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Comment by scarmig | Hacker News Reader

At some point, the overhead cost of managing people whose labor is worth less than $7.25/hour is the predominant cost in employing them--at which point, you might as well just hire the person doing the oversight to do their job, or replace their labor with capital.

Minimum wage laws, at some level, prohibit useful employment. But every day the pool of people whose labor is effectively worthless--zero marginal product people, as Tyler Cowen calls them--is growing larger. Very few people, left or right, seem to want to confront this fact. Mostly because it's unpalatable: when horses' labor became uneconomic, we just turned them to glue. What do we do with people?

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Do you really think that there are that many zero marginal product people? Or do you think that it's mostly people who are unwilling or don't have the education background to do work with utility? I feel like a lot of minimum wage is a big negative feedback loop - if you are making $7 an hour, you have to work a lot of hours to put food on the table. And these are generally manual jobs, or at least involve a lot of standing, and so you are exhausted by the end of the day. Plus - with poverty being so endemic, chances are nobody around you has an education either, so you can't see first hand that education really gets you anything. And, with a lack of money, you either have no credit or (more likely) bad credit. So how do you get out of that trap?

When your parents are struggling to make ends meet like this, what do you do as a kid? You start working night shifts in high school instead of studying for the SATs.

If you took people in this trap who were willing, and subsidized them for two years to go to community college, I feel like you'd have a huge increase in productivity, especially across generations. And it wouldn't even be that expensive, especially if you factored in increased tax revenue. Or heck, as a lesser goal, make it a goal to enable people making under $X/hour to get their GED.

Maybe this is way too idealistic.

I was lucky. Relatively rich parents, we could move into a good school district, I got to go to a good university, not really worry about money, and now I work in the software industry which is booming. But a huge part of that I owe to circumstance - I could study in school, never hungry, never worried about paying rent.

> I was lucky. Relatively rich parents, we could move into a good school district, I got to go to a good university, not really worry about money, and now I work in the software industry which is booming. But a huge part of that I owe to circumstance - I could study in school, never hungry, never worried about paying rent.

But there are also plenty of counterexamples of people who didn't have rich parents, didn't live in good school districts, and did it on their own. I know a person just like that, and she paid for school on her own working fast food shifts at night and full time in the summer, and now has a great job in biotech. $anecdote++;

> you can't see first hand that education really gets you anything.

I don't see that education really does get you anything except a stifled sense of creativity, decreased curiosity, and crushing debt. See: the current college-grad crisis.

"Education" in a modern, western sense is a red herring. Being a lifelong learner, being always curious, and having the desire to do something useful with your life -- if you have these qualities you'll do just fine.

Of course, there are always counter examples. A stuck clock is right twice a day. And someone always wins the lottery. Stats don't lie though, parents income and education is highly correlated with their childrens' success (and apparently even brain development). So you know one person who overcame poverty - how many people do you know with a pretty typical middle class family who are about as successful?

Suppose that we were to play a game - you are given two people, A and B, and the following information about their parents: income level and education level (name of degree/diploma(s) and schools). Do you think that you could come up with a strategy for guessing which person - A or B - will make more money at age 30, that would do better than just flipping a coin?

Formal education does offer you huge benefits. I walked out of school into a job paying many times minimum wage - I got the job because I did well on the interviews, but I got the interviews because I have a degree. Is this fair? Probably not, but it is the reality of the situation. And I do feel like I learned a ton in school. Of course, there are problems with the education system, but that's another discussion.

> Stats don't lie though, parents income and education is highly correlated with their childrens' success

Is the lesson that parents' education causes this, or that parents who value education/learning produce that type of child? Not to be a "correlation != causation" parrot, but it's worth considering.

Maybe being raised in an environment where participating in "the system" (school, college, salaried job) is the norm produces children who are more likely to participate in the system themselves?

> but I got the interviews because I have a degree

I wouldn't argue against this point on another site, but it should go without saying that here in hacker land this isn't really a thing.

> But there are also plenty of counterexamples of people who didn't have rich parents, didn't live in good school districts, and did it on their own. I know a person just like that, and she paid for school on her own working fast food shifts at night and full time in the summer, and now has a great job in biotech. $anecdote++;

Yes, but those people are playing on "hard" mode, so to speak. More power to them, but it's unreasonable to imply that all people in poor socioeconomic circumstances will be able to do the same.

EDIT (reply to below): Like I said, they're playing on "hard" mode. You cannot expect all or even most people playing on "hard" mode to achieve the same things that people playing on "easy" mode can achieve (people like me living in an affluent suburb, whose parents are upper-middle class, who went to fantastic local schools filled with other upper-middle class students, whose parents can afford to pay for college and any educational expense, etc.)

> it's unreasonable to imply that all people in poor socioeconomic circumstances will be able to do the same.

Why?

Two reasons:

First, while it's not entirely a zero-sum game, there's a considerable competitiveness aspect - there aren't enough college slots or scholarships to accommodate everyone getting a good degree from a strong school, and if there were, there wouldn't be enough jobs to hire them into. So at various points, people are going to not make the cut. Do we simply say "well, if you're not in the top X% of the nation you'll have to make do on $10/hour?"

Secondly, because we can't simply wave our wands and make everyone 15-30 IQ points smarter. Getting every poor child to be as motivated and intelligent as that anecdote is at least as large a problem as income inequality generally. It's like saying "I've got a cure for cancer, but it requires time travel" - you've just reduced a Very Hard problem to a different Very Hard problem, which is a solid achievement but doesn't actually solve anything.

EDIT: And Thirdly, why should the answer be that poor people have to work their asses off to catch up just because they made the wrong choice of parents? It's like a race where some contestants have to carry dumbbells - it's great that they can actually succeed, but it's still miles and miles from fair.

> So at various points, people are going to not make the cut. Do we simply say "well, if you're not in the top X% of the nation you'll have to make do on $10/hour?"

False dilemma. The choices are not "either get a good degree from a strong school, or make $10/hour forever".

> we can't simply wave our wands and make everyone 15-30 IQ points smarter

I'm not sure what your point is here.

> why should the answer be that poor people have to work their asses off to catch up just because they made the wrong choice of parents

I wasn't arguing that they should, just that they could.

>False dilemma. The choices are not "either get a good degree from a strong school, or make $10/hour forever".

You're right that it's not yet that stark. Nonetheless, while we need a system which encourages, motivates, and rewards the people who succeed, we also need a system which doesn't abandon the people who don't make the cut. We can't just simply say "well, everyone had a shot" and leave it at that. There are millions of Americans who are working poor, and tens of millions more who are still struggling to get by in the land of plenty.

>I'm not sure what your point is here.

My point is that just because there are ways out for people who are unusually intelligent and unusually diligent doesn't solve the societal inequity, because not everyone can take advantage of those outs unless they suddenly get a lot smarter en masse. Again, even if we perfect meritocracy and all the incentives, we can't ignore the people who don't have IQs over 115 or whatever[1]

[1] - or if IQ is an inadequate measurement, whatever measurement you have for merit.

The world is full of examples like this, but here's the thing that is always glossed over: hard work alone isn't sufficient for success. The kid who grows up on the wrong side of the tracks not only needs to do all the right things, they also need to never do the wrong thing, which typically requires both diligence and luck.

The rich kid who gets caught with drugs? It's a youthful indiscretion, he gets off with a talking to. The poor kid gets a criminal record, which makes it many times harder to succeed.

The rich kid who get pregnant? Her parents pay for an abortion. The poor kid drops out of school to raise the child.

The rich kid who slacks off an flunks a couple classes in high school? Parents pay for some fancy prep school to polish the kids academic record. The poor kid is essentially locked out of top-tier colleges.

The rich kid who doesn't land the Goldman Sachs internship after junior year? Goes to work at his mother's friend's consulting firm and still has something "good" on his resume when he's applying for the first job out of college. The poor kid works at the supermarket.

It's not that being poor means that you can't succeed if you work hard. It's that it means that the deck is stacked against you every step of the way, and that just working hard isn't actually enough even if you do everything right that's in your power to do. You also need to be lucky. If you are sufficiently well-connected and wealthy, however, lots of "minor" things get overlooked and you can be quite successful even if you don't work especially hard and aren't especially lucky.

The idea is that no matter how good people are, we soon won't need so much labor hours as a society to employ everyone.

We'll have good, decently skilled, enthusiastic, hardworking "zero marginal product" people simply because software/robots will be able to do it cheaper than even a subsistence (calories+shelter) wage, and in most tasks employing a human for it would be a senseless luxury.

You can hire a bunch of people to carry you around in a carriage on their backs, or you can hire people to do arithmetics for you - but almost noone does. Soon (in my and your lifetime) the same will be for all the manual, exhausting jobs; for most of the driving, service, cleaning, delivery, and retail jobs; for most of the simple clerical jobs. Even if there is no progress in AI at all, we'll come to a state where, say, 10% of population can cover all major needs (agriculture, food production, service, clothing, construction, consumer goods manufacture, transportation, medical, legal, etc) of everyone. What we'll do with the other 90% (or 99%, or even 100% if AI happens) ? They will be nice, great, fellow humans, but practically speaking, the society can do with them and can do without them. That's a choice for the society - utopias or distopias are both possible.

That sounds nice, but I don't think it's true, especially not in the near future. We're already in a state where society could go on with say 30% of the population working to produce food, but we keep growing, because as a society we want more. Who would give up what they have right now to go back and live as a billionaire in the 1500s, giving up their iPads and TVs and modern medicine? Not many people. I don't see that trend reversing. How many times has cost been the determining factor on whether to purchase or do something? Probably a lot.

With trade, there's always relative competitive advantage. It's probably economically more sensible for you the software developer to hire someone to mow your lawn, since you make more money in an hour of writing software than it costs to get someone to mow your lawn. Even if you're better at mowing your lawn than the person you hire - you still make more money writing software (example: You make $100/hour writing software. It takes you 1 hour to mow your lawn, or you can hire someone for 2 hours to do it for you at $20/hour. Opportunity cost to mow the lawn: $200. Gain from hiring someone to mow the lawn: $160. So even though you can mow the lawn twice as fast as the person you hire can, it's still better to hire someone.)

So now it becomes a resourcing problem - you need people who can mow your lawn. Robots can do that, but I don't think that robots can do all jobs at least not in the near future. Which is why I think that a huge part of this is a resourcing problem - you have a mismatch between skills and demand, which again I think is solved through education. Consider software developers again - I bet that if suddenly there was no demand for software developers, any one of us could be successful in another career, since at the heart of it, we're logical thinkers. We need to get as many people to that level as possible.

Furthermore, it's very important to not make poverty generational. I think that I contribute to society through my employment (at least I pay a ton of taxes), but if I wasn't as lucky as I was, I might not be in the same position to do so. I'd still be as capable, at least in terms of potential, but I wouldn't have the opportunity.

Food agriculture in the developed world already takes only something like 1-2% of population - the rest of food jobs are in processing and other sectors.

The lawnmower example isn't what we're seeing already now - we have structural unemployment of young average people who could and would do simple jobs like mowing lawns, flipping burgers and cleaning sidewalks; but there already are millions more of them than such jobs. And with every year, millions these simple jobs are going away, and unlike all the previous tech-job-shifts, this time the new industries aren't creating new jobs for them. Software developers are hiring other people for lawns and babysitting, but they are currently replacing much more people in "obsolete" industries with high-tech low-headcount disruptive business models.

I do agree with your comments about what's important and how it should be - but it's not really relevant when estimating what will actually be; wishful thinking won't solve it, especially as it's clearly beneficial for the powerful to ignore this problem as long as possible.

its interesting you mentioned this because i recently read a "book" online about this very topic (albeit in the form of fiction - its called Manna).

Both distopia and utopia is possible, but the distopia is much more likely due to the capitalist system we have, and the rich/poor gap is only going to grow.

What skills does it take to make minimum wage? Often it is the ability to show up on time and follow directions. If someone doesn't have those skills, I question how well they will do in a community college.

If they do have enough reliability to show up on time and enough motivation to go to the community college, there are parts of the country where they can work a minimum wage job and still pay for tuition and a place to stay.

Find some places that pay minimum wage and will also pay for education in some form. And do you really think that the unemployment problem in unskilled or low skill labor is simply because there aren't enough people who can show up and follow directions?

The business owners I know who employ low skilled workers all have trouble finding people who will show up to work on time and actually do work.

The unemployment problem in unskilled or low skilled labor is largely because government benefits make is economically better for low skilled people to NOT work. In my town there was a waitress who quit her job rather than take on the more hours they wanted her to work because it would have meant losing the money she was getting from the government.

I see a lot of people whose job hunting efforts are minimal or are for jobs they know they aren't qualified for because they want to stay on unemployment. When the unemployment runs out, the real job search will begin.

For a statistical look at this see the book: The Redistribution Recession: How Labor Market Distortions Contracted the Economy

I found the movie 'Waiting for "Superman"' http://www.waitingforsuperman.com/action/ (it's on Netflix) to be pretty enlightening on the topic of how the education system is failing kids in this country. They make the argument that even schools in well off areas are not particularly good in absolute terms though relatively they seem great.

> Do you really think that there are that many zero marginal product people?

About 15% of Americans are borderline mentally retarded. They are trainable, but most of the suitable jobs have been automated. Finding interesting work for them is a real problem and has gone badly. Currently the welfare apparatus is farming them for votes, but this is not a desirable or sustainable situation.

How did you get the 15% number? Assuming IQ of 70 is taken as margin of borderline intellectual functioning, and 15 points being the standard deviation, only people below two standard deviation lie below 70 IQ, or about 2.5% of population. (The other 2.5% being above 130 IQ)

70 is generally taken as the threshold for mild mental retardation. I was using 85 as the threshold for borderline and assuming a non-normal distribution.

You have got your thresholds wrong. http://en.wikipedia.org/wiki/Mental_retardation#IQ_below_70

Also, the distribution is by definition normal, and I have hard time believing 15% of population is retarded. That would mean about 1 in every 6 person I met is retarded, a number too big to believe. Now 3 genius/3 dumb out of 100 is more like what my experience has been.

Many people learn their skills on the job. Setting an artificial lower limit of what they are allowed to work for prevents some people from starting to climb a ladder toward higher skills and higher wages.

Regarding just hiring the person managing the labor to do the work: Don't forget that one person can manage multiple people.

Surely you must be joking right? How on earth would someone earning < minimum wage try to start climbing the corporate ladder? If you clean toilets you don't learn any valuable skills, you won't someday be promoted to manager of the cleaning staff and you can't walk in to your boss and demand a higher salary because you're now an expert at cleaning toilets.

you won't someday be promoted to manager of the cleaning staff

Actually, that's exactly what will happen. You'll do the job. Then you'll learn how to do it well. Then your job will be to teach others to do it well. Then you'll become an assistant manager, making sure people have the training and equipment to do it well, and handling problems that others don't have the experience for. Then you'll become a manager because you know how to handle people and make that part of the business succeed. Then you'll become a higher level manager because you know how to make a team of workers successful.

That's not a far-fetched scenario. That's exactly what happens in many organizations. It's not the only way into leadership, but it is a well-trodden path.

Anectodal evidence but: that's exactly the route my father took. From working on the assembly line to managing planning & logistics from the company, learning and contributing at every step of the way. He started with no relevant qualifications, and wound up with a bunch of industry certifications too.

For a short while I worked for close to minimum wage washing dishes in restaurants. On my breaks I would read microprocessor manuals. One day, a customer saw me reading such a book and we struck up a conversation. He worked at a small technical shop where everyone was basically commission-only for repairing computers. I knew quite a bit about electronics and we were one of the few shops in the area that could repair monitors. (This was back when they were expensive.)

To make a long story short, today I'm a Senior Software Developer at a large company. I'm happy enough without any aspirations to management at this time :-)

I agree with you that you don't learn a lot of great marketable skills by scrubbing things clean. But such a job, by itself, can't stop you from learning if you're determined.

The impact is evident in apprenticeships. We've got a lot of laws about them that makes them tough to run, and a small shop won't usually do it for fear of being crushed by the Labor Dep't.

But consider, if a HS dropout could learn how to wrench on a car for $2/hour, maybe they could get a full auto tech position (at a living wage) later on, without the crushing debt of trade school.

Yes, someone who starts out cleaning does learn skills. They can become better at cleaning than the average person. They will know how to clean really bad messes without getting grossed out by it. They will know how to dispose of the stuff they clean. They will know how to clean efficiently and without wasting time. They will know what type of cleaning supplies to use.

That may not make them a manager, but there are jobs that pay higher than minimum wage that require the ability to clean as a skill. Often those jobs come with new skills to be learned. And yes, someone who has some degree of management potential could definitely start out cleaning toilets for minimum wage and work their way up to managing the cleaning staff somewhere.

The churn rate at, for example, fast food joints is high enough that you can secure (piss poor, initially) promotions by simply not being a teenager that only works there for 3 months. By no means is it easy, but very modest "climbing" is very common in the fast food sector. Skill has nothing to do with low-level promotions, it is all about reliability.

The guy yelling at the toilet scrubber doesn't have his job because he is particularly skilled at yelling at toilet scrubbers.

Minimum guaranteed income. Let the people whose labor has zero marginal value opt out of the work force, which has the incidental effect of reducing labor competition for people just above the margin.

I want to run an experiment: build a town that's equal in all ways: everyone has the same house, the same car, the same clothes, the same bank all provided for them. Give them a monthly stipend. Give them all the same job doing anything (breaking rocks, whatever).

I would love to see what the wealth distribution looks like after a year.

I recently wrote a very simple economic simulator. Given X actors, each starting with $Y (for a total money supply of $(X * Y)). For each "tick," two actors are selected, a buyer and a seller. The buyer gives the seller a random amount of money (if the buyer didn't have that said amount, no transaction happened). That's it. No skill. No talent. No fraud. Just random transactions between a fixed number of actors and money.

Even after a few hundred transactions an interesting pattern emerged---a power law distribution of money, with the average amount of money per actor less than the starting amount of money (generally, about 66% of the starting amount). The results were similar regardless of the number of actors, the amount of starting money, and the amount per transaction (even a fixed amount exchanged per transaction would result in a similar result).

I think the result would the same for your hypothetical town.

That is also too simplified to be applied to the real world, since the interactions we have we other people are very far from random.

Do you mean median?

Possibly, it's been awhile since I last ran the code.

Yeah, if it's a closed system with no people or money added or removed the average would stay the same.

I want to see the reverse version: get 2 18-year-old guys, both equally smart and hardworking. Give one guy $10, and the other guy $10,000,000. See who earns $1,000,000 first.

If hard work is all it takes to succeed, then both should earn their first $1,000,000 at the same time, right?

This right here is the sinister truth about conversations like this -- though clothed in the holy robe of "equality", you're not looking for equality of opportunity, you're looking for equality of outcome.

It shocks me truly because we see the reality every single day. Two people, same job title, same responsibilities, same home life situation, and one far outperforms the other. The outperformer gets the bigger bonus, the bigger raise, and the promotion. Factored out 10 years, the outperformer ends up far "richer" than the other guy, and the other guy calls it inequality.

Yes, inequality happens. Yes, some people get a big head start. Yes, some people can tap family connections. But look around you, and I guarantee you'll observe my scenario 1,000,000 times before you observe your scenario once.

This right here is the sinister truth about conversations like this -- though clothed in the holy robe of "equality", you're not looking for equality of opportunity, you're looking for equality of outcome.

I'm not sure where you get that idea from. The purpose of my thought experiment is to show that outcome is inextricably tied to opportunity.

That guy who received $10,000,000, he's going to have a lot of opportunities. He gets to buy himself an education; he gets to invest in businesses that won't pay out for a few years, without having to worry about where his next meal will come from. He gets to treat minor ailments, before they fester into something more serious.

Too many people assume that the outcome is only dependent on effort alone. Too many people like to think that a person is destitute only because he is lazy, not because he didn't have any of the opportunities offered to those of us who grew up in a well-off environment.

In a perfect world, your financial outcome will be tied only to the amount of effort you put in. I'm trying to point out that the real world is hardly perfect.

General statement, not making any presumptions about what you personally believe:

One of the great ironies is that many people who think that what you're born with have no correlation with how your life will turn out are also the same people who think that an inheritance tax is a socialistic imposition that unjustly punishes rich parents from helping out their kids.

1,000,000?! Anyone born into an upper middle class family, whose parents paid for college, tutoring, etc, has a $100k or more head start over someone born into a bottom 40% family. These aren't 1 in a million people. Maybe 1 in 10.

This is a far more relevant comparison for our own society.

I agree we should run that experiment, but until then abandon the pretense that our society is really meritocratic.

I never played but could you be talking about Minecraft?

Nothing says "disposable income" like a diamond hoe.

You might be interested in the Mincome experiment in Manitoba: http://en.wikipedia.org/wiki/Mincome

Given the option to legally cut their lower-tier employees' wages to zero tomorrow, I wonder how many companies would do so, and still expect those people to show up for work?

When horses' labor became uneconomic, we just turned them to glue. What do we do with people?

Force companies to pay a living wage.

Trust me: I believe that people deserve an honest living. I believe people have the right to housing, warmth, good food, healthcare, and the ability to have plenty of autonomy and free time to do what they love and achieve self-fulfillment. I am not averse to governments passing laws to achieve this.

But all organizations have a choice: I can either pay a worker $X or replace labor with capital for $Y, within the budgetary constraint $Z. If $Y < $X, they'll do that, or be outcompeted by organizations which do choose to do that. (If $Y and $X are both >$Z, well, that's when the organization closes up shop.)

That's a real choice, and it's not easily legislated into oblivion.

"That's a real choice, and it's not easily legislated into oblivion."

It might kill the economy or grow a black market, but it is easily legislated into oblivion. The thing is: legislation can decrease $X and/or increase $Y. Put a $1000 a barrel tax on oil, and proportionally on other sources of energy, and abolish income taxes and you will find that people are willing to pay close to $Z for manual labour.

Yes, that is exaggeration, but any increase of the cost of capital relative to that of manual labour will have some effect. It will either put companies out of business or it will create manual labour jobs.

Problem is that this requires international cooperation or unilateral restrictions on trade (import bans or high import tariffs)

It's easily legislated into oblivion for any particular instance - just ban the automated looms (or whatever else is replacing workers), or require that the companies still employ people to watch the capital do its thing (some unions have gone this route, at various points). It's not, however, easily solved well - both the above are things I'd object to; particularly the latter, where I feel like we're removing not adding dignity.

That's a real choice, and it's not easily legislated into oblivion.

I understand that, and I don't mean to demonize business by any means. A minimum wage might well stifle competition somewhat, but I think the lack of one would do more harm than good. Given the choice between harm to business and harm to people, I'll choose to harm business.

Lets say you run a small movie theater. You hire a 5 people for $5 per hour to sell tickets. Many of these are teenagers and other people who have schedules that can't work a normal job. The government comes in and says minimum wage needs to be $10 per hour. After doing the math, you decide that financially you can't afford to keep all those people on at $5 per hour. So you keep one to help run the front of the theater and put in a machine where people can swipe their credit cards to buy tickets.

Who was harmed? The business or the people?

The $5 per hour may not seem like much, but to the teenager it is $5 per hour, plus a chance to learn to manage their own money, a chance to learn people skills, a chance to learn work ethic, a chance to have a good reference from you for later jobs, etc.

I understand your point, and I admit it's complex. But what happens when the government says I can pay whatever I want and I tell those people they're now making $2 an hour because nobody's buying the six dollar popcorn anymore? A minimum wage may have its downside but at least with it, people have an expectation of how little they can expect to make and plan accordingly. It provides a measure of stability at least.

To me the ability to find a job is a more important measurement of stability than the government saying that no job worth less than X and hour can be had.

But back to your question about what happens when employers lower their wages to $2 per hour, they would probably lose all of their employees and have to raise wages if they want workers. Believe it or not, wages do correspond in some way to the amount of benefit an employee brings to a company.

Lets say you want to hire someone to clean your house. How much would you have to pay in order to attract someone with enough skill to do the job? You couldn't just say you'll pay $0.50 per hour and magically get people to clean your house at that rate. There might be some people you'd attract for $5 per hour. As the price goes up, so does the pool of people you could pull from. However, above a certain price, it isn't worth it for you to pay someone else to do it. You might do it yourself or just live with it being dirty.

If having your house cleaned is worth only $5 per hour to you and someone is willing to do house cleaning for $5 per hour should you be allowed to hire them? They probably aren't going to be willing to work for $5 per hour if they can make $10 per hour somewhere else. Does it make sense for the government to say, "You can't hire this person unless the value they provide is greater than $7.25 per hour"? I don't feel that benefits you or the person who you want to pay. I don't feel it benefits society as a whole because I think we benefit by having money flowing through more hands not fewer. Minimum wage says that transactions below a certain hourly rate are not allowed, so it prevents money from flowing through some of the hands that might get it otherwise.

the danger you run into tho, is that the whole neighbourhood conspires (whether deliberately or not) to fix the price at $2. Price fixing like this completely favours the employer, and they can do it if they have the knowledge that the employee can't possibly find employment elsewhere.

The least worst situation, in my opinion, is the minimum wage, and the only cost is that it has an overhead on society (in the form of benefit pay outs for jobs that got destroyed by the minimum wage).

Do the people actually benefit in that situation? When a business closes up shop, do other businesses naturally expand their labor force in a linear manner to provide new jobs for the ones that were lost? Ideally the competing businesses will easily expand of course, since they have less competition after their competitor dropped out, but is that expansion linear?

I suppose for some types of jobs it may be. If a coffee shop closes, and it's competitor opens another branch to soak up the extra demand, the additional coffee shop will probably use approximately the same number of employees as the old one fired. But can the same be said of, say, factories? What if the second factory, while filling the same demand as the first, was more successful because it used more effective automation?

That is a fair point. But what's the benefit in lower wages across the board, to the workers making them and to the economy?

Perhaps the answer (at least in the US) would be to reduce the cost of reeducation to facilitate transition, and socialize healthcare? Lower wages might not be so bad where healthcare and education don't represent potential lifetime burdens for people. But then the tax burden for that would fall disproportionately on the poor wouldn't it? And also, there might just not be jobs at all to replace the ones lost.

I don't know.

Free education and healthcare definitely seem like good first steps to improving the situation to me. Letting the prospective workers be as smart and as healthy as they care to make themselves seems to have no obvious downsides to me. With any luck that would create an expanded middle class that could be taxed to pay for it.

The trend of people squandering their education and ending up in low paying jobs anyway disturbs me, but I think that could be solved by offering only majors that are in demand for free. Free STEM and medical sciences would be my initial suggestion, but I would want to see any decision like that backed up with some solid data (perhaps the data would reveal my concern is unfounded).

> Force companies to pay a living wage.

So what is a living wage for a teenager living at home? What is a living wage for a college student going to school full time but still supported by their parents? What is a living wage for a retired grandparent that wants to 'stay young'? How about for a spouse who just wants to be out of the house because the other member of the marriage brings home sufficient disposable income?

The notion that there is a single administratively selectable price point that is the 'minimum' wage for any and all job situations is a fallacy.

Some countries--Germany from what I understand, for instance--have sector and job class-specific minimum wages, which seems so eminently sane that it's impossible in the USA.

No direct statutory universal minimum wage. But sector-by-sector minimum wages are set by collective bargaining agreements. In Germany in particular, 70% of the labor force are covered by them.

I admit to not knowing the full details of how it works in Germany--not many good sources on the Internet immediately apparent, so I'd be plenty eager to hear if I'm misunderstanding how it works.

There is no minimum wage in Germany.

Could you expand on that please? Surely there is some kind of protection against 20 hour shifts for $20? How are workers protected?

Many industries have strong union presences that negotiate wages. But there is only a statutory minimum wage for 5-6 different jobs--painters, mailmen, etc. But in general, the best protection against low wages is the high mobility that low wage jobs offer.

>Force companies to pay a living wage.

Who determines what a "living wage" is? Does it include having cable? Internet? A car?

But beyond that, why do you want to put up any barriers to what jobs companies can hire workers for? Lets say you own a company that employees 20 people and it sits on one acre of land. You need to get someone to mow the grass. You can hire company to come in for $80 per week to mow for you. They have big expensive lawnmowers and can do it very quickly. Or you can hire Joe to mow it using an older push mower you have. Joe isn't super fast and it will take him 10 hours. So you decide the value is $8 per hour in order to be on par with the company that will do it.

I wouldn't want the government to come in and make laws that make it better for you to hire the big company than Joe. I wouldn't want them to make it harder for you to justify taking a chance on hiring Joe and giving him a shot at a job just because someone doesn't think that $8 per hour is a living wage.

If Joe works for you for a year and has good track record, who knows. Maybe he will prove dependable enough that you can find other things for him to do. Maybe some of those things will be worth paying him more. Or maybe he can get a higher paying job working for the big lawn-mowing company based on his track record with you.

The situation is more complex that that, because the mowing company uses a great big machine, and they constantly try to improve it. Say it now only takes $40 to mow instead of $80 due to efficiency increases and whatnots.

Do you now fire joe and hire the mowing company? or do you instead choose to pay hin $4 an hour? Ovbiously joe can't increase his speed of mowing beyond a certain limit - he is human after all.

The real underlying question is - if the value that joe provides can be instead provided via a cheaper source, then the business _should_ use that cheaper source, joe's life shouldnt and won't come into consideration. This method of thinking seems incompatible with the concepts of compassion and empathy, but it seems this is the way the real world works...

You can force a living wage, but you can't force companies to hire people at that wage. I mean, you can, but most people would find that pretty extreme.

Let them eat cake!

+1 Those that don't learn from history are destined to repeat it

So, when a person's job becomes outdone by technology or automation, we should force companies to pay them more?

Companies shouldn't be able to set wages at an arbitrary low. Because then companies could simply set them as low as possible, without any regard to the standard of living for the employees making those wages.

But then any company willing to pay a decent price would instantly have their pick of anyone in the workforce.

It's called supply and demand. If there's no demand for cheap laborers, the answer is not to make them more expensive to hire, or to force companies to pay them a minimum. That just exacerbates the problem - now they can't even work for wages they might be able to be worth. It's very difficult to get better at a job unless you're either working at it or have the resources to do it in your free time. Someone who can't get a minimum wage job probably doesn't have the resources to learn the skills to move up.

I can personally attest that it's not just teenagers trying to find minimum wage jobs. I am a teenager, and I while I was looking for a summer job (I'm now employed as a software consultant) I was regularly (i.e., every single time) competing with people in their 20s or even, in some cases, older than that, who were simply unable to find work elsewhere.

A minimum wage affords unskilled workers some amount of time to learn new skills or improve their lot in life. An unskilled worker who has to work 18 hours a day at $2 an hour to make ends meet will never be able to learn new skills and claw their way out of that hole. It's the same with unemployment benefits - it affords citizens time to learn new skills without worrying about what they will eat that night.

perhaps unemployment benefits should give food and other basic necessities in the form of vouchers, and force the benefit taker to take (gov't provided) classes that will reskill them.

This way, they can either look for a real job to earn cash, instead of living on "vouchers/food tickets", or have to take classes to reskill/up-skill. They won't be battling for their next meal, but they also can't have leasure time.

Hmm. I'm not following the logic, there. If that were true, wouldn't every company have their wages set to the minimum wage right now?

I will admit I can't argue against that.

> Companies shouldn't be able to set wages at an arbitrary low.

Why not? You seem to think that there is only one big company setting wages for everyone. If company X needs good workers and is only willing to pay $5 per hour, but company Y is willing to pay $12 per hour, company X is not going to get the good workers. If they want better workers they will have to raise their wages.

> without any regard to the standard of living for the employees making those wages.

The clients who pay me do so without any regard to my standard of living. They pay me with regard to the value I provide. If you are suggesting that low skill employees need to be paid based on something other than the value they provide then you are suggesting that they be given charity rather than wages.

Absolutely they should be given charity, and wages not solely determined by value provided. The American economy (and world economy to some degree) is evolving in a way that eventually only high-skilled workers will be needed, as most unskilled work will be fully automated. This continues to raise the bar on citizens for even entry-level positions.

10 years ago a college degree in business or communications was enough to land a salaried-job. Now, to obtain a well-paying job straight out of college either a STEM degree or graduate work is usually required. It is extreme to suggest that citizens either acquire a high-level of education (which many simply cannot complete) or perform work for $2 an hour.

> It is extreme to suggest that citizens either acquire a high-level of education (which many simply cannot complete)

why is that a wrong ideal to move towards to? I agree that current education is poor, but thats an implementation problem. The idea that every citizen should be highly educated is a good one, and that in the future, in order to provide value (which is rewarded in the form of money), you can't just labour.

Then I suppose you would consider it stupid and irrational for any company to pay more than minimum wage.

If you're meaning to reply to me, then no. I don't even see how you can draw that inference.

I'm only suggesting that a minimum wage is necessary, because there is a cost of living in a modern society. Money pays for shelter. Money pays for healthcare. Money pays for education and food. And unless you're in a socialist system, that money comes from wages. So a standard should be met. Especially in cases where a corporation would otherwise consider someone's labor to be essentially worthless.

And yes, perhaps if that standard itself were fair (assuming it's currently unfair), then in some places and in some jobs it might be less than whatever the current minimum wage is, where the minimum wage exists. Elsewhere it might be higher. I don't know, and I'll readily admit I might be bringing a checkers set to a chess match when discussing economics on this forum but I honestly believe it should be something.

there is a cost of living in a modern society. Money pays for shelter. Money pays for healthcare. Money pays for education and food.

That's a good argument for a guaranteed minimum income. It's a bad argument for a minimum wage laws, because at least sometimes they result in people earning zero instead of low wages.

And unless you're in a socialist system, that money comes from wages.

We're already in a partly socialist system. Minimum wage laws are a convoluted and inefficient form of welfare; it's better to just directly give money to poor people, and then avoid doing anything that interferes with their ability to increase their income.

You seem to imply that unrestricted companies in a capitalist society would obviously set wages lower than current minimum wage laws require, but that model has no explaining power for the huge portion of jobs which already pay more than minimum wage.

The question is, how much shelter, healthcare or food can you pay when your job is replaced by a machine or an offshore worker because your wage is now too high (relatively to the alternative) to be worthwhile keeping you employed?

Would those companies necessarily choose not to outsource or automate those jobs if they had the option to do so, without a minimum wage requirement?

If the standard of living is low enough that, taking the same wages as an outsourced worker, someone doing that job could still survive, you might have an argument against the minimum wage standard there.

Otherwise, if only option to retain local employment is to pay what those outsourced workers are making, or less, in a market where more than that means living hand to mouth, then it's a distinction without a difference to me.

Ideally provide them with a better safety net and the means for which to develop skills which would give then a value over the minimum wage.

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