I think most of the previous "Living Wage" discussions might have been before hard sun's joining of these forums.
So I grabbed one of his comments to drag him into the discussion:
I think a wage should be tied to the value of the work performed.
But... because of our human nature, I do support a minimum wage floor, (as contrary as that seems).
I don't think a "living wage" argument can be supported by anything other than emotion. I think reasoning easily proves the argument to be only an emotional one.
The first step in discussion of a "living wage" is defining what it should include. What should a worker earning that figure be able to purchase with it?
Will it provide complete support, including health care, for a family of 6 or 7? Or just for the worker?
Will it include funding for luxuries like cell phones, TV's and entertainment outside the home or minimum necessities to live in our society?
It seems to me that this "living wage" grows over time, without regard to cost of living. In other words, it is expected to buy more and more over time rather than providing minimum living conditions.
As you, I support a minimum wage. If nothing else, to help limit sweatshops from appearing in tough times. As it is now that isn't a real problem - jobs are too plentiful - but it could be in the future.
At the same time, I also support wages designed for youth, to get them started in the working world before they need to support themselves. And wages designed for the disabled, wherein they can provide at least some of the support they need and to give them some pride in themselves. There are likely others as well, where a special "minimum wage" is appropriate.
We differ slightly Wilderness. I think your points are the details of the discussion.
I think the first question is the number, and then its justification. Currently I think $15 p/hr. is the number being tossed around.
Maybe another hook for hard sun would be a response to his comment about respecting the janitor.
Of course we should respect him. And the garbage collector too. Imagine our world without them. But what is the monetary worth of their jobs to their employers?
Right now I pay about $50 a month for garbage collection. If my service raised its price to $100 per month to maintain a profitable business and be able to pay those living wages I would opt to take my own trash to the dump. Who loses the most? It is not me.
And if they lose me, (and how many other cheapskates like me?), as customers, how much more will they need to raise prices to stay in business with a smaller customer base?
You make a good point. Whatever the product being sold, the one that pays the wages, if it is priced too high then jobs are lost. Perhaps not all (some people will pay $100 for garbage pickup) but most definitely some people will be priced out of work.
That seems to be a point that the minimum wage people never seem to get, even when we see it in real life. Somehow it is pushed aside as if it will never happen even after it already has.
This is why we have governments, subsidies, etc. Societies don't advance to well without them. If you end up having to take care of all of you own services you may not have time to enlighten so many people on Hubpages or make that cash that you spend in other areas of the economy.
I just think the entire discussion is based on some type of unrealistic Ayn Rand utopia that cannot exist, and for good reason. People organize and do things to solve problems.
Some of the comments posted may lean to your thought about Ayn Rand hard sun, but that is not the reality of the discussion.
I agree with your opening sentiment. But... my question was about justifying the demand for a living wage--in the face of reality, with reason instead of emotional should-be or desire.
The first step is to determine how labor should be valued. Whether by the inestimable value of a person, or the value of their labor contribution.
How do you think the value of labor should be priced? By the worth of a person, as a person, or by the worth that person can contribute to the success of your business?
I am not talking about some Atlas Shrugged "you are on your own" philosophy, I am talking about the reality of demanding a price above value that will become substandard a short time after it is achieved.
I offered you a realistic illustration in that "widgets" example. Nothing Ayn Randish about that. You were that widget employer, and you want to and try to do the right thing for your employees. So how do you address the reality of that example?
I answered twice. I attempt to get help where I can. Are you arguing against minimum wage? I think I'm just growing bored of this scenario. We all know tough choices must be made in business.
Those of us with triple bottom line philosophies try harder to consider more than just profit. With this as a starting point. the "value of labor" is a long and laborious discussion vastly dependent upon the particular labor.
The value of any laborer I employed would be determined by how he or she enhances quality of life for our society, which goes way beyond monetary rewards. If my business isn't enhancing quality of life by my standards I shut up shop. I can't specifically answer your question in a nice neat little box. It's just not how I think. Is that closer to the answer you're trying to get out of me?
It appears the best that will be made.
I really thought I was illustrating a simple thing.
I have been a small business owner in the very labor intensive restaurant and hospitality food industry.
I considered myself a good and fair employer. I paid fair prevailing wages, and rewarded superior performance, (which also benefited my business), when appropriate.
But, I could never afford to pay more for labor than my sales could support. And like that widgets market example, restaurants very definitely have price ceilings.
If I had to pay more than the value of that labor was worth to the success of my business, I couldn't just raise my prices and continue merrily along, I would have only two choices: cut jobs or close the doors.
I have done both.
It escapes me that this simple logic is so arguable.
And as a ps. for each failed business effort, I did seek every possible government and private source for help keeping my doors open. I don't know what system you think is available to support a failing business, but I couldn't find one.
Of course we must make tough business decisions. I've worked for myself most of my life and just didn't hire employees. No failed businesses. So, I respect your efforts especially as I'm not hospitality industry material. I just don't see why so much fuss over my answer, especially when you state the first move you made when you had failing business was exactly as I said.
The smaller businesses I did work for were triple bottom line focused and, yes, they could sometimes raise prices and sometimes had to make other decisions. It is obvious. Apologies that you didn't get the answer you desired but got the same answer you had come to previously?
We still must strive, as a society, to treat the triple bottom line as best we can. I agree that greed, too often, runs wild no matter what side of the coin you're on. We must emulate and innovate upon systems that work, but the spin on that discussion is dizzying.
You are right about that Wilderness. A good, easily understood example might be the fact that bread doesn't cost a quarter anymore.
Another point is that increasing wages is very often at the root of inflation. It doesn't stop with minimum wage earners, but everyone above them as well.
I saw on the news that wages rose 3.2% over last year, the largest in a decade. And immediate fears of inflation sprung up; wages most definitely have a very large effect on inflation.
I generally lean more with GA and Wilderness on this issue. The problem with it is probably best reflected in my own conflict. On the surface, I think it's a great thing to raise the minimum wage to $15/hour and having a living wage should take the pressure off of government to provide as many services, thereby shifting the burden from the public to the private sector.
However, in practice, it's a very difficult thing. I sympathize with GA's example of being a small business owner. It could put many of them out of business or force them to raise prices which could put them at a competitive disadvantage.
The issue of mandated minimum wage increases has had a direct impact on my working in a business where we're seeing labor increases. It has a direct effect on the consumer. The business either eats the increase or passes it on to the consumer.
It's a tough issue.
Hi there crankalicious, let me throw you a curve ball and introduce another point in this "living wage" controversy.
Understanding that most nations, (including the UK), are economies based on the capitalistic linchpin of supply and demand, what do you think will happen to the buying power of that $15 living wage when it increases demand on a limited supply?
Use housing as an example. There are a limited supply of units in each price range - from low-income to luxury. And I say that all are now priced at what the market will bear.
Do you suppose those prices won't go up when there is more money creating more demand, increasing what the market will bear?
In one or two years I think the affordability issue for those new $15 earners will be the same as it is now for $10 earners.
I can't see how just mandating a higher wage rate can fix the problem.
I would think you are correct, given my understanding of economics.
I just read an article about the Seattlization of cities and how other cities are trying to avoid becoming the next Seattle. Basically, the cost of living in Seattle has gotten very high.
Now, that has more to do with the increase in the "living" wage. It also has to do with the number of tech firms, Amazon, and various other things. Basically, everything is expensive in Seattle.
So, one wonders whether workers in Seattle calling for $15/hour is even applicable to other economies. Each one is different. In fact, if companies in Seattle want workers, they probably need to pay $15/hour or they won't have anyone to serve their coffee; etc.
For people to see workers in Seattle getting $15/hour when the cost of living there is so high and then demanding it for wherever they are working isn't reasonable.
I agree with Wilderness in that just demanding what you think is fair or equitable is ridiculous. One problem I've personally seen is that you get low-skilled workers making as much as people with more skill and more experience and then the business is forced to raise the wages of their mid-tier people.
I'm not saying the minimum wage is fair or who should be setting it, but it shouldn't be a national wage. It should be set based on the cost-of-living in the community. If rent in one community costs 30k/year and the other it costs 15k/year, why should the minimum wage in each community be the same. That's actually NOT equitable.
Sorry for going stream-of-consciousness.
Hi GA: I would like clarification on one point e.g. you mentioned that you pay about $50 a month for garbage (rubbish) collection, and infer in your comment that it’s a private service not provided for by the Local Government?
Showing my ignorance, I just assumed that (as in the UK) collection of household rubbish (garbage) in the USA was a service provided by Local Government (State), and paid for out of local (State) taxes!
I am also a little surprised on how much you pay per month for your rubbish (garbage) collection e.g. having checked my Council Tax Bill (Local Government Tax), I’m paying just £13.22 (about $17) per month for weekly collection of recyclable waste and fortnightly collection of non-recyclable waste.
My Total Local Tax Bill (based on 1% of the value of my home), which pays for ‘All’ Local Government Services, is just £122.50 (about $156) per month.
Hello Arthur, (did my memory serve me?)
Regarding that garbage collection point
That $50 was for easy illustration and comparison. The more accurate number is $45 per quarter, (I misspoke with that month part, but the illustration is still valid), or about $15 per month for service similar to what you described.
I now live within a city limits area, so our trash pick-up is run as a municipal provided service, but we are billed for the cost on a quarterly basis, and I don't have a choice of "opting out.".
Trash collection for non-municipal areas is done by for-profit companies, and I think their rates are $25 to $35 per month. And I would have a choice of using the service.
Thanks for the clarity GA, yes it is Arthur here….
So the only real difference between the USA and UK is that in the UK, even if you live in a rural area (small country village with a small population e.g. 200 residents) you still get the same level of ‘Service’ from your Local Government for the same general rates as someone living in a big city.
Nice discussion, and I don't entirely disagree with anything you stated. There are differing circumstances that should be accounted for. I also don't really have the will, or the knowledge, to determine all the factors that go into determining a living wage across the country. I can evaluate differing expert analysis, but that's why we have experts,...so leaders can choose the best path forward...if they even consider what experts say. I'm a strong believer that the best leaders get information from people in the fields involved in the decision making process and make final analyses based on that information.
"It seems to me that this "living wage" grows over time, without regard to cost of living."
This is where I may disagree. Feds haven't raised min wage increase was 2009. It should probably go up a bit. It's at that where I live. However, as I stated in my comment to GA, I like leaving most minimum wage increases up to localities.
"I can evaluate differing expert analysis, but that's why we have experts"
But are those "experts" evaluating the cost of living at a minimal level, or are they injecting their own concept of morality into the equation? Experience says the latter.
"This is where I may disagree. Feds haven't raised min wage increase was 2009."
If that's why you disagree then you didn't understand the sentence at all, for it references the "living wage" being demanded, not the minimum wage.
Leaving it to localities - how large a locality? A state? A city? Town? Village? A ranch in the middle of nowhere? At some point the "locality" is not representative of what your intent is, seems to me.
You are right as far as living wage vs minimum wage. However, I took GAs statement "But now you must pay $15 p/hr as a living wage." As, well, now I'm bound by law to pay a that $15 living wage.
As I stated before, I'm not an expert here, but states and cities have had some success with having their own minimum wages. It's not my job to craft a minimum wage policy for the entire US and I don't care to do so.
"But are those "experts" evaluating the cost of living at a minimal level, or are they injecting their own concept of morality into the equation? Experience says the latter."
Well, this isn't too hard to understand and is why I say we need good leaders that make the decisions in the end using the data, and conclusions, they are presented. If the leaders agree with any morality that may be in the conclusions, then what is wrong with that? We are now at the point of zero morality?
My original point stands. As a developed society we have a responsibility to do every thing we can to ensure that people working full time have a reasonable standard of living. This is one way societies, and humans, evolve. That next malnourished worker could have helped invent that medical device that saves lives.
It is what it is whether some wild west libertarian ideals get in the way or not. And, I often find myself as a libertarian on individual freedom issues. Unfortunately, economics are never in a bubble and treating them as such results in pain. The world's strongest economies with highest life expectancy, quality of life, etc. right now recognize these things.
The value of any work should amount to a living wage as long as that work is performed at acceptable levels/number of hours etc. I think this is a basic ethics, and standard of living issue not an emotional one. Too many people not making "living wages" and we have very little buying power, and begin to look like a third world country. Abandoning ethics has consequences across the board..that's just reasoning.
At the same time, a "living wage" as a number needs to be thoroughly analyzed considering multiple factors. I support minimum wage, but don't think what's right for Seattle is what's right for Topeka. Thus, I kind of like leaving that up to localities.
Also, a clever debater can make great arguments for the monetary value of most any work. So, it always comes down to societal norms and emotion anyway.
This could be a great thread hard sun. Just think, a non-Trump topic. dare we hope?
Anyway, to your point. Check out this basic picture.
You, hard sun, own a small business making widgets.
As with any business, all costs are factored into the selling price of your widgets. But, also like all businesses, the market has set a price ceiling for your widgets.
Folks will buy all the widgets you can make at $10 each, but won't buy them at all at $15 each.
Now being the good guy you are, you want to offer the best pay you can to your employees. And that is $10 p/hr, for 10 employees--which is the number you need to make your widgets.
But now, the reality is that a decent living wage is $15 p/hr.
What are you going to do?
An honest appraisal determined that the value, to you, for the work needed to produce your widgets was $10 p/hr.
But now you must pay $15 p/hr as a living wage. The next "but" is that the market won't buy your widgets at a higher price, so what do you do?
Cut jobs until the total labor dollar, (at $10 p/hr), you can afford--and stay in business--equals the number of jobs you can afford at $15 p/hr?
Can you get your widgets made with fewer employees? Do you feel remorse for the employees that now aren't even getting that $10 p/hr. because they no longer have a job?
Forget localities, this isn't about cost of living, it is, or should be, (by my thinking), about the value of work.
Do you think your widget customers will give-in and say, hey, he's trying to do the right thing so I will buy the same amount of widgets at $15 each instead of $10 each?
Think like a business owner hard sun, how can you not price your labor by the value it produces--and still stay in business?
Think like an employee, your boss offers you a 50% wage increase but demands a 100% labor increase in return. Double the work for only half again the money. What would you do?
As the employer, I go to one of the various levels of government and ask for tax breaks or some other form of welfare that allows me to turn a profit and still pay the minimum wage. If that minimum wage is a living wage, and this is happening with other businesses, then the government will help out.
If the minimum wage is well above the living wage than its too high and i would't support it, just as an aside
There has never been and never will be a total free market that works on any kind of real level no matter how much we emotionally want to think there can be.
But, by my thinking it shouldn't be, and never will be, entirely about the value of work either. There's too many other factors involved. Am I the bosses son?
I could not go along with this at all, for my opinion is that tax breaks should not be offered in hardly any circumstances. Certainly not as a subsidy to keep a business in operation and making a profit. To my mind that is a losing path that never truly ends well.
So the alternative is to offer charity to the employee, which is what we already do. Either way, though, the tax base is used to subsidize work which cannot support itself with the value being produced and THAT is not a very good option, either!
A couple clarifications hard sun.
When I speak of a "living wage" I am not equating it with a "minimum wage." The living wage, ($15 was only the current quesstimate, it is the concept not the actual amount I am discussing), is intended to represent a wage that will do what you advocate--allow a full-time worker to live at a reasonable level of security.
To me, a minimum wage is a wage floor, which as has been noted helps stop the reemergence of sweat shops and employers abusing employees because they can.
Reading your first point seems to be saying that if you can't make your widgets profitably, then the government ought to subsidize you so you can keep making widgets -- instead of going out of business, as unprofitable businesses should.
You don't have a right to make widgets, so why should taxpayers, (the government), pay you so you can?
I also don't believe there should be a completely unfettered free market, but that wasn't part of my reasoning.
As a business owner, (and let's add a wife and kids to your mix), if you can make a small profit selling widgets at $10 each, but the market loves your widgets and would gladly pay $20 each to get them, and, you are already making as many as you are capable of, would you raise your price to $15 or $20, (you wouldn't be cheating your customers, remember, they would gladly pay $20), to make a little more profit and make a better life for your family, would you raise your prices?
Remember, you are already a good employer; good living wage pay rates, benefits, happy employees. Would you, (and your family), continue to stay in the same life place provided by that small profit, or would you bump the price just a little to prepare for your kid's college costs?
Now, from a different direction and going back to the first $10 widget scenario. Your business is doing fine making that small profit, but margins are thin. A $10 p/hr employee comes to you and says my wife is pregnant with twins, I need $20 p/hr now to live. You owe me a living wage, so I demand a raise.
What is your answer?
I know I am narrowly focusing on this one aspect, but if there is no understanding of this basic point -- that the purpose of owning a business is to make a profit/living, then the points that follow won't be productive either.
You don't have a right to make widgets, so why should taxpayers, (the government), pay you so you can?
This is how the system operates. So, I answered your question GA. The purpose of owning a business goes beyond profit. It goes to the triple bottom line. That's the school of economics I attended.
Are you trying to make an argument against capitalism? You are certainly making a good one.
Does the monetary value of the work really matter? If it is a matter of ethics and not value, then it would not seem so.
But at the same time, the value DOES matter, no matter how much we decry the morality of paying a wage that will not support a single person, for if it is too high the wage becomes zero as the job goes away.
A conundrum, then, as society will not pay more than they will pay, and that figure can be less that what some determine is the minimum wage to live on.
The idea of a minimum living wage is fabulous. But enacting such will run up against the human trait of greed - not just corporate greed, but greed also of those who'd benefit.
If it could be decided and agreed upon the definition of a living wage, that is, what a living wage is expected to deliver, then the enactment would be cinch, right? No or few individuals would disagree with this, and businesses/corporations would totally be in line with it.
Sadly, none of this is possible. Yes, a modicum of agreement can be reached, but nothing widespread enough so that the enactment of this policy would be by consent rather than coercion. Human nature has demonstrated, and continues to demonstrate traits that counter most of what is needed otherwise.
Despite this, I do support a minimum wage, and believe that those who must, for the time being, labor under that wage, that their goal has to be to obtain more skills to gain better paying jobs. For the handicapped and elderly who can't do this, various forms of social assistance are already available.
In a way this is already done, in that if an employer doesn't pay that living wage, the myriad of entitlement programs we provide will.
The problem that I see is that that "wage" continues to grow, ever increasing what it is intended and sufficient to purchase. The latest large addition, of course, was ObamaCare, but it has been on this track for a long time. As you point out, the greed of the people is never ending and whatever figure they receive is never enough.
"if an employer doesn't pay that living wage, the myriad of entitlement programs we provide will".
So the greed has expanded entitlement programs beyond what was intended - can't disagree with that. We've seen some movement in years past to means test some programs like welfare, though if we want a truly effective and less greed ridden system of government provided social assistance we have to do this on a wide scale that, sadly, most of society won't accept.
Yes, I remember the "workfare" that was tried a few years ago. And the immediate cries that it was "demeaning" to have to actually work for what was received.
But I'm not following the rest of this; what wide scale are you referring to and how would it work?
Hi Hxprof, I saw the reality of the question a couple times in your comment: human nature.
Whether it is the greed and avarice of the employer or the greed and avarice of the recipient, human nature is the factor that confounds our kumbaya idealists.
You just can't pay $20 if you only have $10 in your wallet.
Yep. Because of human nature, our kumbaya idealists can only have their way via coercion, which fortunately our constitution prevents, at least on a grand scale.
We've seen the constitution subverted in so many ways, however ,by kumbaya radicals, that we're actually seeing the effects via Obamacare.
I’ve just spent the past 90 minutes reading everyone’s comments with interest.
It’s a good question, but one which I find difficult to answer for several reasons, including:-
• There isn’t a simple right or wrong answer, as there is an element of ‘political view’ e.g. based on economics a ‘Capitalist’ will have a different perspective to a ‘Socialist’; and from both perspectives valid points are made (politics).
• All the discussion in this forum focusses predominantly on the USA; and although the principles and ethics of ‘minimum’ and ‘living wage’ are broadly the same in the USA as in any other modern industrialised free democratic country, and the principles of economics is the same worldwide, there are some subtle differences from country to country that makes some of the comments specific to the USA a little difficult to fully follow in this forum for a Brit (language barrier).
• The gulf between the USA political spectrum and the UK political spectrum e.g. whereas USA Republicans equate to UK Conservatives, and USA Democrats to UK Liberal Democrats; there is no equivalent for British/European Socialists (such as the Labour Party) in American Politics e.g. my politics is on the British Socialist Spectrum, so some of my views may be more left wing radical than many Americans views.
Although, like ‘hard sun’, I studied economics at college as one of the exams I had to pass in order to obtain my ONC qualifications in ‘Business Studies’. FYI, an ONC is equivalent to two ‘A’ levels (Advanced Level), and is just one step down from a university degree. So in this respect I have been able to follow and understand the valid economic arguments in this forum debate.
So putting my ‘Intro’ aside, rather than trying to answer the question I would like to convey what happens in the UK in respect to ‘minimum’ and ‘living’ wages; and leave you to judge on how the UK compares to the USA.
Prior to 1998 there was no ‘legal minimum wage’. The Labour Government introduced the ‘Legal Minimum Wage’ (known as the National Minimum Wage) in 1998; which at the time meet with fierce opposition from the Conservative Party for obvious political reasons.
Nevertheless, with the Labour Government having a huge majority in the House of Commons the law was passed. And at that time, to calculate the ‘National Minimum Wage’ the Labour Government set up the ‘Low Pay Commission’, which is an Independent Government Body. An Independent Government Body in the UK is a Government Department that is NOT answerable to the Government, but only answerable to Parliament e.g. it helps to reduce the risk of Governments interfering with Departmental Affairs for Political Reasons.
The Low Pay Commission consisted of 9 Commissioners, an equal mix of Employers, Trade Unionists and Academics; all appointed by the Department for Business, Innovation and Skills; this Government Department being answerable to the Government.
Each year, the recommendations made by the Low Pay Commission to the Government were advisory only, but the Government of the day would usually accept the minimum wage levels recommended by the Commission and introduce them as law as part of the Annual Budget which comes into force every April.
When the Conservatives came to power in 2015, rather than scrapping the ‘National Minimum Wage’ (which they bitterly opposed 17 years earlier), they upgraded it to the ‘National Living Wage’.
Because of the good work done by the Low Pay Commission over the years in raising the minimum wage the difference between the old National Minimum Wage and the new National Living Wage is marginal e.g. the new rates (introduced in April 2016) are only marginally better than the old rates; but what’s more important perhaps, is that the Government’s rate for the National Living Wage is set at 60% of median UK earnings e.g. it makes the calculation automatic (based on economics) and largely takes it out of the political arena. Albeit, there are plenty who argue that 60% of median UK earnings is too low e.g. the current legal ‘National Living Wage’ in the UK is just £7.83 (about $10) per hour, whereas the Living Wage Commission argues that the minimum Living Wage should be £9 (about $12) per hour.
The Living Wage Commission (set up in January 2016) is an Independent Non-Profit Making Organisation run by a body of employers, trade unions and independent experts, who supports and promotes the goals of the Living Wage as an attainable benchmark for employers committed to ensuring their employees earn a wage that meets the real cost of essential goods and services.
The Living Wage Commission gets its data directly from the Resolution Foundation. The Resolution Foundation (established in 2005) is an independent British think tank, and its aims are to improve the standard of living of low- and middle-income families. Its recommended rates are calculated annually based on the best available evidence about living standards in the UK.
As well as being a ‘Pressure Group’ (Lobby) on the Government, the Living Wage Commission encourages Companies (Industry) to sign up to commit paying the Living Wage as recommended by the Commission. To date, since January 2016, 4,928 British Companies (of all sizes) have signed up to paying the Living Wage recommended by the Living Wage Commission; which is higher than the Legal Minimum Living Wage set by the Government.
I came back to this one Arthur.
In the USA the concept of a minimum wage is to prevent unscrupulous employers from taking advantage of employees. Since our labor pool is almost always larger than the job pool, it would be easy to find someone willing to work for $5 p/hr--because some money is better than no money.
Our minimum wage floor equates, very roughly, to a reality that if a business can't afford to pay at least a minimum wage, then it shouldn't be in business.
A general rule of thumb for the business entities I have been involved with, (labor intensive businesses), is that labor costs need to be no more than about 34% of business costs in order for a business to hope to be profitable--and stay in business.
My intent with this discussion was to be about the economic realities of a "living wage" demand within the concept of our society, which is much more capitalistic than socialistic. It was not to debate the virtue or desirability of one over the other.
I would think a British business perspective would have to be the same. The labor costs would dictate the product price and number of employees it could sustain.
Putting aside niche markets, aren't there also market-set price ceilings in the UK? Would you, (you, as a generic customer), pay $4 for a scone today that you paid $2 for last week. Or, if you bought 6 scones a week before, would you now cut back to 3 scones at the new price?
Do you think your market economy is so different that scone customers would just shrug and pay the higher price without any buying pattern changes?
Even understanding the differences in our societal perspectives, I don't see that as a reasonable expectation.
If as a British scone maker you have 6 employees before a 50% labor cost increase, would you cut 3 jobs, or raise your price and sell fewer scones, which would probably still mean job cuts because you don't need to make as many scones?
Let me ask this. If you were a business owner, with your socialist-leaning, perspective, and were making $60K a year, from your profitable business, to support you and your family, would you just accept a decrease in your profits/income to pay for increased labor costs, or would you take steps to maintain your income level?
What could those steps be other than cutting jobs or increasing prices?
I am struggling to make a point that I don't think the discussion is confined to a variant of our blended Capitalist vs. Socialist perspectives. As long as any Capitalism is involved I think the realities of these illustrations will be the same.
Starting from a business cost model of your "National Minimum Wage" I don't see how the realities can be any different.
When your Living Wage Commission achieves a new increased living wage mandate, won't those UK businesses have to adjust to accommodate it? I can't imagine a business just deciding to allow profits to decline with each wage increase.
And regardless of cultural differences, and like the "... shin bone connected to the thigh bone...", isn't everything else produced by labor going to move as labor costs move? It will cost more to build a house now, so surely it must cost more to buy it. Which means the affordability level of wage vs cost will most certainly re-equalize itself to the new numbers. Meaning you couldn't afford it on $10 p/hr this year, you probably won't be able to afford it at $15 p/hr. next year.
Do none of these USA realities exist in the UK?
Thanks for a comprehensive and detailed reply. In spite of our cultural and political differences it does predominantly come down to ‘economics’ so (as you are indicating) there shouldn’t be a great deal of difference between the UK and the USA.
I’ll cover each of your main point in turn, and see where that leads:-
1. In the UK part of the concept of a legal minimum wage is as you describe for the USA e.g. to help prevent unscrupulous employers from hiring cheap labour; but also, the main emphasis is to help ensure that even the lowest of the paid (full time workers) receive something approaching a ‘living wage’ so that those people don’t live in abject poverty.
2. Yep, if a business can't afford to pay at least a minimum wage, then it shouldn't be in business.
3. Yep, the 1/3rd rule is a good guide e.g. 33% Labour Costs, 33% Overheads and 33% Profit; but this all depends on the business, and other factors. There are some British Businesses who (for various reasons) do operate on a small (single percentage figure) profit margin e.g. British Supermarkets squeeze the profit margins of their agricultural suppliers (the farmers) so as to pass the savings onto the consumer (shopper) as a way of keeping food prices in the shops low (part of the ‘price war’ that’s been raging between competing British Supermarkets for years).
4. Yep, focusing on the economics of ‘living wage’ demands, rather than the politics, should give a more constructive debate; and in that respect I am trying to put my ‘civil service’ hat on rather than my ‘Socialist’ hat.
5. Yep, from a British Business perspective, it is generally the same as in the USA (and anywhere other Industrialised free democratic country in the world) e.g. Labour Costs do have an impact on the Product Price and Number of sustainable Employees; but there are other factors involved and although the Labour Costs is a major factor it doesn’t on its own ‘dictate’ the Product Price and number of sustainable employees.
Other factors that can also influence Product Price, number of Employees, and what wages a Company can afford to pay, may include the state of the economy e.g. economic growth; the relationship between ‘Supply and Demand’; the level and strength of ‘Competition’; Inflation; changes in Productivity; Marketing Strategy, and the Company’s Policies etc.
6. Yep, reference your ‘scones’ scenario. As part basic economics, there is a relationship between ‘Price’ and ‘Demand’, and a good financial expert will advise the Company of the best price to maximise profit as at that time. But nothing is static, and many changing factors can influence the Price/Demand ratio, so it’s something that should be monitored and regularly reviewed e.g. a sudden increase in popularity of a ‘Product’ may outstrip ‘Supply’ and may encourage ‘Prices’ to rise (Supply and Demand) temporarily, until either the Company increases ‘Productivity’ (such as by taking on more employees) or other competing Businesses fill the void to meet the increased ‘Demand’ etc.
If a Company, in the face of ‘Competition’ finds it can’t compete at the market rate for the Product its making, then it will go out of Business and its Competitors will take up the slack. If it ends up with there being not enough competition due to the big Companies (taking advantage of the ‘Economies of Scale’) and undermining the smaller competitors, then there is the risk of the larger Companies subsequently pushing prices up because of the lack of competition. Hence why we have the Competition Commission (an Independent Government Department), who has the powers to prevent mergers of large Companies if they feel it will destroy competition in the free market.
7. Reference your question on (if, as a Socialist, I owned a Business earning $60k) whether I would take steps to maintain my income level or decrease my profit margin in order to pay higher wages.
It’s a good question, and my answer is simple: I would happily raise the wages at the expense of my income level.
I’m not greedy, and my needs are modest e.g. I don’t care for big houses and fancy cars, or a luxurious life style; and other than having enough income to pay the bills and have a few small luxuries, money doesn’t interest me. I get far more enjoyment doing DIY around the home and growing organic vegetables in my back garden than going out wining and dining.
And in Britain, my views in the Business world are far from unique. In Britain, there’s a plethora of ‘non-profit’ making Organisations, whose prime goals are to put ‘people before profit’ who successfully compete with ‘Private Businesses’. One such ‘non-profit’ Company is my local ‘Utility Company’, who supplies electricity and gas to my house (Bristol Energy), and because they are non-profit making they undercut all the other commercial companies; which is why I signed up to them, and in doing so cut my electricity bill by over 20%.
Welcome to Bristol Energy: https://youtu.be/ylsCnf_4pt4
Also, a prime example of a British Billionaire Businessman who as a philosophy puts ‘people before profits’ is Richard Branson. Richard Branson owns more than 400 Companies and has a personal net worth of $4.9 billion (for comparison, Donald Trump’s net worth is $3.1 billion).
Richard Branson’s Work Culture Ethics: https://youtu.be/V67nDvfNQV0
8. Yep, when the Living Wage Commission announces its new annual increase in its recommended ‘Living Wage’ the UK Companies signed up to the Commission do have to make adjustments to accommodate the increase in wages; but those Companies (almost 5,000) have voluntarily signed up to the goals of the Living Wage Commission, and are willingly committed to absorb those costs into their Business Plan; it’s their choice. Although to put it into perspective, there are about 5.7 million businesses in the UK, of which over 99% are small businesses employing less than 250 employees. So the 4,928 British Companies who voluntarily raise their ‘living wages’ in line with the recommendations of the Living Wage Commission is just a drop in the ocean; but nevertheless, it shows that there are Companies in the UK who do have work ethics that is more than just ‘Capitalism’.
9. As regards your last point e.g. if Labour Costs go up then everything else costs more. It’s not necessarily so: Yes increase Labour Costs can increase the overall cost of Production, but it’s not always the case; especially on the macroeconomics scale.
On the microeconomic scale (the Company itself), increase wages can be offset with for example increased ‘Productivity’ e.g. employing better skilled labour and or increasing mechanisation, streamlining production process, more aggressive marketing etc.
On the macroeconomic scale, in simple terms, more people in an economy earning more money increases the spending power (propensity to spend); the concept that the increase in personal consumer spending occurs with an increase in disposable income. Thus creating a greater demand for Products, which in turns can stimulate increased Production (taking on more employees); ‘Supply and Demand’. This kind of economic activity does tend to stimulate economic growth, which in turns puts upward pressure on ‘Inflation’. In turn, the economic policy of British Governments in times of economic growth and inflation is to raise the ‘Base Interest Rate’ to help siphon excess money from the economy (easing pressure on Inflation) by encouraging more people to ‘Save’ rather than ‘Spend’ because of the Higher Interest Rates.
Arthur, much of your response is a level or two above the basic understanding I was trying to reach in this thread. A basic foundation for the conversation to be started from, ie. what should be the basic determiner of labor value; the value of the labor provided to the employer, or the needs of the labor provider.
An example of those next level discussion points might be your comments about "other factors" that determine price. I agree, and will gladly discuss such points, but I think a mutual understanding of the basics must first be established. Otherwise, it would probably a case of talking past each other.
A couple notes:
Your point #2: I agree. And our Federal Minimum Wage laws require it. But the discussion was about a "Living Wage," which, in the climate of current US debates is being discussed as around $15 p/hr. (about 50%, (51,67%), to be exact), more than our current Federally required minimum wage. Perhaps that mix-up was due to you Brits looking at what you call a minimum wage as being the same as a "Living Wage."
Point #3: That 33% profit implication is not how I understand it. We agreed on the first 33% being labor costs, and the second 33% being fixed-costs; rent/mortgage/insurance, etc. etc., all the semi-static and recurring cost to operate a business. But it is that last 33% where I disagree.
Remember I am speaking from a food service business model perspective, We would love to have a 33% profit margin, but that isn't how I experienced it. (notice I refrained from just saying you are wrong ;-)), Our profit does come from that 33%, but so does cost of materials, non-static recurring costs such as repairs, replacement costs, advertising, and many other non-fixed costs that every business will have
We would typically see a single digit, (around 8 or 9%), or sometimes, if we ran a tight ship, a low double-digit, (11-14%) profit margin.
To think businesses, (such as we are discussing), achieve a 33% gross profit margin is unrealistic.
There is much more to discuss in your response. And much of it I agree with, like the the obvious national and societal benefits of businesses pursuing a TBL, (Triple Bottom Line), business model, but I am still trying to establish the basics of the discussion as it relates to the huge majority of businesses, which in the US are the category labeled Small Businesses.
Now, about that National Living Wage gov.uk page: National Minimum Wage and National Living Wage rates
Well damn, I just misclicked something and lost half a page of response. Sugar!
Anyway, Age determined pay rates? Sounds like a can of worms to me.
Yep I agree, with the subtle difference in our cultures it is so easy to ‘talk past each other’; I often have this problem when corresponding with my American associates by email, and end up having to simplify my text to a very basic level to find common ground of understanding.
In answer to your first question:
• “What should be the basic determiner of labour value; the value of the labour provided to the employer, or the needs of the labour provider.”
It is a good question; but from my perspective, as a Socialist, and with my education in Economics, I can’t give a ‘simple’ answer.
The best (most basic) answer I can give is “It’s an element of both factors”.
To expand on my answer above:-
The value of the labour provided to the employer is a basic ‘important’ determiner e.g. you wouldn’t expect someone applying for an unskilled job, such as stacking shelves in a supermarket, to earn as much as an Accountant.
However, the ‘need of the labour provider’ should also be a factor e.g. a person stacking shelves should expect to receive at least the ‘legal minimum wage’, to help reduce the risk of that person living on subsistence (below the poverty line); and for that person to receive the other basic working conditions (such as in the UK six weeks paid holidays, paid sick leave, maternity/paternity leave etc., all of which are basic rights under British law).
While in contrast, the Accountant would quite rightly expect, with his qualifications and skills to receive a good wage well above the legal minimum wage.
As regards your notes on Points #2 and #3:-
Point #2: Yes, in Britain the distinction between ‘minimum’ and ‘living’ wage has become blurred in the last couple of years thanks to the Conservative Government tinkering with what was the legal ‘Minimum Wage’ and rebranding it as ‘Minimum Living Wage’ for workers over the age of 25. That’s why I also referenced the work done by the ‘Living Wage Commission’ because there figures is closer to what many would consider a more realistic ‘Minimum Living Wage’ e.g. the Government’s idea of what a minimum Living Wage should be is £7.83 (about $10) per hour, whereas the ‘Living Wage Commission’ suggests the minimum ‘Living Wage’ should be £9 (about $11.50) per hour.
I guess the nearest comparison between the USA and UK is the tinkering the Conservative Government did with the ‘Legal Minimum Wage’ in 2016 e.g. for workers over the age of 20 the Conservative Government added extra layers on top of what was the ‘Legal Minimum Wage’ (higher rate) and for those over the age of 25 called it the Minimum Living Wage.
So now if you are 18 or 21 you get what is called the ‘National Minimum Wage’ for your age group e.g. £5.90 (about $7.50) and £7.38 (about $9.40) respectively, per hour. Whereas once you reach 25 you then go onto what the Government has called the National Living Wage of £7.83 (about $10) per hour; which as from April 2019 is set to be increased to £8.21 (about $10.50) per hour.
Point #3: Yep, your points are valid; I was trying to simplify my answer by quoting a recommended profit margin of 33% in an ideal world; but I did qualify my answer by referring to how the UK Supermarkets squeeze the profit margins of farmers down to single digits. Just earlier this year some food producers were bitterly complaining to the Supermarkets; pleading with them to raise their prices and pay more to the producers because the Supermarkets are only allowing them (in some cases) as little as just 2% profit margin, which makes them very vulnerable to ‘Market Forces’.
And in all fairness to the farmers, many British Shoppers wouldn’t mind paying a little extra for locally produced food if the Supermarkets were willing to pass that extra income back up the supply chain to the farmers by paying them more for their produce. But at the moment the Supermarkets are raging a ‘price war’ with each other, with each intent on keeping prices low for the shopper, so there seems little prospect of any real change for the foreseeable future e.g. the UK Supermarket Price War has been raging for quite a few years.
Likewise, in the UK, the vast majority of Businesses are category labelled ‘Small Businesses’, the correct terminology being SME (Small and Medium Sized Enterprises). SME’s, which makes up over 99% of total Companies, and includes the ‘self-employed’, employ less than 250 people (and together make up 60% of the total workforce; with the large Companies (less than 1% of the total number of Businesses employing the other 40% of the total workforce.
A detailed breakdown of percentage of employees for the UK being:
• Self Employed = 17% of the total workforce.
• Small Companies employing less than 10 people = 16% of all employees.
• Small Companies employing between 10 and 49 people = 15% of all employees.
• Small Companies employing between 50 and 249 people = 13% of all employees.
• Large Companies employs 40% of the total workforce.
UK Age Determined Pay Rates
Reference your comment “Now, about that National Living Wage gov.uk page: National Minimum Wage and National Living Wage rates…………. Anyway, Age determined pay rates? Sounds like a can of worms to me”.
Well yes, I guess that’s British Politics for you……
Back in 1998 the Conservatives bitterly opposed the introduction of the ‘Legal Minimum Wage’ by the Labour Government; but when the Conservatives finally got back into power in 2015 with an overall majority, rather than scrapping it, they just tinkered with it!
But all that is likely to become ‘academic’ within a few years because when Labour gets back in power (which could be anytime between now and May 2022), Labour’s Policy is to scrap the changes the Conservatives made in 2016 and introduce a unified National Minimum Wage of £10 (about $13) for all age groups.
Thanks for the detailed discussion--just a couple small points from me.
"The best (most basic) answer I can give is “It’s an element of both factors”.
Very true IMO. I think I was too lazy, or too hurried, to get into an explanation though yours was better than I could do at any rate. I guess my lack of explaining opened me up to generalizations of my statements.
The age determined pay rate is very interesting. This is basically what many employers do by default in the States, and is another option for GA's example-- hire teenagers, or people who are not entirely dependent upon a living wage---i. e.two-earner households where the individual just needs some extra cash.
I'm not in favor of a nationwide $15 min wage for the States.
Thanks for your input ‘hard sun’.
Likewise, many large employers in the UK also use pay scales, so that younger people (or people with less experience) come in on the bottom pay scale, or part way up; and then over the years they automatically move up one pay increment each year (as they gain experience) until they reach the top pay for their grade. If someone decides to leave (or is made redundant) and subsequently works for a competitor, the usual practice for British Companies is to match your previous pay (from the previous employer) e.g. put you on the appropriate pay scale to reflect your experience.
Yes, you have a valid point; often teenagers are still living at home and are not as dependent on a higher wage as an older person might be; so there is some justification in not paying them the full ‘minimum wage’. Although it is a generalisation, and in practice some teenagers do leave home and rent their own place; that’s where the ‘Welfare State’, as originally structured by the Labour Party in 1948 kicks in as a safety net e.g. in the UK a young couple with a baby renting their own flat (apartment) on a low income will be entitled to ‘Housing Benefit’, and other ‘Benefits’ to help them make ends meet.
Also, the second point you mentioned, where in a two-earner household the spouse to the main breadwinner (often, but not always the wife these day) may just want ‘pin money’. The househusband or wife may not want to work full time, or would prefer flexible working to be able to pick up the kids from school, or work from home because they have young children etc.
In this respect, the European/British Government Ethos is one of a Good ‘Work/Life’ Balance. So these days in Britain the Government’s ethos is to encourage ‘part time’ working, ‘home working’ and or ‘flexible working’, and although this ethos is also supported by most large employers it is also reinforced by law e.g. in Britain, an employee has the legal right to ‘Request’ ‘Flexible Working’, and although the employer has the legal right to refuse the request, they do nevertheless have a legal obligation to consider it.
Although it all may sound ‘wishy-washy’, in practice it works quite well because many employers do see the benefits of offering their employees ‘flexible working’ including ‘home working’, and ‘part time’ working.
This video below (from the perspective of two different Industries, car manufacturing and Retail) sums up the ethos of ‘flexible working’ in the UK quite eloquently.
Creating a flexible working culture at John Lewis Partnership and Ford UK: https://youtu.be/2Qs0EL6JWD0
Beyond the basic determination of the value of labor, I don't disagree that what an employer actually pays for it is more than a simple answer. Perhaps my comments have been, as hard sun laments about his own, too general.
And perhaps my obstinance in method has also made my intention less than clear. I hesitate to use this categorization because if not understood as intended, it could easily be viewed as pretentious, but...
My efforts have been to mirror what many might call the Socratic method; First establish a base of agreement, some point that all can accept, and then proceed from that base to address the contentious points.
My thinking is that in the reality of a capitalistic market-based system, the only true value of labor can be the value of that labor to the one paying for it - the employer.
From that basic true value, all the other discussions about the ethics of a particular business model, the social responsibilities inherent in the pursuit of an evolving society, and more, can then come into play.
Even if your, (generic "your" relative to progressive ideals), argument is that the system is wrong, it should change to a more socially responsible system, it wouldn't change the reality that in our current system, labor is a commodity.
And like any other commodity, its value is determined by the buyer.
If the discussion of this Living Wage debate was viewed as analogous to a set of stairs, my point has been to get all on the same first step, before some jump to the third or fourth step.
And that is where I am stuck. My view of current reality is that labor can only be described as a commodity in establishing its basic value.
Raw ore is a commodity, but so is refined ore. I don't think it is realistic to establish the value of raw ore to a refiner as the same value of refined ore to a producer. But, perhaps that same example could be another analogy.
What if that ore refiner could be the labor provider, and the refining process compared to the labor provider refining, (enhancing), his labor skills. Then his "ore" is still a commodity, but now has more value.
I can't let go of this bone, but let me jump to the next step anyway. Using your shelf stocker example, how can the laborer's living needs be used to justify the determination of a living wage when one might be a single guy, and another might have a wife and two kids. Of course their living needs costs will be radically different. Wouldn't the common argument used to justify demanding a living wage be paid then require tiers of pay for the same labor provided?
How can you avoid that reality when using the needs of the labor provider as a labor value measure?
Thanks for the clarity GA.
Jumping to your penultimate paragraph first: I think I may have just given an answer to that when responding to ‘hard sun’s’ comments above e.g. the onus shouldn’t be on just the employer to pay a decent wage (whether that’s called a legal ‘minimum’ or ‘living wage’) but the Welfare State should also play its role as a ‘Safety Net’.
To elaborate, a decent wage in this context doesn’t necessarily mean a liveable wage for the individual; it means a wage to be high enough so that the employee isn’t considered by society as being exploited e.g. to avoid what is often referred to in Britain as ‘slave labour’.
In that context, someone stacking shelves in a Supermarket should only expect a ‘low wage’, and if that ‘low wage’ isn’t enough to meet their living expenses, then through a system of ‘means testing’ the State should pick up the slack by paying ‘Welfare Benefits’ to help ensure the individual isn’t living in abject poverty.
In answer to your other points:
I agree, it should help to reduce the risk of misunderstanding to “First establish a base of agreement, some point that all can accept, and then proceed from that base to address the contentious points.”
Moving onto your main point e.g. the concept that “labour can only be described as a commodity in establishing its basic value………… And like any other commodity, its value is determined by the buyer.”
This is where we may have a different perspective. Yes, Labour is a ‘Commodity’, but the value of that ‘Commodity’ isn’t set by just the buyer (employer) but is also set by the ‘Seller’ (employee); and 'Market Forces'.
In the UK (and I assume the same applies in the USA?), when starting a new job the employee signs a ‘Contract of Employment’. The Contract (which has to incorporate the Employment Laws) sets out in detail the terms of employment, and can be used in an ‘Industrial Tribunal’ (which is a free service in the UK) if the terms of the Contract is broken by the employer.
In a free market (like the one in the UK) when an employer is looking to recruit new workers they may not necessarily want to recruit just anyone, they may want to attract people with specific skills or experience, and people who may be more likely to be reliable workers e.g. people with qualifications, previous experience in the job, good sick record etc.
Obviously, for unskilled work like a shelf stacker in a Supermarket many of these prerequisites will be less relevant. Nevertheless, even for unskilled work, the worker can choose which Companies they apply to for a job, and in times of Labour Shortages (as is currently the case in the UK) an unskilled worker will be more inclined to opt for working for a ‘good’ employer rather than just any employer (as they might be more inclined to do when there is stiffer competition for jobs).
Also, because it’s not the employee who is the ‘Commodity’ but the employee’s ‘Services’ (Labour) then the employee can withdraw his/her Labour ‘as a bargaining chip’ at any time during a dispute e.g. Industrial Action (Strike Action).
Therefore (in the UK) Trade Unions play an important job in negotiating ‘pay and Conditions’ terms for the ‘Commodity’ (Labour) with the employer to help mitigate Industrial Action; and when negotiations break down then ACAS (Advisory, Conciliation and Arbitration Service) can act as Arbitrator to help solve disputes. ACAS, a ‘Free Service’ is an ‘Independent Government Body’ (not answerable to the Government but only answerable to Parliament, to help ensure impartiality).
I don't think a labor provider can set, (as in determine), the value of their labor, (the commodity). They can set a price, but that is not the same as setting a value.
(*with the caveat that enhancing labor skills can enhance labor value)
They can set an asking price, such as $15 p/hr. but if there are no buyers at that price then the value of that labor is essentially zero - nobody wants it at that price.
The market forces you mention do influence the price of labor, but I think their influence still affects what an employer is willing to pay - the value of the labor to the employer. Unless you are including government intervention, (UK examples), as market forces, (which I disagree is appropriate), then the value determination still boils down to what the employer is willing to pay for the labor.
Your determination that the "Welfare State" has an authority to determine labor value is contrary to our American, (Conservatives at least), perspective. Which means it is not a universal value determinate, but a market-specific one - a point that is more than a few steps above where we need to start our climb.
But we did make progress. I do agree that a decent wage does not necessarily equate to a living wage. And that was my point about the fallacy of demanding that a wage be determined by a labor provider's living costs needs - the argument that a fill-time job should meet those needs regardless of what the job is.
Next would be considering how impossible it would be to apply the same concept to a non-uniform aspect - the labor provider. Which would be the reality of one shelf stocker being single, and one having a family. I don't see how the justification for demanding a living Wage could be applied fairly to all parties.
That is the first understanding, that labor must first be valued uniformly within a market, regardless of social philosophy, (Socialist vs. Capitalist). Who can do that except the employer? Your government's tiered age-determined labor values seem to support that thought.
I don't understand how you say that laborers can have no say so in the value of their labor. It's akin to stating, let's make a trade but you have no right, or no justification, to barter as to the terms because the market tells me so. I've quit jobs because of low pay. To me, that proves my point. How much profit margin is an employer entitled to?
"Which would be the reality of one shelf stocker being single, and one having a family. I don't see how the justification for demanding a living Wage could be applied fairly to all parties."
I may be wrong, but the partial answer here seems to have already been explained by Nathanville. It seems that in the UK, people agree to certain circumstances in order to be paid at a different rate because they have other sources of income within the family unit. If you agree, how is it not fair.
Ultimately, GA, I think the American "free market" lens you are looking at this through is simply not conducive to understanding. Of course, the same could be true for me to an extent.
You are absolutely correct in that laborers have a say in the value of their product - just as you point out they do not have to sell it at a price they consider below it's value. Only when employer and employee agree on the value is there a sale...even if both wish it were different. It is that agreement - one to sell, one to buy - that determines value.
And it is that way in virtually everything we buy and sell. Whether a house, a car or a loaf of bread; if we don't agree that the value is equal to the price (as buyer OR seller), then there is no transaction.
Except in the sale of labor, where some believe that they, rather than the buyer OR seller, is in charge of determining value (price). Whether the terminology is "price", "value" or "living wage", that third party is determining the value rather than the two primary parties of buyer and seller.
It seems you misunderstood my intent hard sun.
Set aside any considerations of market forces, employee bartering, or any of the secondary considerations. Just consider the basics for this point.
Look at it this way. If a commodity is priced at $10, but sells at $8, (because there were no buyers willing to pay $10), I say the value of that commodity is $8. (and the scenario isn't one of "getting a deal" or getting something at a bargain) Do you disagree?
If a worker sets his wage rate at $15, but no employer, (buyer), will pay $15 for his labor, what is the value of his labor? I say the value of his labor is zero, because no one buys it.
But what if the labor provider is seen as asset, beyond just the value his labor would contribute - such as a potential candidate for later promotion, or something other that would benefit the employer? Then an employer may pay that $15. Now his labor is valued at $15.
When I speak of value to the employer, I am not confining it to a simple production capability benefit, such as being able to produce x-number of widgets. That value can include that, plus other things the employer might view as valuable to him.
Now take your question about an employee negotiating, (bartering), with the employer for a higher wage rate. And also your note about leaving low paying jobs:
If the employee has nothing more to offer the employer than the direct production ability of the position, (like shelf stocking ability), and if the employer has the choice of other candidates that will do the job for a stated rate, then the employee has no bargaining power, and the employer determines the value of the labor he pays for.
But, what if the employee asks for more money, above the established production ability rate - and the employer sees value in keeping, (or hiring), that employee for reasons other than just that production ability, and accepts paying a higher wage rate. Who do you think has set the value of that labor?
The labor provider set the price, but I think the employer set the value by accepting it.
Using the two examples; one increase demand was rejected, and one was accepted, it seems clear that it was the employer that set the value.
In both cases the laborer set the price, $15 - but in only one case was the price met.
I do understand your point, and how my harping on this employer-value thing could paint that picture. But that is only because you are jumping ahead of the first point - who sets the true value.
Once that is established, then all these other points you make can come into consideration. My contentions were not intended to ignore, discount, or refute any of those things you mentioned - except those that placed the value determinant somewhere other than the employer.
Bear with me hard sun, I am not trying to be obstinate, or a cold-hearted to hell with the other guy capitalist. I am just trying to establish a point that I think must be agreed upon before any of the complexities of that point can be discussed.
I would say your response, (this one), is all about a semantic misunderstanding - that price and value are always the same. What you spoke of is the labor providers ability, and Right, to set the price of his labor. I completely agree.
But if that price is never paid, is it the true value of the labor?
Here is a simplistic "commodity" example. Those Finger Spinner toys that were the rage a year or two ago. They were shelf-priced at $9.95 and sold faster than they could be stocked. So their price was their value.
Then, the raging demand flamed out and it was hard to find buyers at $1. So what was their value now?
In both cases the buyers set the value. Now just replace spinner with labor and buyer with employer, and the concept is the same.
My "free market lens" may well affect my perspective, but on this basic point I don't think it is a wrong perspective.
Look at what I am actually saying hard sun, not what you think I am saying. Look back at my comments and note what response points I have not addressed, (purposely) - such as when I noted to Nathanville that several of his points were "a level or two above" the basic point I was trying to establish.
My belief in this point is so strong, and my perplexity that it is being misunderstood can only mean one of two things; either I am being much less than clear, or, the point is so ideologically grounded that folks are reading what they expect me to be saying and not what I am actually saying.
Hells bells, even Arthur the Socialist, [;-)] finally saw my point:
I do see your intent, and the truth, in your belief now GA, but I still feel you are not not 100% correct. I will use your words, and your questions to make my point. Not ideology.
"But what if the labor provider is seen as asset, beyond just the value his labor would contribute - such as a potential candidate for later promotion, or something other that would benefit the employer? Then an employer may pay that $15. Now his labor is valued at $15."
This process is a negotiation, and is not solely determined by statistics. As an employer, I can attempt to negotiate a higher wage based on my perceived potential. If the employer determines my potential to be less, I can go to another employer who may determine otherwise.
After going to another employee the price is paid, and I think it's difficult to state the the employee didn't have a hand in setting that price. Thus, in this instance, I still feel it's semantics.
When you take your example beyond " If a commodity is priced at $10, but sells at $8, .." the employee plays a role in setting the value.
How can you state "(because there were no buyers willing to pay $10)," and continue to state the employer sets the value of labor. Doesn't this, at the least, suggest the buyer/customer sets the value? I don't think you can consider the employer, both the payer of labor and the one that sets the value of labor. By your own admission, if people were willing to pay more for a product (i.e. because it's made locally, etc) the customers increase the value of that labor, not the employer.
I understand the pressures that minimum wage laws can put on an employer. However, employers are not the sole determiner of labor value.
It is a relief to see some progress hard sun.
Using your bargaining example of going to another employer that will accept your price: What if that next employer did not accept your price? Or the next one, or any employer?
I do agree that negotiation can play a part in a labor provider getting their "price," but what made that possible? I say it is the employer's acceptance of the laborer's negotiation points. The employer set the value by agreeing to the laborer's price.
If you were bargaining for $15, and after a few refusals finally found an employer that would agree to $14.90, would you accept that? I will presume that you would. Am I wrong about that? If not, then who set the value of your labor, you with your $15 price, or the employer with your acceptance of their $14.90 offer?
Now don't quibble about that measly 10 cent difference, the point remains that regardless of the amount of the difference, it was still the employer that set the value. The labor provider affected that value by negotiating and going to other employers, but in the end it was still the employer that set value, or "price" of the labor.
I never intended to say the labor provider has no part in affecting the determination of the value of their labor, but I am saying that without the employer agreeing to it, those efforts have no effect on their labor value.
In short, I agree with you that the labor provider can have a role in setting the value of their labor. But once again, without the employer's acceptance, that role has no effect on their labor value.
Your own example of going to different employers illustrates that.
And using your own last example of customers being willing to pay more. That customer demand is what would make it possible for the employer to pay more. It surely affected the price/value, but the bottom line is still that the employer decided to pay more because the demand increased the value to them.
Conversely, if customers were not willing to pay more, would the product have the same value to the employer? So once again, your example does show that the value can be affected by the provider, (or in-demand product in this example), but it is the seller, (employer), that makes the final determination of whether it is worth the higher price, (sets the value).
Maybe it will help if I declare that I do think a labor provider can have an effect on determining the value of their labor, but without an employer that will accept those effects, then they are fruitless efforts.
One more note; at this point minimum wage, or any wage level isn't even part of the point I am trying to make. We could just as easily be talking about a $25 p/hr rate discussion. If the employer doesn't see a $25 value, then he won't pay it.
"Using your bargaining example of going to another employer that will accept your price: What if that next employer did not accept your price? Or the next one, or any employer?"
What if the next employee does not accept your price? Or the next one, or any employee? This happens a lot. So, you end up with under-qualified employees are no employees.
"If the employer doesn't see a $25 value, then he won't pay it."
If the potential employee doesn't see taking an hour from his life for $25 he won't work the job.
The degree to what the employer and employee bring to the bargaining table is debatable and dependent on the current labor market in the area.
Each and every one of your examples can be equally seen from the other side. It's just that simple.
You are right hard sun, the status of the labor pool, (market), can affect the power of the employer to set wage rate value.
And our current historically low unemployment rate may be the proof of your point.
But, as a rhetorical question, how often has that happened?
Because of the responses insisting that a labor provider can influence the value they receive for their labor it is obvious I I have done a very poor job making my point, because I do agree that a labor provider can have an impact.
However, I see a difference between being able to influence and being able to determine the rate.
My intent for establishing that initial point was to lead to thoughts about the pitfalls and real-life ineffectiveness of artificially determined, (as in mandated to meet Living Wage goals), wage rates, as in forcing employers to pay $15 p/hr for a job realistically valued at $10 p/hr.
I guess ‘GA’ this is where we may struggle to agree.
All the points you make about an employee can be turned on its head (at least in other Industrialised Nations outside of the USA):-
#1 Likewise, and employer can set the price they want to pay (wage) at $5 per hour, but if no one wants to work for them at that price, then the value of their job offer is zero; nobody wants to work for them at that price.
#2 Yes, market forces do influence the price of labour, but it also influences the minimum an employee is willing to except for his labour; and ‘government intervention’ (UK examples), as market forces, is appropriate in the UK market because that is a factor in the UK.
Maybe in the USA the value determination is predominantly determined by what the employer is willing to pay for the labour because you don’t have strong ‘labour protection laws’; but in Europe, where there are strong ‘labour protection laws’ it does put the employee on a more equal footing with the employer.
The impression I get of America (particularly from watching American films where American employment culture is shown) is that American employees are virtually slaves to their job, in America, an employee:-
• Can be sacked on a whim
• May struggle to find another job
• Loose their Health Insurance benefits paid for by the employer; and then unable to afford Health Insurance if unemployed.
• Not get their pay rise, promotion or bonus if they don’t show absolute loyalty to the Company, and aren’t at the ‘beck and call’ of their boss e.g. put work before holidays (vacation).
Whereas across Europe it’s a whole different scenario (a different playing field):
• In Europe, you cannot be sacked on a whim. In Europe, once you’ve worked for a Company for more than two years you have the full protection of the Employment Protection Laws, and then it becomes extremely difficult for an employer to get rid of you; even if they have a good valid legal reason which is well defined by law.
For example, if after two years of employment and employee suddenly starts to take lots of paid sick leave, frequently turn up for work late and don’t do their job properly, there are a strict set of procedures that has to be followed by the employer (well defined by law), which starts with a ‘verbal’ warning, but must also include at least two sets of written warnings over a set period of time (to give the employee every opportunity to pull their socks up).
And even then the employer must make every reasonable effort to get to the root of the problem, and try to offer assistance e.g. is the employee suffering from depression due to a break up of their marriage, does the employee have a drinks problem. If a problem is identified and the employer offers help and advice e.g. by putting the employee in touch with a free counselling service to help with their problem; then at any subsequent ‘Industrial Tribunal’ (which is Free in the UK) the employer is more likely to win their case for dismissal.
Also for clarity: In Europe/Britain, an employee cannot be sacked for taking ‘Industrial Action’ (strike action). Secondary picketing is illegal e.g. one trade union supporting the picket line of another trade union; but a trade union member is legally protected from discrimination by their employer if they refuse to cross a picket line organised by a different trade union. For example, the Post Office will not cross a picket line.
• Sure, in the UK it may not always be easy to find another job, but most people who want to work do; and if they can’t there is always the Welfare State as a Safety Net. Albeit, after a set period if someone on unemployment benefit don’t provide evidence that they are making a genuine attempt to find another job their benefits will be reduced, unless it’s for a valid reason e.g. single mother, disability etc., in which case they will be entitled to other Welfare benefits to make up the difference.
And in Britain there are people who ‘job hop’ e.g. work for one supermarket for a couple of weeks or a few months on minimum wage shelf stacking, and then hand in their resignation (take a few weeks break) and then work for a shop (behind the till) on the minimum wage for a while.
FYI, in the UK not all Supermarkets pay just the minimum wage for unskilled work e.g. shelf stacking. Of all Supermarkets in the UK (including the two warehouse food stores) for unskilled work, six actually pay above the legal minimum wage of £7.83 (about $10), and these Supermarkets pay the same rate to every new recruit, regardless to their age e.g. the same pay for 18 year olds as a 25 year old. These six are:-
(i) Aldi (warehouse food store), who’s pay starts at £8.85 (about $11.26) per hour
(ii) Lidl (warehouse food store), who’s pay starts at £8.75 per hour
(iii) Morrisons (Supermarket), who’s pay starts at £8.70 per hour
(iv) Asda (Supermarket), who’s pay starts at £8.67 per hour
(v) Sainsbury’s (Supermarket), who’s pay starts at £8 (about $10.18) per hour
• As regards Health Insurance; that’s not a consideration of employment as’ recruitment and retention’, because in the UK we don’t pay Health Insurance e.g. Healthcare in the UK is Free at the ‘Point of Use’ for all. So in the UK if someone does lose their job, or decides to resign, they don’t have to worry about paying for Healthcare because it’s free (at the point of use for everyone anyway).
• In the UK, unlike the USA, employers don’t expect you to be at their beck and call, if you want to take Annual Leave (vacation), or take a day off (paid leave) then you take your leave.
All the employer is concerned about is that you get your work done when you are there. When and how you get your work done is predominantly up to you; this is a commonly used ‘Works’ Ethos known as ‘Empowerment’ in Europe.
#3 Yep, the ‘Welfare State’ and ‘Employment Protection Laws’ in Britain (and across Europe) as determining labour value is contrary to the American Culture; but then Europe is a big place (about half a billion people). So the American work culture (USA population 325 million) isn’t that big on the world stage when compared the European work culture (half a billion population); and China’s work culture (1.3 billion population). So the American’s work culture for determining ‘labour value’ is far from universal.
#4 Yep, it’s a no-brainer to me that a decent wage doesn’t necessarily equate to a living wage; and it is a fallacy that a legal minimum wage should try to meet the employee’s living costs in all circumstances regardless to what the job is.
As I’ve previously stated the term ‘minimum living wage’ in the UK was trumped up by the Conservative Government when in 2016 they tweaked the way the minimum legal pay system works.
Whether a shelf stacker is single (living at home with few financial commitments) or married with children, doesn’t come into the equation as far as the employer is concerned in the UK; and that’s how it should be. What a shelf stacker gets paid has nothing to do with his personal financial commitments. If he/she isn’t earning enough, then as a means tested mechanism the Welfare State will pick up the slack as appropriate; and that’s how it should be, even from a Socialist view point. So I don’t see what the issue is.
Let me start with a short definition of terms, and what they mean in the US.
To be "sacked" here means to be fired for cause. You didn't show up for work, you didn't do anything while on the job, you mistreated coworkers or customers, etc. On the other hand, to be "laid off" means you lost your job through no fault of your own - the company said they didn't want you as an employee for their own, internal reasons.
The results of this are very different: in the US employers are forced to pay for "unemployment insurance" - a program whereby an employee being laid off can draw income for a period from a few weeks to a year at a time during their search for more work. Costs to the employer vary based on their history of ex-employees drawing from the fund. On the other hand, a person that has been "sacked" (fired) cannot; they lost their job as a result of their own poor actions and unemployment insurance is not available to them. There are legal remedies available for both employers and employees when the two do not agree on the cause of termination.
Now. Yes, in "right to work" states - states where an employee cannot be forced to join a union, paying union dues and supporting union VIP's as a condition of employment, they can be laid off at an employers whim, just as they can quit at their own whim. And it can be difficult to find another job, just as it can be difficult to find another worker to replace one that has quit.
They can lose their health insurance...but only in the sense that the contract between employer and employee is being renegotiated and the employer is offering to maintain employment at a lower level of compensation. The employee is NOT obligated to accept that offer and may leave at will. This is something that is rarely done - in 40+ years of work it has happened to me only once, during the recession and when ObamaCare made health insurance costs go through the roof. The employer could not afford to continue to offer the same benefit when prices doubled.
Employees may not get a pay raise they expect (if one was guaranteed it's a different story)...just as they may not accept NOT getting one. Here, too, it works both ways - either employer or employee may end their contract at will.
Paid time off is generally scheduled at a mutually agreed on time; employers need to be able to fill the spot being vacated without undue trouble, and the employee needs to be able to pick and choose as they wish. Both sides need to be accommodated, then, not just the employee, and employers generally go to considerable lengths to make that accommodation. What employers cannot do is simply take that right away - if the contract states 3 weeks of paid leave is earned over a years time then it is earned and must be given. It is only the dates that must be mutually agreeable.
Bottom line, seems to me, is that the UK is in no way attempting to "level the playing field"; they are tilting it badly in favor of the employee, with employers having almost no rights at all. The worker may quit at will; the employer cannot. The worker may take paid leave at will, without any regard to employers needs; the employer must accommodate whatever the employee wants.
On the other hand, most (but not all) states in the US DO have that "level playing field", wherein both employer and employee have the same basic rights. Either one can terminate employment at will, both must work together to schedule vacation, compensation (including health insurance) is mutually agreeable, etc. Both have some protections from the other; workers may unionize without punishment, employers may replace striking employees without punishment. It is a balancing act that seems far, far out of whack in the UK, with almost all protections going to employees and leaving employers holding the bag with almost no rights of their own.
Wilderness, thanks for your feedback; very informative.
In your first paragraph, I note you mention ‘mistreated co-workers or customers as one of many reasons why an employee in the USA can be ‘sacked’ (fired). Mistreating co-workers (which includes bullying) or mistreating of customers is taken seriously in the UK e.g. disciplinary action; but wouldn’t necessarily be an immediate sacking offence (maybe suspension with or without pay) pending an investigation.
If the nature of the mistreating of others was such that it contravened other laws such as ‘harassment’, discrimination, or ‘abuse’ e.g. verbal abuse, hate crime etc., then it may become a sackable offence, and even criminal offence in extreme cases.
Mistreatment in the UK isn’t just confined to co-workers and customers, it also extends to the employers conduct towards employees e.g. bullying. In the UK, in a small Business where a Trade Union may be weak if an employee finds his job intolerable because of bullying by his employer then the employee has the legal right to terminate his ‘Contract of Employment’ without giving notice and claim compensation for ‘Constructive Dismissal’ in an Industrial Tribunal (which is a free service).
Yes, Redundancies in the UK work on a similar principle (although I’m sure there are differences in the detail). The only caveat is that a Company can’t make people redundant and then a few months later create the same jobs but with lower pay and worse working conditions. Likewise, in the UK, during a ‘take-over’, ‘Transfer’ or ‘Merger’, if the employees in the old Company enjoyed better ‘pay and conditions and pension’ than is paid in the New Company, then the New Company has a legal obligation to honour the higher rates of pay, conditions and pension for those employees that they are taking on from the old Company. The whole process, following Due Diligence by the prospective new Company is called TUPE (Transfer of Undertakings Protection of Employment) Regulations.
In reading through your last two paragraphs, we do disagree because of opposing political views; but that’s to be expected. And as I’ve said before, I respect your political views, even if I don’t agree with them. So rather than get into a fruitless debate where neither of us will change our political views, I’d like to just focus on one or two contentious points; just to give my view (which I’m sure you probably know anyway):-
(a). Given that it’s easier to sack a person in the USA, and given that employers may replace striking employees without punishment; it does seem to me that it’s not a ‘level playing field’ in the USA. For example, if workers have genuine grievance with their employer (especially if it’s an unscrupulous employer) then there seems little redress for the workers e.g. in the event that the only reasonable course of action left to the worker is strike action, and they fear not to because of the risk of being sacked and replaced (for striking); then it puts the workers in a very weak and vulnerable position.
(b). I don’t dispute that (when seen in writing) the Labour Protection Laws in the UK (and across Europe) may seem excessive; but in practice it’s a system that works. Albeit it’s not perfect (nothing is ever perfect), to this end various Governments (Labour and Conservative) are always tweaking the system whenever they are in power; and both political parties make mistakes (and error of judgement) from time to time, but that’s true for any political party in any country.
Although: I do freely admit that Trade Unions in the UK prior to the 1980s had become too powerful and needed to be taken down a peg or two; few people would disagree with that. And it’s exactly what Margaret Thatcher (Conservative Government) did during the 1980s, when she took the Trade Unions head on in a major showdown that put millions out of work and almost crippled the British Economy e.g. Margaret Thatcher closed down the coal mining Industry (the Strongest Union at the time); with the resulting collateral damage to the Private Industry by destroying the business base of thousands of private businesses (large and small) in the ‘supply chain’ to the coal industry out of business. On the plus side, we still have 200 years of untapped coal reserves in the ground, rather than it being used to pollute the atmosphere e.g. we've gone from being almost entirely dependent on coal in the 1980s for electricity to less than 2% of our electricity coming from coal; with the last coal fired power station in the UK due to close in 2025.
During the 1980’s the changes Margaret Thatcher made to the Trade Union Laws, to redress the ‘balance of power’ included making ‘wildcat’ strikes and ‘secondary picketing’ illegal. But, in the UK, providing a Trade Union holds a postal ballot and the majority of members vote for Industrial Action, then that Industrial Action is legal and does have the full protection of the law. And holding lawful picket lines works well enough because Trade Unions do respect each other picket lines e.g. refuse to cross them, so a Company in dispute with its members can have all its ‘deliveries’ stopped.
But one perception which may not come across in these forums, is that it’s not a ‘them and us’; the vast majority of large Companies do have a good working relationship with their Trade Unions, and most disputes most of the time are resolved amicably e.g. it’s in the mutual interest of both employer and employee (Trade Union) to work together to make the business successful. Often good Companies will involve the Trade Union in the Policy Making Process of their Business to keep the Trade Union on side and to keep the good working relationship between the two sides healthy.
Where this amicable relationship often breaks down is when a Company who is making huge profits award their senior staff ‘fat bonuses’ and big pay rises, and pay huge dividends on shares, but give the employees a measly pay rise (especially if it’s below the rate of inflation). That is a recipe for disaster that’s most likely to lead to a protracted Industrial Dispute.
a) If an employee can quit at will, but cannot be "laid off" at will, how is that a level playing field? Seems to me that a level field is where both sides have identical (as much as possible) rights, and that certainly is not identical.
Likewise, if a union strikes, fellow unions will refuse to do business with the company. Can a company do the same? Tacitly agree with other companies not to provide work for their employees? If not, it isn't a level field, is it?
Like the UK, most unions and companies in the US have learned (the hard way in some cases) that company and unions either get along or both fail. Unions, just as in the UK, are much weaker as a result, but the country is stronger. It is not the continual fight that you might expect, or that we saw in years past, but a cooperation between the two. The vast majority of companies in the US pay reasonable wages and receive reasonable profits. There will always be exceptions (to both) but in general the system works well. Of course, IMO, a large part of the reason for that is that more and more states are backing off requiring employees to join a union as a pre-requisite for working in a union shop, weakening the union as a result. They can't afford to be as unreasonable as they were in the past.
Wilderness: The problem with both sides (employer and employee) having identical (as much as possible) rights, is that it creates such an uneven playing field because the employer is far more powerful e.g. the ‘David and Goliath’, with the employer being ‘Goliath’.
If the employer can sack an employee at will, with the employee having little protection and with Trade Unions powers being hamstrung because employees taking ‘Strike Action’ can be sacked, then it does put the employee in a very weak position; and is certainly isn’t a level playing field.
Therefore, the Employment Protection Laws, and Trade Union Laws, as defined by Governments across Europe, help to redress that imbalance by effectively tying one hand of ‘Goliath’ (the employer) behind his back, and forcing ‘Goliath’ to hop on one leg.
I’m not saying that European Governments have necessarily set that ‘balance’ at the right level. Whether the ‘protection’ laws have gone too far, or not far enough is a subject of a separate debate; but the principle is there.
As regards your second point; reference to picket lines. It’s a long understanding (tradition) in Britain that a fellow trade unionist respects the picket line. Ironically, an employer in the UK can discipline a non-trade unionist for refusing to cross a picket line; so consequently, during periods of industrial action union membership increases partly because employees caught up in a dispute can get protection from their trade union for not crossing a picket line.
When I used to go on ‘picket duty’ we found that just six pickets was sufficient to stop the ‘Post Office’ from collecting mail from and delivering mail to our Office; so holding small peaceful picket lines was all that was needed to disrupt business in our place of work. And it used to give us great moral encouragement when the Post Office van would arrive at our entrance, the driver would give us a wave, put his thumbs up in support, and then turn around and drive away. Another great tactic for moral support is holding up signs on the picket line that says ‘Honk if You Support’; because the majority of cars that passed would honk.
I’m sure that Margaret Thatcher (Conservative Government in the 1980s) would have liked to have gone a lot further with her Trade Union Reforms; it was well known that she ‘hated’ the Trade Unions. But she was thwarted by the Courts in some of her attempts, and she certainly wouldn’t have got some of her more contentious ‘Policies’ through the House of Lords.
One area where Margaret Thatcher was thwarted by the Courts, which would have adversely affected me if her attempts had been successful, was her attempts to scrap the Government Employees existing pension scheme and replace it with one that would have been less generous.
She (Margaret Thatcher) made two failed attempts to scrap our existing pension scheme, but blocked by the Courts on both occasions because back in 1974 the Labour Government had signed a binding agreement with the Trade Union (that stated in writing) that neither side could withdrawal from the ‘Agreement’, or make changes to the Agreement, without the consent of the other.
After Margaret Thatcher was forced to resign as Prime Minister in 1990 because of the ‘civil unrest’ (massive riots and demonstrations) caused by her ‘unpopular’ introduction of the ‘Poll Tax’ that year; John Major (Conservative) took over as Prime Minister, and after scrapping the Poll Tax, took a more conciliatory approach with our pension. His approach was to make an offer that both the Trade Union and Trade Union Members couldn’t refuse; his desire in making the offer was to raise the retirement age from 60 to 65.
The offer he made was to raise the full pension (for 40 years’ service or more) from 50% of final salary (indexed linked to inflation) to 66% of final salary (indexed linked to inflation) and (obviously people with less than 40 years’ service are paid pro-rata). In exchange to accepting this change (‘trade off’), the offer was to also accept a rise in retirement age (For New Members Only) from 60 to 65, but with existing Members (if they agreed to the new pension scheme) to retain their retirement age on the full works pension at 60.
For scraping the old pension scheme, and going onto the new pension scheme, it’s an offer that the Trade Union ‘Recommended’ to its Members, and when voted on the Membership accepted.
Obviously, this (the works pension) is on top of the State Pension, which everyone who’s worked for at least 35 years get in full at the age of 66. Therefore, although I took early retirement at 55, it means that when I reach 66 I will be earning more in pensions than I was earning when I was working; especially as the State Pension has a Triple Lock (Introduced by the Conservative/Democrat coalition government in 2010 and reaffirmed by Theresa May’s Conservative Government in their election manifesto of 2017). The Triple Lock on the State Pension is that it increases annually by either the ‘Rate of Inflation’, in line with ‘Average Wage Rises’, or by 2.5%, whichever is the higher of the three.
Nothing contentious in your last paragraph; the only addition I would like to make is that in Europe it’s not just about ‘pay’; it’s also about working conditions e.g. flexible working and achieving the ‘right’ work/Life Balance e.g. limiting the working week to no more than 48 hours on average and ensuring adequate paid leave (vacation) etc., which across Europe is about six weeks a year as a legal minimum.
Let's see if you did set my arguments "on their head" Arthur.
But first, let's set aside the "Minimum Wage" constriction. The point I am making would apply to any wage level, even a $25 p/hr one as I mentioned to hard sun.
#1 - That employer with their $5 p/hr offer has not set a value, he has merely set a price. If no one accepts his offered price, then no value has been set. It takes two to tango.
But wait, if some employee does accept that $5 haven't they set the value? No, they have merely confirmed the employer's value. But doesn't that look like I am trying to have my cake and eat it too - yep, but it was still the employer that set the labor price, and when that price was accepted it became the value. The employer determined value.
#2 - I agree, but the difference in US and UK perspectives has been noted, so I don't think #2 counters my main point. Set aside UK's welfare state perspective, and its income-supplementing programs, and it is still essentially the same as in the US - both governments set a minimum wage, and everything above that is still an employer-determined value.
You can value your labor at $25 p/hr, that is the price you set, (just like that previously mentioned $5 p/hr. employer), but if no employer hires you at that price, or no employee will work for that price, then all you have done is set a price, not a value.
As also mentioned to hard sun, if an employer countered a $25 price with a $24.90 offer - which is accepted, (wouldn't you think most $25 demanders(sp?) would accept a $24.90 offer?), what is the value of the labor negotiated? I say it is $24.90, the employer determined rate accepted by the $25 price setter.
"Maybe in the USA the value determination is predominantly determined by what the employer is willing to pay for the labour ..."
Small steps can also be first steps, we are making progress Arthur. ;-)
Your US labor market impressions aren't far off Arthur, but like your subsequent UK comparisons, they aren't germane to the point I am valiantly struggling to make. I haven't yet gotten to that higher step of arguing which labor perspective is the better one.
Both you and hard sun seem to be grudgingly admitting the truth of this "employer" point, but because of the implications of that agreement to the ideological perspectives you both hold, keep wanting to add "yeah, but..." caveats.
It shouldn't be a surprise that I could probably agree with most of your, (both of you), "yeah, buts...', but even that wouldn't negate the main point I am making. Employers are the ones that establish a labor value.
And a most appropriate ending:
"Whether a shelf stacker is single (living at home with few financial commitments) or married with children, doesn’t come into the equation as far as the employer is concerned in the UK; and that’s how it should be. What a shelf stacker gets paid has nothing to do with his personal financial commitments...
Amen and hallelujah, we made it. I completely agree.
"... If he/she isn’t earning enough, then as a means tested mechanism the Welfare State will pick up the slack as appropriate; and that’s how it should be, even from a Socialist view point. So I don’t see what the issue is."
Well hell, that agreement didn't last long, My perspective is that it is the worker that should "pick up the slack," not the state. I can support government programs to help them but not programs that do it for them.
It's been a good conversation Arthur.
Moving the Goal Posts? GA.
Your Comment was: “If a worker sets his wage rate at $15, but no employer, (buyer), will pay $15 for his labor, what is the value of his labor? I say the value of his labor is zero, because no one buys it.”
My Response was: Likewise, and employer can set the price they want to pay (wage) at $5 per hour, but if no one wants to work for them at that price, then the value of their job offer is zero; nobody wants to work for them at that price.
Your follow up Comment was: That employer with their $5 p/hr offer has not set a value, he has merely set a price. If no one accepts his offered price, then no value has been set. It takes two to tango.
I used ‘value as zero’ in my example, because you used ‘value as zero’ in your example e.g. to give a like for like example; then because it suited your purposes you changed the ‘rules’, which invalidates your first comment as much as it invalidates mind. Besides, if you remember, I did clearly state at the beginning of this particular strand of the thread that the relationship between an employer and employee is a ‘Contract’ between the two parties (it takes two to tango, as you say); inferring that its not just the employer that sets the value of ‘Labour’ as a Commodity.
This is an area in which (as I said earlier in the thread) we are not going to agree on. Therefore I see little or no common ground that we can agree on in your comments covering #2. But before moving on there are a couple of thoughts I would like to add to the mix:-
(i). In negotiations between Trade Unions and Employers (which is common in Europe), The Trade Union puts in its ‘Demands’, and following negotiations a ‘price’ (value) for ‘labour’ (wage rate) is agreed by both employer and the Trade Union (on behalf of the employees).
If agreement cannot be reached then it may escalate to Industrial Action (strike Action) and is only resolved after either the employer capitulates, the Trade Union capitulates, or a compromise by both sides is reached in further negotiations, or the matter is resolved by ACAS (Arbitrator).
So in Trade Union negotiations with the employer, the employee (via their Trade Union) does have a say in determining their ‘labour’ value.
(ii). Also, as mentioned above, five of the Supermarket Chains in the UK do pay above the legal minimum wage for unskilled work:-
(i) Aldi (warehouse food store), pay starts at £8.85 (about $11.26) per hour
(ii) Lidl (warehouse food store), pay starts at £8.75 per hour
(iii) Morrisons (Supermarket), pay starts at £8.70 per hour
(iv) Asda (Supermarket), pay starts at £8.67 per hour
(v) Sainsbury’s (Supermarket), pay starts at £8 (about $10.18) per hour
This is another example where the ‘value’ of labour as a commodity is influenced by the workforce (and market forces) e.g. five supermarkets offering the same type of unskilled jobs, but competing with each other to attract ‘labour’ (recruit and maintain). In February 2017 Aldi was the first UK Supermarket to pay above the legal minimum wage for unskilled manual work, Lidl quickly followed suit and was followed shortly afterwards by the other three Supermarkets mentioned above.
Putting Words into Our Mouths
Your Comment: “Both you and hard sun seem to be grudgingly admitting the truth of this "employer" point, but because of the implications of that agreement to the ideological perspectives you both hold, keep wanting to add "yeah, but..." caveats.”
Firstly, I haven’t agreed to your viewpoint that it’s the “Employers are the ones that establish a labor value.”. In fact, as I keep stating at each point in this forum, I disagree with this concept of yours, for the reasons I’ve given in the various threads above.
Secondly, regardless to my personal views, I had 40 years of training in the civil service to wright ‘Objectively’ and not ‘Subjectively’, and to ‘Qualify’ each statement I made (old habits die hard). So all of the so called “yeah, buts….” you keep seeing from me are the ‘Qualifying Statements’ I make to each ‘comment’ or ‘view’ I give.
Thirdly, when writing, because of my 40 years of experience in ‘Report Writing’ in the civil service; I’ve been trained to put my emotive feelings on the back burner, so when I make a ‘Point’ or ‘Statement’ its ‘factual’ from my perspective; and if it’s an opinion or viewpoint I will say so. So I have no need to ‘grudgingly’ admit to anything; if I am proved wrong on a point I will say so, and apologies if necessary.
Well it is good to hear we completely agree on something e.g. in essence that we both agree in principle to a simple flat rate legal minimum wage, provided it doesn’t try to be a ‘living wage’.
We could have got to that conclusion much earlier, and simpler, if you just asked me whether I agree in the ‘living wage’ as a minimum legal wage or not; rather than trying to find common ground in a principle where we disagree with each other e.g. your concept that the employee has no influence over the value of his labour.
As regards your penultimate paragraph, we have radically different political views so we are never going to agree on it.
When labor goes on strike, as I understand your earlier comments, it is illegal for the company to hire replacements. They either capitulate to the demands or close their doors.
The value of the labor isn't what they are buying, then - they are buying the value of their company. Purchasing different labor to produce for them would set the value of that labor, but instead govt. has insisted they put their entire company on the block instead - that they either pay an inflated price for labor, as determined by the workers rather than the market place, or go out of business.
Have I erred here?
Your comment about "moving the goal posts" forced me to take a good look at my recent responses Arthur.
I don't think I did. In your $5 employer offer and zero value example, I agreed that the employer had not set the value. It wasn't until the example found a taker for that $5 that a value was set.
As for putting words in your mouth, well, perhaps I misunderstood your comments.
I quoted and emphasized the ones I thought pertinent, so if I misunderstood what those quote said, then the "putting words in your mouth" was unintentional.
We have chased this one round and round the bush Arthur, so just one last clarification. It appears I have not been clear. It is not my contention that a labor provider has no influence on their labor value. But being able to influence falls short of being able to set a value.
Hi Wilderness; your first point is correct e.g. an employee in the UK cannot be sacked for taking Industrial Action. But the purpose of Industrial Action isn’t to force the Company to ‘capitulate’ or go out of ‘Business’. The Purpose of Strike Action is to force the Employer to the negotiating table e.g. to reach a compromise that both sides can agree on.
Any Trade Union that makes ‘unrealistic’ demands and sticks to them are fools; and no one wants the Business to fail because it’s financially crippled by agreeing to excessive pay demands.
In practice the Trade Union will know what the profits and profit margins of a Company is, and therefore what it can reasonably afford in pay; and if a Company is giving its senior management huge pay rises (and fat bonuses), and giving large ‘Dividends’ on Shares, but only offering its employees a miserly pay rise then obviously the Trade Unions are going to be incensed to fight bitterly for a fair deal.
And although Trade Union Laws gives Trade Unions greater protection in Europe than in the USA, the British Government do offer an ‘Arbitration’ Service (through ACAS) as a ‘Free Service’; which can be quite effective in breaking a deadlock in negotiations, and settling disputes.
Thanks for the clarification GA; I guess we’ve reached a point where we are arguing semantics, and could continue arguing these points without making any real progress e.g. just going around in circles.
Part of the problem isn’t just ‘politics’ (opposing political views) and linguistics (American English vs British English), but also the cultural differences (values) between the USA and Europe.
Nathan, as always it is with great interest to hear from someone with large differences in philosophy and requirements. It very much appears that the concept of "value" that GA keeps asking about is not part of the equation when it comes to purchasing that very specialized product - what the labor of a worker produces and that is then sold to produce a profit for the employer.
When govt. sets a minimum price for labor it isn't about the value, it's for other reasons. Maybe to prevent labor abuse and sweatshops. But when it raises that price if the worker is one day older the entire concept of value goes right out the window for it is apparent that the value of the product has not gone up at all. To do so twice, from $7.50 to $10, for the same product simply reinforces that.
Nor does saying that "the people want it" add anything to the mix. The example of the result of farmers labor falls into this category, for if "the people" shopping at supermarkets actually DID want higher prices they wouldn't be shopping for the lowest price. An example in the US is that WalMart has entered a great number of areas with very low prices on food products, and have driven out long established supermarkets...because people don't WANT higher prices under the theory that the farmer will receive more for THEIR labor. They want lower prices, and make that statement loud and clear with their choice of location to purchase from. I strongly suspect that the farmers in England are doing the same thing; shopping for the lowest possible food price and reinforcing that low prices, not high pay for farmers, is what is desired.
So, in the UK, this concept of a "living wage" isn't about the lowest value for a product; it's about society demanding that a worker be paid enough to live on. And it is done by forcing an employer to pay the price for the decision rather than society paying it. This, too, can be seen in your statement that it is done "to help reduce the risk of that person living on subsistence (below the poverty line)". And to ensure that the worker gets other benefits that society has decided they should have. All paid for by a few individuals (employers) rather than by society.
While I recognize the end goal - enough income to produce not only minimum requirements for living but luxuries as well - I'm kind of losing it when it comes to deciding that specific individuals rather than the society itself provide the cost. Rather than risking the pocketbooks of the entire society (via subsistence help from govt.), the entire burden is put on employers. How is that justified ethically? It certainly looks like the socialist society is completely two faced: "we demand certain luxuries for all, as a moral imperative, but the cost is not to be shared by all".
And how does it work in a capitalistic world? Certainly manufacturers in China or the US aren't concerned with what you think a minimum living wage should be in the UK, so how does the competition from outside sources (imports) fit in? You can do it with tariffs, benefiting the British citizen by both keeping prices high for the finished product AND by padding the pockets of govt., but it certainly does nothing for the person whose labor is producing the product you bought! This, too, then seems two faced: We'll require the workers of other nations to subsidize the labor of Brits because morality and ethics require Brits to have luxury and the heck with anyone else.
Do those of socialist leanings simply ignore such things, or is there a rationale somewhere in the mix?
Good to hear from you wilderness. We may not disagree as much as you might think; it may be more of a case of misunderstanding each other! Going through each of your points in turn:
Yep, I agree, when the Government sets a minimum price for ‘Labour’ it is for reasons other than just the value e.g. also to help prevent labour abuse (slave labour).
For Clarity: The concept of setting the minimum wage higher for older people, in the way it’s currently done in the UK is not a ‘Socialist Government’ Policy; it’s the policy of the Conservative (Capitalist) Government in 2016.
In 1998, when Labour (Socialist Government) were in power they set just a simple minimum wage for all (over the age of 18), and a reduced rate for those under 18 on the assumption that most under 18’s would still be living at home and predominantly supported by their parents.
When the Conservatives (Capitalist Government) came into power in 2015 they complicated the issue by keeping the legal minimum wage for under 18’s and over 18’s (as previously set), raised it slightly for those between the age of 22 and 24 (to take into account inflation at the time) and raised the rate even higher for those over 25 to a rate which they call a ‘living wage’.
Consequently, currently, under a British Right Wing Capitalist Government we have the following minimum wage:-
• Under the age of 18 = about $5
• Aged between 18 & 20 = about $7.50
• Aged between 21 & 24 = (about $9.40
• Aged 25 or over = about $10
When Labour (a left wing Socialist Political Party) gets back into power (which currently is highly likely to be before 2022) then their ‘Policy’ is to scrap the changes the Conservative made in 2016 and re-introduce a flat rate for ‘All’ over the age of 18 of (at current value) of £10 (about $13) per hour.
In general, people would ‘like’ farmers to be paid more by the Supermarkets for their produce, but I agree with you, people also want to see food prices low in the Supermarkets; and it does create a conundrum for the British!
But in the UK it isn’t all about price. As well as the ‘Big Four’ Supermarkets (who have been waging a price war with each other for years), there’s also the Independent food shops, smaller supermarkets, Farm Shops and Warehouse Food Stores; and all are flourishing in spite of the fact that some are far more expensive than others.
The Most expensive are the Independent food shops and farm shops.
The Independent food shops are the most expensive because they can’t compete with the large supermarkets e.g. they don’t have the advantage of the ‘economy of scale’. Independent food shops are popular because of their convenience e.g. they are found on every ‘High Street’ (the main road running through each suburb of a city or through the centre of a town), and found on most street corners away from the main roads so that there is always a local food shop within a 5 minutes’ walk of where you live.
And Farm Shops are also the most expensive, because they sell ‘quality food’ directly from the farm e.g. fresh organic farm produce is a highly sought after commodity in the UK and British people are prepared to pay the extra for it.
The cheapest food prices are in the two ‘Warehouse Food Store’ chains (Lidl and Aldi); many people shop here because they are the cheapest, but many others prefer shopping in a supermarket.
The Big Four Supermarkets in the UK are Tesco, Sainsbury’s, Asda and Morrisons. Their current share of the retail food market is:-
• Tesco = 27.8% of the market
• Sainsbury’s = 15.8%
• Asda = 15.3%
• Morrisons = 10.4%
In comparison, the current share of the retail market by the two warehouse food stores is:-
• Aldi = 7%
• Lidl = 5.2%
The share of the retail market by the two biggest of the smaller supermarkets is:
• Co-op = 6.3%
• Waitrose = 5.1%
The British Public do respond well to well organised and well publicised campaigns that are in a ‘good cause’ e.g. ‘Fair Trade’ products are popular in Britain because of the concept behind the campaign; and ‘Free Range’ eggs sold in supermarkets do well in spite of the fact that they are considerably more expensive than other eggs; and, ‘Organic’ Food (food grown without the use of pesticides and artificial fertilisers), although more expensive than ‘non-organic’, also does well in supermarkets.
Moving on to your next point “in the UK, this concept of a "living wage" isn't about the lowest value for a product; it's about society demanding that a worker be paid enough to live on. And it is done by forcing an employer to pay the price for the decision rather than society paying it.”
The concept of the ‘living wage’ in the UK has been blurred by the Conservative (Capitalist) Government in 2016 tinkering with the way the legal minimum wage was calculated and implemented, by introducing an extra (higher) level for those over the age of 25, and calling it a ‘living wage’.
In practice, if the ‘so called’ living wage isn’t high enough then there is still the Welfare State to fall back on as a safety net (means tested).
But I agree with you, the actual level of any so called ‘living wage’ (or minimum wage) shouldn’t be set too high, so as to cripple Industry.
As a ‘Socialist’ I would like to see the minimum wage higher rather than lower, and in putting on my ‘economist’ hat, I do recognise that setting a minimum wage too high is as damaging to the economy as it is when the minimum wage is set too low.
Exactly what the minimum wage (or living wage) should be is a matter of debate, and the ideal level (rate) will be different in different countries simply because living costs are different in different countries.
As explained above, it’s the Conservative (Capitalist) Government who are muddying the waters by calling the minimum wage for those over the age of 25 as ‘living wage’. Whether it should be called a ‘living wage’ may be debateable, and will be dependent on the financial circumstances of the individual e.g. the financial needs of a young person living at home is going to be considerably less than an older person buying his own home. Nevertheless, that’s what the Conservative (Capitalist) Government has called it.
However, regardless to the Conservative’s current policy on minimum/living wage, and Labour’s future policy (when they get in power), I don’t think it’s anyone’s intention in the UK to burden the employer to the point of making them pay ‘exclusively’ for Societies Social needs.
Although Labour (when next in power) will raise the legal minimum wage to $13 for ‘ALL’ over the age of 18 from the Conservative’s current rate of $10 for those over the age of 25, even Labour recognises that there are limits, and that the Welfare State should play its role of giving assistance to those in needs, rather than putting all the Burdon on the employer.
Whether Labour’s policy of the minimum wage being $13 for all over 18 is too high, or the Conservative’s policy of the ‘so called’ living wage of $10 for anyone over 25 is too low, is debatable.
However, from my perspective (as a Socialist and an education in economics) I trust the recommendation of the Living Wage Commission as being the most realistic e.g. $12 per hour.
My trust in the Living Wage Commission (set up in January 2016) is that they are an Independent Non-Profit Making Organisation that is run by a body of employers, trade unions and independent experts, and they get their ‘Findings’ from the Resolution Foundation (established in 2005), which in itself is an independent British think tank who make their calculations annually based on the best available evidence about living standards in the UK.
With reference to your comment: “While I recognize the end goal - enough income to produce not only minimum requirements for living but luxuries as well - I'm kind of losing it when it comes to deciding that specific individuals rather than the society itself provide the cost. Rather than risking the pocketbooks of the entire society (via subsistence help from govt.), the entire burden is put on employers. How is that justified ethically?”
I think this stems from a misunderstanding, one which I hope I have now clarified above. But for clarity, no one is suggesting the employer to bear the brunt exclusively; it is an end goal that should also be shared by society as a whole e.g. the funding of the Welfare State through taxes so that those in need do have the safety net of the Welfare State to fall back on (means tested) if they are on a low wage and don’t earn enough to live on to a standard deemed as reasonable by Society.
In answer to you penultimate paragraph:
Certainly Labour Costs are cheaper in China and other third world countries compared to the Industrialised Nations like the USA, Britain and other countries across Europe.
And yes, Tariffs do help to ‘level the playing field’ (a complex subject on its own).
Also, ‘Products’ that don’t meet ‘British Standards’ are illegal to import anyway; which blocks the imports of many products from China, and some (especially food products) from the USA.
Although British Goods are ‘Expensive’ its selling point is ‘Quality’. When I (like many Brits) is considering purchasing an expensive product we don’t just look at the price, we also look at the ‘Quality’, and in that respect I tend to buy either British, Japanese or German (even though they tend to be more expensive) because I know that products from these countries do have a good reputation for having ‘Good Quality’; whereas historically, products made in China have tended to be of ‘low standard’.
However, it is a changing world e.g. in recent years the Quality of some Chinese products has improved (along with a corresponding increase in price); so there have been occasions in recent years where I have chosen to buy a Chinese product because the ‘Quality’ and ‘Price’ have both been reasonable.
To sum up (reference your last sentence). Socialist leanings don’t ignore ‘market forces’ but the bias is more towards seeing that the lower classes are not exploited by the upper classes.
A classic example of a difference between a Socialist Government (Labour) and a Capitalist Government (Conservative) in the UK is the level of benefits paid to the low and medium paid workers (Low and Middle Classes), and the Tax Rates for top 5% highest Wage Earners (Upper Class).
When Labour is in power they raise the tax rate for the top 5% wage earners and raise benefits not just for the low paid, but also (to some degree) non-means tested benefits e.g. disability benefit, child care allowance and NHS funding etc. which benefits everyone, including the top 5% wage earners.
When the Conservatives are in power they cut benefits and reduce the tax for the top 5% wage earners.
An example being that (after being out of office since 1998), when the Conservatives finally got back into power in 2010 (as part of a coalition Government, sharing power with the Liberal Democrats) they reduced the tax for the top 5% wage earners down from 50% to 45%. And when Labour gets back in power (anytime between now and May 2022; which could be sooner rather than later) their policy is to push the top 5% wage earners tax back to 50%.
Another example of how Labour differs to the Conservative is that in 2015 (when the Conservatives finally got back into power with an overall majority, and not shackled by the Liberal Democrats in a coalition Government), their first plan was to cut spending on the Welfare State by $12 billion (about $15 billion), but their policy plan was blocked by the House of Lords, so the Conservatives had to abandon their plan to cut public spending on the Welfare State; and instead have resigned themselves to continue raising it in line with inflation each year instead.
Albeit between May 2015 and June 2016 (when they weren’t pre occupied by Brexit) the Conservatives did try tinkering with the Welfare State to reduce some of the costs to the Tax Payer e.g. the changes they made to the minimum wage; but they haven’t made much progress in a lot of the Social Welfare areas because they have been too pre occupied with Brexit ever since, and a lot of their proposals are controversial and do meet with stiff opposition from the House of Lords.
This bias in favour of the lower classes or the upper classes has been part of the see-saw of British Social and Political Society (dependent on whether Labour or Conservatives have been in Power) ever since Labour first came to power in their landslide victory in 1945.
And before you say anything, I know that you are going to favour the British Conservatives over Labour; but that’s politics, and I do respect your political views, even if I don’t fully agree them.
Arthur (aka Nathanville)
First, it's fascinating to me just how much more fleshed out the UKs labor laws are as opposed to the US. Is it corporate influence, and public sentiment, influenced by that sentiment that keeps the US mired in the most basic of arguments? I think perhaps so. As a reformed astroturfer for a firm that advocated any cause that would pay them, I know the links that big money interests will go to paint any talk of progressive policy as devastating to the economy, anti-American, and even anti-Christian.
Getting down to a little of the specifics of the UK system, of which I just learned:
""When Labour (a left wing Socialist Political Party) gets back into power (which currently is highly likely to be before 2022) then their ‘Policy’ is to scrap the changes the Conservative made in 2016 and re-introduce a flat rate for ‘All’ over the age of 18 of (at current value) of £10 (about $13) per hour."
My economic philosophy is considered liberal by US standards , but upon first thought, the UK Conservative plan makes more sense. As I believe you stated, Nathanville, the social safety net system will stick kick in when needed, even when someone is receiving the "living wage." If I'm understanding this correctly, it does thus seem disingenuous to call it "living wage" as opposed to "minimum wage."
However, I don't think I'd be inclined to be on the UK Conservative side of the other issues mentioned. In the US, conservatives have a hard time even being honest about things such as marginal tax rates, making any real discussion about taxing the wealthy difficult.
Ultimately, if we, in anyway, are to have our macroeconomics reflect the People/Planet/Profit triple bottom line ideal, we must be able to have the sort of discussions that it seems they are at least having across the pond.
In reference to the flexible working environment in the US. As a college educated individual, with lower middle class origins, the only true flexible work environment I can find is part time and contract work. As pointed out in the youtube video, many UK workers are part time. This holds true for the US as well. In the States, this means no healthcare, no paid vacation, perhaps a 401k with minimal matching, etc.
We have a long way to go, and while I don't support all the policies of the new Bernie Sanders's style Democratic Socialists in our Congress, I think them being there is a healthy move in the right direction. It's not bad for workers to fight for rights. In fact, it only seems natural, and to do otherwise, offsets the balance. But, I think the US has convinced many that it's somehow evil, and lazy, for workers to demand most anything. I think otherwise.
"In the US, conservatives have a hard time even being honest about things such as marginal tax rates, making any real discussion about taxing the wealthy difficult."
This is indeed a major difference in politics in the US. But I'm not sure that it is the conservatives being dishonest: "In the US, conservatives have a hard time even being honest about things such as marginal tax rates". It is this concept - that the masses own what others have worked for and earned - that is at the end of the trail, and it is the liberals not conservatives, that refuse to acknowledge it. It is the liberal taking the position, while concocting a myriad of excuses to pretend that is somehow "right" - excuses that are just that. Nothing BUT excuses to force others to buy what they want but cannot afford.
Then, to compound the error, they operate under the theory that it won't matter how much they take, there will always be more available. The pretense that the "haves" will not protect themselves is patently false (offshore tax havens come to mind) but they still promote the idea. "Dishonest" comes to mind.
"In the US, conservatives have a hard time even being honest about things such as marginal tax rates".
The above was my specific statement about a specific issue. Yes, I agree liberals can be dishonest as well. The reality is that no one in our society lives in a bubble and we all benefit for the greater good. I'm not looking to debate the general merits of taxation though.
This is a prime example of why I say we cannot even get off the ground, in terms of labor policy, healthcare, etc. in comparison to other developed nations.
"This is a prime example of why I say we cannot even get off the ground, in terms of labor policy, healthcare, etc. in comparison to other developed nations."
I believe you are right here - we cannot "get off the ground" (give away what others own) because there are still a lot of people to don't agree that others have a right to what they don't own. I vast difference in philosophy, as I said.
Thanks for your feedback ‘hard sun’, which I found very informative; and has helped to give me a greater insight into American Social Politics. Like you I fall into the ‘Lower Middle Class’ Category; but only because my education and qualifications gave the opportunity for a career path that put me into that Social Grouping.
In conjunction with your comment about Corporate influence, and public sentiment in the USA as a barrier to more progressive ‘Labour Laws’; from across the pond (in Britain) the impression we get is that in the USA politicians are in the pocket of Industry, and that Industry is the most influential lobbyist in American Politics.
In Britain it’s a lot more difficult for Industry to have such influence on the Government because of various safeguards set-up in the UK over the decades to make such interference by Industry more difficult; such safety measures in the UK includes (but not exclusive to):-
(i) Strict Laws Covering Elections and Funding of Political Parties, including strict Spending Limits in Elections.
(ii) Laws covering MPs and Government Transparency, and
(iii) Keeping a barrier (fence) between Government and politically sensitive Government Departments e.g. Independent Government Departments.
On the first point, Rules governing elections in the UK for Political Parties (and individual candidates) spending on election campaigns is strictly limited and strictly controlled by the Electoral Commission.
For example, the Electoral Commission is very strict in seeing that ‘All’ main Political Parties have equal ‘air’ time on television during election campaigns.
Although the precise rules are complex, in general a political party fighting all 650 seats in a UK General Election is entitled to spend up to about £19.5 million (about $25 million) in total. Spending by an individual candidate on their own campaign within a political party is limited to about £16,000 (about $20,000). Likewise an ‘Independent’ Candidate (who doesn’t belong to any political party) is restricted by the same spending limit of $20,000.
And any breach of these rules is a ‘Criminal Offence’ (election fraud), which for a political party can mean a hefty fine by the Electoral Commission, or for an individual candidate a police prosecution with a prospect of up to six months in prison.
After an election, all political parties and individual candidates must submit detailed accounts (and receipts) of spending on their election campaign to the Electoral Commission who then scrutinise all the accounts.
In this respect, the Conservative Party was investigated by the Electoral Commission following the 2015 General Election, and in March 2017 was fined £70,000 (about $90,000) by the Electoral Commission for trying to hide £275,813 (about $350,000) of expenditure, some of which had been illegally used to promote 15 individual Conservative candidates (who were close to their own legal spending limit) rather than the funds being used to promote the Conservative Party itself nationally. After imposing the fine on the Conservative Party, the Electoral Commission then past their findings onto the Police, who in May 2017 announced they would not bring criminal charges in 14 of the 15 cases because there was insufficient evidence to secure a conviction in a criminal court of law, but will in due course bring criminal charges against one of the Conservative MPs for election fraud.
Not only does political funding, which is strictly regulated and scrutinised by the Electoral Commission, has to be transparent, but also MPs (Members of Parliament) must declare their ‘financial interests’ in the ‘Register of Members Financial Interest’. There is nothing stopping an MP from having a Financial Interest in Businesses, but they must be transparent about their interests so that when they debate or vote on issues in Parliament where they may have an ‘invested interest’, it’s clear to all other MPs the potential ‘conflict of interest’ that that MP may have.
Also, in 2000 the UK Labour Government passed the Freedom of Information Act, which over the years has proved an invaluable tool to campaigners and lobbyist in getting factual information from the Government that they wouldn’t otherwise get.
Independent Government Departments
An ‘Independent Government Department in the UK is a Government Department that is NOT answerable to the Government, but only answerable to Parliament; such an arrangement helps to reduce the risk of an unscrupulous Government from having direct influence in areas that would be inappropriate or undesirable.
Examples of Independent Government Departments include the ‘Electoral Commons’ and ‘Office of National Statistics’ (which publishes Government Data in the Public Domain on the Internet, being independent of the Government helps to ensure the Government doesn’t massage or hide sensitive information about public spending or the state of the economy etc.)
UK TAX LAWS
Yes, I agree, the UK Conservatives calling the minimum wage for those over 25 a living wage is disingenuous, and I’m sure it was done for political reasons e.g. sounds good to the voter.
In the UK, no political party can hide their taxation intentions, or any other of their policies. In the UK Governments have to be transparent for the following reasons:-
The Salisbury Rule
In order for a Government to pass laws it has to get its legislation passed in the House of Commons (elected MPs) and through the House of Lords (unelected peers).
The mechanism of the Salisbury Rule is that provided a Government published the details of its Policies (including taxation policies) in its Election Manifesto, then on the principle that ‘the people’ voted for that Government on the strength of those policies, then the House of Lords (an unelected Chamber) will not block such legislation; although they may try to Amend it or Delay it.
However, if a Government introduces New Policies that were not published in their Election Manifesto, then it’s fair game in the House of Lords e.g. the House of Lords has every legal right to block such legislation if they so wish.
The Origin of the Rule stems back to Labour’s 1945 landslide Victory. It was the first time that Britain had a Socialist Government in power, previous to that it had always been either Conservative or Liberal (Democrats). The newly elected Socialist Labour Government wanted to push through a load of ‘Radical’ Socialist Policies, including the creation of the Welfare State and the NHS (National Health Service, free health for all at the point of use).
The problem was that as things stood there would have been an impasse between the House of Commons and the House of Lords, because the House of Lords would have voted down everything Labour proposed e.g. 761 of the Lords at the time opposed the Labour Policies and only 16 Lords supported the Labour Policies.
Therefore, the Leader of the House of Lords (Lord Salisbury), a Conservative; recognising that the people had voted Labour into power with a landslide victory (massive majority) made a magnanimous ‘Statement of Principle’ that as the Labour Policies were the ‘will of the people’ and that the House of Lords is unelected, that the House of Lords should not stand in the way of ‘the will of the people’.
Therefore the Salisbury Rule has now become part of the British ‘unwritten’ Constitution.
The only time the ‘Salisbury Rule’ has been broken since 1945 was in 2016 when, although the newly elected Conservative Government has clearly stated in their election manifesto of 2015 that they would cut Welfare Benefits by $15 billion, the House of Lords refused to pass the Bill on the grounds that such cuts would be to devastating for the poorest people in Society.
In the light of the fact that the House of Lords was not going to budge on the issue, rather than pressing the issue, and creating a Constitution Crisis, the Conservative Government backed down, and scrapped its plans for the proposed cuts.
In the UK the Benefit Rules are complex, but essentially (dependent on which Benefit) the distinction between part-time and full-time working is between 16 hour and 24 hours per week. To complex matters more, some benefits are only applicable if you work part-time, while other benefits are only paid if you are working full-time; and other benefits (such as Housing Benefit) isn’t affected by whether you are working or not, it’s means tested on your overall income e.g. how much you earn if you are working, or if unemployed then it’s an automatic entitlement if you rent rather than buy your own property.
As regards entitlements such as holidays (vacation), then in the UK part-time workers are entitled to the six weeks leave just like full-time workers, but its pro-rata e.g. if you work a three day week (part time) then a week’s paid leave is three days; or if you work just 10 hours a week (part time) then taking 10 hours off work as paid leave is a week’s leave.
It’s the same principle for Maternity and Paternity leave e.g. both partners are each entitled to two weeks parental leave when a woman becomes pregnant, while the other 50 weeks parental leave can be shared e.g. the wife may take 40 of those weeks during pregnancy and the husband take the remaining 10 weeks shortly after birth to allow the wife to return to work earlier than she would otherwise have been able to do. The decision on how the parental leave is shared is the choice of the parents.
Flexi leave was introduced into the workplace in 1974, just a year after I started work; and I found it extremely useful in balancing my work/life. It started fairly basic, but over the years the Trade Union negotiated continuingly better ‘flexible leave’ conditions so by about 2000 it was quite a sophisticated system.
The flexible system we had was that you could start work anytime from 7am, but no later than 10am, and go home anytime between 3:30pm and 7pm.
Over a 4-week period you could work as many or as few hours as you liked provided you worked an average of 37 hours per week; plus or minus a given limit. The given limit was 1.5 days in debit at the end of the 4-week period, or 3 days in credit; and if you were in credit you could either work less hours the following month or take your credit as paid leave (flexi-leave). So if I wanted a week’s leave I would often put the extra hours in to build up my credit and then take 3 days flexi-leave and 2 days annual leave; so that my six weeks annual leave would go a lot further.
Home working became widely available where I worked 5 years before I took early retirement; so for the last five years I would work from home two days a week, spent one day travelling to other Offices for meetings, and then nip into the Office for two days.
Part Time Working
My wife opted to change from full time working to part-time working (16 hours a week) for the last five years before she took early retirement. She negotiated a four day week (4 hours per day) with her employer.
Bernie Sanders/Jeremy Corbyn
As a Socialist, I agree, it’s good for workers to fight for rights; and I wish Bernie Sanders all the best for the future.
It’s how Socialism started in the UK. On the 27th February 1900 the Trade Unions formed their own political party, and called it the Labour Party. But it wasn’t until 1945 before they finally came into power, with a landslide victory that took everyone by surprise; because everyone was expecting the Conservatives to win because Winston Churchill won the war (2nd world war). So you can imagine how gutted Winston Churchill felt at the time.
Likewise, although I support Jeremy Corbyn, and I do support most of his policies, there are a small number of policies areas where I don’t agree with him; namely, as an extreme left wing Socialist, his anti-nuclear defence policy e.g. when he gets into power he wants to scrap Britain’s nuclear defence capability.
How do the Democrats in the USA select their leader and set party policies?
In the UK the Conservative Party choose their leader by MPs nominating candidates (who must be an MP of course) and then whittling it down to two contenders before allowing party members a postal ballot. Then it’s the Conservative Leader who sets the policies for the conservative party.
In contrast, in the Labour Party, although a candidate (a Labour MP) must be nominated by at least 15% of Labour MPs in order to stand as a candidate for leader, the actual voting to select the leader from the candidates is shared between Party Members and the Trade Unions.
Jeremy Corbyn’s election as Party Leader in 2015 was controversial because only 15.52% of Labour MP’s supported his nomination, most of the other Labour MPs wanted a more moderate Leader; but the Trade Unions and Party Member had others ideas and voted him in power with an overwhelming majority of 59.5%, while the other three more moderate candidates who the MPs favoured only got 19%, 17% and 4.5% share of the votes respectively.
The Labour Party formulates its Policies at its Annual Conference where Trade Unions get 50% of the vote and Party Members get the other 50%.
In the Liberal Democrats (Democrats) in the UK it’s the party members who elect their leader and makes the party policies.
Campaign finance in the US is something that I think most Conservatives and Liberals can get behind. Yet, it never happens. The big money influence is just too entrenched I guess. This the one with the most cash wins invited the type of abuse and circus atmosphere that Trump is IMO. Politicians will get the cash from where they can and they will get the publicity however they can, even if it means being a clown.
Deomocrats are elected through our primary system. This varies in a few states, but basically means the people vote for the party's nominee. Once they are in office, like Congress, the representatives choose from the party leaders.
Great discussion. I'll leave it at that as to not entirely change the subject of GAs thread. It's good to get this information out there though, especially to Americans IMO, as most of us know very little about how European governments really work. Maybe that's by design?
Do the Democrats have an anthem, ‘hard sun’: The Labour Parties main anthem (adopted by the Labour Party in 1906) is ‘The Red Flag’, and their other anthem which they also frequently use is ‘Jerusalem’; both are sung at the end of the Labour 2017 Party Conference (as shown here):- https://youtu.be/-SHhXMzXFl0
No anthem, though it may be good to remind us of the importance of fighting for fair labor laws. Perhaps Woody Guthrie's "This Land is Your Land' is the closest the Democrats have to an anthem. It was played by Seeger and Springsteen at Obama's first inauguration. America needs a Woody Guthrie now.
Very interesting. Upon first glance the Living Wage Commission seems a decent idea. Of course, as you stated, there are not right or wrong answer here and much of it depends on perspective.
For clarification, I took a few economics courses in the context of my environmental studies. I wouldn't say I'm an economist.
Thanks for your feedback ‘hard sun’. Likewise, I’m not an economist, but getting suitable qualification in Business Administration was a key step in getting promotion in the civil service. As part of the two year course at college (in which I had to pass all the exams at the end to get my qualification) the subjects I studied on the Business Administration course included: Business Law; Economic History; Economics; Accounts; Statistics and English.
An average American high school student working 15 hours a week at a minimum wage job is among the top 20% of wage earners in the world. Thanks Capitalism.
Exactly. Minimum wage means starter jobs. What people fail to comprehend is that minimum wage jobs aren't lifetime jobs- they are STEPPING STONES to better jobs once experience is acquired. Why don't people understand this?! People don't remain in minimum wage jobs for a lifetime nor do they remain in entry level jobs which pays considerably less than similar jobs which require EXPERIENCE!
In a perfect world, maybe it would just be an emotional argument. But, let's take the city I live in. The average rent on an apartment hovers around $1800-2000 per month. Electricity about$150. One has to eat so, eating cheap you might get by on $50 per person. The law requires you carry health insurance so tack on another$150. You have to get to work, living near your work would raise your rent, no viable bus service city wide so you have to have a car. Let's say it's paid for but gas and maintenance adds$150 a month.
Without adding any comforts like phone, internet, eating out, buying clothes and no savings, if you share your apartment that's $1425 per month to just survive. You'll have to make$10 per hour so that after taxes you just might get by. Leaving nothing for savings, deductibles, minor creature comforts, etc.
It isn't emotional. It's basic common sense. If a person can only scrape by to survive on minimum wage, why should they work? You can make that on welfare and food stamps. And have more disposable income because you will qualify for subsidized housing, Medicaid, etc.
You say it is not emotional Live to Learn, but let's look at what you offered for support.
That apartment cost. I suspect your area is like most other areas, those prices are the market rate. Meaning there are enough people that can afford them to keep them occupied. If you raise wages, and more people can afford them, do you think those rents won't go up too? Up to the maximum bearable market rate they were before the labor raises? That's an undeniable fact of our supply and demand society.
If an employer can only pay $10 p/hr and make a profit--for argument sake, let's say we are talking about minimal reasonable profits to make it worthwhile to stay in business--and, the market will only bear the prices he is charging, (while bearing those $10 p/hr labor costs), what do you expect him to do if he has to pay $15 p/hr? Raise prices or go out of business?
The market has already told him he can't raise prices--and stay in business, so he either cuts jobs and makes do with less employees, (and all the negatives that go along with that), or goes out of business.
Do you see a different choice?
Commuters are the proof of the emotional aspect of that argument. Surely you have heard of, or even know people, that commute rather long distances to work because they can't afford to live closer to their work.
Going back to the city you live in. I bet cheaper rents can be found in its rural or bedroom communities. Of course it's tougher to live further from your work, but whatcha gonna do?
I see what you think was factual support, ie. the cost of living argument, as an emotional, "but it's more convenient, I want to live there" argument.
Then of course there is the work two jobs to get by discussion. I would bet that more folks/families have done that than ones that just say to hell with it and go on welfare, or become homeless.
I think you are approaching this from an unrealistic angle. If living closer to work means you cannot afford safe and secure housing, your income level excludes you from some type of assistance, or your assumptions of what government should provide citizens prohibits you from applying..you've lost one incentive. Why work if non work has the exact same outcome? If it means you scrape to survive, never seeing a chance to get ahead, you've lost another. And so it goes.
We have to accept that for every fantastic high paying job there are a thousand pretty good paying jobs. For those there are thousands of low paying jobs. All working in the same area. I doubt the cleaning staff, the security guards, the landscape guys or the maintenance crew where I work makes much. They have many of the same basic needs I have.
Your argument was a great one to push the need for social security. The robber barons got to get filthy rich, pay wages which did not allow the average citizen to plan for their retirement so, seemingly presto (to those who argue the employer can't afford it, or people just need to get a better paying job, people are lazy, or 'that's not happening to me so it's your problem', etc.) social programs were implemented over the years, costing taxpayers billions upon trillions as time progressed.
People are diverse and unique. IQs challenge and limit, as much as do things like education and morals. We live in a world which constantly looks for ways to make higher profits. Which causes the cost of living to rise. Minimum wage needs to keep up. Full time jobs with benefits need to keep up.
The social programs we bemoan footing the bill for were implemented during times where employers were not meeting the needs of the workers. I see that now, with large corporations cutting full time jobs. Look at Sears. Filing bankruptcy, full time staff losing their jobs, told there are no funds for severance and then millions allowed by the courts for bonuses to management.
Things are off kilter. I've been owner and I've been employee and I've been management. I accept that someone out there has to make the fries or clean the toilets (let's hope there isn't someone doing both on the same shift.) If they move up, someone else has to do it. Those jobs can't magically disappear. If you work, you have a right to some basic expectations.
I have basic expectations that our economy should be able to ensure we don't have massive tent cities within a metropolis, teeming with people who can't afford housing. I have basic expectations that the average person shouldn't be beggared by an unexpected illness. I expect the society I live in should have incentive for a strong work ethic. Fair wages meet those expectations in a manner which alleviates the need for tax payer dollars to fill the gap or an ever growing number of regulations and taxes to support programs designed for the employer or employee to cover costs incurred by the government when some companies shirk their responsibilities.
It isn't emotion. It's basic economics which would allow for government to shrink.
While I see your premise, I believe that people are paid for what they are worth, given their job & educational qualifications. Jobs pay people for the skills, education, & experience they acquire. Furthermore, jobs pay people based upon societal demand. Doctors earn far more than baristas because becoming a doctor requires years of schooling in addition to a specialized skill. Barista jobs don't require any skillset.
One must be realistic here. Raising minimum wages doesn't help. Jobs pay what they pay. If one is dissatisfied w/the job at hand, either apply for a promotion or leave the present job for a better job. If one wants a good job, one either has to acquire the necessary educational &/or skillset or one has to be extremely talented That is the name of the game.
Jobs that have intricate skills or are difficult such as technology, computers, medicine, math, & sciences are going to pay more than jobs that are easy & are low skilled. Let us face facts. People do earn decent wages(there are SOME EXCEPTIONS) based upon their educational & skill qualifications. One has to acknowledge this. If one wants a better job, get the qualifying education &/or skills required to do the job. If you can't, well you have to live on what you earn.
If everyone in the United States held a PhD, again, someone would have to make the fries. Someone would have to clean the toilet.
A person with 100 or lower IQ has limited options from the outset.
Although I agree we are paid for what society values our services (in many jobs) devaluing the contribution of the labor sector is a very serious mistake.
I'm continually shocked tio find people in low paid jobs, in high cost of living areas. People can make all the arguments they want, in favor of the market allowing housing costs to rise above average wage ability to rent, but cities such as San Francisco should be looked to as examples of the problem with this philosophy.
Capitalism, fairly unbridled, has caused the rise of ignorance. It has caused people with pie in the sky ideas like we find in the darling of the left, little 'Alex from the Bronx'. I think it threatens our continued existence as a free society. We have placed too high a value on money, for money's sake and the growth of our economy, no matter the toll on the working family, is fundamentally flawed.
The perception the average worker has of their opportunities, their life and their future determines the strength of a society. It is as emotion driven as the stock market. Not as volatile in the short run, but it can be a powder keg which eventually topples a country.
Our current political climate, the one in existence for most of our lifetimes shows the country very, very strongly divided. I see this as a dangerous powder keg. It is long past the time to identify and rectify the causes. Income inequality is growing and one of the already identified causes. It needs to be addressed.
Well, it isn't inequality but a fact of life. Intelligent/educated people will have better jobs & living conditions while the less intelligent/less educated will have the jobs slated to their abilities. They have to learn to live on what they earn. That is REALITY. It is the survival of the smartest, even the most cunning who will thrive in this society. It is a winner's take all society. You have to learn to play the game or perish!
There's no evidence that higher intelligence people make more money.
"It is a winner's take all society. You have to learn to play the game or perish!"
Evolution kind of counters this. It is survival of the fiting-est not survival of the fittest. You get too selfish and just may pay a price.
I would be very disappointed if I believed a large number of people agreed with 'learn to play the game, or perish'. A callous disregard for one's fellow man is not a society I can respect or participate in.
"Capitalism, fairly unbridled, has caused the rise of ignorance. It has caused people with pie in the sky ideas like we find in the darling of the left, little 'Alex from the Bronx'. I think it threatens our continued existence as a free society. We have placed too high a value on money, for money's sake and the growth of our economy, no matter the toll on the working family, is fundamentally flawed.
The perception the average worker has of their opportunities, their life and their future determines the strength of a society. It is as emotion driven as the stock market. Not as volatile in the short run, but it can be a powder keg which eventually topples a country."
Bingo..this really says it all IMO, and is why I say we are missing the big picture with this entire discussion, which is what really matters on the level of the voter .
Let's see how we function without SS and Medicare. How will all these highly educated people bring dedication to their fields if they have no one to make their food or take their trash to the dump? It all falls apart. We really must function on a new paradigm to continue as a nation and a species.
Live to Learn, you start with a thought about removing an incentive to work. If it, (where you live), isn't as convenient to work as you want it to be--why work?
That certainly is realistic, but only because we have forced our government to provide that disincentive. Do you think that is a good thing?
Wouldn't forcing an employer to pay a worker enough to live securely--regardless of the job level or work value be a similar disincentive--for the employer?
Your different level jobs thought seems to be saying that if a good paying management or skill-based job allows a worker to live somewhere, then that fry cook or garbage collector that works in the same area should be paid enough to live there too.
Did I misunderstand? Because I certainly don't see that as a realistic expectation.
I agree with you that "People are diverse and unique. IQs challenge and limit, as much as do things like education and morals. " How would you justify paying a single, intelligent, and moral fry cook, the same pay as an IQ-challenged immoral fry cook--without using the value of the work performed as the rational?
And if that were your rational, that a wage is tied to the work value produced, then how could you justify forcing a living wage regardless of job or worker?
Need can't the deciding factor. Not in our market-based capitalist society anyway.
Need and desire are emotional rationalizations. Can you support them with reasoned rationals without changing how our economy functions?
And to your last point about basic expectations, I have just one that I think is reasonable. If I work, I have a basic expectation to get paid for the value of that work. I don't expect to be paid more than the what value of my labor is worth to my employer. I think that is a very realistic expectation.
Also, the discussion isn't about "fair" wages, it's about justifying paying more for labor than it is worth to the one buying that labor.
Maybe I am missing your message, but I don't see any support for your points beyond, should, need, and desire; all emotional rationalizations.
Want a reasoned rational for your points? Then look at them again with the perspective that a wage is and should be tied to the value of the work performed. You already started on that track with your thought about the diversity of people in the labor force.
We cannot possibly design laws that set a minimum wage based on the need of each and every individual worker. To even TRY to do that will simply price them out of the job market entirely.
Which brings us back to a minimum wage designed to...what? Supply a basic minimum wage for a single person? Supply more than that? Where do we stop requiring an employer to provide for a persons needs rather than society doing it? Seems to me that putting the onus on employers rather than society simply means there will be fewer employers - look what happened when Seattle tried to ding employers for the needs of the homeless.
Most of the apts in my area are subsidized based on income. I do see a different choice. Is it ideal? Maybe not. However, this is one reason why governments exist and why we advanced passed pure feudalism. I'm lucky enough to have a home because I got it cheap when the market was down.
A living wage is different in different places. There's no certain "living wage" that fits all.
I think a garbage collector actually provides a service and actually works for a living. I cannot say the same for all the other city employees up the chain. Most fly under the radar for 50k plus benefits. They have "titles" but no discernible monetary value.
H.G. Wells was right. In the future, the above ground will be inhabited by Kardashian/Politician/Banker types, wall papering the world with fiat currency and trying to convince themselves of their talents, which are not readily apparent. Morlock/ manual laborers will live below, only visiting the surface to eat one of the paper hangers above, from time to time.
I am certainly not arguing against capitalism hard sun, so I must be less than clear in my responses.
I am arguing that capitalism is our reality, and that I think it is the best reality to have.
There may be many reasons to start a business other than just for the profit, but capitalism demands that a business must make a profit in order to survive. Otherwise that business becomes something else; a non-profit, an organization of some kind, or a charity. That is capitalism.
I understand that and embrace it.
Pursuing an evolved business environment that adopts TBL, (Triple Bottom Line), objectives is an admirable and desirable goal. I support the concept.
But, if a business cannot pay the basic bills to keep its doors open, how can it afford to implement programs to bolster its social and environmental responsibilities?
If it has to cut jobs, to pay more wages to the workers it keeps, (an effort to follow a TBL philosophy), do you balance the lost jobs against the benefits of that philosophy to the workers that still have jobs?
My question about a living wage isn't whether if should be a goal, it is about whether it can be supported by reason in our current capitalist society. Your responses seem to be addressing the desirability, (which I don't argue), instead of the reality of the demand.
The reality of your scenario seems so self evident that I assumed you were attempting to make a deeper point.
Perhaps if you cannot afford to pay a true "living wage," as difficult as that is to determine, then you shouldn't have employees. It may be that simple. This also may be a good argument for large businesses that more often have the means to pay above minimum wage. There are many arguments to be made that large businesses are often times better for the environment as well.
That is certainly a new direction to consider hard sun ... restricting small business start-ups.
But I am going to just let this thing go. Our perspectives are too different to allow us to find a starting point.
I believe that a wage rate should be determined by the value of the labor given. It appears you believe that wage rate should be determined by the the labor provider's needs.
Can there be any doubt that we will disagree on the other aspects of the question?
No. I said nothing about restricting small start ups. I simply stated maybe if a small business can't pay a living wage, it shouldn't have employees. I think you know the difference...nice try though. I'm sure American's for Prosperity would be proud.
I also never indicated I think wage rate should be determined by the labor provider's needs. You keep stating over and over again that a labor provider can only pay what they can pay, so I guess you're trying to correlate the value of labor with the amount that an employer thinks he or she can make off of that labor. All semantics.
No hard son, none of it was semantics, and none of it was a "nice try." It was all about answering a serious question.
Going by your comments, (and let's just use, whether right or wrong, the currently tossed around number of $15 p/hr), you say that if a business can't afford to pay $15 p/hr, as a start-up, they shouldn't have employees.
Isn't that advocating restricting small business start-ups? You can afford a minimum wage worker to help your business, but if you can't afford one living wage worker maybe you should not start a business--did I get that wrong?
That wasn't a "nice try, it was a consideration that that little start-up might grow to employ multiple living wage employees--after they get their business established? But, by your thoughts, maybe they shouldn't even try.
As for never indicating that a wage rate should be determined by the labor provider's needs, isn't that the philosophy behind the living wage movement?
Didn't you say:
It is not an attempt at semantics hard sun. You based the value of labor on the concept of a living wage, and a living wage is based on the concept of a labor provider's needs.
If I misunderstood those two points then that is an innocent error, on one of our heads, but in neither instance was I playing games or arguing semantics.
And one final clarification. I have not, and am not saying an employer, (isn't that what you meant by labor provider - a misspeak?), should only be what that employer can make off that labor. It may be a fine delineation, but I see a difference, and an important one, between make off of, and value to.
"Perhaps if you cannot afford to pay a true "living wage," as difficult as that is to determine, then you shouldn't have employees. It may be that simple.
"Isn't that advocating restricting small business start-ups?
-- No. It's not advocating restricting anything.
I cannot understand how you don't understand the difference. Restriction implies forcing something onto someone. I'm simply stating that maybe business owners should choose not to have employees. I'm not stating a government, or anyone else, should restrict anything.
That's all I have for this as we clearly aren't going to be able to have a productive conversation here. I still see much, of what you are stating as purely semantics and taking a statements I make and generalizing them into absurdities.
Take it easy GA
Just a general comment. I don't believe it is possible or desirable to separate morality or human values from any discussion that involves decisions that affect what kind of society we want to live in.
Yeah, that needed to be stated. I think when we abandon morality we abandon progress. Then we miss out on the next Salk, Margaret Pittman, etc.
You are right, that was a general comment. But ...
The conversation doesn't have to separate those issues from the question. We just have to establish a common understanding before we can address the real complexities of the question.
For instance, I am not against hard sun's Triple Bottom Line business model advocacy. I think it would be great if all businesses adopted that goal.
I am not against working toward a goal of a minimum "living wage."
But, I am against the demand that an arbitrary number be determined as that Living Wage, and I am against the emotional reasoning that a Living Wage is a magical number that will help people - without them first helping themselves by improving the value of their labor to an employer.
Creating a business. Feeding people. Creating jobs that feeds even more families, is sincerely commendable.
Reality includes Hooters franchises. More than we admit. We toss around the notions of what labor is worth what. In a hyperinflation scenario, or like castaways on an island, an uneducated farmer, a politician or banker. Which one do we keep? Which two are more likely the cause of the hyperinflation to begin with?
It seems that minimum or living are arbitrary terms. Isn't it all about an almost set in stone purchasing power as opposed to unknown value of skills for any particular occasion?
This reminds me of something Warren Buffett said in relation to how the hell he was lucky enough to have his particular skill valued so highly. I can't remember, or find, the exact quote.
I take it you're referring to purchasing power as it is at any particular moment in time? I'd keep the farmer, and that's why we try to pass on true "real life" skills to our children.
If everyone is in agreement that people shouldn't be left to die in the streets from poverty, it seems ludicrous to me to allow corporations to get off the hook at every turn. Either forcing people out, by raising the cost of living in areas; forcing society to pick up the difference by doling out the gap between the cost of living and the low salary; watching jobs migrate to countries which haven't evolved to think of social programs; creating a monopoly in order to raise prices; or, worst of all, watching countries like China incarcerate in order to create a slave labor class.
This blindness has created the lop sided 1%. I think we can all agree that any model we function within will eventually have 10% holding more wealth than the bottom 90% and the lions share of the wealth will be held by 1% of the whole.
The question is how and why. We face many challenges created by growth and we function in a trickle down model. Which sounds somewhat equitable, since any system will appear unfair to some. But, in the West, the model has met a logjam. The accumulation of wealth of the average person depends on the scraps garnered from the stock they invest in. Large corporations use the global market to their advantage with no concern for the welfare of those they make money off of or those who perform the labor. And when a company fails it is not those guiding the ship who suffer. No captain goes down with the ship.
Maybe, if we developed a simple model where no less than a certain percentage of profit earned should be put toward salary of those who actually make it and the value of a product made externally, to be sold internally, must be determined by the cost of labor in the country it is being sold and that percentage is either paid by the same model or tariffs imposed to make the value commensurate to the cost of production in the country that ultimately purchases the goods corporations and independents would be on a level playing field.
It seems impossible and insurmountable. Doesn't take into account the reality of emerging economies. But, if we hold a standard for human dignity we should hold those who hold the reins of power accountable. We should not foot the bill because we look to the welfare of the people and they look only to profit.
A global economy should not give the impression of working for the few who know how to manipulate it, to the detriment of all who seek to survive in it.
In the 21st century, there will be a widening gap between the technologically/educationally skilled & those who aren't. That is a fact of life which can't & won't be changed. In fact, the situation will be grossly exacerbated. The lower socioeconomic classes which are the less educated & unskilled will be part of a permanent underclass w/no future. They will be the new slave class. However, the technologically/educationally skilled will thrive & become part of the affluent classes. FACTS are facts.
Let us go into deeper analysis here. For the most part in America, people are poor because of a lack, whether it is a lack of perspective, thinking, & other factors. People in America are poor because for the most part, they want to. There have been myriad opportunities in America for people to improve their socioeconomic & educational lot but they would rather use excuses & copouts than to make the sacrifices necessary to improve their conditions. If one makes one's best, one has to lie in it.
The lower socioeconomic classes have a far different psychology & mindset. They are happy in the condition that they are in. They expect the world to rescue them instead of being proactive. Since they are in dire circumstances, they want everyone, including their children to be in the same dire circumstances as they are in. The lower socioeconomic classes don't want to improve themselves & are contentious of those who elect to do so. These classes are the most venomous towards those who desire to do better. Those in the lower socioeconomic classes have a crab in the barrel mentality, especially towards their children. They hate people who aspire to goals beyond survival & struggle. They are of the philosophy that misery loves company unlike the more affluent classes who encourage education & self-improvement. Let us say that in the 21st century, the lower socioeconomic classes are going to SELF-DESTRUCT in one way or another- they will kill each other off in the areas where they live, they will be conscripted into armies to die, or they will be imprisoned en masse.
Hi ‘Live to Learn’. As a Socialist I aspire to your sentiments.
The one point where I would like to add my ‘two-penny worth’, is your statement “We face many challenges created by growth and we function in a trickle down model”.
It’s one area where the UK (and many countries in Europe) probably differs from the USA e.g. in the UK, although the Conservative Political Party follows the ‘trickle down model’ (just like any other right wing Capitalist Party); in the UK we also have the Labour Party (a left wing Socialist Party) who’s philosophy is one of the ‘trickle up model’ in economics.
Which philosophy is followed in the UK is dependent on which Government happens to be in power at the time: And in practice both methods work, albeit in the ‘trickle up model’ under Labour’s Socialist Policies the lower classes do benefit at the expense of the upper classes. And when the Conservatives are in power, it’s the reverse.
"Maybe, if we developed a simple model where no less than a certain percentage of profit earned should be put toward salary of those who actually make it and the value of a product made externally,..."
I've thought for years that executive pay, including bonuses, should be capped by a certain percentage of profit. This concept about global trade is interesting. If we could only garner the political will to even discuss such things.
Yeah, a global economy could be beneficial to more if so many weren't convinced that it's counter-productive to fight for worker's rights.
Corporations exist in a global economy. We have to look at large multinational corporations. They exist in a different world than independents. The deck is stacked in their favor, thus small business owners operate at a significant disadvantage. Rules for one should not be the same as for the other because that stifles small business ownership, standing in the way of the ability for the little guy making a go of it.
But, yeh. Caps on compensation for the top tier would be a conversation worth having. Golden parachutes, profiting from being forced out of top management due to misconduct, etc. stick in my craw.
I'm finding your responses a bit surprising given some other interactions we've had, but kudos on the deep thinking. I've always thought you were ethical and moral, so this is not surprising.
Should we be discussing a cap on what people can make period? What does it take to be comfortable?
What would happen if we taxed all income above $5 million/year at 100%? $10 million?
Does anyone in the U.S. need to make more than $10 million/year?
I would argue no, but I don't know how it would affect the economy to create that kind of tax. Perhaps there could be incentives for job creation. Those who are job creators could make more. Those who make their money from say, stock price changes, would not.
The executive pay thought is reasonable...except for one thing. When we go to set that percentage the people that earn it aren't going to have a vote - anything they say is overridden by the power of the vote of millions. Millions that want for themselves rather than for the people who produce the value that their salary is set on.
Seems fair that millions would want for themselves when the people who produce the value of their salary is often by chiseling it from others. Wasnt original wage laws a cap as opposed to a minimum, anyways?
Of course they do - it's human nature to want as much as we can get. It's why we have thieves and robbers, too.
But labeling it "chiseling" doesn't mean it is unfair, or wrong, or illegal...OR that you have any right at all to it.
I am unaware of any wage cap, in any country or at any time, that withstood the test of time. Do you know of any?
"When we go to set that percentage the people that earn it aren't going to have a vote - anything they say is overridden by the power of the vote of millions."
You really thing the billionaires that sponsor so many of our politicians will have no say so in such a thing? Poor people may have to be more equitable with the fruits of labor.
You really think that our huge entitlement system has come about without the approval, and demand, from the poor that they get what they haven't earned?
I think it's a checks and balances. Two of the biggest social safety net systems in the US are Medicare and Social Security. And no, not even those are entirely paid for by the individual. They are paid for out of pools of cash. Then see Medicare Advantage, of which we've discussed before, where much of the funds come from an entirely different place as opposed to payroll contributions. Do you suggest we get rid of these programs?
As I recall, medicare and SS were designed and implemented as a method of forcing retirement savings. They are paid for by contributions from employers and the people that will eventually get them. Both are an "insurance" type of program in that the payouts come from a pool of money collected from those contributions and, if not used by the contributor go to someone else in the "pool".
Medicare Advantage insurance, on the other hand, is a purely voluntary insurance program paid for 100% by the person purchasing it. It is not an entitlement program in any sense of the word and is not paid for via the tax base.
And yes, I think both medicare and SS should be ended. As a replacement, every person should be forced to contribute to an involuntary retirement savings plan, but one controlled (with limits set by government) by the person in question. Congress has done us all a great disservice in their handling of OUR funds - they have completely set aside any fiduciary duty in that process in favor of using that pool as a source of cheap money to buy the entitlement programs and pork barrel spending they wish to give to their constituents.
What if we just removed Social Security from the control of Congress and created an independent, bi-partisan group to manage it? You could force a certain percentage into index funds (which historically outperform individual stock-picking) or just create some kind of allocation to make sure people didn't gamble away those funds.
Social Security would not be in trouble if our representative did not borrow from the fund's surpluses and never pay it back.
Something like that, yes. Or let providers submit plans to a committee for approval, then let taxpayers pick which one they like. As you say, something so that it wouldn't be gambled away. I could see some people investing in a mutual, then becoming disabled at a low point in the market fairly early in their career and ending up in considerable poverty as a result (considerable as opposed to only normal poverty), but that seems to me to be far preferable to living in "normal" poverty at normal retirement because congress refused their duty to care for the fund.
Not only that, but when it IS paid back it is at the lowest possible interest that could be arranged. Between the two the people contributing to their retirement don't stand a chance.
"Medicare Advantage insurance, on the other hand, is a purely voluntary insurance program paid for 100% by the person purchasing it."
You can continue to lie to yourself about Medicare Advantage all day long. As I stated before, and provided the clear evidence for, it's highly subsidized.
I used to lobby for government funds for the program. One of the tactics we used was to use phrases such as "non-government run healthcare" because the plan is run through insurers...with government money!
In no way are the premiums, or costs, of the program paid 100% by the insured.
The majority of MA member pay nothing beyond their part B Medicare Premium. As I said, it's income based. In fact, it's run almost exactly like the HIP program in Indiana, which is part of the expanded "Medicaid" program. Users pay based on income.
"Why Medicare Advantage Costs Taxparyers Billions More Than It Should"
https://publicintegrity.org/health/why- … it-should/
Facts don't always fit with how we want them to. Based on an your stance MA should be the first to go.
I guess we want what we want from the government. Even Wilderness.
Then you need to provide evidence of that subsidy. Not just say it is there, but provide details.
Your link discusses outright fraud, for instance, and that is not a subsidy. It is an illegal activity that has a doctor at the root of it, not an insurance company.
It discusses billing errors, but that isn't a subsidy, either.
It discusses how some advantage plans cost more than medicare coverage itself, but that is paid by the buyer, not the government and is not a subsidy.
It discusses overbilling, but that is again illegal and not a subsidy.
So try again, but with something that details a subsidy not a criminal activity.
Here you are:
https://www.cms.gov/Medicare/Health-Pla … ks2019.pdf
https://www.cms.gov/Medicare/Health-Pla … ks2019.pdf
The above link, referenced below, includes subsidies by state, but, if your're paying attention, you understand these subsidies are just the tip of the iceberg when it comes to MA or Medicare Part C funding.
Statutory and Plan-Bid Components of the Regional MA Benchmarks
2019 Low Income Premium Subsidy Amounts
Region State(s) Subsidy
1 NH, ME 33.20
2 CT, MA, RI, VT 36.20
3 NY 39.33
4 NJ 37.16
5 DE, DC, MD 29.98
6 PA, WV 37.03
7 VA 30.61
8 NC 28.91
9 SC 24.55
10 GA 25.68
11 FL 30.25
12 AL, TN 31.40
13 MI 32.91
14 OH 32.92
15 IN, KY 31.75
16 WI 40.80
17 IL 27.37
18 MO 32.06
19 AR 24.81
20 MS 26.85
21 LA 33.06
22 TX 23.96
23 OK 30.84
24 KS 32.46
25 IA, MN, MT, ND, NE, SD, WY 35.78
26 NM 26.61
27 CO 32.00
28 AZ 32.62
29 NV 25.33
30 OR, WA 33.80
31 ID, UT 38.66
32 CA 34.79
33 HI 25.73
34 AK 33.60
You see, the insurers get cash above and beyond regular Medicare funds.
"Medicare pays the insurance company to administer your Part A and B benefits through the Medicare Advantage plan. While all plans must cover the same services as Parts A and B, different Medicare Advantage plans will have different networks, copays, and drug formularies."
https://boomerbenefits.com/original-med … -advantage
Why do you think they must fight to get funding for MA? Because it's big government money and it's coming from ALL of our taxes:
"Medicare Advantage provides better value. Unlike in traditional Medicare, Medicare Advantage plans cap out-of-pocket costs. That means they protect not just beneficiaries’ health, but also their financial well-being – including for the more than six million Medicare Advantage enrollees with incomes of less than $20,000 per year."
The government giving money to private businesses to run them may be closer to fascism than socialism. But, it's a good way to lead those "I don't take any welfare" seniors into believing their insurance is privately run.
However, these seniors who advocate for CMC understand how important the hundreds of millions extra given to MA each year is.
"How are benefits paid under Medicare Advantage?
Medicare Advantage plans are offered by private insurance companies contracted with Medicare to provide program benefits. Under Medicare Advantage, the insurance company receives a set amount of money each year per enrollee to cover health care expenses for the year. The amount is usually exactly the same for each enrollee and it doesn’t increase or decrease depending on the individual’s actual medical costs.
In addition to the Part B premium, which you must continue to pay when you enroll in Medicare Advantage, some Medicare Advantage plans also charge a separate monthly premium."
Follow this. You see, cash is paid to insurers from the Medicare Trust Fund. The MTF is "The trust fund is financed by payroll taxes, general tax revenue, and the premiums enrollees pay."
Well, with the subsidies most members pay next to nothing....
"The insurance company uses this pool of money from the Medicare Trust Funds plus any additional premiums paid by plan members to pay the covered health care expenses for everyone enrolled in a particular plan. Claims for people enrolled in Medicare Advantage are paid by the insurance company and not by the Medicare program as they are for those enrolled in Original Medicare."
https://medicare.com/medicare-advantage … an-funded/
"A.The Medicare trust fund finances health services for beneficiaries of Medicare, a government insurance program for the elderly, the disabled, and people with qualifying health conditions specified by Congress. The trust fund is financed by payroll taxes, general tax revenue, and the premiums enrollees pay."
https://www.taxpolicycenter.org/briefin … t-financed
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