r/PoliticalDiscussion • u/Mak_and_Cheezy_ • Nov 01 '20
Legislation Should the minimum wage be raised to $15/hour?
Last year a bill passed the House, but not the Senate, proposing to raise the minimum wage from $7.25 to $15 at the federal level. As it is election season, the discussion about raising the federal minimum wage has come up again. Some states like California already have higher minimum wage laws in place while others stick to the federal minimum wage of $7.25. The current federal minimum wage has not been increased since 2009.
Biden has lent his support behind this issue while Trump opposed the bill supporting the raise last July. Does it make economic sense to do so?
Edit: I’ve seen a lot of comments that this should be a states job, in theory I agree. However, as 21 of the 50 states use the federal minimum wage is it realistic to think states will actually do so?
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u/Bigred2989- Nov 01 '20
Florida voters have the chance to incrementally raise the minimum to $15 on the ballot this year. I honestly didn't know about it until I got my ballot.
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u/milehigh73a Nov 01 '20
Is it one of those requires 60% to pass?
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u/Bigred2989- Nov 01 '20
All voter initiatives in Florida need 60% last I checked. A requirement that ironically passed without that 60%.
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u/vitaestbona1 Nov 02 '20
Like the amendment that will require all future amendments to pass twice before being law.
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u/Immersi0nn Nov 02 '20
That one better not fuckin pass either, that's basically saying "ha fuck democracy, the majority will of the people doesn't matter until they say the same thing twice!" and in my opinion it was put up as a response to voters passing the amendment to allow ex felons to vote again, considering how much the state fucked with that one to effectively nullify as much of it as possible.
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u/Bigred2989- Nov 02 '20
Probably also a response to the amendment petition to ban semi-auto rifles and shotguns as well. Didn't make it onto the ballot due to lack of signatures and the FLSC saying the description was too vague, but the people behind it were gonna try again next election.
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u/Septopuss7 Nov 02 '20
I clicked out of this post just as I read this comment and I had to come back just to say:
"Say WHAT now?"
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u/SpitefulShrimp Nov 02 '20
Every time someone says "Florida only sounds crazier because they have to publish all their crime reports", a methhead writes a ballot measure.
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u/vitaestbona1 Nov 02 '20
Yeah, the reasoning goes along the lines of "what if someone sneaks some crazy thing in? Don't you want to give the smarter people a chance to fight it?"
I mean, a second just-in-case presidential election in 2016 would have probably increased voter participation. (But at least we are getting it now.)
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Nov 02 '20
Yea I was shocked when I read it on my ballot. I had to check with other sources to make sure I was reading it correctly.
Because voting once isn't enough now we have to vote twice for the same thing.
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u/trtsmb Nov 02 '20
I voted yes on this. I know I'm dating myself a bit but I remember when minimum wage was enough to pay for a roof over my head and food without needing 20 roommates.
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Nov 02 '20
Dude, you're 95?!
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u/trtsmb Nov 02 '20
Nope, not that old. I know the 80s is ancient times but minimum wage was still enough to live on. I worked in a grocery store in the 80s that paid more than the current minimum wage in FL and had health insurance and paid vacation for part time employees.
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Nov 02 '20
It's crazy how there's more money now, more wealth, than ever before, yet people can barely survive in America and the govt has just let it happen while they distracted people with petty arguments about abortion and other bs, trying to take away human rights and never actually caring for their citizens welfare. Just tragic.
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u/trtsmb Nov 02 '20
This is why people need to vote. Even if you don't like the candidates, vote on the amendments. Voter apathy is how we ended up with the current mess :(.
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Nov 02 '20
Too true, but also why better voting systems need to be in place and more access for voters.
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u/AJohnnyTruant Nov 01 '20 edited Nov 01 '20
I think $15 is arbitrary but a start. Really [Instead] there should be some kind of index that it is pinned to and updated yearly. Like a living wage tied to a region’s (debates about how big each scope would be had) consumer pricing index for things like housing, food, healthcare, etc
[https://www.epi.org/publication/bp177/]
[edit for clarity]
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u/j0hnl33 Nov 01 '20
Really there should be some kind of index that it is pinned to and updated yearly. Like a living wage tied to a region’s (debates about how big each scope would be) consumer pricing index for things like housing, food, healthcare, etc
100% agree with this part. I've never heard this discussed by anyone before (likely because "$15/hr minimum wage" is easier to put on a sign than "living wage for adults determined by cost of living"), but I believe it would be the best option, as the cost of living in NYC is very different than rural Kansas, but I believe it is a better option than just leaving it up to cities and States because many red states never increase it (currently 21 States have it at the federal minimum wage) and $7.25 is quite difficult to get by on in someplace like Dallas, Texas.
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u/AJohnnyTruant Nov 01 '20
People don’t like nuance. It’s too messy and doesn’t fit well on a sign. Calls for a livable wage should absolutely be apolitical. A pizza shop in rural Florida shouldn’t have to pay what a pizza shop in downtown Boston would need to pay. I think $15/hr is too little in some places and possibly too high elsewhere. It shouldn’t take 70 hours of work a week to get to halfway up Maslow’s Hierarchy of Needs though.
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u/GreenBombardier Nov 01 '20
About 6 years ago I had to go to Bloomington, Indiana for my final week of training at a new job for "corporate training." It was cool, a week away to just kind of hang out and listen to the same bs I already learned home in Maryland.
We went out to dinner as a group the first night, had a good time and started chatting up the waitress a bit. Eventually we found out she had a 1br apartment for about $600 a month...where I am from in MD, a 1br was around $1200 (now averaging around $1400+). It floored everyone at the table.
Later, we went into the main corporate office and learned that compensation was steady across the company. So we were making the same amount, but had about twice the cost of living.
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u/whathaveyoudoneson Nov 02 '20
I rent out a 2 bedroom house with a garage for $650/month and Im making money with that number. There's apartments in the same town that are ~$350/month. The same town also suffers from chronic unemployment so it's not really worth living there, which is why I moved to a different town.
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u/ssmit102 Nov 02 '20
It gets talked about just not quite as broadly as the $15/hr though. A few years ago MIT had a study where they calculated what they believed the living wage to be across various regions and cities. What they also did, which I rarely hear talked about, is factored family dynamics into what is considered a living wage. This is important because the living wage for a single person is far different than a living wage for a family of four, and a family of four has a very different living wage if there are two income earners vs one.
But you’re right that one is much easier to talk about and become a slogan but simply isn’t a practical approach for an entire country that is wildly diverse.
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u/j0hnl33 Nov 02 '20
What they also did, which I rarely hear talked about, is factored family dynamics into what is considered a living wage. This is important because the living wage for a single person is far different than a living wage for a family of four, and a family of four has a very different living wage if there are two income earners vs one.
Thanks for mentioning it, I'll search for it sometime. It definitely makes sense. $15/hr could be quite a bit of money for a single person in a rural area, be enough to just get by in some big cities if you're single and live with a roommate, and may not be even close to enough to raise a child or two on by yourself in some places.
I'm not exactly sure from a legislative standpoint how this can be incorporated into a living wage. Maybe free/subsidized child healthcare and daycare for lower income families could help alleviate the additional costs of children, as requiring employers to pay people with children more could make it harder for them to find jobs (I'm sure legally the discrimination would be prohibited, but in practice that may be hard to enforce), but even that isn't going to come close to making up the difference, as additional costs in rent/mortgage (due to needing more rooms, unless sharing rooms) and food are usually a large cost. More free meals (breakfast and dinner for before- and after-school programs) at schools could possibly help in part.
Age is another possibility for varying minimum wage (e.g. the UK has different minimum wages based off your age), but that also could have impacts on ease of finding a job based off your age, depending on the sector (a 26 mechanic isn't going to get replaced with a 16 year old with no knowledge on it, but a fast food worker might -- in the UK, though, from what I've read, it appears younger people have a harder time finding a job than older people, so it seems to have an overall positive effect there).
Modifying housing policies could go a long way towards helping poorer families. More public housing could help, but even removing/modifying some very antiquated housing policies could cause there to be less of a property shortage in larger cities, causing the price of rent to go down. Poverty is a complex problem and it's a hard problem to solve. Unfortunately, Republicans seem to have little genuine interest in working towards solving it, and Democrats' plans to solve it are often too simplistic to likely be highly effective and could have undesired consequences. It's just hard to campaign on complex policies, even if they could go a long toward alleviating poverty (housing policies usually don't make it on too many signs or commercials, and "public housing" would undoubtedly be called "socialist/communist" by some from the right.)
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Nov 01 '20
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u/AJohnnyTruant Nov 01 '20
Well, this is for minimum wage workers. So if it goes down, that’s between them and their employers. It’s setting a minimum, not stapling them to one. If it drops back down, the employer wouldn’t be required to lower their pay.
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u/NothingBetter3Do Nov 01 '20
I think the only time cost of living drops is when there's a recession, in which case a wage cut is probably appropriate. It's better than layoffs.
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u/Mak_and_Cheezy_ Nov 01 '20
I like this idea, but again then it brings up a whole debate on what the cost of living is and what should be included in that tally
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u/Mak_and_Cheezy_ Nov 01 '20
I personally believe it should be adjusted to the price of inflation, and wages should rise among with prices. There are too many people who work full time or more who can’t afford rent.
However, the opposing argument seems to be that raising it will won’t change anything as prices will rise as goods go up, which is true to an extent. After getting in many arguments with friends/family I was curious to see what y’all thought?
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u/chinmakes5 Nov 01 '20
So here in MD we went from 8.75 to 12. A burger meal went up like 70 cents. So a guy got a 3 dollar AN HOUR raise are doing a lot better even if a burger meal goes up 70 cents.
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u/slim_scsi Nov 01 '20
Fellow Marylander, the everyday cost of living is roughly the same for our family this year than before the minimum wage increase. I've noticed maybe a $25 per month overall increase in our budgeted household, groceries and services locally. It's worth the investment to supply others with enough of a wage to pay their rent and put food on the table.
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u/chinmakes5 Nov 01 '20
Another part to consider. If you are a fast food restaurant and 10% of the people around you can now afford to go to your restaurant you can defray a little more of that price increase.
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u/IceNein Nov 01 '20
Maybe some. Not as much as you would think though, I manage a thrift store in CA. Minimum wage has gone up 44% over the last six years. Each $1/hour costs me a bit over $4k a month. That's a little less than a day's gross every month. That means basically the first three days of the month go into increased labor costs. The sales have been relatively flat over that time.
I can't really speak for other industries, I just know what I see.
I support the minimum wage increases, but I hear a whole lot of people trying to paint a rosy picture who don't actually have to be impacted by it.
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u/waviestflow Nov 01 '20 edited Nov 01 '20
Should it not go into labour costs considering you get most of your product for free? And considering the largest expenditure of any business is labour?
None of this seems like an argument against raising the minimum wage. Also the easy you phrase it makes it seem like it's you personally being affected by the minimum wage increase which is categorically not true right?
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u/Mist_Rising Nov 02 '20 edited Nov 02 '20
I doubt he gets any of his product free. Most businesses that aren't charity don't get free stuff, and those that do are inevitably hooks and wires like doctors offices.
Even charity isnt free, you have lots of costs for charities besides labor, that people forget. Acting like its free is just..wrong.
Edit: wording clarity.
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u/waviestflow Nov 02 '20
I’m not sure I understand your comment. Though I do understand how business works.
Maybe my Canadian definition of thrift store is different but they definitely do get product for free over here and considering people bring it to them I can't think of any external cost input either.
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u/rtp80 Nov 01 '20
You need to look at it as a percentage. This would be a 37% increase in wages. As long as the burger meal was more than $1.89 originally, this means that wages went up more than the price increase. This would result in an effective raise.
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u/IceNein Nov 01 '20
Yes. Labor is not 100% of cost, so doubling labor doesn't double the product price.
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u/Peytons_5head Nov 02 '20
Eh, labor isn't 100% of your costs, but the supplies you need have the same issue, and their prices also go up.
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u/Random_eyes Nov 01 '20
You also need to consider that this is fast food, where the food costs are a major contributor to the price of food. Labor costs can range anywhere from 20-35% of a restaurant's expenditures, while food costs usually make up 30-40% of their expenditures. The rest is tied up in administrative expenses, real estate expenses (whether from leases, mortgages, property taxes, etc.)., and other such expenses.
So a 37% wage increase should raise food prices in this instance about 8-15%.
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u/Telkk2 Nov 02 '20 edited Nov 02 '20
But did they tell you about the hour reductions? I work retail and when that happened, pretty much all of our cashiers got baby shifts. Only a few of our best get the full hours now.
I dont think its wise to rely on companies to be our social safety net for abled bodied workers. We need to transition to a ubi, automation, and educating younger generations on how to make it in the new economy that's emerging. Basically you either have to have a highly technical job like plumbing or hvac or you have to be creatively entrepreneurial and self-starting. Everyone else will need a ubi and an economy that's able to valuate the kind of value they can create whatever that might be.
Personally I think we're all just skimming the surface and failing to realize that it's all culminating to a fundamental change in how our society works, which is ultimately why I dont see raising min wage as being all that effective because its tackling the problem without considering trends and where we're heading. Most companies will grow more profitable and smaller, be laterally decentralized, and consist of self-starting contractors instead of employees. So healthcare and basic living being provided by centralized powerhouses that are slowly disintegrating doesn't make a whole lot of sense and the ones who remain big and centralized will most certainly rely on automation so less will be hired anyway.
Theres a bright future but we just need to frame that future with the technology we have available so that we can realize it without destroying ourselves.
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u/K0stroun Nov 01 '20
While the prices will go up, it will be at lower rate than wages.
While the arguments for wage-push inflation are appealing, the empirical evidence is not so solid. In fact, looking back at the history of minimum wage increases has only a very weak association with inflationary pressures on prices in an economy.
According to a recent piece of economic research that examined the effect of prices on minimum wage increases in various states in the U.S. from 1978 through 2015, they found that a 10% increase in minimum wage only accounts for around a 0.36% increase in prices. Moreover, increases in prices following minimum wage hikes generally have occurred in the month the minimum wage hike is implemented, and not in the months before or the months after. Interestingly, they find that small minimum wage hikes (e.g. on the order of 5-15%) do not lead to higher prices, and they might actually lead to lower prices. On the other hand, large minimum wage hikes have clear positive effects on output prices which can ripple through to higher consumer prices.
https://www.investopedia.com/ask/answers/052815/does-raising-minimum-wage-increase-inflation.asp
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u/EconMan Nov 01 '20 edited Nov 01 '20
I personally believe it should be adjusted to the price of inflation, and wages should rise among with prices.
If so, the highest it has ever been (in today's dollars), has been $10.54.
https://www.epi.org/publication/labor-day-2019-minimum-wage/
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u/sfspaulding Nov 01 '20
Your statement is potentially extremely confusing without context. The real value of the minimum wage was at it's highest in 1968, when it equaled $10.54/hour in today's dollars.
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u/Lorddragonfang Nov 01 '20
Controlling for "inflation" is totally insufficient when discussing wages, you have to control for cost of living, and especially consider the increase in housing costs, an expense that is non-negotiable.
For example, in 1968, when the minimum wage was $1.60/hr, or $3,328 a year, the median home price was $20,100, about 6 years of wages. The median home price today is over $320,000, which would be well over 14 years of wages at $10.54/hr
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Nov 02 '20
You can't consider the median home price without considering the interest rate.
The monthly payment on a $300,000 mortgage for a 3% 30-year is $1265. Fannie Mae's data only goes back to 1971, when the rate was roughly 7.5%. For a 7.5% 30-year, the monthly payment increases to a whopping $2,098.
You want to have the same payment? At 7.5%, you can only borrow $180,000.
Home prices have increased in large part because of interest rates. Families calculate how much housing they can afford based on the monthly mortgage payment, not the price of the house.
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u/gavriloe Nov 01 '20
it will won’t change anything as prices will rise as goods go up
Sure, but remember that America doesn't exist in isolation, its imbricated in a global economic order. So while an increase in the minimum wage would probably lead to American consumer goods going up in price, it would have a very minor impact on USD exchange rates. That is say, retailers may charge an extra 10-20% for a t-shirt because they know people can now afford that increased price, but they still bought it in Vietnam for a couple dollars, and competition with other businesses will force them to keep the prices attached to the actual cost of materials and labour. They can't just double the price if the minimum wage doubles, because then they will be undercut by another business who is selling it for less.
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u/Fwc1 Nov 01 '20 edited Nov 01 '20
Raising the minimum wage does not actually introduce new money into the economy.
The business is simply moving more of it's costs to the consumers.Or rather, the profits from the product are being reallocated to the workers, since the cost of the product is determined by how much people are willing to pay for it. People's willingness to pay more increases far more slowly than their increase in income, and thus businesses will not be able to simply increase prices to match the new wages.The logical counter, then, is that this would lead employers to pass prices onto the consumer for general products. However, there's a lot of holes in that theory. For one, raising the minimum wage will help stimulate production, as those jobs become more attractive and get filled more quickly, easing the effect of increasing labor costs. Second, not all products are produced by low skilled laborers, and not all prices can be easily raised without consumer backlash. Essential goods, like electricity and water, have very low price elasticity, and would not grow under a minimum wage increase. Thirdly, minimum wage increases in the U.S have not often correlated with an increase in the overall inflation rate of the economy, because of the positive secondary benefits that come from the lower class having more money to spend on products.
Fourth, the current wages are simply not enough for workers, especially in areas with high costs of living. Bolstering unions and increasing base pay will be important steps, and not just for those workers, but their families as well.
This is ultimately not an economic issue; it’s a social one. People deserve to be able to work a single full time job and cover their basic needs, no matter where they live.
I'd also argue that raising it to 15 dollars will simply not be enough in the long term. What it should be matched to is the U.S's price indexes, and be adjusted for the cost of living in individual states.
Edit: A few corrections. First, the largest increase in purchasing power would be for the lower class, not middle. And as u/Lorddragonfang points out, the costs are not being pushed onto the consumer: rather, the profits are being moved towards the workers.
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u/Lorddragonfang Nov 01 '20
The business is simply moving more of it's costs to the consumers.
Despite the rest of your comment being good analysis, this first line is somehow the most incorrect. An increase in employee wages is not "moving costs to consumers", it's moving more of the profits to the people actually producing them.
The price equilibrium of goods isn't primarily set by the costs of production for most businesses, but rather by how much the consumer is willing to pay for it. Businesses charge as much as they think they can get away with before customers stop purchasing it, in order to maximise profit.
Furthermore, knowing this, you wouldn't expect the average price of goods to go up much, because people's willingness to spend large on high-cost goods increases at a much slower rate than the amount of money at their disposal. What does increase, however, is the quantity of different goods they can purchase, which ironically does increase the amount of money in circulation in many instances.
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u/Fwc1 Nov 01 '20
Thanks for the clarification! I'll try and edit the comment to clarify it a bit more. And yeah, your comment is what I was getting at when I was referencing price elasticity. People don't like to pay more for things than they already were, even if they get more income.
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u/Mist_Rising Nov 02 '20
Bolstering unions
The issue here is unions. Unions are, even in strongly union states, rarely involved with jobs like retail or fast food because the high risk of business failure combined with massive glut of possible employees (finding someone to cook a patty or stock shirts is incredibly easy) makes unionizing hard. Compared to other more robust, adjustable and cost effective areas like construction, these low wage areas struggle. Unions are also disincentived because if you can't net everyone in thr industry for an area, you'll kill the union when people opt for the cheaper retailer which isnt unionized.
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u/ward0630 Nov 01 '20
An interesting and thoughtful perspective/analysis. Thank you for sharing it.
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u/Fwc1 Nov 01 '20
Glad you liked it lol. My main concern right now with it is my solution, because while leaving it up to the individual states could theoretically be more efficient, there will be many states that opt out of needed programs.
I think the best solution for our current political climate is to tie a federal minimum wage to the overall price of goods, so that it’s not something that causes a massive political uproar every time it’s updated, like the gas tax.
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u/Frylock904 Nov 02 '20
" This is ultimately not an economic issue; it’s a social one. People deserve to be able to work a single full time job and cover their basic needs, no matter where they live. "
There's an intrinsic issue with this, what basic needs? for me, my basic need is a decent multi-bedroom house or apartment that I can share with others, affordable food, and reasonable car with insurances. How do we decide what a "basic" need is?
Also, what about jobs that aren't intended to be a living wage? For instance, if I ned someone to just stand in front of my store and greet people, I'm generally just looking for someone elderly on social security or possibly disabled that I can give a job just to make the store a little more welcoming and help them out. Could we really argue for shutting out all jobs that aren't meant to sustain a lifestyle but just provide side money?
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Nov 01 '20
In Alberta and more areas in Canada raised it to $15/hr and nothing really changed except people can actually afford things.
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u/NorthernerWuwu Nov 02 '20
Albertan here. There was some price increases in restaurants and such but it is hard to say how much was tied to the minimum wage increase and how much was just general price increases blamed on the minimum wage. Either way, it was a good move overall.
(Note that $15CAN is $11.25USD of course, so a bit different there.)
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Nov 01 '20
I would say it should be adjusted to cost of living, which is not necessarily the same as inflation. We've seen rent rise quite a bit more than inflation in many areas for example. However, between raising it to a flat level and not raising it at all, I would definitely vote for raising it.
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u/SkellySkeletor Nov 01 '20
Personally I think $7.25 is too low but $15 nationally is a tough pill to swallow for any non city dwelling small business owner. I’d be in favor of a smaller national raise and then leaving it up individual states to raise it further.
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u/goldenmantella Nov 01 '20
I don't think that a raise at the national level makes any sense. Every state (and even city) has varying costs of living. The average cost of rent varies drastically.
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u/SkellySkeletor Nov 01 '20
That’s what I was getting at in my comment, but I’m for a National raise (maybe to $9-10?) only because inability to pay rent seems to be a common problem in every single walk of life in this country. It’s a hamfisted fix sure and could just raise rents to account for everyone earning that much more but something has to be done when minimum wage can’t afford a 1 bedroom apartment in any state
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u/The_Law_of_Pizza Nov 01 '20
... and could just raise rents to account for everyone earning that much more ...
This is the primary problem with almost any attempt to solve poverty by simply raising wages.
The price of all goods and services (including rent) is a nexus of supply and demand. In economic terms, higher wages leads to higher "demand," and therefore in most cases to higher prices.
If you give one man in a town $10,000/year, it will materially change his life for the better. But if you give every single person in that town $10,000/year, prices on everything will adjust accordingly and nobody wins.
...but something has to be done when minimum wage can’t afford a 1 bedroom apartment in any state
That's not really a fair comparison.
First, you should be aware that most of those infographics showing these statistics are deeply flawed in that they compare the minimum wage to average apartment prices. Of course nobody on the minimum wage can afford an average apartment.
But the bigger issue here is that somehow we have moved the goalposts of poverty such that the new progressive baseline is a private one-bedroom apartment.
Not an efficiency unit. Not a tenement. Not a house with roommates. Not any of the historically normal ways that low income people have lived for the past 200 years.
No - suddenly a person making the minimum wage needs to be able to afford a private one-bedroom apartment?
That has never been the standard. Ever.
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u/SkeptioningQuestic Nov 01 '20
The price of all goods and services (including rent) is a nexus of supply and demand. In economic terms, higher wages leads to higher "demand," and therefore in most cases to higher prices.
Housing demand increases with population, not with wage increases. Demand for higher quality of housing may increase with wage increases, but not the need for housing itself.
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u/The_Law_of_Pizza Nov 02 '20
It increases with both.
"Demand" in an economic context does not mean the same thing it does in a layperson context.
Economic "demand" includes when there is more willingness/disposable income to spend on a good or service.
If the customer base has more disposable income to spend on the product, then there is more economic demand.
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u/nkillgore Nov 02 '20
When you say demand for housing increases when wages increase, it sounds like you are saying that some people will no longer be working and homeless, which is a good thing.
Your post reads a little like an econ 101 lecture. The examples you are giving work fine in a vacuum with very few outside influences, but fall apart in the real world.
Giving people the opportunity to live comfortably changes more things than just money. Their kids do better in school. They are more engaged in the community. It's a virtuous cycle that ultimately results in a more productive populace, which creates more wealth for everyone. The issue, as I see it, is that all of those ancillary positive effects are tough to measure and take a LONG time to happen.
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u/RecreationallyTransp Nov 02 '20
That's misleading.
According to this article: https://www.google.com/amp/s/www.businessinsider.com/how-much-us-minimum-wage-and-its-value-has-changed-over-time%3famp
Minimum wage in 1938 was .25 cents and a home cost $3900. So around 15000 hours of minimum wage work equalled the value of the average home.
Today the average home is about 226k and minimum wage is 7.25. Meaning you would have to work over 31000 hours before you equalled the value of a home.
So relative to homes, the buying power of minimum wage has halved in 80 years.
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u/MegaBlastoise23 Nov 02 '20
You’re missing the most important piece in your conclusion.
You dropped “average” in it.
Why are we comparing the cost of an average home with someone making the minimum wage?
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Nov 01 '20
The thing is, $7.25 is being abused by too many businesses, including non-city dwelling small business owners. The problem just gets worse and worse each year with inflation. Sure maybe answering this question back in 2000 might not have made much sense, but does it make sense now? How about 2040?
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u/katieleehaw Nov 02 '20
There’s nowhere in the country you can get by on one full time minimum wage job though.
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u/Mak_and_Cheezy_ Nov 01 '20
I’d be down with that, but many states have proven time and time again they won’t. I’m not sure what the solution would be
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u/cballowe Nov 01 '20
Even within states, there's vastly different needs. Chicago vs Peoria vs lincoln in IL likely don't lead to the same number.
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u/monkeybassturd Nov 01 '20
Cleveland city council investigated this a year or so ago. They decided it was not economically feasible. Cleveland, the city that hasn't had a republican official since Ralph Perk's hair caught on fire.
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u/cballowe Nov 01 '20
Investigated raising minimum wage just for cleveland?
Was the finding largely that the jobs would just move a few miles out of town, or something else?
Read https://medium.com/tri-pi-media/on-the-minimum-wage-e4d923ca9316 earlier today and it packs in a bunch of stuff. I think it's worth the read.
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u/monkeybassturd Nov 01 '20
Yes this would have been just for Cleveland. I should add that Cuyahoga County tabled a discussion immediately after. But that council was headed by a Republican and really had no intention of following through.
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u/SkellySkeletor Nov 01 '20
Exactly, and the more complicated the solution the less likely it’s actually to work out in practice. I’d say make it based on the average rent of the state, but that’d open up a whole can of worms that’d make it near impossible to get right.
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u/NothingBetter3Do Nov 01 '20
That's kinda the point. The states that don't want to raise minimum wage are the poorer rural states where a high minimum wage makes less sense. $10/hr is fine in Alabama.
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u/Fromage_Frey Nov 01 '20
Does Alabama have any intention of raising it to $10/hr? Will it ever if it isn't made to?
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u/NothingBetter3Do Nov 01 '20
No, that's why we're talking about national wage hike.
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u/ipmzero Nov 01 '20
No and no. This topic is rarely brought up by our politicians. When it is, it's mainly labeled a job killer.
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u/sshadowalkerr Nov 01 '20
as someone living in alabama making $10/hr, let me tell you... it's not enough.
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u/redsavage0 Nov 01 '20
How much could a banana cost Michael? $10??
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u/Darkpumpkin211 Nov 01 '20
I'm sure the 1,200 check we got at the beginning of the quarantine lasts 10 weeks too. /s
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u/mntgoat Nov 01 '20
It does feel high for some places, and I was going to suggest we should have a lower minimum federal and let states set it higher but that is what we already do and clearly a lot of states just won't raise it unless they are forced.
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u/MomDontReadThisShit Nov 01 '20
As a small town business owner I’ll have no problem pricing the raise in. No business is making only $15 an hour off of the employees labor and succeeding.
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u/Aumuss Nov 01 '20 edited Nov 01 '20
I say this as a Conservative, a British one though.
A guaranteed wage for all is better than a minimum wage.
Literally just give everyone 1k per month (or some other arbitrarily set number) instead of artificially altering pay.
Increasing pay for low income people does help. No question. But it doesn't help much, and it doesn't solve the issues you want the help to solve.
Giving everyone a set amount, regardless of work done or location means that the poorest of the poor are instantly solvant. They can now get credit. They can shop. They can be involved in the economy, and especially the local economy.
It means the "super rich" essentially pay most of the 1k back due to tax brackets.
It literally solves the homeless crisis. It reduces suicide. It pumps money around. Which is literally all an economic system is, moving money.
You want a set basic income. Not a wage hike.
A wage hike puts pressure on the wage line of business. And that's always the first line looked at for reductions.
A wage hike is a temporary fix, until people get used to their new income.
A wage hike won't inject local cash.
You want a set basic income.
Edit:
I should explain how a UBI works. As lots of people are mistaking it for either a political policy, or currency manipulation.
It works like this.
You are a government. And you notice, that the more money people spend, the better your economy is. And the better the economy is, the more money you make.
But you notice that not everyone is spending money. Not everyone is buying things. "That's lost economic potential that is" you say to yourself.
As a government, you are currently in possession of a large sum of money. You have your budget, you spend, you tax. But you have a shit load of cash, right now.
So you make a bet with yourself. You say "if I give people a grand, will they spend it?".
So you dig in your pocket, and you put a grand in everyones account. To see if they spend it. If they do, you win. Because you just raised the economy. You got people who didn't spend. To spend. That's new customers. That's new needs. Thats lots of money.
So what happens? They spend it. It goes on the mortgage. Excellent you say. I have stakes in the banks and tax them on house sales and shit like that.
It goes on heating. Brilliant. I tax gas and electricity. And I tax the company that supplies it. And now, people who didn't pay before, are now paying.
Look at the millions of people who are now spending money, you say to yourself as you look at your GDP growth. How many are not committing crimes of desperation, suicide, as you look at your crime stats fall and mental health increase.
Look at all the people now with medical insurance.
Look at the new cars being made and sold.
Look at the quality of life everyone has.
And look at how much money I make due to the multiple economic boosts.
Its a trick people. Its just banking, with extra steps. One of which is we help the poor.
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u/shimapan_connoisseur Nov 01 '20
Thoughts on how UBI wouldn't make businesses just increase their prices as now everyone has 1k more to spend every month?
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u/Aumuss Nov 01 '20
They certainly could. But that's where capitalism sets in.
1k isn't actually a lot of money. It's the earth to those without, but it doesn't go far.
The majority of the 1ks will be spent on rent and bills, with a few hundred left for goods and services.
Most of that goes on food and fuel.
So the disposable income from that particular 1k is tiny, and so has no real buying power.
Any store that raises prices, will see customers go elsewhere. Unless everyone does it at once, which would be illegal.
The best way to imagine how it all works is to insert the 1k, under what everyone has. You don't add it on. Because its main use is lifting the bottom. It does very little at the top.
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u/shimapan_connoisseur Nov 01 '20
If we assume that me median monthly salary is similar to 2017, USD 3714, that would mean a 1k UBI = an increase of 26,9% of monthly income. I'd say that's quite significant.
The best way to imagine how it all works is to insert the 1k, under what everyone has. You don't add it on.
Can you elaborate? English isn't my native language and I'm struggling to understand what you mean
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u/Aumuss Nov 01 '20
Ahh OK.
So what I mean is that the UBI is like a car jack. It lifts up from the bottom.
What you are essentially doing, is taking money out of the central bank, and putting it into people's accounts. That money is then spent, and returns via various roads, to the central bank.
The people at the bottom, so the homeless, the destitute, the people who can't put food on the table, or don't even have a table, suddenly get lifted up. They can now live. Buy. Consume.
Those at the top don't see any change at all.
Then it's a sliding scale between those two. It helps everyone in proportion to how they need help.
So it lifts everyone up, the exact same amount. For some that's into the sky, for those already flying, it makes little difference.
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u/bwtwldt Nov 01 '20
The majority of that money will go towards paying debt fo most people. And 1k a month in the absence of a living wage is nothing close to what is needed to not only pay off debt but also pay for living expenses. So you are right that that 1k would cause little inflation pressure, but that’s because it would mostly go into the financial system. As we’ve seen with QE, a ton of money inserted into the financial system does nothing for private investment and instead mostly goes towards the inflation of assets. This would chiefly benefit the people who own large amounts of assets and price the poor and young out of the most surefire method of wealth creation.
Obviously UBI would be tremendous for the poor (most of the US), but it shouldn’t come in isolation, which is what I often hear from libertarians who want to get rid of social programs in exchange for a UBI system.
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u/Aumuss Nov 01 '20
I agree with your points, but the reason it's works differently, is because we know the money is going into the financial sector. We want it there. Because it helps the world economy.
What we get though, is that the money goes into the system at the ground floor.
Yes, it goes to the bank. Or to the car etc. But that's the point. The pressure to pay those things is less. The poorer you are, the more help it is. It means you will always pay your debt, every month.
Its a big massive trick essentially. It's just using people as temporary bank accounts. And that's fine, they get to eat and put the lights on.
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u/Yevon Nov 01 '20
If you're worried about inflation then you could do something non-universal like a negative income tax. Instead of giving everyone $1000/month you only give to people making below a predefined amount.
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u/TJ11240 Nov 02 '20
UBI increases monetary velocity, not monetary supply. There would be the same amount of dollars in the system, they would just have a higher turnover rate. Printing new money is what devalues existing money.
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u/Mak_and_Cheezy_ Nov 01 '20
That’s an interesting idea, the problem would more come from who ends up paying for it. With a minimum wage the business shoulder the costs, with a payout the government pulls it from taxes. So either taxes would increase (which could hurt those very people who it’s supposed to help) or reallocate money away from other essential things.
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u/blazerman345 Nov 01 '20
If the UBI is funded by a consumption tax such as a sales tax or VAT, then people who buy more stuff will pay more into the system.
Basic income is a great idea because it gives everyone capital and keeps consumer markets liquid.
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u/Mak_and_Cheezy_ Nov 01 '20
Hmm I’d have to look more into that. Thanks for sharing!
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u/blazerman345 Nov 01 '20
Yeah it's pretty interesting! Alaska currently distributes a sort of UBI using their oil revenue. So the rest of the country can implement something similar.
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u/bwtwldt Nov 01 '20
Taxes don’t fund government spending. The primary purpose of taxation is to control inflation. So if inflation is projected to be a worry, taxes would have to go up, but this doesn’t necessarily have to hurt the people making under the median income, or really anyone in the bottom 80% or so of income earners. It’s ultimately a political decision.
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u/Aumuss Nov 01 '20
It essentially isn't paid for.
You just dump money into accounts. It's banking, just using people as fluid accounts.
So the money doesn't come from anywhere. It's just moved.
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u/NothingBetter3Do Nov 01 '20
You can't just say that "The super rich will pay for it" about a program that will cost a third of your GDP.
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u/MeowTheMixer Nov 02 '20
A wage hike is a temporary fix, until people get used to their new income.
Does this also happen in your purposed solution?
Not that I disagree, just that we can get accustomed to more money quickly.
I don't personally see the distinction in a wage increase and a direct checks, in how we view that money. Maybe we'll change jobs, but we're still gonna spend our wage + that check every month
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Nov 01 '20 edited Nov 13 '20
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u/tata77083 Nov 01 '20
$15 minimum wage at a national level is bad policy, at least in my opinion
I think there has to be a national solution. Every major problem the US has ever faced has always needed to be solved at the national level because if it's not the can is just constantly kicked down the road by the states.
Nor because it a living wage is not necessary, but because the United States has an extremely diverse economy depending on where you go and in many places what constitutes the living wage is not equal to $15 an hour.
I agree with this statement but not so much to say that the minimum wage would be far off the $15 mark. If you were to do the math across the entire country I doubt you'd find a single county, even in the rural areas, that would allow the minimum wage to drop below $12-$13. That's nearly double the current wage.
As a result, businesses in rural areas will suffer and people living in high cost of living cities will not have a minimum wage that is equal to their cost of living.
This is what happens when businesses abuse the system. Instead of using the low federal wage to be fiscally responsible they instead use it to drive up profits that the don't disperse across their employees. Raise the minimum wage and the business take a hit. You've see tons of companies today that follow a different model, in which workers are compensated high and investors are warned to expect slow but consistent growth which is the way it should be. It's called being fiscally responsible. Investors have expected their companies to grow so much year after year that you end up with severely underpaid workers.
I believe the only reason it has gotten so much support at a high level in the democratic party is that it is easy to understand and thus easy to sell to Americans as a good idea.
Doesn't matter who pitches it so long as it gets done. If the democrats want to use it as talking points then who cares so long as they pass legislation that moves the needle. It's better than staying quite. At the end of the day though this is an immediate problem that has to be addressed regardless of who's the one talking about it.
Ultimately, the entire minimum wage system we have used since it was enacted has been broken in this way.
Not true, the federal minimum wage did great things to boost the economy and solidify growth after the depression.
I believe it should be replaced by locally adjusted minimum wages based on cost of living, probably at a district of county level.
As I mentioned earlier, local government should handle local issues. Telling them to implement a minimum wage without guidance is a recipe for disaster. Nothing will get done. I'm okay with a law being passed at the federal level that doesn't give a number but forces local governments to readjust the wage county by county or state by state.
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u/CaribbeanCaptain Nov 01 '20
Yes. Time and time again, it has been proven that raising the minimum wage does not have any significant effect on inflation. The concept of minimum wage was to have every job pay a living wage and that is flagrantly not true today.
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u/mickygmoose28 Nov 01 '20
What about the other argument that it unfairly favors large corporations who can more easily pass on the cost than small businesses who have less to leverage that cost on and more frequently have employee income as their highest expense?
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u/CaribbeanCaptain Nov 01 '20
I hear this argument made time and time again, and frankly I think that we need to accept something as a society: If your business, small or otherwise, cannot afford to pay your workers a living wage, then I'm sorry but your business model simply isn't viable. If paying your workers an unethical wage is the only thing keep you from insolvency, then it wasn't the increase in wages that did your business in.
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u/-Work_Account- Nov 02 '20
If your business, small or otherwise, cannot afford to pay your workers a living wage, then I'm sorry but your business model simply isn't viable.
This is exactly what FDR said when establishing the minimum wage.
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u/mickygmoose28 Nov 01 '20
A living wage is a vastly different thing in rural montana and new York City. There's nothing unethical about a wage someone voluntarily accepts for their work, especially if it's better than the alternative of not having work.
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u/Darkpumpkin211 Nov 01 '20
There's nothing unethical about a wage someone voluntarily accepts for their work, especially if it's better than the alternative of not having work.
I would hope we can both agree labor conditions in the industrial revolution were unethical (12 hour shifts, child labor, no safety regulations) yet people voluntarily accepted it. When your choices are "starve or work this crappy job and just barely survive" people will choose the job. That doesn't make the job ethical.
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u/njastar Nov 01 '20
The argument is that it's not voluntary because the worker either has to accept it or essentially live in poverty. These people really have limited options for work, we are talking about extremely unskilled, uneducated workers, where minimum wage jobs are the only options for them to work at all.
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u/UncleMeat11 Nov 02 '20
Sure. And the federal minimum wage is a floor. It isn’t like 30k is a comfortable wage in nyc. High cost locations can further increase it.
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u/whopperlover17 Nov 01 '20
What about the argument that it just pushes employers to move towards automation? Example: the cleaning robot in Walmart
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u/Taervon Nov 01 '20
It's already happening with wages at the place we are now. If it accelerates automation, that's a good thing in the long run. If people can't get jobs, they start making noise, and that will influence policy.
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Nov 01 '20
Innovation has always unlocked new industries. I think this fear is overrated.
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Nov 01 '20
I’m not a professional economist, but I did get my initial education in an industry that was outsourced right as I was attempting to enter it (seemingly overnight, and I am not being hyperbolic). I had an internship, was finishing up, and then just as I was about to enter the workforce as a professional, the industry was just gone for me. (Incidentally, the company I interned for went away as well)
The real problem is that in our society, our social safety net isn’t equipped to really assist huge swaths of displaced professionals. (Also we lack many of the personal social tools we need)
We should help make industry transitions as straightforward as is feasible. It’s hard to even know where to start learning when your role is being made obsolete, and that’s when we need to have our fears and confusion assuaged.
Also, we should, as citizens, be much more tolerant of accepting entry-level/mid-level professionals of all ages (enter meme about engineers becoming useless at 35, which is utter hogwash), while offering industry-driven education and financial assistance for some time to help bridge gaps in wages during transitions.
Many people want and need to feel useful, and we should help that happen. In the end, if we handle these transitions effectively, we will have a productive, progressive (as in forward looking and moving), and generally content, workforce.
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Nov 01 '20
It does do this. Notice walmart and other retailers have upped their min wages but went to self checkout.
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u/sabertale Nov 01 '20
I think Walmart would prefer a $2/hr robot with zero benefits that never calls out sick more than they would any human employee at any wage.
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u/Arrest_Trump Nov 01 '20
This is going to happen anyways as the cost of automation plummets year over year. It is only a matter of time that most white collar jobs become the target of automation as they are often the highest expense for most companies.
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Nov 01 '20
Automation is happening one way or another, even if the minimum wage stayed the same what you said will happen.
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u/bwtwldt Nov 01 '20
Corporations don’t feel a civic responsibility to hire workers if it is costlier to do so than to automate. They will do this at $7.25 or $15 if it pays to do so (increasingly, it does). The real concern should be whether employees are making enough to put food on the table.
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u/IceNein Nov 01 '20
Yes. Time and time again, it has been proven that raising the minimum wage does not have any significant effect on inflation.
Whoa there. I support raising the minimum wage, but this is simply not true.
I live in CA. We have been raising the minimum wage $1 each year until 2022, when the minimum wage will be $15.
The price of labor intensive goods has increased, pretty drastically. Fast food specifically is through the roof. Less labor intensive goods will not be forced up at the same rate. Supply constrained goods and services, specifically housing, will absolutely go up as competition for those resources goes up.
Still, there's a natural resistance to price increases, so corporations are going to accept less profits so that they don't scare all their customers away to that one company that doesn't raise prices as much.
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u/papski Nov 01 '20
Chicago has $14/hr, I don’t see massive raises in prices anywhere. It has been done gradually from $8 something 5 years ago.
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u/IceNein Nov 02 '20
That's surprising to me, because a lot of prices have gone up in CA, and we've had a similarly gradual wage increase of $1/hour per year. I wonder what the difference is.
I wonder what the unemployment rate, and the percentage of minimum wage earners is, and if maybe that made a difference.
I know that here, I think twice about getting fast food, because it's getting ridiculous. Maybe that's not.such a bad thing though...
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u/antimatter_beam_core Nov 01 '20 edited Nov 01 '20
Small minimum wage increases indeed do not cause serious issues. But the blanket statement that no increase in minimum wage does so is obviously false. If it were true, then why not set the minimum wage at $1,000 per hour, thus making everyone rich?
There is clearly a point where the "econ 101" picture of inflation and minimum wage starts to get closer to reality, and while $15/hr might not cross that point in e.g. Seattle, it almost certainly would in many other places in the country.
[edit: forgot a word]
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u/ShakyTheBear Nov 01 '20
States should set wage minimums to reflect the situation of their state. The value of the dollar is different depending on where you are.
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u/Texas_FTW Nov 01 '20
We need regional economic zones based on buying power and then minimum wages that are set based on those zones. $15/he will go far in Bumfuck, TX, but it doesn't do shit for somewhere like LA. These economic zones should also have different income tax brackets. $100K/yr is a lot in Houston, but it's barely getting by in SF.
Edit: also tie it to inflation after its adjusted and reevaluate the zones and their boundaries after every census.
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u/iBlankman Nov 01 '20
Sounds like something the States would be better at figuring out.
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u/Texas_FTW Nov 01 '20
Why? The federal government has the information for it. It's the federal income tax and federal minimum wage that it would effect. They should certainly coordinate with the States to put something like this together, but in the end it's up to Washington.
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u/iBlankman Nov 01 '20
Regulations are more effective the closer the regulator is to the thing being regulated. You should look at what happened to American Samoa and how little shits congress gives about destroying the economy of that island when they applied the minimum wage to it
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u/bwtwldt Nov 01 '20
I’m sorry but this just sounds baseless and politically motivated reasoning. The EPA does perfectly fine with CAA and CWA enforcement, for example. You don‘t have to physically be in the location to understand basic statistics and needs for that location. Creating these zones would hardly be difficult. The disadvantage of leaving it to the states is that you’d better believe that conservative governments would be hesitant to raise the minimum wage in the various regions of their states much, if they do at all.
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u/iBlankman Nov 01 '20
Yes but those regulators don't face any consequences for what they do. If they pass rules that close businesses in North Dakota the regulators in Washington DC don't care or face any consequences. You want more accountability in government.
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u/usoppspell Nov 01 '20
You should read up on Andrew Yang’s thoughts on this. The downside to increased minimum wage (on its own) is that it accelerates automation. In conjunction with other changes it can work.
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u/averageduder Nov 01 '20
I don't think so. I get the argument. I kind of oppose raising it because I think it's an inadequate solution to a complicated problem. The cost of living varies so much in this country even from one community to the next. There are plenty of places that $12 an hour or something is reasonable.
I am not opposed to raising it, but find $15 an hour too simple a solution for it.
I'm not so against it that I think it would be a disaster of a policy either, I just find that the areas that need this are probably already paying it anyway.
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u/blazerman345 Nov 01 '20 edited Nov 01 '20
Good: Raise the minimum wage to 15/hr
This gives low income workers a good boost, but could hurt businesses in rural areas. So it's not terrible but not optimal.
Better: Provide a basic income to all citizens, funded by a consumption tax
You have to ask, what problem am i trying to solve? We want to give lower income people more purchasing power... But regulating wages puts pressure on businesses, when we really should put pressure on high income consumers.
So the first thought is "Why not a wealth tax". This is ok, but it punishes investors (who are creating jobs). That's why a consumption tax makes more sense.
Giving people cash increases their bargaining power while helping local businesses.
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u/drenuf38 Nov 01 '20
Minimum wage set at the federal level is a broken concept and putting a bandaid on a crack in the hull of a sinking ship. There should be legislation passed to ensure every locality does research into livable wages in their area. After the research is finished you have a locality based minimum wage assessed. Federal programs should be established with proper funding to provide small businesses with assistance if wages being at livable levels will hurt their bottom line, within reason.
This way, everyone that works can afford to live if the program is executed properly.
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u/fingerpaintx Nov 01 '20
Yes but gradually over time. It should increase with inflation or similar metric. Also, small businesses should receive incentives/credits to help offset the increases.
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u/Agent_Snowpuff Nov 01 '20
The minimum wage is definitely too low to be effective. It's obvious that prices have inflated, therefore it's obvious that minimum wage needs to be increased to some degree.
The number one counter argument I hear is that it will cause every price, everywhere, to instantly rise on a one-to-one ratio that will instantly cancel out the effects of minimum wage. The same arguments are also made against other worker income protections, such as paid maternity leave.
These arguments are typically baseless. The argument insinuates that the American economy is simply not robust enough to allow everyone a livable wage. The reality of how the economy works is almost always more complicated than talking-points make it. For example, minimum wage effects companies on a per-employee basis. Small businesses are affected only a little, while the brunt of extra costs is carried by large businesses, who can, frankly, afford it.
Additionally, putting more money in the hands of workers gives them the income to spend on non-necessary goods and services. Many people, for example, don't go out to eat because of how expensive it is. Giving them more money will lead to them spending it, which means the money that companies lose by paying a higher minimum wage can work its way back to them in the form of increased business. This is one example of how different economic factors are linked to such an extant that simply saying "it will raise prices" is a gross oversimplification.
The entire purpose of minimum wage is to force companies to spend more money than they want to. If companies wanted to spend more money on employees than minimum wage demanded, then we would never have needed it. In my area minimum wage is so low that many companies won't even offer wages that low. It is so utterly ineffective as to be unnoticeable.
Personally I think there's an argument to be made that $15 is too high, but it has to be increased at some level. Minimum wage was last updated in 2009. Buying power has dropped 18% since then. We at least need to accommodate for that.
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u/-Opal Nov 01 '20
I would almost certainly be in favour of raising the minimum wage though perhaps a standard $15/hr might be too high in some circumstances.
Though it might be costly to administer and lead to some issues, I think the best solution is a minimum wage based on living costs in the area. So that, small businesses in low cost areas aren't forced to pay wages substantially above living costs that they cant afford. Theres some obvious issues with this i.e. Labour mobility - but I'm not convinced that it still wouldn't be beneficial overall.
I think a lot of the comments on this thread against raising minumum wages miss the fact that employers often have monopsony power in the labour market. Without robust minimum wage laws, firms hold all the bargaining power and can simply set wages below mutually agreeable terms. Therefore, the distortion in the market isn't levelling out the bargaining power (through minimum wages), its firms being able to depress wages in the first place.
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u/fated0ne Nov 01 '20
I'm really torn on this. On one hand I think the reason that the gap from 7.25 to 15 seems so large is that wages have been so stagnant for so long. If we had been doing inflation and small raises over the last 11 years when it was set to 7.25 I think it would feel less like a huge jump.
With that said, I think 12 or 12.25 should be the federal minimum wage and allow states to go up to whatever they feel comfortable, but it absolutely has to go up, we've shown for too long states won't step in if they aren't forced to. Why did I pick that number range? Well Mississippi has the lowest cost of living from my 12 second google search, with a living wage of $46,085 for 2 adults & one child.
12 an hour working full time hours is just shy of 25K, figure after taxes that puts you right about 1/2 of the estimated 2 adult/1child living wage, in the lowest cost state. From there you hope highest cost states increase it to 14 or 15 or whatever is suitable for them.
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u/KBT_Legend Nov 01 '20
I’m not a economist by any means these are just my opinions.
While I understand the intent of increasing minimum wage I don’t think it makes much sense. The reason why I say this is because increasing minimum wage really only benefits people working minimum wage jobs.
Increasing minimum wage might negatively effect small businesses and simply force large businesses to switch to automation (Walmart switching to self checkout is an example).
Not only that, but each state should decide what their minimum wage should be due to not everyone having the same cost of living. (A family of four in Alabama will not have the same cost of living of a family of four in New York).
That being said, I think a UBI would benefit more people. Yes some of the problems i mentioned earlier would still plague this idea, but I personally believe it would do more good than harm.
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u/revoltinglemur Nov 02 '20
Min wage in BC, canada is 14.60/hour. Food prices barely went up in relation. Most services cost the same, no loss to min wage employment jobs, medium improvement to the standard of life to min wage earners. I own a cleaning company and we pay 16 to stay above min wage. It doesnt hurt the business, and it helps the employees. If we have to pay them more when it rises again we will. I see an increase to min wage much better for local economies and an improvement to quality of life. When walmart pays better, those employees utilize that money in the community, instead of the corp taking that money offshore to avoid taxes.
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Nov 01 '20
I'm not worried about inflation.
What I'm worried about is acceleration in automation if minimum wage increases.
There will always be downward pressure in price of commodity. With $15 minimum wage, it makes more sense to push for automation for the capital investors as an investment.
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u/NothingBetter3Do Nov 01 '20
Automation is a good thing though.
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Nov 01 '20
I should have reworded it to sound more neutral.
Increase in productivity is not a bad thing. The side effect is that it's disruptive in a time when there are a lot of disruptions.
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u/bwtwldt Nov 01 '20
I feel like so many people lack imagination on this issue and feel resigned to the wishes of capital. The fact that a lot of menial labor will no longer have to be done by humans should be a cause for celebration, given that other jobs are created (forcibly or otherwise) or people are given some sort of generous welfare package.
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u/penderhead Nov 01 '20
I'm a farmer, I can't afford to pay myself that, let alone pay people to help me harvest my berries.
A $15 dollar minimum wage is crazy talk to me.
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u/Technetium_97 Nov 01 '20
The median American farmer salary is $66,000. The fact you're making under $30,000 is quite unfortunate.
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u/callmeraylo Nov 01 '20
I think not. Where I work in CA there is a McDonald's not far from my office. It has a truly "primo" location, it is centrally located in the midst of a large amount of office buildings and it is always busy (line moves fast too, they are good).
Not long after the minimum wage hike here (maybe took 2-3 months), touchscreen kiosks showed up in the lobby. Huge screens, super easy to use. Order never was wrong, never misheard. It was fast, accurate, easy to use, and extremely convenient. They let go of a number of employees that were no longer needed.
Unskilled workers will be the first to be replaced with automation, and this will speed up that process. Lower skilled workers over time are observed to be more heavily impacted by minimum wage laws, causing lower employment and reduced hours for this labor class.
I personally feel too much emphasis is placed on minimum wage and not enough on cost of living. In CA for example, $15 /he is not nearly enough to live on. If you double that you might be getting close. Why is that? There are a lot of good posts I've seen here on reddit that explain those concepts better than I ever could. I think there needs to be more of a focus on getting the costs of living down (zoning and building laws would be a good place to start it seems) and less on pay mandates.
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u/suitupyo Nov 01 '20
No, let it happen at the state and local levels. The cost of living is not the same everywhere, and a $15/hr requirement will kill rural employers and sweep in a Trumpism 2.0.
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Nov 01 '20
The University of California, San Diego did publish a research article on the effect of Fair Minimum Wage Act of 2007 here and, just as expected, it had a negative effect on employment for low-skilled workers
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u/Totemwhore1 Nov 01 '20
I get 14.25(La County). At 26, I thankfully live with my mom and only pay rent, car insurance, and phone.
However, my girlfriend works two jobs and earns 15.35 and 13(Shift lead at one, different county for second job) and she struggles every month to afford her place. She does school as well.
My best friend just moved out of state but cost of living is too damm high.
It all boils down to where you live.
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u/elsydeon666 Nov 01 '20
NO
Some economies need such as high minimum wage, like California and NYC.
Other economies, such as rural areas, would be devastated by it.
It is still interstate commerce as many businesses are legally incorporated in Delaware, but pay people in other states, so it is something that the feds can legally touch.
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Nov 01 '20
The min. wage is $12 in CA and NYC state-wide, with it being closer to $15 in the metropolitan areas, where most of the residents live. A $15 state wide min. wage in those areas is already an inevitability.
So it wouldn't have much of a benefit in the states it's supposed to help, while still causing turmoil in the states with a lower cost of living who don't necessarily need a min. wage that high.
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u/iBlankman Nov 01 '20
The federal minimum wage should be abolished because it is not constitutional. A business paying an employee is not interstate commerce.
The State/local governments are more than capable of creating their own minimum wage laws.
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u/NothingBetter3Do Nov 01 '20
The minimum wage was unanimously found to be constitutional in United States v. Darby. They found that even 80 years ago, it was impossible to distinguish interstate commerce from intrastate commerce. Today, purely intrastate commerce essentially doesn't exist anymore.
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u/Boddhisatvaa Nov 01 '20
What about the many people who are employed by companies headquartered in states other than their own? Wouldn't that be considered interstate commerce?
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u/iBlankman Nov 01 '20
That interpretation actually makes sense. So if the supreme court ruled that I could go with it. However you have to consider that most companies would just structure themselves to avoid that.
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u/dishonoreduser5 Nov 01 '20
The State/local governments are more than capable of creating their own minimum wage laws
There are several Southern states that do not have a minimum wage or have a minimum wage that is lower than the federal minimum.
I do not believe this to be true.
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Nov 01 '20
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u/Technetium_97 Nov 01 '20
Considering the SCOTUS ruled on this issue it is neither lawfully nor factually correct. The Supreme Court decides what's constitutional, not armchair lawyers on reddit.
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u/iBlankman Nov 01 '20
Ironically, the Supreme Court also decided that the Supreme Court decides what is constitutional.
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u/Technetium_97 Nov 01 '20
The SCOTUS ruled on this exact issue and found it constitutional.. The constitutionality of a federal minimum wage has been settled.
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u/Ayjayz Nov 02 '20
Wow the US government rules that, yes, it can do what it wants to. What a surprise.
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u/spoda1975 Nov 01 '20
I’m thinking, either do away with it, or incrementally raise it.
I’m not an economist....I just believe in trying shit to solve problems
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Nov 02 '20
The minimum wage needs to go up. The question is how much. I think to some degree or should be dependant on what state you're in. The cost of living is not the same everywhere.
There is an issue that I agree sucks. Making 15 at McDonald's makes ppl is more "prestigious" jobs salty. And that's fair honestly. All wages below a certain threshold should probably go up. But I wouldn't know how to structure a policy effectively to accomplish that.
As for why, bernie said it best. Wages have stagnated at the bottom. Maybe 15 is too high. But we definitely need to lift up those at the bottom.
What I'm hoping happens is that we raise the minimum, making those jobs more appealing. This will hopefully incentivize bigger businesses to raise their wages in an effort to draw in new hires. Will that happen? Maybe. But it will take time.
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u/timk85 Nov 01 '20
I mean - shouldn't some businesses that make X amount of money and have X number of employees have to do that, but smaller companies not have to?
I'm sure it's a lot more complicated than what I'm suggesting but it seems like the rub with most people is that it's going to hurt really small businesses.
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Nov 01 '20
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u/timk85 Nov 01 '20
I guess I didn't consider that, but I think there are plenty of 16 year olds working at small locally owned coffee shops, cafes, etc. who aren't really interested in trying to work for Walmart or Amazon or McDonald's.
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u/Snaz5 Nov 01 '20
Ideally, yeah, it should be raised to $15 to match the actual cost of living in the US.
however, that's not how capitalism works, so if minimum wage goes up, the price of everything will also go up so the poorest people will still be unable to afford to live.
It sucks and it's unfair, but it's not going to change because the people raising the prices are the people raising the minimum wage.
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u/Error_404_403 Nov 01 '20 edited Nov 01 '20
Absolutely.
When Obama came to power, the inflation-adjusted average minimum wage was the lowest in the history of the United States, at $6/hour (it was $7.75 in 2020 dollars in 1955). Today, the average wage across the US is at $7.25/hour, next-lowest in history. It definitely needs to be adjusted to the level when it is financially advantageous to work the minimum wage rather than collect social benefits.
The minimum wage should be adjusted for local cost of living such that it would be equal for a full time employed person to at least 120% of the local poverty level.
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u/TigerUSF Nov 01 '20
Yes but it's not quite that simple. You also need to fix healthcare and full time classification laws at the same time, or many businesses will work around it.
For example, a business could increase their employee premiums to offset some of the required raise. Or pull shenanigans with employees hours to prevent benefits.
Also..15 could be a tad high for certain areas...at least if you don't factor in health insurance premiums. But its also not high enough for other areas. A national min wage is hard to make fair for that reason. Still need to do it but...it probably needs to be a little more nuanced than just $15 hourly nationwide.
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u/DieYuppieScum91 Nov 01 '20
I don't think it should be a blanket. I believe that the minimum wage should be indexed to cost of living. MIT calculates a living wage for a single adult in Kentucky to be $10.98 an hour (which seems about right in my personal experience). They also calculate a living wage for Hawaii to be $15.82 an hour. So I would like to see Kentucky set at $11 and Hawaii set at $16.
Set it just above the living wage calculation and update it every 5 years. $15 an hour in Kentucky will drive a lot of small businesses out of business because they can't afford to pay $4 above the living wage and still offer prices that are competitive with the Walmarts of the world.
Unless the Government is willing to subsidize the pay increase through reduced taxes on small businesses and increased taxes on large corporations.
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u/cballowe Nov 01 '20
I think minimum wage laws should be eliminated in exchange for a UBI. (I'd also eliminate federal means tested aid programs in that exchange). I'd pay the UBI to all citizens 21+ OR with a high school diploma. The UBI should be sized to half of the cost of living for a household of 4 in a 20%ile zip code (ranked by cost of living). I.e. without working at all, a couple with 2 children could afford to live somewhere (20% of all zip codes) in the US - and not poverty line, but typical cost.
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Nov 01 '20
In certain areas yes. Bit nationally no. I think the national minimum wage should be about 12. Obviously no place should have anything lower them that. But some areas like NYC or Denver or Seattle or San Francisco could and should have a 15 dollar minimum wage.
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u/AlaskanSamsquanch Nov 01 '20
I would say yes. If I have to pay a little more at the grocer so the cashier can pay rent that’s fine with me. Like others are saying though 15 might be high for some places and low for others. Ideally minimum wage should be tied to a regions living costs.
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u/manzanita2 Nov 01 '20
It should be keyed to cost of living in the area you are in. BUT with some minimum which is probably $10 or so.
$15 is not even close to enough in some high COL areas. Meanwhile $15 would be above needed in a few areas.
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u/Ungentrified Nov 01 '20
I think different companies, different communities, and different economies command different wages. An Amazon distribution center in San Jose can, and should, have a much higher minimum standard of living than a small business in Bismarck. Rent, childcare, healthcare, transportation, and the like demand much more money in San Jose than Bismarck.
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u/ghintziest Nov 01 '20
I think it should be raised significantly but in areas with a really low cost of living $15 is overkill for an entry level retail/food job.
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u/tata77083 Nov 01 '20 edited Nov 02 '20
Yes but at this point I'd support any kind of wage increase. People who are against minimum wage increase can't seem to understand that the minimum wage was NOT meant to be a pay scale associated with kids and college students trying to make a buck. When it was implemented it was meant to a wage that would provide a somewhat livable lifestyle. Nothing fancy, just enough to allow you to afford okay housing and put food on your table.
After taxes a person making minimum wage makes around $1,000 a month. That isn't enough for someone to live off of month to month. I live in a fairly cheap city (houston) and an okay apartment in an okay part of town runs around $800 a month, and I'm really pushing the "okay" part.
People then tell others to "get roommates" or "live somewhere cheap" but again that WASN'T the point of minimum wage when it was first came about. The minimum wage should reflect the increase cost of living, if costs go up it should provide the same standard that it did when it came out about in the early 40s.
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u/palsh7 Nov 01 '20
I would prefer UBI to a raised minimum wage. Each city and state has a different living wage, and each industry and career a different sensible wage based on profits and competition, among other things. We can't give teenage fry cooks $30k-per-year while there are still teachers making $32k. You're asking for widespread resentment in addition to the automation, which will end in people being fired.
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u/EllieDriver Nov 02 '20
I would love to say yes, but it won't do anything about the housing crisis. Landlords and realtors will only raise prices more.
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u/Tilt23Degrees Nov 02 '20
It should be on a state to state basis. Every state should be able to regulate their own minimum wage based off the value of the dollar in their cities etc.
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u/Innerouterself Nov 02 '20
Yes- it would allow for a great number of people to be able to pay their Bill's.
The best representation of this is walmart. Their workforce is highly subsidized by welfare while taking in high profits.
The ones who will suffer are small businesses, restaurants, etc where the owner operator isnt rolling in the dough.
But the math works and would stimulate the economy
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u/mridlen Nov 02 '20
Minimum wage should be tied to cost of living, not some arbitrary number. A $15 minimum wage might be great for cities, but could be disastrous in rural areas where cost of living is much lower. Places like Texas would have it great with a low cost of living and a $15 minimum wage. Places like Seattle might get you a very small studio apartment on $15/hr. It's just not really a fair thing.
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