Sam Walton would either be the richest man in the world, or second richest man in the world, if he were still alive and didn't divide up his fortune between his kids.

Yet tax payers subsidize a large portion of Wal-mart's employees. Either we tax Sam more, or we force him to pay his workers a living wage.

10/30/2013 10:39:52 PM

First of all, none of that has anything to do with anything, other than that we should be taxing billionaires (and those worth hundreds of millions) more. Not at a higher rate--but by capping [generously; maybe something like $250-500k/year] the amount of dividend/LTCG income taxed at 15%...

but not for any of the reasons you listed--just that it makes no sense for the tax curve to go sharply regressive past a certain, stratospheric point. I don't believe in soaking the rich and having them foot the bill for everyone else's goddamned bright ideas or the laziness and/or jealousy of the masses, but it's wrong principally to extend artificially good deals to them, and terribly unsound fiscally.



As far as "subsidizing Wal-Mart", first of all, if the average Wal-Mart worker really does receive as much in government assistance as they do in pay, then we need to gradually scale back government assistance, because we are distorting market wages--wages would be forced to increase if we scaled back how much Uncle Sam is chipping in. That, and being a Wal-Mart cashier doesn't rate $30k/year (in combined pay and welfare), and we don't need to be "assisting" people to that level, either.

Additionally, why single out Wal-Mart? There are shitloads of business paying low wages.

10/31/2013 12:08:07 AM

Quote :

"I get the argument that government is subsidizing the minimum wage workforce, but what is the fix?"

if you view minimum wage as a tax credit system, then you offset it by taxing employers in proportion to the benefits their employers receive.

(or you accept that it is society's responsibility and not the employers)

10/31/2013 9:42:54 AM

Exactly. If society takes it upon itself to subsidize the working poor, then it is society's responsibility and not the employers.

If we have a problem with some workers earning too little in this country, punishing the only people bidding up those wages cannot help.

10/31/2013 10:55:15 AM

These last three posts are terrific.

Keep up the good work,

10/31/2013 11:12:22 AM

Does anyone know anyone older than 21 who works for minimum wage?

I personally don't.

10/31/2013 1:42:45 PM

One friend from high school. He's been a book/coffee shop employee most of his "career". The funny thing is he has two degrees. I understand that happening from one angle. My dad was in textiles and got most of his jobs the old fashion way, so I didn't have a role model for how to get a professional job. If it wasn't until I coop'd that I got experience landing a "real job" and if I hadn't of done that I may have ended up in the same boat. It all seems like black magic until you have experience.





[Edited on October 31, 2013 at 1:56 PM. Reason : a]

10/31/2013 1:49:44 PM

If you have 2 college degrees and are working for minimum wage, it is 100% by choice. You can make a lot more if you want to, even if they are bullshit liberal arts degrees.

[Edited on October 31, 2013 at 2:48 PM. Reason : Tense]

10/31/2013 2:47:32 PM

Does he have a trust fund?

10/31/2013 2:55:37 PM

shoot has 4 college degrees and he can't find shit!

10/31/2013 4:11:20 PM

Quote :

"Does anyone know anyone older than 21 who works for minimum wage?"

Have you been out of your house lately?

10/31/2013 4:49:43 PM

Quote :

"^So is Walmart hiring only robots and zombies?"

well, they now have those "check yourself out" scanners

Quote :

"This one capitalist tycoon, Henry Ford, had this wild idea that if he paid his workers enough money to buy his new car, he would actually sell some cars! He was totally looking out for his profits, though. Only commies would pay more than a minimum they could get away with, but now even in the US the hard-working shareholders have to pay those suckers flippin' dem burgers MORE than the actual market rate, because we got communist Obummer in charge and them dang on librals writing those labor laws and stifling our daggone economy!"

The reason Henry Ford did that was because he knew that if he wanted to have the best cars to sell he had to have the best people manufacturing, designing, and working on them. That way Ford had the best product coming from the best personnel in the business.

Does anyone think that way when it comes to the people working in the Wal-Marts or fast food? Our society does not value quality. If it did, Wal-Mart would not exist to start with. Wal-Mart's entire business plan was and is based around selling a lot of items dirt cheap which put most other stores in town out of business. So we have a store based around selling poorly made shit dirt cheap, and people are surprised that this race to the bottom for quality results in minimum wage workers?

[Edited on November 1, 2013 at 3:56 PM. Reason : /]

11/1/2013 3:43:05 PM

The comparison between the work, risk, and skill involved in building a car in the early 20th century and somebody dumping fries into a computer controlled fryer in McDonald or running a gallon of milk over a barcode scanner is not comparable.

The "Pay people the rate so they can buy the product" is still in effect, for Skilled labor (Just as Ford would have wanted it). For Walmart those "Skilled" workers to figure out which products to stock, negotiate prices, study consumer trends, and keep their automated systems running (Computers, Systems, Payroll, Inventory management, Shipping Delivery) and I bet they all make a living wage, they might even be able to shop at Target!

Lets face facts, many of these big corporate, or even large company minimum wage jobs are virtually mindless. Some people do work these jobs, but most people, with a minimum of effort can wages beyond minimum wage if they show up on time, actually do more than go though the motions, and look for opportunities.

[Edited on November 15, 2013 at 2:01 AM. Reason : dd]

11/15/2013 2:00:51 AM

Quote :

"The comparison between the work, risk, and skill involved in building a car in the early 20th century and somebody dumping fries into a computer controlled fryer in McDonald or running a gallon of milk over a barcode scanner is not comparable"

Ryan, the point is, they are both performed by people that could be trained in matter of hours. I don't think you worked as either a early 20th century car assembler or a cashier at a modern fast food joint to know exactly how much different those jobs were. The point is, even mindless jobs are not completely MINDLESS, otherwise, they would have been replaced by machines. I am ALL for automation. If we can have a cashier handling four, eight, twelve registers, I'm all for efficiency. Same with factory assembly jobs. However, every job that requires a human needs to bay enough for that human to survive on. If these jobs are so mindless, why would these companies NOT replace then with self-checkout kiosks or robots??? We have the technology (cue the turtle). Some jobs, even "entry level" ones, cannot be replace by machines without changing the customer experience. Now, to your second point, figuring out what products to buy and how many to stock. Many of those functions CAN be replaced by a machine, right not. Check out Amazon. I worked as a Buyer and I can tell you right now that job can be as mindless a a cashier job. And I agree the, there is a mindless part of it that need to be automated. But at some point, it needs human intervention. Now, I will mention the IT guys. Half of their job time can be automated. But the other half requires a human. Mostly to interface with other humans. Are the (maintenance) IT guys getting paid for the IT knowledge or for the knowledge about how to interface with other people? If their job is to interface, how much more valuable they are compared to the cashiers, who essentially have the same job?

11/15/2013 4:07:26 AM

Your looking at a difference of scale, complexity and responsibility. The person sighing off on that 20000 unit order of beanie babies because the computer told him to has to have an understanding of the business enough to check and balance the automated systems. I'm sure they wont continue to receive that pay check if they do make that million dollar mistake.

I'm associating auto assembly with auto repair, which I think would in general be more dangerous, and more skilled work. Your also working with vehicles, which cost more than 99c and if you mess up, its more likely to be costly.

I have worked as a cashier, I've worked as a line cook, I have worked in grocery stores. There is very little responsibility, and very little thought that goes into most of these positions, most of the time the only thing that is needed is a talking head.

There isn't a skill involved, aside from basic human interaction. Functionally most of these jobs don't require an understanding of business, supply, computers, or even math. The fact that the job itself can be taught in a day is an indicator of the skill involved.

There are certainly jobs in every one of these mega chains that do require responsibility, or a deeper understanding of the business, supply or even infrastructure, and generally the its easy to move up to these positions, and most of them pay much more than minimum wage.

About 1 in 4 people in the crappy jobs I worked show up on time, are a team player, work hard, care, and try to learn new skills. These people get promoted, sometimes leaving for new jobs, sometimes staying within the company.

My argument is that if they want more money than McDonald is willing to pay them as a cashier, show some initiative, learn how to order supplies. Learn how to direct work and improve efficiency, go to work and do more then clock your 8 pressing buttons and asking "Would you like fries with that" and you will make more than minimum wage.

11/15/2013 6:26:38 PM

Quote :

"The point is, even mindless jobs are not completely MINDLESS, otherwise, they would have been replaced by machines. I am ALL for automation."

You make it sound like it's as easy as firing employees and inserting robots.

There's a cost associated with automation. The more costly human labor is, the more incentive there is for an enterprise to invest in automated solutions, but those solutions are very expensive to design, manufacture, and implement.

Once again, liberals arguing for higher minimum wage laws are unknowingly arguing for the policies that will eliminate opportunities for the working poor. I should be rooting for it (minimum wage laws) just to see the economically ignorant among us eat crow, but I know that they'd blame any negative consequences on the free market anyway.

Quote :

"There isn't a skill involved, aside from basic human interaction."

If you've ever worked in or around customer service, you know that this is a skill that a significant number of people do not have.

[Edited on November 15, 2013 at 8:27 PM. Reason : ]

11/15/2013 8:24:31 PM

And even if you suck at it, you can work in the back of mcdonalds.

11/16/2013 12:52:05 PM

Quote :

"There's a cost associated with automation. The more costly human labor is, the more incentive there is for an enterprise to invest in automated solutions, but those solutions are very expensive to design, manufacture, and implement. "

Its expensive now, but won't be forever. In fact, most expect the costs of automation to start dropping precipitously in the VERY near future. Racing to the bottom to compete with robots is not a competition workers are going to win. A huge amount of low-skilled and semi-skilled American workers weren't able to out-compete Chinese mega factories or Bangladeshi child workers; they aren't going to out-compete automation and robots either.

There is evidence, even now, that our sluggish job growth is partly due to automation:

http://www.technologyreview.com/featuredstory/515926/how-technology-is-destroying-jobs/

Some research indicates that as much as 47% of current jobs could be plausibly automated in the next 20 years:

http://www.futuretech.ox.ac.uk/sites/futuretech.ox.ac.uk/files/The_Future_of_Employment_OMS_Working_Paper_1.pdf


We act like we are doing low-skilled workers a favor by pushing their wages ever lower, but its just delaying the inevitable, while making them ever more dependent on handouts - its unsustainable. I'm not saying that raising wages to $15 is a solution to this problem, only that using automation as an argument against raising wages doesn't work for me. Those jobs are going to be automated at some point in the near future no matter how far we suppress wages.

11/16/2013 2:08:33 PM

Better they starve on the street today than starve on the street at some probable point in the future?

Allowing wages to find their lower marginal price today will incentivize entrepreneurs to find something else for these workers to do in the economy. Artificially jacking up the wages of those with the least alternatives doesn't just destroy their current jobs, it rules out the creation of new ones.

[Edited on November 16, 2013 at 2:16 PM. Reason : .,.]

11/16/2013 2:16:07 PM

^the point is, whether its today or tomorrow, our current system for low-skilled workers isn't sustainable. Arguing over where we should set the minimum wage (or even if there should be a min. wage) is just rearranging the deck chairs on the Titanic.

11/16/2013 2:22:46 PM

And I disagree. The degree of automation being deployed in various industries is not due to falling prices or rising effectiveness of automation, but principally due to rising regulatory costs associated with employees (healthcare reform, rising minimum wage, rising litigation, etc). Nevermind the actual recession we're still not recovered from.

End the regime uncertainty. Scrap the costly regulations. Scrap the price controls. Then, if people are still starving in the street, we'll discuss the evils of technology.

11/16/2013 2:41:59 PM

Even if you are right about the current economy (you aren't), it doesn't change the fact that at some point in the future, even with paying workers pennies per hour, the cost of automation will be less than a human being's wage.

11/16/2013 3:04:51 PM

Real Unit labor costs dropping like a rock



Employment Cost Index growing at its slowest rate since the FED started tracking it



oh noes!!!!! Its cheaper and more predictable to hire a worker today than the past 20 - 30 years. Thanks Obama!!!!

11/16/2013 4:32:19 PM

Your graphs are for all workers, not the ones we are talking about.

The first graph disagrees with the second. The second shows labor costs going up every year. Not what one would expect to see if machines are driving down the marginal value of human labor. What your theory predicts we should see is wages falling while rents and profits grow as a percentage of GDP every year. While profits are way up recently, almost all of the growth has been in politically favored industries such as finance and healthcare, not the industries expected to prosper in an automation dominated world (patent holders, real-estate holding companies, etc).

[Edited on November 16, 2013 at 5:30 PM. Reason : .,.]

11/16/2013 5:25:40 PM

Quote :

"Ryan, the point is, they are both performed by people that could be trained in matter of hours. I don't think you worked as either a early 20th century car assembler or a cashier at a modern fast food joint to know exactly how much different those jobs were."

First, that wasn't me that wrote that, it was someone else.

Second, I've worked in factories my whole adult life as an engineer. You have to be a more intelligent person to assemble an engine or a car than you do to be a cashier. That's one reason why the people that work on assembly lines are paid more.

I always love the cashiers that when they ring me up and the cost is $6.27, their face goes weird for a second wondering why I give them $10.02. Those people, we can tell that cashiering is about the only thing they can do, because we just demonstrated they don't understand basic math, and if that's the case, how did they graduate high school?


It's all not going to matter anyway. I think the global economy is going downhill and there's nothing anyone can do about it. Japan and Europe are about to enter deflation which prefaced the Great Depression. They're fighting it tooth and nail at the moment, Japan is using Paul Krugman's economic ideas pretty much, and I don't think it's going to work just as austerity didn't work either. I think what we're going through is the new normal on a global scale.

The '90s are looked on so fondly but there were so many one-time events that made that such a great decade economically: the end of communism as a practicable economic policy from governments, opening formerly closed markets, free trade, widespread use of the internet completely transforming supply chains, planning, and operating over long distances (Wal-Mart is directly a boom of this economic transformation).

We're at the end of those events' lives as far as being game changers, and when you look at the workforce from a global point of view, where can it grow? Sections of the first world is undergoing a demographic crisis due to low fertility rates which is going to cause long-term recessions and depressions in countries I think for the next generation or two. You have beggar thy neighbor taking place: Bretton Woods II is completely fucked, it should be put in a trashcan and a new currency system put in place by countries across the globe where nations don't do competitive currency debasement to prop up exports which harms other countries, so they then do the same thing, and it's a major cycle which all the time puts everyone in further and further debt that will never possibly be repaid, leading to depression. And that competitive debasement harms all workers because they are paid the same while actually receiving less (inflation tax). The cheap jobs that went to Asia are returning but are increasingly becoming automated, so even if the jobs come back, they won't require as much labor as they did before.

And all this hardship and suffering that's going to come, all it takes is one Robespierre or Hitler to make things burn. I'm pessimistic on the future, for everybody, not just one country.

[Edited on November 17, 2013 at 11:16 AM. Reason : /]

11/17/2013 11:07:51 AM

FT article titled "Prompt Action Required on Eurozone Deflation"

this is a macroeconomist based in Barcelona I read that studies the long-term effects of demographics on economies

simply put, if Europe and Japan go down, it's going to affect the U.S. negatively; we're already at zero percent interest rates, so it's not like they can adjust that to boost demand

Quote :

"Despite the promising title of this article - deflation IS likely to become the key issue confronting the ECB in the coming months - I have to admit to having been disappointed by the end product. The writer seems to be talking about a world which existed before the start of the crisis, using stereotypes that seem to show their age. For example. "Within the very diverse monetary union Germany looks nothing like Japan did at the start of its long period of economic stagnation from 1990." Right, Germany doesn't look like Japan in 1990, but it does look incredibly like Japan in 1997. The working age population is about to start to decline, there is a lot of debt still lingering in the banks that hasn't yet been cleaned up, and above all the economy is totally export dependent running a large current account surplus. Germany faces all the demographic challenges today that Japan did in 1997, which is actually when it really fell into deflation. Germany is at risk of deflation today as the other Euro Area partners sink in. The Irish economist Philip Lane made the point at the start of the crisis that a short sharp deflation shock on the periphery might be no bad thing, since the deflation wouldn't necessarily become self-fulfilling as competitiveness would correct between countries and then the inflation rate would stabilise. Fair enough, but what he didn't consider, and I think we now should, was that THE PERIPHERY MIGHT DRAG GERMANY DOWN WITH IT. What do I mean? That an ongoing drop in the price level on the periphery would force Germany to respond by also cutting costs in order that all the work they have recently generated didn't just move out to the periphery. There is no obvious win win dynamic from an internal Euro Area rebalancing due to the fact that the whole region is now ageing fast. So you could end up getting a lose-lose dynamic where instead of a currency war between the various member states you get a price and wage cutting one. I mean, German domestic demand and inflation is not very strong at the best of times. Here's another example of this old fashioned reasoning: "That brings us to the heart of what is different about these two episodes. Any potential challenge from deflation in the eurozone lies primarily in Italy and the other peripheral countries. And the challenge is greatly exacerbated by the dynamic of a flawed monetary union. Just as a one-size-fits-all monetary policy gives an interest rate that is too low for Germany, it gives one that is too high for the weaker members of the eurozone." Look, this problem is now beyond conventional monetary policy help. Going down to zero won't make any significant difference to the deflation dynamic on the periphery. This one size fits all argument belongs broadly to the pre crisis era, even if perhaps countries like France, Holland and Finland are still being kept afloat by low rates alone. Then there's more: "The eurozone countries with the biggest competitiveness problems have no exchange rate flexibility. They will have to address their cost disadvantage through internal devaluation. That is where the latest eurozone inflation numbers become disturbing, because it is much easier to reduce real wages if there is inflation. With deflation workers would have to accept falls in nominal wages. In unionised countries such as Italy this is unlikely to happen without considerable strife, if it happens at all." Again, we are behind the curve. Italy is already having nominal wage cuts via labour force churn made possible through the labour market reform. Old workers leaving and younger ones being employed on newer less remunerative contracts. My sense is that this is now happening all along the periphery. Nominal wages (on aggregate) are now falling. That is precisely why the deflation is coming. Only yesterday afternoon the head of Italy's business lobby Confindustria told Reuters that Italy is in a worrying "situation of deflation". "There is a very negative sign, and that is that despite the one point increase in VAT the latest data show inflation is falling. This means we are well and truly in a situation of deflation. It is worrying," Giorgio Squinzi told reporters. Now back to the FT article: "The eurozone is also in a less comfortable place than Japan in relation to government debt. Japan, as a big international creditor, has no need of external funds to finance its deficits..................... Because these countries have been forced into fiscal austerity and borrow at interest rates that exceed the growth rate of nominal GDP, public sector debt rises inexorably. Deflation would further increase that debt burden." Well this is where we get to the heart of it. The Eurozone is now the biggest source of the CA surplus, since the periphery has now joined Germany in becoming export dependent for growth. This is what the US Treasury is kicking up all the fuss about. So together the Euro Area can finance, and this point won't be missed in countries like Italy and Spain. I expect the pressure for Japan style QE to become massive as the problem grows. The two big questions about the future are: Will Abenomics hold together long enough for it to still be seen as a plausible alternative? Would Germany - in extremis - accept it. Which would be the worst scenario for Germany, accepting QE, or leaving the Euro?"

so really the global economy is about to fall down in a big way the next year or two, and we want fast food workers to unite to be paid more? they could I guess, but if they got their way a lot of those places would go out of business in the next half-decade then I'll bet anyone on this thread money on

[Edited on November 17, 2013 at 11:34 AM. Reason : /]

11/17/2013 11:27:05 AM

The exact trends you name from the 90s destroyed a whole bunch of jobs. Walmart does literally reduce the number of retail worked needed to service a population. The trick was that worker compensation was lower then, less than productivity, and that expected profit drove an investment boom which created more jobs elsewhere than were being destroyed.

Such is why productivity gains are great. But there is nothing about economics which makes ready productivity growth a requirement for an economy to not fall apart. Stagnant productivity should not mean widespread unemployment; all it should mean is stagnant wages.

What is different now is that the first rule of politics is to ignore the first rule (and, really, all the rules) of economics. Governments have built schemes which cause the country to collapse if productivity growth slows. But this is not a law of nature or economics: government built them, it can dismantle them. And, it will. They will have no choice on the matter. As borrowing costs rise, politics will shift, and governments will cut back. Disaster averted.

Yes, the minimum wage and healthcare penalties may be permanent, so America will forever have a permanently unemployable underclass. But America has had such an underclass for almost have a century, it clearly isn't a major problem. The rest of the economy is relatively free and will continue to adjust normally once the current regime crisis is passed (come on 2014!)

11/17/2013 11:43:24 AM

I have to facepalm when people want businesses to pay unskilled workers more than they're worth, and don't want to replace them with automation/technology, either.

11/17/2013 1:08:12 PM

Quote :

"Your graphs are for all workers, not the ones we are talking about. The first graph disagrees with the second. The second shows labor costs going up every year. Not what one would expect to see if machines are driving down the marginal value of human labor. What your theory predicts we should see is wages falling while rents and profits grow as a percentage of GDP every year. While profits are way up recently, almost all of the growth has been in politically favored industries such as finance and healthcare, not the industries expected to prosper in an automation dominated world (patent holders, real-estate holding companies, etc). "

Automation cuts across all industries, its actually very difficult to predict which industries have been or will be the most affected in the future. Its best to view the data on the entire economy in this case IMO.

The graphs don't disagree. The first graph shows the nominal index increasing, which is the growth rate you see in the ECI. But REAL unit labor costs are decreasing. Its showing that per unit of productivity, its very cheap to employee someone right now and the growth in those costs is about as low as you can expect. Wages are growing only at the rate of inflation while productivity continues to climb. All of those productivity gains have gone directly to corporate profit and we've all seen the graphs of corporate profit as a % of GDP and wages as a % of GDP. Yes much of that growth is in finance and healthcare, but both have made huge gains from automation in the past 20 years. Look at nearly any sector and you are going to see recent rises in profits since the recession, yes I'm sure there are some exceptions, but the rise in profits has been pretty broad.

Quote :

"The exact trends you name from the 90s destroyed a whole bunch of jobs. Walmart does literally reduce the number of retail worked needed to service a population. The trick was that worker compensation was lower then, less than productivity, and that expected profit drove an investment boom which created more jobs elsewhere than were being destroyed. "

Exactly. There is no investment boom this time because there is no expected growth in demand. There is no expected growth in demand because there is no growth in compensation. I'm not suggesting that a higher minimum wage is the solution, only that when you suggest that workers racing to the bottom is doing them and us a favor, its just shortsighted and wrong. "Disaster Averted" I've never read anything so delusional in my life. You're telling me you expect workers to accept falling wages, as productivity continues to grow (it will), while dismantling the billions we subsidize them with (even larger drop in demand). And all of this is going to happen in the current somewhat (or perhaps highly) destabilized world?

I'm disregarding the rest of your post as more supply-side bullshit.

11/17/2013 4:26:51 PM

The minimum wage should be $33/hour. I want to see the impact that would have.

11/17/2013 9:01:41 PM

Quote :

"Look at nearly any sector and you are going to see recent rises in profits since the recession, yes I'm sure there are some exceptions, but the rise in profits has been pretty broad."

Yes, since the recession. It is not the case that automation only became a thing five years ago, yet prior to five years ago profits in the economy oscillated around and always returned to 10%.

Meanwhile, healthcare and finance are the two sectors of the economy LEAST prone to automation. Yes, they use a bunch of fancy computers in finance and healthcare, but it is not the case that they are employing fewer workers at lower salaries to do their work. These two sectors are not employing fewer people over time, but more, at higher salaries. This is no ways fits any theory of automation driven profitability.

Meanwhile, what we see is exactly what we would expect to see if the two sectors were booming due to being politically favored...which they just so happen to be. As such, filter out healthcare and finance and profits prior to the recession were not unusually high.

As for after the recession hits, it is the natural state of a capitalist economy that if investment is cut off for any length of time, such as due to the current rampant regime uncertainty, profits will rise over time as new businesses are not created and existing businesses do not expand into new markets.

As for your demand theories, they are bunk. A higher minimum wage and therefore higher compensation merely transfers income from business owners to workers. Every dollar spent by workers is one less dollar spent by owners. Such cannot increase demand, especially as some owner income drops below zero and businesses close.

11/17/2013 10:54:13 PM

Quote :

"Regarding the minimum wage, here is some data for Western Europe: There are nine countries with a minimum wage (Belgium, Netherlands, Britain, Ireland, France, Spain, Portugal, Greece, Luxembourg). Their unemployment rates range from 5.9% in Luxembourg to 27.6% in Greece. The median country is France with 11.1% unemployment. There are nine countries with no minimum wage (Iceland, Norway, Sweden, Finland, Denmark, Austria, Germany, Italy, Switzerland.) Five of the nine have a lower unemployment rate than Luxembourg, the best of the other group. The median country is Iceland, with a 5.5% unemployment rate. The biggest country in Europe is Germany. No minimum wage and 5.2% unemployment. Still want to raise our minimum wage to $10? Germany used to have really high unemployment. Then they did labor reforms to allow more low wage jobs, combined with subsidies for low wage workers. Now they don’t have high unemployment. Still want to raise our minimum wage to $10?"

http://www.themoneyillusion.com/?p=24759

11/17/2013 10:58:36 PM

^ that's one of the dumbest arguments against minimum wage in the us. The reasons are obvious, but I'll point out that those countries have other social programs far more supportive than anything we have here as well as differing rules on overall pay structures (including compensation caps).

11/18/2013 1:28:41 AM

If you want to remove the minimum wage, you have to increase taxes on the wealthy and vastly expand social welfare programs in the US. Otherwise there will literally be people dying in the streets of hunger and massive amounts of crime.

11/18/2013 5:25:57 AM

How does that make sense? How does having an ineffective safety net mean we MUST declare it illegal to employ the poorest among us?

If our safety net sucks, then being unemployable is a disaster. As such, we must abolish the minimum wage, because the people harmed by the minimum wage won't be saved by our ineffective safety net and will just die on the street.

Or is your point we need the minimum wage to make sure enough people are dying on the street in order to build political pressure to fix the safety net? Do you value human life so little as to view this as okay?

11/18/2013 6:43:46 AM

Quote :

"As for your demand theories, they are bunk. A higher minimum wage and therefore higher compensation merely transfers income from business owners to workers. Every dollar spent by workers is one less dollar spent by owners. Such cannot increase demand, especially as some owner income drops below zero and businesses close."

God, you have no clue how the demand side of our economy actually works. You know, the consumption that actually drives the modern economy. Business owners aren't spending their money, unless you count questionably useful financial instruments and parking the rest in reserves. If workers had that money the vast majority of it will go directly to demand. Dollars spent by workers tend to have an immediate multiplying effect since it greatly increases the velocity and movement of the money throughout the economy.



There is nothing more dangerous to the American economy right now, than the supply-side ideologues.

11/18/2013 7:35:22 AM

Quote :

"Business owners aren't spending their money"

11/18/2013 10:14:32 AM

Quote :

"Business owners aren't spending their money"

And why would they, given the current regime uncertainty in the economy?

But I guess you're assuming they're just going to hoard it all forever? Economists have already run this thought experiment: even if they're taking all the money they earn and setting it on fire, in the long run there will be no discernible effect upon output. All they are doing is shifting consumption away from themselves towards everyone else holding dollars.

Ineffective safety net? Fire the parasitic army of government workers and pay people for being alive!
http://www.nytimes.com/2013/11/17/magazine/switzerlands-proposal-to-pay-people-for-being-alive.html

[Edited on November 18, 2013 at 10:43 AM. Reason : .,.]

11/18/2013 10:43:09 AM

And you don't think consumer demand, which has been sputtering since the early 2000s (except in the case of the housing bubble), contributes to economic uncertainty at all?

11/18/2013 12:37:32 PM

As consumer spending has fully recovered to well beyond pre-recession levels, no. No I don't.

11/18/2013 12:43:43 PM

I wouldn't say well beyond, lol. We are still lagging behind where we should be if the recession hadn't happened (hysteresis). Not to mention real personal consumption is growing at its slowest rate in a long time (basically growing at the rate of inflation)

11/18/2013 1:00:38 PM

Given that a hugely significant portion of consumer spending in the past couple of decades has been funded by credit, is it really a bad thing that consumer spending might drop a bit? Debt-fueled consumption isn't sustainable, and it's also not particularly wise on a micro level.

It completely boggles my mind how modern American liberals believe that savings are bad for the economy. How myopic can you be? These are the same people that bitch about how people won't save for retirement, therefore we need Social Security. Maybe people would save if there was an incentive to save. Cash deposits lose value over the time, and academics keep telling us that it's a good thing and necessary for a healthy economy.

11/18/2013 3:34:12 PM

That consumer credit, and the associated demand, is the only thing that was able to prop up our economy in the face of stagnating wages since the 70s. Its the only reason we continued to have investment in the economy as businesses could expect demand to continue to grow (as it always had). That investment in the economy and growing demand allowed us to continue to create jobs in spite of losing some to automation, demographic changes, and financialization. Using credit to sustain demand isn't ideal, but neither is an economy that only hoards and doesn't invest in the future.

Which is why it complete boggles my mind when American conservatives tell me that pushing wages even lower will be good for the economy. While it may provide poors a job in the short term, it does nothing for the economy in the middle to long-term but reduce growth and raise unemployment. There needs to be an expectation of future untapped profits to encourage investment, which will create jobs.

Cash is losing value over time - but even this fact hasn't been enough to goad corporations to invest their cash reserves right now!!!!! Let that sink in for a moment - Corporations would rather park their cash somewhere that is relatively safe, growing at or below the rate of inflation (losing money basically), than risk investing in some part of their businesses because there is NO EXPECTATION OF FUTURE GROWTH IN DEMAND. Basically, the REAL natural interest rates should probably be in negative territory right now, and we likely need it to go even more negative to spur investment. That's not a healthy economy to me, and it will be reflected in the continued slow slog of 1.5% GDP growth and 7+% unemployment.


See Larry Summers discuss it more eloquently then I ever could:
http://www.youtube.com/watch?v=KYpVzBbQIX0


[Edited on November 18, 2013 at 5:05 PM. Reason : I'm not a Summers fan, so don't project onto me - but in this case he is right.]

11/18/2013 4:43:44 PM

Quote :

"A Walmart in northeast Ohio is holding a holiday canned food drive — for its own underpaid employees. “Please Donate Food Items Here, so Associates in Need Can Enjoy Thanksgiving Dinner,” a sign reads in the employee lounge of a Canton-area Walmart."

http://www.slate.com/blogs/moneybox/2013/11/18/walmart_food_drive_retail_giant_is_raising_money_for_its_own_employees.html

11/18/2013 5:20:16 PM

Classy

11/18/2013 6:50:38 PM

Quote :

"That consumer credit, and the associated demand, is the only thing that was able to prop up our economy in the face of stagnating wages since the 70s. Its the only reason we continued to have investment in the economy as businesses could expect demand to continue to grow (as it always had). That investment in the economy and growing demand allowed us to continue to create jobs in spite of losing some to automation, demographic changes, and financialization. Using credit to sustain demand isn't ideal, but neither is an economy that only hoards and doesn't invest in the future."

Stagnating wages that coincided with the removal of the gold standard. It wasn't perfect, it wasn't even great, but it was the last vestige of a currency system backed by real value, not subject to the whims of bankers and cheap money giveaways.

Take away that basic constraint (that any new debt be backed by some kind of collateral or at least have its creation bounded by some predetermined limit), and unsurprisingly, bankers did what anyone should have expected. Most of the new money goes right back into the financial sector rather than flowing through the greater economy.

I take issue with your assertion that, without a economy primarily fueled by credit, everyone would hoard money. There's no reason to believe that. Yes, I'm certain you can Google a bit and find examples of where spending did drop and people were, relative to other times, "hoarding" money, and I guarantee that these examples were preceded by some kind of ridiculous bank intervention, certainly supported if not outright demanded by the administration.

11/18/2013 7:40:19 PM

Quote :

"Take away that basic constraint (that any new debt be backed by some kind of collateral or at least have its creation bounded by some predetermined limit), and unsurprisingly, bankers did what anyone should have expected. Most of the new money goes right back into the financial sector rather than flowing through the greater economy."

Let's not fix this with higher capital gains taxes or higher taxes on the investor class though...

11/19/2013 12:12:01 PM

How will giving more money to the government solve anything? The problem is that newly created money goes directly to the "investor class". Do you think the Federal Reserve is giving money to poor people?

The people that benefit the most from new money are the people that get it first. My solution is to stop giving away money like that. Your solution is to tax the people that get the new money, and then hope that the government spends the money in a way that benefits the population.

11/19/2013 1:41:37 PM

^x5 PR disaster. This is basic stuff lol.

I would love to see massive strikes on Black Friday. Like shut the whole fucking store down strikes with angry customers forced to wait outside. I mean come on, it's 2013, grow a pair people.

Alas

[Edited on November 19, 2013 at 2:19 PM. Reason : .]

11/19/2013 2:18:57 PM

I would hope they'd lose their jobs for that. Breach of contract, and all that.

What next? Can employers refuse to pay employees for past work until they agree to lower salaries?

Quote :

"A Walmart in northeast Ohio is holding a holiday canned food drive — for its own underpaid employees"

Facts not in evidence. Walmart does not set the prevailing wage for its employees. As such, it is as powerless as the employees are in the matter of their "underpaid" status. As such, if some of them warrant help, why shouldn't walmart organize some help for people that need it?

[Edited on November 19, 2013 at 2:59 PM. Reason : .,.]

11/19/2013 2:56:52 PM