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Greed and Total Cost of Employment

It seems that everytime I learn something new about this world, not only do I lose another shred of my innocence, but gain a more depressing insight into human nature. Its pitiful, yet interesting at the same time.

Matters of employment are always of concern on this forum, and especially in today's economy. Having a job is a good thing. Isn't it?  While there is a modest percentile of people in North America that make a decent living, I can't help wonder how *so many more* cannot. My $24CDN/hour salary enables me to support an average way of life.  Nothing flashy at all.  And I've become even more frugal during these times. But I can't even fathom how those who only make $8.50/hr (min. wage) can support *any* lifestyle. And so then I look at our wonderful government and question how they can let employers in this country exploit such cheap labour, while essentially subsidising their options with a welfare plan. Which by the way, seems to pay *more* than an $8.50/hour job ever could.

So I assume that its greed that creates this scenario. Or do people like working for peanuts. As that's all they can afford at two weeks minimum wage.

So its better to be the employer then an employee. After all, as an employer, you don't really care about the overall standard of living. Just your own. And its not entirely unfair if the poor sucker accepts that rate of pay. Or I guess most people just don't have a choice.

Its all relative, but definately not equal.

Now the tech industry is known to offer good coin to those who are educated and ambitious. And for those who are not, there is enough money to make them into cheap labour. While workers in 3rd world Mexico can do fine with $2USD a day, the U.S. and Canada cannot. And therefore I think it just seems that this continent with regards to employment and exploitation is dragging itself down into 3rd world status. No wonder its getting harder to be employed.

Software development or not, would you take a job for $8.50/hr?  Would you employ someone for min. wage?

sedwo
Monday, March 24, 2003

I have worked for minimum wage, at "Dairy Queen." Then I learned how to program in high school and got a job at the local college for $8.50 an hour and I was the RICHEST KID IN HIGH SCHOOL.

I have also lived in a 3rd world country (Kenya) and the difference is that not only are there no $8.50 an hour jobs in Kenya, there is also no plumbing, intermittent electricity, one paved road, everyone has malaria, and when a new president gets "elected" they have to reprint all the money so that it includes his photograph.

I don't think there is any chance of USA or Canada becoming a 3rd world nation anytime soon, but a quasi 2nd world country, like Brazil, or Mexico, or Japan...maybe.

choppy
Monday, March 24, 2003

Choopy,

Japan a second world country ?????????????

Ged Byrne
Monday, March 24, 2003

Have you been to japan? I lived there for a year. Yes, there are high speed bullet trains and buy anything you need from vending machines, but the economy has been in a recession since 1990, people in my generation (generation "X") don't get jobs until they are in their 30s, families of 4 live in two room apartments, people heat their homes with heating oil from the convenience store, etc.

choppy
Monday, March 24, 2003

Coming from my background, I can't believe that anyone would NOT want to take a job for $8.50 an hour.  I grew up on a farm with no money.  When I graduated high school, I thought I was in heaven working at a local manufacturing plant making $9.00/hr.  (This was mid 90's by the way.) Then i joined the service and by the time I was an E-4, I was making more money than I had ever seen in my life (~$24k/yr).  Now that I have a CS degree, I can't find a (CS) job, so I have to settle for one of those "low" paying jobs.

In my eyes, $8.50/hr is not a "low" wage, then again I don't know what it means to earn $50k/yr. 

Greed may be a part of it.  A big part.

But, I think you have to remember that this is America.  If I WANT to make $50,000/yr and aspire to do so, then I can. (Or least I have a chance to do so, even it means hiring the $8.00/hr worker). 

On the other hand, If I am satisfied living on $7.00/hr then so be it.

So how do you distinguish Greed from someones Expectations of what they strive to earn?

I think it's when employers say, "I can't imagine having to live like the people I employee who ONLY makes $8.50/hr, while I wallow in my cash."

Slim
Monday, March 24, 2003


The whole minimum wage thing is a red herring.

Lots of people that work at McDonalds are high school kids, retirees, soccer moms, or dependants of a more highly paid worker, and do't really -NEED- to make a "living wage."

By the same token, when I graduated college, I was living in a rented townhouse with 3 other college kids.  One of the job offers I recieved was to make $9.00/hour, and stay in town.

By dividing the rent, electric and heat by four and driving a cheap car, I figured I could actually make a go of it.

Eventually, I took a job in michigan that could afford me what other people here would call a "living wage" - because I wanted to live on my own. (And who would NOT take such a higher paying job out of college?)

just food for thought ...

Matt H.
Monday, March 24, 2003

Off topic:

I get pedantic about the terms 1st, 2nd, and 3rd world. Curious what they meant, I looked them up some 20 years ago. The terms are legacies from the cold war.

The 1st world were those countries aligned with US / NATO.  The 2nd world were countries aligned with the Soviet Union / Warsaw Pact countries. The Third World were countries that were not aligned with either.  Because those countries were generally undeveloped, the term became synonymous with undeveloped or developing nations.

Nick
Monday, March 24, 2003

People can live on minimum wage.  They do it every day.  What makes you think they can't?

Brent P. Newhall
Monday, March 24, 2003

Here's a more current definition:

First World:  Drink tap water, you're fine. 
Second World:  Drink tap water, you get sick.
Third World:  Drink tap water, you die.

Dave Coffin
Monday, March 24, 2003

Brent:

People cannot live on minimum wage. *A PERSON* can live on minimum wage. You cannot pay rent, utilities, and buy food on minimum wage, if you're supporting a family.

I suppose I should be a bit more generous, and grant that you may be able to live on minimum wage, but how can you support a family of four decently on that kind of pay? I know what I'd do if I had to, but I never want to need to.

When one whole work day out of each week pays for nothing more than the gas to get to work and back, you are going to be hurting (no, public transportation is NOT good enough, and moving is expensive) everywhere.

I know families where they have two or three out of the four working, and it's tight there, and not every family has kids old enough to work.

And just because it's possible doesn't mean it doesn't suck.

Mike Swieton
Monday, March 24, 2003

Salaries are all relative!!!!!!

Some of you act like $50,000 is a lot of money - like if you make that you're rich or something. Not here in Long Island New York. You can't even get a house for under $300,000 anymore - and that is a run-down house you are going to totally gut and put a lot of money into it.

Normal regular 2 bedroom houses are $350,000 +.

A family on Long Island looking to buy a house better be making a lot more than $50,000 or have a rich relative helping them out or else they'll be saving up for years & years.

Think your situation is bad? My generation (so called generation X - graduated '96) is screwed with the current economic situation + current housing market in the Northeast!!!!!!!

KenB
Monday, March 24, 2003

You want cheap rents, an infrastructure that makes luxuries  free, a tight clustering so transportation costs are nil.  A college town does most of that.

The job must be one where you can work for 20 hrs/week.  Otherwise you'll want luxuries to make up for the unnaturalness of a 40 hr week.  This usually means mental labor.  At minimum wage, you're likely getting paid lower than your qualifications, so if you can do 40 hrs in 20, no sane employer would mind you jacking up your hours.

Definitely no family, or longterm romantic interests.

Tj
Monday, March 24, 2003

One comment on the original post...

Remember that the government is pressured ("lobbied") by the companies to allow them to pay minimum or less. Why do they lobby? Because they need their goods and services to be as cheap as possible to complete in the marketplace.

This is because almost any consumer will choose the cheaper item, all things being equal. One way to cut costs and have a lower consumer price is to have a less expensive payroll.

If we paid fast food restaurant employees a "living wage" then hamburgers could not cost 2 for $2.00.

Think about it. In a capitalist system, every time you buy something, you are voting in favor of the practices of that company.

Lauren B.
Monday, March 24, 2003

There comes a time when individuals need to make thier own decisions as to how comfortable they are living.

Instead of the gov't forcing employers to pay a "living wage", why can't the LAZY people decide that the salary of a burger flipper at McD's isn't enough to raise a family.

By letting the gov't set a higher and higher minimum wage, you just perpetuate this laziness.

Be an individual, think for yourself, and be responsible for your actions...

apw
Monday, March 24, 2003

I just have a few points.  First off, raising the minimum wage is not necessarily a good thing.  Doing so tends to cause low wage employers to lay off employees because they can no longer afford to provide their services if they have to pay everyone more.  I think most of us can agree that having a minimum wage job is better than having no job at all...

Second, as I touched on and someone else mentioned, low wage jobs are usually low wage because of market forces.  Most of the products and services you pay for on a regular basis come from people working low wage jobs.  The reason those jobs are low wage is because we aren't willing to pay more for the product/service they eventually provide.  I'm not trying to be callous, but it is capitalism at work.

Also think about it this way.  If you raised the minimum wage to whatever you consider a "livable" wage, this will in turn raise the costs of all goods and services, bringing things right back to the way they are now.

I have great respect for people trying to support themselves/their families on a low wage.  In some places, I have no idea how they cope.  I live in an area with a high cost of living, and I really have no idea how people with average service type jobs (clerks, waitresses, etc) manage to live here.  That said, in a capitalist society there will always be such a stratification.  People whose services are less "valuable" will be paid less.  People at the low end of this spectrum will have a harder life.  I don't really know any way around this besides socialism/communism, which have their own problems

Mike McNertney
Monday, March 24, 2003

Dear Dave,
                  Firstly the Second World, as has already been pointed out, is the phrase that was used for the  Communist block countries before the fall of the Berlin Wall. Since that time they have had the benefits of First World Capitalism and top class Chicago School economists, and with a couple of exceptions have sunk inexorably to near the bottom of the Third World heap.

                  Tap water is safe to drink in every city in the world, with the possible exception of cities devastated by war, such as Mogadishu, or for the next week at least, Basra. I have drunk tap water in Cairo, Delhi, Colombo and Marrakesh with no problem. In fact a lot of the bottled water you buy in India is water from the municipal driinking supply which they may have bothered to filter. The real problem is where there isn't tap water, and the ground water has been contaminated by nitrates, or river water by faeces upstream.

              The "modernization" of the Third World, seems to include the privatiization of the water supply and its purchase by multi-nationals (the UK water boards whose "Fat Cat" bosses made such a splash a few years ago are into this big time). Third World countries are pressurized into agreeing to this by threat of not been given loans, or being refused trading concessions or WTO membership.

            The result will be an increase in the price of water beyond what the poor can pay and a massive increase in preventable water-born diseases. That the economic costs of this will greatly outweigh any savings made by the privatization is obvious, but economics and common sense divorced a long time ago as far a policies towards the Third World go.

Stephen Jones
Monday, March 24, 2003

I love the argument that people who are poor are just "lazy" and if they want to have a better life they should just work harder and find a better job.  That's such an incredibly arrogant and idiotic thing to say.  For one thing, getting a better job simply isn't an option for large segments of the population due to lack of education, lack of opportunity (living in a poor area and can't afford to move, can't take the time to find a job since you can barely put food on the table as it is, etc), or any number of other reasons.  Secondly, people in low wage jobs work their butts off to make ends meat.  I'd bet they work much harder on average than the average joe who sits in an office all day.  Salary is not dependant on how hard you work nearly so much as how "valuable" or rare your services are.  Since any teenager can flip burgers at McD's you can bet they won't be paid much.  That doesn't mean low wage jobs aren't hard work.

Mike McNertney
Monday, March 24, 2003

Any industry which requires intensive labor input is going to be expensive.

If everybody had to go to the dentist every day from the age of six to eighteen then dentists salary would be down with those of teachers.

Economies in the First World are producing a three tier labour force. At the top are the few percent of the very rich, either through inheritance or because they posses a hlghly marketable skill, e.g talk show host, rap artist, brain surgeon, software designer (?), and at the second level there is a fairly large swathe of skilled workers e.g.plumbers and machine operatives, and government workers (teachers, nurses, policemen), who have lower salaries but still have a reasonable amount of security, and then there is the majority of the population who are directly or indirectly service providers to the other two groups(particularly the first); this group will extend from hamburger flippers through maids up to personal trainers but will have little or no job seciurity, and/or generally low wages.

            The real problem is that this new working class, or old servant class if you prefer, is obliged to work near the residences and offices of the first and second groups, that is to say they must either live near the most expensive areas in town or wast loads of time and money on two-hour long commutes. $8 an hour isn't too bad if you are paying $300 for your apartment, but if you are paying $700 for the apartment and $300 for the car and gas then there's a problem.

              This is clearly seen also in Europe where there is the, apparently strange, combination of unemployment and job vacancies that are being snapped up as soon as an asylum seeker manages to get off the train. In 2000 I stayed for a month in a hotel in London where the whole staff was Romanian apart from the Indian night manager. Indeed this applies to most of the South East. There are jobs and there are iunemployed British, but the unemployed British can't afford to go and take them up.

Stephen Jones
Monday, March 24, 2003

Stephen,
You opened my eyes today. I really I can't believe that the world's water supplies are being privatized and I wasn't aware of it until you mentioned it. So I did a little web search and came up with tons of links like this:

http://www.purefood.org/Monsanto/waterfish.cfm

It's simply outrageous! They gain control of a natural resource necessary for survival, turn it into a market, then fund the whole operation using public finances.

Is there a better example of greed in the world? What is the justification for this? What can the excuse possibly be for controlling water besides to line the pockets of the rich? I understand that providing water to the masses costs money but it should be a publically controlled common, not a line item on a corporate balance sheet. Outrageous.

Ian Stallings
Monday, March 24, 2003

Just found another good link about Monsato:
http://www.organicconsumers.org/monlink.html


Old but relevant link:
[A Monsanto official told the New York Times, October 25, 1998, that the corporation should not have to take responsibility for the safety of its food products. "Monsanto should not have to vouchsafe the safety of biotech food," said Phil Angell, Monsanto's director of corporate communications. "Our interest is in selling as much of it as possible. Assuring its safety is the FDA's job"]

Ian Stallings
Monday, March 24, 2003

Personally, if we want to set some sort of guarenteed minimum income, I'd prefer that we did it through direct government to individual transfers rather than screwing up the labour market by having the government manipulate salaries.

Bill Tomlinson
Monday, March 24, 2003

Ian,
      Thanks for the link. There are reasons for privatizing services; the main one is that until people pay for water they will misuse it, but I agree with you that it should not be put in the hands of private firms in countries where people might genuinely not be able to afford it.

      In Sri Lanka they tried to pass a bill commodiotizing water but it was thrown out; the problem there is going to be that climate change caused by global warming might cause drought and water shortage - irregualar monsoons have already wreaked havoc with the electricity supply.

        There is vast pressure on the third round of WTO talks to open up the markets for water, phones and electricity. Third World countries are being told that reductions in EU and USA farm subisidies, which are ruining manyThird World farmers are dependent on progress being made in this area.

        A lot of the problem comes because the First World advisors see things through the perspective of their own country. It is clearly better to give people who cannot afford to pay their electricty bills or phone bils or water bills, money through some kind of means test and not use the provision of services to cover social welfare, but subsidizing the first kilowatt hours or telephone calls of a consumers bill is in fact administratively by far the easiest way. However, even, as in the case of the staggered charges for phone calls, where there is an excellent economic case for the practise (it increases the value of the network) if companies are privatized then unless this is forced by law on all providers, the companies will have to drop it or lose thier top end business to the provider who simply caters to the big consumers.

Stephen Jones
Monday, March 24, 2003

Argh!  Take a critical thinking course, Sedwo!

"Greedy" business owners, "exploiting" the masses indeed.  That's like saying all Canadians in the military are sadistic brutes based on certain peace-keeping "incident(s)".

I don't know where in Canada you are living - but here in Ottawa, Ontario - I had no problems living on Cdn $30,000 last year. (http://discuss.fogcreek.com/joelonsoftware/default.asp?cmd=show&ixPost=33282&ixReplies=48) I find it mindboggling that although you make far above the average annual salary across Canada - instead of saying to yourself - "gee, I wonder why I'm not doing better than I am" - you are spouting off about "the government" and "exploitation of greedy employers".

No, it's not easy to live on minimum wage - but it is not as hard as you seem to think.  Paying the million and one taxes associated with employees, in the right order, amount and on time - however, is a completely different story.

And don't get me started on subsidies... Nor on the mentality that one should make it harder to qualify for subsidies so that abusers can no longer abuse.  Wake up!  How well did that work in Ontario and welfare fraud?  If people want to abuse the system, they are going to abuse it regardless (and I've seen this first hand).  On the flip side, the "non-abusers" usually end up getting screwed.

If you raised minimum wage - sure, a number of sub-human human-beings, out only for themselves, would have to start paying more.  They would also continue to do what they could to avoid this.  The vast majority of employers would have more difficulty making ends meet and hire fewer people.  The money has to come from somewhere - and while the papers are full of stories about all those business owners making millions of dollars - most of the business owners I know have a lower salary than any of their staff.  Honestly, if the popular perception of all business owners being out to "screw" their employees and get as much cash for themselves as possible were really accurate, the "really successful business person" story would go the way of the car accident stories...

Ah well.  If you are interested in this area, you'd probably find a basic economics course interesting.  Getting to know people who "survive" on less than $24 / hour would broaden your horizons too...

Hungry
Monday, March 24, 2003

Hey Hungry, I'm jealous!!!!!!

You said: " I had no problems living on Cdn $30,000 last year"

Maybe I should think of moving!!!!!! Do you own a house? Are houses attainable within that budget? Long Island is ridiculously expensive (see my post above). Are there any jobs up North? Do they let US citizens move there?

(I'm big NHL fan - I could root for Chara & The Senators!!!!!)

KenB
Monday, March 24, 2003

The argument that minimum wage jobs are a natural and inevitable part of the economy, deriving from "market forces," and resulting in lower prices, is not correct.

Minimum wage jobs generally occur in large, highly organised, highly profitable industry sectors and deliver higher profits, not lower prices.

The classic case is that tawdry chain of hamburger shops. If they didn't exist, there would be 100,000's of family-based and small-business hamburger shops whose owners would derive the profits and live well. They would probably pay better too, if they used casual staff.

e
Monday, March 24, 2003

On the issue of water privatization, another greedy multinational player is Bechtel, based out of San Francisco.  The SF Guardian has an article about riots in Bolivia back in 2000 because Bechtel privatized the water supply, and then jacked up the prices:

http://www.sfbg.com/News/34/35/bech1.html


On the issue of markets driving minimum wage jobs, a good counterexample is the burger chain In-N-Out -- they pay a "living wage" ($7-9.00/hr in the bay area) and also provide benefits for full-time employees.  They also have better burgers than McDonalds/BK/Wendys and fresher food.  The way they manage it is by having a small menu with a very limited (but high quality) selection,  so they don't have to worry about manufacturing/shipping/stocking/storing a diverse menu.

Colin Evans
Monday, March 24, 2003

McDonalds is a franchise operation. Thus each McDonald's is actually owned by a local, small business person, who derives the majority of the profits from the operation.

choppy
Monday, March 24, 2003

~70% of McD's are franchises.  The rest are owned by McD.  The employees there often use theft (food) as a way to lower living expenses.  The managers (paid ~$12-16/hr) account for more theft per capita.  One can't say franchisees are generally better than corp-owned stores -- they're very variable.  After all, individuals can often be as "evil" as multinationals, on a smaller scale.

Tj
Monday, March 24, 2003

Some of the franchisees are people who would have had local shops, but not many. There is a much greater concentration of "investors."

Along with that is a much greater use of the types of techniques we're talking about here, intended to screw some groups for the benefit of others, to a sophisticated level totally unrelated to productivity or contribution to the economy.

e
Monday, March 24, 2003

"a welfare plan ... seems to pay *more* than an $8.50/hour job ever could."

Yup! I'm on welfare now. Free medical care. The whole nine  yards. Spend about 8 months a year working on open source software and really enjoying it. The rest of the time I spend travelling.

Corporate jobs are for suckers. Get on welfare and do your own thing in the open source community. THe cool thing is you can make a stack of cash on the side doing this and no one will be the wiser.

Eddie
Monday, March 24, 2003

"Tap water is safe to drink in every city in the world"

Either you haven't done much travelling, you have an iron stomach, or you were raised in an area with really bad water and you have grown accustomed to it.

I personally have been to many countries in which the tap water is not safe to drink in Latin America, the South Pacific, Southeast Asia and Africa.

Dennis Atkins
Tuesday, March 25, 2003

Dear Dennis,
                      I have travelled to about twenty-five courntries and lived over a year in six of them. I have never seen anywhere where you can't drink the tapwater. How on earth do you think the locals live?

                      Now what you will get when you change country is travellers' diarrohoea. That is because you are not used to that country's bugs. An Indian going to the
States would probably find himself suffering from a mild version of it. I actually found that when I went back to the UK on holiday I got it.

                      If you are just going somewhere for a few days you might decide it is better to avoid the water. However if you are going to stay any period of time you might as well get used to it.

Stephen Jones
Tuesday, March 25, 2003

My aunt raised four children on £6000 (~$9000) a year. God knows how. I personally find it hard to figure out how I managed on the £18000 I started out on a couple of years back.

The idea that raising the minimum wage will result in layoffs is utter bunk, and everytime a country has had the balls to do so, it's been shown as such. The reason is simple, nearly all minimum wage jobs are vital. They're the cleaners and checkout girls of this world. Without them the companies they work for simply cease to function.

Mr Jack
Tuesday, March 25, 2003

aaaarrrrrrrgghhh!!!!

Sorry folk, but I had to get this out of the way. I always want to cringe when I hear folk advocating for more govt controls and subsidies and regulation.

What makes you think that the govt is any better at regulating your life than you are at doing it yourself.

Here is the way I see it. Someone offers you a wage, and you don't like it, then don't work for them. If you can't get any of the employers to give you the sort of money you like, then go at it yourself, or be unemployed. The reason it is so hard is that govt puts up unnecessary barriers. You need about a dozen licences to open a business!

"Government is good at one thing. It knows how to cripple you, hand you a crutch, and then tell you that you couldn't walk without government."
-- Harry Browne

Govt agencies do not exist to provide a service to the public. They exist in order to justify their existance.

"It has become fashionable in some quarters to argue that women ought to be able to make such [breast implant] decisions on their own. If members of our society were empowered to make their own decisions about the entire range of products for which the FDA has responsibility, however, then the whole rationale for the agency would cease to exist."
-- FDA head David Kessler, New England Journal of Medicine, quoted in the Wall Street Journal 6/24/92

I think every individual is capable of making the right choices for themselves, even if the individual choice is to snort cocaine, or eat ride a motorcycle without a helmet, or employ the services of a prostitute.

"But Lisa, that's why we have government officials, so we don't have to think.
-- Homer Simpson

Once again, why advocate for govt to redistribute resources that do not belong to them. At the end of the day, that wealth is going to have to come from somewhere .... from the wealth creators. These are the people that add value by trading their services/goods for a profit. Might be the kid at McD flipping burgers and converting his time and energy into 99c burgers for McD, and £5/hr for himself. It might also be Microsoft converting Office CDs in $$$. Same story, just the voices that change.

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the Public Treasury. From that moment on, the majority always votes for the candidate promising the most benefits from the Public Treasury with the result that a democracy always collapses over loose fiscal policy always followed by dictatorship.
-- Alexander Fraser Tyler  in The Decline and Fall of the Athenian Republic

Lastly, anyone calling for government subsidies has got to have faith in the govt's ability to read the market, and decide what people should have. Let the people decide what the want to buy, and by extension, what businesses remain viable, instead of letting politicians decide, with your money, what they think you should have.

Quick question, why should my money be used to subsidise milk production if I am lactic intolerent? Why should some minister in Whitehall decide that the telephone is a good thing, and that every household should have a telephone. I know a few people that don't have one and don't want one. Where does it end. I think everyone should own the entire collection of the Grateful Dead. Lets therefore subsidise their production and make them really affordable to everyone.

There is a short letter highlighting the ills of subsidies ..

"Dear Sir:

My friend Ed Peterson over at Wells, Iowa, received a check for $1,000 from the government for not raising hogs. So I want to go into the "not raising hogs business" next year.

As I see it, the hardest part of this business will be in keeping an accurate inventory of how many hogs I haven’t raised. My friend Peterson is very joyful about the future of the business. He’s been raising hogs for over 20 years, and the best he’s ever made was $420 back in ‘68, until this year, when he got your check for a thousand dollars for not raising hogs.

If I get a $1000 for not raising 50 hogs, will I get $2000 for not raising 100 hogs? I plan to operate on a small scale at first, holding myself down to about 4,000 hogs not raised, which will mean about $80,000 the first year.

Now another thing. These hogs I will not raise will not eat 100,000 bushels of corn. I understand that you will also pay farmers for not growing corn or wheat. Will I qualify for payments for not raising wheat and corn not to feed the 4,000 hogs I’m not going to raise? Also, I’m considering the not milking cows business, so, please, send me any information on that, too. In view of these circumstances, you should understand that I will be totally unemployed and therefore plan to file for unemployment and food stamps.

Patriotically yours,

John Partridge."

tapiwa
Tuesday, March 25, 2003

Good link Colin,
I wasn't aware that so many companies are busy exploting the third world's water supply. I mean big oil perfected exploiting natural resources, but a man doesn't need oil to live (this arguable I'm sure but I think we can all agree that food, water, shelter are the basics).

It's intolerable. These companies are projecting an image of the US that is very unpleasant, to put it mildly, and since they work outside of its borders they feel they can get away with actions that would be considered crimes inside the US. I thank god somebody is watching these people.

Ian Stallings
Tuesday, March 25, 2003

The trouble with this, tapiwa, is what's known as the prisoner's dilemma.

You have two prisoners in separate cells, both of whom were involved in some shady business.  But there's not enough evidence to convict either of them unless one talks.  So if neither one talks, they both go free.  But if one talks, he'll be punished, but his punishment will be much lighter than what the other one gets.

As there's no communication between the two, they can't discuss a strategy.  So as one of the prisoners, what do you do?  If you confess, you'll face punishment, but relatively light.  If you don't, you might go free...or you might get sent up by your partner's confession.  Do you take the unpleasant sure thing, or the uncertain path that could be very good or very bad?

Now let's talk about jobs.  Let's say I need a job.  McDonald's is hiring at $5.50/hr or whatever.  Absurdly low wage which no one would call a living wage.  Now on the one hand I can hold out, not take the job, and hope no one else takes the job either.  Eventually if no one takes the job, McD's will have to raise the wage to find a worker.  On the other hand, maybe lousy wages are better than no wages at all; I can't eat future hopes.  And if I don't take the job with the lousy wages, someone else will.

That's the trouble with saying, "If you don't like the wage, don't take the job!"  And that's why unions exist: Unions bring communication between the prisoners in the dilemma, so all can agree to hold out till the wages are higher.  But unions require a limited workforce of skilled workers, something McD's employees don't qualify for.  So government steps in as an imperfect substitute with minimum wage laws.

In a perfect world, sure, we could all refuse to take any job until the wages are reasonable.  But in the world we actually live in, corporations are happy to wait until you're hungry enough that you have to take the job at whatever wage they offer.  This is why we have government, which attempts to restrain the abuse somewhat.  Whether it's successful or not, it's preferable to the alternative.

Kyralessa
Tuesday, March 25, 2003

Stephen said that although he was well-travelled, he didn't know of anywhere that you couldn't drink the water ("what do you suppose the locals drink").  In many third world countries (particularly African ones), the poor quality of water is a leading cause of disease and death.  They drink the water rather than die of dehydration.  If you were travelling there, as a comparatively fabulously wealthy person, you'd likely choose to boil your water to avoid nasty diseases that could kill you...  If you ignore third world countries, Belgium has some of the worst water in the world.  ~Ten years ago (when I lived there), some municipalities were "boil water or drink bottled water" zones, and from what I hear, the problem is just getting worse.  Here in Canada (where we have seemingly limitless fresh water), Walkerton is a good example of what happens if you don't have a safe water source.  As a result of Walkerton, many municipalities recommended that citizens drink boil their water or drink bottled water.  And so, in many parts of rural Ontario (and actually, across the world) - that's what the "locals" do.

Ken said:

"Maybe I should think of moving!!!!!! Do you own a house? Are houses attainable within that budget? Long Island is ridiculously expensive (see my post above). Are there any jobs up North? Do they let US citizens move there?"

I do own a house (a rather expensive one actually - as per my discussion in the thread I referenced).  It is my personal opinion that houses are almost always more attainable than renting, especially right now due to the low interest rates on mortgages.  Here in Ottawa, the rental market was so tight a couple of years ago, I was forced into buying - and it turned out to be cheaper and a good investment to boot! 

One big reason housing was attainable for me originally was because to get your "first" house here in Ontario, you only need to put five percent down, which is often not much more than the first and last month's rent required for most landlords.  I was then able to focus on paying down the mortgage, and then used the money from the sale of my first house to purchase our current place.

However, as I pointed out in the thread, living on a lower amount of money requires a great deal of discipline and a clear idea of your personal goals (in our case, the house was the goal for several years). 

In terms of jobs here in Ottawa, the tech sector sort of disintegrated, but the federal government has picked up a great deal of the slack.  It's my general impression that those who don't speak French and English fluently (generally required) are feeling the squeeze more than others.  The housing market is also very hot (which might not be the greatest for people looking to move here at this particular instant).  We've found business has really picked up in the last year, and the employment statistics are fairly encouraging.  We aren't being bombarded with really high quality resumes the way we were two years ago.  Some people are still having trouble finding high tech work however, especially if they don't have top notch skills and experience. 

With respect to whether we "let" Americans move here, you'd have to talk to someone who knows about immigration.  I know nothing about this area and anything I would say would be spouting random perceptions on the level of the original poster of this thread.

"(I'm big NHL fan - I could root for Chara & The Senators!!!!!)" - You mean you're not already?  Don't tell me you root for Cashin' Yashin...

Hungry
Tuesday, March 25, 2003

Don't tell me you root for Cashin' Yashin...

Coming from Long Island I obviously bleed Islanders Blue & Orange.

I know Canada hates Alexi Yashin and bashes him all the time. I think you do have good reason for that - being that his holdout was so stupid!

He's not my favorite player by far (Dave Scatchard is *see below) & Alexi is definitely haveing an off year (to say the least) but he's 1 of 2 franchise players on this team (other being Peca) - so I gotta root for him.

With the silly contract that Wang & Milbury gave Yashin he will be here for a long time!!!!!!!!!!!! (for better or worse).

* Why Dave Scatchard is an awesome human being:
http://www.newyorkislanders.com/news/scatch032002.htmlhttp://www.newyorkislanders.com/news/scatch_ill010803.html

KenB
Tuesday, March 25, 2003

Scatchard URLS (they got screwed up)

http://www.newyorkislanders.com/news/scatch032002.html

http://www.newyorkislanders.com/news/scatch_ill010803.html

KenB
Tuesday, March 25, 2003

Kyralessa,

"But in the world we actually live in, corporations are happy to wait until you're hungry enough that you have to take the job at whatever wage they offer."

This doesn't reflect my experience at all, nor is it consistent with logic.  Businesses are in competition for labor just like employees compete for jobs.  If burger king down the street is fully staffed and cranking out product, mcdonalds isn't going to sit around trying to drive the price of its labor market to a minimum.  They are going to pay whatever the market demands in order to get the burgers sizzling.  If your statement was correct, then why isn't everyone making next to nothing?

As far as the government restraining business from exploiting workers, what about times when workers exploit businesses?  Right now, we have a labor glut in many industries, so businesses can take liberties in this area.  A few years back, though, labor was in short supply in many areas and workers could and did exploit martket conditions in that environment.  Should the government have stepped in and implemented a "maximum wage?"  Should the government have dropped all its rules governing businesses to allow communication between those "prisoners" so that they could form some sort of "union" of their own? 

mheeber
Tuesday, March 25, 2003

Dear Hungry,
                    You don't have to travel anywhere to realize vast numbers of people are incapable of understanding what they read.

                      I never said that water was safe to drink everywhere. I said TAP water in CITIES  is safe to drink (I'm referring to the fact that you won't get cholera or other water bonr diseases from it, not to the existence of lead, mercury or nitrates that can adversely affect health in the long run).

Stephen Jones
Tuesday, March 25, 2003

" Businesses are in competition for labor just like employees compete for jobs"

The competition for labor is only relevant when the labor is scarce (or in demand). The entire point of Kyra's post was that many (most?) low wage jobs are not scarce labor markets -- and have NEVER been scarce labor markets, simply because practically anyone can do them (perhaps not well, but sufficiently).

I promise you, I never worked in a food establishment which paid more than slightly higher than minimum wage in high school. Chefs and line cooks made more, but as a bus boy / cashier / etc, I didn't rate it -- it was minimum wage or a few cents higher for me.

Steven C.
Tuesday, March 25, 2003

The statement I was debating was this one: "But in the world we actually live in, corporations are happy to wait until you're hungry enough that you have to take the job at whatever wage they offer." 

I was trying to say that the business cannot set an arbitrarily low price on what they will pay - the price is set by the market.  You are, of course, correct that in certain labor markets, there is rarely a scarce supply.  That doesn't mean that businesses that operate in those markets can happily "sit and wait" for the price to go to zero (or whatever low price the business wants to offer) - they face competition of their own and have to get products out the door.  To the extent that they require labor to accomplish this, they will pay what the market will bear for the labor, high or low.

In the fast food industry, some of my high school mates from yesteryear were making slightly higher than minimum wage at one establishment.  I suspect the reason was that the place where they worked wanted to keep their workforce more stable and have the kids actually show up for work on time, so they paid a premium.

I also suspect that in some places, where the cost of living is especially high, businesses like this have to pay well above the minimum wage.  Anyone know what a fast food position pays in San Francisco?

mheeber
Tuesday, March 25, 2003

Hey, I want to hear more about that whole living on welfare and writing software thing...  It sounded like a pretty good deal.  :)

Weary of Meetings
Tuesday, March 25, 2003

-- I also suspect that in some places, where the cost of living is especially high, businesses like this have to pay well above the minimum wage. --                   


not true. you just hire people that can't get jobs anywhere else due to other socio-economic issues.

choppy
Tuesday, March 25, 2003

choppy: do you have any data to support your statement? 

mheeber
Tuesday, March 25, 2003

Since you asked, mheeber, here are a few choice links.

(Google:  san francisco minimum wage)

http://www.alternet.org/story.html?StoryID=9474

http://www.bizjournals.com/sanfrancisco/stories/1997/09/22/focus3.html

http://www.prospect.org/webfeatures/2001/09/just-r-09-14.html

http://www.mcspotlight.org/media/press/sfbguardian_29jan97.html

Kyralessa
Tuesday, March 25, 2003

Incidentally, note especially on that first story (a) the date, and (b) what stage of the business cycle we were at then.

Kyralessa
Tuesday, March 25, 2003

What Kyralessa said. I've lived in the most expensive cities in the USA (Manhattan, SF, Boston, and Miami (although miami isn't comparatively that expensive)).

I lived in Berkeley in 2000 and worked in SF. I would take the bus from Berkeley through Oakland into SF. Basically the other people on the bus were black guys from Richmond who were busing into SF to work security jobs in the city. Overhearing what they made it was anywhere from $7-$11 an hour. Richmond is about 2 hours away from SF on the bus.


I live in Boston now and Starbucks pays between $6 and $8 an hour.

Prior to berkeley I lived in Manhattan. I never asked any fast food employees how much they made, but I remember reading about this guy:

http://www.heiferman.com/mcd/

and it looks like about $5.75 an hour at McD's in Manhattan.

choppy
Tuesday, March 25, 2003

tapiwa

> I think every individual is capable of making the right choices for themselves...

This is actually what democracy is. For it to function, there need to be governments and government agencies to set fair ground rules as decided by the majority.

Businesses are the biggest users of the roads government creates and workers educated by government schools. They use police forces to prevent shoplifting, enforce payment of bills, and prevent damage to buildings during protests, and they expect the defence forces to protect their offshore interests, whenever threatened.

At a personal level, business executives rely on police to protect their houses, their cars and their safety on the street.

You advise low-paid people to start their own businesses, and claim government regulation is a barrier to this happening. The biggest barrier to someone starting their own business, especially retail or service businesses that would suit low-wage people, is lack of capital, not business licences. 

You also represent concerns about wage levels as being theft of resources. In actual fact, low wages are a theft from workers. Low-paid workers could be paid better without reducing managers' pay. The only losers would be shareholders, who don't actually do anything anyway.

mheeber

Businesses are in competition for labor but they also distort the market by using migration. One reason low wages can be maintained is the presence of populations of migrants. This effect is well known in agriculture, household services and hotel work.

I don't know what you mean by saying that workers exploit tight markets. Businesses never pay more than they can afford. If workers were getting paid at higher rates, it just indicates how much they're robbed when workers are plentiful. During the dot com boom, managements and investors obtained higher returns than normal anyway.


Tuesday, March 25, 2003

"Here is the way I see it. Someone offers you a wage, and you don't like it, then don't work for them..."

Tapiwa

The reason we have government regulate employment is that your theory of how employment works is not true for the simple reason that an efficient market consists of many competitors who "DO NOT HAVE MARKET POWER" employers, maybe not in Major Cities, but in general generally do have market power.

But it is a good point that the government is not the best people to regulate employment, the logic going something like why would a charge the people most susceptible to corporate bribes with protecting people from corporations.

I think the real answer is better corporate governance laws, more small businesses, and banning mnc's, but then we would need the govenment for two of those wouldn't we.

Daniel Shchyokin
Tuesday, March 25, 2003

The minimum wage has been an important factor in the innovation that has made America prosperous.  Without the minimum wage and other labor laws such as 150% pay for overtime, the way to increase production was to throw more more $1/day workers at the problem and/or whip them harder into working more hours for no extra pay.

Having to pay no lower than the minimum wage forced businesses to innovate their equipment and processes so that the workers could produce the output required to support the higher-than-$1 wages. The innovation created jobs in the industries that supplied the equipment and supported the business processes, and the higher wages of the lowest level workers provided them with more money to spend, enabling them to contribute more to the health of the economy.  The minimum wage also decreased the incentive to resort to other means of obtaining money such as stealing and drug dealing, allowing the rest of society to lose less of their money to theft and taxes.

Some people make the argument that the minimum wage causes fewer jobs to be available for the lowest level workers. That might be the case in countries where a large percentage of the population lacks the qualifications that would enable them to find anything better. But in America, any able-bodied person in America can find a minimum wage job if they actually look, except perhaps in a few extremely depressed towns.  It's not that hard to get hired at McDonalds or the supermarket.

And believe it or not, there are some business owners who support the minimum wage and don't have a problem when it increases slightly, because their competitors also are affected by the increase.  Some businesses actually would like to increase their workers' pay, because they notice reduced turnover and stealing and absenteeism as a result.  But they don't do it because it would mean their competitors would outdo them by either selling for less or investing more into their business.  The minimum wage enables them to keep their own workers' pay at that level without losing a competitive advantage.

T. Norman
Wednesday, March 26, 2003

Ken - In Ottawa we don't like Yashin, but not because of "his holdout", it's because of his *four* holdouts - the last one after we got swept from the playoffs largely due to his lack of effort.  In fact, despite being our "best" player - he barely registered a single point during any of our playoff attempts.  Furthermore, to improve public relations before his last hold-out, he very publically donated a large amount of money to the local arts center (NAC).  But later it came out that most of it was to be illegally funnelled through the center to his parents.  Despite poor playoff performance, three holdouts and the scandal re: the NAC - he still was by far the most popular player (we were still willing to give him a chance).  The last holdout was the straw that broke the camel's back - and to this day fans will boo whenever he has the puck.

Stephen - I remember massive public campaigns in Belgium to let everyone know *not* to drink the tap water, because it was not safe.  As far as I know, it was not carrying chlorera (although we did stay at a hotel once in the Canary Islands where that was a concern - we were told not to drink the TAP water - brush your teeth with bottled water etc etc), but the danger to health was not some theoretical longterm "drink it if you really want to" kind of thing.

And although Walkerton is not excessively large, (a town, rather than a city) - it still has tap water - which was not safe to drink due to e-coli.  Furthermore, there is nothing about what happened there that could not happen elsewhere - which is partly why it got so much media coverage.

The point is that just because water is coming out of the tap and happens to be in the city, doesn't make it "safe".  Safety depends on the surrounding area (eg contamination of ground water from pig farms), the load on the water system, and the age and type of filtration systems in place.  As we learned a couple of years ago - filtration systems are not infallible, and as bacteria mutate and the contents of the water change, the filtration systems need to change too.

And to the person who stated that businesses never pay more than they have to or can afford - this statement is completely false in my experience.  That's like saying Americans settle road rage disputes with a shotgun.  Both you (and Stephen) should learn that most blanket statements (including this one) have so many exceptions as to be useless in debate :)

Just ranting about greedy employers and minimum wage is pretty easy to do, but it's not exactly productive.  If you care: Do something about it.  Come up with a plan.  Otherwise, quit whining.

Hungry
Wednesday, March 26, 2003

Incidentally T Norman, it was my understanding that process innovation is not widely considered to be an important factor in increased prosperity (tends to reduce employment, and increase minimum wage jobs). 

It's product innovation that is the really important factor (tends to increase employment as well as wages) However, in a balanced economy you want both.

Hungry
Wednesday, March 26, 2003

I'd like to know how many people died in Belgium of drinking tap water.

I have a Dutch friend who has passed the last fifteen years in Sri Lanka, is perfectly integrated and yet will go crazy if they try and give him ice made with tap water.

The strange thing is, as you pointed out, that Holland probably has a much more serious problem with contaminated ground water caused by pig slurry than Sri Lanka.

I still maintain that tap water in most third world cities is as safe as in first world ones. Your arguments actually suggest you tend to agree with me.

And tap water is still better for your healthi in the long term than neat Bourbon, though it doesn't taste anything like as good.

Stephen Jones
Wednesday, March 26, 2003

T. Norman is right about the fact that cheap and plentiful labour is the biggest single impediment to technological innovation. He is also correct in saying that the shortage of labour in the States throughout most of the 19th century was behind the States industrial success. I doubt if the minimum wage was a significant factor however.

Those who claim that a decent minimum wage is the main barrier to entry for budding entrepreneurs ought to consider the case of slavery. You can't think of a clearer example of only paying the reproductive cost of labour, yet a new entrepreneurs costs were still high as instead of paying the slaves he had to pay for them.

In my opinion the main question with setting a minimum wage is what it should be. Set it too low and it is almost meaningless, but set it too high and you are pushing up prices and depressing employment. One of the few things I do thiink Tony Blair's government got right was in fixing the level at an initiial £4-20 instead of the £4-60 the unions were asking for.

Stephen Jones
Wednesday, March 26, 2003

Thanks for the links.  Looks like the wages are pretty low in an absolute sense.  Consider, however, that the $6.80/hr rate mentioned in the first story, at a time when the minimum wage was $5.15.  This represents a premium of amost 33% above minumum wage.  33% seems like a significant number to me. 

Also, from story "B":

"Finding someone willing to work for the minimum wage of $5.15 an hour is difficult, and sometimes impossible in areas with low employment rates and booming economies."

"'We think of minimum wage as $7-an-hour. We can't recruit anyone for less than $7.'"

Isn't this exactly the point I was making? 

mheeber
Wednesday, March 26, 2003


"I think every individual is capable of making the right choices for themselves...

This is actually what democracy is."

Actually, democracy is every individual making what they think is the right choice not only for themselves, but also for everyone else.  When I go to the ballot box, I'm not voting for a referendum that will apply to me only; my vote is whether it should apply to everyone.

"The only losers would be shareholders, who don't actually do anything anyway."

Shareholders risk their capital to finance the operations of the business.  You don't count this as "doing something?"  You even mention "lack of capital" as a primary impediment to starting a business.  So which is it?

"I don't know what you mean by saying that workers exploit tight markets."

This isn't obvious?  You don't think some of the extremely high salaries commanded during the dot com days were the result of workers with in-demand skills "exploiting" a favorable market?  I tried to exploit the hell out of it.

mheeber
Wednesday, March 26, 2003

Saying that 33% higher than minimum wage is significant seems to me like saying that someone was going "double" the speed limit when he was going 20 MPH in a 10 MPH zone.  I'd still like to see you try to live on $6.80/hr in San Francisco.  (Works out to about 14K/year before taxes.)

Either you live in an apartment with twenty other people and split the rent, or you have a two-hour commute _each way_.  Then after a thirteen or fourteen hour day including commute, lunch, and time to get ready for work or to change when you get home, you're supposed to study or learn some new skills to better yourself so you can get ahead instead of being lumped with those lazy minimum wage people.  Might be possible if you're single, but difficult otherwise unless you're supposed to just ignore your wife and/or kids in the evening.

Kyralessa
Wednesday, March 26, 2003

>This is actually what democracy is. For it to function, there need to be governments and government agencies to set fair ground rules as decided by the majority.

When did we suddenly become so dumb that we need some govt agency making decisions on our behalf. And if the majority decide as in the case of Nazi Germany, that the Nazi Party is a good thing(tm), then according to you it is fine. You will probably going to point out that you said FAIR. The question though, is who determines what is fair. Is it fair for example, that one man has 12 Ferraris, when just a few miles down the road, are homeless women and hungry children. Should we as society force (TAX) him to pay for the women. While we are at it, with limited resources, who decides who gets the first share of the pie. The only people who benefit from this are people who have perfected the art of extracting resources from the 'societal kitty'.


>Businesses are the biggest users of the roads government creates .....

If you expect businesses and the rich to pay a proportionately larger share of their incomes into society's kitty, because they have more to lose than the poor, then should they not, by exptension be entitled to greater representation, again because they have more to lose. In most private interactions, your vote is proportional to your stake. aka Put your money where your mouth is!


>The biggest barrier to someone starting their own business, .... that would suit low-wage people, is lack of capital, not business licences. 

Look at all the small businesses in the third world countries. If you read the research material coming out of those areas, the most successful by far have been in areas with the least govt intervention. True, most of these businesses are tiny, and possibly primitive by the standards of most of the folk in the 1st world. What we have to remember though, is that incomes in these countries are just a fraction of what they are in the developed world. A lot of people would rather be a market gardner for example than be flipping burgers at MacD. How many people have left the rat race, and armed only with a laptop, and brains have built consulting firms. If your value proposition is compelling, you will get investment. A bit cheecky of you too to decide what industry would suit someone because of their income levels.


>You also represent concerns about wage levels as being theft of resources. In actual fact, low wages are a theft from workers.

Wage levels are not theft. Minimum wage says that if I am happy to clean your shoes for £2/hr, you can't employ me because that is less than the minimum wage. At the min wage  >£4, then its not worth it for you. You would rather clean your shoes yourself. Me, I am stuck with all this time, and no ££. Just out of interest, how much do you pay your baby sitters?? Do you find that prices change depending on the season (NY Eve vs Term holidays vs Rest of the yr)?


>Low-paid workers could be paid .... the only losers would be shareholders, who don't actually do anything anyway.

How much interest do you think is fair when you put your money in a bank?? What do you do to earn that interest? You save. Well, not only does a shareholder save, he also takes a risk. More risk, more premium. Only logical from where I am sitting. Another thing to consider is that it is not the absolute profit that counts, but the return on investment. Company A makes £1million on a £1billion invested. Company B makes £1million on £1m invested. Which one would you rather put your money in.


>Businesses are in competition for labor but they also distort the market by using migration. One reason low wages can be maintained is the presence of populations of migrants.

So let me get this right. You are happy for the good ol' USA to export the stuff it makes best (tech, cars; entertainment etc), but you start moaning when those same countries export the stuff they are best at producing (educated hard working labour).


>If workers were getting paid at higher rates, it just indicates how much they're robbed when workers are plentiful. During the dot com boom, managements and investors obtained higher returns than normal anyway.

Does the price you pay for your forex when you go on holiday differ day to day?? If you get Zimbabwe Dollars cheaper today than you were getting a year ago, does that mean that you were getting ripped off. No. You just paid fair value for them at the time. Same thing with labour. HTML 'programmer' who were earning stupid money when everyone and they cat was scrambling to put a website up now could not do the same stuff for free. Did they rip off firms?? No, they just got paid what the market thought they were worth at the time. I am not sure what papers you read, but labour seems to have benefited the most from the dotcom boom. Tons of investors (read Pension Funds) got burnt badly.


>employers, .... in general generally do have market power.

What about trade unions. Do they not have market power?? My problem is not with workers bonding, and negotiating as a collective (I think the stars of Friends did this). My problem is with the govt according the one side more power. I can go on strike any time, but you can't fire me. Also a problem when all players in an industry are compelled to agree to industry wide scales.


>I think the real answer is better corporate governance laws, more small businesses, and banning mnc's....

Why should this  happen. The fact that I sell burgers very cheaply in 20 countries does not inherently make me bad. For most things, I could not give a s**t whether the company I am buying from is mutinational or not. Do I like their product at that price, is the only question I need to ask. Sometimes a multi national is a good thing. Sheraton in Harare will not be too dissimilar to the one in London. If Mac burgers were so bad, no one would buy them, and the company would have to change the menu/practices, or go out of business. Vote with your money. Do not impose your ideals on me. I don't like MacD, but the fact that another one has opened just down the road from our offices suggests that there are enough people out there who do to justify their existance.


>The minimum wage has been an important factor in the innovation that has made America prosperous.....

Can you justify this?? By your argument, let us set the minimum wage at £100/hr. That really should kickstart innovation and prosperity. In fact, why stop there, we could set it at £5000/hr, and get even more innovation! The kind of innovation you are talking about is the kind of innovation that replaces labour  in one industry with machines/better processes. You therefore agree, that minimum wages do cause unemployment.



>might be the case in countries where a large percentage of the population lacks the qualifications that would enable them to find anything better.

Hate to disappoint you, but America and the UK are quite a bit down the line in education rankings for high school kids. Education alone is not the key to economic prosperity. Look at Zimbabwe. They have the most educated populace on the African subcontinent, but look at them now.


>And believe it or not, there are some business owners who support the minimum wage ...

If I opened a burger shop, and put up a big sign that said, "We pay all of our employees £25 per hour", but sold our burgers at 5 times the Burger King prices, would you buy them??

tapiwa
Wednesday, March 26, 2003

Kyralessa,

Just to be clear, I was making no judgement about whether minimum wage is or is not enough to live on, or whether anyone should be content to accept minimum wage.  I couldn't live on it for any length of time, and if I had to, I would certainly be doing whatever I could to make that a temporary situation. 

My argument was about the misrepresentation of market dynamics that a few of the earlier posts were presenting, starting with this one from you:

"But in the world we actually live in, corporations are happy to wait until you're hungry enough that you have to take the job at whatever wage they offer." 

I apologize if you thought otherwise.

mheeber
Wednesday, March 26, 2003

----"When did we suddenly become so dumb that we need some govt agency making decisions on our behalf"---

Some time round about seven or eight thousand BC when the agricultural revolution started to make communities too large to be governed by the informal hunter-gatherer group mechanism that existed beforehand.

Whenever people talk about getting rid of government intervention they mean getting rid of the bit of it that annoys them. I don't think Bill Gates "freedom to innovate" included taking copyright protectiion for MS products outside of the criminal and penal justice system.


---"I can go on strike any time, but you can't fire me."---

Perhaps you can tell us what country you live in. Certainly not the US or UK. In most courntries in fact the opposite is true.

Stephen Jones
Wednesday, March 26, 2003

Warning! Nazi's were recently mentioned, leading this thread perilously close to destruction by age old internet rules.

Steven C.
Wednesday, March 26, 2003

I was the last one to post before Nazis were mentioned.  Does that mean I win?

Kyralessa
Wednesday, March 26, 2003

>>And believe it or not, there are some business owners who support the minimum wage ...

>If I opened a burger shop, and put up a big sign that said, "We pay all of our employees £25 per hour", but sold our burgers at 5 times the Burger King prices, would you buy them??

You left of the important part of my sentence that said they "don't have a problem when it increases slightly, because their competitors also are affected by the increase."  $25/hour is not a slight increase.

If it was raised to say $7/hour, both you and Burger King would have to pay that wage, so you wouldn't have sell your burgers for more than Burger King sold theirs unless your business was otherwise less efficient than BK.

T. Norman
Wednesday, March 26, 2003

forgive me for mentioning Nazis....

I get really worried when folk sell Democracy as the "it cannot get better than this" political system. Not only that, but many folk are proponents of this fallacy that democracy can only result in good things.

While there are many cases of democracy failing ove the course of human history, this is one of the more recent examples with very severe consequences.

I am just getting people to maybe realise that "It was a democratic choice" is not a good enough reason to justify societal/governmental behaviour.

tapiwa
Wednesday, March 26, 2003

Maybe I don't understand SF too well, but the right strategy there might be to live at hostels, crashing at peoples' places to save money.  That's what I once did, though I didn't find it too sustainable, even though I was programming.

BTW, with those low wages people are quoting for McD's, I'd have to lower the wages I mentioned for managers.  The lower managers earn 2-3 bucks more than normal workers.

Tj
Wednesday, March 26, 2003

T Norman.  I recommend that you read an essay by Frederic Bastiat called that which is seen and not seen.
http://bastiat.org/en/twisatwins.html

What you see is the govt decreeing that every man woman and child at min wage should earn more. You say this is a good thing. This is irrespective of whether that value of their output has increased. That is seen.

When the business owner gets this increase wage bill, he is faced with two choices. He can take the added expense and reduce his profitability, or he can pass these added costs onto his customers. He might attempt to squeeze the costs from other areas (cleaning? cut staff levels? make smaller burgers? use cheaper rolls?), because he knows that he cannot pass these added costs to the customers.

Even if did pass the costs on to his customers, what you and I, burger consumers now find is that where we could afford 10 burgers a week, we can now only afford 7. Why?? Because some govt bureaucrat decided that raising the min wage to £7 was a good thing.
All of this is not seen.

Let me ask you a direct question.

If you could set the minimum wage in the US, what level would you set it at, and how do you arrive at your figure??

tapiwa
Wednesday, March 26, 2003

Actually the Nazis never got the majority of votes in an election.

They were the party with the greatest number of votes - rather like George W. Bush was the candidate with the highest number of votes in 2000 :) - but they were a definite minority government. Indeed you could say it was Stalin who put Hitler into power since the communists in 1933 did not have a policy of combining with other anit-nazi forces.

And just as irrelevantly, in 1950 the Conservatives under Churchill got the highest number of votes nationally, but had less MP's and  beciame the opposition, and in 1951 the Labour Party under Attlee increased its votes to come ahead of the Conservatives, but lost seats, and went into opposition.

Only slightly more relevantly we have Benjamin Franklins definition of demodracy as being two wolves and a sheep sitting down to vote on what to have for dinner.

Stephen Jones
Wednesday, March 26, 2003

Dear Tapiwa,
                    At least you are beginning to ask the right question. Not "should we have a minimum age" but "what should it be and how should it be worked out".

                      You should however be careful of presuming that any increase in wages will automatically work its way through the system and result in an increase in prices. As I pointed out in my example on slavery there are plenty of places where the profit can disappear. Think of the price of real estate. You lower the cost of labour and owning a downtown fast-food franchise becomes more profitable; more franchisees want to own one and the rents go up to swallow the savings; increase the cost of labour and you might find the opposite will happen.

Stephen Jones
Wednesday, March 26, 2003

tapiwa:

I am not saying that the minimum wage should necessarily be higher than it is now.  I am just saying that the existence of a minimum wage is good for society, and slight increases are not as deadly as you make it sound.  It can be dangerous if it is set excessively high, just as an overdose of a disease-curing drug can cause instant death.  But there is no indication that the current US minimum wage is so high that it is pricing the low-skilled workers out of jobs, as there are very many minimum wage jobs available.  Those people who remain unemployed now instead of getting a minimum wage job would be even less likely to decide to work for a lower wage.  Increases in the US minimum wage have not been followed by increased unemployment, and the states with minimums higher than the federal amount have not been worse off for it.

T. Norman
Wednesday, March 26, 2003

tapiwa,

Wage increases may well cause an increase in price to consumers, but I don't stop eating at Taco Bell just because the bean burritos cost 89c instead of 79c all of a sudden.  Now if dinner at a fast food joint for my wife and me suddenly cost $20 where before it was $10, of course we'd get sticker shock; but if, as is more likely, dinner went up to $12, I don't think we'd worry about it; if we couldn't afford that shallow an increase, we wouldn't be eating out in the first place.  Actually, it's a 20% increase in price, but when you're dealing with numbers that small, it's just not significant.

Kyralessa
Wednesday, March 26, 2003

Hi folk

I am TOTALLY OPPOSED to a minimum wage. I am not convinced that govt planners know enough about the economy at any given time to set the minimum wage at a price which would not distort the labour market.

What I hoped to do was to elicit people's views of what the minimum wage should be, and more importantly whether that figure was guesstimated or based on reason.

If it is reason, the next step would be to test the validity of the premises, and the logic that lead to the conclusion.

tapiwa
Wednesday, March 26, 2003

Let me ask another question.

Do all you advocates for a minimum wage also advocate minimum prices for farm produce?? (or steel, or coal  or whatever??)

Just remembered a question one of my professors used to ask.
    Would you rather be employed at $5 and our, or be unemployed at $20 an hour?

tapiwa
Wednesday, March 26, 2003

Kyralessa

The size of the increase is not the issue. It is the principle.

Stealing £1000 from Bill Gates does not make it any better than stealing £1000 from you does it??

The govt has managed to transfer wealth from you the consumer, or from the employer, to those employees who remain employed, without increasing the value that you derive from them.

tapiwa
Wednesday, March 26, 2003

Stephen

I totally agree with you. There are a number of factors that can affect the pricing of a good.

The only difference is that in most of these cases, the prices are determined by individual voluntary action aka market forces, in mutually beneficial transactions.

My issue is with the govt setting prices - for anything.

Imagine you had a car you wanted to sell to me. I offered you $100 and you were happy. Now imagine there was a govt set minimum price at $150 (in order to protect the new-car industry and jobs blah blah!!). You would be stuck with a car worth $150 according to some dude in a govt office, but which you are willing to trade for $100.

Hell, it could be the other way round. The govt might set a max price. I might be prepare to pay $150 for your car, but some govt official might (to prevent profiteering and oppression of the poor) decide that the max price for that car should be $100, which you are not happy with.

A lot of countries do implement price controls (yes, in the developed nations too), in the interests of protecting the citizens.

My main question again, and one that no one has stopped to answer, is where does this unquestioned faith in the govt's ability to make better choices for you than you can make for yourself come from.

And if we are that bad at making choices for ourselves, what makes us think we are any better at choosing this said government.

tapiwa
Wednesday, March 26, 2003

It's not an unquestioning faith, we're ALWAYS questioning it. People talk about almost nothing else.

But we occasionally think they might be better qualified, what with their being politicians by trade and that.

optimistic coder
Wednesday, March 26, 2003

Another idea: how about fixing the minimum wage at a percentage of GDP?

optimistic coder
Wednesday, March 26, 2003

Stephen Jones: "You should however be careful of presuming that any increase in wages will automatically work its way through the system and result in an increase in prices."

Would you agree that the increase has to come from somewhere, presuming that the increase did not somehow make the worker receiving it more productive?  The shareholders realize a smaller return, or the customer gets lower quality, or something similar?  Someone is subsidizing the increase, yes?

What I'm driving at, obviously, is that someone is getting less so these others can get more.  Whether this is right or wrong really depends on your personal ethics, I suppose, so I'm only asking if the statement is true or false to your way of thinking.

T. Norman:  "But there is no indication that the current US minimum wage is so high that it is pricing the low-skilled workers out of jobs"

Check out: http://www.frbsf.org/econrsrch/wklyltr/wklyltr99/el99-06.html

One hundred to four hundred thousand lost jobs is more than statistical noise.  There are lots of studies that demonstrate similar results, so if you'd like more links, let me know.

Kyralessa:  Your reasoning works well for individual cases, but a business sees things in aggregate, across their entire market.  Small increases in price chew away at marginal customers - there is some number of customers (possibly a tiny percentage) for whom that 10-cent increase is enough to change their purchasing habits.  This is called the "Price Elasticity of Demand" (see: http://www.quickmba.com/econ/micro/elas/ped.shtml).

For a familiar example of how businesses are sensitive to price, think about why things often cost 9.95 instead of 10.00.  That nickel difference in price can mean a large difference in profit.  These things aren't as insignificant as they might seem.

Just so everyone knows where I'm coming from, my own opinion on the minimum wage is that it does more harm than good economically, and that at its base it's morally wrong.  YMMV.

mheeber
Wednesday, March 26, 2003

great! I propose that we fix it at 0%

tapiwa
Wednesday, March 26, 2003

tapiwa, the role of democracy is to see that all of our interests are reasonably represented.  This most certainly means that the interests of some people will not be catered for, where those interests would cause significant harm to other people.

> When did we suddenly become so dumb that we need some govt agency making decisions on our behalf.


Wednesday, March 26, 2003

fine, 0% for your next pay rise, too. you deserve it.

optimistic coder
Wednesday, March 26, 2003

mheeber, 9.95 is to make it look cheaper to stupid people (so yes, screw them, fair enough), and stop sales people pocketing the note (they have to give change). Apart from that, it's just tradition.

optimistic coder
Wednesday, March 26, 2003

>>where those interests would cause significant harm to other people.

how does me offering to pay you $2 per hour to flip burgers harm you??

0% increase sounds good to me if I have not earned the raise. If on the other hand I am offered 0%, and I think I can get significantly more elsewhere, I will walk.

tapiwa
Wednesday, March 26, 2003

This is getting a bit boring again. So:

What does everyone think of the Basic Income idea - that is, *everyone* gets paid, say, $100 per week by the state, then pays flat rate tax on everything they earn?

One advantage I can see is it would make a large number of tax lawyers redundant.

Milton F
Wednesday, March 26, 2003

Milton F: isn't that what nobel prize winning economists have been proposing for decades, to solve welfare problems? It wouldn't work in the USA, because:

it is too logical

there is too much ingrained puritan work ethic / racism / confused "survival of the fittest" attitude

it would remove the welfare state controls placed on a huge percentage of the populace, and the bureaucracy that goes along with it

choppy
Wednesday, March 26, 2003

Dear Mheeber,
                      It's three in the morning here so just two quickies.

                        The link you post to from the San Francisco Reserve Bank, doesn't back up your ideas anything like as much as you want. First of all the job loss it takes as its base was the result of a vast percentage increase in the minimum wage, basically a result of the fact that Reagan refused to raise it for ideological reasons for many years. The result was that when the increase came it produced a jolt, and econiomies don't like being jolted.

                        Secondly the job loss it is talking about is of a 2%-6% loss AMONG TEENAGERS. Considering the benefits that a 19.5% increase in the minimum wage would have bought to many others apart from teenagers (single mothers springs to mind) the raise was at least worth considering.


---"What I'm driving at, obviously, is that someone is getting less so these others can get more..... so I'm only asking if the statement is true or false to your way of thinking"----

Actually, it isn't necessarily true at all. One of the guys who a hunderd years ago proved it not to be was that notorious antii-capitalist, Henry Ford.

Stephen Jones
Wednesday, March 26, 2003

Thanks for taking the time to reply Stephen.  I didn't actually post the SFRB link to support my point.  My aim was to offer some information to one of the earlier posters that there *was* indeed reason to believe that fooling with the minimum wage could have significant impact on the job market, in terms of raw number of jobs.  I wasn't attempting to demonstrate that the impact produced a "net societal loss," or that the minimum wage was bad, or anything like that.  Just that there was a correlation.  I probably should try to be a little more clear when I post links.  Sorry for the confusion.

I'm not sure I understand your reference to Henry Ford, though.  Henry Ford proved that he could pay his workers more without taking those funds from somewhere else?  I've read your posts before, and I know you are typically a very logical fellow, so I'm certain I am missing something.  Can you elaborate?

mheeber
Wednesday, March 26, 2003

$100/wk per American means about $1.6 trillion per year.  The examples I've heard are more along the lines of ~$150/MONTH.  About the amount all Alaskans get.

While it's below subsistence, I think that a big problem with unemployment benefits is that you're supposed to get a job Right Now.  But when you're unemployed, you need to learn a bit before settling into the right job, for job security and to be productive.  And you could take on a parttime job while doing this, instead of falling into the welfare trap.

This is one of those things that some other, more enlightened country needs to experiment with though.  The entitlements bureaucracy would fight tooth and nail.

Tj
Wednesday, March 26, 2003

(I was talking about the Basic Income Guarantees that Milton F. raised above.)

Tj
Wednesday, March 26, 2003

Ford's idea was that he needed to sell more cars so he would pay his workers enough to be able to affiord one. (or so the myth goes - I reserve judgement).

I have seen significant research into the concept that pumping money into the bottom of society who have a much greater stimulus effect on the economy than tax cuts on the rich.

An increase in wages will result in jobs being lost; however the increased spending power should result in jobs being created in another place.

The argument for government intervention in contracts (whether work or housing) is that a fair contract requires equality of bargaining power by both sides and this often doesn't happen. So a cardiologist for example can't open you up and then insist the price has gone up 1000% just before they give you a second dose of the anaesthetic.

Stephen Jones
Thursday, March 27, 2003

Stuff income guarantees.

I am a bit drunk, but I still remember reading Henry F's biography. One of the wives of the guys working at the Ford plant complained that while her husband made better money there than in most other jobs available, he really earned it.

Coming back home tired and all. For some folk, this is worth the extra money... especially earlier on in their lives. For others, quality time with the family is worth more. Only an individual can decide that.

Ask all the folk that I work with. Or indeed all my lawyer friends. All of us put in stupid hours and effort now, in the hope that it will secure a better future. What we do not need is a govt like the one in France that mandates that for every working man, woman and child, 35 hours is a good thing(tm)!

Off to bead now. Peace :)

tapiwa
Thursday, March 27, 2003

Martyr.

optimistic coder
Thursday, March 27, 2003

I've never heard that about Ford, though I have heard enough strange ideas connected to the man to believe it.  It's kind of like thinking a cow would get nice and fat by drinking her own milk.  Maybe there was some advertising advantage or something.

Anyhow, I'm travelling, and I'm beat, so I'm gonna drop out.  Hope you folks can get it figured out.

mheeber
Thursday, March 27, 2003

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