[sonnyblarney]

Minimum wage laws are absolutely necessary otherwise they'd pay $1 an hour and you'd see the '25 cent store' instead of the dollar store and people living in huts.

But - as you rightly point out - a 33% jump in a short period is stupid.

It would be nice if min wage were tied to some kind of economic indicator.

But good comment.

[sien]

Germany had no minimum wage until 2015.

Can you please show us the people that were living in huts there from the post war recovery until 2015.

[sonnyblarney]

Hey thanks for bringing up Germany.

Germany is a 'socialized economy' meaning that they have welfare benefits, collective bargaining, social services, strong rights, and fairly high control of the economy by the government [1]. In fact - workers in Germany have representation at the Board level (!!!) [2] which would be unheard of in a place like America.

Germany, is in fact the 'founder' of modern socialized economies. Otto Von Bismark was the first person to offer state workers a healthcare plan.

So in my (way too long) explanation, I indicated that people would obtain the best possible economic deal - of course if they can 'get a job with the government and do nothing' by collecting welfare benefits, they will do that in lieu of working for wages below that.

By this I mean: there has to be some externalized, or non-market intervention. Minimum is one of them.

So no, technically Germany may not need a minimum wage, but they have market interventions that are so strong, that it was not necessary.

My point was more general (maybe I should have been more clear) absent non-market interventions, people will work for the minimum survivable wage.

Irregular workers in an area will work for that minimum survivable wage so long as it's beyond what they can get elsewhere (i.e. at home), i.e. undocumented workers will work for a salary provides them just a little bit higher standard of living than they can achieve in Mexico (which is roughly what's happening) - and that 'Mexico-like economic conditions' will develop in certain areas to support that. Have you been to South San Jose - to the primarily Mexican marketplaces there? They are reminiscent of Tijuana in terms of services, quality of goods etc..

And absent the ability to 'return to a homeland' - they will accept extremely low standards of living - like people living in closets in Hong Kong, even though HK is very rich.

Absent non-market forces, like minimum wage, welfare etc - workers are effectively serfs, and will live in cardboard boxes, as they do in almost all places without such interventions.

[1] https://en.wikipedia.org/wiki/Government_spending

[2] https://www.worker-participation.eu/National-Industrial-Rela...]

[3] https://en.wikipedia.org/wiki/Otto_von_Bismarck

[paulddraper]

> Minimum wage laws are absolutely necessary otherwise they'd pay $1 an hour and you'd see the '25 cent store' instead of the dollar store

This is the first time I've seen inflation attempt to be used as an argument in favor of minimum wage.

[austenallred]

You really think people would work for $1/hr in San Francisco?

[csa]

I assume the original poster was exaggerating for effect.

That said, there is probably some wage at below minimum wage at which people would be willing to work. That wage would, imho, be very exploitative, but it would have a very high chance of happening.

The difference in bargaining power between employers and low-paid employees is astounding — astounding to the point that a true floating point “market rate” would be tough to describe as a living wage.

[sonnyblarney]

People will ultimately work for their minimum survivable wage and economies will adjust to support ever decreasing wages among a subset of the population.

People live in favelas in Rio. They live in tiny, one room flats in Hong Kong without plumbing in deplorable conditions. They live in 'work camps' in Dubai without any rights at all.

And they work hard.

Of course 'people in SF' would do the same.

Don't think you're exempt - you would do the same if your skills were commoditized and you had no recourse.

Your salary has nothing to do with how skilled you are, how hard you work, or how much value you can provide. It's entirely a function of 'power' relative to your employer. So even if you are a full-on genius, and can speak 10 languages, code in 10 languages and have a PhD in AI - you will earn next to nothing if those things are common and your skills are a commodity.

In any given economy, a good chunk of people have commodity skills, i.e. manual labour or not much more. This bar is getting higher. Way back before minimum wage we (and without knowing you, there's a very high chance this applies to your ancestors as well) survived on next to nothing - and probably worked hard. Land owners, mine owners, factory owners would leverage and leverage and leverage to make sure the workers had 'only enough barely survive' - after all - every additional penny to workers would have been simply charity, in the raw economic sense.

So - all modern and civilized economies have 'minimum wage' and/or collective bargaining for some groups. Minimum wage and unions were essential to bringing civilizations out of the dark ages. Some caveats to that would be a very high social security system with gracious benefits - i.e. the government gives you a 'job' which is 'not doing anything' which would set a floor for wages obviously. Or an economy in which there were very few people with commodity skills and 'everyone' was somehow empowered a little bit against everyone else (like 'equality and diversity in skill set' kind of thing), which is not very common.

Because of the imbalance of power - we have no choice but to have minimum wage, or something like it - and it's also generally why we don't need such things in areas wherein people are not commoditized.

The really interesting paradox is that the 'minimum survivable wage' for any individual is not the profit maximizing wage for employers in the long run!

In the 'short run' employers save money / increase profits by cutting wages. But - those people can then 'spend less' and it hurts the economy, which hurts business!

Henry Ford realized this pragmatically. He realized that if he wanted to sell a 'model T' to 'everyone' and his own factory workers could literally not afford one, then few people would be able to buy his cars, ergo, his business model was not going to work! So he paid his employees more than the short-run minimum requirement.

This requires a fairly enlightened strategy on the part of employers - moreover - it requires kind of a common buy-in by most employers, which is like a strategy game:

> If all employers pay subsistence wages - then they all kind of lose because nobody can afford to buy the crap they make in their factories.

> If all employers pay some difficult-to-calculate wage higher than subsistence, like a minimum wage ... well, everyone is better off.

> But - if most employers pay this 'decent wage' but some employers 'cheat' and pay much less, well, those 'cheating' employers can benefit quite a lot, and get rich of a system by sneaking off surpluses from a system they are not paying into. Kind of like 'not paying taxes'. But of course - every employer is under constant pressure to keep wages down - and they have no formal pressure, like a taxation agency or regulatory body, to keep them from doing otherwise. So of course we're going to have low wages without regulation.

The minimum wage is actually economically rational from a practical, surplus sharing perspective (you could say 'socialist' or 'communitarian'), but even if you want to look at it more from a 'free market' perspective, minimum wage could be argued to be the wage at which the economy (including employers and shareholders) maximally benefit in the long run ... but it's just simply impossible to get 'all business' to intelligently collude and set this wage because they are all competing more or less on short-run business cycles, and have great incentive to cheat. Hence regulation.

As for SF, especially the increasing ratio of undocumented workers who have no access to social services, yes, they will work for next to nothing - the minimum that will allow them to survive.

SF would form favelas just like in Brazil, and there's absolutely no economic reason why it wouldn't - only regulatory policies etc. keep it from that i.e. wages, rights, services, etc. etc...

FYI - this partly why having a lot of undocumented folks in the economy is a really bad idea. For a host of other reasons well. If you're going to have people participating in the economy - give them full rights. But that kind of means 'open borders' - which you can't have ... (ie can't have open borders and social welfare at the same time). A much better solution would be to have 'reasonably effective border control', close unprofitable factories/businesses in the US and move them to Mexico so that entire communities of regular people can aspire to a higher standard of living, safety, civility etc.. That's a much better win for everyone.

[Semirhage]

People will ultimately work for their minimum survivable wage and economies will adjust to support ever decreasing wages among a subset of the population. People live in favelas in Rio. They live in tiny, one room flats in Hong Kong without plumbing in deplorable conditions. They live in 'work camps' in Dubai without any rights at all. And they work hard.

You just used examples of places for which a tiny one-room flat is an improvement over previous conditions. If you think a favela is bad, try being a peasant on a working farm.

The idea that people used to life in, for example, Texas or London will get used to a similar lifestyle which represents a massive downgrade is ridiculous. Historically people started overthrowing governments and sending people to guillotines for more modest losses. You’d have riots in SF if the options were “work for $1” or “starve.”

I think minimum wage laws are a good idea too, but your argument is bizarre.

[sonnyblarney]

"Historically people started overthrowing governments and sending people to guillotines for more modest losses. You’d have riots in SF if the options were “work for $1” or “starve.”"

YES. And what would those riots be for: MORE WAGES. Basically a minimum wage or collective bargaining. Hence my point of why minimum wage has to exist!

Using an externalized or non-market function like rioting to achieve wage increase, is the same as voting to require minimum wage etc:

--> You literally just made my argument for me <--

"Texas or London will get used to a similar lifestyle which represents a massive downgrade is ridiculous."

People have no choice but to accept the economic conditions they face.

This is 'reality' , it's not 'bizarre' at all.

My argument is nothing but basic, classical economics. It's not even an argument, more so an explanation. Nothing new.

If people have to work for 'next to nothing or die' - what do you think they will do?

Die? Or work like a slave? The later in most cases.

It's economic reality.

I think what would happen in London/SF/Texas is that irregular workers would probably move in and form the basis of this ever lowering economy, and empowered citizens would be much less likely to fall - but they definitely could. And that includes you, and me, if we didn't have access to family, social services, minimum wages etc..

[Semirhage]

People have no choice but to accept the economic conditions they face.

My whole point is that as I said, people don’t just accept, they riot and revolt. I agree with minimum wage laws, but not because of some hyper-extreme scenario in which San Franciscans are working and living like Brazilians in favelas. Frankly we shouldn’t need to resort to that kind of hyperbole to make the case for a living wage.

If you want to see what happens, even in traditionally poor places when people face a “fight or die impoverished” scenario, see Egypt, Tunisia, Libya. People were willing to face tanks and bombs with their bare hands because the alternative was to starve. I think you underestimate the potential belligerence of the average American if faced with a similar scenario.

The larger issue though is that riot, abject poverty, and revolt aren’t actually the foundation of a minimum wage. Fairness, and Econ 101 are, and there’s no need to get so far out there as to divert the debate away from present conditions to extreme hypotheticals.

[sonnyblarney]

Yes, of course people would revolt, I fully agree.

Of course American citizens would revolt and demand non-market interventions, like minimum wage etc..

Without non-market interventions, they would be serfs, is my point.