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Originally Posted by JKDS
I dont understand. Even when they expand or contract, they use the amount of labor that is necessary, and nothing more. A pizza shop with 3 delivery drivers when only 1 is ever needed is very soon going to have only 1 delivery driver. If they decide to expand to more stores, theyll only hire the exact amount that they need.
"Need" doesn't assess it. I worked in a restaurant for years and we always could have used much more labor than we had. Managers focused on nothing as much as sending employees home because labor was the biggest cost under WA's high minimum wage. The restaurant suffered tremendously from this because we couldn't handle any periodic, unexpected boosts in customers. The restaurant had a million opportunities to grow, but never did, partly because of this.
Assessment of necessity or potential value is complex. Businesses never know what they need. They know what they think will increase revenues, and the less capital they have, the less they can do this.
Well, you got me asking 'why' now. If I was an employer, I'd want my employees doing as much as they could for me. I'd be the Mr Krabs of business. Why wouldnt every company be interested in making their employees 'earn their wage'?
Well, they are, but there are drawbacks. Low skill work is hard. A laborer in a low skill job has to work harder to increase his productivity. The higher a wage floor for a low skill job, the more the worker is required to work in order to have a job.
Oh, I understand this. However, I dont believe we arent there already, and I dont believe we wont be quickly approaching that point even without a wage boost. (Except the food cooking robot...thats a few years away development wise.)
There isn't a point where this is achieved. Every field has marginal workers regardless of what the wage or technology is at. Wage floors are just a way of turning more marginal workers into the unemployed. Lowering wage floors does the reverse.
It seems like the small businesses which do exist only do illegally then? If thats the case, a higher minimum wage wouldnt effect them at all.
Well if we want to encourage more illegal and/or off the books work...
Im not sure we can identify exactly why china's economy is so great though. It seems that would be harder than analyzing why ours sucks.
Sure we can't do exactly, but we have gotten quite close. Imagine NYC if no licensing for street vendors were required and no zoning laws existed. Entrepreneurs and laborers would be flocking in droves. Many thousands of new tiny businesses would pop up everywhere and the amount of small, cheap apartments would skyrocket. This is basically what happened in China. The poor rural folk flocked in droves to the reformed big cities where there are virtually no regulations on street businesses and housing.
I dont believe people are paid what theyre worth. They're paid the smallest amount of money the company can get away with paying them, and they get away with it because they have incredible bargaining power.
So do workers. If businesses had the type of bargaining power that outweighs the worker so greatly, then why are workers constantly getting raises and constantly moving to new jobs for more money? I've gotten a bunch of raises I never even asked for or expected because I was a more productive worker than my coworkers and my bosses knew that if they didn't have a policy of rewarding productivity, they would have a lower quality of employee than their competitors. All industries behave like this.
Nobody is ever paid exactly what they're worth, but regardless of what you do, if your wage is too low relative to your productivity, it is not hard at all to get raises or to find a different company who will give you higher pay. Typically, most people aren't that aggressive about getting the most of what they're worth, but they still benefit from a competitive market economy that makes it hard for employers to pay them less than close to what they're worth regardless.
Maybe they shouldnt avoid them then? You could have two competing grocery stores...one deals with the minimum wage by firing some employees. In return, they are worse at collecting grocery carts, have longer lines (or more, annoying, self serve checkouts), and a store that is less clean...among other things. The other store instead increases their prices by a marginal amount (everything increases by 10 cents). Consumers would hardly notice the 10cent increase, and would likely be willing to pay it to avoid the long waits and unclean store that cut labor.
They don't fire the employees (for the most part). They hire new employees more stringently. In your scenario, assuming one grocer raises prices and the other just hires new employees more stringently, the latter will have a smoother transition and will gain some marginal customers who did notice the price increases.
I mean...its obvious that the more expensive labor is, and the less productive it is, the less an employer would want it. But its also true that theres a point where its so inexpensive and productive that the employer loves it (Point A), so expensive and nonproductive that the employer hates it (Point B), and where we currently are, (Point C). Your argument suggests the catastrophic result, that we go from here
(good) A--------C---------B (bad)
to
(good) A----------------C-B (bad) such that labor is crap now. but im not certain the result would be so bad, and it may actually be
(good) A----------C-------B (bad)
I'm not suggesting catastrophe. A wage floor hike mostly just kicks out the marginal laborer from the workforce. Seattle's 50% increase may only make the long term natural rate of unemployment 0.5% higher, more or less. It's not the end of the world. But that's 0.5% more marginal laborers that become perpetual unemployed and qualify as those who "fall through the cracks" that pro-welfare people wish to avoid.
Renton made a similar statement earlier in this thread. It seems like a scare tactic populated by people who stand to lose, because it doesnt really make sense. I think I heard fox news suggest $1,000,000/hr or something preposterous.
But no one is suggesting that. $100/hr, same with $50/hr, is a crazy amount of money for unskilled labor. We know this because people with actual skills make less.
It's not a scare tactic. It's meant to give perspective, because if the theory that $1 increase in minimum wage increases prosperity, it would be true for any number. That is, unless you could identify a negative feedback trigger, but nobody has even considered one to begin with. So, making the number huge shows the ridiculousness of the claim that wage floor hikes increase prosperity.
Meanwhile, we know that wages like $1/hr and $0.50/hr are similarly crazy little amounts of money for unskilled labor, because children make more in allowance without doing any work.
But the people arguing for a minimum wage are asserting that there is a range that exists within the reasonable amounts that should be paid to all skilled workers. (Seattle did $15/hr i think? That seems high, since a paralegal with college education gets paid near that, same with lab techs).
Just to pull out a range... I imagine an acceptable Minimum wage could be anywhere from $6/hr to $12/hr. The range is probably narrower. I lean towards the higher side, because $7.25/hr doesnt seem to do much, and it appears like companies could easily afford to pay their employers more (and closer to what theyre worth instead of the least amount possible). I lean towards $10/hr. That wage allows someone to live in an apartment with roommates, and still have a car/phone/internet and some spending money. Its also not too far off what people are paid now.
But to expand on why i picked that range...Seattle's $15/hr would be an insane change. That big of an increase would cause the catastrophe ya'll are worried about, because its more than double the current wage. Prices would have to increase substantially, with more products sold, and more productive employees to compensate...and im not sure thats possible.
With low immigration levels, the negative of wage floors is greatly subdued. It's not entirely subdued, but most of the people born in the country have skills above the minimum wage. However, most of the people in the world do not, and most of the people in the country who are unemployed do not. The kinds of jobs we would have where people were free to work for whatever wage they wanted (this necessarily means they are free to migrate for it too and are not burdened by regulations) would be a bit different than what the current average US citizen would. We can't predict the types of jobs just like we couldn't predict them several decades ago when we got new jobs on the same principle. For example, cheap house cleaning and landscaping wasn't a thing until Mexicans showed up and started offering the services for pay cheap enough for people to no longer do it themselves. Hole-in-the-wall Eastern food joints weren't a thing until Asians introduced them and did so for self-employed pay less than minimum wage. Whole new industries and new tiers to existing industries emerge when the threshold to enter the labor force is low enough.
Doesn't it strike you as ridiculous that if you're self-employed you're allowed to work for less than minimum wage but if you're not you have to work for minimum wage? What is so special about seeking employment that you can't work for what you want to work for, but when self-employed you can? Where's the law that forces the government to give minimum wage to any self-employed person? Obviously, this would be a disaster, but only for the same reason that wage floors are problems. If a self-employed person can only afford to pay himself $5/hr, well, then he gets $5/hr. But somehow if an employee can only be paid $5/hr, it's illegal to do so?
The story of rising out of poverty has nothing to do with wage floor mandates, and everything to do with government restricting itself from intervening in the market. The success story of the country has been for low skill immigrants from every continent over the history of this country to use their dirt low skills to gain dirt cheap work and rise up from there. Irish, Italians, Asians, Germans, and every other established immigrant group started off at the bottom. Mexicans are in the middle of it now. Sadly African Americans have been left out of this, I think because it's the only American group that hasn't embraced capitalism and the mainstream ethic. One day, it probably will, but its road will be different since it's not an immigrant group and its identity involves a lot of being rejected by the mainstream culture and in turn itself rejecting the mainstream culture.
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