And in the process lower the standard of living of the rest. Or tank the tourism sector, since they might have trouble paying this wage to the low-skilled workers they need. If they don't have that trouble, then even immigrants don't care, most of which already earn well above the proposed minimum wage.
Before you dismiss it so fast, the question of how can a person live on $7.25 an hour still deserves some thought? $1,200 barely enough for rent, food and a bus pass.
I didn't dismiss anything, and I'm not saying $7.25 is okay. I'm merely saying that cost of living should be taken into consideration when comparing countries' minimum wages.
The way I see it all work should be sufficient if worked standard fulltime 38-45 hours a week for a person to survive with some free time to better themselves with.
The alternative is people working huge numbers of hours just to survive and having no time to improve their situation, becoming trapped in a cycle of endless low-end jobs and poverty. You can't actually upskill if you spend 12-16 hours a day working dead-end jobs.
Wow. You have guts. Unproductive is a very mean word to use for people who work their ass off and still get underpaid. Something can be exploitation while it's still legal. And the blame does lie with the employer in that case. If they can't pay their workers a reasonable living wage, they should raise their prices or they have no business, or at least the law should make it so that they don't have one.
Productivity has absolutely nothing to do with how hard you work. Productivity refers to the value you produce. Also, in cases where a person is free to leave the job there is no such thing as underpaid. If the person is underpaid he should leave the job and join somewhere else, if he cant get a better pay it means he is getting paid what he is worth unfortunately for him that is far too less than what it takes to live a good life.
Employers which are corporations in which you and me could be investors have no right to waste our money one some else. Their only responsibility is to deliver returns on our investments by hiring the cheapest possible labor while generating maximum possible value.
If there are poor people around us who need help, it is the responsibility of the society and not of corporations. I would help a poor kid get education by spending my money on him but I will not let a company I am invested in to waste my money on such kind of nonsense.
$7.25 is fine for teenagers looking to pick up some experience and extra cash. The notion that the minimum wage is supposed to provide a living is a good way to remove young people from the job pool.
except now people work in minimum wage jobs all their life.
> The notion that the minimum wage is supposed to provide a living is a good way to remove young people from the job pool.
The minimum wage is supposed to provide a living period.
How can people be as selfish as you are is beyond me.There is enough wealth in this world to be shared so everybody can make a decent living,and it wont make whatever you think you are worth less valuable.
Not supporting a particular way of distributing wealth is not necessarily being selfish. There are good arguments for e.g. raisin/expanding the EITC instead.
I don't have an opinion on the matter (not being a US citizen, I certainly don't know enough about the situation), but I think your insult is completely inappropriate.
"except now people work in minimum wage jobs all their life."
Source please.
"How can people be as selfish as you are is beyond me.There is enough wealth in this world to be shared so everybody can make a decent living,and it wont make whatever you think you are worth less valuable."
Nice try on the appeal to emotion and shame, but the tactic is best left to talking heads on TV and not places where people actually care about this problem. I could respond with your utter indifference to the youth problem particularly it seems in minority communities whose starting businesses cannot afford $15/hr makes you a ..... well you get the idea. This is HN, not MSNBC.
This whole minimum wage foolishness is a cover for politicians that have failed our poor. We need to understand why adults cannot get jobs that employers when jobs go empty. We also need to look at our safety net and see how full of holes it is. Its time for looking at new way to elevate our at risk population (basic income is often discussed here) and education (vocational education to fill the infrastructure jobs that are long vacant and not outsourceble for example).
Maybe it's different where you are, but in the Kentucky area I see plenty of people in their 50s and 60s working in fast food, gas stations, and Wal-Marts. Have you really not seen this?
Further, your solution is basically going to get some of those people fired. How about treating the problem of why those people are working minimum wage jobs instead of glossing over it and making things worse.
...Because I know that the position they are working pays minimum wage in my area. Are you just trolling now? Some of them may have been around long enough to earn small raises, but nobody in central Kentucky gets $15 an hour to flip burgers or ring up gas or gather shopping carts.
I live in ND, we have a bit of an economic boom going. I'm not trolling, but you seem to miss the point of a lot of commentators on this post that minimum wage changes are not an answer and only a feel good measure for people who don't take the time to look at the economy. It sounds good, but will have all sorts of backlash. Its a bad idea and treating the symptom, poorly.
The notion that minimum wage isn't supposed to provide a living is a good way to keep adults and the children they support in abject poverty. That's a little more important than teenagers who want after-school jobs for pocket money.
Why push that burden on the job creators? If the labour value someone provides is lower than a living wage, why not let them survive on welfare (food + clothing + shelter)
If this isn't happening, I'd think its more important to provide those basic amenities rather than raising the minimum wage.
Well, for one thing, welfare funding ultimately comes from tax money, and those noble job creators fight tooth and nail against social benefit programs just as they do against minimum wage increases, and anything else that threatens to make the world a better place at a cost to their bottom line.
The US in particular suffers under an entrenched and insidious myth that work is inherently virtuous and people who can't work deserve to starve. Reagan's imaginary legions of welfare queens have taken root in our national dialogue and made widespread, substantial improvements to public welfare virtually impossible. If you feel that progressives are grasping at straws, it's because that's all we have left.
Well it is their income being taxed, why do you feel they should feel obligated to give a portion of it up? (keyword: obligated) they obviously do not.
Because I would like to live in a functional society. Because "my right to a third yacht trumps your right to feed your children and get treatment for preventable illnesses" is a shitty thing to believe. Because I think the members of a society have a positive responsibility to each other and to the society. Because, basically, I don't like selfish assholes, not matter how much they try to convince me that selfishness is a virtue.
It's not a popular opinion, I realize.
And before you start talking about "other people's money," I'm comfortably middle-class, and I would be delighted to pay an extra, say, 20% of my income in taxes if it meant that the sick or homeless or mentally ill people I see every day could get the care that they need.
Popular opinion or not, selfishness and generosity are calibrated by your moral values.
You're proposing an economic transaction where X pays, Y benefits and your moral desires are fulfilled. I doubt X would have a problem with you donating 20% of your income to a charity of your choice, why do you have a problem with their yacht?
> The notion that the minimum wage is supposed to provide a living is a good way to remove young people from the job pool.
Exactly. Imposing a price floor on labor does nothing besides driving up unemployment.
I wish people would stop pushing for an increase in minimum wage. Fundamentally people are trying to subsist on low-skill jobs where the supply/demand realities aren't in their favor. That's the problem we need to address, either through a universal basic income (decreasing the supply of labor) or increased training.
A minimum wage just distorts markets and leaves nobody better off.
> Imposing a price floor on labor does nothing besides driving up unemployment.
Do you have any evidence to back that up? I know it was orthodoxy like twenty to twenty-five years ago, but I remember there were plenty of other theories in my university days.
Pushing young people out of the job pool isn't such a bad thing if there's an educational alternative. Besides, people on lower incomes spend a larger proportion of their income, rather than saving.
Directly increase their disposable income with a minimum wage and I find it hard to believe there won't be an increase in spending in the economy - and that has its own multiplier effects.
Besides, even if what you say is true, then you could pragmatically combine policies for effect; an increase in minimum wage with say, government spending on education initiatives, or raising the mandated school leaving age.
> Do you have any evidence to back that up? I know it was orthodoxy like twenty to twenty-five years ago, but I remember there were plenty of other theories in my university days.
> Pushing young people out of the job pool isn't such a bad thing if there's an educational alternative.
That might indeed be true, but the problem with a price floor is that you have no control over which workers are displaced. I actually think in many places employers would prefer to keep the teens who can, ex. carry more boxes per hour, than older and potentially more vulnerable workers.
Hence, the right solution is to attempt to shift the supply of minimum wages by ex. providing more support/incentives for college education.
> Directly increase their disposable income with a minimum wage and I find it hard to believe there won't be an increase in spending in the economy - and that has its own multiplier effects.
I'm actually not convinced of that. People living on minimum wage often have negative net worth and depend on credit for day-to-day expenses. Hence all that marginally increasing their wage will do is decrease their indebtedness, not increase their spending. Of course, a huge jump in the minimum wage would be enough to push every employed person into the middle class. But it would provide substantial incentives for automation and essentially eliminate low-skill jobs, creating mass unemployment.
>Exactly. Imposing a price floor on labor does nothing besides driving up unemployment.
Uh, no. My state, Washington, has the highest minimum wage in the country and is doing better [1] than most states in the US in terms of job creation. I expect Seattle's recent move to a $15/hr minimum wage to improve the economy and the lives of low-wage workers there.
That logic is flawed because you're comparing apples to oranges without controlling for exogenous factors.
Perhaps the Washington economy has been growing which allows employers to both pay the higher minimum wage and continue hiring.
If you want to do these terrible comparisons, I'll give you Norway where there isn't any minimum wage yet the unemployment rate is far lower than in Washington (3% vs 6%).
Yet somehow, billions of people worldwide live on far less than that number after adjusting for purchasing power. The average Bulgarian subsists on roughly a US minimum wage salary (after adjusting for purchasing power - before adjusting for PPP it's about half a min wage salary). The average Indian subsists on far less.
There are social, cultural and infrastructural factors which you completely trivialize by neglecting to mention them. In Thailand, for example, working-class people do often live with others in small spaces, but either they are strangers in factory dorms or they are extended family members in small apartments.
The crucial role of the extended family may be the hardest for modern Westerners to appreciate. It is not our feel-good notion of family. My brother in law has spent the last 15 years continuously working out of country as a truck driver in Singapore, living in a ramshackle shelter on construction sites while sending most of his earnings back to his wife and kids. This is a somewhat extreme case, but milder instances are commonplace. People often have to work away from their families for years at a time to make ends meet and accrue any sort of savings.
Then there is transportation. Every day you will see mothers on scooters carrying several toddlers who are certain to die in even minor accidents. Another common sight and a less egregious example would be pickup trucks with the backs piled full of day laborers, or commuters casually hanging off the back of high-speed songthaew busses. This is highly efficient in monetary terms, but the human cost is huge.
It's a complex issue that is not reducible to PPP numbers.
I'm not sure why you say things aren't "reducible" to PPP numbers - low PPP-adjusted income corresponds quite well to the low consumption levels you are describing.
In any case, I'm glad we are agreed that unreal37 is incorrect, and it is possible to "live on" $1200/month. It's not anywhere near as nice as American poverty, but it's hardly clear that $7.25 is too low.
I'd propose an alternate direction for the discussion - if we believe the American poor are lacking in some necessary good or service, lets be specific and name it.
A variety of household/family coping strategies, some anomic, and typically utilised together:
1. doing without
2. extended family help,
3. multiple low-paying jobs among family members,
4. subsistence agriculture,
5. family splitting, including emigration
6. informal economy,
7. corruption ('blat' in Russian). Core public services and government jobs pay poorly. But its also institutionalised in INGO's even though they pay very well comparatively.
8. crime.
Numbers 1-4 are classed by the troika as an 'informal welfare acheme.'
You can live on very little if you live in poverty but that does not make it ok or acceptable. It is something we should be trying our hardest to eliminate. The idea that somebody should work hard each week and still be in poverty is a disgrace.
Poverty is a major problem in India. Close to 40% of all impoverished children in the world live in India. Hundreds of millions of Indians lack basic services such as electricity or a toilet in their homes. Hundreds of millions lack basic education. Not something we want to emulate.
It is much better in the major cities though where median PPP income is close to 7.5k USD.
The US has other cultural problems which make cost of living far higher than they have to be. For example many minimum wage jobs in the US "require" a car! Even if the job itself doesn't involve driving.
I had a conversation with someone tonight about just this topic. If it takes two full time jobs just to make ends meet, then you can't have a reasonable expectation of them learning a new skill to get a better job. Not only do they not have the time to learn whatever potentially lucrative skill people want to imagine up, but the fatigue from putting in that much time is probably reducing their ability to fully function at either job. Combine that with the fact that being responsible for two jobs limits promotion chances, and you've got people stuck in a perpetual cycle of poverty.
This proposed Swiss minimum wage is therefore (roughly) equivalent to a minimum wage in the U.S. of $16.28 per hour (taxation differences and non living-expenses notwithstanding).
Didn't the Swiss vote on basic income recently? Seems like it would be a much better alternative. Such a high minimum wage is likely to discriminate against the very poor by favouring automation and reducing demand for unskilled workers.
Different schools of thoughts have differing opinions regarding that. As a libertarian, I'd argue that the free market is better than government at deciding what needs to be automated. Minimum wages effectively impose a tax on human labor which in turn artificially incentivizes automation. Basic income might suffer from the same problem to some degree (by disincentivizing people to do lower paid jobs) but at least, it would accomplish the stated goal of minimum wages (that is, helping the more needy).
Yeah because you can directly compare Switzerland and the US. Where does the high income of Swiss people come from? I don't think the same thing would be replicable for the US (for starters, the US is not a tiny neutral country surrounded by Alps).
Switzerland, which doesn't even have a national minimum wage at all, grew to have a much higher quality of life by the mere presence of theories of the minimum wage. Did I understand that correctly?
Which means about 10% earn less. Which is a big portion of the labor force that has to be paid more or let go. This is potentially a very big shock for the swiss economy.
I think "lower salaries == more people employed" is an overly simplified model economists teach us to justify dropping wages.
Imho lower salaries doesn't create more jobs it just creates more desperate people willing to work for lower salaries because of its downward loop.
I know this opinion is not popular in the states. But this has nothing to do with socialism. Socialism is about common ownership, common management. Minimum salaries is about raising the middle class.
What this is likely to do is to displace immigrants working illegally with citizens working legally.
Imagine what would happen to California unemployment if all the agribusinesses suddenly had to pay a real minimum wage. Illegal immigration would get almost completely displaced with actual citizens willing to do the work now that there was a reasonable wage behind it.
Problem with that assessment: Switzerland doesn't have a lot of illegal immigrants or even a lot of low-skilled legal immigrants for that matter.
Even if there were illegal immigrants being displaced, where would the supply of legal labor come from, suddenly? Certainly not from the jobless. It's simply an illusion that people on a broad scale would choose unemployment because of low wages...
Switzerland even wants to limit immigrants who come to work in Swiss. They introduced immigration quotes, which is illegal for the EU : http://goo.gl/xBmX12
Oh, that issue is even more complicated. For one thing, Switzerland isn't in the EU, but they benefit and depend more than they'd like to admit from trading with the EU and from highly skilled immigrants they don't have to pay to educate. So they do have certain treaties about free trade, and mobility of workers is an important condition in these treaties. In breaking the treaty, there will be at least some consequences.
Also, the opinion about immigrants in Switzerland seems to be very complicated. People seem to both feel "We have to much immigration", but they don't want to get rid of the immigrants they know and depend on. For that matter, they think there are too many Germans in Switzerland, on the other hand their economy extremely depends on those immigrants.
The government will be hard pressed to find enough immigrants they can get rid of without serious consequences and even antagonizing those voters who voted for the restrictions in the first place.
That assessment is wrong. Higher wages in reality and theory usually mean less demand for labor. Employers have to compensate by raising wages or letting employees go, and both decisions negatively impact the business.
I'm not an opponent of a sensible minimum wage legislation, but I'm not kidding myself over the consequences. In Switzerland I highly doubt if minimum wage is doing anything good...
I guess the multiple peer-reviewed studies which have been published countering that particular bit of econo-religious dogma have passed you by. Which surprises me, given I'm pretty sure at least one of them made HN.
Normally, I am not too bothered by the downvotes, but this one makes me chuckle. effects of unemployment rate is not a settled matter in economics, and it's highly politicized - with left wing leaning economists publishing all sorts of empirical studies showing no effect or mixed effect and right wing economists doing the opposite. But, clearly, raising minimum wage to $15 in a strong economy like Seattle will have a less adverse effect, if any, than in a weak local economy such as Chicago
The downvotes are because you didn't make a clear point. Chicago has a high minimum wage and high unemployment, seemingly affirming the economic rule of price floors creating surpluses. So was that your point?
Just stating a data point and then offering a generic platitude (things depend on things) isn't making a substantive contribution.
I don't think you understand Swiss, the large incomes and low unemployment rate is mostly due to the protectionism of the country. Which would fail in a country that is bound to globalized economic rules. They also do a lot themselves (eg. agriculture, which is heavily subsidized), which is why the unemployment rate is so low.
Everything there is extremely expensive because of the higher salaries. Which would make it impossible to live there with a lower income.
Your statement: lower salaries doesn't create more jobs is false through my point of view. I live in Belgium and a lot of multinationals don't ever consider Belgium because of the high taxes (= which create higher salaries, but only the governement is taking the biggest portion). Our politicians try to compensate this by heavily subsidizing multinationals (which create 1000's of jobs in a snap, while heavily taxing the SMB's at the same time), which isn't the way to go.
PS. Switzerland tries to introduce immgration quotas, which would be illegal as member of the EU : http://goo.gl/xBmX12 (is an example of their protectionism)
PS 2. High taxes in Belgium isn't the only reason why multinations neglect us, but it's an important one :)
Paying people more means they'll have more money to spend which can create more jobs. There is no clear cut answer here. Anyone who claims they can predict exactly what will happen with any change to the minimum wage is either a liar or a fool.
Raising the minimum price of chips will increase the amount of money given to chip companies which will give them more money to spend creating more jobs.
How does artificially increasing the price of something make the market more likely to clear?
"Raising the minimum price of chips will increase the amount of money given to chip companies which will give them more money to spend creating more jobs."
This is not actually true. Companies only hire when then they have demand.
Let's say the Swiss set the minimum wage to $25/hr or even half that, $12/hr, what kind of ripple effect would we expect on other salary groups? Would they increase by the same proportion?
Switzerland's need to export stuff and to do business with the surrounding EU-countries is bigger than the EU-countries' need to do business with Switzerland. Putting a minimum wage this high will naturally impact the prices on goods leading to a shrinking export market.
I wonder how they came up with $25/hr and not, let's say, $17,50/hr?
Switzerland is already very expensive; a meal at McD's will run you at least 12 CHF. This rise in the minimum wage is not going to affect exports at all (which are all very high end...and how many bankers make minimum wage?); it will make some things slightly more expensive (on top of already being pretty expensive).
Switzerland exports more than just bank services, e.g. grocery products like cheese and chocolate which are products produced with low wages.
And yes it'expensive, I'm currently living in Gèneve and paying more than enough for my kebabs (it's cheaper to pay for the tram to Annemasse in France and have the kebab over there).
The farmers are well protected in Switzerland, while the chocolate making is highly automated.
What the higher minimum wage will do is push either for automating or exporting lower wage tasks, which will reduce immigration (since those jobs are not really done by swiss citizens anyways), and there are surprisingly a lot of xenophobic people in Switzerland that are OK with this.
It is an honest question, and that's also the most controversial point. The initiants ask for a min wage of (raw) 4000 CHF per month which is approximately 3000 CHF net of taxes. Why this number ? People pretend that's what one need to live well. The reality is more complicated than that, as you may guess, the cost of living really depends on the region and on the industry sector. That's why opposants want to solve this problem with per industry sector conventions (ie: there is already a minim wage in the watch industry) rather than with a global try-fix-it-all law.
There seems to be a pattern here: Swiss referendums more often than not follow the opinion of the government. In cases where they don't, they seem to be quite problematical.
In the vote for "restrictions on EU immigrations" the swiss want to throw out immigrants. But not those they know personally. Or those on whom their economy depends. So basically the government has the choice between not implementing the proposal as intended, or to harm the economy badly. As far as I know, they haven't solved this Dilemma quite yet.
Maybe this "element of direct democracy" has less impact on the actual "democraticness" than some believe it has. At the very least it poses a serious risk for long term investors or entrepreneurs. Any harebrained idea that comes up in this process has a non-zero chance of being implemented just by the power of low participation or ambiguous opinions.
At best, governments already take the "pulse" of public and expert opinion when setting policy, making referendums futile or redundant.
I have not said that, and you deliberately misunderstood me to make a point against practical democracy.
In any country with a practical, working, real-world democracy you can see the government mostly following opinion polls.
Finding out "what the people want" is extremely hard, at least if you aren't a populist politician or their adherents. The task doesn't get easier if you pose simple yes and no questions.
I think it is dangerous that people in western democracies increasingly equate referendums and votes with democracy, leaving out the conditions of the vote, the environment, the institutions and the state of the human rights.
> Swiss referendums more often than not follow the opinion of the government.
This is an initiative, a referendum is something different.
> In cases where they don't, they seem to be quite problematical.
Not always, just in the recent years there have been some problematic votes which were accepted due to (IMO) fear generated by certain parties.
There have been, however, also problematic initiatives/referendums where the people followed the governments opinion.
> At the very least it poses a serious risk for long term investors or entrepreneurs. Any harebrained idea that comes up in this process has a non-zero chance of being implemented just by the power of low participation or ambiguous opinions.
IMO you're a bit oversimplifying here. There are various hurdles to take when you want to vote on a certain thing. Whether things are accepted or declined depends on various things and can change because of some little thing in a week.
The serious risk blabla is always a thing which various parties bring up in various votes. It never has had a bit impact as of now.
In any other country laws are usually made by lobbyists. We have this problem here as well, but at least the public opinion is a bit harder to change in votes..
> In any other country laws are usually made by lobbyists.
Isn't that a much bigger oversimplification, than just saying that entrepreneurs in Switzerland have seen serious risks in quite a few of these votes? Isn't it true that they fear for more of these bad ideas? Even if these ideas only have a slim chance of coming throuhg?
I can see various situations where government intervention in free markets is most decidedly a good thing.
For example, food and health industry needs to be regulated. The incentives for self-regulation otherwise are so low, that lots of people die and suffer until the market reaches its supposed optimal equilibrium of high safety standards.
Antitrust regulation is an intervention in a free market, though one could argue that without antitrust regulation, there is no free market...
The actual dollar amount of the wage isn't the same as real income in terms of what goods and services you can buy relative to the wage, so sentences like this are useless: "would make mostly immigrants here in agriculture, housekeeping, and catering among the world's highest paid unskilled workforce." It's actually likely that the higher minimum wage will lower real incomes by driving up production costs.
Also i personally believe that markets can only regulate themselves if all players start with the same conditions. Which they do more likely in sweden as they do in the states (eg. education, healthcare, middle class, etc)
"doesn't want to" is an awkward way to look at it.
It's more of a catch-22. If you simplify 'welfare' to "If you're not above the poverty line, you're entitled to assistance", then a job which does not bring you above the poverty line is zero-sum - you're still entitled to assistance.
An example I see here quite often, is people who can only find part-time work, and still receive assistance. It's not unusual to find people in the position where they're working <20hrs/week, but do not want to work 20<n<30 hours a week because it'll interfere with their benefits.
This is not the "don't want to work" trope - they'd take 40/hrs week in a heartbeat. But if 20hrs/week + benefits is better than 25hrs/week sans benefits, who would realistically take more work for less pay?
Well, that reasoning was originally revealed to me by an economics professor, resolving the paradox "Germany supposedly has better welfare than the USA, why does Germany not have a minimum wage?"
So basically, that line is 100% standard economic thinking and therefore can be best understood and accepted by making the usual assumptions: humans as rational actors with perfect information and the cognitive ability to weight options, striving to maximize self interest.
If we're a a little more relaxed and maybe realistic with that assumption, we might find that it's a complex issue, with people's actions spanning a wide spectrum from "work? No thanks" to various levels of urgency, then desperation trying to find a new job and to make a living. Finally to people who'd be working hard even if unemployment benefits were 3x their wage, out of principle.
Point is, there are other factors to look at than the minimum wage alone.
Well, we have extremely powerful unions that negotiate on the workers behalf and blockade companies that don't follow the collective agreements. We also have laws that let unions veto work visas for immigrants if they are not paid according to the collective agreements.
This makes the de facto minimum wage something that is negotiated between the main unions and a few large employers' federations.
Fact here: If you convert $ to euros with the current rates, that makes minimum wage 4380 Euros a month.
I worked for a year in Switzerland and I am telling you, you can barely live with that kind of money. Everything is so expensive over there at least Zurich.
So yes expect a Swiss Tourist coming in the US buying everything and have a lot of funs, but in Switzerland with that wage he won't be saving anything.
The effect is that lower skilled swiss citizens will emigrate now that they can no longer be employed in their home country. It is the wolf of eugenics under the sheep's clothing of leftist charity.
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