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Comment by IgorPartola | Hacker News Reader

Wait, why is it bad that Amazon is lobbying for this? Would you say it was bad if, say, ACLU was lobbying for a $15 minimum wage?

My guess is that from Amazon's point of view, they are winning political points by not just raising their own minimum wage to $15, they are also using their standing in the industry to increase quality of life for non-Amazon minimum wage workers. If they succeed, I am happy to grant them the credit they are due.

If a big corporation doing the right thing results in more profits for them, I don't see that as grounds for criticism. Did we criticize Starbucks when they offered a competitive wage and free college education? Or any of the other companies that chose to pay above the minimum?

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By lobbying for the $15 minimum wage they are working to make sure that their competitors don’t retain any competitive advantage on wages. So now the brick and mortar shop that is barely in business because of competition with Amazon is going to get hit with a big bump in wage costs. They either will raise prices, or go out of business, both scenarios benefit Amazon.

That's a nice story, but it's just that. Alternatively, all the minimum wage workers will have more expendable income. Some of that may be spent at those brick-and-mortar shops, and will offset the additional costs.

Remember that the velocity of money makes it a non-zero-sum game.

EDIT: Ends up that Wikipedia covers this nicely:

https://en.wikipedia.org/wiki/Minimum_wage_in_the_United_Sta...

"The interconnection of price levels, central bank policy, wage agreements, and total aggregate demand creates a situation in which conclusions drawn from macroeconomic analysis are highly influenced by the underlying assumptions of the interpreter."

Also has a nice side-bar quote from Henry Ford, who was partially known for higher wages, and which I think addresses the point I was trying to make (emphasis mine):

"The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One's own employees ought to be one's own best customers."

Or they spend their extra money at Amazon because prices are lower. Or you are right and it helps brick and mortar in the handful of cities with Amazon warehouses, but hurts everywhere else.

Worst case for Amazon is they maintain status quo by forcing competitors cost up. Best case for Amazon is that they drive some of their competition out of business, or take some of that business because super giant Amazon is better able to absorb the increased wage cost than smaller businesses.

It is very much like their state sales tax collection strategy. Oppose it for as long as possible, accept it, then lobby for everyone else to have to do it.

The thing is, this is a bit circular. How can Amazon pay more than others, but it hurts them less? Because they have some kind of competitive advantage, no? That advantage is going to manifest somewhere. Saying that they are going to get a competitive advantage by raising wages, which they could only do because they had a competitive advantage... Doesn't really go anywhere. This just happens to be the chosen manifestation of their advantage, and honestly higher wages are probably one of the more socially-positive manifestations.

It's not really a story is it? Output is a function of capital, labour and productivity. Double cost of labour and those that get the most productivity out of capital gain competitiveness. Who is relatively capital intensive? Amazon. So it's a pretty factual story economics-wize.

There's no doubt labour is better of in the short run with double wages. I would not doubt the effects in the long-run but that's part belief. The market structure will change, less capital intensive firms will drop out. That might be brick and mortar stores (note: bricks are capital but bricks are not really productive in the sense meant above).

So you're saying they shouldn't lobby for an increase in the minimum wage, and that large numbers of workers' wages should languish because they work for small businesses?

No, I'm saying it is in their self interest to lobby for it.

I fail to see why it is bad when economic interest and public interests line up. Would you rather Google not advocate for net neutrality because it benefits them?

Precisely this. A small shop in Mobile, Alabama being forced to pay the same minimum wage as some company in Santa Clara County is ridiculous. A rented closet in the Bay Area costs more than a house payment in Mobile. Also, the tax burden on $15 in Alabama is far lower than the tax burden on someone in California.

Want to give low wage people an actual pay raise? Cut federal payroll taxes since those affect workers equally as they are percentage based.

A $10 wage in Alabama is far more valuable than a $15 wage in Sunnyvale. And conversely, a $15 minimum in Alabama would be more catastrophic to a business than the same minimum in Seattle.

Just a clarification, that "small shop" would have to have over $500,000 in sales in order to be required to abide by minimum wage laws.

"For most firms, a threshold of $500,000 in annual dollar volume of business applies to be covered (i.e., the Act does not cover enterprises with less than this amount of business)."

I'd also argue that definition of "small shop" $500k threshold should change between California and Alabama.

https://webapps.dol.gov/elaws/elg/minwage.htm

If you lower the federal payroll taxes then won't companies correspondingly lower wages for new employees?

Not if they are competing for employees; but, yes, if the labor market for particular forms of labor is a monopsony, you are stuck with the inverse of monopsony rents.

Of course, if that's a significant general problem rather than a narrow edge case, the entire idea of market economics is a sad joke.

It isn't bad that they are doing it, they are just pointing out the probable motivation.

I'm not arguing that it's bad to lobby for a higher minimum wage. Only that to communicate both the raising of your wages and the lobbying at the same time, you mix two messages for different audiences. Hence the sour replies, that mix private actions with public beliefs of a firm.

The argument that their relative competitive positions changes by first-moving on wages seems not in doubt? Obviously when the wages double for everyone the most capital intensive gain competitive power.

My guess is because how big advantage amazon has compared to smaller companies. They have good tax cut. Taking that aside, they also applied tight working time and high kpi, which can't be applied by smaller companies. And it gets better with PR stunt like this.

And CMIIW, I think increased minimum wage will increase goods price and higher skilled worker's wage overall, making those changes useless again.

It's just my 2 cents, with source limited from following recent news.

Who claimed it was bad?

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