I wonder what the USA would look like if minimum wage was defined as; two people being able to afford a 1 bedroom apartment within a 1 hour drive without traffic.
The static (both in the nominal and inflation adjusted sense) for minimum wage doesn't make sense imo. Minimum wage should be tied to some level of living (not necessarily a great living, but something)
Inflation, probably followed by corruption. Minimum wage would rise to the point where a person could afford a 1BR apartment within a 1 hour drive without traffic. Then the rents of those 1BR apartments would rise to capture that new minimum wage. Then minimum wage would rise to afford the new rent, and so on. Eventually someone's going to say "Hey, I own an apartment block downtown, I'm supposed to rent it out to the hoi polloi, but I'll let you live there rent free if you work for me and do exactly as I say, wink wink".
This is a very common situation in much of Latin America - both inflation being transmitted through CoL-indexed social goods, and the corruption that comes from trying to bypass that.
Any durable solution needs to address the questions of "How do we ensure that there are enough 1BR apartments within a 1 hour drive for everyone who wants one to get one?", "How do we incentivize the construction of these 1BR apartments?", "How do we maintain the desirability of these apartments once they're built?", and "How do we prevent one firm from owning all of the desirable 1BR apartments and setting whatever price they want?"
My pet theory is cities are malthusian. Contrary to popular belief, Malthus didn't predict runaway population growth. What he actually predicted (and was right for most of human history), is that any gains in productivity would be eaten up by population growth until the average wealth per person diluted down to it's previous level. So back to cities. Here's my pet theory. You build more apartments, or faster trains or whatever to expand the availability and affordability of 1 be apartments within a 1 hour commute, and it will work for a while, but within a few years people chasing opportunity will have moved to the city until the rents and costs of living eventually return to previous levels. This dynamic works because unlike pre industrial malthusian times, cities do not rely on birthrates for population growth.
There is also the Georgian explanation that rent seeking landlords will always increase rent to match any gains in production. Assuming that a landlord will always charge the maximum they can that market will sustain, any increase in production will mean an increase in what the market can pay for housing, and with time, what the landlord can extract from tenants. It neatly explains how cost of living correlates to job opportunities, and how all the productivity gains from technology end up not increasing the general population wealth.
Isn’t that where remote work kicks in but we’re too stupid to realize? If the tech people don’t need to concentrate in one area, good luck jacking up the prices to siphon off that wealth.
Tech needs to create a box. Literally, a hurricane proof box that that plugs into plumbing. Drop it anywhere in the world and fucking live in it. It’s the same box for everyone, like the iPhone, iPhones are not more expensive in Bay Area or NY. All this nonsense over the fact that we all simply need to live in a box somewhere.
I know people living in those famously cheap Midwest areas people online always propose as the obvious solution to avoid high rents. Rents even in nowhere areas have blown up recently.
And remote work really won’t change rents much for normal people. People want to live where their family and friends are, where some good restaurants are, where some good weekend activities are, where some nice nature is an hour or two away, where a good hospital isn’t too far, and where grocery stores stock good food. Any one of these and landlords decide it’s okay to raise prices 30% a year.
People theoretically have a choice, but every landlord everywhere is doing this. People leave one town with rapidly increasing rents and go to the next, and those landlords do the same while the people in the already expensive town never lower prices. There is no escape or alternative.
Rent stayed flat because of the moratorium, not because of the demand. You will start seeing the rent increase as the leases are coming up for renewal, many places are already up for 20% rent increase.
sokoloff was talking about rising rates, not rising rents. And I agree completely, when interest rates rise money is more expensive, thus credit/mortgage has more interest, thus people can’t afford that much of a property price for the same monthly installment, thus property prices are going down.
Take a fixed monthly payment, with lower rates the principal can go up. Thus house prices can go up. On other hand renters have the same pretty much fixed monthly payment.
Rent's are not tied directly to value of property, but need to service the debt linked to property. Or equivalent one.
Tech people, even those working from home full time, have to contend with living somewhere nice with good schools and perhaps a place for their partner to work (if they can’t WFH also). Given that those places tend to correlate with expensive real estate, it doesn’t seem like WFH is going to do this work for us.
That’s only possible if there’s is never enough housing for everyone. ITV does sort of work out because western building cannot be built for lower income folks as they cost too much. So low cost housing is essentialy all old end of life building
I think we really need to limit how many one can own. Start taxing very very very heavily for anything beyond a second home for individuals and and anything beyond another number based on statistics for a company. Also add attitional tax for every two months a property is owned but no one is living in it or using it for business. This should cut down on hording and incentivize companies and people to get rid of any property that is just lying there waiting for prices to go up.
Land tax is horrid. A person should be able to live off the land if they choose, self sufficiently. This is impossible when the government demands yearly cash payment just for having your own place to farm.
A person who removes land from the common good should have to do something productive with it, give it back to the common good, or simply pay a fee to the commons for having kept it from productive use. A person absolutely should not be able to keep several blocks of downtown Manhattan off the market so they can run a private farm for themselves.
In practical terms, anywhere a person would want to do such a thing, the land would be cheap enough that LVT wouldn't really matter anyway.
They do pay a fee to the commons for removing it; it's called sales tax. They are also doing something productive with it, by living on it and using it.
If we are to keep trespassing laws, there must be ways to own land permanently and without further cost. There must be a way for man to survive without participating in government enforced labour. All land is owned by some entity; he can't live in the woods owned by the government or someone else; even after buying land and being entirely self sufficient, he cannot simply live, but must pay the government in their currency which he can only get through participating in the labor economy. There is literally no legal way to live freely by your own means. This is a form of slavery that the ancients would find absolutely intolerable.
Increase the price of land or the sales tax, limit the ownership a single person can have, levy inheritance tax, but an indefinite land tax is inhumane.
Huh... who does enforce trespassing laws? I'm 99% sure that's the state, and for good reason. Are you supposing that the unlanded should pay for the protection of the landed's assets, but that the landed doesn't need to?
> A person who removes air from the common good should have to do something productive with it, give it back to the common good, or simply pay a fee to the commons for having kept it from productive use. A person absolutely should not be able to breathe several kilos of downtown Manhattan oxygen off the market so they can continue their private lives.
Is this meant to be a counter argument? Because yes, if air in a given area were a strictly finite resource that everyone needs for survival (like land), one person should not be able to just indefinitely own enough of it for millions of people to live on.
Nobody made it an investment asset, it just happened as certain pieces of land grew more valuable for practical reasons. This is unavoidable unless you make it so you can't sell property, which would also mean you can't buy property - the government would need to manage peoples' needs based on family size and do the maintenance of maintaining property to the same level as landlords.
This is not true. We did make it an investment asset around the advent of agriculture. And there is a way to avoid it without freezing the market, which is called the Land Value Tax. As far as I know, no serious economist (from any ideological perspective) seems to actually dispute the functional fitness of this tax.
Bad money (like inflationary fiat currency) creates the need to use other assets to preserve wealth, which creates bubbles in those assets.
Bitcoin advocates say good money (Bitcoin) will return the value of all other assets to their utility value because the best passive store of value will be the money itself (which due to a fixed supply would be deflationary).
In that world, people would rather sell assets they don't use to accumulate bitcoin (or money x) because only useful activities will produce more yield than the money itself. This frees up housing, land, precious metals,... and all other resources that are artificially scarce due to hoarding for wealth preservation.
I've heard people estimate, under a Bitcoin standard, the actual utility value of a house would be approximately 5-10% of current prices.
if you want to live in my house, and within the safe and comfortable legal framework of tenancy in a property lease contact, then you have to pay competitive market rates to live there.
"Pay your fair share" to the "rent seekers" if it is a place to live that you are seeking...
> This dynamic works because unlike pre industrial malthusian times, cities do not rely on birthrates for population growth.
The same was true in pre-industrial times too. The cities have always been population sinks, and failed to reproduce naturally. They have always been supplied by the constant stream of people from countryside.
I forget exactly when this happened or which data set it's in, but at some point sanitation and medicine got good enough that cities aren't a population sink per se. They can have around equilibrium birth rates.
> So back to cities. Here's my pet theory. You build more apartments, or faster trains or whatever to expand the availability and affordability of 1 be apartments within a 1 hour commute, and it will work for a while, but within a few years people chasing opportunity will have moved to the city until the rents and costs of living eventually return to previous levels.
That's still okay, though, as during the process (and even at the end point in your scenario) much better lives and opportunity have been provided to much greater numbers of people.
If people like the QoL benefits of density, we should do what we can to provide it, even if it causes the same sort of CoL squeezing down the road with whatever optimizations we can put in place. It will still benefit more people, and maybe we can come up with yet more optimizations.
Malthus is the butt-joke of economics, so much it became a rite of passage to mock him. Marx's Capital and Henry George's Poverty and Progress dedicate some time to his humiliation.
Malthus's arithmetic vs geometric model of population is grossly wrong, while also condemns a large swath of humanity to extreme poverty. What a clown.
Paraphrasing Henry George: "Malthus model that food grows arithmetically and population grows geometrically is as arbitrary as saying a dog grows arithmetically and his tail grows geometrically"
Malthusian model is the basics of modern understanding of historical populations. See, for example, Gregory Clark’s “Farewell to Alms”. The population very much reproduces itself geometrically (or at least used to for most of history), and the growth in food supply was much slower. In effect, the historical populations quickly hit the equilibria, and oscillated around Malthusian limit. Compare, for example, rapid population growth of colonial America, with very lackluster growth of population of England during the same time (and even then, the growth in England was partially fueled by food imports from America).
> What is that "kind of economics"?
Marx’s “Capital” is the bullshit kind of economics. If anything, it is the butt joke of economists today.
You've demonstrated that you've fallen for the popular misconception of Malthusian theory. It's not that food is "depleted at the margin" as in people starve until death rates go up. What actually happens at the margin is, lacking in sufficient resources to comfortably do so, people forego having kids. Perhaps, in olden times, lacking the prosperity to get the fathers permission in marriage.
What stopped the world population from hitting 8 billion in year 1 AD already then? Why did population of British Isles was under 1 million at the time, instead of over 70 million today? You can’t explain this without Malthusian arguments.
In a Malthusian model there would be a larger share of poor and starving as food becomes more abundant, because remember necessarily population outgrows food production.
The Malthusian model predicts forever growing extreme poverty as a share of population.
> Marx’s “Capital” is the bullshit kind of economics. If anything, it is the butt joke of economists today.
Compared to what? Not other mid-19th century economic works... Marx published Capital prior to the so-called "Marginal Revolution" that presaged the emergence of Neoclassical economics - i.e. the first era of economic thought generally compatible with modern theory, so it's basically meaningless to claim that his views are derided by economists today.
Compared to "The Wealth of Nations", for example, which had much better economic analysis, despite being published a greater part of a century earlier. Ideas of Smith, Ricardo, or Bastiat predate Marx, and are very favorably cited today by modern economists. Marx's, not really.
It sounds like you mean to say that Smith, Ricardo, and Bastiat are more popular in casual online discussions of economics or economic history, because they aren't any more relevant to contemporary academic economics than Marx is. In fact, as products of the same classical era, they shared some of the same problematic views, including adhering to the labor theory of value, that would discredit Marx's economics.
Of course, any of those names would necessarily be more agreeable to modern economists by nature of not being inherently anti-capitalist, but that's no credit to their scholarship. If anything, extending the our gaze beyond the realm of the contemporary field of economics would reveal that Marx far outpaces these other names in citation value.
> It sounds like you mean to say that Smith, Ricardo, and Bastiat are more popular in casual online discussions of economics or economic history, because they aren't any more relevant to contemporary academic economics than Marx is.
No, I meant exactly what I said. Ricardian theory of comparative advantage, for example, remains being part of foundation of modern understanding of international trade. Every economics textbook teaches it. Same with Bastiat’s broken window fallacy. If their writings don’t get explicit citations in published papers, it’s for the same reason Pythagoras or Euclid don’t get citations in modern mathematics either: their results are so foundational that everyone knows them.
> If anything, extending the our gaze beyond the realm of the contemporary field of economics would reveal that Marx far outpaces these other names in citation value.
Of course, people keep citing Marx. Not economists though, or if they do, not favorably.
Ah, well then I will continue to be puzzled by your response - i.e. why you think any of the classical "economists" you've named are so much better qualified than Marx to critique Malthus (going back to the original premise of this discussion).
Adam Smith is, of course, famous for being the first "economist," but his legacy isn't the result of him being particularly accurate (nor are his actual economic views very clear or citation-worthy). What did Bastiat even produce that could be cited by economists today? Of course the broken window fallacy is popular in Econ. 101 textbooks, as well as with the Austrians and in the free-market blogosphere, but it's not citable research. Ricardo was a seminal figure in the development of modern economic thought, but he was also a product of his era who was wildly wrong about lots of things. Moreover, Marx was familiar with his work, both adopting and critiquing parts of it throughout his career, so it seems a bit peculiar to lionize Ricardo while portraying Marx as incapable of offering a critique of Malthus.
Let me clarify it then. The poster I responded to claimed that Malthus is a butt joke of economics, which is patently false, and to support that, he cited Marx, whose economic theory is in fact a butt joke of economics. Is that clear now?
I can see what you've written, but I'm having trouble with the level of certainty you ascribe to what is surely a highly-subjective claim. It's not at all clear that Malthus is not (or hasn't been), at least partially, a "butt joke of economics", nor is it clear that Marxian economics' heterodox status today has any bearing on the quality of Marx's critique of Malthus.
Both Marx and Malthus have present-day adherents, though current positions have evolved well beyond those of their progenitors, but they've both also been widely panned. Obviously, the fact that neither mass global starvation nor global communism have overwhelmed humanity makes it easy to critique the pair, at least on a superficial level. You might suggest taking a more nuanced examination of their legacies, but I think that would reveal this entire discussion's lack of intelligibility. Perhaps you'd like to take a nuanced view of Malthus, but view Marx superficially?
This is 60s boomer philosophy (it's called "cities as growth engines".) The people running California cities now also believe this, which is why around 1970 they essentially made it illegal to ever build or change anything. This was supposed to stop people from moving to California, but since they won't even build enough housing to let their own children live there it's just brought us where we are now.
Zoning. You link the "zones which employ people" and "zones which house people" to balance so you don't have significantly more jobs than homes.
Next you zone for type of housing, where you only allow a certain percentage of the most profitable 1BR apartments to be built, and require those to be above certain size thresholds so that a variety of life situations can actually live in your city.
You don't need to "incentivize" construction, the people that do that already make enormous amounts of money.
From what I’ve seen in and outside America, my gut feeling (I don’t claim expertise) is that zoning can make things worse.
The apartment directly under mine is used as an office. Down and to one side is a psychiatrist. Ground floor is a cafe and a pizza takeaway. The apartment opposite me has a grocery store on the ground floor, an office on the second, a dentist on the third, and it looks like the rest of the units are residential. I may be missing something important about the rules here because I can’t read German well enough, but it feels self-balancing.
America… well, this is a tourist perspective, but I didn’t realise how realistic SimCity was before I visited.
Zoning only became the downfall of American public transit because constituents are selfish; when 80%+ of a county's residents are homeowners, they're incentivized to fight back against anything that would cause their home values to drop (including public transit due to the noise and apartments which would reduce demand for single family homes), and the local politicians are incentivized to listen lest they be ousted in the next election for working against the community's interests.
> incentivized to fight back against anything that would cause their home values to drop
That they perceive will cause their home values to drop. In reality, they use "home value" as a proxy for "my happiness" and tend to block things they don't like, without really considering the impact on prices.
In very large cities, your SFH is worth a shitload more if someone can put an multi-tenant unit down on it. We still see the odd SFH or diner in NYC, which is now worth bajillions of dollars because the city was allowed to grow to be so dense.
Increasing density is pro home values. Anyone fighting against it is absolutely leaving money on the table. They just don't realize it.
Mixed light-commercial and residential is all over the place in US cities. Those places work best when they are supported by transit and fully walkable resources, which often limits their adoption in the US to areas that are highly dense or have newer commuter rail development. Zoning can keep big lot single homes and giant warehouse areas from disrupting those spaces.
Spot on. What zoning proponents miss is that people living and people working and people doing sports etc. are the same people. Zoning is equivalent of a spherical cow in a vacuum and would work only if there are people that work 24/7, then those that live 24/7 etc.
> only allow a certain percentage of the most profitable 1BR apartments to be built
Ah yes, the "ban return on investment and ban certain construction" method of promoting construction. Works 100% of the time, every time. See: SF, Seattle, etc.
If you want to go the Japanese liberal zoning route, simply redefine a one bedroom apartment as a 2.5 tatami sized micro dwelling without central heating and maybe a shared bathroom (or maybe no shower in building at all). Western standards on viable housing are a bit more generous than other countries.
I think that’s intentionally to keep out the poors. Nobody wants those kinds of building in their neighborhood because they house folks of lower social economic class and “bring down the neighborhood”
This happened in East Nashville. It used to be the shady side of town. Then a bunch of artists went over there because that's all they could afford. Then the sycophants followed, property prices are now stupid expensive, and no one with low income can really afford to live there any more.
Ok, in California for example, before this works, you need to undo most of the anti-building laws (these are mostly environmental related btw - not sure if you would be happy with removing them), corrupt permitting boards, and also do some reform on the lawsuit system (since everyone sues you when you start building). Also there are tons of accessibility related laws that make building more expensive - e.g. you must have an elevator on any complex with 3+ apartments. It's probably illegal to build cheap apartments with no AC like we used to.
If you dont change any of this, a new "affordable 1br apartment will probably cost 700K.
> If you dont change any of this, a new "affordable 1br apartment will probably cost 700K.
There are places in California where you can get a single family home, let alone a 1br apartment, for around $200k. Let’s not kid ourselves and substitute California for when we really mean LA or the Bay Area (places where people want to live, as opposed to susanville, where most people don’t want to live).
That sounds all well and good but I live in a desirable central coast city and thanks to SB9 I can now build 4 extra res units on my property. You are mistaken if you think anyone is going to spend that effort and charge anything less than current market ... maybe more, new houses are expensive.
What we need is subsidized housing close to mass transit, single payer medicine, progressive tax reform and subsidized child care. Changing laws to allow the wealthy land owners to build more for-profit residences will help only land owners.
They don't have to charge less than market. They charge market rates and absorb 4 families that would've otherwise taken their market-rate salaries and kicked 4 immigrant families out of a 4-plex that used to rent far below market.
Section 8 are the only units that arent going to go up. Further, in my area 4 households moving to a property is not going to free up 4 local, otherwise cheap, units. New units in my area are going to attract higher-pay-than-average workers from San Jose or somewhere else in the bay area. I think one delusion is that many people think there is a single fix all. Its gonna be more than just build more housing. There are already millions of empty houses in the US.
the trick is that landlords and property owners are not some closely linked cartel but are viciously competitive, so if everyone spends enough effort it can eventually cause a stabilization or even drop in prices.
We do not need subsidized housing further driving up prices.
We need fewer people in the market and that means less availability of large loans and taxes on commercial real estate loans. You can't have so many people competing to buy real estate to rent to you and pushing out people who want to buy.
And people need to be comfortable when a region doesn't want to grow, force them to curtail their commercial zoning, and people just need to leave and go somewhere else. There's plenty of space elsewhere.
When there are no real infrastructural/environmental limitations for population growth in sight, “our region doesn’t want to grow” paints a picture of some residents placing their own emotional attachment to how things used to be above all else.
> When there are no real infrastructural/environmental limitations for population growth in sight, “our region doesn’t want to grow” paints a picture of some residents placing their own emotional attachment to how things used to be above all else.
What exactly is the problem with that? The only thing that welcomes growth forever is cancer, and economists.
We are not discussing restricting human reproduction. Keeping low density strictly ensures humans spread wider and live with larger environmental footprint to appease those averse to change in a futile attempt to hold on to the past.
To make your proposal more reality-compatible, “people should be comfortable when a region has to grow”. This means people’s attitudes as well as infrastructure’s capability to handle increased number of people.
The problem with this sort of balancing act is that most zoning isn't centrally planned enough that you can actually balance this. Most of the time you are planning one small section of a larger urban/suburban complex, not the entire country. So you have to consider inflows and outflows of both commercial and residential demand.
If more people want to live in your city than you currently have housing for, then it's not simply a matter of "balancing zones" anymore. Your plans no longer match reality, and one of four things can happen:
- Your zoning remains static and housing prices rise according to demand, pricing people out of the market
- You hope businesses leave so that you can convert some of the commercial space to residential
- You decide to allocate existing zones on some criteria other than willing price paid
- You zone for higher density and allow existing homeowners to make money by making room
The first option is gentrification. The do-nothing option. The one that we're trying to avoid because we find it distasteful. If we don't fit more people in the city then it becomes a playground for bored rich people as the market will kick everyone else out.
The second option usually doesn't happen - residential demand drives commercial demand because most businesses want to be close to people. If businesses are leaving, that usually means that people are leaving, too. This also means that balancing zones isn't really a thing you need to actually do. The problem isn't that the space is being used inefficiently; the problem is that there isn't enough space to go around.
The third option is rationing. This takes many forms, and is politically popular with basically everyone. But it doesn't actually solve the problem: there are still more people who want to live in your city than houses to put them in. You're just choosing a different way to allocate those houses, and invariably it tends to be a metric that's easier to corrupt, because suppliers now have an incentive to charge rich people more to bypass the system.
The fourth option will actually fix the problem; and in fact is the only way to fix the problem. But it's also the easiest to politically oppose, because we've set the standard here in America that land is supposed to be divided entirely between large shopping centers and low-density suburbs; and that living in anything else is a symbol of urban poverty. This actually isn't true anymore - the areas worst hit by gentrification are also the ones zoned for high density or mixed use, and this is precisely because of people making it difficult to upzone property.
If we didn't have zoning, or at least had less of it[0], then the market could actually work to incentivize resupply rather than just redevelopment. Then we could talk about social housing or housing subsidies on the demand end, knowing that we have a market that actually responds to supply rather than just pocketing the wealth.
[0] e.g. Tie the planners' hands a bit and just have mixed commercial/residential zones of varying densities, with industrial land use separated out for safety/noise reasons. Japan does this.
The reason no one is building expensive apartments in these areas with socialist like governments is because of things like rent control and laws that disadvantage landlords, and which make the prospect of leasing to poor people completely undesirable. This is why a huge number of the apartments in California are sitting empty, because it is still better to have an empty apartment than having a poor person living there and paying you money. Any laws that force people to build low quality homes will just mean no one builds at all.
People always want to control everything, and when there is a problem they think they can fix it by forcing everyone to do what they want. No one ever wants to consider that it is them that is causing the problem in the first place.
Huh, you are absolutely right. The internet is full of articles saying the exact opposite, but none of them compare California to other states. Turns out this is part of a push, by certain political groups, to introduce even more laws to disadvantage landlords into the California property market, and I fell for it. Thanks for setting me straight on that.
We have a thing in Melbourne where empty places can be fined. They can track by utilities use. There's a process for appeal etc etc but it amounts to: "you have a liveable place, let someone live there"
I have no problem with this. If investors argue it is a shit deal, that is fine, get out of the market and let someone who wants to live there buy it.
I firmly believe that housing cannot be both an investment market AND affordable for everyone.
By some definition of 'expensive', probably there are more expensive apartments in NY, LA, and SF than anywhere else in the country. Those are probably the top three cities.
The reason rents and sale prices are high is that people love living in those areas.
> socialist like governments
How do you define that? Loaded terms are important to define; otherwise they become, 'whatever I think', which means different things to the writer and reader.
Alternatively you could just not make building housing illegal. the mor regulation you add the more expensive things are going to be and the more opportunities there are for corruption. The harder you make building housing (the more regulations there are) the more expensive housing is going to be. If housing is expensive homelessness will rise.
Alternatively you could be like San Francisco and lard on regulations "meant" to help that have the effect of reducing supply, resulting in a large homeless population, since people want to live there.
Better yet, you can just have the government build the housing.
The state has all the information it needs, and anything it doesn't have it can find out by mandating businesses comply. It then figures out exactly the housing needs in a given location and build that housing. It doesn't need to be fancy and wasteful like the private market tends to build. It's meant to just house people efficiently. It would be a lot cheaper than current options and we can be sure there's enough supply. It could distribute the housing based on needs. Family of 4 gets a bigger apartment than a single person.
>Then the rents of those 1BR apartments would rise to capture that new minimum wage.
This is commonly expressed as a consequence of raising the minimum wage, but in the most nuanced discussions of inflation that I've been exposed to, people are mindful of the fact that inflation ripples out into different segments of the economy in different ways.
I think the most plausible outcome is that certain segments of the economy function as shock absorbers, which take the hit of inflation disproportionately as the economy rebalances itself and relieves pressures on segments of the economy that were being squeezed unsustainably hard.
And so there is indeed a ripple effect of raising the minimum wage, namely there's more money to spend, but it radiates out into the economy in disproportionate ways, and can be a net benefit to wage earners because prices on critical necessities may rise, but not in proportion to the rise in wages.
That's a real phenomena, of inflation rippling outwards and occasionally hitting buffers that cannot pass the price increase on and hence take the hit of inflation disproportionately.
Unfortunately it rarely works the way any progressive would want it to. The "buffers" are firms in competitive markets - basically anyone who can't raise prices because there are dozens of other competitors doing the same thing and one of them is going to undercut you if you try. This includes most unskilled labor, many small businesses, small farmers, etc. It most definitely does not include the S&P 500, who got to be one of the top 500 biggest companies by having high margins, economies of scale, and pricing power. This is why the S&P 500 index is roughly double what it was two years ago, while median real wages have fallen about 5%.
I think the phenomenon you're talking about at the end of your comment is something that happens in spite of the beneficial effect of increased wages, rather than something that would count as evidence that people don't benefit from increased wages. Otherwise it would stand to reason that cutting wages would turn the equation inside out, so that buying power goes up with lower wages and economic gains go increasingly to the bottom of the more you lower wages. I don't think that it swings one way or the other, which is to say I don't think that they're so determinative of each other. Those two things just seem too remote from each other to be regarded as in immediate causal connection.
There are other contributing variables exerting their influence at the same time: investing, and lending, and spending, and taxing and policy choices are significant inputs that all happen in parallel with wage increases in particular policy and economic climates that have different outcomes from country to country.
It also seems to fly in the face of reason to suppose that efficient markets don't see market-wide increases in prices. Firms don't just compete against each other but against the existential question of solvency, and if we're really talking about competitive markets, then these pressures are experienced collectively.
So neither the evidence of the stock markets nor the theory about competitive markets never increasing their prices seem to do the work that they would need to do, to suggest that people seeing wage increases are not benefiting from them.
Minimum wage has always seemed to me to be an unfair way to mandate a minimum standard of living. You are placing that burden solely on business sectors that cannot automate most of their workforce. I don't know what the right naswer is, both universal income and negative income tax have issues too. Sunsidized housing... Yeah I have no answers.
If the rent pricing exceeds the production or maintenance cost of the apartments by too high a profit margin, then a government or regulated private entity should be formed to build them at a reasonable margin, thus controlling the minimum wage growth.
Alternately a large enough ratio of government controlled units within a market could be managed to provide a market weighting to reasonable prices. (you can see that in play in some European cities).
>two people being able to afford a 1 bedroom apartment within a 1 hour drive without traffic.
My immediate reaction to this statement was.. it's insane? In my opinion it should read 'a single person able to afford a 1 bedroom apartment within an hour of public transport commute.'
Otherwise it sounds like you don't think anyone should be able to live anywhere reasonable without roommates?
>Otherwise it sounds like you don't think anyone should be able to live anywhere reasonable without roommates?
I think your confusing "should be able to" with "shall be able to, enforceable by law".
I don't expect that a 15 year old working his first job as a fry cook at an Arby's should be compensated enough that he can afford to live on his own. In fact, that could be dangerously disincentivizing his hard work toward his education.
But should a 27 year-old fry cook make enough money to live alone? Labor is labor. Pay shouldn’t be less because it’s going to an acceptable to abuse class of person.
Having roommates in a 1 bedroom apartment is quite terrible. You then need to convert (if there even is one) the living room to a second bedroom and as a result no one in the apartment has any privacy left. I have lived like that, and it's just not great for mental health.
Roommates in a bigger apartment or house is quite reasonable. 1-bedroom apartments are more than half the price of 2-bedroom apartments, so some efficiencies can be had by sharing a kitchen.
This rationale is always based on the fact that a "teenager" doesn't need a livable wage. The problem with this, is that not every fry cook is a teenager that doesn't need to pay for food and shelter. Fast food is a $300bn industry in the US. It doesn't need to be subsidized by parents.
Also...the whole argument falls apart when you realize fast food is open during school hours. Legal working hours for teenagers start after school and end before typical closing times.
Pay should scale with the value of work produced, not the perceived "worth" of the worker. You argue with a hypothetical teenager. But what about my racist and sexist hypothetical uncle who owns an Arby's?
Why shouldn't someone working as a fry cook be able to live on his salary? It's not dangerous to have a system where not everyone needs a university degree to earn a living.
He should be able to live on that salary, no argument. Being able to live alone in a studio or with roommates in a 3BR is the way loads of 20-somethings have lived for many decades.
He should be able to live; that doesn’t (for me) extend to “rent the average 1BR apartment for less than 35% of his gross pay, by law”.
Think about that. Let's take your world, the fry cook can live on his salary. Now the person with a University degree can command a much higher wage since his skill is in great demand.
He's got more money, so he can afford more expensive stuff, increasing demand, which increases prices, and now your fry cook can no longer live on his salary.
Do you want to respond by raising wages again? You're in a never ending loop.
It's pretty much automatic. If there's more demand than supply, then companies will offer more money to hire this person with a university degree.
The only way you keep this person's wage down is increase supply - have lots of people with university degrees. But that's not the real world, in the real world most people are not able to get a degree.
> The only way you keep this person's wage down is increase supply - have lots of people with university degrees.
Again, the second part of this statement does not necessarily follow from the first. There are countless ways of tweak supply/demand of McJobs, such as low minimum wages resulting in a glut of retail locations , changing total hours non-degreed workers (read high-schoolers) can work, adjusting rules on temp workers, community college intakes, etc.
There a many variables, and increasing minimum wage impacting a subset of (mostly unskilled[0]) workers doesn't automatically mean an increase in income for skilled jobs.
0. I dislike the term, but it conveys my intended meaning. "Jobs that require no prior training" is unwieldy.
The demand for the university degree didn't increase when the fry cook's salary rose. Increased demand raises salaries, not a worker commanding a higher wage.
I don't see why the persons age should be relevant. But given the cost of college tuition, even instate public college tuition, means he should probably make at least that much.
The age is relevant because he is a dependent and does not need to pay for any living expenses.
So, forcing an employer to pay him a "living wage" makes no sense. The rationale behind that law is invalid. You can invent new rationale, as you've done here, but it doesn't change the fact that his standard of living doesn't depend on his paycheck.
I'm not inventing a new rationale. I'm saying he deserves minimum wage because that's what we pay everyone. It's part of him being human. That the minimum wage has to be sufficient to allow some standard of living is also true but not relevant.
Other people think that the minimum wage should only apply to adults for some reason. Thats them changing rationales. We don't have a lower minimum wage for couples or higher minimum wage for parents. And that the 15-year-old isn't spending the money right now doesn't mean he won't spend it later.
But sure, If you really want I guess you could argue that we should t let teenagers work at all. After all, they don't need the money.
It is however realistic given the the US's urban layout and population preferences. Also nowhere has succeeded in keeping essential, low paid workers living near where they work - gentrification forces them out.
I live in a neighborhood where the median income is below the national average by about 10% and above the national average by about the same amount. This implies to me that there are is a fair bit of economic diversity.
Also, I very rarely encounter a service worker that does not live within 25 minutes of the establishments in my neighborhood unless they do so by choice to live in a much hipper neighborhood.
Part of this is a university that stabilizes the real estate prices and attracts a lot of low income students who take on service jobs, but also a big part of it is housing diversity. Within 1 block of me are a commercial district, a high rise building, many mid-rise buildings, lots of townhomes and a handful of single family homes including at least 2 I’d call mansions. This housing diversity came about due to several phases over the course of over 100 years of urban planning that specifically centered on making it possible for lots of housing desires to be fulfilled in a single place.
It’s entirely possible if there is enough will. But that will is lacking.
> I live in a neighborhood where the median income is below the national average by about 10% and above the national average by about the same amount.
My brain is not parsing this sentence properly. Could you elaborate a touch?
I'm reading it as "the neighborhood median income is, at the same time, 10% below and 10% above the national average income", which is only possible if both the national average and your neighborhood median is 0. I presume I'm reading it wrong.
You can also rent really small apartments that wouldn’t be allowed in the west. 2.5 tatami, no shower in building, shared toilet, no central heating, $250/month.
That's because their work has so much value and they get paid none of it.
EDIT: That's what Henry George said. The reason San Francisco land has so much value and the land in an undeveloped part of California has nearly none is the development, meaning the work of developing it, what human hands do to the land to transform it, the construction. You can sprinkle gold on it and nothing, put a bulldozer there (capital) and nothing, send an entrepreneur or economist to look at it and nothing. It's when people work that it becomes worth something.
Most of the price is due to the shortage of land, near the employment market, where the government has permitted any housing to exist. Someone paid over a million for a half-burned shell in Walnut Creek, which is a lot more than a very nice house in the middle of nowhere.
It’s funny that the ideals of granting everyone “life, liberty and a the pursuit of happiness” are regarded as wisdom, but as soon as somebody tries to ponder of what that might be on the specific, then it’s regarded as crazy.
The reason why single earner households can't afford a house on a single earner wage isn't because houses got 2x harder to build, or a single earner got half as productive. It's because there's only so many houses (land) available, and therefore the people with money (mostly 2 earner households) bid up the price until the people who can afford it equal the number of houses available. So yes, those people "with 'traditional values' or whatever" could certainly get that implemented, but that'll involve banning women from the workplace (or similar legislation to prevent 2 earner households from out-bidding 1 earner households).
Here is a radical idea. Build more houses. Maybe put them on top of each other so they don't have to be so far away from jobs. American love complaining about the inefficiencies of centrally planned economies, but then make one of the most important aspects of the economy, where people can live and work, into a entirely centralized way of doing.
>Here is a radical idea. Build more houses. Maybe put them on top of each other so they don't have to be so far away from jobs.
No disagreement here.
>American love complaining about the inefficiencies of centrally planned economies, but then make one of the most important aspects of the economy, where people can live and work, into a entirely centralized way of doing.
Are they really centralized? NIMBYs aren't some cabal of shadowy billionaires, they're a grassroots effort by local residents. By that definition it's quite decentralized.
At the end of the day there are less houses than people, so somebody's going to be priced out of a house. However, the law stipulates that wages must be raised so that everyone can afford a house. Immovable object, meet unstoppable force.
I think it is more likely that some types of industry would become non-viable in really high property value areas (of course this is already the case). This might reduce demand for housing in an area (who's going to live in a town without a decent coffee shop?), so I guess some equilibrium would eventually be established.
Dual-income families are because of equality, not poverty. When women earn nearly the same pay, it's worth it for them to work (and hire childcare) because then you can use the money to buy stuff.
When they don't work, it's because it wouldn't allow the household to buy more stuff on the margin - but rather than "spouse earns so much their income doesn't matter", it's more likely "they wouldn't earn enough to pay for the services they have to hire". Which is a bad thing.
In general? Yeah, I'm sure both factors are considered in many cases (as well as things like keeping long term career options open). But this thread was specifically about where the floor for minimum wage should be set. If it is set to a point where a couple can just afford a place to live with two workers, then the decision is by definition made based on poverty, right?
living alone is a luxury all over the world. i don’t think it’s good to expect minimum wage will afford you a luxury style of living. we don’t have the infrastructure to support that for all. nor does any country
2 people sharing a 1 bedroom is a pretty low bar, I think minimum wage should afford someone their own bedroom. However I do often see people claiming no one should have to have any sort of roommates, even if they are a single minimum wage earner trying to support a spouse and children. I agree with you in that I don't understand why having to share a kitchen or living room is such an issue.
The problem is always finding good roommates who aren’t secretly murder hobos. Sharing can work, but it seems to be getting harder and harder as we have to rely more and more on close vetting via friends and family.
Why is it hard, and harder now, to find "good roommates who aren’t secretly murder hobos"? I and many others I know have found plenty of roommates, no problem. Not every roommate is perfect, including you and me, but there have been zero murder hobos.
I think the internet might be the problem? It used to be that we would use personal networks to find roommates because that was all there was, but with the internet, more people are connected to each other, and there is less intrinsic vetting via social circles. So that friend of a friend on Facebook could be anyone.
> The problem is always finding good roommates who aren’t secretly murder hobos.
As in a roommate who murders hobos or who is a hobo that murders? If a hobo becomes a roommate, are they too stationary to still be a hobo?
A hobo is a migrant worker in the United States. Hoboes, tramps and bums are generally regarded as related, but distinct: A hobo travels and is willing to work; a tramp travels, but avoids work if possible; and a bum neither travels nor works.
He didn't say that no one should live reasonable places without roommates. He said that the few percent of people making the lowest wages in the country might have to have roommates.
Because the only way to guarantee that people have less than an hour of commute to their job is to create extremely dense population center which means extremely small living spaces which are almost universally hated. And most jobs cannot be done remotely, so to guarantee that each individual has space, he must accept to be some distance ways from the hub where people concentrate to perform their daily tasks.
Think of how many people a big hospital employs, and how you'd need to organise living center if all of them had to have a reasonable living space within few minutes of commute. Now you need stores and restaurant there as well and the space to host the workers of these places too, etc. The only way is to build huge tower hosting tons of small appartements, kill all green areas to gain as much space as possible. People don't seem to like that idea that much.
I live in Liverpool, a moderately large city in England (and work in the city centre). An hour's cycling, let alone driving, will get you basically out of the city. And, for all that there isn't space for vast exurb-style tract houses, there are a ton of houses of different sizes up to large detached houses with decent gardens, large parks, and all the other nice things.
Travel-to-work areas are circular-ish, and the available space for housing increases with the square of the distance. Accommodating a large hospital's workforce won't make a sizable dent in that. Compulsory tiny rabbit hutches in the sky it is not.
> The only way is to build huge tower hosting tons of small appartements, kill all green areas to gain as much space as possible.
This is precisely backwards! Dense housing creates green areas, sprawl devours them. This should be obvious if you think for even a moment—-dense housing requires less land per person housed, which leaves more for nature.
I live in a cluster of small towns with a major regional hospital, almost exactly the situation you describe. After decades of sprawl, we’re finally starting to do an OK job of building dense housing right next to the hospital, and it’s saving a huge amount of wild space.
Most people who are commuting for jobs in the service industry in the US likely live within 15 minutes of their job, though. Most of them have cars by necessity, and they don't have that kind of money to blow on fuel.
The vast majority of jobs cannot be done remotely. The HN crowd is heavily skewed toward programming / engineering jobs that can sometimes be done remotely. But overall, most jobs do require a physical presence.
Think "people care" (and all the ramifications or that: babies, children, sick, elders + everything around that). All people working in stores (unless we exclusively want online shops). Transportation of goods. Building, sanitation, construction. Any job that requires specialised equipment (like factories), ... .
The whole idea that we can transition to a society where people don't have to move to get to work is an illusion. COVID gave us a false glimpse because most activities were closed or significantly reduced, so it felt like people didn't need to get to work anymore but that's just because they simply did not work. And it was not sustainable on the long run. We made the - right IMHO - choice to subsidise their income, wether directly via stimulas checks, or indirectly by helping their employers, but all that was based on the bet/assumption that we would be able to resume "normal society" and we would be able repay the debt we incurred over the next years.
This is a discussion I've had with a number of folks.
To shift to a world of "mostly" remote work in reality means the smaller population of higher paid desk workers working from home, and everyone else having to commute to in person jobs.
Worse if companies don't adjust wages to match local rates (per the protests of many tech workers) we end up with deep income disparity between the remote workers and in person ones. Bringing many of the problems of a place like SF to all the other locations.
It feels like something has to give, or the society that results is awfully dystopian.
A universal basic income would have some advantages over a minimum wage. Minimum wage interferes with supply and demand in the labor market, which is why some economists dislike it. UBI moves the supply curve to a different place, but it allows those principles to function.
The evidence for 2) is literally all around you. Why is an empty shack-sized lot in Palo Alto worth $1MM+? Simply and only because the people there earn enough money to buy it.
Typical UBI proposals are funded, e.g., by additional progressive taxes, and so no actual income surplus is generated (in a first-order analysis), income is redistributed, compressing distribution.
Not really. The fundamental problem of means-tested welfare programs that UBI addresses remain:
(1) Eliminates multiple sets of inefficient benefits/eligibility bureaucracy that duplicates functionality already performed as part of taxing authority.
(2) Eliminates a counterproductive incentives associated with typical means-tested benefit eligibility, which has clawbacks at low income levels and rapid marginal rate (sometimes exceeding 100% with marginal income when tallied across all means-tested programs; this effect creates a barrier to progress beyond a low income level. (While progressive income taxes may be raised from previous levels to fund it, when viewed as clawbacks these changes typically kick in at much higher income levels and lower marginal rates than typical means-tested benefit clawback.)
From a US point of view, when was the last time any entrenched bureaucracy was eliminated? As a baby step in redundancy reduction, is it realistic to think that UBI going to get rid of a program like WIC, against the full power of big ag brandishing starving baby pictures?
Your second point acknowledges that taxing away UBI through progressive tax rates is a clawback. As I read it, your idea is that the increased marginal taxation due to the clawback will occur at higher income levels than exist with current programs. Why not just change the existing tax rates instead of sending out cash and taxing it back?
> From a US point of view, when was the last time any entrenched bureaucracy was eliminated?
The most recent that springs to mind is the elimination of most of the conscription-related bureaucracy post-Vietnam.
> Your second point acknowledges that taxing away UBI through progressive tax rates is a clawback. As I read it, your idea is that the increased marginal taxation due to the clawback will occur at higher income levels than exist with current programs. Why not just change the existing tax rates instead of sending out cash and taxing it back?
A baseline tax credit plus adjustments to existing rates is widely recognized as one mechanism for implementing a UBI, but even the there is often a desire to have an estimated advance mechanism, to avoid a delay of potentially more than a year from when people enter the UBI-covered population and when they start benfiting from it.
> elimination of most of the conscription-related bureaucracy
I was just thinking of that as an entrenched bureaucracy example but decided to focus things on an entitlement program. Despite having zero purpose for 49 years, Selective Service still manages to spend $26m/year [0].
> often a desire to have an estimated advance mechanism, to avoid a delay of potentially more than a year
The model for advance payments on an upcoming year's tax credits already exists [1]. I can see how this doesn't address downward change in income, but also don't see how that couldn't be added.
There are goods and services with income-elastic pricing, like housing.
UBI indirectly and unfairly benefits only the people who control those goods and services. If everyone made $1000 more per month, housing prices would raise up to that amount for everyone. This means the majority of the UBI raise would go into just the landlords pockets.
This is why many welfare programs are expense- or need-dependent, because it maximizes the benefit to those who need it without impacting price inflation as much.
That said, the UBI inflation would incentivize construction. But this requires zoning changes, approvals, and consecutive land reclamation anyways.
Might as well start with:
- Removal/reduction in zoning
- Automate construction approval workflows
- Leverage eminent domain to aggregate land, and sell for profit to the builders.
Its just a win-win-win (given the views / property values would be reduced regardless without extra housing causing SF/LA/Seattle levels of homeless people):
- Homeowners get paid, by the city / local gov, at market rate or slightly above market rate.
- The city / local government has a new profit stream, to be used for more housing / services / reduced taxes. They would aggregate land, re-zone it, get approvals completed, and sell the whole package to the highest bidding developers.
- Developers reduce costs to aggregate land and due to interest payments while waiting for all the land + approvals.
- City gets to better plan the hosing market, i.e. superblocks, transit, etc.
- City dwellers get more access to housing (i.e. cheaper housing), and possibly reduced taxes. Also reduced crime and homelessness because the city is affordable for everyone.
Whitewashing UBI as a "win-win" is pretty bold considering I just showed how UBI disproportionately benefits property owners and discriminates against everyone else.
There are ways to achieve all of the above that doesn't require destroying income-elastic priced markets. UBI is not a good solution.
The win-win-win was for "Removal/reduction in zoning", "Automate construction approval workflows", "Leverage eminent domain to aggregate land".
UBI doesn't work well at all, like you stated, if there isn't a big increase in the supply of housing. For example, Seattle needs 10x more housing than it has today, and in 10 years it'll need 100x more housing than it has today. Ideally, all of these should be new luxury condo buildings, with 1000-3000 sqft condos, driving prices of all housing down by 10x. I would really like to see the city make this their only priority.
> For example, Seattle needs 10x more housing than it has today, and in 10 years it'll need 100x more housing than it has today.
Seattle has about 740k people and about 370k housing units. 10 times the housing units would be enough for the entire state population at an average occupancy of 2 persons/unit. 100 times would be enough for roughly every US state bordering on or one state out from the Pacific Ocean.
Seattle pretty emphatically does not need that much housing.
Greater Seattle has 3MM people many of whom would like to be in the city core in a 3000sqft lux condo instead, or Airbnb space for concert nights. You’re also greatly underestimating the number of people from around the US who would rather live in Seattle but just can’t afford it right now. Seattle has a labor shortage and just can’t fill it right now. Restaurants and even many bars close early because it’s not cost effective to stay open later.
Density also facilitates business and pulls in even more workers, who are also customers and it’s a positive cycle.
Seattle needs 100x more housing in the next 10 years if it wants to continue to be a competitive city. As a resident I sure hope it does.
> He's saying that if everyone has extra money, then everyone can afford higher prices.
UBI only gives everyone extra money if it is unfunded; typical UBI proposals are funded by either increased progressive income taxes or cutting other spending (which produces income to the recipient), and so is (in first order effects) zero-sum. (Typically, it replaces rapid clawbacks from means testing with slow clawbacks by progressive tax increases.)
That’s not how market prices are generally set. Competition and demand keep them low. It might happen the way you describe sometimes but it’s far from a guarantee.
The theory is just supply and demand, which is how prices are determined in a competitive market. If you give everyone $20k, would you expect grocery stores to raise the price of bananas to $20/lb? Probably not, since people can just go to the grocery store down the street. Now if everyone suddenly wanted to buy more bananas with their new cash that would have an effect, but that’s how markets are supposed to work.
In practice it probably depends on a lot of factors and would need empirical studies.
Who would supply these bananas? After receiving $20,000, do you think the farmer's laborers will go to work the next day for the same wage as before? The trucker? The grocery store cashier? Will the "grocery store down the street" be immune to the higher labor costs?
The gocery worker and trucker will have a better bargaining position, yes. On the other hand, they can also affort to take a lower pay because their basic needs are already covered and any additional income can be spent on luxory. So yeah they will demand better working conditions and goods will increase somewhat in price - but there is no reason to expect that this will be proportionally to the UBI amount.
Why wouldn't rent just increase to capture this new income for most people? If UBI is high enough to afford mortgage payments on an owned house, housing prices will skyrocket (even more than now) until those receiving the UBI are priced out of the market once again. Because once the mortgage is paid off, the value of the property is expected to grow, and that's a bet lots of people are taking, even now in this crazy market.
We could do what they do in Japan and deprecate housing as it ages. Very few people buy second hand properties, so a house is a liability that needs to be demolished vs land without one. It also helps if no one believes in property speculation because of a huge property bubble that burst in the 80s.
UBI could allow the elimination of minimum wage entirely, along with a ton of other scattered welfare programs that have lots of administrative overhead and the typical middleman industries that leech off of government programs.
Most people working for minimum wage (and probably most people in general in the US) work pay check to pay check (like the Applebee's manager stated in the article). They max out their available credit so that the interest takes up all of the possible slack in their income. Under UBI how to you prevent people from now borrowing more money (spending it on a vacation, clothes, fancier car, etc.), paying all the UBI as interest and ending up back in the same financial situation they were before. I don't think UBI solves peoples financial problems. I think Thomas Paine's idea of getting a large lump sum when reaching the age of maturity has some merit. Maybe a manditory two year service in the military or other government org after high school and then they receive a large chunk of money to start their life ($200k or something like that). The person could spend it on school, start a business, down payment on a house, wedding, etc. Having classed in high school discussing what one should do with that money would be a great way for students to think about the future and in a positive way.
> Under UBI how to you prevent people from now borrowing more money (spending it on a vacation, clothes, fancier car, etc.), paying all the UBI as interest and ending up back in the same financial situation they were before.
Don't make UBI subject to garnishment/attachment to pay debt and exclude it from income considered available when determining bankruptcy terms. Lending behavior under those conditions will prevent the use of credit you are concerned with, and bankruptcy itself will resolve problematic cases to the extent that lending behavior does not prevent it.
Most people in financial distress don't do bankruptcy. They run up their credit cards/car loans/etc. till the interest payments are high enough that they are living paycheck-to-paycheck. They get stuck in that situation. I think in the US only the government can garnish wages. Private entities can only bug you a lot and wreck your credit. I just don't think UBI solves the poverty problem like many people think. But I sure would like some country to try it to see what happens.
I find this comment very classist and detached from reality.
Most minimum wage earners are not in poverty because they are taking too many vacations and buying too many luxury items: they are in poverty because rents are consuming 40-60% of their income, costs of essentials to live and commute to work are rapidly rising, and a single medical debt can wipe out all of their savings in an instant.
Avocado toast is not destroying the middle class - corporate greed is.
People aren't poor because they are lazy and stupid, as ultra-capitalist pundits would like you to believe to prevent you feeling empathy. America is systemically broken in a way that it is no longer 'the land of opportunity': poverty today is a trap that hardly anyone can escape by simply working hard and spending wisely.
Minimum wage has other effects. It eliminates extremely unproductive jobs, which I'm sorry if you don't like the freedom reduction, but it's a form of industrial policy that's useful when you're competing with other economies. Also protects workers from accidentally ending up in such a job, which is bad for them even if UBI would let them quit it easier.
And of course, economists don't find it has the negative effects it used to theoretically have, because throughout the 90s they switched from just making things up to actually doing real-world empirical studies. (That is, it doesn't seem to have them up to "60% of local median income" IIRC.)
I prefer sector-specific minimum wages though. Somewhere in the neighborhood of Denmark or Australia.
>Minimum wage has other effects. It eliminates extremely unproductive jobs
what are these "extremely unproductive jobs" you speak of? Is the job of a burger flipper really so bad that we should eliminate it from the economy? Is it so bad, that if someone's skills only allows him to do that job, that it's better for him to stay at home and twiddle his thumbs than to show up to work?
That's for sure a productive job and it hasn't been eliminated here. Sunnyvale's minimum wage is $17/hr and McDonalds/Wendys/In-n-Out pay slightly above that (I read the posters in the drivethrough.) I've never seen a fast food restaurant in the area close, though of course family run strip mall places have as they often do.
I was thinking of things like servants, typists, textile workers.
>I was thinking of things like servants, typists, textile workers.
I don't think they were eliminated because of minimum wage. They were eliminated because of a combination of outsourcing/globalization, which set an upper bound on how much those jobs can pay (at least in the US), and baumol's cost disease, which set a lower bound on what workers were willing to accept. The two forces combined to make those professions unviable. Getting rid of the minimum wage probably won't bring those jobs back. If anything the jobs will go to more productive sectors (thanks to baumol's cost disease), rather than to the utterly unproductive ones like you mentioned.
It recently occurred to me that the complex Byzantine structure of the existing welfare state does have one major advantage over UBI: it’s significantly harder to make the entire thing agenda driven. As soon as you have a UBI, there will be massive political pressure to use it for some agenda.
Of course everyone gets UBI…
…except the polluters
…and CO2 emitters
…and meat eaters
…and porn watchers
…and weed smokers
…and tobacco smokers
…and alcohol drinkers
…and maybe it’s distributed on a curve, depending on race
It could be corrupted so easily. And it’s a single point of failure.
Cash welfare is extremely good, but an advantage of directly giving out non-cash welfare like food stamps is that they can't be stolen from the recipient. ie if everything was UBI and you ended up in debt or someone stole your bank account contents, you still can't pay for groceries. But with a guaranteed free groceries program then you can always get something.
Unfortunately, non-cash welfare has tons of the manipulation you describe. You can get kicked out of public housing for using drugs and food stamps have all kinds of arbitrary limitations on them based on what the state legislature thinks you should be eating.
> It recently occurred to me that the complex Byzantine structure of the existing welfare state does have one major advantage over UBI: it’s significantly harder to make the entire thing agenda driven
Uh, no, it's not.
The byzantine structure is because of (and in part to disguise the way that) every component of the system is agenda driven, and often by an agenda rather divergent from the overt purpose of the programs.
Eliminating complexity for the sake of eliminating complexity is not an effective solution, especially when it introduces new problems like inflation on income-elastic priced goods like housing.
>along with a ton of other scattered welfare programs that have lots of administrative overhead and the typical middleman industries that leech off of government programs.
That sounds great in theory, if everyone is the type of person that can take care of himself for $15k (or whatever) a year. But what about people with special needs? eg. people with mental health problems or medical conditions requiring expensive therapy? Unless you think we should let those people fend for themselves, you'll still need welfare programs to help those people, which mean all the "administrative overhead and the typical middleman industries that leech off of government programs" that you're so against.
> But what about people with special needs? eg. people with mental health problems or medical conditions requiring expensive therapy? Unless you think we should let those people fend for themselves, you'll still need welfare programs to help those people
Speaking from experience, such people already have to fend for themselves...so nothing really changes.
Something changes: Those people can spend the energy that they currently need to chase after means-tested benefits on getting better. Being poor is not just expensive, it can also be extremely mentally taxing.
It is very tempting to draw a straight line between something you don't like and some other event that is negative and declare causation.
Do you really think this is what is causing inflation? Perhaps there are other facts, such as trillions of dollars of almost zero interest money injected since 2008, massive tax cuts for highly profitable companies (eg AAPL) that result in great payouts to people who are already paying low taxes (long term capital gains), complex interacting forces that moved the cost of a barrel of oil from a low of $20 to over $100?
The 6 trillion in government spending, subsidizing labor non-participation with federal money, and canceling federal leases and pipelines and saking banks not to lend for fracking didnt help any of that.
I'm not sure how I see how spending a ton more money (UBI) will help with inflation at this point. 100% debt-to-gdb is already a lot.
You might recall 2008, where we tried not spending money and what we got was a 10-year-long recession.
Currently private investors are refusing to invest in oil even without environmental factors in the picture - they think it's a temporary spike and are insisting the oil companies pay them back dividends instead.
The covid checks weren't UBI, only people under a specific income range were eligible. Also keeping businesses afloat solved stagnation (worst) at the cost of inflation (bad, but not the worst).
I'm critical of UBI but using a global pandemic with millions of deaths as an example isn't what UBI is.
How much funds were paid out to individuals aka UBI and how much was spent to stimulate business? How much of those funds paid out to individuals were funded via additional progressive income/wealth taxes rather than just printed?
Everybody is giving you theoretical answers, but I am literal minded.
According to some website, Miami, FL is the most expensive real estate market in the country, and Florida has a fairly low minimum wage currently. So, I'll work with that.
I assume that a 1 hour drive without traffic puts you at most around 55 miles (freeways are faster, city streets are slower, but this is an estimate).
That could put you in places like Belle Glade, Florida, where the 1 bedroom apartment listings are between $400 and $650 per month.
But, it could also put you in the much nicer West Palm Beach, Florida, where (according to Zillow Fair Market Rent for ZIP Code 33401) the average rental for a 1 bedroom apartment is $1274 per month.
Divided between two people, that's $637 per month. If we go with the rule that 1/3 of your wages should go to housing, that means you'd need to make $1911 per month to afford that apartment. If you worked 40 hours a week, and there are (on average) 4.3 weeks per month, that means you'd need to make $11.11 per hour to afford that apartment.
According to this other random website, the average hourly wage in Miami is $21 per hour. The minimum wage in Florida is currently $8.65 per hour.
In summary, if they took the least generous interpretation of your rule set (the Belle Glade case) they could safely lower the minimum wage. If they took the most generous (the West Palm Beach case) they would need to raise it by about $2.50 per hour.
The average wage across the U.S. is about $27, and 2/3rds of people make "at least" above $15/hour, so it may not affect most people at all, ceteris paribus, and making the assumption that the example region is a useful example.
This is all very hand-wavey and back of the envelop, of course.
> Divided between two people, that's $637 per month. If we go with the rule that 1/3 of your wages should go to housing, that means you'd need to make $1911 per month to afford that apartment. If you worked 40 hours a week, and there are (on average) 4.3 weeks per month, that means you'd need to make $11.11 per hour to afford that apartment.
Apologies for the approximation nit and acknowledged that it was all back of the envelope, but $11.11/hr struck me as low at face value.
Upping the ante a bit, let's further assume single standard deduction earner with a $1911 net monthly income requirement (because you can't actually pay with money you don't have), which roughly implies 12% marginal tax bracket. Let's also account for fixed 6.2% social security withholding, and fixed 1.45% medicare withholding.
Squaring against this standard 2022 IRS Publication 15-T withholding method[1], we come to the following arithmetic expression to determine gross monthly income requirement:
Crunching the numbers (~$2196 gross monthly income) while using your proposed 4.3 weeks per month scalar, it's more like $12.77/hr (or $11.11 being -13.0% in relative error).
To be sure, this assumes complete omission of common tax-advantaged benefits such as deferred 401(k) retirement savings and medical/dental insurance coverage.
> The minimum wage in Florida is currently $8.65 per hour.
Florida's prevailing minimum wage is in fact $10/hr[2], with scheduled increases at $1 every year towards a $15/hr target by 2026[3].
There'll be a bunch of cheap singular apartments spread all over the US - let's for convenience's sake assume they're about a one hour drive apart from each other but that's a totally random number of course.
You can rent them for very cheap but just as you're about to move in they suddenly become unavailable for whatever reason? Probably the owner lost their keys or something and then lawyers can argue for years if the owner is actually required to hand over the keys. Or maybe the apartment has no way to enter and lawyers can now argue for years if an apartment needs to have a door?
Yeah, and this is the trouble with trying to get people to engage with hypotheticals on the internet in thoughtful ways.
The usual formula for any engagement with hypothetical ideas is for it to be reflexively dismissed with a "that'll never work" response. Most of the time I think this is the instinctive friction we feel at being asked to engage with a new idea, and saying that'll never work for [insert reason] is intended not to express a counter-argument so much as it is to reject the invitation to participate in the exercise.
But even in the genre of "that'll never work" responses, this one is uniquely strange. Normally the "that'll never work" response suggests that there's some obstacle that arises as a consequence of the change to the status quo. But here, it's just a list obstacles that aren't connected to any underlying principle. It doesn't even feel like the usual "that'll never work" response.
It's not really that complicated. If everyone has more money, then everyone can afford to pay more, so prices will rise to consume that extra money.
And you are back where you started. Or you have to raise prices again, in a never ending loop.
I suppose you can hand out ration cards for food and housing, so those never have a price, just a government supply. That's the only "out" I can think of to keep the loop from happening.
I mentioned this in a different comment, but this assumes the uniform distribution of inflation, which isn't how it works.
Different segments of the economy can function as shock absorbers that bear the brunt of inflation, while other segments of the economy see their prices rise more slowly then the increase of wages.
Different sectors of the economy face different degrees of surplus and strain, and the relations between those structures are always up for renegotiation as new money enters the system.
You seem to be assuming that all this new money comes out of thin air, which might be a plausible way to think about central banks issuing new money, but it doesn’t seem to be a natural way to think about changing the minimum wage. Changing the minimum wage makes specific things cost more, which isn’t the same as creating new money or “giving everyone more money.”
You obviously don't live in Indiana....to think there are basic renter's rights. That would be a huge win.
I'm only slightly kidding. The Indiana legislature was "too busy" to consider a renter's rights bill this year. They were busy trying to "solve the problem" of transgender kids playing on sports teams in schools. That's obviously way more important than lower income people having affordable, safe places to live.
>> I wonder what the USA would look like if minimum wage was defined as; two people being able to afford a 1 bedroom apartment within a 1 hour drive without traffic.
> [imagined nonsense rules-layering]
That won't happen for two reasons:
1. It requires a massive conspiracy.
2. Any law like the GP describes would most likely be written to block off the exploits that it took you five minutes to think of. Exploits that are missed can be addressed in subsequent laws.
Practically, a minimum wage defined like the GP's would require a detailed census of actually-paid one bedroom apartment rents, which would be immune to your exploits.
I know this won’t be popular but minimum wage shouldn’t exist. Basic income, sure but not minimum wage. Every discussion of minimum wage blames employers for something that is completely out of their control: inflation. When the price of gas, housing and food rises the business where you work doesn’t suddenly have more money to hand out. If anything their costs have gone up too reducing what they can afford to pay out.
It blows my mind that people continue to act like rising costs are the fault of their employers, who have no control of it at all.
No doubt, this exec in particular was a moron who deserves to be fired for even suggesting what he did but the overall sentiment just doesn’t jive for so many businesses that are getting squeezed harder and harder everyday.
By raising prices and further cementing inflation across the board, which will be passed on to other people and other business to persist the effect even further if they don’t lose customers because of the price increases.
It sounds so simple to just raise prices, but if it were that simple it would have happened long before. Especially on the lower end of the consumer goods and services market the price sensitivity of people is sky high. In grocery stores companies chose to shrink their products and hope people didn’t notice rather than increases prices for that exact reason.
It gets passed along somewhere and in the end the more people who decide to “just raise prices” the worse the problem gets.
I agree that UBI would be better than minimum wages. Until we have UBI though (and it does not look like that it will be a reality anytime soon if only because those with wealth really don't like wealth redistribution schemes) minimum wage is the next best thing we have.
With UBI the entire conversation around inflation would shift to increasing UBI to compensate, which is a federal problem that would directly tie inflation to higher taxes. IMO it puts the conversation in the proper venue.
That's not nearly enough detail for the setting of the wage. Companies would simply assume that they always eat the cheapest food, buy the cheapest transportation, never go on vacation, no luxuries at all, etc etc. If you don't factor all that in, they'll factor it out.
Even with all that factored in, and even with skipping meals, not traveling anywhere minimum wage does not afford one a roof over their head. Maybe with hours of commute it could start working out (if far away remote places are considered) but commute time is not included as wage and commute also costs money so it breaks the equation again. But CEOs are getting insane paychecks and bonuses.
I don’t think commute should factor into this discussion at all. People choose to live in expensive urban cities, why not move to a cheaper place? The point of opportunity is that everyone has it, but people that take advantage of it and succeed get chastised while other people who don’t wish to apply themselves get angry. Then add children on top of it and you have people with multiple kids living on minimum wage who feel entitled to earn more money because of their poor choices and family planning.
Cheaper places have fewer work opportunities and one end up with slightly cheaper rents and even lower wages but thats okay if the wage is enough to pay rent. Minimum wage is not. The assertion I made is not for expensive places but not rural either. Anywhere urban is already hard to make a living on Applebee’s salaries.
Still a great deal better than the current situation. Currently if you do all that stuff and have room mates you might break even.
I'd be here for using the same standards as rental agencies do though so it's actually possible to get a place: 3x the rent of 1 bedroom for one full time job. And make it within 30 minutes during peak hour (by whichever means is fastest). Also if they cite a train as their fastest, then no car or license requirements on the job and no penalizing anyone if the train is late.
If they want to be feudal lords, they can at least have the bare minimum responsibilities that actual feudal lords had.
Nothing stops a local government, to my knowledge, or a state government from raising minimum wage for the unique conditions their locale faces and the ideals they want to reflect. People too often think about federal minimum wage, but think about how diverse the environments are that federal minimum wage affects. If you live in a city/state where the minimum wage is lower than you think it should be, you'll probably have better luck changing local conditions rather than trying to boil the ocean that is the US with 350m people and an enormous landmass consisting of the densely urban and sparsely rural, the rich coastlines and wealthy mountain resorts to the impoverished hill countries.
Indeed in California where I live we have our own minimum wage, and I believe cities like San Francisco have their own too.
But when someone says
> I wonder what the USA would look like if minimum wage was defined as; two people being able to afford a 1 bedroom apartment within a 1 hour drive without traffic.
Then "nothing stops local government from doing it" seems to me to lack the aspect of wonder the parent had intended to evoke.
A large number of states don't allow local governments to set local minimum wages. Many of those states are as diverse as you describe the US. Trying to adjust the minimum wage may not be trying to boil an ocean but is trying to boil a sea or the great lakes.
I wonder what the USA would look like if zoning laws were defined as: Issue building permits until people can afford a 1 bedroom apartment within a 1 hour drive of work without traffic
You need to issue building permits and also build public transport infrastructure to guarantee the 1 hour commute. Driving from all around the Valley to Big Tech campuses is already pretty bad with traffic and the highways are not bad, and the urban density is ridiculously low.
>I wonder what the USA would look like if minimum wage was defined as; two people being able to afford a 1 bedroom apartment within a 1 hour drive without traffic.
A lot of stuff would be automated or simply not exist. I don't see how high minimum wage can "work" to solve social issues if companies can choose between not hiring people and paying a high minimum wage.
If automation was free it'd be here already. Automation creates high skilled jobs to manage the automation - it can be a significant labour save but the way healthy economies work that freed labour is going to find some other service to offer.
So how does taking low-wage jobs away affect or inprove "finding some other service to offer", or conversely, how is the presence of low-wage jobs preventing people from finding these services?
>I wonder what the USA would look like if minimum wage was defined as; two people being able to afford a 1 bedroom apartment within a 1 hour drive without traffic.
Is that using the same logic that predicted the Ford Motor Company would go bankrupt in a few years after they raised their minimum wage over a 100 years ago?
I don't know. Based on the wikipedia description[1] they seem pretty reputable by economists and other academics
>Whereas politicians on both sides of the aisle have criticized the CBO when its estimates have been politically inconvenient,[3][4] economists and other academics overwhelmingly reject that the CBO is partisan or that it fails to produce credible forecasts. There is a consensus among economists that "adjusting for legal restrictions on what the CBO can assume about future legislation and events, the CBO has historically issued credible forecasts of the effects of both Democratic and Republican legislative proposals."[5]
So I'm inclined to give them the benefit of the doubt, that they didn't make obvious mistakes in their analysis that a hacker news commenter could have pointed out. Feel free to read the report in depth and disprove that, though.
A better method is to give everyone a universal basic income enough to afford a place to live and to eliminate the minimum wage. That way jobs would have to pay what the job is worth to people, not amounts that create a poverty trap.
The real estate industry would need significant overhauls before tying it to UBI. A minimum wage increase based on inflation would be vastly easier to get done politically in the US and even that bare minimum still hasn't happened yet.
Or, you know, have a Cost of Living/Inflation adjustment every year. That's such a simple idea to me and it's sort of insane to me that not only is that not something that happens, but no one seems to be even suggesting it (or at least, no politicians are campaigning on it). Hell, adjusting the 70's minimum wage to today's dollars puts it at like $24, so just hearing that, I don't know how it shouldn't be around there today, but people talk about $15 like it's crazy.
> Hell, adjusting the 70's minimum wage to today's dollars puts it at like $24...
Bullshit...the unqualified assertion doesn't even pass a ballpark sniff test using Department of Labor's historical federal minimum wage rates[1] and Bureau of Labor Statistics' CPI inflation calculator[2] against Feb 2022 buying power.
| Eff Date | Rate | Today |
|----------|------|-------|
| Jan 1970 | 1.60 | 12.01 |
| May 1974 | 2.00 | 11.68 |
| Jan 1975 | 2.10 | 11.44 |
| Jan 1976 | 2.30 | 11.74 |
| Jan 1978 | 2.65 | 12.03 |
| Jan 1979 | 2.90 | 12.05 |
BUT, these numbers may not yet be taking into full account some of the most recent upticks in inflation. SO, there may be some room for error yet. But $24... sorry pal, but nope. Not quite there yet.
And for the Canadians out there: It's pretty much the same deal. I think last I checked, it was at $15.65 for 1$ @ 100 years range.
Maybe a source? I was curious and using federal minimum wages from either 1970($1.45/hr) or 1979($2.90/hr) would yield less than $12/hr. I know you can contest how inflation is calculated, or use shadow stats, but then you're getting into murky waters. The official numbers are no where near the claim of $24/hr though.
That math doesn't work out. $24/hr is roughly the average (not median) US wage today. $15/hr is close to the median US wage. Making that work would imply extreme wage compression for everyone regardless of occupation or skill.
It wouldn't fix things if that is what you are wondering. You MIGHT get away with 1 person with a 1-bedroom apartment. However, regarding gas prices, contrary to popular belief, the US does not have any permanent control at all over gas prices. They COULD have control over gas prices, however that would require all parties to pass a law to prohibit speculations (aka "futures") on oil pricing. There are too many hands in the pot for that to happen. Note that this isn't an issue unique to the US. Not a single country in the world has a law like this.
That being said, I 100% agree with minimum wage being 3x the median cost of a 1-bedroom apartment for 1 person working 20 hours a week. Why 20 hours a week? Companies LOVE to only give folks part time hours. Of course, in my area that equates to $42/hour, however, note that even at 40 hours a week you are looking at $21/hour. Also, why 3x? When you apply for a mortgage OR sign a lease you typically need to earn 3x the housing cost in order to qualify. Mortgage companies and landlords alike typically want to see housing take less than 33% of your pretax income.
Think about the positive feedback loop you are proposing here:
Minimum wage goes up -> everything costs more -> minimum wage needs to go up some more.
So labor expense grows and grows, while expense for "stuff" becomes a smaller and smaller part of that.
So how do you make that stuff? You can't hire anyone - too expensive. So either automation, or buy things from other countries. This means firing people.
Your proposal will lead to mass unemployment.
But it gets worse, since you've tied your numbers to the cost of housing, and cities have the most expensive housing, people won't be able to live in the city (no jobs available that pay enough).
So mass migration to places with lower housing, until the cost of housing in a city goes down. What's you've done is incentivized everyone to kind of spread out in a diffuse way to keep down the cost of housing.
But where are the jobs in these places? There are no service jobs, since services are too expensive for anyone to buy. You'd have to drive more than an hour to find a job.
People will respond by demanding rent control, but that also means less housing is available.
So not only did you cause mass unemployment, you also caused mass homelessness.
The anchor you're looking for is the median wage. In the US, the minimum wage tends to be around 35-45% of the median wage, and is mostly harmless to employment. In Chile, it hovers around 65% and the effects are more significant, while the distributional effects seem to be exhausted:
Half the median wage is obviously the simplest answer, but some studies have suggested other numbers.
Now you're probably wondering: what does the median wage have to do with a "level of living"? It's simply the presently existing normal "level of living"! The median wage reflects various aspects of the local economy, and is responsive to things like housing prices.
> I wonder what the USA would look like if minimum wage was defined as; two people being able to afford a 1 bedroom apartment within a 1 hour drive without traffic.
More labor being "outsourced" to cheap counties, for one. Rather than a restaurant making meals on site, they'll do most of the prep work 50 miles away where the CoL (and minimum wage) is cheap and truck it in.
I'm pretty sure any restaurant in the United States that prepares meals on site does so because that's a crucial part of the product they're offering, not because it's cheaper to prepare the meals on site.
Correct me if I'm wrong, but wouldn't it be better for the environment if all the produce is delivered in one trip, verse the environmental cost of 50 employees driving 100 miles / day? I'm assuming the LCOL employees live close to the factory.
> if minimum wage was defined as; two people being able to afford a 1 bedroom apartment within a 1 hour drive without traffic.
It would implode or we would adjust our standards in every other area to make it happen. We are simply not rich enough to afford that for everyone the way things are currently structured.
> How about people figure out how much money they need to afford the lifestyle they want and then get a job that pays that much?
What if your lifestyle consists of:
1. pay off student loans in 10 years
2. be able to take transit to work (can't afford a car)
3. save at least 5% of take home pay to get a used car
4. eat ramen and salad
5. maybe see a movie once a month, or go to a bar twice a month
6. internet & cell phone
7. try not to starve or get evicted
8. avoid more than 2 roommates
9. have Obamacare catastrophe-ony health insurance (bare minimum)
And the only job you can get doesn't even pay for that?
That's pretty much the lifestyle of every 30 something I know who is struggling. That's also why this and student loan debt is being called a crisis, because it is. It's not like people honestly want a lifestyle that involves a McClaren and weekly trips to Bali.
I guess they should take on more college debt to get a programming degree, right? Or in your world, the minimum wage is just for kids, is that it? Or it is just their fault that you got lucky where something you like is high paying, and something they like and are good at pays shit?
You don’t need a degree to learn programming. There are many, many other jobs besides programming that pay more than minimum wage with varying levels of requirements. People hanging drywall and digging ditches make more than minimum wage.
You think everybody with a job paying more than minimum wage is doing something they love?
Welding, auto repair (though the barrier to entry is tools), HVAC, electrician, plumbing, etc.
College as a "necessary tool" to get work is seriously broken. I've considered hanging up my "programming" hat and becoming a fabricator (welder, machinist, etc). Not because of the money, but because I know 1) I could make a decent wage and 2) I would enjoy the work more.
The US Department of Defense already has a Cost of Living Allowance (COLA) calculated for most of the United States, large parts of Germany, and large parts of Korea.
Even further, the US State Department has a COLA for any city it has an embassy or consulate in the world. But it's for a diplomatic lifestyle, not for minimum wage workers in the US.
That takes into account the specific set of apartments within a 1 hour drive of each individual work location in the US and automatically updates as apartment rents fluctuate?
If this was a real law, lawmakers would definitely need to flesh out the requirement beyond what an HN commenter presumably spitballed in a couple minutes or less, yes. As written, the requirement also doesn't account for factors like public transit.
That was my initial reaction, but the more I think about it—is it really so unreasonable? Right now, we force employees to deal with the burden of ever-changing real-estate markets. Why not make employers do that?
And if it's too much of a hassle for the employer, just pay your employees substantially above the minimum.
Most people are more than capable of dealing with the burden of managing their personal finances and budgeting. The more responsibility you want to shove off on institutions to take care of for you, the greater you increase your dependence on them and the more susceptible you make yourself to their control.
Not sure if you're being facetious but "we" don't force anybody to deal with anything.
All markets change because people buying something and people selling something have changing ideas of what it is worth when they trade. Business owners are subject to fluctuating prices for everything they buy and sell as well, labor, energy, materials, product... and real-estate of course.
The complaint I assume is about transactions affecting someone who is not party to it. I'm not sure how valid that is -- a region based minimum wage effectively already exists due to different costs of living so presumably it could be made to follow some region based formula like the one proposed that is updated every few years...
I don't know enough to know whether it would be workable or not, but your force employees argument is not a justification for it.
> Every location has to have a custom minimum wage
I think the federal structure of the USA lends itself nicely to that problem.
There would be an issue in extremely heterogeneous states like Washington or California, where the big cities on the coast are known for being expensive while the interior is often cheaper, less desirable and subject to snobbery, as in the case of Bakersfield which I have never heard anything good about.
States and even cities already do set their own minimum wages. I don’t see how further complicating the issue by requiring each individual building to consider the apartments available within a 1hour drive radius to figure out what their minimum wage needs to be.
I wonder what the USA would look like if the cost and supply of 1 bedroom apartment were guaranteed in order to ensure affordability by those making minimum wage.
In other words: why should landlords be allowed to capture the majority of value created by society? There are plenty of examples of successful affordable housing -- case in point, Vienna:
That idea ("1 bed room within 1 hour") is simplistic when you consider places like CA that have NIMBY brigades and huge amounts of red-tape making housing needlessly limited driving up prices with bad leadership.
Hard to feel super supportive of massive changes to min-wage for places that literally make affordable housing impossible.
Growing population + massive regulation + NIMBY = you're gonna have a bad time.
Increasing minimum wage without fixing other issues is a ticket to non-solutions.
California is subsidized by the people living in their cars.
Wage adjustment like that will drive some of the market effects that are suppressed by the inertia that unchanging property taxes creates. Grandma would move out of her 4 bedroom home that costs $300/yr in taxes if she had to pay the gardener $40/hr.
Those cost increase tax would reduce property cost. In states where property tax adjusts you can see that dynamic.
NYC metro area is cheap compared to California, and the depressed upstate cities feature high taxes and incredibly cheap property.
So gentrification? Get rid of the "undesirables" instead of building more housing...
The problem isn't "grandma" (Or, I think that problem is vastly smaller than lack of new building/investment due to hostile regulations). The problem is anti-grow regulations that block what can be built (IE: must match look/feel, can't build high rises, etc)... and anti-grow regulations that demand massive investment in what can be built (IE: requiring water sprinklers in new homes, solar, etc) making new options grossly over-priced.
Cars aren't more expensive just because of inflation... they are more and more expensive due to regulations upon regulations such as air bags, abs, etc. Some of which is good... but a lot of which is debatable or outright wasteful. Same for housing.
Making grandma move out won't create the massive amount of new housing required for some areas. Those areas need new, affordable housing to be invested in - not getting rid of "undesirables" to raise taxes.
"feature high taxes and cheap property"
It's not cheap if you're taxed to death to stay there. Artificially low prices due to artificially high taxes aren't a solution any more than over regulation is.
And the idea of higher wages won't solve the issue that'll end up being inflation adjusted higher prices to pay higher taxes to pay for higher prices to pay for higher taxes to...
The US would import lots more illegal immigrants (because they aren’t subject to wage laws, being illegal and all that), unemployment of unskilled labor would go up, and everything would cost more. And whoever owns Boston Dynamics would get really, really rich.
You can play as many games as you like, but if people aren’t able to generate enough value to justify their pay, Stein’s Law will bring things to an abrupt halt.
The minimum would be way, way lower than $15 per individual in an extreme majority of areas. An hour from a job will get you well out of most every urban center.
Even in Manhattan two working adults could easily afford a 1BR apartment on a combined income of $30/hr. If you extend that out to one hour in any given direction it drops to as low as $24/hr.
Unfortunately, adding complexity to legislation often makes it impassable. This is especially true now, with the increased polarization in our politics.
Some variation of your suggesting is better than what we currently have for minimum wage. However, getting that through congress seems impossible, IMO.
Not just the USA, but what country does that hold? I guess if housing standards are lower, it is easier to survive on a minimum wage, but you specifically stated an at least 90 sqm 1 bedroom apartment in a semi-prime location. Where in the world is that already possible?
Make it one bedroom per adult (so 1 bed apt for one, or 2 bed for 2, whichever is more) with a 30 minute commute in peak hour (by any means), as well as enough left over for a deposit on a similar home in 5 years for 20% lvr assuming current property value growth continues.
>I wonder what the USA would look like if minimum wage was defined as; two people being able to afford a 1 bedroom apartment within a 1 hour drive without traffic.
It would look like both minimum wage, and rent/real estate prices going directly to infinity.
I think that may be aiming a little too high. How about defining it as the minimum you need to be able to feed yourself, have a roof over your head, and healthcare without needing food stamps, medicaid, or other basic government assistance.
To be honest, I think that’s thinking small. I think we should define minimum wage as being tied to how much one needs to afford a single space colony. Two space colonies would be too much, but one per American seems reasonable.
I commend you for actually defining a "living wage"...
using your standard, against the current average 1 bedroom apt rent in my area, factoring housing as 1/3 of the budget. I come at $11.00-11.75 as minimum wage for my area...
Without debating the merits of said concept, the effect would be to (finally) boost the supply of housing, and find a way to transition (decouple?) stored wealth from real estate assets to something else.
Employers would pay apartment owners to keep a below market apartment "available" but turn down all applicants, then use that below market price to justify arbitrarily low wages.
The word “afford” is doing a lot of work there. Is paying 40% of gross income for rent “too much”? 35%? 30%? What if utilities were included vs not? 10th percentile rent? 25th percentile?
Usually 36-40% is the standard. Around $1000 assuming $15 minimum wage and full time employment.
There’s already a standard for this with things like Section 8 vouchers. It’s hilarious how many HN commenters think these are intractable, impossible problems.
You realize that’s got the direction wrong? “Given the affordability of housing somewhere within a pretty huge circle, what must the local minimum wage be?”
The federal government already tallies prevailing rent for every US city/county.
If the policy goal was to set minimum wage to a 40% of full time gross income, and the prevailing rent for basic housing is $1000/mo, 1000/40%=$2500, or $15/hr. You can rent an apartment for $450 in the small town I grew up in. Same calculation would be $6.75/hr.
Most employers use a similar methodology to set travel expense thresholds, etc.
A system like this could be subsidized by tax credits on the payroll side.
you could bypass all the bull and get a far better outcome by simply tying the salary of every member of Congress to the median income. One day people will realize how important it is to hold their representatives accountable and hopefully make it happen.
“Minimum wage” is different for a single guy and a single mother. Business shouldn’t be responsible for making sure everyone has a “livable” wage. If you believe that should be a policy -and I agree. Then that should be the responsibility of the government.
We already have something like that - the earned income tax credit. It just needs to be expanded. Every administration before Trump - both Republican and Democratic supported expanding it.
It does take into account the difference between my 18 year old son living at home and a single mother.
The government should collect taxes and implement social policy - not private business.
EITC is too little too late. I agree that this is the job of the government, to make sure everyone has livable wages, but basing something on an optionally claimable tax credit which most low/moderate income people are only dimly aware of and gives you a net payment from the IRS doesn't help when the cost of living rises suddenly and you face the question of eviction.
In general the US government is very bad at handing out benefits to its population. The closest thing that it can do with consistency is task the IRS with debits and credits on a yearly basis, a task that hasn't changed in decades. Until the US gov't can get better at this kind of work, any benefit scheme is bound to fail.
Why is it such a hard question? Half of the world does it this way. If implemented right, it would be a socialist democracy and function mostly as Scandinavian countries do - free market for everything, except the stuff that is affecting basic quality of life for majority of population.
there are way more expenses besides that. it will never be enough without creating problems . Rather than putting the onus on business, just fire up the brrrrinter.
1. You tie it to always being set about 5% higher than current inflation. Minimum. It's not that great a pay raise when the inflation goes up, but seeing as how they don't even do this all the time in every area... it would be a start to get them all on the same page between Canada and the USA. (All meaning provinces and states.) The only grace period that employers should retain, is 1 month to change their pay accordingly. And without reducing hours. On that note.
2. Make it illegal to reduce hours in an attempt to reduce pay due to higher wages; with out some legitimate reason that pertains to the employee's conduct and not external forces. If the employer has to increase prices to make this work, then fine. Do it. But make sure to not skimp on the cheese, etc. Customers who get annoyed over price raises will ruin you if you are just an ass. And at that point, rightfully so. Fines for something like this should be something like forcing them to pay all their employee's extra $$ per hour every time they do it. This way the money goes to those who need it, and not those who don't; cause lets be real here, lawmakers and governments don't need every penalty paid put into their pocket. Theirs is a crime against the people who work for them, so therefore they should get that cash.
3. Enforce not exactly a minimum wage, but something that might be referred to instead as a 'balanced' wage. Not a living wage, cause that's basically what we are already talking about. No, instead we should just accept that not every job is worth X$/hour. But a person still needs to get the money they need to get by. So what to do? You base it off that persons budget and potential future expenses vs the job they will be doing. If the employer and employee cannot come to terms on what is appropriate, then the employee probably needs to find a different job worth that much instead. Personally, I have no issue with this idea not because it is my own; but because I wish we took this kind of approach more often, instead of 'trying people out' just to fire them. This would reduce that, while being more beneficial to things like income equity, instead of equality, because again... not everything is the exact same. Not all jobs are worth X$/hr.
Basically the premise of 3 is ultimately to enforce fair pay, instead of minimum pay. Minimum makes it into a benchmark. If you meet that benchmark, you are considered an okay employer, even if you're a p.o.s. We need to do away with that, without ruining people's lives at the same time. I think this is the best step forward for that, while being reasonable to all sides needs and demands. Also, things like wage ceilings and gaps and etc would essentially disappear as a notion, since at that point it's up to every single person on a equal front to determine their ideal pay for each job. It's not longer just up to the employer, but also the employee. Some may say it's already like this, but it really isn't. Not like I am explaining. Then again, it also may be a factor of what kind of work a person is in. Like many, I'm currently service industry. Even as I fix computers on the side.
4. All employees should essentially be treated like contractors in terms of taxes. It may be convenient to never have to think about it, but having automatic income taxes and other payroll taxations occur just embolden governments to spend that money however they like. Instead, we should be creating a system that better understands just how much a person uses or contributes in regards to society, and tax them according to both that and their current income based annually; but with each month in a separate table as well for better context.
I think if done right, most people would prefer this system, since it would only ever be taking what you should actually be having to pay for in the first place. That said, rebates will probably not ever be a thing anymore, since they don't have the automatic tax base to fund it all with.
Tit for tat, right?
Either or, these 4 things I think would mostly solve our pay problems. Or at least help us get onto a better path again.
Obviously you could set up a very complex super computer run socialist system of welfare subsidies (European countries do it) that makes life better for the poors but that only works if you can get the rest of society on board to actually give a shit.
I was impressed with the Trump cheques though. Did not think the US would just helicopter drop money into the economy like that.
I think there should be an exception for people who are financially dependent on someone else. If you're a teen living at home you should be able to work for whatever someone will pay.
I hire alot of people, I pay them based on the value of what they produce.
One guy I work with has 8 children. Another is married to a partner in a law firm and lives in a home likely worth >$5M. I don’t pay them any different.
Okay, so you wouldn't hire anyone who produces less than minimum wage. What if a teen wants to learn about your profession and is willing to work, but wouldn't really contribute or produce that much?
If there was no exception to hiring people who are financial dependents you wouldn't be able to hire on such a person for a small rate. You'd either have to overpay, discouraging you from hiring them, or not hire them because you couldn't justify the expense.
Perhaps such labor is uncommon in your profession, but there are many professions where it is common. The kid at the mechanic's who answers phones and gets things for people may not actually be all that valuable compared to a wage high enough for two people to live off of. The job may be really valuable to the kid though giving experience and a bit of money.
Odd - in your previous comment you say you pay people based on what they produce. Here you seem to be saying you pay people more than what they produce - I'm reading "I do that too" as a response to my point about hiring people who produce less than a large minimum wage in value.
No? They have less experience and education on account of being young. Some teens may be geniuses who are better than anyone else, and business owners would be well advised to hire those genius teens at market rates, but some teens will not be as productive as their older counterparts and they shouldn't find themselves forbidden from working just because their labor cannot sell for more than minimum wage.
There are jobs where you don't need any experience and education anyways. The ones that are typically considered minimum wage jobs, like cleaning or restocking shelves. Employers shouldn't be able to hire teenagers for cheap just because they're younger, especially since a teenager isn't going to be less productive than an adult with those types of jobs.
Age is an upper bound on experience and is related to experience and education if not equal. The average 19 year old, all else equal, will have less experience and education than the average 45 year old in the same field. There are exceptions of course - but they are only exceptions.
I'm curious given your view that employers shouldn't be able to hire teens to do low wage jobs what you think about immigration. Is it the same thing, that we shouldn't allow low skill immigrants because they will compete for minimum wage jobs, or do you have a different view there and if so, why?
If you believe someone should be paid lower because of lower experience and education, then pay them based on their experience and education. Not on their age.
Otherwise, what experience and education do you expect that a brand new adult entering the job market to have that a teenager will not? An adult who needs (at least) minimum wage to be able to survive, and a week ago was a teenager. Who is going to hire such an adult when they could hire the teenager, with identical experience and education, for cheaper?
Low skill immigrants are still getting minimum wage aren't they? You're arguing that teenagers shouldn't even get that much. Or are you suggesting that low skill immigrants shouldn't get minimum wage either?
Gas prices putting financial stress on Applebee's employees will also put financial stress on Applebee's customers, who may cut spending on things like going to Applebee's.
I agree they may need to cut their prices. How would this email have been received if it had said:
We are facing headwinds and may need to cut prices
To stay viable this means we need to cut costs
One way to do this is offer lower starting wages. Though this wasn't viable in the recent past, it may be possible now. That's because our pool of workers are feeling pinched and may need to pick up extra jobs
I understand he does not talk about the need to tighten the belt on prices in his email. But obviously all restaurants have been under pressure with COVID and inflation. It may be understood by the recipients that they need to cut costs wherever possible.
The core line of logic "We can pay our workers less, because our workers are more desperate" never gets any better. It's one thing to say they're going to pay less because the business isn't viable at these levels of pay, but extending that to "so we're going to focus on who we can exploit" is where it crosses the line. Becuase if the reason you're cutting wages is that you can't afford them... well, let's start with that big fat juicy CEO bonus.
I think maybe workers would be receptive to this if it weren't for the fact that whenever there's plenty of cash going around it doesn't loosen the belts of workers - it just gets dumped into BS like stock buybacks.
> It may be understood by the recipients that they need to cut costs wherever possible.
Except executive compensation, I suppose.
It's also not an isolated event, just another moment in a trend of big corporate entities pushing wages in only one direction, down. No matter how you word it, it's starting to look a lot like: "We need to lower wages because no one can afford anything anymore because no one is paying high enough wages".
Wages have been going up for restaurant staff, not down, because nobody wants such a high-stress, low-quality job. Offering lower starting wages will end up with reduced staff and burnout.
It will also force employees to look for higher-paying jobs, potentially causing them to leave if Applebees doesn't raise its pay. Normally inflation is associated with higher wages, not lower ones.
>It will also force employees to look for higher-paying jobs
...implying they weren't already doing so? I'm not sure about you, but I don't think applebees is the type of place you stick around for "the good work culture" or whatever.
Shouldn't it be easier to look for new jobs if you have a financial buffer? If anything being more pinched => more time being stressed out and/or more time at work (trying to rack up OT) => less time/energy to spend looking for new jobs.
For one reason or another (all of which we must be empathetic to) many people resist change even to their own benefit. I think all humans are guilty of this in some form or another to varying degrees. For some people, change in job / career is met with severe resistance. It takes a catastrophe for people to get going into finding something better.
* Satisfaction: This is a personal reason of mine. I make a solid technology wage that probably rests somewhere in the middle or maybe low-middle. I could definitely find myself a 15-20% bump if I tried, but I am so damn happy with my employer that I really don't feel the need. As long as my current wage tracks inflation, I honestly would be ok with not making any more money.
People working at these places are highly dependent on transportation and hours.
When I worked retail, we were in sales and were top of the food chain. The restaurant people were a notch over regular mall workers in pay, but had to deal with different hours. Many people work multiple jobs… one line cook I remember did prep work starting at 6am at one place, painted, and closed the mall restaurant. He couldnt flip jobs easily due to bus schedules.
People don't realize how expensive it is to be working poor if they've never been working poor. It's a difficult trap to escape. For some it may be their own doing getting there, for others it may be environmental factors that lead them there or some combination of the two.
The fact is, it's difficult to find resources to escape and you're trapped in a difficult space where gathering momentum to make even small transitions could take years of time while barely staying afloat. This is the life of the precariat class.
In fact, high transit costs might make low paying jobs like Applebees completely untenable. Why take a job if the cost of getting there is higher than what they pay?
Look at Uber… it wasn’t uncommon for drivers to pay Uber to work as comp was less than depreciation. They were basically working for free to cash out car equity.
Financial stress on the customers means also likely means smaller tips. With fewer customers, that also means fewer tips, and fewer hours. So the employees are fucked even if Applebees doesn't say, "Hey if you twist this knife handle a funny noise comes out. Here, you try it."
Rising gas prices mean we can lower wages to keep employees?
Outside of the moral implication, this doesn't even logically make sense.
People are already facing higher costs, if you pay them lower, they will not work for you, because you know, commuting to work at your place will eat into the budget.
The idea is that they think of themselves as a labor monopsony. They are foreseeing an increase in supply (due to higher living costs forcing more people into the labor market, either those not previously working or those who are now taking on second jobs) and thus plan to accordingly reduce the price (wages).
The main fault in their reasoning is the belief that higher living costs necessarily results in more people getting into the labor market.
At some point the marginal benefit to a worker becomes zero or negative, where higher living costs can actually result in a reduction in the labor pool. Whether we are at that point though, is not known yet without more information about the localized economy.
> Outside of the moral implication, this doesn't even logically make sense.
If I'm reading his point correctly ... He's saying there _was_ an employment crunch, and companies were competing with each other for employees by raising wages. He supposes that an increase in gas prices means that people need more money, so there are more employee hours "to go around". Therefore, companies don't need to compete as much with each other to attract employees, so they can go back to not paying as much.
I think the point was since the stimulus money has stopped they don't have to compete with the government and with inflation these folks will need to find a job.
Not suggesting you would get a sponsored work visa from Applebees (although maybe at Applebees corporate) but I am suggesting that there are companies which take advantage of people who are on a work visa because those people on a work visa "need the job" in order to stay in the country.
Actions of the franchisees reflect on the brand (that's the point of franchise agreements). In case I want to avoid giving this guy money (as is my right as a consumer under capitalism), how can I easily confirm which franchises his company owns? I can't, you say? Well, next time I want to eat mediocre food in a bland corporate environment, I'll have to go to Chili's instead.
Exactly. It's totally reasonable to attribute to the larger brand the shitty actions of their franchisees. That's the downside to licensing out your brand and image to separate businesses. Their actions taint the same brand.
You can't be "Applebees" when you're doing good, then become "Apple Central" when you're getting shady.
It's also why many businesses refuse to sell franchises in the first place. Doing so reduces your quality control.
It also doesn't look like any sort of policy suggestion and more like an attempt to size up the situation and see if they can get away with lower wages. Market forces will still prevail regardless of what anyone predicts.
I think that many corporate executives have thoughts along these lines: they want employees to be so desperate that they'll accept low wages and bad working conditions. That is, of course, why they tend to campaign against e.g. minimum wages, food stamps, and reforms that would make it easier to unionize.
The only difference is that other execs have the good sense not to put such thoughts in writing.
People like this love food stamps. They are quite happy to have the taxpayer feed their workers for them.
Many years ago I applied to work at Kmart. The wages were lower than I could get elsewhere so I pass and the manager offers to go over "the benefits", he tells me that I can get healthcare (Medicaid) and money towards groceries (Food stamps) as well as rent assistance (another government program). They had systems in place to help you apply to these programs.
According to this guy’s (possible wrong) view of market elasticity.
More food stamps-> each person work more hours to survive-> more labor supply-> lower wages.
(EDIT) Which would make him not like food stamps.
There are other effects of food stamps, but in this guys view, that’s the dominant term. Maybe he’d like it for his own employees, but certainly not for the market as a whole. I guess it’s the opposite of “restaurants have to pay people more to compete with coronabucks” narrative that started a year or two back.
At a certain level, I'm convinced that sociopathy is a strong factor in the executive world. They don't view the workers as fellow humans, but as a cost center to be minimized. Or rubes to take advantage of. They suppress what little compassion they have and are often rewarded by owners and boards of directors for hitting the financial numbers.
Not all are like this, but it sure seems like a trend. For every Dan Price, there are a thousand Jack Welch clones.
"that means more hours employees will need to work to maintain their current level of living."
Wayne really should have had someone who isn't siloed in an upper class bubble proofread this, because 'maintain their current level of living' really sounds like "in order to not die", which is worse than what he meant - even though what he meant is still super gross.
Title is wrong, wasn’t a corporate executive but instead “Wayne Pankratz, executive director of operations for Applebee’s franchisee Apple Central LLC”, from franchisee that has 47 locations, out of 1787 total. In conclusion, this was corporate sabotage by Chili’s.
When you run a business, you choose a location. If the landlord does something that causes a noxious smell, it's on you to fix it. We don't say, "Well, that's the landlord's fault." Your business, your leasing arrangements.
When you run a business, you choose employees. If an employee does something noxious, it's on you to fix it. We don't say, "Well, that's the employee's fault." Your business, your employee hiring, firing, and training.
In conclusion:
When you run a business, you choose franchisees and set standards of behaviour. If a franchise does something noxious, it's on you to fix it. We don't say, "Well, that's the franchisee's fault." Your business, your franchisee selection, training, and standards enforcement.
There's no weaseling out. You run a business, the buck stops at your desk. If you don't like that, don't run a business. It's 100% on you to choose your vendors, landlords, employees, franchisees, contractors, &c.
All your responsibility. In exchange for which, you enjoy the benefits when you get it right.
p.s. Your conclusion is speculation. It's fine to speculate, but I reject the claim that your conclusion follows from your argument. Your speculation could be correct, maybe Chillis bribed the manager to send a bad email, or heard about the ruckus and put their PR machine into high gear to publicize it. All possible, but it doesn't follow in any way from the relationship between franchisor and employee of a franchisee.
I've worked with so many businesses, especially rental businesses, that don't understand that their business model - that every business model - is that they provide consistency and indemnification in exchange for more money than their other services are objectively worth.
It's not that I'm paying you for a bacon cheeseburger, it's that when I got chewed out by my boss about some work issue, and I'm telling myself I just need to keep my shit together to the end of the day, and then I'm going to go home and get that cheeseburger from my favorite place, and somehow that's the glue that is going to help me keep my shit together, that your store is open, and you haven't run out of bacon because the manager you sexually harassed was the only one good at keeping on top of ordering.
I, the average preoccupied customer, don't need to hear the sad story of the bacon supply, and frankly the idea of offering it shouldn't even cross your mind, let alone find my ears. It's one thing if I pull the whole story of a broken freezer or a burst pipe out of you, I've done that any number of times, but don't open with it. You're paid not to open with an excuse. Open with an apology, a discount, and possibly a recommendation another customer favorite that's good even without the bacon.
If you can't keep your doors open without a stream of excuses, then you fail at logistics and you should throw money at someone to solve that problem for you, or go back to working for someone else, or someone might send Gordon Ramsay to explain it to you with a lot more swearing and a lot less empathy.
This is a stretch. The corporate office may or may not have the contractual ability to intervene; they can't just cancel franchisees because they feel like it.
More importantly, it's up to journalists and even randos on HN to avoid trying to confuse the relationships involved. If some McD's manager said something stupid and offensive, we can't indict the whole chain. Individual humans have agency.
The parent company doesn't get a blank check though. That's the risk with franchising. Some franchisee may do something stupid and it reflects poorly on the parent. That's why most franchise agreements are very one-sided.
Here's a perfect example of how a franchisor can play hardball. I worked for a McD's that was a dominant store in our region. Located right off the Interstate and got tons of consistent traffic. Just an excellent, very profitable store. But our owner/operator was a dick to Corporate. So they opened a new store at the next offramp. "Offered" it to our operator, but the terms were ridiculous, so he passed on it. Found someone to take it, and we dropped 30% in sales. Back in the 80's that cost our owner $80K in lost PROFIT. He was pissed.
Probably depends on the franchise. I know the one I worked for in high school seemed unusually obsessed with the notion that a secret shopper from corporate would catch us on a bad day and they never went into what the consequences of such a thing were.
As some franchises also involve loans, if they don't like how you're running your store they can call in your loans. I'm not saying you have to close, but unless you know where a sunken treasure is, good luck avoiding bankruptcy.
No, they may not have the contractual opportunity to intervene, just as if I leave a location on unfavourable terms, I may not be able to compel the landlord to solve a noxious odour smell. But that's the risk I willingly take when I negotiate that lease.
And where franchises are concerned, I have little empathy for the franchisor. They chose franchising as a business model for its advantages, such as making franchisees finance their growth, and having a captive market for products and services they compel the franchisees to resell.
I think when you choose to be a franchisor, you're willingly accepting the inherent tradeoff of growth in exchange for the risk that your reputation and brand will suffer if franchisees behave badly.
I'm sure Ford isn't happy that some of its independent dealers take a hot seller like the new Bronco and mark it up $10,000 or $20,000 above MSRP for customers who ordered one thinking they'd pay MSRP.
But the headlines in the newspapers rarely say "Reggie's Westchester Ford-Lincoln is ripping customers off," the headlines say "Ford Dealers are ripping customers off," and the public rarely gives a lot of thought as to whether Ford can do anything about it, they think, "Ford ought to do something about it."
> Besides hiring employees in at a lower wage to decrease our labor ( when able ) make sure you have a pulse on the morale of your employees...Do things to make sure you are the employer of choice. Most importantly, have the culture and environment that will attract people.
This is kind of amazing. Surely they know that the culture and environment that will attract people will be the one that pays better, right? The only thing more amazing is that some brown-nosing sycophant managed to call it "words of wisdom" without vomitting.
These are businesses that operate on single digit profit margins. And are easily replaced by eating meals at home. They either find a way to procure cheap labor, or shut down, because Applebees clientele do not really have the will or ability to spend more at Applebees.
Wahhhh. I heard this crap from my owner/operator every time the minimum wage went up. We'd be told to cut staff hours because it would hurt the bottom line. He made roughly 10% profit after controllable. 10%. Sounds horrible. However his gross sales at our best store were over $3M/year in the 80's. So PAC was $300K. Waaaahhhh.
He also owned four other McD's (though none as profitable as this one), so he was able to amortize all his corporate costs across five stores. He pulled in over $600K/year back in the 80's, yet was a Scrooge when it came to treating his employees. Cry me a river about "single digit profit margins." Tons of businesses have small margins, but make it up in volume.
And then he suggests doing things “...to make sure you are the employer of choice.” - LOL
So if your Chotchkies franchise is in the middle of a wasteland where nobody can walk, bike, or take the bus to work, and then gas prices go up, doesn't that mean people need, y'know, more money? Won't they be looking for higher wages? Paying less just makes other employers look better and positions you to capture exactly zero of the supposed new growth in the applicant pool. Even not working at all (i.e. not driving to a job) gains a few preference points compared to working at your Flingers. Seems like when they were handing out brains, this guy thought they said trains and said "gimme a slow one."
If the inflation is up, why won't the employees demand more wage to cover the rising cost? It isn't like Applebee is a high-sought after career, isn't it?
Economic analysis has shown the low skill labor market has monopsony power. https://journals.sagepub.com/doi/abs/10.1177/103530462110424...
This means the workers at applebees don't have much leverage to demand higher wages. Their options are accept a shitty job or don't work. This manager believes higher gas prices will force them to shift towards the "accept a shitty job" part of the spectrum.
The core idea is the more desperate people are, the lower you can push their wages.
Same reason exploitive employers oppose increasing the minimum wage, single payer, etc. Keeping people wretched means a steady supply of new bodies if the ones you're employing start thinking they can negotiate.
Currently it is definitely not a good time for those employers to talk about slashing wages or adding up hours, when there is literally a labour shortage in US.
The talk to exploit the high gas prices to their benefits sound nothing but delusional.
Think the premise is that people who work there don’t have many alternative options other than continuing to work for them. In addition, greater financial pressures presumably contributes to forcing them to remain employed where they already are.
These are not employees who get paid time off and can take days off to go looking for other jobs/interview.
Meaning any time they take to find another job might be eating into their finances even more, and really be more of the same (e.g., another restaurant).
this is probably uncharitable, but i can’t help but wonder if they’re true thoughts were with the addition of “We are still scratching head about what this gentleman was thinking saying this out loud.”
This quote from corporate sounds insincere. It's not hard to understand what this "gentleman" was thinking. Disagree with him, sure, but _not understanding_ him? Please.
I really doubt it. Can you imagine being an exec at some company and some random dude who is a manager at a franchise does something this stupid? You'd be pretty annoyed.
I just don’t understand how Mr. Pankratz’s opinion is considered acceptable in modern society. It’s 2022. Isn’t it time for humanity to evolve past this kind of thing? Why are we as a civilization still mired in a culture of exploitation and incentivizing suffering?
From reading the full email it seems like just one sentence lacked tact, only maybe inaccurate, and the rest was .... decent management? Like the part about making schedules for employees further in advance so they could accomodate their other jobs? That's pretty good.
The part about what employment trends will look like due to gas prices and competing employers having to shut down? Is that inaccurate?
Mentioning directly to offer lower wages, didn't have to be mentioned... that way.
Do I like that the managers walked out over that? Absolutely
The title should be "An email urging lower wages for new employees due to higher gas prices sparks walkout at Lawrence Applebee’s", per HN guidelines.
The user-created title is also incorrect, because it was not an Applebee's exec, it was the director of operations for a company that franchises Applebees who wrote the email.
I also find it interesting that the author of the email doesn't even get a smidgen of credit for his parting paragraph:
> "Your employees that live check to check are impacted more than the people reading this email. Be conscious of that. Many will need to work more hours or get a second job. Do things to make sure you are the employer of choice. Get schedules completed early so they can plan their other jobs around yours. Most importantly, have the culture and environment that will attract people"
I don't think the author is a bad person. He was just caught treating a certain business expense like one treats other business expenses, except in this case it is the wages of the employees and so looks wrong. Many people are of the mind that businesses aren't charities, have no need to pay their employees anything more than the employees accept, and through free association, if you accept an offer, that means you agree with the terms of the offer.
In my mind: If you don't like the wages Applebees will pay, then don't accept a position at Applebees. Maybe there are huge structural problems with society forcing your hand, or maybe you're just a skill-less deadbeat, or maybe Applebees is shooting itself in the foot by not offering high enough wages, but regardless, that is not Applebee's responsibility to pay you more than what they view your labor as worth.
It's a big difference, both practically and in theory.
Practically, a real exec at Applebees has a bigger blast radius and can cause pain for more people than this guy. Theoretically, we should expect better behavior by people with more responsibility.
This guy is dumb and careless. He's not some evil dictator.
As much as I am not a fan of Applebee's, the article title on HN should probably be fixed. The executive who sent the email works for Apple Central, a mid-sized franchisee with less than fifty locations. They do not work for Applebee's itself, nor do they represent a major franchisee. (Though in this case, it sounds like their views aren't even representative of their own franchise.)
Reading down to the later parts of the article, this sounds like a bad game of telephone from upper-management to middle-management.
Central Applebee management puts out vague message about inflation affecting costs and revenues. That hiring managers need to work harder to retain their employees by giving potential employees more flexible schedules (which may have a benefit of cutting costs: some employees may be willing to take a lower pay if they can have a different schedule).
Some middle-manager reads that statement as having to do with gas-prices making prospective employees more desperate for a job.
And the rest is history.
------------
Upper-management always issues vague strategic-level statements. Its the middle-managers who have to translate the vague statements into something that connects with the lower-level employees. This middle-manager colossally failed at the job.
This is the reason why communities like r/antiwork are so massive. The sad fact is that working class people who don't possess rarer skills are frequently mistreated this severely. In other words it's much easier for a sociopath to exploit unskilled labor than skilled labor. This in my opinion is part of the responsibility of the government which they've been largely failing at lately, it's supposed to balance businesses so they don't just throw humans into the furnace to keep the wheels turning.
The oligarchs and people at the top aren't your friend. Granted, neither are most middle managers or small business owners, they just have a smaller pool of people to throw into the furnace so it's in their own best interest to show some restraint.
Also middle managers are out of job if they can't fulfil their goals. Slave masters have only so much use when they don't effectively extra enough out of the slaves under their control. Maybe someone else will do better job.
This is textbook example of a bad manager. These kind of people are the reason why employees leave. The person should be removed from that position and made into an individual contributor.
The whole point of minimum wage is to ensure that employer wages to employees to exceed some level of poverty. If there is still flexibility within the wage amount, then the floor needs to be raised higher so the employer can't play within this gray space.
This thinking seems to assume that employers are unable to choose how, when, and where they employ people. At some point it's cheaper to automate the job than hire someone to do it, or simply put money into higher ROI generators.
Everyone in this thread ahould be required to read Das Kapital, Poverty and Progress, and Economic Possibilities for our Grandchildren before commenting.
Your radical ideas about society, individualism, and economics have already occurred to others. Arm yourself.
These chain restaurants have always freaked me out. I know most of the people working there are at the bottom of the barrel, but their job forces them to feign a cheery demeanor. It's like underclass hell--imo.
I've got friends that work those jobs and they are usually in a cheery demeanor all the time, even when they are angry. I couldn't do it because my default demeanor is like "depressed" but I understand that they get easy money out of it.
The only reason this new story became a problem for Applebees was the suggestion to exploit high gas prices. But the suggestion to hire people at lower wages is par for the course, unfortunately.
Exactly. He is not the only person thinking this; he was just the only one who put his thoughts on paper. I remember when American capitalism was about succeeding by making other people successful. This kind of business - succeeding by sucking the blood out of your employees - should never be tolerated.
Henry Ford, capitalist extraordinaire, famously paid his workers $5 a day, double the average automaker's wage at the time. This extracted maximum value from said labor.
Has this actually been studied empirically? If you had to choose between paying your workers $1000 more and pocketing it, surely the latter option is the better one? Sure, they might use some of that money to buy your product, but they're not going to spend all of it, and after your own costs (eg. cost of goods sold), you're going to end up with less than $1000? How is that extracting "maximum value from said labor"?
Does it even need to be studied that heavily? What is India and China trying to do? They have massive billion people populations that are poor. Lift them into a lower middle class, voila, you have unmatched consuming class.
We’re going to lose this fight to these countries because our country cannot for a second think outside of squeezing the living hell out of a stagnantly growing 350 million person population. That’s why they squeeze you on home mortgages, rent, cars, salary, everything. They are squeezing because they see no fucking growth and that’s all these people understand. If the population isn’t scaling horizontally, they have no other creative ideas. It is unimaginable to them that an enriched 350 million Americans is as potent as a billion person population. We will actually go to your stupid diner and drop 50+ every week. Why are these people so fucking scared?
>Does it even need to be studied that heavily? What is India and China trying to do?
And how did they achieve it? By paying workers luxurious wages? The whole reason they're successful was that they industrialized and offered labor cheaper than the west, and the west outsourced labor to them. "Henry Ford, capitalist extraordinaire, famously paid his workers $5 a day, double the average automaker's wage at the time" has nothing to do with that's happening there.
Again, it’s how you see it. They brought jobs at mass scale there. We on the other hand, ship jobs out at mass scale, AND squeeze the people that are here. You can’t get away with both.
If your workers don't leave, enjoy their jobs, and do them well, how can you argue that's less valuable than Amazon worrying about running out of people to hire because they blow through workers like Patrick Bateman through homeless guys and coworkers?
My wife just left a manufacturing company because of the latter attitude, and they're fucked, because she was the only person left who could operate a 50s era prototype machine (that happens to make the only dry test slides in the world).
I'm fully aware this is anecdotal, but if that company had treated workers well, they wouldn't have to be asking people to come out of retirement to operate a machine. That's a loss of value for them.
Because they are humans that are not legal slaves. Happy employees don't quit, produce more and contribute to their community. In what way is denying all of that furthering anyone's agenda except the craven individual driving it?
Capitalism as a zero-sum game is myopic at best. Based on your comment I wouldn't be totally surprised to hear some esoteric argument to support the economic wisdom behind chattel slavery.
Civilization was created by people working together to survive, and then thrive. Throughout history it has been captured by strongmen annd enabled by fear. The US forgot the face of its father and started to concentrate on "Shareholder Value" insanity after Marshall Plan.
Pirate Equity firms swoop in and start dismantling all that was built for quick profits, not only destroying communities, but eliminating proficiency in all types of industry.
Do you think that pattern is valid, moral and what you'd want to achieve as an entrepreneur? I am curious and not trying to attack, is this the kind of idea you'd want promulgated into the future? How can that lead somewhere positive?
You seem to be arguing "companies should be nice to workers". I don't disagree that's a worthy goal in and of itself, but that's not what I'm asking/disputing. The whole idea of henry ford story is that paying your employees well benefits them AND the business, a win-win for all. The first part by itself (ie. "that paying your employees well benefits them") is pretty obvious and doesn't need discussing. My original comment is questioning whether the second part is also true, but your comment doesn't address that at all. If that can be proven, then we'll basically have zero opposition to eliminating poverty. Imagine: we get to lift people out of poverty AND billionaires get richer? Who can say no?
Ah yes, around the time of things like the Triangle Shirtwaist Fire, the Radium Girls, the battle for no child labor, legally segregated (by sex, religion, and race) jobs and education, and the Battle of Blair Mountain.
Right, What are the odds some regional manager is actually putting this out? An investment banker would predict more people taking second jobs as expenses rise and charge a lot for the information. It takes analysis, skills, a budget...
Probably like many here, I read this and just had to vent outrage at the sheer injustice and inhumanity. This comment is for you to rage upvote.
Compassionate capitalism is more needed today than ever. Sure, this is likely just some low-level buffoon at a chain mouthing off in ignorance. But that's why it's dangerous; toxic capitalism has thoughtlessly metastasized to the middle.
Given the severe and extreme states most commodities markets have found themselves in of late, I expect an exacerbating withdrawal of liquidity by most market participants -- even posting margin for normal hedging requirements is beginning to require completely untenable amounts of free cash flow. I fear that severe inflation is very much looming at the door.
If I were King of America, the tax code (and other financial instruments I can't think up on the spot) would reward companies based on the degree to which they enrich their rank and file employees.
- Tie tax rates/benefits/penalties to the discrepancy between CEO/C-suite pay and average/lowest-paid employee pay
- Tax benefits to companies who provide enriching programs for employees (like some universities that offer tuition benefits and programs to help you get mortgages, etc)
- Tax penalties for not giving COL raises each year
>- Tie tax rates/benefits/penalties to the discrepancy between CEO/C-suite pay and average/lowest-paid employee pay
All that's going to do is cause companies to jettison their lowest paying employees. For instance, Apple would outsource janitors to another company (i'm pretty sure they already do that) and spin out apple stores/genius to another company. That way, the only people you have left are tim cook and other highly paid engineers/designers making 6 figures. Yay we fixed the pay gap!
>- Tax benefits to companies who provide enriching programs for employees (like some universities that offer tuition benefits and programs to help you get mortgages, etc)
1. this just sounds like a roundabout way for governments to fund said "enriching programs", except you're now at the whim of the company rather than the government.
2. this worked great for healthcare insurance, right?
>- Tax penalties for not giving COL raises each year
Sound like that would push employers into moving more of their compensation to year-end bonuses, which can be arbitrarily raised/lowered without being subject to "COL raises". In other words, "good news, you have received a COL raise of 5% this year! bad news, your year end bonus has dropped by 5%"
That's the problem with trying to do ANYTHING in our current system: It's going to turn into a circus of definition abuse and loopholes. Not to mention the IRS would be sued to high heaven and this shit would take years to implement, if it were allowed at all.
Our system is completely fucked.
But we're all stopping shy of having THAT conversation, so to address some points:
> All that's going to do is cause companies to jettison their lowest paying employees. For instance, Apple would outsource janitors to another company (i'm pretty sure they already do that) and spin out apple stores/genius to another company. That way, the only people you have left are tim cook and other highly paid engineers/designers making 6 figures. Yay we fixed the pay gap!
True, but this would still overall be beneficial because the CEOs of those janitorial companies are now paid more in line with the janitors, which means that the working conditions are more likely to improve.
> Sound like that would push employers into moving more of their compensation to year-end bonuses, which can be arbitrarily raised/lowered without being subject to "COL raises". In other words, "good news, you have received a COL raise of 5% this year! bad news, your year end bonus has dropped by 5%"
Probably, but how many employees in America get year end bonuses? Because I've gotten like...2 and I've worked a decent range of jobs. They're way less common than you think. Yes, this would probably mean the people at the top would start taking from the middle instead of the bottom to retain their profit. It's not ideal, but I'd rather someone be stuck renting longer/have to cut their grocery bill (middle class) than end up homeless (lower class).
You're right about the enrichment programs, though, now that I think about it. There's a reason I mostly saw that in universities, I'd imagine.
Yeah, turns out problems like these aren't easily solved, hence why they're not solved.
>True, but this would still overall be beneficial because the CEOs of those janitorial companies are now paid more in line with the janitors, which means that the working conditions are more likely to improve.
Amazon has contracted some of its delivery to DSPs, which are essentially what you described. Have those turned into a worker's paradise?
>Probably, but how many employees in America get year end bonuses? Because I've gotten like...2 and I've worked a decent range of jobs. They're way less common than you think. Yes, this would probably mean the people at the top would start taking from the middle instead of the bottom to retain their profit. It's not ideal, but I'd rather someone be stuck renting longer/have to cut their grocery bill (middle class) than end up homeless (lower class).
Not much, because there isn't pressure to game the regulatory system. When such measures are implemented, workarounds would surely spring up. It's not any different than how early in the pandemic, landlords gave move-in bonuses (rather than straight-up decreasing rent), because those bonuses could be easily taken away whereas rent could not easily increased.
Not only that, but it incentivizes hiring discrimination based on family status. Are you going to hire the 19 year-old college kid or the 24 year-old single mother of 2? Guess who's more likely to qualify for AFDC?
It looks like what needs to change most is consumer expectation for the true cost of dining at sit-down restaurants in their current format. Taking the Applebee's salmon menu item[1][2] as an example and comparing the cost if it were to be replicated in Australia:
Ingredients cost ~USD$11:
In Australia, fresh (never frozen) farmed salmon from Tasmania is $USD29/kg delivered to your doorstep within 24-48hrs of being pulled out of the water. Applebee's salmon menu item[1] looks to have approx 200g serve so that is USD$5.80 for the salmon. Fresh green beans are USD$6/kg (greenhouse as out of season in Australia) and there is probably 100g plated up in Applebee's item, so USD$0.60 for the beans. Premium fresh brushed potatoes are USD$3/kg and there is probably 200g plated up, so another USD$0.60 for the potatoes. Premium fresh asparagus is USD$25/kg (also out of season) and there is perhaps 75g plated up, so another USD$1.90 for asparagus. I've also seen some images of the dish plated up with broccoli instead of beans and asparagus and that is USD$6/kg (also out of season) and assuming 150g plated up, so USD$0.90 for broccoli as a cheaper option. Add two dollars very generously for sundries such as salt, paprika/other spice (not sure what I'm seeing in the photo), olive oil and the slice of lemon. All up, approx. USD$11 for ingredients if you were to make a similar dish at home in Australia. Restaurants generally get better unit pricing from the food service supply chain but the cheaper unit prices of buying in bulk are somewhat offset by increased delivery costs (premium service) and inevitable wastage of buying in bulk.
Typical cost to consumers should be higher than ~USD$36 but is currently ~$USD17 (US including +25% service) or $USD26-30 (AU):
An average food cost percentage for a successful restaurant business (note: still paying minimum or effectively below minimum wage to employees) is 28-35% so picking 30% we end up with this salmon dish needing to have a sale price of USD$36 or AUD$47. Instead, Applebee's are selling that salmon menu item for USD$17 (25% service included) and a salmon dish at a typical restaurant/pub in Australia would be sold for approximately USD$26-30. These sale prices would have to go up higher again to fix the already broken industry with regards to employee treatment and pay (for example, no overtime).
You’re over estimating the quality of applebee’s ingredients. Also restaurants generally have higher profit margin items such as appetizers/drinks/deserts to offset entrees.
Hopefully this is the moment we realize that capitalism is really not serving us in any meaningful way. As long as we have enough people brave enough to quit and take to the streets the working class might have a fighting chance at ending their exploitation.
Unfortunately only some of us have realized this, and there is no clear path forward yet. We still have a long, long way to go to achieve meaningful improvements.
Capitalism is a system, this guy is just a participant. Make him famous and turn the system against him.
I’m a dyed-in-the-wool ubercapitalist, and I hate scarcity-focused, race-to-the-bottom companies and people like these. It’s a question of values and approach to life.
One guy that works for a franchise of an increasingly irrelevant restaurant chain has a bad take in a private email conversation and you think this is the end of capitalism?
No it doesn't. Your example only works because information gets leaked. And market can only absorb that much information, unless you put special regulatory bodies. And "punish" is still to be seen here.
Achieving the optimum economy by allowing human nature to do its thing was supposed to be the way capitalism works. To me that would mean including scumbags, somehow the invisible hand would create paradise.
And capitalism's main advantage is that tries to account for the scumbag human nature (competition) and attempts to use that to its advantage (creating an economy that strives to be efficient). Other systems pretend like that human nature doesn't even exist, and everything will be fine if we ignore it.
> Wayne Pankratz, executive director of operations for Applebee’s franchisee Apple Central LLC.
> “The advantage this has for us is that it will increase application flow and has the potential to lower our average wage. How you ask?
> “Most of our employee base and potential employee base live paycheck to paycheck. Any increase in gas price cuts into their disposable income. As inflation continues to climb and gas prices continue to go up, that means more hours employees will need to work to maintain their current level of living.”
Just wow, what a soulless scumbag.
Not that I ever went to Applebee regularly, but seeing as how this is the kind of person the organization promotes, I will never return. I'd even rather starve. Utterly disgusting.
Thank goodness for HN today, because with this broadcast I know that by tomorrow or the next day the news feeds will be awash with this story.
Is it just one worm, or is this Apple is rotten to the core?
This is the economic model they operate within. It’s dangerous to paint systemic issues as bad individual actors because it gives false relief when individuals happen to appear dealt with or reformed but the structural issues and powers remain. See for example the false relief of On the Waterfront’s ending (an incredibly and subversively anti-worker film for this reason)
It's both. There's a tendency to excuse bad behavior because they "have to" due to systemic forces, but the system does not have them at gunpoint. Businesses in this system can and do survive without being ruthless and amoral right up to the edges of legality, even when they don't reap the rewards of a positive image because they decline to publicize such small integrities. You're right, however, that the system is the bigger problem.
But also, these people do have a choice. They could work elsewhere, they could be more ethical. It is more that the system picks and rewards people like this.
What is often forgotten are many people who reject positions and situations and systems like this. And work elsewhere, for less money and less power, because they made active choice to not be like this.
Aside from the fact that this person is a soulless scumbag, how do you ever even get to the position of executive director without realizing what a toxic and abusive attitude that is and should never ever be expressed by anyone in his position? Did he think that what he said was smart business sense? Is he that disconnected from the average employee? I just don't understand how it made it past all of the ethical filters that someone in a leadership position should have, and how that failing never manifested itself sooner.
> I just don't understand how it made it past all of the ethical filters that someone in a leadership position should have, and how that failing never manifested itself sooner.
Ethical filters? They're probably less likely than you think. There's a not-uncommon idea that the sole ethical obligation of a business is to make money for its shareholders, and this soulless scumbag seems to be thinking that way.
This guy's professional mistake probably just saying the quiet part loud, not so much thinking what he did or acting on that strategy.
I’ve been at executive level for a decade or so and am honestly not surprised at all.
1) their main job is “be strategic” and as such they throw out all kinds of horrible ideas to improve the normal business metrics / profitability. In healthcare, I hear things that clearly and obviously would worsen patient care and the line “let’s run that by Clinical” essentially means I really doubt that idea deserves consideration.
2) they’ve been hit with a multitude of problems. Rising wages is certainly the hottest topic since they were furloughing people in 2020. They begrudgingly raised menu prices. It continues to puzzle them where all the labor went?
3) as much as I hate to admit it, there might be some truth to the point he’s making regarding gas prices. I’d never put that in writing, but it happens and is rather normalized behavior.
My open letter to Wayne would read: your food sucks, the portions are small, and your prices are high. The service is hit-or-miss at best.
You’ve bean-counted this chain into the ground, maybe spend a little less time looking at financial tricks on your balance sheet and a little more figuring out how you can make food people want to eat at a reasonable price.
Agreed. One of the things that surprised me the most working in healthcare was how many people have a flagrant disregard for anything but self interest — even human life. Sadly the policy mechanisms have failed to keep these people out.
Yes, I've been appalled by the pervasivness of the self-interest mentality throughout big healthcare. An unfortunate side-effect of capitalism and top-down management structures. Even if the workers want to do better things, they don't have the power to enact meaningful change within the organization. The health insurance companies are even moreso this way.
Anecdotally, Kaiser is easily the worst offender, not even trying to hide it.
Pretty much all the chains are equally bad — I’ve worked for 3. Agreed on the management problems preventing meaningful change though. Nothing will get better until the entire system collapses in my opinion…
To put this another way: any argument that boils down to “the free market will solve it” is complete bullshit because it doesn’t account for these people.
Theoretically it would (and actually we are seeing that unfold now in the great resignation). With competition people aren't forced to work at Applebees. In fact it's a great time to be looking for work right now.
I think one of the overlooked pieces of the email is on the second page. I read it yesterday so my memory isn't super fresh. But he essentially says that:
* they've been hiring people at $18-20/hr
* the government pandemic aid/unemployment is dropping off and therefore they are no longer "competing with the government"
I think a lot of the "progress" with increasing wages was artificially inflated by government overspending of unemployment and COVID benefits. The people out there looking for jobs were in a sellers market. They could get a better rate because people were staying at home because "they could make more on unemployment". Now we're moving back to a buyer's market as that runs out and people are forced to re-enter the workforce.
While I think we can agree what he is saying here is cold, he has an interesting point. Ultimately the government is responsible for this and it will be interesting to see how it impacts wages and the mid-terms given what inflation is doing.
Personally, it seems like we are in for a "correction" in the labor market where we will see wages go down since more people _need_ jobs and aren't relying on government handouts. But I think he's mainly pointing out that the wages were artificially high and are going to lower back down. Perhaps to $12-15 an hour? Who knows.
I come at this from probably a different perspective. A close family member has been having problems hiring people recently.
People want to make a minimum of $15/hr. For some small businesses this is a hard ask. But it's complicated further by the fact that many of the people they have hired have walked out when they got busy. Basically, they want to be paid to sit around and do the minimum amount of work possible. All the while not realizing that the person who is employing them is just barely more than they are (and bearing the brunt of bad months by making less).
So personally, I know that many small business owners are definitely hoping that the market changes so that they can hire not only quality people but at a rate that makes more economic sense.
In this case, this isn't some super-specialized job, it's just a job with high variability in load and requires (sometimes) long hours doing tedious (but not physically demanding) work.
On that note, I've seem someone remark that some business owners apparently believe that "don't buy things you can't afford" applies to everyone but them.
Perhaps start lobbying for affordable housing and labour rights. Right now, the only kind of leverage that workers have is to leave, and they are doing just that.
I am not suggesting that the owners try to make the economics work in an impossible way that makes them go out of business, I know the uncertainty in this environment is making things very difficult. But while owners can look at aggregate data, a single worker is looking at this as a way to survive until tomorrow. They don't want to be made into a statistic, so the owners should keep that to themselves.
One would think that but given how quickly some people give up and go without a job leads me to think that something else is at play. That is—if they truly needed the job I don’t think people would give up and leave so easily.
People being forced to sell their only product (labour) at any price to the first bidder or have that product vanish (hours go by) and starve in a situation with massive information asymmetry where the bidders are using collective bargaining and control the means of survival is not a market interaction.
When they are denied the opportunity to easily obtain better positions through structural roadblocks, I would to an extent say this. At a minimum I would say that they are being exploited.
Fair enough. I do already know that rule, honestly, I'm a long-time user and I've seen others fall into the trap of that thinking many times. It just happened to occur to me with this thread.
He didn't say that hn is turning into reddit, he ist talking about this particular thread, and at the moment that he had posted the comment, I would have agreed with him.
I saw this on Reddit yesterday, the comments were much worse.
In this thread there is a mention of Ethics, and even a post that shows the thinking of how someone could write the email without being Satan's brother.
Having someone in here arguing for the ethics of this sort of thing is not better. Just because it looks like we all follow an official style guide in here doesn't make what is said here automatically better. It has to do that on its own merits, and as long as "arguing persuasively for evil, as a thought exercise" is considered a good thing here that can't happen imo.
Civility and debate themselves are not virtues! What purpose do they serve for us? What are we doing here? If you want to make an argument that we're superior to reddit you need to make it on more than the aesthetics of the prose bc that isn't shit in the end.
Civility is a virtue on a site like this, it means the conversation has to rise a step above repetitive 4 letter vocabulary slinging. Sure, it doesn't get you much above the swamp but it at least points in the right direction.
>as long as "arguing persuasively for evil, as a thought exercise" is considered a good thing
There in lies the problem, it isn't evil. There were some pro worker points about making life easier for your employees, and there were some anti-worker points about trying to pay your employees less. On the whole I am not sure what the big deal is, companies have never paid more than they have to, suggesting that the current environment might allow for a reduction in wages is not "evil".
Sure. I agree. But a thread-full of that disgust doesn't have any value as a conversation. We already all know how we all feel about this sort of treatment of other people, it's a given.
Sure, but discrediting the disgust on the basis of it being valueless has a similar effect of discrediting the positions that disgust is based on, especially when you aren't adding value yourself. Mention some solutions! Otherwise you're just talking about HN vs reddit in a thread about vile corporate practice that is very real and serious.
The static (both in the nominal and inflation adjusted sense) for minimum wage doesn't make sense imo. Minimum wage should be tied to some level of living (not necessarily a great living, but something)
This guy smh