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Minimum wage/Livable Wage

Discussion in 'Tilted Philosophy, Politics, and Economics' started by Aceventura, Jan 2, 2014.

  1. Aceventura

    Aceventura Slightly Tilted

    Location:
    North Carolina
    I am not sure what is in dispute. If the working poor spend 50% or more of their income on housing, how is housing not their primary problem? If they will spend more than 50% on housing after a minimum wage increase, how has that helped?

    I will challenge you and say a city like San Francisco can not possibly have a "livable wage" for no/low/semi skilled workers. It is because of housing costs! They can pretend all they want, you can cite as much science and academic studies all day long - the reality is what it is.

    I recall when I lived in California, the regular stories about scores of people living in a single family home, a garage, or other make-shift housing when something like a fire happens bringing it to light. Perhaps there is an underbelly in our society that academics don't study and some are not aware of. How in the world are you folks arguing with my premise that affordable housing is the biggest issue facing the working poor? I don't get it.
    --- merged: Jan 11, 2014 4:35 PM ---
    I have not run the numbers but I have given you principles. For example, rather than food stamps, I would give people cash - it can be done through the EITC or similar device/method. Again, guarantee every family a minimum income and in principle, don't take it away as they earn money on top of that. Let the market determine wages. Have a simple and flat tax system to pay for it. If you can't see what I suggest in principle, details won;t matter.
    --- merged: Jan 11, 2014 4:37 PM ---
    Thank you. A rational common sense response.
    --- merged: Jan 11, 2014 4:41 PM ---
    Rents are going to be mostly correlated with supply. Vacancy rates below 5% is as close to full as the market will allow. After all, it will take time to clean and paint - assuming they would all do that for a new tenant.
    --- merged: Jan 11, 2014 4:46 PM ---
    I said you can raise the minimum wage to whatever you want. I am saying it won't have an impact on the working poor. Perhaps it is ironic, but landlords benefit more than renters.

    Also, clarify something for me:

    We both agree current consumption is important.
    We both agree that capital investment is important.
    I believe capital investment is essential for long-term sustainable economic growth - i.e. - farmer needs to set aside for seed - next years crop.
    Capital investment comes from some form of surplus - savings, profit or not consuming everything produced.

    Where do we disagree?
     
    Last edited by a moderator: Jan 18, 2014
  2. redux

    redux Very Tilted Donor

    Location:
    Foggy Bottom
    Ace....The biggest contributors to poverty are low wages (below a living wages) and health care. Raising the minimum has reduced poverty. More affordable health care (under the ACA) will reduce poverty. You can dismiss those numerous studies as "academic" but the data are from real life experiences and you have provided nothing to refute that data but your beliefs.

    But the biggest joke is how you dismiss the cost of your grand scheme to end poverty as "details that don't matter." Would you run your business without knowing the cost of implementing a new service or offering a new product? Cost matters and, in the case of public policy, the impact to taxpayers matters. And you simply cant raise the EITC (and your other suggestions) without either raising costs to taxpayers or lowering services to those most in need.
     
  3. Bodkin van Horn

    Bodkin van Horn One of the Four Horsewomyn of the Fempocalypse

    San Francisco is an outlier. A family can pull in twice the US median household income and have a hard time finding affordable rent in SF. This fact isn't an argument against raising the minimum wage though. That same family living in a different city could afford at least two mortgages on some fairly nice properties (and the city isn't Detroit). You're conflating separate issues.

    Maybe it isn't that people are disputing the fact that housing costs are problem, it's that you're in a thread about the minimum wage, trying to tell everyone they should be talking about housing costs. Why don't you start a thread about housing costs?
     
  4. Street Pattern

    Street Pattern Very Tilted

    Oops -- sorry about my post then.
     
  5. redux

    redux Very Tilted Donor

    Location:
    Foggy Bottom
    One last comment on housing and the example of San Franciso.

    SF historically has had one of the best low income housing assistance programs in the country, with a combination of federal Section 8 vouchers to residents, HUD grants to the city and non-profits to develop affordable, low income housing, a percentage of Cal state taxes dedicated to low income housing, etc.

    The problem is that the federal funds were cut as part of the sequestration and revenue to the city from state taxes are down as well.

    It is still a bad example and a distraction from the fact that higher minimum wages reduce poverty.
     
  6. Bodkin van Horn

    Bodkin van Horn One of the Four Horsewomyn of the Fempocalypse

    No problem. Your post was interesting and factual, and not at all an effort to distract from the topic at hand. The problem is that some folks (not you) throw out non sequitur examples as a basis for their arguments.
     
  7. redux

    redux Very Tilted Donor

    Location:
    Foggy Bottom
    Census has an interesting new infographic on poverty

    How Census Measure Poverty - U.S. Census Bureau

    What keeps millions out of poverty? Tax Credits, (EITC and CTC), SNAP, Subsidies (including Sec 8 housing), School Lunch, WIC, LHEAP (home heating assistance)

    What pushes people into poverty? MOOP (medical out of pocket), work expenses, payroll taxes, federal/state income taxes)

    It supports the case for a higher EITC, NOT cutting SNAP or other support programs...but at a significant cost to the taxpayers.

    Raising the minimum wage, while not as effective, is far less costly to the taxpayers.
     
  8. ASU2003

    ASU2003 Very Tilted

    Location:
    Where ever I roam
    No, it is all inter-related. And housing costs are a very big expense. Moving to a new city to get away from the high costs isn't always an option, and moving out to the suburbs isn't an option if they aren't building housing that people making $15/hr could afford. It isn't just SF. LA, San Diego, Miami, NYC, Boston, Seattle, etc have this problem too.

    Add in the inflation that raising the minimum wage will create (because there is now more demand for products/resources).

    This isn't the first time the minimum wage has been increased. I still see plenty of people living paycheck to paycheck.

    I'm not saying that the minimum wage shouldn't be increased, but I think we need to show people that this is how you use that extra money to improve their lifestyle and have some savings. But, I also think that start-ups and new businesses should be able to pay a lower wage for a year or two (with a 1% equity in the company) (the owners would only be able to use this once every 7 years for any business they start). It will reduce the risk of starting a business and get more people employed, and if the company is successful, hopefully they will get a bigger pay raise.
     
  9. Street Pattern

    Street Pattern Very Tilted

    I don't think the minimum wage has ever been lower in real terms. This isn't complicated -- it needs to be raised.
     
    • Like Like x 1
  10. redux

    redux Very Tilted Donor

    Location:
    Foggy Bottom
    I agree it is all inter-related and related at the most basic level to a livable wage.

    When has raising the minimum wage been inflationary? Certainly not the last 2-3 raises in the early 90s, late 90s and early 00s.
     
  11. Baraka_Guru

    Baraka_Guru Möderätor Staff Member

    Location:
    Toronto
    Citation needed.

    Nowhere, but we're not really talking about this.

    We're talking about whether minimum wages should go up, and, in turn, we're talking about living expenses, specifically among the poor.

    1) You seem to oppose minimum wage increases on the basis that they have no impact (we still need a citation).

    2) You seem to support a socialist solution to help make homes more affordable for the lower classes.

    I disagree with 1, but you haven't provided any real support for it. I may change my mind if I can be convinced.

    I agree with 2 in principle, but it really depends on the details.

    I don't see why we need to maintain a disconnect between 1 and 2.
     
    Last edited: Jan 11, 2014
  12. redux

    redux Very Tilted Donor

    Location:
    Foggy Bottom
    "The devil is in the details"

    or

     
    • Like Like x 1
  13. Baraka_Guru

    Baraka_Guru Möderätor Staff Member

    Location:
    Toronto
    Increasing minimum wages isn't necessarily inflationary—or a serious problem in inflationary terms. It only becomes a problem if supply cannot keep up to increased demand. This shouldn't be a problem considering the amount of liquidity currently sitting around doing nothing.

    Besides, the American economy is more at risk of deflationary problems than inflationary ones. The issue is lower production as a result of lower demand (and therefore lower wages/income). As you say elsewhere, everything is inter-related.

    There are other factors at play. One thing to note: Generally, despite minimum wage increases, average real wages remain relatively flat.
     
  14. ASU2003

    ASU2003 Very Tilted

    Location:
    Where ever I roam
    But won't the "real terms" go up too? There will be more people with more money (hopefully), but if that money is worth less, is it any better? And there are plenty of things that people won't buy if the price goes up, even if in "real terms" the cost is the same. It is the whole inelastic vs elastic demand thing, and people will use the money to buy what they need first, and those companies will try and make as much money as possible. With businesses always wanting to make more money and show growth quarter after quarter, they will try and increase prices if business is good. Or if there are some customers still willing to pay that higher fees to make up for those who dropped them like the cable companies today.

    I would want to see the evidence that it isn't inflationary. And there are very few unlimited resources, which even if companies like the oil industry keeps pumping out faster, doesn't mean that they won't run out sooner.

    You can look at Mexico and the Peso for what happens in the long run. The Peso is worth a lot less than the US dollar, but the rents and product prices reflect that. It doesn't matter that someone is making 140 pesos and hour if it costs 14 pesos to buy a candy bar. Or 7000 pesos/month to rent an apartment.

    McDonald's got in some trouble for putting this budget guide out there for their workers, but it is a realistic step to improving the situation. But, getting the economy and jobs to come back requires that some people spend money too. And spend it locally and at different places. If I fill out my values, the expenses side looks a lot like what someone making minimum wage would spend. I don't have a car payment, I ride my bike most places to cut down on the gas I buy, I have $25 in car insurance a month, $16 in HSA premiums a month(I have to put $50 in a savings account too), I keep my house at 54F, so heating is $15/month throughout the year, I don't use AC, I do generate solar power, so my electric is $10, but it was $25 when I lived in an apartment. I'm not sure why they missed food, but that is a big one that varies. I don't have cable, I don't pay for an ISP, and the phone company does gouge me for $60.
    How the Big Cell Phone Companies Are Getting Away with Ripping You Off Each Month | Alternet

    Increasing the income is only part of it, reducing or eliminating monthly expenses is the other part. Some people are in a better position to do this extreme saving than others. And, I am lucky that I haven't had any major health problems or girls/kids to paid for.

    But, the mortgage, property taxes, HOA fees, add up to $1200/month. I was paying $625 for my apartment though, and would have needed to keep paying until I made enough to buy a house with cash. Or, if house prices kept going up and up, I would never had been able to buy a house. It would be nice to not have a mortgage/housing payment, the same can't be said for apartments. That is until they start making micro-condos (with low/no HOA fees), which would be a very interesting development. Then you have to make sure people take care of them and the common areas...

    [​IMG]
    --- merged: Jan 11, 2014 at 5:35 PM ---
    There has been plenty of inflation in the past 24 years. I'm not sure if any of it can be blamed on the minimum wage going up or not. There are plenty of other factors. But, I'm not a fan of inflation, and I am suspicious that the minimum wage impacts it.

    • U.S. inflation rate 1990-2012 | Timeline

    Way too much for me. I think it shouldn't matter if you work in 1989 or 2005, spending $1 should buy you the same amount of stuff both in the past and today. And working against inflation, or if you are unemployed trying to get back into society is very hard. Especially if you don't think you or anyone else is worth paying $75,000 or whatever a 'livable wage' is in some big cities.

    Imagine someone who worked all their lives and retired with a few hundred thousand in 1990, where would they be at today with that kind of year over year inflation going on? And can you imagine the outrage if prices jumped overnight from 1989 levels to 2014 levels?
     
    Last edited by a moderator: Jan 18, 2014
  15. redux

    redux Very Tilted Donor

    Location:
    Foggy Bottom
    I dont think an average 3% annual rate of inflation is alot....unless wages dont increase.

    And if you look at your chart and the recent raises in minimum wage, the year following the raise in minimum wage had a lower rate of inflation than the year before the raise. I think your suspicions that a raise in minimum impacts inflation is unfounded.
     
  16. Bodkin van Horn

    Bodkin van Horn One of the Four Horsewomyn of the Fempocalypse

    Housing costs are a big expense, 'tis true. And housing costs are connected to income, but in an economic sense everything is related to everything and those connections aren't always interesting. In cities like SF, minimum wage has nothing to do with apartment affordability. People who make multiples of median household income have a hard time affording rent in SF. Anyone on minimum wage in SF is getting some sort of direct or indirect rent subsidy, and it is wholly possible that this subsidy wouldn't be affected at all by changes in minimum wage.

    And quanititative easing was supposed to cause inflation too. But it didn't to any appreciable degree. There is no credibility in arguing about policy ramifications based on economic first principles because economic first principles assume simplistic systems that don't exist in reality.

    What's your point? There are people who make $250,000 a year who live paycheck to paycheck. The idea is that we can give more people the option to not live paycheck to paycheck.

    I think financial literacy is important too, and that it should be a larger component of primary education. However, there are a lot of people who make a lot more than minimum wage who make shitty financial decisions (hence, the existence of luxury goods).

    I think that startups much are more robust to minimum wage problems than you. What proportion startups rely on minimum wage labor?
     
  17. Aceventura

    Aceventura Slightly Tilted

    Location:
    North Carolina
    My challenge: How many different ways can I say the same thing before it sinks in.

    Adults dependent on the minimum wage 25 years ago were in poverty (however you define it).
    Adults dependent on minimum wage today are in poverty.
    Adults dependent on minimum wage 25 years from now will be in poverty.

    The minimum wage is a low wage. The minimum wage will always be a low wage. Low wages are what no/low skilled workers get paid. Inorder to solve poverty we need a focus on something other than wages!

    For the working poor health care cost is not a large percent of their expenses. A bigger factor is the loss of income. A person making $1,800 per month ($7.50 X 60 hours X 4 weeks), if they miss a week of work their income drops to $1,350. If their rent is $800 (not counting utilities), you can see the margin for a problem is very small, odds are they will be in a hole even if they got medical care at no cost. Not to mention situations like when the Chicago teachers go on strike and working parents lost work due to daycare problems (or the safety of their children if left alone) - or that given the ACA multitudes of working poor people had their working hours reduced.

    Just an illustration, but I spent some time talking to people struggling financially over the holidays. I asked them some detailed questions, most where more than happy to discuss these issues. I would suggest you do the same. Go outside your normal circle. I can give you a tip, find a McDonald's in a low income working neighborhood, show up for about a week in the morning as people head off to work, strike up some conversations with low income working people, find out what their issues and concerns are.

    Here is a link to a study: http://www.census.gov/prod/2013pubs/acsbr12-01.pdf

    It is from the US Census Bureau, published 9/2013 here is a quote from page one:

    --- merged: Jan 12, 2014 at 11:09 AM ---
    Read the original post. My point is that a livable wage is a function of the local cost of living. Washington can not effectively set a livable wage for the nation. I argue the discussion and adjustments to the minimum wage are purely academic, an illusion, perhaps to make some people feel good, perhaps so others can raise price (rents for example), perhaps for some just so they can stop the complaining knowing it won't matter. I started this thread to discuss doing something that actually can make a difference.

    The obvious place to start is safe, clean, affordable housing. What do you think the start is? Raising the minimum wage? To what and how will it make a difference.
    --- merged: Jan 12, 2014 at 11:12 AM ---
    You have to be kidding! I lived in California, housing affordability has to be the worst on an overall basis for a state. And like I previously posted, the NIMBY factor for affordable housing borders on immoral in my personal view - yet well to do liberals pretend they care!
    --- merged: Jan 12, 2014 at 11:16 AM ---
    Inflation is measured based on typical middle class income expenditures. You think you can measure your average cost of living increases to that of the working poor. Their situations are different. The one size fits all mentality fails - you have to start to dig deeper.
    --- merged: Jan 12, 2014 at 11:18 AM ---
    Or, they live in conditions most would not tolerate for their pets.
     
    Last edited by a moderator: Jan 19, 2014
  18. Baraka_Guru

    Baraka_Guru Möderätor Staff Member

    Location:
    Toronto
    The minimum wage 25 years ago was $3.35. If it were the same rate today, do you think that those in poverty would be better off? Worse off? The same? You seem to be arguing that they would be the same.

    Also the current minimum wage is closer to $4.87 if you measure it in constant 1996 dollars. This means that inflation has eroded any minimum wage gains made over the past seventeen years. This may explain why minimum wage increases seem to have little or no impact: The increases haven't been high enough.

    I still don't understand why addressing poverty requires, in your mind, excluding wages. It's as though you think wages are insignificant. Are you suggesting that those in poverty should rely mostly on the welfare state? After the development of the welfare states in Scandinavian countries (accounting for more than 20% of GDP), poverty rates dropped precipitously. Drops in poverty were also recorded elsewhere, including the U.S., but further development to those programs to be more like those in Scandinavian countries would certainly do more.

    Would you suggest that this is the way to go?

    Also Scandinavian countries have no minimum wages. Wages are negotiated through collective bargaining with strong unions (relatively speaking compared to the deplorable conditions of unionization in the U.S.). Actually, the unions themselves have lobbied against the government setting minimum wages, as they believe this would interfere with their leverage in negotiating wages through collective bargaining. As a result, you have situations like in Norway, where McDonald's workers earn double to triple what they make in the U.S. (Although Norway has a much higher cost of living, much of this is mitigated by means beyond higher wages, including more welfare state support and benefits such as healthcare and education.)

    Would you agree that improving the antagonistic (and historically violent) conditions of unionization in the U.S. is another thing that should be addressed?

    Poor families can still find themselves paying as much as 10% or more of their income on healthcare. When you're already paying 40% or more on housing (plus 20% on food, 20% on transportation, etc.), that's still a pretty big hit (especially compared to nations where universal healthcare is the norm).
     
    Last edited: Jan 12, 2014
  19. redux

    redux Very Tilted Donor

    Location:
    Foggy Bottom
    Ace....look athe poverty rate over time since the anti-poverty programs of the 60s

    [​IMG]
    The significant decline through the 70s had nothing to do with newly implemented anti-poverty or income support programs?

    It is no surprise that poverty would rise during the periods of recession in the 70s, 90s, and 00s. Many economists believe it would have risen even more in the last recession w/o the federal social/income support programs (including those included in the stimulus bill) and will rise even more with proposed cuts in SNAP, housing assistance, etc.

    And as I noted, numerous studies across the spectrum using the same Census data concluded that the most recent minimum wage increases had a positive impact as well.

    As to my having conversations with low income working people, my job is to have conversations with local elected officials and community organization executives across the country on how to help those low income working people (among other programs). While not speaking to those workers directly, I think my approach and my perspective from talking with community leaders is more than adequate as opposed to simply talking to folks at McDonalds.
    --- merged: Jan 12, 2014 at 12:36 PM ---
    Since now apparently Ace likes Census data, this might add some perspective....using a new Census poverty measure, the SMP, that considers issues like medical out-of-pocket expenses.

    Without accounting for medical out-of-pocket expenses, the number of people living below the poverty line would have been 39.2 million rather than the 49.7 million people classified as poor with the supplemental poverty measure.​

    [​IMG]

    That is, under the SMP numbers, 10 million additional people fall below the poverty line as a result of medical expenses....the largest contributor to the increased SMP measures of poverty
     
    Last edited by a moderator: Jan 19, 2014
    • Like Like x 1
  20. Bodkin van Horn

    Bodkin van Horn One of the Four Horsewomyn of the Fempocalypse

    Washington can set a minimum wage and then leave it up to the states or local municipalities to set livable wages. This appears to be how things work now. How does raising the national minimum wage screw the pooch here?

    You should go to Zillow and check out how much a large, brick 4 bedroom costs in any middle-sized city in America. I the ones I was looking at two years ago were any indication, then for the average apartment rent in SF, I could pay two mortgages, one for my family and one for my pets. Both mortgages would get me more quality and more space than the SF apartment.