Living Wages and Inflation

Reading through comments about that "socialist" city council member in Seattle made me think I should revisit my support of livable wages. Some commentators brought up the potential for prices to rise dramatically if the minimum wage is increased.

On the surface such a concern seems valid. After all labor is the highest [recurring] cost for most businesses. Equipment has a high one time purchase and then a cost associated with maintenance and then can be sold to recoup some of the original costs. But as automation has shown, machines cost far less than human labour, particularly when measured against sheer productivity gains.

There are businesses that run at very high profit margins on their final product. It is completely false to claim that somehow raising the wages of workers who put together say Nike sneakers would push prices of Nike sneakers up. The only reason why Nike sneakers would go up in price would be because Nike was protecting it's profit margins. Smaller mom and pop stores would have larger problems with large increases in wages. On the one hand many family run stores with family as employees are somewhat immune from the issues, because the family generally co-owns the business and so money is evenly split. They live their lives with the business and nobody is really getting insanely rich off the business. They may be a part of the 1% due to raw income but they are at the bottom part of the 1%.

At the upper end of the 1% are folks who aren't really making money because they produce anything. They make money off of money off of money. Minimum wage increases will do nothing to their wealth. Not one bit. In fact I would hazard to guess that a lot of those top top top earners give away more money than a lot of workers make in a year or ten.

On the other hand one has to be pretty careful about wages. Should a no skill job pay the same as one that takes 8 years of specialized training to do? I certainly do not think that the guy who changes the oil on my car deserves the same pay as the one who can take apart my engine or transmission. I DO think that the guy who changes my oil should have the opportunity to get the training to take apart my engine so he can get that pay if he so chooses. But I'm not up for increasing his oil changing pay because he simply thinks he should be paid more to do it.

Of course therein lies the conundrum: What job deserves "living wages" as opposed to shall we say "entry level, HS student, don't expect to support a family on this" pay? If a lot of people who should be in "support a family" job are in "HS Student part time" job trying to support a family then there is a problem with the kind of work available and not so much what is being paid to do it. As I've pointed out in other entries, those "part time, don't expect to support a family" jobs are going to go away with automation and self-service. So, for example, if you think you will be able to be a cashier at a department store for the next 30 years and support your family, you have a whole other thing coming. And no amount of minimum wage is going to help.

This brings us back to the point I made in the last post: As technology decimates low and medium skill work (anything done by hand) and those previously employed doing these things (and the future would have been workers) are no longer employable but are still, you know, alive, what is government going to do? That is the policy question that needs to be looked at.