Every time I visit, say, Macdonalds, I try to figure out how much it would cost to pay everyone in the logistic chain decently. E.g. let's suppose we agree to give 5% extra to Macdonalds at the register to distribute to its employees in some equitable fashion. So my $12 order (two happy meals and a burger, say) costs me an extra $0.60. <10 people are processing something like 200 orders per hour (I suspect it's more like 5 people and 400 orders, I'm guesstimating), so that's $12 for each of them. But let's assume there are another ten people in the logistic chain. So that's $6/h for each of them.
Now imagine the flow-on effect to the rest of the economy if people in those horrible jobs had some kind of living wage. I suspect not only would these workers be $6/h better off, I'd probably be better off too.
I really don't think the people in these jobs understand the whole picture. I already typically won't establish a McDonald's already because prices have gotten so high. It's cheaper to cook at home. If wages double and prices raise less people are going to eat there and hence less people who are employed.
These people should be focused on how they can increase their long term earning potential instead of helping to further squeeze out the middle class.
Good grief, I didn't plan to defend Macdonald's, but this sounds delusional to me. If you're trying to get food cheaply, unless your labor is pretty much free and you're incredibly efficient I very much doubt this is true.
Assuming I were to prepare a home cooked meal from scratch, the chances I would get away with less than 1h of labor (including driving to markets, shopping, and preparation) alone justifies eating out (at a restaurant, forget Macdonalds).
Certainly eating home-cooked food is healthier. And it's probably more delicious. And cooking can be enjoyable, but not as a daily grind. But don't make the cost argument unless your time is free.
Don't make the argument "unless your time is free" unless you have 0-turn around time->money converter. Which, your argument is that "Time isn't free, so neener neener", which falls flat in its face.
I'm not in the upper, or middle economic class. And making our own food is how we save a great deal of money, and also eating much healthier. We probably could eat on $50/wk for both my wife and I. But it would be junk food and bad calories and malnutrition.
Last night, we had shrimp, tilapia, roasted veggies, and a capezzi salad. That would have been ~$40 each out on the town. It cost us $10 for both of us combined. And it was a half hour work for one of us. We can't even work a half hour on no minutes notice.
Yes but your "free" time is valuable in a different way. I cheerfully cook for myself and my family on occasion, but having to do it all the time (for a family which has different conflicting dietary issues) is not much fun. (We don't eat out much for reasons of health as much as anything.) I just wouldn't make the cost argument -- it doesn't hold water.
Ok, I'll follow on just slightly here related to the cost argument. First let's take time out of the picture because there are too many factors to measure it properly... How close is a McDonalds, do you enjoy cooking, blah... blah...
Instead let's compare on cost only...
When I originally posted I did not mention the dollar value menu, that is what was immediately posted as a response by someone else. But since it is the lowest common denominator and the representation of McDonalds has cheap food... Let's try to approximate how much it costs in money only to make a "dollar burger".
The dollar burger has only 1.5 ounces of meat.
Today when I checked my local grocer 80% lean ground was $2.48 a pound. So that should make about 12 dollar burgers.
~21 cents per burger for hamburger
Hamburger buns were 68 cents for an eight pack; that's 8.5 cents per burger.
It was $2.50 for an 8 pack of presliced cheese
These were much thicker higher quality cheese, and unsliced cheese can be bought far cheaper...
But we splurged so that's another 32 cents per burger.
88 cents for a head of lettuce which will easily make 20+ dollar burgers so that's
4.4 cents per burger
So we add this up and we are now at a burger that costs 57.4 cents to make. We still need to add a sprinkle of onion crumbs as well as a squirt of mustard and ketchup; I think we can safely assume that is going to cost less than the remaining 42.6 cents.
So yes; in fact I can make an equivalent burger for less than it costs at McDonalds. If I was going to get a sandwich at McDonalds more likely I would end up with something that doesn't totally suck, like the Big Mac, which averages $4.79 in the US. For $4.79 I can make one hell of a burger.
My point was not that I can't afford to eat at McDonalds, but rather that it is a convenience purchase and eating at home is more cost conscious. If prices raise, which they will if wages go up, then more people will choose not to eat there and this will result in less jobs for the very people protesting the wages.
Preparing food at home is not actually cheaper than Macdonalds -- I defy you to create a double cheeseburger for $1. (The beef alone would cost over $1 at Walmart -- roughly $6/lb. Macdonald's gets its beef a lot cheaper.) The food at home is possibly healthier, but healthy food is even more expensive. That said, I doubt people will baulk at paying $1.05 (after all they are paying sales tax on it in many cases).
Indeed, the dollar menu is incredibly cheap, but I cringe to even call that food. I'm probably better off eaten the cheapest off brand hot dogs than those slime burgers.
That said, they are looking for a $15/hour rate. Since federal minimum wage is $7.25 an hour we are talking a potential wage cost doubling. I doubt that will only result in a 5% cost increase and that it will be much more.
Also, I'm not saying that all sales will stop, but that they will decrease. That is the substitute goods effect. McDonalds food is an inferior good. As it's prices raise more people will move away from them to substitute goods.
It's easy and fun to dismiss Macdonalds, but their "slime" burgers are made from beef (no pink slime even). I doubt that cheap hotdogs are made from better ingredients.
"I doubt that will only result in a 5% cost increase and that it will be much more."
Well -- make your case.
A Bloomberg reporter guesstimates that doubling salary costs at fast food franchises would increase prices by 25%.
But that's pretty much a worst case scenario (assumes that everyone working there is minimum wage -- in fact from the figures I see, no-one at Macdonalds earns the Federal minimum wage).
I suspect if you did the analyses what you'd see is something like this:
1) Increasing the minimum wage would have flow-on effects to other salaries causing wage increases across the board.
2) There would be price rises generated by increased labor costs, and also by more money being in the economy (this would improve GDP, but that's not a useful measure).
3) It would have a significant stimulus effect (low income people tend to spend more than save, so giving them more money has a high multiplier effect -- it's really the best kind of stimulus). This would reduce unemployment.
4) A lot of people who have multiple jobs to survive would be able to give up some of them, which would reduce unemployment.
5) Some companies would make do with fewer employees, which would increase unemployment.
6) My guess is 3 + 4 would overwhelm 5. Combined with 2, this would raise interest rates.
> These people should be focused on how they can increase their long term earning potential instead of helping to further squeeze out the middle class.
"These people" -- what, people with awful jobs?
"further squeeze out the middle class" -- how is this squeezing out the middle class?
Low end salaries in the US are a tragedy of the commons. Because people can cobble together subsistence services when collecting a "salary" (e.g. by going to the ER for medical care or collecting food stamps to eat) companies are able to get people to work for them for artificially low prices. Effectively, taxpayers are subsidizing Walmart and Macdonalds for paying people too little.
This is not the same as, for example, providing decent welfare or unemployment benefits that go away when you have a job. That drives up salaries because it makes having a shitty job seem worse than just collecting welfare. Instead we have income-based support that cuts in even for people who are working.
The middle class are being squeezed by medical costs which are in large part driven by the US healthcare situation. If our health costs were under control, the "middle class" would have enjoyed healthy salary increases over the last decade.
People with completed unskilled jobs that could be performed by a twelve year old if labor laws allowed. An unfortunately high number of unskilled, unmotivated people take jobs at places like McDonalds with no ambition to do anything better.
Raising the minimum wage ONLY raises the minimum wage in terms of earning, so yes it squeezes the middle class as their earning comes closer to the minimum wage. Raising the minimum wage results in inflation and raising costs; this directly impacts the middle class.
Quite frankly many of these are also providing services that just aren't necessary; they are purely convenience. People only have so much money to spend, so raising prices results in fewer sales as some people will switch to substitute goods. In the example I'm working with here, buying groceries and cooking at home is a cheaper substitute good for McDonalds; as the cost of McDonalds raises more people will substitute this with cooking at home.
This is just the basics of supply and demand. So yes, "these people", anyone with a low paying unskilled job should be doing anything in their power to develop needed and in demand jobs so they can raise their earning potential. Aside from the few that move up to managerial roles at a place like McDonalds there is no earning potential. These are the types of places where you get hired with no prior job experience or skills. They are not now, nor have they been in my lifetime, sustainable careers.
This is not basic supply and demand. You're making the common error of applying the laws of perfect competition to a complex, non-zero-sum marketplace. So suppose more people do substitute away from McDonalds to cooking at home; that means more jobs in the supermarket and consumer packaging industries, to name but two.
anyone with a low paying unskilled job should be doing anything in their power to develop needed and in demand jobs so they can raise their earning potential
Guess what, taking classes or developing a new skill often costs money, even with the internet, community college subsidies and so on. If you only pay people barely enough to live, then there's nothing left over for them to invest in career development.
Probably prices will not be doubled, but even more jobs will be transferred to China / other countries. And the Valley will win as well due to increased demand for automation.
Expensive labor helps automation a lot. It's the question of economy after all, if humans are cheaper than robots, there's a little incentive to spend money on deploying the bots.
It will dictate when the labor-saving technology is cheaper than cheap human labor. If fast food workers were making $200/hour, it would probably be cheaper to replace them with robots today.
Keeping that inflection point far away gives us time to solve other issues (like housing affordability) that will impact the minimum-wage class of workers extremely hard when they're automated out.
Food service workers and laborers are the most likely to be affected by these wage increases. I don't think anyone's going to be driving to China to get a Big Mac or flying in shelf stockers from Shenzhen.
Well, the oft-maligned Luddites were against automation because it was a tool used to cut them out of the income stream. To be absolutely certain, however, they weren't anti-technology, they were anti-getting-screwed.
There are a few things in play here that you may not be considering. First this minimum wage increase would probably happen over 5 years like San Francisco and Seattle are doing. So businesses would have time to prepare and it would not go from $9 -> $15. Second, these companies have many costs outside of labor. If labor were to double for just employees making less than $15/hr, the price of everything would not just double. It would have to go up, of course, but it would not double. The final thing to consider is that if every one in the USA is making more money, they will also have more money to spend. This means they are more likely to spend money at these types of businesses thus increasing daily sales for the company.
The argument you are making is an extremely common argument from before the minimum wage was instituted decades ago where minimum wage was also (relatively, of course) significantly higher than it is right now. It turns out that people do like to spend money and when they have more of it, they spend more of it.
You say if everyone is making more money they will have more money to spend, that is blatantly false. If you give everyone in the US a million dollars, do you seriously expect all prices to stay the same?
These companies can afford to pay their workers a living wage. It's not a question of whether workers "deserve" one hourly rate or another. The question is whether the working class will continue to tolerate it.
"McDonald's had a 'bad' 3rd quarter last year, which means they only made $1B in profit. It was down from 1.5B the previous year.... These companies can afford to pay their workers a living wage."
Big number fallacy... you see a big number and it doesn't occur to you to check against the other big numbers that may be involved. Wikipedia has 36,000 franchises worldwide. Assume we're paying about 100 person hours/day for a franchise, assume 360 days in a year, and you get... about 1.3 billion paid hours. (And I suspect I'm being generously conservative with 100 personhours/day for an average franchise, especially when you account for the whole thing, like the shipping and accounting and such.)
So, all else being equal (which it never is, but roll with it), and had they paid everyone another $1/hour, they'd be making a loss.
You can't just see big profit numbers and go "Oh, they've got money, surely they can pay better!" Capitalism is very efficient (in the conventional sense of the term of "using inputs well") and very competitive, in that McDonalds can't just charge 50% more and nobody changes their buying habits, and it's actually really good at shaving profit margins down to a surprisingly small level, contrary to the numerically-illiterate rhetoric often flung at it.
A lot of big corporations make billions a year, but it turns out that when you do the analysis in percentages, they're typically making waaaay less than you think. For instance, here's the 10 most profitable companies in 2013: http://www.usatoday.com/story/money/business/2013/01/20/10-p... By #10, "Wal-Mart" (how convenient, a favored bête noire of the labor community), you've got a company pulling in $467 billion in revenue, to make a "mere" $16 billion earnings. That's a 3.4% of their revenue! Yes, it would be a big pile if you just handed it to me personally, but it means that a 4% fuckup at a high enough level would be enough to fry their entire profit.
(Do you do your job with 4% tolerance?)
And those are the 10 most profitable, not even the "average" companies.
There both is, and is not, a lot of money in the system. Start trying to "distribute" the "excess" out and suddenly it looks a lot less "excess".
Further, bear in mind this is simple math. You can't argue away the math.
That basic math assumes that you add on the cost of raising the minimum wage by $1.00 instead of reallocating it from one paycheck to another. Person A now makes $999/hr and Person B now makes $11/hr from 1000 and 10 respectively. Net loss: $0.00. The real problem isn't that people making minimum wage don't make enough, it's that the wage gap is gigantic.
There aren't anywhere near enough people making "gigantic" wages to make that math work. The vast bulk of the McDonalds labor force will be middle class at best.
You're right that it's a 'big number fallacy', but you've made many mistakes here:
- $1B profit is only for a quarter, not for an entire year, for which you've attempted to roughly calculate labor costs.
- $15 minimum wage is only in the US, not worldwide. Although McDonalds does pay its workers more than $15 in some parts of the world, and somehow manages to stay in business despite the ruthless efficiency of capitalism
http://www.businessinsider.com/denmark-mcdonalds-pays-20-hou...
- It's a mistake to talk about profits as a percentage of revenue because the profit is distributed to very few hands. You scoff at "a big pile if you just handed it to me personally", but McDonald's board of directors is 14 people.
"$1B profit is only for a quarter, not for an entire year,"
Fair. $4/hour then, which is still less than we're talking about. I rather suspect I'm lowballing the labor by about 2x, also, if not more, but I'll stick with my numbers below.
"$15 minimum wage is only in the US, not worldwide. Although McDonalds does pay its workers more than $15 in some parts of the world, and somehow manages to stay in business despite the ruthless efficiency of capitalism "
I very deliberately did not try to calculate the price of raising minimum wage, because I do not have that data. I very deliberately calculated what they even theoretically could pay additionally across the board, because I think even at ~4$/hour, people are still going to be surprised at how small that number is! I do not think that when people think "Oh, big companies are just using people as wage slaves and sucking oodles of value out of everyone's pockets" that they're thinking "McDonalds is making about $4/hour/person." I think people think that McDonalds is making at least $dozens/hour/person, but there's no way that's the case.
Also, McDonalds has a lot of people who get more than minimum wage. They've got stacks of professionals, accountants, managers business people, etc. But, contra what LesZedCB asserts, you can't make up for it by just taking it out of their paycheck, because then those people will on the margins go work for someone else... plus these are still generally speaking middle class people (not even upper middle class here, I'm sure!), not people getting "rich". And if you do just try to take it out of a few execs hands, well, we're back to the problem where even all of McDonalds profits being reallocated back to the workers doesn't do as much as people think.
There is no scenario where McDonalds can pay enough to make a front-line order taker a "middle class" job.
"It's a mistake to talk about profits as a percentage of revenue because the profit is distributed to very few hands."
The board of directors do not just walk off with the profits. That's not how this works, and it's the sort of criticism that makes this sort of argument hard to take seriously. Where it does go is complicated, but theoretically it eventually ends up in the stockholders hands, and "the set of people who own McDonalds stock" is extremely widely distributed. The executives generally get a good chunk of stock and that's how they get the money, but in order to pay the executives "lots" it also means paying out to the rest of the stockholders "lots and lots and lots", and a lot of that stock is also ultimately going to middle class holders via various funds.
And again, my point is to work on recalibrating your understanding of just how much money "$1.5Billion" isn't, rather than argue for or against any particular policy. It isn't anywhere near as impressive as it sounds. It is not an infinite money fountain that can be easily "just" handed out to employees en masse and simply isn't Because Greed. And given the variance we experienced between quarters, it's a money fountain that can in the blink of an eye become Negative $1 Billion Dollars, even with labor costs where they are now. It's way more temperamental and way more fragile than it looks.
You think that the MCD board of directors gets all the profits? McDonalds is a publicly held corp, and pays dividends to shareholders, not to the board.
McDonalds only has 14,339 franchises in the US [1] -- where the pay raise debate is happening.
> Assume we're paying about 100 person hours/day for a franchise, assume 360 days [sic] in a year, and you get... about 1.3 billion paid hours.
According to the parent comment, McDonald's made $1B in profit during the 3rd quarter alone. Correcting for both the number of franchises & the quarter vs the whole year of labor yields an estimated $7.64 in profit per hypothetical hourly employee (HHE). And keep in mind that it's down from $1.5B profit previously, which corresponds to an estimated $11.46 per HHE.
> That's a [sic] 3.4% of their revenue!
McDonald's has $7.95B of earnings on $27.44B in revenue [1]; about 29%. Even if their profit is only $4B annually ($1B in Q3 x 4 qtrs.), that's still 14.6%.
> Capitalism is very efficient...
People are not. And that's the point. People making minimum wage don't always have the flexibility to take risks that would allow them to advance. "A bird in the hand" and all that often means that a stable minimum wage job is more valuable than a risky opportunity to make more.
"McDonalds only has 14,339 franchises in the US [1] -- where the pay raise debate is happening."
As I mentioned in another reply, the point was more to recalibrate understandings of the money size involved than to specifically speak to this discussion.
I'm not sure how you "corrected" for the number of franchises, then... if you did it by accounting all worldwide profit as for US franchises that is not a "correction". And regardless of the correction remember not to party too hard with "profit" amounts right now when McDonalds may very well go negative in the near future; the point I'm trying to make survives that, but it would make hash of yours. Profit is not guaranteed!
Somewhere online I saw a list of the profit margins of all the Fortune 100. Single-digit percentages were the norm. I was unable to google it up for this.
"> Capitalism is very efficient...
People are not. People making minimum wage don't always have the flexibility to take risks that would allow them to advance. "
That's a complete nonsequitor. And moreover it's a frankly stupid accusation of me you're trying to implicitly make. Give me the button to push to make everyone in the world effectively as rich as billionaires and somehow it all works out with no negative effects, and I'd push it in a heartbeat. I'd love to manifest Iain Bank's Culture. It sounds great.
But in the real world, we have to work with what resources we have, and we don't actually have anywhere near as many as people think. The rich may be rich, but divide their riches up somehow perfectly efficiently amongst everybody, and we all get a lot less than our generally-innumerate intuitions are telling us we would.
> ...you did it by accounting all worldwide profit as for US franchises that is not a "correction". [sic]
The corporation is not debating raising wages worldwide, only in the US. Their total corporate revenue (including international revenue) can be included in the calculation of whether it is "affordable". But only the workers in the US should be included in the calculation.
> Profit is not guaranteed!
The focal point of the discussion is that the current distribution of earnings marginalizes the hourly workforce. It does not have to be this way. The napkin math supports the idea that changing the proportions in the distribution could be reasonably accomplished. Furthermore, the napkin math ignores price increases, which would likely be part of any more sophisticated projections.
> That's a complete nonsequitor. And moreover it's a frankly stupid accusation of me you're trying to implicitly make.
People are not "efficient" in the economic sense. They do not make perfect decisions for themselves, even given perfect information. They will compete with each other irrationally, and even against their own best interests. The efficiency of capitalism exploits those traits. We ought to use reasonable policies and regulations to address that.
> The rich may be rich, but divide their riches up somehow perfectly efficiently amongst everybody, and we all get a lot less than our generally-innumerate intuitions are telling us we would.
I'm not arguing for carving up the wealth of the rich and redistributing it. But hourly workers should share in the gains wrought by their labor. As it stands, the top 1% takes an amazingly disproportionate share. [1]
You're speculating. There no economic evidence that increasing the minimr um wage pushes up prices significantly. The fact is there are plenty of corporations that make billions in profit while paying their workers badly - there's a lot of room to pay people better without affecting prices at all.
You misunderstood my point - I'm saying that a company that makes billions in profit could put wages up without putting prices up by redirecting some of that profit in to better pay for it's workers, rather than, say, piling money up in the bank. That is not speculation, that's very basic accounting.
> Do you expect your employer to keep his same prices and same amount of work force and just eat the labor cost?
Many will simply eat the cost, actually. The minimum-wage debate is more about politics than economics. There's not as many minimum wage workers as people think, so for very little economic cost, you can increase the quality of life for the lowest paid workers in our society.
A few businesses may be forced to change, but those are the ones that run razor-thin margins.
> What happens if you make $9 now, make $15 tomorrow, but tomorrow the prices of everything you buy suddenly doubled?"
Nothing will double in price. Given the amount of minimum wage workers that actually exist in the US, prices shouldn't increase by more than 5%. Anything more would just be opportunistic gouging.
3.3 million is about 2% of the workforce of the US. The point I'm making, is that the economic cost of the price increase (which is the argument made against minimum wage increases) is far less than the tangible quality-of-life benefits to those 3.3 million workers.
I'm for raising the minimum wage BTW. Because the pros (better life for those workers) far outweigh the cons, especially from an economic standpoint.
I don't know the numbers, but far more then 3 million will be affected. 3 million are at or below minimum wage, but how many make more than minimum wage but less than $15?
Or they'll just hire more illegals. There's 11.5 million illegals in the US already [1] (edit: vs 3.3m legal workers on or below minimum wage [3]!), a large part of which are probably doing "minimum wage" type jobs for less than minimum wage. Every rise in the cost of doing business legally will push a few more jobs towards the illegal, or law-abiding businesses to bankrupcy from lack of competitiveness. My entirely anecdotal evidence places the dishwasher illegal salary in big cities (my data is from New York in 2010 or so) at around $3/hour.
Different countries handle the issue of high minimum wage differently. Some countries have very thorough enforcement and drive the cost of everything through the roof, but end up with a more egalitarian society (I think Norway, where a beer costs as much as a large meal in neighbouring countries, counts). Singapore chooses not to have a minimum wage and to make it easy to import manual labour legally, and affords these labourers the same legal protection afforded any other resident. China uses the hukou system [2] to regulate the influx of unskilled labourers into more prosperous regions.
The US simply turns a blind eye to the rule of law when it comes to unqualified labour, which allows businesses to keep their costs low, and politicians to save face and pretend they did something "for the workers", whilst a side effect is increasing the stress on the legal unskilled residents which might even be a positive for politicians as they love a good crisis.
Conclusion: legal unskilled workers should fight for the law to be enforced, not for minimum wage to be legally increased. It would both remove competition and drive up demand for their unskilled work, and since there is no population explosion in the United States and legal immigration is incredibly regulated, should result in a natural rise of wages matching the higher cost of living in locations like Seattle.
So that's why, even with the recent strengthening of the US dollar vis à vis the Canadian dollar, things are still dirt cheap in the US compared to Canada.
I do enjoy travelling down there to Montana - ski tickets are cheaper, gas is cheaper, and good beer is much, much cheaper (I seriously love the micro-brew scene in the US. Canada has a good micro-brewing scene too, but not to the same degree).
I'm guessing there's other factors. For example, Australian prices are high because of labour (it's very hard to illegally immigrate to an island surrounded by oceans) but also because everything has to be transported over vast distances and many products have to be imported.
I'd guess the much smaller market (35m inhabitants vs 320m - Australia has 22m), the weather, the distance from production centres and major ports, and so on would impact prices as well.
As for beer it might be taxes, which Wikipedia says are amongst the highest in the world.
Seriously? If you were a Mexican national, why wouldn't you come to the US? Better jobs, more safety, more hope for your kids. Mexico has so many problems that a trip across the border solves. I have no ill will towards anyone traveling north. It's a rational response to conditions in Mexico that seem intractable.
Strange. Even though Canada strongly supports multi-culturalism, our public is equally opposed to letting illegal immigrants stay (and we certainly make it more difficult for illegal immigrants to stay).
> No, I'm more surprised that the US is so bad at dealing with illegal immigration. Do they tacitly accept it?
Some industry players benefit from having low-skilled workers that are demotivated to complain to government of labor violations, etc., so there is some of that.
OTOH, a bigger issue is that, while most people would agree that illegal immigration, per se, is bad, there is no census on how to deal with the issue.
There are groups that oppose not only illegal immigration, but are strongly concerned with controlling the level of immigration (and often with managing its origin), so that they see the solution in enforcement measures (though even groups in this category often don't agree on which enforcement measures.)
Then there are groups that are less concerned with the level of immigration than with illegality itself, and so would favor new avenues of legal immigration, or increased quotas within existing avenues, etc.
And there are additional disagreements over approaches to dealing with the existing population that is present without proper immigration status beyond the different views on "going forward" policy.
Yes, because there is no choice in the matter. The only durable way to stop mass illegal immigration would be to relieve the enormous incentives for both illegals to come in, and businesses to hire them, which means making it legal for a restaurant to hire anybody - including foreigners - to work 16 hour days for $3/hour vs 10 hour days for $9/hour. This will never happen, not even under the most hardcore Tea Party government, not even if Goldwater rose from the ashes and brought with his election victory a House and Senate majority somehow with the same spine he had.
I thought the (excellent) movie "Act of Valor" pointed out the other way this issue could be resolved. In the movie, terrorists use the people smuggling networks to allow suicide bombers into the US, targeting a few stadiums in Southern cities. This is not the first time enemies of the US try to smuggle people in illegally - the Soviets and the Cubans especially sent many agents that way, as well as infiltrating US criminal organisations (see for example Oleg Kalugin's biography [1] which explores the links between the Soviets and the Italian mafia).
In the real world, no criminal organisation would be mad enough to let that happen (much as gangs in Mexico try to avoid killing gringos) because it would mean a promotion from "criminal organisation" to "effective terrorist organisation" and we saw after 9/11 how the American public reacts to that. So long as you're "just" smuggling drugs and people, it's "just" the DEA and ATF and the odd border agent.
If they did facilitate terrorist attacks, you can bet there'd be an enormous appropriation and militarization of the border, coupled with a systematic destruction of virtually all smuggling networks on Mexican soil and maybe temporary occupation of the territory south of the border. Panama was invaded for less.
But this is not going to happen just because a few people go on strike, especially when the majority of manual labour (11m vs 3m) appears to be illegal already without much outcry from the public which tacitly understands that this is key to cheap food and service.
How many minimum wage workers are there? If you only look at the number of current minimum wage workers there may not be many, but we are talking about raising the minimum wage to $15. That means everyone under $15/hr is affected. So, I think the real question is how many people are making less than $15/hr. I skimmed this article http://en.wikipedia.org/wiki/Personal_income_in_the_United_S... and it seems that median personal income is somewhere around 30K in the US. Well, $15/hr of full time work is about 31K. Therefor the number of people who will see a rise in their wages is potentially very large. So, I think that the problems with price increases are a real issue.
Another issue I thought of is this. If min wage workers all suddenly have wage increases by law, then businesses like fast food chains might just replace many them with machines. I mean, you already know your McDonald's burger is disgusting, so probably wont mind if it gets pooped out of a dispenser like pudding. So, this policy may simply lead to layoffs.
Wawa in Pennsylvania has touch-screen sandwich ordering machines, and has since a pilot program in 2001. It briefly gained national attention when a edited clip surfaced of Mitt Romney being "amazed" by the machines.
If the median is the middle number, wouldn't that mean that around half of america makes less than $15/hr? The same wiki page says "slightly under 45% had incomes below $25,000". So a raise to $15/hr would potentially impact half the county.
That's incredibly naive. Most business owners won't eat the cost. They'll cut hours. How do I know? Because I used to work in the fast food industry as a GM. Whenever CA increased the min wage, the first thing our owner would do is ask us how much more this was going to cost us, then he'd instruct us to cut the number of hours scheduled. Because in fast food, it's not like it only affects the workers making minimum wage, it bumps the entire pay scale. So if min wage is raised by $1, everyone working hourly gets a $1 bump. For a restaurant that has say 100 man hours of labor a day, that means $100 extra cost per day right out of the owner's pocket. Multiply that by 365 and you have a pissed off owner. He can't always raise prices, and labor costs are the largest controllable expense. So what happens is that each store manager is told that they need to make everyone work harder, and they have to cut $100 worth of labor each day. So the survivors get more money, but they get worked harder; the losers get their hours cut, or they don't get hired as the positions/hours are not replaced when attrition occurs. TANSTAAFL!
I don't understand why the restaurant waited until there was a wage hike to do that. If they were able to cut hours and make the remaining people work harder in order to make up for the extra costs due to minimum wage, couldn't they have cut hours and made the remaining people work harder long before that, when instead of the savings going to offset a new expense, they would have gone into profit?
Well, first off, maybe the restaurant doesn't run on greed? Hopefully there's room in your philosophy for that to be a possibility.
Outside of that though, raising prices immediately hurts sales, but worse customer service due to the restaurant being chronically short-staffed takes longer to hurt sales. Being chronically short-staffed also makes for a worse working environment which leads to employee turnover, which is more costly in the long run, but when you're struggling to make rent this month, the long term costs may not be as apparent.
Finally, if it's a small restaurant where the owner also helps with the day-to-day operations of restaurant (maybe they're even the chef), it mean's they'll have to work even harder. The owner may just find it worth the cost to have an extra employee and be able to work just a little bit less.
Another issue is the misperception of franchisees as fat cats. Our owner had five franchises; each cost over $2M back in the 80's. The average annual sales were around 1-2 million, and he would net around 10%. So he invests $10M to make $750K a year before taxes. That's 7.5% return. Not exactly AAPLesque.
So if you increase his labor costs from 20% to 30%, you just wiped out his return. If you double it to 40% like a $15 increase would do, then he's got to either automate or cut to the bone.
And yes I realize I'm conflating figures from the 80s to today, but the percentages still hold.
Sounds like he overpaid for the franchises themselves. That's just called a bad investment.
I'd generally expect a restaurant to do twice as much in sales (or more) in a year compared to the initial cost, and be able to recuperate the initial investment in 5-10 years (one of the more recent restaurateurs I worked for paid back his investors in 3 years, and has a second location 5 years in).
But even using his sub-par numbers, $750K a year since the 80's means he's already recuperated his costs and made some serious profits since. What more does he expect? He could close them all tomorrow and be ahead. If anything, this anecdote does show just how greedy some people are.
The franchise business is just wacky really. The parent corporation owns the land you use, so they become real estate tycoons, and they can cause huge headaches to franchisees who don't play ball with their latest initiatives. It's really hard to compare them to regular restaurants though. I'm not sure if it's much different in Canada, as I've lost touch with a cousin who owned some White Spots in BC when I was a kid.
I can't speak for all owners, but our franchisee had relatively higher standards than many. He expected QSC (quality, service, cleanliness) to surpass the minimum expectations of the parent corporation. However, he was only willing to pay so much in salary. Just because we made the remaining people work harder didn't mean that things were the same in terms of QSC. Service was slower, and the place wasn't as clean. Quality didn't drop as much as the other two metrics.
Also, he had a lot of longer term employees who were making more than min wage, but still would benefit if it was raised. So it became more economical to let them go, despite the loss of their higher productivity.
Also, you can't just think in terms of the hourly rate. Increases in the hourly rate also affect worker's comp rates, Social Security contributions, etc. So an $8 increase would probably be at least a $10 cost increase to the owner.
I worked in fast food as well for a while. There ain't no such thing as a free lunch for the restaurateurs either - at some point people want more for the demands of increased productivity, and if they don't get it they'll quit. Employers have been in a buyer's market for most of the last decade, while a great many employees have done a great deal of belt-tightening. If labor pricing is such a concern for a restaurant owner, it may be time to consider raising prices or raising the quality of the offering, or watch your employees walk across the street. there's enough churn in the restaurant business that anyone who thinks they're the employer of last resort is lying to themselves.
Owners are limited by franchise agreements to what they can charge, as well as limited by what the market will bear. As wages got pushed lower and lower in fast food, QSC declined dramatically. Owners have already invested a lot in automation (steps that ironically have damaged quality), and there's only so much blood you can squeeze out.
The issue isn't that owners will fare worse, but that raising the min wage while it makes us feel good won't necessarily help lower income workers. Doubling the salary of an entry level position will only reduce the number of entry level positions. And as I'm sure your experience in fast food illustrated, there's some people who aren't even worth paying min wage. Except for a few management folks, it shouldn't be a long term job or career.
I'm fine with people exiting the market in that situation. They're not providing jobs any more, but their departure leaves underserved demand that can be met by someone else.
Just because demand is underserved doesn't mean it can be met when it's unprofitable.
I used to love flying flight sims back in the Falcon 4.0 days, and I expected flight sims to progress as hardware advanced. Nowadays the flight sim market is DOA, despite my demand.
Most will and do, judging by the amount of fast food outlets that still are in operation, and still hire people, despite the numerous wage hikes over the years.
Sounds like you just worked for an asshole. Also sounds like you guys eventually adapted to the wage hikes (I'm assuming he's still in business?).
Of course no one's happy when things become more expensive. Here they just announced a new tax on gas (making it as expensive as before the price of oil went to shit), and a new tax on booze. Guess what - people still drive, and drink beer (hopefully not at same time).
The prices will not double. According to someone on the internet†, labor is 25% of fast food revenue. The prices need only go up 25% to maintain profit margins.
Economics wil then raise its ugly fuzzy head and the balance between automation and human labor will shift, there will be more machines doing work. People already making $15/hour will eat less fast food since it is more expensive, people who have had their wages double will probably eat more fast food since they have more money. Total consumption could go either way. Total employment could go either way, it depends.
One possible outcome is that revenue gets shifted to lower paid workers who spend it, creating more jobs and a larger economy. Capital investors will get less, but they already have so much capital piled up that there is a glut and they have difficulty getting people to rent it from them (~3% prime rates).
What actually happens? That is the realm of gamblers.
technically, if labor is 25% of costs and the cost of that labor is increasing by 66%, prices would only need to rise 16.5% to maintain current rates of profitability (.25 * .66)
But raising the min to $15 is a 107% bump, so prices would have to rise by +/- 27%, before you factor on the increase in Social Security costs. The employer contrib to SS is 6.2%, and Medicare is 1.45%. So a $15 min wage actually costs the employer an additional $8.60/hour.
An even easier and more insightful way is to carve up a Big Mac. In the US, the average price for a Big Mac is $4.79.
Overhead: 30% or $1.44
Food Cost: 25% or $1.20
Labor: 25% or $1.20
Franchise Royalties: 13% or $.62
Profit: 7% or $.34
Now a Big Mac isn't as profitable as fries or soda, but those percentages are across the entire menu. Not a lot of profit for a burger...
I think a lot of devs here are not seeing the overall economics of the fastfood world, and perhaps feeling a bit of guilt due to the difference in their salaries versus the fastfood workers...
Most restaurants run on really thin margins, a percent here or there is going to eat the profit. And a lot of restaurants, unless they're super successful are right at the edge. The owner puts in long unpaid hours or something similar.
Absent overall changes to the competitive forces that drive pricing (which is complex, because this might force some companies to increase prices, which would decrease competition for companies which don't need to, which would allow them to increase prices), and assuming this pricing change doesn't make labor alternatives (eg increasing automation) economically viable, it's actually pretty reasonable to expect employers to eat the labor cost. It's probably the rational thing to see.
Remember what happened when the big financials got bailouts? One under Bush and another under Obama? The banks said, please help us, if we fail we'll take the economy with us. If you help us, we promise to make more loans and stimulate housing growth.
What actually happened was they tightened up their standards and gave out very few new loans, while dumping billions into board room bonuses. This is exactly what happens when there's a tax cut: we used to call that voodoo economics or trickle down. Sounds good in practice but it depends on the good will of executives, which has been proven largely absent time and time again.
Now, take that behavior into the board room at Walmart or Target, and instead of a windfall, it's a new expense (just flip the sign bit :-). Of course they're going to raise prices; where else will it come from? Touching share price is verbotten, as is anything in the executive suite.
I had an idea a while back that a job doesn't provide wages per-se, but a level of lifestyle.
E.g. as a software developer in Silicon Valley, my salary is somewhat large compared to the rest of the world, but my lifestyle is fairly unremarkable for a working professional (2 used cars, a house that needs updates, weekends off, vacation time, etc).
I could move somewhere with a lower cost of living, and my compensation would decrease, and if I did the same job I would probably live approximately the same lifestyle (perhaps with marginal improvements to the house considering SV's real estate situation).
If I moved up the career ladder my lifestyle would improve a bit; if I moved down my lifestyle would get a bit worse.
Using this rubric of job type = lifestyle, what kind of lifestyle is a minimum-wage job meant to support? There will always be a bottom-rung lifestyle, and those that support themselves on minimum-wage jobs will always occupy the next rung up from the bottom. The ladder itself may move up or down, but compared to fellow workers in other jobs, they will always feel the delta. And that's what this is really about, the unhappiness caused by seeing that delta.
We were never meant to support entire families on minimum wage jobs.
> False. Americans used to raise large families on minimum wage.
That's false. When minimum wage was introduced in 1938, it was for 25 cents per hour ($4.16 per hour adjusted to 2015), and was intended for low-skilled temporary jobs (they also had 44 hour work-weeks). Minimum wage only applied to 1/5th of the entire workforce in 1938. What does it apply to today?
Minimum wage jobs are supposed to be targeted at young unskilled/uneducated individuals, often times not supporting themselves nor a family (living at home while attending university or high school).
The problem is we now have a massive portion of the population attempting to live off minimum wage jobs instead of graduating into higher paid - higher skilled jobs.
We need to fix that. Raising minimum wage every few years when it perpetually becomes "not enough to feed a family on" is a near-sighted solution. How about we put money back into schools and high-skilled job training programs? That's the long-term solution.
Spot on. I'd add that many minimum-wage jobs are good for retirees who often(?) don't need the money to eat and will drop their checks right back into the economy on hobbies and other entertainment.
> Minimum wage jobs are supposed to be targeted at young unskilled/uneducated individuals...
Young, unskilled & uneducated individuals are disproportionately represented in minimum wage jobs because (by definition) they lack qualifications for other jobs. That doesn't mean that these jobs are targeted at that group.
> The problem is we now have a massive portion of the population attempting to live off minimum wage jobs...
There are only approximately 3.3 million hourly workers earning minimum wage in the US -- which works out to about 2% of the workforce. How much smaller should it be as a percentage of the workforce?
> ...instead of graduating into higher paid - higher skilled jobs.
Working sufficiently hard at a minimum wage job is not a path towards advancement. A minimum wage job is not enough to pay for college [2], and combined with aggressive part-timing isn't enough to live on [3]. How ought these low-skilled workers with two jobs and inadequate income to afford college go about "graduating into higher paid...jobs"?
> Raising minimum wage every few years when it perpetually becomes "not enough to feed a family on" is a near-sighted solution.
I agree. We should index it to inflation with automatic corrections applied every decade or so. Then we won't have to keep arguing about it.
Thanks Dwight Schrute, that's quite an assertion without anything to back it up.
Historically, and worldwide, the inception of a minimum wage was enough "for a man, his wife and two children to live in frugal comfort" (Australia). In the US, the biggest win wasn't the wage at all, but the abolition of child labor in textile plants. In this snippet from [0]:
In the meantime, various industries developed more complete codes. The Cotton Textile Code was the first of these and one of the most important. It provided for a 40-hour workweek, set a minimum weekly wage of $13 in the North and $12 in the South, and abolished child labor. [Roosevelt] said this code made him "happier than any other one thing...since I have come to Washington, for the code abolished child labor in the textile industry." He added: "After years of fruitless effort and discussion, this ancient atrocity went out in a day."
Yes. Parent is asking what (exactly) is required to provide "dignity and comfort" for the bottom-most rung on the "lifestyle ladder."
For example, if our modern standard of living is compared to medieval times... then many minimum wage workers live in relative dignity and comfort. But I'm guessing you're not using that as the basis for comparison. So please elaborate. :)
[I would try to define a base level for "dignity and comfort", but frankly, I can't even fathom living on minimum wage -- esp. here in Silicon Valley. But I would appreciate perspective from someone with a bit more grounding.]
> Some of us are interested in providing every human being with dignity and comfort, if at all possible.
Providing? Or Enabling?
How about you empower every human being to achieve dignity and comfort?
Education and high-skilled job training.
The solution isn't to just "provide", it's to empower. Providing is a short term solution... one that must be re-visited every few years. Empowering people to build themselves a future lasts forever.
> Providing dignity is enabling. And we could provide it long-term to everyone if we wanted.
We have 77 years of history proving raising minimum wage is absurdly ineffective at enabling individuals to climb out of minimum wage jobs.
Yes, one can indefinitely raise minimum wage every few years (as we have been since 1938), but that doesn't provide long term growth for the individuals trying to live on it.
Providing better and cheaper/easier access to higher education and high-skilled job training has proven time and time again to be the only permanent solution which lifts individuals out of minimum wage jobs.
That's not free, though. Even if you subsidize all the tuitition, there are study materials, the opportunity cost of attending classes, and possibly physical costs in getting to/from them and so on. Small costs like this add up to significant sums for people who earn small amounts.
Then let's take that $15/hour and send it to Haiti or Nepal, or boycott Dell and Apple until their factory workers don't have to live in cells attached to manufacturing plants.
I realize I'm being a little snarky, but seriously, give the gift of dignity and comfort for basically pocket change here: https://watsi.org
I actually had a paragraph mentioning them, but I removed it because I thought someone would downvote me for being off topic, and not mentioning retail workers, which is what the article is really about. The game can't be won either way, I guess.
Tips are largely a red herring in discussions of minimum wage, since tipped workers always earn minimum wage regardless of whether they get any tips or not. This is true under US federal law, at least, though I haven't researched how it works under state laws for minimum wage.
Despite the debate over short-term effects, I think many forget that this is a rebellion over a general and widespread shift of income and wealth toward higher-paid executives and knowledge workers, and away from lower-paid service and production workers.
There are a ton of possible reasons for this (less powerful unions, automation, globalization, etc. etc.) but my favorite is that it happened simply because it could happen; because wages concentrate power and therefore self-reinforce. The power vacuum (and therefore value vacuum) that emerged out of that shift was filled, because it was available.
This is an effort to break that self-reinforcing cycle and say, hey, we as a society do not support the idea that corporations exist solely for the benefit of shareholders; we demand that they start existing a little more for the benefit of their employees too.
We can debate about what effects it will have or not til the cows come home, but the large scale effort is sensible and commendable to create a better economic balance. So far, there's very little evidence to show that it will make the sky fall.
The minimum wage is just really inefficient way to help people. I'd much rather see a large increase in the earned income tax credit (which directly helps those who need it most, without the distorting effects of a minimum wage) or an introduction of a basic income system.
How is the Earned Income Tax Credit not an economic distortion? One could easily argue that it's a form of welfare to business as much as to people, with the government picking up the slack for employers who won't pay adequate wages. Minimum wage laws can indeed a challenge for small businesses and filter through to consumer prices, but wages are not the biggest or only expense most businesses face, and the pleas of poverty from many business owners do not stand up to rigorous scrutiny.
Make low-skill labor more expensive and you'll make it more attractive to find ways to eliminate low-skill jobs, such as the hamburger machine: http://www.gizmag.com/hamburger-machine/25159/
McDonald's is already testing ordering machines. I'm sure most of us have been to a grocery store with self checkouts.
The minimum wage doesn't necessarily cause unemployment, but it does increase unemployment amongst those with the least skills.
Your examples are instances of technology affecting employment, not effects of the minimum wage. And continuing to depress the cost of wages will not stop development of labor automation.
It doesn't stop the development of labor automation, but instead increases it, much against the interest of those that fought against the maintenance of current wages.
It's like when oil producers increase prices, as a side effect, they also increase the likelihood of a competing technology replacing them.
It makes sense in the short term, but speeds up the long term effect.
Of course, this is neither here nor there to the "aught/naught" debate.
A bird in the hand is worth two in the bush; I think most people in low-wage jobs would rather get paid a decent amount today and have some meaningful financial options than be offered an alternative of longer tenure on slim wages, which is only attractive if you don't think there's any prospect of getting any other kind of job.
Replacing human workers with machines that don't require a wage is going to happen even if the minimum wage were $1/hr.
Automation is going to become a very real problem. Increasing the minimum wage is a good idea, but eventually we're going to have to address the problem of mass unemployment when there little to no lower-tier jobs available.
We're talking about basic income (negative tax) for the unemployed, and subsidizing education to get more people into white-collar positions.
Or... eliminate the loopholes, generate a flat tax, put limits on un/under-utilized assets and reserves corporations can hold as well as reducing foreign shelters... from there, limit distribution of taxes as a percent, with 25% to the federal gov't, 25% to states/territories based on population, 10% to states/territories based on land mass and the remaining 40% as a check to every citizen that filed for taxes the prior year.
By creating a flat tax, and flat payout, you can eliminate huge swaths of welfare and entitlements in favor of a consistent system with much less bureaucracy. In order for this to work, you have to eliminate corporate taxes in favor of ensuring that companies pay out to owners/shareholders who in turn pay taxes on that income. With a flat payout, you can also reduce retirement programs as they stand.
People who browse HN should be some of the biggest advocates for this wage increase, as it's our efforts in automation that is creating such huge profit centers for these corporations. Yet instead of these profits being redistributed throughout the business they're being funneled into financial schemes to inflate stock prices.
The entire point of automation is to give the average person less work, yet the capture of the benefits has already begun by those at the top. Make no mistake, this fight will eventually end up on our doorstep as well, minimum wage increases are merely the first salvo. If we back down now we are only harming our future selves when this inane startup culture of "dedicate your every waking hour to making the VC's rich" becomes the defacto MO of tech. If neccessarily be completely selfish and realize that an increase in the minimum wage will directly cause an increase in your very own salary... if for the only reason that automating these more expensive jobs will become that much more valuable.
But even if that doesn't convince you, the economic argument is pretty simple. Minimum wage hasn't even kept up with inflation, much less cost of living in this country. You don't have to give a flying crap about someone's "lifestyle" to understand that creating a class of workers that will forever be trapped by poverty is inherently bad for anyone without enough capital squirreled away to live off the interest. If you want a healthy economy you can't have insane gaps between just the middle class and those earning the lowest wage (not even going into the gaps between higher earners).
At the very least you have to realize that your responsibility as a citizen of the US (sorry non-US people, we still like you!) is to other citizens, not the corporations.
Edit: I'll quickly address those arguing that the increase in wage will put certain businesses out of profitability: In startup land we have no sympathy for those who cannot raise/earn enough money to pay the costs for quality engineers, why should we have any sympathy for a business that cannot continue it's business model in the face of increasing it's lowest paid workers' wage? I've not infrequently seen blatant scorn towards those startups with terrible business models... let's not become advocates for MBAs who exhibit the same kind of ineptitude.
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[ 2.7 ms ] story [ 172 ms ] thread"What do you think will happen if you actually GET $15/hr?"
"Do you expect your employer to keep his same prices and same amount of work force and just eat the labor cost?"
"What happens if you make $9 now, make $15 tomorrow, but tomorrow the prices of everything you buy suddenly doubled?"
Now imagine the flow-on effect to the rest of the economy if people in those horrible jobs had some kind of living wage. I suspect not only would these workers be $6/h better off, I'd probably be better off too.
These people should be focused on how they can increase their long term earning potential instead of helping to further squeeze out the middle class.
I can make the similar much healthier, tastier, and cheaper than they can.
Assuming I were to prepare a home cooked meal from scratch, the chances I would get away with less than 1h of labor (including driving to markets, shopping, and preparation) alone justifies eating out (at a restaurant, forget Macdonalds).
Certainly eating home-cooked food is healthier. And it's probably more delicious. And cooking can be enjoyable, but not as a daily grind. But don't make the cost argument unless your time is free.
I'm not in the upper, or middle economic class. And making our own food is how we save a great deal of money, and also eating much healthier. We probably could eat on $50/wk for both my wife and I. But it would be junk food and bad calories and malnutrition.
Last night, we had shrimp, tilapia, roasted veggies, and a capezzi salad. That would have been ~$40 each out on the town. It cost us $10 for both of us combined. And it was a half hour work for one of us. We can't even work a half hour on no minutes notice.
Instead let's compare on cost only...
When I originally posted I did not mention the dollar value menu, that is what was immediately posted as a response by someone else. But since it is the lowest common denominator and the representation of McDonalds has cheap food... Let's try to approximate how much it costs in money only to make a "dollar burger".
The dollar burger has only 1.5 ounces of meat.
Today when I checked my local grocer 80% lean ground was $2.48 a pound. So that should make about 12 dollar burgers.
~21 cents per burger for hamburger
Hamburger buns were 68 cents for an eight pack; that's 8.5 cents per burger.
It was $2.50 for an 8 pack of presliced cheese These were much thicker higher quality cheese, and unsliced cheese can be bought far cheaper... But we splurged so that's another 32 cents per burger.
88 cents for a head of lettuce which will easily make 20+ dollar burgers so that's 4.4 cents per burger
So we add this up and we are now at a burger that costs 57.4 cents to make. We still need to add a sprinkle of onion crumbs as well as a squirt of mustard and ketchup; I think we can safely assume that is going to cost less than the remaining 42.6 cents.
So yes; in fact I can make an equivalent burger for less than it costs at McDonalds. If I was going to get a sandwich at McDonalds more likely I would end up with something that doesn't totally suck, like the Big Mac, which averages $4.79 in the US. For $4.79 I can make one hell of a burger.
That said, they are looking for a $15/hour rate. Since federal minimum wage is $7.25 an hour we are talking a potential wage cost doubling. I doubt that will only result in a 5% cost increase and that it will be much more.
Also, I'm not saying that all sales will stop, but that they will decrease. That is the substitute goods effect. McDonalds food is an inferior good. As it's prices raise more people will move away from them to substitute goods.
"I doubt that will only result in a 5% cost increase and that it will be much more."
Well -- make your case.
A Bloomberg reporter guesstimates that doubling salary costs at fast food franchises would increase prices by 25%.
http://www.bloomberg.com/bw/articles/2013-08-02/this-is-what...
But that's pretty much a worst case scenario (assumes that everyone working there is minimum wage -- in fact from the figures I see, no-one at Macdonalds earns the Federal minimum wage).
I suspect if you did the analyses what you'd see is something like this:
1) Increasing the minimum wage would have flow-on effects to other salaries causing wage increases across the board.
2) There would be price rises generated by increased labor costs, and also by more money being in the economy (this would improve GDP, but that's not a useful measure).
3) It would have a significant stimulus effect (low income people tend to spend more than save, so giving them more money has a high multiplier effect -- it's really the best kind of stimulus). This would reduce unemployment.
4) A lot of people who have multiple jobs to survive would be able to give up some of them, which would reduce unemployment.
5) Some companies would make do with fewer employees, which would increase unemployment.
6) My guess is 3 + 4 would overwhelm 5. Combined with 2, this would raise interest rates.
Seems like a pretty desirable outcome all round.
"These people" -- what, people with awful jobs?
"further squeeze out the middle class" -- how is this squeezing out the middle class?
Low end salaries in the US are a tragedy of the commons. Because people can cobble together subsistence services when collecting a "salary" (e.g. by going to the ER for medical care or collecting food stamps to eat) companies are able to get people to work for them for artificially low prices. Effectively, taxpayers are subsidizing Walmart and Macdonalds for paying people too little.
This is not the same as, for example, providing decent welfare or unemployment benefits that go away when you have a job. That drives up salaries because it makes having a shitty job seem worse than just collecting welfare. Instead we have income-based support that cuts in even for people who are working.
The middle class are being squeezed by medical costs which are in large part driven by the US healthcare situation. If our health costs were under control, the "middle class" would have enjoyed healthy salary increases over the last decade.
People with completed unskilled jobs that could be performed by a twelve year old if labor laws allowed. An unfortunately high number of unskilled, unmotivated people take jobs at places like McDonalds with no ambition to do anything better.
Raising the minimum wage ONLY raises the minimum wage in terms of earning, so yes it squeezes the middle class as their earning comes closer to the minimum wage. Raising the minimum wage results in inflation and raising costs; this directly impacts the middle class.
Quite frankly many of these are also providing services that just aren't necessary; they are purely convenience. People only have so much money to spend, so raising prices results in fewer sales as some people will switch to substitute goods. In the example I'm working with here, buying groceries and cooking at home is a cheaper substitute good for McDonalds; as the cost of McDonalds raises more people will substitute this with cooking at home.
This is just the basics of supply and demand. So yes, "these people", anyone with a low paying unskilled job should be doing anything in their power to develop needed and in demand jobs so they can raise their earning potential. Aside from the few that move up to managerial roles at a place like McDonalds there is no earning potential. These are the types of places where you get hired with no prior job experience or skills. They are not now, nor have they been in my lifetime, sustainable careers.
anyone with a low paying unskilled job should be doing anything in their power to develop needed and in demand jobs so they can raise their earning potential
Guess what, taking classes or developing a new skill often costs money, even with the internet, community college subsidies and so on. If you only pay people barely enough to live, then there's nothing left over for them to invest in career development.
Keeping that inflection point far away gives us time to solve other issues (like housing affordability) that will impact the minimum-wage class of workers extremely hard when they're automated out.
You mean a win for humanity. How can anyone be against automation?
The argument you are making is an extremely common argument from before the minimum wage was instituted decades ago where minimum wage was also (relatively, of course) significantly higher than it is right now. It turns out that people do like to spend money and when they have more of it, they spend more of it.
McDonald's had a 'bad' 3rd quarter last year, which means they only made $1B in profit. It was down from 1.5B the previous year.
http://www.forbes.com/sites/laurengensler/2014/10/21/mcdonal...
These companies can afford to pay their workers a living wage. It's not a question of whether workers "deserve" one hourly rate or another. The question is whether the working class will continue to tolerate it.
Big number fallacy... you see a big number and it doesn't occur to you to check against the other big numbers that may be involved. Wikipedia has 36,000 franchises worldwide. Assume we're paying about 100 person hours/day for a franchise, assume 360 days in a year, and you get... about 1.3 billion paid hours. (And I suspect I'm being generously conservative with 100 personhours/day for an average franchise, especially when you account for the whole thing, like the shipping and accounting and such.)
So, all else being equal (which it never is, but roll with it), and had they paid everyone another $1/hour, they'd be making a loss.
You can't just see big profit numbers and go "Oh, they've got money, surely they can pay better!" Capitalism is very efficient (in the conventional sense of the term of "using inputs well") and very competitive, in that McDonalds can't just charge 50% more and nobody changes their buying habits, and it's actually really good at shaving profit margins down to a surprisingly small level, contrary to the numerically-illiterate rhetoric often flung at it.
A lot of big corporations make billions a year, but it turns out that when you do the analysis in percentages, they're typically making waaaay less than you think. For instance, here's the 10 most profitable companies in 2013: http://www.usatoday.com/story/money/business/2013/01/20/10-p... By #10, "Wal-Mart" (how convenient, a favored bête noire of the labor community), you've got a company pulling in $467 billion in revenue, to make a "mere" $16 billion earnings. That's a 3.4% of their revenue! Yes, it would be a big pile if you just handed it to me personally, but it means that a 4% fuckup at a high enough level would be enough to fry their entire profit.
(Do you do your job with 4% tolerance?)
And those are the 10 most profitable, not even the "average" companies.
There both is, and is not, a lot of money in the system. Start trying to "distribute" the "excess" out and suddenly it looks a lot less "excess".
Further, bear in mind this is simple math. You can't argue away the math.
- $1B profit is only for a quarter, not for an entire year, for which you've attempted to roughly calculate labor costs.
- $15 minimum wage is only in the US, not worldwide. Although McDonalds does pay its workers more than $15 in some parts of the world, and somehow manages to stay in business despite the ruthless efficiency of capitalism http://www.businessinsider.com/denmark-mcdonalds-pays-20-hou...
- It's a mistake to talk about profits as a percentage of revenue because the profit is distributed to very few hands. You scoff at "a big pile if you just handed it to me personally", but McDonald's board of directors is 14 people.
Fair. $4/hour then, which is still less than we're talking about. I rather suspect I'm lowballing the labor by about 2x, also, if not more, but I'll stick with my numbers below.
"$15 minimum wage is only in the US, not worldwide. Although McDonalds does pay its workers more than $15 in some parts of the world, and somehow manages to stay in business despite the ruthless efficiency of capitalism "
I very deliberately did not try to calculate the price of raising minimum wage, because I do not have that data. I very deliberately calculated what they even theoretically could pay additionally across the board, because I think even at ~4$/hour, people are still going to be surprised at how small that number is! I do not think that when people think "Oh, big companies are just using people as wage slaves and sucking oodles of value out of everyone's pockets" that they're thinking "McDonalds is making about $4/hour/person." I think people think that McDonalds is making at least $dozens/hour/person, but there's no way that's the case.
Also, McDonalds has a lot of people who get more than minimum wage. They've got stacks of professionals, accountants, managers business people, etc. But, contra what LesZedCB asserts, you can't make up for it by just taking it out of their paycheck, because then those people will on the margins go work for someone else... plus these are still generally speaking middle class people (not even upper middle class here, I'm sure!), not people getting "rich". And if you do just try to take it out of a few execs hands, well, we're back to the problem where even all of McDonalds profits being reallocated back to the workers doesn't do as much as people think.
There is no scenario where McDonalds can pay enough to make a front-line order taker a "middle class" job.
"It's a mistake to talk about profits as a percentage of revenue because the profit is distributed to very few hands."
The board of directors do not just walk off with the profits. That's not how this works, and it's the sort of criticism that makes this sort of argument hard to take seriously. Where it does go is complicated, but theoretically it eventually ends up in the stockholders hands, and "the set of people who own McDonalds stock" is extremely widely distributed. The executives generally get a good chunk of stock and that's how they get the money, but in order to pay the executives "lots" it also means paying out to the rest of the stockholders "lots and lots and lots", and a lot of that stock is also ultimately going to middle class holders via various funds.
And again, my point is to work on recalibrating your understanding of just how much money "$1.5Billion" isn't, rather than argue for or against any particular policy. It isn't anywhere near as impressive as it sounds. It is not an infinite money fountain that can be easily "just" handed out to employees en masse and simply isn't Because Greed. And given the variance we experienced between quarters, it's a money fountain that can in the blink of an eye become Negative $1 Billion Dollars, even with labor costs where they are now. It's way more temperamental and way more fragile than it looks.
> Wikipedia [sic] has 36,000 franchises worldwide
McDonalds only has 14,339 franchises in the US [1] -- where the pay raise debate is happening.
> Assume we're paying about 100 person hours/day for a franchise, assume 360 days [sic] in a year, and you get... about 1.3 billion paid hours.
According to the parent comment, McDonald's made $1B in profit during the 3rd quarter alone. Correcting for both the number of franchises & the quarter vs the whole year of labor yields an estimated $7.64 in profit per hypothetical hourly employee (HHE). And keep in mind that it's down from $1.5B profit previously, which corresponds to an estimated $11.46 per HHE.
> That's a [sic] 3.4% of their revenue!
McDonald's has $7.95B of earnings on $27.44B in revenue [1]; about 29%. Even if their profit is only $4B annually ($1B in Q3 x 4 qtrs.), that's still 14.6%.
> Capitalism is very efficient...
People are not. And that's the point. People making minimum wage don't always have the flexibility to take risks that would allow them to advance. "A bird in the hand" and all that often means that a stable minimum wage job is more valuable than a risky opportunity to make more.
[1] http://www.statista.com/topics/1444/mcdonalds/
As I mentioned in another reply, the point was more to recalibrate understandings of the money size involved than to specifically speak to this discussion.
I'm not sure how you "corrected" for the number of franchises, then... if you did it by accounting all worldwide profit as for US franchises that is not a "correction". And regardless of the correction remember not to party too hard with "profit" amounts right now when McDonalds may very well go negative in the near future; the point I'm trying to make survives that, but it would make hash of yours. Profit is not guaranteed!
Somewhere online I saw a list of the profit margins of all the Fortune 100. Single-digit percentages were the norm. I was unable to google it up for this.
"> Capitalism is very efficient...
People are not. People making minimum wage don't always have the flexibility to take risks that would allow them to advance. "
That's a complete nonsequitor. And moreover it's a frankly stupid accusation of me you're trying to implicitly make. Give me the button to push to make everyone in the world effectively as rich as billionaires and somehow it all works out with no negative effects, and I'd push it in a heartbeat. I'd love to manifest Iain Bank's Culture. It sounds great.
But in the real world, we have to work with what resources we have, and we don't actually have anywhere near as many as people think. The rich may be rich, but divide their riches up somehow perfectly efficiently amongst everybody, and we all get a lot less than our generally-innumerate intuitions are telling us we would.
The corporation is not debating raising wages worldwide, only in the US. Their total corporate revenue (including international revenue) can be included in the calculation of whether it is "affordable". But only the workers in the US should be included in the calculation.
> Profit is not guaranteed!
The focal point of the discussion is that the current distribution of earnings marginalizes the hourly workforce. It does not have to be this way. The napkin math supports the idea that changing the proportions in the distribution could be reasonably accomplished. Furthermore, the napkin math ignores price increases, which would likely be part of any more sophisticated projections.
> That's a complete nonsequitor. And moreover it's a frankly stupid accusation of me you're trying to implicitly make.
People are not "efficient" in the economic sense. They do not make perfect decisions for themselves, even given perfect information. They will compete with each other irrationally, and even against their own best interests. The efficiency of capitalism exploits those traits. We ought to use reasonable policies and regulations to address that.
> The rich may be rich, but divide their riches up somehow perfectly efficiently amongst everybody, and we all get a lot less than our generally-innumerate intuitions are telling us we would.
I'm not arguing for carving up the wealth of the rich and redistributing it. But hourly workers should share in the gains wrought by their labor. As it stands, the top 1% takes an amazingly disproportionate share. [1]
[1] http://www.politifact.com/punditfact/statements/2014/jan/22/...
You're applying annual wage costs to quarterly profits.
You're speculating, too.
Many will simply eat the cost, actually. The minimum-wage debate is more about politics than economics. There's not as many minimum wage workers as people think, so for very little economic cost, you can increase the quality of life for the lowest paid workers in our society.
A few businesses may be forced to change, but those are the ones that run razor-thin margins.
> What happens if you make $9 now, make $15 tomorrow, but tomorrow the prices of everything you buy suddenly doubled?"
Nothing will double in price. Given the amount of minimum wage workers that actually exist in the US, prices shouldn't increase by more than 5%. Anything more would just be opportunistic gouging.
3.3 million is about 2% of the workforce of the US. The point I'm making, is that the economic cost of the price increase (which is the argument made against minimum wage increases) is far less than the tangible quality-of-life benefits to those 3.3 million workers.
I'm for raising the minimum wage BTW. Because the pros (better life for those workers) far outweigh the cons, especially from an economic standpoint.
Different countries handle the issue of high minimum wage differently. Some countries have very thorough enforcement and drive the cost of everything through the roof, but end up with a more egalitarian society (I think Norway, where a beer costs as much as a large meal in neighbouring countries, counts). Singapore chooses not to have a minimum wage and to make it easy to import manual labour legally, and affords these labourers the same legal protection afforded any other resident. China uses the hukou system [2] to regulate the influx of unskilled labourers into more prosperous regions.
The US simply turns a blind eye to the rule of law when it comes to unqualified labour, which allows businesses to keep their costs low, and politicians to save face and pretend they did something "for the workers", whilst a side effect is increasing the stress on the legal unskilled residents which might even be a positive for politicians as they love a good crisis.
Conclusion: legal unskilled workers should fight for the law to be enforced, not for minimum wage to be legally increased. It would both remove competition and drive up demand for their unskilled work, and since there is no population explosion in the United States and legal immigration is incredibly regulated, should result in a natural rise of wages matching the higher cost of living in locations like Seattle.
[1] http://en.wikipedia.org/wiki/Illegal_immigrant_population_of...
[2] http://en.wikipedia.org/wiki/Hukou_system
[3] http://poverty.ucdavis.edu/faq/what-are-characteristics-mini...
I do enjoy travelling down there to Montana - ski tickets are cheaper, gas is cheaper, and good beer is much, much cheaper (I seriously love the micro-brew scene in the US. Canada has a good micro-brewing scene too, but not to the same degree).
I'd guess the much smaller market (35m inhabitants vs 320m - Australia has 22m), the weather, the distance from production centres and major ports, and so on would impact prices as well.
As for beer it might be taxes, which Wikipedia says are amongst the highest in the world.
It was a little tongue-in-cheek, however I still am surprised that there are so many illegal immigrants in the US...
No, I'm more surprised that the US is so bad at dealing with illegal immigration. Do they tacitly accept it?
Some industry players benefit from having low-skilled workers that are demotivated to complain to government of labor violations, etc., so there is some of that.
OTOH, a bigger issue is that, while most people would agree that illegal immigration, per se, is bad, there is no census on how to deal with the issue.
There are groups that oppose not only illegal immigration, but are strongly concerned with controlling the level of immigration (and often with managing its origin), so that they see the solution in enforcement measures (though even groups in this category often don't agree on which enforcement measures.)
Then there are groups that are less concerned with the level of immigration than with illegality itself, and so would favor new avenues of legal immigration, or increased quotas within existing avenues, etc.
And there are additional disagreements over approaches to dealing with the existing population that is present without proper immigration status beyond the different views on "going forward" policy.
I thought the (excellent) movie "Act of Valor" pointed out the other way this issue could be resolved. In the movie, terrorists use the people smuggling networks to allow suicide bombers into the US, targeting a few stadiums in Southern cities. This is not the first time enemies of the US try to smuggle people in illegally - the Soviets and the Cubans especially sent many agents that way, as well as infiltrating US criminal organisations (see for example Oleg Kalugin's biography [1] which explores the links between the Soviets and the Italian mafia).
In the real world, no criminal organisation would be mad enough to let that happen (much as gangs in Mexico try to avoid killing gringos) because it would mean a promotion from "criminal organisation" to "effective terrorist organisation" and we saw after 9/11 how the American public reacts to that. So long as you're "just" smuggling drugs and people, it's "just" the DEA and ATF and the odd border agent.
If they did facilitate terrorist attacks, you can bet there'd be an enormous appropriation and militarization of the border, coupled with a systematic destruction of virtually all smuggling networks on Mexican soil and maybe temporary occupation of the territory south of the border. Panama was invaded for less.
But this is not going to happen just because a few people go on strike, especially when the majority of manual labour (11m vs 3m) appears to be illegal already without much outcry from the public which tacitly understands that this is key to cheap food and service.
[1] http://www.amazon.com/First-Directorate-Intelligence-Espiona...
Another issue I thought of is this. If min wage workers all suddenly have wage increases by law, then businesses like fast food chains might just replace many them with machines. I mean, you already know your McDonald's burger is disgusting, so probably wont mind if it gets pooped out of a dispenser like pudding. So, this policy may simply lead to layoffs.
Like McDonald's is currently piloting in France where you order your food from a touch-screen kiosk instead of a cashier.[1]
[1] http://www.cnet.com/news/mcdonalds-hires-7000-touch-screen-c...
Outside of that though, raising prices immediately hurts sales, but worse customer service due to the restaurant being chronically short-staffed takes longer to hurt sales. Being chronically short-staffed also makes for a worse working environment which leads to employee turnover, which is more costly in the long run, but when you're struggling to make rent this month, the long term costs may not be as apparent.
Finally, if it's a small restaurant where the owner also helps with the day-to-day operations of restaurant (maybe they're even the chef), it mean's they'll have to work even harder. The owner may just find it worth the cost to have an extra employee and be able to work just a little bit less.
So if you increase his labor costs from 20% to 30%, you just wiped out his return. If you double it to 40% like a $15 increase would do, then he's got to either automate or cut to the bone.
And yes I realize I'm conflating figures from the 80s to today, but the percentages still hold.
I'd generally expect a restaurant to do twice as much in sales (or more) in a year compared to the initial cost, and be able to recuperate the initial investment in 5-10 years (one of the more recent restaurateurs I worked for paid back his investors in 3 years, and has a second location 5 years in).
But even using his sub-par numbers, $750K a year since the 80's means he's already recuperated his costs and made some serious profits since. What more does he expect? He could close them all tomorrow and be ahead. If anything, this anecdote does show just how greedy some people are.
Also, he had a lot of longer term employees who were making more than min wage, but still would benefit if it was raised. So it became more economical to let them go, despite the loss of their higher productivity.
Also, you can't just think in terms of the hourly rate. Increases in the hourly rate also affect worker's comp rates, Social Security contributions, etc. So an $8 increase would probably be at least a $10 cost increase to the owner.
The issue isn't that owners will fare worse, but that raising the min wage while it makes us feel good won't necessarily help lower income workers. Doubling the salary of an entry level position will only reduce the number of entry level positions. And as I'm sure your experience in fast food illustrated, there's some people who aren't even worth paying min wage. Except for a few management folks, it shouldn't be a long term job or career.
I used to love flying flight sims back in the Falcon 4.0 days, and I expected flight sims to progress as hardware advanced. Nowadays the flight sim market is DOA, despite my demand.
Sounds like you just worked for an asshole. Also sounds like you guys eventually adapted to the wage hikes (I'm assuming he's still in business?).
Of course no one's happy when things become more expensive. Here they just announced a new tax on gas (making it as expensive as before the price of oil went to shit), and a new tax on booze. Guess what - people still drive, and drink beer (hopefully not at same time).
Economics wil then raise its ugly fuzzy head and the balance between automation and human labor will shift, there will be more machines doing work. People already making $15/hour will eat less fast food since it is more expensive, people who have had their wages double will probably eat more fast food since they have more money. Total consumption could go either way. Total employment could go either way, it depends.
One possible outcome is that revenue gets shifted to lower paid workers who spend it, creating more jobs and a larger economy. Capital investors will get less, but they already have so much capital piled up that there is a glut and they have difficulty getting people to rent it from them (~3% prime rates).
What actually happens? That is the realm of gamblers.
␄
† http://smallbusiness.chron.com/common-food-labor-cost-percen...
An even easier and more insightful way is to carve up a Big Mac. In the US, the average price for a Big Mac is $4.79.
Overhead: 30% or $1.44 Food Cost: 25% or $1.20 Labor: 25% or $1.20 Franchise Royalties: 13% or $.62 Profit: 7% or $.34
Now a Big Mac isn't as profitable as fries or soda, but those percentages are across the entire menu. Not a lot of profit for a burger...
I think a lot of devs here are not seeing the overall economics of the fastfood world, and perhaps feeling a bit of guilt due to the difference in their salaries versus the fastfood workers...
Wages go up 66% and prices double in response? Not gonna happen, except in the greed fantasies of a few petit bourgeosie.
What actually happened was they tightened up their standards and gave out very few new loans, while dumping billions into board room bonuses. This is exactly what happens when there's a tax cut: we used to call that voodoo economics or trickle down. Sounds good in practice but it depends on the good will of executives, which has been proven largely absent time and time again.
Now, take that behavior into the board room at Walmart or Target, and instead of a windfall, it's a new expense (just flip the sign bit :-). Of course they're going to raise prices; where else will it come from? Touching share price is verbotten, as is anything in the executive suite.
http://www.theatlantic.com/business/archive/2015/02/why-walm...
And closing stores in response:
http://www.zerohedge.com/news/2015-04-28/walmarts-mysterious...
I realized that of course they would close the stores that are no longer profitable. It's simple economics.
E.g. as a software developer in Silicon Valley, my salary is somewhat large compared to the rest of the world, but my lifestyle is fairly unremarkable for a working professional (2 used cars, a house that needs updates, weekends off, vacation time, etc).
I could move somewhere with a lower cost of living, and my compensation would decrease, and if I did the same job I would probably live approximately the same lifestyle (perhaps with marginal improvements to the house considering SV's real estate situation).
If I moved up the career ladder my lifestyle would improve a bit; if I moved down my lifestyle would get a bit worse.
Using this rubric of job type = lifestyle, what kind of lifestyle is a minimum-wage job meant to support? There will always be a bottom-rung lifestyle, and those that support themselves on minimum-wage jobs will always occupy the next rung up from the bottom. The ladder itself may move up or down, but compared to fellow workers in other jobs, they will always feel the delta. And that's what this is really about, the unhappiness caused by seeing that delta.
We were never meant to support entire families on minimum wage jobs.
False. Americans used to raise large families on minimum wage.
That's false. When minimum wage was introduced in 1938, it was for 25 cents per hour ($4.16 per hour adjusted to 2015), and was intended for low-skilled temporary jobs (they also had 44 hour work-weeks). Minimum wage only applied to 1/5th of the entire workforce in 1938. What does it apply to today?
Minimum wage jobs are supposed to be targeted at young unskilled/uneducated individuals, often times not supporting themselves nor a family (living at home while attending university or high school).
The problem is we now have a massive portion of the population attempting to live off minimum wage jobs instead of graduating into higher paid - higher skilled jobs.
We need to fix that. Raising minimum wage every few years when it perpetually becomes "not enough to feed a family on" is a near-sighted solution. How about we put money back into schools and high-skilled job training programs? That's the long-term solution.
Young, unskilled & uneducated individuals are disproportionately represented in minimum wage jobs because (by definition) they lack qualifications for other jobs. That doesn't mean that these jobs are targeted at that group.
> The problem is we now have a massive portion of the population attempting to live off minimum wage jobs...
There are only approximately 3.3 million hourly workers earning minimum wage in the US -- which works out to about 2% of the workforce. How much smaller should it be as a percentage of the workforce?
> ...instead of graduating into higher paid - higher skilled jobs.
Working sufficiently hard at a minimum wage job is not a path towards advancement. A minimum wage job is not enough to pay for college [2], and combined with aggressive part-timing isn't enough to live on [3]. How ought these low-skilled workers with two jobs and inadequate income to afford college go about "graduating into higher paid...jobs"?
> Raising minimum wage every few years when it perpetually becomes "not enough to feed a family on" is a near-sighted solution.
I agree. We should index it to inflation with automatic corrections applied every decade or so. Then we won't have to keep arguing about it.
[1] http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-mi... [2] http://www.cleveland.com/datacentral/index.ssf/2011/11/a_min... [3] http://www.theatlantic.com/business/archive/2013/07/mcdonald...
Historically, and worldwide, the inception of a minimum wage was enough "for a man, his wife and two children to live in frugal comfort" (Australia). In the US, the biggest win wasn't the wage at all, but the abolition of child labor in textile plants. In this snippet from [0]:
In the meantime, various industries developed more complete codes. The Cotton Textile Code was the first of these and one of the most important. It provided for a 40-hour workweek, set a minimum weekly wage of $13 in the North and $12 in the South, and abolished child labor. [Roosevelt] said this code made him "happier than any other one thing...since I have come to Washington, for the code abolished child labor in the textile industry." He added: "After years of fruitless effort and discussion, this ancient atrocity went out in a day."
Minimum wages for women were also a part of this.
[0]: http://www.dol.gov/dol/aboutdol/history/flsa1938.htm
For example, if our modern standard of living is compared to medieval times... then many minimum wage workers live in relative dignity and comfort. But I'm guessing you're not using that as the basis for comparison. So please elaborate. :)
[I would try to define a base level for "dignity and comfort", but frankly, I can't even fathom living on minimum wage -- esp. here in Silicon Valley. But I would appreciate perspective from someone with a bit more grounding.]
Providing? Or Enabling?
How about you empower every human being to achieve dignity and comfort?
Education and high-skilled job training.
The solution isn't to just "provide", it's to empower. Providing is a short term solution... one that must be re-visited every few years. Empowering people to build themselves a future lasts forever.
We have 77 years of history proving raising minimum wage is absurdly ineffective at enabling individuals to climb out of minimum wage jobs.
Yes, one can indefinitely raise minimum wage every few years (as we have been since 1938), but that doesn't provide long term growth for the individuals trying to live on it.
Providing better and cheaper/easier access to higher education and high-skilled job training has proven time and time again to be the only permanent solution which lifts individuals out of minimum wage jobs.
Education and training are a great way to help people move up, but we need a ground floor too, rather than a basement full of jagged rebar.
Not until we have worker bots to do all of the menial tasks that are essential for civil living.
That's not free, though. Even if you subsidize all the tuitition, there are study materials, the opportunity cost of attending classes, and possibly physical costs in getting to/from them and so on. Small costs like this add up to significant sums for people who earn small amounts.
I realize I'm being a little snarky, but seriously, give the gift of dignity and comfort for basically pocket change here: https://watsi.org
http://www.thestreet.com/story/12557757/1/5-housing-markets-...
There are a ton of possible reasons for this (less powerful unions, automation, globalization, etc. etc.) but my favorite is that it happened simply because it could happen; because wages concentrate power and therefore self-reinforce. The power vacuum (and therefore value vacuum) that emerged out of that shift was filled, because it was available.
This is an effort to break that self-reinforcing cycle and say, hey, we as a society do not support the idea that corporations exist solely for the benefit of shareholders; we demand that they start existing a little more for the benefit of their employees too.
We can debate about what effects it will have or not til the cows come home, but the large scale effort is sensible and commendable to create a better economic balance. So far, there's very little evidence to show that it will make the sky fall.
McDonald's is already testing ordering machines. I'm sure most of us have been to a grocery store with self checkouts.
The minimum wage doesn't necessarily cause unemployment, but it does increase unemployment amongst those with the least skills.
Automation is going to become a very real problem. Increasing the minimum wage is a good idea, but eventually we're going to have to address the problem of mass unemployment when there little to no lower-tier jobs available.
We're talking about basic income (negative tax) for the unemployed, and subsidizing education to get more people into white-collar positions.
By creating a flat tax, and flat payout, you can eliminate huge swaths of welfare and entitlements in favor of a consistent system with much less bureaucracy. In order for this to work, you have to eliminate corporate taxes in favor of ensuring that companies pay out to owners/shareholders who in turn pay taxes on that income. With a flat payout, you can also reduce retirement programs as they stand.
The entire point of automation is to give the average person less work, yet the capture of the benefits has already begun by those at the top. Make no mistake, this fight will eventually end up on our doorstep as well, minimum wage increases are merely the first salvo. If we back down now we are only harming our future selves when this inane startup culture of "dedicate your every waking hour to making the VC's rich" becomes the defacto MO of tech. If neccessarily be completely selfish and realize that an increase in the minimum wage will directly cause an increase in your very own salary... if for the only reason that automating these more expensive jobs will become that much more valuable.
But even if that doesn't convince you, the economic argument is pretty simple. Minimum wage hasn't even kept up with inflation, much less cost of living in this country. You don't have to give a flying crap about someone's "lifestyle" to understand that creating a class of workers that will forever be trapped by poverty is inherently bad for anyone without enough capital squirreled away to live off the interest. If you want a healthy economy you can't have insane gaps between just the middle class and those earning the lowest wage (not even going into the gaps between higher earners).
At the very least you have to realize that your responsibility as a citizen of the US (sorry non-US people, we still like you!) is to other citizens, not the corporations.
Edit: I'll quickly address those arguing that the increase in wage will put certain businesses out of profitability: In startup land we have no sympathy for those who cannot raise/earn enough money to pay the costs for quality engineers, why should we have any sympathy for a business that cannot continue it's business model in the face of increasing it's lowest paid workers' wage? I've not infrequently seen blatant scorn towards those startups with terrible business models... let's not become advocates for MBAs who exhibit the same kind of ineptitude.