“Supply and Demand” A Privileged Arguement

One of the first things you learn in any intro economics class is the theory of Supply and Demand. What you will be told is that the supple of a product and the demand of a product will impact the price of said product. When prices are higher, suppliers are willing to supply more. When prices are lower, demanders will demand more. The final price will fall where there will be not too much back order, nor too much surplus. In layman’s terms, that is the theory.

However! This theory is VERY simplistic. This theory only takes into account the price of the product and no other factor — such as the factors that go into determining price.

The phrase “supply and demand” arises frequently in discussions about wages — ESPECIALLY the minimum wage. You may hear arguments or comments similar to these:

Burger flippers shouldn’t make as much as an ambulance driver.

Nonskilled people shouldn’t be making more than our armed forces

They should go to college.

They should get a better job.

These are just a few off the top of my head that I have heard or read. The argument that is typically used to defend the person’s stance is … you guessed it! SUPPLY AND DEMAND! I would like to propose that as a privileged argument. Not everyone can be a CEO of fortune 500 company. Besides, if it REALLY was about supply and demand, our teachers and armed forces would be paid better.

The Other Factors

Some of the factors that go into accepting a wage or salary at an organization:

  • comparable wages and salaries
  • communication expenses
    • phone
    • internet
    • etc
  • type of work
    • is it entertaining/enjoyable?
    • does it come with well being risks?
    • is is prestigious?
    • etc
  • human capital (if you have more or less skills than your co-workers)
  • fixed expenses
    • car payments
    • debt
    • etc
  • cost of living in the area and surrounding areas
    • housing
    • food
    • entertainment
    • etc

Those are obvious. You may even be able to think of a few more. Yet, there are is one factor is not included in that list and is seldom thought of from those of privilege (for which there are many levels) — the alternative.

If a job is not obtained, what will happen? Will you have housing? Will you be able to eat? Will you have transportation? Will you be able to make your fixed and necessary expenses? The answer to these questions influence people’s wage demand and tolerance toward unemployment.

A person’s access to housing AND alternative housing will influence their ability to attain a higher paying job and thus the demand for such a job. For example, what if you are offered a well paying job, but it requires a move for which they won’t pay for. Before you accept, consider these:

  • You will need first and last months rent
  • Application fees
  • housing permit fee
  • down payment for electricity
  • moving van
  • gas for move
  • groceries between then and first check
  • transportation to work and errands between then and first check
  • mini trip before hand to scout out areas and apartments
    • hotel
    • travel expenses
    • food

Could you afford a hotel for a few weeks if you couldn’t get an apartment right away? Keep in mind, not everyone has family who can give them a few hundred dollars to get them by until EVENT X. Not everyone has family they can stay with until EVENT X.

Sometimes bad events happen, but you still need a roof over your head, a hot meal in your stomach, and bills to pay. Sometimes you can’t say “no, you must pay me more” because if they disagree then you have to look again which takes time–which you might not have much time. If you are in that situation, it can make it difficult to do the more that is needed for more. If you take that bad paying job, you may not have the money to get a better education — or you may not have the time or energy. You might not even be able to assist your child or dependents in getting educated or trained. Thus, a cycle is started. You can’t so you don’t so you can’t so you don’t so you can’t so you don’t ….

Conclusion 

Any person who works what our society deems a full time job should be able to afford the necessities in life — and yes, a smart phone is a necessity in the 21st century, though it can be substituted by other technologies if needed.

An argument against raising the standard wage (minimum wage) is inflation. If the minimum wage is raised than the cost of goods and services will skyrocket … and that is the other issue we have as a society. You should not need an above average salary to afford decent housing, health care, etc. Slum lords shouldn’t be a thing.

To solve all our aliments as a society, we will need to tackle these issues from multiple points: regulation (because some people behave unethically whether it is legal or not) and from ethics education (because some people need to taught that whether an action is legal or not it is unethical).

Tell me what you think!

Advertisements

Deflating the Fed?

The Fed Is Swimming Dangerously In Uncharted Waters by Scott Minerd

Many people from all walks of life are terrified about what is happening at The Federal Reserve. The Fed’s balance sheet has dramatically increased over the last several years. The reason this has happened was because we have learned our lesson from the Great Depression — do nothing and things will get MUCH worse.

The author is right these are uncharted waters. Janet Yellen and the other central bank leaders have to be cautious about shrinking their respective balance sheets. The problem is that we don’t  have an example to go by. With the Great Depression we learned that an influx of capital can help stabilize the economy – even if just a little. We have not seen either a successful or unsuccessful reduction of capital. Therefore, all the concern is warranted.

With that in mind, you can’t live in fear. We might now have the direct experience to learn from, but we still have other lessons. Such as, care for the masses. Now granted our politicians don’t really do that for the most part, but … luckily not all of our officials are politicians. Keep that in mind. Some of our leaders do actually care and have morals.

Highways, Banks, & Congress

Congress to Eliminate Billions in Wall Street Subsidies to Fund Repair of Nation’s Highways by C Robert Gibson a Contributor of US Uncut

Lawmakers Weigh Cut in Fed Payout to Banks by Ryan Tracy a Reporter for The Wall Street Journal

A US Uncut article popped up on my Facebook discussing Congress possibly defunding banks to pay for the repair of US highways. This tickled my suspicious nerves. Of course, I had to look deeper into it. Then I found The Wall Street Journal’s article. This could actually be a thing.

Here is the problem with cutting the Fed dividend rate from 6% to 1.5%: Banks are counting on that 3.5% difference when creating short term (yearly) and long term budgets. So Janet Yellen is right, this does have unforeseen consequences. For many of them, Congress members are just diverting their eyes away. Some of the bigger banks could make up for the difference by not paying their execs HUGE bonuses, but not only will that not happen, the smaller banks don’t have that leeway.

I have mixed feelings about this. On one hand I am all for requiring the rich to help keep this country great — or make it great again — by financing infrastructure directly and indirectly. On the other hand, a 3.5% drop in expected revenue/income/etc is a BIG drop to makeup.

As stated previously, the “big” banks have areas they could cut that would not affect their customers, clients, or the “average” American. These include: not remodeling the million dollar exec offices, lowering exec bonus, reducing “marketing” budgets for their largest clients (businesses spend money winning and dinning their clients, especially their big client. It is reasonable to assume banks do too), and much more. However, we can all assume that these reasonable adjustments will not be implemented. Instead, overage charges will increase, and loan terms will become less favorable and the “perks” will be reduced for the smaller clients.

Banks will react to this, they can’t not react. In the end, someone is going to be hurt, and I doubt it will be the wealthy.

Business Women and the Challenges for Minorities in the Business World — Commentary on an Article

Fundraising While Female: Women Entrepreneurs and VCs On How to Bridge The Gender Gap by Clare O’Connor a Forbes Staff member

This article has a some great advice. My favorite is if you have no idea what you would do if someone wrote you a million dollar check, it is too early to fundraise. My least favorite is “Look for ways to be unimpeachably good,” said by Sarah Kunst.

This advice upsets me, not because it is ‘wrong,’ but because it is true. An old saying, [insert minority group here] have to work twice as hard as white men to be seen half as good. This is a sad reality. Now before you get your panties in a bunch, we all understand that the ratio is not 4:1 (twice for half). However, minorities are hardly ever seen as the equal of the non-minority for equal work.

Once I spoke out about this inequality in a college class and the instructor had the audacity to tell me that there wasn’t a discrepancy between the pay of men and women and when asking for a raise I should bring up the fact that I am a woman and use that to my advantage. HELLO!

If I have to blackmail my employer for a pay raise by crying sexism in order to get the raise, the gender gap still exists… or I am a poor employee. We as a society should not have use our minority status in order to get equal footing. However, until we can get equal footing without it, inequality will remain a problem.

To eliminate the whitewash, each minority group has its own disadvantages, and if you are part of multiple minority groups, the issues compound. Are you a female? Strike! Are you anything but white? Strike! Are you a foreigner? Strike! Do you have an accent ? Strike! Are you not a citizen? Strike!

There are so many things that  can be held against you. Our society needs to recognize this so that we can overcome it. The good news is that there are many people who have. We have many social scientists that recognize that we all have bias and have discovered ways we can overcome our own bias. The bad news is that there are many people who refuse to recognize their own bias.

It is disturbing that minorities have to work harder and be better to be recognized as equals, competitors, and such.

What advice gets your panties in bunch? What do you think can be done to eliminate bias and discrimination?

Companies verses Countries: The Topic of Syrian Refugees

Do Companies have an Obligation to Help Syrian Refugees?

Whether companies have the obligation to help Syrian Refugees or not, they are helping. Some even want to help more, but … governments are standing in their way.

Companies are donating MILLIONS of dollars to help organizations provide for the refugees, such as shelter, food, medication, and education. Many companies have even open up internships and job training programs, but they are hesitant to put more resources into providing such opportunities for the refugees because …. countries across the world are clarifying their legal status. By not clarifying the refugee’s legal status, the governments are cause ambiguity towards whether they have the right to work or not and making it unclear whether or not they will be deported.

This makes companies hesitant to put resources towards job training and internships for them because at any moment – near or far – the refugees could be sent off. This wastes the company’s efforts towards job creation.

World leaders, I call on you to do your part in ensuring the wellbeing of those fleeing Syria.

Leading Employers: Local vs National

A few decades ago, GM was the largest employer in America — so I have been told and I am lazy and don’t want to look it up.
Today, Walmart is the largest employer in America — so I have been told and I am lazy and don’t want to look it up.

The problem that people propose is that when GM was the largest employer, people were paid well on average and the their was a large middle class. Since Walmart does not pay well on average, it is one of the causes of the decline in purchasing power of the middle class — among other issues.

My thought is this…. America is HUGE. Like super huge. Though I agree with the premise of this argument, there are additional factors at play. Yes, having a low wage employer dominate the job market does affect the quality of the middle class. That is on the macroeconomic scale. There is also the microeconomic scale.

You may or may not be aware that there are several magazines (FORBES being one of them) that publish on occasion Best/Worst Cities in America for Business/Middle Class/Whatever.

A single company is the leading employer in a nation because it has multiple locations. As the leading employer, its average wages does affect the national economy; however, that company is not necessarily the leading employer on a local level.

On a local scale, a manufacturer, bank, or other higher paying company may be the leading employer. Those companies have far fewer locations thus have far fewer employees than the nationally leading employer. This local leading employers have a greater impact on the economy.

During our fight reduce income inequality, we must identify our local leading employers and insure their feet are held to the fire too. This does not take from the social responsibilities for a company like Walmart.

Who is the leading employer in your area? What is their average wage?