6 ms·

Interesting comparison: inflation is much faster than wage rises.

by JohnyLy 11y ago

higherpurpose 11y ago
Some countries have the minimum wage linked to inflation. While that can have some disadvantages as well (in certain short term periods), overall it's probably much better off in the long term for the population.
- eru 11y ago
  > [...] overall it's probably much better off in the long term for the population. [...] if a minimum wage is a good idea in the first place.
  - bjelkeman-again 11y ago
    When isn't it a good idea to have a minimum wage?
    - meric 11y ago
      In an environment with little social welfare, a minimum wage will disproportionately negatively affect workers with disability because they can almost never get hired, and do not receive sufficient support from the government. They will be at the mercy of affection or pity from family and friends.
    - superuser2 11y ago
      When you are optimizing for employment ratio. Zero minimum wage gives 0% unemployment and creates millions of jobs. Those are some great achievements to have if you're running for reelection. There is no reason to support a minimum wage if you don't care about quality of life.
      - rogerbraun 11y ago
        There are lots of countries without a minimum wage that still have lots of unemployment.
        peterfirefly 11y ago
        An official minimum wage is not the only way to create a de facto minimum wage. Welfare subsidies is another. Strong unions is yet another. High contributions to medical insurance and pensions paid by the employer is yet yet another. There are also others way to create high unemployment: making it very risky and expensive to get rid of mishires or to reduce headcount if the company isn't going so well. Making management more difficult once the headcount reaches a certain level (because of unions or the creation of employee boards mandated by law) -- that leads to companies trying to stay below such ceilings. Others would be salaries/pensions/benefits tied to how long one has worked for the same company -- which discourages moves to other companies (that might fit ones personality or talents better -- or that has better management). The housing market also has an influence: there might be opportunities in a different city but how easy is it to move? It is relatively easy if you rent your house or appartment. Not so easy if you own it, especially if selling it means you realize a loss. Lots of laws and regulations in a country influence the structure of the housing market (how liquid it is, what loan types are available, how many people rent instead of owning, etc.).
      - thecopy 11y ago
        >Zero minimum wage gives 0% unemployment and creates millions of jobs. Sweden has a quite high unemloyment, especially for young people, and Sweden has no minimum wage.
        dagw 11y ago
        Technically true, but the combination of a generous welfare system and powerful unions means that there is a de facto minimum wage. No one is going to work for much less than they'll get from unemployment, and just try starting a company paying less than the union collective bargaining rates and see how long it takes before a bunch of thugs harass you out of business.
    - forgingahead 11y ago
      Because it is essentially a law that makes it illegal to hire unskilled labour: https://www.youtube.com/watch?v=rQj1qlsjVoM https://www.youtube.com/watch?v=rQj1qlsjVoM
    - taki1 11y ago
      You can have someone working for free (internships) or for $8/hour, but everything in between is illegal. So first of all this is stupid. Two, nobody stays forever at $8/hr job with exception of very few. If you are unskilled worker looking for your first job ever, why would anyone hire you, if they can get experienced unskilled worker for the same minimal wage? I.e. I can get you fresh from high school flipping burgers for $8/hr or I can get someone with 5 years experience flipping burgers for the same $8/hr. Guess what, I will get someone with 5 years of experience instead of you with zero years experience for exactly the same price. I could hire you for $3/hr with zero experience, so you could get some on the job and finally land $8/hr job after some time. Or learn on the job how to run a cash register, work with others and treat customers, but instead - thanks to the minimal wage - you will spend that time trying to compete for jobs having zero experience with people who for the same price have plenty of it. Thank minimal wage for high unemployment rates among young (no experience). Before minimal wage was enacted unemployment rate among young was the lowest from all age groups. Now it is the highest. Minimal wage killed the concept of the "first job". For your first job you must be worth the minimal wage. If you aren't, there are no jobs for you.
  - dredmorbius 11y ago
    Adam Smith thought it was: "A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation." http://www.reddit.com/r/dredmorbius/comments/2311mb/adam_smith_on_living_wage_national_wealth_growth/ http://www.reddit.com/r/dredmorbius/comments/2311mb/adam_smi... http://www.reddit.com/r/dredmorbius/comments/1z5vfb/thoughts_on_minimum_wage_enterprise_viability/ http://www.reddit.com/r/dredmorbius/comments/1z5vfb/thoughts...
    - fennecfoxen 11y ago
      Adam Smith was a genius, and the foundation for much of the field of economics, but not an old-testament prophet or an oracle. His work has been built upon and surpassed by extensive research in the field today. I mean, I'd be quite happy to trot out sources like Is there consensus among American labor economists? Survey results on forty propositions (Whaples, 1996) -- or another of the similarly titled papers in that series -- to illustrate there's a scientific consensus against the minimum wage, but worry that it's a mere two decades out of date. :P
      - StillBored 11y ago
        I'm hesitant to say, this but... Consensus amongst economists, is like saying consensus amongst weathermen. You need look no further than recent history. If the past 10 years (or longer if you please) have taught us anything, its that economists can be dangerously wrong. Especially if the issues are at all political.
        fennecfoxen 11y ago
        Yeah, especially pop-economics and economists that the politicians trot out to promote their latest policies, or the guys trying to forecast the future of some part or another of the economy. And overall economic conditions change a bunch, all the time. Hence the aforementioned hesitance. Unfortunately good consensus surveys only come out every so often and then you have trouble looking them up if you aren't somewhere with JSTOR, so. But, that said, economists in general have been pretty consistent on a few basic principles. Supply and demand, the impact of price controls thereupon, et cetera. And if you think through enough of that you might begin to think that the EITC is a better vehicle to help out the working poor than a minimum wage (since it doesn't cause unemployment or promote unnecessary investment in automation to further damage employment unnecessarily...) It's been known to happen, anyway.
Altay- 11y ago
That's the whole point of inflation. Remember, wages are 'sticky' in that workers don't like getting their pay cut. So economists invented a way to rob them while giving them nominal wage raises!
- peterfirefly 11y ago
  Inflation makes adjustment to relative wages much easier (i.e., having some jobs decline in wages and others increase). That is such a good thing that it (probably) outweighs the negatives. It does seem like it should be a low and relatively constant and predictable inflation, though.
- angrybits 11y ago
  I don't feel like you're deserving the downvotes you're getting. Printing money is indeed theft or taxes, depending on your bias, because it dilutes your cash savings.

Interesting comparison: inflation is much faster than wage rises.

by JohnyLy 11y ago

Interesting comparison: inflation is much faster than wage rises.

Some countries have the minimum wage linked to inflation. While that can have some disadvantages as well (in certain short term periods), overall it's probably much better off in the long term for the population.

eru 11y ago
> [...] overall it's probably much better off in the long term for the population. [...] if a minimum wage is a good idea in the first place.
- bjelkeman-again 11y ago
  When isn't it a good idea to have a minimum wage?
  - meric 11y ago
    In an environment with little social welfare, a minimum wage will disproportionately negatively affect workers with disability because they can almost never get hired, and do not receive sufficient support from the government. They will be at the mercy of affection or pity from family and friends.
  - superuser2 11y ago
    When you are optimizing for employment ratio. Zero minimum wage gives 0% unemployment and creates millions of jobs. Those are some great achievements to have if you're running for reelection. There is no reason to support a minimum wage if you don't care about quality of life.
    - rogerbraun 11y ago
      There are lots of countries without a minimum wage that still have lots of unemployment.
      - peterfirefly 11y ago
        An official minimum wage is not the only way to create a de facto minimum wage. Welfare subsidies is another. Strong unions is yet another. High contributions to medical insurance and pensions paid by the employer is yet yet another. There are also others way to create high unemployment: making it very risky and expensive to get rid of mishires or to reduce headcount if the company isn't going so well. Making management more difficult once the headcount reaches a certain level (because of unions or the creation of employee boards mandated by law) -- that leads to companies trying to stay below such ceilings. Others would be salaries/pensions/benefits tied to how long one has worked for the same company -- which discourages moves to other companies (that might fit ones personality or talents better -- or that has better management). The housing market also has an influence: there might be opportunities in a different city but how easy is it to move? It is relatively easy if you rent your house or appartment. Not so easy if you own it, especially if selling it means you realize a loss. Lots of laws and regulations in a country influence the structure of the housing market (how liquid it is, what loan types are available, how many people rent instead of owning, etc.).
    - thecopy 11y ago
      >Zero minimum wage gives 0% unemployment and creates millions of jobs. Sweden has a quite high unemloyment, especially for young people, and Sweden has no minimum wage.
      - dagw 11y ago
        Technically true, but the combination of a generous welfare system and powerful unions means that there is a de facto minimum wage. No one is going to work for much less than they'll get from unemployment, and just try starting a company paying less than the union collective bargaining rates and see how long it takes before a bunch of thugs harass you out of business.
  - forgingahead 11y ago
    Because it is essentially a law that makes it illegal to hire unskilled labour: https://www.youtube.com/watch?v=rQj1qlsjVoM https://www.youtube.com/watch?v=rQj1qlsjVoM
  - taki1 11y ago
    You can have someone working for free (internships) or for $8/hour, but everything in between is illegal. So first of all this is stupid. Two, nobody stays forever at $8/hr job with exception of very few. If you are unskilled worker looking for your first job ever, why would anyone hire you, if they can get experienced unskilled worker for the same minimal wage? I.e. I can get you fresh from high school flipping burgers for $8/hr or I can get someone with 5 years experience flipping burgers for the same $8/hr. Guess what, I will get someone with 5 years of experience instead of you with zero years experience for exactly the same price. I could hire you for $3/hr with zero experience, so you could get some on the job and finally land $8/hr job after some time. Or learn on the job how to run a cash register, work with others and treat customers, but instead - thanks to the minimal wage - you will spend that time trying to compete for jobs having zero experience with people who for the same price have plenty of it. Thank minimal wage for high unemployment rates among young (no experience). Before minimal wage was enacted unemployment rate among young was the lowest from all age groups. Now it is the highest. Minimal wage killed the concept of the "first job". For your first job you must be worth the minimal wage. If you aren't, there are no jobs for you.
- dredmorbius 11y ago
  Adam Smith thought it was: "A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more, otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation." http://www.reddit.com/r/dredmorbius/comments/2311mb/adam_smith_on_living_wage_national_wealth_growth/ http://www.reddit.com/r/dredmorbius/comments/2311mb/adam_smi... http://www.reddit.com/r/dredmorbius/comments/1z5vfb/thoughts_on_minimum_wage_enterprise_viability/ http://www.reddit.com/r/dredmorbius/comments/1z5vfb/thoughts...
  - fennecfoxen 11y ago
    Adam Smith was a genius, and the foundation for much of the field of economics, but not an old-testament prophet or an oracle. His work has been built upon and surpassed by extensive research in the field today. I mean, I'd be quite happy to trot out sources like Is there consensus among American labor economists? Survey results on forty propositions (Whaples, 1996) -- or another of the similarly titled papers in that series -- to illustrate there's a scientific consensus against the minimum wage, but worry that it's a mere two decades out of date. :P
    - StillBored 11y ago
      I'm hesitant to say, this but... Consensus amongst economists, is like saying consensus amongst weathermen. You need look no further than recent history. If the past 10 years (or longer if you please) have taught us anything, its that economists can be dangerously wrong. Especially if the issues are at all political.
      - fennecfoxen 11y ago
        Yeah, especially pop-economics and economists that the politicians trot out to promote their latest policies, or the guys trying to forecast the future of some part or another of the economy. And overall economic conditions change a bunch, all the time. Hence the aforementioned hesitance. Unfortunately good consensus surveys only come out every so often and then you have trouble looking them up if you aren't somewhere with JSTOR, so. But, that said, economists in general have been pretty consistent on a few basic principles. Supply and demand, the impact of price controls thereupon, et cetera. And if you think through enough of that you might begin to think that the EITC is a better vehicle to help out the working poor than a minimum wage (since it doesn't cause unemployment or promote unnecessary investment in automation to further damage employment unnecessarily...) It's been known to happen, anyway.

Altay- 11y ago

That's the whole point of inflation. Remember, wages are 'sticky' in that workers don't like getting their pay cut. So economists invented a way to rob them while giving them nominal wage raises!

peterfirefly 11y ago
Inflation makes adjustment to relative wages much easier (i.e., having some jobs decline in wages and others increase). That is such a good thing that it (probably) outweighs the negatives. It does seem like it should be a low and relatively constant and predictable inflation, though.
angrybits 11y ago
I don't feel like you're deserving the downvotes you're getting. Printing money is indeed theft or taxes, depending on your bias, because it dilutes your cash savings.