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?
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.
>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.
>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.
>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.
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.
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.
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.
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?
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".
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.
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.
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.
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.