I’m in the Sydney International terminal. Even if I wasn’t
leaving the country, I’d still be leaving Port Douglas. Whenever you stay in a
place for a while you make a family. And eventually you have to rip yourself
away. Like some particularly adhesive band aid. And sometimes bits of you are
peeled away, revealing a raw mesoderm. And some sticky gunk sticks to your
flesh. The sticky gunk of friendship.
So to avoid that currently exposed abrasion. I’ll try to
keep my mind on other things. Like minimum wages.
I was floored by the minimum wage in Australia. There are a
few parameters, like if you’re under 18 you make less (presumably because
you’re a dependent and the money you earn is just spending money, not living
money). But basically if you’re an adult, on the grid and paying taxes, your
minimum should be no less than $17/hr.
I was rolling in it in my last job. $21/hr as a part time
dishwasher, 33,000 a year. Part time. That’s like a normal wage full time in the US.
Like 24k USD for working 3.5 days a week. In paradise. I loved it.
Granted, cost of living is higher in Aus. I use the standard
Big Mac index (cost of a Big Mac) or beer in a bar (use your brain). I’ll keep
everything in USD. A big mac is about $3 and a glass of Miller-level beer is
like $6. That’s a good 2.5x more.
A few presidential candidates have commented on raising the
minimum wage. Bernie Sanders wants it up to $15/hr. Clinton up to $10.10/hr,
Rubio $8.75 and Trump and Carson wanting no change (from a very opinionated New
York Times Opinion Editorial). Carly Fiorna has the interesting position of
having no federal minimum wage.
Her reasoning is one that makes sense, a minimum wage should
be “a state decision, not a federal decision”. Hey no worries, it’s easy to see
why a rural state like Montana shouldn’t have to compete for labor against a
more populous Washington. There just isn’t as much money flowing in the
mountains as there is in Seattle. A federal minimum wage could be seen as too
broad a stroke.
Another intuitive argument against raising the minimum wage
is that with higher labor costs, businesses will hire fewer workers, and
unemployment will increase. On the surface that might seem logical but if you
take one step past that sentence it really makes no sense.
Employers don’t have excess workers. If they need to hire three
people, three people will be employed. If the minimum wage goes from $7 to $10,
no one is getting fired to save $3. The job still needs to be done if the
business wants to be profitable. Yes higher labor costs could cause a business
to go from black to red, but then the whole business has to close. Not just lay
off some employees. If entire businesses are folding when you hike the minimum
wage too high then you could go too far. But if your business is only in the
black because you’re paying a non-living wage, intended for children and the
1970s, then you’re probably not very good at running a business.
Thoughtfully raising the minimum wage doesn’t eliminate jobs
(Department of Labor, The
Guardian), but it does take money away from elsewhere. From R&D, customer
service or from the CEO or the collective “top”. That’s probably where we would
want that extra wage money to come from. And that’s still bad because that’d
what’s attractive about America. That you can have a billion dollars and you
can run the country with it. You can break the rules with all that money. That
appeals to a lot of people.
Let me bat for the other team for a sec. America is supposed
to be a country of 1 percenters, of leaders, and of people who think they’re
going to be the absolute best at what they do. Obviously that’s an impossible
goal, but in communism everyone is supposed to be equal, also impossible. So
when you threaten the unlimited power that can be achieved, when you take away
something from hardcore capitalist business empires (ie, literally double their
labor costs, which are probably already the highest cost they have), you attack
a very American part of being an American. At least, this version of American.
And to be fair, those ideals have in part been responsible for the economic
powerhouse that is the United States. Of course, the first thing I learned in
business school is that past performance doesn’t indicate future performance.
Increasing the minimum is supported by many US economists, citing
a “small stimulative effect” on the economy (Bloomberg).
Notable within the article is the admission that less than 5% of US workers
make the minimum or less, so any increase in the minimum is probably assumed to
bump up above minimum wage workers as well. A “trickle up” economic stimulus,
as workers then have more money to spend.
I’m not an economist but $15/hr across the country may be
too much. Certainly in Metropolitan areas like San Francisco and New York this
could be an economic boost, and should be implemented, but costs are different
in different cities. Just look at the massive difference in rent between
someplace like Detroit and San Francisco. It’s
25 times more expensive.
Changes to the minimum wage should be more flexible, why isn’t
the minimum wage indexed to inflation? That seems like a pretty simple and
useful mechanism, barring any sudden economic movement. If we use the last
change in the minimum in 2009 as our guideline, minimum wage would be $8.04(Inflation Calculator). Not
saying this would be a major economic relief, but it would peg the value of
hourly work to the actual value of the dollar… seems to make sense to me. And
while we’re at it, why don’t we separate labor by age? Sub 18s should make
less, along the “it’s just spending money” mentality. The minimum wage is a
complex issue, but a few simple tweaks can make it more efficient.
