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View Diary: How to get people out of the cycle of poverty? (48 comments)

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  •  Beginning With the New Deal We Ensured That (9+ / 0-)

    all forms of work paid better. We didn't create the middle class with education we created it with good-paying bluecollar jobs. And we tore it down again by opening up our bluecollar sector to slave-wage foreign competition.

    We do need to restore our poverty programs to their pre-Clinton ability to lift people out of poverty, but that can't suffice until there's a thriving lower income economy they can use to keep climbing on their own.

    Presently both parties oppose such an economy.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Fri Aug 23, 2013 at 06:43:38 AM PDT

    •  Well, there are two different questions. (2+ / 0-)
      Recommended by:
      FloridaSNMOM, VClib

      What you answered at the end is the question:  What level of support should we provide to people who are unable to support themselves?  That's a question to be answered with prices and numbers -- at what level do we provide support -- i.e., what amount does it take to live in this country?  

      The much more difficult question -- and the question over which very smart economists can, in good faith, disagree -- is this:  how do we reduce the number of people,  as a percentage of our working-age population, who rely on these programs?  That's the central question, it seems to me.  "Lifting someone out of poverty," in my view, means (assuming that they are capable of working -- i.e., they are not severely disabled) putting people in a situation where they can provide for themselves without government assistance. Government assistance does not "lift people out of poverty" in the sense of not making them poor any longer.  It provides a level of sustenance for those who are poor, but it is not a way for them to escape being poor.  

      How do we reduce the number of working-age people who need to rely on government assistance?  That's the central question. And it's a far, far more difficult and complex question to anwer.

      •  It's not difficult. It's not complex. It's not (3+ / 0-)

        hard to answer.

        It's a 15 dollar an hour minimum wage phased in over the next five years.

        BTW - it fixes most of the projected SS shortfall, and extends Medicaid and Medicare both by years.

        It generates tens of billions in tax revenue when profits get paid in hourly wages to people without offshore accounts, instead of being paid out in barely taxed capital gains.

        It works.  All it takes is the will.

        Mr. Universe is a known degenerate Robotophile, and his sources include former Browncoat Traitors. What is their agenda in leaking top secret information about the Reavers and endangering us all?

        by JesseCW on Fri Aug 23, 2013 at 08:00:10 AM PDT

        [ Parent ]

        •  Not that simple - not an answer. (1+ / 0-)
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          While I agree that a small increase in the minimum wage would not do severe damage to the employment rate, a doubling of the cost of employees certainly WOULD cut down on hiring.  

          By way of example, a typical fast food franchise owner may operate at a 5-6% net profit margin, with employees being perhaps 1/3 of his costs. If you double his employee cost, that's perhaps a 15% increase in his overall cost of doing business. Either he's going to have to severely cut back the number of employees, or go out of business.  

          And the price he can charge for his product is a function of supply and demand -- and when increasing prices means decreasing sales. If a business owner could charge 15% more for his product and not lose any sales, he'd do that NOW.   Businesses put a great deal of effort into finding the highest amount they can charge for their product or services without losing volume.

          I agree that a smaller increase in the minimum wage would mean only marginal changes in employment and certainly is something that is do-able.

          But even an increase in minimum wage does not provide jobs for those people on government assistance who do not have jobs.  And making it MORE expensive for an employer to hire an unskilled worker generally makes it LESS likely than an employer will hire an unskilled worker.  An increase in the minimum wage -- alone -- is not any kind of solution.  The solution has to be much more than just that.  

          •  Then how can McDonald's in Australia (4+ / 0-)
            Recommended by:
            FloridaSNMOM, Tonedevil, JesseCW, Ralphdog

            pay their workers so much more and the costs for a burger don't go up by much at all? Their minimum wage is twice ours.

            There are other examples of fast-food franchises in other countries who pay their employees a living wage because the country demands it. Their burgers aren't twice the price.

            Americans just aren't willing to force their businesses to pay fair wages, because Freedom...or something.

            "The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug." -- Mark Twain

            by Brooke In Seattle on Fri Aug 23, 2013 at 08:21:53 AM PDT

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            •  It's going to depend on the individual business (1+ / 0-)
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              each fast food franchise is an individual business.  When I say the average net profit margin is, say, 5-6%, that means some may make 15% and some make squeak by on 2%.  

              Also, it's going to depend on where the business is located. Upping your burger cost from say $3.50 to $4 might be less damaging to sales in some areas of the country, or even in some neighborhoods than in others.

              We can make a choice to make a huge increase in the minimum wage.  But we need to be realistic that such a huge increase -- like to $15 -- is certainly going to result in fewer minimum wage jobs.  I don't know of any serious economist who doesn't recognize that a HUGE increase in the minimum wage will cost jobs.  Even  economists who advocate for increases in the minimum wage are advocating for much smaller increases -- increases that will not cost employers all that much.  For example, this one cited by Krugman  

              The report reviews evidence on eleven possible adjustments to minimum-wage increases that may help to explain why the measured employment effects are so consistently small. The strongest evidence suggests that the most important channels of adjustment are: reductions in labor turnover; improvements in organizational efficiency; reductions in wages of higher earners ("wage compression"); and small price increases.

              Given the relatively small cost to employers of modest increases in the minimum wage, these adjustment mechanisms appear to be more than sufficient to avoid employment losses, even for employers with a large share of low-wage workers.

              Of course, there's a lot of disagreement among economists about what exactly the right level of increase is before the benefits to employment turn into a hit on employment.  But even those who argue that increases in the minimum wage do not hurt employment levels make clear they are talking about "modest" increases that mean "relatively small cost to employers."  

              I know of no well-respected economist who thinks a huge increase in minimum wage won't hurt employment for unskilled workers.

              •  Of course, with a minimum wage increase (1+ / 0-)
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                a .50 increase in burger cost is going to be much more affordable for those buying them as well.

                "Madness! Total and complete madness! This never would've happened if the humans hadn't started fighting one another!" Londo Mollari

                by FloridaSNMOM on Fri Aug 23, 2013 at 09:10:32 AM PDT

                [ Parent ]

                •  With a minimum wage increase, a nice big (1+ / 0-)
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                  spaghetti dinner at a family owned corner restaurant  with cloth napkins is going to be much more affordable for the people making minimum wage.

                  I wouldn't be surprised at all if, over a few years, a minimum wage increased caused fast food sales to slump.

                  But, me, I'd see that as a feature and not a bug.

                  Mr. Universe is a known degenerate Robotophile, and his sources include former Browncoat Traitors. What is their agenda in leaking top secret information about the Reavers and endangering us all?

                  by JesseCW on Fri Aug 23, 2013 at 09:25:58 AM PDT

                  [ Parent ]

              •  It's never happened. Ever. (1+ / 0-)
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                We've never seen jobs decline due to a minimum wage hike.

                That's why there's "a lot of disagreement".  It's a theoretical phenomenon that's never been observed in the real world.

                Mr. Universe is a known degenerate Robotophile, and his sources include former Browncoat Traitors. What is their agenda in leaking top secret information about the Reavers and endangering us all?

                by JesseCW on Fri Aug 23, 2013 at 09:24:25 AM PDT

                [ Parent ]

                •  Loss of jobs from a higher min wage are rarely (1+ / 0-)
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                  seen as the changes are small, and they are discussed over an extended period of time, so there is not a sharp before and after line as business makes adjustments well before the change goes into effect.

                  Few would expect no employment change if min wage was increased to $50/hr from current levels.

                  The most important way to protect the environment is not to have more than one child.

                  by nextstep on Fri Aug 23, 2013 at 11:06:02 AM PDT

                  [ Parent ]

                •  Jesse - we have never doubled the minimum (0+ / 0-)

                  wage in one step. The reason that increases in the minimum wage have not been disruptive is that they have been modest.

                  "let's talk about that"

                  by VClib on Fri Aug 23, 2013 at 08:24:14 PM PDT

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              •  Different Min Wages depending upon local cost of (2+ / 0-)
                Recommended by:
                coffeetalk, VClib


                Many of the highest cost of living places in the country have Democrats dominating government.  In these places, they should increase their min wage to reflect their higher cost of living.

                To match the standard of living from $7.25/hr in Tulsa, one would need to make about $15/hr in New York City.  A single min wage across the country makes little sense.

                The drive for higher minimum wages should come from local government.

                The most important way to protect the environment is not to have more than one child.

                by nextstep on Fri Aug 23, 2013 at 11:01:37 AM PDT

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          •  It's that simple. It's not "an" answer, it's (1+ / 0-)
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            the answer.

            You're being very mislead in in ignoring that one of the biggest costs for a franchisee is the fees they've got to hand over to the mother corporation.  These fees are not somehow immune from market forces.

            If the cost of labor goes up, the profit margin for McDonalds Inc. will have to take a hit.

            Employees aren't luxuries.  The franchisee can't cut back workers without longer wait times that will drive customers elsewhere.  It's not a viable option.

            From start to finish, your entire argument presumes that "Decreasing Corporate Profits" is an impossible outcome.

            Taking money out of the hands of mega millionaires and putting it in the hands of working people creates jobs, and does so quickly.

            They go to barbershop every four weeks instead of every six.  They have money to go to a movie, and they hire a sitter when they do.  They have money to buy a bike, and money to pay a guy at the bike shop to work on it.

            All that cash being taken from the .01% and given back to the bottom 80% who are struggling daily not just to make ends meet but to restrain their justified rage?

            That makes a functional economy, and it creates jobs.

            Mr. Universe is a known degenerate Robotophile, and his sources include former Browncoat Traitors. What is their agenda in leaking top secret information about the Reavers and endangering us all?

            by JesseCW on Fri Aug 23, 2013 at 09:22:25 AM PDT

            [ Parent ]

            •  Sigh. Read papers by respected (1+ / 0-)
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              economists.  Even economists who advocate for minimum wage increases recognize that, if you don't want to hurt employment levels, you are talking about "modest" increases that don't significantly increase employer costs.  See for example here.  

              And anyone who tells business, "well, you just won't make much profit" doesn't understand business.  The purpose of business is to make a profit.  If your profit margins get too low, you either do whatever is necessary to increase them (you figure out how to change your business model to cut expenses and increase revenue), or you close, and put that investment money into a vehicle that does generate a sufficient profit.  If the profit margins for a particular McD's franchise (the franchise owners employ the workers in the restaurant, not McD's corporate) gets too low, that franchise either changes to cut expenses and increase revenue, or it closes and the people lose their jobs. It's that simple.

              Any solution that relies on "business just won't make much profit" completely unrealistic and would only be advocated by someone who does not understand running a business.

              •  Right. Because no one wants to make the kind (1+ / 0-)
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                of profits McDonalds makes in Australia.

                They'd close their doors first.  Which is why they're opening a new location every 37 days in Australia.

                If McDonalds has to lower franchise fees to stay in business, they'll do so.  They won't be the first company to ever do so.

                Your imaginary capitalist who goes Galt at the site of single digit profits is a hilarious construct worthy of Ayn Rand, but not of serious discussion.

                Mr. Universe is a known degenerate Robotophile, and his sources include former Browncoat Traitors. What is their agenda in leaking top secret information about the Reavers and endangering us all?

                by JesseCW on Fri Aug 23, 2013 at 09:55:01 AM PDT

                [ Parent ]

                •  Really? So if you know so much about (3+ / 0-)
                  Recommended by:
                  Pi Li, VClib, andalusi

                  Australia, tell me what are their average total costs per employee? I'm not talking about the wages because that is only PART of the cost of an employee.  What are the employer's total costs per minimum wage of employee?  And what percentage do employee costs make up of total expenses in a typical McD's franchise in Australia?  And what is the tax burden on such a franchise?  And what is the cost of physical set up -- the building, the utilities -- and the cost of the raw material for the product in a typical Australia franchise?  

                  And that's only on the expense side of the profitability equation.  I'm sure you can tell us all about the revenue side, and how that compares to the typical U.S. franchise, as well.  

                  Because since you are using a McD's salary in Australia to discuss the profitability of a McD's franchise in America, surely you know all those OTHER things that bear on profitability as well.  

                •  Jesse - what are McDonalds profits in Austrialia? (0+ / 0-)

                  "let's talk about that"

                  by VClib on Fri Aug 23, 2013 at 08:15:35 PM PDT

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            •  Jesse - the fees paid to the parent are very (0+ / 0-)

              sensitive to the market. McDonalds competes with all the other major fast food franchisors for locations and franchisees. The franchise agreement offered by McDonalds has to be competitive with the other fast food providers or franchisees won't sign up with them.

              I have no idea what the franchise agreements look like in Australia, or how they compare to the US. It's possible the franchise operators have a more favorable deal in Australia to take into account their higher labor costs. I know that in the US those cities that have higher minimum wage laws those costs are passed through in higher prices than the national norms. You will hear that in the commercials for these fast food companies, that some areas don't participate in national pricing.

              "let's talk about that"

              by VClib on Fri Aug 23, 2013 at 08:35:46 PM PDT

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        •  Jesse - business profits aren't taxed as (0+ / 0-)

          capital gains. Business profits only turn into capital gains for the owners when the profits increase the value of the equity and then that equity is actually sold. Business profits are taxed depending on how the corporation is organized, but for the typical McDonalds franchise owner at 25-35%. The only time a franchise owner can realize a capital gain is when they sell the franchise.

          "let's talk about that"

          by VClib on Fri Aug 23, 2013 at 08:21:45 PM PDT

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      •  No, that's the wrong question! (1+ / 0-)
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        We now have tens of millions of Americans working full time, often at two different jobs, and they are still one paycheck from eviction and repossession.

        The real question is, when will we see that the corporate stranglehold on wage scales and the obscene disparity between executive and working class pay are destroying the middle class and leading the entire nation down an economic black hole?

        •  Ralph there are only a few ways to change (0+ / 0-)

          The most powerful way is a better supply/demand balance for labor. However, with such persistent high unemployment employers have much more leverage in negotiating wages. Raising the national minimum wage is another method, and we should increase and index the minimum wage. The third is a more favorable climate for unions.

          "let's talk about that"

          by VClib on Fri Aug 23, 2013 at 08:39:16 PM PDT

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      •  Minimum wage, union rights, (0+ / 0-)

        real investment in public education, child care, public transportation from where the poor live—None of this is rocket science. The problem is one of political will, where the opponents pretend that effective programs cost more than poverty, ill health, crime, and the rest, but the actual motivation for most is racism, bigotry, and misogyny.

        Those who object to the cost of dealing with poverty must explain why they don't mind our astounding and absurd expenditures on prisons and the War on Druggies; why they don't mind paying taxes to fund Food Stamps for Walmart clerks on minimum wage; why they don't mind Emergency Rooms closing down nationwide under the pressure of providing mandatory but unreimbursed services.

        Ceterem censeo, gerrymandra delenda est

        by Mokurai on Fri Aug 23, 2013 at 04:42:18 PM PDT

        [ Parent ]

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