Minimum wage: how much is too much?

[Josh]

Regarding wage growth and inflation. This is what the numbers look like since 1964. Essentially real wage growth has been completely flat over the past 50+ years

Almost all productivity gains in the last 20-30 years have gone to the top 1% (or the top 0.1%). The American worker (and the global worker) is more productive than ever, but has not received any of those gains.

[Josh]

It would be interesting to know how standard of living has changed for someone earning the same real wage during that period.

My grandfather was a poor truck driver and was able to save up cash to buy a house in the early 1950s for about $4,000, including a neighbouring house he rented out. He never raised the rent, so by the 1990s, he was still renting it for something absurdly low like $45 a month. (Common wisdom then was to rent something for 1/100th of what you paid for it.) Before they bought it, they rented rooms or houses from various people.

He also bought his cars cash. His first car was a 1936 Ford Model A which kept stranding him and my grandma. Back then when you got stuck, you would go to the nearest neighbour and ask for help and usually pay them around $5, which I imagine was a fair bit back then. After that he got a 1960 Dodge, later a '77 Plymouth Valiant, and finally an '85 Dodge Diplomat (which I inherited for $1).

A truck driver these days can't buy a house cash after working a few years in a typical prosperous American region, let alone get the neighbouring house too, and also be able to buy a car cash.

He had enough free time left over to volunteer at the American Legion, sing in a community choir at a nearby Grange, and to dig out the basement of the union chapel down the road so that they could hold Sunday school in the basement, despite the fact he wasn't a religious man himself. He helped start a co-operative grocery store along with others, so that they could have a grocery store in town instead of needing to drive to a bigger city.

One could argue that fancy smartphones and Internet access represents a higher standard of living; I really doubt this. People are not healthier than they were in the 1960s. They have a lot less social capital, too. The opportunities to do things like start a co-op grocery store to help bring fresher food and better groceries close to home or be in a thriving community choir are much less present.

[Josh]

It would be interesting to know how standard of living has changed for someone earning the same real wage during that period.

My grandfather was a poor truck driver and was able to save up cash to buy a house in the early 1950s for about $4,000, including a neighbouring house he rented out. He never raised the rent, so by the 1990s, he was still renting it for something absurdly low like $45 a month. (Common wisdom then was to rent something for 1/100th of what you paid for it.) Before they bought it, they rented rooms or houses from various people.

He also bought his cars cash. His first car was a 1936 Ford Model A which kept stranding him and my grandma. Back then when you got stuck, you would go to the nearest neighbour and ask for help and usually pay them around $5, which I imagine was a fair bit back then. After that he got a 1960 Dodge, later a '77 Plymouth Valiant, and finally an '85 Dodge Diplomat (which I inherited for $1).

A truck driver these days can't buy a house cash after working a few years in a typical prosperous American region, let alone get the neighbouring house too, and also be able to buy a car cash.

He had enough free time left over to volunteer at the American Legion, sing in a community choir at a nearby Grange, and to dig out the basement of the union chapel down the road so that they could hold Sunday school in the basement, despite the fact he wasn't a religious man himself. He helped start a co-operative grocery store along with others, so that they could have a grocery store in town instead of needing to drive to a bigger city.

He sent my mother to the local Catholic college and tuition back then was low enough it was just paid in full. No student loans, no debt. My mother went on to an Ivy League-tier school for graduate school, which also required no debt.

One could argue that fancy smartphones and Internet access represents a higher standard of living; I really doubt this. People are not healthier than they were in the 1960s. They have a lot less social capital, too. The opportunities to do things like start a co-op grocery store to help bring fresher food and better groceries close to home or be in a thriving community choir are much less present.

How many truck drivers can pay cash tuition for their children? The modus operandi now for the working class is to be buried in debt.

[Josh]

If house prices go up $100,000 a year (which is what they did in the last year here), how can a family making $50,000 a year afford to ever buy a house?

Folks can move somewhere cheaper for occupations one can do remotely. The house across the street from us sold a couple months ago for $20,000.

https://www.zillow.com/homedetails/505- ... 4158_zpid/

People in occupations making $50,000 a year often can't do their jobs remotely. Being able to do a job remotely is a privilege, and a privilege that usually belongs to the wealthy.

The working class are expected to live hours away from their jobs so they can afford basic housing, and then have to spend lots of their money on commuting costs. In the old days, there were at least safe neighbourhoods closer to jobs in the city. Those are mostly gone. They are priced out, unless they want to be in a very dangerous neighbourhood, and even those are gentrifying quickly and pushing those people out.

[mike]

If house prices go up $100,000 a year (which is what they did in the last year here), how can a family making $50,000 a year afford to ever buy a house?

Folks can move somewhere cheaper for occupations one can do remotely. The house across the street from us sold a couple months ago for $20,000.

https://www.zillow.com/homedetails/505- ... 4158_zpid/

People in occupations making $50,000 a year often can't do their jobs remotely. Being able to do a job remotely is a privilege, and a privilege that usually belongs to the wealthy.

The working class are expected to live hours away from their jobs so they can afford basic housing, and then have to spend lots of their money on commuting costs. In the old days, there were at least safe neighbourhoods closer to jobs in the city. Those are mostly gone. They are priced out, unless they want to be in a very dangerous neighbourhood, and even those are gentrifying quickly and pushing those people out.

The idea that we should all be able to live very cheaply near the places where all the highest paying jobs are seems to ignore basic economic realities that none of us can change.

[mike]

If house prices go up $100,000 a year (which is what they did in the last year here), how can a family making $50,000 a year afford to ever buy a house?

What price range of houses jumped by $100,000 in value? Are you saying that $75,000 houses are now worth $175,000? Or was it more like $500,000 houses that became worth $600,000?

[Sudsy]

When is minimum wage too much ? When it is paid and the receiver gives some of it back and says it is too much. Seems quite simple to me.

[Josh]

If house prices go up $100,000 a year (which is what they did in the last year here), how can a family making $50,000 a year afford to ever buy a house?

What price range of houses jumped by $100,000 in value? Are you saying that $75,000 houses are now worth $175,000? Or was it more like $500,000 houses that became worth $600,000?

The house I'm sitting in right now jumped from $150k to about $250k.

The house across the road sold for $220k and then sold again a few weeks later for $230k, and it's smaller and on less land than the one I'm in, but is a more attractive brick structure. A few years ago it was worth maybe $120k.

When my brother in law bought this place, he picked a place he could afford, not too far from church and church people, and that was about an hour drive from his job. I sure hope you don't think being an hour away from one's job is "luxurious living".

This is in a lower-cost part of my state, by the way. There are other places where it's way worse. This used to be a place that working class people could expect to afford a home. Not anymore.

[Josh]

The idea that we should all be able to live very cheaply near the places where all the highest paying jobs are seems to ignore basic economic realities that none of us can change.

I think the working class should be able to live near jobs that pay them a living wage, enough to afford to own their own home, and still have time to see their families.

An environment like in L.A. where the average apartment is $2,600/mo means most people are going to live in grinding poverty, and can barely afford rent, let alone to own a home or condo. Living near any job would be a luxury, let alone a "highest paying job".

I don't think it's good or healthy for families to have their breadwinner making 1 or 2 hour commutes each way every day.

[mike]

If house prices go up $100,000 a year (which is what they did in the last year here), how can a family making $50,000 a year afford to ever buy a house?

What price range of houses jumped by $100,000 in value? Are you saying that $75,000 houses are now worth $175,000? Or was it more like $500,000 houses that became worth $600,000?

The house I'm sitting in right now jumped from $150k to about $250k.

The house across the road sold for $220k and then sold again a few weeks later for $230k, and it's smaller and on less land than the one I'm in, but is a more attractive brick structure. A few years ago it was worth maybe $120k.

When my brother in law bought this place, he picked a place he could afford, and that was about an hour drive from his job. I sure hope you don't think being an hour away from one's job is "luxurious living".

My suspicion is that markets where real estate values jump by those kinds of percentages are markets where they can drop quickly as well. For example there are real estate developers that lost everything in California during the crisis of 2008. Or people who got mortgages during the peak ahead of that collapse and then afterward were completely underwater.

In my rural area, we never saw the extremes peaks and valleys of that crisis. We were never extremely overvalued, and so never had a crash. Wanting to live in areas where you can make the big bucks often comes with that kind of risk.