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U.S. Suffers Sharpest Rise in Poverty Rate in More Than 50 Years

bloomberg.com

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Re: U.S. Suffers Sharpest Rise in Poverty Rate in More Than 50 Years

#41

Post by Jochim »

ihsw wrote: post #14
whateveracct wrote: post #4

Earlier quoted context omitted.

> Now, talks for a massive federal minimum wage increase means further sending people into poverty by destroying the value of what small savings anyone on the bottom might have. are you suggesting the newly-proposed $15 minimum wage will cause inflation so bad it will destroy people's savings?

There is only so much money for businesses to allocate towards labor, it is not infinite. Eg: $15K per month for staffing translates to $3750 per week, which translates to $125 per hour at 30 hours per week on average, which translates to ~10 staff at $12 per hour. At $15 per hour that is reduced to 8 staff. Alternatively the hours for 10 staff would be reduced from 30 hours per week to 24 hours per week. The money d…

This only holds true for places where there's no room to increase the staffing budget.

There are some industries where it might have an effect, restaurants/coffee shops in particular. But I wouldn't expect mass produced goods/foodstuffs to increase much if at all, simply because of how efficiently the labour is utilised.

There are also be potential productivity gains from having workers in a more financially stable position.

Re: U.S. Suffers Sharpest Rise in Poverty Rate in More Than 50 Years

#42

Post by NortySpock »

machiaweliczny wrote: post #22
macspoofing wrote: post #11

Earlier quoted context omitted.

I think that's what OP is saying and if that's the case, they are wrong. Minimum wage is not inflationary. It has other problems like the fact it never ever decreases poverty, and has a good chance of increasing unemployment, and is a one-size-fits all ($15/hr in NY, is different than $15/hr in Alabama) ... but it isn't inflationary. You're not creating new money.

Minimum wage just forces some ppl to do more productive stuff. It will take away some jobs but you probably dont want such jobs in developed country. It's just better to allow more part-time work IMO. I would like some opinion of Dutch ppl on their part time work law, which seems interesting to me.

"probably dont want such jobs in developed country"

You don't want cashiers, wait staff, grocery baggers or call center staff? All of these jobs are generally minimum wage.

Re: U.S. Suffers Sharpest Rise in Poverty Rate in More Than 50 Years

#44

Post by machiaweliczny »

WC3w6pXxgGd wrote: post #34
bwestergard wrote: post #25

Earlier quoted context omitted.

"talks for a massive federal minimum wage increase means further sending people into poverty by destroying the value of what small savings anyone on the bottom might have." This statement is only true, and then only formally, if you limit yourself to considering first order effects. The distributive effects of minimum wage policies will alter final consumer demand, which will have an impact on capital structure and d…

Actual Econ 101 would be understanding how setting a price floor on peoples' ability to sell their labor (aka a "minimum wage") is destructive and immoral.

Actually understanding current laws, game theory and money supply make minimum wage preferable.

Re: U.S. Suffers Sharpest Rise in Poverty Rate in More Than 50 Years

#45

Post by Agebor »

37ef_ced3 wrote: post #20

Let them eat stonks (Downvotes? "Let them eat cake" is the traditional translation of the French phrase "Qu'ils mangent de la brioche", spoken in the 17th or 18th century by "a great princess" upon learning that the peasants had no bread.)

There are actually now some ideas in crypto spaces to use stablecoins bound to stock/coin indexes instead of fiat, so...

Re: U.S. Suffers Sharpest Rise in Poverty Rate in More Than 50 Years

#46

Post by cle »

pradn wrote: post #26

The poverty rate is an awful metric. It simply counts the number of people who earn below a certain income. So people dipping $1 below the line are counted the same as those dipping $10,000 below the line. So, poverty-rate alleviation measures can be implemented simply by focusing on the top end of those under the limit - of course, this doesn't help much. What we should really worry about is the poverty gap - the am…

I don’t know how this is typically measured (or measured in this specific case because I can’t find the actual paper), but do economists generally apply the same dollar threshold to everyone across the country, or do they account for regional cost of living?

Re: U.S. Suffers Sharpest Rise in Poverty Rate in More Than 50 Years

#47

Post by cartoonfoxes »

commandlinefan wrote: post #24
37ef_ced3 wrote: post #20

Let them eat stonks (Downvotes? "Let them eat cake" is the traditional translation of the French phrase "Qu'ils mangent de la brioche", spoken in the 17th or 18th century by "a great princess" upon learning that the peasants had no bread.)

Did you mean "stocks"?

Stonks - see https://knowyourmeme.com/memes/stonks.

Re: U.S. Suffers Sharpest Rise in Poverty Rate in More Than 50 Years

#48

Post by bmitc »

throwaway0a5e wrote: post #2

Alternative title: "events of 2020 case poverty rate to regress to 2017/2018 levels" Frankly I'm surprised the effect was so small considering that the industries hit hardest by covid employ a heck of a lot of people who are near the poverty line to begin with. I would expect all those people to be pushed to the other side of the line resulting in a much more dramatic increase in the poverty rate.

I think using the word regress seems to imply that it was improving. Wealth inequality in the U.S. has been getting worse at faster rates, even before 2020.

Re: U.S. Suffers Sharpest Rise in Poverty Rate in More Than 50 Years

#49

Post by jeffbee »

ihsw wrote: post #14
whateveracct wrote: post #4

Earlier quoted context omitted.

> Now, talks for a massive federal minimum wage increase means further sending people into poverty by destroying the value of what small savings anyone on the bottom might have. are you suggesting the newly-proposed $15 minimum wage will cause inflation so bad it will destroy people's savings?

There is only so much money for businesses to allocate towards labor, it is not infinite. Eg: $15K per month for staffing translates to $3750 per week, which translates to $125 per hour at 30 hours per week on average, which translates to ~10 staff at $12 per hour. At $15 per hour that is reduced to 8 staff. Alternatively the hours for 10 staff would be reduced from 30 hours per week to 24 hours per week. The money d…

A better way to think about this is for retail businesses the storefront landlord acts as a spring-loaded sink of money. The landlord will take all available money until the retailer has bare minimum margins, 2-5% typically. Retailers will trade away wages for rent because landlords are very powerful and retail labor is not at all powerful. Therefore the minimum wage is simply a way for the government to set a rule saying you can only trade down to this amount. To treat the staffing budget as a fixed thing isn't a proper model. You have to understand it as being in tension with other budgets.

Re: U.S. Suffers Sharpest Rise in Poverty Rate in More Than 50 Years

#50

Post by rconti »

WC3w6pXxgGd wrote: post #34
bwestergard wrote: post #25

Earlier quoted context omitted.

"talks for a massive federal minimum wage increase means further sending people into poverty by destroying the value of what small savings anyone on the bottom might have." This statement is only true, and then only formally, if you limit yourself to considering first order effects. The distributive effects of minimum wage policies will alter final consumer demand, which will have an impact on capital structure and d…

Actual Econ 101 would be understanding how setting a price floor on peoples' ability to sell their labor (aka a "minimum wage") is destructive and immoral.

You're fair to argue that it's immoral; I'm agnostic on the idea. Though I'm not sure that Economics has much to say about it.

As for whether it's destructive, I used to strongly believe so.

Now I believe that, as long as there is unemployment in the system (and my understanding is economics tells us that there will ALWAYS be unemployment), the lack of an adequate wage floor will always result in a race to the bottom and a drag on wages.

In the minimum-wage-adjacent pay rates, you might have double the potential workers than the number of workers actually hired. There is therefore zero incentive to offer additional pay for additional productivity at that wage tier, because the employees can simply be replaced (yes, at some fixed cost).

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