And it's already pretty large: 3.3 million legal workers at or below minimum wage [1] vs 12 million illegals in the United States. That's almost 80% of low wage workers.
The real fascinating part is how quickly we'll have robotics doing a lot of those job when municipalities push out mandatory $15 to $20 an hour laws. These low level fungible workers have been mislead by the far left into thinking this is all "free money" and things like unemployment, lay offs, automation, etc can't happen. A lot of companies have tested automation solutions and have been shy to launch them for a variety of reasons, mostly political.
$15 an hour full time is a $31,000 a year job. In most markets that's entry level white collar college educated material that will work exempt for you. Fry cooks and dishwashers who think they can get that via legislation are going to be surprised at how quick they can be replaced with machines or in other ways be made redundant.
Personally, I think we should just move to as much robotics as possible and setup some kind of minimum welfare income and call it a day. All this pussy-footing around with unions, minimum wages, etc just delays the inevitable.
The answer to that on the part of governments, will be to tax and regulate robot labor. They will attempt to force a gradient simulation of human costs onto robotics. We'll see serious efforts made toward those types of laws within a decade. Countries, to the extent they resist such taxes and regulation, will become new hot zones for robotic manufacturing etc.
You will probably just see labor intensive operations leave LA or shut down. LA proper is too small of a market to debut robotic replacements for workers.
I'm guessing this will just lead to higher food service costs and the disappearance of lower margin fast food.
What about groceries? Farm worker salaries? Now you have to absorb those new costs. Food, in general, will skyrocket.
There's this narrative that the left is playing up of "It'll be great, we'll kick out McDonalds!" Any industry that has low wage workers will suffer. Think the lines to return something in a retail store are long now? Wait until they have half the staff.
More than likely privatization services will move in the same way MSP's have taken over the role of well paid IT people in smaller organizations today. Mega-grocery co will eliminate ma and pa groceries because they will only be the ones with the scale of industry to have competitive prices. Boutiqe restaurants will be replaced with franchises for the same reasons. Mail/internet ordering from other jurisdictions with lower wage prices will hurt local retail.
This is neither good or bad, imo, but I don't think the people on the left are really considering what happens when you radically change wages by fiat. You get the Walmart-ization of all things because only organizations like Walmart can compete on price.
Automation (or AI) is coming for all of our jobs sooner or later. We need to start talking about how our society can pay for Basic Income for all the unemployable former fry cooks, truck drivers, lawyers, anesthesiologists and software developers.
>A land value tax is said to be a progressive tax, in that the tax burden would fall on landlords and cannot be passed on as higher costs or lower wages to tenants, consumers, or laborers.
The stereotype of rich landlords hoarding money is a falsehood. Every landlord I know here either makes a very modest income or loses money because of shady tenants and the incredible amount of pro-tenant legislature they take advantage of. In Chicago, an eviction takes 6-12 months.
Are you guys going to take these laws off the books then? You can't have it both ways, really. Poor urban areas have enough abandoned buildings as-is without punishing landlords further. If you make rental properties a poor value proposition then squatting takes over. We've seen this a million times. Landlords, are unfortuantely, an easy target for politicians looking to score voting points from the non-land owning rabble.
All the landlords I know are really whiny that they have to actually maintain their properties and provide services to their customers. They seemed to assume they could just get free money for owning a building. I've suggested they sell their multimillion dollar asset and retire or go get a job, but they don't seem to want to do that.
At any rate, the point of the land-value tax is that it would encourage land owners to build larger and better improvements on their property, instead of just holding the land and waiting for its price to increase. Think building a high-rise apartment building instead of leaving it as a parking lot.
Further making everyone a renter, and eliminating any chance of widespread economic security as there will be even greater dependency on month-to-month cash flow.
What needs to happen is the exact opposite, via eliminating repossession of residences in bankruptcy or otherwise breaking the financial abstractions that create the never ending positive feedback in housing prices. Then we can finally have a housing correction and people will be able to buy homes instead of only renting them from banks. Labor will then have more bargaining power and wages will raise naturally.
What makes you think you can own land in the first place? The land belongs to the US, and is the birthright of every US citizen. You should have to pay rent to the actual owners (the US citizens) to use it.
> What makes you think you can own land in the first place
Well sure, if you want to define it that way. But my argument is coming from pragmatic utility - when people own things, they are freer to choose their own path as they are less encumbered by obligations.
A major assumption of the concept of free markets is that the parties to a transaction are coming from roughly equal bargaining positions with regards to walking away. But a starving man doesn't have much choice of what job he takes or how much it pays when he just needs to eat.
If everybody had their basic needs taken care of and people were working solely for extra gadgets, which job do you think would command more compensation - sitting in front of a computer writing CRUD crapps or arduously picking up garbage while wrecking your body? Is the current gradient of pay rates actually inevitable or simply just convenient?
So what I'm pointing out is that in my opinion, the main problem with our economic conditions is that the concept of ownership has been greatly eroded. People that have to continually pay rent don't have much choice whether to work (whether scraping by minimum wage or hitting it out of the park with an in-demand job), and your proposal makes the problem even worse.
> The land belongs to the US, and is the birthright of every US citizen
Now you're proposing your own narrow framework, which actually contradicts your previous sentence - why wouldn't it be the world population? (USG holds a force monopoly on one chunk, but one can make the same argument about individual self-defense bootstrapped up through game theory and pooling in a sheriff)
>These low level fungible workers have been mislead by the far left into thinking this is all "free money"
Economically it's pretty much a direct transfer from profits to workers.
Given that corporate profits are at an all time high and are largely being hoarded instead of being invested (and thus not generating new jobs), it pretty much is free money. It's money that's only going to be spent and drive economic growth if given to a worker on minimum wage.
If it gets creamed off as corporate profits it will just end up in one of the many ultra-high-net-worth sinkholes, like Manhattan real estate. As if that hasn't been bidded up enough.
Yes. If you're some teenager selling ice cream for the summer and being taken care of by your parents, you shouldn't be making $35,000 a year.
The larger question, of course, should be answered by the customers of McDonalds or Target. Are they willing to pay twice the cost of goods so everyone who works there can make more money? Probably not, and those businesses will probably fold. Now you have everyone complaining about unemployment and the lack of affordable goods. Do you pass yet another law to make those cheap? Who pays for this stuff in the end? You can't economically dictate everything unless you want to migrate into command-economy communism, and the world tried that fairly recently with disastrous results.
Not to mention price inflation for common goods once the local econony has everyone getting $15 an hour. Great, now everything costs more and the people who weren't minimum didn't get a raise.
this is a ridiculously warped view on minimum wage
1) The average age of a minimum age worker is 35, and 88% are not teenagers. So no, the example in your first line should not be "you're some teenager", it's "you're a parent working two jobs and still on food stamps". http://www.nytimes.com/2014/06/10/upshot/minimum-wage.html
2) Talking about the cost of goods doubling is straight-up fear-mongering. Walmart set their minimum wage to $9, so raising it to $15 wouldn't even be doubling if minimum wage labor was literally their only cost of business. That's not even close to true, of course, but let's be generous and assume it's 1/3 of their sales minus CGS (~120B, so 40B). Their sales were ~500B last year, so with literally no other changes, they would only have to raise prices by 5% to go to $15 minimum wage.
The 35 - 64 band is especially egregious because it includes both people at the peak of their careers and retirees (who often take throwaway jobs to stay busy or supplement early SS @ 62).
Ok, so everyone's got an agenda, no real news there. The money shot is here:
> “All of us used to think minimum wage meant a wage you could live on,” de Blasio said
Wat? Who used to think that? Roosevelt didn't think that when he introduced the FLSA, actually the major win there was the abolition of child labor in America. At some point the thought around minimum wage went from "the minimum amount you have to pay so you're not basically whipping child slaves all day" to "the wage we need to buy iPhones and 2 cars".
The actual question is, what level of lifestyle should minimum wage/basic income/whatever support? Is that level adjusted for local prices, or do you have to live in a "designated poor person area" to survive (ie, is the amount the same in SF as it is an Akron)? What about if someone blows all their BI on liquor or gambling and becomes homeless, do we give them more? Who is responsible?
I don't have the answers, and ultimately the discussion is pointless because no group of people will ever agree on this.
... are you replying to the right comment? i didn't talk for a second about what de Blasio said, and those age bands don't do anything about the stat i cited: that 88% of minimum wage employees are 20 or older.
> The actual question is, what level of lifestyle should minimum wage/basic income/whatever support?
Enough to enable the barista, garbage collector, concierge, etc, to live in the same city they work in. It produces nicer cities. Like reserving and maintaining park-space, it's a cost you pay for for a nice place to live.
If some coffee shops want to automate, great. They'll be competing with vending machines, not the remaining human-staffed cafes.
>> The larger question, of course, should be answered by the customers of McDonalds or Target. Are they willing to pay twice the cost of goods so everyone who works there can make more money?
In most cases the cost of labor is not a large percentage of the purchase price. When the cost of labor is doubled, passing this on to the consumer will not double the price. In many cases it won't even be close.
So the 6 dollars I pay for a fast food lunch take nearly a man-hour of labor? Once you get beyond the few minutes of handling my individual order its all bulk back to the source, so I have a hard to time believing that. OTOH the prices farmers get paid would suggest you're correct.
One argument that can be made is that everyday services are needed and won't be automated in the near future. Also, rich people like going to cafes and restaurants, and it's nice to live in a place where everybody goes out in the city.
So, you end up with places like Australia and Switzerland where wages are high, but everyday costs are very high. I would be shocked if this didn't end up happening in the US.
Ultimately, do we want a two-class society, or do we want something more egalitarian (Brazil vs Germany)? I know which one I prefer living in!
>Also, rich people like going to cafes and restaurants
I wouldn't use restaurants as some example of progressive and egalitarian labor. They're the number one source of black market labor today, let alone what would happen if you double these wages.
>I know which one I prefer living in!
The countries with the terrible disparities in living are usually the ones that flirted with communism in the past and are largely socialist and anti-free market today. They put in these policies which caused depressed entrepreneurial activities, lack of free markets, heavy corruption, etc and have a legacy of poverty from these failed leftist policies. More leftist policies aren't the solution here (see: Greece).
>(Brazil vs Germany)
New data shows Germany is not egalitarian. In fact, its the worst in the EU.
Earlier this year, the German Economic Institute (DIW) had released a study indicating that contrary to common conceptions, Germany had the most unequal distribution of wealth in the eurozone.
[1] http://en.wikipedia.org/wiki/Minimum_wage_in_the_United_Stat...
[2] http://en.wikipedia.org/wiki/Illegal_immigration_to_the_Unit... - assuming most of them don't work as investment bankers.