So industrialization is a binary bit? You just “do” it and it’s over? Not a very convincing take imo.
Industrialization, like deindustrialization, is a continuous process. Every industry suffers from depreciation and decay which means that pace of industrialization per unit time matters.
Small decrease in employment in exchange for ~25% higher wages for those employed? Did I get that right? Obviously every single row in the dataset is a unique human, but overall sounds like a big success?
It depends upon how you define "success." I visit California regularly, and since the new minimum wage law went into effect, I've noticed reduced hours, reduced staff, and increased prices. So now my normal breakfast spot isn't open when I want to go there, so I eat at home. The places I visit when they are open are mostly empty, because the customers don't want to wait longer and/or pay higher prices.
So aside from the fewer employees getting a raise, the businesses are now under financial stress because of the reduced revenue, the customers have fewer options for where to eat, and the State of California and the local city/county governments will receive less tax revenue from these restaurants.
Like most of the other recent California legislation, it's a "success" at further damaging the local economy and encouraging people like myself to stay away.
Is your usual breakfast spot a location with more than 60 locations? The minimum wage increase here only applied to chains with more than 60 locations.
A lot of what you're describing is nation-wide. Food is more expensive everywhere. Cost of living in California is up significantly. Rents for restaurants is significantly higher as well (at least anecdotally, my wife's family restaurant has to close because they doubled the rent after their lease was up, I have heard this is incredible common).
This study by UC Berkeley attributed a 3.7% increase in food price because of the minimum wage changes. It's quite likely that food overall getting more expensive is responsible for a lot of what you're seeing.
If we can't afford to pay people in California a wage where they can live here, then maybe the economy overall isn't sustainable? A $20 minimum wage is like $2800 take home per month and in many places that can barely cover rent.
You are correct that I was unable to summarize an incredibly complex tangled web of economics, sociology and politics in a few hundred words on a forum. I don't think any of us can do this. Of course it's an oversimplification. Is the comment I'm replying to also not doing this? Are you also not doing the same thing?
My only point is that this seems like an awful lot of confirmation bias. Something everyone suffers from.
Not all people suffer the same level of confirmation bias, especially across all topics. And, for most topics, broad consensus of experts is better and less biased than individuals.
A better example would be Los Angeles and the new $30 per hour minimum wage for hotel and airport workers. Conceptually it makes sense. The crux of the issue and some opposition is there are more people now who use those jobs for primary income for a family, where in the past it may have been perceived as jobs for supplemental income and no health benefits.
The problem is a California tax law that lets home owners pay the tax rate from when they bought the home despite the value increasing. It disincentives selling. Which leads to retirees sitting on family homes rather than relocating and releasing them back into the market.
How am I supposed to plan my retirement? Plan to leave my home of years, where I have built a life and have all my things? If you think that, you are a sick person and I have to imagine you are younger and only thinking "but I want that nice house, so f*k off old person, take some money and go die somewhere else."
Old people should not be prioritized over the young.
A 600% increase in property taxes over 7 years is an extreme outlier. Zero of my friends or family have ever once experienced such a thing happening.
I certainly am not a fan of how heavy my property taxes are in one of the heaviest taxed cities in the US - but I would absolutely vote down anything resembling something like Prop 13. It's an immoral bit of tax code that favors old people over the young and productive - like seemingly most of our current policy.
I should not be paying a different rate than the young couple moving in next door to me simply because I got here first. The services need to be paid all the same regardless of my age.
> How am I supposed to plan my retirement? Plan to leave my home of years, where I have built a life and have all my things?
Yes, obviously. I have this giant asset called property I can sell and downsize to something reasonable in retirement. Or in the worst case - move. I could also use the equity in my home to pay for living expenses if I must. This was considered normal and expected just a couple generations ago.
This whole "let the old eat their young" streak of society needs to die off sooner than later.
Letting some old person stay in their lifelong home is not the old eating the young. Kicking that old person out of their home literally is the young killing off the old.
Old people don’t need to monopolize real estate the way they have over the past 40ish years.
At least when being subsidized by the young via tax rates. The old voted themselves in a benefit at the expense of those taking care of them - it’s not sustainable. They cannot have their cake and eat it too. I say this as someone far closer to “old” than young. I should be paying exactly the same amount as my young neighbors for the same house value. Anything different is immoral at best.
The young productive couple with kids has far more utility being located closer to work and other economic opportunity than a retired couple, so retirees sitting on the most productive bits of real estate is a problem beyond even taxes. That we forced young couples to buy places out in the exurbs and spend hours a day commuting while also trying to raise kids would be laughable to an alien species looking at us from a big picture standpoint.
We have an inverted sense of priorities at the moment - likely due to demographics and voting power. These will rapidly shift as demographics change, hopefully without too much backlash over what we have done to the young.
If we want to make a point that overall property taxes are too high in general I’m much more receptive to that idea. No (residential) property owner should be privileged over another due to age.
The price is the price. Maybe you shouldn’t have eaten avocado toast so much and saved more for retirement?
Renters have to move all the time, regardless of where they built a life and have all their things, many times because their income is being taken to subsidize people living on large lots (earned income tax is stupid, it’s working people paying for the rent seekers who get to enjoy living and profiting from larger spaces).
Another option is to have multiple kids, and bet that a few might support you in your old age.
Also, I would like to see which region nominal property taxes increased 6x in 7 years. I research real estate all around the US, and I have never seen anywhere close to that increase. You can link to a Zillow link of any random home in the broader region, as they all would have experienced the same rise.
Property tax rates are usually 0.5% to 2.5% of market value, and you would be in very rarified company if the market value of your house went up 6x from 2017 to 2024.
This comes across as if you want people to work for your convenience but without paying for it. You are not obligated to the output of other peoples' work. The subway isn't open that early? It wasn't cost effective to pay the people according to that store based on the amount of business they got.
You are utterly dependent on complex supply chains and would find it extremely difficult to continue to survive if something ever happened to most or all of those chains.
It is rich of you to support a law that interfered with one kind of supply chain and then to lecture someone who gave a detailed description of harms that probably are effects of the interference.
Although it is true that a person is "not obligated [you meant entitled] to the output of other peoples' work," that does not mean that enough interference by ham-handed governmental policies won't make everyone significantly worse off -- because we all make extensive use of complex chains of economic transfer.
It's been a long time since I worked in the SoCal fast food scene, but it's been decades since it was true that a majority of the workers were students.
> I've noticed reduced hours, reduced staff, and increased prices
Anecdotally, this also describes how things have played out in the South generally. (Southern states generally have no set minimum wage, so they mostly default to the $7.25/hr set in 2009.) Perhaps this is different in other regions?
I have similarly stopped going to most "fast" food restaurants because the waits are interminable.
This is in states where an hour of minimum-wage labor will not gross you enough money to buy a pound of store-brand ground beef.
> Southern states generally have no set minimum wage, so they mostly default to the $7.25/hr set in 2009.
You may be shocked to learn this, but just because they follow the minimum wage doesn’t mean companies are _actually_ paying minimum wage. Even in my southeastern state, McDonald’s is paying $12/hour. Why? Because there’s no takers, even in a LCOL area, at $7.25/hour! That’s why all this handwringing over the federal is so stupid. Local labor markets will dictate what an acceptable wage is.
That's great, I live in a HCOL area in a Southern state and McDonald's here also pays higher than federal minimum.
BUT in other parts of the state, especially rural areas, there are definitely jobs advertised for < $8/hr. In those areas, McDonald's is paying a premium wage compared to Local Burger Joint. McDonald's pays $12/hr so they can get a higher caliber of employee than Local Burger Joint. Neither pay as much as Perdue.
> what an acceptable wage is
We agree on this, but probably on what factors go into making a wage "acceptable" and the degree to which taxpayers in other parts of the state/country should have to subsidize those wages/owners' profits via social support programs.
(I understand there is a third group of people who don't really care if the working poor are able to eat, but in the spirit of charity I do not assume anybody willing to engage in discourse is in that group.)
> since the new minimum wage law went into effect, I've noticed reduced hours, reduced staff, and increased prices.
The problem with that line of reasoning is that in the meantime:
- unemployment has declined, which means it's harder to find people wanting to work in such a place.
- inflation has kicked in, raising prices over the board.
In that context, attributing the changes you've seen to a particular policy is very very hard (and the linked paper doesn't do a better job than what you do here…).
Most of those in favor of the government interference cite the points that you made. They don't really ring true though. Inflation has slowed, but the changes in the restaurants were sudden, and coincided with the new wage law.
Is your normal breakfast spot a fast food joint? If it is not, it is my understanding that is not affected by the "higher minimum wages for fast food workers" regulation.
If it is a fast food joint... well, I can't speak for all of California, but the fast food places in the section of San Francisco that I live (and roam around) in seem to have a reasonably healthy amount of customers in them.
Perhaps things are different where you are, but I've noticed food getting markedly more expensive, have heard of commercial rents getting higher and higher, and have heard that many of the folks who would have done waitstaff jobs have decided to fuck off for places that were (at the time, if not now) less expensive than California. Oh, and there was the whole "flight from the expensive cities because WFH means that many folks don't have to tie themselves to an expensive, small apartment in a city they don't really like" thing a while back that gutted the downtowns (and leisure districts) of some-to-many big cities because -like- many folks exercised their new option to leave and left.
Were it me, I'd consider blaming factors like those before I blamed modest increases in wages.
I’d point to savings-driven relocation as well. It’s why some suburban towns have seen an increase in number of restaurants even as options in cities decline.
If the desire is to reverse that trend, the best way to move the needle is to bring housing prices (by far the largest living expense) in cities back down to earth so they’re affordable to normal people again, however that’s best done (probably building more housing, unlike SF which decided to instead prioritize offices and retail, leaving it vulnerable when the pandemic hit).
Restaurants have a lot of competition, and low margins. Like any other employer, they can offer jobs at low wages (or at least could, until the government got involved). People are under no obligation to accept a job with low wages, but some do. By definition the employees are not slaves, because they can quit at any time.
Employers offer wages that the labor market will bear. Some jobs are mostly unskilled labor, and the pay is appropriate. Restaurant workers get tips, and I am usually very generous. Apparently tipping has become much less popular lately.
Notable exceptions to skill vs. wages include things like the Longshoremen in the Port of Los Angeles, who belong to a union that extorts the shipping industry. There is no justification whatsoever for the high salaries they earn.
> People are under no obligation to accept a job with low wages.
This is the wrong premise you are basing your entire conviction on.
When you don't have an alternative to working then it is not a jobmarket as you are not in a position do not transact.
This is the same reason why the housingmarket is not a market the second people do not have alternatives to buy into overpriced rents.
A free market requires that participants can decide not to transact. A pro-market government makes sure that this is is the case to a reasonable extend.
But this is more like a return of slavery, not its abolition.
It is like when slavery was abolished, someone would protest against it, arguing that slavery cannot be abolished, since the masters feeds their slaves, takes care of them, treats and educates them, and if slavery is abolished, the standard of living of former slaves will fall sharply.
You need to factor rent increases into your thinking, both commercial and residential. Your breakfast spot is a business that no longer makes financial sense to operate.
Feed the location of a business into a trip planner and note every neighborhood within reasonable commute radius. Calculate the average cost of renting a room in these areas and then multiply by three. That's your de facto minimum wage because you have no applicant pool beneath it.
Adding on to this, your competitors in a better financial position are all paying well above minimum. There's probably a McDonalds across the street starting people at five bucks an hour more than you, and they have that wage plastered on a banner right out front.
If everything you wrote above is true (and I have no reason to believe otherwise), then the labor market should self adjust to the local economy and the government shouldn't need to step in and dictate a minimum wage.
People with better fitness for employment had their situation improved. People with less fitness for employment may be more likely to be harmed.
That’s a big success for the former group for sure. Whether that’s a policy success is slightly hazier than you presented I think, without other interventions to support those who are more likely to be harmed by the reduction in employment.
If it's actually only a 2.7% decline in employment relative to baseline then the increase in total wages paid would have to be very small to make this a bad policy.
I agree that a lost job should carry some kind of premium compared to a total increase in wages paid, and you also have to go and look at the total hours worked to get a good picture, but if the total relative increase in remuneration was higher than about 10% or so I think that's probably enough to be able to hand wave the employment decrease.
If it only turns out to be 5% I'd be a bit iffier about it.
In the UK we have a pretty generous minimum wage (for over 21s), I think even relative to $20 in California, and the effect on employment has been very small while minimum wage jobs now give a pretty OK life, so I'm inclined to support high minimum wages generally.
> If it's actually only a 2.7% decline in employment relative to baseline then the increase in total wages paid would have to be very small to make this a bad policy.
That seems unlikely to be just that though, this study was just on the people who lost jobs. If 20,000 people are out of a job, there is probably another larger cohort on less hours. And we also don't know how much wages rose. The people who were fired were the ones who could only justify being paid the minimum. The ones who stayed might already have been paid more like $17, $18 or $19/hr.
So yes to what you say, but the study doesn't say anything about whether total compensation went up or down.
Also low minimum wages are actually just corporate welfare.
The gap between what a minimum wage job pays and what it costs to scrape by is covered by government or charity, if they didn't do that the workers would die, which means the jobs don't get done, so that means the resource spent by governments or charities as a result of a low minimum wage is a subsidy for the employer. Instead of paying what it costs they get it for cheaper to create a fiction of "employment".
This right here. We should demand not to subsidize the richest companies in the world. The Walmart family can afford to pay their employees a living wage. Instead you and I pay for that in taxes, while they extract billions in profit and value from their business.
If anything we should be subsidizing small businesses to give a more level playing field against companies with global economies of scale.
> We should demand not to subsidize the richest companies in the world.
Not without overturning Dodge Bros vs Ford, I believe. The ruling created shareholder primacy, the privilege of shareholders to have maximum bites of the corporate apple. It rigidly protects shareholder (and by ext, executive) interests.
The never-ending wealth that flows from that - first buys politicians, then officials, judges and (eventually) every part of regulation & corporate oversight.
Have you actually looked at what Walmart pays? Even in areas where the minimum wage is still $7.25, they're paying nearly double as a starting wage. They raised their starting wage over $10 in 2017 and have consistently raised it even where they're not legally obligated.
Meanwhile, all raising wages in the current market does is implement a wealth transfer from businesses to landlords with minimum wage workers as the mules transporting the money.
If you let the housing supply remain this tight and just increase wages, you just bid up rents and make the most economically vulnerable fight over the insufficient supply of affordable units.
> what it costs to scrape by is covered by government or charity, if they didn't do that the workers would die
I take this to mean the assistance covers the gap to prevent death.
I would amend that to note the following: We can exist in a state of profound poverty w/o assistance for a very long time without dying. Persistent Hunger and crisis-level stress kills very indirectly; it commonly takes decades.
source: me + 5 kids. a decade of hunger-level poverty in a red state.
This isn't so straightforward. I would argue that they have some effect on the customers as well.
In the US, fast food restaurants are remarkably cheap, which is probably caused by low wages as well. If the workers were paid Danish or Swiss wages, quite a non-trivial part of the US population would be no longer able to afford a visit.
Now there is a wider question if that wouldn't actually improve their health, but that is already a bridge too far from the conversation. Miserly wages of restaurant workers do make the restaurants themselves more affordable to the general public, and the customers seem to be content about it.
No, it's not corporate welfare. Min wage hikes mean those workers unable to add that much value don't have jobs anymore, are left out of a workforce and thus cannot gain skills, and now require actual welfare.
Requiring companies to pay more than value added by an employee simply fire those workers.
The purpose of govt is to provide assistance, and perhaps training, so those on min wage can gain experience and skills to move up.
But that was the best job they could find. Presumably those people are going to be unemployed now. I mean, maybe they're kids and their families will have enough slack to just adsorb the change but in theory they need welfare checks now to survive since they probably can't justify anyone paying them $20/hr. So it actually costs the broader economy more than the salary they lost - firstly the work they were doing isn't being done, secondly someone else now has to work to earn the keep of the person who was just laid off because the job that paid them around what their skills were worth just got regulated out of existence.
You'd probably have to know more about what the jobs were. Certainly there's more self-service and fewer people waiting around to help customers in large stores than there were at one time. And small-time retail has also fairly visibly declined in favor of big-box and online purchases.
The abstract states that there are 2.7% less fast food jobs, not 2.7% less jobs. There might be 2.7% less fast food restaurants as a result of this change, but in their place will be other businesses that employ people of higher than minimum wage. Those businesses might hire the best fast food workers while the average fast food worker continues to be employed doing fast food. As a result, there may be no people who have now become unemployed as a result of this change, and only increases in wages. The data is inconclusive.
Regardless, instead of arguing over which commercial property takes which spot and trying to engineer the perfect fit with the limitations we are dealing with, we should be increasing the amount of places that are zoned for commerce. This will bring increased demand for labor, which will increase wages.
If one of these fast food places shuts down, it's not like the lot is just going to sit vacant forever.
The primary effect of these types of laws is that businesses that employ fast food workers are less profitable, and thus when they compete against other businesses for a given lot, will bid less for the land. If the marginal buyer changes, it would have to do so to a business that relies less on minimum wage fast food workers.
That isn’t what’s happening. A lot of these areas are permanently hollowing out far beyond fast food, at least with respect to local businesses. Lots of places in decent neighborhoods are boarded up and stay that way. This is an issue even in some cities with strong population growth.
I recently had the mayor of a major west coast city tell me this was a permanent trend, that there was no way to reverse the loss of these small businesses and that the disposition of all that real estate was a major issue, compounded by a loss of basic neighborhood services like groceries that used to operate out of this real estate.
The future isn’t other businesses that somehow magically pay higher wages. The future city planners are seeing is all delivery all the time from warehouse districts, and ghost towns of commercial real estate for which there is no purpose. Even city centers are starting to turn into suburbs in terms of occupancy density.
Sure, but this has nothing to do with the land values which are still extremely positive. It has everything to do with Prop 13 allowing speculation. Repeal Prop 13 and all of those lots will be better cared for and rented out.
> but in theory they need welfare checks now to survive since they probably can't justify anyone paying them $20/hr
Are you implying that there are people in the world who just can't do anything productive enough to be worth $20/hour? That they are so useless that this was the only thing worth doing with them?
That seems fucking insane. If that's true, we have a huge problem with misallocation of value.
I think it's self-evidently true that there is a not ignorable group of people who can't create enough value to be worth being paid $20/hr (plus the employer-paid overheads) and have that be something that an employer would voluntarily do.
Around 10% of the population does not score highly enough on the ASVAB (an aptitude test for the military) to qualify for military service. The military, like any large employer, has an awful lot of jobs that require minimal skills and aptitude and for 10% to be Category V [unqualified for military service] based on aptitude, I would expect they wouldn't be the employees to create $20+/hr in value for private sector or other government employers either.
> I think it's self-evidently true that there is a not ignorable group of people who can't create enough value to be worth being paid $20/hr (plus the employer-paid overheads
Ignore the mock outrage of my sibling comment, they are uninformed.
You are absolutely right that some people aren't capable of work valuable enough to pay at least the minimum wage, and in fact there are programs in place specifically to serve these people. The Fair Labor Standards Act allows qualifying employers to hire people with disabilities (including mental disabilities) for less than minimum wage. This is specifically to ensure that employment opportunities still exist for such people, who otherwise could not provide labor worth at least the minimum wage. In some cases, other state programs may pay part of the disabled workers income, effectively the state subsidizing the employment of the otherwise unemployable.
The real problem I think comes from people who are able-bodied and mentally capable, with no legitimate disability, who are just unwilling to take the jobs available to them because it doesn't fit their desired lifestyle (e.g. let them be lazy and keep their hands clean.) Entry level jobs in manufacturing settings have better pay than being a cashier at a burger joint. A first time factory job for a 19 year old highschool dropout with no developed skills but a willingness to show up on time and try hard will almost always pay more than the minimum wage, but finding people who are willing to even apply to such jobs can be challenging due to perceptions of social status and entitlement. These are people who have no legitimate disability but are unfit to work due to their poor attitudes towards working. Our system doesn't accommodate them, unlike people with legitimate disabilities, because the general consensus is those people need to get bitch slapped by reality and man the fuck up.
The problem is that people don't understand that it's a market that determines wages, and instead think it's a number that employers just come up with off the cuff and minimum wage is the only thing stopping them from picking $1/hr.
Right. They also fail to understand that many low end jobs only provide very marginal value to companies and could easily be eliminated if the minimum wage exceeds that value. For instance, baggers at grocery stores hired as a convienence to shoppers and to speed up checkouts. But this is only very marginal value; customers and cashiers can do the bagging themselves and the negative side of that is only very slight to the business. It's an easy job to eliminate first, many stores these days don't have one. Low minimum wages create more jobs like this, which are good jobs for teenagers or people with intellectual disabilities.
Lowering the minimum wage for people with disabilities creates more jobs for people with disabilities, demonstrating the whole point. Higher minimum wage price less capable labor out of jobs.
Don't you think it's a little unlikely that people, in this day and age, with the current political climate in the west, don't "understand that it's a market". I think it's extremely unlikely.
I think it's more likely (because that's what I'm doing, and I expect others to do the same) that we are rejecting your market based framing, because it unnecessarily restricts good political action. I understand that wage can be viewed through the lens of the labor market, even Karl Marx knew that. I just don't think that's a very important or useful lens to view it through.
It's much like viewing political climate action, or product safety action, through the lens of the "market". You can do it, it's just not very useful for setting public policy.
The "labor market" didn't get children out of the factories, restrictions on that market did.
> Ignore the mock outrage of my sibling comment, they are uninformed.
I'd like you to point at the "mock outrage". If it's anything it's very real outrage. Real outrage that this disgusting example of a military IQ test as the decider of the worth of a person, is being perpetuated by otherwise intelligent persons. You cannot point at an IQ test and say "that proves this person is worthless" because the next step for that line of reasoning is eugenics. That's where the outrage comes from.
With that out of the way, I can address your point. A point that's much more interesting than what you're responding to. It's true that there are differences in people's abilities. Some people have mental disabilities, some people have physical disabilities. Those disabilities can affect us in different ways in different tasks. You can't neatly stack people in a gradient of ability, because tons of different tasks require different kinds and combinations of abilities. I think we agree so far.
My problem starts when you then extrapolate that into "for such people, who otherwise could not provide labor worth at least the minimum wage". Firstly you pick the symbolic "minimum wage" which abstracts away the actual value. That implies, at least to me, that you think those people would be unable to provide "labor worth the minimum wage" no matter what the minimum wage was. That obviously silly, but I'd encourage you to fix that with a number.
Secondly, and much more importantly though. I think that your argument reveals a skewed sense of value. My argument is not, and was never, that there can be no difference between what peoples abilities. My argument isn't even in this case that disabled people should be paid if they had no disability. My argument is instead that paying somebody able, less than the cost of a parking spot in New York City is ridiculous. The core of my argument is that the normal wage should be so high that the potentially reduced wage for disabled people would still be above $20/hr.
The outrage you're detecting isn't at the revelation that disabled people exist. It's that we are discussing paying real people actually working $20/hr as some sort of unreasonable expense.
Not every job is the military. Most jobs are in fact not the military. Not qualifying for military service does not render you worthless in the general economy. Furthermore, being worthless in the general economy does not render you worthless in society.
I wasn't qualified for military service in my country, not because of intelligence but some physical conditions. I became a banker.
There are a significant number of people with developmental conditions such as Fetal Alcohol Syndrome or Down's Syndrome who, realistically, are never going to be capable of generating $20/hr of economic value. The higher we raise the minimum wage, the more of those people we condemn to permanent dependence on government aid.
Where I live we solve this in part with state sponsored offsets in wages. If you hire a person with a medically diagnosed handicap, you get some of the wages back from the government.
That way they aren't "dependent on government aid". They get to work for a fair comparable wage, avoid having to deal with too much additional paperwork, and don't have to be constantly faced with a stigma of being worth less. They are treated equally, and the employer gets to handle their crap on the back end.
It's not some insurmountable gotcha to drag people with a handicap into the conversation.
I support caring for those who can't care for themselves, but most people want to be able to make a positive contribution. Being taken care of is humiliating.
>I support caring for those who can't care for themselves, but most people want to be able to make a positive contribution. Being taken care of is humiliating.
And so in your ideal world, if they can make a positive contribution, just not enough to live on, we can let them live on the street? Having a "Let them eat cake"[0] moment, are we?
Who is to say that folks being subsidized because they don't have the means or wherewithal to support themselves can't make a positive contribution?
Does that contribution have to be that they mop floors, clean toilets or flip burgers?
Perhaps they might contribute positively to society in other ways, just perhaps not those that have monetary (and ones that don't allow them to pay rent or eat healthy at that) rewards?
You know what's humiliating? Living on the street. Rooting through garbage cans to find food to eat. Having to listen to wealthy, entitled folks tell them they're worth less than everyone else and that they should be happy that they're "contributing" to get scraps from their tables. Forcing those with nothing to jump through hoops just to feed themselves and their children. Those things are much more humiliating than getting a helping hand to make ends meet so one can have a roof and electricity and maybe even food.
A better approach would be to increase the Earned Income Tax Credit to help those people rather than distorting the labor market by increasing the minimum wage.
It's too soon to say. Increasing the cost of labor will reduce jobs in the short term, and increase the cost of fast food. In the medium term, that may lead to people cutting back on fast food, which then leads to more job loss.
If fast food companies have perfect knowledge of their market, then the immediate job loss would be all that happens, but they don't so it will take some time to adapt to the new market, and see if consumers will bear the increase in cost.
That's not even considering substitutes for labor, which have never been as competitive as they are now. AI, robotics, single-purpose machines, etc. One negative to a minimum wage is that we don't actually know the market price of labor. When there is a shift from humans to machines for labor, it will happen quickly and without warning, rather than slowly as humans become dissatisfied with decreasing wages.
Also, you only really need to cover any increased taxes, everything else you pay them is someone else's income (fast food workers probably spend almost all their income). So your getting a big income increase to people very likely to spend it, this creating more employment.
Maybe here this will be offset by decreases in welfare program usage and the very, very high effective marginal tax rates that creates.
Indeed, the positive for increasing minimum wages is that it makes robotics and automation more cost effective.
With Silicon Valley being in California, one might think this is done on purpose—favoring the automation sector over the wage holders.
Once these companies get some scale in California, they can then drive prices lower to be competitive in other states.
In the end, sacrificing minimum wage workers in California will lead to (generally California based) automation companies taking this revenue across the country.
Labor reduction in fast food doesn't necessarily look like 'automation'
It's things like self-ordering, machines that make change (if cash handling still matters), conveyor ovens/charbroilers, more centralized food prep, self-service and automated beverage dispensing.
Plenty of automation is happening outside of California though. Here's an Illinois bases company's blurb about beverage automation [1].
Reducing labor in small amounts increases service capacity, and in large enough capacity lets you operate a restaurant with a smaller minimum crew.
It does really disfavor low productivity industries.
Actually, a core part of Sweden's original plan for social democracy was to have "solidaristic wage policy" where high wage workers would accept a lower wage in exchange for a higher one for low wage workers. The idea was you'd both squeeze low productivity businesses out _and_ provide a windfall to high productivity ones, who could expand faster.
Robots will always be cheaper, it is not a matter of if they will come, it is a matter of when. That is no reason the state should subsidise workers for big corporations by allowing them to pay such low income that workers are often eligible for social security.
If the total salary has gone up, for less work done, it is a positive change. You can solve the inequal distribution via taxes and benefits.
Start: 100 people paid $100
After minimum wage change: 90 people paid $125, 10 people paid $0
After tax increase: 90 people paid $113 + $12 taxes, 10 people paid $108 from taxes
Now everyone is paid at least as much as they were before, and fewer people are forced to perform labour
In practice it was only 3% unemployment not 10%, which means the tax increase is less and there is more of an incentive to continue working. You can also pay the displaced workers less than their original wage, to reach an equilibrium where everyone is happy with either work+more money, or leisure+less money. Or have it be age-based with an earlier retirement. Or have people work part-time.
We need to stop seeing having a job as being inherently good. Being able to live is good. Humanity should strive for 100% unemployment.
"Less work done" doesn't look like a positive change, you can't tax your way out of a smaller pie. Specially if you strive for humanity to produce no pie to start with.
I disagree that increased employment and increased labour always makes the pie bigger. If minimum wage was low enough, we would decommission our cement mixers and use a human with a shovel instead. But that's not an improvement. Automation is happening, jobs can be replaced right now. The problem is that humans are too cheap to bother automating, and that the profits of the automation are not being distributed to the displaced workers.
Paying more for less is never a positive change, it's an inefficiency that is costing someone and resulting in less goods for society. It's a net loss. That money paying for less is now not being spent where it was before, making that place lose out.
Well, on the other hand, it can be seen as something like a eugenic program to cleanse society of those unworthy of the state. After all, there is nothing stopping them from going to work somewhere else where there is no such minimum wage.
People dont think holistically about the economy. They think there are jobs. When they go there are that fewer jobs. Immigrants come in a steal jobs. Etc.
But in an economy, each richer consumer creates more jobs. The McD employees now buy better food, creating work for that supply chain. Or they can pay for education. Or they buy a takeaway coffee more often.
The immigrants who come and do jobs work hard for lower pay them spend that money into the economy.
If they could get higher paying job they would already do so. No legal immigrant dreams of working at McDonalds. No illegal immigrant would be employed by McDonalds.
They will decrease on their own if people think about where to get food, and not about extra money for the lottery.
> and maximum stock investments as well?
No, there are no restrictions. Any amount of investment. But there are only government's stocks and the terms of return on investment are determined by the government
> Will I still be allowed to hunt for food?
Only deep in the sparsely populated provinces. To avoid armed rebellions.
> Society is something better encouraged than gamified.
You'll be surprised at what methods encourage people best.
Read the biography of Korolev, who sent the first satellite and the first man into space. A case was fabricated against him, he was sentenced to 10 years in a gulag, but after a year he was transferred to a prison for engineers, on the condition that he will be a very effective engineer.
And he was. The results of such encouragement were amazing and almost unachievable by any other methods.
> And he was. The results of such encouragement were amazing and almost unachievable by any other methods.
Oh boy. You've missed the glaringly obvious. They only did this because they couldn't pay him. In other countries that paid their engineers they produced more and better products. History is clear and obvious on this fact.
> You'll be surprised at what methods encourage people best.
There's very little surprise when you study the actual science of human psychology and performance and not the journals of demented cold war generals.
Anyways, thanks for being honest about wanting to create a Company Scrip Town, I and many others, of course, will never cooperate with you. You're right to fear rebellion.
> They only did this because they couldn't pay him.
But they could. But no amount of money will encourage an engineer as much as the need to escape the gulag. Especially if you add some variety to their experience by staying in the gulag.
> In other countries that paid their engineers they produced more and better products.
It is precisely for this reason that the overwhelming majority of engineers in the USSR were not threatened with the gulag for inefficiency. And many believe that this is a good thing, and that "efficient" engineers threaten to destroy the labor market entirely.
> History is clear and obvious on this fact.
Yes. The Soviet space program created by Korolev is the pinnacle of human engineering thought, only God is above it. History is definitely clear and obvious on this fact
> I and many others, of course, will never cooperate with you.
That's the best part. You will vote yourself out of economic freedom, and then there will be no reason to ask about your opinion. Just look at the trends and public opinion on the necessity for economic freedom. You are already in checkmate if you look a few moves ahead.
This has been tried, and actually does work reasonably well.
Well, not maximum wages as policy but policies where high productivity workers take a lower wage than they could individually bargain for in exchange for boosting wages of low productivity workers.
It provides a windfall to the most productive industries and a squeeze to the least productive ones.
Nah, they didn't lose them, they got employed elsewhere for what they are worth, so if we do random calculations, it was probably something like 25% increase for many of them.
The unemployment statistics were not influenced by raising the minimum wage here, so you can assume that the people who lost their low paid jobs simply moved elsewhere and got better paid jobs. It's mostly the employers' loss, which is how it should be. If you can't afford to start a business, don't start a business.
> Small decrease in employment in exchange for ~25% higher wages for those employed?
It's a 25% higher minimum. It doesn't mean everyone was making the minimum before the law. Certainly not all were. (It would be interesting to know actually how much the wages went up on average.)
Also, do we know if prices went up? Because that could have a negative effect on the rest of the local population.
First, 2.3 to 3.9% decrease in fast food employment in a year isn't really small given only a fraction were affected by increase.
Second, the effective wage increase for fast food employment was actually quite a bit lower than 25% since several large municipalities had higher minimum wages and not all fast food restaurants were affected.
Yes. The paper doesn't go into detail about the wider economic effects in the state in business growth, tax revenue, and less reliance on public assistance.
One issue with a minimum wage is there isn't a great economic theory for what it should be. So even if this one had good effects, it doesn't mean $25 per hour would also have positive effects. It's also possible a personally beneficial outcome was a net-negative.
And the "decrease in employment" could very well be attributed to other factors, like inflated prices and shallow pockets of consumers, translated to them skipping on fast food more often...
Sounds like a net increase then in the money put into the California economy. Perhaps that has helped other sectors as well — like retail seeing more money spent in their stores as a result.
These were tax cuts on the order of 1-3% of GDP, so of course the effect on GDP growth was similarly muted.
Meanwhile the baseline level of recent US GDP growth isn't 4%, it's more like 2.5%, making a 0.5% increase much more significant for such a small tax cut, so it's not absurd that a hypothetical doubling of the growth rate could result from a hypothetical 15% of GDP reduction in taxes. The hypothetical was just using larger numbers on multiple dimensions.
You get a similar payback period if you use smaller numbers all around, e.g. a reduction in the overall tax rate from 23% to 21.5% resulting in an increase in the GDP growth rate from 2.5% to 3%.
Moreover, the exact rate is difficult to calculate given limited data (and depends on changing factors in the economy), but the point is the existence of the effect. And it's not obvious that even quite long payback periods wouldn't be worth it, since the lower tax rate and the higher growth rate could then be sustained thereafter indefinitely.
> "major tax cuts" were actually very small [...] on the order of 1-3% of GDP
3% of the GDP in tax cuts is pretty enormous.
> a hypothetical 15% of GDP reduction in taxes.
For reference, total federal spending was 23% in 2022. Total government spending was 36% in 2023.
So let's say you want to cut 15 of that 36%. That would mean cutting all of health care + all of pensions, or all of health care + all of education. Or defense + pensions + infrastructure. Good luck doing that.
It's a <10% reduction in total taxes. It's only enormous if the assumption is that taxes never really go down as a percent of GDP (even in the face of per capita real GDP growth), which has been the case in recent history, but that's kind of the issue.
> So let's say you want to cut 15 of that 36%. That would mean cutting all of health care + all of pensions, or all of health care + all of education. Or defense + pensions + infrastructure.
The obvious thing to do would be to increase the efficiency of each thing rather than cutting any particular thing entirely. Defense spending is full of notorious boondoggles and waste. US healthcare spending goes to a highly captured industry with a large amount of bureaucratic overhead and could be made significantly more efficient, e.g. if US healthcare spending per capita was on par with Canada then healthcare spending could be reduced by more than the identified amount percentage-wise.
Social security, by contrast, isn't exactly "waste" but the program is extremely poorly tailored to its intended purpose of providing a baseline for the elderly, because it pays out higher benefits to people who made more money and can be correspondingly expected to have more savings and need it less. A far more efficient program would be to provide the same amount to every retiree. Enacting that change would be politically difficult, just like making the US healthcare system more efficient would be politically difficult, but the question here is not "how hard would it be to get the votes for this" but rather "if we actually did this, would we be better off"?
It seems totally arbitrary to compare the two. Is the national debt of smaller countries (with higher debt/gdp) OK because they’re below the number of stars and trees?
I guess it’s is in the spirit of the original article though…
Reminds me of software i have built which had some basic foundational problems.
Each bug was fixed with a data-patch that fixed the symptom but not the cause.
hence we continually played whack-a-mole with bugs. we would squash one bug, and another one would appear.
same with llms, squash one problem with a data-fix, and another one pops-up.
This makes it worse IMO. I was starting to think it didn’t have a letter by letter representation of the tokens. It does. In which case the fact it didn’t decide to use it speaks even more towards its unsophistication.
Regardless, I’d love if you would explain a bit more why the transformer internals make this problem so difficult?
Transformer needs to retrieve letters per each token while forced to keep internal representation still aligned in length with the base tokens (each token also has finite embedding, while made out of multiple letters), and then it needs to count the letters within misaligned representation.
Autoregressive mode completely alleviate the problem as it can align its internal representation with the letters and it can just keep explicit sequential count.
BTW - humans also can't count without resorting to sequential process.
How is Europe the largest single consumer market at 500 million people? Are you unaware of China, and also India? What am I missing? Even if you measure in economic size and not population, you’re still wrong.
I’m also curious, how and when will it be decided that it’s eventually time to move onto a new/better standard? If the law came into force 20 years ago, would we still be stuck with the standard of that time? Who decides when a new standard is worth upgrading?
This is a pretty obvious and desperate attempt to comfort yourself. Take the intellectually honest road and question why Europe (I’m European myself) has gotten itself into this sorry state and then try to do something about it.
In what way is Europe not in the mess of the experiment that is AI? It seems to me that it has all the exact same problems, without any of the benefits (the jobs, experience and money) that comes with it.
What you are claiming is as dumb as saying that Europe fixed climate change by blocking drilling in Europe and buying oil and gas from the Saudis instead.
It's just a swing into a recent hot topic and talking points around it, don't read too much into it. Everybody knows that US and EU are both way behind Asia and this EU is lagging behind USA due to regulations is just a meme, not more relevant than if Poutine is healthier than french fries.
The problem is misrepresented in online discussion. For example, typical argument is that EU doesn't have TOP10 companies by market cap and US has half of it but when you think about it market cap doesn't mean much and even if it did it would have ment capital concentration which is not a good thing by European culture. We don't want to have some ultra rich giant companies when everyone else tries to survive by the scraps, we actively try to redistribute wealth and are proud of our better gini coefficient. Europe is so not into this stuff that the "startup guys" of Europe on social media who are raving for accelerationism are just small businesses with a revenue of a restaurant on a high street but they think that they are early stages of Musk or Bezos. They just don't get it.
IMHO just look at the stuff you care about and forget using proxies like GDP or market value etc. For example, US has the largest companies by market cap but they are excited to have Taiwan opening a plant in USA that will produce chips on a few years old tech when Taiwan and Korea have the cutting edge stuff.
Examples are numerous, it goes above and beyond everything. China is not behind US in AI, in fact in some areas US is already trying to catch up. Tesla has enormous market cap but Chinese brands already displaced them in actual product sales. Americans think that self driving cars will be ready to go mainstream soon when China already has those disrupting their taxi sector.
Apple is about to become $4T company but Chinese and Koreans have all the cutting edge tech and Apple is faltering.
In military front USA boosts about how much money they spend on military only to find out that they are just paying more than they should and can't match Russia on ammunition.
While I may disagree on the overall trajectory and importance of some of these topics. I really appreciate your response, in spite of my semi-aggressive earlier responses.
I think it’s false to think that the value of these companies is just their salary. It’s about experience. Many of today’s businesses exist because their founders were given the chance to gain experience somewhere else. I can’t expect the next Volkswagen to come from a country where entrepreneurship is constrained to starting a bistro.
> We don't want to have some ultra rich giant companies when everyone else tries to survive by the scraps,
So we’d rather have nothing at all?
The extremely low salaries for tech workers is one of the best indicators. There is just not enough demand in Europe because there is no growth and very few companies doing anything innovative.
> capital concentration which is not a good thing by European culture.
Higher disposable incomes are also bot good for European culture, right?
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