[BeaverFever]

Lemmy Lemmy:

BeaverFever BeaverFever:

so raising the minimum wage actually leaves them with more money in their pocket, not less.

Not following your logic now.

The increase in minimum wage increased the employee's net take home pay by 7.33%, which is several times greater than the rate of inflation so net gain to the employee.

BeaverFever BeaverFever:

Lastly as Andy said, it's comical that people somehow only think raises affect inflation when its a minimum wage being raised. Nobody seems to think anyone else wages, especially THEIR raises affect anything. When have any of you said "oh, no thank you, I don't want a raise, it will just drive inflation and I'll be worse off than before".

$1:

That's an argument in favour of union work: that higher wages in one place will cause higher wages elsewhere. Problem is, that theory isn't supported by empirical evidence. And the reason it isn't is that it, as Boots posted above, ignores the power of demand. Businesses can't simply pass costs on to consumers because demand is independent of business costs.

I'm not suggesting everyone's income increases when the minimum wage increases. All I'm saying is that it's funny how nobody who is opposed to minimum wage increases ever seems to be opposed to getting a raise for themselves.

[Brenda]

uwish uwish:

bootlegga bootlegga:

andyt andyt:

Sure, sure, businesses can just cut positions and go on their merry way. That's why all the business people are whinging about labor shortages for their shit jobs and want the TFA system ramped up again. And of course we had huge, sorry yuge layoffs after BC raised it's min wage by 25%.

I'm guessing you mean TFW, not TFA...the fact is most fast food places and retail places in Alberta were already paying more than minimum wage, at least when the economy was booming and most young people preferred to go to work in the oil patch for far more than the $13 or $14 McDonald's and Old Navy were offering here in Edmonton. That's also why the Tim Horton's in Fort Mac couldn't operate 24/7 during the boom - there simply weren't enough people willing to work for $17/hour when they could earn twice that in the patch.

The difference between 2014 and now is the economy in Alberta - the oil patch is not adding workers, they are shedding them and that means a labour glut (especially in the unskilled segment), not a shortage like we had for the past decade.

No matter some analyst at TD says, unemployment here is higher than it's been in more than two decades (and higher than Nova Scotia):

http://globalnews.ca/news/2867455/alber ... a-scotias/

The biggest problem with minimum wage increases is that eventually employers raise their prices and inflation eats up a significant chunk of their raise (usually the rest is lost to taxes/CPP/EI/etc.), leaving them barely any better off than before the increase. Minimum wage increases are nothing more than a giant hamster wheel for the poor.

The way to get the poor off minimum wage is to teach them skills other than how to make french fries or fold shirts for the sales table. We have to help those who want to help themselves and just accept that some people simply aren't willing to work hard enough to get ahead in this world.

Well said Boots!

Although I agree with your sentiment, it always astounds me that there is so little appreciation for people skills. The one thing that cannot be taught.

Dealing with people, with rude, obnoxious, demanding and 'deserving' people is exhausting and can be nerve wrecking.
Customer service ain't that easy!

[Lemmy]

BeaverFever BeaverFever:

The increase in minimum wage increased the employee's net take home pay by 7.33%, which is several times greater than the rate of inflation so net gain to the employee.

For the employees who are still employees, of course they're made better off. Problem is, others are made worse off (those who are fired as a result of the increase plus those who are unemployed because they entered the workforce in response to the price floor's increase). Net, society is worse off.

BeaverFever BeaverFever:

I'm not suggesting everyone's income increases when the minimum wage increases. All I'm saying is that it's funny how nobody who is opposed to minimum wage increases ever seems to be opposed to getting a raise for themselves.

Apples and oranges. People not earning the minimum wage aren't earning a wage that is a price floor. Competitively negotiated wages don't create labour market chaos the way minimum wage increases do.

[andyt]

$1:

Myth: Increasing the minimum wage will cause people to lose their jobs.

Not true: In a letter to President Obama and congressional leaders urging a minimum wage increase, more than 600 economists, including 7 Nobel Prize winners wrote, "In recent years there have been important developments in the academic literature on the effect of increases in the minimum wage on employment, with the weight of evidence now showing that increases in the minimum wage have had little or no negative effect on the employment of minimum-wage workers, even during times of weakness in the labor market. Research suggests that a minimum-wage increase could have a small stimulative effect on the economy as low-wage workers spend their additional earnings, raising demand and job growth, and providing some help on the jobs front."

https://www.dol.gov/featured/minimum-wage/mythbuster

[BeaverFever]

$1:

For the employees who are still employees, of course they're made better off. Problem is, others are made worse off (those who are fired as a result of the increase plus those who are unemployed because they entered the workforce in response to the price floor's increase). Net, society is worse off.

I don't agree that layoffs ensue after minimum wage increases and I don't think there's any historical evidence of that. Wage increases are not unexpected events, businesses know about them years in advance; if anything it is simply factored in to their plans for future growth, which may or may not be deciding factors. Some businesses can't operate as well with fewer workers or will still be more productive with with more workers, even at a higher wage.

$1:

People not earning the minimum wage aren't earning a wage that is a price floor. Competitively negotiated wages don't create labour market chaos the way minimum wage increases do.

Can you elaborate?

[Lemmy]

BeaverFever BeaverFever:

I don't agree that layoffs ensue after minimum wage increases and I don't think there's any historical evidence of that. Wage increases are not unexpected events, businesses know about them years in advance; if anything it is simply factored in to their plans for future growth, which may or may not be deciding factors. Some businesses can't operate as well with fewer workers or will still be more productive with with more workers, even at a higher wage.

There is historical evidence and it doesn't matter if the owners know and plan for it or not. Demand for labour is downward sloping. You increase the price, you decrease the quantity demanded (jobs). Supply of labour is upward sloping. You increase the wage, you draw more workers to that work. Combine the two and increasing the wage above the market rate creates excess supply of labour; more workers and fewer jobs. That's French for unemployment and it's an immutable universal truth. And who is unemployed? The least skilled people who most depend on unskilled work to make ends meet.

BeaverFever BeaverFever:

$1:

People not earning the minimum wage aren't earning a wage that is a price floor. Competitively negotiated wages don't create labour market chaos the way minimum wage increases do.

Can you elaborate?

If I'm not earning the minimum, I've negotiated my wage rate in a competitive environment and am, therefore, earning the market wage rate. Increasing my wage doesn't create excess supply of labour because my wage only goes up if I've done something to increase my Marginal Revenue Product of Labour.

[martin14]

Lemmy Lemmy:

If I'm not earning the minimum, I've negotiated my wage rate in a competitive environment and am, therefore, earning the market wage rate. Increasing my wage doesn't create excess supply of labour because my wage should only goes up if I've done something to increase my Marginal Revenue Product of Labour.

ftfy

[BeaverFever]

$1:

Demand for labour is downward sloping. You increase the price, you decrease the quantity demanded (jobs). Supply of labour is upward sloping. You increase the wage, you draw more workers to that work.

That sounds like textbook theory, where a computer models shows that a wage of $10.01 generates more demand than a wage $10.00. In the real world, people are motivated by minute changes. Nobody is dropping out of school or changing their career plans to join the low-wage labour force because McD's now pays a whole extra $30 a week before taxes. We're talking about increases that are so small that while they might generate results in some computer model, they don't drive behaviour in the real world.

Also, go to any third-world country to see what the "market rate" is at the bottom of the labour pool. People have to eat, feed their kids, obtain food and shelter. A market implies bargaining power. Low income workers have no bargaining power, Without a minimum wage it is exploitation not a market. There is a real limit to the minimum food and shelter they can survive without so why should there not be a limit to the minimum income they earn to obtain those things?


Imagine a convenience store that is currently open 24 hours. In theory, it's possible that in response to a $1 raise in the minimum wage, the owner lays off the night cashier and keeps the store open for fewer hours. But more than likely the owner makes more money keeping the store open. The store owner doesn't say "I must lay off a worker because the demand for labour is downward sloping!" He says "do I lay off some workers and allow the work they were performing to go undone? or would I be better to just eat the cost and have lower profit margins? Or do I raise my prices? Or all of the above?" If your business sells $100 worth of merchandise an hour, are you going to forego that just because you'll have to pay the cashier an extra $1 an hour?

$1:

Increasing my wage doesn't create excess supply of labour because my wage only goes up if I've done something to increase my Marginal Revenue Product of Labour

Again, I think this is another textbook answer. Salaries almost always increase and measurements of Marginal Revenue Product are often minimal or non-existent. I'm involved with wage increases in workplaces. The Marginal Revenue Product of Labour applies to front-line employees directly involved in business operations, where you have multiple people in similar roles. So you can say "what's the marginal revenue of one hour of overtime? or one more worker on the assembly line?" But beyond that, when you get to salaried "office personnel", other than lawyers and certain professions that track billable hours, it can be tough to quantify what their marginal product because they are not so directly associated with the production of goods and services and there is usually only one of them in a specific role. And often the bulk of employees are in administrative positions, like Finance, IT, HR, etc where there is no real relationship to production and influence over cost control is often even limited. The typical practice for these workers is that everyone whose performance review is better than negative gets a cost of living increase, with greater increases awarded to employees with higher individual performance ratings and higher overall business performance. Nobody says "this back-office filing clerk saved the company x dollars with their with super-accurate filing and fewer misplaced documents." Most Often they're rated on objectives such as projects they have contributed to, or behaviours they have demonstrated ("demonstrated leadership", "displayed personal initiative", etc.). All employees basically expect and receive basic cost-of-living increases simply as an entitlement of being employed, typically about 3% unless the business is really having a bad year. Usually the only employees who don't get one are those who had poor performance and are on some kind of probation.

[Caelon]

$1:

Increasing my wage doesn't create excess supply of labour because my wage only goes up if I've done something to increase my Marginal Revenue Product of Labour

$1:

Again, I think this is another textbook answer. Salaries almost always increase and measurements of Marginal Revenue Product are often minimal or non-existent. I'm involved with wage increases in workplaces. The Marginal Revenue Product of Labour applies to front-line employees directly involved in business operations, where you have multiple people in similar roles. So you can say "what's the marginal revenue of one hour of overtime? or one more worker on the assembly line?" But beyond that, when you get to salaried "office personnel", other than lawyers and certain professions that track billable hours, it can be tough to quantify what their marginal product because they are not so directly associated with the production of goods and services and there is usually only one of them in a specific role. And often the bulk of employees are in administrative positions, like Finance, IT, HR, etc where there is no real relationship to production and influence over cost control is often even limited. The typical practice for these workers is that everyone whose performance review is better than negative gets a cost of living increase, with greater increases awarded to employees with higher individual performance ratings and higher overall business performance. Nobody says "this back-office filing clerk saved the company x dollars with their with super-accurate filing and fewer misplaced documents." Most Often they're rated on objectives such as projects they have contributed to, or behaviours they have demonstrated ("demonstrated leadership", "displayed personal initiative", etc.). All employees basically expect and receive basic cost-of-living increases simply as an entitlement of being employed, typically about 3% unless the business is really having a bad year. Usually the only employees who don't get one are those who had poor performance and are on some kind of probation.

Lemy is correct. While admin positions do not have a directly quantifiable performance versus profit, they do perform an essential service. The busines needs to tracks sales, receivables, credit prucahses, etc. If you are paying $40,000 for a task, but the market rate is $45,000 you will either raise the wage or run the risk of higher staff turn over. In a tight job market raises are low or non existent. In a tight labour market there are incentives to join a company. Witness the $20 an hour Tim Horton jobs with signing bonusses for high school kids when the oil patch was booming. There are no signing bonusses at Tim Horton's this year.

[BeaverFever]

$1:

If you are paying $40,000 for a task, but the market rate is $45,000 you will either raise the wage or run the risk of higher staff turn over. In a tight job market raises are low or non existent.

. Yeah but I'm telling you often nobody knows what the actual "market rate" for a particular job is. A lot of jobs are tough to benchmark to the market because the division of labour is different in every company and the work is done with a different combination of talent and responsibilities.

So for example your company has a manager of Sales and Marketing but your benchmark competitor doesn't have that position; they have a Manager of Marketing and Communication,who in addition to advertising also handles non-sales related PR and therefore has an education and experience with more of a communication background. And their sales are handled by a Sales and Service manager, who is alo responsible for ongoing post-sale repairs and parts replacement and provide customers with ongoing consulting on how to best employ your product(s) so that role requires someone with more of a technical or operational background,such as a product engineer or repairman or a former customer. These are oversimplified examples but you can see how complicated it could be, especially in fields like IT where accountabilities can be very complex and skills are always changing.

And often employers don't really know what companies they should be benchmarking salaries to. Is it other companies of the same size? Or other companies in the same industry? Or every employer within a 1-hour radius? The right answer depends on the individual job but a company with thousands of employees can't easily make those decisions on an individual level without it turning into an expensive overly complex gong show so often salaries are just "slotted in", as in "just pay this position noticeably more than its subordinates but noticeably less than its boss". I am not oversimplifying or exaggerating.

So my point is labour markets are not perfectly efficient as the textbooks make it seem.

[bootlegga]

Lemmy Lemmy:

bootlegga bootlegga:

The biggest problem with minimum wage increases is that eventually employers raise their prices and inflation eats up a significant chunk of their raise (usually the rest is lost to taxes/CPP/EI/etc.), leaving them barely any better off than before the increase. Minimum wage increases are nothing more than a giant hamster wheel for the poor.

That's a myth. Demand determines prices, not businesses' costs. A business can't simply choose any price to charge and have people pay it. If the market price is $2, the market price is $2, no matter what the business's costs are. And any time a business raises prices, they'll sell less...ANY TIME.

Well, that's certainly the way it felt when worked a minimum wage job, because within six months or a year, I was right back to square one because the price of bus passes, entertainment, food and/or rent went up.

[andyt]

BC raised it's min wage 25% over about a year and a half. I don't recall the dramatic headlines about inflation increasing anywhere near that. If minimum wages only increase with the pace of inflation, then sure, min wage workers won't get any further ahead in terms of buying power. But to say that inflation will run at 50% over 3 years as Alberta goes from $10 to $15 is ridiculous. Or that the marginal tax rate for these workers will jump 50%

[bootlegga]

andyt andyt:

It's amazing to me how wage increases at the bottom of the scale cause such massive inflation that the increase gets mostly eaten up, and that the taxman takes the rest, yet people who earn in the higher ranges don't seem to feel this effect and are glad of any raise they can get. The argument goes that few people work at min wage anyway, yet paying them a bit more has this huge effect on the economy. Amazing.

Also amazing to me to hear that minimum wage workers are all just lazy, and so deserve to get as little as possible.

There are a couple reasons why there is a difference between minimum wage increases and raises to staff.

The first is that a minimum wage increase affects literally thousands of workers (and not just those on minimum wage), and that can cause inflation and/or layoffs as employers work to balance their increased labour costs while maintaining the profit margin they expect to run a business (nobody works for free after all).

The other is that anyone who gets a raise likely earned that through hard work. They learned a new skill, got a certification or gained experience. Those people earned those raises through hard work, and raises happens to employees in every business, even in industries where most workers earn minimum wage...like the kid at McDonald's who moved from fry cook to cashier or shift manager.

I have never, ever said that minimum wage workers are lazy - as someone who worked at minimum wage (or close to it) for nearly a decade, I know how hard you have to work in most of those jobs.

But I'm also a firm believer in helping only those who want help and are willing to put in the effort to better themselves.

TANSTAAFL

BeaverFever BeaverFever:

$1:

The biggest problem with minimum wage increases is that eventually employers raise their prices and inflation eats up a significant chunk of their raise (usually the rest is lost to taxes/CPP/EI/etc.), leaving them barely any better off than before the increase. Minimum wage increases are nothing more than a giant hamster wheel for the poor.

Let's unpack this:
- Inflation eats up the wage increase, therefore lets not increase the wage:

Inflation is driven by many things, like the price of oil, energy, grain, etc. The minimum wage in local jurisdiction has very little impact, especially in a global economy.

Inflation happens regardless, so raising the minimum wage actually leaves them with more money in their pocket, not less.

- The rest is lost taxes, CPP, etc.
CPP and taxes are not 100% of income. A worker in Alberta earning $12.20 per hour and working full-time (37.5 hours per week, = $23,790 per year) will have a net federal and provincial effective rate of 10.01% and will have an after-tax income of $21,409. Compared with $19,956 at the previous rate of $11.20, that is an increase to after-tax pay of almost 7.33%, almost $1500 per year, several times the rate of inflation.

https://simpletax.ca/calculator

I worked minimum wage jobs for nearly a decade and minimum wage increases never helped me or anyone I know get off that hamster wheel - the thing that got me into a decent career was getting an education and working hard, period. I doubt anyone in North America has ever gotten out of poverty due to increases in minimum wage.

As I've said many times, if society wants to help those on minimum wage, the best way is not to raise minimum wage, which long term hurts them more than it helps them, but to provide training to them to help them get off the hamster wheel.

I would argue that grants/bursaries or maybe even low-interest/interest-free loans to help those willing to put in the effort to get a skill would benefit society more than minimum wage increases. Those willing to put in the effort would find it easier to become a plumber, hair stylist, teacher or whatever and the increased taxes they'd pay over the course of said career (income taxes and sales taxes) would provide more revenue to government, which would allow better services for everyone. Win-win-win.

BeaverFever BeaverFever:

Lastly as Andy said, it's comical that people somehow only think raises affect inflation when its a minimum wage being raised. Nobody seems to think anyone else wages, especially THEIR raises affect anything. When have any of you said "oh, no thank you, I don't want a raise, it will just drive inflation and I'll be worse off than before".

See above...

[bootlegga]

andyt andyt:

BC raised it's min wage 25% over about a year and a half. I don't recall the dramatic headlines about inflation increasing anywhere near that. If minimum wages only increase with the pace of inflation, then sure, min wage workers won't get any further ahead in terms of buying power. But to say that inflation will run at 50% over 3 years as Alberta goes from $10 to $15 is ridiculous. Or that the marginal tax rate for these workers will jump 50%

I didn't say inflation would run to 50%, but it will go up, and coupled with increased taxes (both income and sales taxes from increased consumption), their buying power will erode over time, and eventually, they won't be all that much farther ahead. Sure, they might still be marginally ahead of where they are today, but it won't be noticeably better off.

To do that, workers on minimum wage need skills training to enhance their employability.

[andyt]

Yeah, yeah, training. But we'll always have workers at the bottom of the pile. They need a min wage set that is livable, then needs to be tied to inflation. Of course if you never raise the rate, eventually inflation will eat it all up - what a shitty argument for not raising it. And if they're paying more sales taxes from increased consumption - isn't that a good thing - they get to buy more? Or should they just live on bread and water?

And again, it's amazing to me how much influence min wage workers have over the economy, where any raises they get will cause such massive inflation that their wage increase will all get eaten up - what nonsense.