Random thoughts and plans for the coming inflation.

[EvenSteven]

Unemployment isn't going to improve if there's a growing trend for unemployment payments to be higher than many minimum wage and low paying jobs.

Hell, we spoke off the record with one of our furloughed guys who had been making $30/hr working an easy tech job, and he said he would rather just stay at home and take advantage of the unemployment benefits, and that's what he did.  He wasn't concerned about when they eventually end because he's 66 and collect SS when the free generous unemployment benefits run out.  So, I can't imagine too many of those minimum wage workers who have crappy jobs wanting to go back to work when they can live off the taxpayer dime sitting on their a$$es.  They need to put an end to those extra benefits (and they are in some states).

My God, a 66 year old retiring? This is a moral outrage, and we need to demand that everyone must work until 80. What forum am I on again?

I think the point being made wasnt so much about retirement as it was about someone taking advantage of unemployment benefits since he viewed it as near to full income replacement  (or more) instead of working at all. Why get paid to work when you can get paid as much if not more for not doing anything? The kicker, I thought, is that if you file for unemployment aren't you supposed to be showing some sort of 'proof' that you're actively searching for a job?

That requirement will probably come back soon with the winding down of the pandemic, but was stopped because we didn't want people out looking for jobs, because of the pandemic. States with Republican governors are also ending the fat paychecks for unemployment, so that is going away altogether, at least in red states.

My point was to express incredulity that someone would be peeved after a 66 year old was furloughed and so decided to retire. Especially on this board.

[Simpleton]

These inflation numbers are hitting despite the fact that the jobs report missed by the largest gap in history. Wait until employers start enticing people off benefits with higher wages. All those jobs posted with wages less than benefits and many more.

Benefits wont go away for years in many states. This pandemic will string along politically for a long time.

[Simpleton]

Benefits wont go away for years in many states. This pandemic will string along politically for a long time.

Could you explain your reasoning here? Even the states which haven't opted out have the remaining unenployment benefit expiring in September.

If you think the $300 federal top up is expiring in September, I say to you we should shut down for 2 weeks to flatten the curve!

Maybe it could happen... I don't see it though. Not this year, not when the Dems just got in. It will be a political issue more than an economic one.

[Paper Chaser]

Unemployment isn't going to improve if there's a growing trend for unemployment payments to be higher than many minimum wage and low paying jobs.

Hell, we spoke off the record with one of our furloughed guys who had been making $30/hr working an easy tech job, and he said he would rather just stay at home and take advantage of the unemployment benefits, and that's what he did.  He wasn't concerned about when they eventually end because he's 66 and collect SS when the free generous unemployment benefits run out.  So, I can't imagine too many of those minimum wage workers who have crappy jobs wanting to go back to work when they can live off the taxpayer dime sitting on their a$$es.  They need to put an end to those extra benefits (and they are in some states).

My God, a 66 year old retiring? This is a moral outrage, and we need to demand that everyone must work until 80. What forum am I on again?

I think the point being made wasnt so much about retirement as it was about someone taking advantage of unemployment benefits since he viewed it as near to full income replacement  (or more) instead of working at all. Why get paid to work when you can get paid as much if not more for not doing anything? The kicker, I thought, is that if you file for unemployment aren't you supposed to be showing some sort of 'proof' that you're actively searching for a job?

I'd be really interested to see some data or run some numbers to see just how common this may or may not be, or just how much a person might make. I heard from friends that own restaurants during the peak of the pandemic that it was true for a handful of employees but not exactly common. I'm not sure if it's still the case or not.

I live in a "Red State" with a $7.25/hr minimum wage that's been pretty open for months now. They just announced yesterday that they'll be reinstating the weekly requirement to be actively looking for work in order to continue receiving unemployment benefits, so I'd imagine that there are more than a few more liberal states that still are not requiring those collecting unemployment to be looking for work. I do know that around me, nearly every fast food place has signs begging for help and advertising starting wages in the $11-13/hr ballpark with signing bonuses. Warehouses and factories have similar signs, but they're starting in the $17-22/hr range. These are jobs that require little more than the ability to pass a drug test and show up with some consistency. Surely unemployment isn't offering those levels of pay right?

I suppose the other side of this unemployment income debate is expenses, and the role that eviction moratoriums and debt forbearance might play. A lower wage worker is more likely to rent than own their own home. If they know that they can't be evicted right now, and many institutions are still doing some form of debt forbearance or payment forgiveness programs, then it's at least possible that their need for income is much lower and they could get by on unemployment benefits even without additional money floated from the Government.

[pecunia]

Wages:  I went to a Wendy's yesterday.  I asked the guy at the drive through window if they were still looking for folks.  He said yeh and asked me if I was interested.  I said no and the conversation confirmed that it was the government benefits that is the reason all these places can't get people.  He offered that if they just paid a better wage it wouldn't happen.  I finished the conversation by telling him all they'd have to do was raise the price of these hamburgers by a buck and they could pay everyone working there a living wage.  Then I drove off and ate my unhealthy food.

You guys are saying these teachers are getting paid too much.  It used to be that teaching didn't look so good when the USA had good jobs.  Teachers weren't paid what factory workers are paid.  I don't think it's that the teacher pay has skyrocketed in terms of cost of living.  I think it is that the other jobs have slid backwards.

[GuitarStv]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

[Paper Chaser]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

[RWD]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Aren't you assuming that the cost of goods will increase the same amount as minimum wages? There are several reasons why that probably wouldn't be the case. Labor isn't the only cost of creating goods. There is also energy, materials, etc. And also if minimum wage is increased not all wages will necessarily go up the same percentage. For example, the electronics engineer that is designing a toy isn't suddenly going to go from $70k to $140k because minimum wage for the person stocking the store shelves with it went from $7.25 to $14.50.

[Simpleton]

And it begins already. Precident being set by the big boys.

https://uk.sports.yahoo.com/news/mcdonalds-owned-u-restaurants-boost-121052726.html

[ender]

And it begins already. Precident being set by the big boys.

https://uk.sports.yahoo.com/news/mcdonalds-owned-u-restaurants-boost-121052726.html

I'd take care to separate causation and correlation here.

Is it inflation that caused them to have to do this? Or is it the government benefits which are paying more than jobs like this?

[Simpleton]

And it begins already. Precident being set by the big boys.

https://uk.sports.yahoo.com/news/mcdonalds-owned-u-restaurants-boost-121052726.html

I'd take care to separate causation and correlation here.

Is it inflation that caused them to have to do this? Or is it the government benefits which are paying more than jobs like this?

In my view the two are interrelated.

A ton of money was created and helicoptered onto the unemployed. This decreased the value of money for them, making people likely to work for it.

As I have explained above, Inflation as I see it is the decrease in the value of the dollar in any form.

Specifically this is wage inflation, not necessarily CPI, yet. I do believe that all business costs are eventually passed along to the consumer and it will eventually be reflected in CPI.

[JLee]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Yet somehow society survived back in the 60's, when the minimum wage was an inflation adjusted $10.68/hr. :)

If minimum wage goes from $7.25 to $14.50 and your claim is that they're going to lose buying power because prices go up, you're arguing that the cost of everything is going to double?

That seems rather far fetched, to put it mildly.

[Paper Chaser]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Yet somehow society survived back in the 60's, when the minimum wage was an inflation adjusted $10.68/hr. :)

If minimum wage goes from $7.25 to $14.50 and your claim is that they're going to lose buying power because prices go up, you're arguing that the cost of everything is going to double?

That seems rather far fetched, to put it mildly.

Corporate ideologies were much different in the 1960s than they are now, as were tax brackets/rates, and the state of global commerce too. In the current environment, where businesses look to maximize profits, and the wealthiest people are taxed at lower rates, and the US has to compete economically with the rest of the world I'm not counting on things being the same.

[JLee]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Yet somehow society survived back in the 60's, when the minimum wage was an inflation adjusted $10.68/hr. :)

If minimum wage goes from $7.25 to $14.50 and your claim is that they're going to lose buying power because prices go up, you're arguing that the cost of everything is going to double?

That seems rather far fetched, to put it mildly.

Corporate ideologies were much different in the 1960s than they are now, as were tax brackets/rates, and the state of global commerce too. In the current environment, where businesses look to maximize profits, and the wealthiest people are taxed at lower rates, and the US has to compete economically with the rest of the world I'm not counting on things being the same.

Hold up.

Rich people pay less taxes now, therefore we should pay poor people even less?

[Metalcat]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Yet somehow society survived back in the 60's, when the minimum wage was an inflation adjusted $10.68/hr. :)

If minimum wage goes from $7.25 to $14.50 and your claim is that they're going to lose buying power because prices go up, you're arguing that the cost of everything is going to double?

That seems rather far fetched, to put it mildly.

Where GutarStv lives minimum wage IS $14/hr. Or 30K/yr.

I don't know where he's getting 15K/yr from, that's what I was making working minimum wage in the 90s. It's been at the current level for years.

[EvenSteven]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Yet somehow society survived back in the 60's, when the minimum wage was an inflation adjusted $10.68/hr. :)

If minimum wage goes from $7.25 to $14.50 and your claim is that they're going to lose buying power because prices go up, you're arguing that the cost of everything is going to double?

That seems rather far fetched, to put it mildly.

Where GutarStv lives minimum wage IS $14/hr. Or 30K/yr.

I don't know where he's getting 15K/yr from, that's what I was making working minimum wage in the 90s. It's been at the current level for years.

The US federal minimum wage is $7.25/hr

[bacchi]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Yet somehow society survived back in the 60's, when the minimum wage was an inflation adjusted $10.68/hr. :)

If minimum wage goes from $7.25 to $14.50 and your claim is that they're going to lose buying power because prices go up, you're arguing that the cost of everything is going to double?

That seems rather far fetched, to put it mildly.

Yeah, prices wouldn't increase so dramatically.

Figure 6 people working at a Mickey D's during a busy lunch. You're telling me that they only sell 42 burgers during that lunch hour? That's less than a burger per minute combined through the drive-through and 2 registers. That doesn't include adding $0.10 to fires and drinks either.

A study: https://www.purdue.edu/newsroom/releases/2015/Q3/study-raising-wages-to-15-an-hour-for-limited-service-restaurant-employees-would-raise-prices-4.3-percent.html

Raising wages to $15 an hour for limited-service [that's fast-food to you and me - bacchi] restaurant employees would lead to an estimated 4.3 percent increase in prices at those restaurants

That's because wages are only ~1/3 of total operating costs.

A 2010 Deloitte study for the NRA [National Restaurant Association - bacchi] identified salaries and wages -- which include employee benefits and all paid amounts, including those to managers -- as ranging from 25 percent to 35 percent of total sales.

[Metalcat]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Yet somehow society survived back in the 60's, when the minimum wage was an inflation adjusted $10.68/hr. :)

If minimum wage goes from $7.25 to $14.50 and your claim is that they're going to lose buying power because prices go up, you're arguing that the cost of everything is going to double?

That seems rather far fetched, to put it mildly.

Where GutarStv lives minimum wage IS $14/hr. Or 30K/yr.

I don't know where he's getting 15K/yr from, that's what I was making working minimum wage in the 90s. It's been at the current level for years.

The US federal minimum wage is $7.25/hr

Ah, I was somehow assuming he was talking about min wage where he lives, which was actually $15 until recently.

And no, the sky didn't fall and price of goods didn't double. Nor did salaries above minimum wage magically jump up in proportion either.

People have a lot of economic theories and then somehow don't look at examples right next door to see how it sometimes plays out.

[Simpleton]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Yet somehow society survived back in the 60's, when the minimum wage was an inflation adjusted $10.68/hr. :)

If minimum wage goes from $7.25 to $14.50 and your claim is that they're going to lose buying power because prices go up, you're arguing that the cost of everything is going to double?

That seems rather far fetched, to put it mildly.

Where GutarStv lives minimum wage IS $14/hr. Or 30K/yr.

I don't know where he's getting 15K/yr from, that's what I was making working minimum wage in the 90s. It's been at the current level for years.

The US federal minimum wage is $7.25/hr

No business will employ someone for long when they are incurring a loss on that labor.

Any increase in wage has to be married to an increase in efficiency/automation, or increased cost to the consumer. Business does not bear this cost in the long run - all businesses that last generate a profit, and the profit margins are essentially range-bound across the decades. There is certainly cyclicality to this though.

Certainly the increase in minimum wage benefits those workers who keep the jobs because the increase in cost of goods is passed along to people at all income levels, not simply to themselves.

Longer term though (years), every position will demand proportionally more compensation in relation to the lower skilled labor.  Eventually the cost of everything increases.

[GuitarStv]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Yet somehow society survived back in the 60's, when the minimum wage was an inflation adjusted $10.68/hr. :)

If minimum wage goes from $7.25 to $14.50 and your claim is that they're going to lose buying power because prices go up, you're arguing that the cost of everything is going to double?

That seems rather far fetched, to put it mildly.

Where GutarStv lives minimum wage IS $14/hr. Or 30K/yr.

I don't know where he's getting 15K/yr from, that's what I was making working minimum wage in the 90s. It's been at the current level for years.

The US federal minimum wage is $7.25/hr

Yeah, I was going off the chart posted a little earlier in the discussion that showed minimum wage in the US to be 7.25$ an hour.

We do have much higher minimum wage here in Canada . . . but our society has completely collapsed and you need to arm yourself to battle off roving gangs of reavers (apart from the usual polar bears) on the way to the supermarket.

[Paper Chaser]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Aren't you assuming that the cost of goods will increase the same amount as minimum wages? There are several reasons why that probably wouldn't be the case. Labor isn't the only cost of creating goods. There is also energy, materials, etc. And also if minimum wage is increased not all wages will necessarily go up the same percentage. For example, the electronics engineer that is designing a toy isn't suddenly going to go from $70k to $140k because minimum wage for the person stocking the store shelves with it went from $7.25 to $14.50.

More or less. I'm assuming that the corporations are likely to pass any increase in costs on to consumers in order to maintain profit margins similar to the current ones. That holds whether the increase in costs comes form labor, material, production, or some combination of those. I suppose they could always defer some cost increases by reducing the labor pool, but that doesn't seem like a great option if you're a minimum wage worker either.

I know that those earning more than minimum wage aren't likely to see commensurate increases in their wages, but GuitarStv seemed to focus on the plight of those making minimum wage, so that was the focus of my post. A person currently making minimum wage, and that would presumably continue to make minimum wage moving forward. I'm not sure those people will be much if any better off with a minimum wage increase across the board. I'm not arguing that the minimum wage shouldn't increase over time, or that it's currently where it should be. I'm just saying that I'm not sure that it's ever been easy to make ends meet on a single, minimum wage income. And if it were, I'd be curious to know what things like taxes, average debt, housing/education costs, etc were during that time too. If you have to go back to a time when the US was basically the only standing super power on the planet, and corporations were more focused on doing good for their communities than maximizing profit for shareholders, in order to find an example of minimum wage being adequate income, then I'm not sure that it's relevant in the current environment.

[bacchi]

Yeah, I was going off the chart posted a little earlier in the discussion that showed minimum wage in the US to be 7.25$ an hour.

We do have much higher minimum wage here in Canada . . . but our society has completely collapsed and you need to arm yourself to battle off roving gangs of reavers (apart from the usual polar bears) on the way to the supermarket.

And then, when you get to the supermarket, you can only afford to buy a few slices of bread at a time because of inflation caused by the poors making too much money.

[Paper Chaser]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Yet somehow society survived back in the 60's, when the minimum wage was an inflation adjusted $10.68/hr. :)

If minimum wage goes from $7.25 to $14.50 and your claim is that they're going to lose buying power because prices go up, you're arguing that the cost of everything is going to double?

That seems rather far fetched, to put it mildly.

Corporate ideologies were much different in the 1960s than they are now, as were tax brackets/rates, and the state of global commerce too. In the current environment, where businesses look to maximize profits, and the wealthiest people are taxed at lower rates, and the US has to compete economically with the rest of the world I'm not counting on things being the same.

Hold up.

Rich people pay less taxes now, therefore we should pay poor people even less?

I'm not saying that. I'm saying that the example of something working in the 60s, which was a wildly different environment than the current one, doesn't mean it will work now unless everything else in that environment is changed to be like it was in the 60s too.

I'm not saying the current minimum wage is where it should be. I'm just arguing that those minimum wage workers aren't likely to be much better of with an across the board increase to the minimum wage if their expenses go up, or their jobs are less likely to exist. As far as I can tell, it's always been hard to survive on a minimum wage income, regardless of what that minimum wage actually was.

[ender]

No business will employ someone for long when they are incurring a loss on that labor.

Any increase in wage has to be married to an increase in efficiency/automation, or increased cost to the consumer. Business does not bear this cost in the long run - all businesses that last generate a profit, and the profit margins are essentially range-bound across the decades. There is certainly cyclicality to this though.

This is only true in aggregate.

But wages do increase, over time.

It's certainly possible for a business to increase the wages of the lowest paid workers much more rapidly than the non-minimum wage type of workers and allocate a bigger pool of the increase to them. Or to increase the wages of the highest paid workers and keep lower wages low.

For example, it would be easily possible for a company like McDonalds to increase their lowest paid employee wages 10% and have no cashflow impact if they adjust how they pay their salaried/leadership folks (which can be done in many ways; even just rehiring fewer people can adjust the ratios without even adjusting wages down).

[Metalcat]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Yet somehow society survived back in the 60's, when the minimum wage was an inflation adjusted $10.68/hr. :)

If minimum wage goes from $7.25 to $14.50 and your claim is that they're going to lose buying power because prices go up, you're arguing that the cost of everything is going to double?

That seems rather far fetched, to put it mildly.

Where GutarStv lives minimum wage IS $14/hr. Or 30K/yr.

I don't know where he's getting 15K/yr from, that's what I was making working minimum wage in the 90s. It's been at the current level for years.

The US federal minimum wage is $7.25/hr

Yeah, I was going off the chart posted a little earlier in the discussion that showed minimum wage in the US to be 7.25$ an hour.

We do have much higher minimum wage here in Canada . . . but our society has completely collapsed and you need to arm yourself to battle off roving gangs of reavers (apart from the usual polar bears) on the way to the supermarket.

And all min wage jobs have been lost to automation.

I know that's what we did in our clinic, we just used robots instead, plus their easier to arm with weapons to protect us from the reavers.

Oh wait...before covid we actually had such strong employment rates that it was actually hard to find people for minimum wage jobs, so a lot of companies were paying $16/hr for entry level positions just to attract staff.

We actually had the OPPOSITE problem, and were desperate for automation solutions that could compensate for the lack of min-wage level manpower.

And we never saw an explosion in prices, because competition kept the pressure on.

Funny, no?

[JLee]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Aren't you assuming that the cost of goods will increase the same amount as minimum wages? There are several reasons why that probably wouldn't be the case. Labor isn't the only cost of creating goods. There is also energy, materials, etc. And also if minimum wage is increased not all wages will necessarily go up the same percentage. For example, the electronics engineer that is designing a toy isn't suddenly going to go from $70k to $140k because minimum wage for the person stocking the store shelves with it went from $7.25 to $14.50.

More or less. I'm assuming that the corporations are likely to pass any increase in costs on to consumers in order to maintain profit margins similar to the current ones. That holds whether the increase in costs comes form labor, material, production, or some combination of those. I suppose they could always defer some cost increases by reducing the labor pool, but that doesn't seem like a great option if you're a minimum wage worker either.

I know that those earning more than minimum wage aren't likely to see commensurate increases in their wages, but GuitarStv seemed to focus on the plight of those making minimum wage, so that was the focus of my post. A person currently making minimum wage, and that would presumably continue to make minimum wage moving forward. I'm not sure those people will be much if any better off with a minimum wage increase across the board. I'm not arguing that the minimum wage shouldn't increase over time, or that it's currently where it should be. I'm just saying that I'm not sure that it's ever been easy to make ends meet on a single, minimum wage income. And if it were, I'd be curious to know what things like taxes, average debt, housing/education costs, etc were during that time too. If you have to go back to a time when the US was basically the only standing super power on the planet, and corporations were more focused on doing good for their communities than maximizing profit for shareholders, in order to find an example of minimum wage being adequate income, then I'm not sure that it's relevant in the current environment.

For years, employers have been passing their profits up the chain to the CEOs. There's no good reason for that other than greed and simply because they can.

https://www.epi.org/publication/ceo-compensation-2018/

CEO compensation has grown 940% since 1978
Typical worker compensation has risen only 12% during that time

https://www.theguardian.com/business/2021/may/11/us-millionaire-ceos-saw-29-pay-raises-while-workers-had-decreases-report-says

The millionaire chief executives of some of the American companies with the lowest-paid workers saw an average pay raise of 29% last year while their workers saw a 2% decrease, according to a report released Tuesday.

The Institute for Policy Studies calculated that the average CEO compensation in 2020 was $15.3m, when looking at the 100 companies with the lowest median wage for workers in the S&P 500 index.

The median worker pay was $28,187. This means that chief executives saw a 29% pay raise compared to 2019, while workers saw a 2% decrease. For all 100 companies, median worker pay was below $50,000 for 2020.

[Simpleton]

No business will employ someone for long when they are incurring a loss on that labor.

Any increase in wage has to be married to an increase in efficiency/automation, or increased cost to the consumer. Business does not bear this cost in the long run - all businesses that last generate a profit, and the profit margins are essentially range-bound across the decades. There is certainly cyclicality to this though.

This is only true in aggregate.

But wages do increase, over time.

It's certainly possible for a business to increase the wages of the lowest paid workers much more rapidly than the non-minimum wage type of workers and allocate a bigger pool of the increase to them. Or to increase the wages of the highest paid workers and keep lower wages low.

For example, it would be easily possible for a company like McDonalds to increase their lowest paid employee wages 10% and have no cashflow impact if they adjust how they pay their salaried/leadership folks (which can be done in many ways; even just rehiring fewer people can adjust the ratios without even adjusting wages down).

I agree with this to a limited extent.

My contention is that raising wages would increase the cost of the products produced. It would follow that decreasing wages (in this case for leadership) could result in a savings and decrease in cost of good.

Where I am skeptical of your argument is that your assumption is that they CAN simply reduce wages of higher earning positions. I would argue that those positions generally should command a higher wage, which should increase even further given the increased salary competition from the lower-skilled positions. Things like this can happen in the short term, but I think longer term this is not usually an option unless a gross-imbalance already existed.

[GuitarStv]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Aren't you assuming that the cost of goods will increase the same amount as minimum wages? There are several reasons why that probably wouldn't be the case. Labor isn't the only cost of creating goods. There is also energy, materials, etc. And also if minimum wage is increased not all wages will necessarily go up the same percentage. For example, the electronics engineer that is designing a toy isn't suddenly going to go from $70k to $140k because minimum wage for the person stocking the store shelves with it went from $7.25 to $14.50.

More or less. I'm assuming that the corporations are likely to pass any increase in costs on to consumers in order to maintain profit margins similar to the current ones. That holds whether the increase in costs comes form labor, material, production, or some combination of those. I suppose they could always defer some cost increases by reducing the labor pool, but that doesn't seem like a great option if you're a minimum wage worker either.

I know that those earning more than minimum wage aren't likely to see commensurate increases in their wages, but GuitarStv seemed to focus on the plight of those making minimum wage, so that was the focus of my post. A person currently making minimum wage, and that would presumably continue to make minimum wage moving forward. I'm not sure those people will be much if any better off with a minimum wage increase across the board. I'm not arguing that the minimum wage shouldn't increase over time, or that it's currently where it should be. I'm just saying that I'm not sure that it's ever been easy to make ends meet on a single, minimum wage income. And if it were, I'd be curious to know what things like taxes, average debt, housing/education costs, etc were during that time too. If you have to go back to a time when the US was basically the only standing super power on the planet, and corporations were more focused on doing good for their communities than maximizing profit for shareholders, in order to find an example of minimum wage being adequate income, then I'm not sure that it's relevant in the current environment.

For years, employers have been passing their profits up the chain to the CEOs. There's no good reason for that other than greed and simply because they can.

https://www.epi.org/publication/ceo-compensation-2018/

CEO compensation has grown 940% since 1978
Typical worker compensation has risen only 12% during that time

https://www.theguardian.com/business/2021/may/11/us-millionaire-ceos-saw-29-pay-raises-while-workers-had-decreases-report-says

The millionaire chief executives of some of the American companies with the lowest-paid workers saw an average pay raise of 29% last year while their workers saw a 2% decrease, according to a report released Tuesday.

The Institute for Policy Studies calculated that the average CEO compensation in 2020 was $15.3m, when looking at the 100 companies with the lowest median wage for workers in the S&P 500 index.

The median worker pay was $28,187. This means that chief executives saw a 29% pay raise compared to 2019, while workers saw a 2% decrease. For all 100 companies, median worker pay was below $50,000 for 2020.

Are you suggesting that modern CEOs aren't working 940% harder than in the 70s in order to justify these increases?  I'm shocked sir.  Shocked.

[JLee]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Yet somehow society survived back in the 60's, when the minimum wage was an inflation adjusted $10.68/hr. :)

If minimum wage goes from $7.25 to $14.50 and your claim is that they're going to lose buying power because prices go up, you're arguing that the cost of everything is going to double?

That seems rather far fetched, to put it mildly.

Corporate ideologies were much different in the 1960s than they are now, as were tax brackets/rates, and the state of global commerce too. In the current environment, where businesses look to maximize profits, and the wealthiest people are taxed at lower rates, and the US has to compete economically with the rest of the world I'm not counting on things being the same.

Hold up.

Rich people pay less taxes now, therefore we should pay poor people even less?

I'm not saying that. I'm saying that the example of something working in the 60s, which was a wildly different environment than the current one, doesn't mean it will work now unless everything else in that environment is changed to be like it was in the 60s too.

I'm not saying the current minimum wage is where it should be. I'm just arguing that those minimum wage workers aren't likely to be much better of with an across the board increase to the minimum wage if their expenses go up, or their jobs are less likely to exist. As far as I can tell, it's always been hard to survive on a minimum wage income, regardless of what that minimum wage actually was.

There are levels:
https://medium.com/@aaronmhill/minimum-wage-vs-cost-of-living-e6b1257b6bba

In the years leading up to 1980, full-time minimum-wage earners could afford to pay for a median-priced dwelling (and their utilities!) while only being “moderately burdened”. But from 1980 to 1990, this scenario changed drastically, and has been relative stable since, leaving individuals and families with barely 20% of their income to be spent on things such as food, healthcare, clothing, and anything else.

[pecunia]

You guys have already said all this in a far more intelligent and coherent manner, but I had it typed up so I'll paste it in.  You can berate me.

"Corporate ideologies were much different in the 1960s than they are now, as were tax brackets/rates, and the state of global commerce too. In the current environment, where businesses look to maximize profits, and the wealthiest people are taxed at lower rates, and the US has to compete economically with the rest of the world I'm not counting on things being the same."

Yeh - I love this one.  I don't know about corporate ideologies, but a lot of these guys running the show would maybe like it to be the same way it was in England in Charles Dickens time.  As far as the taxes go, the businesses and rich folks buy the politicians and set the laws regarding trade.  There has always been global trade.  That's what made the British Empire.  There certainly was in the 1960s.  As far as the US having to compete economically with the rest of the world, yes and no.  I was told by an Indian immigrant once that the US is a big enough market and supplier on their own that they can maintain a decent living for folks if they ever realized that they can make and sell most stuff here.  Those global agreements can be altered.

Classical economics people say we are better off with world trade.  Tariffs will be applied against the US if we favor our own people.  So what.  If you make it here, sell it here then the money stays here.  The standard of living is drifting inexorably down so maybe it's time to just take care of the folks in North America.  (And no I didn't vote for Donnie boy,)  Let's tax those rich suckers and get some good jobs rebuilding America and making the stuff we use here.

If the inflation is coming, lets use it as a time to make things better, then we can enjoy ourselves as it hits.

[Telecaster]

Where GutarStv lives minimum wage IS $14/hr. Or 30K/yr.

I don't know where he's getting 15K/yr from, that's what I was making working minimum wage in the 90s. It's been at the current level for years.

The US minimum wage is $7.25.  At roughly 2,000 working hours per year, that's $15K. 

[Simpleton]

For years, employers have been passing their profits up the chain to the CEOs. There's no good reason for that other than greed and simply because they can.

I think there is no doubt CEO pay has increased dramatically in the past decades, but I think this has much more to do with the fact that company size has been increasing exponentially.

The average multinational company simply has an order of magnitude more employees than they did in decades past. Globalization has created a small number of massive companies.

CEO compensation has tracked the size of the company more closely than the wage of the average worker which I think makes sense to me. I would certainly not invest in Amazon if its leader could pick up and leave his $200,000 per year job to go be a software engineer at google for more money.

[Telecaster]

I agree with this to a limited extent.

My contention is that raising wages would increase the cost of the products produced. It would follow that decreasing wages (in this case for leadership) could result in a savings and decrease in cost of good.

Where I am skeptical of your argument is that your assumption is that they CAN simply reduce wages of higher earning positions. I would argue that those positions generally should command a higher wage, which should increase even further given the increased salary competition from the lower-skilled positions. Things like this can happen in the short term, but I think longer term this is not usually an option unless a gross-imbalance already existed.

The CEO of McDonald's has a total compensation of about $20 million.   I find it completely implausible he adds that much value to the company or that the board couldn't find a person with a similar skill set for say, $750,000. 

I find it more plausible the board of directors is corrupt and jacking executive compensation because it is in their own best interests. 

[Paper Chaser]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Aren't you assuming that the cost of goods will increase the same amount as minimum wages? There are several reasons why that probably wouldn't be the case. Labor isn't the only cost of creating goods. There is also energy, materials, etc. And also if minimum wage is increased not all wages will necessarily go up the same percentage. For example, the electronics engineer that is designing a toy isn't suddenly going to go from $70k to $140k because minimum wage for the person stocking the store shelves with it went from $7.25 to $14.50.

More or less. I'm assuming that the corporations are likely to pass any increase in costs on to consumers in order to maintain profit margins similar to the current ones. That holds whether the increase in costs comes form labor, material, production, or some combination of those. I suppose they could always defer some cost increases by reducing the labor pool, but that doesn't seem like a great option if you're a minimum wage worker either.

I know that those earning more than minimum wage aren't likely to see commensurate increases in their wages, but GuitarStv seemed to focus on the plight of those making minimum wage, so that was the focus of my post. A person currently making minimum wage, and that would presumably continue to make minimum wage moving forward. I'm not sure those people will be much if any better off with a minimum wage increase across the board. I'm not arguing that the minimum wage shouldn't increase over time, or that it's currently where it should be. I'm just saying that I'm not sure that it's ever been easy to make ends meet on a single, minimum wage income. And if it were, I'd be curious to know what things like taxes, average debt, housing/education costs, etc were during that time too. If you have to go back to a time when the US was basically the only standing super power on the planet, and corporations were more focused on doing good for their communities than maximizing profit for shareholders, in order to find an example of minimum wage being adequate income, then I'm not sure that it's relevant in the current environment.

For years, employers have been passing their profits up the chain to the CEOs. There's no good reason for that other than greed and simply because they can.

https://www.epi.org/publication/ceo-compensation-2018/

CEO compensation has grown 940% since 1978
Typical worker compensation has risen only 12% during that time

https://www.theguardian.com/business/2021/may/11/us-millionaire-ceos-saw-29-pay-raises-while-workers-had-decreases-report-says

The millionaire chief executives of some of the American companies with the lowest-paid workers saw an average pay raise of 29% last year while their workers saw a 2% decrease, according to a report released Tuesday.

The Institute for Policy Studies calculated that the average CEO compensation in 2020 was $15.3m, when looking at the 100 companies with the lowest median wage for workers in the S&P 500 index.

The median worker pay was $28,187. This means that chief executives saw a 29% pay raise compared to 2019, while workers saw a 2% decrease. For all 100 companies, median worker pay was below $50,000 for 2020.

Completely agreed. And I think that's a problem. Do you think changing the minimum wage is likely to change any of this?

[mntnmn117]

For years, employers have been passing their profits up the chain to the CEOs. There's no good reason for that other than greed and simply because they can.

I think there is no doubt CEO pay has increased dramatically in the past decades, but I think this has much more to do with the fact that company size has been increasing exponentially.

The average multinational company simply has an order of magnitude more employees than they did in decades past. Globalization has created a small number of massive companies.

CEO compensation has tracked the size of the company more closely than the wage of the average worker which I think makes sense to me. I would certainly not invest in Amazon if its leader could pick up and leave his $200,000 per year job to go be a software engineer at google for more money.

Yeah company size plays a big role.  Every manager has to make a little more than their underlings. I went from a 10K+ employee const/engineering firm to a 400 person firm and found a huge increase in equality of pay/distribution of earning. Much better working at a place without corporate jets and multiple 20M/50M/yr CEOs to support.

[Paper Chaser]

Oh wait...before covid we actually had such strong employment rates that it was actually hard to find people for minimum wage jobs, so a lot of companies were paying $16/hr for entry level positions just to attract staff.

We actually had the OPPOSITE problem, and were desperate for automation solutions that could compensate for the lack of min-wage level manpower.

This is what I'm seeing on the ground right now. I wonder how many people actually exist in the work force making just the Federal min wage. I live in a state with a minimum wage of $7.25/hr. Pretty much every fast food restaurant that I pass has signs out front begging workers to apply for $11-13/hr and usually offer signing bonuses too. Warehouses and manufacturing operations have similar signs but start in the $15-22 range. They're obviously struggling to fill those positions at those pay rates or they wouldn't have signs out front. My MIL has a low level job in a local grocery store making over twice minimum wage. Seems like the market is taking care of the minimum wage issue for the most part.

[Simpleton]

I agree with this to a limited extent.

My contention is that raising wages would increase the cost of the products produced. It would follow that decreasing wages (in this case for leadership) could result in a savings and decrease in cost of good.

Where I am skeptical of your argument is that your assumption is that they CAN simply reduce wages of higher earning positions. I would argue that those positions generally should command a higher wage, which should increase even further given the increased salary competition from the lower-skilled positions. Things like this can happen in the short term, but I think longer term this is not usually an option unless a gross-imbalance already existed.

The CEO of McDonald's has a total compensation of about $20 million.   I find it completely implausible he adds that much value to the company or that the board couldn't find a person with a similar skill set for say, $750,000. 

I find it more plausible the board of directors is corrupt and jacking executive compensation because it is in their own best interests.

The sort of person who jumps through the hoops to be the CEO of McDonalds surely deserves MUCH MUCH more than $750,000. A run of the mill surgeon can easily surpass $750,000, many lawyers do etc.  Heck, at that rate the CEO may be tempted to simply go run 2 McDonalds franchises and make more money for way less stress/sacrifice.

I can't defend a specific number, but I would much rather have the market set that price on a voluntary basis than have the government mandate it. Let the people actually paying the CEO, decide what he should/shouldn't be paid.

When it comes to corporate governance, there is certainly some conflicts of interest and opportunities for improvement particularly when it comes to HOW the CEO is compensated. That is a very complex topic though without easy solutions.

[Edubb20]

I'm a pretty cheap guy . . . but I would have some difficulty living on the 15 grand a year that minimum wage pays (assuming you work 40 hrs a week, and never take a day off for vacation).  Simply finding a way to get to work, pay rent, feed myself, and then pay for the occasional medical expense would sure be tricky on those kinds of wages.  Pretty much any unexpected expense would throw you into debt.

It doesn't seem unreasonable to me that minimum wage be set at a higher level.

But if higher wages mean the cost of goods increases, then buying power hasn't changed at all for that person. In fact, they'd be paying more in sales tax on a given purchase and potentially losing buying power. They're seeing a higher number on their W2, but it's not actually going further for them. It's just more inflation.

Aren't you assuming that the cost of goods will increase the same amount as minimum wages? There are several reasons why that probably wouldn't be the case. Labor isn't the only cost of creating goods. There is also energy, materials, etc. And also if minimum wage is increased not all wages will necessarily go up the same percentage. For example, the electronics engineer that is designing a toy isn't suddenly going to go from $70k to $140k because minimum wage for the person stocking the store shelves with it went from $7.25 to $14.50.

More or less. I'm assuming that the corporations are likely to pass any increase in costs on to consumers in order to maintain profit margins similar to the current ones. That holds whether the increase in costs comes form labor, material, production, or some combination of those. I suppose they could always defer some cost increases by reducing the labor pool, but that doesn't seem like a great option if you're a minimum wage worker either.

I know that those earning more than minimum wage aren't likely to see commensurate increases in their wages, but GuitarStv seemed to focus on the plight of those making minimum wage, so that was the focus of my post. A person currently making minimum wage, and that would presumably continue to make minimum wage moving forward. I'm not sure those people will be much if any better off with a minimum wage increase across the board. I'm not arguing that the minimum wage shouldn't increase over time, or that it's currently where it should be. I'm just saying that I'm not sure that it's ever been easy to make ends meet on a single, minimum wage income. And if it were, I'd be curious to know what things like taxes, average debt, housing/education costs, etc were during that time too. If you have to go back to a time when the US was basically the only standing super power on the planet, and corporations were more focused on doing good for their communities than maximizing profit for shareholders, in order to find an example of minimum wage being adequate income, then I'm not sure that it's relevant in the current environment.

The older I get, the more I start to identify as a Marxist or something similar(with some real and unresolved reservations). Capitalism sure does seem to be at inflection point one way or the other.  I'm along for the ride either way I guess.

[mntnmn117]

Oh wait...before covid we actually had such strong employment rates that it was actually hard to find people for minimum wage jobs, so a lot of companies were paying $16/hr for entry level positions just to attract staff.

We actually had the OPPOSITE problem, and were desperate for automation solutions that could compensate for the lack of min-wage level manpower.

This is what I'm seeing on the ground right now. I wonder how many people actually exist in the work force making just the Federal min wage. I live in a state with a minimum wage of $7.25/hr. Pretty much every fast food restaurant that I pass has signs out front begging workers to apply for $11-13/hr and usually offer signing bonuses too. Warehouses and manufacturing operations have similar signs but start in the $15-22 range. They're obviously struggling to fill those positions at those pay rates or they wouldn't have signs out front. My MIL has a low level job in a local grocery store making over twice minimum wage. Seems like the market is taking care of the minimum wage issue for the most part.

The problem really is that State + Covid benefits are just really too high. With the amount of help needed signs it needs to end now.  Let say you had a 40/hr week food industry job at $15/hr pre covid.  WA state unemployment for that is 311/wk + 300/wk federal covid = $611/wk or $15.28 per hour. In a weird sort of way the people on unemployment just discovered what FIRE is like, you can work, but there's not much benefit to working, and you really don't have to if you don't want to.

[Edubb20]

I agree with this to a limited extent.

My contention is that raising wages would increase the cost of the products produced. It would follow that decreasing wages (in this case for leadership) could result in a savings and decrease in cost of good.

Where I am skeptical of your argument is that your assumption is that they CAN simply reduce wages of higher earning positions. I would argue that those positions generally should command a higher wage, which should increase even further given the increased salary competition from the lower-skilled positions. Things like this can happen in the short term, but I think longer term this is not usually an option unless a gross-imbalance already existed.

The CEO of McDonald's has a total compensation of about $20 million.   I find it completely implausible he adds that much value to the company or that the board couldn't find a person with a similar skill set for say, $750,000. 

I find it more plausible the board of directors is corrupt and jacking executive compensation because it is in their own best interests.

The sort of person who jumps through the hoops to be the CEO of McDonalds surely deserves MUCH MUCH more than $750,000. A run of the mill surgeon can easily surpass $750,000, many lawyers do etc.  Heck, at that rate the CEO may be tempted to simply go run 2 McDonalds franchises and make more money for way less stress/sacrifice.

I can't defend a specific number, but I would much rather have the market set that price on a voluntary basis than have the government mandate it. Let the people actually paying the CEO, decide what he should/shouldn't be paid.

When it comes to corporate governance, there is certainly some conflicts of interest and opportunities for improvement particularly when it comes to HOW the CEO is compensated. That is a very complex topic though without easy solutions.

Do they deserve MUCH MUCH more? Really? How about 19.25 million more? Based on value added to our society, I disagree. To each there own.

[jeromedawg]

I agree with this to a limited extent.

My contention is that raising wages would increase the cost of the products produced. It would follow that decreasing wages (in this case for leadership) could result in a savings and decrease in cost of good.

Where I am skeptical of your argument is that your assumption is that they CAN simply reduce wages of higher earning positions. I would argue that those positions generally should command a higher wage, which should increase even further given the increased salary competition from the lower-skilled positions. Things like this can happen in the short term, but I think longer term this is not usually an option unless a gross-imbalance already existed.

The CEO of McDonald's has a total compensation of about $20 million.   I find it completely implausible he adds that much value to the company or that the board couldn't find a person with a similar skill set for say, $750,000. 

I find it more plausible the board of directors is corrupt and jacking executive compensation because it is in their own best interests.

The sort of person who jumps through the hoops to be the CEO of McDonalds surely deserves MUCH MUCH more than $750,000. A run of the mill surgeon can easily surpass $750,000, many lawyers do etc.  Heck, at that rate the CEO may be tempted to simply go run 2 McDonalds franchises and make more money for way less stress/sacrifice.

I can't defend a specific number, but I would much rather have the market set that price on a voluntary basis than have the government mandate it. Let the people actually paying the CEO, decide what he should/shouldn't be paid.

When it comes to corporate governance, there is certainly some conflicts of interest and opportunities for improvement particularly when it comes to HOW the CEO is compensated. That is a very complex topic though without easy solutions.

Do they deserve MUCH MUCH more? Really? How about 19.25 million more? Based on value added to our society, I disagree. To each there own.

Also, exactly *who* is it deciding what the salary package should be at the C-level? And how are we to determine what is "fair"? Is "fair" always correctly established based upon what a group of 10-12 people determine?

[Simpleton]

I agree with this to a limited extent.

My contention is that raising wages would increase the cost of the products produced. It would follow that decreasing wages (in this case for leadership) could result in a savings and decrease in cost of good.

Where I am skeptical of your argument is that your assumption is that they CAN simply reduce wages of higher earning positions. I would argue that those positions generally should command a higher wage, which should increase even further given the increased salary competition from the lower-skilled positions. Things like this can happen in the short term, but I think longer term this is not usually an option unless a gross-imbalance already existed.

The CEO of McDonald's has a total compensation of about $20 million.   I find it completely implausible he adds that much value to the company or that the board couldn't find a person with a similar skill set for say, $750,000. 

I find it more plausible the board of directors is corrupt and jacking executive compensation because it is in their own best interests.

The sort of person who jumps through the hoops to be the CEO of McDonalds surely deserves MUCH MUCH more than $750,000. A run of the mill surgeon can easily surpass $750,000, many lawyers do etc.  Heck, at that rate the CEO may be tempted to simply go run 2 McDonalds franchises and make more money for way less stress/sacrifice.

I can't defend a specific number, but I would much rather have the market set that price on a voluntary basis than have the government mandate it. Let the people actually paying the CEO, decide what he should/shouldn't be paid.

When it comes to corporate governance, there is certainly some conflicts of interest and opportunities for improvement particularly when it comes to HOW the CEO is compensated. That is a very complex topic though without easy solutions.

Do they deserve MUCH MUCH more? Really? How about 19.25 million more? Based on value added to our society, I disagree. To each there own.

Also, exactly *who* is it deciding what the salary package should be at the C-level? And how are we to determine what is "fair"? Is "fair" always correctly established based upon what a group of 10-12 people determine?

It's not about "fair" though. I don't think its up to any arbitrary person to decide what is "fair" for others to make. It is also not up to the board of directors to determine the value of the CEO to "society" - that is beyond the scope of professional burger peddlers.

The people paying the CEO (shareholders) employ a board of directors who in turn manage the CEO and his compensation package.

If the CEO is not producing value it is up to the board to recognize this and adjust. If the board is not doing its job properly, the shareholders can elect a new board.

Where we have agreement is that the election of the board sometimes lacks engagement/transparency, and this process could be better. Ultimately it is the shareholders who allow this to go on, and it is their money to waste.

What I firmly disagree with is a bunch of outsiders who are not involved in that chain looking at a big number and crying foul.

[jeromedawg]

I agree with this to a limited extent.

My contention is that raising wages would increase the cost of the products produced. It would follow that decreasing wages (in this case for leadership) could result in a savings and decrease in cost of good.

Where I am skeptical of your argument is that your assumption is that they CAN simply reduce wages of higher earning positions. I would argue that those positions generally should command a higher wage, which should increase even further given the increased salary competition from the lower-skilled positions. Things like this can happen in the short term, but I think longer term this is not usually an option unless a gross-imbalance already existed.

The CEO of McDonald's has a total compensation of about $20 million.   I find it completely implausible he adds that much value to the company or that the board couldn't find a person with a similar skill set for say, $750,000. 

I find it more plausible the board of directors is corrupt and jacking executive compensation because it is in their own best interests.

The sort of person who jumps through the hoops to be the CEO of McDonalds surely deserves MUCH MUCH more than $750,000. A run of the mill surgeon can easily surpass $750,000, many lawyers do etc.  Heck, at that rate the CEO may be tempted to simply go run 2 McDonalds franchises and make more money for way less stress/sacrifice.

I can't defend a specific number, but I would much rather have the market set that price on a voluntary basis than have the government mandate it. Let the people actually paying the CEO, decide what he should/shouldn't be paid.

When it comes to corporate governance, there is certainly some conflicts of interest and opportunities for improvement particularly when it comes to HOW the CEO is compensated. That is a very complex topic though without easy solutions.

Do they deserve MUCH MUCH more? Really? How about 19.25 million more? Based on value added to our society, I disagree. To each there own.

Also, exactly *who* is it deciding what the salary package should be at the C-level? And how are we to determine what is "fair"? Is "fair" always correctly established based upon what a group of 10-12 people determine?

It's not about "fair" though. I don't think its up to any arbitrary person to decide what is "fair" for others to make. It is also not up to the board of directors to determine the value of the CEO to "society" - that is beyond the scope of professional burger peddlers.

The people paying the CEO (shareholders) employ a board of directors who in turn manage the CEO and his compensation package.

If the CEO is not producing value it is up to the board to recognize this and adjust. If the board is not doing its job properly, the shareholders can elect a new board.

Where we have agreement is that the election of the board sometimes lacks engagement/transparency, and this process could be better. Ultimately it is the shareholders who allow this to go on, and it is their money to waste.

What I firmly disagree with is a bunch of outsiders who are not involved in that chain looking at a big number and crying foul.

Okay, so maybe not "fair" is the right term. It seems like "value" is...so, who determines what the CEO's value is in monetary terms if it's not the board? The CEO himself? The shareholders? And in turn, who determines the "value" of everyone else who works for the CEO?

[JLee]

I agree with this to a limited extent.

My contention is that raising wages would increase the cost of the products produced. It would follow that decreasing wages (in this case for leadership) could result in a savings and decrease in cost of good.

Where I am skeptical of your argument is that your assumption is that they CAN simply reduce wages of higher earning positions. I would argue that those positions generally should command a higher wage, which should increase even further given the increased salary competition from the lower-skilled positions. Things like this can happen in the short term, but I think longer term this is not usually an option unless a gross-imbalance already existed.

The CEO of McDonald's has a total compensation of about $20 million.   I find it completely implausible he adds that much value to the company or that the board couldn't find a person with a similar skill set for say, $750,000. 

I find it more plausible the board of directors is corrupt and jacking executive compensation because it is in their own best interests.

The sort of person who jumps through the hoops to be the CEO of McDonalds surely deserves MUCH MUCH more than $750,000. A run of the mill surgeon can easily surpass $750,000, many lawyers do etc.  Heck, at that rate the CEO may be tempted to simply go run 2 McDonalds franchises and make more money for way less stress/sacrifice.

I can't defend a specific number, but I would much rather have the market set that price on a voluntary basis than have the government mandate it. Let the people actually paying the CEO, decide what he should/shouldn't be paid.

When it comes to corporate governance, there is certainly some conflicts of interest and opportunities for improvement particularly when it comes to HOW the CEO is compensated. That is a very complex topic though without easy solutions.

Do they deserve MUCH MUCH more? Really? How about 19.25 million more? Based on value added to our society, I disagree. To each there own.

Also, exactly *who* is it deciding what the salary package should be at the C-level? And how are we to determine what is "fair"? Is "fair" always correctly established based upon what a group of 10-12 people determine?

It's not about "fair" though. I don't think its up to any arbitrary person to decide what is "fair" for others to make. It is also not up to the board of directors to determine the value of the CEO to "society" - that is beyond the scope of professional burger peddlers.

The people paying the CEO (shareholders) employ a board of directors who in turn manage the CEO and his compensation package.

If the CEO is not producing value it is up to the board to recognize this and adjust. If the board is not doing its job properly, the shareholders can elect a new board.

Where we have agreement is that the election of the board sometimes lacks engagement/transparency, and this process could be better. Ultimately it is the shareholders who allow this to go on, and it is their money to waste.

What I firmly disagree with is a bunch of outsiders who are not involved in that chain looking at a big number and crying foul.

The entire population is involved in this chain.  The wealth gap has been widening for decades and it's detrimental to the vast majority of people.

[bwall]

What I firmly disagree with is a bunch of outsiders who are not involved in that chain looking at a big number and crying foul.

And what I firmly disagree with is a bunch of outsiders who are not involved in that chain looking a a big number and crying "FAIR!"

[Simpleton]

What I firmly disagree with is a bunch of outsiders who are not involved in that chain looking at a big number and crying foul.

And what I firmly disagree with is a bunch of outsiders who are not involved in that chain looking a a big number and crying "FAIR!"

I am not saying it is fair or not. I am saying it is none of my business. I am saying the people who are employing the CEO should be able to decide what to pay him with their own money, simple as that.

The entire population is involved in this chain.  The wealth gap has been widening for decades and it's detrimental to the vast majority of people.

Pre-covid median income was at an all time high as a result of this system and the wealth gap was shrinking.
https://www.aei.org/carpe-diem/the-wealth-gap-shrinks-the-three-years-before-the-pandemic-saw-big-gains-for-lower-earners/
https://www.cnn.com/2020/09/15/politics/census-median-income-poverty-2019/index.html

Okay, so maybe not "fair" is the right term. It seems like "value" is...so, who determines what the CEO's value is in monetary terms if it's not the board? The CEO himself? The shareholders?

The value is determined the free market competition for the job, the hiring takes place by the board. The board sets the pay structure for the CEO. They are employed by shareholders who elect them, to do this job among a few others.

And in turn, who determines the "value" of everyone else who works for the CEO?

The market for labor ideally

[pecunia]

All these arguments and almost all based on the "market."  So many people have been brainwashed by the rich into thinking the "market" decisions are the best rather than decisions that are best for human beings.  I think future generations will look back at this time and shake their heads.

Markets don't solve problems people do.

[JLee]

What I firmly disagree with is a bunch of outsiders who are not involved in that chain looking at a big number and crying foul.

And what I firmly disagree with is a bunch of outsiders who are not involved in that chain looking a a big number and crying "FAIR!"

I am not saying it is fair or not. I am saying it is none of my business. I am saying the people who are employing the CEO should be able to decide what to pay him with their own money, simple as that.

The entire population is involved in this chain.  The wealth gap has been widening for decades and it's detrimental to the vast majority of people.

Pre-covid median income was at an all time high as a result of this system and the wealth gap was shrinking.
https://www.aei.org/carpe-diem/the-wealth-gap-shrinks-the-three-years-before-the-pandemic-saw-big-gains-for-lower-earners/

Okay, so maybe not "fair" is the right term. It seems like "value" is...so, who determines what the CEO's value is in monetary terms if it's not the board? The CEO himself? The shareholders?

The value is determined the free market competition for the job, the hiring takes place by the board. The board sets the pay structure for the CEO. They are employed by shareholders who elect them, to do this job among a few others.

And in turn, who determines the "value" of everyone else who works for the CEO?

The market for labor ideally

To be clear, you are arguing that the very same system that created the utterly massive wealth gap we have today is also going to be responsible for fixing it all on its own, and your evidence is that the poors saw a whopping $2400 net worth increase over THREE YEARS:

while the net worth of the average family in the lowest income quintile experienced a 34.3% increase in net worth from $7,000 to $9,400 in 2019 dollars

Let's continue to here:

And if we consider the last six years from 2013 to 2019, the 40.3% increase in net worth for the average low-income family below the 20th income percentile was more than twice the average increase of 17.0% for familes between the 80th and 90th income percentiles and nearly double the 27.6% increase for familes at or above the 90th income percentile.

First off, 40.3% is not nearly double 27.6% (that isn't even 1.5x).  Second, the 2017 net worth at the 90th percentile was $1,262,318.

A 27.6% increase for families at/above the 90th percentile means at least an increase of $348,399.77.

tldr: One 90th'er family's 27.6% increase is the same number of dollars as 145 poor families' increases combined.  And that's only using the very bottom of the "90th percentile and up" range, and as we all know it scales massively as you climb up to the top.

still tldr: The wealth gap between the bottom quintile and the 90th percentile increased by a minimum of $345,999.

[ender]

All these arguments and almost all based on the "market."  So many people have been brainwashed by the rich into thinking the "market" decisions are the best rather than decisions that are best for human beings.  I think future generations will look back at this time and shake their heads.

Markets don't solve problems people do.

Not to mention, the "market" doesn't set any of this, which is the biggest lie in the whole thing.

Pretending the average non-union minimum wage worker has meaningful influence whatsoever on CEO salaries is completely crazy.

[Simpleton]

To be clear, you are arguing that the very same system that created the utterly massive wealth gap we have today is also going to be responsible for fixing it all on its own, and your evidence is that the poors saw a whopping $2400 net worth increase over THREE YEARS:

To be clear I am not actually concerned about a wealth gap - I just addressed it because it was brought up. Personally I think a wealth gap is fine so long as all boats are rising.

Watch this.
https://speakola.com/political/margaret-thatcher-on-socialism-last-speech-1990

The median income raising is important though and it was at an all time high, so the MEDIAN POTENTIAL FOR WEALTH was at an all time high.

The wealth gap is much more a function of spendy-pants behavior than an actual income problem. I would have thought MMM readers would be the most aware of this. Having no money is not the same thing as having-had no money.

MMM wrote an entire blog about this with a really popular forum!