It's still a net loss of jobs. I'm certain the future will involve increasing automation to further reduce headcount. A McDonald's recently opened near me with no seating, and orders can only be placed through the app or at the drive thru. I spoke with the owner who mentioned two main reasons for this setup: first, ongoing issues with the local homeless population and second, a desire to minimize staffing. Fewer employees are needed when there's no dining area to clean or counter to staff. I’m pretty sure this is the direction things are headed in California.
I currently live in a petty remote area and we have literarily zero homeless folks in our hamlet area. (We actually have a fairly robust program that provides housing for folks in need). We have one fast food restaurant in the area and it's a McDonalds. It was one of the main hangouts for folks in the area. We would have weekly meetups there. After Covid, they closed the seating area and installed the touch screens. They went from employing around 7 to 9 folks down to only 3 and talking with the franchise owner, they're not planning to ever hire back up and re-open seating. He did mention that the gross revenue is way down, but net revenue is about the same and his stress in managing the location is way reduced with the headcount reduction and simplification of the business.
But on the other hand... Some people open cafes specifically because they dream of creating a place for the community to hang out. At least that's what they say. I often see McDonald's fill that niche for older folks.
That can all be trivially fixed by style of seating and tables, removing all power outlets and so on. People who don't go there to work won't care.
I live in the country with probably the highest sit-down cafe density cities in the world (Korea), and this issue has been figured out ages ago. If you know any such cafe owners who don't understand how to deal with this, I'm happy to have a chat with them. Or they can come over here and I can show them a dozen cafes so they can see it with their own eyes.
You simply set up the cafe to accommodate the exact % of such laptop users as you're comfortable with, which can be 0%, 100%, or anywhere in between. If you do for some reason want to run a cafe where 100% of seating is usable for laptop workers, then the way to keep it all profitable is also straightforward: 1. you make your cheapest coffee (converted to Dutch CoL) 7+ euros a cup (use some single origin stuff that's still cheap when bought from wholesale). 2. As food, only offer small sweet bites and make those similarly overpriced. 3. Make the seating dense so you can fit a lot of these office workers. Bar seating is especially space-efficient for this.
The Netherlands even has an advantage; people can't just leave their setup on the table and leave for hours as it may well get stolen - this is not an issue in Korea so some people actually do this, the worst case scenario for cafe owners.
The $10 comfortable folding chairs that recently became available changed the equation for me. Rather than sitting in a cafe, I much prefer to take my laptop and a chair and go sit in a nice park, on the beach, or even in the woods.
The common non-tourist behaviour in a café in Vienna is to sit there talking for hours, buying a few cups of coffee total. It has been like that since before laptops were a thing. Yet the cafés remain viable.
> Some people open cafes specifically because they dream of creating a place for the community to hang out
Having people sitting alone looking at a laptop for hours while buying the minimum amount of coffee needed to not be just flat out loitering, I think it would be a problem both from a cold business perspective, and even more so from the human perspective.
I think it's pretty common today though. There are a number of cafes with a lot of seating where I see a whole lot of tables with someone seated working on their laptop.
Cafés as a place to be for cheap where the weather can't reach you while you read the newspaper you can't afford or a book or plan a revolution is quite old. Like centuries old, perhaps millenia if you count gossip and include inns.
Like i think the intended path here is that taxes pay for a library, a park, or a community center. Having random businesses create hang out spots out of the goodness of their heart is not the intended path. They can if it makes sense for their business, but community needs should be primarily funded through taxes not business charity.
Would make sense, your reasoning, if they actually paid taxes. Unfortunately everything is very broken on that front, labor pays much higher taxes than corporations, the richest don't pay taxes at all, and the shortfall is plugged by cutting public services and issuing debt on what remains.
The comment thread is about a McDonalds franchise owner. They are not going to be committing Apple-level tax evasion. They will be paying taxes like everyone else.
> I currently live in a petty remote area and we have literarily zero homeless folks in our hamlet area
This is a common observation and should make more people ponder: why is it that higher local wealth/economic productivity increases homelessness (especially if you control for public services to counteract the effect)?
> why is it that higher local wealth/economic productivity increases homelessness (especially if you control for public services to counteract the effect)?
May I suggest the book Progress and Poverty by Henry George https://www.gutenberg.org/ebooks/55308 that asks almost the same question. The answer is that private land ownership allows landowners to capture economic growth of prosperous places, so wages barely cover rent at the margin. This is particularly relevant to California which passed a disastrous constitutional amendment Proposition 13 (1978) which slashed property taxes from around 2% to 1% and declining, especially for older estates, which is pretty much the opposite of the ideal policy to deal with the problem of rising rents.
I think two factors - high productivity leads to high cost of living, which means people without labor skills have a hard time making enough money for food and shelter.
But ALSO - these areas tend to lean towards higher levels of social services such that they have much higher homeless shelter / services / etc per capita.
So while many people may go homeless in place, certainly there is some homeless migration towards areas that actually provide food/shelter and don't harass/arrest them/chase them away.
I'd suggest high local wealth and economic productivity tend to correlate strongly with increased housing costs.
People move there for the jobs, and the ones who do have jobs tend to have relatively well paying ones, so can pay more for housing. But the ones who don't have a well paying job are in trouble...
Like everyone else, homeless people tend to have ties to specific areas, and by the time you're homeless you tend not to have the capital required to move and restart someplace else.
Basically at what point do you decide you're "failing" (no moral valence intended) in one area in which you have a support network that you're willing to risk moving to a totally new area and starting over? At that point, do you have the resources required to do so successfully?
I live in Boulder and homelessness is a big problem here. Some people tie it to housing costs, which I don't buy. There are nearby towns with housing that is substantially cheaper, within a 30 minute bus ride if you really need to get to Boulder for some reason.
And how good is that support network if it leaves you camping in a tent down by the river? I'm not taking about moving across the state, just down the road a bit.
>There are nearby towns with housing that is substantially cheaper, within a 30 minute bus ride if you really need to get to Boulder for some reason.
That's great! But if you have no place to store your clean (or dirty) clothes, or to shower, how many landlords are going to rent to you? How many employers are going to offer you a job?
You're talking about getting out of homelessness, I'm talking about not becoming homeless in the first place. It's not like rent increases happen overnight
You said "I live in Boulder and homelessness is a big problem here...And how good is that support network if it leaves you camping in a tent down by the river?"
Nope. Definitely not talking about homeless poeple. Gotcha.
I have an interesting observation about homelessness.
I live in a country where the average household makes about US$6000 a year.
The cost of living here is about 1/2 of the USA, with rents about 1/4. The unemployment rate is about 5%.
Homelessness is very, very low (to the point of near invisibility) and mostly limited to illegal immigrants.
The thing that seems to make homelessness a non-issue here is the tolerance of ad-hoc construction. This leads to neighbourhoods where construction is really low cost / quality, but people are housed.
I don’t really understand why these neighbourhoods don’t devolve into hotbeds of violent crime as I would expect them to in the USA, but they mostly don’t.
Mostly, the construction tends to improve over time, and the neighbourhoods often gradually metamorphosize into more contemporary and inviting areas with vibrant small businesses and elegant homes.
I often wonder if it’s cultural, as poverty is not seen as failure but rather a temporary condition to be transcended as possible?
Doesn't Dominican Republic have like a 50% higher homicide rate than the US? Or do you mean it's just not localized in the spots you'd expect it to be?
Yea that's why I was wondering if GGP was talking about specific areas. There's certainly cities in the US with eyewatering violent crime rates (St Louis, Baltimore, etc). Not sure if OP was specifically talking about a similar localization within the Dominican Republic.
Idk. IMHO the crime exposure here is pretty insignificant if you aren’t going to the tourist hotspots. At the touristy places it’s about like NYC risk wise.
It’s not high for a developing nation. since 2015 the average is about 13/100k. By comparison, Louisiana is 19, New Mexico is 14, Missouri is 13, Maryland is 11, Alaska is 10.
? Not sure what this is supposed to mean. I’ve lived here for over a decade and have seen very few people that don’t have a home of some kind. Family connections obviously play a large role.
You're swapping cause and effect. Places with lots of economic opportunity and significant public services to assist the homeless are the place where you can have large homeless populations, ie large numbers of people just barely scraping by. Decrease the money flowing in and the population will go down, because they would no longer be able to survive. Those who can will go elsewhere, you can imagine what happens to those who can't leave a place where they can't survive. One must be very careful using "number of people observed with a particular symptom of the problem" as a proxy for how well the problem is being handled.
There's still money in those places to support people even if it's not flowing through public services. Many homeless people work, and it's easier to get work in high productivity areas. Most of those who don't rely on generosity from people who do.
Touch screens have been around for a long time. Just like the situation on the upper end with AI: I don't think it's the technology, people are actually getting worse at socializing (creating stress for the people responsible) and so socialization is becoming more expensive and opportunities for it are becoming more rare.
My general observation is that a lot of self-service wasn't super-popular pre-COVID. But, now, it's become more entrenched and a lot of people just grumble and deal with it while a lot of stores made the investment and accept the (probably overall) reduced cost even if customers don't love it. My local DIY home store doesn't even really have regularly-staffed full checkout lanes any longer.
Often advocacy groups or municipalities will perform counts on specific days each year.
So while one does not need to say "literally" in that sentence (it wasn't figurative, after all), it is possible to say "zero homeless folks" as there may be data backing the statement up.
Yes- I live in a pretty affluent Los Angeles suburb and we recently just hit "functional zero" street homelessness.
"To achieve Functional Zero, the number of individuals placed in interim or permanent housing must be greater than the number of individuals who become homeless over a six-month period, and the homeless population, as a whole, must have a median duration on the streets of less than 90 days."
The data is gathered by the city as well as local nonprofits.
People like to think that employment is pretty much the only good that does not result in a mismatch of supply and demand from a price floor.
Take for instance a proposal that says "no one is allowed to sell their used car for less than $10k". Maybe the justification is poor people are desperate and sell their car too cheap and all these dealerships and buyers are a monopsony underbidding the real value of the car, profiting off these uninformed, unorganized individual sellers.
Does anyone think this is a good idea? Would anyone bother reading studies contemplating the effect this may have?
No, of course not. Everyone knows that this would essentially mean many cars that would have sold under $10k would just not get sold. Sure some people would benefit, maybe getting a higher price for their car. Some things would shift, maybe people would opt for scooters or e-bikes or something.
But I wouldn't want this price floor if I was on either side, trying to offload a bad car or buying one.
The cost of employment is not comparable to the cost of a particular good. Employment has much more complicated implications on the economy and on society. A minimum wage is set in part to prevent a desperate race to the bottom, and to (try to) ensure something approaching a living wage. It’s a blunt and often ineffective tool, but viable alternatives are scant. The free market won’t solve this one any more than it solves the problem of healthcare.
Interestingly, minimum wage seems to be more likely in places with weak unions.
In places with strong unions, there is often a de facto, negotiated minimum at least on a sector by sector basis instead.
E.g. Norway has a roughly 50% unionisation rate, and no minimum wage in most situations, but most sectors are covered by negotiated agreements between the unions and employer organisations.
Humans have certain fundamental maintenance costs. $100/hr vastly exceeds maintenance. However, if you pay below those maintenance costs, then society effectively picks up the tab via other social costs and programs. For instance, if employers don't provide healthcare, then we either pay more for emergency medical treatments and other publicly-subsidized healthcare programs, or we accept being a country with a bunch of people dropping dead at age 40 of entirely preventable problems.
This is very different from most other goods, because no one really cares if you break your chair, the chair's parents didn't spend 18 years of their life on it, etc.. If you break a chair, you bear the full costs of replacing it.
Also, the full cost of replacing a human is vastly higher than the maintenance wage.
It would be more efficient to pay someone market rate, have needed work get done, and subsidize their existence than to try and offload that cost onto employers.
Exactly. Minimum wages are an attempt to solve economic redistribution policies by obfuscating the cost to employers rather through the tax code, which is the cleanest way to achieve the goals of broad based prosperity.
It also has consequences like increasing the attractiveness of substituting capital (i.e., automation) for labor or simply leaving some work undone (e.g., many smaller restaurants in CA are going out of business due to multiple government policies, including very high minimum wages).
Why would it drive wages down? The less desperately that workers need a job (due to universal basic income), the more they can demand, assuming they also have skills that fill the employer's need.
The trick for this to work is that the UBI has to really cover a lot of basic needs.
Overall, this works better for lower skilled workers than it does for higher skilled and higher paid workers. But it could also make sense for people staying home to raise their children, a job which is not compensated today.
The alternative is that certain types of work simply do not get done, as shown by the article. That means if you care about providing for these people you'll now be responsible for shouldering 100% of their cost as they sit around unemployed.
Is it? Minimum wage is a pretty simple law, compared to the paperwork and bureaucracy of existing welfare programs. I suppose you could go with Universal Basic Income, but I'm not convinced society is actually ready for that one yet.
How would such a program even work? If we say the Maintenance Wage is $15, is the government just paying the difference between that and the market rate? If so, it seems the ideal salaries to offer are $0 (let the government subsidize it) and $16+ (but you could just get two $0 workers, so I'd expect pay scales to really start at more like $30?)
This seems like it rapidly descends into Bureaucracy or Communism
Just because a law is simple does not mean it's efficient. We are talking about the total value being produced. But if you want simple, something like a negative income tax would be simple and decently efficient.
>However, if you pay below those maintenance costs, then society effectively picks up the tab via other social costs and programs.
No, that doesn't hold because humans need these "maintenance costs" regardless of whether they're working or not. Therefore it's fallacious to claim that such "maintenance costs" stem from the job itself. It's a sunk cost arising from the person existing in the first place.
Exactly why healthcare should be just one more part of the standard social contract. We the people should collectively pay (single payer) for everyone to have the required basic healthcare in bulk, without the stress of billing, collections, etc.
Same idea as police, fire, basic education. We want a properly educated, health, safe workforce. That's the basis of a healthy, productive, strong society.
> Real question: If government-mandated wages are good policy, why not set the minimum wage to $100/hr?
Because min wage policies have a cost and a benefit. The benefit only happens at relatively low numbers (enough for basic necessities). After that point you dont get more benefits but the costs still increase.
Is a three-bedroom house in [pick nicest neighborhood in any metro area] a necessity?
How about a one-bedroom apartment in the same neighborhood?
An in-law unit (e.g., "granny flat") on a farm just outside town?
A room in a six-bedroom co-op house where meals are collectively prepared and shared?
Same could be asked about food, clothes, etc. I can buy used clothes for $5 or new ones for $100.
"Basic necessities" is woolly term that in practice is full of paternalistic value judgements. Every individual has a variety of resources to draw upon that would make them willing/unwilling to work a job at a given wage.
A government-mandated minimum wage means some people who could find employment will not because their output do not exceed the wages the government has declared must be paid. In practice, it also means many people starting out in life or who are less skilled never get the chance to be hired and learn new skills that increase their pay.
Minimum wages remove the lowest rungs on the job ladder that often teach skills required to be successful higher up.
It is still useful to ask the question just so we know the answer. I admit the person asking in this case probably didn't mean it this way... :)
On speed limits, when it comes to road deaths, you get people saying "one death is too many" and so on when one of their loved ones die, even when speed limits are set to 20 mph.
These people are wrong. Asking why a 1 mph limit is bad can help reveal that we do put a cost measured in lives on convenience, and we do face the risk of death when driving a car, and everyone has a number they think is reasonable.
Asking why $100/hr is too high can at least help us decide on a quantitative way to decide on a number rather than just guessing.
Another reply already addresses your question about speed limits, which is another great example through which to examine these questions.
"Reasonable" is a completely subjective standard and not a good way to run a complex economy with an infinite combination of job seekers and providers.
Who gets to decide what is reasonable has big real world implications for millions of people. Get it wrong, and as we see in California here, people lose their jobs and businesses close all because some politician or bureaucrat (or misinformed voter) thinks they know better than workers and employers what the correct price for labor should be.
Your question can be applied to literally any market intervention with a grey area. If housing code is good policy why not make all houses 10 times as strong?
It's the same question, really. If we make housing too expensive to build through stricter codes, then housing won't get built and at some point (e.g., last decade in California discussed in the parent article), the homeless population increases and people/businesses decide to relocate because the math doesn't work.
I don't think a full look at the history of minimum wages will be kind to their supporters. Minimum wages were created by labor unions for the sole purpose of excluding other workers who are more productive or less expensive than their members[0].
Going back further, labor unions were created during the railroad boom by racist white workers to exclude Chinese laborers who were 2x more productive for the same price. Instead of responding to competition by getting better, American railroad workers formed labor unions and lobbied politicians for relief, culminating in the Chinese Exclusion Act [1] that forcibly expelled 400,000 Chinese immigrants and led to some horrific violence and racism towards Asian people in this country.
In all cases, the role of government should not be to mandate wages or prices or anything else that markets are better suited to establish, or there will necessarily be higher unemployment. Governments can help by establishing some health and safety standards and policing abuses, but when it comes to accomplishing the social goals that minimum wages intend to, that's better done through tax policy and income redistribution (e.g., guaranteed minimum income, earned income tax credit, welfare benefits).
You still didn't address the idea that there is a threshold for all intervention. You said "why not make $100hr minimum?" and the answer is "that's too high".
It sounds like, were you to acknowledge that thresholds exist somewhere for most things you think the threshold for minimum wage is 0 and that UBI and guaranteed services is a better mechanism.
Which is respectable, at least in that you recognize a government role in ensuring humane living conditions for its citizens. Most people who argue against a minimum wage seem to think any government action of any kind to protect or provide for citizens is "theft by taxation".
I don’t think there is a threshold for intervention in setting prices. If a $100/hr minimum wage is too high, then a $20/hr min wage will also be too high for plenty of employers and would-be employees who are now unable to legally transact. Safety standards create similar issues, but most typically require capex that can be amortized or depreciated (unlike labor opex).
I’m not opposed to taxes. When designed properly, they’re transparent and avoid excluding economic activity like min wages do.
Ah sorry I was taking you seriously when you said "real question", I didn't realize it was a rhetorical device. The history of the minimum wage is pretty irrelevant compared to the economic models and empirical studies in that article, I'm not going to engage in such a pointless distraction. If the Nazis invented building codes I would still support them based purely on whether they are a good idea or not.
But you seem to be missing my point on housing code: do you support a nonzero housing code? Some is good, too much is bad. Same for minimum wage, many models and analyses show that some minimum wage improves productivity and counterintuitively increases employment in monopsonistic industries up to the point when they (partially) undo the damage the monopsony caused, at which point obviously a further increase in minimum wage causes damage as you say. My point is that your "real question" (which was an argumentative point in disguise) works rhetorically against nearly every intervention, some of which you certainly support (I tried to pick an obviously good intervention and came up with building code), and thus is a weak argument. If you truly support no market interventions I at least respect the internal consistency of your worldview but think you must underestimate how much food poisoning, fire death, servitude, etc it would cause.
Rhetorical questions are real questions and useful for exploring the logical fallacies that are embedded in ideas like minimum wage.
As shown by comments elsewhere, picking a minimum wage is often based on some imagined everyman/woman’s standard of living that may preclude others from earning a livelihood at all due to jobs never created or capital replacing labor because government decided by fiat that no work that generates less than $X/hr in output shall occur. Human skills and living arrangements are infinitely variable, and governments fail when they attempt to preclude people with lower skills from finding work.
In practice, very few workers earn the minimum wage, but union contracts are often tied to it, so unions like to advance laws that increase the minimum wage, which leads to the outcomes described in the parent post.
As economic policy, they’re also bad because inflating the price floor of labor fairly quickly feeds through to higher costs for housing, food, and services.
Safety standards (ie rules of the road) and competent enforcement are good roles for government, and while they do tend to increase operating costs and function as regulatory barriers to entry, setting prices is best left to markets.
Monopsonies are easily solved by workers moving out of the (labor) market controlled by the buyer to better job prospects. Claiming ancestral ties to a place, etc, as reasons for remaining are then the choice of the worker. If enough people leave, the employer will be forced to increase wages to attract workers.
I think the solution here is to have you work at a fast food restaurant with a salary just low enough not to be able to eat at the end of the day. There really is no substitute for experiencing first hand what it is like to stack 500 burgers on an empty stomach then telling your kid there wont be any dinner today. Imagine some land whale exploding over her 7th burger not approaching perfection closely enough and that it seems you are not taking the issue seriously enough.
In contrast, if one earns enough to live a normal life they instantly change into one of the best regular customers. One can make a career out of flipping burgers and have a long term [professional] relationship with them. If they are indeed overweight give them a salad on the house and have them explore the many delicious healthy things on the menu. Delicious because one gets room to think about improvements when not drowning in bills. An eating disorder usually comes with above average knowledge of the culinary realm. Should make an interesting conversation.
Where do we see a desperate race to the bottom? People leave if there's too much competition / low wages in an area. At least in America where the people are nomadic.
People forced to move because of low wages is a societal negative. High population churn disrupts communities, worsens local governance, and causes atomization.
Suppose a town forms around a coal or gold mine. Then the mines dry up, or demand for what they're mining dries up. There are no jobs and no reason for people to live there any more.
If this community ceases to exist, is it a societal negative? And further, will a high minimum wage speed up or slow down the decline of this community?
Viable alternatives are many when you look at minimum wage closely and see that it is, in essence, welfare funded by a regressive (even more so than usual) sales tax: businesses will pass most of it to their customers, and the fraction it in good or service sold is broadly inversely proportional to the price of that service. That is, people who buy the cheapest stuff - i.e. the poor - are those who are disproportionally taxed, as percentage of their overall spending. So it's taxing the poor to feed the poorest.
The obvious alternative is to tax the rich to feed the poorest. We can start with capital gains.
Most arguments for minimum wage solutions are better served by UBI-style solutions tied to having a job somewhere. People show up to work to benefit society in some way deemed valuable by someone who put a much larger investment in play (maybe tie to some really small minimum wage like $2/hour just to make sure the business owner really does deem the labor beneficial), but the vast majority of the worker's income comes from wealth transfers from the wealthy (via UBI) instead of from the working classes (who are the vast majority of clientele at places like McDonald's).
Prevent a desperate race to the bottom? Ensure something approaching a minimum wage? Nobody cares, so long as they're getting a UBI check from the government.
I don't disagree with you and think that UBI and universal health care are better alternatives. However, there is a much easier path forward to getting higher minimum wages and we shouldn't stop making incremental changes just because there is a potentially better solution that we will probably never implement.
The price mechanisms of supply and demand are very well understood since the 1800s, and apply to anything that's bought and sold, including labor. 150 years of solid science.
When facts conflict with beliefs we hold dear and perhaps define our identities, our brains are very skilled at finding ways to keep believing what we want to believe.
Especially when the facts define your in-group. Changing such beliefs, makes you one of the people you and your friends hate. The mind will convince itself of pretty much anything to avoid such social suicide.
This comment is weirdly heavy on lecture and light on substance. I'm going to ignore the second two paragraphs and just stick to the first. The person you're replying to says that labor is different because it has more complex costs to society aka an externality. Your rebuttal, as far as I can tell, is "nuh uh". I can think of a very simple externality - low paid workers are supported by the rest of us via social programs. Goods that require similar support from the rest of us (cigarettes for example) should also be regulated because it breaks the economic magic that makes efficient decisions and allocations. We have known about these basic (literally econ 101) flaws for almost as long as we've studied markets.
I am open to being convinced by either you or OP but your argument is failing to do so.
My claim is just that wages are prices which arise from the same supply vs demand dynamic as any other price. This important truth is sadly very controversial, which I think is really damaging to society.
Of course, I can't prove that from scratch in a HN comment. What I can do is point out that in the science studying this, it is an uncontroversial fact.
I know, you can think of an externality. Trust me, Economists can also think of externalities, far more than you or me. In general, they just add interesting nuance to the supply/demand model. They don't completely invalidate it.
But I can't easily demonstrate that, so I suspect I have not changed your mind.
I'm not the poster you replied to but I appreciate your clarification. However, I still don't understand your argument. I don't think anyone has argued that supply and demand don't apply to the labour market. However, it seems that you do agree that there are externalities if workers are paid extremely low wages. Is your argument that the government shouldn't put in laws to mitigate or prevent those externalities? Are you saying that minimum wage laws don't actually address the externalities and should be removed? Are you trying to promote other solutions to solving those externalities? If so, what are they? Is there some other point you're trying to make that I'm completely missing?
Many people argue that supply and demand don't apply to the labour market!
Often because they're not even aware of the concept. The more sophisticated claim that it doesn't apply to the labor market.
The minimum wage discussions are dominated by this view.
The supply/demand analysis is simple: If a worker has skills worth $12/hour on the labor market, and the minimum wage is $15, that worker will be unemployed, making 0$/hour. They'll also not learn new skills, since they can't get a job.
Try bringing that up in a minimum wage discussion, and you'll be called many nasty names. Often equalling market wage to human worth, which means you think the poor are lesser humans. A few sophisticates will bring up vague externalities arguments, as if they negate the whole supply/demand concept.
From my perspective minimum wage laws is one of the main factors keeping people in poverty, but that concept is impossible to even explain to most people.
My main thought about externalities is that they their effect is usually minor, and can be ignored. Many of them are also positive. For the bigger ones, it's a case by case analysis.
Is the externality you're thinking of something around the government paying money to the working poor?
That's a strawman. I don't doubt that you've read these things that bother you so much that you bring it up in unrelated discussion, but to the extent serious people critique supply and demand, they don't say it doesn't apply at all (literally all things have supply/demand curves) but that the market distortions in our concentrated economy lead to suboptimal outcomes for society and that the simpler market model (in econ 101 you learn this model is optimal under many assumptions including "perfect competition" that is rarely true of the real world) is an incomplete model of reality which leads to the wrong answer. If you're going to argue against anything please argue against a serious point like one found in an introduction to the topic such as https://en.wikipedia.org/wiki/Minimum_wage and characterize it fairly. If you don't understand this graph then you aren't ready to debate the topic https://en.wikipedia.org/wiki/Minimum_wage#/media/File:Monop...
To demonstrate that this is a strawman, I will parrot back what that basic wikipedia article provides as a critique of your point: often in the real world that $12/hr number you provide is depressed by a one-sided monopsony (few large employers vs many small employees, a fact known as market concentration that has grown stronger over decades) and minimum wage can provide effectively a mega union against it to put it simply. When a market is dominated by a single entity what is something "worth"? You may say whatever the market will bear but in noncompetitive markets that is absolutely not the most efficient allocation of resources for the broader system. If insulin were a complete monopoly would it be worth $1M/vial because a billionaire would happily pay that much to save their life? I use the extreme to demonstrate the concept of market failure to you. By pointing out monopolistic forces am I saying "supply and demand don't apply"? Maybe in a way, but putting it that way is reductive and unproductive for our collaborative search for the truth in this discussion.
Or, for a totally separate but less abstract argument, say someone has no skills except for an ability to dig a ditch at $5/hr - it is low value because you could pay someone $50/hr to rent and operate a trencher and be 100x more productive at less total cost and a better overall outcome to society (I think these numbers are probably roughly reflective of reality), but this low skill person is unable to run that trencher. Is it better for society to "learn new skills" as you say by digging ditches for years? They probably would get a bit stronger but obviously never get close to the trencher's productivity or bang per buck. This is an exaggerated toy model but it demonstrates the point that many sub-minimum wage gigs teach negligible skills compared to formal education. I point this out just to object to your example - many people turn to education if possible when they fail to find employment, so to say sub-minimum wage employment will teach them skills whereas unemployment will be worthless just doesn't map on to most people's experience in the real world and to be frank sounds out of touch.
History has already shown that the free market will reduce wages to the point of slavery and destitution. Minimum wage laws are very important to counter the psychopathic greed of many company management.
Labor isn't just another good, it is actual human beings whose wages greatly affect their quality of life.
The predictable end game of unregulated free markets is the opposite of freedom for 99.99% of the population.
There's a curious authoritarian tinge to these "free market" argument. "Free markets are powerful, therefore if I support free markets I am a powerful insider."
It usually takes an encounter with a major economic reverse - like being bankrupted by healthcare - for proponents to realise that the free market doesn't care about them either, no matter what they believe.
Minimum wages are an economically imperfect (as you've pointed out) but politically possible way to put some downward pressure on much, much bigger failures of our species and society to have attitudes and policies around acceptable minimums for basic human needs that are even logically self consistent, to say nothing of enlightened.
We can't quite get it together on saying "food, shelter, healthcare are human rights" or it's sinister sibling "we'll let you die in the cold if there's no profit to be had from you".
Those are both consistent, actionable policies, but no one wants a consistent policy on this because everyone gerrymanders it dofferently.
So we get clunky hacks like minimum wage that are sort of the average of Aspirational Star Trek and Aspirational Blade Runner.
Hate to boil this down to the basics, but I think it’s pertinent here. You’re comparing human beings working to survive to used vehicles. Even removing the complete lack of reckoning with basic humanity, the basis of your analogy is a ridiculous starting point to argue from. The value of an asset is not in any way analogous to the value of labor.
> You’re comparing human beings working to survive to used vehicles.
You could flip this and say "you're comparing people who are selling off an essential possession just to survive to a bit of company work."
The way people frame things in completely different ways to justify their preexisting beliefs is part of the reason why it's difficult to get people to consider other possibilities. The person could be doing their job to survive, or they could be working a few hours on a fun job on the weekend for a bit of extra cash. A person might just be getting rid of their used vehicle, or they might be giving up an essential possession because they're in dire straights.
People sell something to survive (their labor, their goods, etc.). It doesn't mean that every single transaction they make is for the sake of survival, or that external actors are a better judge of what their prices must be.
In college I would often make some extra spending money by partaking in social science experiments. I didn't really care if the compensation was below minimum wage - I had time, it was easy enough, and it was easy to opt in when I could. I wasn't doing it for survival, but for a bit of extra spending cash. If someone forced them to significantly increase wages, I might have benefited, but it's far more likely that they would done fewer experiments with a more select group and I would have been worse off.
If someone is on the edge, and it's only a minimum wage job that they have open for them, California's minimum wage could help them if they're one of the lucky ones who benefit from it, or could hurt them if they were one of the people hurt by the loss of 18,000 jobs it caused (per the linked report). A policy that leads to fewer jobs that pay more tends to just increase inequality.
It's a typical thinking of someone who read "Econ 101 for kiddies and libertarians" and never got the rest of education that explains all the ways those pronciples aren't as simple as descibed. And how people aren't interchangeable with cars.
Except that every company's wages is another company's revenue. Healthy consumer economies depend on consumers actually having disposable income, but this is becoming increasingly less and less true in the US.
It's an interesting point, but it's the closest thing to guaranteeing a minimum return on a person's work and preventing downright slavery that we have.
Well, employment and taxes are special because they can increase the propensity of people to spend. So, yes, they don't obey whatever idea of "supply and demand balance" uninformed people get from the news.
We absolutely do have laws that are the equivalent of “no one is allowed to sell their used car for less than X".
These laws take the form of transfer and registration fees for vehicles, taxes, and especially inspection requirements. We also have much stricter requirements on what a large commercial enterprise can sell versus a private individual.
We have rules like that for everything. We also say you can’t sell houses for less than X by mandating things like how many stairwells they have, and so on.
To the extent you’re tempted to argue some semantics about how you could still sell a car for a dollar you’re wrong and missing the point on purpose by arguing over the definitions in a way that doesn’t change the principle.
We do this because we are a society and we get to decide what the society looks like. Prices are downstream of our value system.
That's a terrible comparison. As a society we want cars to be cheap. A race to the bottom for cars is a good thing. The cheaper the better.
We do not want a race to the bottom for wages. If full time employment is not enough for basic necessities, that is the sort of thing that leads to riots. Society in general does not want that. Society prefers stability.
That's the direction every company is headed everywhere. It's far more prominent in locales with very high labor costs, but once those technologies are easily scalable they will roll out everywhere, even places with cheap labor.
There used to be many grocery and liquor stores that you handed in a list of what you wanted at the counter and the staff collected it for you from behind the counter. With the way stores are locking up items it seems like we're steadily returning to that era.
All grocery stores were once like that, before Piggly Wiggly invented the "self service" model of grocery store in 1916. It could turn out that the self service model is ultimately a historical oddity of the 20th century.
It's funny how old things become new. From the late 19th century (and in declining amounts all the way up until the 1980s), people in the US routinely would order things from the Sears Roebuck catalog and have them delivered. Local merchants used to complain about how this was taking their business. Of course ironically, Sears got out of catalog sales in the 1990s, shortly before e-commerce took off.
No, you don’t understand. If the government hadn’t been involved, private organizations would have kept employees around even when cheaper alternatives exist.
This is sarcastic of course. Ideally if our economy distributed rewards across all of society everyone would be for changes like this if they did actually speed up automation
The government does have an effect, though. If a company is avoiding automation because automating things is expensive, a big jump in labor costs may speed the process along. If you push a bunch of companies to automate, automation becomes cheaper for everyone.
From what I can see, it's pretty much a bad thing all around. The business would have had more money if it had hired someone, and there would have been a job available to someone who needs it.
The other thing that will probably happen is a reduction in service. Cashiers get replaced by ordering kiosks, for instance.
There are times and places when service is greatly reduced because the work force is tied up in more profitable employment. Such as working in factories instead of doing butler type jobs.
One way of forcing this is making the minimum wage high enough that any venture has to make sure their workers have a high output. And some types of businesses become inviable as a consequence. Investment which would have gone to such ventures will instead go to other ventures, and workers become available for better jobs.
Yes, the significant downside is we have a bunch of people with no job. It's not economically efficient to have half the work force being paid more than their labor is worth and the other half on government assistance.
Exactly, that's the biggest down side. But you're wrong that anybody would be paid more than their labour is worth. Companies never pay any worker more than they are worth, unless it's a mistress, a nephew or an old buddy, etc.
Increasing wages (or increasing taxes on labour) are methods of forcing and increasing the minimum level of productivity for all jobs. If you have a business and suddenly have to pay your employees 20% more, then you have to make sure they are 20% more productive as well. If you are able do that with training them and/or investing in more effective processes and practices, then everybody wins. Or you have to this in combination with raising prices, which is not a bad thing if that means higher worker compensation.
Now let's say your business is not able to train, invest, and price increase enough to cover for a 20% increase in wages. Perhaps your customers simply do not accept a higher price? Perhaps the kind of business you are in has a very low return margin and thus cannot motivate investments in better tools for your workers? Then that kind of business generally goes under - or more realistically there won't be new businesses of that kind opening. For the economy as a whole this is good, that people are not wasting their time with inefficient ventures which customers are not willing to pay for.
Even considering some unemployment, this can be beneficial. Instead of two workers producing for example 100 units per day, you might have one worker producing 1000 units per day and the other being unemployed.
But for all of this to work as intended, it is absolutely necessary to have enough opportunity for workers to switch into different jobs. And why shouldn't we be able to have that?
In quite a few industries, companies are very reluctant to risk $$$$$ on developing new automation (which might not even work, and even if it does work might not be cheaper)
Why spend $$$$$$ developing a drone delivery system that might face insurmountable technical hurdles like range, capacity and safety if you can just pay undocumented migrants on bicycles $2 per delivery?
Its not at all imo. Franchised businesses are not in the habit of employing low skill workers as a public service. This data is interacting with both covid effects and infrastructure upgrade/rollover - in other words, it takes a while for companies to adopt affordable touch screen ordering systems and its been phased in at a ton of non-fast food (at least in my area) over the same period of time. Local health grocery store has touch screen ordering at their deli, as well as simultaneously going cashless. Most coffee shops too. Look at most international airports - almost all the kiosks have one or no attendants now.
The causality is raising the minimum wage pushed business to do this sooner rather than later. this is why, as per the study, California lost more jobs than states that didn’t raise the minimum wage
> A McDonald's recently opened near me with no seating, and orders can only be placed through the app or at the drive thru.
I personally know a couple of Uber Eats restaurants whose only physical presence is literally a garage in a residential neighborhood, and they only take orders from the app. I also know of a Uber Eats competitor whose business model includes rider hubs that stock on a limited set of high volume products for quick delivery.
I wouldn't call them net loss of jobs per se. I see those as entirely different businesses with completely new business models. It's more a kin to ordering groceries online than to going on a night out.
I just can't understand McDonald's long term strategy. I can either go to them or to a locally owned burger place near me, and spend about the same. Waiting times are the same, and every other metric is worse at McDonald's. I went to McDonald's last week because I haven't been there for over a year and well, I won't be going for the next few years again. If they can't compete on price, speed or taste, they only compete on location and/or their current customer base. I just don't see how that is a viable long-term strategy.
McDonald's main value for me is consistency: it might not necessarily taste great, but it tastes roughly the same everywhere. There are better restaurants, but there is a greater probability of finding a McDonald's because it has more locations. McDonald's might not be the best choice, but it's usually a great fallback option if you are unfamiliar with the area.
I guess I'm a minority but when I generally dislike McDonald's but one of the reasons I continue to go there is because they often employee so many people from different demographics. It's been a redeeming quality trait of theirs. They give young people a start with work experience , 20-40s some managerial experience and sometimes elderly people a job too.
Once I'm just ordering a shitty burger from a machine, I have probably lost any reason to give them my money at all, there is just way better alternatives.
The owner isn't neglecting it, it's a tragedy of the commons.
If the owner was to overhire, it might reduce the homeless population a little, but at great cost. And other businesses nearby will benefit for free.
Only large coordination at the level of state or national government can afford to implement welfare as a real investment in their citizens. If you do it at the city, county, or corporate level, it's just charity.
The neglect I mention occurs because they perpetuate the outcome they seek to avoid, largely without knowledge of the true factors that lead to wealth as a group/nation in the first place which are codified in some older books.
You make the same assumptive leaps, which are based in fallacy, that cause this route to be a giant circle without agency/choice.
Your, "Tragedy of the commons" implies there's nothing you can do to change the world unless you are at the top of government, and that is both wrong, and the perspective of a demoralized hopeless person.
Actions matter, and you can do quite a lot at the local level by building strong community, and community is not government.
I have always preferred to sit in my car to eat at a park or some relatively peaceful place in the shade without too much activity. Sitting in a big dirty room with a bunch of people watching me eat has never been comfortable.
I agree. I can listen to a podcast in my car, there's no chance someone will cough or sneeze near me, etc.
My first time being into a McDonalds since I was a kid was earlier this summer when I gave my 3 year old the option of going in or staying in the car. I was pretty shocked at how barebones it was now. There weren't even napkins available and none with our food...which, when you have a kid with, is an issue.
> “meeting other people in person” as a tiresome chore.
Someone linked the short story The Machine Stops by E. M. Forster the other day where this is an element. A character makes a big deal of having to meet her son in person, opposed of through the machine.
Written in the 20s, gets a lot of things uncannily correct for a society 100 years later. Video calling, silence/do not disturb mode, notifications, air conditioning, people no longer wanting to look at real things with their eyes, etc.
Pre-COVID, I used to go to a small kabob restaurant in Silicon Valley. During COVID, I'd order from them via Doordash. The food wasn't as good cold, though, even if re-heated. After COVID, I started going back in person. Often, I'd be the only in-person customer, despite a steady stream of deliver drivers going in and out. Now, they're out of business.
>Pre-COVID, I used to go to a small kabob restaurant in Silicon Valley. During COVID, I'd order from them via Doordash. The food wasn't as good cold, though, even if re-heated. After COVID, I started going back in person. Often, I'd be the only in-person customer, despite a steady stream of deliver drivers going in and out. Now, they're out of business.
Because DoorDash/GrubHub/UberEats/etc. charge the restaurants more than their gross margins. In such an anvironment, unless a restaurant raises prices 25-30%, they're eventually going out of business.
I'd say that these companies are most certainly not providing 25-30% value add. Rather, it's just leeching off restaurants and their customers.
It's disgusting and has killed many, many restaurants where I live (NYC), even though we already had a culture of delivery before these parasites came along.
This reminds me of the Sonic fast food chain. The first (and so far only) time I've visited Sonic was some years ago, I was staying at a motel across the street, walked over there to order, and was surprised there was no place to sit or even a normal counter to order at. The ads they run on TV give no indication that Sonic is strictly a drive-thru operation.
We need to detach from the "jobs at any cost" mentality behind your first sentence.
By that logic ending child labor is "still a net loss of jobs."
I mean, here you are talking about a business owner having issues with the local homeless population who are homeless because their jobs don't pay enough to afford housing.
All these business owners race to the bottom paying their employees scraps and then wonder why they have empty dining rooms with no customers to afford their products sold at record-high profit margins.
Obviously, minimum wage doesn't really fix the economy on its own, but it is a very important tool in a toolbox for ensuring that capitalism is restrained from following its worst instincts.
