[soccerdave]

Didn’t read the article, but why would you go work at a lower end job when you can make 80-90% of what you would make by just collecting unemployment benefits?

I personally know at least 2 people that admitted this and said they would wait until unemployment benefits expire to seek work.

[ChuckNorris89]

Same in Germany and Austria. Local farmers complain about a shortage of fruit pickers in the season even though there are plenty of able bodied unemployed locals with no skills or degrees but since they have the option of staying on unemployment, why would they do back-breaking work for 10-20% more money then what they get paid for sleeping in at home?

So they just import and abuse poor workers from Eastern Europe[1] living and working in illegal conditions, who have no better options back home than to do back-breaking work for what would be peanuts in Germany but somewhat-half-decent money back home.

The local authorities know about these illegalities regarding foreign worker exploitation but turn a blind eye as this keeps the meat and vegetables cheap in the supermarkets for the very price sensitive local consumers, since the farmers are all under the pressure of the big supermarket chains to deliver produce on time and on razor thin margins so they have no other way but to find cheap exploitable workforce to stay competitive or lose their contracts.

Welcome to 21st century European capitalism.

[1]https://youtu.be/OUiFYhVEUvU

[CodeGlitch]

Yes exactly the same happened in the UK pre-brexit. Now we have left I wonder if the situation will change much (I suspect not).

[CodeGlitch]

I wonder if the solution to this is to offer workers a non financial benefit, so it doesn't cost the farmer and more to employ a local person, but that local person gains something that they wouldn't get just by sitting at home collecting benefits...

[lumost]

Why don't companies pay more then? In Switzerland service employees make 20-35 dollars an hour. Is there some intrinsic reason why employers feel compelled to pay so little?

[sunpar]

Switzerland is also one of the most expensive places in the world. As is NYC, where I live and the minimum wage is $15/hour and service jobs paying between $20-$35 is not unusual.

In the US, there are also places where the minimum wage is $7.50 (the federal minimum wage) and things also cost far less. The US in general is a much more diverse place than a place like Switzerland, and yet it’s all governed by the same federal law, which paid expanded unemployment benefits the same regardless of where the person is located.

[logicchains]

>Is there some intrinsic reason why employers feel compelled to pay so little?

The average US small-business owner makes around $70k/year, less than most devs: https://www.cnbc.com/2020/02/28/this-is-how-much-to-pay-your... . It's not like small business are rolling in cash. The only way for them to pay more is either to raise prices (meaning everything costs more) or hire fewer people. Would you be willing to patronise a shop that charges 50% more for coffee than the shop next to it because it pays its workers more? I'd bet not.

Switzerland is a very rich country, so all wages are higher; shops can afford to pay more.

[vharuck]

>Would you be willing to patronise a shop that charges 50% more for coffee than the shop next to it because it pays its workers more? I'd bet not.

I'm not a business owner, but from a customer's point of view, I regularly settle on my favorite stores for reasons other than price. As long as it's not exorbitantly priced (e.g., $8 coffees in a small city), I prefer places that have good atmosphere, offer quality products and service, and become part of the community. A coffee shop that displays and sells works from local artists is better than a Dunkin Donuts.

My wife chooses where to shop and eat by price, and I hate it. We end up saving some money but often not enjoying it (cheap batteries that need frequent replacement, foul-tasting marinara, etc.). No matter how thrifty we were, I just see it as paying to be less happy.

[seanp2k2]

>Would you be willing to patronise a shop that charges 50% more for coffee than the shop next to it because it pays its workers more? I'd bet not. I would, assuming that it’s not just the exact same product. I really enjoy going to different coffee shops and checking out what they’ve got and what they do differently. I don’t actually care about price; I would pay $20 for a cup of something really interesting. I’m not talking about drip from an air pot, think more WBC. I wouldn’t expect someone at that level in their craft to work at a place paying minimum wage, and I wouldn’t expect the coffee shop paying people min wage to have excellent coffee, which I’m happy to pay more for.

There is a market for McDonald’s coffee as there is a market for $20/cup coffee.

[lumost]

Presumably, a business struggling to hire has too much demand to fill with their current workforce. The econ 101 solution to this is to raise prices or hire more capacity. If hiring additional capacity is impractical raising prices would be the next step.

If we're living in a world where prices are inelastic, then labor supply will also become inelastic. Presuming that successful businesses aren't trying to hire for the sake of hiring, then it's almost certain that they are raising prices to meet demand.

[thesuitonym]

Yes. Absolutely yes. If your workers make more money, they are happier and provide better service. The coffee shop next store will likely have terrible service, with high turnover because everyone there is just waiting for their chance to get out and move onto a better paying job.

Why do you think people shop at stores like Publix or Whole Foods when Walmart has lower prices? Because those stores (even though they still treat their employees--sorry, "associates" poorly) have better service, due to better pay.

[plater]

In Switzerland the cost of living is also >50% higher than other western European countries. Housing is even 100% higher. Service employees in Switzerland come mainly from Germany, France, Portugal, Brazil etc.

[baggy_trough]

Presumably the market price for their products doesn't support profitability at some higher rate.

[dahfizz]

Unemployment scales with how much money you used to make. In my state, you can receive the equivalent of $31/hr on unemployment.

[seanp2k2]

It does scale, because the assumption is that you’ve built your life around that previous level of income. Going from a few hundred K/year down to 60k/yr would probably be devastating for most.

The thing that people seem to forget is how higher AGI = higher taxes. People are just getting back some of what they’ve paid into the system already. Would you expect to get full coverage insurance on a new Ferrari, with premiums based on the value of that, then get compensated by the insurance for the value of the cheapest car on the market in the event that it was stolen?

Edit: minor typo

[dahfizz]

I'm not arguing against the fact that unemployment scales, I am merely stating a fact.

OP's question was "why don't you pay more? That will make people want to leave unemployment". My response was "higher wages will not incentive people to leave unemployment because they would be receiving unemployment that scaled with those higher wages".

[gher-shyu3i]

They can't afford to. This is the natural outcome of running businesses on loans.

[6gvONxR4sf7o]

And the natural outcome of the business’s landlord running off loans/mortgage. Credit makes everything harder to change, and the more coupled the system, the worse it is.

[gher-shyu3i]

Very true. Usury is the cause of many financial problems today.

[6gvONxR4sf7o]

Usury to me implies that it's a predatory rate. Even with reasonable rates, being on the hook for a reasonable amount still means I'm now incentivized to keep my little corner of the world static, as well as simply slowing change down, which also forces change in the wrong places while the "right" change plays catch-up.

If you have a chain of A owing B $2k/mo and B owing C $2k/mo and so on from A to Z, then if A through Y's sectors all change, Y still needs to pay Z, meaning X needs to pay Y, mean W still needs to pay X, and so forth. Meaning that even though nobody's paying usury rates, nearly everyone is still heavily constrained in terms of how they can adapt to change. And so they're incentivized to push the world towards whatever scenario they planned for, not because they like that scenario a priori, but because that's what they planned for.

tl;dr Credit lets you play time arbitrage, which sets up bad incentives when things don't go according to plan.

[gher-shyu3i]

It's proven that any interest rate above zero is destructive and predatory. Thus, there is no difference between usury and interest in terms of immorality. There's a reason that usury is prohibited in all three major religions (Islam, Judaism, and Christianity).

We shouldn't have chains of people owing money to each other, we've seen what happened in 2008. Prohibiting lending money with interest will not allow such chains to form.

[fatnoah]

>Didn’t read the article, but why would you go work at a lower end job when you can make 80-90% of what you would make by just collecting unemployment benefits?

I think you wouldn't. A family member runs a small shop and unemployment plus additional COVID benefits ended up being very close to wages of some employees, who did the math and decided that 90% of the pay for 5% (not zero due to expectations for unemployment) of the work.

[6gvONxR4sf7o]

> Didn’t read the article, but why would you go work at a lower end job when you can make 80-90% of what you would make by just collecting unemployment benefits?

There’s a good article somewhere that looks into that specific question and provides some data and weighs alternative explanations. I wish I could find the link.

Alternatively we could all just debate it without any of the data from the article. I’m pretty sure I know which option is most popular.

[blacktriangle]

And yet people still think UBI will work.

[freedomben]

Unemployment isn't UBI. If you work you lose the unemployment money you would have got for free, hence the disincentive. UBI (most proposals) would supplement work not replace it.

[sltkr]

With UBI, if you take an additional job, you would lose a large share of your income to taxes used to pay for the UBI.

Yes, you can restructure income tax levels so that people get to keep most of their additional income, and then you'd have to tax the remaining people more heavily to compensate. But if that's the solution, why don't we do that today?

This argument shows that UBI doesn't solve the incentive problem. It can only be solved by keeping welfare benefits significantly lower than minimum wages, which means lowering one or raising the other. This isn't logically impossible, but it's matter of political feasibility. That's true of UBI also.

[freedomben]

I don't necessarily disagree. I think UBI is an important thing to study and consider as we increasingly displace workers with the ever-moving capability of tech, but it will undoubtedly have some unintended consequences.

I do think it's important to point out though that you lose unemployment if you work, so there's direct incentive there.

[breakfastduck]

UBI isn't even remotely comparable to employment benefit.

You stop getting the benefit if you get a job, you wouldn't stop getting UBI, so there's no negative response to being employed.

[sigspec]

Sounds like you misunderstand the point of UBI.

[DavidButter]

What does he misunderstand about the point of UBI?

[akvadrako]

The U means that you still get your monthly basic income even if you work. With unemployment working earns you 10-20% more. With UBI working earns you 105-115% more.

[Tarrosion]

UBI seems very different? You lose unemployment benefits if you start working; you wouldn't lose UBI benefits.

[dageshi]

The point from most of the comments seems to be, if unemployment is enough to live on and the alternative is a job you don't particularly want to do, then there's no incentive to do the job you don't want to do?

If UBI just replaces unemployment, how does that calculation change? You still have enough money to live on you still don't want to do the job being offered?

Unless UBI is sufficiently low that you need a job to survive, in which case... is it UBI?

[akvadrako]

Nothing says people aren't willing to work if they pay is good enough. Unemployment is effectively a 90% tax rate in the bottom bracket, making work pointless.

[Maxion]

Just look at the Nordic countries, very good unemployment benefits but we do not have any issues with people staying on benefits even if they could get a good paying job.

A UBI that works as e.g. a negative income tax would definitely work.