Is it worth working? (2 Viewers)

[The_Doc_Man]

As to the issue of government-control vs. supply/demand economy:

There are arguments on both sides because there are conflicting viewpoints on the economic theories that are in operation. I.e. the old saying is true: If you took all the government economists in the world and laid them end-to-end, they still could not reach a conclusion.

A mandated minimum wage IS going to cause a price spiral OR an increase in unemployment or a mix thereof. It IS going to happen. The spiral comes from the realization that if folks can get minimum wage, folks now making less than that will stay in the minimum wage jobs. But folks who need more people for THEIR business will need to boost wages or benefits to attract people away from the minimum wage jobs.

The unemployment spiral WILL happen when a business is inherently less efficient than it needs to be. In order to keep a profitable margin, it has to cut costs, and that usually comes by cutting labor costs. If you can't cut wages due to a minimum wage law, all that is left is to get rid of people based on whether they are contributing efficiently or not. Which gets into the issue of whether an employer can EVER use compassion as a reason to keep on a less efficient worker. (Which in turn undermines the parable of the Sower and the Seeds...)

The down side of this is that once you pay more money for labor, your income has to increase because a business that increases costs without increasing incomes will very soon reach a tipping point and go out of business. The price spiral WILL occur. I see it every day. There was a time (around the Nixon presidency?) when wage and price controls were attempted. The situation became so unstable that businesses started failing because it became impossible to adjust for supply/demand.

When you run out of workers, you have to entice them. But folks don't always want to change, particularly if they have reached a "comfort zone." (See, for example, the work of Herbert Maslow and his "pyramid of motivations.")

Money is NOT a zero-sum game (because, like Lay's Potato Chips "We can make more.") But making more money without concomitant expansion of labor value essentially just thins out the money supply. (See, for example, Germany after WW I with bread that rose in price faster than the government could print the money.)

I'm all for capitalism - but not for unrestrained capitalism. If your billionaires actually invest their money to improve monetary circulation, that is one thing. However, the ones that sock it away in the Bahamas or Grand Caymans where it sits in a bank passively? Those folks deserve to lose their shirts. I absolutely do not believe for even the shortest time available at the quantum fluctuation level that anyone should have a salary or equivalent annual compensation that exceeds the gross national product of countries like Norway.

According to Gordon Gekko, "Greed is good." My answer is, watch out for the people beneath you. Their greed could undermine you in a heartbeat if you tick them off enough. That is (at least in part) one the underlying cause for the Russian and French revolutions. There is no practical difference, only a minor legal difference, between a King who taxes his subjects into poverty or one of the modern "Robber Barons" of business who rides his employees' backs to become wealthy at their expense.

I worry about the current imbalances between the general population and the excessively wealthy because history tells us that is an unstable situation. Typically, reactions of that type occur in proportion to the degree of instability. When the bubble burst on this one, I will not want to watch the bloodletting (figuratively or literally).

 

[Frothingslosh]

The flipside, however, is that when the poorest people have more money, they (unlike the rich) spend it. That's why the naysayers were wrong when they claimed that Washington state raising the minimum wage would cause out of control inflation and the collapse of the state economy; the additional money earned went right back out in higher spending, which largely offset the higher labor costs.

People like to complain that small businesses just can't accept a higher minimum wage, so let's run some numbers: raising it from $7.25 to $10 an hour is in increase of $2.75 an hour, or $110 per week per full-time employee. That works out to approximately $5700 per year per employee. So the mom-and-pop store that the naysayers worry will be shut down by this? If they have, say, 4 employees besides the owners? That's approximately $23,000 in extra expenses. Even if they don't see a DIME in extra sales due to people having more money available to buy whatever they sell, they could easily offset that with minor price raises. If they can't, and that $23k per year was the difference between them staying open or being shuttered, then that business was doomed anyway.

For the big companies, it's much the same - they get that big because they sell a LOT, and people having more money to spend means that people WILL spend more money, including on whatever those big companies sell, be it gasoline, video on demand, books, or fast food. Hell, I've seen reports indicating that McDonald's could cover the entire increase in labor costs of a $10 minimum by raising the price of the Big Mac by $0.25 even if sales didn't increase at all.

Another thing to keep in mind: the minimum does not and has never been updated to match inflation. If it had, then (depending on the basis you use), it would be at either $16 or $21 an hour now. Hell, the current $7.25 was set in 2009. I guarantee you prices have gone up since then, even if gas prices are currently down.

Even though the right wing objects because CAPITALISM!!!!!!!, I'm with FDR on the idea:

“In my Inaugural I laid down the simple proposition that nobody is going to starve in this country. It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By "business" I mean the whole of commerce as well as the whole of industry; by workers I mean all workers, the white collar class as well as the men in overalls; and by living wages I mean more than a bare subsistence level-I mean the wages of decent living.”

 

[Twincam]

Interesting thread, so I'd like to add the idea of a Citizens' income.

http://www.citizensincome.org/

http://www.telegraph.co.uk/finance/...-week-may-be-an-idea-whose-time-has-come.html

My kneejerk reaction when I first came across it was... OMG the cost!!! But when you realise that it replaces state pension, unemployment benefit, housing benefit etc. etc. it makes a lot of sense. There are proponents in most parties (left/right/centre/green etc) for various different reasons.

Implementation would probably be by raising tax rates at the same time as issuing the citizens' income, so people on higher salaries wouldn't see much change in their income.

Is it worth working? Yes, if you want to. If you want to accumulate millions, I don't have a problem with that, or live close to the breadline if that makes you happy.

What I dislike is people destroying other people's lives or the environment to make their money. Also, people sponging off the State by paying their employees peanuts and then expecting the State to pick up the tab by paying benefits.

 

[The_Doc_Man]

FDR, like ALL liberals, gets it wrong in this specific sense:

and by living wages I mean more than a bare subsistence level-I mean the wages of decent living.

The problem is "decent living" because that implies someone's OPINION of what is decent. Just remember that socialism fails when you run out of someone else's money to spend.

I don't object to a minimum wage being inflation adjusted. What is bad is that other wages are not simultaneously adjusted when you do that, so we have to go through the gyrations of letting the ripple effects find their way through the system.

the additional money earned went right back out in higher spending, which largely offset the higher labor costs.

This is why I don't totally object to upping the minimum wage. The problem is that the spending has to find its way back to the businesses that are hurt the most by the extra cash out-flow. Frothy, you neglect this in your consideration: If your hypothetical four-employee business is that close to the margin, they will let go of one of those four employees - at which time your boost in money disappears because you are now dividing up that pot among a group that just lost one person.

Saying that a business doesn't deserve to exist if it would fail based on a difference of $23K per year is flawed because that difference MIGHT be the difference between paying all your creditors and putting the small amount aside for a rainy day, or being unable to pay the creditors and putting ALL FOUR people out of business. Just remember that fully 80%of all USA startup businesses fail each year. You can look that up from the US Commerce Dept. stats on small business failures.

We probably aren't so different as you might think on this subject. I am just more aware of the fact that money is to a business like heat is to a chemical process. I see the world of business this way: If the business is stable, it is like a reaction at equilibrium. If you take away heat from the reaction (or money from the business) it slows down. Eventually, it reaches a new equilibrium at a lesser level. Both business and chemical processes can eventually reach situations in which the process stops because they have run out of heat/money.

OK, it might be a flawed viewpoint (but then again, I'm human and allowed to be flawed sometimes.) But I see minimum wage increases as a way to take away resources from a business in a way that doesn't necessarily counterbalance the loss to the places first affected by the change. And if you go by your "they don't deserve to be in business if they are that close to financial ruin" standard, I think you don't understand just how many businesses DO run that close to the margin for a while before they finally get strong enough to withstand a little buffeting.

Now, this leads to one more question: In the recently burst bubble over REITs, were there really ANY business that were too big to fail, or was that all politics and cronyism?

 

[Twincam]

This is why I don't totally object to upping the minimum wage. The problem is that the spending has to find its way back to the businesses that are hurt the most by the extra cash out-flow. Frothy, you neglect this in your consideration: If your hypothetical four-employee business is that close to the margin, they will let go of one of those four employees - at which time your boost in money disappears because you are now dividing up that pot among a group that just lost one person.

This is why I like the Citizens' income. The cost of that falls on the taxpayer, not on individual businesses. If everyone gets enough to survive already, then being paid a small salary (less than the current minimum wage) by a start-up becomes attractive instead of being a potential threat to benefits.

 

[Alc]

Interesting thread, so I'd like to add the idea of a Citizens' income.

http://www.citizensincome.org/

http://www.telegraph.co.uk/finance/...-week-may-be-an-idea-whose-time-has-come.html

My kneejerk reaction when I first came across it was... OMG the cost!!! But when you realise that it replaces state pension, unemployment benefit, housing benefit etc. etc. it makes a lot of sense. There are proponents in most parties (left/right/centre/green etc) for various different reasons.

Implementation would probably be by raising tax rates at the same time as issuing the citizens' income, so people on higher salaries wouldn't see much change in their income.

Is it worth working? Yes, if you want to. If you want to accumulate millions, I don't have a problem with that, or live close to the breadline if that makes you happy.

What I dislike is people destroying other people's lives or the environment to make their money. Also, people sponging off the State by paying their employees peanuts and then expecting the State to pick up the tab by paying benefits.

Very interesting idea. haven't been able to read the whole thing, but did read the 'booklet' version. Personally, I'd be in favour of it.

I would, though, go out on a limb and say that it's never going to happen. A lot of people don't like the idea of making poor people less poor, for various reasons, and I can't imagine its proponents having enough political clout to push it through.

I can also imagine some of the less scrupulous employers using it as an excuse to pay less to employees, in much the same way that waiting staff
are poorly paid in many places, since the employer knows they will get tips.

 

[Frothingslosh]

Unfortunately, I really am too busy today to replay at length, so instead I invite Doc to explain, based on his points listed above, precisely why Washington state's economy has NOT imploded despite raising the minimum wage virtually every year (link HERE), and in fact has been in the top 10 states for economic growth every year. In fact, in Seatac, the instant increase to $15 per hour (which virtually no one actually suggests happen overnight even if it had a chance of going through nationwide) did not appreciably change the unemployment rate. In fact, there was a drop, although that drop mirrored the nation-wide drop that happened at the same time.

I'd also be interested to hear how continuing to pay starvation wages so corporations can abuse minimum wage (and federal assistance, don't forget, which gets taken out of everyone's paychecks!) helps the American populace more than letting businesses who rely on preying upon their employees go under.

Oh, and the thing about most new businesses failing? That's been old news since before I was born, back when minimum wage was $1.45, and my understanding was that it was 90% of new businesses failing inside the first five years. That will continue happening REGARDLESS of whether minimum wage is increased.

We live in a society where the richest 1% controls more wealth than the lowest 90% and the richest 40 people are wealthier than the poorest 160,000,000 (50%) COMBINED. That is, for the record, a greater concentration of wealth than existed in the Roman Empire, and that particular civilization included MASSIVELY widespread slavery.

That imbalance is completely unsustainable, and historically, has almost always been 'corrected' by bloodshed. Personally, I'd like to try for a solution a little less lethal.

 

[AccessBlaster]

We live in a society where the richest 1% controls more wealth than the lowest 90% and the richest 40 people are wealthier than the poorest 160,000,000 (50%) COMBINED. That is, for the record, a greater concentration of wealth than existed in the Roman Empire, and that particular civilization included MASSIVELY widespread slavery.

That's not where the Mom and Pop business reside. The top one % don't care about a living wage, they will happily pass that increase to the consumer. The mom and pop are on a razor thin budget and simply cant raise their prices, they will be absorb by the one %.

 

[Frothingslosh]

That's not where the Mom and Pop business reside. The top one % don't care about a living wage, they will happily pass that increase to the consumer. The mom and pop are on a razor thin budget and simply cant raise their prices, they will be absorb by the one %.

Except that mom and pop stores can and do raise their prices.

While I am not, myself, a business owner, my father was for about half of my life, and I worked with him quite a few times. Additionally, a number of my friends are small business owners (mostly game and hobby shops), and we do talk business on occasion. I have seen many, many small startups in my time, both successful and not. The failures were never because labor costs went up, even on those rare occasions when the minimum wage did increase; instead, they were, with a couple notable exceptions, because people were not frequenting their stores or purchasing their services. (The exceptions were things like 'Rick's Sicilian uncle made it clear that I could either sell the store or I could bury my six year old son' (really happened) or 'my partner came in late last night and stole everything in the store'.) It's never as simple as 'labor prices increased but it was utterly impossible to raise prices a penny', nor is it ever as drastic as 'labor prices increased, so I had to raise prices by 50%'.

The fact is that minimum wage HAS increased several times before, sometimes drastically. The raise from $5.15 to $7.25 from 2007 to 2009 sort of comes to mind, and it's approximately the same percentage increase that would be involved from $7.25 to $10 (and doesn't even compare to what Washington did from 2003 on). Yes, I'm sure people will love to anchor it to the housing bubble crash, but not a single study I could find, by Dems, GOP, or independents, blamed the US minimum wage as even a contributing cause for the worldwide recession that happened then, as opposed to, say the housing market and lending crashes that were the direct cause.

Inflation ALONE means that the minimum wage (like other wages) needs to be adjusted if only to keep its purchasing power steady. As I mentioned earlier, had that been done since its inception, the minimum wage would be between $16 and $22 right now. And it's not like inflation only happens when minimum wage goes up - it's a constant based on FAR more than that.

At what level of economic serfdom do we say enough? Do we wait until people can't make enough to even cover the costs of survival? Hell, we have that already with the vast majority of the workers at WalMart, McDonald's, and the like. (And anyone who says that the minimum-wage-paying 7am to 3:30pm shift is for high school kids to make a little money is either lying or a fucking idiot.) Do we wait until economic serfdom is slotted back into place, where you pay more to your employer to survive than they pay you for your labor? Again, already there with the likes of WalMart.

Conservatives say this is fine because Capitalism, that somehow these businesses will magically change and start paying more because their labor pool vanishes, but what really happens is that people will take ANY job, no matter how low-paying, rather than watch their kids starve, even if that means they need to work 4 jobs and work a hundred hours a week (and yes, this happens).

And conservatives are fine with that misery and suffering, because it's not them, so it's not their problem.

 

[Frothingslosh]

And MAN, that was a half hour I really needed to spend on my reports.

 

[Frothingslosh]

And something that should NOT be happening in America:

Today I didn't bring my lunch to work, so I went to the Little Caesar's down the road. This store is about 2 blocks from a major hospital, and yet it's STILL a dangerous enough neighborhood that the crew and work area is separated from the entry by a locked, reinforced door and a several-inch-thick hardened plastic window, with an airlock-style delivery slot.

While I was waiting for my Hot-n-Ready (HA!) lunch to be ready, an old homeless guy came in begging for food. Apparently he's something of a regular, because the guy behind the counter knew his name and gave him a couple slices free.

A couple minutes later, a woman in her 20's showed up with two little girls. Again, they looked to be at least in extreme poverty, if not homeless themselves. (In fact, the woman was one of the regulars who are often at the nearby intersection with signs asking for anything people will give.) The woman asked if anyone would be willing to give them anything, while the girls were crying about being so hungry. The guy behind the counter said he'd have to check with his boss on that one. The two young female customers in fuzzy rabbit suits (I didn't ask) just started whispering to each other, looking at the three, and laughing. The two Middle-Eastern guys to my right focused on their music, and the two other white folks in there with us moved as far away from the trio as they possibly could.

THIS
SHOULD
NOT
HAPPEN
IN
AMERICA!!!!! :banghead:

 

[Rabbie]

Interestingly since the UK introduced a minimum wage at the end of the last century we have had the lowest inflation rate since the second world war. This seems to refute the suggestion that a minimum wage feeds inflation

 

[The_Doc_Man]

I am by no means an expert on this subject but as I understand it, inflation is harder to measure than one might first think. Inflation occurs when you need more money in circulation because there isn't enough to go around.

Let's do another analogy. Money to a business is like food to a person. If you have enough to eat, you can go on working. When you don't have enough to eat, you slow down and eventually stop due to exhaustion of your body's resources (or go out of business for exhaustion of your company's resources).

This analogy starts to break down because you do something with money that you can't do with food - use a credit card. That money is temporarily virtual money. The money supply expanded for the duration of the "float" period. There is no such thing as virtual food, of course, so my food vs. money analogy stops there.

As to why Washington state hasn't felt specific effects, I cannot answer because I have not studied that problem. I won't speculate beyond saying that the growth HAS to come from somewhere, and I'll surmise that it is because you attracted a larger work force there. The question would then be whether Washington state's population rose right after the minimum wage change. Because there is one theory of economy that says that value (and thus money) comes from labor. Adding labor to a mix should increase the total valuta circulating in that market. If you were to tell me that Washington instituted a higher minimum wage, the population didn't change, and the unemployment rate didn't change, yet their economy expanded, I would have to categorically say that some statistic is not being recorded that is vital to understanding what has happened.

Rabbie, a minimum wage coupled with a higher tax merely increases the flow-rate of the money. I.e it forces money out of the hands of the taxed and into the hands of others. That does not cause inflation. What causes inflation is when there is not enough money in circulation to meet demand for whatever economic growth you wanted.

Frothingslosh:

I'd also be interested to hear how continuing to pay starvation wages so corporations can abuse minimum wage (and federal assistance, don't forget, which gets taken out of everyone's paychecks!) helps the American populace more than letting businesses who rely on preying upon their employees go under.

I categorically do not agree with this practice. If you look at my post more carefully, I spoke against this practice, though I might have worded it obtusely. There is no excuse for any corporation to suck the marrow out of the common worker's bones like you describe. Executives who do that have lost, forgotten, or never learned their humanity.

 

[BlueIshDan]

You can become a hell of a lot more of a "human being", a dynamic conversation simplified for now, if you choose to tackle life in the environment of the real world. Being pampered by your country's tax money, in my eyes, can be a life limiting experience that stumps and/or limits your growth as a human.

 

[Frothingslosh]

To be fair, Doc, the part you quoted was a loaded question, because I knew your stance on the topic. I was just pointing out that it really comes down to either you raise the minimum wage or you don't. Today's GOP almost unanimously comes down on the side of "don't". Hell, at least one presidential candidate (Rubio, I think it was) wants to eliminate it altogether.

 

[ColinEssex]

And something that should NOT be happening in America:

Today I didn't bring my lunch to work, so I went to the Little Caesar's down the road. This store is about 2 blocks from a major hospital, and yet it's STILL a dangerous enough neighborhood that the crew and work area is separated from the entry by a locked, reinforced door and a several-inch-thick hardened plastic window, with an airlock-style delivery slot.

While I was waiting for my Hot-n-Ready (HA!) lunch to be ready, an old homeless guy came in begging for food. Apparently he's something of a regular, because the guy behind the counter knew his name and gave him a couple slices free.

A couple minutes later, a woman in her 20's showed up with two little girls. Again, they looked to be at least in extreme poverty, if not homeless themselves. (In fact, the woman was one of the regulars who are often at the nearby intersection with signs asking for anything people will give.) The woman asked if anyone would be willing to give them anything, while the girls were crying about being so hungry. The guy behind the counter said he'd have to check with his boss on that one. The two young female customers in fuzzy rabbit suits (I didn't ask) just started whispering to each other, looking at the three, and laughing. The two Middle-Eastern guys to my right focused on their music, and the two other white folks in there with us moved as far away from the trio as they possibly could.

THIS
SHOULD
NOT
HAPPEN
IN
AMERICA!!!!! :banghead:

Two things:-

a) Why is it necessary to differentiate between the "two middle eastern guys" and "other white folks"?

b) in the UK, there was a thing on telly a while ago about street beggars. It concluded that this method of work was very lucrative. Some (not all) beggars and so called homeless people earned over £100 per day, they had a nice house and lived as normal people. They went to work appropriately dressed for begging and were very happy doing this as a tax free job.
One even had a new BMW he had paid cash for.

If people are sucked in and fooled by this scam then more fool them.

Oh, and don't you get sick of those begging adverts on telly for anything from stray dogs to financing African poverty. There's even one where they say some 8 year old girl walks 5 miles to get water from a well, er, why not move closer to the well? It's not rocket science.

Col

 

[Alc]

b) in the UK, there was a thing on telly a while ago about street beggars. It concluded that this method of work was very lucrative. Some (not all) beggars and so called homeless people earned over £100 per day, they had a nice house and lived as normal people. They went to work appropriately dressed for begging and were very happy doing this as a tax free job.
One even had a new BMW he had paid cash for.

That one's been a regular filler item for "news" programs at least since I was a child. Which show did it this time?

There's even one where they say some 8 year old girl walks 5 miles to get water from a well, er, why not move closer to the well?

Ah, the old gags are the best.

 

[ColinEssex]

It was a channel 4 documentary, on telly about a year or so ago. It focused on the scroungers in Oxford Street who mainly targeted tourists.

The long and short of it is that donations to charities mostly end up in the back pocket of the directors or funding guns for a civil war, and donations to homeless people fund the mortgage and Mercedes in the driveway.

If the money all went where it was supposed to go, Bob Geldof would have solved Africa's poverty just by doing live aid and the hundreds of millions raised through that racket.

Col

 

[Frothingslosh]

Colin logic:

Problem: Some cops in the USA have killed innocent people.
Solution: Kill all cops in the world.

 

[ColinEssex]

Colin logic:

Problem: Some cops in the USA have killed innocent people.
Solution: Kill all cops in the world.

Sorry Frothy, I don't follow what you are saying there. Who mentioned American cops? What is true though is:-

USA logic.

A Muslim kills some people. Ban all Muslims from entering the USA.

A British Muslim family was stopped from flying to the USA to have their holiday in Disneyland yesterday because they had the name Mohammed and because of their faith.

It was on the BBC news last night.

Oh and could you answer my question from earlier, I'll remind you of it:

a) Why is it necessary to differentiate between the "two middle eastern guys" and "other white folks"?

Thank you

Col