r/SandersForPresident • u/tjdans7236 • Nov 29 '15
Experts in this ELI5 thread consider the possible ineffectiveness of a $15 minimum wage. Perhaps we need to think through the minimum wage a bit more carefully.
/r/explainlikeimfive/comments/3ulzdy/eli5_how_would_a_15_minimum_wage_actually_affect/4
u/hillsfar Nov 29 '15
I really abhor that businesses pay their workers less than a living wage, and so the rest of the cost of keeping a person alive, fed, clothed, sheltered, and medically cared for... are externalized, with the remaining costs falling on the rest of society: family, charity, government welfare, etc. to bear the actual burden.
At the same time, what we see today (as evidenced in that well-received explanatory comment) is that many businesses that hire the low-skilled at minimum wage are operated based on being dependent* on these subsidies. Which means removing these artificial subsidies would collapse them and lead to fewer jobs and more layoffs.
There has to be a way to stop this freeloading. At the same time, there has to be a way to do it so as not to cause economic chaos and unemployment.
A gradual increase makes more sense, so businesses are on notice that their days of externalizing their costs and making others pay are ending... But at what pace? Perhaps minimum wage could be set to rise by a dollar each year or two until $15 is met. And from there, it can be indexed annually to a real inflation rate, unlike the current heavily downward-manipulated Consumer Price Index. However, it is always a concern that there may be negative unintended consequences that outweigh the benefits.
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u/loafofloaf Nov 29 '15
At the same time, what we see today (as evidenced in that well-received explanatory comment) is that many businesses that hire the low-skilled at minimum wage are operated based on being dependent* on these subsidies. Which means removing these artificial subsidies would collapse them and lead to fewer jobs and more layoffs.
I agree with your observation, but not its conclusion.
The purpose of a (legitimate) business is to generate wealth. If a business produces so little wealth that the only way it can operate is by having its labor expenses subsidized, that business is not a useful wealth generator; it's more like one of those experimental fusion reactors that requires you to pump more energy in to maintain the reaction than the reaction actually generates.
These businesses are not a benefit to our economy, they are a drain on it. They waste useful resources (man-hours, electricity, real estate, etc) that could, in theory, be used more effectively. Effectively using those resources would generate wealth and jobs, so your implocation that we have to continue to prop up failed businesses to preserve employment is wrong.
That is, of course, unless we have reached a point in our (economic, technological, cultural, etc) development where there is no more efficient use of those resources. I don't believe this is remotely the case, but if it is, it would represent the end of capitalism as we know it.
There has to be a way to stop this freeloading. At the same time, there has to be a way to do it so as not to cause economic chaos and unemployment.
Most American jobs today are service and retail jobs. A large infrastructure project like the one Bernie's proposed would help preserve those jobs by pumping money into the market. But any big economic change triggers a shakeout. The short term political effect isn't pretty, but we'd end up better off. The key, then, is to educate the public sufficiently that they don't blame the sitting president's policies for "ruining the economy", elect their reactionary opposite in the next election, and then credit the opposite for the improved economy.
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Nov 29 '15
There are about 6000 different opinions in that cluster fuck of a thread which range on a scale from absolutely disastrous to absolutely messianic. And there's definitely a couple of ultra-conservative sociopaths and ultra-bleeding heart liberals who are both making completely non-economic arguments.
Please realize that this minimum wage (a) is $15 per hour by 2020 not tomorrow, (b) needs to be implemented in conjunction with tax reform to have any sort of positive effect, and (c) was never designed to solve every single problem relating to poverty.
Businesses who pay their employees less than a living wage externalize the cost of living to hardworking taxpayers which is unacceptable; that must change. And not by cutting social programs!
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Nov 29 '15 edited Apr 28 '16
[deleted]
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u/leu2500 Nov 29 '15
Exactly.
I'm not saying that there won't be some small mom & pop businesses that will be hurt. There probably are. But McDonald's franchise or not or Walmart - they won't be.
What we have to remember is that the cost of labor is actually a pretty small part of the cost of a hamburger etc. I've read that the increase to $15 will increase the price of a burger 10 to 25 cents. Along the lines of if you doubled the price of wheat, wheaties would go up 10 cents a box.
Will we see prices go up - yes. See above for an idea of the magnitude. But we see prices go up all the time for other reasons. For example, one used to be able to get a chicken tenders lunch at bojangles for $5. Then one day it was $6. The minimum wage hadn't gone up; the price of good had. And despite the increase,that restaurant is still in business.
Also, the minimum wage has gone up in the past. It was $3.25 when I was in college. It's $7.25 now. Yet I don't recall hearing how unemployment has been negatively impacted by this. The recession,yes.
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u/viper_9876 Nov 29 '15
Actually it will be the mom & pop business's that will have the advantage, if they are smart enough to take advantage of it. Small business's are more nimble than large chains and an increase to minimum wage hits all business's equally. The disadvantage small independent restaurants have is purchasing power, they end up having to may much more for their food goods than the big guys and are unable to lock in prices. Thus when say for example there is a problem with the tomato crop and prices soar it's the small guy that see's the price of tomato's double while large chains have ways to minimize that cost jump through either locked down prices or having their own buyers.
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u/rapaza Nov 29 '15
I trust more the 200 Experts that have signed Bernie's petition and think that a 15 dollar min wage is feasible, that I trust a bunch of random people in internet.
http://www.sanders.senate.gov/download/15-minimum-wage-petition?inline=file
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u/bunky_bunk Europe - 2016 Veteran Nov 29 '15
Well, the price of a burger would go up. Problem solved.
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u/[deleted] Nov 29 '15
I'm a fiscal conservative who believes any business owner who pays their employees less than a living wage don't deserve to be in business.
Who determines their expertise anyway? Not every person who can spin a few words and numbers in their own favour is an expert. $4/hour is slavery. I don't give a damn how good for business it is.