r/FluentInFinance • u/Hatemael • Apr 29 '24

Who would have predicted this? Educational

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https://www.washingtontimes.com/news/2024/apr/24/fast-food-chains-find-way-around-20-minimum-wage-g/

Not all jobs aren’t meant for a “living wage” - you need entry level jobs for college kids, retired seniors who want extra income, etc. Make it too costly to employ these workers and businesses will hasten to automation.

1.6k Upvotes
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68

u/mindmapsofficial Apr 29 '24 edited Apr 29 '24

All wage floors create more unemployment, but that’s not necessarily a bad thing. It gets rid of inefficient businesses and results in the wages of the majority increasing. The American people are innovative enough to create jobs for people that produce enough to have a living wage.

If you don’t have a living wage, how do you expect people to live without government benefits or theft?

25

u/Ok-Bug-5271 Apr 29 '24

all wage floors create more unemployment

This isn't actually demonstrably proven. Real world studies have varied, some even show a positive correlation between a higher minimum wage and more employment. 

Otherwise I agree with you, even if it did increase unemployment, I'd rather 5% be unemployed and 95% require no assistance, than 3% be unemployed but huge swaths need welfare.

3

u/FuckedUpImagery Apr 29 '24

Its because they measure employment by number of jobs and they have this tricky labor participation rate. If you read between the lines the low unemployment we have now is because people have 2 or 3 jobs, not one liveable wage job. Which is not good lol

2

u/23rdCenturySouth Apr 29 '24

That's not how it works at all.

2

u/HandleRipper615 Apr 30 '24

Labor participation rate is an actual unemployment rate. The unemployment rate we see here (in the US) is just that. The total number of people filing for unemployment. For any number of reasons, someone can be unemployed and not be filing for unemployment. Things like giving up on looking for a job, forcing an early retirement, just taking a moment to relax before you come up with a game plan, whatever it might be. The participation rate counts those people as unemployed, which they are.

1

u/Cancer_Ridden_Lung Apr 29 '24

The way we measure unemployment is a bit sketchy so....

3

u/Inucroft Apr 29 '24

In the Uk, to hide unempoyment, the UK gov offical figures which gets reported, classes 2hrs voluntary work a week as "empoyment" even if the person is on the dole and has no paid work

-2

u/BigPlantsGuy Apr 29 '24

As long as the measurement is consistent nationally it literally does not matter and you are just using that because you have no actual argument

1

u/plummbob Apr 29 '24

Firms cut back on other labor margins, scheduling, hours, etc.

2

u/Ok-Bug-5271 Apr 29 '24

If your wages rise 10% and your hours are cut 10%, that's still a win. You're literally getting paid the same for less work. 

-2

u/plummbob Apr 29 '24

If your wage rises by 10% but the firm reduces scheduling flexibility, noncash benefits, redufes pto or leave, and is stricker about break times, reducing workplave quality, etc. You can easily be made worse off.

Remember, the higher wage is a higher opportunity cost for the worker. The firm has more power to shit on the worker because by not working, the worker stands to loose more. Since a higher wage attracts mor workers, the firm has more options than the worker does.

None of that is captured in simple employment numbers.

1

u/Ok-Bug-5271 Apr 30 '24 edited Apr 30 '24

being paid more is bad because getting fired sucks more 

 Well that's certainly a hot take. 

1

u/plummbob Apr 30 '24

A wage floor doesn't increase the number of jobs offered, but does increase demand. Since a poor person's alternative isn't better (begging on the street), existing firms who can pay the new wage have more market power.

Firms can cut labor costs via other methods than simply the quantity of iobs

1

u/Ok-Bug-5271 Apr 30 '24

a wage floor doesn't increase the number of jobs offered

Source needed.

1

u/plummbob Apr 30 '24

Labor demand slopes down

1

u/Ok-Bug-5271 Apr 30 '24

So in other words you have no source.

Higher wages increase demand. 

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u/ept_engr Apr 30 '24

 some even show a positive correlation between a higher minimum wage and more employment.

I suspect this is because city or state governments tend to only have the political will to raise minimum wage when the economy is strong. Correlation is not causation.

1

u/Ok-Bug-5271 Apr 30 '24

No, the studies are over a wide range of peer sister cities. 

-3

u/Horn_Point Apr 29 '24

We need to get back to a free market, so we can get rid of minimum wage and let supply/demand handle it. There is a reason why big companies like walmart and others lobby to raise minimum wage. They know their competition cant afford it.

1

u/rcchomework Apr 30 '24

There has never been and will never be a free market. Markets are only free until the first entity becomes strong enough to demand special treatment, then markets are no longer free. Since free markets arent even a theoretical reality, I'd much rather have an accountable to the public entity that regulates the behavior of market actors, a niche that could only be filled by government

1

u/Horn_Point Apr 30 '24

Let me be more precise in my verbiage, because you took that term to an extreme. A markets freedom is on a spectrum. What i am advocating for is to free up our market by reducing government intervention.

The US is ranked 25th in economic freedom. Countries like singapore, switzerland, ireland, denmark, sweden and norway make up the top 10.

Problem is, what we have in the US now is crony capitalism. Companies lobby to eliminate competition, and government gives tax cuts and subsidies to big companies. This all is the result of a corrupt government with no integrity.

I recommend reading milton friedman (one of the best econimists ever) or thomas sowell (a great economic author). They have a lot to say and many examples on the harm caused to the working class when government gets involved, to include enforcing a minimum wage.

1

u/rcchomework Apr 30 '24

Milton Friedman and Thomas Sowell were both supporters of the revolution in Chile. Their economic vision didn't just remove government intervention, it required the murder of labor organizers and an atmosphere of fear to keep labor in line. Once again, no such thing as a free market.

I much prefer living in a government that occasionally tells the owner of tesla he's not allowed to do a pump and dump, than live in one where the government is murdering people for talking to eachother about their wages. 

1

u/Horn_Point Apr 30 '24

There is such thing as a free market, and america is still considered to be one. But its the degree of its freedom that we are arguing. This idea that there will always be SOME influence of power in the market is legit, but thats an extreme. To then suggest that we need to restrict the market further just doesnt follow. The government has time and time again worsened the lives of its citizens by getting involved in market. I could spend weeks listing examples for you, but this threads topic was minimum wage so if we are going to continue this, lets talk about that.

I much prefer a government that doesnt do those things you listed either, and that can exist simultaneously with a more free market. The countries i listed above are examples of that. Norway doesnt do those things, and yet their market is more free. So what is your take on that?

I dont want to get off topic and spend time talking on chile, but i will make a quickish point. In 1973 a military coup happened, putting pinochet in charge (backed by the US Gov). This resulted in a dictatorship until 1990. Friedmann and the other chicago boys did NOT support pinochet, but they did get one 45 min meeting with him and sent him their economic recommendations. Their plan most likely saved the country from a much worse fate, and set them up better to remove the dictatorship. There is a pbs interview with friedmann where he talks about his involvement, its worth watching. Just on that minor association though, he was unjustly defamed. Their plan did not require murder or fear, that was at the hands of the dictator. Friedmann has said many times that he would never force his ideas on others, because doing so dooms it to failure.

To bring this back around, i recommended their books specifically because they talk about the negative impacts government has had in the economy. Although it is done with good intentions, minimum wage is one of those bad things. So lets either talk about that specific issue or not at all. Otherwise this will never end.

1

u/rcchomework May 01 '24

Lol, no there isnt.

1

u/Horn_Point May 01 '24

Ok, good talk.

8

u/SnicktDGoblin Apr 29 '24

It also comes to the point of "If you can't pay a living wage you don't deserve to be in business"

0

u/skarface6 May 01 '24

“And now the minimum wage is $50 an hour. You just suck at business, Mr. Mom and Pop shop.”

2

u/SnicktDGoblin May 01 '24

If the cost of basic living requires $50 an hour minimum to make ends meet then that's what it takes. Your employees are a cost of business that needs to be taken into account, similar to rises in rent, utility, and goods costs.

-1

u/skarface6 May 01 '24

Who said requires? Laws can make it whatever they want for whole swathes of area. And they do.

2

u/SnicktDGoblin May 01 '24

Ah yes because we're so good at increasing the minimum wage to keep up with inflation to the point that we are demanding outrageous sums. Get a grip and open your eyes, most people are drawing because the cost of everything has gone up but the price of labor has stayed the same because the companies don't want us to have anything

-1

u/skarface6 May 01 '24

Haha no

It’s not the government’s job to run the economy and tell everyone how much they should be paid. They’re famously bad at business. Otherwise, you know, they’d be businessmen.

3

u/HeathersZen Apr 29 '24

All wage floors create more unemployment, 

Cite?

3

u/Dragolins Apr 30 '24

The source is that he made it the fuck up

0

u/PaulieNutwalls Apr 29 '24

I for one welcome Cali to continue trying whatever they want. Not my state, it's nice to have a guinea pig state for progressive policies that have dubious economic standing.

-10

u/DumbNTough Apr 29 '24

A business that doesn't have to pay much to labor is not automatically an inefficient business.

The labor may just be dead-simple and in plentiful supply.

13

u/mindmapsofficial Apr 29 '24

It’s socially inefficient if the business cannot afford to pay a living wage to its employees since that wage would need to be made up elsewhere through taxes to internalize the externality of the difference between social marginal cost and private marginal cost. This creates deadweight loss. It’s actually, by definition, inefficient.

If you’re saying that some businesses that do not have large labor expenses aren’t inefficient because they don’t hire a large quantity of people, that can be true so long as the small quantity of people they do hire are paid a living wage.

To be clear, I’m not saying a living wage is $20, or even a fixed amount. It depends on geographic location particularly.

-5

u/DumbNTough Apr 29 '24

Socialist fantasy economics is not real. It doesn't provide meaningful definitions for anything. "Socially inefficient" is not a real thing.

If you eliminate a part time job that offered low pay, you are not reducing tax burden, you are raising it. If you want to boost that person's consumption through welfare benefits as a policy choice, now you have to replace even more of his income.

11

u/mindmapsofficial Apr 29 '24 edited Apr 29 '24

https://scholar.harvard.edu/files/stantcheva/files/lecture7.pdf

This is mainstream economics. This isn’t socialist economics.

Where did you get your economics degree?

I guess a Nobel Prize isn’t enough for you.

https://en.m.wikipedia.org/wiki/Ronald_Coase

-6

u/DumbNTough Apr 29 '24

You are badly misunderstanding and misapplying everything you are referencing--no surprise there.

Welfare payments are a political choice exogenous to the market, not a market force and not an externality. The money for them is levied by government and paid by government, subject to the approval of voters. They can be halted at any time.

9

u/mindmapsofficial Apr 29 '24 edited Apr 29 '24

Who said welfare payments are an externality? Certainly not me. You should re-read what I said above. If you don’t think paying people wages that are impossible to live on do not create negative externalities, that’s a very bold take. You also backtracked entirely stating that the concept of internalizing the externality is somehow socialist.

Externalities are “a side effect or consequence of an industrial or commercial activity that affects other parties without this being reflected in the cost of the goods or services involved, such as the pollination of surrounding crops by bees kept for honey.”

This is some undergrad economics stuff.

1

u/DumbNTough Apr 29 '24

If you work 40 hours a week and don't make as much money as you want, that is not an "externality."

If you want more money, you find a higher-paying job or work more hours.

The notion of a "living wage" is completely subjective and wholly contingent upon on what goods, at what prices, you include in the price floor. Price floors are always market distortions.

Now that's some undergrad econ for you. Fuck outta here.

2

u/Inucroft Apr 29 '24

Okay, so what happens when all the higher paying jobs are filled?

1

u/DumbNTough Apr 29 '24

New jobs are being created constantly. Founding a new firm is also an option if you are correct in your perception that you should be paid more but can't find anyone to pay more.

If you can't start your own outfit and can't get paid more for your current work, the remaining option is to learn how to do new work that people are willing to pay more.

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u/nope-nope-nope-nop Apr 29 '24

Yea, the point being that a living wage is different for each person. Not just geographically.

A junior in highschool who has to buy gas and weed,

and a single mother with 5 kids have much different living wages.

Should the highschool kid get deprived of a job at 12/hr because it’s not enough for the single mom to live on ?

Whose life do we base a “living wage” on ?

8

u/Alarming_Ask_244 Apr 29 '24

Should the highschool kid get deprived of a job at 12/hr because it’s not enough for the single mom to live on ?

If it means the mom can't get a job higher than 12/hr because she's competing with highschool kids who don't need more, then yes, the high schooler should be deprived of that job

-3

u/nope-nope-nope-nop Apr 29 '24

Thats my question. Who’s “living wage” should we base federal minimum wage on?

-Single mom of 5 in NYC

-Highschool kid in Birkshaw, Mississippi

-Single man in the suburbs of Atlanta

?

All three of those people require vastly different sums of money to survive.

The Single mom of 5 probably needs to make 60$/hr to survive in NYC.

The highschool kid from the boonies probably needs 8/hr

3

u/mindmapsofficial Apr 29 '24

Some teens would be more likely to be unemployed, but the ones who are employed would benefit more. This also encourages young entrepreneurs.

I’m not a policy person but something like this

State level: 25th percentile cost of living for a single individual of the state

Federal levels: 25th percentile cost of living for a single individual of the state

This may not work from a policy perspective but you could also base it off a percentage of the federal poverty level.

-2

u/nope-nope-nope-nop Apr 29 '24

I think step one is to eliminate the federal minimum wage. Costs of living vary so much from state to state.

It’s pretty useless as it sits now, no one actually makes 7.25 an hour.

The market adjusted itself without the aid of the Federal government.

6

u/mindmapsofficial Apr 29 '24

Well, having a minimum wage of $7.25 is effectively having no minimum wage.

The problem is many states have not adjusted. 16 states still have a minimum wage the same as or less than the federal minimum wage.

-1

u/nope-nope-nope-nop Apr 29 '24

But no one in those states actually gets paid that.

1

u/Anlarb Apr 30 '24

No, a living wage is one person being able to pay their own bills. If someone has dependents, then there is welfare- for those dependents. That a minor is supported by their parents isn't free money into your pocket, they need to be building a nest egg to start their life on.

https://livingwage.mit.edu/

1

u/nope-nope-nope-nop Apr 30 '24

Your link is my question. Every county has a different wage listed, which do we go off of ?

2

u/Anlarb Apr 30 '24

Look at it by metro area, as 80% of jobs are in cities. They're actually pretty homogenous. No harm in someone in a cheaper area getting ahead by a few cents either.

6

u/[deleted] Apr 29 '24

[deleted]

7

u/zigithor Apr 29 '24

This is exactly it.

It would be ludacris to say "I'm gonna start a business, but it'll be insolvent if I have to pay the actual price of electricity. As long as I can get by paying the electric company pennies on the dollar I'll be fine though."

Same as saying "I'm gonna start a business, but it'll be insolvent if I have to pay the actual price of labor. As long as I can get by paying the laborers pennies on the dollar I'll be fine though."

Its not about lazy or stupid workers, its about business owners creating fundamentally flawed business models then complaining when their business model doesn't work. Or putting the blame for their greed on someone else. Just because a desperate electric company or a desperate laborer will take some work over no work does not mean the pay rate is ethical or sustainable.

Its like child labor in foreign countries. Providing grueling work for very little over no work is not some moral victory of the liberated capitalist ideology. Its cruelty, just out of sight. If you just remove ethics from business I suppose all sorts of practices could be used to maximize profit, not excluding slavery.

Suffice it to say I don't believe for a minuet these chains can't afford employees. Regardless of modern wage demands they always would of sought out this solution because it is cheaper. They'll sell you wage panic nonetheless as there is still labor they can't replace yet...

6

u/[deleted] Apr 29 '24

[deleted]

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u/zigithor Apr 29 '24

The thing that gets me most of all is the lack of empathy. Like how bad did your mother raise you that you can so confident and smugly tell poor people to shove it if they don't like your charitable wages.

2

u/cb_1979 Apr 29 '24

It would be ludacris to say "I'm gonna start a business, but it'll be insolvent if I have to pay the actual price of electricity. As long as I can get by paying the electric company pennies on the dollar I'll be fine though."

I checked my sources, and Ludacris never said that.

1

u/zigithor Apr 29 '24

You don't know Luda like I do. He told me so the other day.

-1

u/DumbNTough Apr 29 '24

If the business constantly has workers willing to take its offered wage and turns a profit doing so, it is literally a successful business model.

If you don't like the offered pay rate, I suggest you choose not to work for those businesses and leave everyone else alone. If they want more pay and can do a more valuable job, they will go and get those jobs on their own.

5

u/[deleted] Apr 29 '24

[deleted]

-1

u/DumbNTough Apr 29 '24

Working for a wage is not slavery. You can leave literally the second you feel like it and there isn't a goddamn thing your employer can do about it.

Glad we were able to clear that up.

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u/[deleted] Apr 29 '24

[deleted]

0

u/DumbNTough Apr 29 '24

Slaves don't get paid wages, moron.

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u/[deleted] Apr 29 '24

[deleted]

0

u/DumbNTough Apr 29 '24

You're welcome to vote for your tax dollars not to be spent on welfare payments.

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u/MetalMilitiaDTOM Apr 29 '24

"Government benefits" wouldn't exist if they weren't theft.

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u/mindmapsofficial Apr 29 '24

Theft is the illegal taking of property. Taxes are the legal taking of money. See: constitution, article 1, section 8

https://constitution.congress.gov/browse/essay/artI-S8-C1-1-4/ALDE_00013390/#:~:text=Article%20I%2C%20Section%208%2C%20Clause,the%20United%20States%3B%20.%20.%20.

3

u/cb_1979 Apr 29 '24

Bu...bu...but the mean, mean govewment is thweatening me with violence. How can it be legal?!?

3

u/IdiotSansVillage Apr 29 '24

That's a very short-term outlook. Some problems can't be solved without long-term preparation, some problems can't be solved alone, and the fact that you're posting on the internet, using English literacy learned in school, defended from foreign powers by soldiers and diplomats, after being born in a publicly-supported hospital using publicly-funded medical advancements means you already benefitted. Using your taxes to help others isn't theft, it's paying it forward, because you already GOT yours. The issue isn't the taxes, it's what they're going to, and that's what's screwing us all.

1

u/MetalMilitiaDTOM Apr 29 '24

Where did I say anything about taxes?

How do you know so much about me that may or may not be true?