Ontario raising minimum wage to $15

[Canard DuJour]

That's a great analogy.

Nah. The welfare cheque isn't reducing the grocer's operating costs, and the grocer isn't claiming he'd go out of business without that reduction in operating costs. It's barely analogous.

I take it you mean to imply that the welfare check is reducing the employer's operating costs. What's your evidence for that hypothesis?

I don't need any - it ain't me objecting that a load of businesses would go bust if they had to pay employees enough to live on.

It ain't me making that objection either. It is you objecting that the welfare check isn't reducing the grocer's operating costs. If you don't need any evidence, does that mean you're withdrawing your objection to JP's contention that I made a great analogy?

No.

So, you're saying I made a bad analogy because of a difference between the two cases that you don't need any evidence for?

No.

Sounds like it's time for us to agree to disagree.

I expect if there were a mass political movement trying to order grocers to supply poor people's food needs at grocers' expense, a typical grocer would start claiming he'd go out of business if that burden were assigned to him.

Indeed, which puts grocers in the position of tax payers with respect to unlivable wages. The mass political movement is effectively saying that it is not the responsibility of consumers to bear the full cost of groceries.

I lost you. Which mass movement is effectively saying this? The "living wage" movement?

No, your hypothetical "mass political movement trying to order grocers to supply poor people's food needs at grocers' expense"

Oh, I see. Okay. So what was your point? As far as I can see, pretty much everyone agrees it's not the responsibility of consumers to bear the full cost of groceries. Nobody's saying a poor consumer should starve. So somebody other than the consumer is going to be picking up part of the cost of her groceries.

And pretty much everyone would agree that poor consumers who couldn't otherwise afford groceries are thus subsidised. Ditto employers who aver that they couldn't afford employees if they had to pay them enough that they didn't need welfare.

Who? Pretty much everyone who isn't a UBI proponent would rather it be somebody other than himself. We have a hypothetical movement saying it should be grocers, and an actual movement saying it should be employers, each movement trying to put its selected minority group in the position of tax payers.

I.e., she should hire a different worker. I.e., you choose option two. I.e., the first worker should be stuck with a $30000 problem instead of a $10000 problem. I.e. you grabs his duds and his picks as well, and you hurls 'em down the pit of hell.

If hiring an individual means hurling everyone else down the pit of hell, you place a huge burden on employers.

I lost you again. How does it place a huge burden on employers if hiring an individual means hurling everyone else down the pit of hell? Did you perhaps mean "place a huge burden on employees"?

No, I meant employers. How does it not place a huge burden on employers if hiring an individual means hurling everyone else down the pit of hell?

Okay, then I've failed to understand your metaphor.

I wasn't drawing any metaphor, I was denying the aptness of yours in reference to not hiring employees who generate insufficient revenue for an employer to at least break even.

I was using an incident from the miners' song -- keeping union miners' pay up by throwing a blackleg's tools down into a hard-to-get-to part of a mine shaft to stop him from competing for work -- as a metaphor for stopping a guy from competing for work by getting the government to order employers to choose between not hiring him and taking a loss on him. You're using a different metaphor, since you spoke of throwing people rather than tools down the pit of hell. So can you explain your metaphor? What does "If hiring an individual means hurling everyone else down the pit of hell" refer to?

Since getting unskilled workers the monopoly price for labor requires reducing the total amount of unskilled labor, reducing it enough to jack the marginal revenue product of the labor up to the monopoly price, why not share the reduction in that total amount equally among all the unskilled workers, instead of inflicting the whole reduction on an unlucky few who are rendered jobless?

Because that assumes so-called 'perfect competition' where, absent MW/unions, "it's rational for employers to hire all the unskilled laborers willing to work for them." Real firms overwhelmingly stop producing/hiring before that point because they're constrained by demand for the product of labour (in turn constrained by ..wait for it.. wages).

They're constrained by a lot of things; but if not for the minimum wage or the union contract, they could relax the constraint of demand for their product, by lowering prices, which they could do if they lowered wages, which would in turn make fewer unskilled laborers be willing to work for them. I.e., we appear to be agreed that it's the obstacles to competition that make it rational for employers to turn away some of the people willing to work at the price they're paying.

No, we agree that perfect competition is unrealistic. Under perfect competition, firms can sell all they can produce at a prevailing market price ("price-taking" firms and consumers). Why the unrealistic assumption? Because otherwise it probably isn't rational to employ everyone willing to work. If there are people willing to do the same work for less, replacing existing employees with them gets you a definite, knowable increase in profits at the same price and output. If, instead, you try to sell more for less, there's no guarantee of the same increase or any increase in profits at all. And if firms have to reduce wages in the process, that changes the distribution of income so that you cannot assume increased quantity demanded for a given price reduction. Absent 'perfect competition', you'd have to gain market share which just means displacing other firms' workers.

But I don't agree that demand is limited by the wages of unskilled labor.

Wages in general. I didn't say wages of unskilled people. The same arguments apply to oversupply of skilled labour.

If the unskilled aren't buying much, because they don't have much money, companies can make stuff that skilled people will buy.

:laughing-smiley-014 Like how? Say you manufacture toothpaste. Do you make the top really tricky to get off?

Given which, the non-union guys are not trying to join the workforce by entreating the union guys to share wages, they're trying to replace the union guys by offering wages back to the employer. That is why union miners fought blacklegs.

They're certainly trying to join the workforce. If they're trying to do it by replacing the union guys, that's because the union made it irrational for the company to hire everyone willing to work.

See above. It's not rational to employ everyone willing to work if you have to lower prices in order to do so, because people willing to work for less present employers with a more rational alternative. Unions are a consequence, not cause, of that.

If they aren't trying to do it by entreating the union guys to share wages, it's because their entreaties would fail. The union guys won't share. Sure, the union guys will pretend to themselves that they'll share. They'll even write a line into their song about it: "So join the union while you may, don't wait till your dying day, cause that may not be far away, you dirty blackleg miner." But letting the guy into their union won't magically increase the number of workers it's rational for the company to hire at the price the union negotiated. It won't get him a job. So when you imply the blackleg deserves what happens to him for the sin of trying to replace the union guys, you're blaming the victim. You're talking as though a person who already has a job automatically has more right to a job than a guy who's pounding the streets looking for one.

Also, I don't accept that getting unskilled workers the monopoly price for labor necessarily requires reducing the total amount of unskilled labor. Income effect, velocity of money etc, variables not depicted.

Income effect, meaning the higher paid workers will buy more? But minimum wage workers are only a small fraction of the work force. Paying them 30% more isn't going to increase sales by 30%.

It might or might not. Where small increments make big purchases affordable, it might increase by more. There must, at some point, be a countervailing income effect or there'd be full employment at zero wages.

And if you think raising the minimum wage will increase the velocity of money, show your work.

Nah, google it.

The only realistic ways unskilled workers can get the monopoly price for labor without reducing the total amount of unskilled labor is if the demand for unskilled labor is perfectly inelastic -- and that would require extraordinary evidence -- or if employers are compelled to buy more unskilled labor than they benefit from, or if the government commits to hiring everyone who can't find a private-sector job.

The simpler solution is to just make the best of the reduction in the size of the market for unskilled labor. If you're going to force everyone to join a de facto union, get the guys who wanted the compulsory union -- because they already had jobs and didn't expect to be the ones who'd lose theirs -- to share wages. Reduce each worker's hours in proportion, in order that everyone willing to work can get a job. Some real unions already do this -- it's pretty much how a merchant marine hiring hall works -- but that mechanism only works well for limited duration gigs. If you want people with permanent jobs to share, you need to shorten the work week.

I'm all for shortening the work week. The rest is argument from premises under dispute.

 

[LordKiran]

<--The point





<--Your head

In other words, you're "thinking" with your emotions rather than your brain and don't want to admit that what want would actually hurt people even though it would make you feel better.

Loren if this is going to be the comment you're going to use to try and nail me to the wall, you'll need to try a little harder than that. Once more, spare me your crocodile tears.

 

[LordKiran]

People don't like it when they're food is made by people who:

-spit in their food

-get their orders wrong

-give them their food late/cold

-are rude

Employees who do such things are typically people who hate their job and don't give a crap about doing 'well enough' never-mind their best.
And it makes sense, at 7.50-8.25 an hour, you get what you pay for.

So you would prefer that people are unemployed so they don't have a chance to do bad things to you?

No frankly. I'd rather people be employed in fields that actually interest them, with pay rates that afford them a proper living and the ability to maintain a family. In either case though, you are still missing the point I'm making.

 

[Loren Pechtel]

In other words, you're "thinking" with your emotions rather than your brain and don't want to admit that what want would actually hurt people even though it would make you feel better.

Loren if this is going to be the comment you're going to use to try and nail me to the wall, you'll need to try a little harder than that. Once more, spare me your crocodile tears.

You still have not addressed the point that your desires amount to preferring people to be unemployed than working a shit job.

- - - Updated - - -

So you would prefer that people are unemployed so they don't have a chance to do bad things to you?

No frankly. I'd rather people be employed in fields that actually interest them, with pay rates that afford them a proper living and the ability to maintain a family. In either case though, you are still missing the point I'm making.

You don't accomplish that by getting rid of their jobs, though.

 

[Jolly_Penguin]

With sufficient UBI, there wouldn't be any shit jobs. People would take jobs because they enjoy the work, or they are being paid enough to make it a good job for them, or a combination of the two.

 

[laughing dog]

With sufficient UBI, there wouldn't be any shit jobs. People would take jobs because they enjoy the work, or they are being paid enough to make it a good job for them, or a combination of the two.

It is undeniable that in utopia that everything is wonderful by definition. But what makes you think that
1) there will be agreement on what constitutes a sufficient UBI,
2) there are the resources to fund that sufficient UBI, and
3) attaining that UBI in our lifetime is feasible?

In this week's Economist, there is a short article (I cannot reproduce a link here) about Finland's current UBI experiment. In it, it reports that 70% of Finns like the idea until they find out the income tax will have to raised to support it (then the favorable ratio is about 35%).

 

[SimpleDon]

Ontario raising minimum wage to $15

The OP is a very good summation of the con arguments against raising the minimum wage. I can provide the pro-arguments for raising the minimum wage, although I can't be quite as succinct as Jolly. He has stated the problems that he thinks an increase would cause without any supporting explanation of why the problems would occur as stated. They are presented as accepted fact. They are far from it.

For the most part these problems won't occur and I can explain why Jolly probably thinks incorrectly that they will and why they won't. Unfortunately, this involves quite a bit of verbiage on my part. The real world is quite a bit more complex than the world of alternative facts, of fantasies, so bear with me.

Note that I am talking about a moderate program of raising the minimum wage slowly to a level that the economy can adapt to easily. Of course, we can't raise it to $50 or $100 a hour over night, that would hurt the economy dramatically. But this doesn't mean that the minimum wage is a bad policy rule or that it shouldn't be raised at all. These are disingenuous arguments.

The first major point that the "cons" ignore is the impact of an increase of the minimum wage on profits. A suitably moderate increase in the minimum wage will decrease profits, shielding consumers from increases in prices and will reduce if not eliminate the unemployment and the dis-employment, i.e. reduced hours, resulting from the increase in wages.

It is worth noting that this assumption that the actions of the government primarily impacts the split between wages and profits is not only accepted by the theory of supply side economics, the theory doesn't work without this assumption being true.

The second point that the cons accept as established fact is that labor is like candy, that the price, the wages, determines how many employees are hired and how many hours they work. In fact employers hire as many people as they have work to do, when they have work to do, no more, no less.

Cons also accept as established fact is that the impact of profits on the economy is greater than the impact of wages. That profits boost investment and that savings are needed before there can be investment. This is not true. Profits largely go into savings, not investments. And investments generate profits and savings, not more investments.

It is increased wages that creates increased demand that results in increased investment. This investment does come from savings of a sort, corporate retained earnings which combined with corporate borrowing from a bank or bond issues provides the money for corporate investment.

This is accepted fact for the cons when they talk about inflation, that raising wages too much, too fast results in increased inflation, which is correct, without realizing that they by doing so are also admitting that wages have a greater impact on the economy than profits do. No one asserts that raising profits creates inflation, which would have to be the case if profits had a greater impact on the economy than wages do.

If too much money is diverted from wages to profits, as our supply side economics driven economy has for the last forty plus years, it does cause inflation in the stock market, which is up more than 2300% since 1980 in nominal terms, compared to a cost of living increase of 300% in that time.

Where this increase in the money paid to the rich does effect the economy is in real estate costs. In search of higher returns for their savings the beneficiaries of the excessive profits bid up real estate values, which directly increases the cost of housing for all of us, harming the real economy, reducing further the discretionary income in the economy.

=============== continued below ===============​

 

[TSwizzle]

A very credible study from University of Washington that is interesting;

When Seattle officials voted three years ago to incrementally boost the city's minimum wage up to $15 an hour, they'd hoped to improve the lives of low-income workers. Yet according to a major new study that could force economists to reassess past research on the issue, the hike has had the opposite effect.

WaPo

 

[SimpleDon]

With sufficient UBI, there wouldn't be any shit jobs. People would take jobs because they enjoy the work, or they are being paid enough to make it a good job for them, or a combination of the two.

It is undeniable that in utopia that everything is wonderful by definition. But what makes you think that
1) there will be agreement on what constitutes a sufficient UBI,
2) there are the resources to fund that sufficient UBI, and
3) attaining that UBI in our lifetime is feasible?

In this week's Economist, there is a short article (I cannot reproduce a link here) about Finland's current UBI experiment. In it, it reports that 70% of Finns like the idea until they find out the income tax will have to raised to support it (then the favorable ratio is about 35%).

This will always be the case, of a UBI as it is for the US type welfare. This is why it is always better to raise the wages of the poor rather than dreaming up elaborate government programs like an UBI or even US's welfare. The government programs will always be demonized by the most powerful people in our society, the very rich, who pay for these programs.

The following are among the few absolute truths accepted by everyone,

• it is better for all if people make their livelihoods by working rather than having money handed to them
• when the government subsidizes something it creates more of that something

Welfare for the working poor or a UBI subsidizes low wages. This means that we will get more low wages, not fewer.

These two accepted economic truths together point to raising the wages of the working poor as the best solution for the country. We even know how to do this since we have arrived at where we are now by intentionally lowering wages for the last forty years. Simply reverse those economic policies that the supply-siders instituted some forty years ago.

 

[Jolly_Penguin]

With sufficient UBI, there wouldn't be any shit jobs. People would take jobs because they enjoy the work, or they are being paid enough to make it a good job for them, or a combination of the two.

It is undeniable that in utopia that everything is wonderful by definition. But what makes you think that
1) there will be agreement on what constitutes a sufficient UBI,
2) there are the resources to fund that sufficient UBI, and
3) attaining that UBI in our lifetime is feasible?

America is a country where there is absolutely no question that this is doable. It is certainly feasible, as is universal single payer health care, and not just in our lifetimes, but immediately. It is only a matter of political will and priorities. Some cutting back on military spending, and some higher taxes on the rich should cover the funding just fine. America is a very wealthy nation.

 

[Jolly_Penguin]

These two accepted economic truths together point to raising the wages of the working poor as the best solution for the country. We even know how to do this since we have arrived at where we are now by intentionally lowering wages for the last forty years. Simply reverse those economic policies that the supply-siders instituted some forty years ago.

When you mandate a minimum wage that is higher than the actual value of the labour (what would be agreed on between the buyer and seller absent coercion due to desperation for money), you are forcing the employer to subsidize the employee. I still don't see how that is much different than the government doing it, other than the government doing it spreads it out over all of us instead of putting it all on those who hire workers.

Perhaps you have another way to drive up wages? If so that could add a nice 3rd option for us to examine

 

[ksen]

A very credible study from University of Washington that is interesting;

When Seattle officials voted three years ago to incrementally boost the city's minimum wage up to $15 an hour, they'd hoped to improve the lives of low-income workers. Yet according to a major new study that could force economists to reassess past research on the issue, the hike has had the opposite effect.

WaPo

"very credible"

nah, it's already started to get torn apart.

 

[TSwizzle]

A very credible study from University of Washington that is interesting;



WaPo

"very credible"

nah, it's already started to get torn apart.

No doubt. But how is it being torn apart ? I've not had a chance to read much about it.

 

[laughing dog]

It is undeniable that in utopia that everything is wonderful by definition. But what makes you think that
1) there will be agreement on what constitutes a sufficient UBI,
2) there are the resources to fund that sufficient UBI, and
3) attaining that UBI in our lifetime is feasible?

America is a country where there is absolutely no question that this is doable. It is certainly feasible, as is universal single payer health care, and not just in our lifetimes, but immediately. It is only a matter of political will and priorities. Some cutting back on military spending, and some higher taxes on the rich should cover the funding just fine. America is a very wealthy nation.

Wealth is not the obstacle - there is little political will at this time. At there is little prospect of that changing. Hell, Nixon could not get a small negative income tax passed in his first term.

 

[Crazy Eddie]

With sufficient UBI, there wouldn't be any shit jobs.

Of course there would. Unpaid internships are already a thing; you should expect them to become even MORE common in a labor force where lack of compensation is considered less of a problem for workers.

You are still arguing from a fantasy land where workers have the same amount of bargaining power as employers in the labor force. Entry level workers have NO bargaining power and are more vulnerable than anyone else to predatory hiring practices. In some fields -- programmers, graphic artists, musicians, even contractors -- it is already becoming increasingly common for those workers to be paid in "exposure" and not in actual money (as if having more people know what an awesome worker you are is worth more than you actually getting paid). This is a douche move by many employers taking advantage of inexperienced workers without a really solid reputation; the combination of UBI with a zero minimum wage would make this kind of douche move STANDARD PRACTICE in those industries.

 

[ksen]

"very credible"

nah, it's already started to get torn apart.

No doubt. But how is it being torn apart ? I've not had a chance to read much about it.

One big complaint was that they didn't consider about 38% of the workforce by excluding from their data people that work for larger businesses with multiple locations.

 

[LordKiran]

Loren if this is going to be the comment you're going to use to try and nail me to the wall, you'll need to try a little harder than that. Once more, spare me your crocodile tears.

You still have not addressed the point that your desires amount to preferring people to be unemployed than working a shit job.

- - - Updated - - -

So you would prefer that people are unemployed so they don't have a chance to do bad things to you?

No frankly. I'd rather people be employed in fields that actually interest them, with pay rates that afford them a proper living and the ability to maintain a family. In either case though, you are still missing the point I'm making.

You don't accomplish that by getting rid of their jobs, though.

And I already told you it doesn't matter what I want, because it's going to happen regardless and all we can do is hope our social net for the people is sufficient to get them back on their feet. Don't blame your inability to read properly on me.

 

[SimpleDon]

A very credible study from University of Washington that is interesting;

When Seattle officials voted three years ago to incrementally boost the city's minimum wage up to $15 an hour, they'd hoped to improve the lives of low-income workers. Yet according to a major new study that could force economists to reassess past research on the issue, the hike has had the opposite effect.

WaPo

Yes, I read this article or one on the same subject. The criticism of this study is that economic forces in Seattle were increasing wages in the city starting at the same time that the study started and that they used a compilation of smaller cities to try to cancel out this effect rather than using another major city.

The study that you quoted wrote off the problem that there was no indication that raising the wages by market forces didn't have any negative results, that only the minimum wage increase did. This is highly counter intuitive, that only increases in the minimum wage causes these problems, not the increases in the wages just above the minimum wage. It seems to me to be another problem with sentient money that behaves differently because it remembers where it came from.

But even if raising the minimum wage causes problems with unemployment, businesses going bankrupt and widespread cost increases, this doesn't mean that we don't need to do it. As we saw with the election of Trump, the dissatisfaction of the working poor with their situation can strike out in ultimately harmful, random ways. We now have a totally unqualified man-child as president because people are fed up with their situation and they will support anyone who says that they will change it. I have no doubt that many of these people voted for Obama, because he also campaigned on a platform of hope and change, which he didn't deliver on.

If we don't do anything and income inequality keeps growing it can only get worse. We have seen this time and time again throughout history. The Trump, Tea Parties, Huey Long, Germany and der Fuhrer, Spain and Franco in 1936, Italy and Il Duce, Russia in 1917, the populism of the late twentieth and early twentieth century in the US, France in the French revolution, etc. If Dr. Martin Luther King, Jr. was killed by vested interests for his beliefs, it was not for his views on civil rights, it was because he said after the civil rights bills were passed that to avoid angering the white working poor his movement had to pivot to include them and to concentrate on increasing the wages of all of the working poor, black, white and brown. It is a shame that we didn't do this him after his death.


This is going to always happen because it has always happened in the past, the rich try to get all of the money and the poor always are going to revolt when they get hungry enough.

 

[Jolly_Penguin]

Of course there would. Unpaid internships are already a thing; you should expect them to become even MORE common in a labor force where lack of compensation is considered less of a problem for workers.

It isn't a shit job if the person still agrees to do it without coercion, even if they are volunteering or doing an unpaid internship. I've done both quite happily and consider both to have been great experiences. If the worker doesn't need the job to get by, the problem here isn't for the worker so much as for the economy and society at large, as this would encourage hobbying instead of working so GDP would go down if employers didn't pay enough to keep workers. There would be a legitimate complaint from those who are producing useful work and creating revenue and being taxed heavily on it, supporting those who do useless but fun hobby-like work. So a minimum wage may make sense for that reason, but note how different an approach that is from where you are coming from.

Entry level workers have NO bargaining power and are more vulnerable than anyone else to predatory hiring practices.

Because they feel that they need the job and the employers know this. If they don't really need the job, this becomes much much less potent, and sometimes vanishes altogether. For some jobs (dirty or dangerous jobs nobody wants but they do so they can fee their families) wages could actually drastically increase.

 

[laughing dog]

It isn't a shit job if the person still agrees to do it without coercion, even if they are volunteering or doing an unpaid internship.

That is a pretty idiosyncratic definition of a "shit job". I've known plenty of interns who lived through an abusive job in order to put a positive listing on their resume.