people with other means of support. If you have UBI, you create the perverse situation of "I might do that for free because I don't have to work to live, but I can't take any money for it unless I can get someone to give me a lot of money for it".
They do /eventually/, but because working takes time, working a bad job reduces the time you have available to find a better one, which has the effect of giving everyone less than ideal work situations. That's why it's called search theory.
What if you are a lonely oldster who'd love to slowly sweep away dust and cigarette butts in front of the local store for 5$ an hour. It doesn't seem obvious that outlawing this is good for society.
But next time add sarcasm tags if you making that point.
It may. Buy are those issues worse than the current issues?
I don't think so — especially if you are inclined to look at countries where the minimum wage is close to (or above) the living wage.
That's what I consider the correct way to think about this. So do you have thought on what metrics you'd use to measure the net effect?
One of the nagging facts that bothers me is that, even as we see increases in minimum wage, there seems to be certain segments of society (particularly young men) who are disproportionately dropping out of the labor pool.
I'm thinking of a reddit post copied off facebook describing college or uni graduates in biology who could only get a job at Starbucks because there wasn't enough demand for their specialism.
So you want a dying wage. How can a dying wage exist? Two ways:
1 - someone else is subsidising the business, I.e. parents are paying the rent/mortgage, and food of the teenager
2 - the person is literally slowly dying, living in a caravan or a tent as ‘working homeless’ unable to afford healthcare or racking up debt, and it’s only a matter of time until they literally kick the buckets and cease to function. Or they will become birdedfor the taxpayer, with food stamps and other kinds of aid.
A business needs to pay for its inputs, labour is one of them. The cost of labour is whatever is costs to take care of basic needs of a human, the exact number is debatable but it does exist.
If we are going to provide subsidies, why don’t we subsidise healthy food, or planting trees or solar panels for example, for both businesses and individuals? Why should my tax money subsidise cheap labour, often for corporation that avoid paying tax themselves?
https://www.epa.gov/green-power-markets/summary-inflation-re...
If we raised the minimum wage to $20/hour, some businesses would raise their wages, and some will fire those workers.
And once on welfare it is extremely hard to get off welfare because of claw-backs and because once you have a gap in your resume it's really hard to get a full time $20/hour job. There might be employers willing to take a chance on you for a lower salary part-time.
The solution isn't to raise minimum wage, it's to eliminate minimum wage and put in an equitable UBI/welfare system. It'll raise wages naturally, because if they have a decent safety net, most people will feel comfortable quitting / not accepting an unjustly low salary. OTOH, if companies make massive profits through paying low salaries then we should tax those profits to pay for the UBI/welfare.
Sure the US is always different (and solution working elsewhere can't possibly be applied to it), but granted: a UBI might be a better choice ultimately. But the question is if that is really within the set of realistic choices. A UBI is a hard sell even in comparably "socialist" countries in Europe. In the US it would be dead on arrival. Consider that maybe this is the idea.
You know, a bit like what the Hyperloop did for intercontinental trains, proposed by a guy who wanted to sell more cars.
It's not an either / or. If the US were to invest more in education and developing the economy everywhere, there would be more jobs beyond low paid "unskilled" labour. That is, at the moment there's too much demand in low paid jobs, too little in e.g. college or uni level positions, and too much supply of people desperate enough for a job to take something below the standards of living.
Compare with my country, which during the pandemic saw a large amount of people in the service industry change jobs, because during the pandemic a lot of restaurants and the like were closed. When those opened up again, they found themselves with a shortage of staff, leading to the ones that still worked in the industry to be in a strong negotiating position and have their wages increased significantly.
Take away the supply - by increasing supply of higher-paid and diverse jobs everywhere - and low wage jobs become higher paid jobs automatically. In theory.
I don't know how far this extends, though. I live in an area where nearly anyone who wants to can get an affordable college education (and, I'd venture to guess, very close to free in most cases). And yet the graduation rate is abysmal. The fact is the higher ed path is a round hole and many people are square pegs. We can't just turn everyone into a highly educated skilled worker. I agree with the other posters that a wealthy country should have a dignity threshold for the members of their society, but I'm come to realize education may not be the main pathway to get there.
The USA and many other countries already have a surplus of people with college degrees that have no real value from a job skills perspective (elite overproduction). Future job growth is likely to be concentrated in skilled labor fields as we re-industrialize. We should probably shift some funding away from universities, and towards community colleges and trade schools.
No need to compare, that happened in the US.
As for a "business plan", that's a total joke. In the real world most small businesses have no real plan. They just make it up as they go and try to survive another day.
If you think that unskilled workers should be paid more then how much exactly? Please be specific. And if paying that much would cause the business to go bankrupt and leave those workers with no jobs, is that a preferable outcome?
I worked in a restaurant for a while as a youth and made minimum wage. It sucked and I hated it, but that was good motivation to learn some actual job skills.
This is one of those pushbacks you see on social media that is used like a gotcha but it’s fairly useless because you and I know it can’t be encapsulated into a forum-sized answer any more than the question “what should a company charge for it’s product, and be specific.” The answer is it depends.
At the risk of sounding as glib as your question, I’ll refer back to earlier comments: an amount that allows employers to “afford life”. That means these two things should not be happening at the same time: 1) a relatively high percentage of the employees rely on the taxpayer to “afford life” in the form of welfare benefits and 2) the company is turning a relatively high profit. Now I know “relatively” needs to be defined, but that’s what crafted policy does, and a forum like HN probably isn’t the place to get into those kinds of weeds. It can probably be pegged to CPI in some way, or limiting executive pay as a multiple of median employee pay when they do rely on taxpayers, as a starting point for the discussion.
It’s odd to me that you want to give a business a free pass for incompetence for lacking a viable plan, and then holding the employees to a high level of responsibility/accountability to “motivate” themselves to “just do better”. What you’re advocating is a kind of semi-permanent underclass since your understanding ignores all kinds of social and psychological barriers that prevent some people from getting “actual job skills.”
To use your own turn of phrase, get some “actual skills” at creating a profitable business.
Welfare does not subsidize employers, it is a subsidy /against/ employers. Giving employees welfare increases their wages because it increases their negotiating power.
If we apply market logic to that this would just mean that employers have to offer better deals.
I'm not sure this follows. By this logic, do you think UBI would cause employers to increase wages?
I think (given sufficient UBI), you would see some industries increase wages but many businesses fold because they are only viable by suppressing wages (which are then subsidized by taxpayers). So, yes, on one hand the remaining employers would be paying more but the overall employer base would be smaller.
Another way to think about it is that as forms of welfare go up like disability, those workers tend to fall out of the labor market. They are using that as a tool for negotiating higher wages. (granted, there many complications in this point)
Example:
-Employee needs $15/hour to 'afford life'.
-Business is only profit-positive if it pays $12/hour or less
-Assuming the employee will only accept a job if it allows them to 'afford life', as long as the government subsidizes the equivalent of $3/hour, business is able to turn a profit. Anything less than that, the employee does not accept the position and the business is not viable.
This was laughably on display a few years back when McDonald's received blowback by publishing their training that teach their employees how to apply for government assistance while they were posting outsized profits.
But it doesn't do that, in fact it requires the employers to raise their wages.
Your model has a single employer (a monopsony) who doesn't need to negotiate. That's a case where minimum wages cause both wages and employment to rise.
> This was laughably on display a few years back when McDonald's received blowback by publishing their training that teach their employees how to apply for government assistance while they were posting outsized profits.
McDonald's (mainly) doesn't have employees, it has franchisers and those have employees. Different companies.
More importantly, if you're on the left then you should think welfare is good. It's good that they're telling people that! We should require it in fact!
If you're saying that telling someone to get welfare is bad, you're making an argument that welfare is bad. In your model signing up for welfare makes employees poorer. That doesn't make sense.
Is there evidence to this claim? Even the most recent UBI studies seem to run contrary to this point.
This otherwise borders on a bad-faith post. Yes, McDonalds corporation is different than a franchise, but the profits of the former are obviously tightly coupled to the operations of the latter.
And it’s not a left/right political argument on whether welfare is “bad”. That’s an overly simplistic perspective. It’s about how a particular system is structured and whether that leads to desirable outcomes for society as a whole.
This is not an accurate description of the empirical evidence for either minimum wage or UBI.
The evidence is that minimum wages do not reduce employment up to 60% of local median wage and can increase employment - so there's no reason to get rid of it. And UBI doesn't have much effect in either direction - so it's not really that important and the main reason to do it is that it's much simpler than welfare alternatives.
Anyway, UBI isn't an alternative to minimum wage because the point of UBI and other welfare systems is to support non-workers, namely children and the elderly.
Those people are lining up to take a job that doesn’t pay enough because it’s better than no job or whatever worse job they currently have.
We could restructure society so that $5/hour is “enough” for some people and then the rest of could enjoy even cheaper meals. /s
If the wage for a job is too low to afford life, then we can say either the job is underpaid or the job is fairly compensated but simply not worth doing. If dishwashers quit in numbers for other jobs, dishwasher pay would have to rise if restaurants can afford it, or the restaurant industry would wither, and from an economic point of view, deservedly so.
Of course, this theory works best in a dynamic economy where people and capital can move around with a minimum amount of friction.
Their point stands.
This assumption is akin to a spherical cow, frictionless surface, etc.
In the real world capital and people won't ever move around with a minimum amount of friction, nor will people retrain for other jobs easily.
This also simplifies the scenario to assume that wages are the only income. It would be like building a mental model around people who live at home with their parents and concluding whatever money they make is obviously sufficient to 'afford life'. It ignores all the extraneous ways their life is being subsidized by others. Whether or not those external subsidies are desirable or sustainable are intrinsically related to this problem.
I was kinda upset today that my raise I just found out I was getting will barely beat inflation, but according to this MIT site, I make enough, by myself, to support another adult and 3 children, based on where I live.
Thats a very different perspective for me today.
I have seen this meme repeated a lot, e.g. any full time job should automatically provide for a LOT of shit that used to require 2 incomes, or a stay-at-home mom to take care of it.
Now the goalposts have moved to provide for food and housing and for "a kid or two".
Do you have any evidence that our societal productivity has advanced so far that we can simply pay this "living wage" to everyone working 2000 hours a year, regardless of their profession?
I would ask you - do you have evidence to show that lowering wages benefits anyone other than the employer?
Look at the Nordic countries. Paying everyone a minimum wage and creating a societal safety where education is free and everyone has access to the tools to better themselves results in staggeringly good outcomes.
The safety net from social security does ensure that it is pretty hard to starve and not have at least some accommodation.
Those two scenarios are pretty different.
Let's say a stay-at-home mom makes "a kid or two" reasonable. If I look up living wage charts for my state, that would require tripling the minimum wage.
We're nowhere near that level. The "two income" level is a lot lower and we're not even close to that one either.
A single parent with one child would fit right in between those stay-at-home numbers too, so that's not a goalpost move. Single with two children takes enough money that it would require a goalpost move, but single with one child does not.
I'd rather see the answer on the other end closer to a UBI then making basic jobs uneconomical by making a "minimum wage" higher then the value of the labor.