Or unions who fight automation?
Yep. I live in Iowa. We used to have unionized meat packing with wages that allowed US born workers to buy modest houses and afford children. Then the non-union packers discovered there were enough workers who were desperate enough to do that work for less. Some of that was the “farm crisis”, some was immigrants, often illegal. I expect that if we could get the numbers, current real meat packing wages are half of what they were in 1980.
IMO, that shouldn’t be true. We shouldn’t have any " very difficult, dirty work, with lousy pay."
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So, you think the price of housing, for instance, would stay static or not change by more than 5% if we doubled the wages of the bottom quintile? I don’t want anyone thinking I am against a rising standard of living, and the task of ensuring productivity gains don’t flow disproportionately to capital is difficult, but legislating such a change would be a huge disruption with serious unintended consequences.
Go on. You’ve peaked my interest. What sort of consequences?
I find it very disturbing that wealthy societies think it’s ok to bring in immigrants to do key functions of society like taking care of the elderly, producing food, child care, etc. These are the fundamental building blocks of society. We should be valuing these things much more.
Another aspect is that people want to eat meat at a low cost but we can’t find people to work in meat processing plants. Fundamentally, if you’re not willing to kill animals then why should you be allowed to have inexpensive meat at the grocery store? We are becoming so fundamentally disonnected from what we’re consuming, literally outsourcing all the inconvenience.
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This shouldn’t be a discussion about labor markets but one about society, culture, etc. What is the purpose of working your ass off so you can save money so that someone from Guatamela can get paid to take care of you?
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I am not really sure the point of this…people who show up without skills and then don’t do anything don’t last long. That is not a skilling issue.
Note: I agree with most you wrote, but this doesn’t seem like the prevailing view, at least when recent inflation is brought up in our politics. We went that direction, and everyone complained endlessly.
I see an issue where we are running out of unskilled labor available in the country at a time when I think we could use a lot more of it in the next decade as the boomers age. Is $20 the right amount to pay a fast food worker? What should we pay for in-home help for the elderly that don’t need skilled nursing? $40? Do we have the labor to support that with our current population? Should those rates all be 25% higher and no one needs government support?
I guess the point is we can agree but there are real political constraints to getting there, and in my mind one side is trying to simultaneously argue that immigrants are forcing down wages while they complain about the inflation that has been caused by a lack of cheap labor.
The US is an individualist society and culture, not a collectivist one. We rely on social security and medicare to take care of our parents so we don’t have to. This is nothing new, and like it or not, it is pretty fundamentally part of the US and unlikely to change any time soon.
I’m not sure what you mean by “legislating it”. No, I wouldn’t try a $30 minimum wage for all jobs.
But, I would limit legal immigration to high skilled workers. I’d hope that resulted in higher wages for low skilled US born workers. The sample numbers (doubling => 5%) were intended to show the scale. Large percentage gains for low skilled workers wouldn’t have much impact on our total cost of living because they start from such a low base.
It would certainly vary by product. If you are talking about the cost of new construction, I don’t know what percent of the total cost is labor for low skilled workers so I don’t know the percentage impact on that product.
I’m not one of those people.
I’m complaining that wages are too low for low skilled US workers and we continue to make that worse by importing more low skilled workers. I won’t complain about the amount of inflation that results from paying low skilled workers something closer to a “living” wage.
I could ask if $20 is enough that you are seriously considering quitting your job and doing fast food instead? If not, then $20 isn’t excessive.
More reasonably, is $20 attractive to the typical median (maybe that should be mean) wage worker?
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Forget individualism. We are losing the very notion of what it means to be human.
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We are often rewarding the worst employers. If you can’t attract workers then maybe you are a bad employer. And then these bad employers have the right to hire temporary workers from poorer countries who are extremely hard working and never whine. You’re in fact rewarding bad employers and helping poorly run companies have a market advantage. Eventually other businesses take notice and want in on the action as well. Here in Quebec, farmers have routinely abused temporary immigrants for their own gain.
I am not sure how one would accomplish changing the wages paid to the bottom quintile other than by legislation given we don’t have the political will to limit immigration.
I have no formal economic training so you probably have a much better idea of what may happen. If the minimum wage changes to accomplish a doubling of wages for the bottom quintile, many business that have a larger than average share of labor costs will fail. Many jobs that don’t provide the level of economic output necessary to support the higher wage will disappear. Summer jobs for teenagers will become very rare. Owners of businesses will invest more in automation to reduce dependence on laborers.
How is OASDI and Medicare individualist and not collectivist?
I guess in “political topics” sometimes we discuss the likelihood of some political change, other times we discuss our ideas of what changes we should make. My comments are in the “should” not “likely” category.
If reduced immigration leads to higher market wages, that increases costs for all businesses that have been relying on those low wage workers. When costs go up for all sellers, the first thought is that those costs can be passed on to buyers (because sellers don’t worry about being undercut by their competitors). Of course, demand isn’t perfectly inelastic, some buyers don’t want to pay the higher price. So, yes, some firms that depended on cheap labor don’t make it. That’s fine. I don’t think we “need” businesses that only exist because consumers don’t want to pay a living wage to workers.
I don’t know why teen jobs would be rare. If businesses can hire teens for less than they hire adults, I’m sure they will. Again, I am not promoting a higher legal minimum wage, I’m promoting less immigration of unskilled workers.
Yes, after businesses see wages go up, then more automation will be economically viable. That is a Good Thing. We get decent wages for workers and we also get greater productivity.
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OK, fair enough. I was operating under what I consider the “more likely” assumption of using minimum wage.
What is a living wage? Is it based on one-earner families or two-earner families? If it is based on one-earner families, how do one-earner families compete with two-earner families?
I think that if society want to make sure everyone has enough to live on, it should be done through tax policy or govt subsidies as opposed to through employers.
IFYP. Raising wages to $100K per year won’t get everyone earning less than that fired, but there will be a large number of folks who won’t be employable. Current low skill workers would need to up-skill to remain in the market.
Your proposal for limiting immigration of low skilled persons is seen as cruel to most left-leaning folks due to the conditions many immigrants are fleeing from. We may even face international pushback given how asylum is treated. The rich business owners who profit from cheap immigrant labor may not be left-leaning, but their financial interests are aligned with them.
Because it removes the expectation that we need to care for our aging parents and neighbors. Most of welfare exists so we can make the needy someone else’s problem with a paycheck deduction, then go off and live our own lives with the rest.
I think you have it backwards. Businesses don’t automate when there are available workers who will do the work for less than the cost of buying the machine. First, wages go up for the willing workers. Then, businesses seeing the increase look for ways to automate. Decreasing the number of unskilled workers we admit does not result in higher unemployment for US born workers.
Again, I am not advocating for a change in the legal minimum wage. I want to reduce the number of unskilled workers and then let the market react naturally.
If we think that a younger single person working full time and earning $x needs gov’t assistance to cover the cost of health insurance for one person, I’d call that “not a living wage”. Going further, if they can’t cover food and housing for themselves and one child, I’d call that “not a living wage”. You seem to be okay with the gov’t providing subsidies for people who don’t earn enough to live on. You must believe it is possible for governments to draw that line.
I understand the politics. You are correct, there is a strange alliance between people who (IMO) are foolishly “compassionate” and other people who are just looking for a source of cheap labor, while “someone else” bears the burden of augmenting inadequate wages.
This is only true if they have enough money available for the investment.
If its being swallowed up by higher wages and taxes, you will see little automation
And if you have higher wages and no real increase in productivity, you just end up with higher inflation as the costs are pushed to the consumer.
Thats the problem. Those low wage workers end up back at square one because their cost of living has also materially increased, given that inflation pushed up prices
Nope. Did you see my earlier estimate? If the bottom quintile could somehow double their wages, and all of that went to consumer prices (not your assumption), the CPI might have a one-time increase of 5%.
Low wage workers would be vastly better off.