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Comment by pauljurczak | Hacker News Reader

How about raising wages to attract employment? Where is the invisible hand when you need it? Is it a workforce shortage or a pay rate shortage?

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As an employer, it's really hard to compete for talent with the company down the street, when the company down the street is paying $300 per week for 0 hours worked. That really messes with the invisible hand.

If you can't afford to pay more than $7,50 per hour, then the market has spoken: you have no working business model.

It’s not the $7.50 so much as the $7.50 extra for zero hours.

So my calculus is “Would I rather make $300/week for zero hours worked or $600/week for 40 hours worked?”

So it’s not just a more money question, but a money vs time issue. It seems rational to me to prefer less money for no work. The problem is that it’s not sustainable as we’re adding debt to pay for it in the short term. This seemed important when work was impossible due to COVID, but now that we’re recovering it’s again possible to work.

Is there was a sustainable UBI plan to keep paying for this in the long term, that would be nice.

The Wendy's in Bozeman MT is starting at $17/hr. The McDonalds is starting at $15.50.

This is not a wages problem. This is a huge influx of wealthy people to the state that aren't working but are taking up property and services problem.

The cost of living in Bozeman is astronomical. $800k single family houses. $1,500 apartments.

Even the exorbitant sounding $17 an hour isn’t much of a living wage in Bozeman anymore. Hasn’t been for a decade or more.

People getting paid entry wage at McDonald's were never supposed to be able to afford a house on that.

Also housing prices are astronomical, but your numbers are a touch high. I believe the median home price is $600k or so.

> were never supposed to be able to afford a house on that.

Cost of living isn't just "buying a house". It's housing, transportation, clothing, food, etc.

> your numbers are a touch high.

Nope. I just got a flier that mentioned that the average home price for a townhouse in Belgrade (a "suburb" of Bozeman (which itself only has roughly a 50k population), for those not local) is $765k.

> entry wage at McDonald's

"Entry wage" is a misnomer for jobs like that. There's no advancement at a job like that except to management, and there will always be an order of magnitude fewer managers than workers (and far less turnover.)

Not everyone who works at McDonald's is supposed to stay there forever and advance there. In general, you should either be getting a college degree or taking up a skilled trade, and only working at McDonald's until you do.

A college degree is not a guarantee that you'll get a high paying job. Some degrees will only offer a $10k improvement over a full time McD's job. The average will push you into $70k a year, which puts you about $20k over the poverty line at least†.

And skilled trades... they've been devalued as well. The average salary for a welder is in the $17/$18 range across America††. Not really better than McD's (in this thread of conversation at least).

† https://www.indeed.com/career-advice/pay-salary/average-sala...

†† https://www.indeed.com/career-advice/pay-salary/welding-jobs...

This comment completely shocked me. Quick zillow verifies it... If you had asked me, I would have guessed <$200k.

What drives those prices?

People selling their $1.5M home in California and buying one home here and one in Arizona/Florida.

> People selling their $1.5M home in California and buying one home here and one in Arizona/Florida.

And real estate investment groups buying up housing to rent.

As per a conversation I had with a realtor, they don't buy houses to rent them out, since the wear and tear of the renting lowers the eventual sale price. Since the price for houses has been going up steadily for over a decade now, it's financially advantageous for them to leave the houses empty and wait for a sale.

Sounds like a supply/demand problem; I wonder what caused an influx of out-of-towners buying up properties.

Okay but they should be paying taxes locally.

I don't know about Montana but in my state I pay state income taxes, county and city property taxes, and state, county, city sales taxes.

It's $7.50 per hour extra:

> Starting June 27, Montanans will lose access to the extra $300 in weekly unemployment benefits, but maintain their regular benefits.

What if you are just starting out? Should only the big companies be able to hire workers? Is this tilting the odds in favor of say McD etc?

Then it means your working business model relies on VC money or government subsidies. Founders can take the cut but not the employers who don't benefit from it. Isn't the buck supposed to be passed down to the customers, not the workers ?

If you can't pay a living wage, don't start or have a business. Period.

This isn't a big vs small business debate - small places don't always pay crap wages, and some big places do pay crap wages.

Sidenote: A lot of fast food places are franchises, and a franchise might just have one or two. They aren't in any better position than a family-owned fast food place in a small town.

They're often in a worse-off position, as you can run a family diner with a family; I've seen a number where it's a husband/wife team with maybe one "employee" (as owners don't need to be paid a wage). Franchises usually can't get away with that (maybe Subway could).

Sometimes worse off, some aren't. There are different challenges to both models. I was more pointing out that many fast food places aren't exactly a real part of a big international chain, but rather some folks that are paying to use the name and menu. None of this changes my main point, though:

If you cannot pay your employees a living wage, you should not run a business.

Perhaps. But doesn't competition also drive firms to make decisions that rely on such business models? If you leave fiscal room for an increase in the cost of labor, aren't you paying the opportunity cost that will put you at a price disadvantage relative to your competitors? Markets punish inefficiency, even at the price of long term risk.

You, the customer, is the person who pays the employee down the road.

Sounds like you should be paying your staff more than $7.5/hr if that is the going rate by this company down the street paying $300 a week.

If people are comparing $300 for 0 hours vs $300 for 40+ hours then sure.

Try paying them $600 per week. If they see you pay enough for them to afford rent (which is not possible with $300 week) you will have the better offer.

If they see you pay enough for them to afford rent (which is not possible with $300 week)

It is quite possible to pay rent if you make $300 a week in parts of this country. That is why the $15/hour nationally is dumb. Let the locals pick their number for their area.

$600 a week, when some Montana cities (Bozeman) have apartments in the $1,500 a month range, still isn't much to try and live on.

That just means your company should go out of business and free up resources for a more productive company.

Edit: How does the more productive company survive? Well, there is a "company" down the street creating customers who have $300 per week to spend on things they actually need.

Or, if you are able you can move your business to Mexico or China.

No, it's easy, you pay $400 a week.

I don't think many people would work for $400 a week when you can get $300 a week by not working.

The invisible hand of the market has selected the most profitable solution: a combination of PR and donating to politicians.

Why raise wages if you can force people to choose between starvation and working two jobs until they break of old age or die of a very likely preventable disease that they could not afford to diagnose and/or treat?

A minimum wage is below housing wage in every single state in US. https://www.businessinsider.com/minimum-wage-worker-cant-aff...

> Why raise wages if you can force people to choose between starvation and working two jobs until they break of old age or die of a very likely preventable disease that they could not afford to diagnose and/or treat?

Well they obviously got what they deserved from not working hard enough. Must have not been told about bootstraps

I keep seeing this argument, but do you get that there's an artificial floor placed by these benefits? You can't really talk about the free market at that point.

There is no free market anywhere, ever. There are only interest groups and power relationships between them, leveraged by various political traditions, one of which includes a very specific kind of relationship we call "money".

The concept of a "free market" belongs with Santa Claus and the Tooth Fairy. It's not something a rational adult should ever admit to believing in.

Remember this next time the financial industry demands a bail-out or a major military project goes ridiculously over budget, and everyone pretends to be shocked and surprised.

Supply and demand work both ways. If you remove unemployment benefits from the local economy, what do you think this will do to local demand, and thus to revenue of local shops? And what will this do to the wage level the average local shop can afford?

Edit: Growing up in the poor part of my country, I could see that first-hand: The father of my friend had a small shop and had a revenue spike every month, the same day every month. It was the day after unemployment benefits landed on people's bank accounts.

Presumably this benefit is to cover the wages of someone who might have been employed full time. $300 a week / 40 hours = $7.5/hr. There's your artificial floor. Great money if you are living with your parents, tougher situation if you are the parent.

I'm happy to be corrected on this point, but actually aren't we talking about $300 of additional benefits on top of whatever the state is providing that is funded by the Federal government?

Yep. For me in Minnesota that’s $850 a week, so over $21 an hour for a 40 hour work week. I’m not sure how anyone even approaching minimum wage is supposed to compete with that.

>I keep seeing this argument, but do you get that there's an artificial floor placed by these benefits?

Artificial floor? This is literally a mechanism in place that adds more money into the economy. You can complain about the tax burden of unemployment insurance but that's not what I am seeing in your comment.

Seriously what the hell am I reading here? This is literally the free market in action, if you don't see it then your definition of free market only includes a market that only benefits yourself.

The minimum wage is crap because it is a price control. It prevents market signals from working. No additional money is being added into the economy, there is no guarantee that you find employment, it is literally a ban on work.

However, unemployment is not that, it is a defacto jobs guarantee except the job in question is merely seeking a job. The reason why job guarantees work is that they create additional money that drives inflation beyond the point where the job guarantee is necessary.

If the job guarantee is set at $1500, then inflation will rise until the private sector can afford to pay everyone $1500 or more.

Right, gives a whole new meaning to the term “invisible hand”

I hear this argument quite often, but it IS the market’s will. In fact, if the market got what it wanted, many towns and villages would just not be viable.

My point is not that minimum wage is bad, but rather, redistribution of wealth is necessary.

Who are we redistributing it from? It seems it is always the not overly secure people who have to have their wealth redistributed.

Which proposal is that? The ones about putting more taxes on people making over $400,000 a year?

With inflation and cost of living rising so much, is 400k pretax really "insanely rich"?

I can barely afford my house and car, which middle class people of 50 years ago had no issues affording.

Aren't there many more people out there making 50M a year who should be targeted before I am targeted?

If a breaking point is reached any wealth is distributed.

Violently, inefficiently and unfairly, but all of it. Where do you think the support for communism came from in early XX century?

Wealth redistribution to support small towns would be taken from large cities. Large cities are typically enormously profitable.

Wealth redistribution to support poor people would be taken from businesses. This is a typical social welfare model.

My "radical" take is that we need to crush wages.

Mcdonalds cook - $40k/yr

Senior Dev - $130k/yr

CEO - $180K/yr

I don't know how something like this could be implemented, but we are on a fast track to 95% of wages going to 5% of workers.

>we are on a fast track to 95% of wages going to 5% of workers

Really? Based on what data?

The US Census Bureau has data on the aggregate share of income in Table H-2. For 2019, the top 5% of households received 23.0% of aggregate income (a bit lower than 2018 and 2017).

Looking back 25 years before that to 1994, that number was 21.2% and (eyeballing it) seems to have been fairly range-bound in the 20-23% range since the early 1990s.

The data starts in 1967, where that number was 17.2%.

If unemployment is low then this is not a matter of viability though. Redistribution of wealth is necessary but only to the point where it enables productive work to be done.

Supply and demand until it comes to the labor market.

Then, it's we're entitled to all the cheap labor we require.

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