Question for you numbers guys

So I watched this video - I can't be that simple right? Are they figuring out all the extras besides base wage? FICA, benefits etc? 

.69 cents for mac and cheese is way too much.

There are some flaws in the logic. For example, we raised the worker's wage to a livable wage based on current prices, but then we raise the current prices to account for her livable wage. This means she is back under the cost of living and needs another raise to make the new livable wage. This still won't jack prices immensely, but it does mean its not as simple as just raising everyone's wage to the current cost of living.

Another flaw in the logic is the assumption that all the people who work at Wal-Mart want to get off financial assistance. My ex-wife is a great example of someone who would much rather take a hand out than be useful and productive. Some people have no desire to be anything other than a burden on the system. The Soviet Union, the ultimate Welfare State, claimed an official unemployment rate of 0% because *everyone* can used for *something*. However, even there, people chose not to work and instead live on hand outs even if it meant living in a park down the road from the apartment building I was staying in. If we got rid of 100% of welfare, we would have to prepare ourselves to watch useless people starve to death.

Another flaw in the logic is the reaction of the stock market when share holders find out they will getting a smaller return on their investment because Wal-Mart is giving more money to its workers. I know I would sell my stocks in a company that is suddenly going to earn me 4% instead of 5%. Paying their workers more may be the best thing for some, but it wouldn't be best for me as a stock holder. I don't earn anything extra by being socially responsible.

The final flaw I'm going to point out is they never explain what a livable wage is. What costs get included? Food for sure since they are talking about food stamps. Probably shelter too, but what kind of shelter? A bedroom for every child? My grandmother had to share a bedroom with 3 sisters. I had to share a bedroom with my brother. What about other expenses? Is a home phone mandatory? What about a cellphone? Is internet or cable a necessity now? I would questions what parts of a livable wage are for necessities and which are for luxuries.

I found this chart to be interesting: http://nlihc.org/sites/default/files/oor/2012-OOR-Min-Wage-Map.pdf

What I don't understand is how they figure that no one can afford housing on a 40-hour work week at minimum wage. For example, they say in North Dakota (where I live) you need to work 68 hours to get a 2 bedroom apartment. That sounds about right because a 2 bedroom in my building costs $525 a month. A MONTH. Last I knew, every month had at least 4 weeks. That's at least 160 hours of pay per month. Someone can check my math here, but I think 160 is greater than 68. If I have a full time job at minimum wage, I get to live on the remaining 92 hours of pay for the month. They are correct though; You can't pay a month's rent working just one 40 hour week, but I'm not sure working one 40 hour week a month makes you "full time".

Tim_Myth wrote:There are some flaws in the logic. For example, we raised the worker's wage to a livable wage based on current prices, but then we raise the current prices to account for her livable wage. This means she is back under the cost of living and needs another raise to make the new livable wage. This still won't jack prices immensely, but it does mean its not as simple as just raising everyone's wage to the current cost of living.
There is a problem with this. There doesn't need to be a poverty line where people earn less than livable. The entire population CAN make enough for themselves to live. The cost of living doesn't need to go up as wages do. It just does out of the greed of mankind in this style of economy. But I agree that you cannot simply raise wages immediately and just because.

Another flaw in the logic is the assumption that all the people who work at Wal-Mart want to get off financial assistance. My ex-wife is a great example of someone who would much rather take a hand out than be useful and productive. Some people have no desire to be anything other than a burden on the system. The Soviet Union, the ultimate Welfare State, claimed an official unemployment rate of 0% because *everyone* can used for *something*. However, even there, people chose not to work and instead live on hand outs even if it meant living in a park down the road from the apartment building I was staying in. If we got rid of 100% of welfare, we would have to prepare ourselves to watch useless people starve to death.
Unemployment Insurance and Welfare were the two largest contributors to unemployment rates rising in the decades they were introduced. There are people who don't want a handout for any reason and will try to avoid it at all costs. But, this isn't a flaw in their logic. This is their statement of how many qualify for foodstamps, not how many are receiving it.

Another flaw in the logic is the reaction of the stock market when share holders find out they will getting a smaller return on their investment because Wal-Mart is giving more money to its workers. I know I would sell my stocks in a company that is suddenly going to earn me 4% instead of 5%. Paying their workers more may be the best thing for some, but it wouldn't be best for me as a stock holder. I don't earn anything extra by being socially responsible.
This is key. This is exactly WHY Walmart DOESN'T do a damn thing to benefit employees. Look into the Durbin Amendment. It basically gave Walmart a free 2% bonus to its profits that went into shareholder pockets. Not a cost reduction of products for consumer benefit like it was intended for. Or employee wages increases.

The final flaw I'm going to point out is they never explain what a livable wage is. What costs get included? Food for sure since they are talking about food stamps. Probably shelter too, but what kind of shelter? A bedroom for every child? My grandmother had to share a bedroom with 3 sisters. I had to share a bedroom with my brother. What about other expenses? Is a home phone mandatory? What about a cellphone? Is internet or cable a necessity now? I would questions what parts of a livable wage are for necessities and which are for luxuries.
No flaw here. Video doesn't mention livable wage. It just simplified the ~15% of employees eligible for foodstamps into a single mother of 1 child and mathed out how to make all those 15% into non-foodstamp eligible.

Silky, it is that simple.

And Tim_Myth is mostly right as well.

Basically, Walmart doesn't need to be so shitty to their employees as still be a viable company with good profits. A great example to look at is Costco. They pay average workers a much higher wage and keep prices low. The only people upset by this are stock holders, who still just cry but don't ditch the company because it keeps doing well, but not AS well as it can if it shafted employees and customers.

Forcing minimum wage up doesn't solve the problem since not everyone needs to earn an above poverty line level and not all jobs are worth that much. However, the problem is life. There isn't a way to guarantee jobs for the people who need them.

I agree with 99% of everything you guys are saying. I think I get upset a companies like walmart - They move into areas promising TONS of local jobs which is what sales these to the community. If you have never served on a city counsel or approving committee it is quite an eye opener. 

What walmart fails to mention is that only 1 in 20 to  1 in 30 will be full time employees. There are many people that want to work (many that don't too). But for walmart jobs it comes down to many people can't afford to work a part time job at minimum wage with very little benefits. Gas, childcare etc etc can make this impossible for many. It is a vicious cycle that needs to be forced into breaking point. 

I live in a small town that allows small businesses a chance. Over the years many "box" stores have tried to buy and build - but the city fathers and the community keeps them out. We have 1 chain in the town - a subway. Keeping the big box stores out seems to work for the most part.

I don't get upset with Wal-Mart...they are doing exactly as any successful entity must do in a Capitalist system. Don't get me wrong: I'm certainly no fan of Communism! However, Capitalism rewards the successful, and success is measured by the bottom line. When those are the rules of the game, you play that game. The "rules" don't reward a company for being socially responsible. 

That gave rise to unions. Unions were able to collectively force companies to be socially responsible. Unfortunately, unions are just the flip side of the same coin. Unions really only thrive when they can prove their worth by increasing the bottom line of the worker: his pay check. They fight for the worker even if it means the death of the company (The Twinkie being a recent example). Big Business has always sought to limit the power of unions, and there is always a threat that if workers unionize the company will move the facility.

Boycotts are perhaps the most effective way of dealing with large companies in this day and age. It does not have to involve the union or the worker at all. It simply requires educating enough of the public to have a financial impact on the business. IF you can get enough people who don't work at Wal-Mart to recognize a problem and IF all these people choose to shop somewhere else because of what they have learned about, then Wal-Mart would be forced to change its ways because you would have impacted their bottom line.

This video is more or less accurate but it does oversimplify things.

"There are some flaws in the logic. For example, we raised the worker's wage to a livable wage based on current prices, but then we raise the current prices to account for her livable wage."
I would disagree with this. There is no real world example I can think of this happening. There are much bigger factors that impact inflation than the minimum wage. Also at one point not so long ago the average American had much more spending power and the middle class was much larger. What changed that would not allow this to happen again?

"Another flaw in the logic is the assumption that all the people who work at Wal-Mart want to get off financial assistance."
I hear this type of statement a lot but it is rarely backed up by any numbers. I would want to see how long people are on social assistance. What percentage get off after 3 months, after 6 months and after a year. It is obviously more challenging for a single parent to get off than a single man in his 30's so the time-frame is important.


"Unemployment Insurance and Welfare were the two largest contributors to unemployment rates rising in the decades they were introduced."

Same statement as before. Where did this come from? It is also not enough to say that they both happened in the same decade therefore... There was a reason a social safety net was introduced, it would never be done just because. What were the extra factors at the time? For this quote I would urge you to look into the studies done after the great depression focusing on how to prevent it from happening again. I will actually try to find some sources for this when I have some time.

The video just explained that if they raised the Wal-Mart worker's wages, the price would go up by a penny. I think that demonstrates a "real world example of this happening". Yes, there are other factors that influence the rate of inflation. For example, if the demand for oil goes up, the price of oil goes up, and then the cost of shipping your product to market goes up which means the price of your product must increase to cover the additional cost. Yes, at one time we did have more spending power and a much larger middle class. I'm not sure what caused it to shrink, and I'm sure wages play a very, very small role in this given the way Minimum Wage has stagnated versus inflation. But simply raising the minimum wage will not create a bigger middle class because frankly, anyone earning *minimum* wage should not be middle class.

No, I have no hard numbers on the number of people who would rather be on welfare than work. I have a lot of personal anecdotal evidence though. My dad drank my family into subsidized housing before my mom divorced him. My mom was a waitress and raising 2 kids, so we stayed in subsidized housing. I personally knew of at least 2 families in the 12 or 16 apartments that actively worked the system so they did not have to go out and get full-time jobs. But they would go get cash under the table jobs (only if it would give them a fat check) so it was not laziness or disability or lack of work that caused this. I'm not suggesting that 12%-16% of people on assistance refuse to get off assistance, but I think it might be a measurable percentage. Any minimum wage short of $50/hr (my own guesstimate, not a cite-able fact) would likely not be enough to make these people get jobs.

I did find this report interesting: http://www.cato.org/publications/commentary/when-welfare-pays-better-work

I personally am opposed to increasing the minimum wage for two reasons:
1) It erodes MY personal buying power. If low wage workers got even a ~25% increase in pay, I can guarantee you that I won't also get a 25% increase in pay. Even if it cost a box of Mac&Cheese to only go up by 1 cent (about 1.5%), that's a 1.5% increase in my personal costs, and effectively represents a 1.5% pay cut for me.
2) I believe in free markets and supply and demand. Yes, it can create a harsh environment that makes the lives of some people miserable, but in the long run it works out. At the tail end of the great depression, worker would take any job regardless of the wage because it was better than the poverty they had been living in. The average wage of a manufacturing job before the great depression was $27.36/week or about 68 cents per hour. That equates to $9.53/hr in today's dollars. I'm assuming (but I could be wrong) that manufacturing jobs were not "minimum wage" but also not quite middle class in 1929. Based on that timeline, minimum wage seems to be higher than it should be, and in theory then, our "average joe" should be better off than a manufacturing worker in 1929.

"The video just explained that if they raised the Wal-Mart worker's wages, the price would go up by a penny. I think that demonstrates a "real world example of this happening". Yes, there are other factors that influence the rate of inflation." -This only explains that the price goes up by a penny if they choose to pass on the loss. It also doesn't say people will stop buying it. You would need an example of the cost being driven up by demand, there is no shortage of macaroni & cheese. My example of the middle class was only to question the concept of more people can spend so inflation happens. This isn't true until you introduce greed and then it's not really inflation, more of an artificial inflation. I understand that is the point of a corporation, I just wanted to distance actual vs artificial inflation. There is no real world reason walmart would have to raise their prices in order to pay their employee's a decent wage. 

Obviously you know "I have a lot of personal anecdotal evidence though" is not a meaningful statement when you are making a point. I get that from the rest of what you said. I would still want the actual numbers. It is entirely possible that there are more people in subsidized housing abusing the system that those who live elsewhere (in fact that seems likely). If someone is abusing the system I'm all for kicking them out and cutting them off.

Be careful about that report, the funding for that think tank is very biased and I refuse to trust anything backed by the Koch brothers. Fucking scumbags.

"but in the long run it works out" -Not yet, there is no system that is built to last. A free market system will eventually eat it's self. Look up fiat currency. When this was introduced it was already understood that it will not and cannot last.

I like thinking about this stuff and it might seem like I'm bashing America but I'm equally, if not more critical of the Canadian system. They are both fundamentally broken and I don't want to be comfortable with them.

"Koch brothers. Fucking scumbags." Amen brother!

"They are both fundamentally broken and I don't want to be comfortable with them." I generally agree with this statement with the exception that Pure Capitalism is essentially Natural Selection. Nature is ugly, mean, and harsh. Nature has no regard for individual life and is completely amoral. It kills the unfit and allows the weak to perish, and in the long run the species (not the individual) either grows to meet the existing conditions or dies out. Pure Capitalism is the same: your company either adapts to meet the current business climate or fails. I think Natural Selection has worked out for about 3 or 4 million years. (but I won't argue that its working because it produced humans! Just that it has managed to fill every conceivable niche with some form of life.) Not that I'm in favor of Pure Capitalism either. I think morals and emotions play an important part in a social society and business cannot exist without that.

There is a good argument that humans are no longer subject to the sort of natural selection you describe. Definitely a system created by humans would not be considered part of such a system as natural selection. In fact in natural selection the physically stronger more able species might die out due to any number of influences. If we have imagined and brought into being a system of self regulation it is entirely subject to the conditions we chose. This is partly what separates humans from the rest of the animal kingdom. We can choose to be different and choose what path we want to take.

Oh no...humans are still very much part of natural selection. As you point out, the physically stronger species might die out. Physical strength may not be favored by natural selection. It is the "most fit" that survive. If weakness makes you more able to reproduce and pass on your genes, then weakness will eventually get favored by natural selection. We have managed to conquer many diseases that brought down our ancestors, but at the same time we have become the subject of many new diseases that have adapted to the current conditions: drug resistant bacteria for example, SARS, Influenza, Swine Flu, AIDS, etc. Nature finds a way. Always. We think we have a choice, but I'm not so sure. We are genetically predisposed to a lot of behaviors, and we think (because our brain is very good at fooling us) that we made those choices. But did we make the choice or rationalize it after the fact? The brain makes and takes many shortcuts to deal with all the information it takes in (watch Brain Games...great show!). I would challenge you to consciously make EVERY decision for even 5 minutes. It will be much harder than you imagine. But I digress...

Pure Capitalism would be the same. Anywhere a buck could be made, a buck WOULD be made. We would have slavery, child labor, sweat shops, ddt, monopolies, price gouging, insider trading, contract murders and every number of currently banned, illegal, and/or government regulated activities.