Working poverty in Canada

May 1, 2006 10:34 AM

Maid for a Month. On February 1, Ontario raised its minimum wage from $7.45 to $7.75 per hour. Well-known Toronto Globe and Mail writer Jan Wong: "I thought the best way to tell the story of that 30-cent raise was to work — and live — at the bottom of the food chain. I would find a low-paying job, a low-rent apartment and, single-mom-like, take my boys with me for the month and see how we survived."
posted by russilwvong (151 comments total)

I read most of the series in the dead-tree edition. Good writing; Wong is an amazing journalist. Too bad she no longer does lunch.
posted by GuyZero at 10:36 AM on May 1, 2006

Wow, what a novel idea.


But still you'll never get it right,
cos when you're laid in bed at night,
watching roaches climb the wall,
if you call your Dad he could stop it all.


PS: Raising the minimum wage does nothing.
posted by keswick at 10:38 AM on May 1, 2006

So, it's the Canadian version of Morgan Spurlock and his "30 Days" show.

Or is there something special that I missed about this one?
posted by drstein at 10:39 AM on May 1, 2006

Judging from how popular nickle and dimed was it seems some people like a tourist.
posted by I Foody at 10:39 AM on May 1, 2006

Nickel and Dimed.
posted by bigmusic at 10:41 AM on May 1, 2006

Also caught the paper editions. I had been surprised to find out that Wong was a standout as a visible minority. I had assumed that she would blend right in, but in fact, the majority of people in these positions are undereducated local-born. I seem to remember one coworker telling Wong "Immigrants are too determined to settle for this." Thought she spent a little long on the first issue with the "we SEE you" thing, but the later stuff on treatment by and expectations of clients, issues of self-respect, and just what extra effort and cost it takes to do the job was fascinating.
posted by dreamsign at 10:43 AM on May 1, 2006

At the end of the series, Wong asks a provincial minister why the Ontario government doesn't raise the minimum wage. Anyone interested in helping the working poor should take a serious look at the US's Earned Income Tax Credit, which transfers money directly to the working poor, in the form of a refundable tax credit (like the GST tax credit in Canada).

The problem with just raising the minimum wage is that it's likely to make it harder for unskilled workers to find a job in the first place. For example, if maid services pay higher wages, they'll raise their prices, and that'll reduce the number of people willing to pay to have someone else clean their house.

Wong mentions Ehrenreich's book in her third article.
posted by russilwvong at 10:45 AM on May 1, 2006

Am I the only person in the world who thinks Jan Wong is a tad overrated? Having read Nickeled and Dimed, this series struck me as a pale imitation. Did it really take her 3 weeks to realize she stole someone else's bit, 10 years too late?

I thought it was hillarious to read the last part of her series in the Globe on the same day that the Viswanathan story broke.
posted by drmarcj at 10:52 AM on May 1, 2006

PS: Raising the minimum wage does nothing.

Well, except for raising people's wages.
posted by octothorpe at 10:54 AM on May 1, 2006

The problem with just raising the minimum wage is that it's likely to make it harder for unskilled workers to find a job in the first place.

This is what the cheap labor conservatives always say, and I seriously doubt it. Where is the proof? Show me places where raising the minimum wage had a direct effect on the unemployment rate.

If you have to pay your maids/fast food workers/gardeners $1 more an hour, is that really going to affect your hiring? You'll still need those people, because presumably, the demand hasn't gone away. You'll just make a bit less money.
posted by Afroblanco at 10:54 AM on May 1, 2006

The problem with just raising the minimum wage is that it's likely to make it harder for unskilled workers to find a job in the first place. For example, if maid services pay higher wages, they'll raise their prices, and that'll reduce the number of people willing to pay to have someone else clean their house.

Alternatively, it'll put more money in the pockets of the least well off which is likely to be spent in the local economy, creating more jobs. UK minimum wage is now 5.05 UKP/hour - over 9 USD at the current exchange rate. There were all kinds of predictions from the CBI etc that the introduction of the minimum wage in 1999 (at a much lower rate) would cause a huge increase in unemployment but so far there is no evidence of this at all.
posted by teleskiving at 10:57 AM on May 1, 2006

PS: Raising the minimum wage does nothing.

i saw it on mefi so it's gotta be true.
posted by wakko at 11:00 AM on May 1, 2006

Employers calculate how much it will cost to pay their employees. If they have to pay, say, $8 an hour instead of $7, because of a raise in the minimum wage, then, instead of hiring, say, 10 workers which they would pay $70 an hour under the old wage law, they might only hire 9 workers at a cost of $72 under the new wage law. If you aggregate this across the entire economy you can see how it would result in fewer jobs available. Conversely, if each individual employee is cheaper, it encourages employers to hire more.

Employers largely operate on a cost-benefit system. They don't care about giving people a fair shake. They just do what they can afford to do and still turn a profit.
posted by fugitivefromchaingang at 11:01 AM on May 1, 2006

PS: Raising the minimum wage does nothing.

But raising the salaries of congresspersons has been a quality, high-yield incentive for my government to work better (speaking as a USian). FEMA too--those six-figure salaries prevented New Orleans from being underwater and bodies being devoured by stray dogs and birds. Don't get me started on 9/11--those high salaries at the CIA, FBI, and NSA prevented the deaths of 3,000 innocent civilians

What bullshit. What classless, contemptible bullshit to heap further scorn upon the working poor, and then to tell them it's for their own good.

Honestly keswick, couldn't you just go see a shrink rather than spew your bile on mefi?
posted by bardic at 11:06 AM on May 1, 2006

They don't care about giving people a fair shake. They just do what they can afford to do and still turn a profit.

Now that I see it explained so logically, it must make the practice OK.
posted by sourwookie at 11:06 AM on May 1, 2006

you know, we've done an awful lot of drastic things to our economy lately. tax cuts, rebates, changes in allocation of federal funding, the whole lot.

so, why is it that conservatives always seem to balk at changing minimum wage? with all the snap decisions this administration has made lately, why is something tiny, like bumping the minimum wage up 50 cents an hour, always shot down?
posted by wakko at 11:06 AM on May 1, 2006

Having read Nickeled and Dimed, this series struck me as a pale imitation.

Canada and the US aren't the same. I think Wong's series is useful as evidence that the difficulties of the working poor are not confined to the United States, even though we have universal health care and more generous anti-poverty programs in Canada.

Brad DeLong on the minimum wageand the EITC.
posted by russilwvong at 11:07 AM on May 1, 2006

(i have my own guesses and they basically amount to hatred)
posted by wakko at 11:07 AM on May 1, 2006

Instead of raising the minimum wage why don't we have a Maximum Wage law?
posted by DragonBoy at 11:08 AM on May 1, 2006

keswick, what a bizarre association of ideas you came up with. You are quoting a pop song that mocked a certain "poor is cool" pretentious tourist attitude. Here you have a Spurlock-like report on the poor working conditions of cleaners. Where exactly do you see any similarity?
posted by funambulist at 11:09 AM on May 1, 2006

If they have to pay, say, $8 an hour instead of $7, because of a raise in the minimum wage, then, instead of hiring, say, 10 workers which they would pay $70 an hour under the old wage law, they might only hire 9 workers at a cost of $72 under the new wage law. If you aggregate this across the entire economy you can see how it would result in fewer jobs available. Conversely, if each individual employee is cheaper, it encourages employers to hire more.

That's a lot of 'mights.' As others have pointed out, though, actual real-world data doesn't seem to back up your assertion. On the other hand, ideas like 'lowering taxes will reduce the government's income' are borne out by historical realities.

Those two issues are interesting example of political dogma being more important than economic reality to those currently making decisions about our nation's future. Kind of depressing, really.
posted by verb at 11:15 AM on May 1, 2006

You'll just make a bit less money.

No. You raise the price of your product.

We simplify the issue with talking about "minimum" wages. It's in the gradual inflation that raises cost of living that is the problem. You raise wages artificially and the cost of living goes up. you do it again. It goes up.

Look at the housing market on the coasts of the US. $8 an hour? Fuck. $15 an hour? It won't matter. You're not buying a house.

It would be far more productive to subsidize housing - and NOT by creating ghettos and slums, rather by mixed use neighborhoods in upper tax bracket areas. You would be better served by subsidizing food staples, transportation and healthcare etc.

Now sure. That means raising taxes. But at least income taxes are more progressive and eventually the buyer can choose what he needs from what he wants. As it stands we are appraoching the point that what we NEED is out of reach and are goiing in to masssive debt for it.

Mandating minimum wages won't help with that at all.
posted by tkchrist at 11:18 AM on May 1, 2006

An increase in the minimum wage often leads to a reduction of hours, to the point where there is no discernable benefit to the employee.
In fact, it's often quite damaging for serving staff, who are in it more for the tips than the actual wage.
Less hours=less tips.
posted by Alvy Ampersand at 11:19 AM on May 1, 2006

sourwookie: Now that I see it explained so logically, it must make the practice OK.

George Washington: "A small knowledge of human nature will convince us, that, with far the greatest part of mankind, interest is the governing principle; and that almost every man is more or less, under its influence. Motives of public virtue may for a time, or in particular instances, actuate men to the observance of a conduct purely disinterested; but they are not of themselves sufficient to produce persevering conformity to the refined dictates and obligations of social duty. Few men are capable of making a continual sacrifice of all views of private interest, or advantage, to the common good. It is vain to exclaim against the depravity of human nature on this account; the fact is so, the experience of every age and nation has proved it and we must in a great measure, change the constitution of man, before we can make it otherwise. No institution, not built on the presumptive truth of these maxims can succeed."

verb: That's a lot of 'mights.'

It's basic economics: as prices rise, demand falls. But because the US minimum wage is so low, DeLong suggests that the effect on unemployment will also be low: "... ask U.S. economists today about the effects of a small marginal increase in the minimum wage, and the answer you will get is that a 10% boost to the minimum wage will reduce employment among affected workers by 0.5% to 1.0%--a loss of employment opportunities that is small relative to the boost in earnings received by those low-wage workers who remain employed."
posted by russilwvong at 11:19 AM on May 1, 2006

In fact, it's often quite damaging for serving staff, who are in it more for the tips than the actual wage.

i thought minimum wage for serving staff was set differently, and was significantly lower than normal minimum wage.
posted by wakko at 11:21 AM on May 1, 2006

From the Brad DeLong article that russilwvong linked to:
"For Robert Reich--I dare say for Tony Blair--the minimum wage is a way of pledging allegiance to social democratic values. It is a symbolic statement that the U.S. Democratic Party and the British Labour Party think that you are worth something, even if your market wage is low. It is, in a sense, a gesture of chivalry."

I don't think it's a good idea to use economic policy to make symbolic statements.
posted by fugitivefromchaingang at 11:21 AM on May 1, 2006

When I announced I was going to be a maid, my housekeeper laughed her head off. After all, I've never lifted a finger. I hadn't cleaned a toilet in, hmm, 20 years. Recently, I had to phone her to ask where we keep the iron, because the man renovating our basement needed it to put finishing touches on some shelving.

It's funny because she used to be a communist and and even turned in a fellow student when she was living in China. Jerry Rubin's got nothing on her!
posted by Mayor Curley at 11:21 AM on May 1, 2006

Being poor sucks but its an unavoidable fact of life that some in society will always be poor. The best thing we've done and should continue to do is ensure our less fortunate still have an OK quality of life. Many of our poor lead happy lives, while being poor in places like China or Indonesia is practically a life of torture leading up to death.

If we want to help our poor, I think there's 3 things we should do:

1) Eliminate or reduce the payroll tax. Forget about what this does to rich people. Poor folks legitimately need this money.

2) Keep public education free and strive to increase its quality

3) Teach our youth that being poor sucks, and the decisions they make could ultimately lead to a life of poverty.

It's a sad fact that nobody wants to admit: 50% of us are below average.
posted by b_thinky at 11:24 AM on May 1, 2006

Wakko: Depends on where you are; here in Manitoba, serving staff get the same minimum wage as everyone else($7.60, if memory serves).
The practice of paying servers a reduced minimum is appalling, IMO.
posted by Alvy Ampersand at 11:24 AM on May 1, 2006

Raising the minimum wage does compensate for the slide in real buying power a set amount of money has when you take into account inflation.

However, it also readjusts the bottom of the scale and therefore increases inflation. It's really not much of a useful thing in the long run for any sort of active economic control -- it's something that needs to be done, but it doesn't really mean much.

When you're sad about poverty, what you need to do is make what they have go further, not shovel money downward. Widen the lowest tax bracket, add credits for things, tax more at the highest bracket to compensate, etc. Make some things free. (Like I dunno, child care and medicine and university.) You have to give people power, not bigger numbers of dollars.

Not that I think raising the minimum wage is a bad thing, it's just kind of a pointless thing to argue about.
posted by blacklite at 11:25 AM on May 1, 2006

Teach our youth that being poor sucks, and the decisions they make could ultimately lead to a life of poverty.

Absolutely. But this will not happen because it will be seen as kicking already-poor people when they are down, or blaming the victim, etc. It's really hard to do--communicate that not all poor people are poor because of their own bad choices, but that bad choices often do lead to poverty.
posted by fugitivefromchaingang at 11:28 AM on May 1, 2006

Employers calculate how much it will cost to pay their employees. If they have to pay, say, $8 an hour instead of $7, because of a raise in the minimum wage, then, instead of hiring, say, 10 workers which they would pay $70 an hour under the old wage law, they might only hire 9 workers at a cost of $72 under the new wage law. If you aggregate this across the entire economy you can see how it would result in fewer jobs available. Conversely, if each individual employee is cheaper, it encourages employers to hire more.


To me, this argument assumes that companies keep extra people on the payroll for the heck of it. If the minimum wage is raised, then these benevolent companies will apparently reduce their labor force to the amount they really need. I think that companies keep their labor costs as low as they possibly can. I imagine that the bulk of the "damage" caused by increasing the minimum wage would be a decrease in the profits of business owners.

And maybe I am wrong. But raising the minimum wage has (to my knowledge) caused no economic collapse in the past. So what is the possible harm in raising the minimum wage? If it looks like it is destroying the economy, then they can simply roll it back. People seemed to like that idea when it came to those "temporary" tax cuts a few years back.
posted by flarbuse at 11:28 AM on May 1, 2006

Robert Reich calls for another increase in the minimum wage--the last increase (in 1996) has been wiped out by inflation.

flarbuse: To me, this argument assumes that companies keep extra people on the payroll for the heck of it. If the minimum wage is raised, then these benevolent companies will apparently reduce their labor force to the amount they really need.

No, that's not the argument.

Think of the maid service. If Wong is correct in saying that her employer doesn't have a lot of excess profits, he would respond to an increase in wages by raising his prices. This would lead to a fall in demand: people don't have to hire cleaners to clean their houses, they can clean it themselves. With higher prices, some people would clean their own houses instead of paying for a cleaner. So the total number of paid cleaning jobs would go down.

Again, in the US, economists appear to believe that this effect would be small, because the minimum wage is currently so low.
posted by russilwvong at 11:34 AM on May 1, 2006

50% of us are below average.

Who makes up what's average, man? And people below this arbitrary average have more children more likely do be doomed to be below average. They have more seniors decaying on medicare we pay for. More criminals rotting in prison we pay for.

We pay for it in one way or another. I'd like to pay for it by being compassionate rather than greedy.

The problem is nearly everybody wants a pimped out $40,000 car. Everybody wants a 4000 sq ft. crib. And if you don't don't your a loser. So what we do is to go into debt. What we do is become blindly greedy that we convince our selves this is what we need. We scramble to get every minimum credit card payment to afford useless shit so then we vote down the $6 per year boost in education levies and tax increases we actually DO need to make that payment.
posted by tkchrist at 11:37 AM on May 1, 2006

(sarcasm) doesn't anyone on this board understand the intelligent design of the invisible hand? (/sarcasm)
posted by pyramid termite at 11:37 AM on May 1, 2006

The real world data is that raising the minimum wage doesn't hurt employment at all. Putting money in the hands of the people most likely to spend it has a stimulus effect, resulting in more jobs being created. Additionally, few people are actually paid the minimum wage - people such as the maids in the story are in no danger of losing their jobs, because they're already making over the minimum wage.

Probably if you raised the minimum wage to $50/hour, there would be detrimental effects on employment. But in the ranges that are politically possible, there's no detrimental effect to be shown.

There's some sort of manufactured truthiness put out by the Republican fat cats that says that raising the minimum wage will immediately result in massive layoffs, even though the minimum wage has been raised repeatedly and massive layoffs have never occurred. That doesn't change the truthiness though - people want it to be true, so it is true.

If minimum wage went up as fast as CEO pay, just since 1990, it would be at $23/hour currently. Here's a question: in the last 16 years, has the average CEO gotten that much better over the average worker? Or is it more likely that the average CEO and average worker have remained in rough parity with each other, and the CEO has just managed to finagle himself a larger share of the pie?
posted by jellicle at 11:41 AM on May 1, 2006

Robert Reich calls for another increase in the minimum wage--the last increase (in 1996) has been wiped out by inflation.

And what contributed to that rise in inflation? Energy costs. Debt. Labor costs. Etc.
posted by tkchrist at 11:47 AM on May 1, 2006

Years ago, a man dyed his skin and lived in theAmerican South as a Black and then, research done, he wrote his book Black Like Me. The problem with this as with all this sort of living like others stuff is that you know there is an end when you want it to end. Thus, the guy experiencing prison; the lady experiencing welfare, the college president (yes!) working a garbage truck for a year--all have the reprieve, the fact that what they do is but temporary. But if you are on welfare, lving on a low-wage job, serving a 20 year term in jail then HOPE is gone and DESPAIR becomes a part of your life. Not to get snippy, but that is why we have divorces too.
posted by Postroad at 11:48 AM on May 1, 2006

I did "lunch" with Wong once -- but I was the interviewer, she the subject, during the junket for her well-regarded "Red China Blues" book. We ate at a famous Mtl resto; she had osso bucco. She was nice, if bossy. It was the most uncomfortable meal of my life.
posted by docgonzo at 11:49 AM on May 1, 2006

The problem is nearly everybody wants a pimped out $40,000 car. Everybody wants a 4000 sq ft. crib. And if you don't don't your a loser. So what we do is to go into debt. What we do is become blindly greedy that we convince our selves this is what we need. We scramble to get every minimum credit card payment to afford useless shit so then we vote down the $6 per year boost in education levies and tax increases we actually DO need to make that payment.

The sad thing is that if we were able to convince a lot of people that all this stuff is bullshit, then all the many, many Americans who make their living producing, marketing, and selling this stuff would be out of a job.
posted by fugitivefromchaingang at 11:52 AM on May 1, 2006

flarbuse : "I think that companies keep their labor costs as low as they possibly can. I imagine that the bulk of the 'damage' caused by increasing the minimum wage would be a decrease in the profits of business owners."

Ditto. The "9 employees instead of 10 employees" example seems to imply "If we keep minimum wages low, companies will be nice and hire employees they don't really need. If we raise minimum wage, they will suddenly become meanies and fire those employees". No, companies are companies, they do what economically makes sense. If they have 10 employees now, it's generally because they need 10 employees. Raising the minimum wage will not magically decrease their labour needs.
posted by Bugbread at 11:53 AM on May 1, 2006

Whoops, russilwvong, missed your maid example. In that case, I can see the decrease in labour usage.
posted by Bugbread at 11:57 AM on May 1, 2006

The "9 employees instead of 10 employees" example seems to imply "If we keep minimum wages low, companies will be nice and hire employees they don't really need. If we raise minimum wage, they will suddenly become meanies and fire those employees". No, companies are companies, they do what economically makes sense. If they have 10 employees now, it's generally because they need 10 employees. Raising the minimum wage will not magically decrease their labour needs.

It's not that simple. If hiring an extra employee will bring in certain benefits (such as faster response time for the company or an ability to start making or selling a new product) that will bring in more money than it will cost to pay the employee, then the company will hire the employee. However, if the employee is too expensive, the company won't. You COULD run, say, a McDonald's with a few fewer employees than it probably has on each shift, you'd just lose something in terms of the "customer experience." The idea that all companies need exactly a certain number of employees and there's no possible way it might be economically advantageous to hire more is silly.
posted by fugitivefromchaingang at 11:58 AM on May 1, 2006

"Below average" doesn't bother me.

Working my tail off and still being unable to pay for basic preventative medical and dental care bothers me.

Living on rice and beans for months at a time to save up a few thousand dollars only to have it wiped out by car repairs or medical bills bothers me.

Realizing that even a minor illness or injury means slipping behind on the bills another month because you don't get paid if you don't put in the hours bothers me.
posted by KirkJobSluder at 12:05 PM on May 1, 2006

and the CEO has just managed to finagle himself a larger share of the pie?

He got the entire pie. See the big Fortune 500 CEO has hard assets. This crude cash you foolish puny humans use is subject to all sorts of economic weakness. The CEO buys hard assets that increase in value with inflationary pressure. Not only that he gets massive amounts of public wealth that has been transferred to the private sector by friendly politicians.

However, this is misleading because not every CEO is a Fortune 500 CEO.

I just sold my share of the company my wife and another partner founded. And most businesses in the US are about our size 10-20 people. We were GREATLY affected - personally - when the local labor market wages fluctuated. We had to lay people off twice over the last four years. We had to cut wages. It was either that or go out of business and 10 other people lose their jobs. These were horrible decisions to make.

So again. The solution is a burden for the larger society to share. We need affordable living standards and healthcare. We need to stop the transfer of public wealth into private hands.
posted by tkchrist at 12:11 PM on May 1, 2006

I just finished reading Wong's 'Red China Blues' and I enjoyed it thoroughly. She's had a very interesting life in communist China. Jan Wong was also the commentator with those memorable red glasses from the recent Frontline documentary about the 'Tank Man' in Tiananmen Square.
posted by jsonic at 12:24 PM on May 1, 2006

raising wages increases the spending in an economy and helps everyone...

in 1911, Henry Ford doubled the pay for his employees... everyone thought he was mad (he was, but not for this reason) and that he would be out of business in a year...

But the result was that his employees could now afford to buy the vehicles they were making... his profits soared...

The amount of money gained in both spending and taxes (both income and sales) would far outweigh any extra burden on businesses...
posted by WhipSmart at 12:25 PM on May 1, 2006

Speaking as someone who worked minimum wage jobs for far too long, here's what happened: I made a whopping 50 cents or whatever more an hour, and promptly the prices for everything else went up. And then everyone else's wages went up because, dammit, they deserve to be paid minimum wage + X. End result? Diddly/squat.

But hey, far be it from me to let reality interfer with a feel-good plan that accomplishes nothing.
posted by keswick at 12:25 PM on May 1, 2006

CEO wages now average well over 400% of average employee wages.

Minimum wage in Alberta is $7/hr. That's roughly $14 000. Housing in Calgary averages some $200 000; impossible to afford. Average rent in Calgary is upward of $800/mo; also very difficult to afford on that wage, leaving only $400 to cover every other cost of living.

Untenable.

Meanwhile, the fatcat CEOs in the high-rise towers in Calgary are earning an average $5.6 million.

Fuck the minimum wage.

Institute a maximum wage.
posted by five fresh fish at 12:25 PM on May 1, 2006

The sad thing is that if we were able to convince a lot of people that all this stuff is bullshit, then all the many, many Americans who make their living producing, marketing, and selling this stuff would be out of a job.

Yeah. Maybe. However, it must be pointed out that almost no Americans MAKE this stuff anymore. They do market it and sell it. I am one of them. And that is not a birth-right. And secondly all this stuff COSTS more than it makes. In resources. In environmental and social problems. And third there are still capital economic models that don't over reley on rampant out of control consumerism to drive the machine.
posted by tkchrist at 12:25 PM on May 1, 2006

And third there are still capital economic models that don't over reley on rampant out of control consumerism to drive the machine.

But none of those models are doing as well as America's is, right?

You can say that we don't NEED to be doing "as well," since we use that money to buy all that crap. But I worry about how feasible it is to divorce Americans from their crap. How can it be done?
posted by fugitivefromchaingang at 12:30 PM on May 1, 2006

Keswick inadvertently mentioned one of the advantages of raising the minimum wage, that it will push up other, slightly higher wages as well.

He's of course wrongheaded in thinking that an increase in the minimum wage causes inflation when it's plain that inflation has been happening over the last decade while the minimum wage has stagnated. (if he was old enough to be working when the US last increased the minimum wage colour me surprised and a little saddened.)
posted by Space Coyote at 12:32 PM on May 1, 2006

Fuck the minimum wage.

Institute a maximum wage.
posted by five fresh fish at 12:25 PM PST on May 1 [!]

I really disagree with that type of thinking. Executives get raises because profits are up, typically meaning they're doing a good job. An executive's skillset is more rare than the average laborer. The fact is, if you don't pay your CEO a competitive salary, he'll go work somewhere else. Same is true for labor. But we have lots of labor and little executive talent.

Supply and demand.
posted by b_thinky at 12:34 PM on May 1, 2006

If they [employers] have to pay, say, $8 an hour instead of $7, because of a raise in the minimum wage, then, instead of hiring, say, 10 workers which they would pay $70 an hour under the old wage law, they might only hire 9 workers at a cost of $72 under the new wage law. - fugitivefromchaingang

That doesn't make any sense, and flarbuse does a good job of explaining why. russilwvong's arguement at least makes sense. But it overlooks the many cases in which employers require a fixed amount of labour. Example: a gas station owner needs at least one clerk there all the time that the store is open. Presumably she's running as efficiently as possible w/r/t how many hours she doles out, so she can't cut those back. Rather than eat the loss, she raises her prices to cover the increased costs (as tkchrist said).

I hear a bunch of back-and-forth about whether employers have fixed labour needs or not and the real answer is: it depends. Neither answer applies to every employer.
posted by raedyn at 12:35 PM on May 1, 2006

Speaking as someone who worked minimum wage jobs for far too long, here's what happened: I made a whopping 50 cents or whatever more an hour, and promptly the prices for everything else went up. And then everyone else's wages went up because, dammit, they deserve to be paid minimum wage + X. End result? Diddly/squat.

Yes, but you'll never convince the pie-in-the-sky types that there is no such thing as a free lunch.
posted by oaf at 12:35 PM on May 1, 2006

i thought minimum wage for serving staff was set differently, and was significantly lower than normal minimum wage. - wakko

In the states this is common. Not so in Canada, which is where this article was written.
posted by raedyn at 12:38 PM on May 1, 2006

But none of those models are doing as well as America's is, right?

Depends on how you define "as well?" The EU seems to be humming along quite well (though I believe they will have some serious problems in the Energy sector very soon).

Over all Europeans seem to do well without massive consumption. I think this may also be a product of limited space and older higher density cities with good transportation infrastructure more than other factors. Still they are going along nicely despite predictions (including my own) to the contrary.

Look, I used to be a big believer in the US model. But it is broken and not sustainable for much longer (our currency is vulnerable, our debt is insane and we have no plan B for energy). What? Maybe 20 years? It is headed for a cliff at full speed. Maybe all we can do is slow it down and prepare better for the crash and let the crash do the rest. But I think it's better we try, no?

There have to be better, more just and sustainable, ways of living.
posted by tkchrist at 12:42 PM on May 1, 2006

Over all Europeans seem to do well without massive consumption. I think this may also be a product of limited space and older higher density cities with good transportation infrastructure more than other factors.

They also drive a lot less than we do. They seem to be doing fine with gas prices that are at least double what we here in the States pay.
posted by wakko at 12:46 PM on May 1, 2006

I'm not sure the EU is doing that great. Many Europeans countries have much higher levels of unemployment than the US's. We saw what happened when the French tried to reform the "you're hired for life" laws.

Not that they have an absolutely terrible thing going. But their system(s) have flaws. Just like ours.
posted by fugitivefromchaingang at 12:47 PM on May 1, 2006

The problem with this as with all this sort of living like others stuff is that you know there is an end when you want it to end. Thus, the guy experiencing prison; the lady experiencing welfare, the college president (yes!) working a garbage truck for a year--all have the reprieve, the fact that what they do is but temporary.

That's why it's interesting when even temporary experiences result in feelings which initially strike the reporter as startling and sometimes irrational. That's why the Stanford prison experiment was so interesting. And it tells you that what's being described is only a drop in a very deep bucket.
posted by dreamsign at 12:48 PM on May 1, 2006

Executives get raises because profits are up, typically meaning they're doing a good job.

[cough] American Airlines [/cough]

Have you not been reading papers there, sparky?
posted by tkchrist at 12:48 PM on May 1, 2006

I really disagree with that type of thinking. Executives get raises because profits are up

Are you implying that there is an actual correlation between increase or decrease in a CEO's pay and the profitability of the company? Or were you expecting us to just take that as "common sense"?
posted by Space Coyote at 12:49 PM on May 1, 2006

I'm not sure the EU is doing that great. Many Europeans countries have much higher levels of unemployment than the US's.

I am sure. They do have higher unemployment. But they also have better safety nets, higher levels of education, and lower crime. Can THEY sustain this. No. But part of that problem is the energy thing. And it's OUR consumerism (and China) making that a problem for everybody.

Yeah, they are not perfect. I don't want perfect. What I want is *more* sustainable. More just. And we here, my friend, are sliding the other way fast. Our system is serving fewer and fewer people well. Keeping it as is will not hold.
posted by tkchrist at 12:54 PM on May 1, 2006

He's of course wrongheaded in thinking that an increase in the minimum wage causes inflation when it's plain that inflation has been happening over the last decade while the minimum wage has stagnated.

Increasing the minimum wage does cause prices to go up. Money is worth less. However, inflation has a number of other causes as well -- leaving the minimum wage where it is will not stop it.

Anyway, like a number of people have been saying, the problem isn't where the bottom is, it's the spread. Income disparity sucks. (really cool graph of income disparity from 1940-now, not that I know anything about the data)
posted by blacklite at 12:57 PM on May 1, 2006

The problem is nearly everybody wants a pimped out $40,000 car. Everybody wants a 4000 sq ft. crib. And if you don't don't your a loser. So what we do is to go into debt.

Reading this askmefi thread on credit card debt and several others, I do wonder wether people in the US suffer from overspend-to-avoid-looking-like-a-loser more than in the Netherlands.

Although I must say some acquaintances and colleagues of mine are quite prone to overspending on nearly unsustainably high mortgages for houses that are not worth it. Just to have that succesful feeling.
We just do not seem to use credit cards for getting a loan, it seems.

The minimum wage in the Netherlands is quite comparable it seems: 7.34 euro before taxes ($9.23), 6.30 after taxes ($7.93). Not including 80 to 90 euros for obligatory health insurance.
posted by jouke at 12:59 PM on May 1, 2006

Clearly the answer is giving CEOs more money.
posted by Smedleyman at 1:01 PM on May 1, 2006

"If they have to pay, say, $8 an hour instead of $7, because of a raise in the minimum wage, then, instead of hiring, say, 10 workers which they would pay $70 an hour under the old wage law, they might only hire 9 workers at a cost of $72 under the new wage law."

Or 10 "undocumented migrants" at $5 an hour.
posted by MikeMc at 1:07 PM on May 1, 2006

People don't know whether minimum wages increase or decrease unemployment. There are plenty of good studies that go both ways. The problem with the studies is that minimum wages tend to increase when societies are feeling comparatively well off and optimistic. Mandating changes to the wages of a small segment of the population is going to have a small impact on employment that is hard to accurately quantify.

Economists tend to agree that the minimum wage acts as a barrier to entry in the labor market. The theory that predicts this is pretty intuitive, and the fact that it is possible to conceive of cases where people aren't driven out of the labor market is irrelevant because no one is claiming that everyone earning minimum wage will be driven out of the labor market. In my nonexpert opinion it seems that some people are driven out of the market but more people break a little bit less than even because they get less overtime.


I'm strongly against minimum wages because we, as a society, have better tools than the minimum wage for elevating the standards of living of the poor. Earned income tax credits, increased social services, and negative income tax all do what minimum wages aim to do better.
posted by I Foody at 1:08 PM on May 1, 2006

Ever notice that the opponents of minimum-wage raises never bring up the "rising tide floats all boats" cliche in that discussion? They save it, to justify why tax cuts for the wealthy are good.

Think of the income range as a slinky, with one end on the floor, and the other end up in the air. Pulling up on the top end will also pull up the coils near the top, to a decreasing extent as you go down. Pushing the floor up also pushes up the coils near the bottom, to a decreasing extent as you go up. If you're anywhere in the middle, neither approach will do you much good. The question is, why make rich people richer, without also helping the poor? Do the $5M/year CEOs actually make the world that much better, as compared to an average worker, who spends most all of his income in the local economy? I don't think they do. Raise the floor.
posted by Kirth Gerson at 1:10 PM on May 1, 2006

b_thinky: It's a sad fact that nobody wants to admit: 50% of us are below average.

If only. 50% of us are below the median but many more of us are below average, and we're getting more numerous every year.
posted by RibaldOne at 1:17 PM on May 1, 2006

My mom is always trying to get me into these types of projects, and, as a journalist, she is very nosy and sometimes she even quotes me without my consent or even my knowing. Sometimes, I have to ask her if it's off the record or not.

LOL.
posted by delmoi at 1:19 PM on May 1, 2006

Ever notice that the opponents of minimum-wage raises never bring up the "rising tide floats all boats" cliche in that discussion? They save it, to justify why tax cuts for the wealthy are good.

The reason they don't do this is because you are talking about two different economic occurences.

One is decreasing government influence on economic free markets. The other is increasing government influence on economic free markets.

Lowering taxes and letting rich people keep more money is favored by people who think that that will CREATE a rising tide. If they think that government regulation of the economy is going to LOWER the tide, then the "rising tide lifts all boats" argument doesn't apply. You may not agree with it, but it's not inconsistent.
posted by fugitivefromchaingang at 1:19 PM on May 1, 2006

"If they have to pay, say, $8,000,000 a year instead of $7,000,000 because of a raise in the executive wage, then, instead of hiring, say, 10 ceos which they would pay $70,000,000 a year under the old wage law, they might only hire 9 ceos at a cost of $72,000,000 under the new wage law."


yeah, right

in a few months, the minumum wage is going up in michigan ... i guess we'll see what really happens then, won't we?
posted by pyramid termite at 1:35 PM on May 1, 2006

...minimum wage acts as a barrier to entry in the labor market.
I've never quite gotten my head around this one. Does this mean that wages should be allowed to go as low as employers can push them? Well, I guess we do need to be more competitive with Chinese labor...
posted by Thorzdad at 1:37 PM on May 1, 2006

The problem with just raising the minimum wage is that it's likely to make it harder for unskilled workers to find a job in the first place.

Someone failed econ.
posted by delmoi at 1:38 PM on May 1, 2006

The problem with just raising the minimum wage is that it's likely to make it harder for unskilled workers to find a job in the first place.

Someone failed econ.

Can you support this assertion? At all?
posted by fugitivefromchaingang at 1:47 PM on May 1, 2006

The reason they don't do this is because you are talking about two different economic occurences.

One is decreasing government influence on economic free markets. The other is increasing government influence on economic free markets.

Nonsense. The phrase is used, universally, to explain why relatively "rich" individuals should pay less in taxes than they currently do. Obviously, it's said, if a rich man has more money he'll spend it, and that spending will help others who run and work in the businesses he spends it on.
posted by verb at 1:55 PM on May 1, 2006

Being poor sucks but its an unavoidable fact of life that some in society will always be poor.

1) Eliminate or reduce the payroll tax. Forget about what this does to rich people. Poor folks legitimately need this money.

Working poor already pay negative taxes due to the Earned Income Tax Credit, After that, no tax reduction would ever help a poor person, because they're not 'really' paying it. Your proposal would mostly help only the rich, and give the poor maybe $10 extra a month. Wow, so generous.

2) Keep public education free and strive to increase its quality.

Which, we're already doing.

3) Teach our youth that being poor sucks, and the decisions they make could ultimately lead to a life of poverty.

LOL.


It's a sad fact that nobody wants to admit: 50% of us are below average.

Well, that doesn't mean they have to suffer for it.
posted by delmoi at 1:58 PM on May 1, 2006

Can you support this assertion? At all?

Yes, economists (at least the good ones) don't make sweeping non-quantitative statements like that very often. "If this happens, X happens" isn't how it works, it's more like "If this happens, X, Y, Z, and Q in the amounts n, m, o, and p) then you make the argument X*n > Y*m+Z*o+Q*p using real world statistics.
posted by delmoi at 2:01 PM on May 1, 2006

The phrase is used, universally, to explain why relatively "rich" individuals should pay less in taxes than they currently do.

No. I will copy from Wikipedia:

The substantive aspect of the statement is that economic growth which raises the GDP of the entire economy will also raise the incomes of all of the individuals within the economy.

Please see link here.

It refers to policies that one believes will improve the overall economy, and if one doesn't think a policy will improve the overall economy, one will not use the phrase, obviously. If one believes that raising the minimum wage will hurt the overall economy, then no--"rising tide" doesn't apply.
posted by fugitivefromchaingang at 2:01 PM on May 1, 2006

Yes, economists (at least the good ones) don't make sweeping non-quantitative statements like that very often.

Your dismissive statement was pretty sweeping and non-quantitative. I wanted some kind of contribution other than 'you are wrong.'

"If this happens, X happens" isn't how it works, it's more like "If this happens, X, Y, Z, and Q in the amounts n, m, o, and p) then you make the argument X*n > Y*m+Z*o+Q*p using real world statistics.

By this definition of what's acceptable when we talk about economics, you shouldn't be speaking either.
posted by fugitivefromchaingang at 2:05 PM on May 1, 2006

The argument that the minimum wage raises unemployment is perfectly sensible from a theoretical point of view. The problem is there is conflicting real world data and there is no way to control for all the variables involved and gather actual data to verify the theory. A major problem is that minimum wage increases almost always happen during economically good times.

That being said, as several people have pointed out, there are plenty of poverty elimination programs, that don't have the theoretical downsides, and are probably preferable to the minimum wage.
posted by Bulgaroktonos at 2:07 PM on May 1, 2006

Me: ...minimum wage acts as a barrier to entry in the labor market.

Thorzaad: I've never quite gotten my head around this one. Does this mean that wages should be allowed to go as low as employers can push them? Well, I guess we do need to be more competitive with Chinese labor...

I think no person should be prevented from seeking work at any level of compensation, high or low. I also think that members of a society should provide for individuals up to certain point regardless of the wage that that person's labor will bear. My problem with the minimum wage is that it isn't efficient and it would be better to simply tax people and provide an acceptable standard of living for everyone. I am not sure what standard of living we should deem acceptable but for certain people it ought be higher than it is today.

Compared to earned income tax credits and good social programs minimum wages are terrible at helping the people they seek to help. They either cost the employers who use unskilled labor or they cost specific consumers or they cost the poor. Probably some of all these groups suffer to some extent. Poverty is a problem for society and it should be the responsibility of all members of society to address it, not just those that employ unskilled labor. Luckily, in this case because the methods that force a society to deal with this problem together are more efficient than the minimum wage that punishes, depending on who you believe the businesses that employ unskilled workers or the unskilled workers themselves. With an adequate social safety net a minimum wage is a pure liability.
posted by I Foody at 2:10 PM on May 1, 2006

By this definition of what's acceptable when we talk about economics, you shouldn't be speaking either.

I shouldn't be speaking, or I shouldn't be speaking about economics? If it's the latter please show me what specific statements I made, if it's the former, please explain why rules for discussing economics should apply to discussion of all topics, including rules for discussing discussing economics.
posted by delmoi at 2:14 PM on May 1, 2006

It refers to policies that one believes will improve the overall economy, and if one doesn't think a policy will improve the overall economy, one will not use the phrase, obviously. If one believes that raising the minimum wage will hurt the overall economy, then no--"rising tide" doesn't apply.

And we return to my point -- some say that if the poor have more money, it will help the economy. Others say that the if the rich have more money, it will help the economy. Both say that 'a rising tide lifts all ships,' but the difference lies in what will lift the tide.
posted by verb at 2:16 PM on May 1, 2006

delmoi--wait, I don't get it. Are you saying you haven't said anything about economics in this thread?

verb--OK. Then I guess we don't disagree about anything.
posted by fugitivefromchaingang at 2:20 PM on May 1, 2006

I really disagree with that type of thinking. Executives get raises because profits are up

Are you implying that there is an actual correlation between increase or decrease in a CEO's pay and the profitability of the company? Or were you expecting us to just take that as "common sense"?
posted by Space Coyote at 12:49 PM PST on May 1 [!]

Not necessarily, but as corporate profits have risen as a whole, more companies want to get in on the earnings frenzy. Turnarounds and profits are brought by strong leadership. So the market for strong leadership is hot.

Labor costs, whether on assembly line workers or a CEO, should be seen as an investment. Some investments pan out and some don't. But CEO packages are approved by the board and the shareholders, so it is a democratic process - and a fair one.
posted by b_thinky at 2:21 PM on May 1, 2006

delmoi writes "Working poor already pay negative taxes due to the Earned Income Tax Credit"

I thought this was only counting income taxes. They still pay net positive payroll taxes on FICA, medicare, and unemployment insurance, don't they?
posted by mr_roboto at 2:22 PM on May 1, 2006

bugbread: Raising the minimum wage will not magically decrease their labour needs.

fugitivefromchaingang: It's not that simple.

Actually, it is that simple.. Companies try to make products that provide customers utility. They minimize costs and maximize price and hence maximize profit. If costs go up the optimization balance sometimes implies a price increase, sometimes a profit decrease, sometimes a drive for more 'efficiency'..

In rare cases, an increase in costs will price a certain type of business out of existence altogether, like the maid example. I think that is a good thing! People need to have the skills, understanding and mental flexibility to do some things for themselves instead of hiring it out all the time. It would certainly shrink the measured economy, so what? Fewer 4,000 sq.ft houses and more people doing their own oil changes seems like a good thing to me!

(raedyn's "It depends" and delmoi's slightly more complicated model are pretty good ways to put it too.. But raedyn, I think Ontario has a lower wage for wait staff..)

tkchrist: I just sold my share of the company my wife and another partner founded. And most businesses in the US are about our size 10-20 people. We were GREATLY affected - personally - when the local labor market wages fluctuated. We had to lay people off twice over the last four years. We had to cut wages. It was either that or go out of business and 10 other people lose their jobs. These were horrible decisions to make.

Clearly not due to a change in the minimum wage :)

When you get labour market changes like what is going on in Alberta right now...

But in general, I think I agree about the lower taxes for poor people rather than increased minimum wage (which should be brought up to date and indexed, and then left alone).

Much more importantly, and not on anybody's radar, I think we need to lower the barriers to entry for small businesses. Governments do a lot to make small business very hard - in Ontario there has been some suggestion that everybody selling jam at the local farmers market will have to have a separate kitchen for their business - these types of regulations exist across all economic sectors and they are stifling.

Make it easy for people to get housing, healthcare, education, and operate a business - starting one is easy, earning a living for 10-50 years isn't, but I'm sure tkchrist understands this far better than I do - that will take care of a lot!

b_thinky: I really disagree with that type of thinking. Executives get raises because profits are up, typically meaning they're doing a good job. An executive's skillset is more rare than the average laborer. The fact is, if you don't pay your CEO a competitive salary, he'll go work somewhere else. Same is true for labor. But we have lots of labor and little executive talent.

The only reason that might be true is training. Penalise big business and encourage small business and you will get a lot more skilled executives. Then the demand will go down, and pay will be a lot more equal across the population :)

b_thinky: It's a sad fact that nobody wants to admit: 50% of us are below average.

Ugh! Let me say that a little differently... I don't give a fuck how hot Brad Pitt is, and I'm never going to do anything to try and compete with him on that scale. However, I am pretty good at electronics, and making a fool of myself while spouting off on the internet, I bet Brad Pitt doesn't do either of those particularly well. Meanwhile b_thinky clearly beats me at the 'fool of himself while spouting off' skill, but I'm still happy because I can solder!

What was that about average again?
posted by Chuckles at 2:35 PM on May 1, 2006

I read this in the Dead Tree edition as well, and I'd like to point out that in Toronto a job that pays less than about 10.00 a hour is unlikely to be filled with any regularity. People will take them, you understand, but they won't be able to stick with them, because living in TO under 1,000.00 a month is all but impossible.

The thing that struck me was the income disparity between the freelance cleaners that Wong mentions (the woman who works for her, for example) and the women she worked with. Freelance cleaners in Toronto, who often are immigrant women, get between 25 and 15 bucks an hour: they can say what they will and will not do, and they can set specific charges for particularly grotty work. The work is just as tough, of course, and you'd have to find your own clients, get to and from the jobs on your own, and get your own equipment -- but like Wong, I'm a little stunned that these women haven't put an ad in their neighborhood paper.

My cousin's been a cleaner for years: 10 clients, more or less, have provided her with a flexible and reasonable (but not a great!) living. She has no car, and travels to and from appointments on the bus with a bucket and mop. For years she lugged the vacuum cleaner, then it dawned on her that she could tell the clients that they needed to supply one.

I'm sure that the barrier is capital: the cost of running a car, the cost of buying and hauling equipment and such. Part may be fear: going alone into a house that you don't know, with no-one that knows you're there, would be scary. But part of it is experience on the other side of the fence. My cousin, like me, was raised by a woman who needed and used cleaning ladies, once a week: she knew that good cleaners were hard to find. When she walked out on a particularly stinky waitress job, she knew that she could make decent money if she were willing to scrub other people's toilets. And, with a good deal of dignity and loud insistance on her boundaries, she does.

The overwhelming sense I got was that the women really though of themselves as servants, not as people providing a service, which is entirely different. I am not blaming them: there's a real risk to going out on your own, but I'm surprised none of them have twigged to the fact that the work they do can be much, much better paid.
posted by jrochest at 2:39 PM on May 1, 2006

Executives get raises because profits are up, typically meaning they're doing a good job.

Bull. Shit.

CEO paycheques have been rising faster than the profitability of their companies, faster than the increase in GDP, faster than every measure of company or economic success.

Type ceo pay into Google. And weep.
posted by five fresh fish at 2:39 PM on May 1, 2006

Don’t know much about economics. But I do know that when rich folks spend, they’re not buying more than a few refrigerators, say. So cut taxes on Joe Champagne and he buys a yacht or another house and some stuff to fill it, maybe some services, etc. Put money into the pocket of Joe Six pack and he buys a dishwasher instead of hiring one.

And since there are more of him...
posted by Smedleyman at 2:48 PM on May 1, 2006

delmoi: Someone failed econ.

Never took it, actually. I was just summarizing the standard argument: increasing the price of something lowers demand, all other things being equal.

My understanding from DeLong is that (a) the minimum wage is much easier to implement than the EITC, so it's worth having both a minimum wage and the EITC; (b) the increase in unemployment from a modest increase in the US minimum wage would be small; (c) in terms of actually helping the working poor, the EITC does a lot more than the minimum wage.

My understanding from DeLong and Krugman is that the reason inequality has risen so much is because demand for unskilled labor has been dropping, mostly because of technology (increased automation) rather than trade. Here in Canada, at least, I think public opinion will back redistributive measures to compensate. And from a technocratic point of view, something like the EITC would probably work better than increasing the minimum wage.

Statistics Canada: Government transfer programs have had a substantially equalizing impact on family income distributions on both sides of the border. In fact, between 1974 and 1985, the American transfer system appeared more redistributive than Canada's. However, between 1985 and 1997, government transfer programs in Canada generally had larger impacts.

At the other end of the scale, there's the "superstar" effect: CEOs get paid the same way celebrities do.
posted by russilwvong at 2:51 PM on May 1, 2006

verb--OK. Then I guess we don't disagree about anything.

Well. I might not go that far. :-) The eralier poster you responded to was pointing out that many economic conservatives predictably use the 'rising tide' metaphor when talking about policies that benefit those who are already doing very well, but dismiss policies that would potentially benefit those not doing well by pointing at potential damage to the economy. The assumption, obviously, is that the tide always starts with the folks at the top.

Obviously, in the context of this discussion, we're talking about two kinds of government actions: raising minimum wage, and lowering taxes. But the real-world usage of the 'rising tide' meme has nothing to do with that difference.
posted by verb at 2:51 PM on May 1, 2006

(But raedyn, I think Ontario has a lower wage for wait staff..) - Chuckles

Yes. That's why I said it's not common in Canada, rather than saying that doesn't happen in Canada.
posted by raedyn at 3:15 PM on May 1, 2006

Institute a maximum wage.

One way you could do this in a company is to set the maximum wage tied to the minimum wage e.g. the maximum wage is 20 times the minimum wage or whatever. If a company makes a profit and the CEO gets an increase, well so do the workers that made that profit happen.

Does anyone know of a company that actually does this? It seems like there would be some feel-good company out there doing this...
posted by meech at 3:23 PM on May 1, 2006

It's a sad fact that nobody wants to admit: 50% of us are below average

It's not about being below average, it's about not having a normal life. Within a certain (fairly large) range of the median income it's possible to afford a life that is qualitatively normal by shopping in the cheaper grocery store and avoiding items that are poor value for money, having less expensive and fewer vacations, toys for the kids, changing the car less often, doing more household jobs yourself instead of hiring someone etc. When income drops more than a little below that the standard of living plummets - vacations and proper Christmas presents for the kids are impossible and people end up asking themselves insane questions like "Should I get my brakes fixed or renew my health insurance?" As a society I think we can do better than that.
posted by teleskiving at 3:28 PM on May 1, 2006

...they might only hire 9 workers at a cost of $72 under the new wage law. If you aggregate this across the entire economy you can see how it would result in fewer jobs available. Conversely, if each individual employee is cheaper, it encourages employers to hire more.

Employers hire people because there is work to be done, not because they have spare money to a certain level and they'll hire as many people as fit the cash.

If there is work for 10 people to be done, they will hire 10 people. They won't hire 9 people and let needed work fall by the wayside.

This is, and always has been, the major flaw with this argument.
posted by Kickstart70 at 3:33 PM on May 1, 2006

Kickstart70 writes "If there is work for 10 people to be done, they will hire 10 people. They won't hire 9 people and let needed work fall by the wayside."

Only if the marginal cost of the 10th worker is exceeded by the marginal benefit of the 10th worker, right? Otherwise, they'd be taking a loss.
posted by mr_roboto at 3:37 PM on May 1, 2006

If a company makes a profit and the CEO gets an increase, well so do the workers that made that profit happen. Does anyone know of a company that actually does this? It seems like there would be some feel-good company out there doing this...

Not precisely what you asked, but the UK retailer John Lewis Partnership pays an annual bonus which is calculated as a fraction of salary - the percentage is the same for every employee of the organization. It's an interesting company.
posted by teleskiving at 3:39 PM on May 1, 2006

Toronto wants to limit people to two garage sales per year - reader comments in The Star and article in The Sun..

See what I mean :P
posted by Chuckles at 4:14 PM on May 1, 2006

For a person below a certain income level (let's just mark it at a "living wage", or whatever it costs to buy a typical basket of goods and services in your area) the larger the portion of that person's income the government pays rather than his or her employer, the more equal the system is going to be. This is because the money to support that person's existence would come from the taxation levied against the highest earners (CEO's) rather than those in the middle range (small business owners). If you make it more affordable for the middle range to do business, you spark entrepreneurship, investment, the creation of capital, all of those things that Americans are supposed to love.

Spending stimulates the economy whether it's your maid or your CEO that's doing the spending - the main difference is that you'll see more money going to industries that provide essential goods and services (agribusiness, textiles, etc.) rather than those that provide luxuries (yachts and such).

Raising the minimum wage takes money from the middle range earners while having only a minor effect on those at the top of the bracket. The effect would actually be an increase in the wage gap, because you'd be pushing the middle earners into the low-earner bracket (since they'd be paying a greater portion of their income to pay for a higher minimum wage). Higher taxation on the very rich and greater government subsidization of unskilled labor seems to correct this problem - skim the cream off the top.
posted by rockabilly_pete at 4:22 PM on May 1, 2006

I DEMAND a living wage for the lemonade girls down on the corner!
posted by HTuttle at 5:01 PM on May 1, 2006

I DEMAND a living wage for the lemonade girls down on the corner!

You know you're being spurious, right?
posted by Space Coyote at 5:44 PM on May 1, 2006

Does anyone know of a company that actually does this? It seems like there would be some feel-good company out there doing this...

I think Ben & Jerry's does this IIRC, although obviously the founders make more through stock then anything else.
posted by delmoi at 5:50 PM on May 1, 2006

The problem I see with an all EITC is that it's rife with opportunities for fraud and funky situations. I mean couldn't a bunch of poor people get together, form a corporation, pay eachother to do jack squat and then all earn an EITC?
posted by delmoi at 6:06 PM on May 1, 2006

The earlier poster you responded to was pointing out that many economic conservatives predictably use the 'rising tide' metaphor when talking about policies that benefit those who are already doing very well, but dismiss policies that would potentially benefit those not doing well by pointing at potential damage to the economy. The assumption, obviously, is that the tide always starts with the folks at the top.

Obviously, in the context of this discussion, we're talking about two kinds of government actions: raising minimum wage, and lowering taxes. But the real-world usage of the 'rising tide' meme has nothing to do with that difference.

Thanks, verb. I'm the "earlier poster," and that's just what I meant.
posted by Kirth Gerson at 6:51 PM on May 1, 2006

minimum wage acts as a barrier to entry in the labor market.

Here's another way to look at it: a minimum wage makes it illegal to work if your labor is worth less than that amount hourly.

The value of your labor is set by supply and demand. How many other people have the skills you have vs. how many jobs are available for people with your skills. If you have no skills, then anyone can do the same jobs you can, and it becomes a buyer's (employer's) market -- if you won't take the job at the wage being offered, someone else will.

Of course, there is not an infinite pool of unskilled labor (especially not in the United States). For one thing, a lot of people do have skills, which means they're not competing with you -- rather than competing with a couple hundred million people you're competing with maybe a tenth of that many. Also, there are in fact a lot of jobs suitable for unskilled workers, and in fact some unskilled workers are superior to others (more conscientious, more productive, more reliable, etc.) so that it's not necessarily the case that the employer can just treat its unskilled workforce as interchangeable parts and is willing to pay slightly higher wages if you at least have a good work ethic. So an equilibrium is reached and your labor is valued at $5 an hour.

Now let's say minimum wage is set at $10. Since your labor is only worth $5 an hour, it is illegal for any company to hire you. A company could theoretically pay you $10 for your $5 labor, but stupid companies don't last very long.

The truth is, no matter where you set the minimum wage, there will always be people who won't be allowed to find work because the minimum wage is lower than the value of their labor. If you suddenly raised it to $100 an hour, most of us reading this right now would not be able to work legally. Our labor simply isn't worth that much in the current market. It is easy to see that such an extreme change would result in throwing most Americans out of work and massive economic upheaval.

Now of course if the government starts at $5 and raises the minimum wage slowly, then companies who have minimum wage employees will tend to simply raise prices slightly and keep these workers on. However, this increases the cost of living, which everyone will want a raise to compensate for, and you get inflation, i.e. no net improvement in anyone's economic condition. Actually you get a marginal decline in economic condition because of the frictional costs of implementing the minimum wage.

Minimum wage is a form of price control and price controls nearly always lead to undesirable consequences. And I say "nearly" not because I know of any situations in which that hasn't happened, but just in case someone manages to find one. In the case of minimum wage you end up with inflation or increased unemployment or both. You simply can't avoid it. You fuck with the law of supply and demand at your peril.
posted by kindall at 8:03 PM on May 1, 2006

Has anyone here ever hired an illegal immigrant to work? They're just as obnoxious and odious as any unionized worker (I'm in construction). They won't work for less than 90-120 per day ( depending on the "skill" and I use that term LOOSELY) they profess to have. They send 85% of their income back to their country so their relatives can live like kings while they bust their asses doing terrible jobs. That's an admirable quality, but YOU ARE NOT LEGAL! If you have a problem with how this country treats you, leave. plain and simple. You're not welcome here as it is currently, so just take a truck or bus to back where you came from .
posted by Debaser626 at 8:05 PM on May 1, 2006

I've had guys walk away from a demo site saying they will NOT work for less than $100 per day when dealing with "rubble." (of the non-asbestos kind). Meanwhile, I was able to find several able bodied WHITE american kids to work for 80 per day for the same job. Fuck Juan and Raul... let 'em walk... there are plenty of Americans who will take up the slack... Get a social, you piece of shit.
posted by Debaser626 at 8:08 PM on May 1, 2006

If you have a problem with how this country treats you, leave. plain and simple.

Funny...you're not Canadian, and this article isn't about U.S. immigration, or immigration at all.
posted by oaf at 8:21 PM on May 1, 2006

Here's another way to look at it: a minimum wage makes it illegal to work if your labor is worth less than that amount hourly.

You must have slipped up a word or two in there, because it otherwise reads as batshitinsane.
posted by five fresh fish at 8:41 PM on May 1, 2006

Meanwhile, I was able to find several able bodied WHITE american kids to work for 80 per day for the same job.

I hear you, man. There's nothing like teenage slaves for labour. Those dumbshits will do any crazy work for shit-all pay! Dumb fucks. :-)
posted by five fresh fish at 8:45 PM on May 1, 2006

Meanwhile, I was able to find several able bodied WHITE american kids to work for 80 per day for the same job.

Seeing as how that's ~$10 an hour for a normal day's work, well, above the minimum wage in both the US and Canada, I'm not quite sure how that fits into this discussion. Or are you trying to say that illegal aliens are greedy? I think you might want another thread.
posted by verb at 8:46 PM on May 1, 2006

If you suddenly raised it to $100 an hour, most of us reading this right now would not be able to work legally.

Ah, it wasn't a typo, then?

Lemme get this straight: you're saying that if some lunatic came along to offer me a $100 an hour to, say, post batshitinsane shit to the web, it would be illegal?

Well fuck me with a bowling pin and call my balls Ebonite, the goddamn government screws me over again. I so wanted to take that job, too.

What's a FFFish to do, eh?
posted by five fresh fish at 8:52 PM on May 1, 2006

Kindall: Here's another way to look at it: a minimum wage makes it illegal to work if your labor is worth less than that amount hourly.

five fresh fish: You must have slipped up a word or two in there, because it otherwise reads as batshitinsane.

Not at all. It makes perfect sense, once you understand that there is an objective, innate "value" to labour, which exists in a vacuum outside of all other economic forces & conditions. This decrees that you cannot be paid above your true "value", for any reason.

(Some say that these labour rates were inscribed on the reverse sides of the tablets that Moses brought down from Mount Sinai, but this may be apochryphal)
posted by UbuRoivas at 9:11 PM on May 1, 2006

kindall: Minimum wage is a form of price control and price controls nearly always lead to undesirable consequences. And I say "nearly" not because I know of any situations in which that hasn't happened, but just in case someone manages to find one. In the case of minimum wage you end up with inflation or increased unemployment or both. You simply can't avoid it.

See above.
posted by russilwvong at 10:05 PM on May 1, 2006

heh, 118 posts about the minimum wage and not one mention of the word 'rent' or 'landlord'.

Given any pressure on the supply of housing, I'd wager 90%+ of any blanket wage increase would end up in landlords' pockets in the end, just like the blanket Bush tax cuts have just resulted in land valuations rising to match everyone's increased buying power.

cf. the Georgist theory of the all-devouring rent.
posted by Heywood Mogroot at 10:16 PM on May 1, 2006

you're saying that if some lunatic came along to offer me a $100 an hour to, say, post batshitinsane shit to the web, it would be illegal?

Other way 'round. If the minimum wage were $100, it would be illegal to pay you less than $100 an hour to post batshitinsane shit to the Web.

It makes perfect sense, once you understand that there is an objective, innate "value" to labour, which exists in a vacuum outside of all other economic forces & conditions.

Other way 'round. It's entirely determined by economic forces and conditions, i.e., how many other people have equivalent skills, how many jobs there are that can use you, etc.

I'm going to give up posting here, it's clear I'm doing something wrong when two people read something that seemed perfectly clear to me and get out of it exactly the opposite of what I was trying to say. If it was just one person, I could probably assume they were just twisting my words around to try to score a hollow rhetorical point, but two -- that'd have to be a conspiracy, and that's just crazy talk!
posted by kindall at 11:05 PM on May 1, 2006

These experiments always seem to reach the wrong conclusion. Instead of "We should pay our uneducated marginal types more," shouldn't they be pointing out that they wouldn't have to live like this if they stayed in school, stayed away from drugs, and kept their pants on?
posted by bovious at 5:44 AM on May 2, 2006

. . . and knuckled their foreheads while kneeling in the dust as the Lords of Capital passed in their chariots?


posted by Kirth Gerson at 7:09 AM on May 2, 2006

But without uneducated marginal types, who would do the marginal uneducated-type jobs?

A world where everyone has a Phd. would be a dusty, smelly, blue-plate specialless world indeed.
posted by Alvy Ampersand at 7:14 AM on May 2, 2006

PhD., even! /Snagglepuss voice
posted by Alvy Ampersand at 7:15 AM on May 2, 2006

"Institute a maximum wage."

Right! Because the best thing one could do for a society would be to put a cap on rewarding the exceptional.

Brilliant.
posted by soulhuntre at 8:27 AM on May 2, 2006

Did anyone read what I Foody wrote?
I think no person should be prevented from seeking work at any level of compensation, high or low. I also think that members of a society should provide for individuals up to certain point regardless of the wage that that person's labor will bear.

This is the simplest solution both socially and economically. There are certain things which human beings deserve independent of their economic status; proper housing, adequate nutrition, all the health care that is medically necessary, as much education as their intellects can handle etc. These things should be guaranteed by the government, leaving business to do what it does best, make money. Business has no intrinsic duty to serve people (though Ben & Jerry or whoever else should still be applauded if they choose to), that's government's job.
posted by Octaviuz at 8:33 AM on May 2, 2006

For example, if maid services pay higher wages, they'll raise their prices, and that'll reduce the number of people willing to pay to have someone else clean their house.

I don't know, i just had to double the money I was paying for having my house cleaned per month. It definitely hurts, I was arguably spending too much money previously, but I was willing to take the hit because I don't want to lose an additional 4-6 hours a week to household maintenance crap.

And since an additional $150/month really hits my budget pretty hard, I'm guessing most people who have house keepers could swing an extra $1/hour, since most people who have their house cleaned are only having it done once or twice a month, so it's not like it's an extra $40/week.

Right! Because the best thing one could do for a society would be to put a cap on rewarding the exceptional.

No, the best thing a society could do is put a cap on how much it's elite can suck on it's resources. The argument that every one who makes a lot of money is exceptional and deserves it is total aristocracy crap. Paris fucking Hilton does not deserve a dime from where I stand -- she is exceptional at nothing besides being a public drunkard and having awkward sex on a nightvision camera, yet she makes millions by being or own global village idiot.

For every exceptional person you can name who makes their own million I can show you a legacy aristocrat-in-all-but-name who deserves none of the largess they enjoy.
posted by illovich at 10:19 AM on May 2, 2006

From the first google hit of "ceo pay": The average CEO of a Standard & Poor's 500 company made $11.75 million in total compensation in 2005, according to a preliminary analysis by The Corporate Library.

If you are working minimum wage, you will earn about $8 x 40hr x 50wk x 40yr = $640 000 over your entire lifetime.

The average CEO will earn $470 000 000 in that same time. A half billion.

Give your heads a shake.
posted by five fresh fish at 10:28 AM on May 2, 2006

Here is another way of looking at it: the CEOs of the Fortune 500 earn $5 785 000 000 per year.

In one year, they earn the equivalent of what nearly ten thousand minimum-wage employees will make over their entire lifetimes.

Or another way:

In one year, they earn the equivalent of what three hundred sixty thousand of their minimum-wage employees will make in that time.

And we have people who are starving to death in America.

What. The. Fuck.
posted by five fresh fish at 10:32 AM on May 2, 2006

There are certain things which human beings deserve independent of their economic status; proper housing, adequate nutrition, all the health care that is medically necessary, as much education as their intellects can handle etc.

That sounds pretty but what you do when people a) decide they don't feel like working since they'll get all that stuff without it in your glorious welfare state and b) have dozens of children that will be a sap on resources just like their parents? I mean, it sounds spiffy and all, just pay for it with *your* tax money please, not mine.
posted by beth at 10:49 AM on May 2, 2006

Well, gosh, beth, I suppose that a country that does that better than the USA would be like... Canada?
posted by five fresh fish at 11:12 AM on May 2, 2006

Yeah but Canada won't let me in, neither will any other civilized place that I know of. They all have wording in their immigration websites about "health certificates" and such required of potential immigrants. That's code for "NOT YOU!" if you've got a lifelong illness as a preexisting medical condition, like I do.

My only hope is to become a gozillionaire or something.
posted by beth at 11:20 AM on May 2, 2006

beth: That sounds pretty but what you do when people a) decide they don't feel like working since they'll get all that stuff without it in your glorious welfare state--

Octaviuz didn't say "without working." You just set up the welfare state so that it transfers money to the working poor (and to those who are too young or too old to work).

Brad DeLong: The Earned Income Tax Credit [EITC] gives a family with two children a 40-cent payment from the IRS for each dollar of the first $9,500 of income earned. A part-time $8 an hour job thus becomes--after taxes--an $11.20 an hour job for the working poor. The Earned Income Tax Credit means that a two-child family with a full-time minimum-wage worker is lifted (barely) above the poverty line.

The EITC is a rare program with bipartisan support, because both Democrats and Republicans can agree on helping the working poor. Clinton was strongly influenced by William Julius Wilson's When Work Disappears, which discusses the social problems resulting from concentrated unemployment (not just poverty).

illovich: I don't know, I just had to double the money I was paying for having my house cleaned per month. It definitely hurts, I was arguably spending too much money previously, but I was willing to take the hit because I don't want to lose an additional 4-6 hours a week to household maintenance crap.

Sure, and maybe most people would be willing to pay the higher cost; but some people would clean their own houses instead. People adapt to prices. It's like gas prices: as gas prices rise, some people are driving less, buying more fuel-efficient cars instead of Hummers, etc.

Regarding CEO pay, I tend to agree that CEO compensation in the US is totally out of control. BusinessWeek: [Japanese CEOs] earn only about 10 times more than a manufacturing employee, according to a 2000 Towers Perrin survey that looked at industrial companies with about $500 million in annual sales. In the U.S., where the multiple is the highest in the world by far, CEOs of 365 top companies raked in 531 times more in 2000 than the average hourly worker did.

That said, let me put this counterargument on the table: if we're interested in helping the working poor, is the excessive wealth of the rich really the problem? George F. Kennan:

By my own observation, and much of it from life in socialist countries, I know of no assumption that has been more widely and totally disproved by actual experience than the assumption that if a few people could be prevented from living well everyone else would live better. I have seen village after village in Russia where the wealthy landlord and his family had been driven out, killed or dispossessed, where the ashes of the ruins of his house stood as mute and tragic evidence of his elimination, but where the prevailing misery could not have been greater than it was. I have, to be sure, seen welfare states where a wide improvement in living standards for the mass of the people indeed went hand in hand with the disappearance of most evidences of ostentatious prosperity on the part of the few. But this had been achieved not so much by the impoverishment of the wealthy as by the prevalent egalitarian social spirit that had caused the latter to conceal the evidences of their prosperity rather than to flaunt it. In itself this was, perhaps, not a bad thing. But it did not prove that the impoverishment of the few was essential to the advancement of the living standards among the many.

The plain fact, which I believe will be confirmed by many economists, is that the luxuries of the very rich are of
relatively little importance as a factor in the general economy of the modern advanced country. Much of what the rich own must, after all, be invested in ways which, while indeed they are normally profitable to one degree or another for the rich themselves, also benefit, by the very fact of the investment, the general economy. Which is better?--that the rich should themselves invest their surplus income or that the government should take it by taxation, and then, after passing it through the sticky substance of its own bureaucracy, spend it in its own favored ways? The government would claim that it spends it (or what is left of it when the bureaucrats have taken their cut) for the public good. The rich would say that they themselves use it, and invest it, more wisely and economically than the government could. There is much to be said, it seems to me, for the latter view.

posted by russilwvong at 12:45 PM on May 2, 2006

thanks, russilwvong, anecdotal evidence is always the best evidence.
posted by keswick at 12:47 PM on May 2, 2006

But it did not prove that the impoverishment of the few was essential to the advancement of the living standards among the many.

I doubt anyone is calling for the impoverishment of the wealthy, aka. driving them from their wealthy estates and burning down their homes in the spirit of Russian revolution.

Hey, here's another CEO wage number:

That's $11 750 000 average annual wage x 500 CEOs x 40 years = $235 000 000 000. Two hundred thirty five billion dollars concentrated in the pockets of five hundred men.

Yes, of course these numbers are all bogus. Of course all 500 are not going to earn that much every year for forty years.

But to focus on that nitpick is to miss the reality: in a country that has such a huge GDP, it is utterly bizarre that so many of the people who actually produce that wealth get so little of it in return.
posted by five fresh fish at 1:10 PM on May 2, 2006

I know of no assumption that has been more widely and totally disproved by actual experience than the assumption that if a few people could be prevented from living well everyone else would live better.

That's a terrific argument! It could use a little more straw in the legs, though. Who's making this assumption - that someone is to be "prevented from living well"? If those CEOs were limited to making a horribly punitive 50 times what they allow their average worker, it would stop them from living well?
posted by Kirth Gerson at 1:26 PM on May 2, 2006

Kirth Gerson: If those CEOs were limited to making a horribly punitive 50 times what they allow their average worker, it would stop them from living well?

That's not the issue. The issue is whether or not this would allow everyone else to live better (particularly the working poor).

Consider Bill Gates's enormous and arguably ill-deserved wealth ($57 billion). According to the Bill Gates Wealth Clock, if we confiscated all of it, everyone in the US would get a one-time payment of $200.

The 18 families which are lobbying to repeal the estate tax have a total net worth of about $200 billion. That'd be good for a one-time payment of $600.

If we want to transfer more money into the hands of the working poor (which I fully support) on an ongoing basis, the bulk of the money is going to have to come from middle-class taxpayers, i.e. most of us, not just from the obscenely wealthy.

By the way, as a Jack Vance fan, I've always wanted to ask: why "Gerson", not "Gersen"?
posted by russilwvong at 1:58 PM on May 2, 2006

the bulk of the money is going to have to come from middle-class taxpayers

The bulk of the wealth is held by the mega-rich. Have you never looked at a chart?

One-third of the country's wealth is held by 1% of the population. The top 20% are getting wealthier over time, at the cost of making the other 80% poorer.

The middle class doesn't have most of the money. The middle class is not getting wealthier. The middle class can not be expected to shoulder the tax burden whilst the top 10% make off with three-quarters of the wealth.
posted by five fresh fish at 2:57 PM on May 2, 2006

Maybe things in the US are worse than I thought. Still, if you want to do redistribution on an ongoing basis rather than a one-time basis, you need to look at income rather than wealth. Although it's still disproportionately distributed, it's not as skewed: the top 1% receive 16% of total income, according to Krugman.

So I still think you'd need to look beyond the top 1% in order to increase redistribution significantly. In Canada, the top 10% of taxpayers pay 52% of total income tax, according to Statistics Canada. But I suspect a lot of people in this bracket still consider themselves to be middle class; an income of C$64,500 is sufficient to put you into that bracket.

I'm all for increasing the progressiveness of the tax system, but I still think that if you want to raise tax revenues significantly, you're going to have to raise taxes on people who are part of the middle class.
posted by russilwvong at 3:34 PM on May 2, 2006

There are also huge loopholes via which the mega-wealthy and corporations avoid paying tax. Again, this does nothing to actually help us have a well-functioning society.
posted by five fresh fish at 3:49 PM on May 2, 2006

why "Gerson", not "Gersen"?

Either:

1. I didn't want my inferior writings to show up in people's internet searches for the Master's stuff.

or

2. I made a typo when I first used the name on another board.


Take your pick.
posted by Kirth Gerson at 4:28 PM on May 2, 2006

My idle curiosity is satisfied, thanks. (From time to time I've thought to myself that perhaps I ought to create a sockpuppet account called "Kirth Gersen", sowing confusion everywhere. Fortunately I resisted.)

There's a quote that's apropos to this discussion somewhere in The Face. I'll see if I can find it and post it.
posted by russilwvong at 5:33 PM on May 2, 2006

I know of no assumption that has been more widely and totally disproved by actual experience than the assumption that if a few people could be prevented from living well we cut the heads off all members of the artistocracy and confiscated the clergy's possessions everyone else would live better.

See, isn't it a lot of fun to equate bloody revolutions and civil wars with fiscal policies?

This also is a lot of fun:

Which is better?--that the rich should themselves invest their surplus income or that the government should take it by taxation, and then, after passing it through the sticky substance of its own bureaucracy, spend it in its own favored ways?

Because of course, paying taxes like everybody else means these unlucky uber-rich people no longer can take their capital off to the Cayman Islands buy off another slice of Argentina reinvest in business that will create more jobs blah blah.

No, no, they should be treated specially cos they're special, all disproportionately paid CEO's are exceptional people with exceptional talent, who all achieved their fortune through a rare combination of genius, skill, hard work, spotless ethics, fiscal transparency, honesty, and self-sacrifice. Corruption, crony capitalism, nepotism, unfair competition, offshore money laundering, fraud, these things are fantasies, made up by envious communists who want to enslave everyone and drag everyone down. The uber-rich deserve to pay less taxes than they should, otherwise the economy would collapse!

(sarcasm) doesn't anyone on this board understand the intelligent design of the invisible hand? (/sarcasm)

I do!
posted by funambulist at 11:23 PM on May 2, 2006

russelwvong, I recently re-read the Demon Princes books, and I think I know which passage you're talking about. If you post a different one, we can argue via Vance (or Baron Bodissey, or whoever).

And thanks for not socking me with a puppet.
posted by Kirth Gerson at 3:52 AM on May 3, 2006

People will take them, you understand, but they won't be able to stick with them, because living in TO under 1,000.00 a month is all but impossible.

It's very difficult, but most of my family has at one point or another. If you are lucky, you live in subsidized housing or share an apartment with someone else. If you aren't lucky, you're living in a hole in the wall for about $500-700, probably with roaches and certainly with questionable plumbing and fixtures, and trying to get by on the rest.

Welfare for a single person with no children in Toronto was $500/month after the Tory cuts - at the time, my brother was paying $450 for a single room, and eating at soup kitchens, which isn't the best position to be in when trying to get a job. (It's hard to to drop off applications when you can't afford public transit). With children, it's about $1000/month, and people live on that, many without subsidized housing. Waitlists in Toronto are years, even decades long - the government also ended all expansion plans for subsidized housing.

Sometimes I feel like many people in Toronto (and elsewhere) really don't understand what poverty is like. They haven't lived it (at least, since being a student, which isn't the same thing)*, they don't know anyone who has. When my husband (a well-informed but nonetheless middle class Torontonian) first visited an Metro Toronto Housing Authority apartment building for the first time, he went into culture shock. He had no idea that people in Canada lived like that, let alone people a half and hour bus ride up the road.

That's why I'm glad to see series like this. I don't care how repeditive it may seem - we need them over and over again, because so many people really don't understand what first world urban poverty is like. No, it's nothing like third world poverty. It's not even anywhere as bad as Canadian rural poverty. But it is real, and there is a real impact on people's quality of life, health and opportunities.
posted by jb at 5:57 AM on May 3, 2006

The quote from The Face is at the start of Chapter 14. It's an amusing flamewar-like exchange, but in Vance's inimitable style. Unfortunately the whole thing is too long to post (even for me).

From Life, Volume III, by Unspiek, Baron Bodissey:

I am constantly startled and often amused by the diverse attitudes toward wealth to be found among the peoples of the Oikumene.

Some societies equate affluence with criminal skill; for others wealth represents the gratitude of society for the performance of valuable services.

My own concepts in this regard are easy and clear, and I am sure that the word "simplistic" will be used by my critics. These folk are callow and turgid of intellect; I am reassured by their howls and yelps. ...

The critics respond:

What an unutterable ass is this fellow Unspiek! I am reduced to making furious scratches and crotchets with my pen!
--Lionel Wistofer, in The Monstrator

I am poor; I admit it! Am I then a churl or a noddy? I deny it with all the vehemence of my soul! I take my bite of seed-cake and my sip of tea with the same relish as any paunchy plutocrat with bulging eyes and grease running from his mouth as he engulfs ortolans in brandy, Krokinole oysters, filet of Darango Five-Horn! My wealth is my shelf of books! My privileges are my dreams!
--Sistie Fael, in The Outlook

Not to be taken seriously; posted for entertainment only.
posted by russilwvong at 12:39 AM on May 4, 2006

Yes, that's the one I had in mind. I have been waiting for an opportunity to drop "These folk are callow and turgid of intellect; I am reassured by their howls and yelps" into a thread. I guess it's too late now.
posted by Kirth Gerson at 10:01 AM on May 4, 2006

I guess it's too late now.

Never too late. Besides, once you do it, it'd make an awesome MetaFilter tagline.

jb: Sometimes I feel like many people in Toronto (and elsewhere) really don't understand what poverty is like.

Agreed. That's certainly true for me. I'm somewhat familiar with the problems of the Downtown East Side in Vancouver, but that's a completely different story from working poverty.

The big theme of the latest federal budget is "tax cuts for everyone!" It'll take a while to see what that means on the spending and services side. There's a new Employment Tax Credit, but it's for employment expenses, it's not an EITC-style program to help the working poor.
posted by russilwvong at 1:33 PM on May 4, 2006

And "tax cuts for everyone" is actually a tax INCREASE if you make under $35,000. Super.
posted by raedyn at 2:04 PM on May 4, 2006

How do the new tax cuts work? I just did my taxes (so last minute!), and I noticed the modest reduction in the base tax rate (from 16% to 15% for the first $35,000, which applies to everyone), but no other reductions. I did find that I paid more this year than last (when I made a fair bit less this year), which confused me, except I think much of the increase was for the new Ontario Health premium (now that's a progressive tax. Not.)
posted by jb at 8:20 AM on May 5, 2006

--no other reductions.

There was a small increase in the basic personal amount as well.

How do the new tax cuts work?

Here's the budget in brief.

GST is reduced to 6% starting July 1. And there's a new Universal Child Care Benefit of $100/month per child under 6, also starting July 1. Both of those should be very popular.

The tax rate for the bottom tax bracket will be increased from 15% to 15.25% in 2006 (15% in the first half, 15.5% in the second half), 15.5% in 2007.

It sounds like the basic personal amount is being reduced for a couple of years, but I haven't been able to find any official documents.

There's some new tax credits--for children's fitness, bus passes, employment expenses.

Corporate taxes are being reduced: general rate is being reduced from 21% to 19% by 2010, corporate surtax eliminated in 2008, federal capital tax eliminated in 2006.

Projected spending: $13.7 billion for 2004-2005, $13.1 for 2005-2006, $13.0 for 2006-2007, $13.0 for 2007-2008. Since those are nominal dollars, not real dollars, that'll translate into real per-capita cuts.
posted by russilwvong at 1:09 PM on May 5, 2006

I noticed the modest reduction in the base tax rate (from 16% to 15% for the first $35,000, which applies to everyone), but no other reductions. - jb

russilwvong is correct that the basic personal exemption was increased slightly.

But all the income tax changes announced in this budget are for tax year 2006 - meaning they're for the money you're earing right now. The taxes you just filed were for 2005 tax year. The tax rate for that lowest bracket is going back up for 2006 taxes (assuming this Budget gets passed).
posted by raedyn at 4:08 PM on May 6, 2006