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Barbara Lee is running for Senate with this promise here in California. While it may be fringe absurd at this point, I would have thought the same about $20/hour minimums for restaurants passed here recently.
Perhaps it is time that we had an IQ test for candidates. Otherwise, we are left with these experiments run amok. Sure, let's set minimum wage up to $50/hour; oh wait, minimum wagers still can't afford a CA house. Now let's hike it to $100/hour and see what happens.
One thing I love about Asia is that generally cost of living is vastly cheaper than the US and they don't have minimum wage at all. You can get a meal, a ride, place to live, and entertainment all generally more affordable for all income brackets there than in the US where everything cost so much. And I've never bought anything in Asia that has a sales tax.
It takes a lot of money to live an affluent lifestyle in Hong Kong or Singapore.
It takes a lot of money to live an affluent lifestyle in Hong Kong or Singapore.
Asia is the region of the world where the standard of living is ever increasing.
The changes we have seen in Singapore in the past forty years are amazing. As are those in China in the past thirty years.
A $50 minimum wage is $104K annually. I'll apply as a dishwasher, pronto.
And rent for a small one bedroom apartment will be over $5,000 a month. A dishwasher in CA can't afford an apartment without roommates so it will take $208K a year to qualify for the smallest apartment, meaning rent for the year will be very close to $70K a year.
It will take a lot more inflation devaluing the money before minimum wage is $50 an hour. All you are seeing is the political practice of buying votes with empty promises. There are a heck of a lot of voters who will trade their vote for an empty promise. Not only getting nothing in return, but being worse off than before.
I'm used to be an auditor. When I'd go overseas I'd generally get a big 4 translator and have them help me understand statutory rules. I recall one trip to Shanghai we ended up with 2 translators. One was a local that had the PRC rules down, the other was a young expat from LA. She noted that they paid for everything for her, but there was such a critical shortage of US GAAP versed accountants there. No wage differential and all expenses paid, including housing which was considerable. This was 2005 maybe? Starbucks at the time had an even longer line and to my surprise was actually more expensive than in the US. I did spend St. Patricks Day there on another trip in 2006, and Guiness was $8/pint, or on par with Chicago prices at the time. It was around then that Shanghai actually banned new single family homes. Everything was going to be apartment moving forward, and the skies just sparkled at dusk with all the welding going on. Workers perched on little bamboo scaffolding 6 stories up. The first little bullet train went live around then. On a trip to Beijiing around that same time I recall talking to a waiter who was from the Philippines how he managed with the expensive rent. His answer was that there were 17 of them sharing a one bedroom.
Not just China though. Malaysia's got some terrific deals for 4 star hotels in Penang, but it doesn't have the millions locked up China has to make the cheap junk you buy in the markets. Bangkok's malls were 2nd to none. Hong Kong was a gem of a city. It's too bad the PRC got their grubby hands on that one. Japan is really it's own world.
While I don't travel anymore, during covid, I was with a meat company importing high end lamb from New Zealand and meat from Australia. Thankfully there are regional preferences, but the price being paid by the Chinese for our lamb was often exceeding what it was being sold to America for. So America bought the racks and the legs from grind....everything else went to China. This phenomenon is attempted to be captured in the Purchasing Power Parity figures.
Beyond it though is that inflation should be expected to stick around for awhile. China and India really represented the last great reservoirs of underutilized populations big enough to move the needle, and China's population is going to start shrinking and isn't really investable anymore. With all due respect to Modi, I'm not entirely sure India's got it right yet either.
What nobody views anymore is our trade deficit. If our currency were free floating and not the underpinnings of the world economy, certainly value would have degraded sooner and inflation been higher. How much of our low inflation has really been supplemented purchasing via imports. Really in the US, you have to go luxury high end to stay in the game, or be otherwise protected by the government. Otherwise we're all service jobs for a very wealthy innovation sector. Middle market companies can make it, but they have to be better on focusing their companies towards providing for the high end target of their markets and forget about the lower levels that don't pay the bills....that's what drags many of these companies down.
Forcing an obscene minimum wage isn't going to help either.
Perhaps it is time that we had an IQ test for candidates. Otherwise, we are left with these experiments run amok. Sure, let's set minimum wage up to $50/hour; oh wait, minimum wagers still can't afford a CA house. Now let's hike it to $100/hour and see what happens.
Eventually it starts to work. Where law and order is basically gone in parts of Oakland...you can find cheap housing. Don't expect any of your neighbors to invest another dime into the neighborhoods because of all the tenant protections and the runaway crime....but if you prefer, the Okies are basically back lining the streets with their tents and campers.
If you want to hit fast forward a bit, look at Detroit 10 years ago. Once the epicenter of mechanical engineering mastery. Later a bastion of $1 homes up for grabs. We should be careful what we wish for.
I heard a funny thing today. It was a local commenting on the tremendous number of policies and sticky items setup to basically make sure nothing changes. No new housing gets built. San Francisco will likely look exactly as it does now 50 years from now.
He asked....what did we used to label politicians that protected us from changes....were they progressives or conservatives.
I think at some point, we are going to have to look into "company housing" type arrangements for HCOL and VHCOL areas where housing costs greatly outpace what companies can offer for reasonable wages.
If you look at our own history, acquiring land/housing was actually quite expensive for much of it; its why they did employee housing and whatnot. Prior to the 1930s most Americans rented. We were spoiled for about a 50-70 year period where owning housing was relatively cheap.
We're running into this in my area. There is no way any viable business can raise wages to keep up with the annual growth in housing value. They just can't. We can't pay fast food workers 90k a year, nurses and teachers 150k a year, etc... I mean nowhere in the world pays that for those jobs. So for these areas where CoL has gone insane the employers are going to have to factor housing for their labor into their cost of doing business. Elite resorts do stuff like this, ie: provide dorms for their workers. Cruise companies do it, etc... If we refuse to build new housing and the accompanying infrastructure for the workforces to commute, that is the only solution.
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