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When Henry Ford Doubled His Minimum Wage (2014)

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Re: When Henry Ford Doubled His Minimum Wage (2014)

#71

Post by leetcrew »

icebraining wrote: post #54
leetcrew wrote: post #44

Earlier quoted context omitted.

> there are two types of minimum wage workers - teenagers looking for summer money, and adults making a living -, and you can help the latter if you don't mind screwing the former. when you put it like this, it seems obvious to say that the right move is to screw over the teenagers who are much less likely to be supporting a family or themselves. I'm not sure this is great in the long run though. imo, having some kin…

It may be an important experience, but it's not such a common one: https://www.oecd.org/statistics/students-at-work.htm

if it's important and uncommon, isn't that a good reason not to add additional barriers?

Re: When Henry Ford Doubled His Minimum Wage (2014)

#72

Post by Consultant32452 »

jimmaswell wrote: post #65
Consultant32452 wrote: post #57

Earlier quoted context omitted.

The production cost of a McBurger may only go up 4%, but the consumer price of goods is also significantly dependant on how much money is in consumer's hands. If you just hand everyone in the country $500/mo, rent is going up everywhere.

Only Not to mention, rent control is a good idea in addition, or finding ways to make homeownership more in-reach for more people.

Rent wasn't intended to mean literally just rent. You'd need price controls on everything, which is historically a terrible idea.

Re: When Henry Ford Doubled His Minimum Wage (2014)

#73

Post by defertoreptar »

lovich wrote: post #69
defertoreptar wrote: post #43

Earlier quoted context omitted.

> If all companies offered $.02 per hour, with little change in purchasing power, basically everyone would elect not to work Yes, this seems obvious. > And you can't look at economics in a vacuum Agreed, as long as we acknowledge that we shouldn't use this truism as an excuse to sweep away every argument about economics. Overall, I don't see how you've contradicted my point, which was that when Ford increased bottom…

You responded to his first point about people electing to not work at all if the wage is too low. That's the contradiction to your point. If everyone getting minimum wage had their wage increased it would decrease the number of people who left the workforce entirely. The same effect would happen in for a case if all his competitors increased their wage too

> You responded to his first point about people electing to not work at all if the wage is too low. That's the contradiction to your point.

It only works as a contradiction in this case if Ford employees quit and stopped working altogether. If they tended to seek employment elsewhere, which I believe to be the case, then that makes my point.

Factory work was repetitive and monotonous. The Ford workers preferred to take work elsewhere, until Ford doubled wages. Had those other companies doubled wages as well, then why would they come back to Ford?

> If everyone getting minimum wage had their wage increased it would decrease the number of people who left the workforce entirely. The same effect would happen in for a case if all his competitors increased their wage too

This doesn't make sense to me. If employers didn't have enough staff, they would increase bottom wages in order to fill those positions rather than forgo potential profit and business health. If there is unemployment and bottom wages are low, then that says something about the labor market, not minimum wage. It means there is low demand for staff. Increasing minimum wage doesn't magically increase the number of open positions in the labor market.

Re: When Henry Ford Doubled His Minimum Wage (2014)

#74

Post by opo »

jimmaswell wrote: post #50
dreamache wrote: post #28

Earlier quoted context omitted.

100% agree. In Ford's case, it was a voluntary decision to attract and keep the best workers. In the case of federally mandated minimum wage, it's a threat of force against business owners who are otherwise acting peacefully and quite literally, minding their own business. Raising the minimum wage results in: - A raise in the price of products (hurting the poor the most) - Firing employees - Reducing hours - Going ou…

As you must know being a business owner, labor is only one component of expenses, so prices don't go up x% just because labor went up x%. In McDonald's case, a 100+% rise in wages would represent a 4% rise in price. Obviously most minimum wage increases don't double at once so it would be even less. You don't go on a firing spree and shut down the business when property taxes or materials go up so why would you need…

>...n McDonald's case, a 100+% rise in wages would represent a 4% rise in price.

Estimates are that labor costs are more like 33% of the costs of a fast food restaurant like McDonalds:

https://s3.amazonaws.com/s3.documentcloud.org/documents/2915...

Increasing pay by close to 50%,one would expect that prices would have to increase by closer to 15%, not 4%. Though, given how price sensitive those customers are, it isn't clear how much you can raise the price.

In terms of margin, it looks like McDonalds is doing much better than other chains:

>...In 2012, for example, when McDonald's had a net profit margin of just under 20 percent; Burger King's net margin was less than a third of that and another big chain; Wendy's, had a scary thin 0.3 percent.

https://smallbusiness.chron.com/average-profit-margin-restau...

But even at McDonalds, I think it is safe to assume that in the longer term, fast food restaurants would look into replacing rising labor costs with machines - that might be replacing cashiers with kiosks or even machines that prepare and cook the food, etc. This would be expected to happen anyway, over time, but mandating huge increases in labor costs will mean it happens quicker and be more disruptive. (One might say "good riddance" as these aren't great jobs, but they are entry level jobs which are disappearing in all industries.)

Re: When Henry Ford Doubled His Minimum Wage (2014)

#75

Post by Alex63 »

colanderman wrote: post #22
bmmayer1 wrote: post #5

I can't believe this actually needs to be said, but a single employer raising its wages is not the same thing as a government raising a legally mandated minimum wage. It's so much not the same thing, that the very fact the article tries to conflate them by comparing Ford's decision with the proposal from the Obama administration makes me doubt the voracity of the entire piece. For one thing, Ford's logic is quite sou…

> Furthermore, the idea that people become richer because the number on the bottom of their check goes up, rather than the buying power of that number, is easily debunked by looking at the entire history of inflation. I'm easily making more money, in nominal dollars, than an average CEO in 1919, but I'm not running wild in Saint-Tropez every summer either. This argument makes no sense. Raising the minimum wage doesn'…

I think you are mistaken. Raising the minimum wage is exactly like inflation. Raising the minimum wage temporarily gives an advantage to those with the least power to set a price for their labor. This will increase demand for goods and services. In response to that increased demand, providers of goods and services will raise prices. Those with more bargaining power will set a higher price for their labor, and unskilled workers (i.e., those earning minimum wage) will find themselves back where they were.

Re: When Henry Ford Doubled His Minimum Wage (2014)

#76

Post by vokep »

benjohnson wrote: post #66
folli wrote: post #15

Earlier quoted context omitted.

This is actually a really interesting point. In some ways even moderatly poor people in a Western country are better of than the Caesars of Ancient Rome, especially the availability of medical care is something I would never want to trade. In other ways even the richest and most powerful people today will never be able to have comparable power, in terms of political and cultural influence. It would be an interesting…

It is strange! One of the problems some moderately poor people have is eating too much food.

For the first time in history, it is now possible to be obese and malnourished simultaneously.

Re: When Henry Ford Doubled His Minimum Wage (2014)

#77

Post by paulddraper »

jimmaswell wrote: post #50
dreamache wrote: post #28

Earlier quoted context omitted.

100% agree. In Ford's case, it was a voluntary decision to attract and keep the best workers. In the case of federally mandated minimum wage, it's a threat of force against business owners who are otherwise acting peacefully and quite literally, minding their own business. Raising the minimum wage results in: - A raise in the price of products (hurting the poor the most) - Firing employees - Reducing hours - Going ou…

As you must know being a business owner, labor is only one component of expenses, so prices don't go up x% just because labor went up x%. In McDonald's case, a 100+% rise in wages would represent a 4% rise in price. Obviously most minimum wage increases don't double at once so it would be even less. You don't go on a firing spree and shut down the business when property taxes or materials go up so why would you need…

> a 4% rise in price

But a much larger change to profits. And it's the profits that matter to the business decision makers.

Re: When Henry Ford Doubled His Minimum Wage (2014)

#78

Post by paulddraper »

bmmayer1 wrote: post #13
louisswiss wrote: post #11

Earlier quoted context omitted.

> I'm easily making more money, in nominal dollars, than an average CEO in 1919, but I'm not running wild in Saint-Tropez every summer either. Not arguing with your general point. But on this count, I think you're vastly better off than the average CEO in 1919. You have luxury they couldn't have even imagined. - quality of medical care - entertainment - air travel - cars - food regardless of season - etc

That's a good point, and also speaks to the futility of trying to define wealth in dollar terms, even when adjusting for inflation. An inflation-adjusted dollar in 2019 buys more than an inflation-adjusted dollar in 2000, even (iPhones alone!)

> An inflation-adjusted dollar in 2019 buys more than an inflation-adjusted dollar in 2000, even

Depends. Does it buy more concrete? Does it buy more rocket ships? Does it buy more childcare? Does it buy more iPhones?

Just depends on what you're talking about.

Re: When Henry Ford Doubled His Minimum Wage (2014)

#79

Post by colanderman »

Alex63 wrote: post #75
colanderman wrote: post #22

Earlier quoted context omitted.

> Furthermore, the idea that people become richer because the number on the bottom of their check goes up, rather than the buying power of that number, is easily debunked by looking at the entire history of inflation. I'm easily making more money, in nominal dollars, than an average CEO in 1919, but I'm not running wild in Saint-Tropez every summer either. This argument makes no sense. Raising the minimum wage doesn'…

I think you are mistaken. Raising the minimum wage is exactly like inflation. Raising the minimum wage temporarily gives an advantage to those with the least power to set a price for their labor. This will increase demand for goods and services. In response to that increased demand, providers of goods and services will raise prices. Those with more bargaining power will set a higher price for their labor, and unskill…

Minimum wage is not the only variable which determines the value of money. You're forgetting the source of inflation itself: the federal reserve rate.

Think: how could an increase in minimum wage cause inflation? For that to happen – for all goods and services across the board to increase in value – the amount of money in circulation would have to increase, or the economy would have to shrink. But increasing the minimum wage does not cause money to enter circulation! So if an increase in minimum wage were to cause inflation, it would only be because the economy is simultaneously shrinking. (Which could possibly be caused by too great an increase in minimum wage, but that's a separate discussion. Is this what you are arguing?)

Re: When Henry Ford Doubled His Minimum Wage (2014)

#80

Post by lovich »

defertoreptar wrote: post #73
lovich wrote: post #69

Earlier quoted context omitted.

You responded to his first point about people electing to not work at all if the wage is too low. That's the contradiction to your point. If everyone getting minimum wage had their wage increased it would decrease the number of people who left the workforce entirely. The same effect would happen in for a case if all his competitors increased their wage too

> You responded to his first point about people electing to not work at all if the wage is too low. That's the contradiction to your point. It only works as a contradiction in this case if Ford employees quit and stopped working altogether. If they tended to seek employment elsewhere, which I believe to be the case, then that makes my point. Factory work was repetitive and monotonous. The Ford workers preferred to ta…

>If they tended to seek employment elsewhere, which I believe to be the case, then that makes my point.

That is ignoring the point you actively quoted. Once wages decrease enough workers exit the workforce. There is no reason for them to continue working when the costs of living outstrip their wages. This is not even a hypothetical, you can look at modern families that decide to have a parent stay at home because daycare costs outstrip their salary to see this in effect today. You can imagine this happening of wages got so low that a person would be able to spend time growing their own food and getting more free time than if they worked and traded their paltry wages for food.

Having all competitors increased wages would have pulled more workers into the workforce from the pool of people who had decided that they got better value out of doing their own thing rather than working for a company, so everyone would win.

>This doesn't make sense to me. If employers didn't have enough staff, they would increase bottom wages in order to fill those positions rather than forgo potential profit and business health. If there is unemployment and bottom wages are low, then that says something about the labor market, not minimum wage

You are mixing two concepts here. You see correct that if unemployment is high and bittom wages are low then the market is not valuing that labor. The government is mandating a minimum wage would still bring more workers out of the "not looking for work" section of society into the workforce by increasing the benefit of working for those workers.

I feel as though you are suggesting that companies should only pay what workers are worth to them and the government should stay completely out of it. That is a logically consistent viewpoint if you are ok with people who don't currently have a valuable skill dieing in the streets from poverty. Our society,in most western European derived societies, has decided that this is not acceptable and has put in social safety nets to prevent this.

When an employer pays too little to live and the government has to step in to provide enough extra for the employees, that means every taxpayer, including you and me, are now subsidising that employer. If the government wasn't there then the workforce for the employer would either leave them or die off and the employer would naturally be forced to increase wages or go out of business.

As it stands I see three options for society, and only 2 ethical ones.

Option 1, the government taxes everyone enough to provide ubi and employers no longer have any limitation on them concerning minimum wage or other compensation. If they want to offer 1 penny per century and someone agrees, that's fine.

Option 2, minimum compensation is encoded into law and increased to the point where the government no longer has to provide any welfare

Option 3, which I personally find immoral but would be logically consistent, is that we go completely laissez faire so employers can offer what they want, the government doesn't tke taxes to provide welfare, and of a citizen doesn't have a valuable skill they either learn a valuable skill or die from lack of medicine or food

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