Market Pressure to Reduce Welfare Spending

Two applicants in front of me after the changes yor propose. One is on welfare because she has 4 kids. One is not. Who is more valuable to me assuming they are otherwise equal?

Big flaw.

 

How would you know the difference? As the employer their personal life is none of your damn business. Only their job qualifications matter when it comes to the hiring decision.

I've owned my own business with employees and I've always considered the employee to be just as important as I am. I want them to succeed just like I want to succeed because without them I have little to nothing. While inflation changes the "bar" over time in today's dollars I wouldn't expect anyone to work for me for less than $15/hr and I would also provide group health insurance (that would cost me about $1.50 more per hour). Basically with payroll taxes ($1.15/hr), health insurance, and wages my cost would be well less than $20/hr and I could make a lot of money with the labor cost being that low in any enterprise that generates $60 or more per hour per employee. I can run a yard lawn service and make money with those wages/benefits. I can run a McDonalds and make money with those wages/benefits.

If I can't generate over $60/hr/employee in sales then I don't have a good business plan.

In my "capitalistic" world it is a win-win-win situation because I win by earning a profit from the labor of others, my employee wins because they earn a profit (i.e. don't work below what it takes them to provide even basic necessities), and the customer wins because they are recieving the goods/services provided at the least possible cost where everyone wins. I don't believe the owners should be screwed, the employees should be screwed, or the customers should be screwed in capitalism and there is no reason anyone should be screwed.

 

It is your business now, if employing welfare dependents is something that you have to monitor and report and display. Maybe they will do the math for themselves. So you have kids? How much did you make at your last job? Are you married?

Terrible idea. Disincentives to hire welfare recipients is about the worst thing you can do.

 

Sorry but I don't agree with anything above...it doesn't make any difference the root cause...if you try to force $64 billion per year additional expense on a company, even one as large as Walmart, there is going to be negative repercussions!

The $64 billion has nothing to do with sales...it is a reduction in cash/profits! The ONLY way to avoid a reduction in profits is to increase the cost of goods and services to offset the $64 billion additional expense.

What happened with Ford 100 years ago cannot be compared to industry and the economy today.

It's difficult for me to see how the economy benefits since the ripple effect for all American workers will drive inflation, purchasing power will not be greater, and we lose American competitiveness in the global economy.

I'm a farmer, and if my labor costs increase which require me to increase my prices, this is inflation and has nothing to do with the money supply. If all the local labor unionized and forced higher labor costs, either we pass all of those costs to the consumer (inflation) or we shut the doors.

Whether an individual worker seeks government assistance or not has zero relationship to the employers...

 

As noted the $64 billion increase is erroneous based upon the wages/compensation expenditures that Walmart actually reports. To increase the average wage from $9/hr to $15/hr would actually cost much less even though this represents a 66% increase in wages for those earning $9/hr. because those already earning over $15/hr wouldn't see any significant increase in wages at all.

But my proposal doesn't require Walmart to raise wages and even if it did and covered the increase by raising prices it would represent less than a 10% increase in the costs of goods sold by Walmart.

All my proposal does is require that information gathered and provided to consumers. If consumers don't want Walmart to raise prices then all they have to do is keep shopping at Walmart.

Of course the ripple effect that occurred because of the actions of Henry Ford with auto workers is relevant because our economy became better off because of it. It took low paid assembly workers out of poverty and moved them into the middle class throughout the manufacturing sector because of the ripple effect. Ford created market pressure by increasing wages for assembly workers that resulted in other manufacturers having to increase wages and that benefited the workers, the ecomony, and ultimately the manufacturers themselves as the demand increased for manufactured products.

If low income individuals were to see an increase in their wages from $9/hr to $15/hr that 66% increase in wages is greater than the 10% increase in the costs of the goods they purchase driven by the increase in the cost of their labor. There is a multiplier effect when it comes to wages where a $10 increase in "income" for one person results in a total economic benefit much greater in the economy.

Multiplier Effect: An effect in economics in which an increase in spending produces an increase in national income and consumption greater than the initial amount spent. For example, if a corporation builds a factory, it will employ construction workers and their suppliers as well as those who work in the factory. Indirectly, building the new factory will stimulate employment in laundries, restaurants, and service industries in the factory's vicinity. That same multiplier effect occurs if a company increases wages because it introduces new spending into the community.

Some enterprises are more effected by increased labor costs than others so picking out one as an anecdotal case can be quite misleading. For example the cost of labor for retail sales by large enterprises is a small percentage of their expenditures from gross revenue so it generally effects them less. At the same time is can also be the most variable expenditure. The rent and costs of goods for a retail store is relatively fixed and the owner of the enterprise cannot change it but the owner of the enterprise can directly determine their labor costs. They try to maintain the same or cut labor costs if the rent or price of goods goes up and can often do that. The "real wages" of the worker decline over time as the costs of rent and goods go up but they are not receiving proportionate increases in wages. That has been happening since 1998 as real wages have been declining. It is the low paid worker more so than anyone else that carries the burden increased prices for rent and goods.

What we see happening is "inflation" in costs but "deflation" in wages and from an economic standpoint deflation is far worse than inflation. Massive, widespread deflation is always bad for the economy and we're experiencing massive widespread deflation due to excessive unemployment that is driving down wages across the nation. The less a person has to spend the less they will spend and that negatively effects the economy. For example, a low income worker might be able to spend $100/mo in "luxury" expenditures like taking the family out to eat or purchasing a new TV. If, because of inflation their wages don't rise or because of wide spread unemployment the wages for their job go down in "real dollars" then that $100 shrinks to $50 and then shrinks to $0 over time. That's $100 worth of goods and services that are not purchased. The person selling TV's loses their job and the restaurant closes because of a lack of sales putting more people out of work making the problem worse.

While inflation is certianly a concern what many fail to understand is that deflation is occurring on a widespread basis when it comes to wages related perhaps 30% of working Americans. Their purchasing power is decreasing over time which causes a contraction of the economy. When a worker doesn't even have the income necessary to purchase the basic necessities then they don't have any income left over to purchase other durible goods or services and that results in more unemployment.

We can actually see this happening by looking at welfare expenditures. We've seen a dramatic rise in the number of those qualifying for SNAP benefits soaring from about 10 million Americans to over 40 million Americans since 2008. The qualification criteria didn't change but the income level of the households did. That's 30 million more Americans that won't be able to purchase goods and services that pay for the employment of millions of other Americans. It is the reverse-mulitiplier effect where expanding poverty results in fewer and fewer jobs which, in turn, creates more poverty that results in even fewer and fewer jobs.

If an employer provides enough compensation then their workers don't qualify for welfare assistance so obviously theire is linkage between the employers compensation to their workers and the requirement for welfare assistance for their workers. Compensation by the employer, to a very large degree, determines whether their employee qualifies for welfare assistance or not.

BTW - You mentioned you're a farmer and I recall you've also mentioned that you can't get enough labor to meet your needs (mentioned on an immigration thread). I wonder how much of your harvest is lost because you can't find enough labor to meet your needs. Additionally I don't know what type of farming you engage in but I do know about the apple growers in WA. They don't care how much their harvesters earn because they pay based upon bushels of apples picked (i.e. piece work). If a worker can earn $40/hr picking apples for them they would be thrilled because that's more apples being harvested and currently they're losing about 1/3rd of their crop that isn't being harvested because of a lack of labor. Every extra bushel of apples picked, that they pay for with increased labor costs, results in more profit for the apple grower. They would love to be paying "more for labor" because it results in more product to sell without increasing the cost of the product.

 

Back to the initial proposition. We have market pressure driving down (real) wages due to massive unemployment. All I propose is that there can be a counteracting market pressure based upon informed consumers making decisions in their purchasing habits. I'm basically proposing:

Negative Market Pressure balanced by Positive Market Pressure

What I seem to be seeing are arguments that "Market Pressure" related to wages is only good if it drives down the cost of labor but is bad if it drives up the cost of labor but it has to work both ways. An economy can't be based on Negative Market Pressure but needs to have a balance between Positive and Negative Market Pressure to maintain a balance between inflation and deflation. Today the only Market Pressure related to wages is Negative driven by very high unemployment and that is not a good thing for an economy. It is creating deflation in wages on a widespread basis and excessive deflation, according to virtually all economists, is always bad for the economy.

I merely propose a possible means of creating Positive Market Pressure related to wages based upon "informed" consumers making purchasing decision as opposed to making uninformed purchasing decision on what businesses they choose to patronize.

 

If you increase the wages of all workers earning less than $15/hour, then you must also increase all the wages of those earning more than $15/hour. $9/hour becomes $15/hour and $15/hour becomes $25/hour and so forth through the entire wage scales

Yes you can pay everyone higher wages but you force inflation and you lose global competitiveness, not to mention severely interrupting the labor process of supple and demand.

The ratios don't have much meaning, labor cost to overall expenditures, because the only thing that matters is sustaining and growing profits. If costs increase then prices must increase or profits erode. If you add $64 billion extra cost to a large retail company, then they must increase their income to offset these costs. That $64 billion is cash spent and it must be replaced...dollar for dollar.

Why do you believe that consumer prices should increase or decrease at the same percentage as wages? If Apple comes out with a new gadget and it's priced at $400, how can you ratio this product price to someone's wages? Over time it is likely that this same gadget will reduce in price from competitive pressure...should wages be reduced when this happens?

'Don't have any income left over'? Who exactly do you believe is spending trillion$ on alcohol, tobacco, lottery tickets, casino gambling, sporting events, unnecessary luxury items, etc...well I guarantee you the answer is not the wealthy! Sure this type of spending stimulates sections of the economy, and this is fine with me, but it's not fine when someone wishes to (*)(*)(*)(*) and moan about not having enough money to buy 'other durible goods or services and that results in more unemployment.'

It is government, not industry, who decides how to socialize the nation. If I have farm workers competing for labor jobs and they are asking $12/hour do you actually believe I should pay them $17/hour assuming that with this pay they won't apply for any government assistance? I can't raise my prices so there go the profits or I close the door. Government decides 100% separate from industry how it wishes to socialize the nation.

Without illegal immigrant workers, or questionable status workers, we would not have enough labor to farm. This applies to all areas in which day-labor is required over permanent employees which is the largest portion of labor costs. So far we have enough labor but sometimes it's questionable which is a huge problem...

 

I'm proud to say I've never been in a walmart my entire life. ;

 

What's wrong with Walmart?

 

"Duress" also implies that there is a threat of violence or other physical harm. However, if your wife threatens to leave you unless you change your ways, while that is a form of coercion, it is not a form of aggression and is therefore not immoral.

Where is the violence? Threatening to terminate an association, even between employer and employee is not violence and is therefore not the sort of coercion which you imply. Duress does not exist in this case.

The premise of your argument is that anyone is "forced." Unless you can show where the violence, or threat of it, exists, then your premise falls apart and with it your argument.

 

Basically, I don't like the way they treat their employees. I'd rather pay more money at a mom and pop then help to support a company, who in my sole opinion mistreats their employees.

 

As I've previously noted the fact that there is massive unemployment results in "deflation" resulting from decreased wages and according to all economist "deflation" is worse than "inflation" because it suppresses the overall economy.

Where people often make a mistake is that they believe that the law and supply and demand is a necessity of capitalism related to employment but it's not. Capitalism is based upon the law of supply and demand related to commercially provided goods and services and not to employment. The law of supply and demand related to employment does work in many cases related to employment but it also fails related to employment and that is a fact that cannot be ignored. When a person, due to high unemployment, is forced to accept a job that pays less than what it costs them to survive then they are "operating at a loss" and that doesn't exist related to enterprise. An enterprise cannot "operate at a loss" and simply goes out of business but a person cannot go out of business short of committing suicide.

But we know that "market pressure" does exist that drives down wages to the point that a person is forced to "operate at a loss" by providing their labor below the cost of their basic necessities of survival. The survive temporarily by "robbing Peter to pay Paul" but eventually "Paul" catches up with them and they can't afford to pay Paul.

All I propose is the introduction of another form of Market Pressure to counter-act the market pressure created by the Law of Supply and Demand for labor that currently forces some people to operate at a loss.

Yes, the argument can be made that actually providing enough income for a person to live on might raise prices slightly but all this is doing is rectifying a problem where the "necessary costs" of the product are being instated.

By way of analogy let's use the example of electrical power charges. Some places in the US regulate the cost of electricity to below what it actually costs to produce and they subsidize the power production with funding derived from taxes. If it costs $100 for X-Amount of electricity it costs $100 regardless of whether it's fully paid for by the customer or by the customer plus tax subsidies the price didn't change. Only the source of the funding changes.

The same is true for employees that don't receive enough compensation from their employers to live on. All we do is provide the employee with a tax funded subsidy to provide for their necessities of life. We subsidize the enterprise by providing tax funded "subsidies" to their employees but the cost remains the same. The "economy" doesn't change based upon where the funds come from because the same dollars are required.

Another analogy. While Boeing doesn't underpay it's workers the US government could offer to reduce the sales price of Boeing Airplanes by offering a $10 million per plane check to Boeing for every exported plane (that would violate our treaty agreements but ignore that). Boeing could then reduce the pricetag of their airplane by $10 million and out sell Airbus based upon a lower cost to the customers. We're doing exactly the samething by subsidizing the costs of labor for American companies with welfare assistance to their employees. We're allowing them to sell their goods and services below the costs that are required to produce those goods and service and deliver them to market.

Why can't people see that simply fact. Why can't they connect the dots?

All I propose is market pressure. No minimum wage, no government "mandates" related to wages. Let the consumers put the pressure on the enterprise which is what capitalism depends on to work properly.

 

Claims that raising the wages of minimum wage people is to provide them with a living wage is a complete lie.

Raising the minimum wage is a political payoff to the SEIU which pegs its agreements to the minimum wage. What's more the payoff lands in the laps of the consumers.

Take your political payoff and go to blazes.

 

You would have to take it one step further.

The notice would also have detail how many people recieving assistance are part time employees vs full time. Then of course it would have to detail how many of them were already on some government assistance before being hired.

People often forget these inconvenient facts. Sure Wal Mart and other corporations have many employees on public assistance but most of those employees are part time and were already collecting welfare such as food stamps ( snap ) before being hired. which mean now they are at least doing somethign productive and paying back in through taxes.

 

No it doesn't. Duress can be caused by economic force just as easily as by physical force.

 

You're entitled to your opinion...

 

A person has the same options as a business if their incomes are disrupted. Reduce expenses, downsize, create more income, etc. and ultimately bankruptcy. If a business can close it's doors then so can an individual...both can start over or change their course. Of course it's not fun and is emotional and unfortunate, etc. but that's life in our economic system. There are fundamentals to our economic system which should not be messed with! If government wishes to socialize based on their policy and funding, then this is totally separate from industry. Some seem to believe business owners are all wealthy and on top of the world and this is such ignorant BS. Owning a business is equally and more stressful than maintaining a wage job. Some of us succeed and some of us fail and when we do we accept our situation and deal with it accordingly. If people don't like their situation, then those people can take personal steps to change their situation and this has zero to do with government subsidies.

If consumers wish to know something about a business, then let consumers do the research...government does not need to be involved...

 

So much of this is self-serving behavior with little to no application to the best interest of the USA and respect for the economic system which has served us well for a very long time. People seem to believe that they can demand more than they are willing to fund and someone else will pay for it. People seem to believe that they can get something for nothing?! If wages are so meaningless in the grand scheme of things then why not just set the minimum wage at $30/hour and let everything else figure it out? Government needs to be downsized to the levels which average tax revenues can fund, and people more than likely need to downsize their spending habits as well...neither will do it so when we have no constraints we can just keep asking for more. Regarding this thread, and no personal offense to Shiva, since 1/2 of American workers earn $17/hour or less, 70+ million workers all potentially living in or near so-called poverty levels means tens of thousands of US businesses have workers who are accepting government subsidies...

 

Its all about the free stuff and the payoff to the SEIU.

 

A business can simply stop existing but, except for suicide, a person cannot. They are not the same.

A simple question:

Are you opposed to market pressure that could lead to an increase in wages?

That is all I'm actually proposing. Yes, it might lead to higher prices but to support only market pressure that reduces prices but never increases them seems to be rather one-sided and not very caplitalistic to me.

 

A person's economic situation ceases to exist once they file for bankruptcy...they are basically at zero...they can either get back into the game or stay out of the game. It doesn't make much sense regarding this thread to try to compare business and people?

Yes I am opposed to market pressure forced by government with the sole intent to raise wages or punish companies. I do not want government meddling in the economy.

Bottom line is no matter what you think about how much a company spends on wages, or what all consumers think about a company's wages, the business must control costs below income...this is not negotiable! If government forces costs to increase and the income cannot be increased, then the business closes the doors. If the business can increase income to offset higher costs then you have created inflation and reduced US competitiveness.

As I stated in a previous post; approximately 75 million American workers earn less than the median wage and are candidates for government subsidy. This means tens of thousands of businesses across the USA have workers accepting government assistance. If tens of thousands of businesses have government welfare workers, then why should you care about Walmart or any particular company?

 

It does because capitalism is about enterprise which includes employers and employees. While a person can have past debt discharged they still have to pay for current and future expenditures. A business can simply close the doors and go out of business and end all financial obligations. A person cannot move out of an apartment or stop eating but a business can move out of it's rented facitilies and stop purchasing everything. The business simply stops existing but a person cannot simply stop existing. There is a huge difference between the two.

My proposal doesn't have the sole intent of raising wages nor is it to punish companies. It is no different than the government requiring labeling of the contents of a product like food. It is exclusive about providing the consumer with "information" and what the consumer does with that information, if anything, is up to the consumer.

Let me provide a parallel analogy. Back in 2009 when health care reform was the hot topic an investigative reporter found that two hospitals just a couple of mile apart had hugely different charges ranging to over a 100% difference related to some common procedures. Finding out how much a hospital charges for typical procedures is extremely hard to research especially if a person needs those procedures immediately. I made the proposal that hospital should provide a list of the typically costs of normal procedures on their website if they have one. Provide the consumer with a means of comparing the typical charges by comparative hospitals just like we do with a TV or other product. Provide the consumer with "information" so they can choose which hospital they want to use. This information could have resulted in one of the hospitals having to cut prices which would have lowered it's "profits" based upon market pressure due to information being provided to the consumers.

My proposal is no different. Provide the "consumer" with "information" and let the consumers decide what to do. It's no different than labeling a dozen eggs as to whether they are from free ranging hens or not. Let the consumer, not the government, decide but to make that decision the consumer needs to have the information.

Why are some opposed to a mandated requirement for an enterprise to provide information that can affect the consumers purchasing decisions?

 

Look, if a business or a person closes their doors, they both are at the bottom starting from scratch. Both the business and the person can start over again if they desire. Both must put forth focused efforts and investment in their futures. Both will reap rewards if they are successful. Both can fail over and over if they are not focused. You cannot compare a person to a business??

Labeling of food has to do with food and health safety...cigarettes have been labeled for decades and people smoke today as if the labels did not exist. If someone wants detailed knowledge of a company then they can ask for this information or do their research. But they cannot ask the company to tell them personal information about their employees even if you are not exposing their names. How many of your employees are gay and lesbian? How many of your employees are Black? Which political candidates did the company contribute? What percentage of employees have a felony?

You can see where this leads. Either buy the product and services or don't but don't make these decisions based on government welfare workers or how many Blacks or how many gay and lesbian, etc...

 

Closure of a business either voluntarily or through bankruptcy ends all financial obligations but bankruptcy for the person does not. They still have their day to day "operating expenses" and often the discharge of debt by bankruptcy petition only addresses a small portion of their actual expenses.

My point being that you cannot compare bankruptcy and closure of a business enterprise with that of a person. They are completely unrelated. A person still has to spend money to survive but an enterprise that closes it's doors does not.

The intent is not to force enterprises to wage wages but instead is to provide the consumers with information that could affect their purchasing decisions. Many enterprises could actually see an increase in business because of this requirement because the people need to purchase goods and services somewhere.

It is interesting that I read an opinion article yesterday where it was noted that Walmart, that caters to low income families, is considering raising wages because the "working poor" are becoming too poor to shop at Walmart. It is starting to finally realize that Walmart employees can't afford to shop at Walmart because their wages are too low. This was the same problem that Henry Ford faced in the early 20th Century where the employees of the Ford Motor Company couldn't afford to buy a Ford so he doubled their wages.

Here is an article worth reading:

http://www.huffingtonpost.com/2014/...ture_n_4913058.html?ncid=txtlnkusaolp00000592

 

First someone wants to know how many employees receive government welfare...then they'll ask how many employees are Hispanic...then they'll ask how many are LGBT...then they'll ask how many are Black...all questioned "to provide the consumers with information that could affect their purchasing decisions". None of this works for me!

Your referenced article tells us nothing new? For decades now jobs have been broken down to their lowest single processes in order to train low-paid and low-skilled workers to perform these tasks. Millions of processes are now computerized. Robotics and automation have been more and more integrated into our jobs. And, IMO, the US has created a large culture of potential workers who have little education and no skills and simply do not qualify to rise above the lower-paid jobs and achieve more...instead of government providing quality education, and allowing rampant truancy, and allowing crime-ridden neighborhoods, and allowing ghetto conditions of large swaths of the urban areas, etc. etc. etc. government wants to take the Band-aid approach, the political approach, and just welfare everyone and meddle with the private economy.

Pretending that Walmart would ever significantly and arbitrarily increase their wages, would also imply all businesses would increase their wages accordingly...and IMO this would be the worst possible welfare move ever...