PeakTrader.com

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PeakTrader said...

Good luck living on $10 an hour in San Francisco:

Average Rent In San Francisco, San Francisco Rent Trends

"As of February, 2012, average apartment rent within 10 miles of San Francisco, CA is $2133.

One bedroom apartments in San Francisco rent for $1946 a month on average and two bedroom apartment rents average $2367."

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Fortunately, there are minimum wage workers who still live with their parents, live in a car, share an apartment with several other people, etc., So we can buy a sandwich for $5 instead of $5.50.

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Mike, you don't need to make as much as a doctor to be independent, rather than dependent on parents, spouse, or government for subsistance.

Anyway, it doesn't seem that Subway worker will get a $0.25 tip from you.

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It may not be Subway's fault that it can't pay all its workers at least a subsistence wage.

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Doug, my comments reflect a wage floor, or labor standard, not an infinite rise in the minimum wage.

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It's really quite amazing how some people react so emotionally to such a low labor standard, e.g. a $10 wage floor in San Francisco.

Perhaps, we should just do away with all those annoying labor standards.

That way some people can easily exploit the most unfortunate in society.

I'm sure they also wonder how the country ends up with an Obama-Pelosi-Reid government.

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And, Mike says: "As a former waiter...I enjoy the look on the face of the kid...when I give them 10 on a $30 tab."

What about the face of the kid earning minimum wage at a fast food restaurant? Do you give him a 33% tip too?

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Abir, a minimum wage is also a labor standard. For example, you may want to see the Fair Labor Standards Act.

If you had a choice of starving or working for $5 an hour in San Francisco washing windows on skyscrapers without a safety cord, which would you choose?

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If I was running a small business, I wouldn't want a minimum wage or any labor standard.

I could make a fortune on cheap labor, and even lower prices for my rich clients, who pay me.

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Arbitrage789, yes, we could get the 24 million unemployed back to work by paying them $3 an hour and setting up tents.

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AIG, anyone can create a simple and unrealistic model that has some logic.

However, that doesn't reflect the U.S. labor market and economy.

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Arbitrage789, yes, and there would be some people willing to work without any safety standards.

If they're killed or injured, you can hire another one.

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Keith, if one safety cord is sufficient washing windows on a skyscraper, then why have two, five, 10, or more?

And if the worker isn't worth one safety cord, then there should be none, right?

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Ron, I've shown how a minimum wage can be a net benefit for society, in the context of economic models, depending on economic conditions.

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For example, an increase in the U.S. minimum wage can be a net benefit when:

1. Inflation is low.
2. Interest rates are low.
3. Profits are high.
4. Compensation of top management is high.
5. Economic growth is low.

Some profit and compensation will shift to minimum wage workers, low interest rates can offset some of the higher wage, consumption will increase, because low-wage workers have a high marginal propensity to consume, any increase in unemployment is offset by higher wages and unemployment benefits, and productivity can increase.

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AIG, you've completely missed the point.

Would you say it's easier or harder for some people to exploit other people with or without labor standards, e.g. a minimum wage?

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Mike, I could make a high profit exploiting low-wage workers, and also reduce prices for rich clients, and still make a higher profit.

If I'm most productive and my reservation wage is $12 and I was given a choice of starting at $10 or not working, I wouldn't work.

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Jet Beagle, are you saying if you don't have money and need money, you can't be exploited by those with money?

Morganovich, you're comparing apples to oranges, because a wage (an input) is not the same as a price (an output).

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Jet Beagle, for example, a desperate Mexican may be willing to mow lawns for $5 an hour and live in a car, while you increase your profit substantially and buy a mansion.

Of course, some people wouldn't view that as exploitation.

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AIG, I doubt many people are willing to work for $5 an hour in the U.S., unless they had to.

So, you don't believe a Mexican laborer earning $5 an hour in the U.S. doesn't feel even a little bit exploited?

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I can see this goes nowhere with some people.

If it weren't for the minimum wage, some workers would be earning a couple of dollars an hour less, and you could still buy your Subway footlongs for $5 instead of $5.25.

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Ron, why don't you ask the millionaires and billionaires for some insights on microeconomics?:

http://rwer.wordpress.com/2010/11/20/graph-of-the-week-usa-productivity-and-real-hourly-wages-1964-2008/

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Full Debate:

http://www.blogger.com/comment.g?blogID=28997633&postID=3809636905767672370

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Wages can increase substantially without an increase in price:

What Foxconn Changes Mean for Workers, the Industry and You
March 30, 2012

“Labor is only a small percentage of the total cost of a product.”

If a cellphone costs $229, that’s the price it’s going to be.

If labor costs go up and everything else stays constant, it may cost $1 more to make each cellphone, but it’s not going to change that $229 retail price tag.

The manufacturer just has to eat that tiny decrease in profits.

Workers may be paid twice what they were just a few years back. With that in mind, has the cost of the iPhone gone up? Nope.

Foxconn is working on “a compensation package that protects workers from losing income due to reduced overtime.”

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Larry, the labor component to produce an iPhone is small:

Apple pledge likely to boost China factory wages
10 hours ago

"ISuppli estimates that Apple pays less than $8 for the assembly of a 16-gigabyte iPhone 4S and $188 for its components.

The phone sells in the U.S. for $649, though wireless carriers offer them at a subsidized $199 with a two-year service contract.

If Apple were to absorb a Foxconn wage increase to keep pay the same and cut the work week from 60 hours to 49, it would pay about $2 more to have an iPhone made.

Apple's regulatory filings imply that it makes hundreds of dollars in profits per phone.

The minimum wage in Shanghai, one of the world's most expensive cities, is about 1,200 yuan ($200) a month after an increase of more than 10 percent last year.

The northern city of Tianjin raised its minimum wage to 1,070 yuan ($175)."

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Ron says: "exploited Chinese workers...as you can see from the article, they are ecstatic...thank you for reducing their incomes."

Apple manufacturing plant workers complain of long hours, militant culture
February 6, 2012

"Foxconn employees have a saying, "they use women as men and men as machines."

After three weeks of applying more than 4,000 stickers a day onto iPad screens by hand and working 60 hours a week in an assembly line, Chen says she's ready to go back to school and study hard so she'll never have to return to Foxconn.

"It's so boring, I can't bear it anymore. Everyday is like: I get off from work and I go to bed. I get up in the morning, and I go to work.

It is my daily routine and I almost feel like an animal," said Ms. Chen, who aspires to become a biologist.

When asked why humans do machine-like work at Foxconn, she responds, "Well, humans are cheaper."

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Larry, yes. However, in China, workers are restricted to committing suicide.

Foxconn may be one of the better plants to work in China. Nonetheless:

'Mass suicide' protest at Apple manufacturer Foxconn factory
11 Jan 2012

Around 150 Chinese workers at Foxconn, the world's largest electronics manufacturer, threatened to commit suicide by leaping from their factory roof in protest at their working conditions.

In the aftermath of the suicides, Foxconn installed safety nets in some of its factories.

"We were put to work without any training, and paid piecemeal," said one of the protesting workers, who asked not to be named.

"The assembly line ran very fast and after just one morning we all had blisters... The factory was also really choked with dust and no one could bear it," he said.

"Because we could not cope, we went on strike," said the worker. "It was not about the money but because we felt we had no options."

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Unknown says: "Only disingenuous white liberals think the Chinese should work less."

Not all economies are the same.

What about cutting back on work hours to hire more workers, to boost employment, or at least prevent unemployment?

Of course, that may not work in France.

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http://www.blogger.com/comment.g?blogID=28997633&postID=5715105103958585494

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PeakTrader said...

The U.S. minimum wage is such a low standard I don't know why some people make it a big deal.

There are many hard workers earning the minimum wage or slightly more than the minimum wage.

Without the minimum wage, they'd earn perhaps $7 instead of $8, and those earning slightly more than the minimum wage may also earn less.

The difference may end up in higher incomes for top management and more profits rather than more employment.

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Is it better to make income taxes more progressive and increase the capital gains tax rate to give more tax credits to the working poor (which may result in negative income taxes) or raise the minimum wage?

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Ondra, in the global economy, why should hard working low-skilled workers in the U.S. get paid much more than hard working low-skilled workers in China?

Any difference in productivity can be pocketed by top management and profits.

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I'm sure, there are many U.S. teens who'd refuse to work for $7, because their reservation wages are higher, e.g. $8.

So, they choose to play video games, at their parent's house, instead of working.

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It can be reduced to starving or working for $5, while a few live high off the hog.

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Ed R says: "...their own agendas...perhaps they should describe these economic issues for what they really are, rather than just select out the effects that support their points of view."

I find it interesting how they just make things up and assume it all makes sense.

They either want to cling to their biased political beliefs or simply have no comprehension of any economics beyond two-dimensions.

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http://www.blogger.com/comment.g?blogID=28997633&postID=6178593146631609417

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