Yes. Yes you did. Dubious whether to call it 'modern' however. That term in the art world is super tricky. I might fall to contemporary - but that also brings it's difficulties. If you want to be really wiley, you could call it post-genre :)
But what you don't see is the line of people outside the door, whose labour is worth less than $7.25 per hour, but who can't find (legal) work because of the minimum wage laws.
At some point, the overhead cost of managing people whose labor is worth less than $7.25/hour is the predominant cost in employing them--at which point, you might as well just hire the person doing the oversight to do their job, or replace their labor with capital.
Minimum wage laws, at some level, prohibit useful employment. But every day the pool of people whose labor is effectively worthless--zero marginal product people, as Tyler Cowen calls them--is growing larger. Very few people, left or right, seem to want to confront this fact. Mostly because it's unpalatable: when horses' labor became uneconomic, we just turned them to glue. What do we do with people?
Given the option to legally cut their lower-tier employees' wages to zero tomorrow, I wonder how many companies would do so, and still expect those people to show up for work?
When horses' labor became uneconomic, we just turned them to glue. What do we do with people?
Companies shouldn't be able to set wages at an arbitrary low. Because then companies could simply set them as low as possible, without any regard to the standard of living for the employees making those wages.
But then any company willing to pay a decent price would instantly have their pick of anyone in the workforce.
It's called supply and demand. If there's no demand for cheap laborers, the answer is not to make them more expensive to hire, or to force companies to pay them a minimum. That just exacerbates the problem - now they can't even work for wages they might be able to be worth. It's very difficult to get better at a job unless you're either working at it or have the resources to do it in your free time. Someone who can't get a minimum wage job probably doesn't have the resources to learn the skills to move up.
I can personally attest that it's not just teenagers trying to find minimum wage jobs. I am a teenager, and I while I was looking for a summer job (I'm now employed as a software consultant) I was regularly (i.e., every single time) competing with people in their 20s or even, in some cases, older than that, who were simply unable to find work elsewhere.
A minimum wage affords unskilled workers some amount of time to learn new skills or improve their lot in life. An unskilled worker who has to work 18 hours a day at $2 an hour to make ends meet will never be able to learn new skills and claw their way out of that hole. It's the same with unemployment benefits - it affords citizens time to learn new skills without worrying about what they will eat that night.
perhaps unemployment benefits should give food and other basic necessities in the form of vouchers, and force the benefit taker to take (gov't provided) classes that will reskill them.
This way, they can either look for a real job to earn cash, instead of living on "vouchers/food tickets", or have to take classes to reskill/up-skill. They won't be battling for their next meal, but they also can't have leasure time.
If you're meaning to reply to me, then no. I don't even see how you can draw that inference.
I'm only suggesting that a minimum wage is necessary, because there is a cost of living in a modern society. Money pays for shelter. Money pays for healthcare. Money pays for education and food. And unless you're in a socialist system, that money comes from wages. So a standard should be met. Especially in cases where a corporation would otherwise consider someone's labor to be essentially worthless.
And yes, perhaps if that standard itself were fair (assuming it's currently unfair), then in some places and in some jobs it might be less than whatever the current minimum wage is, where the minimum wage exists. Elsewhere it might be higher. I don't know, and I'll readily admit I might be bringing a checkers set to a chess match when discussing economics on this forum but I honestly believe it should be something.
The question is, how much shelter, healthcare or food can you pay when your job is replaced by a machine or an offshore worker because your wage is now too high (relatively to the alternative) to be worthwhile keeping you employed?
Would those companies necessarily choose not to outsource or automate those jobs if they had the option to do so, without a minimum wage requirement?
If the standard of living is low enough that, taking the same wages as an outsourced worker, someone doing that job could still survive, you might have an argument against the minimum wage standard there.
Otherwise, if only option to retain local employment is to pay what those outsourced workers are making, or less, in a market where more than that means living hand to mouth, then it's a distinction without a difference to me.
there is a cost of living in a modern society. Money pays for shelter. Money pays for healthcare. Money pays for education and food.
That's a good argument for a guaranteed minimum income. It's a bad argument for a minimum wage laws, because at least sometimes they result in people earning zero instead of low wages.
And unless you're in a socialist system, that money comes from wages.
We're already in a partly socialist system. Minimum wage laws are a convoluted and inefficient form of welfare; it's better to just directly give money to poor people, and then avoid doing anything that interferes with their ability to increase their income.
You seem to imply that unrestricted companies in a capitalist society would obviously set wages lower than current minimum wage laws require, but that model has no explaining power for the huge portion of jobs which already pay more than minimum wage.
> Companies shouldn't be able to set wages at an arbitrary low.
Why not? You seem to think that there is only one big company setting wages for everyone. If company X needs good workers and is only willing to pay $5 per hour, but company Y is willing to pay $12 per hour, company X is not going to get the good workers. If they want better workers they will have to raise their wages.
> without any regard to the standard of living for the employees making those wages.
The clients who pay me do so without any regard to my standard of living. They pay me with regard to the value I provide. If you are suggesting that low skill employees need to be paid based on something other than the value they provide then you are suggesting that they be given charity rather than wages.
Absolutely they should be given charity, and wages not solely determined by value provided. The American economy (and world economy to some degree) is evolving in a way that eventually only high-skilled workers will be needed, as most unskilled work will be fully automated. This continues to raise the bar on citizens for even entry-level positions.
10 years ago a college degree in business or communications was enough to land a salaried-job. Now, to obtain a well-paying job straight out of college either a STEM degree or graduate work is usually required. It is extreme to suggest that citizens either acquire a high-level of education (which many simply cannot complete) or perform work for $2 an hour.
> It is extreme to suggest that citizens either acquire a high-level of education (which many simply cannot complete)
why is that a wrong ideal to move towards to? I agree that current education is poor, but thats an implementation problem. The idea that every citizen should be highly educated is a good one, and that in the future, in order to provide value (which is rewarded in the form of money), you can't just labour.
Trust me: I believe that people deserve an honest living. I believe people have the right to housing, warmth, good food, healthcare, and the ability to have plenty of autonomy and free time to do what they love and achieve self-fulfillment. I am not averse to governments passing laws to achieve this.
But all organizations have a choice: I can either pay a worker $X or replace labor with capital for $Y, within the budgetary constraint $Z. If $Y < $X, they'll do that, or be outcompeted by organizations which do choose to do that. (If $Y and $X are both >$Z, well, that's when the organization closes up shop.)
That's a real choice, and it's not easily legislated into oblivion.
That's a real choice, and it's not easily legislated into oblivion.
I understand that, and I don't mean to demonize business by any means. A minimum wage might well stifle competition somewhat, but I think the lack of one would do more harm than good. Given the choice between harm to business and harm to people, I'll choose to harm business.
Do the people actually benefit in that situation? When a business closes up shop, do other businesses naturally expand their labor force in a linear manner to provide new jobs for the ones that were lost? Ideally the competing businesses will easily expand of course, since they have less competition after their competitor dropped out, but is that expansion linear?
I suppose for some types of jobs it may be. If a coffee shop closes, and it's competitor opens another branch to soak up the extra demand, the additional coffee shop will probably use approximately the same number of employees as the old one fired. But can the same be said of, say, factories? What if the second factory, while filling the same demand as the first, was more successful because it used more effective automation?
That is a fair point. But what's the benefit in lower wages across the board, to the workers making them and to the economy?
Perhaps the answer (at least in the US) would be to reduce the cost of reeducation to facilitate transition, and socialize healthcare? Lower wages might not be so bad where healthcare and education don't represent potential lifetime burdens for people. But then the tax burden for that would fall disproportionately on the poor wouldn't it? And also, there might just not be jobs at all to replace the ones lost.
Free education and healthcare definitely seem like good first steps to improving the situation to me. Letting the prospective workers be as smart and as healthy as they care to make themselves seems to have no obvious downsides to me. With any luck that would create an expanded middle class that could be taxed to pay for it.
The trend of people squandering their education and ending up in low paying jobs anyway disturbs me, but I think that could be solved by offering only majors that are in demand for free. Free STEM and medical sciences would be my initial suggestion, but I would want to see any decision like that backed up with some solid data (perhaps the data would reveal my concern is unfounded).
Lets say you run a small movie theater. You hire a 5 people for $5 per hour to sell tickets. Many of these are teenagers and other people who have schedules that can't work a normal job. The government comes in and says minimum wage needs to be $10 per hour. After doing the math, you decide that financially you can't afford to keep all those people on at $5 per hour. So you keep one to help run the front of the theater and put in a machine where people can swipe their credit cards to buy tickets.
Who was harmed? The business or the people?
The $5 per hour may not seem like much, but to the teenager it is $5 per hour, plus a chance to learn to manage their own money, a chance to learn people skills, a chance to learn work ethic, a chance to have a good reference from you for later jobs, etc.
I understand your point, and I admit it's complex. But what happens when the government says I can pay whatever I want and I tell those people they're now making $2 an hour because nobody's buying the six dollar popcorn anymore? A minimum wage may have its downside but at least with it, people have an expectation of how little they can expect to make and plan accordingly. It provides a measure of stability at least.
To me the ability to find a job is a more important measurement of stability than the government saying that no job worth less than X and hour can be had.
But back to your question about what happens when employers lower their wages to $2 per hour, they would probably lose all of their employees and have to raise wages if they want workers. Believe it or not, wages do correspond in some way to the amount of benefit an employee brings to a company.
Lets say you want to hire someone to clean your house. How much would you have to pay in order to attract someone with enough skill to do the job? You couldn't just say you'll pay $0.50 per hour and magically get people to clean your house at that rate. There might be some people you'd attract for $5 per hour. As the price goes up, so does the pool of people you could pull from. However, above a certain price, it isn't worth it for you to pay someone else to do it. You might do it yourself or just live with it being dirty.
If having your house cleaned is worth only $5 per hour to you and someone is willing to do house cleaning for $5 per hour should you be allowed to hire them? They probably aren't going to be willing to work for $5 per hour if they can make $10 per hour somewhere else. Does it make sense for the government to say, "You can't hire this person unless the value they provide is greater than $7.25 per hour"? I don't feel that benefits you or the person who you want to pay. I don't feel it benefits society as a whole because I think we benefit by having money flowing through more hands not fewer. Minimum wage says that transactions below a certain hourly rate are not allowed, so it prevents money from flowing through some of the hands that might get it otherwise.
the danger you run into tho, is that the whole neighbourhood conspires (whether deliberately or not) to fix the price at $2. Price fixing like this completely favours the employer, and they can do it if they have the knowledge that the employee can't possibly find employment elsewhere.
The least worst situation, in my opinion, is the minimum wage, and the only cost is that it has an overhead on society (in the form of benefit pay outs for jobs that got destroyed by the minimum wage).
It's easily legislated into oblivion for any particular instance - just ban the automated looms (or whatever else is replacing workers), or require that the companies still employ people to watch the capital do its thing (some unions have gone this route, at various points). It's not, however, easily solved well - both the above are things I'd object to; particularly the latter, where I feel like we're removing not adding dignity.
"That's a real choice, and it's not easily legislated into oblivion."
It might kill the economy or grow a black market, but it is easily legislated into oblivion. The thing is: legislation can decrease $X and/or increase $Y. Put a $1000 a barrel tax on oil, and proportionally on other sources of energy, and abolish income taxes and you will find that people are willing to pay close to $Z for manual labour.
Yes, that is exaggeration, but any increase of the cost of capital relative to that of manual labour will have some effect. It will either put companies out of business or it will create manual labour jobs.
Problem is that this requires international cooperation or unilateral restrictions on trade (import bans or high import tariffs)
So what is a living wage for a teenager living at home? What is a living wage for a college student going to school full time but still supported by their parents? What is a living wage for a retired grandparent that wants to 'stay young'? How about for a spouse who just wants to be out of the house because the other member of the marriage brings home sufficient disposable income?
The notion that there is a single administratively selectable price point that is the 'minimum' wage for any and all job situations is a fallacy.
Some countries--Germany from what I understand, for instance--have sector and job class-specific minimum wages, which seems so eminently sane that it's impossible in the USA.
Many industries have strong union presences that negotiate wages. But there is only a statutory minimum wage for 5-6 different jobs--painters, mailmen, etc. But in general, the best protection against low wages is the high mobility that low wage jobs offer.
No direct statutory universal minimum wage. But sector-by-sector minimum wages are set by collective bargaining agreements. In Germany in particular, 70% of the labor force are covered by them.
I admit to not knowing the full details of how it works in Germany--not many good sources on the Internet immediately apparent, so I'd be plenty eager to hear if I'm misunderstanding how it works.
You can force a living wage, but you can't force companies to hire people at that wage. I mean, you can, but most people would find that pretty extreme.
Who determines what a "living wage" is? Does it include having cable? Internet? A car?
But beyond that, why do you want to put up any barriers to what jobs companies can hire workers for? Lets say you own a company that employees 20 people and it sits on one acre of land. You need to get someone to mow the grass. You can hire company to come in for $80 per week to mow for you. They have big expensive lawnmowers and can do it very quickly. Or you can hire Joe to mow it using an older push mower you have. Joe isn't super fast and it will take him 10 hours. So you decide the value is $8 per hour in order to be on par with the company that will do it.
I wouldn't want the government to come in and make laws that make it better for you to hire the big company than Joe. I wouldn't want them to make it harder for you to justify taking a chance on hiring Joe and giving him a shot at a job just because someone doesn't think that $8 per hour is a living wage.
If Joe works for you for a year and has good track record, who knows. Maybe he will prove dependable enough that you can find other things for him to do. Maybe some of those things will be worth paying him more. Or maybe he can get a higher paying job working for the big lawn-mowing company based on his track record with you.
The situation is more complex that that, because the mowing company uses a great big machine, and they constantly try to improve it. Say it now only takes $40 to mow instead of $80 due to efficiency increases and whatnots.
Do you now fire joe and hire the mowing company? or do you instead choose to pay hin $4 an hour?
Ovbiously joe can't increase his speed of mowing beyond a certain limit - he is human after all.
The real underlying question is - if the value that joe provides can be instead provided via a cheaper source, then the business _should_ use that cheaper source, joe's life shouldnt and won't come into consideration. This method of thinking seems incompatible with the concepts of compassion and empathy, but it seems this is the way the real world works...
Many people learn their skills on the job. Setting an artificial lower limit of what they are allowed to work for prevents some people from starting to climb a ladder toward higher skills and higher wages.
Regarding just hiring the person managing the labor to do the work: Don't forget that one person can manage multiple people.
Surely you must be joking right? How on earth would someone earning < minimum wage try to start climbing the corporate ladder? If you clean toilets you don't learn any valuable skills, you won't someday be promoted to manager of the cleaning staff and you can't walk in to your boss and demand a higher salary because you're now an expert at cleaning toilets.
The churn rate at, for example, fast food joints is high enough that you can secure (piss poor, initially) promotions by simply not being a teenager that only works there for 3 months. By no means is it easy, but very modest "climbing" is very common in the fast food sector. Skill has nothing to do with low-level promotions, it is all about reliability.
The guy yelling at the toilet scrubber doesn't have his job because he is particularly skilled at yelling at toilet scrubbers.
The impact is evident in apprenticeships. We've got a lot of laws about them that makes them tough to run, and a small shop won't usually do it for fear of being crushed by the Labor Dep't.
But consider, if a HS dropout could learn how to wrench on a car for $2/hour, maybe they could get a full auto tech position (at a living wage) later on, without the crushing debt of trade school.
Yes, someone who starts out cleaning does learn skills. They can become better at cleaning than the average person. They will know how to clean really bad messes without getting grossed out by it. They will know how to dispose of the stuff they clean. They will know how to clean efficiently and without wasting time. They will know what type of cleaning supplies to use.
That may not make them a manager, but there are jobs that pay higher than minimum wage that require the ability to clean as a skill. Often those jobs come with new skills to be learned. And yes, someone who has some degree of management potential could definitely start out cleaning toilets for minimum wage and work their way up to managing the cleaning staff somewhere.
For a short while I worked for close to minimum wage washing dishes in restaurants. On my breaks I would read microprocessor manuals. One day, a customer saw me reading such a book and we struck up a conversation. He worked at a small technical shop where everyone was basically commission-only for repairing computers. I knew quite a bit about electronics and we were one of the few shops in the area that could repair monitors. (This was back when they were expensive.)
To make a long story short, today I'm a Senior Software Developer at a large company. I'm happy enough without any aspirations to management at this time :-)
I agree with you that you don't learn a lot of great marketable skills by scrubbing things clean. But such a job, by itself, can't stop you from learning if you're determined.
you won't someday be promoted to manager of the cleaning staff
Actually, that's exactly what will happen. You'll do the job. Then you'll learn how to do it well. Then your job will be to teach others to do it well. Then you'll become an assistant manager, making sure people have the training and equipment to do it well, and handling problems that others don't have the experience for. Then you'll become a manager because you know how to handle people and make that part of the business succeed. Then you'll become a higher level manager because you know how to make a team of workers successful.
That's not a far-fetched scenario. That's exactly what happens in many organizations. It's not the only way into leadership, but it is a well-trodden path.
Anectodal evidence but: that's exactly the route my father took. From working on the assembly line to managing planning & logistics from the company, learning and contributing at every step of the way. He started with no relevant qualifications, and wound up with a bunch of industry certifications too.
Do you really think that there are that many zero marginal product people? Or do you think that it's mostly people who are unwilling or don't have the education background to do work with utility? I feel like a lot of minimum wage is a big negative feedback loop - if you are making $7 an hour, you have to work a lot of hours to put food on the table. And these are generally manual jobs, or at least involve a lot of standing, and so you are exhausted by the end of the day. Plus - with poverty being so endemic, chances are nobody around you has an education either, so you can't see first hand that education really gets you anything. And, with a lack of money, you either have no credit or (more likely) bad credit. So how do you get out of that trap?
When your parents are struggling to make ends meet like this, what do you do as a kid? You start working night shifts in high school instead of studying for the SATs.
If you took people in this trap who were willing, and subsidized them for two years to go to community college, I feel like you'd have a huge increase in productivity, especially across generations. And it wouldn't even be that expensive, especially if you factored in increased tax revenue. Or heck, as a lesser goal, make it a goal to enable people making under $X/hour to get their GED.
Maybe this is way too idealistic.
I was lucky. Relatively rich parents, we could move into a good school district, I got to go to a good university, not really worry about money, and now I work in the software industry which is booming. But a huge part of that I owe to circumstance - I could study in school, never hungry, never worried about paying rent.
> I was lucky. Relatively rich parents, we could move into a good school district, I got to go to a good university, not really worry about money, and now I work in the software industry which is booming. But a huge part of that I owe to circumstance - I could study in school, never hungry, never worried about paying rent.
But there are also plenty of counterexamples of people who didn't have rich parents, didn't live in good school districts, and did it on their own. I know a person just like that, and she paid for school on her own working fast food shifts at night and full time in the summer, and now has a great job in biotech. $anecdote++;
> you can't see first hand that education really gets you anything.
I don't see that education really does get you anything except a stifled sense of creativity, decreased curiosity, and crushing debt. See: the current college-grad crisis.
"Education" in a modern, western sense is a red herring. Being a lifelong learner, being always curious, and having the desire to do something useful with your life -- if you have these qualities you'll do just fine.
> But there are also plenty of counterexamples of people who didn't have rich parents, didn't live in good school districts, and did it on their own. I know a person just like that, and she paid for school on her own working fast food shifts at night and full time in the summer, and now has a great job in biotech. $anecdote++;
Yes, but those people are playing on "hard" mode, so to speak. More power to them, but it's unreasonable to imply that all people in poor socioeconomic circumstances will be able to do the same.
EDIT (reply to below): Like I said, they're playing on "hard" mode. You cannot expect all or even most people playing on "hard" mode to achieve the same things that people playing on "easy" mode can achieve (people like me living in an affluent suburb, whose parents are upper-middle class, who went to fantastic local schools filled with other upper-middle class students, whose parents can afford to pay for college and any educational expense, etc.)
First, while it's not entirely a zero-sum game, there's a considerable competitiveness aspect - there aren't enough college slots or scholarships to accommodate everyone getting a good degree from a strong school, and if there were, there wouldn't be enough jobs to hire them into. So at various points, people are going to not make the cut. Do we simply say "well, if you're not in the top X% of the nation you'll have to make do on $10/hour?"
Secondly, because we can't simply wave our wands and make everyone 15-30 IQ points smarter. Getting every poor child to be as motivated and intelligent as that anecdote is at least as large a problem as income inequality generally. It's like saying "I've got a cure for cancer, but it requires time travel" - you've just reduced a Very Hard problem to a different Very Hard problem, which is a solid achievement but doesn't actually solve anything.
EDIT: And Thirdly, why should the answer be that poor people have to work their asses off to catch up just because they made the wrong choice of parents? It's like a race where some contestants have to carry dumbbells - it's great that they can actually succeed, but it's still miles and miles from fair.
> So at various points, people are going to not make the cut. Do we simply say "well, if you're not in the top X% of the nation you'll have to make do on $10/hour?"
False dilemma. The choices are not "either get a good degree from a strong school, or make $10/hour forever".
> we can't simply wave our wands and make everyone 15-30 IQ points smarter
I'm not sure what your point is here.
> why should the answer be that poor people have to work their asses off to catch up just because they made the wrong choice of parents
I wasn't arguing that they should, just that they could.
>False dilemma. The choices are not "either get a good degree from a strong school, or make $10/hour forever".
You're right that it's not yet that stark. Nonetheless, while we need a system which encourages, motivates, and rewards the people who succeed, we also need a system which doesn't abandon the people who don't make the cut. We can't just simply say "well, everyone had a shot" and leave it at that. There are millions of Americans who are working poor, and tens of millions more who are still struggling to get by in the land of plenty.
>I'm not sure what your point is here.
My point is that just because there are ways out for people who are unusually intelligent and unusually diligent doesn't solve the societal inequity, because not everyone can take advantage of those outs unless they suddenly get a lot smarter en masse. Again, even if we perfect meritocracy and all the incentives, we can't ignore the people who don't have IQs over 115 or whatever[1]
[1] - or if IQ is an inadequate measurement, whatever measurement you have for merit.
Of course, there are always counter examples. A stuck clock is right twice a day. And someone always wins the lottery. Stats don't lie though, parents income and education is highly correlated with their childrens' success (and apparently even brain development). So you know one person who overcame poverty - how many people do you know with a pretty typical middle class family who are about as successful?
Suppose that we were to play a game - you are given two people, A and B, and the following information about their parents: income level and education level (name of degree/diploma(s) and schools). Do you think that you could come up with a strategy for guessing which person - A or B - will make more money at age 30, that would do better than just flipping a coin?
Formal education does offer you huge benefits. I walked out of school into a job paying many times minimum wage - I got the job because I did well on the interviews, but I got the interviews because I have a degree. Is this fair? Probably not, but it is the reality of the situation. And I do feel like I learned a ton in school. Of course, there are problems with the education system, but that's another discussion.
> Stats don't lie though, parents income and education is highly correlated with their childrens' success
Is the lesson that parents' education causes this, or that parents who value education/learning produce that type of child? Not to be a "correlation != causation" parrot, but it's worth considering.
Maybe being raised in an environment where participating in "the system" (school, college, salaried job) is the norm produces children who are more likely to participate in the system themselves?
> but I got the interviews because I have a degree
I wouldn't argue against this point on another site, but it should go without saying that here in hacker land this isn't really a thing.
> But there are also plenty of counterexamples of people who didn't have rich parents, didn't live in good school districts, and did it on their own. I know a person just like that, and she paid for school on her own working fast food shifts at night and full time in the summer, and now has a great job in biotech. $anecdote++;
The world is full of examples like this, but here's the thing that is always glossed over: hard work alone isn't sufficient for success. The kid who grows up on the wrong side of the tracks not only needs to do all the right things, they also need to never do the wrong thing, which typically requires both diligence and luck.
The rich kid who gets caught with drugs? It's a youthful indiscretion, he gets off with a talking to. The poor kid gets a criminal record, which makes it many times harder to succeed.
The rich kid who get pregnant? Her parents pay for an abortion. The poor kid drops out of school to raise the child.
The rich kid who slacks off an flunks a couple classes in high school? Parents pay for some fancy prep school to polish the kids academic record. The poor kid is essentially locked out of top-tier colleges.
The rich kid who doesn't land the Goldman Sachs internship after junior year? Goes to work at his mother's friend's consulting firm and still has something "good" on his resume when he's applying for the first job out of college. The poor kid works at the supermarket.
It's not that being poor means that you can't succeed if you work hard. It's that it means that the deck is stacked against you every step of the way, and that just working hard isn't actually enough even if you do everything right that's in your power to do. You also need to be lucky. If you are sufficiently well-connected and wealthy, however, lots of "minor" things get overlooked and you can be quite successful even if you don't work especially hard and aren't especially lucky.
What skills does it take to make minimum wage? Often it is the ability to show up on time and follow directions. If someone doesn't have those skills, I question how well they will do in a community college.
If they do have enough reliability to show up on time and enough motivation to go to the community college, there are parts of the country where they can work a minimum wage job and still pay for tuition and a place to stay.
Find some places that pay minimum wage and will also pay for education in some form. And do you really think that the unemployment problem in unskilled or low skill labor is simply because there aren't enough people who can show up and follow directions?
The business owners I know who employ low skilled workers all have trouble finding people who will show up to work on time and actually do work.
The unemployment problem in unskilled or low skilled labor is largely because government benefits make is economically better for low skilled people to NOT work. In my town there was a waitress who quit her job rather than take on the more hours they wanted her to work because it would have meant losing the money she was getting from the government.
I see a lot of people whose job hunting efforts are minimal or are for jobs they know they aren't qualified for because they want to stay on unemployment. When the unemployment runs out, the real job search will begin.
For a statistical look at this see the book: The Redistribution Recession: How Labor Market Distortions Contracted the Economy
I found the movie 'Waiting for "Superman"' http://www.waitingforsuperman.com/action/ (it's on Netflix) to be pretty enlightening on the topic of how the education system is failing kids in this country. They make the argument that even schools in well off areas are not particularly good in absolute terms though relatively they seem great.
> Do you really think that there are that many zero marginal product people?
About 15% of Americans are borderline mentally retarded. They are trainable, but most of the suitable jobs have been automated. Finding interesting work for them is a real problem and has gone badly. Currently the welfare apparatus is farming them for votes, but this is not a desirable or sustainable situation.
How did you get the 15% number? Assuming IQ of 70 is taken as margin of borderline intellectual functioning, and 15 points being the standard deviation, only people below two standard deviation lie below 70 IQ, or about 2.5% of population. (The other 2.5% being above 130 IQ)
70 is generally taken as the threshold for mild mental retardation. I was using 85 as the threshold for borderline and assuming a non-normal distribution.
Also, the distribution is by definition normal, and I have hard time believing 15% of population is retarded. That would mean about 1 in every 6 person I met is retarded, a number too big to believe. Now 3 genius/3 dumb out of 100 is more like what my experience has been.
The idea is that no matter how good people are, we soon won't need so much labor hours as a society to employ everyone.
We'll have good, decently skilled, enthusiastic, hardworking "zero marginal product" people simply because software/robots will be able to do it cheaper than even a subsistence (calories+shelter) wage, and in most tasks employing a human for it would be a senseless luxury.
You can hire a bunch of people to carry you around in a carriage on their backs, or you can hire people to do arithmetics for you - but almost noone does. Soon (in my and your lifetime) the same will be for all the manual, exhausting jobs; for most of the driving, service, cleaning, delivery, and retail jobs; for most of the simple clerical jobs.
Even if there is no progress in AI at all, we'll come to a state where, say, 10% of population can cover all major needs (agriculture, food production, service, clothing, construction, consumer goods manufacture, transportation, medical, legal, etc) of everyone. What we'll do with the other 90% (or 99%, or even 100% if AI happens) ? They will be nice, great, fellow humans, but practically speaking, the society can do with them and can do without them. That's a choice for the society - utopias or distopias are both possible.
its interesting you mentioned this because i recently read a "book" online about this very topic (albeit in the form of fiction - its called Manna).
Both distopia and utopia is possible, but the distopia is much more likely due to the capitalist system we have, and the rich/poor gap is only going to grow.
That sounds nice, but I don't think it's true, especially not in the near future. We're already in a state where society could go on with say 30% of the population working to produce food, but we keep growing, because as a society we want more. Who would give up what they have right now to go back and live as a billionaire in the 1500s, giving up their iPads and TVs and modern medicine? Not many people. I don't see that trend reversing. How many times has cost been the determining factor on whether to purchase or do something? Probably a lot.
With trade, there's always relative competitive advantage. It's probably economically more sensible for you the software developer to hire someone to mow your lawn, since you make more money in an hour of writing software than it costs to get someone to mow your lawn. Even if you're better at mowing your lawn than the person you hire - you still make more money writing software (example: You make $100/hour writing software. It takes you 1 hour to mow your lawn, or you can hire someone for 2 hours to do it for you at $20/hour. Opportunity cost to mow the lawn: $200. Gain from hiring someone to mow the lawn: $160. So even though you can mow the lawn twice as fast as the person you hire can, it's still better to hire someone.)
So now it becomes a resourcing problem - you need people who can mow your lawn. Robots can do that, but I don't think that robots can do all jobs at least not in the near future. Which is why I think that a huge part of this is a resourcing problem - you have a mismatch between skills and demand, which again I think is solved through education. Consider software developers again - I bet that if suddenly there was no demand for software developers, any one of us could be successful in another career, since at the heart of it, we're logical thinkers. We need to get as many people to that level as possible.
Furthermore, it's very important to not make poverty generational. I think that I contribute to society through my employment (at least I pay a ton of taxes), but if I wasn't as lucky as I was, I might not be in the same position to do so. I'd still be as capable, at least in terms of potential, but I wouldn't have the opportunity.
Food agriculture in the developed world already takes only something like 1-2% of population - the rest of food jobs are in processing and other sectors.
The lawnmower example isn't what we're seeing already now - we have structural unemployment of young average people who could and would do simple jobs like mowing lawns, flipping burgers and cleaning sidewalks; but there already are millions more of them than such jobs. And with every year, millions these simple jobs are going away, and unlike all the previous tech-job-shifts, this time the new industries aren't creating new jobs for them. Software developers are hiring other people for lawns and babysitting, but they are currently replacing much more people in "obsolete" industries with high-tech low-headcount disruptive business models.
I do agree with your comments about what's important and how it should be - but it's not really relevant when estimating what will actually be; wishful thinking won't solve it, especially as it's clearly beneficial for the powerful to ignore this problem as long as possible.
Minimum guaranteed income. Let the people whose labor has zero marginal value opt out of the work force, which has the incidental effect of reducing labor competition for people just above the margin.
I want to run an experiment: build a town that's equal in all ways: everyone has the same house, the same car, the same clothes, the same bank all provided for them. Give them a monthly stipend. Give them all the same job doing anything (breaking rocks, whatever).
I would love to see what the wealth distribution looks like after a year.
I recently wrote a very simple economic simulator. Given X actors, each starting with $Y (for a total money supply of $(X * Y)). For each "tick," two actors are selected, a buyer and a seller. The buyer gives the seller a random amount of money (if the buyer didn't have that said amount, no transaction happened). That's it. No skill. No talent. No fraud. Just random transactions between a fixed number of actors and money.
Even after a few hundred transactions an interesting pattern emerged---a power law distribution of money, with the average amount of money per actor less than the starting amount of money (generally, about 66% of the starting amount). The results were similar regardless of the number of actors, the amount of starting money, and the amount per transaction (even a fixed amount exchanged per transaction would result in a similar result).
I think the result would the same for your hypothetical town.
I want to see the reverse version: get 2 18-year-old guys, both equally smart and hardworking. Give one guy $10, and the other guy $10,000,000. See who earns $1,000,000 first.
If hard work is all it takes to succeed, then both should earn their first $1,000,000 at the same time, right?
This right here is the sinister truth about conversations like this -- though clothed in the holy robe of "equality", you're not looking for equality of opportunity, you're looking for equality of outcome.
It shocks me truly because we see the reality every single day. Two people, same job title, same responsibilities, same home life situation, and one far outperforms the other. The outperformer gets the bigger bonus, the bigger raise, and the promotion. Factored out 10 years, the outperformer ends up far "richer" than the other guy, and the other guy calls it inequality.
Yes, inequality happens. Yes, some people get a big head start. Yes, some people can tap family connections. But look around you, and I guarantee you'll observe my scenario 1,000,000 times before you observe your scenario once.
This right here is the sinister truth about conversations like this -- though clothed in the holy robe of "equality", you're not looking for equality of opportunity, you're looking for equality of outcome.
I'm not sure where you get that idea from. The purpose of my thought experiment is to show that outcome is inextricably tied to opportunity.
That guy who received $10,000,000, he's going to have a lot of opportunities. He gets to buy himself an education; he gets to invest in businesses that won't pay out for a few years, without having to worry about where his next meal will come from. He gets to treat minor ailments, before they fester into something more serious.
Too many people assume that the outcome is only dependent on effort alone. Too many people like to think that a person is destitute only because he is lazy, not because he didn't have any of the opportunities offered to those of us who grew up in a well-off environment.
In a perfect world, your financial outcome will be tied only to the amount of effort you put in. I'm trying to point out that the real world is hardly perfect.
1,000,000?! Anyone born into an upper middle class family, whose parents paid for college, tutoring, etc, has a $100k or more head start over someone born into a bottom 40% family. These aren't 1 in a million people. Maybe 1 in 10.
General statement, not making any presumptions about what you personally believe:
One of the great ironies is that many people who think that what you're born with have no correlation with how your life will turn out are also the same people who think that an inheritance tax is a socialistic imposition that unjustly punishes rich parents from helping out their kids.
That's the idealized assumption in a simple supply/demand, all-else-equal model, but there's actually little empirical evidence that minimum wages, at least at the level contemplated in the U.S., actually do have an impact on unemployment in the world world, except on part-time work by teenagers. So economists' consensus has weakened on that from what it was if you had polled them 30-40 years ago.
One among many possible positive effects of higher minimum wages is to shift the threshold at which it becomes profitable to upgrade low-tech processes to computerized ones, which can modernize sectors of the economy, and create some highly paid jobs [1]. Another positive effect is to redistribute more money to people in the remaining low-end jobs. But economies are complex and full of feedback loops, so those aren't really well established either.
[1] As an AI researcher, of course, this benefits me: humans undercutting us is one of our top problems with deploying research in the real world.
Well yeah, that's because most people who are making minimum wage are... teenagers working part-time. At its current level the US minimum wage has very little impact on anything, positive or negative. Very few jobs are worth so little, and most of them are being worked by immigrants who get paid under-the-table anyways.
Knowing a few people that make or have made approximately minimum wage for the time I've known them, and seeing the age of people working at various low-end jobs, I would like to see some statistics to compare to your statement to my anecdotal evidence.
I'd like to see your math. http://data.bls.gov/timeseries/LNS11300000 says 64 million at the end of 2011, 3.8M/64M = 5.9% No? I might have mis googled those statistics though.
MILLIONS (3+ in California alone [1]) of retail workers make nothing more than minimum wage (with hours cut strategically short by 1-2 of the company benefit plan requirements). Walk into any Gap, Walmart, Gamestop, mall, etc. and most of them _are not_ teenagers. If anything they're 1/5th college grads who just put 45k into the economy through 'education')
Sure the skillset might be considered less valuable, but is their actual life (and quality of it?).
Afaict, this PDF makes a "correlation=causation" assertion, and doesn't even attempt to account for any other variables of the past 40 years, implicitly attributing all employment variation from 1970s to the present on minimum wage levels...
Correlation may not equal causation, but it does definitely count as empirical support. The slides I posted may not prove that minimum wage causes unemployment among the lower skilled, but they certainly support the idea. At a minimum, they move it away from "idealized assumption" toward "something that survived contact with the data".
And really, does economics ever get much better than that? I think it rarely gets even that good.
When you have a correlation, the logical possibilities are that A causes B, B causes A, C causes both, or the correlation isn't real -- just random noise. I think the last option is pretty unlikely, and I'm having a very hard time imagining how unemployment among lower skilled workers would cause minimum wage increases, or what in the world would cause both. Particularly persuasive to me is that the strength of the relationship changes with education level -- exactly what I'd expect.
No, I suppose I don't know for sure. It's always possible something else causes both, and sure, the dots are all over the map even if there is a relationship; it is a complex system. But to be honest, I really do find that data pretty persuasive.
I didn't see anything in the Wikipedia entry that changed my mind much, either. Mostly it was unrelated to what I posted: studies specifically on teenagers (which showed more or less what I'd expect, that minimum wage increases decreased employment), and a comment that in a complex system, lots of factors affect unemployment. (Sure, of course).
I don't know, it says "Economists now disagree", but it doesn't say much about what changed their minds. I don't feel bound to change mine just because they did, though it's certainly something to take seriously.
Can anyone recommend any sensible texts on this? Ideally something that covers minimum wages/unemployment, places the discussion in an international context, and least shows an awareness of the idea of a spectrum between fully employed and a hypothetical fully automated society? (By sensible I probably mean something coming from more of a first principles/psychology/game theory angle than something that ends up (trying to advance/relying on the assumptions of) some political/economic ideology)
"except on part-time work by teenagers" <= that's really important and shouldn't be dismissed so quickly. Teenagers working part time jobs is where most people, especially the poor, acquire skills and training that they can use to get better paid jobs later on.
Wouldn't you have to take things like the employer's half of Social Security tax and unemployment tax into account as well since they, like the minimum wage, also artificially increase the cost of unskilled labor to an employer?
...there's actually little empirical evidence that minimum wages, at least at the level contemplated in the U.S., actually do have an impact on unemployment in the world...
Minimum wages are usually set at rates well below market. I.e., it's a law that says "keep doing what you are doing" for the vast majority of workers.
In the rare cases when the minimum wage law changes behavior, unemployment is the typical result (see American Samoa's recent troubles, for example).
In the rare cases when the minimum wage law changes behavior, unemployment is the typical result (see American Samoa's recent troubles, for example).
Well, while we're exchanging anecdotes, we've got an $18/hr minimum wage here in Denmark, and unemployment is quite low. The main effect is that wages are more compressed than in the US. It does help that there's an aggressive upskilling program, so people automated out of a job get free education to move up to sectors with more demand.
One way of thinking of it is that a higher minimum wage, coupled with technological advancement and a strong education system, just accelerates the automation curve. Today's $10/hr labor will be tomorrow's automatable-for-$2/hr labor anyway. So people in those jobs are going to have to switch to something else in the near future. Why not automate 'em a few years earlier, and get a jump on both deploying new tech and moving people into something better? Then you can export the resulting tech, too.
I'm not referring to levels, but to rates of change. When the min wage was recently raised in American Samoa, large employers (e.g. Chicken of the Sea) immediately made plans to shutter their facilities and replace humans with machines.
Why not automate 'em a few years earlier, and get a jump on both deploying new tech and moving people into something better?
Because it would be more efficient to invest in automating other processes?
Suppose you have two processes - one process (call it A) costs a human $12/hour, another (B) costs a human $6/hour. You only have enough money to invest in automating one. It's obviously more efficient to automate A.
If the minimum wage is raised to $12/hour, then the market signal to automate A preferably to B is lost.
Job A costs 8+ human hours a day, and Job B costs 8+ human hours a day for something that doesn't really deserve a human at all; simply some humans are so desparate that they need to do it.
The market signal is intentionally changed from "automate A preferably to B" to "it will make financial sense to automate both A and B, do it".
Yes, I think that is the likely outcome if availability of capital is not the constraining factor. And my read of the U.S. economy is that availability of capital is not the constraining factor currently: lots of companies are sitting on huge piles of cash that they don't know what to do with. So they'd happily automate any A or B if it made financial sense to do so, i.e., if ratio of labor cost to robot cost favored the robots.
> there's actually little empirical evidence that minimum wages, at least at the level contemplated in the U.S., actually do have an impact on unemployment in the world world, except on part-time work by teenagers.
There are unemployed people today who would like to have a job. Isn't that sufficient empirical evidence?
> No, because lowering the minimum wage, empirically, does not produce new jobs.
But it does. As the minimum wage goes to zero, I could personally create a larger and larger number of jobs.
Lets say a restraunt owner didn't have to pay minimum wage to a cleaner, vs one who had to pay minimum wage. The one who has to pay more might decide that they don't need cleaning as much, and so forego the job offer, while the one who didn't have to pay minimum could offer a really low amount, and someone might take them up on that job.
One could view the outsourcing of jobs overseas as upgrading processes as well, if you view the process as a black box where orders go in and product goes out.
I struggle to think of a task that needs to be done by a human being that wouldn't be worth at least that.
Even hiring someone who was unskilled to do basic chores around my house would be freeing time up for me either to work at a higher rate (thus profit?) or gives me valuable relaxation time.
You're making a mistake by confusing effort and difficulty with value.
There are uncountably many human-requiring tasks that don't improve the world at all. For instance, "count all 'pretty' things and divide the number by two".
While silly this work still takes effort and you'd have a hard time finding someone to put out that effort without you paying them. You don't benefit in this scenario though because the work is silly. There is no value in having it done.
This is further complicated by subjective value. Even if we had identical homes in identical states we wouldn't identically value the same incremental improvement from having them cleaned. This is especially true across income levels.
If you set a minimum wage you ensure everyone working in that industry makes that wage in the same way that if you execute everyone over six-feet tall you ensure that nobody bumps their head. While you personally may even end up paying a bit more for a cleaner, poorer people who can't afford that would simply stop hiring cleaners. Their ex-cleaners make nothing but have conveniently been removed from the statistics so everything seems to be better. And now everyone's house is dirty.
To add to the excellent points made by the sibling comments, here's another reason why this logic doesn't necessarily apply:
Consider that, as the wage at the bottom end decreases, the supply of labor may actually increase, because people with low income may be looking for a second (or third) job, trying to work more hours to make up for their low income. In other words, the standard textbook picture of how supply and demand work need not apply to labor.
When that happens, the market for labor may never clear despite falling wages. And then everybody loses - even capitalists would lose, because low wages means low income means low spending means low revenue for firms means low profits for capitalists.
I used to believe in the law of supply and demand when applied to labour. Since coming to Australia, where the minimum wage is $14 and change (it varies by region . . . I am not an expert), however, my opinion has changed somewhat. Fast food is a bit more expensive, though not as much as you might expect. The difference, however, is that the minimum wage teenagers are generally working their asses off and earning their pay. At an equivalent place in the U.S. or Canada, the places seem to have 3 or 4 people standing around scratching themselves for every one that is sort of working.
I can't offer any deep analysis, but perhaps, with higher wages, employers are more careful with their hiring decisions and with their use of labour (or perhaps, they can simply attract better workers). Perhaps, also, the workers value their jobs more as the jobs are literally worth more.
It's actually $15.96 an hour / $606.40 a week for an adult employee (with younger people earning proportionally less)[1].
Also, it's worth noting that now the first $18,200 of income (58% if you earn minimum wage for 52 weeks) is tax-free - that is, tax will be withheld on the basis of your estimated yearly income but then returned to you at mid-year when you file your tax return. The tax rate above the tax-free threshold is then 19% [2]. So if you earned absolute minimum wage for 52 weeks a year, you'd net a total of $28,999.57 - essentially, $29,000 after tax. This does not include any further tax breaks you may receive for being a low-income earner.
There's then various social safety nets if you are minimum wage and supporting a dependent (child, disabled family member, etc.) which stack on top of that and/or give tax breaks, but I'm not really familiar with them so can't elaborate much further there.
I feel sorry for people who have built their careers around the fine art of crank turning, it is only a matter of time before their jobs are automated away.
If this piece is displayed publicly, such that anyone who is willing can work for minimum wage, what sort of artful, philosophical statement would be made when one enterprising individual attaches a solar powered motor to the crank?
Just to avoid complicating things with electricity costs. Maybe if you spliced into a city power line you could also make a statement about reliance on government subsidies.
Why don't you embrace true capitalist mentality and just steal the machine and break it open and leave the trash in a public place for public employees to clean up?
On second thought, it would be better if you hired a temp to do the above after they signed a waiver taking all responsibility for their safety and legal risk, then writing off the lawyer's bill for writing up the contract as a business expense.
No, so it's being about 33% too generous. It should be depositing a coin every 7.5 seconds if my calculations are correct.
Just think about that for a second. 7.5 seconds is a long time to wait for a penny, especially if you have to stand there running a crank the whole time, I'd just build a shack in the forest and start eating tree bark and berries instead.
What are your calculations? Medicare & Social Security should be 7.65%, federal income tax should be 10%, of which about half should fall under the standard deduction (assuming they're working about 30 hours a week). What's the rest?
Why? If hiring costs the same everywhere, companies would probably relocate back to the developed countries for other reasons (less shipping, better justice systems, etc), while the developing countries would face massive unemployment.
If anything, it'd make poor people much poorer and increase worldwide inequality.
Not to mention that such countries would have new "castes", between the relatively well paid employed and the majority of unemployed or black market workers, leading to more social instability.
Assuming what the parent said (minimum wage of $7 everywhere, without solving other problems), it really would not.
The local labor market in USA or EU wouldn't change - the laws are already there.
But actually enforcing minimum wage of $7/hour in developing countries would mean what?
If most employees are making $1/hour, and the businesses there don't have 700% profit margins, then (at least initially) they can't pay such salaries. So many of them close up shop and fire everyone. Unemployment rises, and, having almost no welfare support, the people grow hungry. They want to work, so they bunch up, start a business, earn a nice profit that amounts to $2/hour/person and.... the government comes in and breaks down the business for minimum wage violations. Is that what you want when you say "minimum wage of $7/hour globally" ?
Or do you have any other specific way to achieve "global minimum wage laws" in a significantly better way than making the laws and enforcing?
If it involves finding somebody to donate the ($7-$1) * billions people / hour wage difference, then I'd like a pony for every kid in the world while we're at it. And even actually finding such a donor would simply mean inflation, the new $7 buys the same as old $1, and we're back where we started.
The short answer is: it's complicated. I suspect a lot of economic turmoil, particularly in lower wage countries, as manufacturing would probably move back closer to the richer markets. Of course, at some point, the labour supply will run thin, wages will rise, and some outsourcing might make sense again. It might be very good for Europe and North America, but perhaps less good for developing markets. As another commenter said, however, prices might rise triggering spiralling inflation until the point is reached where things stabilise again . . . where the $7 minimum wage has been devalued to $1 or $2 or whatever the equivalent wage is currently in China.
The experiment on a small scale makes some interesting reading here:
The economies of most developing nations would be crippled. Cheap labor is a major export. Once the labor is just as cheap as in developed countries, there's no need to incur the overhead of coordinating production over long distances, so the production of many goods and services would move back to developed countries.
Prices of goods that are currently produced using cheap labor would increase dramatically. The current living wage in developed countries would no longer suffice.
Such a policy would be bad for pretty much everyone, and devastating for the people the policy is ostensibly benefits.
Money is not wealth. Money is just a convenient abstraction facilitating barter. If you have little to barter, compelling the buyer to give you $7/hr (or suitable unit equivalents) only serves to devalue what $7 represents. If you legislate paying the gas station clerk $100/hr, soon a gallon of gas will cost about $50.
Money just divides up the total value in an economy. Forcing people to trade more wealth, however represented, for less value can only wreck an economy.
The economic law of supply and demand is responsible for not existing such a law.
Links? news.ycombinator.com - it's all about the reality of creating wealth.
Deabstraction of money doesn't really make your argument any clearer as it has no bearing on the law of supply in demand except to make clear that it's arbitrary and can be changed at any time.
Gas is a commodity so the price wouldn't fluctuate like that. At least not for a long time and not for economic reasons other than greed. Of course, greed is a natural market force, but it's not like that there would be a gas shortage from everyone being able to afford to fill their 20 gallon tanks.
Who covers the difference between the $7/h gas station attendants currently make, and the new $100/h? How do they do this without raising prices? Where does the farmer buy gas so as not to have to raise the price of food to match?
Correction: government would confiscate the difference from other hard working people and encourage low-end workers to stay in those low-value jobs. Really screws up the labor market: "why work harder? I'm getting $100/hr running a cash register!"
Deabstraction does help: compelling the employer to pay a gas station clerk 30 gallons of gas per hour would screw up the economy. That work isn't worth the value of that much gas.
Mundane labor, that which pretty much anyone can do with minutes of training, is also a commodity. And you haven't lived thru the shortages from everyone wanting to fill their 20 gallon tanks at once.
NAIRU could be connected to this.
"...it was impossible for governments simultaneously to target both arbitrarily low unemployment and price stability, and that, therefore, it was government's role to seek a point on the trade-off between unemployment and inflation..."
If one were inclined to experiment, you could increase the payout of the machine to above minimum wage but with a small chance on each crank rotation that it would deliver a small electric shock.
It's a wonderful piece. One wonders if the experience of the machine would change much if it awarded 6 pennies a second, though. The purpose of the performance is that the labor is soul-crushingly pointless, right? And that anyone who turns the crank is seen as engaged in soul-crushingly pointless work, right? Those both strike me as true even if you're using my 1% Machine.
With a 1% machine, you can pull the lever for a few months then use the earnings to go recuperate and start something wonderful.
The longer you pull the lever on the minimum wage machine, the more you have to rely on it since you'll never have a buffer large enough to go do something else and improve your situation. The common pattern is you'll work overtime then end up wasting the money on conveniences make up for lost time sleeping/eating. The only escape is to work at a grueling pace and starve until you have a large enough buffer that you can look for other opportunities, but this is destroyed the moment anything unexpected happens or the energy spent looking is not fruitful.
If the 1% machine monkey is not fruitful in his attempt to escape the crank, he's still going back to that 7 cents a second. (or maybe 4 cents if his name was in the news)
That's because the lever doesn't contain the shitty working conditions, danger, pressure, back-to-back shifts, forced overtime, and the knowledge that even that pitiful machine can be snatched away from you at the whim of bastards, and society will blame it on you.
democraticunderground.com is thataway. This is ycombinator.com, where people know they can improve their working conditions and get rich even if they are in rough conditions. Grimy work, risks, pressure, 100 hour weeks (making "overtime" laughable), and knowing it could/will all come crashing down - and all with society blaming you - is what you make of it.
Imagine society as being like an array of arrays of humans. There's lots of levels, but there's a clear trend where low numbered arrays are large and high numbered arrays are small. Some of the arrays aren't full, and there's an operation where you can swap up to the array above you if there's a gap. And it's theoretically true for a number of swaps to carry you all the way up to the very short arrays up top. But there is no particular operation to grow the width of an array, in fact the high numbered ones have been getting more cramped. So the trajectory of any one human might end right the top, and you can guarantee some humans definitely will, but the expected trajectory of a human is stagnation in the low numbered arrays.
This should make you understand why the American Dream is a cruel and manipulative lie on the population level, even as it's undeniably true on the individual level.
Also note: the only thing meritocracy adds to the above is competition for the level swaps. Assuming it works perfectly, it becomes a bubble sort, where the humans with most merit semi-randomly bubble up into the highest numbered arrays. The arrays do not become larger. And now you've told the people in the low numbered arrays that they deserve all the crap they're getting.
>And now you've told the people in the low numbered arrays that they deserve all the crap they're getting.
Well, a privileged upper array member to feel that way is somewhat tolerable.
The worst for me is when some idiot from the lowest numbered arrays, by an enormous combination of factors (which he mostly attributes to his "hard work" and "effort"), jumps several levels up, and then assumes that everybody can do it, and the other lower levels are just lazy slobs for not becoming rich themselves...
Yeah. Although the thing that model warns is that even if everybody was perfect on merit - smart, educated, adaptable, personable, hard working and lucky - only the same percentage of them will rise. All merit gives you in this rat race is first call on the opportunity to rise.
Of course this is an over-simplified model. In real life the stratification of society is a bit flexible. A great many people could rise to CEO without saturating the demand. But by no means everybody.
I've spent a lot of time trying to lift people out of such conditions. Crushing realization of reality: most of them don't want to improve. Give them every opportunity and resource, and they squander it.
Incredibly un-PC to say so, but nonetheless there it is.
I don't think it's un-PC. I'm sure you are right. The point is, you look at the family, culture and environments they were brought up in and you understand where that mentality is bred.
>democraticunderground.com is thataway. This is ycombinator.com, where people know they can improve their working conditions and get rich even if they are in rough conditions.
Yes. Where mostly white people of college education with supportive families and friends know they can "improve their situation". What a feat...
As for "getting rich", if they "know" that, then they are idiots. Most of them won't get anywhere near rich, the same way most startups fail.
Oh, and "100 hour weeks" programming in a startup (which I've done myself lots of times), is BS for spoiled boys and girls compared to "100 hour weeks" (and months and years) actual poor people have to work soul-crushing jobs, not as a "bet" to get rich but just to survive day to day life and feed their family.
Good time for me to relate the story of the postal worker I met today. It was 4:30PM. She had been at work since 4AM - gets up at 2:30am from a long commute (from a more affordable area). From what she told me, she does it every day. It could be seasonal, but the point is, even during the holidays, working 13 hour shifts every day isn't acceptable. Nevertheless she was quite energetic and chipper, I really admire her ability to put on a smile in those conditions.
This was at the postal service, much less. A sort of quasi-government corporation chartered by Congress.
We need to take a hard look at the labor situation in this country, especially on the lower ends of the totem pole.
I grew up in a working class town - I'm not working class, but most of my high school friends are, and they mostly work in factories. A lot of them do just that, or listen to mp3s, or whatever. In fact I wondered why one of them posted on Facebook so much until I realised he was constantly playing with his smartphone on the factory floor.
Manual labour jobs are still shitty but it does go to show that tech can make people's lives at least marginally nicer.
199 comments
[ 3.2 ms ] story [ 187 ms ] threadInteresting name for a genre.
[1] http://en.wikipedia.org/wiki/Bona_fide_occupational_qualific...
Minimum wage laws, at some level, prohibit useful employment. But every day the pool of people whose labor is effectively worthless--zero marginal product people, as Tyler Cowen calls them--is growing larger. Very few people, left or right, seem to want to confront this fact. Mostly because it's unpalatable: when horses' labor became uneconomic, we just turned them to glue. What do we do with people?
When horses' labor became uneconomic, we just turned them to glue. What do we do with people?
Force companies to pay a living wage.
?
It's called supply and demand. If there's no demand for cheap laborers, the answer is not to make them more expensive to hire, or to force companies to pay them a minimum. That just exacerbates the problem - now they can't even work for wages they might be able to be worth. It's very difficult to get better at a job unless you're either working at it or have the resources to do it in your free time. Someone who can't get a minimum wage job probably doesn't have the resources to learn the skills to move up.
I can personally attest that it's not just teenagers trying to find minimum wage jobs. I am a teenager, and I while I was looking for a summer job (I'm now employed as a software consultant) I was regularly (i.e., every single time) competing with people in their 20s or even, in some cases, older than that, who were simply unable to find work elsewhere.
This way, they can either look for a real job to earn cash, instead of living on "vouchers/food tickets", or have to take classes to reskill/up-skill. They won't be battling for their next meal, but they also can't have leasure time.
I'm only suggesting that a minimum wage is necessary, because there is a cost of living in a modern society. Money pays for shelter. Money pays for healthcare. Money pays for education and food. And unless you're in a socialist system, that money comes from wages. So a standard should be met. Especially in cases where a corporation would otherwise consider someone's labor to be essentially worthless.
And yes, perhaps if that standard itself were fair (assuming it's currently unfair), then in some places and in some jobs it might be less than whatever the current minimum wage is, where the minimum wage exists. Elsewhere it might be higher. I don't know, and I'll readily admit I might be bringing a checkers set to a chess match when discussing economics on this forum but I honestly believe it should be something.
If the standard of living is low enough that, taking the same wages as an outsourced worker, someone doing that job could still survive, you might have an argument against the minimum wage standard there.
Otherwise, if only option to retain local employment is to pay what those outsourced workers are making, or less, in a market where more than that means living hand to mouth, then it's a distinction without a difference to me.
That's a good argument for a guaranteed minimum income. It's a bad argument for a minimum wage laws, because at least sometimes they result in people earning zero instead of low wages.
And unless you're in a socialist system, that money comes from wages.
We're already in a partly socialist system. Minimum wage laws are a convoluted and inefficient form of welfare; it's better to just directly give money to poor people, and then avoid doing anything that interferes with their ability to increase their income.
Why not? You seem to think that there is only one big company setting wages for everyone. If company X needs good workers and is only willing to pay $5 per hour, but company Y is willing to pay $12 per hour, company X is not going to get the good workers. If they want better workers they will have to raise their wages.
> without any regard to the standard of living for the employees making those wages.
The clients who pay me do so without any regard to my standard of living. They pay me with regard to the value I provide. If you are suggesting that low skill employees need to be paid based on something other than the value they provide then you are suggesting that they be given charity rather than wages.
10 years ago a college degree in business or communications was enough to land a salaried-job. Now, to obtain a well-paying job straight out of college either a STEM degree or graduate work is usually required. It is extreme to suggest that citizens either acquire a high-level of education (which many simply cannot complete) or perform work for $2 an hour.
why is that a wrong ideal to move towards to? I agree that current education is poor, but thats an implementation problem. The idea that every citizen should be highly educated is a good one, and that in the future, in order to provide value (which is rewarded in the form of money), you can't just labour.
But all organizations have a choice: I can either pay a worker $X or replace labor with capital for $Y, within the budgetary constraint $Z. If $Y < $X, they'll do that, or be outcompeted by organizations which do choose to do that. (If $Y and $X are both >$Z, well, that's when the organization closes up shop.)
That's a real choice, and it's not easily legislated into oblivion.
I understand that, and I don't mean to demonize business by any means. A minimum wage might well stifle competition somewhat, but I think the lack of one would do more harm than good. Given the choice between harm to business and harm to people, I'll choose to harm business.
I suppose for some types of jobs it may be. If a coffee shop closes, and it's competitor opens another branch to soak up the extra demand, the additional coffee shop will probably use approximately the same number of employees as the old one fired. But can the same be said of, say, factories? What if the second factory, while filling the same demand as the first, was more successful because it used more effective automation?
Perhaps the answer (at least in the US) would be to reduce the cost of reeducation to facilitate transition, and socialize healthcare? Lower wages might not be so bad where healthcare and education don't represent potential lifetime burdens for people. But then the tax burden for that would fall disproportionately on the poor wouldn't it? And also, there might just not be jobs at all to replace the ones lost.
I don't know.
The trend of people squandering their education and ending up in low paying jobs anyway disturbs me, but I think that could be solved by offering only majors that are in demand for free. Free STEM and medical sciences would be my initial suggestion, but I would want to see any decision like that backed up with some solid data (perhaps the data would reveal my concern is unfounded).
Who was harmed? The business or the people?
The $5 per hour may not seem like much, but to the teenager it is $5 per hour, plus a chance to learn to manage their own money, a chance to learn people skills, a chance to learn work ethic, a chance to have a good reference from you for later jobs, etc.
But back to your question about what happens when employers lower their wages to $2 per hour, they would probably lose all of their employees and have to raise wages if they want workers. Believe it or not, wages do correspond in some way to the amount of benefit an employee brings to a company.
Lets say you want to hire someone to clean your house. How much would you have to pay in order to attract someone with enough skill to do the job? You couldn't just say you'll pay $0.50 per hour and magically get people to clean your house at that rate. There might be some people you'd attract for $5 per hour. As the price goes up, so does the pool of people you could pull from. However, above a certain price, it isn't worth it for you to pay someone else to do it. You might do it yourself or just live with it being dirty.
If having your house cleaned is worth only $5 per hour to you and someone is willing to do house cleaning for $5 per hour should you be allowed to hire them? They probably aren't going to be willing to work for $5 per hour if they can make $10 per hour somewhere else. Does it make sense for the government to say, "You can't hire this person unless the value they provide is greater than $7.25 per hour"? I don't feel that benefits you or the person who you want to pay. I don't feel it benefits society as a whole because I think we benefit by having money flowing through more hands not fewer. Minimum wage says that transactions below a certain hourly rate are not allowed, so it prevents money from flowing through some of the hands that might get it otherwise.
The least worst situation, in my opinion, is the minimum wage, and the only cost is that it has an overhead on society (in the form of benefit pay outs for jobs that got destroyed by the minimum wage).
It might kill the economy or grow a black market, but it is easily legislated into oblivion. The thing is: legislation can decrease $X and/or increase $Y. Put a $1000 a barrel tax on oil, and proportionally on other sources of energy, and abolish income taxes and you will find that people are willing to pay close to $Z for manual labour.
Yes, that is exaggeration, but any increase of the cost of capital relative to that of manual labour will have some effect. It will either put companies out of business or it will create manual labour jobs.
Problem is that this requires international cooperation or unilateral restrictions on trade (import bans or high import tariffs)
So what is a living wage for a teenager living at home? What is a living wage for a college student going to school full time but still supported by their parents? What is a living wage for a retired grandparent that wants to 'stay young'? How about for a spouse who just wants to be out of the house because the other member of the marriage brings home sufficient disposable income?
The notion that there is a single administratively selectable price point that is the 'minimum' wage for any and all job situations is a fallacy.
I admit to not knowing the full details of how it works in Germany--not many good sources on the Internet immediately apparent, so I'd be plenty eager to hear if I'm misunderstanding how it works.
Who determines what a "living wage" is? Does it include having cable? Internet? A car?
But beyond that, why do you want to put up any barriers to what jobs companies can hire workers for? Lets say you own a company that employees 20 people and it sits on one acre of land. You need to get someone to mow the grass. You can hire company to come in for $80 per week to mow for you. They have big expensive lawnmowers and can do it very quickly. Or you can hire Joe to mow it using an older push mower you have. Joe isn't super fast and it will take him 10 hours. So you decide the value is $8 per hour in order to be on par with the company that will do it.
I wouldn't want the government to come in and make laws that make it better for you to hire the big company than Joe. I wouldn't want them to make it harder for you to justify taking a chance on hiring Joe and giving him a shot at a job just because someone doesn't think that $8 per hour is a living wage.
If Joe works for you for a year and has good track record, who knows. Maybe he will prove dependable enough that you can find other things for him to do. Maybe some of those things will be worth paying him more. Or maybe he can get a higher paying job working for the big lawn-mowing company based on his track record with you.
Do you now fire joe and hire the mowing company? or do you instead choose to pay hin $4 an hour? Ovbiously joe can't increase his speed of mowing beyond a certain limit - he is human after all.
The real underlying question is - if the value that joe provides can be instead provided via a cheaper source, then the business _should_ use that cheaper source, joe's life shouldnt and won't come into consideration. This method of thinking seems incompatible with the concepts of compassion and empathy, but it seems this is the way the real world works...
Regarding just hiring the person managing the labor to do the work: Don't forget that one person can manage multiple people.
The guy yelling at the toilet scrubber doesn't have his job because he is particularly skilled at yelling at toilet scrubbers.
But consider, if a HS dropout could learn how to wrench on a car for $2/hour, maybe they could get a full auto tech position (at a living wage) later on, without the crushing debt of trade school.
That may not make them a manager, but there are jobs that pay higher than minimum wage that require the ability to clean as a skill. Often those jobs come with new skills to be learned. And yes, someone who has some degree of management potential could definitely start out cleaning toilets for minimum wage and work their way up to managing the cleaning staff somewhere.
To make a long story short, today I'm a Senior Software Developer at a large company. I'm happy enough without any aspirations to management at this time :-)
I agree with you that you don't learn a lot of great marketable skills by scrubbing things clean. But such a job, by itself, can't stop you from learning if you're determined.
Actually, that's exactly what will happen. You'll do the job. Then you'll learn how to do it well. Then your job will be to teach others to do it well. Then you'll become an assistant manager, making sure people have the training and equipment to do it well, and handling problems that others don't have the experience for. Then you'll become a manager because you know how to handle people and make that part of the business succeed. Then you'll become a higher level manager because you know how to make a team of workers successful.
That's not a far-fetched scenario. That's exactly what happens in many organizations. It's not the only way into leadership, but it is a well-trodden path.
When your parents are struggling to make ends meet like this, what do you do as a kid? You start working night shifts in high school instead of studying for the SATs.
If you took people in this trap who were willing, and subsidized them for two years to go to community college, I feel like you'd have a huge increase in productivity, especially across generations. And it wouldn't even be that expensive, especially if you factored in increased tax revenue. Or heck, as a lesser goal, make it a goal to enable people making under $X/hour to get their GED.
Maybe this is way too idealistic.
I was lucky. Relatively rich parents, we could move into a good school district, I got to go to a good university, not really worry about money, and now I work in the software industry which is booming. But a huge part of that I owe to circumstance - I could study in school, never hungry, never worried about paying rent.
But there are also plenty of counterexamples of people who didn't have rich parents, didn't live in good school districts, and did it on their own. I know a person just like that, and she paid for school on her own working fast food shifts at night and full time in the summer, and now has a great job in biotech. $anecdote++;
> you can't see first hand that education really gets you anything.
I don't see that education really does get you anything except a stifled sense of creativity, decreased curiosity, and crushing debt. See: the current college-grad crisis.
"Education" in a modern, western sense is a red herring. Being a lifelong learner, being always curious, and having the desire to do something useful with your life -- if you have these qualities you'll do just fine.
Yes, but those people are playing on "hard" mode, so to speak. More power to them, but it's unreasonable to imply that all people in poor socioeconomic circumstances will be able to do the same.
EDIT (reply to below): Like I said, they're playing on "hard" mode. You cannot expect all or even most people playing on "hard" mode to achieve the same things that people playing on "easy" mode can achieve (people like me living in an affluent suburb, whose parents are upper-middle class, who went to fantastic local schools filled with other upper-middle class students, whose parents can afford to pay for college and any educational expense, etc.)
Why?
First, while it's not entirely a zero-sum game, there's a considerable competitiveness aspect - there aren't enough college slots or scholarships to accommodate everyone getting a good degree from a strong school, and if there were, there wouldn't be enough jobs to hire them into. So at various points, people are going to not make the cut. Do we simply say "well, if you're not in the top X% of the nation you'll have to make do on $10/hour?"
Secondly, because we can't simply wave our wands and make everyone 15-30 IQ points smarter. Getting every poor child to be as motivated and intelligent as that anecdote is at least as large a problem as income inequality generally. It's like saying "I've got a cure for cancer, but it requires time travel" - you've just reduced a Very Hard problem to a different Very Hard problem, which is a solid achievement but doesn't actually solve anything.
EDIT: And Thirdly, why should the answer be that poor people have to work their asses off to catch up just because they made the wrong choice of parents? It's like a race where some contestants have to carry dumbbells - it's great that they can actually succeed, but it's still miles and miles from fair.
False dilemma. The choices are not "either get a good degree from a strong school, or make $10/hour forever".
> we can't simply wave our wands and make everyone 15-30 IQ points smarter
I'm not sure what your point is here.
> why should the answer be that poor people have to work their asses off to catch up just because they made the wrong choice of parents
I wasn't arguing that they should, just that they could.
You're right that it's not yet that stark. Nonetheless, while we need a system which encourages, motivates, and rewards the people who succeed, we also need a system which doesn't abandon the people who don't make the cut. We can't just simply say "well, everyone had a shot" and leave it at that. There are millions of Americans who are working poor, and tens of millions more who are still struggling to get by in the land of plenty.
>I'm not sure what your point is here.
My point is that just because there are ways out for people who are unusually intelligent and unusually diligent doesn't solve the societal inequity, because not everyone can take advantage of those outs unless they suddenly get a lot smarter en masse. Again, even if we perfect meritocracy and all the incentives, we can't ignore the people who don't have IQs over 115 or whatever[1]
[1] - or if IQ is an inadequate measurement, whatever measurement you have for merit.
Suppose that we were to play a game - you are given two people, A and B, and the following information about their parents: income level and education level (name of degree/diploma(s) and schools). Do you think that you could come up with a strategy for guessing which person - A or B - will make more money at age 30, that would do better than just flipping a coin?
Formal education does offer you huge benefits. I walked out of school into a job paying many times minimum wage - I got the job because I did well on the interviews, but I got the interviews because I have a degree. Is this fair? Probably not, but it is the reality of the situation. And I do feel like I learned a ton in school. Of course, there are problems with the education system, but that's another discussion.
Is the lesson that parents' education causes this, or that parents who value education/learning produce that type of child? Not to be a "correlation != causation" parrot, but it's worth considering.
Maybe being raised in an environment where participating in "the system" (school, college, salaried job) is the norm produces children who are more likely to participate in the system themselves?
> but I got the interviews because I have a degree
I wouldn't argue against this point on another site, but it should go without saying that here in hacker land this isn't really a thing.
The world is full of examples like this, but here's the thing that is always glossed over: hard work alone isn't sufficient for success. The kid who grows up on the wrong side of the tracks not only needs to do all the right things, they also need to never do the wrong thing, which typically requires both diligence and luck.
The rich kid who gets caught with drugs? It's a youthful indiscretion, he gets off with a talking to. The poor kid gets a criminal record, which makes it many times harder to succeed.
The rich kid who get pregnant? Her parents pay for an abortion. The poor kid drops out of school to raise the child.
The rich kid who slacks off an flunks a couple classes in high school? Parents pay for some fancy prep school to polish the kids academic record. The poor kid is essentially locked out of top-tier colleges.
The rich kid who doesn't land the Goldman Sachs internship after junior year? Goes to work at his mother's friend's consulting firm and still has something "good" on his resume when he's applying for the first job out of college. The poor kid works at the supermarket.
It's not that being poor means that you can't succeed if you work hard. It's that it means that the deck is stacked against you every step of the way, and that just working hard isn't actually enough even if you do everything right that's in your power to do. You also need to be lucky. If you are sufficiently well-connected and wealthy, however, lots of "minor" things get overlooked and you can be quite successful even if you don't work especially hard and aren't especially lucky.
If they do have enough reliability to show up on time and enough motivation to go to the community college, there are parts of the country where they can work a minimum wage job and still pay for tuition and a place to stay.
The unemployment problem in unskilled or low skilled labor is largely because government benefits make is economically better for low skilled people to NOT work. In my town there was a waitress who quit her job rather than take on the more hours they wanted her to work because it would have meant losing the money she was getting from the government.
I see a lot of people whose job hunting efforts are minimal or are for jobs they know they aren't qualified for because they want to stay on unemployment. When the unemployment runs out, the real job search will begin.
For a statistical look at this see the book: The Redistribution Recession: How Labor Market Distortions Contracted the Economy
About 15% of Americans are borderline mentally retarded. They are trainable, but most of the suitable jobs have been automated. Finding interesting work for them is a real problem and has gone badly. Currently the welfare apparatus is farming them for votes, but this is not a desirable or sustainable situation.
Also, the distribution is by definition normal, and I have hard time believing 15% of population is retarded. That would mean about 1 in every 6 person I met is retarded, a number too big to believe. Now 3 genius/3 dumb out of 100 is more like what my experience has been.
We'll have good, decently skilled, enthusiastic, hardworking "zero marginal product" people simply because software/robots will be able to do it cheaper than even a subsistence (calories+shelter) wage, and in most tasks employing a human for it would be a senseless luxury.
You can hire a bunch of people to carry you around in a carriage on their backs, or you can hire people to do arithmetics for you - but almost noone does. Soon (in my and your lifetime) the same will be for all the manual, exhausting jobs; for most of the driving, service, cleaning, delivery, and retail jobs; for most of the simple clerical jobs. Even if there is no progress in AI at all, we'll come to a state where, say, 10% of population can cover all major needs (agriculture, food production, service, clothing, construction, consumer goods manufacture, transportation, medical, legal, etc) of everyone. What we'll do with the other 90% (or 99%, or even 100% if AI happens) ? They will be nice, great, fellow humans, but practically speaking, the society can do with them and can do without them. That's a choice for the society - utopias or distopias are both possible.
Both distopia and utopia is possible, but the distopia is much more likely due to the capitalist system we have, and the rich/poor gap is only going to grow.
With trade, there's always relative competitive advantage. It's probably economically more sensible for you the software developer to hire someone to mow your lawn, since you make more money in an hour of writing software than it costs to get someone to mow your lawn. Even if you're better at mowing your lawn than the person you hire - you still make more money writing software (example: You make $100/hour writing software. It takes you 1 hour to mow your lawn, or you can hire someone for 2 hours to do it for you at $20/hour. Opportunity cost to mow the lawn: $200. Gain from hiring someone to mow the lawn: $160. So even though you can mow the lawn twice as fast as the person you hire can, it's still better to hire someone.)
So now it becomes a resourcing problem - you need people who can mow your lawn. Robots can do that, but I don't think that robots can do all jobs at least not in the near future. Which is why I think that a huge part of this is a resourcing problem - you have a mismatch between skills and demand, which again I think is solved through education. Consider software developers again - I bet that if suddenly there was no demand for software developers, any one of us could be successful in another career, since at the heart of it, we're logical thinkers. We need to get as many people to that level as possible.
Furthermore, it's very important to not make poverty generational. I think that I contribute to society through my employment (at least I pay a ton of taxes), but if I wasn't as lucky as I was, I might not be in the same position to do so. I'd still be as capable, at least in terms of potential, but I wouldn't have the opportunity.
The lawnmower example isn't what we're seeing already now - we have structural unemployment of young average people who could and would do simple jobs like mowing lawns, flipping burgers and cleaning sidewalks; but there already are millions more of them than such jobs. And with every year, millions these simple jobs are going away, and unlike all the previous tech-job-shifts, this time the new industries aren't creating new jobs for them. Software developers are hiring other people for lawns and babysitting, but they are currently replacing much more people in "obsolete" industries with high-tech low-headcount disruptive business models.
I do agree with your comments about what's important and how it should be - but it's not really relevant when estimating what will actually be; wishful thinking won't solve it, especially as it's clearly beneficial for the powerful to ignore this problem as long as possible.
I would love to see what the wealth distribution looks like after a year.
Even after a few hundred transactions an interesting pattern emerged---a power law distribution of money, with the average amount of money per actor less than the starting amount of money (generally, about 66% of the starting amount). The results were similar regardless of the number of actors, the amount of starting money, and the amount per transaction (even a fixed amount exchanged per transaction would result in a similar result).
I think the result would the same for your hypothetical town.
If hard work is all it takes to succeed, then both should earn their first $1,000,000 at the same time, right?
It shocks me truly because we see the reality every single day. Two people, same job title, same responsibilities, same home life situation, and one far outperforms the other. The outperformer gets the bigger bonus, the bigger raise, and the promotion. Factored out 10 years, the outperformer ends up far "richer" than the other guy, and the other guy calls it inequality.
Yes, inequality happens. Yes, some people get a big head start. Yes, some people can tap family connections. But look around you, and I guarantee you'll observe my scenario 1,000,000 times before you observe your scenario once.
I'm not sure where you get that idea from. The purpose of my thought experiment is to show that outcome is inextricably tied to opportunity.
That guy who received $10,000,000, he's going to have a lot of opportunities. He gets to buy himself an education; he gets to invest in businesses that won't pay out for a few years, without having to worry about where his next meal will come from. He gets to treat minor ailments, before they fester into something more serious.
Too many people assume that the outcome is only dependent on effort alone. Too many people like to think that a person is destitute only because he is lazy, not because he didn't have any of the opportunities offered to those of us who grew up in a well-off environment.
In a perfect world, your financial outcome will be tied only to the amount of effort you put in. I'm trying to point out that the real world is hardly perfect.
One of the great ironies is that many people who think that what you're born with have no correlation with how your life will turn out are also the same people who think that an inheritance tax is a socialistic imposition that unjustly punishes rich parents from helping out their kids.
One among many possible positive effects of higher minimum wages is to shift the threshold at which it becomes profitable to upgrade low-tech processes to computerized ones, which can modernize sectors of the economy, and create some highly paid jobs [1]. Another positive effect is to redistribute more money to people in the remaining low-end jobs. But economies are complex and full of feedback loops, so those aren't really well established either.
[1] As an AI researcher, of course, this benefits me: humans undercutting us is one of our top problems with deploying research in the real world.
All this talk about minimum wage, haven't seen mention of living wage.
http://www.bls.gov/cps/minwage2011.htm
So it's actually only 3.1% of jobs that pay (Federal) minimum wage.
Sure the skillset might be considered less valuable, but is their actual life (and quality of it?).
[1] http://www.retailmeansjobs.com/data/CA/0 - even if the numbers are off by 300% it's still millions
Hah. Most of the EMTs not related to a fire department, that take you to hospital when you call 911 are on, well... minimum wage.
How's that for unsettling?
I think the data supports it pretty well, too. Minimum wage is reasonably well correlated with unemployment among lower-educated workers.
http://www.learnliberty.org/sites/default/files/Davies_0.pdf
One of these studies might be a better starting point: http://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies
This machine.
And really, does economics ever get much better than that? I think it rarely gets even that good.
When you have a correlation, the logical possibilities are that A causes B, B causes A, C causes both, or the correlation isn't real -- just random noise. I think the last option is pretty unlikely, and I'm having a very hard time imagining how unemployment among lower skilled workers would cause minimum wage increases, or what in the world would cause both. Particularly persuasive to me is that the strength of the relationship changes with education level -- exactly what I'd expect.
No, I suppose I don't know for sure. It's always possible something else causes both, and sure, the dots are all over the map even if there is a relationship; it is a complex system. But to be honest, I really do find that data pretty persuasive.
I didn't see anything in the Wikipedia entry that changed my mind much, either. Mostly it was unrelated to what I posted: studies specifically on teenagers (which showed more or less what I'd expect, that minimum wage increases decreased employment), and a comment that in a complex system, lots of factors affect unemployment. (Sure, of course).
I don't know, it says "Economists now disagree", but it doesn't say much about what changed their minds. I don't feel bound to change mine just because they did, though it's certainly something to take seriously.
Minimum wages are usually set at rates well below market. I.e., it's a law that says "keep doing what you are doing" for the vast majority of workers.
In the rare cases when the minimum wage law changes behavior, unemployment is the typical result (see American Samoa's recent troubles, for example).
Well, while we're exchanging anecdotes, we've got an $18/hr minimum wage here in Denmark, and unemployment is quite low. The main effect is that wages are more compressed than in the US. It does help that there's an aggressive upskilling program, so people automated out of a job get free education to move up to sectors with more demand.
One way of thinking of it is that a higher minimum wage, coupled with technological advancement and a strong education system, just accelerates the automation curve. Today's $10/hr labor will be tomorrow's automatable-for-$2/hr labor anyway. So people in those jobs are going to have to switch to something else in the near future. Why not automate 'em a few years earlier, and get a jump on both deploying new tech and moving people into something better? Then you can export the resulting tech, too.
Why not automate 'em a few years earlier, and get a jump on both deploying new tech and moving people into something better?
Because it would be more efficient to invest in automating other processes?
Suppose you have two processes - one process (call it A) costs a human $12/hour, another (B) costs a human $6/hour. You only have enough money to invest in automating one. It's obviously more efficient to automate A.
If the minimum wage is raised to $12/hour, then the market signal to automate A preferably to B is lost.
The market signal is intentionally changed from "automate A preferably to B" to "it will make financial sense to automate both A and B, do it".
There are unemployed people today who would like to have a job. Isn't that sufficient empirical evidence?
> No, because lowering the minimum wage, empirically, does not produce new jobs.
But it does. As the minimum wage goes to zero, I could personally create a larger and larger number of jobs.
Lets say a restraunt owner didn't have to pay minimum wage to a cleaner, vs one who had to pay minimum wage. The one who has to pay more might decide that they don't need cleaning as much, and so forego the job offer, while the one who didn't have to pay minimum could offer a really low amount, and someone might take them up on that job.
Even hiring someone who was unskilled to do basic chores around my house would be freeing time up for me either to work at a higher rate (thus profit?) or gives me valuable relaxation time.
There are uncountably many human-requiring tasks that don't improve the world at all. For instance, "count all 'pretty' things and divide the number by two".
While silly this work still takes effort and you'd have a hard time finding someone to put out that effort without you paying them. You don't benefit in this scenario though because the work is silly. There is no value in having it done.
This is further complicated by subjective value. Even if we had identical homes in identical states we wouldn't identically value the same incremental improvement from having them cleaned. This is especially true across income levels.
If you set a minimum wage you ensure everyone working in that industry makes that wage in the same way that if you execute everyone over six-feet tall you ensure that nobody bumps their head. While you personally may even end up paying a bit more for a cleaner, poorer people who can't afford that would simply stop hiring cleaners. Their ex-cleaners make nothing but have conveniently been removed from the statistics so everything seems to be better. And now everyone's house is dirty.
Consider that, as the wage at the bottom end decreases, the supply of labor may actually increase, because people with low income may be looking for a second (or third) job, trying to work more hours to make up for their low income. In other words, the standard textbook picture of how supply and demand work need not apply to labor.
When that happens, the market for labor may never clear despite falling wages. And then everybody loses - even capitalists would lose, because low wages means low income means low spending means low revenue for firms means low profits for capitalists.
I can't offer any deep analysis, but perhaps, with higher wages, employers are more careful with their hiring decisions and with their use of labour (or perhaps, they can simply attract better workers). Perhaps, also, the workers value their jobs more as the jobs are literally worth more.
Also, it's worth noting that now the first $18,200 of income (58% if you earn minimum wage for 52 weeks) is tax-free - that is, tax will be withheld on the basis of your estimated yearly income but then returned to you at mid-year when you file your tax return. The tax rate above the tax-free threshold is then 19% [2]. So if you earned absolute minimum wage for 52 weeks a year, you'd net a total of $28,999.57 - essentially, $29,000 after tax. This does not include any further tax breaks you may receive for being a low-income earner.
There's then various social safety nets if you are minimum wage and supporting a dependent (child, disabled family member, etc.) which stack on top of that and/or give tax breaks, but I'm not really familiar with them so can't elaborate much further there.
[1] http://www.fairwork.gov.au/pay/national-minimum-wage/pages/d... [2] http://www.ato.gov.au/individuals/content.aspx?doc=/content/...
http://blogs.law.harvard.edu/philg/2012/12/12/what-do-the-hi...
Just think about that for a second. 7.5 seconds is a long time to wait for a penny, especially if you have to stand there running a crank the whole time, I'd just build a shack in the forest and start eating tree bark and berries instead.
- What if there was a worldwide law about minimum wage at $7/hr?
- How would world economies react?
- Would it end poverty? destroy economies? ignite wars?
- Who is responsible for not existing such a law?
Interesting links?
http://i.imgur.com/9hRn0.png
Found here http://en.wikipedia.org/wiki/Minimum_wage
If anything, it'd make poor people much poorer and increase worldwide inequality.
Not to mention that such countries would have new "castes", between the relatively well paid employed and the majority of unemployed or black market workers, leading to more social instability.
But actually enforcing minimum wage of $7/hour in developing countries would mean what?
If most employees are making $1/hour, and the businesses there don't have 700% profit margins, then (at least initially) they can't pay such salaries. So many of them close up shop and fire everyone. Unemployment rises, and, having almost no welfare support, the people grow hungry. They want to work, so they bunch up, start a business, earn a nice profit that amounts to $2/hour/person and.... the government comes in and breaks down the business for minimum wage violations. Is that what you want when you say "minimum wage of $7/hour globally" ?
Or do you have any other specific way to achieve "global minimum wage laws" in a significantly better way than making the laws and enforcing?
If it involves finding somebody to donate the ($7-$1) * billions people / hour wage difference, then I'd like a pony for every kid in the world while we're at it. And even actually finding such a donor would simply mean inflation, the new $7 buys the same as old $1, and we're back where we started.
The experiment on a small scale makes some interesting reading here:
http://www.acton.org/pub/commentary/2011/07/06/minimum-wage-...
http://finance.yahoo.com/news/congress-oks-american-samoa-mi...
Prices of goods that are currently produced using cheap labor would increase dramatically. The current living wage in developed countries would no longer suffice.
Such a policy would be bad for pretty much everyone, and devastating for the people the policy is ostensibly benefits.
Money just divides up the total value in an economy. Forcing people to trade more wealth, however represented, for less value can only wreck an economy.
The economic law of supply and demand is responsible for not existing such a law.
Links? news.ycombinator.com - it's all about the reality of creating wealth.
Gas is a commodity so the price wouldn't fluctuate like that. At least not for a long time and not for economic reasons other than greed. Of course, greed is a natural market force, but it's not like that there would be a gas shortage from everyone being able to afford to fill their 20 gallon tanks.
Mundane labor, that which pretty much anyone can do with minutes of training, is also a commodity. And you haven't lived thru the shortages from everyone wanting to fill their 20 gallon tanks at once.
http://en.wikipedia.org/wiki/Nairu
Morgan and his girlfriend try to live on minimum wage for a month in Ohio. This is some of the best TV I have ever seen.
[1] http://en.wikipedia.org/wiki/List_of_30_Days_episodes#Season...
[1] http://en.wikipedia.org/wiki/Nickel_and_Dimed
The longer you pull the lever on the minimum wage machine, the more you have to rely on it since you'll never have a buffer large enough to go do something else and improve your situation. The common pattern is you'll work overtime then end up wasting the money on conveniences make up for lost time sleeping/eating. The only escape is to work at a grueling pace and starve until you have a large enough buffer that you can look for other opportunities, but this is destroyed the moment anything unexpected happens or the energy spent looking is not fruitful.
If the 1% machine monkey is not fruitful in his attempt to escape the crank, he's still going back to that 7 cents a second. (or maybe 4 cents if his name was in the news)
This should make you understand why the American Dream is a cruel and manipulative lie on the population level, even as it's undeniably true on the individual level.
Also note: the only thing meritocracy adds to the above is competition for the level swaps. Assuming it works perfectly, it becomes a bubble sort, where the humans with most merit semi-randomly bubble up into the highest numbered arrays. The arrays do not become larger. And now you've told the people in the low numbered arrays that they deserve all the crap they're getting.
Well, a privileged upper array member to feel that way is somewhat tolerable.
The worst for me is when some idiot from the lowest numbered arrays, by an enormous combination of factors (which he mostly attributes to his "hard work" and "effort"), jumps several levels up, and then assumes that everybody can do it, and the other lower levels are just lazy slobs for not becoming rich themselves...
Of course this is an over-simplified model. In real life the stratification of society is a bit flexible. A great many people could rise to CEO without saturating the demand. But by no means everybody.
Incredibly un-PC to say so, but nonetheless there it is.
Yes. Where mostly white people of college education with supportive families and friends know they can "improve their situation". What a feat...
As for "getting rich", if they "know" that, then they are idiots. Most of them won't get anywhere near rich, the same way most startups fail.
Oh, and "100 hour weeks" programming in a startup (which I've done myself lots of times), is BS for spoiled boys and girls compared to "100 hour weeks" (and months and years) actual poor people have to work soul-crushing jobs, not as a "bet" to get rich but just to survive day to day life and feed their family.
This was at the postal service, much less. A sort of quasi-government corporation chartered by Congress.
We need to take a hard look at the labor situation in this country, especially on the lower ends of the totem pole.
I would wager that this worker was earning much more than minimum wage, as well as overtime for >8h days.
Manual labour jobs are still shitty but it does go to show that tech can make people's lives at least marginally nicer.