OT anyone have any idea if the $15/hour minimum wage will impact our DIY hobby?

[LIDAR]

I think that minimum wage is too low. There are lots of people who just cannot make a living at 7 or 8 bucks an hour. It's easy to blame them, that they made bad choices in life, etc. But they are people and they exist and live amongst us. So unless we want social instability we have to find a way for them to at least survive without undue hardship (like having to decide if they should pay for rent, food, or medicine - choose one).

That said, a federally mandated minimum wage makes no sense. $15/hour in New York city is vastly different from $15/hour in rural GA. At a minimum the states should determine their minimum wage, with one caveat - the actual buying power of that minimum wage must be the same across the country (otherwise states will engage in price wars to entice industries to move to their states resulting in a race to the bottom).

[fpitas]

I think that minimum wage is too low. There are lots of people who just cannot make a living at 7 or 8 bucks an hour. It's easy to blame them, that they made bad choices in life, etc. But they are people and they exist and live amongst us. So unless we want social instability we have to find a way for them to at least survive without undue hardship (like having to decide if they should pay for rent, food, or medicine - choose one).

That said, a federally mandated minimum wage makes no sense. $15/hour in New York city is vastly different from $15/hour in rural GA. At a minimum the states should determine their minimum wage, with one caveat - the actual buying power of that minimum wage must be the same across the country (otherwise states will engage in price wars to entice industries to move to their states resulting in a race to the bottom).

I agree with what you said. I'll point out that minimum wage workers often draw various tax or welfare benefits etc. that their employers do not directly contribute to. Effectively, the rest of us are subsidizing their cheap labor.

[Geoff Millar]

We visited the US in 2005. Before the trip we read up on local customs etc and confirmed that tipping was going to be an integral and significant part of our budget, as the kind of workers we would meet on our travels (restaurant workers, guides, drivers, airport staff, etc) need tips to try and make ends meet.

No big deal for us and we were happy to do so, we just budgeted for it and made sure to carry some cash with us everywhere.

In effect, we were subsidising their employers.

Geoff

[carlthess40]

Well with the minimum wage going up I can be certain with saying that we’re going to have less cashiers and fewer customer service representatives to help us with purchasing items. That will make things a lot more stressful when trying to do things. I personally will not go through a self check out line. I prefer the human interaction with spending my money. Let’s see how things start going downhill in the next month or so. As with the desecration of the keystone pipeline in over 20,000 people losing their jobs this is going to have a huge effect on everybody in this country. We will no longer be energy independent and everything will start to go up in price because every product that we use and consume is directly linked with energy production Sent from my iPhone using Tapatalk

[djg]

If only that was our only problem.

[a4eaudio]

That said, a federally mandated minimum wage makes no sense. $15/hour in New York city is vastly different from $15/hour in rural GA. At a minimum the states should determine their minimum wage, with one caveat - the actual buying power of that minimum wage must be the same across the country (otherwise states will engage in price wars to entice industries to move to their states resulting in a race to the bottom).

But this is part of the goal of a federal MINIMUM wage. Just like now, states are free to pay MORE than the minimum.

[LIDAR]

Yeah, they can. But many tend not to. Some states (Kansas comes to mind) occasionally experiment with driving themselves bankrupt! So I'm not sure that I would look to the states to fix this. I wish, but...

[dlr]

But this is part of the goal of a federal MINIMUM wage. Just like now, states are free to pay MORE than the minimum.

So what's your answer? Does the federal government set the minimum at what's appropriate for GA or for NYC (since NYC seems to drive everything in the state of NY)? Or neither, just come up with some random number not based on some verifiable research statistics that doesn't consider the impact in each of the many states? What is the specific basis for $15?

Or do we consider upstate NY to NYC? Setting the wage based on a state wide number doesn't seem appropriate since businesses in upstate would effectively pay more for the area than NYC if the latter were the basis or vice-versa, NYC workers would feel shorted since it costs so much more to live in NYC if upstate were to be the basis. Or maybe somewhere in between? Make no one happy?

I'm reading a lot of opinions and anecdotes on both sides (each side having what are valid arguments), but not much in the way of factual analysis. As the saying goes that my father repeated as long as I can remember "Figures lie and liers figure", so what is one to believe? My first job (in high school) was bagging groceries at the store. in summer I worked close to 40 hrs/wk, but never hit that though, because I would have had to be considered full time at that point (requiring higher pay with benefits), so no part timers ever got a full week. Laws have unintended consequences. Every time. But as a kid in high school it gave me some real cash. I felt pretty good on pay day. And I knew that I could never do that to make a living, even at what was considered full time pay.

dlr

[LIDAR]

It's a complex problem Dave. I can assure you that I don't have the answers (but I can cop out by saying this isn't my area of expertise). But I do know that if left unchecked the problem of long term poverty is corrosive to society and we will pay for it one way or another. Either through expanded social programs (welfare, food stamps, etc.), increased crime (and then increased costs for law enforcement and incarceration), or social instability. Most likely a combination of all three. I may be wrong, but I've never seen a country where there is rampant poverty and economic inequality that is an attractive place to live. I'd hate for the country I love to go down that path.

[a4eaudio]

So what's your answer? Does the federal government set the minimum at what's appropriate for GA or for NYC (since NYC seems to drive everything in the state of NY)? Or neither, just come up with some random number not based on some verifiable research statistics that doesn't consider the impact in each of the many states? What is the specific basis for $15?

Well, it is not "random". It has some basis in estimates of the poverty level. But it would not be feasible for the federal government to implement a state-by-state or city-by-city minimum wage. And I'm sure the standard of living on minimum wage in Mississippi will be quite different than California. But non only are states allowed to have a HIGHER minimum, so can cities - for example, Seattle, DC, San Francisco and NYC all have their own minimum, wages all of which are currently $15 or higher. (Source). One of the frustrations as an economist is that economic policy is not usually driven by the best economic policy but by politics. I bet that the basis for exactly $15 is that it is a nice even multiple of $5 and focus groups suggest that is easy for people to understand.

I would also point out that workers in expensive cities will feel "shorted" but they miss an important point - they choose to live there. At my old company I recruited new graduates from universities in the midwest and our largest office was in NYC. But these graduates thought it was unfair that the NYC salaries did not compensate fully for the cost of living difference. What they didn't get was that if they chose to live in NYC they revealed their preference for certain attributes over others. For example, they value entertainment, dining, arts, etc. over living space, yards, short commute times, etc. Taken to the extreme I could argue that I deserve more salary because I have to fly from the midwest and stay in a Times Square hotel if I want to go to a Broadway show.

I would also suggest there is no obvious answers or we would just do those things. But as you rightfully point out, we can rely on research and credible data rather than just anecdotes.

"Figures don't lie, but liars figure" (history)

One thing I cited earlier was that only 2.3% of the population earns minimum wage. BUT 42% of workers (a little out of date) earn less than $15 an hour.

[dlr]

Certainly a better argument to present data.

Well, it is not "random". It has some basis in estimates of the poverty level. But it would not be feasible for the federal government to implement a state-by-state or city-by-city minimum wage. And I'm sure the standard of living on minimum wage in Mississippi will be quite different than California. But non only are states allowed to have a HIGHER minimum, so can cities - for example, Seattle, DC, San Francisco and NYC all have their own minimum, wages all of which are currently $15 or higher. (Source)

I don't think it's a case of being allowed, however. The federal government isn't in the business of defining what states and localities are allowed to do.

One of the frustrations as an economist is that economic policy is not usually driven by the best economic policy but by politics. I bet that the basis for exactly $15 is that it is a nice even multiple of $5 and focus groups suggest that is easy for people to understand.

Probably so, that number has been used in debates for some time now. My problem is how it's used as some magic number for federal legislation without qualification with regard to its disparate impact. Today when one goes to any chain grocery store or large department store, the number of self-checkout lines constitutes the majority, one with a live person is minimal and slow.

This is with the current prevailing wage in the area. I would also point out that workers in expensive cities will feel "shorted" but they miss an important point - they choose to live there. At my old company I recruited new graduates from universities in the midwest and our largest office was in NYC. But these graduates thought it was unfair that the NYC salaries did not compensate fully for the cost of living difference. What they didn't get was that if they chose to live in NYC they revealed their preference for certain attributes over others. For example, they value entertainment, dining, arts, etc. over living space, yards, short commute times, etc. Taken to the extreme I could argue that I deserve more salary because I have to fly from the midwest and stay in a Times Square hotel if I want to go to a Broadway show.

That is certainly true of highly educated and/or experienced people in a position to make that choice But I would guess that those who are unemployed, underemployed or making less than $15/hr can't simply move themselves and/or their families somewhere else. I'd be surprised if those born and raised in expensive cities would agree with your assessment. I suspect that the vast majority don't partake of many of those things in a place like NYC. I wonder, say, what percentage of the population of NYC goes to the opera, the museums, the 5-star restaurants, etc. We are talking about low wage earners. And increasing the minimum will help them when the small shops, restaurants and other shops are allowed to open for business again? The wealthy, small restaurant owners (shut down for how long now?) will be glad to re-hire those laid off and pay them a much higher wage, right? This is being debated now due to the pledge to increase the wage, so I think it's a valid topic for the debate.

I would also suggest there is no obvious answers or we would just do those things. But as you rightfully point out, we can rely on research and credible data rather than just anecdotes.

"Figures don't lie, but liars figure" (history)

Thanks for correcting the quote.

One thing I cited earlier was that only 2.3% of the population earns minimum wage. BUT 42% of workers (a little out of date) earn less than $15 an hour.

This is probably the most salient point. What this means is that 42% of workers will get an increase. If they are not laid off or have hours reduced. And those above them will, of course, demand a concomitant increase to be fair to them.

What do you think employers, especially small businesses, will do?

I'm not trying to take sides, I see problems on both sides, but too much in politics is all or nothing with no acknowledgement of the opposing side's issues. But if I owned a small business, especially in these times, I have a suspicion that I would have a difficult time with this.

dlr

[Audio Dude]

Higher wages encourage companies to innovate and invest in AI and robotics. China is quickly catching up to us with both and will ship us enough to staff most business whether McDonalds or GM. Soon 90% of people will be making min. wage. So expect most audio hobby purchases to be $.99 2" fullrange buyouts in the future.

[Steve Lee]

Turn it up . . .

https://www.youtube.com/watch?v=EBddkxqB2Pk

Pink Floyd "Us And Them" album "The Dark Side Of The Moon" 1973

Us, and them.
And after all we're only ordinary men.
Me, and you.
God only knows it's not what we would choose to do.
Forward! he cried, from the rear; And the front rank died.
And the general sat and the lines on the map Moved from side to side.
Black and blue And who knows which is which and who is who.
Up and down.
But in the end it's only round and round.
Haven't you heard it's a battle of words The poster bearer cried.
Listen son, said the man with the gun There's room for you inside.

I mean, they're not gonn'a kill ya, so if you give em a quick short, Sharp, shock, they wont do it again.
dig it?
I mean he get off Lightly, cos I would've given him a thrashing - I only hit him once!
It was only a difference of opinion, but really...i mean good manners Don't cost nothing do they, eh?

Down and out It can't be helped but there's a lot of it about.
With, without.
And who'll deny it's what the fighting's all about?
Out of the way, it's a busy day Ive got things on my mind.
For the want of the price of tea and a slice The old man died.

[LIDAR]

Many, many people don't really have a choice regarding where they live. Often it's economic - they can't afford to move or they currently live with relatives, so any move would ultimately increase their cost of living. Other times it's because of family obligations (i.e. having to take care of an elderly parent, for example). Sometimes folks are just locked into where they live for unexplainable reasons. I recall watching a documentary about people who lived in the Love Canal area (not far from Niagara Falls) in the late 1970s. Everyone knew that people were getting sick from pollution in the area. Many were even offered buyouts of their homes by local polluters, but they refused to move because "this is where they grew up". It's unfathomable to me, but it's real.

[r-carpenter]

Marxists very often refer to Inflation as a tool to regulate the value of the commodity known as Labor. So, increasing minimum wage without relating it to purchasing power is fairly meaningless.
But what is a minimum wage after all? Wasn't the idea of minimum wage is to pay a person enough so he or she is not a burden on the society (aka taxpayer)? If a working person makes less than is needed to exist than he or she will use social services that are collectively paid by the rest of the society. So, in fact the society is subsidizing businesses which can't or refuse to pay a living wage. This business should either be regulated or shouldn't exist then. I don't eat big macs. I don't see why I should be subsidizing McDonalds CEO gains. There's a thing that's called Zero Sum Gain after all.

[fpitas]

Marxists very often refer to Inflation as a tool to regulate the value of the commodity known as Labor. So, increasing minimum wage without relating it to purchasing power is fairly meaningless.
But what is a minimum wage after all? Wasn't the idea of minimum wage is to pay a person enough so he or she is not a burden on the society (aka taxpayer)? If a working person makes less than is needed to exist than he or she will use social services that are collectively paid by the rest of the society. So, in fact the society is subsidizing businesses which can't or refuse to pay a living wage. This business should either be regulated or shouldn't exist then. I don't eat big macs. I don't see why I should be subsidizing McDonalds CEO gains. There's a thing that's called Zero Sum Gain after all.

Yes, that's the ironic "joke". The rest of us pay so that big wealthy corporations can have extremely cheap labor.

[djg]

I was married to a communist woman after college. I got years of indoctrination, but it didn't take. I'm so stupid.

[fpitas]

I was married to a communist woman after college. I got years of indoctrination, but it didn't take. I'm so stupid.

Well, communism arose as a backlash to robber baron style capitalism. I agree it won't work, but it's good to realize the practical problems with unfettered capitalism, too.

[anunnaki]

We have anything but unfettered capitalism in the US. The government is so intertwined with the economic system and/or forced certain paths for the economy that many people don’t actually understand what true capitalism is. In order for that to be realized we would first actually have to be free.

[djg]

My estimate is 50% of men in the CPUSA are there because of some BSC female. I could be wrong (but I don't think so).

[dwigle]

There's a thing that's called Zero Sum Gain after all.

Really? The term is Zero Sum Game not "gain" and it comes from game theory. It's used in a political or economic context, to describe the fiction of a world in which if one person gains, it has to be as a result of the loss of another. Simply not true, and there are millions of examples. If I study and learn the right things and keep out of trouble I can get a job, support a family and live the American dream. And it wouldn't be at the expense of another - unemployment is never at zero.

As a business owner, those that you disparage, I saw an opportunity in an underserved industry. With a partner, learned, consulted with industry pros, wrote a business plan, raised capital and started a business. I'm sure many here have done the same. I hired hundreds of people, paid millions in wages and millions in tax revenue. No one lost as a result of our success as the Zero Sum Game concept would suggest.

The Zero Sum Game concept is adopted by Marxists who hate capitalism and the raised standard of living it produces. They want you to believe in us vs them, winners and losers, owners vs workers, all necessarily antagonists. And if you're not successful, it must be someone else's fault. Marxists want a society of dependents. Easy to rule and with equality of misery, but because their entire sustenance is provided by one political party, they can't vote that party out of office.

Smart people long ago correctly observed that when the majority in a society figures out that it can vote for itself, access to the national treasury, democracy is doomed. That may have just happened in the 2020 election.

[LIDAR]

While I agree that our economy is not a zero sum game, I think you missed most of r-carpenter's point. If big corporations (most of whom have figured out how to game the system such that they pay very little taxes - much less proportionately than you or me) pay workers so little that the workers need to depend on taxpayer funded social programs, then these big corporations are effectively being subsidized by taxpayers. IMHO this is wrong on many levels. If someone has a cogent argument to make that this is OK, I'd like to hear it.

[dwigle]

Lidar, I appreciate your perspective and openness to hear an alternative opinion. One example of corporations operating efficiently in open capital markets. BMW, MB, Volvo, Honda, Gestamp all operate in South Carolina and Alabama (right to work states). All without unions and providing great wages and benefits. But they aren't paying $70/hr for a custodian. Greenville has gone from a dump to a stellar city. I know many residents and workers and they uniformly believe the corporations have performed well, morally and become great citizens of the community.

While the auto giants are idling plants and laying off massively in Detroit, the residents of the free states are benefitting.

Also, the corps aren't "gaming" the system, they're playing by the tax rules as written. If you don't like them, change them. Everyone is free and welcome to pay more in taxes than due under the law.

[LIDAR]

dwigle - Yes, I am aware of those automakers in SC and AL. But what you don't mention is the massive government payoffs (mostly in the way of state tax credits) that were uses to lure them there. Also auto makers don't seem to be interested in engaging in the same race to the bottom as Walmart/Target/McD/etc. those are the guys I'm referring to. I'd still like to see a case made where it makes sense (from a taxpayers perspective) to have a company where more than, say, 25% of their full time employees make so little that they need to resort to social programs.

BTW - You note that SC and AL are right to work states which, if I understand your intention correctly, is the reason why these auto makers operate successfully there. I live in MA which is also a right to work state. It's also a relatively high cost of living state. AFAIK we don't have any auto plants here. MA also is generally adverse to doling out huge tax credits to entice employers. I think that that's the main reason we don't have auto plants here.