Friday, May 31, 2013

On The Minimum Wage

I'm blogging from an Irish pub in downtown San Diego on my phone. Been working the Catholic Charities food resource center today.

So Juan came in this morning. Salt of the Earth fellow. Hadn't worked in 6 months. That depressed him severely. He was about 45 years old.

He spoke halting English, had an IQ of about 90. No appreciable skills. Was looking for unskilled work. The kind of guy you'd love to sit and watch the game with. I loved him immediately.

It's doubtful that his labor could create enough value to cover minimum wage plus benefits plus labor regulations.

Was he better off unemployed and coming to us for food than he would have been earning, say, $6 an hour?


tim eisele said...

The problem is, I'm not sure it would help that much.

Your classic unskilled labor is to hand a man a shovel and have him dig. Or, you can hire a man with a backhoe for about $100/hour. In that hour, he can easily move more dirt than 100 men with shovels, so the guys with shovels would have to work for something like $1 an hour to be competitive. And even if they'd work for that little, given a choice I'd still hire the backhoe guy, because I don't want to deal with a small army of guys with shovels. And running a backhoe is a skilled trade, you can't just hire somebody for $5 an hour and plunk him in the seat.

Machines are cheap, capable, and often work so much faster and better than an unskilled worker that it isn't worth hiring him even if his labor is practically free. And the number of jobs that a random unskilled laborer off the street can do, but that a machine+skilled laborer can't do at least 5 times better, is getting smaller all the time. Lowering the minimum wage isn't going to change that.

K T Cat said...

I'm sure that technology has wiped out many jobs. It always does. However, it defies logic to suggest that lowering the cost of labor wouldn't result in more jobs.

B-Daddy said...

There are plenty of entry level jobs that can't be done by machines (yet). My youngest son is on his first job as a bagger/checker where he gets paid minimum wage and has to give back some of that to the union go figure. But the job can't be done by machines.

When I told my son that the California legislature was considering raising the minimum wage, he was upset. He was worried he would lose his job, since he was the most recently hired and he knew that his grocer employer had to limit wage costs to retain customers and still be profitable.

Lowering the minimum wage will open up jobs somewhere in the economy. The least we could do is not to raise it.