I looked over the article and never saw a single justification for $15/hr. outside of "people need it". The Jacobin study included productivity which I don't know if you can even properly quantify into dollars. Certainly, minimum wage is not addressing the needs of the lowest earners in the country. But there must be a metric to go by:
If we use base minimum wage adjusted for inflation the numbers look even worse than they are today. $0.25 in 1938 is $4.74 in today's money. So that's not good. It would appear using these numbers minimum wage has beat average inflation using the BLS' own CPI calculator.
If we loosen the requirements to the last "stopping point", 2009, $7.25 becomes $7.49 according to the same calculator. Not keeping up with inflation, but I don't think even the poorest people are going to write home about coming up 24 cents short.
But this ignoring local minimum wages. Using the following data:
We arrive at an average minimum wage of $9.78 and a median of $9.45. So, neither of these really indicate a lacking in inflationary tracking even at the state level. So what's the cause?
Well, I'm not an economist but I think the issue is local and not federal. The federal government can set the minimum wage to $15, but that doesn't change the fact the wage curve is heavily skewed by ultra low CoL states and ultra high CoL states. Not being an economist I am willing to ascribe to this something I'm going to call "state-local inflation" where places like California and New York probably demand a minimum wage closer to $25/hr. whereas somewhere like Georgia might do just fine sitting at $10.
As a result I think this medium article is more of a tirade than anything and does not elucidate anything related to the problem other than the tautology that it is a problem (which I do agree with). The solution however, seems far more complicated than the "just raise the wage" protests would make it out to be.
why would minimum wage keep pace with productivity if those workers aren’t the ones being more productive?
overall productivity increase because of tech and globalization, of course a work whose productivity has stayed the same shouldn’t expect to make more just because other parts of the economy do well
The productivity is only a matter of local purchasing power. If it were any other, why would third world barber be extremely less productive than Manhattan one?
So, when higher middle and higher classes increase their productivity by tracking global population and selling ads, the productivity of people servicing them has to increase.
A software engineer can’t produce any productive work unless a slave-labourer digs out the rare metals for the chip and a whole host of people work to keep the electricity grid running.
Who is more productive? Everyone is, even the people who use shovels to dig the earth, because the effect of their labour is magnified downstream.
This is how bad things have gotten: In the 1950s, the minimum wage was supposed to be enough for a person to support their family; today the minimum wage is enough for a college student to make it until their next paycheck, not much more. Unfortunately, a lot of people in this country think this is how it should be.
In the 50s US was the only big developed country that was nearly untouched by the second world war. That rent has decreased massively over time. The 50s economic situation would not hold up under any other conditions.
So for an hour’s minimum wage in 1950 you could buy half a gallon of milk. Now in 2021 an hour of minimum wage would buy about 2 gallons of milk or more.
The main item that seems out of balance is housing cost. “ In 1950, the median home value was $7,354. Source: US Census Bureau” that’s $84,000 in 2021 dollars while the modern median house price in 2021 is actually $269,000.
A big part of this is likely due to banning smaller housing, tenement housing, manufactured housing, and other cheap housing options.
The reality is that if the minimum wage had stayed consistent with productivity and inflation since 1968, America’s lowest earners would be making around $24 an hour by now, an analysis by Jacobin found last year. Fifteen dollars is not asking for a lot. In fact, it’s asking for less than the bare minimum of what we should be providing our workers.
Well the reality is also that if $24/hr was the minimum wage the price of items would be through the roof and that $24/hr would be worth less than what the $15/hr is worth now.
No such thing as a free lunch. You can't just inflate a persons worth without having to pay for it somehow.
Because wealth generation is a positive feedback loop which creates a winner-take-all situation. And a persons starting conditions are based on luck. And roughly speaking, the relationship between money and well-being is non-linear, shaped like a log curve. So three kinds of unfair.
If you want to talk about fairness, imagine the guy who started near the bottom, made his way out of dire circumstances, climbed to the top through hard work and perserverance sacrificing his 20s and 30s (all while his friends sat around smoking weed, having families, enjoying life) and now someone like you comes along and takes ~50% of what he makes, in order to give it to those guys he knows did nothing to earn it.
I’m willing to bet you’re still comfortable. Especially if your effective tax rate is anywhere near that.
The point is to see past your own pile of coin and think about society as a whole. If people were up for sacrificing that second holiday house and their stupid expensive watch or whatever, so much good would come of it.
Inequality fuels crime , public services like trains suffer etc...
I think ‘giving money to free loaders’ is a bit of a straw man, as the second order effects benefit everyone. Including you. And note I’m not advocating communism.
If you want to talk about fairness, imagine the guy who had everything handed to him, born into a wealthy family, with parents getting him into a top-notch college despite horrible grades, and... I can't even finish, but you get the idea.
We can sit around making up what-if hypothetical tropes till the cows come home, and nothing will change. The rich at the very top just get richer.
We don't really have a definition for productivity for most labour, let alone a measure. I take your wider point that it should be higher, but any economic arguement invoking productivity is suspect...
The reality is that 1968 had the highest inflation-adjusted minimum wage ever in the united states. I'm not sure it makes sense to compare to an outlier.
According to this chart [1] showing the inflation adjusted minimum wage over the years, it should be closer to $11 to match the dollar value it typically had most of the years it was in place.
Sure, in general, that would be something to take into consideration - but in this specific case, the maximum is not an outlier.
Apparently (based on the comment I was replying to), labcomputer does seem to think the maximum is an outlier, and that this false generality applies here.
But let's check my intuition. The federal minimum wage was raised 10 times from 1960 through 1980. The raises have the following indexed values:
* 1961: 137
* 1963: 145
* 1967: 151
* 1968: 167
* 1974: 146
* 1975: 143
* 1976: 147
* 1978: 150
* 1979: 151
* 1980: 141
So mean = 148, st.dev = 8.1. That puts 1968 at 2.4 standard deviations above the mean.
If you just want to make the pedantic point that the maximum is not in general an outlier, we are in agreement. But, in this particular case, the maximum is clearly an outlier.
I appreciate the work you put into this, but when I look at the data, I see a nonstationary (humped) time series, where I am not sure that 2.4 standard deviations above the mean is a reliable identifier of outliers.
Furthermore, I think the data still supports janandonly's point (though not quite as starkly) even if we throw out the maximum.
It would indeed be pedantic of me to now make an issue of the maximum not in general being an outlier, but at the time I wrote that, I was replying to a post in which the only justification given for considering 1968 to be an outlier was the fact that it was the maximum.
"Overall productivity increases don't increase profits. They reduce prices! Workers make more because everything costs less."
That only applies in an economy without credit and where sales are constrained by the spending of the wage share. In an economy with credit you can use financialisation to give people spending power their wages don't permit, which keeps prices higher than they would otherwise be and allows more to flow to the profit share.
The dynamics then drives the path of interest rates down over the years until you get a credit crunch - at which point the lack of spending from the profit share suddenly shows up in a Minsky Moment.
Please try and explain this to a single mom running a hair salon or a married couple that owns a BBQ restaurant. I expect that they may laugh at you and ask you to leave.
There is no equilibrating condition in the dynamics that brings that about and certainly nothing that is politically viable.
There's an inductive connection between the monetary economy and the real economy, not a direct one. It works more like an iPhone charger than a 1 bar electric fire, and that means you need greater monetary 'apparent power' to get the maximum level of real economy 'true power'.
At least in 2019, you could say there's clearly a surplus of low-skilled labor. In 2021, it's a lot more mixed because of people relocating due to covid, so it hasn't quite settled down yet, and there are genuine unskilled labor shortages in large metros. It's gonna be a brutal snap back, or there will be an even larger class of nuemployable, due to covid-driven automation.
How much more productive is a person flipping burgers or bagging groceries now than 1968? I'm guessing that productivity numbers used are for the economy at large.
Federal minimum wage debate is silly. Places have varying cost of living.
Just give people income tax relief/credits based on their living situation (including credits that are paid out as cash) and let companies fight for workers with whatever wage they want.
Should people in higher cost places by given greater subsidy? Isn't a better approach to hold the tax relief/credits steady so that populations are incentivized to move and occupy less populated areas that are in lower demand and have lower costs? There is a bit of a chicken-and-egg problem with what moves first - people or economic opportunity. But I do think having a more distributed economy would resolve a lot of tensions American society experiences today.
This. I get a little exhasperated wheneve I hear people push for a FEDERAL minimum wage. I'm not against wages being negotiated for the benefit of workers, but like you mentioned; wage hikes will not have the same effect in San Francisco as they would, for instance, where I'm from; San Juan, Puerto Rico. The deleterious effects of price floors on labor are on a continuum and they would disproportionately affect our economy.
As others have pointed out, why can't the States handle it? I feel like Americans are too quick to forget that the United States of America are a federation of States and too often conceptually envisions the country as a single political unit. Comparisons to Europe are frequently drawn even though the scales are different and even then, many European countries have more decentralized minimum wage laws, such as collective bargaining agreements within specific industries, rather than nationally mandated ones.
> I get a little exhasperated wheneve I hear people push for a FEDERAL minimum wage.
I would get exasperated by that, too, if it actually occurred; I mean, we’ve had a federal minimum wage since 1938, why would people be arguing for something we’ve had for close to a century?
But, since that is the case, I wonder if you’d like to clarify what it is you are ranting against, since it can't possibily really be the nonexistent and, if it did exist, utterly redundant movement to adopt a federal minimum wage.
"I get a little exhasperated whenever I hear people push for an increase to the federal minimum wage"
Fixed.
We should not be raising the federal MW and should instead prefer more localized measures, such as States, counties, cities, or individual industries developing their own policies.
> We should not be raising the federal MW and should instead prefer more localized measures, such as States, counties, cities, or individual industries developing their own policies.
Why? Abstract concerns based on ideal market assumptions that (1) apply the same to more localized measures as to federal measures, and (2) haven't been born out by 83 years of experiencing having, expanding the applicability of, and raising the federal minimum wage?
Yes, we should have more localized policies—and we do—but that's no reason not to raise the federal minimum wage to roughly keep pace with the lower of productivity and national price level.
Now, sure, if you want to argue that despite the relatively benign experience of state and federal minimum wages, there's a good argument that providing a floor through something like UBI would have less risk of inhibiting employment, and do we should transition from minimim wage to UBI (say, reducing hourly minimum wages from the level thet would otherwise be set at by annual UBI ÷ $2000 as we ramp up a UBI over time), I’d agree that makes sense.
"It's not how much you make. It's how much you keep."
One of the things that tends to not enter these discussions is that the US has torn down about a million SROs[1] and largely zoned out of existence the ability to build other small scale homes currently being called Missing Middle Housing.
When walkable neighborhoods were more the norm and you could get just a room or small place as market rate housing without having to go through some government program with long wait lists, you could live on not much money. Now a car is practically required to make life work in the US, housing is expensive as hell and then we argue about income and I get told by random internet strangers that the high cost of rent is irrelevant to discussions of homelessness, and never mind that studies contradict such claims.
Meanwhile, housing costs and the fact that it's so hard to live without a car tends to not come up at all in discussions of this sort.
Here in Seattle in the 2000s there was a huge push to tear down or repurpose all the motels along Aurora Avenue as they were viewed as promoting prostitution.
Now, with many fewer motels we have shrank our pool of ultras affordable, unsubsidized housing and prostitutes just take their johns to the alleyways to do the deed.
I literally just drove southbound on Aurora about an hour ago and saw three street walkers between 160th and 80th so I think it’s safe to say that effort was a total failure.
The idea that reducing low quality housing raises quality of life is the same fallacy that's behind minimum wage prohibition.
When you prohibit micro-units and other low-income/low-quality housing, you don't get more high quality housing. You get more homelessness.
When you prohibit low-wage work, you don't get more high-paying jobs. You get more unemployment.
The only process that actually increases the quantity of high quality housing and high paying jobs, is investment, and investment is motivated and sustained by investment profits, which left-wing populists demagogue so much about, and political leaders enact so many laws to inhibit (e.g. laws against price gouging, rent control, tax rates that progress with income, etc).
I mean ceteris paribus. There are numerous other factors that can counter-act the negative impact of price floors, so introducing a price floor, especially one that only affects on the order of 4% of the merchandise, as in the case of minimum wage, does not always correspond with a rise in un-used capacity (unemployment), let alone one that is profound.
I googled it, and seems like full time unemployment didn’t fall, but part time employment felt a little.
Additionally I don’t know (didn’t find) what was the effective minimum wage before the min wage act. If it was already almost equal to min wage, the law was effectively no op. I.e. wages didn’t went up.
Parking minimums are also proven to kill old style walkable downtowns with commercial on the first floor and residential above. You can't develop those old buildings and also meet parking minimums and preserve the dense development.
In practice, you end up tearing down some of the buildings to meet those minimums and there is abundant parking that's half empty most of the time and it becomes a lot less walkable and more spread out, increasing the need for a car. It's maddening.
Plug a good channel related to this called Not Just Bikes on YouTube. He does a great job tearing apart North American urban planning and housing and compares it to examples where the author currently lives in Europe. I want to be able to live in places like that but I’m stuck in the US. Here is an example where he also compares new planning to how we used to do it. These old compact suburbs that have become expensive because they’re incredibly desirable. Yet we don’t build like that now.
Any idea what the historical price of sidewalks was? My search engine foo isn't turning up much before 2007.
I've been wondering how the nice sidewalk / walking / biking places I've enjoyed were built.. was it super cheap in the 80s and skyrocketed since?
I've gone down the rabbit hole of semi-current pricing for sidewalks being built and road expansion in this mid-size city - and it's just dumb that a sidewalk install can easily cost a million dollars for a block or two for example.
I can't imagine building neighborhoods today that mimic what I miss from the past in another state - but there's no way it cost that much to build back then either I'm fairly certain.
On my phone so can't check but this may be covered by the aforementioned Not just bikes youtube series on Strong Towns, I strongly recommend checking it out. IIRC the initial price of building roads and sidewalks was invested by the federal government at favorable terms on the condition that maintenance was covered by the municipal government. This worked great for the first 20-30 years until maintenance costs started to increase greatly towards the end of life of the infrastructure. The central theme of this series is that municipalities and towns have entered a debt trap and are relying on future growth to cover historical infrastructure debt. My explanation may be wrong, inaccurate, or not relevant for your question so I'd recommend checking out his videos if this seems interesting.
I'm not sure why so many people in this comment section dislike cars. To most people they are a benefit, not a burden. Cars let you have fast point to point travel on your own terms, with no waiting times, no dealing with crimes/harassment, protection from weather, the ability to transport cargo/other people, and the freedom to go where you want. I personally love parking minimums and the availability of street parking spaces because they enable this system of direct travel from door to door. It means I am able to lose less time to transit and live a richer life as a result of having fast access to all those destinations. Not all cities have to be the same or follow the same urbanist dictate. People are varied, and carry different preferences. It's OK for some places to elect to have parking minimums and build infrastructure, community, and lifestyle that is car-centric.
And as for costs of living - I don't think it is fair to say that zoning is to blame. Zoning is a choice by a community to preserve the lifestyle and neighborhood character they have built, and there's nothing wrong with that. Yes it may be inconvenient for potential new residents, but so what - local government logically should serve its current residents. I don't think that's particularly selfish, since we could just as well ask those seeking out low cost living to be realistic about their options and live within their means. Why is anyone entitled to live wherever they want at whatever cost they want? If someone can't afford to live in San Francisco or other such high demand high cost location, they are just as free to seek out a lower-cost life elsewhere. America has no shortage of places where one can make a living and thrive. Sure those locations may not have the exact job someone wants or the amenities they want or whatever else - but that's life - you don't get everything you want, and expecting otherwise feels like the dictionary definition of entitlement.
Municipal government rarely serves its citizens. Instead, it bows to the will of an entrenched bureaucracy which optimizes, above all else, the form of self-continuation requiring the lowest amount of effort possible. If you have ever dealt with city government in any capacity, you know how little power the elected representatives have when compared with the lifelong bureaucrats.
Also, if you don’t think it’s a travesty when someone is forced out of their ancestral home because gentrification raises property taxes and they have a low income, you’re kind of heartless.
I think many American cities are in a sort of local optima with regard to cars. Any change that makes walking more viable will reduce the utility of everyone using cars. Converting the freeway right-of-way to rail would take a long time and make lots of people mad in the meantime.
A car can get you places, yes. But it also requires money to purchase, maintain, insure, and fuel. Many people are not great at driving them, killing people in the process. People get fat because they never have to walk anywhere. There is a cost for this convenience.
> Zoning is a choice by a community to preserve the lifestyle and neighborhood character they have built, and there's nothing wrong with that.
Sure, in isolation it makes sense. But then almost every city says the same thing. Then sprawl is the only choice for new people. And the “neighbor character” you have preserved is “only rich people are allowed to move in here”.
The only argument in favour of minimum wage is that if set at a low enough level it does not seem to have a detrimental effect on core prosperity metrics like employment rate. Proponents never attempt to claim any positive effect or show evidence of it. It doesn't reduce unemployment. It doesn't reduce poverty. In many situations it hurts young people who are trying to break into an industry, low income workers and small businesses. It also incentivizes undocumented ('under the table') employment. It's very much like rent control - a policy that feels good, but either doesn't do anything or more likely actually causes pain.
The positive effect is that some workers will earn higher wages. One obviously wouldn't expect it to affect unemployment in a positive way. It also wouldn't affect poverty in a positive way if the affected workers weren't below the poverty line to begin with.
My claim wasn't that the net outcome is positive. I was countering the claim that there weren't any arguments in favor of minimum wage. I don't think a strong argument can be made about the net outcome without real data.
If your hours are cut, or you can't find work or small business goes bankrupt due to enforced minimum wage, then whether or not to implement this policy is an ethical consideration!
>Like workers being able to afford food?
Minimum wage doesn't fix that. Minimum wage does not show any measure of improvement on any metric we care about like poverty rates. And that's in the best case scenario. In many cases, it has a demonstrable negative effect.
>> You shouldn’t be allowed to pay your employees so little that they are eligible for government benefits.
Although a common talking point, it is not inherently a bad thing that low-wage workers can qualify for welfare [1] and it's probably less distortionary to the free market than mandating a higher wage. As an analogy, pretend that the government has decided it would be a good idea that everyone be able to eat apples. It is absolutely better to target an appropriate amount of money at the poorer population so that everyone can afford them, than to dictate that the apple seller must lower their apple prices. The latter would result in less people overall having apples (due to the seller restricting their supply or just shutting down).
"(due to the seller restricting their supply or just shutting down)."
The appropriate thing to do then is for the state to use the labour that they would otherwise subsidise to produce apples.
Which makes sense since the actions of the suppliers shows that there is no more productive advantage in paying a profit share. They are incapable of using the shortage of labour market signal to innovate and automate - thereby producing more with less.
Subsidy is never good for the free market. Nor is giving a monopoly over supply to capitalists. Capitalists should know that they are only permitted to exist where they drive forward productivity. Once they cease to do that in a market segment, then they are out of business.
Free markets only work when both sides can say 'no deal'.
Anecdotally, The US Military also gives these same classes to Junior Enlisted as they too often qualify for Food Stamps and they are in a Government funded job.
Walmart only makes less than $7k per employee. They have 2.2million employees. Regardless of the common narrative - they simply can't afford to raise all of their employees wages by any meaningful amount with their current profits.
Walmart makes over 200k in revenue per employee. Using profit to make your point is not applicable if honest. Otherwise you would advise Amazon to cease hiring altogether in all those years they were seemingly losing money per employee.
How can we know that? The profit margin that is publicly known is after spending that might be optional. For instance, Walmart could forego some investment like building a new store, or expand more slowly, and be able to pay higher wages that go beyond the buffer of their current profit margin as a result.
> The profit margin that is publicly known is after spending that might be optional. For instance, Walmart could forego some investment like building a new store, or expand more slowly...
You can see cap ex on their cash flow statement and create all sorts of hypothetical profit margins for them. Walmart can't actually take a hit like that because their monopoly power isn't strong enough. Their game is low prices. If they grow slower, they'll start losing market share to the dollar stores, Target, etc. If they raise their prices, the same thing happens. It's different when labor is in short supply or you want more skilled labor. Starbucks pays more and hires somewhat overqualified baristas because they see value in it and offering a premium experience.
And it's not just teenagers either. You see tons of 30-something and middle-aged people in low skilled, service sector jobs. There is an overly optimistic assumption by policy makers and economists that low skilled workers are supposed to 'graduate" to better jobs, but for all to many ppl it's the destination.
Don't attribute to malice what can be explained by incompetence. The author relates his story of working for minimum-wage. When minimum-wage was raised, his manager cut everyone's hours. He then concludes that this was the strategy of the corporation (malice), but I don't think that's necessarily the case. It's also possible that management just didn't say anything, and perhaps didn't have any strategy in place (incompetence), and until they did, local managers were forced to do the only thing they could do: cut hours.
Unless you're Lex Luthor, you can't extrapolate the inner workings of the universe from a candy wrapper.
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[ 2.7 ms ] story [ 156 ms ] threadArchive link: https://archive.is/6JuaJ
Using: https://www.dol.gov/agencies/whd/minimum-wage/history/chart
I looked over the article and never saw a single justification for $15/hr. outside of "people need it". The Jacobin study included productivity which I don't know if you can even properly quantify into dollars. Certainly, minimum wage is not addressing the needs of the lowest earners in the country. But there must be a metric to go by:
If we use base minimum wage adjusted for inflation the numbers look even worse than they are today. $0.25 in 1938 is $4.74 in today's money. So that's not good. It would appear using these numbers minimum wage has beat average inflation using the BLS' own CPI calculator.
If we loosen the requirements to the last "stopping point", 2009, $7.25 becomes $7.49 according to the same calculator. Not keeping up with inflation, but I don't think even the poorest people are going to write home about coming up 24 cents short.
But this ignoring local minimum wages. Using the following data:
https://www.statista.com/statistics/238997/minimum-wage-by-u...
We arrive at an average minimum wage of $9.78 and a median of $9.45. So, neither of these really indicate a lacking in inflationary tracking even at the state level. So what's the cause?
Well, I'm not an economist but I think the issue is local and not federal. The federal government can set the minimum wage to $15, but that doesn't change the fact the wage curve is heavily skewed by ultra low CoL states and ultra high CoL states. Not being an economist I am willing to ascribe to this something I'm going to call "state-local inflation" where places like California and New York probably demand a minimum wage closer to $25/hr. whereas somewhere like Georgia might do just fine sitting at $10.
As a result I think this medium article is more of a tirade than anything and does not elucidate anything related to the problem other than the tautology that it is a problem (which I do agree with). The solution however, seems far more complicated than the "just raise the wage" protests would make it out to be.
overall productivity increase because of tech and globalization, of course a work whose productivity has stayed the same shouldn’t expect to make more just because other parts of the economy do well
No software engineers and no workers required.
The productivity is only a matter of local purchasing power. If it were any other, why would third world barber be extremely less productive than Manhattan one?
So, when higher middle and higher classes increase their productivity by tracking global population and selling ads, the productivity of people servicing them has to increase.
Who is more productive? Everyone is, even the people who use shovels to dig the earth, because the effect of their labour is magnified downstream.
Like: cost of living is $1800 a month divided by 3 full days a week times 4 (12), times 8 hours = 1800 / (348) = 1800 / 96 = $18,75 per hour.
In the 50s US was the only big developed country that was nearly untouched by the second world war. That rent has decreased massively over time. The 50s economic situation would not hold up under any other conditions.
https://libraryguides.missouri.edu/pricesandwages/1950-1959 Seems to indicate a lot of commodities match up with this. For instance “ Milk cost an average of 41¢ per ½ gallon in 1950. Source: U.S. BLS”
So for an hour’s minimum wage in 1950 you could buy half a gallon of milk. Now in 2021 an hour of minimum wage would buy about 2 gallons of milk or more.
The main item that seems out of balance is housing cost. “ In 1950, the median home value was $7,354. Source: US Census Bureau” that’s $84,000 in 2021 dollars while the modern median house price in 2021 is actually $269,000.
A big part of this is likely due to banning smaller housing, tenement housing, manufactured housing, and other cheap housing options.
No such thing as a free lunch. You can't just inflate a persons worth without having to pay for it somehow.
y'know, even out the playing field a millimeter or two.
The point is to see past your own pile of coin and think about society as a whole. If people were up for sacrificing that second holiday house and their stupid expensive watch or whatever, so much good would come of it.
Inequality fuels crime , public services like trains suffer etc...
I think ‘giving money to free loaders’ is a bit of a straw man, as the second order effects benefit everyone. Including you. And note I’m not advocating communism.
We can sit around making up what-if hypothetical tropes till the cows come home, and nothing will change. The rich at the very top just get richer.
[1] https://upload.wikimedia.org/wikipedia/commons/thumb/3/30/Ti...
Apparently (based on the comment I was replying to), labcomputer does seem to think the maximum is an outlier, and that this false generality applies here.
Visually, 1968 sure looks like an outlier to me: https://fred.stlouisfed.org/graph/?g=EZn4
But let's check my intuition. The federal minimum wage was raised 10 times from 1960 through 1980. The raises have the following indexed values:
* 1961: 137
* 1963: 145
* 1967: 151
* 1968: 167
* 1974: 146
* 1975: 143
* 1976: 147
* 1978: 150
* 1979: 151
* 1980: 141
So mean = 148, st.dev = 8.1. That puts 1968 at 2.4 standard deviations above the mean.
If you just want to make the pedantic point that the maximum is not in general an outlier, we are in agreement. But, in this particular case, the maximum is clearly an outlier.
Furthermore, I think the data still supports janandonly's point (though not quite as starkly) even if we throw out the maximum.
It would indeed be pedantic of me to now make an issue of the maximum not in general being an outlier, but at the time I wrote that, I was replying to a post in which the only justification given for considering 1968 to be an outlier was the fact that it was the maximum.
When productivity increased, minimum wage earners do make more.
Overall productivity increases don't increase profits. They reduce prices! Workers make more because everything costs less.
If you increased minimum wage with productivity, it would eclipse the highest earners in a matter of decades. It makes no sense to do that.
That only applies in an economy without credit and where sales are constrained by the spending of the wage share. In an economy with credit you can use financialisation to give people spending power their wages don't permit, which keeps prices higher than they would otherwise be and allows more to flow to the profit share.
The dynamics then drives the path of interest rates down over the years until you get a credit crunch - at which point the lack of spending from the profit share suddenly shows up in a Minsky Moment.
There's an inductive connection between the monetary economy and the real economy, not a direct one. It works more like an iPhone charger than a 1 bar electric fire, and that means you need greater monetary 'apparent power' to get the maximum level of real economy 'true power'.
I'll leave it to you to figure out 'Why'.
If productivity is driven by industries with no minimum wage workers, why would the benefit of that productivity pass to them?
Just give people income tax relief/credits based on their living situation (including credits that are paid out as cash) and let companies fight for workers with whatever wage they want.
States have varying conditions. Let them implement their own min-wages as they see fit.
As others have pointed out, why can't the States handle it? I feel like Americans are too quick to forget that the United States of America are a federation of States and too often conceptually envisions the country as a single political unit. Comparisons to Europe are frequently drawn even though the scales are different and even then, many European countries have more decentralized minimum wage laws, such as collective bargaining agreements within specific industries, rather than nationally mandated ones.
I would get exasperated by that, too, if it actually occurred; I mean, we’ve had a federal minimum wage since 1938, why would people be arguing for something we’ve had for close to a century?
But, since that is the case, I wonder if you’d like to clarify what it is you are ranting against, since it can't possibily really be the nonexistent and, if it did exist, utterly redundant movement to adopt a federal minimum wage.
Fixed.
We should not be raising the federal MW and should instead prefer more localized measures, such as States, counties, cities, or individual industries developing their own policies.
Why? Abstract concerns based on ideal market assumptions that (1) apply the same to more localized measures as to federal measures, and (2) haven't been born out by 83 years of experiencing having, expanding the applicability of, and raising the federal minimum wage?
Yes, we should have more localized policies—and we do—but that's no reason not to raise the federal minimum wage to roughly keep pace with the lower of productivity and national price level.
Now, sure, if you want to argue that despite the relatively benign experience of state and federal minimum wages, there's a good argument that providing a floor through something like UBI would have less risk of inhibiting employment, and do we should transition from minimim wage to UBI (say, reducing hourly minimum wages from the level thet would otherwise be set at by annual UBI ÷ $2000 as we ramp up a UBI over time), I’d agree that makes sense.
One of the things that tends to not enter these discussions is that the US has torn down about a million SROs[1] and largely zoned out of existence the ability to build other small scale homes currently being called Missing Middle Housing.
When walkable neighborhoods were more the norm and you could get just a room or small place as market rate housing without having to go through some government program with long wait lists, you could live on not much money. Now a car is practically required to make life work in the US, housing is expensive as hell and then we argue about income and I get told by random internet strangers that the high cost of rent is irrelevant to discussions of homelessness, and never mind that studies contradict such claims.
Meanwhile, housing costs and the fact that it's so hard to live without a car tends to not come up at all in discussions of this sort.
[1] https://en.m.wikipedia.org/wiki/Single_room_occupancy
Now, with many fewer motels we have shrank our pool of ultras affordable, unsubsidized housing and prostitutes just take their johns to the alleyways to do the deed.
When you prohibit micro-units and other low-income/low-quality housing, you don't get more high quality housing. You get more homelessness.
When you prohibit low-wage work, you don't get more high-paying jobs. You get more unemployment.
The only process that actually increases the quantity of high quality housing and high paying jobs, is investment, and investment is motivated and sustained by investment profits, which left-wing populists demagogue so much about, and political leaders enact so many laws to inhibit (e.g. laws against price gouging, rent control, tax rates that progress with income, etc).
That wasn't the experience of the UK when we introduced a minimum wage.
I googled it, and seems like full time unemployment didn’t fall, but part time employment felt a little.
Additionally I don’t know (didn’t find) what was the effective minimum wage before the min wage act. If it was already almost equal to min wage, the law was effectively no op. I.e. wages didn’t went up.
There have been experiments with some buildings without any parking being put up but it's rare. And that adds a lot of expense.
Parking minimums are also proven to kill old style walkable downtowns with commercial on the first floor and residential above. You can't develop those old buildings and also meet parking minimums and preserve the dense development.
In practice, you end up tearing down some of the buildings to meet those minimums and there is abundant parking that's half empty most of the time and it becomes a lot less walkable and more spread out, increasing the need for a car. It's maddening.
https://m.youtube.com/watch?v=MWsGBRdK2N0
I've been wondering how the nice sidewalk / walking / biking places I've enjoyed were built.. was it super cheap in the 80s and skyrocketed since?
I've gone down the rabbit hole of semi-current pricing for sidewalks being built and road expansion in this mid-size city - and it's just dumb that a sidewalk install can easily cost a million dollars for a block or two for example.
I can't imagine building neighborhoods today that mimic what I miss from the past in another state - but there's no way it cost that much to build back then either I'm fairly certain.
And as for costs of living - I don't think it is fair to say that zoning is to blame. Zoning is a choice by a community to preserve the lifestyle and neighborhood character they have built, and there's nothing wrong with that. Yes it may be inconvenient for potential new residents, but so what - local government logically should serve its current residents. I don't think that's particularly selfish, since we could just as well ask those seeking out low cost living to be realistic about their options and live within their means. Why is anyone entitled to live wherever they want at whatever cost they want? If someone can't afford to live in San Francisco or other such high demand high cost location, they are just as free to seek out a lower-cost life elsewhere. America has no shortage of places where one can make a living and thrive. Sure those locations may not have the exact job someone wants or the amenities they want or whatever else - but that's life - you don't get everything you want, and expecting otherwise feels like the dictionary definition of entitlement.
Also, if you don’t think it’s a travesty when someone is forced out of their ancestral home because gentrification raises property taxes and they have a low income, you’re kind of heartless.
A car can get you places, yes. But it also requires money to purchase, maintain, insure, and fuel. Many people are not great at driving them, killing people in the process. People get fat because they never have to walk anywhere. There is a cost for this convenience.
> Zoning is a choice by a community to preserve the lifestyle and neighborhood character they have built, and there's nothing wrong with that.
Sure, in isolation it makes sense. But then almost every city says the same thing. Then sprawl is the only choice for new people. And the “neighbor character” you have preserved is “only rich people are allowed to move in here”.
Right. And other workers are hurt by it. Leading to net negative outcome, or a wash.
> Proponents never attempt to claim any positive effect or show evidence of it
Like workers being able to afford food?
Those are ethical arguments!
If your hours are cut, or you can't find work or small business goes bankrupt due to enforced minimum wage, then whether or not to implement this policy is an ethical consideration!
>Like workers being able to afford food?
Minimum wage doesn't fix that. Minimum wage does not show any measure of improvement on any metric we care about like poverty rates. And that's in the best case scenario. In many cases, it has a demonstrable negative effect.
Walmart knows and teaches employees how to apply.
What kind of free market is that? You shouldn’t be allowed to pay your employees so little that they are eligible for government benefits.
To me this issue seems like something that both political parties would take issue with.
Although a common talking point, it is not inherently a bad thing that low-wage workers can qualify for welfare [1] and it's probably less distortionary to the free market than mandating a higher wage. As an analogy, pretend that the government has decided it would be a good idea that everyone be able to eat apples. It is absolutely better to target an appropriate amount of money at the poorer population so that everyone can afford them, than to dictate that the apple seller must lower their apple prices. The latter would result in less people overall having apples (due to the seller restricting their supply or just shutting down).
[1] https://www.brookings.edu/opinions/does-the-government-subsi...
The appropriate thing to do then is for the state to use the labour that they would otherwise subsidise to produce apples.
Which makes sense since the actions of the suppliers shows that there is no more productive advantage in paying a profit share. They are incapable of using the shortage of labour market signal to innovate and automate - thereby producing more with less.
Subsidy is never good for the free market. Nor is giving a monopoly over supply to capitalists. Capitalists should know that they are only permitted to exist where they drive forward productivity. Once they cease to do that in a market segment, then they are out of business.
Free markets only work when both sides can say 'no deal'.
And why would anyone treat an established retailer like a high-growth company? That makes no sense.
You can see cap ex on their cash flow statement and create all sorts of hypothetical profit margins for them. Walmart can't actually take a hit like that because their monopoly power isn't strong enough. Their game is low prices. If they grow slower, they'll start losing market share to the dollar stores, Target, etc. If they raise their prices, the same thing happens. It's different when labor is in short supply or you want more skilled labor. Starbucks pays more and hires somewhat overqualified baristas because they see value in it and offering a premium experience.
If low pay is an ethical concern shouldn't people take aim with their own purchasing power?
Unless you're Lex Luthor, you can't extrapolate the inner workings of the universe from a candy wrapper.