Seattle City Council votes to phase in $15/hr minimum wage

[MisterChester]

obligatory

 

[BehindBlueI's]

No, that's not how you ask for a raise. You want a raise? Demand the government force your employer to give you one. But seriously, in the real world, if you ask for a raise, if your employer believes you're that valuable, you'll probably get it.


I thought we hashed this out in the last "automation" thread. That's okay. We can go through it again.

Automation happens when the cost of developing and implementing it is less than the cost of the labor it would replace. So, if you want to make minimum wage jobs ripe for being taken over by automation, yeah. Go ahead. Raise the minimum wage so that you cross that threshold.

You both get the point I'm making. Saying "if $15 is good, why not make it $30" is avoiding the issue. We aren't talking about $30, we're talking about $15. If we discuss a 70 mph speed limit and I say, if 70 is safe, let's make it 10 and be even safer, am I really discussing a 70 mph speed limit? Making the argument about something it isn't is just a diversion and you can reduce or expand anything to absurdity with the same technique.

We're not disagreeing about automation. I'm not sure what you think I don't get. All else being equal, automation replaces human labor when its cheaper. Its inevitable. The question is how do we deal with that. If we want continuously falling wages (as automation only gets cheaper as technology improves) across more and more fields (as technology only gets better and more adaptive), resulting in an ever wider wealth gap between workers and the owners of capital, then do nothing. Just don't expect a healthy middle class to result, and if we accept that increased wealth results in increased political influence, then expect an ever shrinking slice of influence in our representative democracy. Assuming that education will continue to rise in cost as wages continue to fall, the "just get an education" route of climbing the financial ladder will be available to fewer and fewer people. Society will adjust either by changing the focus on the role of money in happiness (material goods, home ownership, etc.), by redistributing wealth, or by force. If we see something like the US during the advent of anti-trust laws, something like the French Revolution , or a rise of some poverty affirming philosophy/religion that contents the masses with their lot in the economic system who knows? However the path of the ever widening wage gap and accumulation of wealth my a smaller and smaller part of the population is unlikely to result in an America that we know, from say the post-WW2 era through the Great Recession after a few generations. The only certainty is change.

 

[steveh_131]

You both get the point I'm making. Saying "if $15 is good, why not make it $30" is avoiding the issue.

I think it's relevant, although I get your point.

Either you allow the free market to determine labor prices or you ask the government to do it.

In this case, you're asking the government to do it. Ok. What standard should they use? Who picked $15, and why? Sounds pretty arbitrary to me. So since we're throwing darts at a dartboard, why not $30?

 

[poptab]

You both get the point I'm making. Saying "if $15 is good, why not make it $30" is avoiding the issue. We aren't talking about $30, we're talking about $15. If we discuss a 70 mph speed limit and I say, if 70 is safe, let's make it 10 and be even safer, am I really discussing a 70 mph speed limit? Making the argument about something it isn't is just a diversion and you can reduce or expand anything to absurdity with the same technique.

We're not disagreeing about automation. I'm not sure what you think I don't get. All else being equal, automation replaces human labor when its cheaper. Its inevitable. The question is how do we deal with that. If we want continuously falling wages (as automation only gets cheaper as technology improves) across more and more fields (as technology only gets better and more adaptive), resulting in an ever wider wealth gap between workers and the owners of capital, then do nothing. Just don't expect a healthy middle class to result, and if we accept that increased wealth results in increased political influence, then expect an ever shrinking slice of influence in our representative democracy. Assuming that education will continue to rise in cost as wages continue to fall, the "just get an education" route of climbing the financial ladder will be available to fewer and fewer people. Society will adjust either by changing the focus on the role of money in happiness (material goods, home ownership, etc.), by redistributing wealth, or by force. If we see something like the US during the advent of anti-trust laws, something like the French Revolution , or a rise of some poverty affirming philosophy/religion that contents the masses with their lot in the economic system who knows? However the path of the ever widening wage gap and accumulation of wealth my a smaller and smaller part of the population is unlikely to result in an America that we know, from say the post-WW2 era through the Great Recession after a few generations. The only certainty is change.

As things become automated ie one person can produce more widgets in less time the cost of the widget goes down. This is why our standard of living is so high. Automation improves efficiency which in turn frees up Capitol. That freed Capitol can be invested in other things. Those other things will be the jobs of the future.
The cost of education will go down as well. Eventually it will be essentially free. Minus opportunity cost.
I'm crazy you say? No it's just the internet. The best teachers can now reach unlimited numbers of students for practically 0 marginal cost. I think brick and mortar schools are soon to be extinct.
I think the future will be an interesting place. More people will work less and produce more.
We do have one problem to overcome: the crushing weight of our behemoth government which is currently sucking the life out of its host. It will eventually take care of itself but I'm hoping we as a society fix it before that happens.

 

[MisterChester]

This is going to be an excellent test case of the $15 dollar rule. Can't wait to see the results after a year or so. Nobody really knows how it'll play out. For an economics geek like me, this is pretty big news.

 

[24Carat]

I can see the government mandated signs on the inside of every exit from your home.

" No Food or Drink allowed beyond this point ! "

 

[MisterChester]

I can see the government mandated signs on the inside of every exit from your home.

" No Food or Drink allowed beyond this point ! "

Concealed means concealed

 

[HeadlessRoland]

This is going to be an excellent test case of the $15 dollar rule. Can't wait to see the results after a year or so. Nobody really knows how it'll play out. For an economics geek like me, this is pretty big news.

Any real student of economics knows precisely how this plays out, and it's not good.

 

[Vigilant]

I just ran some figures through my accountant today, with the 3 employees I currently have, if minimum wage were to jump to $15 per hour it will cost me an additional $8.73 per hour for those three employees withholdings alone. That does not count unemployment insurance and workers comp, which will go up as well when their salary increases. And that does not include the actual raise to $15 per hour. Best I can figure, a minimum wage hike such as that will cost me about an extra $24 per hour between the 3. That damn near $50,000 per year. $8.73 will hire another part time employee, a $50k a year increase in expenses will put two on unemployment. I am going to have my accountant work out the numbers for real, and not just his quick guesstimate, but it don't look good?

 

[actaeon277]

Odd that so many seem happy that automation is preferable to paying a living wage. Ah well, the machine isn't here for your job. Yet.

I'm not happy.
And the machine happens at my job, EVERY DAY.

Steel workers make a good living now.
But, my plant went from 30,000-35,000 employees (not including bosses or contractors) to 5,000.

Yet, we make MORE STEEL.

Improved processes, and a buttload of automation.

 

[BehindBlueI's]

As things become automated ie one person can produce more widgets in less time the cost of the widget goes down....

The cost to *make* the widget goes down. The price is not set by the cost of production, however, and the cost of production is irrelevant to what price the market will tolerate. You go to buy a t-shirt. One is $5 and one is $3. Do you care how much EITHER cost to make as you decide which to purchase? No, that's not how you decide which, if either, is worth the money to you. The market as a whole is the same.

As for that capital (not capitol) being invested in other things, even if we assume that's true and doesn't just line pockets and sit (look at how much cash some major corporations are sitting on right now), how does that contradict the end result of more and more assets in the hands of a few? The vast, vast majority of us are never going to have enough capital to invest that we do not also have to earn money from labor. Again, if you want to maintain a middle class, that's not how its going to be done.

Work less and produce more? We've been seeing that for quite awhile. The problem is working less makes it tough to earn a living when there is less work and the share of that increased production hasn't been going into the worker's pocket. While inevitable, it is part of why we are even talking about this. That increased efficiency and reduction in the need for labor is why we no longer have an economy when the average CEO was making closer to 20x his average worker's salary, full time work was available by answering a newspaper ad, and you could afford a house, car, and to raise a family on semi-skilled labor with one income, and the biggest employers of unskilled and semi-skilled labor were unionized manufacturers. The post-WW2 decades that built what we consider the modern middle class, basically, are being reversed.

As far as schools, that's going to take a huge culture shift. College degrees are only partially about what you learned. The contacts you make, the prestige of the institution, and the social narrative that you "need a degree" drives the education market. Perhaps we'll see that, part of poverty affirming philosophy that decides self-learning and free or low cost online "schools" are "just as good" as established Universities. A degree is, currently, simply more impressive to the job market than the same knowledge but without a paper that says you have it.

 

[Smokepole]

According to my wife who is a nurse and was an ER manager, a 2 yr degree LPN makes on average, depending on what type of facility they work in, around $13 to $17 an hour. 2 years of college. And we have some that think an unskilled burger flipper should make the same or more? People don't qualify for a particular wage simply because they exist. One has to actually be able to demonstrate VALUE relative to their ability to produce or contribute to a product or service that has a determined value to a specific market. The product must be priced in a way to appeal to that market's perceived value. If not the market will ignore the product. Result, many fewer jobs due to increased cost and decreased demand. You got some people making more money, but fewer with jobs. And the economy continues it's spiral. As it degrades and becomes worse even more jobs go down the drain. And the cycle continues. More unemployment, (but hey, the few that still have jobs are making a LIVING WAGE) more money being taken from EVERYONE that still has a job and is given to those that don't. Until there isn't anything left to take. Then what will the .gov do? And what about the workers that think, "why should I go to college for 2 years and bust my hump just to make $1 or $2 more dollars an hour? And owe $25,000 in student loans. Don't see the cost v. benefit here to take on additional debt to take away that $2 hr. and reduce my standard of living even further." And I can't even dump it in bankruptcy.

And we aren't even getting into the reasons that most of our manufacturing jobs have all gone to other countries causing the U.S. to no longer be able to produce enough GDP help dig out of the rut that we're in. We aren't a production society anymore. And it ain't the fault of NAFTA, CAFTA either.

Quote Lady Margaret Thatcher: "The problem with Socialism is, eventually, you run out of other people's money."

Personal case in point. When we eat fast food, my kids like McDonald's, I much prefer Wendy's. Wendy's has always been more expensive, but I would eat there when I felt like it. But, over the last couple of years Wendy's has raised their prices more times and by greater margins. Result, I don't buy Wendy's anymore. I can't abide the price. I won't until they either lower the prices or every one else (and my wage) catches up. And I have expressed that to the ownership. I can take the family to Bob Evans or Cracker Barrel and get better food for almost as cheap and eat in the restaurant getting full service. At $15 an hour I might just as well eat in a full service establishment. WHEN I CAN AFFORD IT.

 

[actaeon277]

I don't have a problem with someone flipping a burger making more money.

I have a problem with the GOVERNMENT making someone be paid more money.

And one of the problems with $15 minimum wage, is that different areas need different money to live.

 

[jamil]

We're not disagreeing about automation. I'm not sure what you think I don't get. All else being equal, automation replaces human labor when its cheaper. Its inevitable. The question is how do we deal with that. If we want continuously falling wages (as automation only gets cheaper as technology improves) across more and more fields (as technology only gets better and more adaptive), resulting in an ever wider wealth gap between workers and the owners of capital, then do nothing.

Yeah, you can probably find some economist's book or article that convinces you that automation will make paupers of us all. Anyone can make wrong assumptions leading to an unrealized fear of catastrophe. It doesn't have to be true. Automation shifts the need for labor to higher functions. Automation doesn't happen just because. It happens to fulfill a need. Because of that fact, automation will outpace the need for human labor when the growth of wages outpaces the cost of automation.

The cost to *make* the widget goes down. The price is not set by the cost of production, however, and the cost of production is irrelevant to what price the market will tolerate. You go to buy a t-shirt. One is $5 and one is $3. Do you care how much EITHER cost to make as you decide which to purchase? No, that's not how you decide which, if either, is worth the money to you. The market as a whole is the same.

The price is not set by the cost of production. However, it's not irrelevant to the market. As productivity increases, you can make more tee shirts for the same cost, which allows companies to lower its price to better compete, while maintaining the same profitability. If there's a $5 t-shirt next to a $3 t-shirt, assuming comparable quality, it's not unreasonable to assume that the store will move a lot more of the $3 t-shirts. They won't stay at $3 if there's the same supply. But because of higher productivity there's enough supply that the cost remains at $3. The maker of the $5 t-shirt will likely try to make productivity enhancements so he can sell his t-shirts for $3 and still maintain profits.


BBI, generally speaking, I think you're blaming the wrong things for the plight of the middle class.

Has it occurred to you that perhaps the middle class has a natural state that it tries to gravitate towards, and as much as different forces try to manipulate it this way and that, it still tends towards its place? I can't say what that natural state is, just that it's someplace between rich and poor.

Pre-WW2, the state of the middle class was depressed way below its place. Post-WW2 the middle class moved towards its natural state. I do think unions helped bring the middle class to prominence, but not that it would not have reached it without the unions. Unions just helped it get there quicker. After the middle class achieved its natural state equilibrium, perhaps unions helped it go too far? Unions need to continue to deliver more for its membership, lest its membership start wondering why it's paying union dues. So each contract the union gets its membership more. People want bang for their union bucks as much as any other. So get 'em mo money, then even more money; pensions, more pensions; paid vacation, more paid vacation; on and on and on beyond its natural state. If the middle class reaches above its potential, it's inevitable that it will decline.

I think that greed eventually conquers no matter what kind of system you have. People who thirst for power will build empires whether political ones or corporate ones or neighborhood associations. Laws don't matter because really capable, really corrupt people can conquer legal systems. I think we tend to have cycles of freedom/tyranny because once tyranny goes so far, people revolt. There's a reset. Then the cycle begins again and the power thirsty rebuild their empires.

Increasing the reach of government is not the answer. The minimum wage increase to $15/hour is just a populist ploy to extend a class of people beyond its potential, to make them happy for more [strike]benevolent[/strike] greedy government. More government just makes it easier for corrupt people to build empires. So much for our checks and balances. Once all the "checks" are corrupt, there's no more balance.

Sometimes I think the gone-over-the-cliff Libertarians may be right. Maybe anarchy is the answer. As long as we're all well armed. Certainly the concept of "nations" hasn't lifted humanity past the inevitability of tyranny. Nah, anarchy won't work either. It will eventually devolve into the same thing we have now because even Libertarians are subject to the greed of human nature. No one is truly intellectually honest.

Society tends towards entropy until it can stand no more chaos, and then resets. It'd be nice if society worked like a closed loop heating system. Set the temperature so it's just right and let the system correct for changes in condition that tries to make me uncomfortable.

 

[Johnny C]

Raising minimum wage is the functional equivalent of lowering everyone else's wage. Businesses will not simply absorb the hike and lower their profits, they'll pass the costs on to the consumers. All of us who have worked hard to make ourselves valuable are now being pulled back down to help people who typically won't even help themselves. There are exceptions to this but the majority of minimum wage workers are that way because of the choices they've made in life. We're hurting the majority to help the minority. Ultimately that will end badly for all of us.

Welcome to socialism.

 

[gstanley102]

Welcome to socialism.

^^^^^^ THIS!!!! ^^^^^^

 

[Baditude]

Raising minimum wage is the functional equivalent of lowering everyone else's wage. Businesses will not simply absorb the hike and lower their profits, they'll pass the costs on to the consumers. All of us who have worked hard to make ourselves valuable are now being pulled back down to help people who typically won't even help themselves. There are exceptions to this but the majority of minimum wage workers are that way because of the choices they've made in life. We're hurting the majority to help the minority. Ultimately that will end badly for all of us.

This could not be emphasized enough. I highly doubt we will ever hear of the results unless the statistics are twisted. I would love to see the welfare / unemployment / food stamp programs scaled back dramatically at the same time.

 

[BehindBlueI's]

The price is not set by the cost of production. However, it's not irrelevant to the market.

Again, yes, it is. What you are arguing is that cost of production influences supply, which is possible but not inevitable. One could also restrict production to maintain a higher price (like OPEC does with oil), or the increased production could still fail to overwhelm demand (like Coach purses, where supply has increased from what 6 people could make by hand to an international business sourcing work overseas), or some commodity that you require will remain rare (gold prices don't fluctuate in sync with extraction costs).

Has it occurred to you that perhaps the middle class has a natural state that it tries to gravitate towards, and as much as different forces try to manipulate it this way and that, it still tends towards its place? I can't say what that natural state is, just that it's someplace between rich and poor.

Yes. Historically, the middle class is not widespread throughout a society. A tiny portion of the population holds the vast majority of the resources, a small middle class based on a few specific trades exists below them, and then there's everyone else. Not everyone can be a knight or silk merchant, just as today not everyone can be an engineer or doctor. Our post-WW2 world is an anomaly, and one brought about by a confluence of circumstances previously unseen in history. The GI Bill (one of the most successful transfer of wealth programs ever), the breakthroughs and growth in technologies that created more jobs instead of less, a regulatory environment that prohibited trusts and monopolies, strong trade unions, etc. etc. A middle class does not just organically grow. Of course there's a "natural" state of a middle class, which is what we're returning to. The question, as I keep pointing out, is do we want that?

 

[BehindBlueI's]

Personal case in point. When we eat fast food, my kids like McDonald's, I much prefer Wendy's. Wendy's has always been more expensive, but I would eat there when I felt like it. But, over the last couple of years Wendy's has raised their prices more times and by greater margins. Result, I don't buy Wendy's anymore. I can't abide the price. I won't until they either lower the prices or every one else (and my wage) catches up. And I have expressed that to the ownership. I can take the family to Bob Evans or Cracker Barrel and get better food for almost as cheap and eat in the restaurant getting full service. At $15 an hour I might just as well eat in a full service establishment. WHEN I CAN AFFORD IT.

Wendy's can't match McDonald's price, and aren't trying to. They are marketing themselves as better and fresher food worth the premium in price, and relying on that marketing to justify a higher price. The higher price is negligible for most of the market, about 40 cents for an adult meal and 70 cents for a child's meal (1/4 burger combo and 4 piece chicken nugget meal, respectively). Their stock is up about 30% over the last 12 months (and rose about 50% in the 2013 calendar year), so while your personal experience may differ, the market as a whole agrees with what they are doing.

 

[steveh_131]

Yes. Historically, the middle class is not widespread throughout a society. A tiny portion of the population holds the vast majority of the resources, a small middle class based on a few specific trades exists below them, and then there's everyone else. Not everyone can be a knight or silk merchant, just as today not everyone can be an engineer or doctor. Our post-WW2 world is an anomaly, and one brought about by a confluence of circumstances previously unseen in history. The GI Bill (one of the most successful transfer of wealth programs ever), the breakthroughs and growth in technologies that created more jobs instead of less, a regulatory environment that prohibited trusts and monopolies, strong trade unions, etc. etc. A middle class does not just organically grow. Of course there's a "natural" state of a middle class, which is what we're returning to. The question, as I keep pointing out, is do we want that?

You're going to give credit for our incredible growth, post WWII, to labor unions and government regulations?

You're out to lunch.