Ford's quote from the time is relevant today:
“The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One’s own employees ought to be one’s own best customers.”
Yeah, I don't take that explanation at face value because it's describing a perpetual motion machine. Sales to your own employees are only going to be a trivial amount of revenue for any reasonable business. And I'm sure he knew that.
But interpreted charitably, it's showmanship. This is a way to show leadership, get a lot of publicity, and hire better workers, so what's not to like?
The point wasn't that paying employees more leads to sells.
Its more of a remark about the overall world. Your employees are somebody's customers, your customers are somebody's employees, You are somebody's customer. If nobody in the world makes enough to be a consumer, nobody consumes, and thus you have no customers.
Exactly this. I've spent the last year or so studying Ford. His whole point was that if people didn't have the money to buy his product or time to use it (he reduced work hours as well) then your business will never survive. He wasn't banking on employee sales, he was looking at employees as a snapshot of a wider market.
Great example is fast food as well. If you are offering the "lowest cost" food option, and providing the minimum wage, you've got product/purchasing power that are both at the bottom of the food chain. And if employees can't afford to buy your food... then who is going to? Your product doesn't match the market you'd supposedly be selling to.
This is why Ford is considered the creator of the middle class. He took automation and used it as a way to set a different standard for society, one that inherently helped his own product succeed in the long run.
Why is Bezos doing this? Because Amazon succeeds when people have more disposable income. And it starts with his company. sure he might get regulated to do it anyways, but now he is pushing the needle. Regulators might push an overall minimum wage hike to $15 because "if amazon can do it, why cant you?" The merits of that hike aside, know who stands to benefit from people having more money to spend? Amazon.
For a profitable company where wages are a major expense, it seems like lower prices with higher wages can only be achieved with higher productivity. I think an economist would attribute this more to Ford's assembly line?
But sure, a high-productivity business can lead the way on wage increases. Other businesses might have to raise prices to keep up.
I'd like to read more about Ford's effect on wages outside Detroit. This "creator of the middle class" sounds like it might be exaggerated?
> For a profitable company where wages are a major expense, it seems like lower prices with higher wages can only be achieved with higher productivity. I think an economist would attribute this more to Ford's assembly line?
FWIW productivity has literally exploded in the last few decades.
>For a profitable company where wages are a major expense, it seems like lower prices with higher wages can only be achieved with higher productivity.
Productivity vs hourly pay has pretty famously stagnated since the 1970s[1] after being closely correlated for years before. The issue is simply that people aren't being paid enough for the value they add to companies.
That first chart totally misses the hourly compensation upside that's observed abroad. Globalization really kicked in during the late 20th century so that's to be expected.
That makes a lot of sense. I wonder why I've never before heard the part about Ford triggering an overall wage increase across the country as part of the often repeated story of him paying his employees more so they could afford to buy his cars. It doesn't make sense without that addition.
The showmanship and publicity causes pressure on other manufacturers to pay that much. Otherwise, anybody working at a competitor will just be thinking to themselves "I'm just working here to get experience so I can have an edge on other applicants at Ford." Competitors that pay less will be dealing with high turnover unless they match Ford's wages.
And it's not just car companies that have to match wages. Other industries will have to keep up. And once everybody is making decent money, you have more customers.
Okay, but I doubt this had much effect outside Detroit. Anyone know the history?
This would be like claiming that high salaries in Silicon Valley are somehow going to fix inequality nationwide. There is some spillover but it only goes so far.
There's a large amount of people in other cities willing to move to San Francisco if the wage is higher than their current wage + moving and cost of living differences. That drives wages up in those cities by either paying more to keep employees or now needing to compete for a smaller pool of employees. The same pull on employees pulls people out of other industries into tech as well which should drive up wages.
The wages elsewhere aren't going to go up as high but it should have some upward drag
The history of the ford plant and the $5 a day wage was a seminal moment in the growth of the Industrial Age and the middle class, in general, worldwide (or at least in the western world). There are hundreds of sources, you should be able to find some good ones without too much trouble
Ford was paying above-par wages to have a more-stable workforce, because his production line was more sensitive to bad/absent workers than the typical factory of his time.
It also came with a fair dose of patronage, like inspections of workers houses to make sure they weren't drinking, and were teaching their kids english.
Maybe not 'fix inequality nationwide', but it seems reasonable that high salaries in Silicon Valley have driven salaries up in the industry across the country.
The economy is a sort of perpetual motion machine / ponzi scheme. It's based on some common hallucination that the things we buy matter, and it's all backed up by money we loan each other.
The moment we stop investing, borrowing and loaning, it will all come tumbling down. This is sort of what caused the panic of 2008 and why the governments had to step in with QE.
Without population growth, big parts of many national economies become unsustainable. They're like MLM, Ponzi Schemes, or other pyramid schemes in this way.
If every business in an ecosystem takes that kind of stance it becomes true.
As in if the whole ecosystem pays an significantly proportional wage result is an economy that outgrows costs because fact people's work create more and more value is generated.
And also it's good showmanship. I bet at the time word of mouth was even more significant sales route. And you have literally a factory full of people. Now tell me if you know a guy working on it will you not ask him? So keeping him happy meant a customer who doubled as promoter. In my mind Ford just cut some marketing branch and rerouted the workload to factory workers and payed for it.
It does not mean it BS if it can drive sales. The two don't have to be mutuality exclusive. I wish more people would not forget it
> Sales to your own employees are only going to be a trivial amount of revenue for any reasonable business.
So true. But I wonder if locking in a steady “home base” to the overall market of price-conscious general consumers makes it worthwhile strategically.
Selling to employees isn’t sustainable long-term, but as a strategy for bootstrapping/sustaining word-of-mouth among your customers it might be very smart.
In reality it shows that Ford understood that all of us are in this together (“The owner, the employees, and the buying public are all one and the same”) – and we take it that Ford was not only referring to his own employees but to all employees. So if you want the public to be able to by your goods then we ought to recognise that the public must be able to afford those goods. By extension, even though a capitalist might want to increase profits by keeping wages low he must realise that he decreases the market for his own goods – if enough owners think this way – (“and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers”). To sum it up, (“One’s own employees ought to be one’s own best customers.”) doesn't mean that every single one of your employees will buy your product – rather it's an aspirational statement encouraging all owners to pay their employees a living wage and not to myopically fixate on margins and the bottom line.
It would be showmanship if Ford said this and then turned around and paid his employees crap and worked them to the bone, but
“In 1914, Henry Ford made a big announcement that shocked the country. It caused the financial editor at The New York Times to stagger into the newsroom and ask his staff in a stunned whisper, “He’s crazy, isn’t he? Don’t you think he’s crazy?”
That morning, Ford would begin paying his employees $5.00 a day, over twice the average wage for automakers in 1914.
In addition, he was reducing the work day from 9 hours to 8 hours, a significant drop from the 60-hour work week that was the standard in American manufacturing.”
You're the uncharitable one. You're either a sink-or-swim type or dead cynical because I can't believe you're not intelligent enough to be able to take what Ford said at face value.
I watched a video today about a young American describing his visit (for a sprained foot) to a clinic in the Netherlands and an emergency room in Germany. He recounted his visits because he was so shocked that at how little he had to pay for an X-ray and meds and how little time he waited to get a referral and how little time he spent in the hospital. I honestly think that there's something deeply damaged at the heart of the American psyche. You've no sense that you are “are all one and the same” to use Ford's words. You can't see why collectively paying taxes for healthcare (everyone's family has an illness at some point in time) and collectively bargaining for cheaper medicines from manufacturers might be overall a good thing. You can't see why paying regular folks a living wage benefits all of society, even those who have to do the paying. No man is an island, we're all in the same boat. But hey, I'm all right Jack, I've got mine huh? There's only so much inequity and hardship people will take before something breaks – history shows us this time and time again.
<< I honestly think that there's something deeply damaged at the heart of the American psyche. You've no sense that you are “are all one and the same” to use Ford's words. You can't see why collectively paying taxes for healthcare (everyone's family has an illness at some point in time) and collectively bargaining for cheaper medicines from manufacturers might be overall a good thing.
More than half of Americans support single-payer. Some estimates are as high as 70%.
70% ? If that's true then that's fantastic but also very worrying.
This shows that whereas the majority of the nation support some form of single-payer option the government (no matter who is in charge) resists it. This means that the government works for the few, not the many. This implies an oligarchy which turns out to be verifiable[0]. Out of interest I looked up all the countries that have neither free nor universal healthcare[1] and cross-ranked them according to their human development index[2]. The list is quite small. What we see is that the US is the only country with a _supposedly_ very high human development index (and the only one in the top 70 of countries) that has a healthcare system that is neither free nor fair. 8 out of the 10 least developed countries in the world are on this list. How Americans are not figuratively up in arms over this is beyond me. I think it is fair to say that the US political system is broken in a very real sense. This is worrying because traditionally only catastrophe curbs inequality this bad[3] and I'm not sure incrementalism works in a broken system. Oh well, time will tell.
Country Free? All? Level Rank
United States No No V 13
Saint Kitts and Nevis No No H 72
Grenada No No H 75
Lebanon No No H 80
Dominican Republic No No H 94
Jordan No No H 95
Suriname No No H 100
Dominica No No H 103
Marshall Islands No No H 106
Turkmenistan No No H 108
Indonesia No No M 116
Iraq No No M 120
Tajikistan No No M 127
Micronesia No No M 131
Kenya No No M 142
Cambodia No No M 146
Angola No No M 147
Cameroon No No M 151
Syrian Arab Republic No No L 155
Zimbabwe No No L 156
Nigeria No No L 157
Mauritania No No L 159
Senegal No No L 164
Comoros No No L 165
Sudan No No L 167
Haiti No No L 168
Afghanistan No No L 168
Gambia No No L 174
Guinea No No L 175
Guinea-Bissau No No L 177
Mozambique No No L 180
Liberia No No L 181
Mali No No L 182
Sierra Leone No No L 184
Burundi No No L 185
Chad No No L 186
South Sudan No No L 187
Niger No No L 189
Somalia No No - ---
Not because of the American psyche, because the US is better at marketing an idealized (and false) version of its culture to the world than other countries.
Nevertheless, the US is a country that considers guns an inalienable right, but not healthcare, education or a living wage. Most of the rest of the world would consider that a pathologically insane set of priorities.
A sizable portion of US culture idolizes self-reliance and independence. So, prioritizing gun ownership is consistent with that.
The other side of this ethos is looking down on those who must be given services rather than "earn" them. Similarly, a sizable segment of the population pays taxes or paid taxes during their working lives and is angry when people receive benefits that they had to pay for.
This anger is exacerbated by the preponderance of earnings cliffs, systemic fraud, and lack of oversight.
because the US is better at marketing an idealized (and false) version of its culture to the world than other countries
Of course, not. US became a top destination in a very simple fashion which doesn't involve neither culture, no marketing: your cousin/friend goes to US, and writes back that there are jobs, and food/clothing is relatively cheap, and you think "aha!", and you are the next. And at some moment the whole community comes to the same realization, and now parents prepare their kids for emigration for better life. And it works even in countries where governments are very hostile to Americans, and promote the idea that US is the capitalist hell :-)
"That morning, Ford would begin paying his employees $5.00 a day, over twice the average wage for automakers in 1914.
In addition, he was reducing the work day from 9 hours to 8 hours, a significant drop from the 60-hour work week that was the standard in American manufacturing."
For reference $5/day in 1914 is ~$15.62 an hour in 2018 dollars. The similarities likely end there. Unlike Ford, Amazon's hike is not twice the average wage of a fulfillment center employee. A manager at an employment agency recently told me that you can't hire someone for less than $15 an hour to work in a fulfillment center in Reno, NV. Reno is a major fulfillment/shipping hub in the US.
This post should have been titled "Amazon raises pay to keep up with market rates just like every other company".
I suspect other companies will have to match Amazon's wages. Walmart's employees are looking at Amazon and wondering why they don't get the same wages. This will become the de facto minimum wage at least in retail. This is good news overall.
What Amazon is doing is building a moat to protect themselves from competition.
Amazon has achieved a scale where they have driven down their cost of business per product sold as low as they can. Only other companies operating at a similar scale can compete. By increasing the cost of doing business for smaller competitors that don't have their scale, they are dramatically increasing the cost of anyone else doing what they did to get where they are.
I'm sure Jeff feels good about this more. He can be rightly proud of it. He's managed to build a business successful enough that he can afford to do it. However don't lose sight of the fact this is also a shrewd and actually pretty aggressive business move.
It's truly surprising to me how many people took this announcement at face value. I personally recognized the ruthlessness of it almost immediately. It was seared into Jeff Bezos' quote - "We're excited about this change and encourage our competitors and other large employers to join us."
> At the time, workers could count on about $2.25 per day, for which they worked nine-hour shifts. It was pretty good money in those days, but the toll was too much for many to bear. Ford's turnover rate was very high. In 1913, Ford hired more than 52,000 men to keep a workforce of only 14,000. New workers required a costly break-in period, making matters worse for the company. Also, some men simply walked away from the line to quit and look for a job elsewhere. Then the line stopped and production of cars halted. The increased cost and delayed production kept Ford from selling his cars at the low price he wanted. Drastic measures were necessary if he was to keep up this production.
His factory needed a stable workforce, more so than most at the time -- because one screw-up could stop the line. And he was willing to pay for this. Hire the most stable, least-drunk, workers around.
Of course he wasn't above some good PR, either. (And this was also the era when you could get a patent on a perpetual motion machine, right?) He'd be thrilled to see his PR quoted uncritically a century later.
This shift to more stable employment wasn't all gravy, by the way. In a factory town where the average guy keeps a job for a few months at a time, a recession means that it takes him a bit longer to find the next job... everyone's looking at the same time. But in a factory town where the average guy keeps his job for decades, layoffs are much more serious. Which is part of why the "great" depression gets this adjective in out memory, and others don't.
To add to the discussion, and your mention of boring assembly line work, a valuable quote (that occurs several hundreds of pages after the pin factory observation) from Smith's Wealth of Nations, written in 1776.
> The man whose whole life is spent in performing a few simple operations, of which the effects too are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding,or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become.
> The torpor of his mind renders him, not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgement concerning many even of the ordinary duties of private life. Of the great extensive interests of his country he is altogether incapable of judging; and unless very particular pains have been taken to render him otherwise, he is equally incapable of defending his country in war.
> The uniformity of his stationary life naturally corrupts the courage of his mind, and makes him regard with abhorrence the irregular, uncertain, and adventurous life of a soldier. It corrupts even the activity of his body, and renders him incapable of exerting his strength with vigour and perseverance, in any other employment than that to which he has been bred. His dexterity at his own particular trade seems, in this manner, to be acquired at the expense of his intellectual, social, and martial virtues. But in every improved and civilized society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless the government takes some pains to prevent it.
Vehicle production lines are now heavy users of automation, and workers skilled not only in assembly, but in process improvement, scrum, lean. Not simply being manual workers is to Amazon's benefit, as it was to Ford for he recognised the impact an individual worker had on the end-to-end production; embodied in concepts like TPS, lean, six sigma, but with long histories.
> and thus grew the middle class. The middle class is something we truly need to focus on growing again.
But that's the problem with things like this. We keep focusing on the top and the bottom but not the middle.
So we pass laws purporting to tax the rich (but really anyone with a full time job) and then the rich hire accountants and only the middle class pays. Then we clamor for a higher minimum wage, but the middle class already makes more than minimum wage, so the effect on them is to raise the prices they have to pay.
What we need isn't just to get the people at $10 to $15, it's to get the people at $20 to $35 or $50.
It would help enormously if we had walkable communities with cheap rentals where a single person could reasonably support themselves on local minimum wage. The dearth of affordable housing -- by which I mean market rate cheap rentals, not government subsidized housing -- is a huge factor here in growing a permanent underclass and undermining the growth of the middle class.
I wouldn't expect prices to rise significantly as automation kicks in. We will see a lot of competition and wage stagnation for those middle class jobs as efficiency eats away the margins they live on.
Hopefully we find a solution before the pitchforks come out.
America has always been a nation of middle class people, even back in colonial times. The exception was the southern slave economy, which didn't have much of a middle class.
it's a pretty big exception, even if the other part is true. (And thanks for acknowledging the exception up front!)
At the high points, 20% of the total U.S. population were enslaved. At that point, it's not just an exception, it's a problem with the entire premise, even if the entire rest of the population was 'middle class', which they weren't.
What allowed the U.S. economy to function with an unusually large portion of _white_ people being "middle class" (compared to Europe)... was all the African people who weren't. There's no reason to treat those 20% of people as not part of the U.S. economy, they were a _crucial_ part. If we were to look at what portion of the _entire_ population of the U.S. was "middle class", including those 20% enslaved people, for whatever definition of 'middle class', that'd be closer anyway. There's no reason to look at things without them though, as if they were just a footnote. 20% of the population!
It's 20% of the population of the entire country. It was probably much more than 20% in the South, indeed (in some states as high as _65%_ enslaved people at some times!), and less in the North. The North did originally have some enslaved people.
The severing of the economies at the outset of the Civil War, and the total destruction of the southern economy during the war, yet the continued prosperity of the northern economy shows that the northern economy was not dependent on slaves.
> The North did originally have some enslaved people.
Yes, and the ending of that did not retard the economy or reduce the middle class in any detectable way. The middle class increased throughout the 19th century.
Slavery was integral to the entire U.S. economy, but that economy was changing in the mid-19th century, and indeed it's not totally false that those economic changes were part of what led to the civil war.
// Capitalists in the North profited by investing in banks that handled the exchange of money for people, or in insurance companies that provided insurance for the owners’ investments in enslaved people. So did foreign investors in Southern securities, some of which were issued on mortgaged slaves. The hotbed of American abolitionism — New England — was also the home of America’s cotton textile industry, which grew rich on the backs of the enslaved people forced to pick cotton. The story of America’s domestic slave trade is not just a story about Richmond or New Orleans, but about America. //
"“In the decades between the American Revolution and the Civil War, slavery—as a source of the cotton that fed Rhode Island’s mills, as a source of the wealth that filled New York’s banks, as a source of the markets that inspired Massachusetts manufacturers—proved indispensable to national economic development,” Beckert and Rockman write in the introduction to the book. “… Cotton offered a reason for entrepreneurs and inventors to build manufactories in such places as Lowell, Pawtucket, and Paterson, thereby connecting New England’s Industrial Revolution to the advancing plantation frontier of the Deep South. And financing cotton growing, as well as marketing and transporting the crop, was a source of great wealth for the nation’s merchants and banks.”"
Not sure where your drawing your data from the US does have a large working class population and always has had.
Up in the hollers you can still find some very poor working class people and its noticeable that the forces recruit from these populations (this is from conversations with USAF personnel)
So the original proposition was that "America has always been a nation of middle class people, even back in colonial times."
I'm not sure exactly what they meant. i'm not sure if "middle class people" and "working class people" are the same thing. I'm not sure if a "large working class population" contradicts "a nation of middle class people."
I interpreted the original claim as suggesting that the U.S. had _more_ "middle class people" than European nations, and had much much fewer people who were not "middle class people" compared to contemporaneous European (or other) nations. I am not sure how we define "middle class" or compare the U.S. and Europe "even in colonial times". I am sure that enslaved people were not "middle class" though.
But where I found my data that at some points ("colonial times " and shortly after) up to 20% of the entire U.S. population was enslaved people (who were obviously not "middle class" and to me present some serious problems with considering the U.S. at those times "a nation of middle-class people") by googling, and finding this: https://faculty.weber.edu/kmackay/statistics_on_slavery.htm
The last line is total U.S. population. We can see that in 1750, 934,340 (white) + 236,420 (black) = 1,170,760. 236,420 / 1,170,760 == 20.1%. "colonial times". 1790, specifically breaking out free vs enslaved Black people now, also roughly 20% of the total population was enslaved people. The percentage starts to go down after that, by 1860 down to "only" 12%, which is still enough people who are clearly not middle class that I'm not sure I'd want to call it a "nation of middle-class people".
Talking about a "US economy" in the antebellum years is like talking about a "European economy" today. There were vast economic and social differences between North and South because they followed fundamentally different economic models.
It's shrinking by your definition, growing by others (the poor of today are the middle class of history if you look at poverty levels, purchasing power, or class mobility).
Further, we are in a noticeable amount of ways not a free market. If I took my car engine (the free market) to a mechanic and said "It's not working after I just made a couple of random small changes to it", the mechanic would rightfully laugh me out the door because me just meddling with a complex system, even if its only a small amount, can have disastrous side effects.
Those making $200k-$500k are the new middle class. Are you making that much but only own one house? Are your cars more than 5 years old... Ding... you're in the middle class.
$200k-$500k is a massive range, and $500k is certainly not middle class. That's above the 95th percentile even in the San Jose area[0].
Just because you have to think about money sometimes doesn't make you middle class. Your neighbors having more money than you also doesn't make you middle class.
I don't understand why frugality means you're middle class. I also don't understand how $200k-$500k, a very sizable income, even in the SF bay area, is magically the middle class now
$200-500k in the SF bay area is still considered middle class because housing prices have gotten so ridiculously high.
The 2 br, 1 bath, 800 sq foot apartment I live in 3 years ago for $900/month would probably be $2,500 in SV. Likewise, the 1850 sq ft, 3 br, 2.5 bath house I live in now that I bought for $338k in 2015 would probably have been over $1,000,000 in SV.
$200-500k in the SF bay area is still considered middle class because housing prices have gotten so ridiculously high.
No, that means the middle class can't afford to live in SF. This isn't the first time I've heard this, and I don't know why anyone might think this. As a more extreme example, "middle-class in Pebble Beach is $1MM/year or $20MM net worth". No, there is no middle-class in Pebble Beach, only rich people live there.
I know I'm moving the goalposts here, but the houses in Pebble Beach aren't exactly middle-class houses, and not because of the price. A 4-bedroom, 7-bath, 5000 sqft house just isn't a middle-class home.
It's why I try to define "middle-class" by specific behaviors and possessions, not by dollar amounts.
It's not about dollars. It's about your behaviors. Behaviors of the middle class. Middle class people typically do things like own one home, work two jobs, save for their kids' college, keep their cars for a while, etc.
I wouldn't consider working two jobs to be middle class unless you meant two people in the household working one job each, unless there are a lot of people working two jobs to maintain a middle class lifestyle.
The whole lower vs middle vs upper class split is mostly a fraud. People I've had discussions with about their class in that respect are usually trying hard to make an already meaningless definition make them look great. People who work jobs like mine are always "upper middle class" in their mind.
I wanted to back you up in that you are right that it's behavior that defines classes. But it's more the part that matters, your means of producing wealth. If your money works for you or employs others to work for you, you're investment class or capitalist class. Punching a clock, or picking up a salary check means you're working class. The third class are those who slip below maintaining employment, I call them "capitalism's reserve army" but there's probably a better term for the unemployed.
These little ego boosting distinctions people come up with "upper working class" are meaningless.
Middle class isn't working two jobs. If anything, it is a couple working one job and the partner doing their own thing: raising kids, personal project, community work.
No its social status you can be a poorly paid academic/scientist and are middle class but say a train driver on 80k a year will consider themselves working class
Side note: that’s a relative bargain compared to Manhattan.
A 700 sq ft 1 bed/1 bath can easily be $3,000/mo in a desirable neighbourhood such as the East Village. A nicer doorman condo somewhere like Flatiron or the Upper West Side can be amywhere from $10k/mo to $30k/mo for 1000-1500 sq ft (or $3m to $5m for purchase).
And here I was thinking that SF or SV was expensive...
> $200-500k in the SF bay area is still considered middle class because housing prices have gotten so ridiculously high.
$200k-$500k of probably most often part of the classical capitalist-society middle class (petit bourgeoisie) in most of the country, though in some cases it will be high income proletariat (possibly proletarian intelligentsia), but at that level you are probably either driving a substantial share of your income from labor or forgoing income worth a substantial fraction of your current income by avoiding wage labor, so probably not the classical capitalist society upper class (pure capitalists / haut bourgeoisie.)
I live in suburbs outside Portland, OR. My wife and I together make about $150k/year. We both own cars less than 3 years old. We only own 1 house, but we take a 2-week vacation a 1-week vacation every year.
Oh yeah, absolutely. I consider myself the quintessential middle class.
My point was that kidsnow said $200-500k is middle class, but it really depends on ___location. It often feels that the majority of people on Hacker News are living in a Silicon Valley bubble. They talk as if $1,000,000 for a 1500 sq ft house is normal, as if $150k is decent entry-level wage, and...you get the idea.
$200-500k is middle class for Silicon Valley, but the higher end of that range is definitely upper class where I live.
Certainly, but they'll be working in trades of a couple thousand or tens of thousands.
If you have an investment account (That isn't a 401(k), 403(b), Roth IRA etc.) with hundreds of thousands that didn't happen from a single lucky investment (Like buying Apple or Amazon 10+ years ago), then you're probably more upper class.
Myself, outside my 401(k), I don't have any investments, mainly because I'm more concerned with eliminating my debts than taking on risks beyond my retirement account. But my wife and I make "only" $150k. If we made 300k, I might have some investments.
Again, though, we need to stop focusing on specific dollar amounts, since cost of living varies so wildly around the country. Get out of the SF Bay bubble.
Why do most people react to this as this was a gift from Amazon, when in fact it was organized by workers and a demand they won?
If anything this was a concession from Amazon, because Amazon workers were supporting a bill against Amazon, which probably had more in store for the company than just a minimum wage raise.
Jeff Bezos in the announcement. “We’re excited about this change and encourage our competitors and other large employers to join us"
Is this an attempt to pressure its competition with less money in the bank to do the same, loby for a higher minimum wage and drive them out of business?
Maybe it's a reaction to the union organizing taking place a whole foods and they think this will be cheaper in the long run.
I don't buy the "automation is just around the corner so we can afford to raise wages for a smaller workforce" argument I've seen here because that remains the same even if they kept the wages at the same level.
Happy with the result but I'm curious what the motives are. Bezos wouldn't do this unless he saw a benefit for the business or his hand was being forced somehow.
He is going to lay off all of the employees through automation. You can have $150 an hour for warehouse employees as a minimum wage if there is only one of them.
Why would he bother raising wages then? No need for him to raise wages to do that. He isn't doing it for the sake of it. There is some other incentive involved. Automation happens either way and they have been gradually doing it for years without raising wages significantly.
This would be bargained between management and the union and is not automatic. Maybe it's a threat but not necessarily an issue Amazon would face even with the formation of a union if this is something Amazon really wanted to keep out of a contract.
At the end of the day both the company and the workers/union have to agree on the terms and people may not be willing to strike over this single issue if the rest of the deal was good.
There are plenty of other reasons for Amazon to want to prevent a union from forming including increased pay, benefits and time off but a union's ability to prevent automation may not be huge issue as Amazon is still growing and hiring workers faster than the jobs are being automated.
> Doesn't automation eliminate the need for negotiating with a union?
Not if the union literally forbids you from introducing automation in the first place. This is how the Transit Workers Union prevents the MTA from using technology that's been standard across the industry for decades.
An alternate strategy is to require the employer to pay the union when new technology is introduced. This drives up the cost of technology to the point where it costs more money than simply hiring the manual labor, thereby preserving the union jobs (at the cost of the taxpayers, in the case of the MTA).
> Trade unions, which have closely aligned themselves with Gov. Andrew M. Cuomo and other politicians, have secured deals requiring underground construction work to be staffed by as many as four times more laborers than elsewhere in the world, documents show.
> The critics pointed to several unusual provisions in the labor agreements. One part of Local 147’s deal entitles the union to $450,000 for each tunnel-boring machine used. That is to make up for job losses from “technological advancement,” even though the equipment has been standard for decades.
The TL;DR is that the L (and soon 7) line is automated with something called "communication-based train control". They still have an operator and conductor on every train, even though the train is perfectly capable of driving itself and making station announcements itself.
I think the MTA thought they could kill off the conductor's position when the trains were fully automated, because the operator could take on the conductor's role now that they don't have to actually operate the train. The union did not allow that.
In the end, this is not really the MTA's biggest problem. CBTC was supposed to increase capacity on the L, but it didn't in reality because the MTA doesn't own enough rolling stock to actually offer that capacity, and the terminals on the L don't allow them to turn trains quickly enough to make the signalling system the bottleneck. (The 7 will be better, though, as at least the Hudson Yards terminal has tail tracks that allow the trains to enter the terminal at full speed. The same cannot be said of 8th Ave. on the L, where trains have to crawl into the terminal because the track ends a few feet after the end of the platform.)
This is not strictly true. CBTC was put on the L first since, at the time of procurement in 2004, it was an ideal testbed as a moderate-ridership, fairly long line isolated from the rest of the system.
It was not immediately obvious that the L would become the center of gentrification in the late 2000s and 2010s; in the '70s and '80s it had such low ridership that they were proposing its closure. So they only ordered enough train cars to meet the 2004 ridership demand.
Uh, good publicity? A cheap way to wash off his name? (the attitudes I see about him in Seattle are surprising, even to me, even after being here a while). A great way to buy good publicity before steadily reducing your workforce through automation over the next decades as is surely the plan?
Bezos has shown few, if any, signs of altruism and the one instance I can think of would be roughly the monetary equivalent of me giving a homeless person a penny.
Summary: the raise in Amazon's wages isn't just something that happened. It's part of a lobbying push for a higher legal minimum wage. Amazon's outsized profits-per-employee, compared to other retailers, mean that raising the minimum wage will hammer competitors.
"Bezos wouldn't do this unless he saw a benefit for the business or his hand was being forced somehow."
I don't like this type of knee-jerk suspicion towards people running corporations. Don't forget that they have conscience too, and can make decisions for the better or for the worse. In fact, by not giving credit where credit is due, you disincentivize them from trying to do good things.
Yes, business people need to make hard decisions to stay competitive, and yes, they have an obligation to their investors to make a profit. But these investors are people as well and might be proud of owning the stock if the company makes positive decisions. Further, if there's a certain amount of leeway that is afforded a very successful company to do something like this, but still stay competitive, then capitalism doesn't force that person's hand.
I'm sure the full fallout of such a policy has been considered and it wasn't made impulsively. But immediately dismissing altruism as a partial motive is unfair and sets a bad precedent.
I don't think it's a "knee-jerk" suspicion. It's from experience and knowledge that companies don't generally behave altruistically. Amazon historically has not acted altruistically. There is a considered business reason for this and I was trying to understand it. Suggesting that they likely have a strategic reason is in no way "knee-jerk".
We've seen that its easier to act altruistically once you're a billionaire. I think there can be an element of that - but why lobby to force other companies to do the same?
If you think that conditions in your group would be substantially better off if everyone in the group did a certain thing, you're likely to both do that thing and advocate that others in your group do that thing.
Even if it is motivated by an attempt to gain competitive advantage, it's still a good thing. If the competition can't find labor at less than $15 an hour, then they'll either go out of business or start offering competitive pay. It's an example of capitalism working both for business and employees.
The monopoly exists because competition cannot begin because of minimum wage, so how is that an abuse of power? You couldn't argue that in court to regulate it.
What happens? Are you asking what the government would do if Amazon gains a monopoly and abuses that power?
If so, there are lots of possibilities, including the break of Amazon into baby-Amazons like AT&T in 1984 or Standard Oil in 1911. They could install overseers like they did when Microsoft was found guilty of abusing their monopoly. It wouldn't be an unprecedented situation.
You’re missing the point. If a monopoly is created because of government regulation and no competition can thrive because of government policy. There is no monopoly abuse. It’s just how it is because the government screwed up.
So what was different with AT&T? You couldn't just create a phone company and compete with AT&T. They had franchise agreements with cities and exclusive rights for space on telephone poles.
They were still found to be an abusive monopoly even though their monopoly was created by government regulation.
Agreed. Capitalizm works best when the incentives are not all in one direction. It appears in this case some other incentives are at play be they looking for good PR, the threat of workers organizing or government regulation. It helps when the workers have some leverage on their side.
It's like the complement of flooding the market with cheap goods. You can similarly hog up some resource that your competitors also need, driving up its price. E.g. labor. Force competitors to sell cheap, and/or pay more for inputs.
I thought it was funny that Bezos, who isn't a super frequent tweeter, responded to Bernie Sanders' congratulations to him on the same day that this was announced.
It's not just about signed laws. It's about pressure from many angles. I doubt Bezos liked Bernie's bill that was literally called Stop BEZOS. I doubt Bezos enjoys continuous media coverage saying Amazon workers need food stamps to survive. I doubt Bezos wants to be shamed in public by activists while eating out or something. All these add up.
Trump is already going after Bezos because of Washington Post and is still pushing a populist platform so there's no reason to believe that he would get in a way of a bill that targets Amazon.
And the dude who lost because of a corrupt DNC just forced the wealthiest company in the world to raise the pay of hundreds of thousands of its employees (while also incentiving Amazon to force wages up for workers at other companies) with a marketing campaign. Interesting times.
I saw it as an issue that both progressives and conservatives would eventually agree upon. Amazon is an extremely easy target to focus upon when it came to wage issues.
It doesn't really matter who owns the White House in 2020. This issue wasn't going to go away.
> No democrat is getting any substantive bill through Congress and signed into law until 2020
Not sure whether you meant 2019 or 2021, but 2020 is a fairly nonsensical date given when Congressional and Presidential terms start, unless you assume that Trump would become malleable in a lame duck session after losing reelection or something of like that not tied to term starts.
Assuming a Democratic majority in at least one House of Congress resulting from the 2018 midterm election next month, 2019 would be more likely than 2020 or 2021, because necessary funding bills are a powerful lever for substantive non-appropriations legislation.
Anecdotally, most 30 - 35 y/o and unders I know have Prime or live in a household with Prime. Mind you, not all in that demo are pro-Bernie but that target certainly skews that way.
Bernie vs Amazon? I can't imagine Bernie having a chance. Prime will trump Bernie.
Well also because they are going to automate all those warehouse jobs anyway, and brick and mortar competitors cannot automate retail workers, and this will hurt them even more in the future.
>brick and mortar competitors cannot automate retail workers
Actually, Amazon is looking to do just that with Amazon Go: smart speculation is that they plan on developing it to the point where they can license and sell it to other retailers in much the same way they did with their cloud services.
> - 25% PR - 25% free advertising for their openings (i.e., Amazon pays well) - 25% necessity (we're at full-employment) -- and 25% ROI (they've figured less turnover and better quality employees are worth the investment)
On the other hand, their stock is currently down by ~$30/share (~1.5%) following the announcement.
Despite all the bravado, Wall Street are a bunch of pussies. __Any__ change makes them nervous. They have a natural predisposition to over-react. Let's give it a couple days or a couple weeks. Once WS makes up and realizes their options are limited, that Amazon still have plenty of upside, the money will come crawling back, as its done before.
You joke but probably yes. Amazon can afford to raise wages because it's still slowly strangling old-world retail and absorbing the business they used to do. The raises don't change that.
The wage increase also means more money to spend at...wait for it...Amazon. There's just no way this #15 p/o was pulled out of thin air. They have more data than God, as well as the tools and people to analyze it.
I mean, they get such bad press for the way they treat their workers it only seems fair to laud them for this. Good move. They have more to do though.
I've went through a few articles on this but I didn't see any of them mention what Amazon's minimum actual pay was before this, just the federal minimum wage. Anybody know?
>Amazon's starting pay varies by ___location — $10 an hour at a warehouse in Austin, Texas, for example, and $13.50 an hour in Robbinsville, New Jersey. For 2017, the median Amazon employee earned just under $28,500, according to company filings.
Why are you comparing 12 weeks with the entire 2017 revenue? You'd have a better argument that this is peanuts for them if you'd make a fair and clear comparison.
> Why are you comparing 12 weeks with the entire 2017 revenue?
They aren't. They're comparing to revenue per hour. It doesn't matter what period of time you calculate revenue per hour with, you always get the same number.
Just trying to put some reasonable bounds on this estimate. I assumed 12 weeks is "the holiday shopping season" where Amazon has a lot of extra workers who would benefit. And I guessed 250k of them getting $3 raises. You could also guess at the total cost in other ways, many of which would be superior.
The overall goal of these lazy estimates is to understand how significant a cost this is for a company like Amazon. Could activists have hoped for more? Are other companies, for whom the costs would be felt quite differently, likely to offer something similar?
Think of it like this, 12 weeks of extra labour cost is offset by 17.7 revenue hours, you could also say 1 weeks extra labour cost is the equivalent of just under 1.5 revenue hours.
I'm not making the argument that this is peanuts. Maybe it is, maybe it isn't. I'm just trying to get some perspective on the scale here, relative to other things vying for the time and attention of Amazon's management.
Looking at revenue is completely meaningless. You need to look at margins to see the effect on a company. Imagine you take a loan of $1000 to buy $1000 of gizmos and then sell them to me for $1300. You don't have $1300, you have $300 after covering your overhead costs. And in the case of Amazon you have far more overhead costs than just the costs of goods. And the government also attaches significant tax increases when you pay employees more -- paying an employee $10 more is substantially more than $10 in cost to the employer.
Amazon's 2017 financials showed a final net income of $3 billion. They do reinvest aggressively in their company so a fair chunk of their costs are going to be 'voluntary', but that voluntary expenditure is the very action creating all these jobs. In any case, this is going to be a very substantial cost to them.
If you criticise the entire system, it's pretty hard to identify a point of change that people will actually rally behind.
If you specifically target a few of the more infamous culprits, by getting them to adjust you can establish a precedent and build from there. This move probably isn't going to win Bezos any new fans, but there'll probably be a reshift of focus towards some of the similarly bad employers.
One possibility: the economy has a surplus of people who are looking for unskilled warehouse jobs, so even if other places had better quality, it was difficult to switch.
I'm guessing for many people an Amazon warehouse job is stable employment near their small town that might not have many opportunities otherwise. Lots of small towns on this list and I can't imagine all of them had a booming economy before Amazon showed up. I'm not saying it's right to abuse your workers but $10/hr goes a long way in some places. It's not the same as working in a coal mine but it has some similar themes: small town, crappy job, relatively good pay.
I don't know why you're down voted. People like to shame Amazon/Walmart for their wages and working conditions, but I guarantee they're doing a lot of the exact same things as other companies who are less criticized, Target, Meijer, etc..
Like he said, Amazon has it's issues but the employees were free to quit and work at other similar positions in similar companies.
I think many of the problems of the world come from lack of perspective. If you have never seen first hand how difficult it can be to live without education, how hard it can be to get education in the first place, how could you really understand. I guess it's easy to say the poor aren't working hard, or smart enough, but how can they be expected to do so when the tools to achieve have never been presented to them.
If I cheat on my wife, can I point to somebody else who's also cheating on their wife and that exempts me from criticism? Does somebody have to be doing a completely unique bad thing in order for people to be able to criticize them?
People criticize Amazon and Walmart more than other companies because Amazon and Walmart are bigger than those other companies. That seems like an entirely fair reason for them to get more attention.
And if you cheat on your wife, it's not like she's going to divorce you that day and be married the next. Not everyone can just pickup and go to the other fulfillment warehouse next door. Amazon has their warehouses in a lot of small towns and I'm sure many of them were not doing so great before they showed up. People like having a job, they don't like having to shop around in a place where there might not be too many opportunities.
> People like having a job, they don't like having to shop around in a place where there might not be too many opportunities.
But that's the point, isn't it? They put the warehouse there because it's where the cheap labor is. If you shame them into not paying less than $15/hour then the next warehouse they open might as well be in a place where $15/hour is the prevailing wage, or it was $14.75 with low unemployment and their presence only bumps it up to $15, meanwhile everyone in the small town they originally would have built in goes to the unemployment line.
It's weird to me how we tend to talk about whether worker protections are harmful in hypothetical terms, when we can actually look at history and see that society improved as more protections for workers were implemented, and inequality has gotten worse has gotten worse as worker protections have waned. I love a good philosophical exercise as much as anyone else, but the real world has shown us the answer sheet for this question.
When times are good, people agitate for "worker protections" and get them because the economy is doing well enough to absorb the cost. Then when the economy declines, capital successfully lobbies to relax the rules to keep the country's industry competitive.
The result is that good times correlate with more labor laws, but the causation goes the other way.
The New Deal was primarily a jobs program, not a rise in worker protection, and the things that pass for worker protection are really quite anti-progressive or subtle covers for various corruption.
For example, social security pays benefits based on past income rather than a fixed or need-based payment, and the social security tax is a flat rate with an income cap, making it one of the most regressive taxes short of a poll tax. Meanwhile the amount of political corruption and mafia involvement in labor unions in the era of the Wagner Act makes it highly suspicious that their original purpose or effect was actually labor protection.
And to the extent that there were new actual labor laws, they were often largely symbolic or ineffectual. For example, the original federal minimum wage only applied to jobs in interstate commerce, which at the time actually meant interstate commerce. By contrast, many of the actually-meaningful state-level minimum wage laws were passed during the boom times in the 1920s.
Most of the meaningful labor and safety regulations we have came out of the economically prosperous period of the 1950s and 60s, e.g. that's when the federal minimum wage was extended to other workers, and then extended further in the economically prosperous period in the 1990s.
Worker protections have been going down in our longest bull run ever. Just recently the Supreme Court ruled that forced arbitration was legal and we are at some of the highest profits and productivity ever. Those protections weren't going up during the boom cycles in the 90s either.
> Worker protections have been going down in our longest bull run ever.
Affordable Care Act (and subsequent non-repeal), disclosure requirements for executive pay ratios, very long list of state-level measures (which is where most of this actually happens in general).
The current era is also a bit odd because Wall St. and a handful of megacities are booming but real wages in general haven't risen much, the rust belt is still falling apart, suffering from the opioid epidemic, etc. So it's not that surprising to see lots of new labor laws in places like California while other places are more worried about saving local businesses.
> Just recently the Supreme Court ruled that forced arbitration was legal and we are at some of the highest profits and productivity ever.
There are always counterexamples, and that one is from the courts rather than the legislature.
> Those protections weren't going up during the boom cycles in the 90s either.
Arbitrary sample of state-level changes (1990 and 1998), BLS has the whole set if you're interested:
I find your examples as arbitrary. Just look at the results. If labor rights were increasing they'd be able to pull more compensation due to a better negotiating position, but real wages are falling. Look at the right to work movement and at will employment.
Hell, I gave less than two weeks notice at my last job and was privately approaches by multiple coworkers asking me if I was worried about the company black listing me. When we have companies lay off/fire people though, no one bats an eye at them being immediately walked out the door. Stating that labor rights have been going up just seems willfully ignorant based on the actual results in the economy
> Just look at the results. If labor rights were increasing they'd be able to pull more compensation due to a better negotiating position, but real wages are falling.
That's just assuming the causation goes the other way again. If the labor rules instead are pricing smaller businesses out of the market leading to business consolidation that gives capital more power over labor, you would expect just what we see.
It also doesn't make a lot of sense to expect a lot of labor laws to increase wages regardless. If you pass a law requiring maternity/paternity leave, that benefits the employee but raises costs for the employer who has to find and pay a temporary replacement. The expected result of that is to suppress wages rather than increase them -- the money has to come from somewhere and most businesses don't have huge margins.
You can be a free-market capitalist and also realize that corporations are superorganic entities that, like their organic components, don't always make the "right" decision when faced with a choice between mutual gain and zero-sum thinking. Empirically, the argument that raising the minimum wage would close these warehouses has an extremely low prior probability. Amazon's warehouses exist where they do because Amazon's customers exist where they do.
> Empirically, the argument that raising the minimum wage would close these warehouses has an extremely low prior probability. Amazon's warehouses exist where they do because Amazon's customers exist where they do.
That determines the region, not the town. Equalize the labor cost and the optimal ___location may move significantly, e.g. to border the city from a different side. It would tend to move it from an area with low labor costs to an area with higher labor costs (and therefore cost of living) but closer proximity to customers or transport infrastructure. And making 50% more in a town with double the cost of living is no raise.
If as a society we agree that companies have a moral responsibility / obligation to pay their employees a wage that provided X, Y, Z your analogy would make a lot more sense.
I imagine one reason Amazon is getting a lot of heat is because its stock is appreciating, Bezos is by far the world's wealthiest man and it's easy to claim that he and his fellow shareholders are getting rich of the backs of the workers. Walmart has gotten a lot of criticism over the years for the same reason. The fact that both retailers have a ton of workers also means there are plenty of hard luck stories to tell. In Amazon's case I know of at least one rather interesting book (Nomadland) to come out of stories about the camper communities that spring up around Amazon fulfillment centers.
Did Amazon actually pay any worse or have worse working conditions than any other unskilled warehouse job?
I'm not sure, but I think most places are OK with bathroom breaks. I could be wrong, though.
If so, why didn't the employees change jobs?
See, this is much more difficult. If the Amazon warehouse pays more than other jobs around - even if the pay is still low - it makes it much more difficult to leave the job. You still need food and electricity and so on. The same sort of thing happens if an employer pays less, yet offers things like decent, affordable health insurance (or health insurance at all). To leave a job simply because of working conditions is a position with a bit of leeway.
If not, why is so much criticism directed at Amazon specifically, rather than at capitalism itself?
It isn't directed only at Amazon, but large employers. I'm not sure why some of the anger isn't directed elsewhere, though. I'm not sure it is fully capitalism's fault, but more of lack of laws protecting folks from capitalism alongside adequate enforcement of those laws. It is easier, however, to direct anger at the company, who can change somewhat rapidly, rather than a government that is slow to act and rarely produces quality change for all.
Any government or economic system is bad when it is able to be abused by some of the players. Lots of these things are good in theory.
It is Ok to say that unrestrained capitalism is at fault, because that has led to this. Or capitalism that hasn't adjusted for the modern standards, perhaps.
Abuse is what is happening now, and the proper solution is laws to hinder such things. If it were up to me, a lot more places would be a socialist democracy with a thriving capitalistic sector.
"I'm not sure it is fully capitalism's fault..." I agree. The problem here isn't capitalism. I also don't think it's lack of laws, it might be the opposite. People being abused by corporations who have manipulated laws in order to favor the corporations. Things such as "forced arbitration clauses", "anti-union legislation", and "non-compete clauses" are meant to strip the power away from workers. That we blame any economic system ignores the fact that humans are the root cause of any and all injustices in the systems we implement.
_People_ are responsible for implementing the system and handling all of the problems with said system. We can't get around this. All systems have pros and cons. Pointing this out is akin to saying, "Water is wet." It's how people decide deal with those cons once a system hits reality that cause injustice in the system.
Whoa! not all of them are individual people's fault. There's still problems with the system itself including tyranny of the majority, systemic bias, inflation and recession to name the first few that occur to me.
Per marxist theory (so take this how you will), modern societies can either be dictatorships of the proletariat or of the bourgeoisie. Capitalism as an economic system is inherently a dictatorship of the bourgeoisie, where laws will always be created to favor the interests of those with capital rather than workers. A market driven economy isn't inherently capitalism, as markets existed before capitalism and certainly played a factor in the central planning organizations of many socialist governments.
Any concessions to this only come from fear that the bourgeoisie would lose further power, which explains why the rich historically supported the expansion of the middle class as it created a buffer between their interests and the interests of laborers, and would explain why Jeff Bezos would support a living wage now as without it there is an increased risk of having to make further concessions down the line.
You're ignoring a major component - Warehouse jobs are likely ___location-dependent and switching incurs other, not obvious costs. Targeting all of capitalism is a good idea, but one that is pretty hard to change.
Depends how you look at it. The fulfillment centers are intentionally built out in the middle of nowhere where land and labour are both plentiful and inexpensive.
If you live in such a place and Amazon is your employer, it may well be the case that you don't have a lot of other options, especially if what you came from was being on social assistance.
So now they will have an even stronger foothold in the depressed areas that they provided people with jobs. EMTs, teachers, etc are going to start taking jobs the Amazon because it pays better.
>I'm guessing for many people an Amazon warehouse job is stable employment near their small town that might not have many opportunities otherwise.
If they do their research, they'll realize they probably won't have a job for that long [1] and it would be preferable to stay in a position (that likely pays better with your examples) that is reliable.
Land may be plentiful in the middle of nowhere but labor wouldn't be. Middle of nowhere is usually sparsely populated, that's why it's middle of nowhere.
True, but given pretty hard cap on commute speed, I don't think it changes much. It's not unheard of to commute 50 miles to work now in the Bay Area (it's basically San Jose to San Francisco), how much more you can do in the middle of nowhere - double? I don't think many people would drive 3 hours there and 3 hours back every day.
That makes a lot of sense - there aren't that many companies that "even register in comparison to Amazon". On top of that, most of the other world's-largest companies to compare against aren't as labor-dependent.
(Meijer is a regional chain. Sears is nearly out-of-business. Using them as examples would fall flat.)
I didn't realize Meijer was regional. And I thought Sears would be relevant since this is over the last five years (I guess I'm not sure how long they have been on the cusp of dying). For some reason I was struggling to come up with other chains on the spot, but obviously anyone clicking on the link is free to add their own.
My point being that Capitalism has only been a thing for less 300 years, and what we have now isn't even capitalism. It's a warped perversion of it thanks to the inflated influence of ideologues like Milton Friedman and Friedrich Hayek, and the politicians that bought into their narrow-minded dogma hook, line and sinker.
The worst damage they and their ilk did was to convince the entire political spectrum from the centre-left to the far right that there is no alternative to free market fundamentalism.
I don't have a tried and tested alternative for you, but the idea that there are no alternatives is ludicrous to me.
We just need to be actually looking for these alternatives, which the corporate world has no interest in doing and the politicians in their pockets merely continue the theatrics of fixing a system that blatantly isn't working for anyone but the amassers of capital.
And before anyone loses their shit because I'm criticising the plutocracy we have allowed to be built in our names, nor I'm not a communist; no do I wish for a communist system.
If your criticism of capitalism is that it's not pure and not perfect, it's a non-sequitur since there are no pure and perfect ideologies, not in economics and not in government.
I'm reminded of that comic with the cats on trial. Capitalism sucks in many ways, but it sucks a hell of a lot less than the alternatives we've tried. Same with democracy.
I'm not going to stop criticising something just because I don't have a tried and tested alternative ready to go. That makes no sense.
> Capitalism sucks in many ways, but it sucks a hell of a lot less than the alternatives we've tried. Same with democracy.
And that's fine, but I'm not so narrow-minded as to accept that there are no alternatives. History is replete with people patching up broken systems in futility; all because they could see no other way than the status quo.
> they get such bad press for the way they treat their workers it only seems fair to laud them for this.
That's because they treat their workers terrible. They're a huge company with a lot of profit and how people at the bottom of the chain are treated is maddening. They're seen as an example of how not to treat workers (and for good reason).
They definitely should not be lauded for this: They did some calculations and projections which showed that raising the minimum wage brings more benefits (PR stunt, not being the target of new legislation anymore, etc) than downsides (now having to pay X more to some people).
I refuse to believe Bezos woke up this morning with a new moral sense to change the ship around.
Possibly worth observing: they bring in a ton of gross cash, but their revenue is smaller than a lot of Internet operations because their out-lay is high: physical storage, transportation, etc. are all expenses that Internet companies with similar profits don't have to shoulder.
In 2016, they made a profit of $857 million on a revenue of $30.1 billion--- i.e. profit margin of 2%, compared to Alphabet's 9.7% or Facebook's 36%(!!!). It's the number that investors care about, because it tells them how likely they are to get money back out of a business when the invest money into it. It's also a number the company cares about, because it tells them how much of a shock to their fixed costs they could stomach without suddenly finding themselves spending more than they make to keep the doors open.
Amazon's (relatively) razor-thin margins are what make the company so paranoid about costs like wages and benefits; they've seen America's history of burning hulks of older companies wrecked by making pension promises when profits were high that they couldn't honor when profits tailed off.
Imagine if you are Amazon. Do you take the extra billion dollars you earned this month and throw it into another warehouse and more growth opportunities? Or do you keep your size the same and use that money to raise wages?
It's more of question of how they are allocating funds. Either way, the "profit" stays the same.
Amazon has been focused on growth at all costs, and that meant keeping wages razor slim and reinvesting every spare penny.
The real question is: Will slowing their growth investments and paying their employees a fair wage actually help their growth in the long run?
That's the strategy that makes a company more flexible to market shocks. If your revenue is tied up in new buildings, you can react to market shock by decreasing your growth rate. If your revenue is tied up in wages, you can't react to market shock by slashing your wage budget, for (obvious) psychological reasons that half-constructed warehouses are utterly immune to. ;)
Amazon has never cared about net profit, they care about compounded growth through reinvestment of profits. It took Wall Street about 15 years to figure out they should leave Bezos alone.
That's why any company treats any of their employees well. Google isn't giving their employees all these perks out of the goodness of their heart. They give them to attract the best talent to make the most money. Amazon is doing the same thing.
that's the whole point of the job market. The dysfunction displayed by Amazon is evidence of a supply/demand imbalance in the job market for warehousing roles, because if people have an option to move to another company that does not treat them badly they generally will do. As it stands I'm guessing the ratio of Amazon applicants to positions is way too high meaning they can afford a high turnover rate and focus solely on increasing profit per head by squeezing their people for productivity and cutting costs spent on benefits. It's basically the same as those call centers that employ and mistreat students.
I worked in a call center and I used to always wonder why they'd accept such extreme turnover, given that there were a few weeks of training before they could put you on (the fact that there was a course in touch-typing as part of that training probably gives you an idea where the bar was for hiring). But I'd read some analysis that suggested that in some ways the employers running these systems found that desirable, because it was hard to unionize a workplace where people didn't stick around for a whole year on average.
You have to imagine that the quality of service people are providing isn't that high either if they're miserable. I think about peoples' quality of life in a call center whenever I'm stuck on hold with Verizon or some other faceless corporation.
People pretty regularly just told customers whatever they wanted to hear to get them off the phone. The more scrupulous among us wouldn't say anything false or break any rules but would deliberately upset customers to get them to ask for a supervisor (call length was a major metric which affected your pay substantially, so if you couldn't really do anything for them this was the best strategy).
How would that end up working? I think few people think of themselves as "call center professionals" because they end up in some other job, but maybe I'm misunderstanding your suggestion.
Typically every professions from every sectors (employees, medical, farmer, etc.) end up into a given category (social workers, railroad workers, etc.). Unions then use the memberships of all the employees across different companies and sectors as a leverage to negotiate better working conditions or retirement on behalf of their affiliates. So when/if is a strike is called for for a particular problem at company X or in sector Y they get the full force of every affiliates behind the union (edit: they can also dispatch strikers from company X at company Y ___location so workers from company Y aren't directly threatened or put into uncomfortable situations for instance, and massive street demonstration can rally many workers from many different companies/sectors).
Of course that system has been built over decades and the way it operates and negotiations are handled can vastly differ between neighboring countries (think France which is more confrontational at first and Germany where unions are more integrated into the process) (plus, unions have different political outlooks, so it's not one size fits all).
In countries with a strong social net unions use their affiliate's entrance fees to guarantee they are paid for striked days. Also some countries have laws that forbid employers to punish strikers (granted they announce in time they are going on a strike). Some sectors (medical, police, etc.) have some restrictions on that "right to strike".
That's just a really short resume, though and I don't know if such a thing could be possible in the USA.
it makes sense, because unionisation will decrease the company's competitiveness, leading to their clients shifting to another (non-unionised) call centre and everyone getting fired. Thus companies in sectors like this end up trying to squeeze every drop out of their employees before they quit, because they are expendable.
even in that case, companies are aware of the cost-increasing effect of unionisation so the action is the same, but via direct company action rather than market attrition.
As Amazon is in the retail shipping business, essentially, their market is also seasonal and accustom to hiring and firing. It's seen as a bit more of a stain on a software company's reputation to have high turnover in software engineers; much less so in warehouse workers, where the whole infrastructure is designed to staff up for the December holiday rush and then let most of those people go.
If they do, I'd imagine it would be for the things that are necessary for what they want to provide but aren't necessary for what they want to do.
They want a nice, clean work environment for their employees. So you need janitors.
Want to provide catered lunch? You need food service workers.
And the bar for "good enough" at those levels are much lower. You don't need a 5-star lunch every day. You need a decent lunch that's better than going out. And things can only get so clean.
I'm not sure but I don't see the relevance of that. I was simply pointing out that the incentives for both companies are the same, so Amazon shouldn't be bashed for this in particular.
Amazon's profit is not what I would call "a lot." As recently as 2015 they had some negative quarters. This quarter last year less than 1%. 2018 has been higher but not more than about 4%. Compare the top 20 or so corporations average profitability of about 15%, and Apple's over 20%.
> They did some calculations and projections which showed that raising the minimum wage brings more benefits (PR stunt, not being the target of new legislation anymore, etc) than downsides (now having to pay X more to some people).
This may be true, but it doesn't nullify the fact that the workers are actually receiving a benefit from this, and it's a good thing that's worth pointing out.
I have friends that work there. This was not a gift, the took benefits from the workers to pay for this raise. In fact they pulled all of the bonuses from the lower level employees as well as their share of stock in the company. This is a dog and pony show, nothing more.
- Cuts down on bad PR
- Makes employees happy (while they dont get RSUs)
- Make the employees genuinely skilled in operating semi-automation equipment
- Make competitors bleed, because either they pay $15 per hour or face the PR wrath, while trying to catch up with AMZN in terms of automation.
If you think for a moment that AMZN started replacing 90% of employees with automation, they can still afford to give $30 per hour, and get good PR, while making the competitors look bad for paying $20 per hour.
I hope this doesn't lead to a minimum wage law that requires AMZN competitors to pay $15 per hour. It'll only mean death to those competitors.
Amazon goes for the kill with it's mostly automated warehouses, cashierless and automated checkouts to make life hard for a lot of retail and warehouse competitors
Very smart. Amazon and Bezos is one of, if not the, best at reinvesting profits back into the company, mostly for research and development or new products. Increasing employees pay can also boost the machine and the product which many companies have forgotten, wage increases are pro-growth which increase consumer power.
Many Amazon employees will probably buy more from Amazon and comparatively Amazon looks good to workers/customers/competitors which may end up in higher sales, all that can be reinvested back into the product.
That isn't an Amazon specific thing though, it is an American workplace thing that is more like a dictatorship/feudal empire than anything with rights.
In the US, we live in 'freedom' but then go work on a feudal/sharecropper mini states that act like fiefdoms for corporate overlords.
Labor rights are not even along for the ride anymore, they got left at the station somewhere in the early 80s.
Look at how companies even see raising wages when they know that is a critical part of growth and as American as apple pie, however wage increases have been efficiently metric optimized and worked out of the system.
SCOTUS just recently agreed that forced arbitration is legal [1].
> In a 5 to 4 decision, the Supreme Court’s more conservative justices ruled that companies can use arbitration clauses to block employees from banding together in class action suits.
Corporate overlords, who serve the next quarter earnings only, might even get non-competes to be valid with the way things are going, not looking good for labor. Amazon employees might be able to change conditions if they were weren't locked into forced arbitration.
Raises are very American and needed in a consumer economy that requires growth and new demand, those are almost gone.
Competition is very market friendly and American, non-competes are everywhere and are the most anti-American, anti-business and anti-competitive thing that currently exist, they only favor established and large corporations over investors, entrepreneurs and small/medium companies coming up. If arbitrators are allowed to determine non-competes validity, competition, entrepreneurship and innovation is over.
I agree with all of your points. Noam Chomsky recently points out that when you walk into work in USA now, you're really walking into something akin to a communist dictatorship [1]. Private Governments.
I just don't understand this debate, and whenever I try, I'm left extremely frustrated by how little is understood outside of partisan BS. My big fear is that this view that it will have any positive impact is too optimisitic, because more money per employee X less employees is not guaranteed to be a good thing for the very people these policies aim to help.
> I don’t envy the backlash this team is going to face for daring to present results that will be seen as heresy. I know that so many people just desperately want to believe that the minimum wage is a free lunch. It’s not. These job losses will only get worse as the minimum wage climbs higher, and this team is working on linking to demographic data to examine who the losers from this policy are. I fully expect that these losses are borne most heavily by low-income and minority households.
But it gets worse. The city knew that the results of the trial were going to be bad, passed them on to what is essentially an advocacy group who ended up publishing before said study: http://www.seattleweekly.com/news/seattle-is-getting-an-obje... All of which is correct in timeline, but the specifics of which are impossible (for me) to disambiguate.
I have no idea what the correct answer is here, BTW, but it really shouldn't be hard to have data for the question "does a higher minimum wage help or hurt people? If so, which ones?"
Here are some questions no resource seems able to answer definitively:
Does a minimum wage hike:
- decrease hours worked per employee?
- Decrease total employees?
- What is the net effect of that? And to whom?
Less general, if the problem is not enough jobs, how will higher wages move the dial? If there are lots of jobs, pay still might not matter (see last point), but if it isn't the issue, how do these laws help?
Why is less minimum wage employees a good thing? If we put that figure at minimum wage +=10%, less employees in that bracket just means you don't create jobs for the poor, doesn't it? The companies named by Bernie at least try to employ uneducated/poor people. Will bills like Bernie's likely encourage more businesses to deal with the poor?
I can't imagine why any company would want to employ people who are, to be as controversial as possible, more likely to be racist, homophobic, uneducated Trump supporters. Not voters, I mean out and out supporters. Why bother, when you can have a company of woke individuals in a city with nice food and like minded liberals, who won't get you bad headlines in newspapers that parents of your kid's friends read?
Why pick on the one FAANG company that actual employs minimum wage Americans at any scale? How many minimum wage employees does Google have? Heck, lets go elsewhere, what about Goldman Sacks? Why didn't Bernie go after Goldman Sacks, and demand they increase their attempts to employ the underserved?
It is really a weird world where employing rich, privileged PhDs is a free pass, but creating any jobs for poor people is a PR disaster, and I'm not sure how it is supposed to help.
Or I could be way off base, and this is the best approach, as many companies can't/won't ever create many minimum wage jobs, so why apply a lever there at all? Could be the best chance is to make life hard for companies that do have a need for cheap labour, and negotiate for the best outcomes for their lowly paid workers, while strengthening welfare to cover the costs for a few that would miss out.
THAT is why this is infuriating - I have no idea what is right, wrong, up or down, and I really wish there was solid data either way that we could optimise for.
I suppose there has been some 'breakthrough' in their warehouse automation stack? I suppose in the rest of the USA a doubling of wages will definitely get them through an awkward longshoreman period, "well I'm being paid more unexpectedly, I suppose I can't complain about the robots". Once the robots are well established in operations, they can start to cut labor back some more.
I think there's a much more simple, and clever, explanation. We're looking in the wrong direction. Bloomberg recently ran a story [1] that Amazon is planning on opening up to 3,000 more cashierless 'grab and go' stores by 2021. They are clearly planning on trying to take over physical retail, and this is quite a nasty attack on current players such as WalMart or convenient store type locations.
These companies will not be able to compete with Amazon's cashierless stores. And they absolutely will not be able to compete with them at $15/hour minimum labor costs. This will require these companies to start transitioning to automated systems. But this would be a PR disaster -- firing huge numbers of people earning a hair above minimum wage to replace them with machines? Yeah that'll go over well. By contrast since Amazon is coming in with [relatively] near 0 employees from the get go, they won't face such issues. And an even better side effect here is that this would have a double feedback mechanism. Amazon improves their image of working to do more for their employees at the same time that their competitors are ruining theirs, just to be able to compete!
They just fired a huge salvo towards physical retail outlets. If Amazon does manage to successfully lobby (or create sufficient public pressure) to enact a $15 minimum wage, Amazon could practically won the physical retail game before they even meaningfully enter it.
Good point, I think its a definitely a multi-pronged approach, their labor right now is limited to factory workers and whole-foods right now. My view of whole-foods is that they may already be paying at or above $15/hr wages, so that leaves factory workers, who are being used mostly for sorting goods from large bins into smaller bins.
Amazon fulfillment centers are right now using warehouse robots to retrieve large bins from really really tall 'shelves' because that is a solved problem for Amazon. The sorting into the smaller bins is left to humans because they are faster and more accurate at the moment for awkwardly shaped items.
What is the state of computer-vision, part-identification, and compliant-actuator pick-place robots inside Amazon? Have they released any whitepapers or research papers on robotics of note recently, acquired any interesting automation companies recently?
Have you tried one of the grab and go stores? Took us an hour to get our receipt (presumably after human validation, who probably got tired of my tendency to pull drinks from a few spots back on the shelf).
You're probably right about the strategy, but it feels like there's a good bit of work to be done before they are ready for broader deployment (and even then are likely to be the small convenience style stores). Not sure it really matters if it's +/- a couple of years, doesn't seem like anyone else is thinking this way.
Surely the simpler explanation is stronger, that they are reacting to pressure. Bezos even alluded to that in the press release: "we listened to our critics".
I would still support Bernie's bill. Walmart pays the least of any major retailer. The market power they push onto communities undermines much of the social fabric of America. Small retailers really can't compete with Walmart and a lot of small business owners would feel guilty asking their employees to go on welfare.
Charging Walmart for employees who apply to welfare would likely lead to pay increases and more small business competition.
Walmart struggles to retain people so I honestly doubt they would fire them for going on welfare they would be billed for (regardless if it legal or not).
Individual companies raising their minimum wage is perfectly reasonable. They know what their bottom line can handle, and any consequences are fairly limited to the company itself and its competitors, for good or ill.
An entire national economy raising a minimum wage is pulling yourself into the air by tugging on your bootstraps - futile, and likely to make you keel over instead. There's no alternatives if it fails or has catastrophic effects.
Much like software, businesses work best when there aren't single points of failure - damage is limited when things go wrong. Individual companies can experiment and make decisions that would be dangerous for an entire economy, with nowhere near the same level of risk for anyone except the people at the top.
> An entire national economy raising a minimum wage is pulling yourself into the air by tugging on your bootstraps - futile, and likely to make you keel over instead.
There was a time not very long ago when (inflation adjusted) minimum wage was much higher than it is today. The economy did not "keel over."
It has been pretty plain to see that relying on individual companies to raise minimum wages has failed and that companies see no need to increase wages from their myopic perspective.
A country knows what their bottom line can make good decisions as well.
They employ economists and other experts who can assess the effects of raising a minimum wage in a way that an individual company cannot assess.
Countries can also experiment and make decisions on available data and have controls like inflation and other macroeconomic levers to adjust wage levels to prevailing economic conditions.
I think shutting off an entire sector of economics and leaving it purely to the 'free' market is a dangerous suggestion
This is a case of seeing what they want to see, though: they'll listen to economists who tell them what they want to hear, i.e. that more government power will be helpful, and ignore the vast number of economists that take a more durable analysis.
Also, I'm not sure if you're reading the same article as I am; this is a private company raising its own minimum wage, from its own myopic perspective.
Wasn't that the bill the encouraged employers to only hire people without dependents, because more dependents = more benefits, which the bill does not adjust for at all?
> Wasn't that the bill the encouraged employers to only hire people without dependents, because more dependents = more benefits, which the bill does not adjust for at all?
Employers already have incentive to not hire people with dependents. The media criticizes tech companies for having a young male workforce all the time for this. They feel hungry young men without social attachment will work harder and longer for them and keep their health care costs low.
If an employer feels incentive to discriminate in favor of those without dependents because of this law, they likely already were.
Also this bill only applied to large employers, those with severe market power over labor and markets that really can afford to pay more and are in the best position to exploit welfare benefits.
So since they already have incentive to not hire people with dependents you ... want to make it worse??
Am I missing something?
> If an employer feels incentive to discriminate in favor of those without dependents because of this law, they likely already were.
Except now the inventive is MUCH greater. Before it was some nebulous "they'll work harder", but with this bill it's cold hard cash, and potentially a lot of it.
> Also this bill only applied to large employers, those with severe market power over labor and markets that really can afford to pay more
That doesn't make it better, that makes it worse. That means that the largest portion of the labor force is now closed to people with a lot of kids.
> and are in the best position to exploit welfare benefits.
Meaning they are able to lobby lawmakers to reduce benefits, so that their taxes from this bill go down?
I have a feeling you don't understand just how bad this bill is.
Amazon acquired Kiva systems in 2012, now has over 15000 robots in its warehouses. these robot don’t need lighting or air conditioning, no unions , no overtime. Higher salary means quicker ROI. Smart Move.
Amazon Rising minimum wages is a “amazing” choice. it’s competitors who use more employees in their store will go out of business soon.
Also will be impacted are fast food restaurants chains and coffee and beverage retailers, who are barely surviving in current market.
>these robot don’t need lighting or air conditioning, no unions , no overtime.
That's not entirely correct. They need air conditioning because the bins they carry around need to be climate controlled. And they need humans to pick things up from the floors when they fall out of the bins and sometimes drag the Kivas away manually when they malfunction.
Automation is at the point now where it can put a lot of people out of work but it also creates its own class of expensive problems that still need human intervention.
One major function of minimum wages is to offset the fact that union wages keep ratcheting up and in rust belt areas the minimum wage people could not afford the new items made by union people, like cars - so that is why they buy used cars - if any.
In a sense there is a need for a maximum wage as well, to limit this factor.
This reduced spread between high and low wages is why Germany does so well - in effect the country becomes a large efficient factory. Which is why unions have a management role, board seats etc, so they know when an excess wage is bad for the company and for the country as a whole. Japanese and Korean unions do this as well, but in general do not have board seats. The USA lacks in this respect, so we have a lot of poor at work without enough money to buy much stuff - and selling stuff builds the economy.
I was driving past In-N-Out burger yesterday and they offer $16 an hour to start and then goes up to $18 an hour. No wonder the employees there are usually happy.
People often complain about power concentrating in a few companies, but an interesting side effect of that is that it should, in theory, increase the bargaining power of labor. It's a lot easier to unionize a handful of huge companies than it is to unionize a whole bunch of smaller companies. This move by Amazon is probably a reflection of that.
Amazon says no more RSUs in exchange for $15 min wage, can anyone say how much the RSUs were for those employees? I’m curious as to what the difference is?
In another change, Amazon will phase out its Restricted Stock Unit program for order fulfillment and customer service employees who are paid hourly. Those workers currently receive shares of stock if they meet certain conditions. But the company says the employees have said "they prefer the predictability and immediacy of cash to RSUs."
For those hourly workers, Amazon plans to replace its RSU grant program with a direct stock purchase plan by the end of 2019. The net effect, the company says, will mean "significantly more total compensation" for the workers.
"New Amazon Tier One employees receive a small number of restricted stock units (RSUs) within the first month of hire. These shares are set to vest after two years of continuous service. For every year of continuous service, an employee receives another small number of shares of restricted stock, always vesting two years of service later. For example, I received four shares on 8/27/14 set to vest on 8/31/16. I received four more shares on 4/2/15 set to vest on 7/1/17. I received three shares on 4/7/16 set to vest on 6/16/18."
> Is anything changing with Amazon’s RSU program?
> Yes, we’ve heard from our hourly fulfillment and customer service employees that they prefer the predictability and immediacy of cash to RSUs. We will be phasing out the RSU grant program for stock which would vest in 2020 and 2021 for this group of employees, replacing it with a direct stock purchase plan before the end of 2019. The net effect of this change and the new higher cash compensation is significantly more total compensation for employees, without any vesting requirements, and with more predictability.
note,
> significantly more total compensation for employees
but is that at current AMZN prices or projected prices?
Take a look at the chart for AMZN zoomed way out. All I see with this is they want to hold back those high-growth RSUs and they're paying out in cash to distract people from looking into whether this is actually a good deal, long-term.
>All I see with this is they want to hold back those high-growth RSUs and they're paying out in cash to distract people from looking into whether this is actually a good deal, long-term.
Most of the questions at the all-hands meeting held at my FC today were about stocks, so if they wanted to distract anyone, it didn't work.
It seems like a definite good deal for part timers and full timers who don't stay two years. For everyone else, I mean, working at a fulfillment center shouldn't be part of a long term AMZN investment strategy. Full timers already get their 401K, and the extra income seems more useful than a couple of shares years down the road.
This was a tactical move, i suspect. Restless employees at Wal-Mart type stores can generally get on with another nickel on their paycheck and an angry-dome presentation on how unions will destroy the world. Not so here.
When your employees are filing for food stamps and urinating in plastic bottles, things are only a few war-boys away from Mad Max. No amount of safety meeting shilling is going to convince these people...many of whom source Amazon as the only major employer in the region...that a union is bad. Amazon likely raised wages to prevent the larger thread: mass unionization across its warehouses that could spread to managers, programmers, SRE teams, etc..
Let’s say $11 was the previous avg wage for let’s say 300k employees (250k full and 100k part time avg). $4 increase is $8000 more a year. That’s $2.4B yearly transfer to workers which is honestly really really amazing, props to Bezos.
$8000 means 15.3% in payroll taxes so this wage increase will result in $367.2M in additional payroll taxes.
12% federal income tax as well for that $8000 is $288M per year.
So amazon is paying $655M more in taxes with a stroke of a pen and raising wages by $2.4B for those who make near minimum wage. In terms of taxes, this is equivalent to the US adding 48,000 high paying 50k a year jobs to the economy.
Who says Amazon doesn’t pay taxes? It’s much better for the economy if companies higher more people than higher fewer and pay the equivalent in taxes.
Can we do away with this now please. Amazon paying the taxes it can't avoid doesn't act as an excuse for avoiding the taxes that they do avoid. In fact, excusing Amazon's tax avoidance with the income tax it's employees pay is even worse. It's still a problem. We still need to tackle it, and if this pay rise acts to dissuade people from real tax reform and real workers rights then forget the 2.4B this move is probably profitable for Amazon.
>Can we do away with this now please. Amazon paying the taxes it can't avoid doesn't act as an excuse for avoiding the taxes that they do avoid.
Can we do away with the notion that companies shouldn't pay the amount of taxes required by the law? What should Bezos tell the accountants? Pay 15% above whatever the required amount is? 20%?
Jeff Bezos paying sales tax on his morning coffee is enough for the people looking for an extra dopamine hit by rah rahing Amazon. $15/hour still isn’t enough to live on in many cities and large scale tax evasion by corporations is one of the single most insidious epidemics in our society today.
You need to look up the difference between tax evasion and tax avoidance. If Amazon was evading taxes and there was any evidence of it, they would be hit hard by the IRS.
Why not specifically enumerate the taxes that Amazon is avoiding? Sales tax is the only one I'm aware of, and that seems to be dramatically lessened nowadays as they build out more warehouses for faster shipping.
> Amazon paying the taxes it can't avoid doesn't act as an excuse for avoiding the taxes that they do avoid.
Blaming companies for doing something the law allows them to do is ridiculous. If you don't think they should be allowed to do that, why do you have a law that allows them to? Fix the law, e.g. by replacing corporate income tax with VAT, so they can't avoid it, and then they won't.
That's a toxic behavior not just in part of the amazon but as whole on the part of big businesses. And yes it's legal so we can't fault them except for sure collectively they lobby and influence the law making to make sure these loophole remains.
A lot of the laws are bought and sold for. That's not just true for US but for most of the world I think.
I like the idea of roughing out the overall cost, but lets see if we can get the numbers a bit more precise. Looking up pay rates on Indeed, here's what Amazon currently is offering:
Florence KY, warehouse fulfillment associate: $12.80/hour
Las Vegas NV, $12+/hour; Ashland VA: $12.50; Florida: $11.30 estimate; Joliet IL: $13.10; Irvine CA: $13.35; Lancaster NY: $12.25; Wilmer TX: $12.85
Let's call it $12.50 for average starting pay across the United States. That would be $5,000 more/worker, or a $1.5 billion yearly transfer. Still a big number, but not quite as big.
Also, experienced workers likely are making a little more. Let's assume that half the workforce is new or high turnover that's still very close to starting pay. And let's assume that the other half is getting paid $1/hour more on the basis of seniority or slight bumps up in job descriptions/responsibilities, etc. In that case, the average yearly pay increase drops to $4,000, or a $1.2 billion total.
It's still a big number, but not quite as dramatic as the first pass might suggest.
The press release says it includes seasonal and temp workers, so the answer is surely yes. Besides, imagine if the answer were no. That would be easy to report on and then this big PR story would turn into a disaster.
Edit: Looks like the press release has been updated to make this explicit: Amazon today announced it is increasing its minimum wage to $15 for all full-time, part-time, temporary (including those hired by agencies), and seasonal employees across the U.S.
That was the first thing I thought of too. It's such an obvious question to ask, too, given that many (most?) of Amazon warehouse employees are contracted out.
I think we're seeing an Amazon press release regurgitated as news on a wire service, no independent reporting involved.
No. The majority of "contractors" in America are really just employees of subcontracting firms who have way fewer rights, don't get benefits, and have to pay applicable employment taxes themselves instead of the company taking care of it.
Employer pays subcontracting company $30-$35/hr, subcontracting company pays the employee $15/hr or lower and pockets the rest. Subcontracting company offers benefits at almost 1/2 of your paycheck every month, and nothing else. Subcontracting company offers you nothing of benefit except for the job you could've gotten without them if the parent employer posted the jobs but they don't because then it would be FTE. Parent employer only provides the job openings to the subcontractor. This is all done so the parent employer can avoid paying any benefits.
It should be illegal in my opinion. A lot of lower level tech jobs and now even software development are going this direction. It's very big in Seattle and in my field it's impossible to move jobs unless you're willing to drop your salary $40k/year and wait for a potential FTE opening in which that company will hire you FTE, but you don't know how long you'll be making minimum wage.
In modern America, many "contractors" are just regular employees in every respect except that they're employed and contracted out by a third party, so they don't get the same privileges, protections, and benefits as "real" employees.
A lot of companies (Lexmark is one I know for sure) like to trot out press pieces on how well they treat their employees, leaving out the fact that maybe 80% of the people working for them are not technically "employees."
My company does this to an extent, but they claim it's to avoid trouble with "co-employment". As it was told to me when I was myself a contractor (that is a regular employee of another firm who hired me to work on-site at the company of which I'm now an employee), they have to withhold certain benefits because if they treat me like an employee, I could sue to get them listed as a co-employer, making me eligible retro-actively for benefits the regular employees received during my time there.
I've never quite understood the system, to be honest. My company pays a contract company for my time. The amount they pay for my service is much more than the cost of hiring me as an employee, because they have to pay my portion of my managers' time along with enough to cover my benefits and some profit for the contract company. The company could have just hired me directly for some portion of the cost. The only downsides I see are that they can tout they didn't fire any employees when things get tight and they slash the number of contractors.
Anyone complaining that this will increase inflation or reduce their “advantage” (bastards), do bear in mind that this means several thousands will get off food stamps and thus reduce the burden on tax funded budgets. So there’s that
I think this is a big step in the right direction. It'll help keep workers happy and reduce stress. It doesn't solve all of Amazon's problems, but it's an easy fix to something they often receive criticism about.
This is a direct assault on Walmart by getting the government to raise wages, which are not viable for retail heavy jobs that cannot be automated or streamlined like warehouses.
It's good PR in the face of their recent news, and will definitely help people in the short-term, but it's also a very shrewd business move and may lead to externalities that cause more damage in the long-term.
The article states the minimum will apply to seasonal and part time employees - but AFAIK Amazon employs a lot of people on so called 1099 contracts - the nyt coverage seems to imply those will be unaffected:
"A global employment agency called Randstad, which had handled the recruitment process for Amazon, was also to arrange his shifts, manage him on the warehouse floor and pay him his near-minimum wage. After three months, if he had performed well, he could apply to be an Amazon employee, though there was no guarantee he would succeed."
Still, I seem to recall reading about extensive use of similar contracts at Amazon, more recently too.
Bezos was getting squeezed on both sides. Trump hates him and Bernie hates him. That's got to be unique in the annals of robber barronism. Today's announcement gives him an escape hatch from being a political lightning rod. He's no Elon.
I am amazed the commentary across the web is about Amazon's reasoning and almost no coverage of the patient organizing done by the SEIU and countless others to make $15 the minimum wage.
Then again, that silence is arguably a good thing, for it hides the fact that socialist ideas are increasingly mainstream in the heart of capital :)
I wonder what the actual cost to them was since a change in rate is only a hypothetical to some extent. You have to multiply the delta rate by the number of applicable individuals. What's the `n` for the number of employees who actually worked minimum wage for Amazon? Is it a vast amount of people?
A quick search shows the average salary was $13/hr according to Glassdoor, with a range of $10/hr-$19/hr. That makes this on average a 15% pay raise, which isn’t something to scoff at, but isn’t as crazy as the pay raise of 7.50 - 15.00.
Amazon should be commended for making a move in the right direction.
I personally think people should be paid more. $15 * 40 * 52 comes out to $31,200. Before payroll and income taxes. That's barely enough to survive in a small city like Flint, MI (I live in a suburb of Flint), let alone somewhere like NYC, Seattle, or SF.
This is minimum. It should apply to people with no experience, in training, or living in the middle of no where. There is no reason to live in an expensive city if you can make the exact same amount of money in a cheap city.
Waiting tables is a hard job, and not everyone can do it well. It's physically and mentally taxing, and to make money at it you have to be charming which is harder to train than, say, packing boxes in a warehouse.
Good-paying waiter jobs tend to be in high-cost cities, so you'll spend more money on housing, transit, and food than a worker in a suburban warehouse. Waiters are also harder to substitute for - due to the small scale and personal nature of restaurant service, it's unlikely a restaurant could drastically improve waiter productivity without impacting the customer experience.
Also, to your point in comparing the hourly rate: warehouse and office jobs offer a different type of financial value to workers - relatively predictable schedules. If you're a student, working a few evenings a week and raking in tips is great. If you're trying to support a family, getting consistent full time hours may be more appealing than a higher hourly wage with lower/less consistent hours.
I appreciate your evaluation of waiting tables as being a job that involves physical work (hot plates, standing, walking, carrying) and artful work (verbal skills, kindness, presentation etc).
Maybe not everyone can do it, but once I got laid off from my 4th or 5th IT sales job in 6 years, I said to myself, "self, it's time to find something more stable".
The very first people to offer me a shot were a very busy italian restaurant, and everything is going amazingly well considering when I started, I didn't know how to make an espresso or hold 3 plates!
Still, it is really shocking to me that so many of my colleagues are in the same boat: Reputable college degree, no stable office job.
Our customers are all mostly old/retired couples. We appreciate their patronage heavily, but we greatly wonder why their money is being spent on food and entertainment rather than high tech skills.
This forces us to specialize in skills that will never deliver a 10x leap in innovation. The market for food service is saturated and we will never make enough to jump to the upper class.
>This forces us to specialize in skills that will never deliver a 10x leap in innovation. The market for food service is saturated and we will never make enough to jump to the upper class.
That's the flipside of it being more stable. To make a jump, you need something that's higher variance, which IT sales certainly is.
One other valuable thing about office jobs is that they're usually a stepping stone to other higher paying office jobs, whereas as a waiter there's not really any position to move up to.
I love to see companies freely choosing to pay their workers more. I oppose any such government regulation however because of macroeconomics. Sad to see they're going to spend as bunch of money on Congress lobbying now.
Well the smart money sees massive inflation ahead. Combine a enormous deficit, a very tight labour market, rising tarrifs, and now large pay rises for workers, and we are in for a time of high inflation.
You don’t see inflation coming? Even if Amazon plans to invest in robots the knock on effect up the wage ladder will still have a massive effect. You can’t just raise the minimum wage to $15 and leave the people previously on $15 on the same hourly rate.
Have there been any studies around the length of time increasing wages is actually beneficial for? I assume we’ve been here before and companies eventually increase prices or inflation kicks?
It depends really. It could cause an inflation in prices but not necessarily. It could come out of the profits a company makes as they try and compete by keeping their prices lower while still paying higher wages. This would have an effect on the share price of the company as their bottom line would decrease but could also increase share price if they make it up in volume due to being more competitive. It could also create efficiency in the company since they would incentivized to have fewer employees making more money while producing more efficiently.
Perhaps they raised minimum wages with the future goal to lay off staff that can be "robotized". After that the remaining workers would certainly have a HIGHER WORKLOAD of dealing with the robots and would most likely not be willing to work for less than $15/h. This can also can earn amazon a good guy reputation so that their future move can be justified. I hope i'm wrong but my instinct tells me that Amazon will not loose a cent on this move.
So now that Amazon's worst employee gets $15 per hour, what happens to the salary of a more-skilled, more-motivated employee who busted their ass to get their salary up to $18 per hour when the minimum was under $8? Does it stay the same or increase proportionally?
What happens to the prices at amazon.com? With a 3.8% profit margin, can they really eat this cost without consumers noticing, and if so, will they elect to?
Past economic studies have shown that by increasing the workers' wages, the company can also increase their own revenue and earnings, especially if the company is a sort of baseline goods provider like Amazon is.
I'm a front line warehouse associate that has been working in one of their facilities for over 3 years. There are parts to this puzzle that the media isn't focusing on and some insights I'd like to offer on their general pay philosophies. I'm not very smart but perhaps I at least have interesting perspective to offer.
As far as the HN crowd is concerned I’m so capitalist/conservative that people would probably call me alt-right, though I’m not.
That said, I think this is incredible and I don’t understand the (non sequitur) arguments that $15/hr AS A FEDERAL MINIMUM WAGE would hurt businesses. As a capitalist the higher base wages are the less worried I have to be about a socialist uprising of legitimately poor oppressed people abused by a plutocracy. Besides, do we want to live in a nation where someone who works hard is still way below the poverty line? If businesses can’t compete at $15/hr wages perhaps that’s a sign they should have used automation a long time ago.
I agree with their assertion that hourly employees "prefer the predictability and immediacy of cash to RSUs."
$15/hr still isn't much. $30K year. Sure, it would be nice to get a fat payday down the road. People living on low wages have much more immediate needs.
Why wait for a (maybe) payout, if you can't feed your kids today?
$15/hour isn't much but it's fantastic for entry level pay. That's the minimum. Most people will be getting paid more.
And, yes, of course money today is better than maybe money tomorrow. For example, higher pay today could allow someone replace a car that keeps breaking down on them. That reliability and cost savings of not having to pay for repairs can be worth more than stocks in the future.
Honest question, do those raises amount to anything? Or is it akin to the $0.25/hr that many retail employees see that doesn't even provide them with the equivalent of an additional paycheck over the course of a year?
Another article mentions all employees will get a raise based on a curve related to the minimum increase. However, it's not clear just how that curve will look.
This raise is a good move, so I'll give them the benefit of the doubt that it won't be a superficial raise until the actual numbers come in.
What was the effective hourly wage before with the RSUs factored in? Did they have a 1-year vesting period? There's so many details missing from this story that it's hard to assess the real impact of the $15/hr wage.
Much rather have companies adopt progressive policy then lobby for competitors to have to adopt it vs. lobbying to resist progressive policy.
Plus, they get the PR bonus, they will siphon off the best workers until it’s mandated everywhere, and when it is, they will have benefited and then be on equal playing field.
What are the downsides? (Unless you don’t want $15/hr min wage).
>In addition, the company also pledges its public policy team will lobby for an increase to the federal minimum wage from $7.25 — it doesn’t identify a specific wage that it’s targeting, but instead says, “We believe $7.25 is too low. We would look to Congress to decide the parameters of a new, higher federal minimum wage.”
I'm going to take a wild guess and assume it will be $15/hour. That way they'll get to look progressive for adopting this wage early, while mitigating their competitive disadvantage by forcing every other company to raise their wages too eventually.
Wow, does the top comment always have to be cynical? This is exactly what everyone wanted Amazon to do. Maybe it's time to suck it up and give praise where praise is due?
There are also benefits to paying more salary than your competitors (no hiring shortages, best employees, low turnover, etc), so I'm not going to blindly accept that it's now in Amazon's interest to drag the rest of the industry along with them.
But even if I did, there's absolutely no guarantee that this kind of lobbying would ever work. And if it did, it could be decades from now, $0.50, or both. In the meantime, Amazon has already put their money where their lobby is.
You can both be right. It’s great that they made this move after much criticism, prodding and foot dragging, but... this reaction can also be calculated so that not only they have to carry this load alone but spread it to competitors.
In other words AMZN is willing to do it, but they don’t want to be the only ones “burdened” unlike Costco who did it out of concern and perhaps principle (and competitive advantage by ensuring a more stable workforce) but less as part of manoeuvering.
Exactly this, and it's probably Amazon's real motive.
They did the exact same thing with sales taxes for online purchases: When they were up-and-coming they fought it. Once they had warehouses in the states where most of their business comes from, they supported legislation to force online sales tax since they had to do it already anyway.
Like others said though, at least this move will benefit workers.
Seems like a ridiculous risk to take given it is reliant on the US government that is unequivocally pro-business right now and will be until at least 2020.
Not so sure about that. Many businesses are upset at the import tariffs complaining it will affect them. We also have many labor unions cautiously optimistic about support ftom the current admin.
Let’s also not forget that while Repubs have traditionally been pro business, Dems, since the 80s have also got cozy with business and get humongous donations from corps —something which was not the case pre 1980s.
That's true, but with regards to the minimum wage, which is the topic we are on, republicans are typically against raising it.
> Let’s also not forget that while Repubs have traditionally been pro business, Dems, since the 80s have also got cozy with business and get humongous donations from corps —something which was not the case pre 1980s.
I don't intend to engage on "x is better than y." or whataboutism comparing political parties. It is simply a valid observation that republicans are more likely to be against raising the minimum wage, so it would follow that if Amazon is only doing this in the hopes that the government will raise it anyway and other companies would have to pay more, it would be an absurd risk to take.
The government says they're pro business, but Trump himself is quite anti-Amazon (well, at least anti-Bezos, which extends itself to being somewhat anti-Amazon).
I think you are assuming there is a conflict between Amazon's business interest and the interest of employees. Higher compensation is not done out of generosity, nor should it be. If it were it would be charity.
Higher compensation is done out of the desire to attract and retain better workers.
If Amazon started paying unemployed people or giving them gift cards to buy things on Amazon, then it would be charity.
The person is just pointing out a logical big-business reason behind the decision they are making. It is pretty likely that they did it for PR, and the lobbying will help that as well, even if it doesn't work. No one has to "suck it up and give praise where praise is due".
I think we should praise this move by Amazon, but also realize they're probably the world leader in warehouse robotics. If they raise wages, and push for wage increases now, there is a short term effect of reduced profits for Amazon, but it also puts pressure on raising costs for competitors while Amazon is on a path to being much better insulated from those costs. It also gives them better community relations basis when siting or expanding locations.
Is this cynical, or good move on the part of Amazon? A little of both. It is a smart long-term profit move for Amazon. But I would also say that overall would be great to spark a trend where companies compete via both smart capital investments to raise productivity, and being willing the share the benefit of rising productivity to employees as a tool against competitors.
Perhaps they raised minimum wages with the future goal to lay off staff that can be "robotized". After that the remaining workers would certainly have a higher load of dealing with the robots and would most likely not be willing to work for less than $15/h. This can also can earn amazon a good guy reputation so that their future move can be justified. I hope i'm wrong but my instinct tells me that Amazon will not loose a cent on this move.
Future staff that can be robotized would be laid off no matter what their pay. Or maybe I should say within a wide band of salaries as I doubt that 10-12 vs 15/hr makes much of a difference on that balance. But I don't think all workers would be eliminated within a warehouse, and I can't estimate if the remaining jobs will be higher load or lower load physically.
Well in this respect: Amazon chooses to link the two discussions themselves. They could have easily made their communication less open to an easy attack by pledging $15 an hour while lobbying silently, or at least communicating that on another moment. They could have noble intentions with both moves. I'd even expect them to have noble intentions since $15 seems an unreasonable large increase from $7.25. Why link to two discussions? It's an error of their communication department IMHO. You've got to think as the receiving party. The receiving parties of both messages are separate: communicate them separately.
Wait, why is it bad that Amazon is lobbying for this? Would you say it was bad if, say, ACLU was lobbying for a $15 minimum wage?
My guess is that from Amazon's point of view, they are winning political points by not just raising their own minimum wage to $15, they are also using their standing in the industry to increase quality of life for non-Amazon minimum wage workers. If they succeed, I am happy to grant them the credit they are due.
If a big corporation doing the right thing results in more profits for them, I don't see that as grounds for criticism. Did we criticize Starbucks when they offered a competitive wage and free college education? Or any of the other companies that chose to pay above the minimum?
By lobbying for the $15 minimum wage they are working to make sure that their competitors don’t retain any competitive advantage on wages. So now the brick and mortar shop that is barely in business because of competition with Amazon is going to get hit with a big bump in wage costs. They either will raise prices, or go out of business, both scenarios benefit Amazon.
That's a nice story, but it's just that. Alternatively, all the minimum wage workers will have more expendable income. Some of that may be spent at those brick-and-mortar shops, and will offset the additional costs.
Remember that the velocity of money makes it a non-zero-sum game.
"The interconnection of price levels, central bank policy, wage agreements, and total aggregate demand creates a situation in which conclusions drawn from macroeconomic analysis are highly influenced by the underlying assumptions of the interpreter."
Also has a nice side-bar quote from Henry Ford, who was partially known for higher wages, and which I think addresses the point I was trying to make (emphasis mine):
"The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One's own employees ought to be one's own best customers."
Or they spend their extra money at Amazon because prices are lower. Or you are right and it helps brick and mortar in the handful of cities with Amazon warehouses, but hurts everywhere else.
Worst case for Amazon is they maintain status quo by forcing competitors cost up. Best case for Amazon is that they drive some of their competition out of business, or take some of that business because super giant Amazon is better able to absorb the increased wage cost than smaller businesses.
It is very much like their state sales tax collection strategy. Oppose it for as long as possible, accept it, then lobby for everyone else to have to do it.
The thing is, this is a bit circular. How can Amazon pay more than others, but it hurts them less? Because they have some kind of competitive advantage, no? That advantage is going to manifest somewhere. Saying that they are going to get a competitive advantage by raising wages, which they could only do because they had a competitive advantage... Doesn't really go anywhere. This just happens to be the chosen manifestation of their advantage, and honestly higher wages are probably one of the more socially-positive manifestations.
It's not really a story is it? Output is a function of capital, labour and productivity. Double cost of labour and those that get the most productivity out of capital gain competitiveness. Who is relatively capital intensive? Amazon. So it's a pretty factual story economics-wize.
There's no doubt labour is better of in the short run with double wages. I would not doubt the effects in the long-run but that's part belief. The market structure will change, less capital intensive firms will drop out. That might be brick and mortar stores (note: bricks are capital but bricks are not really productive in the sense meant above).
So you're saying they shouldn't lobby for an increase in the minimum wage, and that large numbers of workers' wages should languish because they work for small businesses?
I fail to see why it is bad when economic interest and public interests line up. Would you rather Google not advocate for net neutrality because it benefits them?
Precisely this. A small shop in Mobile, Alabama being forced to pay the same minimum wage as some company in Santa Clara County is ridiculous. A rented closet in the Bay Area costs more than a house payment in Mobile. Also, the tax burden on $15 in Alabama is far lower than the tax burden on someone in California.
Want to give low wage people an actual pay raise? Cut federal payroll taxes since those affect workers equally as they are percentage based.
A $10 wage in Alabama is far more valuable than a $15 wage in Sunnyvale. And conversely, a $15 minimum in Alabama would be more catastrophic to a business than the same minimum in Seattle.
Just a clarification, that "small shop" would have to have over $500,000 in sales in order to be required to abide by minimum wage laws.
"For most firms, a threshold of $500,000 in annual dollar volume of business applies to be covered (i.e., the Act does not cover enterprises with less than this amount of business)."
I'd also argue that definition of "small shop" $500k threshold should change between California and Alabama.
Not if they are competing for employees; but, yes, if the labor market for particular forms of labor is a monopsony, you are stuck with the inverse of monopsony rents.
Of course, if that's a significant general problem rather than a narrow edge case, the entire idea of market economics is a sad joke.
I'm not arguing that it's bad to lobby for a higher minimum wage. Only that to communicate both the raising of your wages and the lobbying at the same time, you mix two messages for different audiences. Hence the sour replies, that mix private actions with public beliefs of a firm.
The argument that their relative competitive positions changes by first-moving on wages seems not in doubt? Obviously when the wages double for everyone the most capital intensive gain competitive power.
My guess is because how big advantage amazon has compared to smaller companies. They have good tax cut. Taking that aside, they also applied tight working time and high kpi, which can't be applied by smaller companies. And it gets better with PR stunt like this.
And CMIIW, I think increased minimum wage will increase goods price and higher skilled worker's wage overall, making those changes useless again.
It's just my 2 cents, with source limited from following recent news.
While it would be in Amazon's interest to get the federal minimum wage increased after setting their internal minimum wage at $15/hr, why is this negative? Aligning business interests with the public good is brilliant IMO and I strongly feel a $15 minimum wage, plus regular increases, is for the public good. Kudos to Amazon for making the wage increase and aligning their business interests and lobbying efforts to a federal wage increase.
I don't understand the logic that Amazon is doing this for greed or their shareholders. Amazon is the leading company, the number one cost in a business is labor period, they don't have to be early adopters they can be last one in, their business models have nothing to do with service members interacting extensively with customers. So there is no benefit for first one in profile margin sense, they are making less money today then they were yesterday and will continue to do so, from a business standpoint they are working at a disadvantage against any competitors right now.
If they are doing it to look good that means they are doing because they value looking good in terms of ethics, if that is true then they are essentially acting in the right. They could have easily went to $9 or $10 to avoid government penalties.
Perhaps, if you'd look at it this way: Almost every article posted here speaks for the topic at hand.
Many comments provide reasonable counterviews and create a sense of insight and nuance. This creates a sense of a somewhat balanced viewpoint about the topic.
It's not that scoffers or only cynics here are upvoted.
Sadly, cynicism often does seem to be the main emotion doing the rounds.
I -for one- applaud this example of cynical enlightened self interest.
Because no matter how cynical or self interested, there's still the enlightened part. Doing the right thing for the wrong reasons is still doing the right thing, fwiw.
Amazon has been facing extreme pressure to do this (strikes, political action), they did the right thing finally, but some cynicism is warranted. We can praise AND criticize — there's nothing wrong with that.
No what we want Amazon to do is pay a fair wage. Did they offset hourly wage with some other benefit making the total benefits the same? I'd really like to know where this extra money is coming from.
If you're willing to shame a company for behavior you don't like, I think you should be prepared to give praise when they do exactly what you just asked for. When you constantly move the goal posts just so that you never have to abandon your righteous anger for even one day, what kind of incentive does that give companies to change their behavior?
Companies don't really deserve praise, practically ever because their motives are ultimately guided by profits. They only act in the interest of revenue. Sometimes those interests align with the employees, but let's not pretend this isn't self preservation on amazon's behalf.
That's silly. You could also say that humans don't really deserve praise since our motives are ultimately guided by our self interest. We only do things to make ourselves feel good, or make ourselves look better. I think that companies have many paths towards self preservation, and that choosing the paths that lead to a better world deserve praise regardless of motive.
I disagree there, because all throughout history are examples of genuine heroes who stood to benefit not at all from their actions. Vince Coleman[0] comes to mind.
Humans can be motivated by many things, profit and looking good included. I'm vaguely aware of a philosophical branch that postulates that all actions are selfish, but that ain't science and so I disagree. People will sacrifice their pyramid of needs towards s greater good, I've never heard of a company utterly scuttling profits over the greater good though.
On that note, in this case Amazon obviously is shedding profit for a greater good here, especially if they actually lobby, so in this case I believe they (particularly the people that made this decision) deserve praise.
It doesn't matter whether they're doing it for a 'greater good' or not. You should praise them anyway. They took steps to create the world that you want. It doesn't matter why they did it.
I would praise them if they simply made the change before being shown to know about large % of their staff being forced to take subsidies to be able to live in national press. I don't tend to praise minimum standards of ethical and moral behavior.
Yes. I think being one of the largest/most profitable companies in the US while paying people the minimum wage required by law -- which also happens to ensure most of those employees can't survive without government subsidies in their locals is well below the minimum standard for ethical and moral behavior.
Reverse, Do you think that a company such as amazon should be paying their fulltime and part time employee a wage that requires government subsidies (that you and I pay for) to survive while enjoying the amount of revenue and profit they are receiving?
> Reverse, Do you think that a company such as amazon should be paying their fulltime and part time employee a wage that requires government subsidies (that you and I pay for) to survive while enjoying the amount of revenue and profit they are receiving?
Yes, I do. I think most people misunderstand government subsidies when they make this argument. The idea that the company you work for is responsible for maintaining your standard of living is a weird one, that doesn't really come from any obvious moral principle. We, as a society, have decided that we don't want people to have a standard of living below a certain level. Therefore we, as a society, should provide the resources to ensure that that happens. If Amazon wants to come to those people and say "we'll give you $X/hour to do this task for us", and those people say "Yes", then I don't see any good reason for that to change the moral calculus of society at large, or for Amazon to suddenly become responsible for that person's general welfare.
It does matter. In my view: if they were "forced" by bad publicity to do a net positive thing it hardly matters at all (except for the employees in question), because the systems and structures and incentives to keep acting selfishly and greedily are still there intact. No real change was effected.
I disagree completely. They didn't have to capitulate to those forces. They chose to. If you reward them for doing so, they'll capitulate more readily in the future than if you do not. This is really simple: carrot and stick. Everyone knows this approach to literally everything works. People seem to want to discard it here because they don't want to let go of their negative emotions, because they've come to identify with a sense of moral outrage completely divorced from any objective social goals.
Likewise for the system which caused them to act in the greater good - the demands of their customers. How is that any different than when a human is "forced" to act by their sense of empathy or duty?
The three possible target audiences for saying something are yourself (i.e. getting catharsis by articulating one's beliefs), others (i.e. that there is a network effect to him convincing you and you convincing others and shifting a social consensus), or the subject of the speech (i.e. Amazon will read Hacker News and make decisions based on the extent to which the comments flatter them).
On that basis, is the implication here that hearing anonymous and vague internet praise actually tips the utility calculus of the company in some way?
Because if not it's hard to know why anyone should praise them -- as opposed to acknowledging the decision, or silently mentally updating one's assessment, or not engaging with the news at all, or criticizing them for not doing more.
> On that basis, is the implication here that hearing anonymous and vague internet praise actually tips the utility calculus of the company in some way?
In aggregate, yes. You seem to be trying to reduce this to "who cares about silly comments on the internet", but of course, that isn't the point. The point is about where our moral sentiments ought lie, collectively. And yes, the rollup of all the individuals making throwaway comments on the internet actually do synthesize much of our collective worldview. So yes, I do think that anonymous and vague internet praise actually tips the utility calculus of all companies. If you don't, then you haven't been paying much attention for the last decade.
How does motive relate to means here? I think an "ends vs means" argument would be around whether it was ok to cull half their workforce to pay for this wage increase.
Congress was looking to tax companies whose employees redeem federal benefits due to low wages. Walmart and Amazon we're the poster companies discussed in the legislation. This permanently removes that pressure and prepares Amazon for the inevitable. Get your head out of the sand, if you think this isn't a strategic play from one of the most valuable and business-savy corporate institutions on the planet you are being willfully ignorant.
> You could also say that humans don't really deserve praise since our motives are ultimately guided by our self interest
You could say that and you would be right. Why should anyone praise you if your underlying motivations are self-centered? You seem to be asserting that this is fundamental human nature, however, which is a belief which has been refuted plenty of times throughout history.
If the rules of the game are that we only act out of self-interest, then I would only praise you if it directly benefits me in some way. Is that the sort of relationship you would like to have with everyone in your own life?
If you've oversimplified psychology and behavior that much there's no point asking "why" anyone would praise anyone.
You had as an unstated axiom that self-interested action are not praiseworthy. You still have not made an argument for that, though you have pointed out that a world composed only of self-interested action would be an unpleasant one (I agree).
However, using a more realistic understanding, where actions come from a multitude of motivations, why do you consider a given action's being self-interested to exclude it from praiseworthiness?
Sorry, the post I responded to asserted that “our motives are ultimately guided by our self interest”. It seems like you are now applying my words to a different context.
It depends to what degree a person or company acted positively on its/their own. Amazon would have never done it, if it wasn't for the immense pressure. So, it is not worth much praise.
Companies don't really deserve praise, practically ever because their motives are ultimately guided by profits.
That's not actually true.. it's a caricatured straw-man argument, usually employed by people who want to attack Capitalism in the general sense.
Of course companies have to make a profit to survive; but not all companies ruthlessly optimize every single variable to squeeze out the last $0.0000001 of profit, regardless of the side effects. At the end of the day companies are made up of people, and even if big-shot CEO's tend to have more pyschopathic tendencies than average, they're still human beings. And they usually answer to boards, and are advised by other managers, who are also human beings.
Not saying all companies are noble, virtuous, and pure or anything. But hyperbole in the other direction is just as inaccurate.
That's odd. I usually see that argument employed the opposite way — to dismiss criticisms of companies by suggesting that there is no moral dimension to a corporation's actions, and thus it is unreasonable to ask a company to do anything for the good of society or criticize it for failing to do so, because a corporation's purpose is merely to seek profit.
I agree with you, though. The idea that companies have to be like zombies, mindlessly shambling toward revenue, is false. If a company acts that way, it was a choice on somebody's part, not an immutable law of nature. If somebody in charge decides they want it to act differently, they have that option too.
Don't know why you're being downvoted. Since the 70s people have been throwing around this "corporations must ruthlessly pursue profit and profit alone" idea as is it's a truism. It's not even close to true, neither as normatively or empirically.
The modern world was built by corporations. Access to clean water, cheap and healthy food, energy, infrastructure. Yes taxes fund a lot of it but it is corporations that largely do the work at least in the US. Being for-profit is a good thing on the whole because that enables the corporation to continue solving problems for more people. Obviously there is a dark side too. The pursuit of profit left uncheck leads to harming the environment, screwing people out of money, etc which is why regulators are needed.
To say corporations are all bad all the time is bullshit. Likewise to say corporations are all good all the time is also bullshit. Like everything, there are pros and cons. Overall I think our capitalist economy does more good than bad. If it didn't, none of us would be able to be having this debate because we would be too worried about the next meal.
> Access to clean water, cheap and healthy food, energy, infrastructure.
Clean water access? Paid for my government. Cheap and healthy food? Government subsidies. Energy? Government funds majority of research. Infrastructure was mostly inlaid by Government implemented New Deal/other job creation programs.
Corporations had little to no involvement in 'doing the work' here. Access to cheap/healthy food was before corporations were the majority of agriculture due to government subsidy. Energy is largely built on research which is largely funded by the government. The majority of interstate groundwork as it's been laid out today was started by the government's roadbuilding job-creation programs.
While large legal entities may have their benefits, one shouldn't subscribe undue merit to them in the pursuit of attempting to dissuade undue chagrin.
As I said, taxes, aka government subsidies, paid for or continues to pay for a lot of my examples. The railroads were all built by corporations. ExxonMobil is a corporation, Comcast is a corporation, even your local utility for water, etc is likely a corporation. Corporations do much of the work, the government just pays for it with taxes.
I meant government does not generate taxes. It's people and the companies they work for that pay the tax which government then uses. So it's disingenuous of parent to claim government alone is responsible for the good it does.
So what you're saying is, Amazon's self-interest in making tons of money for its shareholders is just as valid as its workers' self-interest in not starving to death?
FFS -- it was shaming of amazon's pay rate for their employees that caused the change in behavior in the first place.
I think it is rational to look at what and why actions were taken. Do you believe that the raise of the minimum wage at Amazon was out of good nature? Was it a decision to mitigate brand perception costs against labor costs after a bunch of national stories reported that they were paying so little in markets that their workers were forced to also take government subsidies while they have had their most profitable quarters ever? As far as the push to get the minimum wage raised -- is it not a reasonable view that it is in amazons best interest to further reduce the reoccurring labor costs effectively by ensuring their competitors are also forced to match their labor cost?
The bottom line is if Amazon (or any company for that matter) wants to treat their employees better than the minimum wage -- they were and still are able to do so. Amazon happened to be in a state where because of the publicity pressure (showing their full time employees unable to live on their wage) it was more cost effective to make a change than not.
>Do you believe that the raise of the minimum wage at Amazon was out of good nature?
Does it matter what the rationale was? I know if I was an Amazon minimum wage employee I could care less what the rationale was. I'd just be thrilled to be getting a pay raise. Where I live the minimum wage is only $11.25/hour. Getting a bump to $15 will be a big deal for those people.
If you're Amazon, yes, it matters a ridiculous amount.
The last thing you'll want is for people to realize that the union drives actually worked. That would mean more union drives and more pay rises on the horizon. Can't have that!
Count the number of mentions of the reason for their decision in their press releases:
I don't think you can necessarily say that. He did have a business justification for the decisions, but he also expressed humanitarian reasons, such as the idea that leisure time should not be a privilege afforded only to the upper class. It turned out to work out well for his company, but would the business case have been strong enough to make him take the risk if he hadn't also thought the social consequences were good? Quite possibly not.
In a 1926 interview to a magazine, World's Work, Ford said: "Leisure is an indispensable ingredient in a growing consumer market because working people need to have enough free time to find uses for consumer products, including automobiles."
He wanted people to have free time so they could appreciate the stuff they buy. Capitalism at its finest.
Yes, he said that. He also said that leisure time shouldn't be a class privilege. He said both of those things. That was the entire point of my comment — he had a business justification, but he also expressed socially minded reasons for wanting to make the change. I see no reason why you'd only pay attention to the business reason. It was similar with other decisions he made that benefited employees — for example, he paid significantly above-market rates across the board because he wanted his workers to be happy, and he justified this in the business by saying that he believed these happy workers would be more productive and would hopefully want to buy the same cars they were making.
Its also the fact that having tax payers subsidise your work force out side of the Cinderella professions (nurse doctor etc) doesn't go down well with tax payers.
Which is why a tory chancellor wanted a higher minimum wage - to cut the social security bill
Thank you for your message. This is not being cynic or critical. Real critic also praise when there is progress. In the present case this is just a hater. Hater are gonna hate, no matter what.
I feel like you're reading a different tone from that comment than I am. The GP provides, to me, a realistic prediction of what Amazon will do next. Making predictions and citing facts isn't anger. I didn't read any anger into the comment, but I get plenty from you. Corporations don't have feelings. Amazon improved their behavior because of pressure from labor, not in order to get invited to your Thanksgiving dinner this year. The raise will likely demotivate unionization efforts, and that likely factored into the decision-making process.
Corporations do not deserve praise for doing the right thing. They are not people, with feelings, who respond to emotional stimuli in the form of positive reinforcement. They are businesses that respond to the market (indeed, their legal duty is to maximize profits). In markets, negative pressure works. Asking nicely does not.
Nonsense--there is no "legal duty to maximize profits". That concept isn't really meaningful: maximize over what term? In fact Amazon is probably the number one counter-example to that idea, they've never prioritized profits and have plowed everything they can back into infrastructure. There's also no "legal duty to pay employees as little as possible", nor "legal duty to fight unionization" nor a hundred other things that some corporations do against the interests of their employees. For publicly traded companies the only recourse shareholders have is to vote out the board if they don't think things are being run correctly, but there's no law that's defining what correctly is.
Again, no, and IMO the cited case (eBay v Craigslist founders) is again more of a counter example. From the court opinion:
> Having chosen a for-profit corporate form, the craigslist directors are bound by the fiduciary duties and standards that accompany that form. Those standards include acting to promote the value of the corporation for the benefit of its stockholders.
"Value" yes, but again says nothing about "profit". The court acknowledged different stockholders can and do have different and even conflicting definitions for value, and that a contract (not a law) should be used to resolve those differences. In the end the only thing that the judge ruled against were actions specifically designed to destroy the value of the company's stock by making it harder to buy and sell. He didn't order e.g. that Craigslist raise ad prices even though it's widely believed they hold a ton of pricing power and are deliberately avoiding maximizing profit because they prioritize community.
I am not nit-picking, asking in good faith: is that enacted into a law ? Or is that part of a contract between shareholders and the board of executives ?
I have heard about that walmart competitor run like a family business and that gives every employees a voice (a cooperative ?).
there is such a thing as “fedicuary duty” [1] which could be sometimes interpreted as “maximize profits” i suppose...
according to this ny times article [2] it states:
`There is a common belief that corporate directors have a legal duty to maximize corporate profits and “shareholder value” — even if this means skirting ethical rules, damaging the environment or harming employees. But this belief is utterly false. To quote the U.S. Supreme Court opinion in the recent Hobby Lobby case: “Modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not.”`
the ny times article also cites some sources such as supreme court case; it’s well worth a read
It is true that companies are not required to "pursue profit at the expense of everything else".
But it is also true that companies are held to legal standards that "include acting to promote the value of the corporation for the benefit of its stockholders" (Ebay v Newmark). This was famously weaponized against Craigslist several years ago, who were successfully sued over their refusal to let shareholders change corporate culture.
It's part of the contract for most standard corporations (that aren't B Corps) - the management has a duty to do what's best for the company, which usually comes out to "have a good reason behind doing something". If Amazon comes out tomorrow and says they're throwing in the towel and giving away their money to the Seattle poor because that will have a more positive impact, the lawsuits will be immediate and fairly one-sided. It would be a fairly easy case to argue that Amazon would be failing in their duty to shareholders by spending their money on something with no hope of an ROI.
It is neither. This seems to be a very common belief (i.e., that corporations are legally required to maximize returns for shareholders), but it is neither law nor regulation. Nothing prevents a company, even a publicly-traded one, from making decisions with other goals in mind, even if those decisions will reduce profits.
Companies, like countries, don't have feelings. Back in school my history teacher was very insistent on that fact, if you said something like "country xy was provoked to enter the war" he'd really tear into you. He taught us to spot propaganda and the motivations of individuals.
There's no need to move goalposts when your objection is concentration of power, resources and finance. By that standard, one can continue to roundly criticise Amazon for all eternity as long as they remain as relatively dominant: this stance favours distribution of control of resources among small independent stakeholders, and is a perfectly legitimate stance to take.
If Amazon's private intentions match this public description, then what they are doing is very admirable. The problem is I get suspicious when power turns populist... there is oftentimes an agenda. (See: Trump, or US politics in general)
Isn't "constantly moving the goal posts" the name of the game in capitalism? Good on Amazon for increasing their minimum wage, but why shouldn't it also be met with a healthy amount of skepticism. Companies definitely do things for the common good (I don't see much competitive advantage gained from going 100% renewable energy - a common move for many tech companies - apart from maybe attracting better/more employees) but it would be naïve to think that most decisions a company makes don’t intend to better their market position in some way or another.
Amazon (and all companies) spend most of their time/resources figuring out how to make more money and gain more power; I think it's appropriate that we as consumers, in turn, spend our time demanding more of them in terms of both value delivered and net benefit to society.
I don’t think Amazon deserves much sympathy. They're one of the most powerful companies in the world, have made a small group of people very rich while continuing to treat employees poorly. It's great that they're making this move but I don’t think we as consumers/citizens should be merely satisfied with it.
I agree with you. And I think it's good that Amazon is given credit for doing this. But I also question whether the incentive that pushed Amazon to do this has as much to do with magnanimity as it does with generating goodwill and preventing tougher legislation. Bernie Sanders and his group have been calling on Amazon to improve worker conditions and pay, and while they have praised Amazon for doing so, I think they would be naïve to think there's not more to expect or demand of Amazon in this realm. That is in effect "rewarding" them for good behavior, but there should also be some negative incentives in place (IMHO) to further encourage more of this good behavior
Cynicism and skepticism are different beasts with different outcomes. Skepticism asks "Did they do it for X reason? Let's investigate." Cynicism says "They can only have done it for X reason. Let's castigate."
Cynicism is lazy. And generally, it has the effect of disheartening anyone from even trying to do the right thing. That people are cynical is of course understandable, but it's nothing to strive for.
Let's suppose they were lobbying to reduce the minimum wage instead. They would receive a lot of well-deserved abuse. So it seems clear they're in a no-win situation. Beyond that, it's a truism that any company lobbying for any policy change is mainly operating out of self-interest.
> they'll get to look progressive for adopting this wage early, while mitigating their competitive disadvantage by forcing every other company to raise their wages too eventually.
That's deeply cynical. In the process, they're actually paying real people more money. Which is sort of critically important if you care about this issue and not just taking pot shots at Amazon on HN.
> In the process, they're actually paying real people more money
Except the OP was talking specifically about the company's plan to lobby. Yes, they're actually paying people more money, but if everyone has that same amount of money then you get wage push inflation. Then everyone loses. This is also why minimum wage discussions always spiral out of control...there really is no good long term solution for setting minimum wages.
It's all relative. If minimum wage workers get their income doubled, but my income does not double, then they are doing better relative to me than they were before. And I do not expect my salary to double upon passing of such legislation.
That's a ridiculously cynical way to view it. First, utility does not scale linearly with income. Second, this allows for greater economic efficiency, because fewer people will be caught in bad situations with an insurmountable hurdle to get out.
If you want to maintain your relative wealth, feudal times are great. The rest of us would rather increase absolute wealth.
In that case, I grossly misinterpreted the tone of the comment, and apologize for it.
I (and baldfast) had interpreted throwaway080383's comment as implying that he will be worse off from this legislation, as the increase in minimum wage will result in inflation, leading to no effective change in inflation-adjusted minimum wage, but a strong decrease in his own inflation-adjusted minimum wage. This is the standard conservative viewpoint that I've seen, which is repeated frequently, and is why I reacted so strongly to it.
Damn, yes I could see how my original comment would naturally be interpreted that way.
To be clear, what I meant to get across was that the wage increase was not going to be a no-op due to inflation or whatever; it will make those people's lives measurably better in the short-to-medium term because not everyone's wages will be doubled at the same time.
Yeah, technically, I will be slightly worse off in the short term because Amazon will cost a little more or my dollar will go slightly less far, but I'm perfectly fine with that if it means tens of thousands of families can now feed their kids or go to the hospital. In the long run, my hope is that those kids will be more productive/innovative, which is good for everyone.
> The rest of us would rather increase absolute wealth.
Some of us would be happy to just have enough money to do work we find productive for society, as opposed to what the market demands of us. Not everybody wants to ride the absolute wealth treadmill.
Fine with me… and I work for myself and make less than minimum wage.
But some of MY customers may end up more able to pay me. I have repeatedly seen a tight correlation betweeen how well I do, and labor share of the economy. If this is real then it'll benefit me, all the more so if it becomes a trend.
Are you saying your salary is based on keeping the working poor? OR are you saying you think corporations and their investors deserve a low wage workforce that the government will take care of with your tax dollars? I find no logical sense other then your mad that people can make money for WORKING.
When people make $15 an hour they will need less government assistance. This will take away from corporate's profits, which has gone through the roof without an salary bumps the last 40 years.
I don't think they are saying anything like that. I think they are saying that a minimum wage increase would bring the lowest earners closer to the higher earners, rather than causing inflation across the board. So that's a good thing if you care about wealth inequality.
Edit: After submitting for 1 minute
The number one weapon against doing anything to help the working poor is that it will cause inflation. It's a hollow baseless argument.
Yes, to be clear, I think raising the minimum wage and decreasing wealth inequality is a good thing, even if it marginally negatively affects me in the short term.
Well I am trying to see the best possible interpretation. What is the best possible interpretation.
I think the poster didn't think of what it meant besides what only affects himself. I have noticed that is where all discussion ends, but it really is implementing that his bottom line is negatively affected if the working poor get higher wages.
That's a radical theory; can you give a more detailed explanation? Mainstream economists and political theorists believe that raising minimum wage reduces wealth inequality which creates economic and political stability, which reduces the risk of things like crime, Great Depression, and violent revolution.
Even if minimum wage growth hits its practical max and creates inflation, (1) that's easy enough to detect and correct, (2) it's not a big deal if all the numbers go up together; the main loss is in reprinted menus.
> Mainstream economists and political theorists believe that raising minimum wage reduces wealth inequality which creates economic and political stability
There is nowhere near the level of consensus on this issue that you're implying.
That's incorrect. Mainstream economists are quite divided on whether minimum wage laws help the poor, let alone the other things you mentioned. See the Wikipedia article: https://en.wikipedia.org/wiki/Minimum_wage
The minimum wage in Australia doesn't work the same way as it does in the US. Australian workers will under an award -- effectively a industry-specific contract negotiated by the respective union. An Amazon worker would likely be on the Storage Services and Wholesale Award.
This starts at $20.72 (14.92 USD) for fulltime, and $25.90 (18.64 USD) for casual work.
There's higher wages based on experience and responsibilities, as well as penalty rates. Public holiday pay starts at $56.98 (41.01 USD).
As someone who has recently moved from Melbourne to Boston; if anything I feel like Australia has a lower cost of living. According to the one source I found, prices including rent in Boston, MA are 36.53% higher than in Melbourne
The minimum wage argument is about tipping the scales of business wealth distribution away from seniority and the business and into the pockets of those lowest on the totem pole.
This balances the scale of products developed and resources spent more towards low income people and away from aristocratic goods and services.
However, in the case of Amazon, a company already very low on margins and on theory of low incomes, this would result in higher costs from the market behemoth
Hot take: if you really want to take shots at Amazon, the best thing here is that their wage rates are going up, draining money from the General Bezos Evilness Pot and towards the employees, who can use it for things like unionization campaigns or pro-worker lobbying. If Amazon literally wants to spend its own money advocating for a shift of power from capital to labor via a minimum-wage rise or other improvements in workers' rights, well, I'm happy to see Jeff Bezos selling us the rope we'll hang him with.
Cynical isn't the right word for the problem in swebs reasoning. Of course Bezos is a villain. But if you get Amazon to do this, it's good for the country, regardless of motivation.
So remain cynical but recognize that good politics can lead to bad companies doing good things.
I'm reluctant to say it's cynical because it's not necessarily negative or pessimistic so much as matter of fact. The Op isn't taking shots at Amazon by exposing their motivations.
A higher Minimum Wage is coming and possibly be a priority for Liberals and Progressives after the November Election. Amazon has been receiving a lot of negative press recently for labor conditions and wages. Regardless of the benefits to others, there is a direct benefit to Amazon.
Now if you want cynical... I think it's borderline delusional to think that a publicly traded multi-national corporation would do anything that isn't in it's business interest.
If you critically care about this issue, the extent of which this is labor-driven vs PR-driven is crucial to the war in which $15/hour is just the first battle.
If this is to be interpreted as evidence that the workers have bargaining power, it is only the first step in a progression of improving conditions (because now they're able to negotiate.) If it's just PR-driven serendipity then it might even be accompanied by worsening conditions elsewhere. This seems reasonable because people are a lot more reliable at fighting for their own interests than they are at considering the interests of others.
I'm assuming it relates to the tight labor market giving workers the power to choose where they work at (as opposed to "this is the only job offer I have")
>I'm assuming it relates to the tight labor market giving workers the power to choose where they work at (as opposed to "this is the only job offer I have")
Lol no it's still not like that unless you have a high salary career, and most people don't have those.
$15 an hour will push a lot of people out of being employable. There is a greater tolerance for whom you will accept at current wage points. The other effect of a much higher starting wage is you will have people enter the market who did not think the wage was worth their time. The people who cannot be relied on to show up on schedule, quit and want to come back, have some issues in their credit or criminal backgrounds, and more.
Meaning more reliable candidates will come back in and those who dismissed fast food, warehouse, and retail, jobs as not paying enough will now accept those jobs. You will get some retirees, stay at homes, college kids, and even some recent graduates, coming in.
A national $15/hour minimum wage isn't going to fly in places like small town Kentucky or West Virginia. Those places don't have good jobs anymore, and the only businesses left are a drive-thru and a Dollar General. They can barely afford a dozen or so people working at minimum wage now, and they can't run a place with half the employees. Their customers can barely afford to shop there and can't take paying more to cover it. The only reasonable option in this scenario is to close.
One of the biggest Amazon distribution warehouses in the country happens to be in Lexington, KY. I’m sure this $15 / hour wage increase is going to go over very well there. I’m from Lexington, KY originally but live in Chicago now (since there aren’t local jobs for Linux Software Engineers)
Lexington, Kentucky is the 60th-largest city in the United States. That is not the "small town Kentucky" that the grandparent is talking about. (S)he is talking about small businesses (or business franchises, like Dollar General) that are barely scraping by in small towns -- a gas station, a diner, a dollar store -- typically with a only 1-3 employees working at a time. A place like that would take a substantial hit from a doubling of the minimum wage.
Don't get me wrong -- workers are grossly underpaid in most of the US, and wage gains are good. But those wage gains do have to be relative. In NYC/SF, a $15 minimum wage is just enough to scrape by with a couple of 20-30 hour a week jobs. In a poorer part of the US, a $10 min wage is plenty... but anything more might be enough to kill what few businesses currently survive there.
The small mom and pop stores have been closing at record paces due to things like Walmart and Amazon. A higher minimum wage might speed that up, but it just moves things faster in the direction they've been moving for decades already.
The thing that blows my mind is what the federal government (by the definition of the IRS) considers the poverty level is based on the cost of food plus inflation, while entirely negating the cost of living. Minimum wage is made based on the poverty level, but the poverty level is wildly inaccurate due to not taking into account housing.
Couldn't agree more. It's also silly that there's a federal poverty level at all -- I see a poverty level as only useful on a scale as granular as county/parish, even state level is probably too large to give any useful data (for reference, I grew up in Northern New York State and now live in NYC, and any New York State poverty level is meaningless in both of those places because they're so disparate).
It's a shame that the GOP, which is supposedly anti-federal power consolidation, no longer embraces that ideal. We would likely be better served here in the US by something more akin to a confederacy.
On the subject of Dollar General: I imagine the corporation as a whole is profitable, but I'm curious about their franchisees. If it's something like the McDonald's setup, then I imagine that their franchisees could be seriously hurting while the name Dollar General remains lucrative. Unfortunately I don't know much about their structure -- maybe they don't have franchises?
A federal minimum wage as a "line that you have to meet or beat" seems sensible enough to me for states that want to screw people. That said, it should definitely be per state and even per-city, as you've mentioned. I was just pointing out the severe problem with the current system and how it is really doing a disservice to those underprivileged citizens.
Dollar General and other national chain drive thru eateries are substantially profitable (profits in the billions of dollars, DG margins are ~%30). The odds of Dollar General, McDonalds, and company and closing up in rural America is so close to zero, for our purposes we can round down to zero.
They might raise prices a bit, and be slightly less profitable to shareholders, but they won't close up shop.
Does this not mean those employees are out of work? Benefit some lucky workers with increased wages, while driving others out of work entirely?
We're talking about doubling the national minimum wage. That's a hefty increase, especially for areas where cost of living is quite a bit different than say, California.
I get that it's inconvenient for everyone in town to get up and leave, but once a region is no longer economically productive, it's the only thing that makes sense.
> $15 an hour will push a lot of people out of being employable. There is a greater tolerance for whom you will accept at current wage points.
I don't believe that. People aren't going to dig the ditches and flip the burgers themselves just because it costs them a few $ per hour more now. These people aren't taking part in "charity" jobs that will dissapear if the wages go up, they're still going to stack shelves, they're just going to do it for more $.
Additionally, paying people an actual livable wage I'd suggest makes it more likely they will be reliable. When you're not juggling poverty related health problems with more jobs than it's sensible to have I'd suggest you will perform better at whatever job you do.
> The other effect of a much higher starting wage is you will have people enter the market who did not think the wage was worth their time. The people who cannot be relied on to show up on schedule, quit and want to come back, have some issues in their credit or criminal backgrounds, and more.
I'm not sure I follow you there. It seems that you're saying that there's a band of workers that are unreliable (credit/crimial issues) that are just waiting for wages to go up before they jump into the labor pool, but that the lower paid workers don't have these problems?
> Meaning more reliable candidates will come back in and those who dismissed fast food, warehouse, and retail, jobs as not paying enough will now accept those jobs. You will get some retirees, stay at homes, college kids, and even some recent graduates, coming in.
This seems to contradict what you said in the last paragraph so I might have misunderstood something somewhere. Regardless, I doubt there's a pool of workers who are well enough off that they don't have to currently work who on discovering that the lowest paid jobs in the country now pay a bit more will suddenly want to start work.
It's putting a positive spin on paying people a living wage. Unemployment goes up, support the unemployed with safety nets and raising taxes.
The problem is not the cost; the money exists in the economic system, clearly. It's simply an allocation issue.
But pessimists can keep carrying on with "the sky is falling" while progressive economic policies continue to march forward, bringing the US to parity with the living standards of other first world countries.
You must admit, this is a significant win for Sanders (Disney first, now Amazon). I agree with you that progressive policies have been dismantled over the last few decades, but would argue that the electorate is engaged enough now to claw back those losses (majority of Americans support universal healthcare now, for example).
My point was this is not the last win for Sanders and those who align with his progressive policies. Efforts will continue to drive up the minimum wage in all 50 states.
Isn't that how consumers behave? A "good deal" is usually finding the product at the lowest cost possible..which is usually made possible by paying people the "smallest possible salary" the market can bear.
Consumers like you and I are responsible for this.
Well, it seems like you are conflating two very different issues, but anyway, that's not how I behave, personally. I buy more expensive products less often, provided that those are produced in a humane way (e.g. no sweat shops or animal cruelty involved).
A "better product", in my view, is radically different from a "cheaper/cheapest product". The same goes for professionals.
> $15 an hour will push a lot of people out of being employable.
On the other hand, isn't it illogical in a free market economy that wages do not increase at a rate at least equal to the inflation? How do you keep the economy running if people have less and less purchase power as time goes by? (These are genuine questions, I'm not an economist at all.)
Have you not seen the explosion of consumer debt over the past decades? Buying power is now tied to how much a bank is willing to lend you, not how much you have in your savings accounts. Synchrony, who Amazon partners with to offer their store card, will give basically anybody with a pulse a $500 credit line and ramp them up to thousands fairly quickly as long as they don't default.
I don't even want to get into the real debt traps targeted at the least fortunate among us like payday/title loans, buy-here-pay-here car dealerships, etc.
I got mine vs an infinitely sustainable long term stable system, is not really an economic problem its a cross cultural human problem for as far back as we have records (or archeology, it seems).
So, no, the economy not being on a survivable path is not really all that unusual of a situation for humanity in general. You'd be amazed what extracting and burning or otherwise disposing of an impossible to replace resource can do to boost a declining economy. "cheap oil" or "cheap fertilizer" masks a lot of problems... for awhile...
How do you keep the economy running as purchase power goes down? Traditionally, I don't think you can.
Henry Ford was one of the people to point this out; in the general case, you need to pay your workers enough (and keep prices low enough) that they can afford your products; else who can? (other threads have quoted him as well )
Note that one of the reasons the great depression was so bad was people underestimated the income elasticity of demand. This especially showed up in car manufacturing, where new car sales were almost entirely replaced by the used and repair markets.
Some of the answers are that technology makes things cheaper, people feel wealth from house prices rising faster than wages, easy access to cheap credit gives another more temporary feeling of wealth
It's not illogical at all. Wages and inflation are not dependent on each other. Inflation means money supply is growing faster than productivity, but it doesn't mean wage-earners are getting that extra money. Banks and capitalists might be.
I think the point is that many people aren’t worth $15/hour. Having a well-stocked grocery store is worth $15/hour if the person doing the job is fast. But slower stockers may lose their jobs altogether.
Most companies I’ve worked at have had mailrooms. Very few have had people actually working in them. Which tells me that when the buildings were designed, the mailroom was considered valuable enough to include in the floor plan, but before I was hired, it stopped being valuable enough to staff. It’s worth something, but many companies apparently think it isn’t worth $7.25/hour.
I can think of tons of jobs that are worth less than $1/hr. That doesn't mean I think people should actually do those jobs. Over time we tend to get more-valuable jobs.
I recently read Fischer Black’s book Exploring General Equilibrium. I’m sure I’d seen the argument before, but one passage that stuck out was the discussion on how something can lose all value when technological advances make it obsolete. It is true that’s partly to blame.
But those companies still send and receive a lot of paper and packages. It’s just that there isn’t any staff dedicated to doing the sending and receiving; instead it’s included in everyone’s job description.
> I think the point is that many people aren’t worth $15/hour.
Who cares? If markets are allowed to compete freely, unskilled labor rates trend towards zero. Most of the people currently working at $7.50 probably would be paid even less if the law didn't forbid it now.
We live in a capitalist society where people are expected to work for a living. Saying that someone doesn't deserve to be paid a living wage is the same as saying they don't deserve to live.
> Saying that someone doesn't deserve to be paid a living wage is the same as saying they don't deserve to live.
I’m not saying anything about what anyone deserves.
I happen to know a general contractor who is incredibly charitable and willing to hire just about anyone who can swing a hammer. He mentioned that one year, he hired so many people that the per-employee costs and taxes ate all of the company’s profit. He had to live on savings that year. Obviously that isn’t sustainable, even if many independent coffee shops and bookstores try it.
Companies that pay more for labor than the value they get from that labor go out of business the same as companies that sell items at a loss and try to make it up on volume.
I wish I could still edit my comment. Instead I have to revise and extend.
I think there’s a disconnect between the phrase “what someone deserves” and “what someone is worth [to a company].” Yes, because you are human, you have intrinsic value and can even claim you deserve certain things. Whether there’s some cosmic guarantee that you will get what you deserve is beside my point.
But your value to a company as their employee can be given a measurable number. It probably has more to do with my age than with the job itself, but I actually enjoyed the minimum wage jobs that I took when I was younger. Even today, when I see a “help wanted” sign at the kind of place I would have worked as a teenager or young adult, I reminisce about those jobs. But I never apply, because my value to them has a hard limit: they aren’t going to pay me more than the market price to keep the store clean, count back change, and provide good customer service. I’m not significantly better at those jobs than the average teenager. My knowledge of C++, C#, web services, databases, UI design, etc. has no value to them, although it has value to many other companies. I would never expect them to pay me more than my value to them.
I’m happy that Amazon has changed its pay scales. But this change will involve laying off people who are profitable at, say, $8/hour or $10/hour but not $15/hour. That’s how the world works. Today, those employees can find other jobs at $8/hour or $10/hour. They may even get a raise. But if minimum wage is increased to $15/hour, they could find themselves priced out of the market.
But it's not true that rising the minimum wage would immediately be cancelled out by inflation. That would be true only if everybody was earning minimum wage.
Increasing the minimum wage from 5 to 50 dollars is unlikely to cause a 10x inflation, it more likely would cause a 3x or 5x inflation.
The poor would have more and the rich would have less.
It would likely reduce the spread of wealth in the society, improve social cohesion and in general may turn out to be a good thing.
High minimum wage doesn't hurt the "rich" it hurts everyone who's making just more than minimum all the way to the upper middle class because their cost of living either increases or their standard of living decreases.
The "rich" are rich enough that it's just a drop in the bucket.
Edit: I don't mean to say that minimum wage isn't worthwhile, just that framing it in terms of a rich to poor wealth transfer is somewhat dishonest.
Well, if that reasoning were true we should just get rid of the minimum wage, surely that will lead to an increase in the standard of living and a decrease in the cost of living.
Really, some of the stuff you read on HN is just mind-boggling.
In spite of the gig economy trying hard to erase decades of stability for millions of people even the smallest attempt at reductio-ad-absurdum would show that there is an optimimum somewhere and that there is absolutely no law of nature that dictates that that optimum lies at $2.75, $7, $15 or anywhere in particular.
Whatever you make the minimum, there will always be people who earn just a bit more and of course it will lead to some inflation but the end result will be a higher standard of living for those for whom the change is the most important.
For all the laughter about the EU from the US when it comes to social security I'd like to point out that Amazon already operates here and has to pay the local minimum wage and that consumers are still buying their products.
We should indeed just get rid of the minimum wage, and replace it with universal basic income guarantee.
Minimum wage + unemployment insurance is basically UBI anyway, except very poorly implemented - with ridiculous overhead, and, most crucially, subsidized through what is, essentially, a regressive tax.
Consider: when you raise minimum wage, the employer will try to put as much as they can into the price of the produced goods. They might be forced to eat some of it by shrinking their profit margin, but ultimately most of it will be passed to the consumer.
Now, who consumes goods and services produced by minimum-wage workers? Everyone, of course - but, generally speaking, the less you earn, the more you have to rely on that. So as the prices on such goods and services go up, poor are the ones that see the biggest increases as a proportion of their overall spending (and hence, their overall income). It's the ultimate con - you get one mark to pay for the other, and the best part is that they don't even notice.
UBI wouldn't have this problem, because the tax would be explicit, applied to income, and (ideally) progressive. So you actually redistribute from the top of the ladder all the way down to the bottom. Better yet if you also tax capital gains for this purpose.
The optimum minimizes the amount of government assistance.
Obviously, everyone not being starved or dead from lack of medical care means everyone gets food and medical care. That is not negotiable at this time.
Some methods of payment for those universal services have extremely low transaction cost like the employer hands money to employee who buys the service or product for cash. Some methods have extremely expensive transaction costs with government departments taxing people and another department full of people paying partial or full payment for people's food and medical care, none of those people work for free and they all need HR and benefits and management and auditors, all very expensive. Of course give/force the employers to hand out too much cash and you get inflation that exceeds the cost of government.
For example everyone at Google eats and has medical care and having the well compensated employees pay for it is extremely low transaction cost. However no one at walmart can eat and obtain medical care so the government provides it at enormous transaction expense. Its believed to be better for the entire economy to slightly tax google employees to pay for government services for walmart employees than just have walmart pay their fair share of the expenses of employees.
At some point in the middle there's a optimum that minimizes the total cost of government programs plus the economic damage wrought by inflation. A lot of people put a lot of time and money into figuring out this optimal ratio, which is probably extremely close to where we are today, and many more in the general public say "eh we should just wing it and +1 one side or the other, because like, what could possibly go wrong?".
There ARE problems such that those highly paid government clerks with fabulous benefits compared to the private sector are not likely to suggest losing their welfare program administrator jobs any time soon, so there are rational human self interest reasons why the minwage is always going to be around the lower bound of optimum. If the general public is not always of the opinion that its somewhat on the low side, then the central regulators and planners are messing up. There should always be this low level of turmoil about it being somewhat too low.
Being part of the gig economy has brought me the best income I've ever had. And a flexible schedule so I get plenty of time with my kid. If I was still forced to look for a 9-5 based on traditional hiring practices I'd be making much less and miserable.
As long as it works... and then when you get ill or something else happens suddenly you find out that all that freedom translates into a complete lack of a safety net. Unless you live somewhere in Europe.
Keep in mind that 'flexible contracts' and 'zero hour contracts' already existed before the Gig economy, and that they still came with all the good stuff that comes with employment.
For the US, where a lot of people were already under the perpetual Sword of Damocles waiting to be told they are no longer required the situation is maybe not all that different. But not all of the world is like that.
The better way to run a life that is free and where you get plenty of time to arrange as you wish is to have a consultancy company where you hire yourself out at a high rate during a few months of the year to take it easy during the remainder.
> Nearly 2/3rd of the federal budget is for social programs.
Not all social programs are safety net programs; notably age- and work-related public healthcare isn't, and neither is work-qualified public pension.
And also a lot of the social spending (safety net or not) is the public portion of the US’s stupendously inefficient hybrid public/private health care system, so even the safety net portions of that (mainly Medicaid) give very little safety net for the money.
By the standards of the developed West, the US has a very weak safety net, however much money it might spend on public social programs.
> Increasing the minimum wage from 5 to 50 dollars is unlikely to cause a 10x inflation, it more likely would cause a 3x or 5x inflation.
I' guessing it would rather create massive unemployment, and subsequently be cancelled. Think about it - middle-class people are ok with paying $4 for their Starbucks coffee, but if they were to pay say $10 (because the baristas salaries just tripled), probably a lot of them would cut back on them. Maybe even Starbucks would disappear altogether. Multiply that effect across all industries hiring minimum-wage workers. It would be a train wreck.
The rich will not have less, they will have a lot more (in dollars at least), because they are mostly storing wealth in inflation-proof assets. And businesses owners will make more than 10x, because when you increase the wages from $10/hr to $50/hr, the amount of spare (fun) money actually grows much more than 5x.
That will hurt the current middle class the most, those earning close to $50/hr. These are skilled professionals who will get equalized with someone who dropped out of high school. It's actually a good example of why socialism is such a dumb idea.
There is a difference between everybody being 'rich' and simply paying a living wage. Note how Ford got as big as it was in part not just because he made a damn good automobile but because he paid his employees a wage large enough that they could afford a car.
A couple of billionaires less and a higher standard of living for the masses is a good thing.
Probably it won't but there is a small risk that some people will due to round-off errors end up just below the billionaire line of they start paying their employees a half decent wage. Or it might take some people a bit longer to get there. In the long run it is irrelevant.
Living wage: a wage sufficiently high that after paying taxes there is still enough left over for small family or individual to live off when all normal expenses are accounted for based on a workweek no longer than 40 hours in total.
That works out to $2400 gross per month (so before taxes) which if you can't recoup it from the work input says more about the company you are working for and their inability to capture value. Keep in mind that raising the wage across the bar will increase inflation but will level the wage disparity between 'smart' work and 'dumb' work.
(Edit: sorry for the annoyance. I just tried to understand how did you work out that the right number is $2400 with such precision. Surely that's the right number everywhere in the US, as well...)
What is a little bit of money for a small family - but still a living wage - is going to be a bit more for an individual. Some countries make up the difference by giving parents of children some money each month.
So that the employers do not have to take the family situation of the people they employ into account.
Np. As for the $2400, $15/hour * 40 * 4 is close enough, and that seems to work based on the salaries of a number of people that I am familiar with.
Working two jobs at $7/hour should not be a requirement to make ends meet. And that's another way in which the low minimum wage hurts employment: people working two shifts because they have to.
Have you given any thought to how wide the gap between "smart" work and "dumb" work should be? Who should decide such a thing? If someone spent their youth doing drugs and having children out of wedlock do they really deserve to earn a salary within say 10% of someone that spent their youth working to gain the skills and experience necessary to be a doctor or lawyer? Just because the outcomes need to be more equal?
> Have you given any thought to how wide the gap between "smart" work and "dumb" work should be?
Large enough to stimulate people to learn, small enough that those working hard do not end up wearing out their bodies before their pension, end up on the streets or dead.
> If someone spent their youth doing drugs and having children out of wedlock do they really deserve to earn a salary within say 10% of someone that spent their youth working to gain the skills and experience necessary to be a doctor or lawyer?
Do you mean to imply that there are no doctors or lawyers with children out of wedlock or on drugs?
> Just because the outcomes need to be more equal?
I would avoid the word equal, I would use the word fair.
Your buying into the argument people who are poor deserve it some how. That's a similar argument used against the 8 hour day - the working classes would waste this extra new time on drink and enjoying themselves.
> Your buying into the argument people who are poor deserve it some how.
Not sure how you got that impression. If you thought that the 'large enough to stimulate people to learn' is a factor in that: I was thinking of kids looking around them seeing zero advantage of having an education might not be incentivized enough to acquire one.
I have given you a definition and a number that +- 20% satisfies all of the US demographic data that I have my disposal, if you're looking for an essay complete with citations you're going to have to line up behind the paying customers.
You started this thread in bad faith ('and no dancing around') and went to worse from there.
In the UK there's a foundation that exists to work out what would a fair living wage, to promote this idea to businesses (getting them to commit to pay this to all workers even though the legal minimum is lower) and to make sure that when media people have your question they've got somebody who can confidently provide quotes/ appear on TV/ whatever to explain.
This was sufficiently successful that the government tried to rebrand their arbitrarily chosen (55% of median earnings) minimum wage as a "National Living Wage" but to their annoyance people continue to refer to the foundation's numbers which you know, are based on evidence.
The Living Wage Foundation uses a "basket" system like economists measuring inflation. For example they imagine that a person should rent somewhere to live, so they go find out how much it would typically cost to rent somewhere a person could live in various parts of the country. They figure you will want food, so they work out a set of groceries you might buy, and so on.
Is it possible to live on less? Yes, and it so happens that I do even though I'm fairly wealthy. But it's very obvious that even small changes in my lifestyle would significantly increase my spending, and many of my choices just aren't open to people who aren't wealthy. For example I spend very little on housing, because I own my home outright. But obviously people trying to get a minimum wage cleaning job don't own a house!
Or maybe they won't employ humans at all because robots will be able to stock the shelves and flip burgers for <$15/hr. At least sooner than they'll be able to for <$7/hr.
Also some jobs will just go away, like grocery baggers (mostly) did. Which customers liked and was a good entry level job for teenagers.
There are a lot of factors to consider and have to be careful about unintended consequences.
I think this is a calculated move against Walmart.
Amazon could easily survive in a $15 minimum wage environment, but it'd be a much larger blow to Walmart (which employs many times more low wage workers), which would have to increase prices or reduce profitability.
"Your margin is my opportunity" - Jeff Bezos. This quote also works when thinking about raising your competitors' expenses.
This is disastrous for low skilled workers. It removes the bottom rung of the economic ladder -- if you have no skills or little skills, the best way to develop skills is to be employed. If you don't provide more than 15$ per hour of value then you won't be able to get a job.
This also helps create a moat around amazon - if they can get the costs of everyone to go up, when they unleash better picking/warehouse automation no one will be able to compete with them.
Sure, there's an element of "this job is only worth $7.5/hour, so if we have to pay someone $15/hour we won't do it", but I'd suggest that those jobs are actually not that common.
I'd instead suggest that most jobs need doing, and they will just cost more. Ditches still need digging, burgers still need flipping, and it will just cost a bit more now.
Lots of interesting things happen when you play with price. Sometimes its higher-paying workers that benefit the most: if you can handle data management manually at 7.5U$S you hire cheap labor. If it costs 15U$S you hire an engineer to make a permanent and scalable solution.
I am not enamored by the concept of minimum wage, and to this day its a fight among economists.
The minimum wage has exactly the same effect on labor as the carbon tax has on the energy industry. There are winners and there are losers. But generally, when the government decides, there is deadweight loss in efficiency.
That's an interesting read, in summary it seems that rises in the minimum wage have a small negative impact, mostly for low paid young people.
That makes sense, there's going to be jobs that just aren't profitable when the wages go up. If I can make $4 on a box of shleem, and the kid who packs the shleem's wages go up $5 I have to pack the shleem myself, or stop selling it.
One thing that the report mentioned, and is maybe a possible cause of this negative increase, was that kids will leave school sooner when the minimum wage is higher. Perhaps to counter the issue there could be some sort of means-tested grant system to help keep kids in school?
That may be their target, but they probably think it's unlikely and when they end up actually getting $10/hr instead, they'll still be able to call it a win.
Similarly, my kids don't get credit for "doing the right thing" only when I'm about to storm into the room to lecture them on whatever they were doing wrong.
Amazon knows most of that $15/hour will be paid into Amazon - regardless of employer - as they have 51% of American commerce. They're turning America into a huge company town.
I think that is a bit of an exaggeration. Housing, utilities, groceries, insurance, transportation, education; all major areas where Amazon has zero or negligible presence. eCommerce is not a major family budget item for most households.
Raising the minimum wage to what they know they can afford looks more like an anti competitive manuever than a PR move. That would be a massive strain on most large retail chains.
Which is how the system should work. Raising wages puts you at a cost disadvantage against competitors, but if all employers take collective action they only have to pay more for wages (rather than lose market share). That's why the early American robber barons lobbied for government regulation of child labor at times - they wanted to be able to abandon it without giving opponents an advantage.
I'm confused, because it seems to me that your tone implies that it's something bad or unethical on their part.
If I'm mistaken - I'm sorry that I've misunderstand you. But I do think that I'm not alone in this, and that a clarification for tone-defa people like me would be welcome.
If I'm not mistaken, and you indeed imply this, can you elaborate further on why do you think so?
The problem is that minimum wage shouldn't be the end of the conversation. With an increase with minimum wage, rent and other costs will go up to match whatever pressure people will as near as sustainable without collapse as possible (indirect costs going up of course), along with other for-profit layers providing for basic necessities also increasing their prices.
People at the bottom of the wage scale getting a few bucks more an hour will not drive up costs. The additional demand is spread across categories of goods. You also assume that businesses are incapable of increasing production (or improving production efficiency) to handle moderate increases in demand.
If Amazon should be paying $15/hour, why should other companies not also pay that much? They are literally doing exactly what was asked of them. Do you not want the same for employees of other companies?
I can understand that its fair to be cynical of their motivations, but they are doing exactly what people have been demanding of them.
You seem to be saying that you think Amazon's lobbyists will advocate for Congress picking $15, though the article quoted them as saying they'd defer to Congress.
Did you not get the same thing out of Amazon's words, or are you saying that they're not telling the truth and will push for $15 despite saying otherwise?
Not a bug, just a manual kludge I did in order to share some karma with the original submitter. The submission that was at #1 before that is https://news.ycombinator.com/item?id=18120667.
Is ~15 dollars an hour considered good? It seems pretty high from a European perspective. In my country, minimum wage is about 10 eur/hour, and 15 eur/hour is normal for a junior developer.
Hmm, I wonder how much Amazon expect their sales to increase by if a $15 minimum wage in implemented. Could it be a case that they expect the increase in customer spending to offset the costs?
If you're going to bite the bullet and pay your employees more, you mind as well hope that everyone else does as well, so they can afford to buy more from you retail.
Woah check out that straw man argument! I think what OP was saying, which you may have missed, is that politically they don’t agree with unions. Neither do I. Unions appear to suppress wages, block people from jobs who are not members of the union, and engage in bullying tactics against those who don’t want to join. On top of the fact they take that money (util recently, forceably) taken from employees and used for political means which go beyond the purpose of the union! A lot of Amazon workers were threatening to unionize, so when I think the original post was saying is that the threat may have worked.
Nothing has actually changed about the scale of corporations. That's just a popular talking point (it's actually always a popular talking point).
US GDP in 2000: $10 trillion
US GDP in 2018: $20 trillion
Largest market caps in 2000: Microsoft & Cisco, about half a trillion dollars. Double that to match the doubled GDP, and you get an Amazon today.
Amazon is not more powerful than these companies at their peaks: GM, Ford, Walmart, Sears, Standard Oil & Exxon, IBM, US Steel, JP Morgan, AT&T, Kodak, etc
The US Government's spending has more than doubled in size in the last 20 years as well. Its power has dramatically increased as well since the mid 1990s (just the capabilities for control that the espionage improvements and law changes have given them, is extraordinary).
It looks like they're at around 600K now worldwide. Most of these are not SWE jobs, of course. I don't know if that figure is only full-time employees though; if not, then the total number goes up substantially.
Median amazon warehouse employee pay is 24k a year. Amazon has around 300k warehouse employees. Jeff Bezos's wealth alone is equivalent to all 300k of them working 22 years at their current rate.
I wasn't saying they were. This is far from anywhere near. Bezos was not able to make all his money due solely to his hard work, it was off the backs of others including all of us whom have to subsidize the workers that he is making 300k X their near lifetime earnings.
The whole reason why warehouse workers are paid so little is because just about anyone can be trained to do it. It's simple economics.
You are kind of right about subsidizing workers, but that's more of the government's fault for how our social services benefits work. It's not Amazon's fault the going rate for labor is below the rate that the government will provide benefits for.
Did I say economical meant good? No, I said it's up to the government to change the requirements if it's decided that a certain pay is required to survive, and market forces won't lead to that amount.
Your other two examples are quite the jump though, and not really worth commenting on.
I agree with this. Think about if we had no regulation or social support. Jeff Bezos is sitting there with 100s of thousands of times the wealth of his workers near starving. He would not be able to have that much wealth as there would be a revolt and he would be in danger. The fact that we subsidize the poor and keep order as a society is helping him to be able to live as an outrageously rich person in relative safety. So the inequity has to be brought down to a level where we don't have to subsidize the people making him outrageously wealthy while they have enough to get by.
I could be wrong, but I think ApolloFortyNine was simply pointing out the way it is, not necessarily claiming that it's how it should be.
Amazon paid so little because they could. Amazon just wants profit. If people want Amazon to pay more because their wage is not a living wage, they should take it up with the government to increase minimum wage.
The natural counterpoint is, well, why aren't they? But that conversation is mostly opinions and hand waving on what is 'fair'.
Assuming they aren't entitled to equal or near equal shares though, we can certainly ask how much is too unequal? A single man having more wealth than 300k people earning in nearly a lifetime seems like it is probably too much.
I think that conversation is actually rather straight forward. You can replace warehouse workers with pretty much any able bodied person in America, and Amazon would operate exactly the same, with no loss in revenue.
Who could you replace Jeff Bezos with? Do you think Amazon could just survive indefinitely without making any major changes and continue to be worth what they are?
AWS alone proves to me he deserves as much as he gets. An eretailer also runs the largest (and pretty much first) cloud computing company in the world. I don't there's a lot of CEOs who would have chosen to branch out in that way, but it's extremely likely that AWS will end up surpassing Amazon itself.
The warehouse workers had no impact on that decision, and that decision is a very, very large reason why they're worth as much as they are today.
I think they're entitled to a basic livable wage so that the federal government doesn't have to give them food stamps and rent discounts. The government's benefits to amazon employees is more or less a government subsidy for Jeff Bezos.
Highly unlikely. Minimum wage in India is 9,000 rupees a month which is about 0.75$ USD per hour. Even if they normally pay double the minimum wage which is effectively what they are doing in the US now with 15$ an hour minimum wage, paying 10 times that would easily make them un-competitive with every other company.
Call me cynical, but it could also be that AMZN will be automating all those lower paid jobs - as in: soon they won't even need 7.25$/H employees because they'll have machines.
In this scenario, 15$/H would just be their current price point for the following tier of bottom of the chain not-yet-automated tasks.
Wow brilliant analysis. Automate the lower pay jobs away before your competitors can. Push for raise in minimum wage. This is “Walmart kills mom and pop shops” at a whole new level.
This is also how I see the robot job apocalypse playing out and why we need political change that can handle both the wealth generation and rapid job churn / requirements for job training that AI and robotics will bring. Either pay more or have the wealth disbursed. The alternative is, as has always been, concentrate the wealth in the owners of capital. But this times it’s different. Current wealth generation by capital is unprecedented. And technology allows control and capture of that wealth in an unprecedented manner. At the same time regulatory and political structures have done nothing to deal the with the negative costs associated with the process. What is the point of having an economic machine the likes of which history has never seen if it all just ends up on a ditigal legder for a few dozen people while automated factories are running in the dark and requiring resources stripping the planet of resources needed for you know like ecosystems and such. Not sustainable. So. Yeah. Amazing move for Amazon. Where does everyone else fit in the picture.
Luddites have always been saying "this time is different" about technology.
And economists have always been saying "no its not".
I understand that robots+AI will eventually be superior to humans (their evolution rate is faster than ours, extrapolating...) . The question is how many life times away is that. Moore's law ended, maybe AI will asymptote too?
This was my exact thought. It's great they increased the wages to $15, but it might also be because now they are in a state to hire fewer humans in logistics and carry out majority of the work through machines.
May be with less humans for $15/hour and machines, their average per unit hour cost is still $7.25.
Call me cynical, but they did this shortly after sending out anti-unionization propaganda videos to managers of Whole Foods. If it really is a reaction to union agitation, then it's not Amazon corporate that we should be praising for this increase.
It may be true that paying workers better hurts them less than other less automated businesses, which gives them a competitive advantage (assuming they succeed in raising the federal minimum wage).
However, this does affect 350,000 employees today, and that is a lot of employees.
Also the fact that they have automated many of their lower paid jobs away is really irrelevant - they did that anyway even when their wage was lower. They could have kept automating jobs away and paid them very low wages. The fact that they aren't is definitely a good thing.
Which is fine by me. We've been automating jobs out of existence since the industrial revolution, and should continue to do so. There are very few people doing a job now that was a job in 1750, but there's still plenty for people to do. That's because we keep turning boring, lower-value work over to machines and finding more interesting, higher-value work for people to do.
This does produce temporary dislocation. Once all the elevators were automated, elevator operators were all out of a job. [1] But I don't think that's an argument against automation. I think it's an argument for a strong safety net and generous retraining programs.
Look at it the other way. Suppose they honestly believe that $15 is the right minimum wage. If they just raise it to $15 for their workers, why should they let other companies freeload?
Look at other sorts of pro-worker laws, like safety. If Amazon were lobbying for increased OSHA oversight of warehouses because they didn't want to compete with companies who treated worker bodies as disposable, would that be bad? I don't think so.
Maybe they'll try to automate some more jobs but I feel like they already automated almost everything they can. Just look at their service centers:
https://www.youtube.com/watch?v=Y-lBvI6u_hw
They're going automate all the jobs they can regardless of wage so might as well pay a decent wage for the few workers left.
>“We listened to our critics, thought hard about what we wanted to do, and decided we want to lead,” said Amazon CEO Jeff Bezos in the announcement. “We’re excited about this change and encourage our competitors and other large employers to join us.”
Ha ha. This shouldn't have taken much thinking Jeff. It's a no brainer, no? The more you pay your people, the more they can spend on your stuff.
$15/hour is still not much in the international market where Amazon sells its goods. In large parts of Europe it's less than what a warehouse worker makes. It's still barely enough for an adult to be able to pay his/her half of family expenses in the US. A lot of employees will still need a second job.
And it only comes now, 20 years after the company's founding, after it has huge profits (and can deduct expenses like salaries in the profits before paying tax), after it has crushed all competitors with extremely low wages that were only possible because many employees received government handouts too (so subsidized wages), and after it de facto has secured itself a monopoly.
And many employees are still on temporary contracts.
>$15/hour is still not much in the international market where Amazon sells its goods. In large parts of Europe it's less than what a warehouse worker makes.
i don't understand this comment. while i'm all for warehouse workers getting a fair wage i don't understand the point of comparing a us wage, being paid in the us, to us workers, to foreign workers in foreign economies? yes USD 15 is not enough to survive in Oslo but these people don't live in Oslo! $15USD is double the average us minimum wage! before taxes for a full working year that's 30k. again in many places in the us that's enough to get by and even probably save a little.
again i think everyone should be getting a fair wage and unskilled laborers should be treated with respect and dignity but that particular line is nonsensical.
I can't even fathom trying to live on 30k. Where I live childcare costs around 20k, so many subsidies would be required for sure. Any little setback like unexpected healthcare or transportation costs would absolutely destroy you.
i have for most of my life lived on less than this. hell i lived on less than this in nyc. it's quite doable if you don't buy new clothes, don't own a car, don't travel, don't eat out, don't go to the movies, etc. you can even afford really bad health insurance. the only real issue is that you can't save enough for retirement (if you're comfortable living this way forever) and you can't save enough to take time off to get more education (votech or higher ed).
I too have lived in NYC on very little money, but I was young, healthy, and single. You list "can't save for retirement" as the only drawback, but I'd add "can't have a child" as another.
And I'm not sure about the actual numbers, but something like $30K per year basically puts one in a top 10% of the world, and more than $50K, you are already in the 1% of the world, by income. (not sure if that factors in cost of living).
not trying to disparage but this comment is wrongheaded in exactly the same way as the one i'm responding to. us workers don't live in subsaharan africa - so it doesn't matter if 30k is top 10% worldwide because we don't have global wage equilibrium. 30k for a single person is fine - you can eat and rent an apartment and probably drive a crappy car. it is not enough for a family, it is not enough to save for retirement, it is not enough to save for further education, and it is not enough to save for medical emergencies. it's not good enough.
You can't just ignore cost of living disparity though. $30K per year is a huge amount of money in some parts of the world -- that's enough to live very well, maybe support multiple wives if the culture allows it. But in San Francisco, that income level for a family puts you below the poverty line and you will struggle to afford housing.
> Also, 30k is a decent wage for a young person with no dependants. It’s not enough if you have kids, not even in the midwest or deep south
a single person working full-time should be paid enough to support themselves, I can agree that companies and society have an obligation to make this happen. but why is it reasonable that the minimum allowable wage now has to support the worker and some arbitrary number of dependents?
>And it only comes now, 20 years after the company's founding, after it has huge profits (and can deduct expenses like salaries in the profits before paying tax), after it has crushed all competitors with extremely low wages that were only possible because many employees received government handouts too (so subsidized wages), and after it de facto has secured itself a monopoly.
Spot. On.
They outcompeted every small retail store and online warehouse by undercutting costs, partly by paying unliveable wages that have to be subsidized by the taxpayer in the form of foodstamps.
Officially not but unskilled workers are paid around 2500 francs on average.
For the rest of Europe $15 an hour is what many people would like to have while working minimum wage even in developed nations like France and Germany.
I am sure its going to cost them some money. Suppose they are going from 10 to 15 bucks. That 350k552*40 = 3.64 billion. They might not all be working 40 hours, but it kind of shows how much of an impact it will be be.
I think its a good thing. Companies like costco have shown you can pay your employees fairly and still make money.
Economies of scale alone gives them an advantage, however it's probable at minimum they know they won't need many more employees in the future - who can instead be supported by autonomous systems to manage increased throughput.
They always threaten bad results for the workers when people try to unionize, often baselessly. If they could automate the jobs away they'd have done it anyway.
Opponents of the minimum wage argue that it reduces employment by creating an artificial floor on wages, that jobs are lost because employers can't afford to pay the minimum. But if you can't pay the minimum, then you didn't really have a job to offer in the first place!
By extension of this logic, employers could argue that they are losing jobs because they can only afford to pay someone who will work 12 hours a day, or can only afford to pay child workers, or can only afford to hire if they get a huge payroll tax cut. Granted, in the job market there are people who would take sub-minimum wage pay for a variety of reasons -- desperation, lack of education, lack of options near their home, felony record, undocumented status, etc. But it is disingenuous to suggest that just because there are people who would take such jobs, that our economy should allow employers to get away with it.
If you can't pay a basic living wage, for fair hours, in safe conditions, with necessary medical benefits, then you don't have a job to offer.
There is no definition of "minimum", "basic living", "safe conditions", "fair hours" etc. Fair hours used to be 10 hours a day 6 days / week. Living used to be able to survive a famine. Safe conditions used to be hunting for animals.
All it matters is people interacting voluntarily, that's the only argument against minimum wage.
But it is disingenuous to suggest that just because there
are people who would take such jobs, that our economy
should allow employers to get away with it
Ex-felons would also "get away with it" (remember there are always at least two sides in an exchange), but they would be in a better situation if they accepted the job
> All it matters is people interacting voluntarily
My point is that it is most certainly not voluntary. There are people in the world who are not as lucky or intelligent or resourceful as you, me, and most others on HN. Try to empathize and put yourself in the shoes of the disadvantaged, they do not know the world as we do, they cannot shop around for high paying jobs, and if they miss a paycheck, they may very well lose their housing.
Given this asymmetry, society absolutely needs to step in to enforce basic protections that the free market cannot solve.
Putting myself in their shoes is exactly why I think they should be allowed to do whatever they think is best for them. What paycheck would they risk loosing if they can't find a job anyway ? Minimum wage exclude and marginalize poor people
Asymmetry and inequalities are everywhere. I don't know which perfect egalitarian symmetric insert here another utopic adjective society you live in, but it's not certainly not mine
> Minimum wage exclude and marginalize poor people
The elimination of minimum wage would marginalize poor people even more.
It's easy to think that the demand for labor is nearly infinite but at a super low wage. I mean, I'd gladly pay someone $2/hour to clean my house, and there are probably people desperate enough for money to buy food that they would do it. But minimum wage laws generally forbid it.
But consider employees at McDonalds. Walmart cashiers. Any other minimum wage job. If you eliminate the minimum wage, you create a race to the bottom. Eventually, you end up with people willing to flip burgers or work a cash register for $2/hour. They'll be living in a cardboard box with all their belongings in a shopping cart, but at least that $2/hour will buy them some semi-decent meals to survive.
Without a minimum wage, sure we'll probably see 0% unemployment, or something very close to it. But you'd end up absolutely tanking the median wage and standards of living. The term "working homeless" would replace the term "working poor" until some extremely low-quality housing popped up that someone could live in for $200/month.
But this is true for everything where you can apply supply and demand, and there's always a balance between the two.
you end up with people willing to flip burgers or work a cash register for $2/hour
But what happens in your scenario where there is a minimum wage law ? Those people magically make 5 times more ?
Do you think you can force business to hire at any rate ? Or does the rate needs to follow productivity and current standard of living indexes ? What if your increase this rate by 100x, what happens ?
But you'd end up absolutely tanking the median wage and standards of living
If the scenario where people don't work for 2 USD/hour they have 0 of salary. So the second scenario where they work for 2 USD / hour makes everyone more rich, I would be more inclined to believe the median wage would increase, but that's a hard question. The most important is that people worked and sustained themselves.
> But what happens in your scenario where there is a minimum wage law ? Those people magically make 5 times more ?
....yes? Considering that's what we have right now? You don't need to imagine this scenario. We're in it right now. In Oregon, the minimum wage is $10.75/hour.
> Do you think you can force business to hire at any rate ? [...] What if your increase this rate by 100x, what happens ?
Obviously not. I knew someone would try to make this argument, but I think its absurd.
> Or does the rate needs to follow productivity and current standard of living indexes ?
I'd make it follow a standard of living index. What the standard should be is up for debate, but I think at a minimum, someone working 40 hours a week should be able to live in a studio apartment on their own and buy food without government assistance. Two people working 40 hours a week each should be able to have a 2-bedroom apartment while raising a kid.
> If the scenario where people don't work for 2 USD/hour they have 0 of salary. So the second scenario where they work for 2 USD / hour makes everyone more rich, I would be more inclined to believe the median wage would increase
You're forgetting that the people formerly making minimum wage would either have their wage reduced to the hypothetical $2/hour or end up being replaced by a worker willing to work for $2/hour.
If you lower or remove minimum wage, every minimum wage job will have a reduction in the wage. When an employer pays minimum wage, they're implicitly saying "I'd pay you less, but the government won't let me."
> The most important is that people worked and sustained themselves.
....yes? Considering that's what we have right now?
So if you have a magic law that force businesses to pay 5 times the normal productivity for free, then you must have a law that force businesses to pay 5000 times the normal productivity ? There must be something wrong
You're forgetting that the people
Yes I agree but then we need to look at new prices for consumers goods and services that will be lower. I don't think talking about median wage is very meaningful without comparing what you can buy with it
> I don't know which perfect egalitarian symmetric insert here another utopic adjective society you live in, but it's not certainly not mine
Societies make a decision to be as they are. If you're trying to say that you prefer an inequitable society, that's fine. If you're trying to say that nature is inequitable, and that society has some responsibility to coordinate with it to preserve that inequity, I'd say 1) that's a weird nature-religion, and 2) property rights protect the weak from the strong.
I am not saying any of those and I don't want to preserve inequity. I am worried by people trying to force society to be more equal, and in that process produce effect that are going in the opposite direction.
Unfortunately the chances of everyone are rigged because of each of our societies history and past injustices. That's something we need to deal with and it's a hard problem
> I think they should be allowed to do whatever they think is best for them.
I think they should be allowed to vote and agitate for whatever they think is best for them. And thus.... viola, minimum wage and subsequent increases.
Although I know majorities are a touchy subject with libertarians since there are like six of you total nowadays.
Please keep ideological flamewar off HN, regardless of how annoying or wrong another comment is. It leads to degraded discussion, as amply demonstrated below!
So, because the world used to terrible centuries ago, and still is in some undeveloped or wartorn nations, we should be OK with it continuing to be terrible here in one of the richest nations in the world, even though it doesn't have to be?
The argument is 1) there is no common definition of what is acceptable, globally it depends on our current living standard hence ultimately the society's level of development 2) on an individual level some would not make the same choices as you so it is ridiculous for you to make judgments on behalf of others 3) if we had implemented those kind of laws earlier, either everybody was forbidden of improving its conditions and freely shop for employers, there would have been enormous inflation (see Venezuela), or the laws wouldn't have been followed at all (most probable).
we should be OK with it continuing to be terrible
The fact is that most poor people right now are better off than two centuries ago ; so your adjective "terrible" is relative. In 200 years from now, maybe not having its own personal spaceship will be deemed "terrible" by some ;)
>if we had implemented those kind of laws earlier, either everybody was forbidden of improving its conditions and freely shop for employers, there would have been enormous inflation (see Venezuela),
99% sure Venezuela's inflation problems come more from the fact that the president-dictator takes monetary policy advice from a ghost-parrot, and not as much from implementing occupational safety standards that have been normal in North America and Europe for a century.
It’s instructive to wonder why Venezuelan rulers felt forced to print money so wantonly. Ie. why did what should be a prosperous country given their natural advantages need to devalue their currency so massively, where did their debts, ruined oil industry, and fiscal irresponsibility come from?
The answer is at least in part that the state attempted to deliver benefits to the poor not directly and honestly through taxing and redistribution, but through wage & price controls, and outright nationalization. Direct massive manipulation of the market. Obviously implementing occupational safety standards, or collecting resource extraction royalties at a rate similar to Canada wouldn’t have had this effect, neither would have a modest increase in the minimum wage that reflected natural wage growth. However there is something to GPs point; the history of labor laws in developed countries haven’t only altered the conditions a competitive labor market must operate in, but also reflect changes that have already been achieved through the competitive market. The laws against child labor, for instance, were only possible once a critical mass of the population had already pulled their children out of the labor market as productivity and living standards increased and made this possible (and don’t forget that unpaid child labour was rampant in agricultural families, and to this day remains largely exempt from legal censure in developed nations).
As productivity reaches higher levels, labor has been able to demand a greater share of the surplus through competitive labor markets and eventually agitate to institute that in laws, but it’s always been an interplay between these two effects. The massive unprecedentedly rapid reduction in absolute poverty in China where millions have left the brutality of rural poverty to work in factories that many of us in more developed nations would consider inhumane has seen this played out in an incredibly compressed timeline, and I’m certain that there are very few people living in a Chinese special economic zone who would trade places with a resident of Caracas in 2018.
You can repeat the living standards meme as often as you like, but when people think the system is rigged against them, they will try to burn down the current system (best case just by election) and replace it with whatever might be more fair. And become susceptible to crappy populist promises.
So: yes, the rising inequality is a problem, no matter how badly some want to sell that as just a part of life (at least the way we currently structure it).
And i don't want a communist utopia. But also not reducing taxes for top earners to zero.
I agree, and I don't think inequality cannot be solved. But I really do think minimum wage increase the inequality problem anyway. Also, "fair" could just mean everyone pays the same tax percentage
It's not a full monopsony, there's often choice. And increasing minimum wage increases their monopsony power because it favors big companies that can afford it (here, Amazon).
Stop right there. What about people who don't need a basic living wage, like students who still live with their parents? Why should they be pushed out of the market?
I worked in high school, starting when I was 16. It was minimum wage. Without that job I wouldn't have been able to afford a car (necessary where I lived), travel to Greece and Italy, and have my own spending money. I also gained a lot of real world experience.
Employers should pay what the position is worth. Why should people like you have the right to tell people like me that we can't willingly work?
This is the key point. There are people who aren't trying to support a family as a sole wage earner.[1] If you raise the minimum wage, those jobs go away.
> What about people who don't need a basic living wage, like students who still live with their parents? Why should they be pushed out of the market?
Part time work. You can work 15-25 hours a week at the higher minimum wage while having time to study or deal with other things. A proper minimum wage should be the amount for a worker to live on after working 40 hours a week. If an employee can not make enough to live in that area (after working for 40 hours), the employer should not be there and is taking advantage of the employees.
So the less fortunate who are forced to rely on these basic jobs should live below poverty, so you can enjoy some extra cash to travel internationally?
The reality is, in modern America the percentage of people relying on these jobs as their sole source of income is much larger than the highschoolers looking to make some extra cash. We shouldn't sacrifice the masses to enable the few to maintain an optional job, in my opinion.
You raise an interesting point, but I am honestly more concerned with people who would otherwise starve or be homeless rather than students who would not be able to backpack around Europe for a summer. Minimum wage (and other worker protections) are aimed at protecting those who literally have no other options.
> Why should people like you have the right to tell people like me that we can't willingly work?
This isn't personal, I as a member of this society have a right to make my point that the powerful shouldn't exploit the powerless. Not that I'm calling you a trust fund kid, but this is the same argument you hear from people who are sitting on inherited wealth, and appeal to "natural rights" to keep the evil tax man from taking anything away from what is rightfully theirs. Rightfully theirs, by birth alone, mind you. Think for a minute about the opposite end of the spectrum, people born into abject poverty. They have a right to a dignified life, with a job that pays them enough to survive, rather than having to beg for whatever Johnny Moneybags decides to toss into the street from the window of his Rolls.
>I am honestly more concerned with people who would otherwise starve or be homeless rather than students who would not be able to backpack around Europe for a summer.
Okay, I worked part time from the end of high school through college. I didn't go backpacking, I just graduated with a smaller student loan balance. Is that a noble enough goal for it to matter if jobs are available?
My general feeling is that if people want jobs and can't find them, that's an economic problem worth considering, even if they'll have food without it.
> If you can't pay a basic living wage, for fair hours, in safe conditions, with necessary medical benefits, then you don't have a job to offer.
Why not let the employees decide if the job is worth taking? If there exists people willing to voluntarily take a job given its wage/conditions, you have a job to offer.
* The switching cost for jobs is very high. You lose the social network of people you know at the old job, all of the knowledge and skill that's specific to that company goes out the window, you may have to uproot and move.
* Jobs are not transparent. It is fantastically hard to tell if a new job is going to be better than your current job. You know the base numbers like pay, but you have little way to accurately evaluate the culture, office politics, other people, management, company direction, etc.
* In many areas, there are few jobs to choose between. Amazon fulfillment centers are a good example because they hire many people in a areas with few other jobs to choose from. (This is also, I think, a big reason for the demographic changes towards cities in the US today: they give employees access to a more diverse job market.)
* Jobs are not homogeneous and interchangeable. One job might have better hours or a shorter commute but worse coworkers. One may pay more but have worse health insurance. There is so much variance that it's impossible to define an "optimal" job or even precisely compare two jobs.
If you, as a company, can't exchange full time work for an amount of money that keeps an individual out of poverty, you're forcing the rest of society to cover the difference.
That's not a deal any government, or any taxpayers, should want to be a part of. I don't want my taxes subsidizing profitable corporations because they can find people willing to work for sub-poverty wages who fill in the gaps using the welfare state.
But isn't using welfare to fill in the gaps the most efficient solution?
A well functioning market drives down the cost of goods and services to the minimum possible price, provided there's adequate competition. Commoditization is a good thing. The fact that bread and milk only cost a few dollars is net-good for society. Commoditization of labor should, thus, also be similarly good for society.
At the end of the day, we as a society (rightly) demand a minimum standard of living for everyone, and we collectively pay for that one way or the other. Either we pay taxes to fund a welfare state, or we pay inflated prices for goods and services to maintain wage floors. I'd argue that paying taxes for welfare is more progressive, as the burden falls on richer people. Paying inflated prices for goods and services is regressive as it's a burden that falls equally on the rich and the poor.
As long as we make sure that markets are competitive via regulation and that everything is commoditized, this sounds like a welfare problem and not a wage problem.
Not on it's own. You can't rely on free market + welfare and everything is fine. You need a number of levers to support those that might be marginalized by your system, defense in depth.
By that logic, any welfare is corporate welfare. Single payer healthcare paid for by taxpayers allows corporations to not provide their employees health insurance benefits.
For sure, that's one way to look at it, but the rest of my comment lays out why welfare is the least bad way to maintain standard of living.
This will lead to worsening conditions. For example, a person who lives with parents and doesn't pay any rent can work for significantly lower salary than the one who lives alone. For him even $1/hour is better than getting $0 sitting at home. Or immigrants who live 8 people in a room will be happy to work for a lower pay. The number of available jobs is limited. So people with higher demands, especially people with kids, will have a tough choice: either stay unemployed or live 8 people in a room too.
This sounds like a welfare problem and not a wage problem. If the market drives down the cost of labor, that's good for everyone. If there exists people whose skillsets aren't sufficient to maintain some minimum standard of living, we ought to give them welfare, either in the form of direct money or "free" goods/services.
The number of available jobs is _not_ limited, it's a supply and demand curve!
An employer doesn't just have X jobs to fill a business. They have some number of tasks to do, and there's always more they could be doing. If they have the option of hiring some people at $5/hr and some at $10/hr, the boss can figure out how to get at least $5/hr in value out of the cheaper people he hires.
I think the person living with parents is a bad example too. $1/hr is nothing, and it'd probably just be better for that person to not have a job at all. Sometimes doing nothing is better than having a job that crappy.
$1/hour is not nothing. If you work full month you get $160 which is more than $0 that you get playing games all day long (also you spend less on an electicity bill). So it is more beneficial than doing nothing.
In a market without minimun wage you'll have to compete against such people for a job.
They can if legal. I am not interested in supporting crime. You can argue that it is a crime worth comitting for many people, but its still not something we should encourage in employment law of all places.
If a job doesn't provide the means to survive then the government is subsidizing these jobs assuming you make sure everyone has enough to live.
Another issue is that the unemployment rate is no longer meaningful although that could be solved by having another statistic but unemployment is much easier to measure.
At the end of the day, we as a society rightly demand a minimum standard of living for everyone, and we collectively pay for that in one way or the other. Either we pay taxes to fund a welfare state, or we pay inflated prices for goods and services to maintain wage floors. The argument I'm making here is paying taxes for welfare is more progressive, as the burden falls on richer people. Paying inflated prices for goods and services is regressive as it's a burden that falls equally on the rich and the poor.
That is an interesting perspective that I admittedly did not think of.
However why do the prices have to be inflated? Can't the company just accept lower profits? That would be progressive since most of the profits currently go to the rich at least for public companies no?
It would actually be a good thing for the prices to be inflated because that would mean that the market is competitive. In a competitive market, profit margins are typically very thin, so unless the increase in labor cost is passed onto the customer, the business will have to operate at a loss.
because employees have inherently more power then workers in suchs an example. Workers need wages and money to survive in the economy, and usually have little negotiation power compared to (massive) companies.
You could argue we could go back to the 1800's in terms of labour standards, but don't be suprised when workers simply decide to kill their bosses and companies retaliating[1].
Diminishing labour rights is just asking for another violent class struggle.
Why would they have more power ? Employees have the power to say no, shop somewhere else, to do a shitty job / not follow orders and let the employer figure it out, quit when they want, leave the employers without the job being done overnight. They also receive something very defined and predictable (money defined in the contract) in exchange for some vague objectives where the employers needs to constantly check if the company mission is being fulfilled, and constantly update this mission.
Workers need wages and money to survive in the economy
And employers don't need wages and money to "survive in the economy" ?
> And employers don't need wages and money to "survive in the economy" ?
Not if they inherited it. The key idea here is asymmetry of power. When people are desperate enough that they would take a sub-minimum wage job, this doesn't necessarily imply a "voluntary exchange". If you're facing starvation or medical bankruptcy, you are essentially being coerced to take any job you can find.
If you're worried about people being in bad situations, why do you think laws that would prevent them from improving their situation is a good idea ? What do you do with those that are not in this situation, yet still interested in the jobs you judge not good ? How can you make that judgment for others ?
Because employers often have more power than employees in that negotiation. they'll pay as little as possible/legal, with working conditions skirting what's allowed by law.
On top of that, taxpayers will have to foot the bill by funding welfare to all these people whose labor is being exploited. Especially since they increasingly don't have the negotiating power of a union to make this idealistic vision you have of the job market fair to both sides.
Techies like to believe they're enlightened when they lean libertarian, when in reality all that amounts to is privatized gains, socialized losses.
In the past I've been downvoted for replying to such a comment with something along the lines of "that makes sense if you're a libertarian". I think people assumed that I was baiting for something but I'm actually totally genuine when I say that: if you think a totally libertarian society is the way to go then things like minimum wage make little sense, just let individuals figure out what they want and don't want to do.
If you don't go full libertarian and you think that the state should provide some level of protection then things change because if people are not paid enough to live a decent life they'll end up falling into one of society's safety net (cost of law enforcement if people start stealing, cost of welfare if they require handouts to eat decently, cost to social security if they become sick due to poor living or working conditions etc...).
In such a situation you basically end with society subsidizing these jobs indirectly by cleaning the mess. That's why it makes more sense to simply force decent working conditions instead of encouraging a destructive race to the bottom.
Now in practice, regardless of our opinions, the USA is not a libertarian state, there are security nets, there is a certain level of socialized assistance (too much for some, not enough for others). In this situation it makes complete sense to have things like minimum wages and laws making it mandatory to wear your seat belt for instance.
That leads to a society that, it appears, many people don't want to live in. Many people don't want to live in a USA where people can work full-time and yet still have miserable lives bereft of hope. Some people do want to live in that USA; we see every day the battles as these differing visions of the USA compete.
I genuinely believe that you're not asking that question in good faith; I believe that for whatever reason, you have some issue with my assertion that some people want one kind of society in the US and some people want a different kind (nothing wrong with having a different opinion), and I genuinely believe that your question is, rather than an honest question on that topic, some kind of sideways attack on this, perhaps based on the practicality of maintaining a decent society, but without actually stating your case such that it can be discussed.
Part of this belief is based on the fact that your question is a fake question (and that when it was clear that I was suspicious of your motives, you simply repeated it without any amplifying remarks - you knew I didn't understand, but you didn't do anything to help me understand you). That the answer is apparent to everyone involved, but drawing our attention to that answer doesn't actually add anything to the conversation. If your fake question did actually add to the topic, it would be a useful rhetorical device, but it doesn't. In effect, you've stated "people want to move to the US" and... that's it. How's that relevant? I don't think it is. I think it's just a veiled attempt to derail.
As such, I choose not to engage. If I have mistaken your intentions, I do apologise, but that's what I believe. In that case, at least now you know why I think you're acting in bad faith.
> Why not let the employees decide if the job is worth taking?
That's the way it should work. And in a functioning market, employees don't make these decisions alone against large corporations, they make those decisoins in large groups like voters or in a union. Thinking that each employer is free to offer and each employee is free to value whether its worth it makes for some kind of "free market" balance for labor is pretty naïve when it comes to individuals vs large corporations.
We wouldn't allow employers to bargain on risk and "letting the employee decide whether the risk is worth taking", I don't see any difference with wages.
If someone is willing to work for $5/hour, I can't pay them $5/hour, even if that's all I can afford. Not all jobs should have to pay a basic living wage for two reasons. Not all jobs create enough wealth to justify that wage, and there are lots of people looking for side work, or just a bit of extra cash, and aren't relying upon this type of job for their living.
A 12 year old running a paper delivery route on their bike doesn't need $15/hour and isn't creating $15/hour in wealth, yet the kid and the employer would be happy to agree on some lesser amount.
> But if you can't pay the minimum, then you didn't really have a job to offer in the first place!
Which minimum? Today's minimum, or yesterday's?
> But it is disingenuous to suggest that just because there are people who would take such jobs, that our economy should allow employers to get away with it.
How is it disingenuous if someone says such a thing and honestly means every word of it?
The point about minimum wage is to prevent labor abuse in crappy week conditions by making sure people are just expensive enough to take their safety seriously.
Anyone can choose their employer, it's the employer who can't pay less than some amount we as a society deem is a necessary minimum.
If anyone's going to have their freedom restrained, let's let it be the folks running businesses, hiring and firing, etc. They already hold more cards.
While this is a very welcome development it would be more impressive to see them reform their slave like fulfilment center work practises. Employees are forced to walk massive distances, have their every move tracked and are penalised for taking bathroom breaks. I doubt many people in Silicon Valley would consider $15 an hour a fair compensation for the oppressive work conditions.
Walking long distances isn't much of an issue. The human body is very well adapted to it (or built for it, depending on who you ask). Having a job that forces you to do it is good for your health.
It's forcing people who might not be in the best of shape to be bending over, reaching, lifting, etc, etc all day that results in health problems.
This new $15 line means that a very large group of labor in the US now earns less than the lowest paid Amazon worker. It removes one of the two or three primary criticisms of Amazon (at least for a while).
It's in fact a labor hammer on mom & pop businesses - who never pay well - at a time when there's an intense labor shortgage. Most likely, Amazon had to raise wages to fill its labor growth demands, and it's a PR benefit simultaneously.
Given Amazon's profits are set to explode higher in the next few years, with AWS and advertising (~$20b in profit in 2020 is likely), it'll give them a competitive advantage to continue to raise wages as necessary and crush everyone else that can't follow. Your typical small or mid-size retailer simply can't generate the kind of return that Amazon can from advertising (which has extreme margins), it puts them in a competitive league above and beyond, which will spill over to being able to better compete on labor. It's good for labor, bad for competitors.
The walking distances isn't really an issue so long as they are given adequate time to actually walk, provided proper footwear and other tools for the job (carts, for instance, so that they carry less), and given proper breaks of proper length (actually able to sit for 10 minutes, for instance). People get used to this over time.
Every move being tracked and being penalised for bathroom breaks is an issue, however.
Senator Bernie Sanders, for example, recently introduced legislation to end what he calls “corporate welfare” — and it’s pretty clear who he had in mind, since the bill was titled Stop Bad Employers by Zeroing Out Subsidies (BEZOS).
Maybe I've got no sense of humour, but I think that's unprofessional and something like bullying, rather than funny. Legislation should surely not target one individual by name like that?
I think turning your employees into welfare-dependent wage-slaves is far worse than unprofessional or bullying, but I guess that's just me and most decent people.
CEOs of large public companies have to take public heat, by name, quite often. It's a huge part of their job; otherwise they'd be COOs.
You're out of touch with the job market and reality itself. It's not easy for these people to just "get a new job". They get paid minimum wage and are probably living paycheck to paycheck. If these people just "move jobs", they're out a paycheck for weeks and may lose their car, their home, not be able to eat, etc.
> If these people just "move jobs", they're out a paycheck for weeks and may lose their car, their home, not be able to eat, etc.
This gets floated around a lot. At least in the US I can't imagine a scenario where not paying bills for 1 or 2 months results in homelessness and a repo'd car.
Being both a homeowner and a landlord, I could not pay my mortgage for a year before legal processes kick in, and if my tenants don't pay rent for a month or two there isn't much I can do about it. I most assuredly can't kick them out.
>This gets floated around a lot. At least in the US I can't imagine a scenario where not paying bills for 1 or 2 months results in homelessness and a repo'd car.
>Being both a homeowner and a landlord
You're in a totally different economic situation, and probably have little to no economic struggles at all. I'll call this out of touch as well.
A lot of the problems encountered in poverty are due to ignorance; of how things work, where to get help, where the line is, it actually makes a lot of sense that low-wage workers think that being without a job for 1 to 2 months is a death sentence.
The real problem though is that "just get a new job" may or may not be possible, but if it is possible, the mechanics of how to do that are not available to low-wage workers. It doesn't really matter that there are plenty of jobs out there if the people who could work at them are not aware they exist, or how to apply for them.
I'd wager that the vast majority of these people are not homeowners. I'm personally not a homeowner and if I missed a rent payment, my apartment complex could start eviction proceedings against me.
Now I've personally got more than enough in savings to be able to move jobs if I so desired, but when a large percentage of this country has little to nothing in savings, they don't have the same luxuries that you and I enjoy.
I got an eviction notice on my door once for being late with rent. I had the money, I think in that case my auto-pay had expired, so it wasn't transferred. My first notice that I was late was the eviction notice.
In some parts of the world, it is - often local economies are dependent on one large employer.
Working for low wages is better than no wages, but I don't believe dollars that I pay in taxes should go towards compensating underpaid Amazon employees (or Walmart, or whatever). The multi-billionaires should be the ones paying the people who work for them, not me.
And, this might astound you, but sometimes the choice is between several employers paying low wages. And regardless, the work still needs to get done; so someone has to have that job. That person should be paid appropriately.
Well, this is a nation that has a religious belief that merely educating people magically creates jobs requiring higher ed, so its not surprising our economy is also based on a magical belief that if people need jobs that are not welfare dependent wage slave tier, then that need, in and of itself, will magically create the those better jobs. Posting stuff like that on twitter is just like prayer, surely it'll be answered eventually.
Would you be able to give up your paycheck, knowing that if you don't have another by next week you would literally be homeless? With no savings, no healthcare, no "fallback", no help, nothing. Sit down, and really decide if you would be able to quit your fulltime job that is giving you about $100 a week after taxes, and have to decide how to make that $100 last paycheck last until you find another job? Maybe you'll sell your car, but then how do you get to your new job? But still, that's like $500 you could get now for it, and that will at least give you a few more weeks to think and figure this out. You think about renting out your studio apartment, but with your landlord about to evict you because you are behind on rent, you aren't sure if that will even buy you anything. And that's assuming your landlord doesn't find out you are doing that and just evict you once and for all. But first things first, you need to reduce spending no matter what, so you'll probably have to stop going into college, because you can't afford the gas or lunch or anything. Then you think about canceling your cell plan, but it's your only internet connected device, and without that you can't apply for jobs. Not to mention that you already work every weekday, so you have to spend your weekends appllying to jobs, hoping that if you get an interview that they will hire you because if you take off another day you'll get fired. So it's this game of poker where you need to determine if the job is a real offer, and if it will be better, and what your chances are of actually getting it after the interview, before you even interview. Because taking that day off from your job will not only push the little bit of money you have even lower, but could cost you the whole job entirely. Maybe you'll just save up another few vacation days to spend on interviewing at other places. It will only be another 6 weeks before you have a full 8 hours to take a day off, and maybe you can plan a few interviews that day, and save up some money by not eating as much so you have gas to drive around that day.
And if you get sick, or you get in a car accident, or there's a fire in your apartment, or anything happens, and it's all over. the house of cards all falls down and you are left with nothing, but you can't think of that, because you are too busy trying to spend every waking moment to find a way out of the miserable job that is literally breaking your body in ways that will impact you for the rest of your life. And the real kicker? You consider yourself lucky. Because you had a friend a few months ago that got fired because of his drinking problem and now is homeless and has literally nothing, and you are so happy that you at least don't have that to deal with.
It may not be "compulsory" in that someone is holding a literal gun to their head, but it's compulsory in a lot of cases by the fact that the workers have literally no other choice. They can either stay at their job that is barely keeping them alive, or they can quit and lose what little they have (a roof over their heads, and food).
I was in that position, I ended up getting fired from that minimum wage job, and by sheer luck it was the same day I had gotten another job, i was going to start working 1st shift (overnights), and luckily they were okay with bumping up my hours to 30 so I could spend my now free days to look for a second job again. I eventually stumbled into a job that paid me $10 an hour to write html and style emails to match what a designer made, and I worked on that during my overnight job until I saved up enough money and vacation days to pivot from there into a job where I was paid about $15 an hour, and from there I was finally able to save a little and get out of the hell I was in.
I have my feelings about amazon, but I will say that for a lot of people I'm sure this raise is literally their savior. And anyone that is against this, especially because they feel amazon is doing it for the "wrong reasons", need to look at the positive impact this is going to have in these peoples lives. Because this is going to get a significant number of people back on their feet, and turn them from slaves just trying to survive, to productive members of society.
How does that work, exactly? To produce this post I googled up the actual data for the state I live in, civilized area far from the coasts (near Chicago but not too close thankfully).
Hopefully this isn't too docs droppy but where I live any single adult making $1011.67 or less per month, or any pregnant woman or any under 18 year homeless kid making $3035.01 or less per month qualifies for the totally free medicaid. Its not like they cut you off at a penny over, there's a sliding scale.
Its actually much more complicated and for my 4 person household, we would get medical coverage totally for free if we make less than $2091.67 per month and my kids are completely free until we make more than $6275.01 per month, and if my wife got pregnant again she'd also be covered to the $6275 per month limit.
So... what kind of unemployment bennies do you guys get such that an unemployed soon to be homeless dude is making that much money? Actually, if you have that much income while you're unemployed (trust fund baby or whatever) how can you be homeless without a very expensive drug addiction or similar problem, if the average single apartment rent is about $700 around here?
I'm very sad to say that medicaid coverage in my state is not very good, but vastly better than my current corporate insurer; the copays and deductibles are so insane I'm considering signing up for medicaid and not working too hard on contract work next year. My kids would get better medical care, I'd get more time off, I have enough investments that I already make too much money for completely free medicaid without working at all...
That's actually another part I should have not included in that rant, because the truth is that healthcare didn't even enter my mind for the most part.
I didn't actually even have any medical coverage at all at that point in my life. There was no reason to. If I got sick or injured to the point that I couldn't work, i'd lose everything anyway, so the worry of some extra medical bills didn't enter my mind, and I didn't exactly have a ton of free time, so I just never bothered to look into medicaid.
I also didn't look into unemployment, so I don't know what my options there were either, since I wasn't really ever unemployed at any point (luckily!)
I'm trying to show what it's like to have to juggle that kind of stuff, while looking for another job as a way to get across what it's like. That kind of stuff is why people don't report workplace issues, it's why unions don't get started, it's why people will do anything to keep the job they have, because the alternative is much much worse in a lot of cases. Not to mention the crushing blow to your morale when you have to use the few hundred dollars you managed to save up over the last few months, it feels like you are taking 2 steps backwards and none forwards, and it really hurts.
And while there are often ways out of each problem individually, the crushing pressure of all of them all building up at once and the feeling that you won't ever get out of it is just so much to handle. And even if there are ways out of it, nobody wants to help you, nobody wants to explain the process. Even at this point in my life, I would have to google what to do to even start the process of getting medicaid. And if I were back then and my phone had just been cut off, I wouldn't know how to even do that. If i'm being completely honest, at the time I thought medicaid was another term for medicare, but different (and in my mind, medicare was for old people, and still didn't cover everything). I knew there was something for poor people, but I had no idea if I would qualify, what i'd have to do to get it, and even what to look up.
Medicaid is often limited in its scope and there have been times when I'm on it, it wouldn't cover diagnostic testing for more serious disorders. Also, there was the knowledge that trying to take advantage of medicaid requires experience and time and education, none of which is often afforded to the poor.
Well, OK... but depressingly its still better scope and coverage than my current corporate plan which is also very expensive. So I get more coverage at lower cost from medicaid... Its insurance season (october) and its going to be hard to pay more to get less given the info I've found about medicaid.
For example taking your diagnostic testing example, I can pay cash on the barrel for an awful lot of testing before I reach my corporate deductible and copay levels which are also cash on the barrel just different form of accounting swindling.
Culturally "I'm gonna go medicaid" is very much like cord cutting, right now very few people are doing it, but in a couple years I think its going to be the majority.
Ya know what, you are right. I should remove that part of my comment, because while it's possible to find situations that you could be a week away from losing your house or apartment, it's not as likely as the situations of:
* having to ration your food out, or just go hungry. After all, they say humans can go something like a week without food right? You can handle that.
* not being able to travel because you don't have money to pay for gas or any other kind of transportation. And it's not like you have the time to walk to the store between your 2 jobs since it's almost 30 minutes away walking, which is better than the bank which can be an hour away. And that's assuming the hours of operation let you go outside of your day or night job.
* losing your phone plan, which cuts you off from the internet and the world in a lot of ways, which in turn makes it much more expensive to apply for jobs (you have to go to a local library for internet, because all applications require online access now), manage what little money you have (no online banking, no paying bills online, no ability to cash checks from your phone, now you are going into the bank), and more.
* resorting to theft to get enough money to pay for the above things, which then does risk you getting caught and losing everything.
And every day you don't pay your rent or your bills brings you one day closer to being kicked out, and if you do get kicked out it's all over, because without a few thousand dollars and a lot of luck you aren't ever going to get another apartment, and will have to resort to living in shitty motels which is much more expensive.
So yeah, you most likely won't lose your house or apartment from one missed payment, but you can absolutely lose your ability to get to any job, which means that you then lose all of your income, which means that you are now not just missing one month's rent, but the next few as well, and you can't move at that point because nobody will rent out a place to someone that doesn't pay their bills. Meanwhile you are getting those fun yellow pieces of paper taped to your door telling you just how deep in the hole you are, and how long you have to fix everything before it's really over.
It's not compulsory, but it's where you find a job, whether it's because you're in a transition phase, a student, an immigrant, in hard times. And it's better than no job, and it sucks, and it doesn't have to be that the company reaches a 1 trillion market cap enriching stock holders and the owner makes 150+ billion dollars while the workers piss in bottles making minimum wage.
This strikes me as being out of touch to the perils of being a non-tech employee in modern day American. I hope this thread has been enlightening.
Congrats to Senator Sanders for forcing Amazon’s hand (and forcing Amazon itself to advocate for a $15 minimum wage increase). This is how you deliver positive policy change.
And I think that kidnapping someone is a greater crime than looking through their backpack without probable cause, but the government is supposed to be held to higher standards.
If you pay your employees $7.25 you deserve to be made fun off at least. Jeff Bezos recently also said Amazon deserved being scrutinised. I'm not saying this is what triggered them, but sometimes you have to take a strong position in order to be listened to.
It hasn't crossed a threshold into being a big deal, but singling out an individual does look like bullying and bullying isn't funny.
Jeff Bezos has to respect the law or face a series of consequences up to imprisonment. We all know he is going to respect the law like we all do. It is mean spirited to write a (potential) law that disrespects him directly. He can't really respond to that.
Sanders should have stuck to calling him names in a speech, or informally calling it the Bezos' Act. That is just discussion and fair game. This type of formal embedding is unpleasant at a deeper level to no-one's benefit. We can do without that in politics, thankyouverymuch.
even if that person is the richest man in the world, a US senator singling out a private citizen in formal legislation is still "punching down". you really shouldn't cheer for that.
afaik, it is commonly used to refer to situations where someone makes a joke at the expense of someone less powerful than they are.
do you disagree with my understanding of the definition, or are you implying that jeff bezos is more powerful than a US senator who made a decent run for the presidency and is acting in his official capacity as such?
The latter. Certainly, Sanders isn't powerless, he's the most popular politician in the US. However, he's only one of one hundred senators, almost all of whom are beholden to or influenced by—to varying degrees and on varying issues—the members of "the billionaire class", as he would put it. Bezos's net worth is currently over $160 billion. Q.E.D.
In a world where wealth distribution was flatter, and the richest person alive had access to like $100 million (a lot of money!), that would be one thing. The distribution is not so flat in our world, to put it mildly. Not to be pat, but money is power, and I think it's important to grasp the orders of magnitude at play here.
Except it doesn't work like this. Employment is not an unlimited supply, and when you have the choice between starving (yes some people do not have any money saved) and working for $7.25, you choose to work for $7.25.
Almost nobody who goes to work for a minimum wage job can afford to say "it's okay, I will find a better, high paying job later".
And if someone is incapable of producing more than $15/hr worth of value with their labor, should they remain perpetually unemployed and dependent on welfare? Or should they earn what they can and allow for public benefits to top them up to a survivable standard of living?
I believe people working in Amazons warehouses ended up in a situation they did not want to end up in the first place.
Adam Smith (writer of The Wealth of Nations, you might have heard of it) pointed out that forcing individuals to perform mundane and repetitious tasks would lead to an ignorant, dissatisfied work force. For this reason he advanced the revolutionary belief that governments had an obligation to provide education to workers.
I think that when you get payed $7.25 an hour you have to work so many hours that there's no way you have spare time to educate yourself to get out of that situation.
Amazon is an example of capitalism gone a tad bit too far. The market is only self correcting to a certain point.
It's great that Amazon (not only Bezos, but all the stakeholders that agreed with this step) is acknowledging that people deserve a decent pay.
Which is both a good thing for workers and something that makes sense for Amazon to provide. Amazon, believe it or not, doesn't actually want to hire and deal with workers who perceive themselves as perpetually and inevitably poor. They want to hire hardworking, ambitious people who want to move on to bigger and better things. Positioning themselves as a way up for hardworking, ambitious people who haven't developed marketable skills yet puts them in a position to benefit from the labor of hardworking, ambitious people, who are generally the most valuable people to employ.
The notion of minimum wage jobs as a stopgap that allows people to support themselves just long enough to improve their future earning prospects, as you point out, doesn't make sense--unless those people have the ability to improve their future earning prospects. Amazon is one of the very few employers, then, for whom it does make sense.
Ironically, Sanders and Amazon's other critics would probably much rather that Amazon pay people just enough money to spend their entire lives working in a warehouse for minimum wage than for Amazon to provide this education benefit. That's because someone who spends a year or two working at an Amazon warehouse, takes advantage of the education benefit, and transitions into a higher earning job is not going to believe Sanders' demagoguery.
I'd rather see actual numbers about the flow of Amazon employees who get promoted in stead of a website with their good intentions.
Apart from that: do not think that I care about the party you're on and which political person you're against. I live thousands of miles away from your country. I only care about the idea. And the idea of getting payed $7.25 in the US seems like a preposterous way of life.
But I don't have the illusion I'm able to change your mind overhere, so I'll stop wasting my time with it. I believe in the free market, but without certain rules (like a reasonable minimum income) people and organisations are able to take advantage in a way that gets out of balance which the free market won't ever get the chance to ever fix.
I don’t think we’ll come to an agreement either; my country was settled by people who decided that enduring short term hardship for the sake of a better future was a worthwhile risk, and your country was left with those who decided to stay home and play it safe. It’s inevitable that such a stark difference in basic attitudes and motivations would lead to vast cultural and political differences.
More like have to work for. People working for minimum wage will work for whatever you pay them, because their choices are that or homelessness/dying of starvation which is no choice at all. Case in point, illegal immigrants work for less than minimum wage.
Do you really want to test the limits of Econ 101?
People are willing to work for pennies. Just look at India. If you want to turn USA into a third word country with high levels of income inequality that’s how you do it.
Have some empathy. Otherwise the peasants will revolt, and they have guns.
I disagree I think it muddies the waters! A political comedian will have an agenda that they try to get across using satire, but they tell half-truths and exaggerate to make their jokes work. It's toxic, as some people don't understand the satire, or misunderstand which bits were exaggerated for comedic effect and which were based in fact.
That's a trait of humans and is not limited to comedians. In fact, the lens of comedy usually focuses on a political personality stating something completely foolish with complete sincerity in an attempt to score points.
I don't agree. I think satire, which this can be perceived as, is a means to achieve people to get to change their mind. Making fun of people on terms of race, age, gender, anything they cannot do anything about, is not something I agree with doing. But come on, this guy was squeezing out people who ended up in the situation where they had to work in warehouse packing boxes.
I don't think the poster you're replying to had that in mind. I think it was more a case of 'you catch more bees with honey' rather than draw the guy's ire unnecessarily, just make a law that does X to help people rather than call it the "F* BEZOS law that also helps people".
Because he was not breaking any laws or doing anything that dozens of other companies are not also doing. If we permit the system to exist as it is, we can't fairly blame someone who plays the game well by the poor rules we've made.
The legislation doesn't target Amazon specifically, just corporations who are leveraging government welfare programs in order to get away with underpaying their employees.
Wal-Mart is the company that would be impacted the most by this legislation.
Nah, it wasn't supposed to be funny. It was an explicit call out.
> I think that's unprofessional and something like bullying
Lol, so what is professional, building a business where your employees have to pee in bottles?
> Legislation should surely not target one individual by name like that
I'd usually agree, but under these circumstances, it's absolutely the right thing to do.
We have to change the climate, profiteers can't live under the impression that their "success" is a positive legacy. People need to be held accountable.
I really dislike the trend in the USA to give silly "marketable" acronyms to laws but as far as bullying is concerned I think when you're a high profile powerful public figure who's outspoken about certain issues your name pretty much de-facto becomes public ___domain. If it was the name of a random citizen then yeah, that would be pretty bad indeed.
If you think this is a shocking example of "unprofessional" or "bullying" behavior in American politics I feel like you must have just awoken from a coma.
As someone who lives in a country which gives its laws sensible titles, I've never understood why Americans have such convoluted names for their legislation. It seems almost ridiculously childish, especially given how serious many of the acts are.
it's not childish, it's a control tactic. combined with making the laws themselves long and complex, it discourages the populace from trying to comprehend what is actually being done on their behalf. this leaves them in a position where they are more likely to just accept what their side says the legislation does at face value.
First, you mean one of his staff. Mad scientists have underlings.
Second, you have literally no idea how much input he had into it. He may have come up with the name himself, or he may have directed his staff to come up with something pithy that spells out "Bezos" or he may have sat around with them spitballing ideas until they came up with something good. But in the end, he was the senator who introduced it, and he gets the credit.
The point is that calling them "underlings" has a clearly negative connotation, and one would hope that instead of just name-calling you'd give arguments of substance against someone.
If I referred to HRC's staff as "underlings" no one would question I was anti-HRC.
The reason that, back in the progressive era, all the eugenicists were on board with the idea of the minimum wage was that they thought that at a high enough wage "undesirables" wouldn't be able to a job and so couldn't compete away jobs from "desirable" workers. Thankfully these days we have a social safety net that generally prevents people from starving whether they could get a job or not but making people starve was part of the reason for the original support for minimum wage laws back at the turn of the last century.
During the second half of the Progressive Era, beginning roughly in 1908,
progressive economists and their reform allies achieved many statutory victories,
including state laws that regulated working conditions, banned child labor, instituted
“mothers’ pensions,” capped working hours and, the sine qua non, fixed
minimum wages. In using eugenics to justify exclusionary immigration legislation,
the race-suicide theorists offered a model to economists advocating labor reforms,
notably those affiliated with the American Association for Labor Legislation, the
organization of academic economists that Orloff and Skocpol (1984, p. 726) call
the “leading association of U.S. social reform advocates in the Progressive Era.”
Progressive economists, like their neoclassical critics, believed that binding
minimum wages would cause job losses. However, the progressive economists also
believed that the job loss induced by minimum wages was a social benefit, as it
212 Journal of Economic Perspectives
performed the eugenic service ridding the labor force of the “unemployable.”
Sidney and Beatrice Webb (1897 [1920], p. 785) put it plainly: “With regard to
certain sections of the population [the “unemployable”], this unemployment is not
a mark of social disease, but actually of social health.” “[O]f all ways of dealing with
these unfortunate parasites,” Sidney Webb (1912, p. 992) opined in the Journal of
Political Economy, “the most ruinous to the community is to allow them to unrestrainedly
compete as wage earners.” A minimum wage was seen to operate eugenically
through two channels: by deterring prospective immigrants (Henderson,
1900) and also by removing from employment the “unemployable,” who, thus
identified, could be, for example, segregated in rural communities or sterilized.
Kraft-Heinz had $26.2B in sales in 2017, of which $9B was profit. They had 39K employees. If we naively assume that all 39K are minimum wage employees working full time all year, that comes out to a payroll cost of $1.2B. that's approximately 5% of their total revenues, meaning if it had to be paid for exclusively through new sales, the price increase per item sold would likely be 5%. In reality, it would be much lower than that because Kraft-Heinz is already paying a large portion of that $1.2B in its existing payroll costs and not all of its 39K employees are minimum wage workers. So the argument that food is expensive because of employee wages is provably false.
False because you take a "real world" example and twist it to fit your beliefs ?
A good amount of the cost of what is produced comes from work. Hence the cost of inputs is also dependent on the cost of work (does the company you refer to contracts with suppliers ?)
If you force work to be paid 1 million USD / month, what happens ?
I didn't twist it to fit my beliefs: i presented a scenario that is actually more expensive than what it would be in reality and showed how even that would not be a substantial increase in cost, even if it was paid for exclusively by increasing the price of products sold.
A $1M/mo additional increase in supply costs would be less than .1% of their revenue. It just manages to be .1% at $10M/mo. Given that the $1.2B/yr payroll cost I cited above is actually only 4.5% of Kraft's yearly revenue (I rounded up to 5% for simplicity), the additional supply chain cost you present would actually be covered by the 5% price increase I initially mentioned. It would in fact be covered by that 5% even at $10M/mo.
But this company buys products from others company so ultimately an increase in wages will feed through almost all inputs, hence output. Your calculation is wrong
Yes, you already said that. You asked what would happen if their supply chain raised payroll (and therefore prices) by $1M/mo. And I answered that question.
No my question is setting the minimum wage to 1 million USD per month (per employee obviously). Of course 1 million USD / month more in cost is nothing
Obviously that wage isn't sustainable. The good news is that the majority of people discussing wage increases are making good-faith arguments about sustainable increases, and are not asking for a (ridiculous) $12M/yr minimum wage.
I'm not sure I understand what point you're trying to make by presenting a hypothetical wage that's 5 orders of magnitude larger than the situation being discussed.
That you cannot create money out of thin air, that you are only trying to force increasing the relative value of labor vs. capital / land / moral hazard etc.
If your increase in minimum wage follows productivity then what's the point ? It's like voting for no child labour laws after most of the children are not working anymore
In a free market without minimum salary, it would be difficult for people living alone and having kids (so they have to pay rent and for kindergarten or school), to compete with someone living with parents (and not paying any rent) or with immigrants living 8 people in a room.
And of course, in minimum wage societies money, resource, wealth just fall from the sky and all the people you described have kids, nannies, multiple houses just like that.
We should just ban poverty it will solve everything
Resources, houses and other nice things are created by people who work. It is not like everyone stops working after setting minimum wage. Business owners might get little less profit, but somehow I don't feel sorry for them.
Socialism has only been tried in third world hell holes like Russia and succeeded so far beyond expectations it ended up being called the second world.
A first world country going socialist would be the equivalent of increasing GDP by between 50 to 500%.
We've banned this account for using HN for ideological flamewar, which is against the site guidelines. Would you please not create accounts to do that with?
I'm not banning your other account, but if you'd please stop the incivility that appears in your comments there, we'd appreciate it.
I don't know what they have in mind, but that sounds like something you could do by improving income inequality. The top decile gets half the income. If you redistribute half of that, you can double the income of the bottom 60%. If you allocate that new money on a flat per-household basis, the high end gets something like a 50% boost, and at the low end you have millions of people in deep poverty getting more than a 500% boost.
Obviously that exact distribution is flawed, but I think it gets the point across.
The very definition of second and third world were created and based off of the cold war.
1st world = USA/Western Europe + allies
2nd world = USSR/China + allies
3rd world = Everyone else.
By definition Russia started as a 2nd world country.
Now your point about Russia not being on the level of western Europe pre-1917, is a very good point. They were year behind in industrialising (for a variety of reasons, including not being capitalist and competitive).
However other countries have tried, such as Eastern Germany. Eastern Germany and Western Germany, whilst not identical (with Western being a bit richer) were not "third world hell holes" except straight after WW2. They then diverged as the capitalist west grew and improved, and the east stagnated under a terrible regime.
Other examples could include North and South Korea, Mao-China, and Deng xiaoping- China.
Socialism does not work. It does not work in the real world.
They're paid more because they cared to acquire skills that a warehouse worker didn't. It could be the coziest simplest job in the world, but if it has a higher skill requirement, it will come with a higher salary.
Irrespective of if this was done out of altruism or political strategy, its a good move on their part and they deserve applause. It is a very positive step for their employees. Its also going to score points for Bezos in his ongoing face off with Trump. Nice feather in Sanders' cap as well. I see no losers in those directly involved in this situation.
There were unionization efforts nationwide, including a somewhat wide dissemination of boycotting on the "Prime Day" sale and appropriate lists of demands including proper access to restrooms and raising of the wages.
I don't know if that's still the case; I've seen instances where e.g. voice actors were replaced by non-unionized competitors. If the jobs shortage is big enough, people will allow themselves to get fucked over by not joining the unions and agreeing to working below the rate unionized employees have all fought for. Because any pay is better than no pay. Right?
Finally, it only took news reports of the abuse workers take and the insane money Bezos makes to make this happen.
I only wonder why the workers took such abuse... was it really better work than anything else around? Is the local economy around those places so bad that these jobs were highly desirable, or did the workers just not understand there were better things?
With a minimum-wage increase comes a higher amount of spending by these workers since the lower the income the higher percentage of spending happens, so that's more money going into the economy and spurning growth and hopefully more competition, school/health/retirement spending, and job opportunities.
> Finally, it only took news reports of the abuse workers take and the insane money Bezos makes to make this happen.
A low wage and abuse on the job aren't the same thing. Hopefully they're addressing the abuse claims, but this is more or less irrelevant to those and the coverage they received.
Ford's quote from the time is relevant today: “The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One’s own employees ought to be one’s own best customers.”