No one here said religion was the root of all evil, at least not in this thread. Rather, fundamentalism is. Fundamentalist Religion is a quick way into the core mindset of someone too lazy or distracted to think on their own. Like cults, they offer people a way to feel like they stand for something, without having to make decisions on their own. It offers a world of absolutes, black and white. All these ideas come in a neat package.
Texas Republican Party Seeks Ban on Critical Thinking
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edit: fade: I'm not sure I understood your point completely. In my view, you are saying that the labor market is not free. I'm saying that the labor market is not free, in significant part due to the price controls in force (minimum wage). Were you agreeing with me, or is there a point of contention? /edit
If I'm reading things in this thread correctly, views against abolishing minimum wage are composed of two main items:
- Disregarding the law for now, the amount of money that is the minimum wage represents the lowest hourly wage that is moral to pay a human being for their work, so the minimum wage is necessary to enforce common decency in employment conditions
- If minimum wage was abolished, then it would open the door to all manner of evils eroding other worker protections, like maximum daily hours and safety standards
As to the first, my understanding is that some people in society are not very well placed in terms of employment qualifications, for one reason or another. Those people need a source of income, preferably employment. Minimum wage puts an artificial cap on the employment opportunities companies can offer, leaving the least unfortunate out of luck and at the mercies of such unemployment benefits as there may be, and their labor resources wasted. As rational actors in the market place, they will choose the option that is most advantageous to them. If minimum wage was abolished and companies were able to hire people for tasks that are currently uneconomical to hire people for, they'd have a better chance of finding a job that is suitable to their qualifications. Even then, nobody is holding a gun to their heads.
As to the second, well, it's impossible to refute that given that nobody has a crystal ball and knows what will happen in the future. I'm just not sure one would necessarily follow from the other.
Yes, things are currently quite messy in a lot of places. But it will pass, like it always does. We'll have to wait and see what emerges afterwards.
It's true that China still has a lot of work ahead of them. Not to trivialise such things as environmental, public health, and rural education problems and corruption, but these are things that can be improved upon, and I'd say will be improved upon. There are other problems as well, especially their monstrous investment rate at a time of declining exports, but things still seem manageable. And their potential is enormous.
Necronic
Staff member
See, I have no problem with religion, or Christianity in particular since that's the religion at issue when talking about american politics.
What I have a problem with is something that even the 10 commandments had a problem with: Taking the Lord's name in vain.
Bringing religion into politics does not just go against democratic american politics, it is downright blasphemous. I'll excuse the people doing it because I don't think they understand how fundamentally evil it is, not just politically but spiritually, but that doesn't change my view on it. What they are doing is not just dangerous to the freedom of religion that makes America wonderful, it's also claiming an authority that they do not have, that goes against the teaching of the Bible that they thump in my face.
What I have a problem with is something that even the 10 commandments had a problem with: Taking the Lord's name in vain.
Bringing religion into politics does not just go against democratic american politics, it is downright blasphemous. I'll excuse the people doing it because I don't think they understand how fundamentally evil it is, not just politically but spiritually, but that doesn't change my view on it. What they are doing is not just dangerous to the freedom of religion that makes America wonderful, it's also claiming an authority that they do not have, that goes against the teaching of the Bible that they thump in my face.
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
In the United States, there is. The Supreme Court has ruled that 1) The First Amendment means that the government can not show favor to any one religion and 2) The government can not show favor to religion over non-religion. The Republican Party has gone off the deep end into fundamentalist Christianity, allowing it shape their position on social issues. We have fights over whether or not the theory of evolution should be taught in schools, for goodness sake! That's not normal! Religion isn't the root of all evil, but Fundamentalist Religion and unconstitutional attempts to enshrine it in law are the root of at least half of the USA's bullshit political controversy. And is frequently used to justify the other half.
Here's a map showing, by state, how many hours per week it takes on the current federal minimum wage ($7.25) to afford rent:
You'll note 0/50 states have a low enough cost of living to allow someone to do it in a standard 40-Hour full time work week. Usually it is somewhere near double that. Here's a link to statistical break down of the data, and here's the source. I make about minimum wage, less than a dollar though, so let's use me as an example:
I work for a major retailer, part time, and after nearly four years there I make $7.74/hour. However, after taxes and social security and the like, I make $6.40/hour (admittedly, I'm still considered a dependent of my father and I might get less taken out if I weren't). Let's imagine that I moved in to my friend Marie's apartment, where I'd have two roommates - my rent would be about $340 per month, counting utilities. If my employer had me work the maximum amount of hours allowed per week (39) every week, I'd be making about $500 every pay period, about $1000 a month, about $12,000 every year. That would place me $300 above the poverty line, after taxes. However, my employer doesn't guarantee hours (ergo, you will rarely be scheduled the same amount of hours two weeks in a row) and a shift can be anywhere between 3.75 hours and 8 hours. Even if I could manage to get 39 hours a week, it might well involve working 7 days a week. To maintain this standard of living would require that I never get sick or injured (I don't have insurance), never living with fewer than two roommates, never having my car break down, etc.
And your saying my life would be made better by being paid less?
As if you can't live off a full time job, if you want your own place. Having to shack up is a problem, and not enough people are seeing it.
If the allowed hours per week is 39,how is that part-time?
1. Part time is considered to be under 30 hours per week.
2. I'd bet that if you went county-by-county on those maps, it wouldn't look as solid. I can tell you rent's a whole lot cheaper up here than it is down where I used to live - or even over by Krisken.
3. Gee, imagine that - from Massachusetts to Virginia, it takes more than 88 hours a week to pay for rent. Refresh my memory - what percentage of the county LIVES there, again?
2. I'd bet that if you went county-by-county on those maps, it wouldn't look as solid. I can tell you rent's a whole lot cheaper up here than it is down where I used to live - or even over by Krisken.
3. Gee, imagine that - from Massachusetts to Virginia, it takes more than 88 hours a week to pay for rent. Refresh my memory - what percentage of the county LIVES there, again?
Because you're lucky to be scheduled for 20. However, if you are trained in multiple areas of the store, you can pick up shifts. I don't think anyone is ever scheduled to work 39 by management. My employer doesn't consider you full time unless you work 40 hours a week.
1) Tell that to my employer. They delineate full-time as 40 or more hours a week. Everyone in the store, short of management and HR, are considered "part-time" at 39 or less.
2) Fair point. However, that argument also becomes a cost of living vs. opportunities. My cost of living would likely be lower if I lived in Hell, MI, but my opportunities for employment are greater in the larger metro areas.
3) I don't know. What does that have to do with the ability of poor people to afford housing?
Because I mean, come on, who the hell wants to live in Buffalo anyways?
(Have to rag on the hometown, sorry blots
)
Like mentioned, many companies don't conisder you full-time unless you work 40 hours a week. They treat it this way for things like benefits.
When I worked for Gamestop years ago as an SGA, my manager specifically told me I would be working around 38 hours per week, and that at no point was I allowed to go over 40. She told me straight up the reason for this was because the company couldn't give me an of the "full-time" benefits, so they kept me just under the threshold as a part-time employee. I even had a key to the store and handled the money nightly, but no way was I going to get medical from them, they made sure of that.
Even my newer job, I was told that if I fell under 40 hours a week (even just 39 hours a week) I would be marked as part-time and lose my medical insurance. That's just business I guess.
Other things being equal, no individual would be better off by getting less money.
That being said, I'd like to focus on a couple of things in your post.
First, the map you showed was very interesting, but I'm not sure if it portrays the actual situation. I had a look at the data and a few other sources, and it seems to me that the Fair Market Rent (FMR) which apparently was used as the cost of living is calculated as a statistical median of rents in a specific locale. Though not being a statistician, I think this would mean that FMR represents the average rent paid for an average-sized apartment with average amenities and condition and located in an average part of town. Meaning it is the kind of apartment that someone making median wage (US 2010: >26k pa) might live in. But a typical low-income person would presumably not enjoy the same standard of living/housing as someone making over over twice as much, and would not have the same rent expense. So your map might be slightly misleading.
As to your current wage, I believe the minimum wage has an influence on it only if you think you are currently being paid more than the free market rate would be for someone qualified to handle your current responsibilities. If this is not the case, then I don't think the removal of the minimum wage would have any effect at all on the salary being paid for what you do. If it is the case, then the company is currently operating at less than optimal efficiency regarding their HR costs (due to the minimum wage requirement), and as we all know costs get transferred to the price the customer pays for a product. In which case theory would suggest the customers are paying more for what your company sells than they have to, if the company was efficient. I hope you understand that I'm approaching this from a theoretical point of view, and that while using the 2nd singular pronoun, I am referring to the bigger picture and making no calls on any single data point that might have anything to do with you specifically.
GasBandit
Staff member
In the past, management has compensated me by getting me stuff on trade - for example, when I got lasik a few years ago, it was paid for by our stations running advertising. However, lately that hasn't been the case, and I'm seeing now that, like you say, these days anyone on salary who goes 5 minutes over his schedule is a fool and a sap.
Warning: Long.
The map is misleading, unfortunately, and does a very poor job of portraying the actual situation, though I'm sure that wasn't Norris' intent. I don't know whether it was an honest attempt to represent the plight of the American working class, or if the makers of the map knew that there were gross inconsistencies built in by using the median rent for various locales instead of doing a more indepth analysis by drilling down and doing a more specific, city by city price. However, that being said, one of the issues that we run into with respect to making the map more accurate, at least in my home state, is that there are so many distinct socio-economic regions in the state (Washington). Each region has its own dominant industry, median rent amount, median individual income, median household income, division of family vs. single occupancy homes, and basic needs costs. I've lived in this state for the vast majority of my life (25 of my 32 years), and even I don't know that I could list all of the various regions and sub-regions that would have to be considered when making an accurate map. I do, however, know three of them:
Region 1: Seattle-Tacoma Metroplex (POP: 3,344,813). The Greater Seattle Tacoma Metroplex incorporates the cities of Seattle, Tacoma, Bellevue, Redmond, and Everett. It also includes many large suburbs (most of them cities in their own right), a combined Airforce/Army base, two Navy bases (three if you include the some of the southern-most islands, which would throw NAS Whidbey Island into the mix), several colleges and a major university, three professional sports teams, several minor league sports teams, a major international airport, several smaller regional airports, and a massive variety of industries and commerce, including, but not limited to, Microsoft, Boeing's commercial aircraft division, Boeing's military and aerospace divisions, shipbuilding, fishing, lumber, transport (trains/trucks/cargo ships), and oil refining. Wages in this area can and do fluctuate wildly. The salary for Microsoft programmers is going to be ridiculously higher than those of someone who unloads cargo containers down at the port, even though those port workers are union employees with union wages. Rent, on the other hand, has a nasty habit of not fluctuating wildly, except possibly on a neighborhood by neighborhood basis. The average price of a one bedroom apartment in Seattle (using the average of 4 key neighborhoods, and using Zillow as the resource) is $1315 per month. The minimum wage in Washington state is $9.04/hr, so before taxes, benefits, etc. are taken out of your check if you make minimum wage, you earn $1518.72 per month (with an average of 21 work days per month). If you add in food and utilities, it simply is not possible to live in the city limits on minimum wage, unless you've got at least two roommates (average price for a 3br apartment is $2136/mo) and all of you would have to be working at least full time, and none of you could own a car unless you'd already paid it off and had the bare minimum car insurance. In order to be able to afford (barely) to live in a 1br apartment on minimum wage, by yourself, you would need to move at least 14 miles south of the city or 15 miles north, at which point your commute cost and time both go up significantly, and if you work in some areas of the city, they don't have transit access, so you have to have a car and then you have to be able to afford parking, gas, and insurance.
Region 2: Southeast Washington (POP: 73,322). Southeast Washington state is primarily an agricultural region, with rolling hills and the perfect climate to grow wheat, barley, lentils, and green peas. The area includes no major cities (obviously), but does include one small city, Pullman, with a population of 29,799, of which approximately 17,000 are full-time undergrad students at Washington State University. The only major industry is farming. There are no major manufacturing plants. The median rent price per month (in 2009, via city-data.com) was $707; though most (85 - 90%) of apartments in Pullman are occupied by WSU students, very few townies live in apartments. In fact, in 2009, of 19,792 households, only 2,770 were single occupant homes, including student rented apartments. It is easy to live in a one bedroom apartment in Pullman even if you're only making minimum wage, so long as you're not working for a farmer, as agricultural employers are exempt from the state minimum wage laws by and large (or they just cheat). It is not uncommon for farm employees to be paid with a percentage of year-end harvest's worth, or for them to be paid an average hourly rate of between $6 and $8. Commute costs and times are virtually nil.
Region 3: The Tri-Cities (POP: 253,340). The Tri-Cities area of Washington is... special. There are three cities; Richland, Pasco, and Kennewick. Major industries in this region include farming (which relies on irrigation from the nearby Columbia river and is mostly devoted to non-staple crops such as corn, potatoes, onions, and various types of fruit including orchard fruit), Wineries, and the US Department of Energy, which manages a nuclear reactor/research center - the Hanford Nuclear Reservation. Again, like Region 1, salaries can and do vary wildly. Again, agricultural employers are largely exempt from the state minimum wage laws, and again average agricultural wage is between $6 and $8 an hour, except during harvest time, which unlike Region 2 is extremely time sensitive. Harvest wages can be as much as $15 an hour, and they call for 10 hour days, 7 days a week, for 2 or 3 weeks at a time, before going back down to $6 to $8 or being eliminated altogether. On the other hand, DoE salaries, especially for PhD holders in the area, routinely run into the $125k+ per year range. The average rent for a one bedroom apartment in the Tri-Cities is $867 per month, making it easy to afford, so long as you're not an agricultural worker. Unfortunately, the vast majority of non-DoE jobs in the area are ag jobs.
Those are only 3 of 13 regions that I could clearly delineate.[DOUBLEPOST=1341532159][/DOUBLEPOST]
Warning: Also long. (Sorry, spoilers completely screwed up the formatting on these).
To address the second part of your argument, the free market rate, the biggest problem that many, many, many Americans have (especially right now) with the concept of the free market rate, is that we simply don't trust companies to follow it. Whether those companies are our employers or the companies who sell us our food, fuel, clothing, etc., we have a very, very hard time trusting that those companies would adhere to free market rate. And it's hard to fault people for feeling that way, because it's hard not to feel like we're being ripped off by a lot of companies right now. Companies that are making record profits (from Citigroup who had a paltry $11bn profit in 2011, to IBM with $20.4bn, all the way up to Exxon Mobil who had a staggering 2011 profit of $41.1bn), whose executives are getting record bonuses and salaries, while the middle-class American's annual salary fell 7% from 2000 to 2010. And honestly, why would these companies pay any more than they absolutely have to? The point of a company is to make money for the owner and/or shareholders. You don't make money by paying your employees more than you have to, or providing better benefits than you absolutely have to. You make money by paying the least amount you can get away with, providing the least amount of benefits, and increasing the purchase cost of your products. Citigroup laid off 4500 US employees while increasing their profit to $11bn in 2011, IBM laid off 3,000 US employees and have laid off another 1700 so far in 2012, and Exxon Mobil hides their layoff numbers sufficiently well that my Google-Fu cannot find them. For more of a breakdown, the top 4 Citigroup executives earned a combined $43M in 2011, an increase of 34% over 2010; while their employees got a 5% raise. IBM's CEO got a 30% raise in 2011, up to $31.7M, while the rank and file received "small, targeted" raises (meaning not everyone got a raise, even a cost-of-living adjustment), and IBM's traditional pension plan (company paid pension) was thrown out back in 2008 in favor of a 401(k) plan, allowing the company to save between $2.5bn and $3bn through 2013. Exxon Mobil's CEO got a 20% raise up to $34.9M in 2011, while most (but not all) of the rank and file received 3% raises.
Now, I'm not saying that everyone at those massive corps necessarily deserves a raise. I've known plenty of lazy, do as little as possible, worthless employees in my 16 years of employment. I've been one of them a time or two. And, of course, while these companies post the pay+benefits packages of their CEOs, they don't post the numbers for their everyday employees, so it's next to impossible to know what a 3% or 5% raise amounts to. But in the end, what that really means for the free market rate, is that the free market rate is a great theory; but in practice the employees just get screwed, the consumer gets pressed as hard as possible until every last drop of disposable (and sometimes not-so-disposable) income is drained out of them, and the CEOs take home record amounts of cash/cars/company jets/travel/etc.
And then there's the other issue with free market rate - determining how much each individual person's work is worth. How exactly does one put a price on all of the various types of jobs out there? What criteria would you use? Does the size of the company matter? The number of other people at the company who do the same thing you do? How long you've been with the company? How hard the job is? Whether it's a sit on your ass all day office job or an on your feet from dawn til' dusk job? Let's take my job, for example. What I do isn't very difficult. It only took 3 or 4 hours of OJT (on the job training) for me to pick up where the last person left off, but I had to draw on a lot of previously acquired knowledge and skills. Also, everything I look at all day long is confidential, and is considered a Medium Business Risk, if the info were to get out. I am the only person in all of Microsoft (worldwide) who can do my job. I don't supervise any other employees, but I am expected to be self monitored and self motivated - which I have to be, because the person I report to is a senior level manager, he doesn't have time to interact with me on a daily basis. Hell, if we talk more than once a month, that means something has gone horribly, horribly, wrong. How much is my work worth? I know how much I get paid. I know that before Sunday when my raise went into effect it was barely enough for me to pay bills, eat, get to work, and have a little money left over for fun/savings. I don't know what Microsoft is paying my consulting company for my time - but I would suspect that they're paying at least twice what I'm getting since that's the normal rate around here.
The last time there was a free market economy in the US, back before the minimum wage was established in 1938, employees got screwed left right and center. The labor unions had to fight tooth and nail to get workers' hours down to a reasonable 40 hours a week and their pay up to a reasonable amount so they could afford housing and food. These days, there are states throughout the country that are bound and determined to make unions ineffective or outright dissolve them (especially for public employees). Some of those same states want to do away with minimum wage at the same time. How is that going to build trust in a free market economy? You want to take away my benefits, take away my pension, cut my hours and/or my pay, force me to move to a different city in order to keep my job as you close down the location where I currently live, and take away my ability to collectively bargain for better wages and working conditions, and you want to get rid of the minimum wage so you can pay less than that amount for new employees in the same field as mine? All while the prices of food, gas, electricity, insurance, and rent are going up? Yeah... I totally trust the free market.
*Ask any of the massive number of employees who've had to take pay cuts, or lost their benefits, or are now working two jobs instead of one just to make ends meet if they feel that the reason they're now making less money is because they were getting paid too much before hand. I can guarantee you that the $7k pay cut I had to take just to get a job again after my last company went out of business wasn't because I was being paid too much. Neither was the $15k reduction in pay my mother has taken in the past 8 years, as she moved to the private sector, to a larger city, to larger companies, where she has more work to do than ever before. Or the fact that my father had to take a second job so that he and my mom could keep making their house payments. Or my friend, the nurse in Children's Hospital's radio-oncology department, who had to take a pay cut and take on additional duties when two of her coworkers quit because they couldn't afford the pay cuts, whose boyfriend had to move in with her so they could afford rent. Or my other friend, who had to take on a lot more responsibility when he switched from working for Amazon to working for Live Nation, where he's gone from just one member of one portion of the payments team to one of the four or five people responsible for redesigning the entire payments back-end. In fact, I don't think that I know, personally, anyone who hasn't take a pay cut, or had their hours reduced, or aren't paying more for their medical/dental/vision benefits and/or more for their actual doctor visits or prescriptions, or been laid off, or some combination of them all in the past 3 years. Except my brother-in-law, and possibly his wife.
And if we're all being paid too much for what we do, then cost of living needs to come back down drastically - but if that happens, companies will see too much of a hit to their bottom line, so it's not going to happen. At least, not until several of them go bankrupt and the government decides that there's no such thing as too big to fail.
It feels like the Republicans don't want to win anything this year.
Maybe they're curious about how the Democrats felt in 2000.
Maybe they're curious about how the Democrats felt in 2000.
Firstly, I'd like to thank you for taking the time to make a very informative, well researched and well-reasoned post.
Let's get to business, then.
Again, I'm not a statistician and on top of it have a language handicap with the more technical terms, so I might be wrong. If I am, please let me know.
Now, you said that americans don't trust companies to follow free market rate. On the demand side, a company could of course offer pittance to their prospective employees, but based on the graph few if any qualified people would want to work for them for that rate. Companies need labor, so they have to offer enough money and benefits to get people to sign on. On the supply side, a person looking for work naturally wants to get as much for their skills and time as possible, but the more that is, the fewer openings there are and the tougher the competition. So they take the best deal that their employment qualifications can get them.
And then somewhere the demand and the supply meet, and there are enough workers willing to work for the wage as there are job openings available for the cost. I'm interested in your views as to how companies would be immune to this, and where exactly the 'companies screwing over americans' happens.
Or were you referring to the lay-offs and pay cuts at a time of increased profits? When demand is low (as it is pretty much everywhere nowadays) companies respond by reducing costs, in order to stay in business. This generally entails downsizing, and such adjustment procedures can have the effect of temporarily boosting profits. The perception of the companies screwing people over is erroneous I think, though perhaps understandable. However, I'm not sure what this would have directly to do with free markets.
Unless price controls such as minimum wage artificially elevated the costs. At which point companies hired less people than they otherwise would, leaving more people without jobs than efficiency demands. In occupations where equilibrium pay is higher than minimum wage, this would not directly apply and I don't really see what effect minimum wage or it's removal would have.
Let's get to business, then.
I believe the map put up was inaccurate as an indication for the housing expenses of low-income people for two reasons. One was the scale, which you already addressed. The other things was that I'm not sure median rent (50th percentile) accurately reflects the rent that an average minimum wage worker needs to pay. Say someone makes >50k/year, meaning they are pretty well-off. The are probably not living in a median rent apartment, but have a fancier place somewhere and pay more rent. Conversely, someone who makes minimum wage probably lives much more humbly, and is paying less than median rent. Median rent seems to me to be more useful in determining the relative differences in rent prices between different locales. So pointing to the median rent for a city-scale locale and saying "this is what a minimum wage worker needs to pay for rent" might not be an accurate statement, particularly in cases where the median rent is very high in relation to minimum wage. Looking at the 25th percentile (?) on a city scale, or the median rent in a low-income neighbourhood of a city, might be more useful in determining the housing expenses of a low-income person.
Again, I'm not a statistician and on top of it have a language handicap with the more technical terms, so I might be wrong. If I am, please let me know.
Just to make sure we're talking about the same thing here, what do you understand by the concept of free market rate? Based on what I know of the theory behind it, free market rate is set by supply and demand. The point at which the curves representing these two meet on the chart is the equilibrium, where both supply and demand are balanced, and you get the price (free market rate) and quantity from that. I believe that point is generally considered to be the most efficient allocation of resources based on utility.
Now, you said that americans don't trust companies to follow free market rate. On the demand side, a company could of course offer pittance to their prospective employees, but based on the graph few if any qualified people would want to work for them for that rate. Companies need labor, so they have to offer enough money and benefits to get people to sign on. On the supply side, a person looking for work naturally wants to get as much for their skills and time as possible, but the more that is, the fewer openings there are and the tougher the competition. So they take the best deal that their employment qualifications can get them.
And then somewhere the demand and the supply meet, and there are enough workers willing to work for the wage as there are job openings available for the cost. I'm interested in your views as to how companies would be immune to this, and where exactly the 'companies screwing over americans' happens.
Or were you referring to the lay-offs and pay cuts at a time of increased profits? When demand is low (as it is pretty much everywhere nowadays) companies respond by reducing costs, in order to stay in business. This generally entails downsizing, and such adjustment procedures can have the effect of temporarily boosting profits. The perception of the companies screwing people over is erroneous I think, though perhaps understandable. However, I'm not sure what this would have directly to do with free markets.
I agree that companies try to maximise shareholder value. But what I suspect you and I disagree on is that I think this is the way it should be. If what they offer to their employees is sufficient to get and retain enough qualified people to run their operations, then companies would frankly be stupid/inefficient to pay more. I don't think it is wrong to look for the best deal, either for regular people or for companies. If you disagree with this, then I'd like to hear your reasoning for it. Companies need labor, and have to pay wages in return for it. Why should they not take the best deal on offer, whether it is the cheapest or something else?
I imagine the skills and contacts necessary to be a CEO of an international megacorp are quite rare, and the people who possessed them to have many takers. So they would be in a good position to negotiate on their own salary. Lots of companies want to acquire their services, so supply and demand indicate the price is going to be high.
Please see above. Their work is worth what someone is willing to pay for it, and in a free market would be based on supply and demand.
As I said, in a free market the wages and benefits would depend on supply and demand. It is quite understandable that people who have a job want as much pay and benefits as possible, due to enlightened self-interest. The downside to this is that the more expensive it is made for a company to hire people, the less they will hire people (they'll adjust their operations accordingly, automate production to require less workers and such), so some other poor guy is left without a job. The idea is that the law of supply and demand moderates these things and makes for the most efficient combination, where as many people are employed as possible earning as much as possible and as much labor needs of companies are met as possible for the lowest cost possible.
Unless price controls such as minimum wage artificially elevated the costs. At which point companies hired less people than they otherwise would, leaving more people without jobs than efficiency demands. In occupations where equilibrium pay is higher than minimum wage, this would not directly apply and I don't really see what effect minimum wage or it's removal would have.
With the decrease in demand due to the global economic crisis, companies pretty much everywhere are forced to reduce costs to stay afloat, which means lay-offs, wage cuts and all the other things you listed. It is unfortunate, but what exactly are the companies supposed to do? And they would do this, with or without minimum wage.
(As a total aside, Gared , I now know you know exactly how I feel when I spend 2-3 hrs researching a mere 200-word post, like you've just painstakingly built a wardrobe out of carefully polished words. Brofist for you.)
Factoring in my raise, Kati's extra part-time income, and the ending of one particular debt (yay!), our "useful" (after-tax) household income probably went up about 15% in total. Factor in the fact that we had to replace our car and the fact that we are raising a (cute) kid, and that means our expenses (including usual COL ones like groceries) went up right around ... 12%. So that's a net increase of about 3%...oh, and Kati will be moving in with her father now, so she will have to leave her part time job and find another on the other side of the State, one which has to be kid-raising-friendly, and our house payment is scheduled to go up 2% in Sept.
Soo...yeah. If I track the paperwork very carefully, I can see that we got a raise. I don't really get to direct it or do anything awesome with it, though. This is what makes articles like this one about wage disparity, this one about the 'new' slave labor, and this one about "educating the work force for work" look more and more appealing to someone seeing things from my perspective.
--Patrick
Agreed, it is an impressive post. Gared, I tried to answer all the points you made, but if there are any you feel I missed, please say so and I'll attempt to give you my view on them.
I can understand your frustration. But if I may ask, and please feel free to ignore this question if it's none of my business, do you think the current situation is due to your employers being soulless bloodsuckers, or is this perhaps more of a temporary money crunch much like those experienced by many other young couples who are hearing the pitter-patter of tiny feet?
My take on those three articles:
The first one is interesting, though it seems to try and make a strong connection between the high corporate profits and reduction of employees' benefits. I'm not sure if this is entirely accurate. In the current economic situation where a lot of people are out of a job and not a great deal of hiring takes place, it is true that the companies may enjoy some advantage, but I think that's just one reason. There are many other reasons as well for the high profits. Earlier I listed the effects of adjustment measures, and there are others further still.
The second one strikes me as a piece of rather sensationalist journalism. Drenched in exaggerating language, it claims exploitation, hints at racism, and suggests some kind of a conspiracy between the judiciary, the executive, and the private sector. I'm not saying there are not things that need correcting in prison labor, but I wonder if the situation is truly as dire and the scale of abuses as significant as the article paints it to be. I mean, "prison-industrial complex"? Really?
As to the third one, there are some professional educators on these boards and perhaps they'd be willing to give a more informed opinion than I can on the goals of the educational system. As I've understood, education is in large part meant to teach students the skills with which they can succeed in life. I suppose job skills would rank quite highly in that. So color me unsurprised if that's what they teach.
For which we can all be grateful. Who really wants more than a month of real hard campaigning?
You're quite welcome. This has been an interesting diversion from my usual boredom during slow holiday times.
The issue here is that there isn't much disparity (at least in my area, the Greater Seattle-Tacoma Metroplex referenced above) between a high-price apartment and a low-price apartment. That's part of the reason that I used the median rent for Seattle, and why I used the 4 price point neighborhoods that I did. I should have explained more about those neighborhoods in my original post, as it would have provided more of an insight into the process. The four neighborhoods used were Downtown Seattle, where all of the apartments available come in high-rise towers (or at least 10 or 11 floor complexes), Capitol Hill, which is kind of half swanky-foodie-hipster and half soup kitchen and gospel mission, University District, which is mostly apartments and houses rented to college students at the University of Washington, and Magnolia, which is a nice-ish family suburb kind of neighborhood. The only type of neighborhood not specifically included was a gang-infested, crime ridden neighborhood where there are gang related shootings and drive-bys, because whether you live on minimum wage or not, you shouldn't have to live in a neighborhood where simply standing near a window is pushing your luck if you want to live through the night. Besides, even in these neighborhoods, rent is pretty much the same as it is outside of them.
Around here, unfortunately, the difference between a low-rent apartment and a high-rent apartment in a relatively safe neighborhood can boil down to one or two things. And really, they're not important things. For a one bedroom apartment in a low-rent apartment complex you can expect to have:
- 1 bedroom, approximately 10ft x 8ft, including the closet, if there is one.
- 1 bathroom, just large enough to open the door (sometimes, if you're lucky), with a sink in a vanity made of particle board with a thin wood-grained plastic veneer, a toilet, and a bath tub with a shower head hung over it, and a mirror.
- 1 kitchen, about the size of a postage stamp, with a dishwasher that occasionally works, a two-sink setup with a garbage disposal, an electric stove with 4 burners and an oven, and a small, apartment-sized refrigerator. You might also have enough counter space to use a small to medium sized cutting board and an electrical outlet to plug in a microwave and toaster. If you're really, really lucky, you might have two outlets, so you don't have to unplug the toaster to make coffee.
- 1 living room, which accounts for about the same amount of space as the bedroom, which invariably has a sliding glass door leading to a balcony that's almost big enough for 3 people to stand on at the same time.
- Your heat will come solely from electric-baseboard heaters which haven't been upgraded or replaced since the complex was originally built, which are the most inefficient heat source short of trying to heat your home using candles.
- You will not have a washer and dryer for your clothes. The complex will, but you'll be charged $1.00 per load to wash and $1.50 per load to dry (and it will always take at least 2 cycles through the dryer to dry your laundry).
- Your complex may have a parking lot or you may have to rely on street parking. If you have to rely on street parking, you'll have to get a parking permit from the city in order to park your car, if you have one, at your apartment complex.
- Your complex will not have any other "amenities" such as a gym, a pool, a clubhouse, etc.
- Unless your apartment complex is 6 stories or more tall, it will not have an elevator.
- 1 bedroom, approximately 10ft x 9ft, including the closet, which is guaranteed to exist.
- 1 bathroom, the same as above.
- 1 kitchen, the same as above with one exception. You are guaranteed to have two outlets, meaning you no longer have to unplug your toaster to make coffee, and you can plug in a mixer or a food processor.
- 1 living room, the same as above.
- The same heaters.
- You may have your own washer and dryer (probably not, but you may), and if not the laundry facilities at the complex will be just as bad and usually cost $0.50 more per load than the low-rent complex.
- Your complex will have a parking lot.
- Your complex might have a gym (by which they mean a treadmill, an exercise bike, and either a bowflex machine or a weight machine), a pool and hot tub, and a clubhouse where they occasionally hold community get-togethers and which residents can rent out for a fee.
- If your complex is three stories or more, it will have an elevator.
Unfortunately, this is just what happens when you live in a metropolitan environment, at least in this country. The majority of people who work in the city, by which I mean the heart of the city, where all of the high-rise buildings are, make minimum wage or within $1 per hour of that wage. They cannot afford to live in the city, because rent in the city is enormously high, because the only apartments available are in high-rise buildings that offer tons of amenities, great views, etc., and are marketed toward the much smaller market of high-salary employees. That means that those employees have to live outside the city, which means that they have to pay to commute to and from work in the city, which unfortunately also means that they cannot afford to live in the immediately surround suburbs, where rent prices are much less than downtown, but are still just at or above the median price of $1315/mo. The people who live in these apartments, in about the 5 to 13 mile outside the city range, are the people in that >$50k+ per year range that you were talking about (I bolded it for emphasis). They are, by and large, family dwellings, in neighborhoods with elementary, middle, and high schools, because not everyone could afford to live in the housing subdivisions in the same radial range. The people who live in these family dwellings, however, are more and more frequently become childless adult couples and/or roommates who are living in the area because it provides the best value for the price that they can afford. Families are either being pushed even further out, or are renting two and three bedroom apartments, which cost (on average) $300 to $500 more per month. That means that the people who are making minimum wage or less than a dollar more per hour, in the heart of Seattle, which makes up a good 1/3 to 1/2 of the workers in the city, have to live at least 14 miles outside the city, or in the most dangerous neighborhoods in the city.
Now, what this boils down to, ultimately, is that people who work for minimum wage, shouldn't do so in the city. They should be looking to live outside the city, sometimes as far from the city as possible. The problem with that is, there aren't nearly enough jobs that pay in that scale (or any, really) outside of the city compared to the number of possible employees. The people who are making minimum wage in Seattle are either, by and large, recent college graduates who have no experience in their career fields, and thus cannot demand higher wages, or people who've been in their career fields for 5+ years but have no college degree and thus cannot demand higher wages, or - and this is where free-market starts to creep in to the current American economic model - people whose jobs aren't worth as much to the economy, mainly the service industries (fast food, restaurant, grocery, gas station, etc.), but also including retail (clothes, consumer electronics, furniture, etc.). So, in order for only people who can afford to live in the city to work in the city, the city would have to completely eliminate fast food places, restaurants, grocery stores, gas stations , clothing stores (department stores in general), electronic stores, furniture stores, etc.; and only have office buildings where high mid-level management and upper level employees work, and all of those people would have to want to live in downtown. Unfortunately, because all of those people would have to go outside of the city to shop for anything, even food, the city would go bankrupt because there would be no tax revenue to support it. The only money they would be able to collect would be parking, real-estate tax, and corporate tax. Or (and this is a big 'or'), restaurants, grocery stores, etc. would have to pay their employees even more than the current minimum wage of $9.04 per hour, and they'd have to pass on even more of that cost to their customers, meaning that the people who do live in the city would have to pay even higher prices for everything that they buy, and they'd have to make more money to support those new prices - or they'd have to leave the city, which is what they've been doing in Seattle for the past 7 - 10 (or more) years.
That is my understanding and usage of the term as well.
1. The issue here, is the assumption that companies need labor. They don't. If America was a closed country, like North Korea, then that would be true - though we'd have a lot more problems to deal with than free-market economy vs. minimum wage affected economy. Because the American economy cannot, at this point in time, be truly separated from the global economy, there is nothing - and I mean absolutely nothing - that requires American companies to hire American employees. This has been made even more true by the signings of NAFTA and CAFTA (the North American and Central American Free Trade Agreements), which reduced - or removed entirely - tariffs which used to be charged for importing and exporting goods between the countries of North and Central America, and the United States of America. It used to be that US companies had an incentive to manufacture their goods in the US, because they could sell them in the US for less money, due to their not having to pay tariffs to import their manufactured goods from countries that could pay their workers lower wages, which would have led to cheaper production costs for the companies but a higher overall cost due to the tariffs. Now that those agreements have passed, we can build our cars, TVs, computers, furniture, etc. in Mexico, or Nicaragua, or Ecuador, or pretty much anyplace north of Columbia but Cuba, and our production costs can be much, much lower.*
2. Because of the current state of the economy, and also because there are just too damn many Americans who are looking for work right now, the supply side of the equation is so far out of alignment with the demand side, that only a very small percentage of people are getting jobs that have any real relevance to their qualifications, and therefore, jobs that compensate them what they believe they are worth. Now, some people absolutely have an inflated sense of what their time and effort is worth. I will never dispute that fact. But a lot of people don't have that over-inflated sense of self-worth. We're just trying to get enough money to eat, sleep, watch TV, and occasionally take a vacation, and not have to work until we're 90 years old just to pay for it all.
The problem is, with US companies shifting jobs out of the country, closing manufacturing plants in the US, or going out of business entirely, it is unlikely that the demand and the supply will ever meet until the population of the US decreases dramatically. Furthermore, even if US employees were willing to work for the amount of money that foreign employees are willing to work (meaning workers in foreign countries, not employees in the US on work visas), there is no practical way that they would be able to afford rent, food, and clothing. For example, if US workers wanted to do the work that Foxconn is currently doing in China, assembling electronic devices for Apple, Microsoft, etc., we would have to work for less than $1.00 per hour (Foxconn employees, as of May 2012, were making $1.50 per hour, but we would have to be willing to work for even less than that in order to get these companies to move the jobs back to the US and build new factories or retool old ones). $1.50 per hour is $252 per month of 8 hour days with only weekends off, or $3,025 per year. And we'd have to be willing to work for less than that amount per year.
Now, the Foxconn example is rather extreme, but let's look at a few more examples. Let's look at Ford and GM, both of whom have car manufacturing plants in both the US and Mexico. US auto-workers averaged (they're all union, there's no way I'm getting my hands on the UAW's complete wage list) $33.77 per hour in 2011 in wages and benefits. In Mexico, workers for the same two companies, for the same time period, earned approximately $26.40 per day, or less than $4.00 per hour. That would be $554.40 per month, or $6,652.80 per year. For skilled labor. GM and Ford are still kind of an extreme example though, because US workers for those companies are union employees and make substantially above minimum wage. So let's look at an industry with which I am extremely familiar, which currently pays either right at minimum wage, or within $1.00 of minimum, since that's the price point that I used for my living expenses argument above - namely, the call center. A lot of Americans work or have worked at call centers, but more and more companies are moving their call center business to the Philippines, Panama, and India. I know they are, because I've worked for 3 companies who have done this exact thing. In fact, I work at one of them right now. Microsoft probably has roughly 7500 call-center employees worldwide. Less than 500 of them work in the US, the rest work in India, the Philippines, and Panama. For the vendors that we use, in the Philippines, the high-range of average employee salary per year is $2,000 less than the annual salary of someone making the federal minimum wage and $4000+ less than someone making Washington state minimum wage. Which means that, in order to get Microsoft to move their jobs back to the US (which will never happen, by the way), US workers would have to be willing to work for $5.00 per hour or less.
Also, I never said that companies are screwing over Americans; I said that the general impression among Americans is that they are. I don't actually think we're getting screwed by the corporations, so much as we're getting screwed by our own greed, bad fiscal habits, and 6 decades of lying to ourselves as a nation about how well-off we are.
1. The problem here is that companies didn't start laying off employees to reduce costs when they started seeing lower demand. Companies started laying off employees when they were making record profits, but had forecast that they would soon see lower demand. That theory is sound. Unfortunately, that theory, when applied in practice, becomes a self-fulfilling prophecy - as employment numbers drop, available cash flow drops, and demand for products drops. I've worked at two companies that downsized before the economy ever even hit its first pothole, in order to push their profits even higher, when they were already making record profits. Both of those companies went bankrupt when the crash hit, because they had no fat left to cut. One of them closed its doors completely, the other was absorbed by a competitor. Also, economic theorists can theorize all they want that cutting employees will only temporarily boost profits. And they're right. The boost in profits is temporary, and comes to an end when the broader economy slows down to the point where no-one has the money necessarily to keep paying pre-slowdown prices for mid-slowdown goods. The problem is, some of these corporate giants seem to have forgotten that temporary profits are not indicators of long-term growth. They've become used to paying the least amount they can, to employing the least amount of people that they can, and now the economy is struggling to goad them into hiring more people so that more people can afford to buy things and the economy can recover.
2. See above regarding perception vs. reality of companies screwing people over. However, the reason that this applies to the concept of free markets is because of the human element of pricing and consumer confidence. In theory, there is no room or accounting for human emotion. In practice, human emotion is just as important as supply or demand, if not more important. The best example of this that I can come up with is the stock markets. In a purely theoretical, emotionless market, there is no reason for the US stock markets to decline just because there are fears that the European Central Bank might lower interest rates. Now, if the ECB does lower interest rates (as they just did), then that could have a direct impact on US stocks, due to that whole global economy point; but because of human emotion, our stock markets took a double hit over the ECB's move. Last week, when there were rumors that the ECB might lower rates, investors and traders panicked and sold stocks and the markets dropped. Then, when the ECB meeting hadn't happened yet, they went back up slightly because there were rumors and opinions that they wouldn't actually drop the rate, that maybe something else would be done. Today, when the ECB did lower rates, the markets dropped again, because now the rates will influence stocks. If human emotion were removed from the equation, the first drop wouldn't have happened, and the second one may not have been as steep.
And it doesn't have to be anything as big as the global stock markets and investor panic. It can be something as small as personal beliefs and ad campaigns, like the people who disagree with gay rights who are boycotting Kraft foods (all of it) because Nabisco, one of their many divisions, ran a gay-friendly ad for Oreo cookies, one of their many products. That means that these people are so upset by one product ad that they're willing to refuse to purchase any of this list of items. Luckily, they're a small group of people and their actions, in the long run, won't amount to much. But what if it weren't a small group of people? What if even 10% of the Kraft's or Ford's or Bank of America's customers suddenly decided to use anyone other than those companies' products/services? What if, when the US was up in arms about the passage of SOPA, and the general consensus was that the movie studios were behind it, all of the people who signed the petitions or even just heard or read about the bill and were opposed to it decided never to watch a movie by those studios again? It would have been devastating to those companies. Supply and demand would dictate that even if those specific companies went out of business, either their competitors would take up the slack, or new companies would rise in their places. Unfortunately, the current feeling in America is that all companies are out to screw hard-working Americans over. And if it's not companies, it's the Government that's out to get you.
Actually, I'm right there with you on that one, mostly. I have no problem with companies trying to maximize shareholder value. I don't think it's wrong to look for the best deal either, I do it all the time. However, one of the things that seems to be frequently overlooked in the calculation of the best deal is value. Not price. Value. Unfortunately, what makes an item valuable from one person to the next can change dramatically, and price is a constant, so it's much easier to track price. Let's take food, for example. I know that when I go grocery shopping, I have 5 options for stores to go to. All 5 of those stores offer the same selection of items (I'm going to assume general/non-specialty foods), and all are within a reasonable distance of my house. My 5 options are Top Foods, Safeway, Albertson's, QFC, and Fred Meyer's. Let's say I want to buy a cucumber, a rib-eye steak, a gallon of milk, and a 5lb bag of flour; and we're going to score product quality on a 1 to 5 scale, 1 being the lowest. Albertson's will be cheapest across the board, but their cucumber will be a 4, their meat will be a 1, their milk will be a 3, and their flour will be a 3. Safeway will be the next cheapest, but their cucumber will be a 2, their meat will be a 4, their milk will be a 4, and their flour will be a 3. Fred Meyer's and Top Foods will cost almost exactly the same, but FM's cucumber will be a 2, their meat will be a 2, their milk will be a 3, and their flour will be a 3, while Top Foods' cucumber will be a 1, their meat will be a 2, their milk will be a 3, and their flour will be a 3. QFC will be the most expensive of the five options, but their cucumber will be a 4, their meat will be a 5, their milk will be a 5, and their flour will be a 3.
Now, if all I was concerned with was price, I'd go to Albertson's and be done with it, and I'd save probably $100/mo on food. But I, personally, place more value on higher quality ingredients than I do on lower cost, lower quality ingredients, so I shop at QFC. It costs me a little more each month (actually, it costs me 1/3rd more each month), but I don't get sick as often from eating almost-rancid meat, my vegetables, meat, and milk all come from local sources so they're fresher and they give back to the local community, and my meals taste better.
Unfortunately, more and more these days, we're seeing companies hire only on price and not value, and (largely due to our own habits of consumerism) deliver products only on price and not value. Why hire someone with more "value" who has a higher price when there are so many possible employees out there who are willing to work for a lower price, even if you have to replace them more frequently? And, if your target audience has demonstrated that when an item breaks, they'll replace it, why deliver a product that has higher than necessary value when you can deliver one that costs you less to manufacture? I can go down to a store right now and buy a 40+ inch HDTV for less than $600; but if it breaks and I don't have a warranty, I have to go back down and buy another one - and all too many of my countrymen are willing to do just that. I'm not willing to do that, which means I either have to buy a more expensive TV, pay for an extended warranty, or try to repair my TV when it breaks - and most of the time these days, the TV is too difficult to repair at home, so I have to balance paying someone to repair it with paying for a new one.
But this was about hiring, primarily, and the issue here again is that companies don't need labor - or at least, not American labor. The best deal for them, even if they do get rid of minimum wage in the US, will never be to hire American workers, because so many of them have already moved all of their manufacturing and customer service out of the country. It would cost too much to move those divisions back to the US and they would never find people willing/able to work for as little as their overseas workers work for. Even if the US employees offered higher value, they'd have to offer significantly higher value at near-equal or lower price in order to account for the cost to move whole divisions of the company and rebuild factories and call centers.
Don't be too sure. Citigroup's CEO, who drew a record profit last year, so under-impressed their shareholders that the shareholders tried (albeit unsuccessfully) to prevent him from getting his raise. JP Morgan Chase's CEO and CIO are on the hot-seat right now because their investment arm managed to lose them $9bn recently. Bank of America's last CEO was forced to resign after his policies brought the bank dangerously close to failure, and was paid $20M for the privilege (he actually took no compensation the year he resigned, other than his $135M retirement fund, that salary quote was from the year before his resignation). WaMu's last two CEOs ran the company into the ground, and were paid $14M and $18M the year before each of them left the company.
I think the rest of this has been pretty well covered above, but let me know if you think there are any specific points that I missed.
What I'm loving here is that this is still polite, and also, that, while we're seeing more democratic/socialist views vs economic liberalism/capitalism, both sides are using rational arguments and assuming the other one's not a blind idiot. Far too rare, this sort of gentle debate/conversation. Huzzah.
Also, Gared is completely right and TommiR is a complete blind buffoon who doesn't understand how the real world works!
Also, Gared is completely right and TommiR is a complete blind buffoon who doesn't understand how the real world works!
I've been looking for a good, gentlemanly debate for years now, and I have quite a bit of experience in the practical side of the US economy in multiple industries, multiple states, and multiple levels of employment, so this is right up my alley.What I'm loving here is that this is still polite, and also, that, while we're seeing more democratic/socialist views vs economic liberalism/capitalism, both sides are using rational arguments and assuming the other one's not a blind idiot. Far too rare, this sort of gentle debate/conversation. Huzzah.
Also, Gared is completely right and TommiR is a complete blind buffoon who doesn't understand how the real world works!
Also, my wife brought up an excellent example for the personal opinion vs. list price argument above. Netflix. A year ago one share of Netflix stock cost $292.42. Five days later, Netflix announced major price changes and a new way that they were going to handle DVD rentals. Their stock, even though the company has scaled back some of those changes (they didn't actually create Qwikster or whatever the name of their new DVD company was going to be), and even though the CEO apologized for so badly misreading his audience, has dropped like a rock. Within a month and a half, their stock price dropped to $130.00 a share, and it's now trading at $81.89. The value of the service they offer didn't go down until very recently, when they lost their contract with Starz to offer their catalog of movies, but their worth dropped like a rock because they pissed off their customers.
Also, I neglected to include transport costs for companies manufacturing goods outside the US and selling them inside the US, and now I'm having trouble finding any records of the actual costs of transporting goods into the country. I can find plenty of data on export costs.
You also left out the bit where most countries still DO pay import tariffs, and on some types of goods, quite a lot. I don't want to undermine your point (I do agree for about 80% with you
), but the USA is often regarded as being one of the protectionist countries - compared to most European countries, the USA does at least make an effort to try and keep the market somewhat closed off - for the exact reasons you outlined; and "not enough" to keep low-wage jobs in the US, but "too much" to really benefit from low-wage labor (if you think it's ethically OK to profit from child labor and such, of course) abroad.Anyway, one point I think you haven't mentioned, and which does matter, is that not every person/group/nation/etc is asproductive as the next.
For example, we still manufacture cars in Belgium, despite horrendous labor costs. One person working on an assembly line costs easily twice as much in Belgium than Poland - and we've got a free marker of goods and people between us. Transportation doesn't even begin to cost as much. However, the Belgian employee can work almost twice as fast as the Polish one - through education and training, different work ethic (arguably), ....
The same is true (in some sectors) for the USA: sometimes, it's more economical to employ more expensive employees/workers, because they can handle more work per day/week/month/given time.
This, of course, leads to ever more stress/pressure at work, resulting in burnout, heart problems, suicides, people at 40 becoming "too old to keep up",... In the context of minimum wage jobs, this can mean simply giving people more work than they can reasonably do and trying to force them to cope (e.g. our patrol guards work 12h/day, including a mandated 1 hour break. Unfortunately, they're under so much pressure to finish all their clients,never to be late at an intervention, but at the same time never to have a car accident or bereak the speed limit, etc etc, that more and more people are starting half an hour or an hour early, and/or work for half an hour or so extra, just to get 'round. This, in turn, resulted in more accidents (because people who drive a car for 14 hours on end apparently aren't that attentive and awake anymore near the end
), which caused a strict nommore-than-12-hours policy, etc etc.). When looking at higher-paid jobs, you get the standard middle manager having to work 60+ hours a week, being paid for 37 or 38, just to prove his worth and remain a "valuable asset". Queue heart attack at 45.e managed to work just a bit less, for a bit less money. More other people'd have a job, we'd all be less stressed and less unhealthy. Of course, we'd all have to surrender some money - and some of us can't, and a lot of us don't want to. It's amazing just how much we've been brainwashed about that. People are perfectly willing to work themselves to death for a bit more money; while a bit less but more free time/less pressure/better hours/whatever would make you much happier. Unless your happiness is solely derived from "having more than your neighbour".
Err, dammit, me and my soapboxing. I'll just go sit over there and let the grown-ups continue the civil discussion that actually manages to stay on topic
Anyway, my somewhat relevant point is this: our whole society is focussed too much on money, and not enough on happiness. A minimum wage, along with maximum hours worked, is one possible way to stop the absolute excesses in one direction (see: 19th-century working conditions). However, this has caused us to overbalance in the other direction, at the cost of well-being. How or when our model of society will change, I don't know, but I'm fairly sure it'll happen....It has to. We'll all have to become a lot poorer (in the West) if we ever want everyone to have a shot at happiness and a good life.
1. This is very true. I was concentrating mainly on US companies that have sent their manufacturing over to foreign countries, specifically the ones with whom we have a low-to-zero tariff relationship; but there are still a lot of countries that have to pay tariffs to export goods to the US. However, some of the more, shall we say industrious, companies have gotten around that by just having a US plant, where they can build American models of their cars and sell them for cheaper than imported models. For example, there's Mercedes-Benz US International, based in Alabama, and BMW US Manufacturing in South Carolina, and I'm sure there are many others (in fact, I know that there are Subaru, Honda, Toyota/Scion and Hyundai/Kia).You also left out the bit where most countries still DO pay import tariffs, and on some types of goods, quite a lot. I don't want to undermine your point (I do agree for about 80% with you
Anyway, one point I think you haven't mentioned, and which does matter, is that not every person/group/nation/etc is asproductive as the next.[SUP]2[/SUP]
For example, we still manufacture cars in Belgium, despite horrendous labor costs. One person working on an assembly line costs easily twice as much in Belgium than Poland - and we've got a free marker of goods and people between us. Transportation doesn't even begin to cost as much. However, the Belgian employee can work almost twice as fast as the Polish one - through education and training, different work ethic (arguably), ....
The same is true (in some sectors) for the USA: sometimes, it's more economical to employ more expensive employees/workers, because they can handle more work per day/week/month/given time.
This, of course, leads to ever more stress/pressure at work, resulting in burnout, heart problems, suicides, people at 40 becoming "too old to keep up",... In the context of minimum wage jobs, this can mean simply giving people more work than they can reasonably do and trying to force them to cope (e.g. our patrol guards work 12h/day, including a mandated 1 hour break. Unfortunately, they're under so much pressure to finish all their clients,never to be late at an intervention, but at the same time never to have a car accident or bereak the speed limit, etc etc, that more and more people are starting half an hour or an hour early, and/or work for half an hour or so extra, just to get 'round. This, in turn, resulted in more accidents (because people who drive a car for 14 hours on end apparently aren't that attentive and awake anymore near the end
e managed to work just a bit less, for a bit less money. More other people'd have a job, we'd all be less stressed and less unhealthy. Of course, we'd all have to surrender some money - and some of us can't, and a lot of us don't want to. It's amazing just how much we've been brainwashed about that. People are perfectly willing to work themselves to death for a bit more money; while a bit less but more free time/less pressure/better hours/whatever would make you much happier. Unless your happiness is solely derived from "having more than your neighbour".[SUP]3[/SUP]
Err, dammit, me and my soapboxing. I'll just go sit over there and let the grown-ups continue the civil discussion that actually manages to stay on topic
Anyway, my somewhat relevant point is this: our whole society is focussed too much on money, and not enough on happiness. A minimum wage, along with maximum hours worked, is one possible way to stop the absolute excesses in one direction (see: 19th-century working conditions). However, this has caused us to overbalance in the other direction, at the cost of well-being. How or when our model of society will change, I don't know, but I'm fairly sure it'll happen....It has to. We'll all have to become a lot poorer (in the West) if we ever want everyone to have a shot at happiness and a good life.[SUP]4[/SUP]
Now, these plants are paying their American employees more than they'd have to pay employees from, say, Mexico; but I don't know if NAFTA/CAFTA would exempt them from trade tariffs if they were importing cars from Mexico while being headquartered in Germany, so this way they're at least partially protected. Also, none of these plants employ UAW workers, so they may have to pay minimum wage or a more, but they don't have to pay that average of $33.77 an hour. It's actually been a big bone of contention that there are auto plants (and now aircraft plants for Boeing) in states that don't support the unions and therefor the companies aren't paying as high of wages, and the union employees are just waiting for all of their jobs to evaporate as the companies move all of the jobs to the non-union workers. But I'd like to avoid moving this conversation too far down the union/non-union line. Partly because I don't know enough about that side of things, and partly because I'm very conflicted regarding unions in general.
2. This is also a good point. However... I worry that you might be putting too much of an emphasis on how good American manufacturing workers and techniques are, compared to foreign countries. Our tech base, which should be one of the higher bases in the world, is actually quite low comparatively. A lot of manufacturing countries blow us out of the water. Our workers, while more skilled as recently as 15 - 20 years ago, are getting less and less skilled by the year, simply because the ones who were really skilled have all retired, and the younger generations haven't needed to become skilled, because we don't manufacture enough these days to keep a large skilled pool going. Unfortunately, in your example, we're Poland. Or maybe something half-way between Poland and Belgium. That'd be what, Brazil?
3. Don't dismiss this argument too quickly. This plays a much bigger part in today's woes than I would like it to, and that's unfortunate. Far too many people these days are willing to see everyone else suffer, so long as they don't have to reduce their level of quality of life in the slightest, and too many people who are outright rooting for that to happen. You see it at all levels of society. People on welfare who want to kick everyone else off of welfare (because of course, everyone else is lazy/on drugs/too stupid/milking the system), because that means that hard-working down-on-their-luck Americans like themselves will have less money to live off of. People working minimum wage jobs who want to end minimum wage, because it makes it too easy for lazy, druggy, stupid people to milk the system and get paid more money than they deserve. People who went to college on scholarships, grants, and loans, who get paid handsome salaries with full benefits and pension plans who think that the current generation of college kids and recent college grads are "entitled" for wanting the same things. I'm not saying that everyone thinks like that, or even that the majority, or even necessarily that a significant portion of the minority of people think this way, but a lot of people would rather tear their neighbors down to their level than build themselves up to their neighbors, metaphorically speaking.
4. Yes. The current system absolutely does have to change. Our current economic system is not sustainable. We've seen that, in the US, in Europe, and looming on the horizon for China. And, yes, what we're going to have to do is buckle down, work a little harder, make a little less money, spend a little less on credit, and (as corporations) understand that making record profits shouldn't be a requirement just to stay employed during an economic slowdown. However, the change is going to have to happen slowly, or else we're going to have people dying off in droves - entire generations of people. And, while that would probably be good from a purely planet-resources-centric point of view, in reality, it wouldn't be good for anybody. Unfortunately, dropping minimum wage would be a fast change, not a slow one.
And besides, the way this country has worked in the past I-don't-know-how-many-decades, we'd repeal minimum wage, but in order to get that to pass we'd have to guarantee that all employees who were currently employed and had been for more than 1 year would still be eligible for minimum wage until they voluntarily quit their current jobs. Then we'd have some companies who intentionally made life hell for their pre-repeal employees in order to get them to quit, and we'd have to have court cases for those employees to be able to either get their jobs back or carry their eligibility over to a new employer. And, we'd also have a bunch of people who weren't legitimately pressured into quitting filing the same lawsuits even if they were fired with cause, and that would tie the courts up even more. And then, after we'd gone through a massive cluster-fuck of enforcement, arguments about things being unenforceable, court cases, further economic woes, and two or three administrations, we'd repeal the repeal and minimum wage would be back - probably at a higher amount to try to dig the working class out of poverty.
5. There's another factor that I haven't touched on. Inflation. Truth be told, I just don't understand how inflation works. I don't know if higher prices for base goods cause inflation, or if inflation causes higher prices for base goods, or if both are true. What I do know is that it doesn't make a whole hell of a lot of sense to me that a durable good (like a house) which was built in 1975 and sold for (median price) $104k, when kept in the same condition (not improved, but not allowed to fall apart either), sold for $50k more 10 years later, and sold for $300k more 20 years later on. I know there are taxes and inflation and all sorts of changes that happened to the country's currency valuation and a whole other load of horseshit that went into those inflated prices, but I can't help but feel that somewhere back when we decided that the same items were suddenly worth $350k more*, we screwed ourselves over. I can't honestly tell you that an hour spent picking peaches in 2012 is worth $8.79 more per hour (we do grow peaches here in Washington) than it was worth in 1938. It's the same amount of work, it requires the same amount of training (pretty much none), and you probably pick the same amount (if not less) of peaches that you did 74 years ago. What has changed is the price of those peaches, the price of fertilizer, the value of the land that they're grown on, the price required to transport those peaches to market, etc. etc. etc.
*Of course, it wasn't $350k all at once. It took 30 years for the price to climb that high.
Yes, I believe you are correct in that things are organised in this fashion in most metropoles in the world, and probably also in smaller places although in a smaller scale. So, housing affordable to a minimum wage worker might be found about 14 miles outside the city. I'd assume that such distances scale in some proportion with population for other large cities.
edit: I seem to have made some error in copypasting in my original post, and the following got left out. I'll include it here:
I believe the distance a person lives from the city and their place of employment is relevant primarily according to the category of transportation needed to travel from home to work. If one lives close enough to walk to work, or whether other transportation such as a car, bus, subway or some such is needed. Now, according to my experience, the option to walk to work is a luxury few people have regardless of income level, so I don't think it is reasonable to expect the city to make such an option available for anyone, minimum wage workers included. They can arrange their daily commutes the same as the rest of us, and are free to seek employment options to accommodate this, according to their own needs.
/edit
(1) I'm not sure this is accurate, either in respect to labor demand or nationality of new employees. According to US Bureau of Labor Statistics, "In the first half of 2012, job gains averaged 150,000 per month, about the same as the average monthly increase in 2011" (source here). Perhaps this is not as much as could be desired, but such a non-insignificant increase in the number of jobs, even in the current economic situation, might indicate that there is at least some confidence that things could turn for the better, and that this is only a temporary downturn. As to the nationalities of new employees, while nothing of course requires the positions to be filled with american citizens, the requirement to possess a workers' permit and the caps in place on many of them would limit the supply of foreign workers. It is of course possible for american-based international companies to invest and hire abroad, but the figures cited reflect job increases in the US. I've encountered some difficulties in detemining exactly how many workers' permits have been issued by US authorities, for example the number of H-1B visas granted for foreign skilled specialty workers seems to be a total of only about 85,000 according to US Citizenship and Immigration Services, assuming I understood it correctly. This would indicate that the vast majority of the jobs created are filled by american applicants.
(2) It may well be that those nations possess an absolute advantage vis-a-vis the US in several manufacturing categories, particularly in labor intensive sectors. But wide-scale protectionism is hardly the answer. Besides creating unnecessary friction in relations with other countries, it increases prices as low-cost foreign products are subject to tariffs, and by further limiting competition from foreign manufacturers it de-incentivizes domestic manufacturers from increasing their productivity. And if protectionist policies will heavily feature in future global economy, then these drawbacks are suffered by everyone, and as exports hit tariff walls everywhere, everybody loses as efficiency plummets. Free trade theory would indicate that more gains can be made by everyone as nations focus on areas where they have an advantage, and then trade with others. What these strong areas are is not usually the direct result of decisions made by some body governing US trade policy, but rather come through market competition in free trade. Markets allocate resources efficiently also in international trade.
(3) Yes, the labor market is currently a buyer's market. But I believe this is the way it has been with every recession or other economic downturn, and things have always improved when the boom cycle comes around. And perhaps one way of boosting job creation would be is reducing the costs of labor, such as eliminating the minimum wage.
It may then be necessary to conclude that certain areas of manufacturing are just not cost-effective to operate in the USA, as things currently stand. Completely eliminating unemployment is unfeasable, and would likely lead to high inflation rates.
(1) I agree the self-fulfilling profecy applies on a macro scale, but as long as you have private enterprises able to make their own business decisions on HR policy, I doubt their behavior will change. Companies reap the entire benefit of reduced costs from laying off employees, while the costs of the decision, the reduction in aggregate demand, are borne by the whole society. The reduction in demand from any individual act are insignificant, but you are right and it naturally adds up when everyone is doing it. But a company is only responsible to it's shareholders, so one can count on them only to do right by themselves. As to the two example companies you mentioned, I of course do not know any of the particulars and so cannot make any clear judgements on the matter, but it would seem to me that their thinking was along the right lines. Companies downsize when they have excess capacity, as they do not want the fixed costs to drag their profits down. Given that downsizing usually takes time to effect, planning ahead and adjusting your capacity to forecasted demand is generally a smart thing to do. So I wonder if there might have been other factors that caused those two companies to go under, but as I said I don't have enough information to really make any calls on the matter.
(2) Consumer demand is quite significant in the United States I agree, but it is only one part of aggregate demand. Luckily, we are not left entirely at the non-existing mercies of self-serving corporations. The government can engage in deficit spending to increase demand and get people to keep their jobs. The central bank can lower interest rates to pump more money into circulation so that companies can expand and create jobs. Corporate taxes can be cut to reduce costs and get cheaper products into the market place, and promoting economic activity in general. The currency can be devalued to make domestic industries more competitive in relation to their foreign competitors. There are problems associated with all these things, of course, but they will get a nation out of recession, with time.
You are correct that consumer confidence is a major factor contributing to aggregate demand. It would seem to me that your term 'human element' is very similar to such things as individual preference, or expectations in case of the stock market example. I believe theory holds that such things are a drivers affecting demand, and are accounted for by it, rather than an outside factor separate from the supply-demand graph. Demand is not static after all but continually changing based on myriad of different factors, and companies are doing their very best to influence these factors to their favor through advertising campaigns, corporate image polishing and all kinds of other stuff. And I think theory would have it that as demand increases so does the price, which is a signal for producers to ramp up supply, after which the increased number of goods on the market (competition) brings down the price.
I imagine such feelings are not all too uncommon in times of economic hardship, when tough decisions need to be made all round. Still, I wonder if it has all that much effect, for where else except the companies would the people go to get certain needs met? Would their rancor truly be enough to cause them to voluntarily scale back on their standard of living, or is this simply a temporary phase which will blow over once this recession is over, and things will return to pretty much the way they were before?
Am I correct in assuming you are referring to value as a sum total of labor input the prospective employee can potentially give to the company? In essence, what they will bring to the company, what they are worth, and that price is a different variable against which value must be measured? If so, then I would posit that companies hire people based on quality, which I define here to mean suitability to requirements. Companies have a job that needs doing, the people who are capable of doing that job according to the company's requirements are their recruitment pool, and from the people in this pool who apply for the position they pick the one they deem to be the best fit. Price is derived from the requirements through supply and demand, and can play a large part in their choice. The easier the employee is to replace, the larger the emphasis on low price is. The basic idea is that most times in blue-collar jobs you don't buy a Porsche where a Honda would do, for although a Porsche is a lot better in everything that matters, the better performance is surplus to requirements and therefore not worth the added expense.
While there may be CEOs in large companies who are actually incompetent, most of the time I'd say one is dealing with a competent person who made a bad call somewhere. It might not even have been their fault, but they are responsible to the board for everything that happens in the company. If something goes wrong, it's their butt on the line.
Don't worry GB, while I have thoroughly enjoyed our discussion, I just don't have the time necessary to devote to these incredibly long responses. My final response on the subject will be much, much shorter. In fact, there's only one point that I really feel needs exposition.
However, all discussions and facts and everything else aside, what my point comes down to, in one paragraph is this.
I agree with you that in a theoretical world removing the minimum wage would have the net effect of increasing employment. Unfortunately, we do not live in a theoretical world, and workers in the US have seen far too steady a trend of US employers eliminating jobs in the US and sending those jobs outside the US. Additionally, if the US economy had never had a minimum wage introduced to it, then Supply and Demand economics may have worked, but if you were to try to start with today's economic picture, with the current cost of living, and suddenly eliminate minimum wage, you would have a disaster of epic proportions. Everyone would lose money, especially the corporations who rely on being able to charge the prices they do for all segments of the US consumer economy, because far, far fewer Americans would be able to afford to pay those prices. And along the way, the poverty rate of the US (though I'm sure it would even out eventually) would rival that of a third world nation. Besides which, it would be political suicide for anyone to actually attempt to remove the minimum wage, so this is all a moot point.
I think you misunderstood my point. My point is not that American companies are importing labor to fill jobs that actually exist inside the borders of the US. My point is that American companies are closing jobs in the US, and opening them in foreign countries. 150k jobs per month added net (the gross figure would be closer to 520k per month, but we're losing 373k jobs per month average in the same period) would be much, much higher, if Ford weren't building Ford vehicles in Mexico because there's no longer any import tariff preventing them from selling those vehicles for a lower price than vehicles actually built in the US; and it would be higher still if banks and software companies based their US customer service (meaning service aimed at assisting customers inside the US) inside the US, but we don't. We base them in India, the Philippines, or Panama. Those are jobs which our economy will never get back.
However, all discussions and facts and everything else aside, what my point comes down to, in one paragraph is this.
I agree with you that in a theoretical world removing the minimum wage would have the net effect of increasing employment. Unfortunately, we do not live in a theoretical world, and workers in the US have seen far too steady a trend of US employers eliminating jobs in the US and sending those jobs outside the US. Additionally, if the US economy had never had a minimum wage introduced to it, then Supply and Demand economics may have worked, but if you were to try to start with today's economic picture, with the current cost of living, and suddenly eliminate minimum wage, you would have a disaster of epic proportions. Everyone would lose money, especially the corporations who rely on being able to charge the prices they do for all segments of the US consumer economy, because far, far fewer Americans would be able to afford to pay those prices. And along the way, the poverty rate of the US (though I'm sure it would even out eventually) would rival that of a third world nation. Besides which, it would be political suicide for anyone to actually attempt to remove the minimum wage, so this is all a moot point.
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