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  1. #581
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    I haven't seen this argument before, it is pretty interesting. Apparently the Council of Economic Advisors floated the idea that the minimum wage might reduce crime, conceivably by improving economic conditions lessening the need for crime. Setting aside just how often that connection has failed to be established historically, it appears that the hypothesis fails because the MW does not, in fact, improve economic conditions. In fact, the opposite is true. The MW worsens economic conditions and increases crime:

    An April 2016 Council of Economic Advisers (CEA) report advocated raising the minimum wage to deter crime. This recommendation rests on the assumption that minimum wage hikes increase the returns to legitimate labor market work while generating minimal adverse employment effects. This study comprehensively assesses the impact of minimum wages on crime using data from the 1998-2016 Uniform Crime Reports (UCR), National Incident-Based Reporting System (NIBRS), and National Longitudinal Study of Youth (NLSY). Our results provide no evidence that minimum wage increases reduce crime. Instead, we find that raising the minimum wage increases property crime arrests among those ages 16-to-24, with an estimated elasticity of 0.2. This result is strongest in counties with over 100,000 residents and persists when we use longitudinal data to isolate workers for whom minimum wages bind. Our estimates suggest that a $15 Federal minimum wage could generate criminal externality costs of nearly $2.4 billion.

    https://www.nber.org/papers/w25647#fromrss




    There was a discussion early in the thread related to the majority of the evidence being in the US. This is largely true because the US has more disparate policies (thus we are able to actually do research) than European or Asian nations. However, an interesting finding out of Denmark (though it relies on the same legal factors and similar methodologies to a study I referenced earlier):

    We estimate the impact of youth minimum wages on youth employment by exploiting a large discontinuity in Danish minimum wage rules at age 18, using monthly payroll records for the Danish population. The hourly wage jumps up by 40 percent at the discontinuity. Employment falls by 33 percent and total input of hours decreases by 45 percent, leaving the aggregate wage payment almost unchanged. We show theoretically how the discontinuity may be exploited to evaluate policy changes. The relevant elasticity for evaluating the effect on youth employment of changes in their minimum wage is in the range 0.6-1.1.
    https://www.mitpressjournals.org/doi...rnalCode=rest&
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


  2. #582
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    If your claim is that it is an arbitrary choice though, how do you argue that your, personal choice should be forced on others against their will? And why should it be your personal arbitrary choice and not theirs, or mine, or some random guy from the phonebook?
    Once you accept that that is the principle for your justification, the argument seems to lose all force. It certainly loses it's status as an argument. It now is just an opinion, or a matter of taste. Sharmak thinks it should be X. Ok, great, but that isn't an argument.
    It's not my personal choice - I am just adopting ideas that other people, who have thought about this more than me, have decided is a good idea. Versus academics and corporations who appear to gain by keeping the status quo.

    It's a conclusion that every economy tries and they each come up with their own number after doing their own analysis. And each government, presumably elected by the people, will determine the best choice to make on the matter. Sounds good enough to me.

    Well they make legislation, generally in this context laws refer to how people self-organize. But we don't need to go down that rabbit hole. I'm not sure where you got the idea from my last response that I was surprised that governments pass legislation.

    My response was two fold: a) the use of resources for how we define society is incomplete for how that concept is generally understood and b) that even if we accept that definition, businesses pay back all resources they take in, so the argument that the don't pay back their "fair share" seems to fail. Profit is included in that latter concept. Profit isn't kept, however, in a box buried underground, it is returned to the owners. Who are, by your definition, part of society. Thus all resources taken in by the company are returned via wages, or procurement, or other costs, or profits to the society they operate in.

    So given that, how are they not returning their fair share? 100% would seem to be a pretty good share.
    Ah - but profit is what we're discussing though. Why should the owners take a lion's share of said profits whilst having the government supplement the poor wages they're paying? I don't begrudge owners profiting obviously, but if they do so by taking advantage of their own workers and then the taxpayers (which in some cases, they aren't)?

    Generally, yes that is the case. This is a well known concept within economics and should be relatively intuitive if explained. Automation generally has a cost associated with it, a large initial investment and an on going service and maintenance cost. Likewise, retaining labor has a stream of ongoing costs (wages, training, government compliance costs, etc). If the Net Present Value of the former is lower than the net present value of the latter, a company will invest in automation. IE, if it costs less to buy and maintain a machine to do a job, companies will do it.

    No one really argues that point. The question you are raising is, does minimum wage alter that equilibrium? Given that not all jobs currently capable of being automated are, in fact, automated, we can agree that there is evidence that companies are considering cost and not just moving to automation because its automated. If you were to change one of the calculations above, in this case the cost of labor long term, that would (at the margin) change whether it is profitable to automate, right? That is all I'm pointing out here, that if you raise the costs of labor, some portion of the labor force will be automated where it is profitable to do so.

    For empirical evidence that this does, in fact, happen see below.
    And that's what McDonalds tried to do but it's generally a failure because having people around is still good for business and there are many things to do with the service industry that can't really be automated. That said, automation is a huge win *no matter* the labor cost because it allows many other automation processes such as what Starbucks is doing. So I don't think they're directly correlated in the way that you're suggesting. Plus, the fact that a lot of companies don't even know how to automate should be taken into account.

    This is a relatively easy read detailing some of the evidene with the journalists' predilection to include personal interest stories: https://www.wsj.com/articles/the-emp...035945?tesla=y

    If you are only going to read one paper, read this one. It specifically shows that companies are making cost reducing automation decisions contemporaneously with minimum wage hikes: https://www.nber.org/papers/w19262

    This paper goes more in depth to the causal mechanisms, showning that firms are specifically automating and laying off workers because of the minimum wage increase: http://ftp.iza.org/dp7674.pdf

    This paper shows a similar relationship, but only at the correlation level. I'm really only offering it because one of the authors is of Card and Krueger fame, and it is that author stating an opposing position to the earlier paper: https://www.nber.org/papers/w3997

    A great paper showing that automation specifically hurts teens from economically disadvantaged backgrounds: http://irle.berkeley.edu/files/2011/...Employment.pdf
    I will read them at some point - I don't doubt that those are legitimate reasons for automation, whether driven by MW or not. We're in a modern age where automation is inevitable regardless of MW - it all just makes sense and no doubt many jobs may disappear due to this. But I still don't see this as a reason not to pay a living wage and having the taxpayer foot the rest of the bill.

    The point that I was making above though is that by imposing those rules, you are also imposing unintended consequences. There are no solutions in life, only trade-offs. The government imposing a law to raise the minimum wage has a lot of unintended consequences. In this case, and from the evidence, consequences that outweigh the benefits. So the question is, if we are going to impose ourselves into the decisions made by individuals, are we going to make the world a net better place. It isn't clear at all that that is what is happening, and it isn't a good idea to impose negative consequences on people with the "we'll fix it later" mantra, because the fix also has negative consequences. Unless we can, at least, do a due dilligence on what those consequences are, it isn't the responsible thing to do to impose a policy that hurts those who are the most vulnerable.
    Are they unintended consequences? Or are we learning how to make better legislation? And what decisions aren't made by individuals any way?
    As for doing better due diligence, I would still raise MW and see what loopholes need to get closed rather than try it make a super complicated set of regulations happen in one fell swoop. The latter probably won't get passed - it's more realistic to make changes incrementally.

    Housing is a market like any other. Regardless, the point isn't industry specific. Let's change it to fresh vegetables, something we all agree the poor should still have access to (and by the way the largest single issue when creating the food deserts referenced by the former first lady). Let's say you are a company that provides some kind of obvious good to a community, fresh vegetables. You are currently earning $995K a year. Do you provide that next shipment of fresh vegetalbes? Your cost structure changes a lot in that case, so it likely isn't worth it to send them to that next market and make the additional $5K. Thus the community is (at least) worse off by one grocery store's access to vegetables due to this provision.
    Fresh vegetables aren't that great example either - I think most poor people can't even afford that - it's cheaper to buy canned veges.

    Which we also talked about and which we also showed that you can't absent some kind of soviet style central planning board. Even if you could freeze labor before increasing prices, some companies would be bankrupt (and therefore there would be job loses) and, probably the larger effect, new companies wouldn't start up because labor costs are too expensive. Similarly, existing companies wouldn't expand or create new jobs as often because the costs of doing so were so high.
    That sounds like scaremongering - no-one is asking for communism. No doubt some companies won't make it - no matter what happens there will always be some that won't be able to take on the burden. But in that case, as I've pointed out before, those companies are likely only surviving because of paying low wages and if so then good riddance!

    That's the rub. We can easiliy say "lets stop them from firing" but the actual implementation isn't so clean and has problems of its own.
    Well, so be it - companies that react badly should just be fined. That'll be easy.


    Corporate welfare, or advocating for corporate wellfare? The former is undoubtedly true, but is a red herring to this debate. The latter is untrue here unles you can offer me a quote of me advocating it.

    What is probably more relevant to this point is exactly what I was saying earlier about each intervention leading to more intervention. The reason you are offering here for the government to get involved in wage rates is because the government got involved in corporate profits earlier. It seems an odd argument to say the government is the best solution to fix a problem the government creates. Why not advocate for just stoping the underlying problem created by government?
    That's exactly what would happen - if workers were paid a living wage, then there'd be less of a need of corporate welfare by having a smaller safety net to run. It might not get down to zero but at least those people that are working would no longer need government assistance.


    Why are they not good? How do they not apply?
    Because the workers, the ones being helped, aren't dying.

    I'm not just suggesting it, I've given you the evidence that they do, in fact, cut hours due to an increase in the minimum wage. It isn't a hypothetical.

    You are claiming that we can counter that. You haven't offered any evidence for that, much less any evidence that your solution wouldn't cause larger problems then it was trying to fix a la above.

    That is the fundamental difference between my argument and yours here. I am offering evidence that the effect is happening, you are appealing to an undefined solution with no details or supporting evidence. How would we force companies to not cut hours? Please be specific.
    Well, all you're doing is describing how companies can work around government mandates. I don't have evidence because I haven't seen the next moves possible. It's also possible that this isn't a widespread issue and some companies will pay and not doing anything; maybe if we had a Democratic government, we could punish Amazon via some other means.

    Ok, which would, from the company's point of view be an additional cost right? So why wouldn't the company then lay off that person? Or, specifically, not hire that person? And don't assume companies are evil here, this doesn't require them to be monsters to have a negative impact. If the cost means that the labor no longer is profitable eventually the company will have to fire them or go bankrupt.

    So it isn't clear at all that this, on net, helps the poor.

    Now, of course you will say it is better that those "unproductive" companies don't exist. Setting aside that the use of the term unproductive is meaningless here because the standard you are applying is arbitrary, the fact is, it still doesn't help the poor. They are net worse off, with lower pay, less future job opportunities, and less services and goods in their community. And it lowers the effective tax base (by decreasing profits and income which are taxed) meaning that governments have fewer resources to help the poor with.
    All I can say is that companies that won't pay a living wage shouldn't exist - I don't see anything wrong with that.


    Of course it is because all status quos are necessarily bad. We don't live in a perfect world so, by definition, the status quo is bad (not perfect). The only relevant question is, will a minimum wage increase make the world better or worse than the status quo. The evidence is unambigious that it makes it worse. So why advocate for it?
    Because it is the only thing that can be currently done and we take things from there.

  3. #583
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by SharmaK View Post
    It's not my personal choice - I am just adopting ideas that other people, who have thought about this more than me, have decided is a good idea. Versus academics and corporations who appear to gain by keeping the status quo.
    Two important points here. 1) You are arguing that popular wisdom should be adopted over the consensus of experts. Should that apply to other fields as well?

    2) You stated earlier that it was arbitrary. That word, by definition, means it is your personal choice. Regardless of where you learned about the idea, you are arguing that it should be adopted. So why should your preference be imposed upon other people?


    Quote Originally Posted by Sharmak
    Ah - but profit is what we're discussing though. Why should the owners take a lion's share of said profits whilst having the government supplement the poor wages they're paying? I don't begrudge owners profiting obviously, but if they do so by taking advantage of their own workers and then the taxpayers (which in some cases, they aren't)?
    You would seem to be altering your definition of "society" then, right? Are you now excluding owners from being part of society? If so, why? Why should we not consider the return owners get for their risk part of the "fair share" that companies return to society?

    Quote Originally Posted by Sharmak
    That said, automation is a huge win *no matter* the labor cost because it allows many other automation processes such as what Starbucks is doing. So I don't think they're directly correlated in the way that you're suggesting. Plus, the fact that a lot of companies don't even know how to automate should be taken into account.
    So if it cost $2M to replace a job that pays $5/hour, that would be a "huge win" for the company? I'm not sure how you make the math work there. What's more, I don't know how you square that with the evidence. If this were the case. If it were true that "automation is a huge win *no matter* the labor cost" then we should never, ever see a situation where a company hasn't automated a role, correct? But we know that isn't the case so there must be something wrong with your hypothesis. The missing part of your hypothesis is the concept of ROI (return on investment). Labor can have a better ROI depending on its efficiency, cost, etc and companies consider that before making automation decisions.

    Quote Originally Posted by Sharmak
    But I still don't see this as a reason not to pay a living wage and having the taxpayer foot the rest of the bill.
    Even if that means their take home pay decreases and the tax payer foots an even higher bill?

    Quote Originally Posted by Sharmak
    Are they unintended consequences?
    You've already conceded in this thread that there are. We already know from countless examples that the MW decreases employment, reduces social mobility, increases economic inequality, reduces workplace safety, decreases standards of living for the economically vulnerable, and disproportionally impacts minority business owners.

    It isn't a question of "if" here, it is a question of how you justify these negative outcomes. What set of moral reasoning says that it is better for us to living with all this negative consequence?

    Quote Originally Posted by Sharmak
    Fresh vegetables aren't that great example either - I think most poor people can't even afford that - it's cheaper to buy canned veges.
    I have a sneaking suspicion that nothing I offer will be a "great example" because you don't like the outcome of the point.

    What good would you like us to explore? We can explore canned vegetables, fresh vegetables, you name it. The point isn't about the product, the product is irrelevant, the point is about the mechanism:

    Let's say you are a company that provides some kind of obvious good to a community, [Sharmak's suggestion of an obvious good to the community]. You are currently earning $995K a year. Do you provide that next shipment of [Sharmak's suggestion of an obvious good to the community]? Your cost structure changes a lot in that case, so it likely isn't worth it to send them to that next market and make the additional $5K. Thus the community is (at least) worse off by one [Sharmak's suggestion of an obvious good to the community] due to this provision.

    Can you address the mechanism?


    Quote Originally Posted by Sharmak
    That sounds like scaremongering - no-one is asking for communism.
    It isn't scare mongering at all. That was the point of the argument made earlier and even earlier in thread. You cannot account for all the of myriad unintended consequences of all the efforts you put in place to account for the unintended consequences without a full control of all aspects of economic life. It isn't scare mongering, that is a logical necessity of the statement you made. If you are going to correct each additional unintended consequence, you will need to be able to regulate that area of economic activity right?

    Quote Originally Posted by Sharmak
    Well, so be it - companies that react badly should just be fined. That'll be easy.
    I think this statement is a bit niave. Let's say you implement a law that says that no company is allowed to fire its workers (remember calling communism scare mongering before?), ok, what is the consequence of that. If I'm a company I don't hire new workers. I contract with individuals for hours in an independent contractor status, exempting me from the law since they aren't employees. There are literally dozens of well established techniques to avoid having to hire someone as a W2 employee.

    So what is the consequence of your law? Fewer W2 employees, and more independent contractors (who are taxed at a higher rate), so the people you were aiming to help have less job security, fewer benefits, and a higher tax burden. Which means...you'll need another intervention, what is it?

    Quote Originally Posted by Sharmak
    That's exactly what would happen - if workers were paid a living wage, then there'd be less of a need of corporate welfare by having a smaller safety net to run.
    But we also know that the reason wages are what they are (and not higher) is because of government compliance costs. All of the backend paperwork and HR staff, and other stuff to comply with the voluminous labor regulations account for about 40% of all costs associated with labor. So again, we are trying to artificially fix a problem government already created. Why not undue the original error rather than compounding it with a never ending set of further interventions?

    Quote Originally Posted by Sharmak
    Because the workers, the ones being helped, aren't dying.
    That is completely irrelevant to the analogy though. The question isn't about dying, its about harm. Do we intervene knowning the patient will be net worse off just so that we can say we "did something?"

    Quote Originally Posted by Sharmak
    Well, all you're doing is describing how companies can work around government mandates. I don't have evidence because I haven't seen the next moves possible. It's also possible that this isn't a widespread issue and some companies will pay and not doing anything; maybe if we had a Democratic government, we could punish Amazon via some other means.
    Not can, I'm describing how companies and governments and employees do respond to the incentives you've laid before them. That is the fundamental difference, I'm talking about what happens in the real world, not what we want to happen.

    The most recent example we've discussed was in Seattle. Seattle has had a Democrat city council (and a left leading democrat version at that) for 40 years. It is in King County which has been a Democrat strong hold for almost as long. Democrats hold both houses in the Washington State legislature and all state wide elected offices (and have done so for more than a decade). This is about as Democrat controlled as you can get. And yet...reduced hours, lower economic growth, and increased income inequality. Maybe it isn't the party in control, its the underlying theory.

    Quote Originally Posted by Sharmak
    All I can say is that companies that won't pay a living wage shouldn't exist - I don't see anything wrong with that.
    Because you are focused on your anger at the companies rather than your compassion for the worker. Fine, let's say you get your wish and they don't exist. How do those additional 100K, 1M, 10M whatever workers feed themselves now? Where does the money come from to support them?

    Quote Originally Posted by Sharmak
    Because it is the only thing that can be currently done and we take things from there.
    I don't mean to hammer this point in so much, but I just want to be clear (since it is so different than what I would expect). Let's imagine two possible worlds:

    1) Current status quo, imperfect, no minimum wage.

    2) New status quo, lower employment, lower take home pay, lower economic mobility, lower opportunity for minority entreprenuers, but we have enacted a policy.

    You are saying you prefer world 2 because we have done something.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


  4. #584
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    Two important points here. 1) You are arguing that popular wisdom should be adopted over the consensus of experts. Should that apply to other fields as well?
    Well, I suppose it depends on the credibility of experts. In this case, for some reason, and almost universally, this is being ignored. And probably for good reason too.

    2) You stated earlier that it was arbitrary. That word, by definition, means it is your personal choice. Regardless of where you learned about the idea, you are arguing that it should be adopted. So why should your preference be imposed upon other people?
    I take it to mean “decided by a judge or arbiter rather than by a law or statute“. Or this case, the collective elective.

    You would seem to be altering your definition of "society" then, right? Are you now excluding owners from being part of society? If so, why? Why should we not consider the return owners get for their risk part of the "fair share" that companies return to society?
    We absolutely should consider everything. I don’t begrudge a business owner to reap the rewards of the risks *they* take. However, explain to me how in the case of Amazon, that barely pays taxes, can justify not paying a living wage?

    So if it cost $2M to replace a job that pays $5/hour, that would be a "huge win" for the company? I'm not sure how you make the math work there. What's more, I don't know how you square that with the evidence. If this were the case. If it were true that "automation is a huge win *no matter* the labor cost" then we should never, ever see a situation where a company hasn't automated a role, correct? But we know that isn't the case so there must be something wrong with your hypothesis. The missing part of your hypothesis is the concept of ROI (return on investment). Labor can have a better ROI depending on its efficiency, cost, etc and companies consider that before making automation decisions.
    You’re absolutely right about ROI and that’s where automation has practically unlimited ROI: it enables further automations, better integrations with other businesses and removes manually mistakes.

    All companies do it in on form or another already - using online ordering systems, inventory management, or just keeping the books. Computers are ubiquitous and whose complaining about all those lost accounting jobs? No-one!

    Even if that means their take home pay decreases and the tax payer foots an even higher bill?
    Of course not - we balance that with more legislation

    You've already conceded in this thread that there are. We already know from countless examples that the MW decreases employment, reduces social mobility, increases economic inequality, reduces workplace safety, decreases standards of living for the economically vulnerable, and disproportionally impacts minority business owners.

    It isn't a question of "if" here, it is a question of how you justify these negative outcomes. What set of moral reasoning says that it is better for us to living with all this negative consequence?
    You justify it by putting stronger legislation in place.

    I have a sneaking suspicion that nothing I offer will be a "great example" because you don't like the outcome of the point.

    What good would you like us to explore? We can explore canned vegetables, fresh vegetables, you name it. The point isn't about the product, the product is irrelevant, the point is about the mechanism:

    Let's say you are a company that provides some kind of obvious good to a community, [Sharmak's suggestion of an obvious good to the community]. You are currently earning $995K a year. Do you provide that next shipment of [Sharmak's suggestion of an obvious good to the community]? Your cost structure changes a lot in that case, so it likely isn't worth it to send them to that next market and make the additional $5K. Thus the community is (at least) worse off by one [Sharmak's suggestion of an obvious good to the community] due to this provision.

    Can you address the mechanism?
    Well, you haven’t really provided an actual good example that applies.
    To your point, assuming such a good exists, then isn’t that what business is all about? This risk and the reward. Perhaps if they absorbed the extra cost for a little while, they can afford it. And if they can’t afford a modest raise then surely that means that they can’t be expected to last long anyway.

    It isn't scare mongering at all. That was the point of the argument made earlier and even earlier in thread. You cannot account for all the of myriad unintended consequences of all the efforts you put in place to account for the unintended consequences without a full control of all aspects of economic life. It isn't scare mongering, that is a logical necessity of the statement you made. If you are going to correct each additional unintended consequence, you will need to be able to regulate that area of economic activity right?
    Well, there’s no reward without risks! And if keeping the status quo isn’t working then something has to be done and we learn as we go along. It’s not like this is the first time we’ve tried it - we can learn.

    I think this statement is a bit niave. Let's say you implement a law that says that no company is allowed to fire its workers (remember calling communism scare mongering before?), ok, what is the consequence of that. If I'm a company I don't hire new workers. I contract with individuals for hours in an independent contractor status, exempting me from the law since they aren't employees. There are literally dozens of well established techniques to avoid having to hire someone as a W2 employee.
    So what is the consequence of your law? Fewer W2 employees, and more independent contractors (who are taxed at a higher rate), so the people you were aiming to help have less job security, fewer benefits, and a higher tax burden. Which means...you'll need another intervention, what is it?
    It’s still no communism but then maybe that’s the new consequence: no more employees. Or maybe we ensure that all contractors also have to be paid a living wage.

    But we also know that the reason wages are what they are (and not higher) is because of government compliance costs. All of the backend paperwork and HR staff, and other stuff to comply with the voluminous labor regulations account for about 40% of all costs associated with labor. So again, we are trying to artificially fix a problem government already created. Why not undue the original error rather than compounding it with a never ending set of further interventions?
    That seems to be kinda high - why is that? Maybe we need better automation.

    That is completely irrelevant to the analogy though. The question isn't about dying, its about harm. Do we intervene knowning the patient will be net worse off just so that we can say we "did something?"
    We do that all the time - we cut someone open that temporarily harms then in order to heal them with further actions. Where your medical analogy breaks down is that it doesn’t give us time to figure out new things.

    Not can, I'm describing how companies and governments and employees do respond to the incentives you've laid before them. That is the fundamental difference, I'm talking about what happens in the real world, not what we want to happen.
    Are you suggesting that there are NO solutions possible? I have to think that economists would work all angles, then I’d feel better that they’re not in the pocket of big business.

    The most recent example we've discussed was in Seattle. Seattle has had a Democrat city council (and a left leading democrat version at that) for 40 years. It is in King County which has been a Democrat strong hold for almost as long. Democrats hold both houses in the Washington State legislature and all state wide elected offices (and have done so for more than a decade). This is about as Democrat controlled as you can get. And yet...reduced hours, lower economic growth, and increased income inequality. Maybe it isn't the party in control, its the underlying theory.
    Or not enough disincentives. I like my idea of billing companies for what taxpayers have to foot the bill for. That can’t be too hard to implement.

    Because you are focused on your anger at the companies rather than your compassion for the worker. Fine, let's say you get your wish and they don't exist. How do those additional 100K, 1M, 10M whatever workers feed themselves now? Where does the money come from to support them?
    I have investments in those companies so I’m not angry at them: they’re doing whatever they’re being allowed to do legally - and why shouldn’t they? So it’s not my *wish* at all but rather a natural consequence of companies relying on the government to pay their workers a living wage.

    I don't mean to hammer this point in so much, but I just want to be clear (since it is so different than what I would expect). Let's imagine two possible worlds:

    1) Current status quo, imperfect, no minimum wage.

    2) New status quo, lower employment, lower take home pay, lower economic mobility, lower opportunity for minority entreprenuers, but we have enacted a policy.

    You are saying you prefer world 2 because we have done something.
    I have saying 2 because we can iterate again and again and again.

  5. #585
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    Increasing the Minimum Wage hurts those most vulnerable in our society.

    I’ve been thinking a lot about your last post, and my own responses and given we’ve been at this for a while, with no real change in either side (other than I’ve found some additional successes and you’ve proven human nature is hard to manipulate) I think the last response summarizes our sides well.

    I generally ignore all your economic “arguments” since they seem suspiciously one-sided for one, but worse, for me, is that they reflect a greedy side of humanity. I say “arguments” because all they boil down to are descriptions of current human behavior. I can totally see your arguments being similarly able to support oligarchies and barons and kings of the past. I can see “economic” arguments supporting slavery and likewise these days seeing arguments against because opinion has changed against those practices. So all I see is that it’s societal and corporate attitudes that have to change.

    I think that’s why, the world over, all governments have ended up choosing MW. Firstly, as you pointed out it’s a quick political win and secondly, they believe that humans can be better bros to each other: particularly those that feel they should be able to afford it. On the other hand, you have investors who risked their money and owners/directors who did all the coordination to create a success; but this largely ignores the actual hard work on the ground and this is made famous with the large wage gaps between managers and workers. Thus that argument holds less weight.

    So the economics of it largely make no sense because you’re basically making assumptions about human behavior and attitudes; both which can be limited, modified, and evolved.

    So onto my new response:

    I don't mean to hammer this point in so much, but I just want to be clear (since it is so different than what I would expect). Let's imagine two possible worlds:

    1) Current status quo, imperfect, no minimum wage.

    2) New status quo, lower employment, lower take home pay, lower economic mobility, lower opportunity for minority entreprenuers, but we have enacted a policy.

    You are saying you prefer world 2 because we have done something.
    If it were up to me to keep things patently unjust I’d rather make changes and adjust accordingly. Maybe, somehow, we can make something like a Universal Wage work (even though it hasn’t yet). Maybe there are new ideas we haven’t explored.

    I understand that you’re a conservative, so maintaining a status quo, is the safest. But even then, this status quo is also illusory - we tried allowing corporations to pay what they *feel* is “fair” and ended up having to create a massive infrastructure to provide the safety net to support that idea.

    And that “status quo”, which is really a few decades of expensive fixes for everyone, has largely, as you pointed out, just made the corporations lives even more difficult with 40% of labor-costs going to administrative tasks! Maybe that money can be better spent.

    Surely then, it’s “fair” to consider another path - one where a corporation shall pay a living wage and reduce the burden on society as a whole as well as reducing administrative costs.

    I think the current status quo isn’t working - it’s too bureaucratic and burdensome and government-heavy and workers still are poor. I’d rather money went directly to the workers than to maintain a system. And that means changing the minds of companies to consider fairly paying that living wage.

    So, current status quo which no-one likes, versus a potentially much better one, perhaps with way along the way? I’m all for the latter!
    Last edited by SharmaK; March 24th, 2019 at 04:52 AM.

  6. #586
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    Increasing the Minimum Wage hurts those most vulnerable in our society.

    As further proof that MW is not a matter for economics but a matter of politics, political will and societal shifts , McDonald’s is halting their lobbying against MW hikes:

    https://www.politico.com/story/2019/...m-wage-1238284

    Exclusive: McDonald's halts lobbying against minimum wage hikes
    By REBECCA RAINEY 03/26/2019 05:37 PM EDT Updated 03/26/2019 11:54 PM EDT
    Fast-food giant McDonald's boosted congressional Democrats' efforts to hike the minimum wage Tuesday by telling the National Restaurant Association that it will no longer participate in lobby efforts against minimum-wage hikes at the federal, state or local level.

    "We believe increases should be phased in and that all industries should be treated the same way," Genna Gent, McDonald's vice president of government relations, wrote in the letter. "The conversation about wages is an important one; it’s one we wish to advance, not impede."
    ...
    If it’s going to be done, it’s going to need to be paired with relief for small businesses,” Neil Bradley, the chamber’s executive vice president and chief policy officer, told POLITICO in January. Bradley added then that the Chamber wouldn't support a raise all the way to $15 an hour.
    ...
    “Ultimately, progress must come from all corners of our society," Gent wrote, "and McDonald’s Corporation is committed to playing a meaningful role in the spaces we occupy."
    Note also that provisions are made for small businesses showing further that there is a lot of wiggle room such that we can avoid the “communist” scare that your pushing. It is clear that maintaining the status quo is becoming an undesirable position for more people and even more businesses.

  7. #587
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Sharmak
    I’ve been thinking a lot about your last post, and my own responses and given we’ve been at this for a while, with no real change in either side (other than I’ve found some additional successes and you’ve proven human nature is hard to manipulate) I think the last response summarizes our sides wel..
    I generally ignore all your economic “arguments” since they seem suspiciously one-sided for one, but worse, for me, is that they reflect a greedy side of humanity…

    If it were up to me to keep things patently unjust I’d rather make changes and adjust accordingly… Maybe there are new ideas we haven’t explored.

    …we tried allowing corporations to pay what they *feel* is “fair” and ended up having to create a massive infrastructure to provide the safety net to support that idea.

    So, current status quo which no-one likes, versus a potentially much better one, perhaps with way along the way? I’m all for the latter!
    I moved this part of the response up to the top because it does seem to be the bottom line of what we are discussing. The question is, do we make policy decisions based on experts in a field and historical evidence or ill-defined hope? I’m sorry to make your position seem so flighty, I know you take it seriously, but it is hard to see it as more than just an aspirational wish. You want things to be better so doing something, regardless of its actual impact, is valuable because it gets at that itch, that need to at least feel like we are doing something, anything. But that is an emotional response, not a rational one. We are dealing with real peoples’ lives and we owe it to them to have least thought through the consequences of our recommendations before we artificially interfere in their individual decisions. [Which brings up an interesting side point, you’ve repeatedly, and here, said that companies “offer wages” as if companies had complete control over what wage rates are. But we know that isn’t true as you and I have discussed earlier. Companies do not simply set the wage rates, they have to compete for employees, and employees can set what they are willing to work for. Hiring someone is not akin to taking a resource absent its consent. It is a two-way relationship that both parties have consented to. To interfere in that consent you need to present a pretty compelling moral reason, of which you’ve offered none so far.]

    So because this is a policy that hurts real people, let's see what we are talking about on the personal level. What you are saying is, it is totally fine that Steve Terrell is poorer now than he was six months ago, that his standard of living has decreased, that his son will be less likely to find a job and more likely to be poor. All of that is fine because we could, maybe enact a further policy to undue that? Even though you've offered no idea what that policy would be, and the ones you have offered have only made the problem worse?

    Really, following the tack you've taken here, that is the fundamental point you are making. It doesn't matter what the policy actually does, we can hope for a better future. Am I wrong?

    Quote Originally Posted by Sharmak
    In this case, for some reason, and almost universally, this is being ignored.
    Would you apply the same reasoning to Climate Change? IE, are you arguing that we should reject climate change as a phenomenon because the political classes tend to ignore it when developing policy?

    Quote Originally Posted by Sharmak
    I take it to mean “decided by a judge or arbiter rather than by a law or statute“.
    That is the definition used when referring to a legal arbitration, not a personal position. In this case, that word clearly means, "based on random choice or personal whim, rather than any reason or system."
    So the question remains. Why should your preference be imposed upon other people? Or if you want to appeal to popularity, why does the majority's preference reflect on the choice of individuals here?

    Quote Originally Posted by Sharmak
    We absolutely should consider everything. I don’t begrudge a business owner to reap the rewards of the risks *they* take. However, explain to me how in the case of Amazon, that barely pays taxes, can justify not paying a living wage?
    I'll grant you it was a fun red herring. But red herring it is none the less. Amazon's ability to manipulate the tax incentives offered by Congress isn't relevant. Well, maybe slightly in that you want to trust the same body that developed the byzantine tax code that allows Amazon to pay virtually no taxes to also determine what a "fair" wage is (I'm not sure why you would trust them in the one case, but not the other).

    Even Amazon pays everything it takes in in revenue back to "society" as you defined it. So how are they not paying their fair share by your definition?

    And to forestall the rabbit hole, do you really mean that you don't like the distribution of who in society it is paid to?

    Quote Originally Posted by Sharmak
    You’re absolutely right about ROI and that’s where automation has practically unlimited ROI
    A McDonald's ordering kiosk does not create further automation. So I don’t think you are correct that the ROI for automation is “practically unlimited.” At very least this indicates that you aren’t accounting for the time value of money in your ROI calculation.

    More importantly, I don’t think you addressed the central point of this response. How do you square your view with objective reality? If automation had “unlimited ROI” then why wouldn’t virtually every dollar invested by firms be in automation? Why hasn’t every single labor role that can be automated, been automated? Why are there companies still hiring people? Again, the problem with your response is that you are assuming that automation is just a natural thing, rather than an investment decision made by a company.

    And returning to the point of this. If you are going to make one resource more unattractive, cost wise, you shouldn’t be surprised to see a rise in the use of the other. If we put a 500% tax on automation machines, we should expect to see labor use rise, for example.

    Quote Originally Posted by Sharmak
    Of course not - we balance that with more legislation
    What kind of legislation exactly?
    You seem to be implying here that there is a legislative arrangement that would make companies more profitable (so they wouldn’t have to lay off people or cut hours as wage rates rise). That seems pretty intuitively incorrect though. Do we really think legislatures are better understanding of business than those actually running the business?

    Quote Originally Posted by Sharmak
    You justify it by putting stronger legislation in place.
    I’m not sure this response makes sense. How does putting “stronger legislation” in place justify decreasing employment, reducing social mobility, increasing economic inequality, reducing workplace safety, decreasing standards of living for the economically vulnerable, and disproportionally impacting minority business owners?

    What legislation specifically would justify those negative outcomes?

    Quote Originally Posted by Sharmak
    Well, you haven’t really provided an actual good example that applies.
    To your point, assuming such a good exists, then isn’t that what business is all about? This risk and the reward. Perhaps if they absorbed the extra cost for a little while, they can afford it. And if they can’t afford a modest raise then surely that means that they can’t be expected to last long anyway.
    I asked if you had one, the fact that you can’t offer one seems to justify my suspicion that you are simply objecting to them as a matter of form. Further justifying that suspicion is that the nature of the product is completely irrelevant to the example.
    Your last two sentences don’t relate to my question. So perhaps we can try again. Do you agree that the provision you suggested results in the the community being (at least) worse off by one [Sharmak's suggestion of an obvious good to the community] due to this provision?
    If not, why not?

    Quote Originally Posted by Sharmak
    Or maybe we ensure that all contractors also have to be paid a living wage.
    Which, de facto concedes my main point. You can’t implement this kind of strategy without it being a continuous set of new interventions, ever expanding the scope in an effort to suspend basic laws.

    Let’s pretend that was step 2 of MW legislation. We expand it to contractors. Setting aside how the accounting of that is virtually impossible (since you aren’t paying a contractor a wage, but rather a fee), let’s look at the repercussions of that.

    We can, for the first impact, simply note that the same effects that occurred for low wage workers will also happen to them as individual contractors. Now that you’ve insisted on increasing the cost of labor in this arrangement, it doesn’t mean the business will magically keep the role and not decrease hours and fire some workers. You applying a price floor doesn’t make money magically appear to pay for that labor, regardless of its contractual arrangement.

    The second major impact is that you’ve now expanded the scope of your price controls, so the impact, likewise, expands. In a whole new area you would see similar decreases in job expansion, decreases in hours worked, and accompanying changes in individuals’ prospects for future career growth. And, not too unsurprisingly, this would happen to individuals I don’t think you intended to affect. It is not uncommon for senior software developers to take a low paying contract role to provide assistance to juniors as a mentor or to provide insight on the structure of a system they developed after they’ve moved on. This rule would essentially end that source of additional income for them. Even more problematic, this is very, very common in the non-profit world where a non-profit can’t afford to pay industry salaries, but people are willing to take low pay contract roles (that allow them to keep their main job) in order to help and defray some expenses. Say what you will, but your legislation will also decrease the availability of those who are highly skilled to help non-profits.

    So now that we’ve had these impacts, with fewer workers employed, lower tax bases, lower job security, fewer non-profits able to lend a hand, etc. we’ll need another intervention right? So what is it?

    Quote Originally Posted by Sharmak
    That seems to be kinda high - why is that? Maybe we need better automation.
    You’ve never worked in an HR department or directly hired someone have you? I think most people are surprised when the find out exactly how much compliance work goes into hiring an employee. You need to register them with nearly a dozen organizations with a dozen different forms (IRS, EEOC, Immigration, SEC for most companies even private ones, industry specific bureaus, department of justice, HHS, Interior, Treasury, Commerce, SSA, etc.). You often have to file additional, periodic paperwork and conduct surveillance on activities to comply with any of a dozen law frameworks related to money laundering, provision of adequate benefits, ADA, banking regulations (including the need to file a stupidly long form about how you wages aren’t a part of money lauding or shouldn’t trigger automatic review under that act).

    It isn’t necessarily about automation, a lot of these forms are done digitally. It is about the sheer volume of paperwork required because of the sheer volume of regulations that govern labor. Even under your MW provision, you are imparting a small amount of cost that is coming out of what would have been available for labor pay since the company will have to report the position and wage under surveillance laws to the State or Federal government.

    If we really want to increase the wages people make, we need to seriously consider cutting some of the 40% of costs associated with compliance. That at least, frees up money to actually pay people.

    Quote Originally Posted by Sharmak
    We do that all the time - we cut someone open that temporarily harms then in order to heal them with further actions.
    But again, that isn’t what the analogy said, you are inserting the mythical “so we can heal them later” argument when you haven’t demonstrated yet how that would happen.
    For the analogy to fit your position, it needs to be something like performing a surgery we know will make the person less well with an undefined hope that we will do some additional surgery later that will help him.
    No doctor in the world would allow that, and if they did they would go to jail or at least lose their license to practice. And it wouldn’t be unreasonable for a patient to ask the doctor, what is that second follow on step before consenting to the first surgery.

    Quote Originally Posted by Sharmak
    Are you suggesting that there are NO solutions possible? I have to think that economists would work all angles, then I’d feel better that they’re not in the pocket of big business.
    Let me start with a serious question. Do you really think that economists are in the pocket of big business? Or is that just kinda a line for debate purposes? No worries if the latter, I just want to understand your actual belief on that one.

    Second, I’m not saying there are no tradeoffs we can make that will make people’s lives better. For example, I just offered one earlier. I’m saying that we know from a whole large set of experiences and data that externally imposing a rule on an economy almost always creates more harm than good. We know, beyond any reasonable doubt, that this rule specifically causes a lot of harm. So I think it is at least reasonable for proponents of that action to lay out how they would mitigate that harm before we start inserting our will onto individual relationships.

    Quote Originally Posted by Sharmak
    Or not enough disincentives. I like my idea of billing companies for what taxpayers have to foot the bill for. That can’t be too hard to implement.
    Ok, how would you implement it?

    Quote Originally Posted by Sharmak
    So it’s not my *wish* at all but rather a natural consequence of companies relying on the government to pay their workers a living wage.
    You dodged the question. How do those additional 100K, 1M, 10M whatever workers feed themselves now? Where does the money come from to support them?

    Quote Originally Posted by Sharmak
    Well, big businesses such as Wal Mart coming into towns and shutting down those same small local businesses will do the same thing: are we to defend these businesses no matter what?
    I wanted to readdress this point because I stumbled upon an interesting study the other day. In it we see that business concentration doesn’t increase when Walmart enters a town, it decreases. IE, when Walmart enters (similar to how I responded in my last take at this) it frees up a lot of capital to pursue new economic activity (starting new businesses). So we see that Walmart doesn’t actually close down all the old mom and pop businesses in an community, it spurs the creation of new mom and pop industries in a community.


    Well, they look at what happens when Wal-Mart comes to town.



    The lower line is the effect on concentration in the years before and after the top national firm enters a market. Concentration drops. If, when Wal-Mart came to town, all the exiting firms went under, concentration would rise. The upper line shows you concentration ignoring the largest enterprise. It's unchanged. Either the mom and pop stores do, in fact, stay in business; or new smaller firms enter along with Wal-Mart. The phenomenon is not just the replacement of all smaller businesses by a larger number of national chains.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


  8. Thanks Ibelsd thanked for this post
  9. #588
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    I moved this part of the response up to the top because it does seem to be the bottom line of what we are discussing. The question is, do we make policy decisions based on experts in a field and historical evidence or ill-defined hope?
    Are you sure that’s what is happening? Seems to me that McDonalds is showing corporate behavior can change, small businesses can still be protected and that your evidence is merely one of many possible reactions.

    [Which brings up an interesting side point, you’ve repeatedly, and here, said that companies “offer wages” as if companies had complete control over what wage rates are. But we know that isn’t true as you and I have discussed earlier. Companies do not simply set the wage rates, they have to compete for employees, and employees can set what they are willing to work for. Hiring someone is not akin to taking a resource absent its consent. It is a two-way relationship that both parties have consented to. To interfere in that consent you need to present a pretty compelling moral reason, of which you’ve offered none so far.]
    Well, I can only say let’s follow the McDonald’s story and see what happens.

    Really, following the tack you've taken here, that is the fundamental point you are making. It doesn't matter what the policy actually does, we can hope for a better future. Am I wrong?
    Unless it’s proven to be impossible for a better future then a short term hit that will benefit more people in the long term is worth it. Particularly if we can get corporations onboard and more people believing in their countrymen. $7 is just ridiculous.

    Would you apply the same reasoning to Climate Change? IE, are you arguing that we should reject climate change as a phenomenon because the political classes tend to ignore it when developing policy?
    Given that it’s not ALL the political classes but only the one side that disbelieves climate change is worth dealing with, whilst continuing to pay people poorly, I think you’re overstating your case once again: it’s not the whole political classes is it?

    So the question remains. Why should your preference be imposed upon other people? Or if you want to appeal to popularity, why does the majority's preference reflect on the choice of individuals here?
    Politicians are always reflecting the majority, in theory. I really don’t see the problem here: MW is clearly about the *idea* of building a better world. If it’s a matter of my personal preference that businesses can take less profit whilst paying their workers such that the taxpayer doesn’t have the burden of supplementing awful wages, then so be it.

    And to forestall the rabbit hole, do you really mean that you don't like the distribution of who in society it is paid to?
    If there’s money to be distributed and it’s not going to workers who in turn depend on the taxpayer then, yes, I don’t “like” it! What’s to like?

    A McDonald's ordering kiosk does not create further automation. So I don’t think you are correct that the ROI for automation is “practically unlimited.” At very least this indicates that you aren’t accounting for the time value of money in your ROI calculation.
    Automation opens up opportunities for remote ordering, pre-ordering, better planning by the consumer thus leading to more efficient running of the business. It provides better metrics and better realtime statistics. The possibilities for integrations and collaborations with other digital partners and incentives that can be locally tailored and influencers that can be marshaled for other events are infinite. That stuff can only be made possible with automation.

    More importantly, I don’t think you addressed the central point of this response. How do you square your view with objective reality? If automation had “unlimited ROI” then why wouldn’t virtually every dollar invested by firms be in automation? Why hasn’t every single labor role that can be automated, been automated? Why are there companies still hiring people? Again, the problem with your response is that you are assuming that automation is just a natural thing, rather than an investment decision made by a company.
    They are hiring and they are developing these ideas out. Watch this space!

    And returning to the point of this. If you are going to make one resource more unattractive, cost wise, you shouldn’t be surprised to see a rise in the use of the other. If we put a 500% tax on automation machines, we should expect to see labor use rise, for example.
    I don’t know why anyone would make automation more unattractive - perhaps these jobs will just have to go away.

    What kind of legislation exactly?
    You seem to be implying here that there is a legislative arrangement that would make companies more profitable (so they wouldn’t have to lay off people or cut hours as wage rates rise). That seems pretty intuitively incorrect though. Do we really think legislatures are better understanding of business than those actually running the business?
    Legislatures are seeing a big bill to pay for “entitlements” whilst also seeing large companies pay few taxes, whist they report high profits. Seems to me there’s money that could be going to the workers.

    I’m not sure this response makes sense. How does putting “stronger legislation” in place justify decreasing employment, reducing social mobility, increasing economic inequality, reducing workplace safety, decreasing standards of living for the economically vulnerable, and disproportionally impacting minority business owners?

    What legislation specifically would justify those negative outcomes?
    Well, how about my idea of billing corporations a portion of their worker’s welfare bill. That seems to me a fair way of dealing with the issue.

    Do you agree that the provision you suggested results in the the community being (at least) worse off by one [Sharmak's suggestion of an obvious good to the community] due to this provision?
    If not, why not?
    It could but it might not necessarily be the case.

    Which, de facto concedes my main point. You can’t implement this kind of strategy without it being a continuous set of new interventions, ever expanding the scope in an effort to suspend basic laws.
    Or corporations will just start to play ball.

    We can, for the first impact, simply note that the same effects that occurred for low wage workers will also happen to them as individual contractors. Now that you’ve insisted on increasing the cost of labor in this arrangement, it doesn’t mean the business will magically keep the role and not decrease hours and fire some workers. You applying a price floor doesn’t make money magically appear to pay for that labor, regardless of its contractual arrangement.
    Money doesn’t magically appear - it is already there in the profits that go back to the shareholders or not paid in taxes.

    Say what you will, but your legislation will also decrease the availability of those who are highly skilled to help non-profits.
    Then make an exception for non-profits! How hard is that?

    So now that we’ve had these impacts, with fewer workers employed, lower tax bases, lower job security, fewer non-profits able to lend a hand, etc. we’ll need another intervention right? So what is it?
    Or legislate more smartly and avoid the consequences we currently want to avoid.

    If we really want to increase the wages people make, we need to seriously consider cutting some of the 40% of costs associated with compliance. That at least, frees up money to actually pay people.
    Well, let’s do that then!

    But again, that isn’t what the analogy said, you are inserting the mythical “so we can heal them later” argument when you haven’t demonstrated yet how that would happen.
    A combination of smart legislation that avoids known pitfalls and reduces impact on small business coupled with a culture that force corporations to pay better will avoid any of this cutting business you keep talking about.

    Let me start with a serious question. Do you really think that economists are in the pocket of big business? Or is that just kinda a line for debate purposes? No worries if the latter, I just want to understand your actual belief on that one.
    They’re just describing what has happened or what can happen, or what is likely to happen from what you’ve shown. All that we need to do now is to understand the motivations and work towards reducing harm.

    Second, I’m not saying there are no tradeoffs we can make that will make people’s lives better. For example, I just offered one earlier. I’m saying that we know from a whole large set of experiences and data that externally imposing a rule on an economy almost always creates more harm than good. We know, beyond any reasonable doubt, that this rule specifically causes a lot of harm. So I think it is at least reasonable for proponents of that action to lay out how they would mitigate that harm before we start inserting our will onto individual relationships.
    That’s fair too - I like that McDonalds talked about protecting small businesses, so that seems to be a good start.

    Ok, how would you implement it?
    So long as everyone declares where they’re working and what benefits are being received, that doesn’t seem like rocket science.

    You dodged the question. How do those additional 100K, 1M, 10M whatever workers feed themselves now? Where does the money come from to support them?
    The excess profits from the corporations that aren’t even paying taxes.

  10. #589
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    First, Sharmak you didn’t answer the primary question from the top of my post:
    Question to opponent.
    So because this is a policy that hurts real people, let's see what we are talking about on the personal level. What you are saying is, it is totally fine that Steve Terrell is poorer now than he was six months ago, that his standard of living has decreased, that his son will be less likely to find a job and more likely to be poor. All of that is fine because we could, maybe enact a further policy to undue that? Even though you've offered no idea what that policy would be, and the ones you have offered have only made the problem worse?

    Quote Originally Posted by Sharmak
    Are you sure that’s what is happening? Seems to me that McDonalds is showing corporate behavior can change, small businesses can still be protected and that your evidence is merely one of many possible reactions.
    Yes, those weren’t my words, they were yours. You are the one that argued we needed to implement a minimum wage because ‘at least we would be doing something.’ And when did McDonald’s become a “small business?” Wouldn’t it seem reasonable that a large company would want a higher minimum wage to lower competition? We know that increased minimum wages reduce industry competition and increase monopoly power, for example; so why don’t McDonald’s actions fit into that model? Why do you assume they are being benevolent rather than profit focused?

    Quote Originally Posted by Sharmak
    Well, I can only say let’s follow the McDonald’s story and see what happens.
    That doesn’t address the question. It is perfectly fine to say “I don’t know” or that you don’t have a compelling moral reason to interfere in the consenting actions of two adults, but ignoring the issue isn't productive. Until you can seriously address the issue that wages aren’t set by companies, but that those companies have to compete for employees, and employees can set what they are willing to work for you aren’t really going to make progress on understanding this market. Hiring someone is not akin to taking a resource absent its consent. It is a two-way relationship that both parties have consented to. To interfere in that consent you need to present a pretty compelling moral reason, of which you’ve offered none so far.

    Quote Originally Posted by Sharmak
    Unless it’s proven to be impossible for a better future then a short term hit that will benefit more people in the long term is worth it.
    What is your rationale that the default position should be to inflict short term suffering? Why wouldn’t the default position be, unless proven otherwise, to no inflict economic distress on individuals?

    Quote Originally Posted by Sharmak
    Given that it’s not ALL the political classes but only the one side that disbelieves climate change is worth dealing with, whilst continuing to pay people poorly, I think you’re overstating your case once again: it’s not the whole political classes is it?
    Nor is it the “whole” economic class. Most states are not increasing their minimum wage nor have increased their minimum wage in the last few years. The party that currently controls the Senate, the White House, and say 45% of the House also does not advocate for a MW increase. 80% of labor economists argue against a minimum wage increase. The case is no more overstated than yours is to the “universal acceptance of the MW.”

    So given that your metric for ignoring scientists was the implementation of policy; does that apply for the MW as well given how limited implementation of MW policy has been?

    [Really, the intellectually honest thing to do here is to admit that politicians have very different incentives than experts and that we shouldn’t judge the actual state of the world by how politicians vote on it. I have no doubt you won’t pursue that patently obvious point, but it is, nevertheless, obviously true.]


    Quote Originally Posted by Sharmak
    If there’s money to be distributed and it’s not going to workers who in turn depend on the taxpayer then, yes, I don’t “like” it!
    Can you provide a defense of why Sharmak's arbitrary (and that was your word) personal preference on how that money is distributed should override Steve Terrell’s? Or anyone for that matter?

    Quote Originally Posted by Sharmak
    That stuff can only be made possible with automation.
    So in my day job I’m the Director for Marketing Technology for the largest RIA in the country, are you saying that I shouldn’t be considering ROI at all? That any investment in technology provides a return? If not, why not? And how does your explanation of why not apply to your underlying argument?

    Quote Originally Posted by Sharmak
    I don’t know why anyone would make automation more unattractive - perhaps these jobs will just have to go away.
    Plenty of your ideological affinity are certainly proposing it. But when you say that these jobs will just have to “go away” presumably you also mean the pay checks of the people depending on those jobs, right?

    Quote Originally Posted by Sharmak
    Legislatures are seeing a big bill to pay for “entitlements” whilst also seeing large companies pay few taxes, whist they report high profits. Seems to me there’s money that could be going to the workers.
    Continuing the question that you didn’t answer, what makes you think you have more insight into those financial affairs than they do? Isn’t is far more likely that this is an example of Dunning-Krueger?

    Can you answer the question asked, What kind of legislation exactly? Exactly what legislation are you proposing that would prevent companies from needing to cut hours or positions as wage rates rise?

    Quote Originally Posted by Sharmak
    Well, how about my idea of billing corporations a portion of their worker’s welfare bill. That seems to me a fair way of dealing with the issue.
    So further increasing the cost of hiring that labor? Given that that is simply an indirect form of increasing the wage rate (but in a way that doesn’t benefit the worker directly as much), how would that not also result in decreasing employment, reducing social mobility, increasing economic inequality, reducing workplace safety, decreasing standards of living for the economically vulnerable, and disproportionally impacting minority business owners?

    And importantly, how does that legislation justify those negative outcomes?

    Quote Originally Posted by Sharmak
    It could but it might not necessarily be the case.
    Go on.. Please provide a defense of why you think these principles might not apply. In what scenario does a company produce the extra [Sharmak's suggestion of an obvious good to the community] that results in them being unprofitable?

    Quote Originally Posted by Sharmak
    Money doesn’t magically appear - it is already there in the profits that go back to the shareholders or not paid in taxes.
    Ok, let’s explore this a bit. This is now your 3rd Intervention following your expansion of price floors to contractors and all the imposed costs brought along with that.

    For your 3rd intervention you are implying some kind of profit cap it would seem. Ok, let’s look at the repercussions of that. Investors specifically look for what is called an “economic rate of return” ie a return on their investment that outweighs the risk associated with that investment and the delay in them having access to that money. Given that (and I’d be happy to link you to a half dozen peer-reviewed studies showing capital flight from economies that have done exactly what you proposed) markets are generally at the average economic return for investors, a law lowering that return would decrease net investment.

    TLDR version, if you decrease the amount of return shareholders get, you will get fewer people willing to be shareholders, right?

    If we have fewer shareholders, that means less money available for investment and less access to capital markets (ie new firms can’t sell shares to raise funds for growth or sell back their ‘bought back’ shares to raise funds for growth). So we would see a significantly lower growth rate in the economy (equity of this kind accounts for something like 60% of funds raised in the economy).

    Which means fewer new jobs available, and in the initial flight of capital resulting from the law’s passage, the same consequences we saw before. Increased unemployment, lower take home wages, increased economic inequality, reduced workplace safety, and decreased standards of living (through lower goods and services being produced).

    We should also note that a significant amount of those shareholders who are taking it on the chin from your legislation are retirement and pension funds. (I’ve seen some estimates that say this is as much as 87% of publicly traded capital). Those retirement funds would see lower growth rates (due to the decreased return) which means we now have a huge population of workers whose pension plans and retirement accounts won’t fund their retirement anymore.

    Those are the consequences of your 3rd intervention. What legislation do you need to offer to counteract those unintended, negative consequences?



    Side note, you mostly ignored the second consequence of your 2nd intervention: [The second major impact is that you’ve now expanded the scope of your price controls, so the impact, likewise, expands. In a whole new area you would see similar decreases in job expansion, decreases in hours worked, and accompanying changes in individuals’ prospects for future career growth. And, not too unsurprisingly, this would happen to individuals I don’t think you intended to affect. It is not uncommon for senior software developers to take a low paying contract role to provide assistance to juniors as a mentor or to provide insight on the structure of a system they developed after they’ve moved on. This rule would essentially end that source of additional income for them. Even more problematic, this is very, very common in the non-profit world where a non-profit can’t afford to pay industry salaries, but people are willing to take low pay contract roles (that allow them to keep their main job) in order to help and defray some expenses.]


    Quote Originally Posted by Sharmak
    Or legislate more smartly and avoid the consequences we currently want to avoid.
    Hey, it was your legislation, I didn’t want to imply you hadn’t come up with legislation that wasn’t smart. How would you implement your legislation “more smartly?”

    Quote Originally Posted by Sharmak
    Well, let’s do that then!
    I’d be happy to, though it is a little outside the scope of this thread. I have a feeling though if I proposed it your normal response wouldn’t be so supportive. Are you really ok with doing away with most of the SEC, FTC, EEOC, HHS, Interior, Dodd-Frank, OSHA, the ADA, and a hundred legal frameworks that impose those costs? [I am since their value is extremely dubious and very hard to support empirically.]

    Quote Originally Posted by Sharmak
    A combination of smart legislation that avoids known pitfalls and reduces impact on small business coupled with a culture that force corporations to pay better will avoid any of this cutting business you keep talking about.
    Except the legislation you are proposing keeps having massive, negative consequences. Consequences which at this point are probably worse than the original problem. No doctor with an ounce of ethics would approve a surgery that is going to have massive consequences to the patient with a simple assurance that it will be done “smartly” with the hope of making the original flu better. They would need to see exact details and weigh the cost/benefit.

    Quote Originally Posted by Sharmak
    They’re just describing what has happened or what can happen, or what is likely to happen from what you’ve shown.
    I appreciate you clearing up that up.

    Ok, so economists are detailing what will likely happen and what can happen in an economy, I don’t disagree with you there. Given that, it would seem pretty relevant to your proposal what will likely occur and what can possibly occur, no?

    Quote Originally Posted by Sharmak
    So long as everyone declares where they’re working and what benefits are being received, that doesn’t seem like rocket science.
    That would seem to leave out a lot of details.
    What benefits count against the company?
    How does the company pay?
    What method of accounting is used for total wage and benefit value is being given to the employee?
    What method of accounting is used to calculate the total cost of benefits being issued by the government?
    Do all benefits count? Or are there some benefits the government offers that the company isn’t liable for?
    Who collects this data?
    How do we fund that group?
    Who processes payments and does enforcements?
    How do we fund that group?
    Is this applicable to 100% of employees across the economy? If not, who doesn’t it apply to?
    Are students covered?
    Government employees?
    Military?
    It is a lot more complicated than just “lets get some numbers and do it” so how, exactly, does your policy work?

    Quote Originally Posted by Sharmak
    The excess profits from the corporations that aren’t even paying taxes.
    Noting all the issues and consequences I listed above, there are some additional questions.
    Do you have any evidence to show that this would be enough to cover those workers?
    How do you define “excess?” How, exactly, do you calculate excess? Was Exxon’s 5% profit rate acceptable, but Apple’s 40% too high? Or Costco’s 26%?
    Also, why is it a problem that they don’t pay taxes? I realize that has been a bugaboo amongst the Progressive crowd of late, but given that they tax rates are primarily determined by utilization of tax incentives liberals favor, why would not paying taxes be an issue?

    Also, what companies do you think "aren't even paying taxes?" (I ask because that seems to be a popular trope lately that ranges from some odd math to flat out incorrect) [Amazon for example, paid over $1B last year. ExxonMobile paid 9.53B]







    And nothing on the Walmart data?
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
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  12. #590
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    I've been thinking a bit (or a lot) about things like healthcare and minimum wage. Not the policies, per se, but how we understand them to be good or bad. For example, in healthcare, I have heard Ben Shapiro make the observation that there are three criteria for judging healthcare. There is universiality, quality, and cost. He goes on to say you can have two of the three things. You get to pick what's important, but you simply cannot have it all. So, it isn't that universal healthcare is bad or that it does not work. Rather if you pick universiality then you have to either sacrifice quality OR endure tremendous cost. With that sort of backdrop, my curiosity is along similar lines with minimum wage. How can we really discuss the desirability of minimum wage without really having a conversation on the criterion for what makes it good.

    Really, minimum wage is a component of employment. Wages don't stand on their own. So, any discussion of minimum wage should be part of a broader discussion regarding employment. Since the three points noted for healthcare are researched and based on economic principles (it isn't like they were just pulled out of thin air). I suspect they would be very similar for employment. We can aim for universality or high wages but you only get to pick one. If you add job satisfaction (everyone gets a job and gets the job they want), then you add, perhaps, another factor that must be considered. However, satisfaction hasn't been something most people have attempted to achieve. So, we can achieve 100% job employment if we allow for wages to drop very low. We can force wages to increase, but we have to accept that employment will likely drop. While no one is specifically calling for every American to have a job he loves, we cannot disregard job satisfaction. If we believe it is worthwhile to push people towards certain careers, then there will probably be a drag to both employment and wages. More people trying to get the same position would naturally put downward pressure on wages.

    So, if our goal is not universality, but a living wage then a minimum wage is a reasonable means towards that end. In particular, right now, when unemployment is under 4% which most economists consider full employment, then you'd have to accept that a minimum wage, right now, isn't terrible. However, let's also look at the populations which have been priced out of the workforce and aren't included in the employment figures. Namely, those over 65 and those under 18. Now, again, if we are willing to accept that those two age groups aren't critical to our economy and we would rather achieve high wages for all those in between, then, again, a minimum wage isn't terrible.

    For me, I'd prefer the system gear towards universality and allow the free market to determine wages. However, we do not live in a perfect free market economy and it seems silly (naïve) to pretend. For instance, large corporations can dictate terms and wages without fear of a competitive market. How many companies are competing against Google and Amazon for instance? When there is competition, the smaller company gets bought out long before it matures and offers itself as a direct rival. In fact, there are relatively few software companies who are competing for the same group of software engineers. Hence, Google can offer what seems like a good wage 100K-150K to start, but when you consider that its CEO's make 100's of times that amount, well, something is skewed. And what is skewing the wages is lack of real competition. So, I do believe that it isn't entirely inappropriate to treat these large companies as something akin to a monopoly which requires some amount of guidance from the government. How much and in what form? Well, that is back to the original criteria. How much negative pressure are we willing to exert on employment?
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Ibelsd View Post
    You get to pick what's important, but you simply cannot have it all.
    Great point. It is somewhat akin to Thomas Sowell's "There are no solutions in life, only tradeoffs" or Friedman's "There is no such thing as a free lunch." I think that that has been the tack I've been trying to take in this thread (perhaps poorly, specifically because we never seem to get there); let's get the real trade-offs on the table, then individuals can decide whether they think that that trade-off is appropriate or not. [There is, of course, also a moral question of why we are making trade-off decisions for other people.]

    To that end I think your triangle is probably a good first approximation of the question. Honestly, this one is probably more of a hexagon or something with criteria such as job safety, mobility, equality, etc, etc, etc. often also being brought up, but this is a good start.


    Quote Originally Posted by Ibelsd
    For instance, large corporations can dictate terms and wages without fear of a competitive market. How many companies are competing against Google and Amazon for instance?
    Not to be nit picky, but I don't think this is true. At least not in the direction being implied. The question of who is competing with Google and Amazon is related to suppliers (labor) not to buyers (product). [The latter also isn't nearly as monolithic as one thinks either. Certainly, there is no clone of Google out there, but Google is a hodge-podge of services, each with their own competitors. In the marketing venue, Google has become increasingly irrelevant for example.]

    But what we are really interested in is how much monopsonistic purchasing power do those firms have for labor? And the answer is, not really that much. Google can certainly outbid a lot of companies to get an engineer it wants (and does). But that pushes the price up, not down. Google cannot say to an api developer "take this job at 35k and good luck finding anywhere else." Dozens, hundreds of companies will steal that API developer in a heartbeat (my firm onboarded three google vets in the last month). Ditto for almost all of its other labor inputs. Search for Front End Developer, Full Stack Developer, UX, Product, etc, etc. and you'll find hundreds upon hundreds of Google/Amazon competitors. So in the sense of labor markets, it doesn't seem to be as non-competitive as one might think.

    One personal conjecture. I think there is a perception that large firms dictate wages because they tend not too negotiate as much. A large firm offers you a salary and tends to wiggle less on it or on benefits than smaller firms. I don't think this is so much because of the larger firm's power though. Now having hired a good dozen people while working at a pretty large firm I can say it tends to be because our HR department has much better labor cost data they can get. They really understand exactly what is being paid for a junior project manager in Charlottesville for example. That kind of hyper-localized data makes them better able to put forward a closer market wage that will fill the role without leaving money on the table. I could be wrong, but this has been my impression.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    Great point. It is somewhat akin to Thomas Sowell's "There are no solutions in life, only tradeoffs" or Friedman's "There is no such thing as a free lunch." I think that that has been the tack I've been trying to take in this thread (perhaps poorly, specifically because we never seem to get there); let's get the real trade-offs on the table, then individuals can decide whether they think that that trade-off is appropriate or not. [There is, of course, also a moral question of why we are making trade-off decisions for other people.]

    To that end I think your triangle is probably a good first approximation of the question. Honestly, this one is probably more of a hexagon or something with criteria such as job safety, mobility, equality, etc, etc, etc. often also being brought up, but this is a good start.



    Not to be nit picky, but I don't think this is true. At least not in the direction being implied. The question of who is competing with Google and Amazon is related to suppliers (labor) not to buyers (product). [The latter also isn't nearly as monolithic as one thinks either. Certainly, there is no clone of Google out there, but Google is a hodge-podge of services, each with their own competitors. In the marketing venue, Google has become increasingly irrelevant for example.]

    But what we are really interested in is how much monopsonistic purchasing power do those firms have for labor? And the answer is, not really that much. Google can certainly outbid a lot of companies to get an engineer it wants (and does). But that pushes the price up, not down. Google cannot say to an api developer "take this job at 35k and good luck finding anywhere else." Dozens, hundreds of companies will steal that API developer in a heartbeat (my firm onboarded three google vets in the last month). Ditto for almost all of its other labor inputs. Search for Front End Developer, Full Stack Developer, UX, Product, etc, etc. and you'll find hundreds upon hundreds of Google/Amazon competitors. So in the sense of labor markets, it doesn't seem to be as non-competitive as one might think.

    One personal conjecture. I think there is a perception that large firms dictate wages because they tend not too negotiate as much. A large firm offers you a salary and tends to wiggle less on it or on benefits than smaller firms. I don't think this is so much because of the larger firm's power though. Now having hired a good dozen people while working at a pretty large firm I can say it tends to be because our HR department has much better labor cost data they can get. They really understand exactly what is being paid for a junior project manager in Charlottesville for example. That kind of hyper-localized data makes them better able to put forward a closer market wage that will fill the role without leaving money on the table. I could be wrong, but this has been my impression.
    So, I am getting at with the first point is that without having a guiding set of principles or values, debate on whether minimum wage is good or bad is entirely subjective. You have produced a lot of charts and data to defend your view, but you have yet to convince. Why? Because you have not really addressed the value(s) at stake. What is Sharmak principle value? Is it job universality or something else? I suspect he isn't moved by your arguments because what he is trying to express is that he is unimpressed by relatively high unemployment rates. He is ok if some group of people are unemployable. What he wants is wage quality for those who are employed. Furthermore, he is looking to establish egalitarianism, meaning wage equality. Again, he is willing to accept some inflationary side-effects so long as the working poor are slightly less poor and the uber wealthy are slightly less wealthy. To that end, he is probably even ok with a smaller upper-middle class and a larger lower-middle class. Has he actually admitted that trade-offs exist? I am not sure. Often, I hear liberals/progressives who want to change the employment structure in America but they refuse to admit real tradeoffs other than the uber rich being less rich. And we know that isn't the only trade off which must occur for their ideals to be actualized.

    Now, about my second point. You find lots of jobs for developers. True. But Google is so large that they dictate the wage structure of the market. They decide, for the most part, what talent they get to have. And there is really no competition. Or, the competition consists of a handful of companies. So, they create a sort of primary market and then everyone else is left competing on the secondary market. So, you have 10000 engineers working for Google and 10,000,000 engineers trying to get employed by everyone else. This creates a glut in the market which lowers the value of the remaining engineers to some degree. If Google was 100 smaller companies that each hired 1000 engineers, you'd have more market turnover, more opportunities for engineers to move up, more opportunities for each of those smaller Googles to grow and hire more engineers. Less ability of any of those smaller Googles to undercut the market. If you want to compete with Google, you can't afford to spend more on labor than Google. But if Google was lots of smaller companies, then they'd have an incentive to compete which would increase wages.

    I am in kinda a rush so I am not being precise here. Let me know if what I am saying makes sense. I am not relying purely on math or econ here. Some of it is just feel.
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  17. #593
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Ibelsd View Post
    So, I am getting at with the first point is that without having a guiding set of principles or values, debate on whether minimum wage is good or bad is entirely subjective. You have produced a lot of charts and data to defend your view, but you have yet to convince. Why? Because you have not really addressed the value(s) at stake. What is Sharmak principle value? Is it job universality or something else? I suspect he isn't moved by your arguments because what he is trying to express is that he is unimpressed by relatively high unemployment rates. He is ok if some group of people are unemployable. What he wants is wage quality for those who are employed.
    I'm not sure this is quite representative of the thread. The opening post was a practice run for an argument I use in my circle of more progressive friends quite a bit, and do so quite successfully. The entire premise of the OP was that these policies hurt those who are most economically marginalized. I think your assumption of what Sharmak wants (which is what I also initially thought it was) isn't quite correct either. A good deal of this discussion has been about how those who retain their jobs aren't actually better off. That their wages aren't higher due to this policy. If that was truly the motivation here, that would have been a decisive point. But I don't think it was. Re-read Sharmak's points in the last few posts and I think you get to the real motivation. It isn't to create wage egalitarianism or better economic opportunity or anything of that sort per se. Its to be doing something...

    In response to your question, he initially was very reluctant to admit the trade-offs. That was the section of the thread where he spent some time arguing that economists weren't scientists and it has some vestiges now in the discussion that we should listen to politicians rather than economists on economic matters, but not politicians when it comes to climate change. More relevantly, I think he acknowledges the tradeoffs, he just doesn't really care because that isn't the relevant driver for him. Taking action for the good is what is driving him. The need and feeling of doing something to address an observed injustice. That is the driver I think, and that is the operating principle in his opposition, a dislike of arguments for the status quo. [Side note: when I've offered more free market solutions to help, such as cutting the regulatory cost of employment, he has expressed some initial support as well. Again, I think because there is a bias for action.]

    That is the fundamental driving motivation. That things aren't optimal (everyone agrees on that), so we have to do something, anything, because action is, in his world view, always better than inaction. Look at post 585 for example, where action, even under the presumption that it would make wage equality worse, is desired because of the belief that action will eventually produce positive results through iteration. The point of this last discussion was for me to highlight to him just how problematic that fundamental assumption is. That tinkering with an emergent system like an economy is far more complex and far more dangerous than I think he realizes.


    Quote Originally Posted by Ibelsd
    But Google is so large that they dictate the wage structure of the market. They decide, for the most part, what talent they get to have.
    Ahh, those are two different points though. Google is nothing like so large that it gets to determine the wage structure of the market. For a full stack developer (you could substitute any development role) for every Google job (even in Silicon Valley) you'll find two to three dozen competing job offers. This is even more true if you don't happen to live in California. In every state east of Nevada the ratio is in the hundreds or thousands to one for that kind of role compared to Google and Amazon combined. Take a look here: https://angel.co/jobs#find/f!%7B%22t...x%22%3A0%7D%7D

    This is one of two dozen startup hiring sites (not including things like the Ladders, Monster, etc) that each have probably 2-3K developer postings. Now most of these will probably fail (its the nature of startups), but they do directly, and successfully poach Google talent all the time.


    Now, the second point is true, which I kind of said before. The pocket books of Amazon and Google are such that they usually get to dictate the talent they want. Generally (though not always some developers prefer startups for example), Google/Amazon will get talent it is going after. They are like the Alabama Crimson Tide of hiring. They have a miss, but it is somewhat rare (and the more I think about it for very similar reasons). However, that doesn't set wage rates. Rather, that is an inflationary pressure on wage rates. In order to do that, Google has to offer higher wages (and they have the money to do so) or some other benefit (here is where they often don't do as well compared to startups).

    Quote Originally Posted by Ibelsd
    If Google was 100 smaller companies that each hired 1000 engineers, you'd have more market turnover, more opportunities for engineers to move up, more opportunities for each of those smaller Googles to grow and hire more engineers....I am in kinda a rush so I am not being precise here. Let me know if what I am saying makes sense. I am not relying purely on math or econ here. Some of it is just feel.
    Rereading this section, I think you are making a slightly different point than what I thought you were above. This seems more about concentration effects and I think you are undoubtedly correct that there is some downward pressure on wages that results from one Google rather than 1000 smaller firms. There is definitely an element of truth here, especially about the more nimble and changing labor market. I'm not sure of the scale though. It is one factor on wages, but is it a large one? Or is it dwarfed by economies of scale. Certain projects would lack the capital to be developed by a smaller company and fail. Or is it small compared to the upward pressure created by the search for talent? I haven't seen any data recently either way. My rough guess is based on the sheer amount of demand, difficulty attracting talent, and massive number of job requests developers get now. And my guess is that it is a small factor in comparison.

    But I think the idea that labor (especially in this field) is dictated by wages is a bit limited. Google can afford to outpay virtually anyone [though this is purely anecdotal, my role directly competes with Google for hiring and I am starting to get a sense that they are more stingy than you would think], but that isn't the only (perhaps even primary) factor in employment. A lot of developers don't want to work for a large company. A lot don't like Google's labor distribution criteria. A lot don't like the structure of having product managers tell them how to build a product as they do in Google [blushes as a product manager], etc. A lot are looking for something more socially impactful. The vast majority in my sense (including Alice if you remember her) don't care about money as long as it hits a certain basic level so much as they are interested in the problems they are solving and how intellectually interesting they are. The single biggest hiring attractor I've had in interviews is when I lay a ridiculously complex problem in front of the developer and then just let them think about it.

    Does that make sense to the point you are raising? That is my intuition in the field as I understand it. But I also have a bias here since I hire away and have people hired away by Google/Amazon all the time.






    Not related to Ibelsd's point, just happened to see this yesterday. It is an interesting analogy by a Professor at George Mason. The minimum wage operates in the same manner that poll taxes did.


    Mr. Ng:

    Thanks for your e-mail.

    You find my colleague Dick Wagner’s case against the minimum wage “weak.” Without offering a reason for your objection to his argument, you ask why you should “believe that the minimum wage causes unemployment.”

    I urge you to explore the vast empirical literature on the actual consequences of minimum wages. You’ll find there a great deal of evidence that minimum wages reduce the employment prospects of low-skilled workers. This evidence isn’t unanimous, but it is very hefty – in my view overwhelming. (Note, by the way, that job destruction is only one consequence of minimum wages. Other ill consequences include reduced fringe benefits, reduced hours, and worsened work condition.)

    But even apart from the evidence, let me offer you one reason to be suspicious of minimum wages: they are akin to a poll tax.

    Those who impose a poll tax demand that persons wishing to vote bring to polling places a minimum amount of value, in the form of money, before being allowed to vote. Likewise, those who impose a minimum wage demand that persons wishing to work bring to job sites a minimum amount of value, in the form of hourly productivity, before being allowed to work.

    Just as a poll tax prevents people with very few dollars from voting, a minimum wage prevents people with very few skills from working. And so just as a poll tax reserves access to ballot boxes to people with more money, a minimum wage reserves access to jobs to people with more skills.

    Only if you can find your way to suppose that poll taxes have no negative consequences on voting should you continue to suppose that minimum wages have no negative consequences on employment.

    Sincerely,
    Donald J. Boudreaux
    Professor of Economics
    https://cafehayek.com/2019/05/if-you...mum-wages.html
    Last edited by Squatch347; May 8th, 2019 at 09:40 AM.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
    Also, if you think I've overlooked your post please shoot me a PM, I'm not intentionally ignoring you.


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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    It isn't to create wage egalitarianism or better economic opportunity or anything of that sort per se. Its to be doing something...
    Indeed, I think it is a very common liberal/progressive kind of thinking. Akin to "it is more important to be morally right than factually correct" (OAC).

    The act of "doing something" can mean as much or more than actual results, as in "at least "we" tried to help the poor, what have you done to help?".

    In such a discussion, the actual outcome is a secondary consideration to the morally superior position of "trying to help"....

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  20. #595
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    I'm not sure this is quite representative of the thread. The opening post was a practice run for an argument I use in my circle of more progressive friends quite a bit, and do so quite successfully. The entire premise of the OP was that these policies hurt those who are most economically marginalized. I think your assumption of what Sharmak wants (which is what I also initially thought it was) isn't quite correct either. A good deal of this discussion has been about how those who retain their jobs aren't actually better off. That their wages aren't higher due to this policy. If that was truly the motivation here, that would have been a decisive point. But I don't think it was. Re-read Sharmak's points in the last few posts and I think you get to the real motivation. It isn't to create wage egalitarianism or better economic opportunity or anything of that sort per se. Its to be doing something...

    In response to your question, he initially was very reluctant to admit the trade-offs. That was the section of the thread where he spent some time arguing that economists weren't scientists and it has some vestiges now in the discussion that we should listen to politicians rather than economists on economic matters, but not politicians when it comes to climate change. More relevantly, I think he acknowledges the tradeoffs, he just doesn't really care because that isn't the relevant driver for him. Taking action for the good is what is driving him. The need and feeling of doing something to address an observed injustice. That is the driver I think, and that is the operating principle in his opposition, a dislike of arguments for the status quo. [Side note: when I've offered more free market solutions to help, such as cutting the regulatory cost of employment, he has expressed some initial support as well. Again, I think because there is a bias for action.]

    That is the fundamental driving motivation. That things aren't optimal (everyone agrees on that), so we have to do something, anything, because action is, in his world view, always better than inaction. Look at post 585 for example, where action, even under the presumption that it would make wage equality worse, is desired because of the belief that action will eventually produce positive results through iteration. The point of this last discussion was for me to highlight to him just how problematic that fundamental assumption is. That tinkering with an emergent system like an economy is far more complex and far more dangerous than I think he realizes.



    Ahh, those are two different points though. Google is nothing like so large that it gets to determine the wage structure of the market. For a full stack developer (you could substitute any development role) for every Google job (even in Silicon Valley) you'll find two to three dozen competing job offers. This is even more true if you don't happen to live in California. In every state east of Nevada the ratio is in the hundreds or thousands to one for that kind of role compared to Google and Amazon combined. Take a look here: https://angel.co/jobs#find/f!%7B%22t...x%22%3A0%7D%7D

    This is one of two dozen startup hiring sites (not including things like the Ladders, Monster, etc) that each have probably 2-3K developer postings. Now most of these will probably fail (its the nature of startups), but they do directly, and successfully poach Google talent all the time.


    Now, the second point is true, which I kind of said before. The pocket books of Amazon and Google are such that they usually get to dictate the talent they want. Generally (though not always some developers prefer startups for example), Google/Amazon will get talent it is going after. They are like the Alabama Crimson Tide of hiring. They have a miss, but it is somewhat rare (and the more I think about it for very similar reasons). However, that doesn't set wage rates. Rather, that is an inflationary pressure on wage rates. In order to do that, Google has to offer higher wages (and they have the money to do so) or some other benefit (here is where they often don't do as well compared to startups).



    Rereading this section, I think you are making a slightly different point than what I thought you were above. This seems more about concentration effects and I think you are undoubtedly correct that there is some downward pressure on wages that results from one Google rather than 1000 smaller firms. There is definitely an element of truth here, especially about the more nimble and changing labor market. I'm not sure of the scale though. It is one factor on wages, but is it a large one? Or is it dwarfed by economies of scale. Certain projects would lack the capital to be developed by a smaller company and fail. Or is it small compared to the upward pressure created by the search for talent? I haven't seen any data recently either way. My rough guess is based on the sheer amount of demand, difficulty attracting talent, and massive number of job requests developers get now. And my guess is that it is a small factor in comparison.

    But I think the idea that labor (especially in this field) is dictated by wages is a bit limited. Google can afford to outpay virtually anyone [though this is purely anecdotal, my role directly competes with Google for hiring and I am starting to get a sense that they are more stingy than you would think], but that isn't the only (perhaps even primary) factor in employment. A lot of developers don't want to work for a large company. A lot don't like Google's labor distribution criteria. A lot don't like the structure of having product managers tell them how to build a product as they do in Google [blushes as a product manager], etc. A lot are looking for something more socially impactful. The vast majority in my sense (including Alice if you remember her) don't care about money as long as it hits a certain basic level so much as they are interested in the problems they are solving and how intellectually interesting they are. The single biggest hiring attractor I've had in interviews is when I lay a ridiculously complex problem in front of the developer and then just let them think about it.

    Does that make sense to the point you are raising? That is my intuition in the field as I understand it. But I also have a bias here since I hire away and have people hired away by Google/Amazon all the time.






    Not related to Ibelsd's point, just happened to see this yesterday. It is an interesting analogy by a Professor at George Mason. The minimum wage operates in the same manner that poll taxes did.

    Mr. Ng:

    Thanks for your e-mail.

    You find my colleague Dick Wagner’s case against the minimum wage “weak.” Without offering a reason for your objection to his argument, you ask why you should “believe that the minimum wage causes unemployment.”

    I urge you to explore the vast empirical literature on the actual consequences of minimum wages. You’ll find there a great deal of evidence that minimum wages reduce the employment prospects of low-skilled workers. This evidence isn’t unanimous, but it is very hefty – in my view overwhelming. (Note, by the way, that job destruction is only one consequence of minimum wages. Other ill consequences include reduced fringe benefits, reduced hours, and worsened work condition.)

    But even apart from the evidence, let me offer you one reason to be suspicious of minimum wages: they are akin to a poll tax.

    Those who impose a poll tax demand that persons wishing to vote bring to polling places a minimum amount of value, in the form of money, before being allowed to vote. Likewise, those who impose a minimum wage demand that persons wishing to work bring to job sites a minimum amount of value, in the form of hourly productivity, before being allowed to work.

    Just as a poll tax prevents people with very few dollars from voting, a minimum wage prevents people with very few skills from working. And so just as a poll tax reserves access to ballot boxes to people with more money, a minimum wage reserves access to jobs to people with more skills.

    Only if you can find your way to suppose that poll taxes have no negative consequences on voting should you continue to suppose that minimum wages have no negative consequences on employment.

    Sincerely,
    Donald J. Boudreaux
    Professor of Economics
    https://cafehayek.com/2019/05/if-you...mum-wages.html
    Maybe I have mischaracterized Sharmak's args. For that I apologize. To be clear, though, I don't want to defend minimum wage. What I am saying is that if your value system, the primary goal, is egalitarianism, then a minimum wage makes sense. In particular if you believe that equalitarianism should be applied to those who are employed and don't mind unemployment for certain demographics. This is kind of the argument I hear from progressives except they generally aren't willing to publicly admit (certainly not politicians) that any tradeoffs exist. Still, I think the tradeoffs are secondary to them as they seek to reach a specific outcome.

    In terms of the Google example, it is an idea I am playing around with. It is not well formulated yet. It is based on a sense I have of the market and I am looking to either validate it with objective evidence or dismantle it. So, I have read your arguments and I am going to sit on them for a bit.

    Let me ask, what values are you seeking with employment?
    The U.S. is currently enduring a zombie apocalypse. However, in a strange twist, the zombie's are starving.

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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Squatch347 View Post
    those who impose a minimum wage demand that persons wishing to work bring to job sites a minimum amount of value
    I'm asking just for clarification, shouldn't this be those who pay a minimum wage instead of impose.
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by CowboyX View Post
    I'm asking just for clarification, shouldn't this be those who pay a minimum wage instead of impose.
    If you are asking this then you do not understand the analogy.
    The U.S. is currently enduring a zombie apocalypse. However, in a strange twist, the zombie's are starving.

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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Ibelsd View Post
    If you are asking this then you do not understand the analogy.
    Indeed, "impose" is more apropos to the point of the argument.

    ---------- Post added at 07:20 PM ---------- Previous post was at 07:18 PM ----------

    Quote Originally Posted by CowboyX View Post
    I'm asking just for clarification, shouldn't this be those who pay a minimum wage instead of impose.
    So do you agree with the rest of the comment?

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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by Ibelsd View Post
    If you are asking this then you do not understand the analogy.
    I don't see where those instituting a minimum wage make any declaration as to an accompanying amount of productivity. Or that raising a minimum wage necessarily means an increase in productivity is due. Is that what he is saying?

    ---------- Post added at 01:00 AM ---------- Previous post was at 12:58 AM ----------

    Quote Originally Posted by Belthazor View Post
    Indeed, "impose" is more apropos to the point of the argument.
    How so? I suppose employers could and do impose minimum wages on themselves, but that isn't what the thread is about, is it?
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    Re: Increasing the Minimum Wage hurts those most vulnerable in our society.

    Quote Originally Posted by CowboyX View Post
    I don't see where those instituting a minimum wage make any declaration as to an accompanying amount of productivity. Or that raising a minimum wage necessarily means an increase in productivity is due. Is that what he is saying?

    ---------- Post added at 01:00 AM ---------- Previous post was at 12:58 AM ----------

    Almost. But not quite.
    The U.S. is currently enduring a zombie apocalypse. However, in a strange twist, the zombie's are starving.

 

 
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