2013 December 21 Saturday
Washington DC Decides To Accelerate Gentrification
The Washington City Council has decided to accelerate the gentrification of Washington DC by raising the minimum wage to $11.50 per hour. Are the council members aware of the most likely consequences of their vote?
At a higher minimum wage employers will decide to use more educated and trained workers for the same job. The least able will get passed over. Want to really gentrify a city? Put the minimum wage at $20 per hour. Services will become heavily automated and the humans doing the work that can't be automated will have at least some college education. Crime rates will drop. Some of the illegal immigrants will leave.
By Randall Parker at 2013 December 21 11:11 PM
Be interesting to see more cities do this, I'm all for it.
However, I can't help but wonder (what are your thoughts?) that at the higher end of the pay scale this could result in some sort of racket controlling who gets these jobs? Would illegals (or others groups) attempt to coerce people out with threats and/or violence? I've heard rumors of such going on for a long time in some construction trades for example.
I think higher wages without a union to ensure job security would put more power into the hands of the employer. The employers will have their pick of who to hire. They will get referrals thru friends. They'll be able to get lots of resumes online. Why hire low functioning people when you are going to pay $20 per hour?
Construction and violence: is this for union or non-union laborers?
I expect high hourly rates for construction in a city with lower hourly rates outside the city will incentivize greater use of pre-fabricated pieces. Move labor off-site. Some Chinese construction companies take that approach because it lets them put up a building much faster. Each floor becomes much faster to build. Faster construction time reduces the amount of time that the lower floors sit unused. So efficiency of capital is increased.
I would say a minimum wage of $12-15 per hour would be optimal for encouraging automation over cheap labor. Rob Unz is trying to get an initiative to raise California's minimum wage to $12 per hour. We also need policies to encourage those who lack the capacity to do work at this level and above to not have kids. For one thing, the Hyde Amendment, which forbids Medicaid spending on abortions, should be repealed. This was a particularly stupid law which made clear the social conservatives have their heads up their asses.
Would it not just lead to under the table employment?
In some industries, yes. But not in most industries. Paying under the table requires cash and the willingness to break the law. Big companies aren't going to do it. Also, industries that do not take in lots of cash won't have the cash to do it with.
Dis-employing the unskilled will only help gentrification if the unskilled are living on wages in the first place. If they are living on income transfers or crime, it won't help much if at all.
Solvable problem. Combine the high minimum wage with zoning laws that encourage the conversion of section 8 rental housing into condos.
There have got to be other ways to accelerate gentrification. How about something like Y Combinator but for advertising agencies, publishers, and other businesses that will get lots of non-technical professionals moving in?
Cut off mass transit that brings people into a city from outside while at the same time improve mass transit from a gentrifying area to downturn office towers. People will want to avoid the commute from the suburbs.
Displacing the Section 8 residents to less-affluent "non-diverse" neighborhoods elsewhere just makes the criminals into someone else's problem. Turning someplace into a new slum so the old slum can reward gentrifiers with nice capital gains isn't my idea of a good or fair process.
A new way to feel more secure in less gentrified neighborhoods:
Doorbot gives you live video of the person ringing your doorbell, and lets you speak with them.
Combine it with keyless entry, and delivery men can drop your package inside the door and you watch them leave.
It works whether you're home or away.