Hiram posted this comment on this post, "One of the ways American workers were inefficient was that they insisted on a decent wage. Our socialist competitors have no such qualms." and it got me thinking...
What is a decent wage?
Does it vary by country?
Does it vary by desperation / alternatives?
Does it vary by "normal std of living"?
How should it be determined?
How should it be enforced?
I'll likely add to this later, however I am out time...
Workers don't get a "decent wage." They get what their work is worth (multiplied by the capital investment behind them) and that's it. Raising the minimum wage puts people out of work because machines are cheaper in the long run. Manufacturing jobs go overseas because labor is cheaper (unless we have the capital investment here to offset it). Service jobs stay here because that's the nature of the job, but again, you can price yourself out of the market and find yourself outsourced to India, just like tech support did, and teaching jobs might.
ReplyDeleteHow is it determined? By competition. Or it should be. Unions aren't competitive.
It varies depending on where you live. Minnesota costs about 20% more than Mississippi, for example, despite most of the amenities being the same.
J. Ewing
There is no particular reason to think workers get paid what they are worth. A good teacher is much more valuable than a good major league shortstop but is invariably paid much less. A fireman is worth more than an investment banker, takes on much more risk as well, but isn't nearly as well compensated.
ReplyDelete--Hiram
Depending on the country, your "decent wage" may or may not have to pay for healthcare, childcare, college for your kid, retirement, etc. And of course standard of living varies widely. I suspect it's really hard to make an apples to apples comparison.
ReplyDelete--Annie
Well, I am guessing a decent wage is very related to how broke you are at the time? If you are in China living in a hut and only eating every other day, I am guessing the Foxconn $1.80/hr, dorms and food service look pretty decent.
ReplyDeleteYet if you think that everyone deserves a 4 bedroom & 2 bath house and a car, no matter their education and/or effort. Then it seems that most humans in the world are being compensated very indecently.
Now, is it decent that an American lower middle class worker can buy an older 2 bed & 1 bath house when the Chinese worker gets a bunk or small apartment? What is your rationale?
As for a Teacher being worth more than a short stop. I understand the thought, yet here is a different paradigm. Let's say 10,000 boys dream of the short stop position, and only the #1 performer has the necessary skills.
Now let's think about some of the #1 in 10,000 Teachers I know of. Typically these folks go beyond a single classroom in order to spread their knowledge. They often publish books, start businesses and become very wealthy.
As compared the the 9,999 others of lesser capability that take that normal teaching job, go the minors or find another job. The minors and non-baseball jobs pay less than most Teachers get.
Maybe a decent wage should be high enough to allow one to pay the rent.
ReplyDeleteYes, We Need Jobs. But What Kind?
This seems to me to be the biggest flaw in the argument. Somehow Paul thinks the Feds can create jobs. They can provide incentives, yet we citizens ultimately decide where we spend our money. If lowest cost/highest quality no matter what persists, who is going to support having higher paid employees providing their product or service?
ReplyDelete"It’s time for the federal government to take the lead in creating not just more jobs, but more good jobs. The job-growth mirage of the Rio Grande Valley cannot be our model. Paul Osterman"
As for "decent wage allowing one to pay the rent". Rent on what kind of living space? By themselves or with room mates?
As a college student I always had room mates, or I had friends who lived in studio apartments. And in the old days there used to boarding houses where you just rented a bedroom and shared the bathroom. I did not get a feel for what thse folks were trying to rent?
Where I am going with this is should we expect the lowest paid, lowest educated, least motivated, etc of us to be able to afford a full 1+ bedroom apartment or a house on 1 income and working ~40 hrs/wk? Or should we expect them to get room mates, stay married, rent rooms, fill dormitories, etc?
Where did this expectation that the poor deserved a private 1+ bedroom apartment come from? Does it make sense? Does this incent them in anyway to work more, learn more or in general "strive for better"?
As for min wage, I have quite a few lesser educated friends and they all make more than min wage. So I am not sure how poorly qualified someone has to be, or how easy the job must be to pay that low. Of course my friends are in the mid-West, maybe the situation is different elsewhere.
With that in mind I have no problem with raising the min wage. Though I am concerned it may automate/displace some more jobs or raise prices on things.
They can provide incentives, yet we citizens ultimately decide where we spend our money.
ReplyDeleteSure. And sometimes we use the federal government to do it.
--Hiram
I am very interested in Nov's results, my Conservative peers are certain the spenders will be shown the door. I myself am thinking it will be close either way.
ReplyDeleteIt it is close, as I agree it might be, it will be a sign that Americans aren't necessarily capable of governing themselves.
ReplyDeleteJ. Ewing
Republicans don't want to spend less. Mitt Romney wants to increase defense spending, and has offered no specifics on any cost reductions while advocating cutting taxes. They just want to spend money on different things.
ReplyDelete--Hiram
Hiram,
ReplyDeleteReagan and Bush II definitely seem to support your statement....
My prediction for November is an Obama win and a GOP congress (senate too.)
ReplyDeleteThere are so many drastic automatic changes coming in January they will be forced to compromise a little before the gridlock sets in again.
Now back to the wage discussion.
ReplyDeleteI can understand wanting to provide everyone with basic food and healthcare. (and I mean basic...) No matter their level of effort. Since human life is dear to most of us.
However, I am not sure why these folks are "entitled" to private apartments? Shouldn't we just set military barracks / shelters rather than the "projects". Safe, warm, and yet not too comfortable. Thoughts?
I think your barracks style housing
ReplyDeleteis better known as a homeless shelter. This new one sounds much better than the one it replaced.
While it doesn't have much specifically related to housing The State of Poverty in America has other interesting info, including that the number of families on welfare or TANF is way down.
Is "homeless shelter" type living then a better model for the most destitute folks than providing them rental assistance and cash. These folks seem to need an adult role model to help them learn to be more responsible.
ReplyDeleteI say this because many are single moms, undereducated, history of bad decisions, etc. So how can giving them free cash and a 1 bedroom apartment be considered helping them? They seem to have a history of making poor decisions.
Some could work for their bed. The operators could monitor their behaviors. Counseling may be available. Some training could be done on site. Childcare trade offs could be facilitated. Job buses could pick up or drop off. Their diet could be made healthy by having a common kitchen.
Though I think "individual units" and "studios" should be reserved for only the people making the best progress. The rest should bunk in cots in a gym. It makes it easier to ensure no inappropriate behavior is occuring.
The State of Poverty article was interesting. I agree with many of their comments, yet I don't believe providing more money is the answer. Somehow we have to incent these folks to want to change their belief systems and improve their skill sets. Otherwise we are just giving them the fish... Instead of teaching them how to fish.
The whole concept of a "living wage" and of government "entitlements" (to ANYTHING) simply flies in the face of human nature. Given a choice between working for oneself or letting someone else work for you, sloth will win every time. The same is true of working for yourself versus working "for the common good," as in socialism. It fails every time it is tried, despite the socialists always having good intentions. This of course is typical of liberals, believing that the world is as they wish it to be, rather than as it is.
ReplyDeleteJ. Ewing
Republicans think we are slothful by nature, Democrats do not.
ReplyDeleteIs it slothful to receive the Social Security checks we paid for? Is it slothful to receive the Medicare we paid for? Does an investment banker get paid more than a teacher, a policeman, a firefighter, a member of our armed forces, because the banker is less slothful?
What do you think?
--Hiram
You know the problem with Mitt Romney isn't the lack of energy or diligence. Presumably he has both in ample supply. The problem is that unlike teachers, firefighters, policemen, and yes even the guy at the government center who takes your driver license application, he uses those qualities to make our lives worse, and not better.
ReplyDelete--Hiram
"Republicans think we are slothful by nature, Democrats do not." -- hiram
ReplyDeleteExactly right. Republicans think that if you can work for yourself rather than having everything you earn go to somebody that isn't working, you'll work a lot harder than the guy on the receiving end of all that government "compassion." But you're mixing apples and oranges. That Social Security check we "paid for" wasn't paid for at all. Everything we paid in went out immediately to somebody that was retired, and when WE retire, we're living off of the SS taxes being paid by the young folks. IF we had made an investment, however, just like those investment bankers do (and in which some of us share through mutual funds and the like), then we are actually earning the dividends and capital appreciation that come our way. They get more because they exercise a unique skill in the free market, while teachers do not exercise a unique skill-- they are paid the same, good or bad-- and do not work in the free market, where they might make a lot more. A decent wage is one you earn by your own merits and hard work. If you can't live on that, work harder or smarter or both.
J. Ewing
"That Social Security check we "paid for" wasn't paid for at all."
ReplyDeleteThen why doesn't it bounce?
--Hiram
J,
ReplyDeleteTechnically it was invested, as we have discussed before. (ie gov't bonds) Unfortunately the organization we invested in seems to be poor at running their business. (ie high debt and losing money every year)
The bonds which were purchased with the Social Security surplus, represent more of a commitment than an investment.
ReplyDelete==Hiram
That "surplus" is just a bookkeeping entry in the federal ledger. It can't be used to pay benefits unless Congress redeems those bonds for actual (freshly printed) cash, or takes money from somewhere else in the general fund. Of course, they could simply abrogate their commitment, just like they did to the holders of GM bonds.
ReplyDeleteTry this: If these bonds are truly an investment in which SS recipients share, than the simple solution to SS solvency is to raise the interest rate on those bonds to, say, 114%. Right?
Apparently they got 4.4% in 2011. Trustee Report I think 114% may seem suspiciously like cooking the books.
ReplyDelete"That "surplus" is just a bookkeeping entry in the federal ledger."
ReplyDeleteIs there something invalid about bookkeeping entries?
"It can't be used to pay benefits unless Congress redeems those bonds for actual (freshly printed) cash, or takes money from somewhere else in the general fund."
These are commitments that were made. Presumably, that's why Ronald Reagan made them bonds, not IOU's. Of course, Congress can try to dishonor America's debt. They did indeed try that last summer. But that would destroy America as we know it.
"Of course, they could simply abrogate their commitment, just like they did to the holders of GM bonds."
Again, dishonoring America's debt could very well have catastrophic consequences for our country. We were not bound by GM bonds, and could not therefore dishonor them.
"Try this: If these bonds are truly an investment in which SS recipients share, than the simple solution to SS solvency is to raise the interest rate on those bonds to, say, 114%. Right?"
SS solvency requires no solution, because we are not insolvent. We are a rich country, the richest the world has ever seen. We can afford to pay our debts. It's just that Republicans don't wish to.
--Hiram
You are wrong. The total debt and "unfunded liabilities of the US" would consume the entire GDP of the nation for 8 years, should we decide to pay it. That means nobody eats, lives, or funds any other function of government. Not a solution.
ReplyDeleteJ. Ewing
8 years seems to be an exageration, yet it is a good point. One does not pay off the mortgage in 1 yr, but you definitely want to get started on reducing it.
ReplyDeleteTrading Economies GDP
Money American Household Net Worth
As for liabilities, Medicare seemed to be the only really bad one based on our previous discussion and research.
If the trend noted below continues. It may impact the deficits and the decent wage...
Daily Finance Game Changer
If the debt is such a big deal, why do Republicans want to reduce taxes?
ReplyDelete--Hiram
I think they are somewhat mentally challenged... They seem to believe, no matter how many times it failed, that they can increase revenues by growth. While forgetting that we are already the biggest fish in the tank by far.
ReplyDeleteRevenues can certainly be increased by growth but there is no particular reason to think that lowering taxes will increase growth. History is full of examples where high rates of growth occurred during periods of high taxes, and low rates of growth occurred during periods of low tax rates. We have had relatively low tax rates for a long time now, and growth has been stagnant.
ReplyDelete--Hiram
about that decent wage, I came across some interesting charts that show Corporate Profits Just Hit An All-Time High, Wages Just Hit An All-Time Low
ReplyDeleteMost of the charts (63 in all) are more related to debt/deficit, which should reinforce your views, John
Fascinating slide show once I figured it out. Thanks.
ReplyDelete""America's infrastructure needs are so huge, and so painfully obvious, that it's mind-boggling we're not investing more. The U.S. government can now borrow for five years at about 0.75% and for 10 years at about 1.7%. Both rates are far below expected inflation, making real interest rates sharply negative. Yet legions of skilled construction workers remain unemployed while we drive our cars over pothole-laden roads and creaky bridges. Does this make sense?"-Alan Blinder in today's Wall Street Journal.
ReplyDeleteWSJ Stimulus Isn't a dirty word
ReplyDeleteA very interesting article and I agree with much of it. Though I don't agree with borrowing any more cheap "short term" funds for projects. This is probably a personal belief issue with me.
I am happy to borrow short term cash to save/earn money if I have the money sitting in another investment that is tied up. Because I can payoff the "convenience" money whenever I want.
Whereas imagine a family that is drowning in debt and they have an opportunity to save/earn a little by taking on some cheap short term debt. This would make sense except for the fact that they have shown no ability to manage their finances. Therefore it is likely that the short term will soon become the long term...
One more thought, with the budget being as large as it is, I would think some long term assets or spending could be shifted to short term to support infrastructure spending. That's why families keep rainy day funds or sell of luxury assets.
ReplyDeleteMaybe we can pawn of some stuff from the Smithsonian? Or rent out bedrooms in the White House? Hold weekly Legislator car washes? Then there would be incentive to keep the debt short term.
The whole purpose of infrastructure spending is so that private enterprise can grow and be more efficient (and profitable). There is no point in the government tying up money the private sector must invest to grow, so that infrastructure and be built to support the private sector growth. Cut government spending back to the essentials and promises, shed debt and future obligations sensibly, and give private businesses a chance to support all of this government.
ReplyDeleteJ. Ewing
A lot of the purpose of infrastructure spending is to make sure people don't get lost in potholes. In terms of private enterprise, Blinder elsewhere in the piece points out that private investment is doing just fine. It's not being crowded out by government borrowing. And at these high levels of unemployment we aren't doing the other thing we need to be concerned about, crowding out the private sector in labor demand.
ReplyDeleteI would love to plan for the long term, but in this political environment, that's not possible, or at least it's useful. The other day, when Mitt Romney talked about his preference for long term solutions to the very short term problems of young immigrants, he was showing a remarkable naivete about both the actual needs of our people, and what the capability of our political system is in addressing them. Made me wonder if the guy even watches the news.
--Hiram