Slashdot Mirror
California's $15-an-Hour Minimum Wage May Spur Automation (computerworld.com)
An anonymous readers links to an article on ComputerWorld: For many California business groups, the state's decision to gradually raise its minimum wage to $15 by 2022 is a terrible thing. But for its technology industry, it may be a plus. Higher wages, says the California Restaurant Association, will force businesses to face "undesirable" options, including cutting staff, raising prices and adopting automation. But a higher minimum wage will "signal to tech companies and entrepreneurs" to look at the restaurant industry, said Darren Tristano, president of Technomic, a research group focused on the restaurant industry. The state's governor and legislators reached an agreement Monday to raise the wages. "I think there are a lot of tech companies that are looking at the restaurant industry to accelerate their growth," said Tristano. The restaurant industry is primed for change, said Tristano, "Many of the routines that take place in restaurants are not very different from 30 to 40 years ago," he said.
The goal of any advanced civilization should be 100% unemployment and automation.
"Have you ever thought about just turning off the TV, sitting down with your kids, and hitting them?"
No matter what "minimum" is dictated by statists? I'm shocked, shocked!
I don't know about anyone else, but if I go to a real sit-down restaurant, I want an actual human server, not a robot or some other form of 'automation', and I sure as heck don't want a robot or some automation preparing my food, either. If that was my only other choice then I'd just as soon stay home and cook my own food.
Are YOU using the TOOL, or is the TOOL using YOU? Think about it!
It hit at least one bookseller pretty hard.
"First they came for the slanderers and i said nothing."
If the machines existed today, they'd be purchased; regardless of the minimum wage.
Not if the machines cost more than minimum wage.
If you want human service staff, be prepared to pay the premium for that. Some people, like you, will desire it and to get that kind of personal, custom service, won't be as cheap as what you can get from a machine.
I'm quitting my IT job and taking one of these $31,000 year dream jobs!
If people who normally live paycheck to paycheck now have some disposable income, maybe they will spend some of it at restaurants. Maybe they will even spend enough to more than make up for the increase in employee wages.
Burger flipping is ripe for automation anyway. The rest of making an automated McDees is already done. Royal Farms uses touch screens for the customers to order, and the automated checkouts are in all the grocery stores now.
I worked in industrial automation 20 years ago, and I knew then that the day when people who were intellectually on the left side of the bell curve were unemployable was coming. No here quite yet, but in the next 10 years it will become a major political and social issue.
Best Slashdot Co
It almost seems like government is helpless or has thrown up its hands in dealing with the root causes of the problem, which is the responsibility of government.
The problem is not that people aren't getting paid enough. That is what is called a symptom (for the layman). The problem is that too many people want to live and work in California, for fucks sake! This is the root of housing issues, unaffordability, income disparity, etc. in California. When will people realize that?
Increasing minimum wage just adds to the fundamental pressures here. People are being paid below this new minimum wage because.... There are people willing to work for less than the minimum wage! Do you really think increasing the wage will make the housing crunch better? Make it overall more affordable and possible to live here?
We need policies that make it less expensive to live here, not more. But of course those are the policies that are hard to come up with, and inconvenient -- so yeah, let's just ignore those.
I have been saying for years that an increase in the minimum wage can partly pay for itself by spurring automation. And that's a very good thing, for everyone.
Some business owners might prefer to pay a bunch of people $1/hour to dig a ditch using a shovel, but at $15/hour, you gotta use a backhoe.
I always find it funny when rightwingers complain that a minimum wage increase is simultaneously entirely inflationary AND that it will cause you to lose your job to automation.
I've often thought that we are using far too LITTLE automation, not too much. If burger flipping can be automated, why the heck aren't we automating it? Oh, right, because it's cheaper up-front (but not long-term) to just pay someone a poverty wage.
And it's also always funny to see rightwingers pull out the Luddite critique, i.e. that automation will put us out of jobs, when in fact we've had increasing automation for centuries, now, but not any lower voluntary unemployment. So the Luddite critique is ridiculous when OTHER people use it, but totally fine otherwise...
And then, realize that we had a real minimum wage of about $11/hour in the 1960s, when productivity was FAR lower, when we had far less economic productivity per person. If you adjusted the minimum wage for productivity growth, it'd be over $20/hour right now.
I actually think that by NOT raising the minimum wage, we've stymied technological progress. Yes, there's definitely a limit to how fast you can increase the minimum wage without hitting inflation (or possibly some unemployment), but we're not near that limit with $15/hour.
Those machines do exist, and they are being phased into production for the sole purpose of keeping labor costs in-line with product prices. The issue is that with the forced increase in minimum wage, the adoption rate will be higher.
Regarding Papa John getting his panties in a twist, his company is actually good to work for. I spent a few years in college delivering pizza for them, and they were good to the people. I can't speak personally for him, but I believe he does see the value of having employees, but there is a price point where a decision has to be made: automation or personnel, and $15.00/hr is going to push for the former. Don't believe me...try opening your own food business and see where you end up because if you have to choose between making money to keep the doors open by adopting automation and eventually you will, or going bust...well, yeah.
But then again, it may not...
Here in Ontario, Canada, we raised the minimum wage from $10.25 to $11.00, and unemployment went down in the following months and year, from around 7.5 %to 6.75% (source). While that doesn't prove that minimum wage increases never result in unemployment rises, it does disprove that they always result in unemployment rises.
Minimum wage increases killing jobs is a ridiculous notion - prices can always raise as well, and besides, the naysayers repeat this line almost Every. Single. Time. - even for overdue inflation-indexed increases, which generally casts doubt on their positions. In reality, it's a lot more complicated than that.
I will never understand why minimum wage is not tied to inflation rates - this is a ridiculous argument to have Every Five Years.
http://www.thenation.com/artic...
http://www.thestar.com/busines...
https://www.weforum.org/agenda...
"Government is like fire; a handy servant, but a dangerous master." -- George Washington
The minimum wage causes no competitive disadvantage to local businesses.
If a single restaurant had to pay minimum wage and not its competitors, it could be hurt by the additional cost. If all restaurants have the same cost, then all are as competitive as they were be before. There is the slight problem that a dinner that used to cost $10 will now cost $11 - I doubt that will deter many customers. On the plus side, customers may feel less obliged to pay a large tip to the waiter.
Other industries will have the same competitive equality as long as their competitors are in California. If they compete with Mexican or Chinese businesses, they may have problems. That issue brings us to the TPP which may expedite solutions for those businesses (at the cost of California jobs).
...omphaloskepsis often...
Those tableside kiosks really drag down the ambiance of a joint with their blinking flash games.
I imagine those touchscreens are an absolute horrorshow during cold & flu season.
Chili's / Ziosk, I'm looking at you.
the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff
Funny... but that does bring up the subject of how quickly such automation would go into effect.
Call day 0 the day the law goes into effect.
By day 1, all businesses that have not started up yet, or who have grown enough to start hiring employees, will probably start looking very hard at adding automation to their list of things to implement, even on a small scale. Consider that some of this is in place now; at the Apple Store, there is no checkout counter, because nearly every employee on the floor is not only the sales-critter and light technical POC, but also handles checkout right then and there with a smartphone/app combination. That eliminates at least 2-3 employees who would otherwise sit around and handle money.
By month 1, most of your existing businesses/franchisees in California with traditionally high turnover will likely start talking to folks willing to sell them automation solutions, so long as the quotes for purchase and maintenance are cheaper than the aggregate labor required to perform the automaton's function. Makes perfect sense - as long as the automaton is more efficient and reliable than the person(s) replaced, why not?
By year 1, we'll see the effects: higher unemployment across certain sectors (unskilled labor, the extremely young, folks in depressed areas, etc), and slower hiring among smaller businesses, since they not only have the option of automation (especially as the market starts seriously filling the demand), but because they're not going to be as willing to take risks on hiring unknown candidates, or on hiring an extra employee (or more) in anticipation of growth (the latter due to increased costs per employee - the business is risking more money now when they do that.)
By year 5? Well...
Quo usque tandem abutere, Nimbus, patientia nostra?
I am always bemused that after call centers being moved to India, manufacturing jobs ending up in China, and even Fords being built in Mexico that people can't fathom that increasing labor costs at home might have an affect on the job market. Like the US labor market is somehow a product of American exceptionalism, free from other cost concerns.
While trying to increase the ranks of the middle class is laudable, it seems to be more ending jobs for entry-level workers.
The difference in yearly income between a burrito engineer and a degreed and licensed professional is about $10k under the new scheme. Why bother with the school debit, the professional associations, and yearly certifications when you could just work fast-food?
Except once that pandora's box of automation is opened, even those professional careers are fair game.
To be fair, a wage hike of $0.75 (Canadian) is not really comparable to a $5.00 (US dollars) wage hike.
One constitutes less than an 8% raise, while the other is a 50% raise.
"-1 Troll" is the apparently the same as "-1 I disagree with you."
This is not about "unskilled labor" This is about the minimum cost to do business. Business owners like to talk about the "market" but the market does not, and cannot fix this issue, because the government subsidizes "the market", which is really what this is about. We need to get this subsidy out of the market and put the proper minimum wage in place, such that if an employee is working 40 hours a week he can make a minimum living. If your company cannot pay for someone to live at that then your company is not viable.
When you cant win, ad hominem.
To be fair, the california hike is actually five one-dollar/hour hike a year apart.
Look at the old US car makers who refused to let the government force them to provide cars that were safer and got better gas mileage.
They fought the regulations, refused to comply, sued and delayed, and eventually got their market taken away by car makers who provided all of those benefits in less expensive vehicles
At which point, the manufacturers tried to blame it all on the unions without considering their own recalcitrant behavior
Yeah, they can all suck it, we see through their bs for the lies that it is
Minimum wage increases killing jobs is a ridiculous notion - prices can always raise as well
Not true. You can't just arbitrarily raise prices when there are substitute goods available. Fast food is labor intensive. If the price goes up, more people will cook at home or purchase low-labor pre-packaged food at grocery stores (using the self-checkout line).
California already has a much higher minimum wage than the rest of the nation. If you go in a McDonalds in California, you don't see teenagers working there. You see adults, since the pay is enough to attract them. Adults are more productive than teenagers, so you need fewer of them. So California has removed an important rung on the economic ladder, by turning entry level jobs into permanent no-skill "careers" flipping burgers. This effect is worst in minority neighborhoods which already have extremely high teenage unemployment.
On the other hand, some (a lot?) of people now have 50% more purchasing power, and money is moving around way more than before. Which, if I'm not mistaken, will generate demand, which will generate jobs...
Way too many people nowadays believe that jobs come from letting (financial) business have a lots of money, while in the real world the jobs come from tasks that need to be done -- a.k.a. demand.
Here in Ontario, Canada, we raised the minimum wage from $10.25 to $11.00
That's about a 7% increase. We're talking a 50% increase here. The company I work for relies heavily on minimum wage-ish laborers for the manufacturing jobs, which are basically screwing caps on bottles, putting them in boxes. Real unskilled stuff, diploma and English not required. We're in Los Angeles, and when they announced the minimum wage hike, eyes immediately pointed just over the border to Ventura County, where no such increase was proposed. Now that this is looking to be a state-wide thing, a 50% increase in labor costs for the bulk of our production workers is going to make the automated fillers and cappers pretty much sell themselves. Either way it goes, it's going to drive the price per unit up. Labor isn't the main cost for producing products here, but when we price out to the tenth of a cent per unit, and we roll off hundreds of thousands of units per run, it begins to add up. This cost will either be passed on to the customer, or more likely, will lose us business as clients take their filling operations to states with lower labor costs and less distance to their distribution houses. Most of our min-wage laborers are day workers, so if there's no work, they don't show up or get paid. If work starts disappearing, the $15/hr doesn't mean a damn thing to them, and ultimately the whole scheme will hurt the very people it's supposedly helping.
I think way to many people forget where that extra $5 is going to come from: higher prices. This is the definition and cause of inflation. Someone gets more pay, the prices go up, everything nets out to be the same.
The other thing I'm concerned about is what happens to everyone else's pay. Will they guy that's now making $15/hour (like the EMTS, construction workers, etc.) now get $20? Wouldn't they expect that? What about the guy/gal that's now making $25? And so on. In the end you get nothing but smoke and steam.
I'm also concerned about the notion that every job should pay enough that anyone would be happy with that job. In such an environment, the motivation to strive to be better is significantly reduced. If you don't need a better job, why work harder to get one? What happens to society when that becomes the norm?
Because the performance / cost of automated technology is steadily increasing.
This wage change only has the potential to bring very slightly sooner what seems an inevitable trend toward significant job losses to automation.
Minimum wage rise or no, society is going to have to deal with one of:
A) Guaranteed annual income (for existing as a human in the country).
B) Building really tall barbed wire walls (with automated machine guns/frickin' lasers?) to divide the still-employed and automation owners/shareholders from the increasing hordes.
Where are we going and why are we in a handbasket?
And if your employer lays you off, sends your job overseas, automates your job, or closes their doors, how much are you spending locally?
Why stop at 15? why not 30? or 300?
Never answer an anonymous letter. - Yogi Berra
The statement was that it impacted minorities more, not that it did not impact white teenagers at all.
And the answer is that more affluent neighborhoods will better adsorb the cost of doing business because they can raise prices more than less affluent neighborhoods.
Never answer an anonymous letter. - Yogi Berra
On the other hand, some (a lot?) of people now have 50% more purchasing power, and money is moving around way more than before. Which, if I'm not mistaken, will generate demand, which will generate jobs...
Way too many people nowadays believe that jobs come from letting (financial) business have a lots of money, while in the real world the jobs come from tasks that need to be done -- a.k.a. demand.
Exactly this. Where do businesses expect to sell their products if too few people make enough money to buy them?
Butlerian Jihad.
Mielipiteet omiani - Opinions personal, facts suspect.
This is a commonly misquoted fallacy that is not substantiated by historical evidence.... please note that it is called *MINIMUM* wage... and as a consequence of that, it's overall impact on the economy is quite low, even though the number of workers that are affected by it is quite large. Typically, also, increases in minimum wage are responses to continual rises in the cost of living that have already occurred, and at best such increases are playing catch-up with the costs of living... the additional boost that such a wage increase might cause for the cost of living is invariably relatively minor compared with the size of increase. Bearing in mind, of course, that this is still only true because the amounts typically involved represent such a small portion of the total consumer spending power when you include wealthy individuals. If there weren't such an enormous gap between how much buying power the lowest paid workers have compared with much higher salaried individuals, then increases in minimum wage would be more likely to produce the effects you describe.
File under 'M' for 'Manic ranting'
If automation is going to happen, then it will happen. No sense letting them dangle this sword over our heads.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
I will never understand why minimum wage is not tied to inflation rates - this is a ridiculous argument to have Every Five Years.
Because it gives politicians something they can brag about to their constituents.
"First they came for the slanderers and i said nothing."
This argument was addressed and debunked by Adam Smith when he invented economics. The argument that higher wages causes inflation isn't really true, because that cost is spread out over the production of the employee. Inflation is caused by more by companies taking excessive profits since the increased cost multiplies as their production goes down the supply chain.
Suppose the local businesses have a 10% profit margin, and that a large fraction of that is fixed costs (rent, power, loans, taxes, etc). Now, suppose that 10% of their customers just lost their job to automation and no longer patronize them. Now their profit goes to zero, and their employees also get canned. This causes cascading business failures are fewer and fewer people in the town can afford to pay for things like going out to eat and movies and new cars. Now your local businesses get trashed, and the pool of unemployed go up, pushing down the value of labor. This, in turn, causes over a longer term, wage depression as there is now much more competition for jobs, and people are now willing to work at the mill for minimum wage instead of being able to demand a higher salary. Now the millworkers have less disposable income, which feeds into this depressionary cycle.
But someone will take advantage of the depressed wages, you say. Sure, why? Are you going to move your Googleplex to Modesto? Your expensive white collar people are unwilling to move there; there aren't any restaurants and such; it's now a poor people town. If low wages are important, move the plant overseas, otherwise, put the new plant where the people you're moving want to live. But, you say, they can get lower cost white collar employees there. Maybe, but those individuals left to get higher paying jobs, and when the real estate value plummeted, so did school funding and the quality of teachers, as the better ones didn't want to live there.
This is the death spiral that bay area taxes and minimum wages have pushed on the central valley. $15/hr in SFO is a reasonable minimum wage. It's going to kill the last 5 full time jobs in Modesto where $15/hr is well over a living wage and, frankly, more than unskilled labor is worth there.
Where do you propose the employees of fast food restaurants live precisely? I'm getting very tired of comments like yours that appear to say something but really just lock us back into the inevitable anyway. If minimum wage cannot support living costs then there are no employees and they must all move away so we have automation anyway. Something needs to actually change if this is not to happen.
Laws are rules for the court, but merely a bottom bar to hit for life. Think beyond laws in your actions always.
Long term, it's probably true that the effect will be a wash.
The typical cycle of automation is that there's some kind of crunch (bad economy, rising wages, etc.) which causes businesses to streamline, including adopting automation.
However, managers are lazy like everybody else, and continually keeping their operations lean & mean would take sustained effort, so head counts creep up again.
When the economy eventually expands (it will, sooner or later), businesses hire even more. They don't automate then because a) automation requires making an investment, yet they can't be sure that the good times will last so it's safer to hire someone who can be easily fired, and b) automating takes management time & effort, plus productivity typically takes a short-term hit, neither of which is acceptable during an expansion phase, i.e. "can't you see we're busy making money now?" In management-speak: staffing up is more flexible and less disruptive than automation.
Wash, rinse & repeat.
Why on earth isn't minimum wage tied to CPI (inflation) like it is in most other countries? Set it to some agreed amount, then index it each year based on official inflation figures. The way it is now, the minimum wage even AFTER being increased to $15 still won't be as high as it was in the 1960s, in terms of actual buying power.
This whole "setting it to a fixed, static amount" is a weird, high-maintenance way to legislate. It just means you have to go through the same process another decade down the track.
Just a few minutes on YouTube browsing videos showing various manufacturing machines and the processes they do suggests that making a machine to cook and build Hamburgers and other fast food orders would be child's play.
The only question is where the point between the capital costs of such a device and the higher wages cross.
Exactly, and a higher employee wage pushes the balance more towards the automation angle.
For instance, let's do a stupid exercise at a fast-food joint. $7.50/hr costs an employer (at full time) roughly $15600/yr *before* counting SS/Unemployment Ins./Healthcare/etc contributions. Call it maybe $19k/yr (we slapped on 20% and rounded up). I suspect that you're going to have a damned hard time finding a burger-flipping machine that will amortize to less than $20k/yr (incl. maintenance contracts).
Now bump the employee's wages to $15/hr, or roughly $37000/yr (we slapped on 20% and then rounded down, just to be fair). $37k/yr is probably well within reach of buying that burger-flipping machine and amortizing it, including an on-site maintenance contract.
Now, as a business franchisee who has to deal with sick-days, high turnover (plus lost productivity caused by it), employee gripes, demands for raises, the usual human-human drama, and other bullshit? Oh, and if that machine can produce more product at a better, more consistent quality than any *two* employees on your payroll? Suddenly that machine looks damned attractive, especially once you realize that it'll be working in the back where no one can see it. For a nominal extra cost, you could probably get a self-cleaning one and save yet one more FTE... so even at $70k/yr to replace the 3 FTE units that you'd spend $110k/yr on? Shit, it's more than doable. As a bonus, if you're a dick about it, you can use the presence of those machines to (very) subtly remind the remaining employees that maybe they should up their game...
Quo usque tandem abutere, Nimbus, patientia nostra?
Okay, so why does it remove entry-level jobs for minorities but apparently not for white teenagers?
Because white kids have a lot more opportunities. Many of them don't want a job, because they are too busy studying for college. Or they work part-time at their daddy's business. Black and Hispanic kids are at the bottom, so when that last rung is taken away, they get hurt the most.
For a clear illustration of what happens when you push "white" solutions onto communities where they don't apply, look what happened in Puerto Rico. The economy was doing well, and it was a hub for low end manufacturing, mostly paying about $3 an hour. Then the courts ruled that federal minimum wage laws had to apply to PR. So overnight the wages went up to $7.25, and the jobs disappeared. So instead of making $3 an hour, the workers were making $0 an hour, debts piled up as people stopped paying taxes, and now PR is bankrupt, and seeking a federal bailout.
What happened to PR will likely not happen in California, because the change will happen more slowly, and California has a far more diverse economy. But the same principles apply, and the worst effects will be on the people that can least afford it.
Here's the actual sitiuation.
On the one hand, cost of employing people in jobs that can be automated is rising. Picture this as a graphed ramp up on a plot.
On the other hand, cost of ever-higher quality automation is dropping rapidly. Picture this as a graphed ramp down on the same plot.
When those two lines cross each other, businesses will automate as soon as possible. Not may; will. Any of them that might be inclined not to, for whatever reason, will be out-competed in very short order and subsequently fail.
This can't be fixed by raising the minimum wage; it can only be accelerated, because it doesn't change the rate of the dropping automation line, but it only steepens the rate of the rising employment costs line.
So the solution cannot lie in "just raise minimum wages" approach. There has to be some way to either add costs to automation (most typically taxation is the cost suggested... which businesses generally arrange to be taken from the income of the remaining workers) or change the entire economic model to something along the lines of Basic Income. Something along the lines of that is inevitable due to inevitable technological change, but there's a lot of pain and screaming that will be done between where we are and that point. The former is right where we are already:
Walmart, for instance, is one example of severely low wage workers that are subsidized by the social safety net, which in turn is paid for by the middle class. This is what enables Walmart to keep prices low; they only pay part of the worker's survival needs. Same thing for waitresses, burger flippers and so on. Your hamburger isn't cheap if you're middle class; it's just that you pay for part of it at McDonald's, and then you pay for the rest when you pay your taxes. Very handy for McDonalds. They get to maintain the illusion that they sell cheap(er) food. Most taxpayers fail to make the connection, and continue to support McDonalds' business model by buying those burgers.
The question is how long that will be sustainable in the face of a mandated wage increase -- will people still buy a burger if, instead of $1.00 at the window and $x at tax time, it's $1.++ at the window? And what, do you imagine, will McDonald's do about it if they see this as less likely?
Pretty obviously, they will automate. People will lose their jobs. But now instead of paying for part of the burger flipper's wages at tax time, the ex-flippers are unemployed, so the social safety net must cover their entire cost of living using the income of those who remain employed. Business will continue to see to it via legislative control that they are not the ones who do the paying.
Isn't it clear that severe pain is on the way no matter what under the current economic model? I can't see a way out of it. At all.
This is why I support a change to a formal basic income. Looking at the stats and polls, though, I don't think it's likely in the near term.
I've fallen off your lawn, and I can't get up.
Dunno why you were modded as "Troll", because your post makes perfect sense, especially when asking at what point do we set this wage? What calculus is being used to set it?
"Living Wage" is not only vague, but it becomes a moving goalpost... so that can't be it. Setting it against a cost-of-living index might work, but that becomes a moving goalpost as well (and barring massive deflation, it always moves upwards).
So at what objective point does one set this wage without creating a self-feeding loop that pushes it upwards?
Quo usque tandem abutere, Nimbus, patientia nostra?
people had four specific jobs.
1) Protect the tribe.
2) Physically gather plants.
3) Hunt animals.
4) Make essential clothing the few minor tools for use in jobs 1-4.
EVERYONE did those things. Today, each of those jobs is done by less than 1% of our population. Each of those jobs, is for all effective purposes, made obsolete by automation and efficiency gains.
Are we all unemployed? No. Work is dependent not on things that need to be done, but instead on things we want to be done..
As long as mankind has dreams and desires, there will be work. And Humans are greedy S.O.B.s Give each of us a sex-bot and we will demand a second so we can have a three-way.
Mankind won't run out of dreams and desires until we flood the universe - which I don't see as being a problem for the forseeable future. We haven't even left Earth yet.
excitingthingstodo.blogspot.com
It is a 50% raise over the 6 next years! That would mean about a 8.2% increase per year. That is faster than inflation but considering the minimum wage has gone from,
California has been fairly good in increase the minimum wage but it most years barely kept pace with inflation. The proposed increases are not drastically higher.
While I agree that this is an undesirable side effect of raising the minimum wage in some (or many?) circumstances, I also at the same time disagree with the idea that wages should be kept low (and in some cases well below the poverty line) simply to provide employment. By your argument, the result of this minimum wage hike is that McDonald's now has more productive workers at the expense of lesser skilled workers being more often unemployed. I see that as a zero-gain, but also zero-loss, proposition.
Now while your point that it removes an important rung on the economic ladder is at least in some (or again, many?) cases true, I tend towards my more capitalistic opinions - that wages should not be kept low simply to provide employment to the unskilled. There should be a wage floor that allows unskilled workers to consume baskets of goods, not merely subsist on them. For the record, I am currently unemployed, have been for a year, and live on a shoestring budget. 90% of my expenses are tax-free, give or take. Things like groceries, diapers, medications, rent, all of it is tax-free in most modern societies. Raise the minimum wage for my wife, and we'll have more money for luxuries, or at least, for taxable consumer goods, returning nearly all of that to the economy rather than a savings account or investment fund, and also returning more of it to government coffers.
Without minimum wage legislation, the market will tend towards indentured servitude (I know, that's a rather poignant term to use). I would rather see poverty level wages eliminated entirely, and a corresponding rise in unemployment, than see subsistence level wages proliferated. If that means I pay more for my Big Macs, I'm all for it. There is a reason I don't shop at WalMart, and don't buy clothing made in Bangladesh. I want the people who manufacture and sell my consumer goods to be capable of supporting a family. It's why I buy my coffee from Starbucks - they pay well (decently, at least, at least in Canada). I for one am happy to see more productive, and hopefully better paid, workers at McDonalds, knowing that the people working there can afford to feed a family. If that means higher unemployment, that is a sacrifice I am willing to make.
I suppose it all boils down to this - I'd rather see fewer better paying jobs than more lesser paying jobs (grammar, ugh...).
"Government is like fire; a handy servant, but a dangerous master." -- George Washington
While I do agree that everyone's wages drive the cost of doing business, there's a problem: Wage discrepancy itself has frig-all to do with determining a workable minimum wage, and for one reason: that metric is honestly based in class envy, and nothing more.
Why? Because there is no sane and objective way to prove the argument that said discrepancy is the cause of poverty. There are a few reasons why, but they're all based on bad assumptions:
First, aggregate monetary wealth is not a static quantity, but grows and shrinks with the economy (usually growing). You do not have everyone fighting for a slice of the same static-sized pie.
Second, there is no way that the average worker making $20,800/yr ($10/hr) has the same skills/education/experience as the average worker making $250k/yr.
The demand and talent pools for each job are radically different - hence the difference. If competent janitors suddenly became ultra-scarce, and the toilets still needed cleaning, you would see janitors making $250k/yr and getting golden parachutes. Conversely, if competent CEOs were everywhere and every company already had one, their wages would drop like a rock.
All that aside, you did leave something out - cumulative effect: 500 $7.50/hr employees in a large company getting a $7.50/hr raise would suddenly cost the company at least an additional $7.8 million/yr, not counting the commiserate rise in FICA and etc. The CEO of the same company literally quadrupling his $250k salary couldn't come near touching that.
Quo usque tandem abutere, Nimbus, patientia nostra?