Minimum Wage and a Roboticized Economy

[dre]

Saying corporations have a 'disproportionately large share of influence' is simply code for 'politicians don't do what I want therefore it must because of some conspiracy and not because what I want is just dumb policy'.

Thats objectively false. Corporate lobbying expenditures were almost zero 30 years ago. Theres more than 5000 people in Canada now with full time jobs influencing the government.

Its not a conspiracy, thats actually the literal definition of their jobs. Special interests dont even deny they are doing it.

[Bonam]

But congratulations. You just made an argument for increasing demand by making prices artificially lower through government subsidies.

That's kind of what governments have been trying to do with close to a decade of ~0% interest rate policies anyway...

Edited September 18, 2015 by Bonam

[TimG]

It would simply mean that the real price of goods and services was built into the price instead being paid for partially by your taxes.

If there were no government subsidies to individuals then prices would likely fall because what people could collectively afford would drop. This would lead to a drop in cost of living until the wages and the cost of living matched.

IOW: if you want wages to match cost of living then end the subsidies and minimum wages and let the market find a bottom. If you don't want to do that then spare us the nonsense about how 'subsidies' reducing prices. They don't - they increase costs which increases prices and the cost of living.

Raising minimum wage is a self-defeating exercise because an increase in the minimum wage increase the cost of living which eventually leads to a need for higher minimum wages. If you want to see how minimum wages can destroy an economy look at puerto rico which is stuck with a completely unrealistic minimum wage level:

http://www.businessinsider.com/puerto-ricos-crisis-illustrates-the-risks-of-minimum-wage-hikes-2015-7

The results were sharply disruptive, according to a 1992 National Bureau of Economic Research analysis. They included "substantially reduced employment on the island" and mass migration of suddenly unemployable lower-skilled workers to the U.S. mainland.

Puerto Rico did post a short-term increase in real earnings, but the causal factor was the out-migration, which shrank the labor supply. Without the exodus, the authors noted, "it would have been virtually impossible to impose the U.S.-level minimum on the island."

the killer:

In short, the minimum wage is a major reason for what a newly published report by two former and one current International Monetary Fund economists calls "the single most telling statistic in Puerto Rico": Only 40 percent of the adult population on the island is employed or looking for a job — versus a U.S. labor force participation rate of 63 percent.

IMO, a job at a lower wage makes more sense than no job.

Edited September 18, 2015 by TimG

[PrimeNumber]

$15 min wage will close the doors on a bunch of fast food joints in Alberta. People buy cheap food because it is cheap, and cracking the wages bill 50% will mean many fewer jobs.

Actually at many places across Alberta and Saskatchewan $13-15 is starting wage for McDonalds employees.

Edited September 18, 2015 by PrimeNumber

[dre]

That's kind of what governments have been trying to do with close to a decade of ~0% interest rate policies anyway...

No... the easing of credit does the exact opposite. It temporarily increases demand which drives prices high or keeps them up. It causes asset bubbles. Thats exactly why we have the most overvalued realestate market in the world.

[dre]

Raising minimum wage is a self-defeating exercise because an increase in the minimum wage increase the cost of living which eventually leads to a need for higher minimum wages. If you want to see how minimum wages can destroy an economy look at puerto rico which is stuck with a completely unrealistic minimum wage level:

Thats a really nice story!

Maybe tell it to someone that called for an increase in the minimum wage?

[TimG]

Maybe tell it to someone that called for an increase in the minimum wage?

Sorry, misunderstood your specious argument that government programs reduce the cost of living.

[Peter F]

TimG:

If there were no government subsidies to individuals then prices would likely fall because what people could collectively afford would drop. This would lead to a drop in cost of living until the wages and the cost of living matched.

People will work for food. Thats where Free Market wages will stabilize: The Corps will feed us in return for work ...and that applies to the our kids too. and only then the minimal to keep you alive and working.

[Canada_First]

$15 min wage will just raise the cost if goods and services across the board. Unions will demand that the wages go up as well. Making that increase worthless.

It will hurt people on social services the most. As min wage, union wages and the cost of goods and services will go up while the amount of welfare and disability benefits will stay the same. Forcing the poorest to do more with less money.

[overthere]

Encourage co-ops or employee-owned franchises to run them instead.

The food will be too expensive for consumers with mandated and greatly increased operating costs. Yours is a classic supply management idea, which without fail results in artificially high costs to customers.

[overthere]

People buy fast food mostly because its fast, and because for whatever reason they like the taste. Its not really that cheap any more. It cost me $25 to take my kids out to A&W the other day and we didnt even eat all that much.

Also not only do fast food restaurants have <15 workers. Normal restaurants do as well and so do grocery stores, farms, etc. Sooo the other food options would increase as well keeping the playing field somewhat level.

And the thing is... you might very well be paying that money already. If workers are paid less than what it takes to live, then they are probably supplementing that income with the use of government subsidies, social programs etc, that you currently pay for today. That basically ammounts to the public paying part of these workers salaries, so they can pretend stuff is cheaper.

Fast food joints are often open 18 to 24 hours per day, every day , and will have closer to 100 employees- not <15.

No, people buy fast food becuase it is cheap. Everybody has to eat, and we'd all rather have filet mignon than turd-on-a-bun but.....

If the price goes up dramatically at cheap places, people will stop eating out so much. That may not be a bad thing, but to pretend it will not cost jobs is disingenuous.

People in unskilled jobs don't collect welfare here, they live worse and/or work more.

[eyeball]

The food will be too expensive for consumers with mandated and greatly increased operating costs. Yours is a classic supply management idea, which without fail results in artificially high costs to customers.

Cheap wages is an old classic to.

In any case it all just underscores how our economy resembles a leaky old tub of a boat with an engine that's about to pack it in.

Edited September 19, 2015 by eyeball

[TimG]

People will work for food. Thats where Free Market wages will stabilize: The Corps will feed us in return for work ...and that applies to the our kids too. and only then the minimal to keep you alive and working.

And we provide social programs to raise that level. My point is only to say that government programs have the effect of increasing prices by increasing the ability of people to pay (which increases the demand). So it is completely wrong to say social programs 'subsidize' businesses by allowing them to pay less than they would otherwise need to pay. If there were no social programs businesses would pay less than they already do for labour because people would have no choice. Edited September 19, 2015 by TimG

[Topaz]

I don't think the feds would want a robotized economy because their revenue would be down unless they jacked up corp. taxes and with a good chuck of people not working, social programs would suffer, along with the food banks. BUT, maybe in time,we could invent robotized MPs and PM we could save huge amount of money.

[WIP]

Our economy does have socialist principles built into it. The question is one of how much socialism you build in.

Which has nothing to do with my point that the employer's obligations are minimal to non-existent for laid off employees in a non-union shop. Even in the union shop, the government has little recourse against foreign employers who renege on their obligations: case in point - it looks like the Ontario Government will be left with a bill of 400 million dollars to restructure the pensions of retired STELCO employees when US Steel decided to shut down most of its operations in Canada and is seeking bankruptcy protection in the US to offload their obligations on to the government.

See, this is the role global neoliberal capitalism has for government: hold the bag while they run off with any profits! It's likely that US Steel had no honourable intentions in the first place when they bought STELCO. They just wanted to eliminate a competitor and work towards monopoly in North American steel production....a monopoly they lost back in the days of antitrust rules in the US...that are completely ignored today!

If you do some simple math you'd see that this argument is deeply flawed. Just sum up all the extra gains that "capitalists" have made over the last few decades and divide that number by the rest of the population. The extra gains, once redistributed, would make only a small impact. Not enough to reduce people's work week by 1 hour, let alone 22.

The main reason Keynes missed on his prediction of shorter work weeks in the future, is because he didn't foresee the increased sophistication in the development of consumer desire-driven capitalism...that was just getting started during his time, and really took off after the age television began. In the 60's and 70's, it was recognized by policymakers on both sides of the border that advertising targeted at children needed greater scrutiny. I recall "Apple Jacks" cereal ads being one offender in particular that was forced to withdraw and create new ads for a cereal that was more than two thirds sugar by weight!

But what about adults today? There are lots of people running around today who can't tell the difference between needs and wants! In the years since Keynes, the captains of industry and commerce have tried to keep production always on the increase...because declines in production when there is overcapacity cause depressions. So the average consumer started working longer hours to buy all of the status symbols they feel they need to impress others; women joined the workforce again (after the end of WWII, policymakers wanted women out of the workforce) but this time it was to buy a better house in the suburbs, two cars, the latest appliances etc.; and consumer credit became fast and loose so that anybody can qualify for more credit than they have the ability to pay for! But today, consumer debt, student debt, government debt, corporate debt, are all at record levels and there is no remaining capacity to provide the kind of economic growth that came to be expected for several decades.

And the last thing that will solve present ills is doing more of the same, so something different...whether you want to call it socialism or not is going to have to replace the capitalism that dominates the globe today, and has spawned environmental crises, wars and millions of refugees looking for a place to go.

[WIP]

People buy fast food mostly because its fast, and because for whatever reason they like the taste. Its not really that cheap any more. It cost me $25 to take my kids out to A&W the other day and we didnt even eat all that much.

When my kids were young, we were going to the burger joints too...but only on the weekend. There are a lot of people keeping McD's & others in business today, because they are stringing together part time jobs to make ends meet, and hardly have time to cook proper meals anymore.

A provincial study conducted in Ontario this summer, found that over 60% of the workforce in Hamilton is employed in "precarious" work: part time, temporary, seasonal or contract work. Having a fulltime job in what used to be known as "Steeltown" is something of an anomaly these days!

And the thing is... you might very well be paying that money already. If workers are paid less than what it takes to live, then they are probably supplementing that income with the use of government subsidies, social programs etc, that you currently pay for today. That basically ammounts to the public paying part of these workers salaries, so they can pretend stuff is cheaper.

That got me to thinking on all of the American stories I've read in the past two years about how Walmart and McDonalds are providing forms and advice for their underpaid employees on how to apply for food stamps and other government benefits! I don't know if these companies are doing anything similar here in Canada...but I wouldn't put it past them! Once again, it shows us why corporate oligarchs will never become anarcho-capitalists! Government makes a convenient tool to offload their expenses...including providing food for underpaid employees in some cases.

[bush_cheney2004]

....That got me to thinking on all of the American stories I've read in the past two years about how Walmart and McDonalds are providing forms and advice for their underpaid employees on how to apply for food stamps and other government benefits! I don't know if these companies are doing anything similar here in Canada...but I wouldn't put it past them!

Many well developed employee benefits and human resources offices in the U.S. can provide a wide range of assistance to hourly and salaried employees as a matter of good business and state/federal law. Standard postings are always visible in a common area like the break room or cafeteria. It's a pity that such complete services and benefits are not always communicated or available in the provinces.