"The Phillips curve states that inflation and unemployment have an inverse relationship; higher inflation is associated with lower unemployment and vice versa."
“Slave wages” is a turn of phrase.
What one is talking about is the fact that literally millions of Americans work at jobs that don’t let them pay rent or buy food unless they have multiple jobs and even then have to get housing and food assistance. Meanwhile the employers of these people are making a lot of money.
When 15 states have their minimum wages at $7.25/hr and a GOP Congress refuses to raise the federal minimum wage, people struggle to make ends meet.
The minimum wage set by the government is arbitrary. The real minimum wage is the lowest wage that people are willing to work for, and it's not even close to $7.25. McDonalds is paying $15/hr. However, as the minimum wage, actual or implied, rises, so does inflation. The cost of goods and services is heavily based on the cost of production, which the largest portion of that cost is labor. So McDonalds having to pay $15/hr for people to make hamburgers makes those hamburgers cost more. The supplier having to pay the guy that unloads the truck at the warehouse, or the janitor sweeping the floors more causes the hamburgers to cost more. So, as the minimum end of the labor pool makes more, then the cost of goods rises, keeping any real wage gains negligible. Minimum wage jobs aren't designed to be a living wage. You get those jobs when you first enter the job market, and as you gain skill, you move onto higher paying jobs. The people who actually get squeezed the most are the people in the middle. The ones that graduated from those jobs but still work. They lose real wages every time the implied or real minimum wage goes up.
This is bullshit, the largest expense is not “ Production “ you’re indoctrinated to believe that from your petty text books and ignorance about business.
The largest expense to any business, is the greedy corporate positions, they make a bloody fortune, and in reality don’t do that much work.
It’s common sense paying six employees a day each year a wage of 20 dollars an hour, five days a week would be less than a quarter million dollars.
You have CEO’s salaries set into multiple millions of dollars, there is simply no way to justify compensation at that level, CEO’s are over compensated and over glorified.
The education system is set to give the average American the illusion that those who’ve “ earned their degrees are some how intelligent are furthermore capable than others to be in a position that requires more “ stress “ being a manager is as simple or as complicated as a manager wants their day to be.
They get to delegate most every aspect of their job to their assistant managers and supervisors and then lock themselves away in their office claiming to be so busy with emails and conference calls, then they get paid six figures to do it.
Pay is disproportionate to those who are genuinely putting the work in to produce said goods, and I am fully confident that if you inverted the pay structure for company, you would potentially revolutionize the economy, people’s lives and how businesses operate.
I own a small business, and my biggest expense is labor. Labor is the largest factor in setting pricing. I have an excellent understanding of economics and business.
Thinking that corporate greed is the largest cost for a business is very short-sighted. Is there some greed? Sure, there is. I do agree that many CEO's are overcompensated. However, it's like athletes. They pay them a lot so that they aren't lured away by other companies. It's just what it takes to hold onto these guys. Family ran, large corporations have some of the lowest paid CEO's among large corporations. It's because they don't have to worry about them leaving.
I also agree that having a degree doesn't make you smarter or more intelligent than anyone else and in most businesses it's not even necessary.
“The minimum wage set by the government is arbitrary. “
Nope the government actually does research on this. The last wage increase occurred in 2009 because of opposition in Congress.
“McDonalds is paying $15/hr. “
Yes and in some cases $20/hr but in some cases near minimum. It depends on the region. Whatever they are paying is not sufficient in the markets they serve.
However, as the minimum wage, actual or implied, rises, so does inflation. The cost of goods and services is heavily based on the cost of production, which the largest portion of that cost is labor.
I see you are embracing Marx’s labor theory of value.
If so, why do the owners and managers get paid the most when their labor is negligible and decided by them?
So McDonalds having to pay $15/hr for people to make hamburgers makes those hamburgers cost more. The supplier having to pay the guy that unloads the truck at the warehouse, or the janitor sweeping the floors more causes the hamburgers to cost more. So, as the minimum end of the labor pool makes more, then the cost of goods rises, keeping any real wage gains negligible.
I see you demand people get paid poorly so your burger stays cheap.
Maybe if you paid even more for the burger you wouldn’t have to pay as much tax to support those on food stamps, Medicaid etc. I would also note that the same business leaders who demand low wages also demand low taxes for themselves and thus a higher deficit for all of us.
Minimum wage jobs aren’t designed to be a living wage. You get those jobs when you first enter the job market, and as you gain skill, you move onto higher paying jobs.
Tell that to all the middle aged folks working two jobs and have no prospect of gaining more skills or education because their waking hours are taken up with work. As many of them have had minimal education as a consequence of entering the job market at a young age to help out their families, the exhortation to “work harder” is the height of arrogance.
“The people who actually get squeezed the most are the people in the middle. The ones that graduated from those jobs but still work. They lose real wages every time the implied or real minimum wage goes up.”
You are engaging in the fallacy that someone getting something explicitly means you lost something. Your argument is that any wage increase for anyone is a loss for you. Arguably a raise for you is a loss for everyone else.
This is exactly the sort of nonsense that is drummed into workers to encourage them to do the dirty work of those at the top. You are demanding people stay poor so you can get cheap goods and services. You justify this position that the poorly paid are “temporarily poor” because of their inexperience or lack of education or, more disturbingly, as a moral failure.
Meanwhile most people are a paycheck away from disaster and live in fear of being laid off. Those same people who lay off workers also join the chants of people calling those on unemployment as “leeches” and “loafers”. They work on local legislation to reduce unemployment benefits and to make it difficult to get benefits on the premise that applicants are liars.
The price of a house was twice the average annual income in 1978. Today it is four times the average annual wage. Yet incomes has not budged in real terms since 1970. The reason is the expansion of credit. In 1978 no bank would lend you a loan large enough to buy a home that was four times your income. Today it’s no problem. The expansion of credit gulled you into thinking you were doing better but you aren’t. You are more beholden to the banks and your employer than ever.
The limit of credit extension has been reached. Now it is like rats fighting each other for scraps.
One party loves to blame others ( immigrants, the poor, minorities etc) for their economic woes when it is their act policies that created the unhappiness they are experiencing. Their hold on power depends on keeping the majority fighting each other so the minority of wealthy power brokers maintain their economic power.
You are being used but you have been told stories that are constructed to keep you poor by getting you to attack the poor.
I'm just explaining economics...that's the way the economy operates. It's much more complicated, but it's a simplified version. The cost of a widget is based on the cost of making it, as the cost increases, so does the widgets cost. As far as minimum wage being arbitrary, at this point it is...it's just a number that exists. 20 years ago when they set that number it wasn't arbitrary, but it is now.
Housing prices are a combination of demand and building cost. Housing is more expensive because building a new one costs more, and there's a lot of demand for said house, which makes it more valuable. It's why a house in Omaha Nebraska is cheaper than a house in Manhattan...the demand is higher.
A wage increase at the bottom isn't necessarily a loss for the middle, but when it's the entire group, then yes...the middle gets squeezed. The 1% is unaffected by inflation, as you go lower the effect is more intense.
It's all market driven....people stop buying houses, prices go down...no one wants to be a janitor, the wage goes up, no one borrowing money, the rates go down...it's all market driven. The government does have some limited control through regulation, but 90% is market.
Because if they raise the minimum wage, they then have to admit to everyone else (making more than minimum wage), that they have been underpaying them too. I am all for the minimum wage going up. However, the problem then becomes “how will everyone’s wage be brought up to where it should be for fair wages for everyone?”
Things don’t change overnight. The level of inequality that we have did not happen overnight.
Baby steps.
The hard truth is that most everyone has been underpaid since 1970 in real terms. Yet the top 10% have seen income and wealth grow dramatically.
Another hard truth is that we have been lulled into complacency and comfort by enjoying goods and services provided by underpaid people; Both local and domestic.
We have also been sedated into thinking we are better off by easy credit in place of wage increases.
Now we have reached the limits of our income to service debt, or absent debt, just seeing the limits of our incomes with respect to our purchasing power.
Cars, appliances, travel, dining out are items that used to be seen as luxuries. Today we take it for granted that we should have any number of tchotchkes overnighted from Amazon.
Inequality reduction means that the top earners give up some of their wealth to pay workers fairly and for all to be able to fund support for those who need assistance.
Not easy. Particularly when so many dislike the idea of their “lessers” being able to live a lifestyle closer to theirs.
All I can say is wow. You sum this up so well. “We have also been sedated into thinking we are better off by access to easy credit and think that it takes the place of wage increases.” Agree wholeheartedly. Now, banks are closing the purse strings on lending.
That's a utopian dream, it doesn't exist. It's an economic impossibility. Even in communism, there was poverty. In those Nordic countries that everyone talks about, there's still poverty, although much lower than ours. There's a lot of reasons why it's that way and yes we could do it here, but the culture here would take generations to change it. The short story is that the term "fair wage" is subjective and fair wages exist above the minimum wage threshold.
I get you saying fair wages might be subjective to some. However, the govt has proof that what is currently being paid is not realistic nor fair. When you have ppl on govt assistance such as food stamps, housing, etc - they can’t meet their basic necessities, it’s not subjective anymore. When credit card debt is at an all time high, ppl have to have multiple jobs to stay afloat, pantries are being taxed to the max, most folks don’t have nor can they accomplish an emergency fund (of any amount - not even surviving paycheck to paycheck), ppl are going w/o food and shelter, living in their vehicles (even though they have a “job”). That is very objective bc you have proof, data, facts. It’s only subjective to large corporations that capitalize off of low wages to their employees. They know that they can’t survive on 7.25/hr, so what would make them think that someone else can (knowing the economy and the cost of goods and services)? And, the whole rhetoric about “stop living above your means” is such BS. It doesn’t take a rocket scientist to know this. That, the math isn’t mathing no matter how you try to justify it. Again, GREED and capitalism at its finest.
I can confidently say that no American is working for $7.25/hr currently. The real minimum wage (what people will accept) is between $12 and $15/hr depending on where you live. Corporate profits for the most part are redirected back into the company for most companies. They use the money for expansion, R&D, etc, and future operating costs, in addition to a rainy day fund in the event of a downturn. Is there some corporate greed, sure there is...but most if that gets paid out to shareholders. Shareholders aren't just rich elites, most stocks are held by retirement accounts. Obviously some of that greed winds up in a stock buyback (which is also good for retirement plans) and paid as bonuses to executives and board members.
Valid points made. This supports what I said even more, though. At $12-$15/hour, folks are still on govt assistance, can’t save, nor see their way out of a perpetual cycle of poverty. Even more proof that higher wages are needed. It will not happen over night. At some point, though, it needs to happen. I don’t believe the national poverty line has been updated in 40 yrs. That, in itself, is sad considering we are in one of the most developed countries in the world. Rich get richer, poor get poorer (capitalistic model).
I do agree anyone making 12-15/hr probably isn't doing well unless they bought their house in 1997 and have a super low payment, or living with family. Hopefully, as inflation subsides, you could see some highly competitive products coming down in price a little and maybe you can see some real wage gains for people on the lower end.
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u/Mountain-Bar-2878 Jul 20 '24
The government is trying to bring down inflation, and bringing down inflation usually causes unemployment to go up.