If raising the minimum wage will do them in, they're already halfway there if things are really[1] that dire and will end up there soon enough. So yes, people are better off not working for those types of businesses. If a business can only remain solvent by paying unreasonably low wages, it puts downward wage pressure on competing businesses and traps unskilled workers in a labor pool of dead-end jobs with little hope of escaping it/them and no time to do so since they're always scrambling to make enough money pay the most urgent bill.
There are plenty of things society needs done to keep displaced workers productive (with better pay and a sense of actual accomplishment) while giving them breathing room to figure out 'what next?' I don't believe for a second that we're doing workers in the sub-basement of the economy any favors by keeping them locked down there. It isn't a binary (either they work in these crap jobs or they sit at home and deteriorate) decision... there are a variety of options between the extremes.
[1] I'm suspicious of the majority of cases where this claim is made. A rational business person would see that such a business is already marginal and that they would likely be better off shutting it down and redeploying the capital elsewhere for a better return. This happens all the time. If the owner can't see this, keeping the business on life support isn't doing anyone any favors.
> [1] I'm suspicious of the majority of cases where this claim is made. A rational business person would see that such a business is already marginal and that they would likely be better off shutting it down and redeploying the capital elsewhere for a better return. This happens all the time. If the owner can't see this, keeping the business on life support isn't doing anyone any favors.
I agree with you, I would never own a restaurant or bar personally. But profits are really ~10% for the average mom n pop restaurant. It's just how it is. So $1mm in annual sales makes you $100k, more or less. People like owning restaurants, despite their best financial interests.
10% is when the restaurant is extremely successful. Average margins are lower than that.
Arguably there are way too many restaurants, in part due to low interest rates. If there were fewer restaurants, the volume would go up and the average restaurant would do a larger gross and be able to handle low or lower margins.
Consider that if someone lived through the last time the US had significant price inflation as an adult, they are 70+ years old. Costs are going up for anything with tight supply, including for labor. Very few working age adults, or business owners, have any experience with that. The transition will be alarming and painful but there is no back peddling now. Businesses with slim margins and an inability to rapidly raise prices just will fail.
> People like owning restaurants, despite their best financial interests.
Which is fine, but then it’s silly to base minimum wage policy on whether or not it will make somebody’s already-irrational hobby business less profitable.
> People like owning restaurants, despite their best financial interests.
And part of the problem is cultural. There is social capital that exists alongside human and financial capital, and because its hard to quantify we end up with this sort of hidden value that isn't accounted for.
Plenty of small businesses, especially restaurants, appear to me to be sustenance operations. Many owners appear happy just to not go broke and pass the job to their kids.
> there are a variety of options between the extremes.
There are a variety of options completely outside of that continuum.
Like, how about a democratically planned economy where we intentionally work on things that actually help society instead of just whatever happens to make the most profit for the current owners?
I think a big part of burnout is that the work we're doing is clearly pointless. I'm stuck writing debugging shitty Android apps all day. Can I please go plant some forests or something?
> I'm stuck writing debugging shitty Android apps all day. Can I please go plant some forests or something?
If this was the status quo, there'd be just as many people thinking "I'm stuck outside doing manual labor planting trees. Can I please spent time doing something mindless sitting at a desk in a climate controlled workspace instead?"
Someone out there is deriving value from the android app you're debugging or else it would not be economically viable to keep paying you to do that job.
> Someone out there is deriving value from the android app you're debugging or else it would not be economically viable to keep paying you to do that job.
Where does this sort of axiomatic economic thinking come from?
Tons of software projects really are completely pointless and will never turn a profit or generate value. And not even in a "the bet was worth making way" -- walk into any Fortune 500 and you'll find whole armies of people doing pointless busy work. Not confined to enterprises, though -- "special projects" are a thing in startups too. I've seen 10% layoffs -- literally workforce decimation -- without a single meaningful change to the economic output of the business. And that's the private sector. Anything defense-related is at least 100x worse in terms of pointless busy-work.
I don't quite understand how these sorts of neo-classical micro-econ axioms have such huge mindshare. Business managers are not omnipotent, and many aren't even competent.
> there'd be just as many people thinking "I'm stuck outside doing manual labor planting trees
Then we could trade jobs for a while. Part of the problem (for us knowledge workers) is that we get pidgeonholed into doing one thing because that's where we have enough experience to convince someone to pay us to work on their thing. Not to mention that switching jobs or taking breaks is more annoying than it ought to be because health insurance and other benefits are tied to employment.
> Someone out there is deriving value from the android app you're debugging
The CEO. Who already has enough money that he could retire if he wanted. I don't think people in general would miss our buggy app if it disappeared tomorrow. I do miss the trees when they disappear, though.
> [1] I'm suspicious of the majority of cases where this claim is made. A rational business person would see that such a business is already marginal and that they would likely be better off shutting it down and redeploying the capital elsewhere for a better return.
> while giving them breathing room to figure out 'what next?'
I'm dubious of this claim. My experience from observing many friends in this situation at different economic levels (enough savings to take a break in US. Unemployment benefits in Europe) is that they rarely use the time to figure out what is next. Instead they most often use the time to relax and only spend time trying to figure out what is next when pressured to do so by impending financial circumstances (doing nothing depletes savings for those in America and unemployment benefits run out eventually in Europe).
Whether the amount of time afforded by savings or unemployment is 3 months or 2+ years, it's only the last 1-2 months where most people spend time figuring things out.
This is a very nice way of saying “I asked my poor friends to confirm what I want to believe.”
When all you have to look forward to your entire life is some slog of service industry jobs with little to no benefits or vacation, of course you maximize the amount of time you spend on your own life. Poor people deserve to relax, and I have never had a job in my tech career that compared to the stress or exhaustion of my minimum wage jobs.
If I get fired now, I’d be happy to go find my next career move. Back then, you would have to drag me into another restaurant.
You seem to know a lot more about his friends then would be expected. How do you know they are poor? I had a high paying job for years but couldn’t have afforded not working for two years without seriously draining retirement savings at the time.
There are plenty of things society needs done to keep displaced workers productive (with better pay and a sense of actual accomplishment) while giving them breathing room to figure out 'what next?' I don't believe for a second that we're doing workers in the sub-basement of the economy any favors by keeping them locked down there. It isn't a binary (either they work in these crap jobs or they sit at home and deteriorate) decision... there are a variety of options between the extremes.
[1] I'm suspicious of the majority of cases where this claim is made. A rational business person would see that such a business is already marginal and that they would likely be better off shutting it down and redeploying the capital elsewhere for a better return. This happens all the time. If the owner can't see this, keeping the business on life support isn't doing anyone any favors.