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Minimum wage in California to become $15/hour

 
 
engineer
 
  2  
Reply Sun 3 Apr, 2016 04:34 pm
I also think when it comes to wages, there is a "tragedy of the commons" force in effect. It is beneficial to all businesses if people have money to spend and if poverty or near poverty is minimized. It drives more economic activity, reduces government assistance and is generally more efficient. But on their own, businesses want to pay the lowest amount they can. That is to their individual benefit, but counter to the overall good.
roger
 
  1  
Reply Sun 3 Apr, 2016 04:44 pm
@engineer,
Yes. An individual solution to a general problem.
0 Replies
 
ossobuco
 
  1  
Reply Sun 3 Apr, 2016 04:45 pm
Sometimes it about kills me to read all you smarties re the economy, so incisive, such a great hobby.
0 Replies
 
cicerone imposter
 
  1  
Reply Wed 27 Apr, 2016 11:24 am
@engineer,
I wonder where the cost/benefit cut off will be by increasing wages to reduce government assistance?
engineer
 
  1  
Reply Wed 27 Apr, 2016 11:30 am
@cicerone imposter,
There is still a benefit, it just isn't to the recipient. It is very inefficient for people to make low wages, the government to tax people, then the government to distribute the taxes to the underpaid people. Much better to just pay them in the first place. On the recipient side, they get full say of their money without government restriction or permission, on the tax payer side they no longer have to pay out benefits to people who are now receiving decent pay for their hard work.
cicerone imposter
 
  1  
Reply Wed 27 Apr, 2016 11:33 am
@engineer,
Didn't somebody mention the problem with Walmart's pay structure?
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Kolyo
 
  2  
Reply Thu 28 Apr, 2016 05:27 am
@cicerone imposter,
cicerone imposter wrote:

I wonder where the cost/benefit cut off will be by increasing wages to reduce government assistance?


After giving it some thought I believe the cut-off point, where the cost to society of increasing the minimum wage another cent exceeds the benefit of doing so, comes at the point where you have a living wage.

The cut-off may be lower than that as I will argue in a few weeks when I have more time, but it can't be higher. The reason is that if the living wage is $15 an hour and Joe the baker is paying someone that, then the person won't need government assistance at that point, and forcing Joe to pay the person more that won't reduce the amount of government assistance taxpayers will have to fund for that person. At that point the amount of assistance is already zero.
Linkat
 
  1  
Reply Thu 28 Apr, 2016 08:28 am
@cicerone imposter,
The obvious pro is giving people making below $15 an hour more money in their pocket.

The cons are not just the potential for increased prices (which depending on several other factors could cause these individuals to be in the exact same situation if prices increase by the same % of their salary increase) - the other negative is for these companies looking for alternatives to hiring people. For example as our local salaries increase - some companies outsource overseas for cheaper salaries. This has happened at my company. Now it is worth the additional investment to go overseas, train and start an operation there where the salaries and benefits are significantly lower.

The other alternative is technology. Is it now for cost effective to replace people with machines? As salaries increase resulting in increased costs to the employers -- other alternatives may become cheaper resulting in less jobs.

Now I don't know if this increase in minimum would result in that - as I don't know the cost of these alternatives in comparison.

But those are some of the potential cons. Increased prices to the consumers and loss of jobs.
0 Replies
 
cicerone imposter
 
  1  
Reply Thu 28 Apr, 2016 01:06 pm
@Kolyo,
I think it's more complex than that. Rents are no all equal even in the same community, and that's a big bite out of one's income. Also, there's the matter of the size of the family and their ages. Food, clothing, cost of school, and other necessities all impact the family income.

When buying a car, I know that traveling to Gilroy about 40 miles away can save hundreds of dollars. I think it's because the cost of living in Gilroy is much lower than in Silicon Valley, and their salaries and other overhead costs are lower.

Kolyo
 
  1  
Reply Thu 28 Apr, 2016 01:48 pm
@cicerone imposter,
That's all true, but I would say what that means is that there is no set number that represents a "living wage". A single guy in my town can get by on $11 an hour, but for a single mother of 3 in NYC, a living wage might be $20 an hour or more.
0 Replies
 
 

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