Minimum wage and the value of labor

Split off from Does the GOP Want the States to Default?

Like I said earlier, the primary purpose of the minimum wage isn't to make life better for people on the minimum wage, it's to cleanse the labor market of worthless and evil jobs, protecting other jobs from parasitic market pressures.

For instance, if minimum wage suddenly means it's cheaper to use and maintain a combine instead of hiring human pickers, that farm is suddenly paying for good jobs (combine operator, mechanics, factory workers, etc…) instead of trash jobs. Likewise if instead of a dish pit manned by starving college students, a commercial dishwasher is purchased by a a restaurant. This also means that if the price of a product that would be impossible to maintain without unsustainable labor practices rises above market value, that industry dies a richly deserved death (maids and gardeners, for instance.)

That doesn't really matter, what matters is income corrected prices. By “free” trade through offshoring and migration (not to mention literal insufficient minimum wage hikes relative to inflation,) for instance, the American economy has effectively seen the effects of lower minimum wages since the 1970s. Though prices went down, pay for Americans has gone down faster, meaning the actual price of goods has gone UP.

Not hardly, as I noted earlier in the thread, numerous loopholes exist that allow most lower end jobs to go as low as $1.60/hour. And that's only for WAGES, with salaried workers, there exist all sorts of contracts bypassing overtime that have effective pay far lower than that.

I agree with Tom here, breaking up a trust does far less harm than letting it harm competition. That said, there should be SOME mechanism in place for the market to prevent trusts from forming to begin with, so that the DoJ isn't in constant shooting gallery mode.

Somewhat the opposite, actually. “More jobs” isn't always a good thing, especially if those jobs are either not up to the jobholder's capabilities (engineer driving a taxi) or employers aren't giving fair compensation (an airline pilot being forced to work extra shifts without extra pay,) this is known as “underemployment.” If wages rise, it forces employers to make better jobs, and gives employees more leverage in hiring and negotiations. In other words, quality over quantity.

Yes, the less of your income is disposable (isn't crucial to quality of life) the greater a proportion of it you'll spend. Since basic living costs tend to rise with social class (housing costs, for instance) most of every dollar added to a worker's pay will still be nondisposable even if they rise to upper middle class, feeding rapidly back into the economy, while money kept by the upper class will tend to just circulate in dubious investment vehicles.

Eric,

edited 3rd Jul '11 5:56:58 PM by EricDVH

I've noticed several comments that productivity has skyrocketed, while wages and earning power have remained static for the middle class.

That may be a problem.

That's a result of asymmetry of bargaining power between corporations and labor forces.

^ So increasing automation or improvements in production efficiency are irrelevant?

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If labor had more bargaining power, the increased efficiency of labor would be distributed more evenly between higher wages and higher corporate profits. Instead, it's higher corporate profits all the way.

They're very relevant. It's a big factor in the increasing market imbalance.

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If Technology (big T-it's a proper noun the way I'm using it) was simply "Things that make for a brighter tomorrow" then that'd all be well and good, but in practice it's "how do we make more money?" The assumption is that technology "does more with less" but who are the people doing more with less? Those are the people gaining the benefits, and since those people are the people who pay the R And D's salaries, they're the one that gain the bargaining power from those results. This is a bit oversimplified but that's what it boils down to-a weird power struggle, with one side having a clear and overwhelming advantage.

Wages work the same way the price works - supply and demand. Given the fact that the numbers of physical workers are getting lower (more and more people are graduating), the working class is getting into a pretty good position. While I think that we shouldn't raise minimal wages and should let the market sort it out, I think that in our discussions we fail to notice that it's getting less and less about this working class and more about low-ranking office workers. Working class focus in social policies used to make sense, but it soon won't.

"Take your (...) hippy dream world, I'll take reality and earning my happiness with my own efforts" - Barkey

Well, to address the title of the thread, value has no (fundamental) value. I don't believe so, anyhow, though the socialists and communists would disagree with me. Perhaps this perception relates to the concept of minimum wage and it being too low, as well. I couldn't say for certain, I don't own a business, and my parents (who do own a small business) can't be bothered to sit still long enough to explain their thinking, and neither one has a college education so they probably couldn't articulate it anyhow.

I tend to look at things (some people like to tell me it's a problem; I usually respectfully disagree) as a slippery slope. Therefore, the idea of having the government, say, do wage and price controls (similar to, say, what we had in the United States during World War Two) seems like a very poor idea save for significant (usually wartime) emergencies.

Then again, I always liked the concept of trust-busting, and I don't think I'd shed a tear if companies like Wal-Mart and McDonalds and the like were split into smaller companies. Once again, though, that has the problem of devolving into cutting down every corporation into little bits and causing havoc in the system.

I think it ultimately boils down to, unfortunately, the fact that most people can't trust the government to effectively regulate commerce without falling to temptation, whereas businesses can't be trusted to regulate themselves, either. Big labor also has a habit of turning into He Who Fights Monsters, so that isn't an option, either. The worst part is that this isn't necessarily true, but... Rule of Perception, right?

I am now known as Flyboy.

Just wondering — where do franchises fit into trust-busting, since the store isn't technically owned by the chain, but by another firm?

Keep Rolling On

Wal-Mart is an international corporation with a ridiculous bureaucracy and centralized structure—which includes stupidly large amounts of money for lobbying and multiple teams of lawyers for the age-old Frivolous Lawsuit—is it not? Certainly it ultimately sub-divides down into individually-owned stores, but the brand as a whole is singularly represented. Each Wal-Mart could be a separate store, or at least it could be many small(er) chains competing with one another.

Naturally, there are problems with that, too, but I'd rather deal with them than ubermart...

I am now known as Flyboy.

Personally, McDonald's is more the sort of thing I was thinking of. Certainly, I know that quite a number of their stores and numerous other international brands probably work the same way. However, ultimately what affects the main brand will affect the francisees, since they licence the company's branding and products...

But Wal-Mart — or as we know it here, Asda (which I avoid like the plague) — yeah, I agree.

edited 4th Jul '11 4:33:35 AM by Greenmantle

Keep Rolling On

Eh, McDonalds and other fast-food places are poor examples, because there are a whole bunch of big ones that compete enough that, economically, they aren't too much of a threat. The health implications, on the other hand... but that's a different argument.

I am now known as Flyboy.

I was thinking in more of the organisational manner — one brand, but with other companies/franchises that actually run the stores. Not that it makes any difference in the end.

edited 4th Jul '11 7:16:58 AM by Greenmantle

Keep Rolling On

Wierdly enough, thier Tesco - known as Fresh'n'Easy - is not as big as Asda is here.

...what is a Tesco? Actually, I've heard the name before (somewhere...) but can't recall what it is. I vaguely recall supermarkets, but I may be wrong.

I am now known as Flyboy.

Super- and hyper-market chain

"Take your (...) hippy dream world, I'll take reality and earning my happiness with my own efforts" - Barkey

Right, ok. See, between Wal-Mart, K-Mart, and Target, plus all the pure supermarkets, we really don't get a lot of foreign competition in that sector. Except, these days, for ALDI, I guess.

Is Tesco like the European version of Wal-Mart, then? Not in terms of products sold, but in terms of size?

I am now known as Flyboy.

Not sure how big Wal-Mart is, but Tesco has both traditional supermarkets and very big shops in malls. The corporation itself is quite big but not powerful enough to destroy the competition

"Take your (...) hippy dream world, I'll take reality and earning my happiness with my own efforts" - Barkey

It's actually kind of embarrassing to describe how big Wal-Mart is. They did a study, and apparently a lot of the time, when they open a Wal-Mart in a medium-sized town, tons and tons of small businesses will die out simply for not being able to compete with the prices offered (because Wal-Mart pays shit to its employees; their standard practice is to close down a store if employees try to unionize), giving them de facto monopoly over where ever they open, unless some other big chain is also around, where upon it just gets worse and worse.

I am now known as Flyboy.

Well someone else already raised the point in another thread but it probably bears repeating.

Companies don't hire labour based on profit. They hire based on man-hours required to run their business and they pay as little as possible based on market-demand for labour cost.

The big fallacy in the discussion of minimum wage discussions or corporate tax rates (they're fairly similar fallacies I find) is that corporations or any other business actually pay their workers based on their profit. They don't and they never would. Would a grocery store hire a bunch of people, cut their profit and have them standing around doing nothing? Of course not. If it takes 10 workers to operate the store, that's the labour they hire no matter what the price is, unless it makes their business unprofitable. In which, case they either attempt to downsize or just shut down.

So when you talk about minimum wage it's not the best solution to a complex problem.

And really this is a problem for middle class labour. Never has the middle class earned a salary based on company profit and so as companies have become more profitable over the last 15 years, there hasn't been a single statistics agency in the west that showed any country's middle class getting wealthier. Real income has been stagnant. Yet GDP has grown considerably since then.

This wouldn't be a problem if over-population wasn't a problem.

Fight smart, not fair.

Tesco is the third-biggest supermarket chain in the world, after Carrefour (the French giant) and Walmart.

Tesco has a chain of US stores on both coasts known as Fresh'n'Easy.

Walmart took over our Asda back in the 90s.

Tesco is the best... of the three in terms of quality, price, and payment of workers.

Asda here, pay their workers much more than Walmart do in America.

Did you know: Lower General Electric (yes, that GE) workers in European nations have more benefits than some of their middle-level workers counterparts in the US?

edited 4th Jul '11 3:02:42 PM by Inhopelessguy

An unemployed person would probably still have better benefits then many workers in the US.

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And I can't imagine they don't have better benefits than an UNEMPLOYED person in the US >=/