Service economy jobs at odds with cost of living in Orlando area

Something that occurred to me in reading all of this...

I can't be the only one here who remembers when the minimum wage in Ohio was $3.35/hr, and there were almost no minimum wage jobs to be had? It was a time of explosive economic growth that only comes with $0.89 gasoline and $0.063/kWh electricity (among other things), and the marketplace had decided that starting wage in fast food was right around $8/hr. The only way you could get a minimum wage job was if you really wanted it, or if you were in a special program (such as Work-Study) where your earnings were fixed.

Obviously we don't have those conditions today and we can argue for years over why that is. But other things have also happened.

The minimum wage in Ohio is now in excess of $9/hr (I don't know what it is; I am not a student anymore...). We have all witnessed the destruction of low-end jobs that resulted from this. When was the last time someone bagged your groceries, for example? Heck, when was the last time you saw more than one cashier on duty? A whole bunch of those jobs are simply gone now.

But people are still doing those jobs, just not as many of them. One cashier now serves 12 check lanes instead of 1. Everybody who is working works harder. And the people doing those remaining low-end jobs are being paid more.

But what about the people in the next tier? What about those shift supervisors, team leaders, and experienced front-line people who used to get paid more than the green help? I'm wondering if the rising minimum wage hasn't been trapping more and more workers in minimum wage jobs! Especially these schemes with automatic increases: that means the worker who started last year at minimum wage gets a typical 3% increase for working his butt off, while this year's new hire starts 2.5% above last year. Now both workers are effectively still working for minimum wage. Meanwhile, the wage floor also means that the spread of work available for minimum wage has grown dramatically. It isn't just low-end entry level work anymore. The minimum wage is moving up the ladder so that higher-skill work is paying minimum, or barely above.

Something tells me this was not the intended effect!

I don't see it that way. As companies become more corporate, expand, grow, etc, the need to grow and squeeze out more profit for the top becomes more important than taking care of their employees. Costco has been brought up a number of times in these sorts of conversations.

That's a decent point, but Costco has chosen to operate as they do. Other companies have chosen to operate the way they do.

I'm just not comfortable with telling any business that they have to limit their profits to accomodate artificially inflated wages for non-skilled labor.

And we always seem to argue that these big evil businesses need to quit being so fat and greedy, but we never seem to mention the smaller businesses. Sure the Costcos and Wal-Marts of the world will roll with the punches. But there are a lot of small and even medium sized businesses and (I hate to throw this out there but it's true) Mom & Pop businesses that increases like this really affect negatively.

The irony is that so many in favor of huge minimum wage increases also seem to be the sorts that dislike big business, but these increases make it harder for smaller businesses to survive and creates even more domination by the big companies.

Lord Gonchar said:

I'm just not comfortable with telling any business that they have to limit their profits to accomodate artificially inflated wages for non-skilled labor.

You could phrase it that way or you could say "Businesses have a responsibility for the well being of the communities they inhabit and rely on, and should not be single mindedly squeezing profit out of the community with no regard to their greater impact."

To-may-to, to-mah-to.

Does the responsibility to pay higher than market wages extend only to the low end of the pay scale or to all employees of a given company? There are a lot of very profitable companies who could raise wages for all of their employees and still make a profit. And those higher wages would help the well being of the communities in which they inhabit and on which they rely. Do they have a resonsibility to raise all wages? Or do they have a responsibility to reduce their prices to help the well being of their customers upon which they rely? What if the company is making small profits which could be substantially reduced or eliminated if they took the community responsibility approach?

Does a restaurant have a responsibility to serve salads rather than fries to certain of its customers for their well being? Or maybe refuse to serve them dessert.

Some companies voluntarily take that approach (not with respect to dictating what foods customers can eat but with respect to having an obligation to the community in which it operates). And to the extent customers favor that approach and support such businesses which then thrive and those businesses which do not take that approach lose support and thus suffer, that is how markets should work. But that is much different than government forcing that approach.

Seems to me government forced responsibility would encourage outsourcing. And presumably the counter would be that part of the responsibility would not allow outsourcing. But foreign entities wouldn't have that responsibility which is what the government forced approach would encourage: more companies moving offshore.

Once upon a time, the government forced businesses to not employ children. At the time, it was controversial.

Many here have made good arguments (even those folks I disagree with :-) ) -- I think the debate at hand is also one on which history will make the final judgement.

It will be very interesting to see how the Seattle situation plays out in coming years.

Child labor laws are in essence extensions of the "age of consent." We have determined that you need to be at least a certain age to consent to various things. Consent of all parties is necessary to do certain things and without the consent of one or more of the parties, it can't be done. So we say kids can't work either.

That is different from minimum wage for adults who are consenting to work for the given wage. Also makes it different from environmental laws where we say that businesses have a responsibility to the communities in which they operate.

And history tends to make the final judgment on everything. It has the benefit of 20/20 vision. ;)

GoBucks89 said:

And to the extent customers favor that approach and support such businesses which then thrive and those businesses which do not take that approach lose support and thus suffer, that is how markets should work. But that is much different than government forcing that approach.

For many things yes, but for other things no. The classic case is the Prisoner's dilemma or the tragedy of the commons where the obvious common good is in opposition to the obvious individual interest.

A more specific example - the customer wants cheaper goods, the company wants higher profits, so both are in favor of the company polluting a river which only affects people down stream. Obviously, this is not in the common good, but people will continue to do it without some outside oversight. (For those economically minded, this is a suboptimal Nash Equilibrium.)

Should we vote with our wallets? Absolutely. Should we also have an organization which explicitly defends the greater good of the community against the interests of the individual? Yes. And that organization is called government.

I'm nominating Andy to be my spokesman for the duration of this discussion... ;~P

Lord Gonchar said:

I'm just not comfortable with telling any business that they have to limit their profits to accomodate artificially inflated wages for non-skilled labor.

ApolloAndy said:

You could phrase it that way or you could say "Businesses have a responsibility for the well being of the communities they inhabit and rely on, and should not be single mindedly squeezing profit out of the community with no regard to their greater impact."

To-may-to, to-mah-to.

I think you shifted the argument though (with that and your subsequent post) and I'm kind of with you on that point. However, I think the good of the community is an entirely different thing than the minimum wage discussion. (at least as we have framed it thus far)

You're sort of comparing polluting water to the worthiness of someone without skills.

With that said,

Should we also have an organization which explicitly defends the greater good of the community against the interests of the individual? Yes. And that organization is called government.

Cool.

You don't artifically apply an inflated rate to non-skilled labor (the interest of the individual) at the expense of employers and, in turn, the jobs the community relies on. (the greater good of the community).

To-may-to, to-mah-to.

And it seems that statement shifts the argument yet again, to how much the government should intervene in public affairs. All three points here are related ideas, but to me, different discussions. Once the umbrella encompasses all of those ideas, you're looking at the situation with a much wider scope than useful for our purposes on a roller coaster forum.

Like I said a few pages back - it's a pretty complex issue. One so complex that the little sliver of the big picture that we've been examining could be proven true either way. Once you discuss it much wider than that, the cacophony of ideas and opinions will be all over the map and what little meaningful focused discussion exists will be lost to confusion and noise.

So I guess my opinion of the issues at hand is that the government should stay out of stuff as much as possible and that raising the minimum wage feels like valuing the individual more than the community to me in the first place.

So if I'm not mistaken, what I hear you saying is that you agree with the premise that corporations have a responsibility to the community, you just don't know why it takes the form of a specific wage policy as opposed to, say, building parks or donating to the local schools or throwing a parade.

Am I close?

Maybe? I don't know.

To say no business responsibility exists is obviously wrong.

To say someone should get paid X regardless of the actual value of their skills is equally wrong.

We all know the potential something like Wal-Mart has to disrupt local communities. But the people sweeping the floors and stocking the shelves at night shouldn't be getting $15 an hour for doing it. And I'm pretty sure forcing them to pay that isn't fixing anything...especially in the sense of the damage they can do.

I wholeheartedly disagree. Minimum wage should be just enough to live on. If you make more money, you can afford to live better, but minimum should be a living wage. Employees should be worth at least that. Why can't that burden belong to their employer?

My opinion will not budge on that issue either. If you work full time, you should be able to make enough to live on.

So minimum wage should have no bearing on value delivered?

If you only create $7 per hour worth of value, I should have to pay you $10 because it's a "living wage"? I should lose $3 an hour because you don't bring anymore than that to the table?

Guess what? You're unemployed. It's not an employers fault that you offer them little value.

If you really think about it, that's just the inverse of a business selling an item for $5, but you can only afford to pay $3 for it so the government forces the business to accept that.

Problem with the "greater good of the community" is defining it. Its rarely clear on an objective basis. And then you have to determine the best way to achieve the greater good (which is also rarely objectively clear). Often times, people aren't advocating for an approach (or result) that is objectively better but in reality, just different (or at least more preferable to a group of people). In those cases, I think the case for government intervention is much less compelling.

And lately, short term focus has resulted in economic bubbles in the pursuit of the greater community good (think housing meltdown and possible/likely student loan bubble). We seem to want to chase the next bubble, enjoy the short term benefits of it, and then pick up the pieces when it all crashes (typically accompanied by calls for more government action).

What is a "living wage?' Live how? How many hours worked to get there? Support spouse and kids (and if so, how many kids)? Long term basis or ust short term?

LostKause said:

Minimum wage should be just enough to live on.

That is the crux of this whole discussion. What is meant by "just enough to live on"? Does it mean having your own place or does it mean living with 6 other people to help pay the rent? Does it include an iphone? Does it include going out to dinner?

Minimum wage should be enough to live off of as long as you accept that you're not going to have more than necessities, which don't include phone, tv, Internet, name brands, etc.

Lord Gonchar said:

If you really think about it, that's just the inverse of a business selling an item for $5, but you can only afford to pay $3 for it so the government forces the business to accept that.

That is somewhat analogous to Medicare reimbursement for medical expenses.

Lord Gonchar said:

To say someone should get paid X regardless of the actual value of their skills is equally wrong.

Well, the minimum wage theoretically exists, not to boost someone's pay above what they're worth, but to bring someone's pay in line with what they're worth. It's no surprise that corporations have a huge vested interest in artificially depressing pay rates regardless of value provided because they know the workers don't have better options. In many places (China, for example) corporations are very successful in paying people pennies to do work which generates hundreds of dollars for them, simply because they can and because nobody can/will challenge it.

The minimum wage exists to protect the worker from being exploited by the company. It says, "Regardless of what is done, 1 unskilled man hour is, at the very least, worth $X to a company." What $X should be is another matter for debate, but I argue that some X exists.

Off-topic: I'm thrilled with the quality of this discussion. :)