Paycheck To Paycheck workers

[jsfisher]

Are you arguing that if an 18 year old works a full time job his parents should still be held responsible for allowing him to live decently?
In other words, his parents subsidising the 18 year old's employer.

I see you are skilled at erecting your own strawmen.

 

[Jekyll]

I don't think this will work. The only taxes your target people are paying are like the social-security tax; exempt from credits. I do my own taxes and I find that I could get refunded all my withholdings with a couple hundred to spare. That was nice, but because I only opted for a minimal withholding in the first place, it didn't help much.

Those extra tax credits didn't help me at all because they only annul eligible taxes that you've already paid and for your population, that is probably non-existent.

The other reason it wont work is because business don't pay people what they're worth, they pay what the market will bear, so if you subsidise wages people will get paid less.
You can see this effect looking at supermarket prices and farms in the EU.

 

[plumjam]

I see you are skilled at erecting your own strawmen.

No, I was asking the question.

 

[Metullus]

I have never been paycheck to paycheck,but only because when I was a very young man I made it a policy to take jobs that few people wanted in places that nobody wanted to go. I made pretty good money and put it away so that I would be able to work as I pleased later in life. It has worked out.

 

[blutoski]

Now here's a strange thing. I have a brother living in Vancouver, which is not a cheap place to live. He's worked a series of odd jobs in the years since the steady job he had disappeared along with the company that provided it. But he's still living in Vancouver and doesn't even own a vehicle, relying instead on public transit to get around.

It could be a timing thing: does he own or rent?

I think the consensus right now about Vancouver is that the high job vacancy rate (maybe 15% of positions are unfilled right now) is almost entirely caused by the high real estate prices: young people are not going to take a $6/hr job in a city where a 350 sq ft batchelor suite costs $1200/mo.

On the other hand, if you're lucky and bought twenty years ago, you're probably paying $350/mo for a comfortable 2500 sq ft four-bedroom house. Of course, you'll rent the rooms out for $1000/ea. Why work at all?

Housing cost makes a big difference as to whether you're 'able' to live in the same city where you work, and that's all about timing.

 

[Blue Mountain]

It could be a timing thing: does he own or rent?

I think the consensus right now about Vancouver is that the high job vacancy rate (maybe 15% of positions are unfilled right now) is almost entirely caused by the high real estate prices: young people are not going to take a $6/hr job in a city where a 350 sq ft batchelor suite costs $1200/mo.

On the other hand, if you're lucky and bought twenty years ago, you're probably paying $350/mo for a comfortable 2500 sq ft four-bedroom house. Of course, you'll rent the rooms out for $1000/ea. Why work at all?

Housing cost makes a big difference as to whether you're 'able' to live in the same city where you work, and that's all about timing.

Unless things have changed in his life in the last few years, he rents. I'm not really sure how he does it if a bachelor's goes for $1200/mo. I know he's not in a desirable part of town, so that may put downward pressure on the amount his landlord can charge.

 

[Tsukasa Buddha]

I don't make paychecks !

I've never had a job, and the people at my University never called me back...

I listed every hour I didn't have class as free!

I have done volunteer work though .

But so far I have $1,500, $1,300 of which is in savings.

My school debt so far will be $50 bucks a month for ten years, though I expect it to reach 200 by the time I graduate.

My projected salary will be 40-50k. Though I am sure my starting salary will be much lower.

But if I agree to work in a high-risk school, they'll forgive 10k in debt !

Also, I am so stingy. So stingy. You really have no idea. In the past month I have spent 15$. And that was for train fare, nothing else (Food's included, so I would be stupid to eat out).

But OMG no one else saves here. Everyone has credit cards! I think they are teh devil .

Students are morons at saving (Excluding me and the devout Muslim girl).

 

[UserGoogol]

I don't think this will work. The only taxes your target people are paying are like the social-security tax; exempt from credits. I do my own taxes and I find that I could get refunded all my withholdings with a couple hundred to spare. That was nice, but because I only opted for a minimal withholding in the first place, it didn't help much.

Those extra tax credits didn't help me at all because they only annul eligible taxes that you've already paid and for your population, that is probably non-existent.

My impression was that the earned income tax credit is a refundable tax credit, thus you if you don't pay any taxes you just get a check in the mail. I don't really have a great understanding of it, though, and it sounds utterly reasonable that it would have some complexities I'm not aware of. But if that's the case, there's no reason why they couldn't just create a new system where tax is completely irrelevant to the system.

Personally, I like the idea of a guaranteed minimum income that gives everyone some amount of money completely regardless of whether they work, (although people of higher income would ultimately pay more in taxes than they get) but I figured that since this thread is specifically about the working poor rather than just poor people in general, setting something more EITC-ish where the income phases in as you move towards full-time work and then phases out as you become wealthy enough that you don't really need it anymore.

 

[Jaggy Bunnet]

I am all for having a different wage for people under 18 and people over 18. My high school kid does not need to earn as much per hour as someone out on his own, and is not as available. That should be reflected in wages.

So two people doing exactly the same job should be paid different amounts for it based purely on their age? Wow.

Do you not think this might create an incentive for employers to have lots of part time jobs for low paid under 18's instead of employing over 18's at a higher rate?

 

[Jaggy Bunnet]

My impression was that the earned income tax credit is a refundable tax credit, thus you if you don't pay any taxes you just get a check in the mail. I don't really have a great understanding of it, though, and it sounds utterly reasonable that it would have some complexities I'm not aware of. But if that's the case, there's no reason why they couldn't just create a new system where tax is completely irrelevant to the system.

The UK tax system may be similar to what you are talking about. Normally taxes are withheld at source by employers and paid over to the government. For low paid workers, there are tax credits (Working Tax Credit, Child Tax Credit) which are effectively paid through the same system (either by reducing the amount withheld from their salary or by "negative reductions" if the credit is more than the withholding due, meaning they get more than their gross salary.

Of course this has led to huge problems in adminstration because the computer system was never designed to deal with such credits, the credits are available to families with incomes that few people would consider to be low (up to £66k - somewhere about $135k) and it leads to some eye-wateringly high marginal tax rates (70%, even before taking into account impact on any social security benefits) for low income earners, which understandably reduces the incentive to work additional hours or trying to find a higher paying job.

However it does allow the Chancellor to claim that benefits are not increasing as fast, and that income tax revenue has not been increased by treating these government handouts not as benefit payments but as a reduction in tax revenues.

 

[Almo]

They should have raised it higher, and established a maximum wage as well. *shrugs*

Maximum wage won't work for many reasons. But, I like the idea Ben and Jerry's was using: Top-paid employee can't make more than some number times the amount the lowest-paid employee makes. So if the CEO wants a pay raise, all the little guys get one, too. Since it's a ratio, there's still incentive for people to take the responsibility that goes with the higher positions. It just makes sure the rank-and-file don't get ignored as a company's profits increase.

 

[JoeEllison]

Maximum wage won't work for many reasons. But, I like the idea Ben and Jerry's was using: Top-paid employee can't make more than some number times the amount the lowest-paid employee makes. So if the CEO wants a pay raise, all the little guys get one, too. Since it's a ratio, there's still incentive for people to take the responsibility that goes with the higher positions. It just makes sure the rank-and-file don't get ignored as a company's profits increase.

Sounds like what I had in mind: maximum wage set as some multiple of minimum wage.

Right-wing "free market" nutters will try to claim that no one will want to be a corporate executive for "only" a few million dollars. They'll tell you that Bill Gates will pack it in and shut down Microsoft if he has to give up even 1% more money in taxes. Hell, Bill Gates won't even claim that...

 

[balrog666]

Maximum wage won't work for many reasons. But, I like the idea Ben and Jerry's was using: Top-paid employee can't make more than some number times the amount the lowest-paid employee makes. So if the CEO wants a pay raise, all the little guys get one, too. Since it's a ratio, there's still incentive for people to take the responsibility that goes with the higher positions. It just makes sure the rank-and-file don't get ignored as a company's profits increase.

It didn't work for Ben and Jerry's, as they found out when they tried to hire a new CEO.

 

[jimtron]

It didn't work for Ben and Jerry's, as they found out when they tried to hire a new CEO.

I know (iirc) that Ben & Jerry's no longer does this, but in what way did it not work? What was the problem with it?

 

[Gregoire]

States have been independently raising the minimum wage, and nothing horrible has happened... so it is a flat-out blatant lie to claim that a national increase will do any damage either.

Sweet Satan, is capitalism really that evil at its core, that billionaires feel like they HAVE to screw over the average worker, to preserve some tiny percentage of their overall profits?

Have you ever studied the Science of Economics? I am sorry to say this, but your reference to "lies" sounds just like a fundy challenging the Science of Biology. Do you think there is a conspiracy too?

As I stated it is very well accepted that the aforementioned small raises in the minimum wage do cause small increases in unemployment in unskilled workers. If you don't believe me, check out any Economics 101 textbook. All the ones I have seen graph it out in exquisite detail.

Does this mean one can't find any Economic Scientists who dispute this? Of course not. There were even two studies in the 90's which reflected the counter position, but most believe these studies were seriously flawed. Still, you are free to come up with theories about why you think differently. It is just that calling the solid majority opinion a "lie" makes absolutely no sense.

 

[Gregoire]

why would you think that?
If a minimum 'living wage' law was brought in it would apply to all medical supply companies... in fact ALL companies.. so the playing field would have been kept level for everyone across the board. The net effect is just a slight redistribution of the money from those at the top and middle to those at the bottom (who need it most)

if people can't live decently, out of poverty, in return for working full time at the minimum wage level.. then that level should be raised until they can

Thanks for the question. I can see where you are coming from. But I think you have to look at the entire market of unskilled labor.

While a medical supply company can simply raise its prices and sell only slightly fewer items (its supply and demand curves are "inelastic"), other businesses will have a harder time.

For example, when fast food restaurants raise their prices, their sales will decrease a lot more. So the fast food restaurant industry, among many others, will employ fewer workers.

Fewer workers employed means much greater competition of unskilled workers for fewer jobs. A 16 without any job experience and no past employment references will probably be viewed not well as most other unskilled workers.

(Please note, this effect was not very noticable with small increases in the minimum wage. Indeed the market clearing price for unskilled labor often exceeds this. But living wage laws require much larger increases so the effect would be much more apparent.)

 

[Gregoire]

My impression was that the earned income tax credit is a refundable tax credit, thus you if you don't pay any taxes you just get a check in the mail. I don't really have a great understanding of it, though, and it sounds utterly reasonable that it would have some complexities I'm not aware of. But if that's the case, there's no reason why they couldn't just create a new system where tax is completely irrelevant to the system.

That is my understanding of the EITC too. Others have discussed the "negative income tax" which I think is a variation on the same theme.

I hope those on this board understand that I am not challenging the question of whether to help the poor. The question is how best to help the poor which will have the least amount of ill effects.

 

[balrog666]

I know (iirc) that Ben & Jerry's no longer does this, but in what way did it not work? What was the problem with it?

It worked as long as one of the founders believed in it and was willing to accept such a salary cap for his own labor; but, in their defense, an owner is the last one to be paid in any event, so it is quite typical for a new owner to undervalue his worth in the job market.

But, in the end, it failed when they needed to hire a new CEO. The ones who would accept that salary were judged unsuitable or incompetent and the rest refused to accept such a pay cut for assuming such responsibility.

 

[plumjam]

Thanks for the question. I can see where you are coming from. But I think you have to look at the entire market of unskilled labor.

While a medical supply company can simply raise its prices and sell only slightly fewer items (its supply and demand curves are "inelastic"), other businesses will have a harder time.

For example, when fast food restaurants raise their prices, their sales will decrease a lot more. So the fast food restaurant industry, among many others, will employ fewer workers.

Fewer workers employed means much greater competition of unskilled workers for fewer jobs. A 16 without any job experience and no past employment references will probably be viewed not well as most other unskilled workers.

(Please note, this effect was not very noticable with small increases in the minimum wage. Indeed the market clearing price for unskilled labor often exceeds this. But living wage laws require much larger increases so the effect would be much more apparent.)

No problem.

Taking the fast-food restaurants example... introducing a living wage throughout society wouldn't, I think, have the effects you say. I don't believe they'd sell less food. People would still eat away from their homes.. and fast-food is just about the cheapest option for this. It would remain about the cheapest option.
Most patrons of fast food restaurants are not high earners, they are average or below average earners. With the introduction of the living wage it is this section of the society that would gain the most, comparatively, and would have more disposable income available. They'd most likely eat at fast food restaurants more regularly. I believe the net effect would be beneficial for fast food.

A similar effect would pertain throughout society. Less money would be spent on the kinds of things bought by the rich and the middle class, and more money would be spent on the kind of things bought by the poor.
Porsche car dealers might sell a few less cars, Gucci sales might drop a bit.. I don't think 99% of society would care about that.

 

[jsfisher]

It would be helpful if some of those advocating the "living wage" minimum wage would clarify what it would cover. I, for one, would not have expected frequent dining at fast-food establishments would be included.

Also, would the minimum very by circumstance? Would a single mother with 3 children qualify for a high minimum than a married couple with no kids? Does the minimum wage in New York City need to be high than in Topeka?