I understand the incentives argument here, but supply and demand is still a real thing. If you can’t hire people, offer more money. Is as simple as that. Your competition is working under the exact same rules you are.
There are undoubtedly some companies operating at very low margins, but by and large, there has been a dramatic increase in profit-taking by companies, without corresponding increases in wages.
0. https://tradingeconomics.com/united-states/corporate-profits
But good luck figuring out a way to reduce corporate profits. Consider that your graph is just the for profit companies and there’s lots of nonprofits and gov-run orgs already.
It’s a tough problem to try to have companies raise wages and reduce profits. Not sure of any legislative examples. Minimum wage laws tend to result in higher prices and fewer positions.
Companies have business models with existing margins and any changes are hard given capital markets and competition.
Look at what happened with insurance profits when the ACA introduced payout requirements. [0] Costs increased and so did profits. Profits weren’t decreased and bonuses weren’t decreased, insurers just raised costs to the level to support the profit and bonus levels. This did not reduce costs nor insurance profits, instead it increased costs. [1]
[0] https://www.healthcare.gov/health-care-law-protections/rate-... [1] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5145008/
If you want to instead talk about unrealistic expectations baked into corporate earnings, then you'll get no disagreement from me!
But they aren’t going to. I know that because if they were, they would have done it already. You could force it up with this stimulus, but only big Corp would survive it.
In this case, that's not true. If your competition can pay people the median US income to stay home and do nothing and offer them a tax break on that free income, it's going to be difficult to convince them to come work 40hrs/week for you even if you offer them 10-50% more money.
The key is to look at the marginal increase in income. Unemployment (plus limited federal additional benefits) can pay out similarly to the median US income for doing zero work. Anyone looking at a job will subtract those zero-work payments from your salary offer and only consider the marginal rate. If someone can only go from $30K on unemployment benefits to $50K working for you, your job really only pays them $20K/year.
Anyone who is remotely employable will get a shitty job thrown at them and their unemployment benefits stopped. They literally say, "if you're offered a suitable job, then you must accept it." And what constitutes suitable, is pretty much any job, even if it pays less, is in a different field, and the commute is significantly longer.
Source: i've been on unemployment before.
> If someone can only go from $30K on unemployment benefits
People are not making $30k a year on unemployment. This is a total mischaracterization of what's happening. It varies by state, but in my state, benefits are 50% of your wage (plus a bonus for dependents) up to a maximum of ~$700+$300 (fed bonus).
The thing is, that maximum is only available to a person making around $72,000 a year with three or more qualified dependents, and only for 39 weeks, and only if nobody offers the person a job. And a person earning $72k is pretty much guaranteed to get a job offer.
Source: used my state's unemployment estimator.
The average, including the federal bonus, is currently around $32K/year equivalent.
You can get the statistics here: https://oui.doleta.gov/unemploy/claimssum.asp (Select US Total).
Comes to a little over $310/week average for recent months. Add $300 federal and you get $610/week, which is equivalent to $31.7K per year.
I'm not making up numbers. I'm just using the government-reported averages.
Your initial disbelief underscores why this conversation is so difficult: Most people don't realize that the current average unemployment payments have reached equivalence with US median incomes.
> and only for 39 weeks, and only if nobody offers the person a job.
The federal changes have extended the unemployment benefits well beyond the 39 week limit. Again, the current situation can't really be compared to traditional unemployment.
Also, being offered a job doesn't automatically end unemployment benefits because job offers aren't registered with the government. This only occurs if the UI beneficiary self-reports that they declined a suitable job, or if the company that offered them a job is suspicious and motivated enough to report the person to the unemployment office. The latter scenario would only occur if the employee admitted receiving unemployment and the hiring manager was motivated enough to seek revenge for declining the job offer. It can happen, but it's not like it's happening frequently.
> People on unemployment aren't dumb: they know unemployment going to end
Likewise, employers are not dumb. They know this extended unemployment is going to end and they're not interested in competing against it for the remaining few months that it will be active.
Yeah, this is where you're messing up and completely mischaracterizing the situation. You're looking at weekly benefits and multiplying it by 52. The thing is:
* In my state, benefits are capped to 26 weeks, with a temporary 13 week extension.
* it's very difficult to continue receiving benefits.
* Those enhanced federal benefits are ending in September. Sooner in some states.
* Past weeks 8 or so, you are forced to take a job or stop receiving benefits. The only way out of this is to disabled or elderly, where requirements to be able to life 20lbs will disqualify you from employment.
There are tons of places out there, mostly factories and the like, which offer jobs to anyone whose been on unemployment long enough. The only way to avoid being forced to take these jobs is to be unable to meet the (modest) physical requirements.
Again, I've been on unemployment before. I remember this headache pretty well. Even with help from family getting my ducks in a row, I was booted off it after a week. Only very specific types of people really benefit from unemployment.
Before COVID, you’re right. But during COVID (scheduled to end around Sep I think) GP is right.
Right now, in mine and most states, unemployment benefits started last April and continue through September and the annualized rate is pretty high.
The exact hourly rate varies state by state but is $300/week higher because of COVID, and extended benefit periods.
In my state unemployment caps out at $350/week if you would normally make $550. So, before COVID, if I made $550/week, I would get $350 in benefits. And if I made more I would still make $350.
So basically if I made $14/hour, approximately, employed and lost my job, I would only get about $9/hour.
With the COVID benefits I get $650/week or about $16/hour. And I don’t have to actively work. And the benefit period is longer than 26 weeks.
This is not conjecture, it’s facts and pretty easily visible.
So if I’m looking for work right now and getting $16/hour in unemployment (annualized to $32k) then it’s unlikely that I’ll ever take a job for $15. Or even $20, etc etc
When unemployment benefits drop, then the calculus changes.
There’s a game theory element where it may be better to stay on unemployment through September and then take a job vs taking a higher paying job now.
Okay, then take the US median income and divide by 52. Compare that against weekly benefits.
The conclusion is the same.
> * In my state, benefits are capped to 26 weeks, with a temporary 13 week extension.
Again, you can't compare traditional unemployment with the current situation. The federal benefits have extended this multiple times. Someone laid off in early 2020 could still be collecting benefits due to the multiple extensions.
> * Those enhanced federal benefits are ending in September. Sooner in some states.
Yes, at which point the argument becomes moot. The article is discussing why some states are choosing to end the benefits sooner.
> There are tons of places out there, mostly factories and the like, which offer jobs to anyone whose been on unemployment long enough. The only way to avoid being forced to take these jobs is to be unable to meet the (modest) physical requirements.
I don't know about your state, but most state unemployment systems rely on recipient self-reporting. There isn't a mechanism by which factories can simply offer random people jobs and then their benefits end unless they accept random factory jobs.
There are also specific exceptions for receiving job offers that are too far below previous salary, would be detrimental to career path, and so on. Programmers aren't being trapped into factory jobs via unemployment, for example.
> Even with help from family getting my ducks in a row, I was booted off it after a week.
You were booted off of unemployment after a week? That's an extreme outlier scenario. Perhaps your strange experience is skewing your perception?
The number of people receiving unemployment benefits right now is around 20 million. Clearly, people are not being booted off of unemployment after a week with any regularity.
https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
Why would McDonald's raise wages to that amount? Why would anyone offer a job that earned the job creator less the 100,000? It seems like the most likely outcome would be that lower paying jobs would disappear not that they would suddenly start paying out more. Either that or the amount of productivity from those jobs would go above that 100,000 amount - which seems functionally the same as saying the jobs would disappear because if you're working at a restaurant generating that much revenue you're doing something far different then the summer job I had.
Also, increased labor costs necessarily means higher prices for goods. Which affects the poor more than the rich. Does it matter to the rich if a gallon of milk or gas goes up 2x? No, they won't even notice. But the poor sure will.
Fixed it for you.
Also, government PPP small business loans are a thing.
I'm sure slaveowners also complained when they suddenly were not able to whip people into working.
I'm not against safety nets in principle. Check my comment history, my last but one comment was a diatribe against Marxism. But even so if Banks can get bailed out, why not sick labourers?
The problem is not safety nets, it's incentive structures. That's why I like the idea of a negative income tax over basic income. The less you earn working the more you get in benefits, but as your income rises your benefits decrease. You are always better off working, and always better off earning more that way. If the incentive structure was better I think the opposition to benefits would melt away.
I suspect you'll find that to be less effective at encouraging people to find jobs for the simple reason that it incentivizes people to work the bare minimum, if at all; when the income sources are mutually exclusive, there's no incentive to work unless the pay exceeds some threshold.
Contrast with UBI, where the alternate income source is constant. Since UBI is by definition not conditional on whether or not someone is fully employed, that someone has no incentive to not work, whereas the compensation for voluntary work (i.e. wage/salary) remains. This ultimately means that - provided it's indeed a universal basic income - you no longer need minimum wage laws, since it's no longer the employer's job to ensure its employees have enough money to survive (and on the flip side, workers have a safety net while they find jobs that actually pay fairly - or else create their own jobs by founding startups).
That is:
> Your competition is a welfare cheque that's paying people to channel surf from a sofa.
Only if it's actually competition, which would be the case for a negative income tax, but wouldn't be the case for UBI.
UBI funds would be paid out of the federal budget, which would be funded by taxes.
Above a threshold, earners would receive UBI but their taxes would increase by more than their UBI. It would still be called "universal" but it would be erased (and then some) for anyone earning more than a relatively low amount.
Negative income tax basically skips the distribution and collection and gets straight to the point.
The money must come from somewhere.
This assumes the use of an income tax. That's currently the case now, but moving to a more economically-efficient tax (cough cough land value tax cough cough) would prevent that situation entirely.
They're not mutually exclusive. As I explained, with a negative income tax you are always better off earning more yourself. In fact you always keep most of every extra dollar you earn.