Livable Wage

Wage is based on what an opportunity is worth to the employer before they outsource, automate, or don't scale.

Progressives often see the choice as: (a) A livable minimum wage (b) A lower minimum wage... But the reality is: (a) What the market will bear (b) Unemployment ($0/hour). So the choice isn't pulling people out of poverty or not, it's what value an opportunity is worth to an employer, before they automate, outsource, or just give up (skip the job) -- and the person is unemployed.

ℹ️ Info

~ Aristotle Sabouni
Created: 2017-05-20

Thus it doesn't matter what progressives WANT people to get paid, or what they call a "livable wage", it matters what the market will bear -- and that's not decided by dickheads in D.C. or by layabouts in their parents basement or on the picket line.

Social benefits ≠ Corporate Subsidy[edit | edit source]

The truly uninformed will argue that Walmart having employees on welfare is corporate subsidies or that the public is subsidizing Walmart's employees. But do basic logic:

If there was no subsidy, what would happen?
- there would still be a Walmart, the job and someone to fill it
If there was not Walmart, what would happen?
- They wouldn’t be magically paid more. Odds are, most of those people wouldn't be working at all: paying no taxes, and needing even MORE in government social benefits and being a bigger burden on society.

Thus, government isn't subsidizing Walmart, Walmart is helping to reduce the burden on government social benefits. Progressives are failing at basic logic/economics.

Raise the cost of labor to Walmart and they need to offset those costs, keep raising them, and they offset those jobs — and those newly unemployed people take a lot more in government benefits than they did as a Walmart employee.

So there’s no winning this one. There's a little elasticity where you can reduce the profits of a company from say 8% margins to 4% by forcing them to raise their labor costs (in the short term). But that 4% came out of what? Growth, security, margin.... that means they're that much closer to putting everyone into the unemployment line, which will cost a lot more than the social programs we choose to pay (and have nothing to do with the going rate of labor). When you take away the corporate buffer (profits), that's putting everyone that works for them, that much closer to the unemployment line.

The stupid are stubborn[edit | edit source]

The determined to stay stupid will argue, “But Costco pays more than Walmart!?!?”.

They do, but they have fewer employees per dollar sold (different volumes in different markets).

If you replaced all Walmart’s with Costo’s (ignoring that’s implausible, or the loss of choice/selection), you’d end up with far fewer people employed per store (and fewer stores) — but the few with jobs would be better off. Can you say, The Broken Window Fallacy? In liberal math, un-employing thousands to help dozens is a net win. In the real world, you hurt more people than you helped.

Conclusion[edit | edit source]

Those of us that argue against arbitrary "livable wage" aren't against helping people. Quite the opposite. We are just smarter or care more about people than we care about our egos: unlike the other side.

I wish I could pay everyone more without consequences. But there are consequences. And as soon as you're smart enough or willing enough to consider them, you start thinking about whether you know how to run Walmart better than they do, let along the entire economy. And you know that if you mess it up, you cost far far more livelihoods than you helped. Helping a few, but raising costs or unemployment that hurts the many, is not a net win. And there's no magic math where redistribution actually works in the big picture. In order to pay some people more, we need to raise costs (+margin) to cover for it -- and that hurts people. Command economies fail (or underperform) free'er economics, virtually always, and always in the long term. I'd rather live in South Korea than North Korea, despite North Korea's better social programs.

Related[edit | edit source]

Minimum Wage (or) The Broken Window Fallacy • [2 items]

The Broken Window Fallacy

This is a fundamental concept of economics (and logic) about seen advantages versus unseen costs. Henry Hazlitt summed up the art of economics as not merely looking at the immediate consequences but the longer effects of any act or policy, and tracing those consequences not merely for one group but for all groups. In other words, break a window and the glazer might win -- but the shopkeeper and customers did not.

Minimum Wage
Minimum wage is the delusion that bureaucrats and politicos know more about what's fair than the laborer and the employer, and that there's a magic round number that fair for everyone, everywhere, at the same time. It hurts employment, increases automation and offshoring, and drives up prices. But other than that...

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Economics
The study of choice, scarcity, Social reactions to policies, and unseen consequences.

Minimum Wage
The delusion that politicians know the big magic round number that fair for everyone, everywhere, at the same time.

Minimum Wage Laws
The minimum wage warriors seem reluctant to accept the economic realities: price and wage controls never work.

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Tags: Economics Minimum Wage Minimum Wage Laws