ann arbor is overrated.

Top of the Snark

Sure, it’s nice for employees to get a living wage and all, but is it really so important for young “temporary” workers — temporary workers whose “pretty good gig” controlling crowds and picking up trash at Top of the Park allows them to experience the thrill of seeing great family movies and interacting with Ann Arborites? Judy McGovern doesn’t think so. Maybe they should be paying the city for the privilege!

62 Responses to “Top of the Snark”

“I really don’t believe this is what the ordinance was meant to do,'’ says the 4th Ward Democrat. “I have no problem applying it to full-time employees in organizations that have major, substantial contracts with the city, but not this kind of community event.'’

My god, is this what she said? Does she not realize that if such ordinances only apply to full-time employees, companies will eliminate the bottom-of-the-pay-scale full-timers and hire part-timers that aren’t governed by the ordinance?
posted by Dale on July 2nd, 2007 at 11:39 am
I can’t get over the gall of a democrat, one Marcia Higgins, attempting to give employers a loophole. I come from a country where living wage is mandatory. I find the concept of paying less than a living wage to any employee reprehensible.

Silly me, I thought the days of slavery and indentured labor were a thing of the past.
posted by Rodney Smith on July 2nd, 2007 at 2:08 pm
You know what? You’re right. These kids that work a couple hours a day for 4 weeks need a full living wage!

How do we expect them to live at home with mom and dad for the summer with less than that? You can NOT purchase recreational drugs or a fake ID on less than a living wage!

And why stop there? They need a full pension and vested retirement plan, 8 weeks paid vacation, fully covered medical, dental and vision, 12 weeks paid maternity leave, a vending machine no further than 50′ from their station and arbitration.
posted by imjustsayin on July 2nd, 2007 at 2:29 pm
I’m with imjustsayin. After all, if the people we’re talking about were real human beings with real needs, they’d have full-time jobs. The only people who work temp, part-time, or seasonal jobs are the people who don’t have any expenses - since they don’t actually need the money, they’ll be happy with whatever we want to give them.
posted by TPM on July 2nd, 2007 at 2:41 pm
McGovern didn’t even say what this mandated living wage was — just that these employees both can’t be worth that much AND that the festival can’t be run without them.
posted by ann arbor is overrated on July 2nd, 2007 at 2:44 pm
(Also, in retrospect, I would say that this was actually somewhere in the middle third of the snark.)
posted by ann arbor is overrated on July 2nd, 2007 at 2:46 pm
I thought Marcia Higgins was a Republican?
posted by (former) OFWinsurgent on July 2nd, 2007 at 5:07 pm
She was. That’s what happens when you leave the Deuce and miss out on all these political happenings!
posted by ann arbor is overrated on July 2nd, 2007 at 5:28 pm
imjustsayin posted:
“You know what? You’re right. These kids that work a couple hours a day for 4 weeks need a full living wage!

How do we expect them to live at home with mom and dad for the summer with less than that? You can NOT purchase recreational drugs or a fake ID on less than a living wage!

And why stop there? They need a full pension and vested retirement plan, 8 weeks paid vacation, fully covered medical, dental and vision, 12 weeks paid maternity leave, a vending machine no further than 50′ from their station and arbitration. ”

From the above quoted post I gleaned that the poster was endorsing some kind of “To each according to thier needs, and from each according to thier abilities” kind of system. Are there better reasons than “I don’t think they need that” or “the budget can’t aford that” to support an exemption? If this is a wonderful community tradition, then it shuld not be too much of a burden to raise the contribution to a level which would cover requirements of the living-wage ordinance.

As an aside:
Is the age of the person or the ways wages are spent (IE: recreational drugs or a fake ID) things to be considered when setting the compensation for work performed?
posted by Anonymous on July 2nd, 2007 at 6:59 pm
“McGovern didn’t even say what this mandated living wage was”

The living wage in general is defined as “if you worked at that rate for 40 hours/week, you could afford to pay fair market rent (40th percentile price, I think?) for housing in the area.”

Ann Arbor and Ypsilanti both have ordinances that state that any business with a contract of at least $10,000 annually from the city must pay a living wage to any employees working on that contract. I believe both the county-wide housing rates; Ann Arbor’s website lists the current “living wage” rate at $9.91/hour if health care is provided, or $11.48/hour if not. Businesses with less than 5 employees or non-profits with less than 10 are exempt from the requirement under Ann Arbor’s ordinance.

Like a minimum wage, the living wage helps prevent downward wage pressure on workers: it’s meant to prevent people from hiring students home for the summer over other workers “because they’re cheap”, and thereby contributing to general wage depression in the local market. (If you want to hire them because they’re available on that schedule, or for some other reason, that’s fine.)

I find it interesting that McGovern wrings her hands over the disparity between the University’s $30k contribution and the City’s $9,900, implying that somebody sees a problem with the fact that “Ann Arbor enjoys equal, if not top, billing”, but doesn’t pay up as much as the U. But how much would the City be putting in if it weren’t trying to duck the living wage law? $12k. Not enough to merit complaining that the U’s feelings are going to be hurt for the difference between the two…
posted by Murph on July 2nd, 2007 at 8:44 pm
well said murph…!!!
posted by dan on July 3rd, 2007 at 2:26 pm
Murph made my point well.

If you think the system is working, ask someone who isn’t.

Living wage ordinances are a small step in a long hard road to social justice in “the land of the free”. Americans are not afraid of hard work and sacrifice, however many folk seem to be under the delusion that we’re already there, and I just can’t see it.

The student looking for some pocket cash can undercut real workers with real families and real needs. Assent to a sub-living wage is assent to wage-slavery. It happens everywhere, it just gets up my nose when folks think it is somehow a good thing.

This time, instead of asking someone who isn’t working, try someone who is working 3 jobs to make rent.

The one that really gets up my nose, though, is that the industries in the South are affecting federal immigration policy in order to keep their cheap labor. If they paid a decent wage, they wouldn’t need to employ illegals at a discount. There are just so many things wrong with that, I have no idea where to begin.
posted by Rodney Smith on July 4th, 2007 at 1:19 am
“For Shack and Beozowski, there’s no question, they’re happy with the pay as long as they can sleep till noon. Just remember, if you’re coming to Top of the Park, you need to park your bike and leave your dog at home - or be ready to accede to the staffers who flag you down.” The should also mention that if you bring a pop from somewhere else the friendly little rule misters will inform you that that pop is a major economic threat to the for-profit food booths that are trying to sell you crap at the typical inflated Ann Arbor premium rates. How about charging the for-profit food vendors more to sell their crap and stop whining about the pay of the people actually doing the hard work of offering the services that are being sold?
posted by Chuck L. on July 4th, 2007 at 11:29 pm
Go out to the MRF and ask the workers on the line if they are getting a living wage. I betcha many will say they are not. Then re-read the new contract and resolutions addressing the living wage.
posted by Worker Bee on July 5th, 2007 at 9:02 am
The manager of the farmers market works 2 days a week and gets 40,000$ plus benefits. WAY OVER PAID. 28 years old and NO experience. What does she do the rest of the time?
Considering she is violating City Code by allowing buying and selling,
according to several vendors comments is that she should be fired. Jayne Miller is trying hard to get new operating rules passed that would give the manager complete rule over market with no oversight.
Pitiful for the farmers.
posted by market watch on July 6th, 2007 at 8:33 am
there are several lively conversations regarding the crisis at the market on Local Harvest web site.
posted by ron on July 6th, 2007 at 8:36 am
“The student looking for some pocket cash can undercut real workers with real families and real needs.”

This was exactly the logic used to send all the women workers home after WWII lest they compete with returning soldiers. The fixed ‘lump of labor’ is a fallacy:

http://en.wikipedia.org/wiki/Lump_of_labour_fallacy

And it doesn’t become a non-fallacy when minimum wages are involved.

“Assent to a sub-living wage is assent to wage-slavery. It happens everywhere, it just gets up my nose when folks think it is somehow a good thing.”

Yeah — for example, in this case it’s a good thing to throw those slow, unproductive retirees out on their butts in order to make sure they don’t compete with ‘real families’:

http://www.coyoteblog.com/coyote_blog/2005/03/case_studies_on.html
posted by mw on July 8th, 2007 at 6:31 pm
Mw,

You have it wrong! The idea that “The fixed ‘lump of labor’ is a fallacy” is a fallacy. Yes, it’s true, markets are dynamic and restricting the work week to 20 hours will not of necessity create twice the number of jobs. However, what it will do is restrict the supply of labor which will increase the rate of pay per hour worked. Yes, the arguments that Rosie the Riveter should leave the workforce so her ex-military husband can work her former job are indeed sexist; however it is a fact that by Rosie leaving the workforce, demand for her husband’s labor would be greater and hence the pay rate would be higher. The fact that the number of women in the workforce has increased greatly since WWII is a mixed blessing; the simple fact is that many women are forced into the workforce to make ends meet whereas one income would have sufficed, now two are needed. For example, if the government gave $500.00/month to the parents of each child in this country (at a cost of $420 Billion/year out of an $11 trillion/year economy, that is ~4% of the US economy), how many women do you think would drop out of the workforce all together to concentrate on raising their children? I bet it would be a lot and I also bet that wages at the low end of the wage spectrum would go up.

MW, you should be honest and admit that what you really think is that the working poor should slave away for you
posted by Chuck L. on July 8th, 2007 at 9:22 pm
Chuck, you are assuming that leaving women leaving the workforce benefits everyone, but actually, it doesn’t benefit women because the benefits of a career accrue over time and that in the event of a divorce (a 50/50 likelihood) it’s a benefit with which you walk away from the marriage — not to mention the other benefits of having a career (intellectual/social/emotional).

And those who assume that students don’t actually need to work are ignoring the fact that many students pay for part or all of their tuition and need to support their living expenses as well. I don’t see how people in that situation are any less morally or practically entitled to a living wage than other workers — many of whom are in the position they are in not because of circumstance but because of poor planning or unwillingness to do what it takes to build a career that doesn’t depend on living wage legislation.
posted by Anna on July 8th, 2007 at 9:38 pm
Semi-related: from an otherwise reasonable “Other Voices” about unions in Friday’s News:

And a good job with benefits made it possible for some of the moms, if living a lifestyle not beyond their means, to have the option to stay at home and raise their families, not having to leave them with strangers.
posted by ann arbor is overrated on July 9th, 2007 at 7:34 am
MW, you should be honest and admit that what you really think is that the working poor should slave away for you

No, I think my kids should get summer jobs — which they’ve not managed to do, but which would be much easier if the minimum wage were lower.

I don’t think that there should be a “minimum productivity barrier” where, if you are young, inexperienced & silly, or old & slow, or mildly mentally disabled you just can’t work because your labor isn’t worth a minimum of $11/hr. I would much rather see people earn what they can and, in the cases where they are supporting themselves or their families, have their income supplemented by with the EITC (or a similar program).

I have a mildly mentally disabled sister. I don’t think anyone will hire her for $11/hour (I have my worries about $7/hour). Do you think she should spend the rest of her life sitting at home on disability watching TV with her cats?

Maybe you should be honest and admit you prefer self-righteous rhetoric over thinking about what solutions would really work best for people like her.
posted by mw on July 9th, 2007 at 7:43 am
Who are these mothers leaving their kids with strangers? They don’t vet childcare workers, or get recommendations from friends, or check the great database the state has for licensed childcare, they just choose a stranger of the street and say “Here, take my kids?” Who knew?
posted by Chris on July 9th, 2007 at 9:47 am
And those who assume that students don’t actually need to work are ignoring the fact that many students pay for part or all of their tuition and need to support their living expenses as well. I don’t see how people in that situation are any less morally or practically entitled to a living wage than other workers.

But if you require employers to pay students (who tend to be lacking in experience, job skills, and maturity, and who can work only limited and irregular hours) a living wage of $11/hour, employers may say, “uh, gee, thanks, but no thanks”. And as it turns out, it’s really hard to earn any living expenses with no wage at all.
posted by mw on July 9th, 2007 at 11:29 am
No one’s forcing them to hire students at all. They are free to offer mature, skilled and experienced workers the same $11/hr.
posted by ann arbor is overrated on July 9th, 2007 at 11:37 am
(And they would also be free to offer the mature, skilled and experienced workers $7/hr if the law didn’t exist.)
posted by ann arbor is overrated on July 9th, 2007 at 11:44 am
No one’s forcing them to hire students at all. They are free to offer mature, skilled and experienced workers the same $11/hr.

Exactly right — if the minimum wage is high enough, very few students (or elderly or low functioning people) will have a job of any kind. That’s what the coyote blog piece was about. Employers adapt. They automate, they use self-serve, they contract out, they hire fewer high productivity workers in place of more low productivity workers.

If TOP were forced to pay $11/hr they might, for example, stop setting up chairs at all and have everybody in the audience bring their own (assuming the chairs are done by paid TOP workers). The food stalls are already contracted out — they could do more and more of that until they needed very few of those $11/hr workers. Or they could substitute more and more volunteers for paid workers (a ‘loophole’ is that you are allowed to work for $0/hr — just nothing between that and the minimum or ‘living’ wage).

Or…they could just close up shop entirely. TOP doesn’t have to exist, and finances are already tight. Or…maybe they could just move out to one of the townships
posted by mw on July 9th, 2007 at 2:42 pm
The living wage went up as of April 30, to 11.96 an hour. I work for a small nonprofit, and we receive a large city grant, so we must pay living wage as well. We only employ three full time employees, but like TOP we must pay our parttimers (about ten of them) living wage as well. The result? Our part-time workers — all university students, who work no more than 10 - 15 hours a week to help kids with their homework, cook dinner for them, or conduct after school program activities- are paid very well –$11.96 an hour. That doesn’t make them any more dependable, btw. Our full-time professionals who all have degrees and carry a great deal of responsibility — and who do support themselves -are paid relatively badly — because there’s just not enough money in our budget to do it all. I’m all for the living wage, but I believe it needs more work. There ought to be a way to write the policy so that it does exactly what it’s intended to do.
posted by Joan Doughty on July 9th, 2007 at 6:22 pm
mw,

Riddle me this: if employers can can save money by substituting fewer high productivity employees for more low productivity employees if us worker radicals get our way and raise the minimum wage through the roof, why would employers not figure out that they could implement this measure with or without a minimum wage increase? You would have us believe that these poor, good natured employers (out of the goodness of their little hearts) are choosing to operate their businesses at less than optimal efficiency and will only resort to the brutal but efficient methods when worker radicals get “unreasonable” and demand too much? What world do you live in? In the world I live in, the employers are always trying to maximize rate of return on investment (ROI) and anything you say they can do to raise ROI after an increase in the minimum wage is something they can do anyway without an increase in the minimum wage.

It’s also interesting in your rebuttal above that your whole reasons for being opposed to a living wage are 1) you have kids whom you think would get jobs if there were no living wages paid for by the city (however you offer no proof it is indeed the city’s living wage which keeps them unemployed), 2) a “mildly mentally disabled sister” who you want to kick out of the house (again, you offer no proof it is indeed the city’s living wage which keeps her unemployed.) So, mw, it all revolves around what you think is best for you and nobody else. Thanks for letting us know that!
posted by Chuck L. on July 10th, 2007 at 11:31 pm
mw,

BTW, I believe that increases in the minimum wage actually increase economic activity, not decrease it. Why? Because poor people share their money by spending it as quickly as they get it while rich people hoard their money by saving it, hence it’s less likely to change hands. Yes, high savings rates actually slow down an economy, not expand it (didn’t the Cato Institute tell you this?) Higher wages reduce profits and hence, transfer money from rich to poor. More money for the poor would mean less income tax money for the Federal government and more tax money for the State government (the rich pay higher marginal income tax rates to the feds but the situation is reversed at the State level.)
posted by Chuck L. on July 10th, 2007 at 11:59 pm
“Because poor people share their money by spending it as quickly as they get it while rich people hoard their money by saving it, hence it’s less likely to change hands.”

You’re kidding, right? Last time I checked, rich people like being rich and want to get richer so they invest their money, make it grow. They might save some of it, but that stock market thing and robust US economy, yeah, without rich people, those things wouldn’t work nearly as well. Job growth, not so much without investments by rich people. The following article talks about how most of the people who exist outside the banking system in the US are generally lower income.
http://www.usatoday.com/money/perfi/general/2007-06-23-banklessinamerica_N.htm
So, any money they save is being put in a jar, where it’s doing no one but them any good, and then not nearly as much good as it could if it was invested. But, the person with a savings account, well, at least their money is earning interest for them, and the bank. And I agree, poor people do spend their money, but so do rich people, they eat, and drive cars, and go places, too. Just don’t expect them to spend their entire paycheck all at once. It takes a few months to save up the money to buy a Maserati (and pay the Maserati employees), you know.

“Higher wages reduce profits and hence, transfer money from rich to poor. ”

That might be true also, but the rich are still going to get theirs. You think some bigwig is just going to sit and tolerate a cut in his profit margin? Nope. He’s going to do one of two things . One, raise his rates so his revenue stream stays the same. Two, reduce costs by, for example, reducing the pay/freezing the pay of those who are making more than minimum wage so his expenses decrease. The coyote blog, Joan’s post, and my experience handling the accounting for a struggling AA hotel address these points. (they raised rates, reduced benefits, and froze hirings at the hotel to make up for lower profits).
And speaking of supporting documents, you might not want to begin a post with “i believe.” You were the one who called out mw for using her personal experience as basis for her position (such a terrible thing, since we’re all already looking out for mw’s well-being), but at least she included a few supporting sources for her opinion.
posted by TD on July 11th, 2007 at 1:40 am
note to mw: upon rereading your earlier post, i realized i misconstrued some of your pronouns. so, if you’re a guy and not a girl, sorry, my bad.
posted by TD on July 11th, 2007 at 2:05 am
A higher minimum wage has costs, sure, and I would expect that an increase in the minimum wage would result in some combination of higher prices and lower compensation for higher wage workers, as TD described.

But increases in the minimum wage are an equity and economic positive because it unambiguously increases the income of the working poor as a whole. The demand for labor at that level is relatively inelastic, so (within limits of course) an increase of n% leads to a much less than n% decrease in the number of minwage jobs.

Over the last 30+ years, the minimum wage (held constant during years of inflation) has fallen dramatically in real terms, and yet it has not resulted in any remotely comparable increase of jobs for the marginally employed.

If anything, the number of university students employed at part-time jobs during the school year seems to have plummeted, at least at MSU and UM. That has a lot to do with the ramping up of costs (e.g., tuition is something like 20x higher than it was when I was in school), so that it’s no longer even remotely possible to work your way through college.

Some of my friends have kids in college now, and none of them are running dish machines or selling hamburgers or cleaning toilets in their college towns. They tell me they’re too busy to work, and maybe they’re right.

But my sense is that the average university student, at least at MSU and UM, comes from a more privileged background than 30 years ago. They didn’t have to work during high school, and it makes little sense to them either economically or psychologically to do minwage work while in college. The decline in the constant dollar value of minimum wage employment only accentuates this effect.
posted by Larry Kestenbaum on July 11th, 2007 at 8:31 am
TD,

I said “I believe” since it is my own analysis. Second, I learned in Econ 101 that high savings rates slow an economy down, not spead it up (are you going to force me to quote sources for an Econ 101 class?) The higher up the income scale you go, the higher the savings rate. Yes, rich people spend their money, but at a lower rate. I have a question; what do you think would produce more happiness in our society: a) two families that each get a brand new Ford Focus or b) one rich family that gets a new BMW? Both a) and b) cost about the same. Better yet, how about providing health care at public expense for everyone like every other industrialized nation except the US does?

The thing that grinds me most is morons like MW who try to argue that lower wages for the working poor lead to higher living standards for the working poor. False, higher wages lead to higher living standards, daaaah. The only thing you get from lower wages for the working poor is richer rich people, a shrinking middle class and lots of crime (look at Brazil as an example.) BTW, the richer rich people are able to flood Washington DC with even more PAC money to tilt the rules even more in their favor.
posted by Chuck L. on July 11th, 2007 at 12:22 pm
TD,

Once again, like MW, you fall into the same trap with: “You think some bigwig is just going to sit and tolerate a cut in his profit margin? Nope. He’s going to do one of two things . One, raise his rates so his revenue stream stays the same. Two, reduce costs by, for example, reducing the pay/freezing the pay of those who are making more than minimum wage so his expenses decrease.”

There you go again! You’d have us believe the bigwig is not already sticking the screws to his workers/customers as much as he can already. You want us to believe that the bigwig could do both points one and two but, out of the kindness of his heart, chooses not to? So, it’s only when ungrateful workers demand a higher percentage of the wealth they produce that the bigwig will get payback by resorting to the measures you speak of? That is the weakness of your argument and like MW, you have not responded to my point.

BTW TD, I was criticizing androgynous MW (aside from being a self centered slug) out for assuming away the point under discussion, that is, MW assumed lower wages lead to higher rates of unemployment because lower wages lead to higher rates of unemployment (get it?)
posted by Chuck L. on July 11th, 2007 at 7:00 pm
Oops, I meant to say “MW assumed higher wages lead to higher rates of unemployment because higher wages lead to higher rates of unemployment (get it?)”
posted by Chuck L. on July 11th, 2007 at 7:06 pm
Chuck L.,

I don’t quite follow you. One the one hand, you want wealthier people to spend (consume) more rather than saving (investing), but on the other hand you want them to buy a Ford Focus instead of a BMW. What are they supposed to do with the difference? The assumption that two Ford Foci yields greater society happiness than one BMW is also a bit strange. Certainly, if a car was necessary for a more productive livelihood for both families, utility would be increased, but happiness is a subjective, individual, and transient emotion. And what if both families lived in a highly urban area where a car was an impediment. Certainly in that instance, one could argue that having a BMW in downtown Manhattan, London, or Tokyo could be more trouble than it’s worth. In fact, I thought the appropriate Green Party line would be to have neither family own a car and seek alternative transport.
posted by JCP2 on July 11th, 2007 at 9:07 pm
“You’d have us believe the bigwig is not already sticking the screws to his workers/customers as much as he can already.”

Uh, Chuck L, could you calm down, read mw’s argument carefully, look at the examples, and get back to us when you’ve understood? I’m sure you mean well, but you seem to be making up some very odd arguments without thinking them through very carefully first.

(Hint: mw’s argument does assume a “bigwig” that is equally self-interested in both cases.)
posted by Bruce Fields on July 11th, 2007 at 10:24 pm
JCP2,

No, I want fewer wealthy people due to a much more equitable distribution of income (not for rich people to consume more.) If we had a more equitable distribution of income, I really would expect more low end cars like the Ford Focus to be built and fewer high end cars like BMW’s to be built. Speaking of Green politics, yes, we would like to give the earth a breather by consuming less and this is how this Green would get there: introduce a concept to our economy called “The Freedom Not to Work!” I say living standards improve when workers are paid more for fewer hours. If labor is expensive, employers will automate which will raise productivity. When productivity goes up, the number of hours workers need to work to produce the same stuff will go down. By mandating minimum levels of paid time off (vacation) and retirement at an earlier age and increasing these levels as productivity goes up, we can accomplish two things 1) restrict the amount of consumption and hence the demand on the earth’s resources and 2) increase leisure time off. Anything that would give the working person increased leverage to secure more pay while working fewer hours is ok in my book. Make unemployment insurance more generous, make employer paid pensions mandatory for all workers, make the minimum wage much higher and index it not only to inflation but to productivity as well, start with a legally mandated four weeks of paid vacation for each worker and increase the mandate when productivity improves, provide a $500/month payment to the parents of each child under 18. Oh, and last but not least, if a business wants to sell it here, they have to make it here as well. We not only lower living standards with global “free” markets but we destroy the right to make democratic decisions about the way we choose to live as a people when we allow unrestricted, unregulated “free” global markets.

In the 1960’s, the government actually did an experiment to see what the effect would be of a guaranteed income on households. The subjects in the experimental group were statistically more likely to work fewer hours so paying people a guaranteed income was considered a bad idea. I say hogwash! The fact people worked less is a good thing! The people who worked less got to spend more time with their families and get involved more in their community. They also spent less time making business owners rich so the rich would not be as rich, so the rich could do less to buy legislators so the rich could do less to bend the rules to their liking.
posted by Chuck L. on July 11th, 2007 at 10:34 pm
Bruce,

I have thought things through! Conventional economic theory says that high wages should lead to high unemployment when in fact the empirical evidence says that high wages exist when unemployment is low and low wages exist when unemployment is high. Recent studies have shown that modest increases in the minimum wage result in almost no increases in unemployment.

Ya, I’ve thought things through; I wonder why Americans are working harder but living less well than our parents generation. I’ve wondered why with so much labor saving technology, we work more hours , not fewer (and have less to show for it.) Why is it that the all time high for the minimum wage was 1968, when the economy was far less productive and capable?

The real point I’m trying to make here is that we (middle class intellectuals) have been brainwashed by hostile, interested parties (think Economic Hit Men–EHM) who have been selling a load of crap conventional thinking that has little to do with reality. I’m always amazed at how powerful the tendency to think like a modern day plantation owner is (ie business owner) by people who work for a check and are only a few checks away from homelessness. The arguments I have raised are counter-intuitive: for example, people think it is pointless to raise the minimum wage say 10% because employers will cut employment by 10% or inflation will go up by 10% or some combo of the two. The reality, as Larry pointed out, is that wage demand is inelastic or non-linear, meaning that raising the price of it a lot will only reduce demand for it a little. We see the same thing with gas prices, health care and tuition; the price goes up a lot, but demand drops off only a little.
posted by Chuck L. on July 11th, 2007 at 11:09 pm
“I have thought things through!”

No. This argument:

“Riddle me this: if employers can can save money by substituting fewer high productivity employees for more low productivity employees if us worker radicals get our way and raise the minimum wage through the roof, why would employers not figure out that they could implement this measure with or without a minimum wage increase?”

which you repeat here:

“You’d have us believe the bigwig is not already sticking the screws to his workers/customers as much as he can already. You want us to believe that the bigwig could do both points one and two but, out of the kindness of his heart, chooses not to? So, it’s only when ungrateful workers demand a higher percentage of the wealth they produce that the bigwig will get payback by resorting to the measures you speak of?”

is completely wrong. Do you understand why?

(Note: that’s not the same as saying that your broad conclusions are wrong.)
posted by Bruce Fields on July 11th, 2007 at 11:29 pm
Chuck L.,

That sounds like a great system! In fact, I’ll sign on to be 100% covered by “The Freedom Not To Work” policy. The unemployment benefits sound outstanding, and I have many other creative pursuits that are not income generating that I want to devote more of my time to. My main worry is that my standard of living might decrease after a few years once the rich have been eliminated as a viable threat and there is no more wealth to redistribute, everybody having reached wage parity. If I volunteer to take on a greater administrative role in local comminity events, would there be an opportunity for me to accrue additional nonwage benefits as a function of my governmental duties?
posted by JCP2 on July 11th, 2007 at 11:53 pm
Bruce,

O.k. you got me this time! I was trying to avoid a long winded discussion so I cut some corners in my explanation. However, opponents of min. wage increases will almost without exception try to claim that the working poor are better off without minimum wage laws because employers will respond by reducing jobs. The thought has occurred to me that if employers could cut jobs after a min. wage increase, why wait for the the min. wage increase? At a given business, a wage increase without passing the cost on to customers will not reduce demand for that business’ product. Opponents of the min. wage will argue that employers will try to pass the cost increase on to customers but they can’t because if they are running their business right, they are already charging what the market will bear (referring on average across a large population of businesses, more precisely, some businesses will increase prices and employ more workers while other businesses will fire workers and lower prices.) For example, if NBA players get more pay, can the owners charge more for tickets? Not if the owners are already charging what the market will bear! If the owners try to charge more, fans will go elsewhere or watch the game on TV more often.

Another argument is that a worker who is paid say $6.00/hour is not worth $8.00/hour and so the job will be eliminated. This overlooks the fact that often times employees who are paid $6.00/hour produce value for the enterprise that is worth many times the $6.00/hour they are paid. A min. wage employee producing $20.00/hour in value is still worth keeping if the pay goes up to $8.00/hour.

Finally, there is no doubt that a step increase in the min. wage will cause the economy to adjust. Some businesses will make out ok while other businesses will go under (see my fewer BMW’s more Focus’ example above.) I meant for my conclusions to apply to the average situation once things settle out and I never meant to analyze things in detail. Another point that is often raised is that employers will respond by automating more since labor is more expensive. This is a productivity increase and can take a long time to have any significant effect. Also, the effect on jobs is probably not linear, that is a 5% increase in productivity produces a 5% reduction in jobs. In the past, increases in productivity lead to increases in pay which would create jobs elsewhere in the economy to soak up the losses due to automation.
posted by Chuck L. on July 12th, 2007 at 12:44 am
JCP2 - come to Europe and you can have that freedom right now. It comes with health care. And a break at lunch. And an amazing sense of responsibility to the environment.
posted by Dale on July 12th, 2007 at 7:41 am
Will I still qualify if I am not a citizen and a visibly identifiable minority? I’ll try my best to fit in, but there are some things I just can’t change.
posted by JCP2 on July 12th, 2007 at 8:21 am
“The thought has occurred to me that if employers could cut jobs after a min. wage increase, why wait for the the min. wage increase?”

Because they are cutting jobs to move to an alternative which is *less* expensive than the post-increase cost in wages, but *more* expensive than the pre-increase cost in wages.
posted by Bruce Fields on July 12th, 2007 at 10:27 am
Because the demand for min-wage labor is relatively inelastic, the proportion of jobs cut in response to an increase in the minimum wage will be LESS than the percentage increase in wages. Likewise, as we have seen in the last generation, a cut in the minimum wage does not result in a proportionate increase in the number of jobs available at that level.

Yes, in the long run, a higher minimum wage will lead to greater automation of routinized tasks, and a shift of tasks that can’t be automated to higher-wage, more professionalized employment. But is that such a bad thing? Automation has already gotten rid of a lot of jobs that we really don’t miss.

As Franklin Roosevelt is supposed to have said, “People don’t eat in the long run — they eat three times a day.” The working poor need more resources now; there’s plenty of time to adjust to long-term changes.
posted by Larry Kestenbaum on July 12th, 2007 at 11:07 am
It sounds like a few of you really want to live in the Soviet Union. Let me know how that works out for you. In the meantime I’ll try to make the most of living on a planet where people follow their bliss and try to make their own lives better.
posted by Nick on July 12th, 2007 at 12:51 pm
“Because the demand for min-wage labor is relatively inelastic, the proportion of jobs cut in response to an increase in the minimum wage will be LESS than the percentage increase in wages.”

Yeah, I understand, though I’m curious what exactly the evidence is there.

“Yes, in the long run, a higher minimum wage will lead to greater automation of routinized tasks, and a shift of tasks that can’t be automated to higher-wage, more professionalized employment.”

But your claim that demand for minimum wage labor is “relatively inelastic” only applies to the short term?
posted by Bruce Fields on July 12th, 2007 at 2:06 pm
Microeconomics analyzes the short term. An increase in the supply of carrots lowers the price of carrots right now, not in 2027. Maybe by then we’ll have developed a cheap substitute for carrots anyway. Doesn’t make any difference now.
posted by Larry Kestenbaum on July 12th, 2007 at 3:25 pm
As for evidence that the demand for low wage labor is inelastic, check out this Google search. It seems there have been many studies.
posted by Larry Kestenbaum on July 12th, 2007 at 3:44 pm
“Yes, in the long run, a higher minimum wage will lead to greater automation of routinized tasks, and a shift of tasks that can’t be automated to higher-wage, more professionalized employment. But is that such a bad thing? Automation has already gotten rid of a lot of jobs that we really don’t miss.”

Yes, it’s a bad thing in some ways. Some low functioning people will be pushed out of the job market entirely. Fewer and fewer students will do any kind of paid work before they finish school (this is already happening — you may think this is a good thing or a bad thing).

And this process will favor certain kinds of business over others in ways that are not obvious. For example, slow-moving, informal local retail businesses that are pleasant places to work, but have always paid low wages will find it tough to compete with chains with high-tech inventory systems and who push their employees to produce to the max. The advantage also goes to the big box stores over those who provide greater customer service.

Do you like bookstores? The higher the minimum or living wage, the greater the advantage for online sellers over local stores. If the living wage were applied to all Ann Arbor employers, who would be affected more–Shaman Drum? Or Amazon.com? OK, trick question — Amazon wouldn’t be affected at all. But what if it were applied to every employer in the country — the answer’s the same — it would have a big effect on businesses like Shaman Drum and much less on Amazon.

Obviously, the trend is already in the direction of automation, self-serve, and sophisticated chain stores demanding high-productivity from their ‘associates’, but the higher the ‘wage floor’ the more of that we’re going to get. You may or may not think that’s a good thing.
posted by mw on July 12th, 2007 at 5:21 pm
I very much doubt that Shaman Drum pays its staff less than the living wage, let alone the minimum wage. I’ll ask Karl Pohrt next time I see him.

But in any case, the big box and online trends have their own logic (e.g., Walmart can underprice any local store), and would be proceeding even if there wasn’t any minimum wage at all.

High school and college students aren’t working in school these days because they don’t have to and don’t want to. Notice that this abstention from the workforce soared during the 1980s and 1990s — while the real minimum wage was declining.

In the long run, our goal as a society should be to have fewer people who need to work at low-wage jobs. And, as I wrote earlier, that is already happening. It wasn’t that long ago that we had millions of farm laborers working for very meager pay, or (longer ago) as slaves for no pay. We had miners and industrial workers in virtual peonage in company towns and sweatshops. None of those things has completely disappeared from the U.S., but the number of people affected is a lot less than it was a generation or two ago.

Pretty much all of us are descended from illiterate peasants. And yet it’s not a problem that we don’t have many jobs any more that illiterate peasants can do.

There will always be some people who are low-functioning, sure, and perhaps better arrangements should be made to help them be productive. But from generation to generation, our workforce is becoming more skilled, better educated, as people take advantage of the considerable incentives to better themselves and their children.

Maybe the minimum wage pushes these trends along; more likely it has little effect. But what it plainly does do is put more money, right now, into the pockets of people who need it.
posted by Larry Kestenbaum on July 12th, 2007 at 10:14 pm
“I very much doubt that Shaman Drum pays its staff less than the living wage, let alone the minimum wage. I’ll ask Karl Pohrt next time I see him.”

Well, I’m sure that Shaman Drum doesn’t pay less than minimum wage. But I’d be surprised if they were paying $12/hr to new part-time employees. I seem to remember Karl Pohrt being quoted in the News at the time of the Borders strike and remember him saying something to the effect that he’d like to be able to pay his employees more but couldn’t afford it and that they were earning about the same wages as pre-strike Borders employees.

And even if Shaman Drum is exceptional, I’m quite sure that the typical struggling independent book store doesn’t pay anything close to $12/hr as it’s lowest wage.

Of course, if I were retired and looking for something to keep busy and earn a bit more money, I’d be willing to accept a somewhat lower wage to work at Shaman Drum than Borders. But high-minimum wage laws tend not to allow that choice.

“But in any case, the big box and online trends have their own logic (e.g., Walmart can underprice any local store), and would be proceeding even if there wasn’t any minimum wage at all.”

I’m not saying a high minimum wage is the cause of this trend — only that it will tend to magnify it.

“In the long run, our goal as a society should be to have fewer people who need to work at low-wage jobs.”

Well, sure, and we achieve that by becoming wealthier over time. But legal increases in the minimum wage are not necessary to make that happen (the process was happening very quickly in the 90’s despite the fact the minimum wage was not changing).

And one of the things that a wealthy society generates (and this is a good thing) is a lot of people who have a basic income and are looking for something interesting and pleasant to do to supplement it (retirees particularly). We are rich enough to be able to afford to allow them the luxury of trading off working conditions against wages.

“There will always be some people who are low-functioning, sure, and perhaps better arrangements should be made to help them be productive.”

We don’t need to make them highly productive, we just need to let them work at a level (and wage) that matches their capabilities and supplement their income as necessary.
posted by mw on July 13th, 2007 at 8:25 am
Bruce

‘“The thought has occurred to me that if employers could cut jobs after a min. wage increase, why wait for the the min. wage increase?”

Because they are cutting jobs to move to an alternative which is *less* expensive than the post-increase cost in wages, but *more* expensive than the pre-increase cost in wages. ‘

The only way the scenario you lay out above makes sense is if the marginal contribution of a min. wage worker is more than the min. wage before an increase, but less than after the increase. For example, if a min. wage worker produces $7.00/hour in value to the business when the cost of wages and benefits is $6.00/hour before an increase of $2.00/hour, then it would make sense to eliminate that position. The problem is that this scenario is not very likely, although I am sure it does happen.

The reason it is unlikely is due to the fact that most businesses have fixed costs that have to be covered regardless of how many employees a firm keeps on staff. The value employees generate to the firm has to exceed not only the staff’s wages and benefits, but the fixed costs of the firm as well if any profit is to be realized. Given that a certain level of service requires on average a certain number of employees on staff to deliver that service, letting go staff means scaling back operations which is an awful way to try to cover fixed costs.

Don’t believe me? Let’s look at Wal Mart’s (wmt) income statement for the last four quarters. Wal Mart had $355 Billion in sales and the cost of goods sold was $269 Billion for a gross profit of $86 Billion. Spread out over 1.9 million full time employees, $86 Billion works out to about $23/hour in value to Wal Mart from each employee. Assuming Wal Mart has average employee costs of about $11/hour in wages and benefits, the opportunity cost of scaling back operations and cutting employees is about $12/hour. Wal Mart’s EBITDA (Earnings Before Interest, Taxes & Depreciation) was $27 Billion with net earnings of $12 Billion. So, Wal Mart has at least $27 - $12 = $15 Billion in fixed costs. I estimate another $15 Billion in fixed cost due to advertising. With fewer employees to spread the fixed costs over, Wal Mart’s profits would go down. Increasing the pay of the 1.9 million Wal Mart workers would cost $3.8 Billion for each $1.00/hour increase.
posted by Chuck L. on July 14th, 2007 at 12:40 am
L Kestenbaum wrote, “High school and college students aren’t working in school these days because they don’t have to and don’t want to. Notice that this abstention from the workforce soared during the 1980s and 1990s — while the real minimum wage was declining.”

I do not doubt this statistic but would like to point out that this time frame almost exactly overlaps the personal computer explosion which might explain at least a part of this. Prior to the PC, offices of all kinds needed workers to move, organize and copy the paper products of the office. It was a lot of work and required a cadre of clerk type personnel (different from the County Clerk, maybe?); executives of even smallish companies could have had multiple secretaries to keep up with the letter typing, report making, and hand copying, etc. required. As the capabilities of the PC became known and used this sector of the business population got scaled way back and in some businesses eliminated all together.

It could be concluded from your comment Mr. K, particularly from the “don’t have to and don’t want to” clause, that the decision on the part of student not to work while in school might simply have been because the money doesn’t justify the time. My point however is that it may have been that in the 80’s and 90’s the computer began to constrict the number of minimally paying, entry level, jobs within professional career paths. I, for example dropped my dead-end, and better paying, jobs when I had the opportunity to work at a company within my field as soon as I could; and I would counsel young workers to do the same. My guess is that as these jobs disappeared young workers made other choices as to how to use their time.
posted by abc on July 14th, 2007 at 9:56 am
abc: I was writing in response to mw’s contention that “Fewer and fewer students will do any kind of paid work before they finish school”, that is, the decline in part-time work by high school and college students.

When I was an undergraduate student in the 1970s, my paid employment all involved kitchen or janitorial work. I don’t recall that any of my peers had office jobs either.

I started programming in 1974 (FORTRAN on the university mainframe with with punched cards), but I’m pretty sure I wasn’t paid for any programming work until well after I graduated.

Obviously I agree with you that students are rational actors and may well have found minimum wage jobs less appealing as their value declined since the 70s.

The paper handling jobs you’re talking about might have been more prevalent if MSU had been located in the midst of a city with a larger demand for that kind of work.
posted by Larry Kestenbaum on July 14th, 2007 at 6:32 pm
“The only way the scenario you lay out above makes sense is if the marginal contribution of a min. wage worker is more than the min. wage before an increase, but less than after the increase.”

Huh? No, it doesn’t matter if it’s still more after the increase; if the increase makes another option (such as automation) cheaper, then it is to the business’s advantage to take that option.
posted by Bruce Fields on July 16th, 2007 at 4:31 pm
Bruce,

You are right. I was speaking to the short term actions businesses will/can take and I did not differentiate between the long and short term. However, what you are describing in your example is a productivity increase (same stuff gets produced, but with fewer workers.)

Myself and Larry have both alluded to this effect and I have seen economists do the same. I’ve seen it used to argue why it is a bad idea to raise wages (so low wages are better after all–as they like to say.) I believe productivity increases are a good thing so long as the benefits are broadly dispersed throughout society. Unfortunately, most of the productivity increases of the last few years have gone to the upper income echelons; which is why I believe more paid time off in the form of paid vacations and earlier retirements should accompany increases in productivity.

Contrary to low wages being a good thing, I believe higher wages lead to faster productivity increases because as you have pointed out, it’s more cheaper to automate. The effect over time should be dramatic due to the compounding of small percentage increases in productivity. The demand for high skilled tech jobs and even sales positions increases while the demand for low skill dead-end jobs decreases.
posted by Chuck L. on July 16th, 2007 at 6:29 pm
Oh, it’s been a while since I’ve been here (LA’s nice, thanks for asking). But since I worked at Top of the Park for three years, I might have a little more insight into this.

First off, since we were classified as “seasonal” workers, that meant that folks started below minimum wage, at $4.25 an hour, and received a quarter raise each year, to a maximum of $5.50 (at which point, you were either pulled into managment or let go). The staff was split evenly between high school students and members of the football team, rounded out by nepotism. But why work at such pitiful wages? This was the ’90s, and even Tios was offering $7 an hour! Well, like Stephen Levitt’s crack dealers, for us high schoolers it was really about moving up to a shot at the big time— one of the two beverage huts. Once you were there, you had both an opportunity to immediately skim off of the tip bucket (which was supposed to be split evenly, but fell under the same nepotistic graft that controlled scheduling and hiring), and to both get drunk underage and to provide friends with free beer. You’d also be able to swap with any of the food stalls, because while they might look askance at attempts to trade sodas for falafel, everyone loved beer. You’d have some responsibilities, sure, like making certain you didn’t get caught and cementing the loyalty of lower-tiered workers by making sure that the losers who got stuck doing trash duty were well-hammered. You’d also have a central location to deal pot, and were generally able to gouge the football players commiserate with the amount of dickish hazing and their propensity to deny your friends entry into the beer garden due to the ludicrously phony IDs.
There were vague attempts to clean it up, but each only encouraged more covert corruption, especially after they got rid of Duck, the firefighter who’d run it for the first couple years I worked there. They replaced him with a clueless guy named Steve, and a hospitality major named Erica, who attempted to stamp out the most public instances of underage drinking and informal economics, but were resented to such a level that the stealing turned malignant and cancerous. Of course, I could just be bitter, having been fired by Erica in order to be replaced by her sister, but I don’t think so.
On some level, mw is right: forcing the TOP to pay anywhere near a living wage would decrease the employment opportunities for the folks who worked there— the retarded, the mendacious, the stoned and the theiving. Anyone else had better sense than to sign on for the shit work for shit wages. It’s just, having worked there and seen it both at its best and at its worst, I have a hard time believing that TOP wouldn’t be helped by trying to employ at least a handful of people who might have been able to hold a job somewhere else.

Oh, and the good money always came from knowing Eric, the guy who did set-up and tear-down. You got $15 an hour for that, and it was relatively easy work.
posted by JS on July 25th, 2007 at 3:37 pm
Its at the snark peak.
posted by Steve lehman on August 1st, 2007 at 2:23 am
Ya, I’ve thought things through; I wonder why Americans are working harder but living less well than our parents generation. I’ve wondered why with so much labor saving technology, we work more hours , not fewer (and have less to show for it.) Why is it that the all time high for the minimum wage was 1968, when the economy was far less productive and capable?
posted by youtube on February 29th, 2008 at 1:02 pm
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posted by Prosolution on April 10th, 2008 at 4:06 am

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