[Wistar]

A friend owns a high line/niche used car dealership and his service shop, who has a legendary mechanic, has not increased rates at all but just got more selective about the service work they are doing. Also, effectively no new service customers as they are booked solid for months.

[eru]

So basically they are taking their increased compensation not in the form of more money from customers, but by improving their working conditions.

It's very interesting, because this situation mirrors what economists predict about minimum wages:

Employees take their compensation as a mixed basket of wages and non-monetary perks (like nicer working conditions or opportunities for learning and advancement). Different people like different baskets. Minimum wage laws make some of these baskets illegal.

So orthodox economics predicts that increases in minimum wage leads, amongst other things, to deteriorating working conditions.

Now the situation here is reversed: there's effectively a wage ceiling when service shops are unwilling to raise prices. But they can still raise compensation, by improving working conditions.

Something similar-ish happens with very high marginal tax rates: eg the US used to have crazy high marginal tax rates after WW2 that essentially amounted to salary caps. Cue companies finding all kinds of fringe benefits that were taxed less, like health insurance.

[quintushoratius]

> So orthodox economics predicts that increases in minimum wage leads, amongst other things, to deteriorating working conditions.

I've never heard that take before, but it's a fascinating idea.

Unfortunately, I think the problem we've run into in the U.S. is that minimum wage jobs have already hit rock bottom working conditions. Raising the minimum wage is the only thing left to improve conditions for those stuck in them.

[eru]

> Unfortunately, I think the problem we've run into in the U.S. is that minimum wage jobs have already hit rock bottom working conditions.

Have you seen working conditions in poorer parts of world, or in previous decades when the US was comparatively poorer?

What makes you think 2021 US is 'rock bottom'?

> Raising the minimum wage is the only thing left to improve conditions for those stuck in them.

Well, here again orthodox economics suggest other avenues: decrease taxation on labour, support increased competition between employers for labour (eg by allowing easier access by foreign companies, by making formation of capital easier, etc).

A really big deal in the US would be to 'decriminalize' construction of new housing. That by itself would open up oodles of blue collar job opportunities to compete with existing employers, and it would also decrease what everyone (including workers) has to pay afford a place to stay.

[throwawaylinux]

If you're subscribing to orthodox economics then in that case raising minimum wage would result in job losses.

What I think would actually happen is (perhaps some job losses, but) more jobs being pushed underground and laws skirted.

I'm not against minimum wages or increasing it as such, but if the lowest paid workers are in such dire conditions, the fundamental problem seems to be that they have insufficient bargaining power. A huge issue has to be illegal immigrant population that largely competes for low wage positions -- I've heard it's estimated about 15 million but could be as high as double that. Absolutely staggering numbers in either case and being concentrated in the supply of low skill labor it hits the most disadvantaged Americans including minorities hardest unfortunately. I know it's verboten to speak about now, but even champions of labor and the disadvantaged such as Sanders talked about the problem before Trump sent everyone off the rails (and/or the corporatists completed their capture of the left-wing side of politics).

[eru]

> If you're subscribing to orthodox economics then in that case raising minimum wage would result in job losses.

No, that's just one outcome. I already described another outcome higher up the comment tree: reduction in non-wage benefits.

In practice, you would probably see some combination of outcomes.

> A huge issue has to be illegal immigrant population that largely competes for low wage positions -- I've heard it's estimated about 15 million but could be as high as double that.

The demand curve for labour seems to be nearly horizontal, ie in the longer run more or less labour supplied (almost) doesn't change its price.

> [...] but even champions of labor and the disadvantaged such as Sanders talked about the problem [...]

Are you suggesting that those people who are desperate enough to become nearly right-less illegal immigrants do not count as labour or as disadvantaged?

(I can very well believe that Sanders doesn't care about them, of course.)

[throwawaylinux]

> No, that's just one outcome. I already described another outcome higher up the comment tree: reduction in non-wage benefits.

I was not replying to you. I asked the posted who claimed that benefits had already hit a floor. I was responding to his supposition.

> Are you suggesting that those people who are desperate enough to become nearly right-less illegal immigrants do not count as labour or as disadvantaged?

No I'm not suggesting that. Seems pretty accusatory and not really in good faith, unless you can explain how on earth I might have been reasonably misinterpreted as suggesting it.

You can advocate for and advance your own interests or the interests of your voters and constituents first without being subject to these stupid witch hunts. Everybody does it, even you. I don't go around accusing you of not caring about poor people or refugees because you have failed to sell all your belongings and donate your wealth to the less fortunate as well as your income except that which you need to barely keep yourself alive.

We are talking about wages in the USA, and massive downward pressure on low skilled labor comes from illegal immigrant workers. If you can't cope with this or debate it rationally then that's your problem not mine.

[eru]

> We are talking about wages in the USA, and massive downward pressure on low skilled labor comes from illegal immigrant workers.

Only, that's not true.

[BurningFrog]

I took "being selective" to mean focusing on the most profitable jobs.

[Wistar]

In this case, it is a blend of more profitable, less challenging jobs such as brakes and LOF, as well as interesting cases requiring the lead mechanic's renowned diagnostic skills. I have often thought this mechanic should maintain a blog about some of the crazy and perplexing issues he has solved but, he just has no interest in writing them up. Besides, I am not sure he could write them up as some of the leaps in logic he makes are closer to magic than any sort of process.

Also, they have used this era to weed out the pain-in-the-ass customers.