If the customer here is a member of the "urban poor" (or what some commenters have decided to call "bums"), then I'd suggest that we start with some customer research. Do the jobless urban poor want to stand at a terminal in the street and perform menial tasks for spare change? Would this solve real problems for them on a daily basis? What happens when it's cold and snowy out? How many of them know how to use a computer, or read?

Buying into this concept as a way to solve urban poverty is no different than some Marketing VP sitting in her 50th floor corner office, thinking that she knows what her customers want from her company's web site without ever asking them. Before you start throwing out solutions to urban poverty, you might want to at least talk to one or two of the people whose problems you are trying to solve.

In SV it's very popular to assume that people are poor because they don't want to work. To the question of what poor people would want to do, the answer is very often "who cares what they want, they're poor!" It's not this blatant -- often it's couched in statements like the ones you see here that assume that people have chosen poverty -- but that's the basic sentiment.

> Buying into this concept as a way to solve urban poverty is no different than some Marketing VP sitting in her 50th floor corner office...

Well, this is at least consistent. If you think that people have merely chosen to be poor, then you simply need to persuade them to make a different choice.

If one acknowledges that they don't know much about the lives of poor people, they should do what they would with any other domain where they lack experience -- find a domain expert. IMO, the best way to start would be to find those members of the urban poor demographic who have the intelligence and the motivation, but not the skills, to solve their own problems. Then, you can help them solve those problems.

This is more or less true. Go look up labor force participation rates of the poor - most poor adults don't have a job, and aren't looking for one.

As long it makes some people think what it's like to grow up poor. Me, I would suggest learning some history and philosophy before the monumental works of the "Lean Startup methodology".

The OP is advocating the installation of a terminal to see if the 'urban poor' use it. That sounds pretty lean to me.

Again, I'd like to attribute the responses to the commenters' young age, and I trust your good intentions, but hackers, engineers and all entrepreneurs should really learn something about work-relations, social policy and ethics.

I'll go with "yes". Doing productive work, earning money, and gaining basic computer experience would be much better for everyone involved than panhandling on the street.

In equally loaded terms, why would you deny poor people an opportunity to improve their lives?

Think about this: is this suggestion going to provide the poor with true social mobility? Is this something our society can be proud of - poor people working for machines, as machines and getting paid by machines? Or is this another way to maximize profit by forsaking gainful, respectful employment, that can be somehow justified by "well, they'll be slightly better off?"

Why not suggest a mechanism by which tech companies can truly offer the poor a hand that will last for generations and create a better society, one we can be truly proud of, even if it's at the cost of loss of some short-term profit? An investment in society's future, if you like. Surely this is something that will be beneficial for everyone in the long run.

Proof by assertion is not terribly convincing.

Not every transaction that is marginally beneficial to both sides is movement towards a global optimum

"Marginal" is more than zero bits.

Think about this: is this suggestion going to provide the poor with true social mobility?

I could easily see that happening.

Is this something our society can be proud of - poor people working for machines, as machines and getting paid by machines?

Even in those ridiculous terms (applicable to many white collar jobs), yes, compared to common alternatives like panhandling or selling drugs.

Why not suggest a mechanism by which tech companies can truly offer the poor a hand that will last for generations and create a better society

Go for it. In the meantime, stop standing in the way of people who are trying to improve things because you don't think they're improving them enough.

You seem to ignore that Everything derives from work. It gives the poor a way to earn a living, an activity to count on, some sense of being independent (instead of relying on welfare), and it enables them to save (even a little) money. It makes them responsible. It provides them experience that they can build on to become better at what they do and aspire for something a little more advanced. Most poor people who work do not stay at the bottom of their society for their whole life. Work is an effective social ladder, and where we stand right now is the downright proof of it.

"Exploitation" is only a matter of point of view. What you see as exploitation is not an universal, tangible truth for everyone in this world.

1. "I don't consider actively exploiting the poor as "not improving their lives enough"." and "Neither do I consider marginal benefit a positive if it comes at the cost of exploitation."

You've framed the debate as "exploiting the poor" and "exploitation" yet do not give any reason for this other than an implicit claim that sub-minimum wage is exploitation. Let's say the minimum wage is $X/hr and this project allows these people to earn $(X - 0.01)/hr. Is that still exploitation? Why do you assume just because something MIGHT not be minimum wage that it's exploitation? Minimum wage and exploitation are only slightly correlated subjects.

All the original author is suggesting is to OFFER people jobs at a rate that the economy identifies as a sustainable employment opportunity. Kids selling gum at school might earn below minimum wage but it's their choice and their life to do. Nobody is FORCING anybody to take those jobs, therefore this is not exploitation and your dramatic and emotionally overloaded choice of words really does not help you make your point. You need to take a moment to define exploitation and I think in doing so you will see your argument is flawed.

2. "I don't see anyone moving from selling drugs to doing menial mechanical turk work" OK but that's your opinion and minimum wage laws block verifying what the reality of the situation is.

3. "By all means - go and try to turn America's poor into Silicon Valley's drones rather than invest in their future"

Why do you constantly resort to such emotive, overloaded language? There's no conspiracy here; nobody is trying to "turn" anybody into anything. What people ARE saying is "Hey here's a way some people can make some money, maybe some will find it acceptable" and people like you are saying "No I refuse to let anybody explore this possibility because I'm uncomfortable with a society where people are earning less than I think they should because of my beliefs about what people should earn, and I believe that my beliefs override freewill".

Notice that your argument, as far as I can tell after filtering out the emotion, is pretty much all about your beliefs about work and society, and has nothing to do with (a) the actual state of the economy at a given point in time or (b) the actual people out there who might benefit from the proposed arrangement.

And I don't need to win an argument here - I've already won. The simple fact is that people earning below average (or, rather, below median) in America are worse off than almost anywhere else in the western world. And that's the majority of the population. I was simply expressing my amazement that a certain world outlook - which I'm not even trying to argue 'cause this is not the place - that has traditionally been common among certain American social groups, has taken hold of SV entrepreneurs. I find this surprising because Northern California has had, for a long time, much sympathy for the counter-culture movement and to ideas of social justice. I also find it interesting that it seems like this approach is expressed here not because of some deeply held beliefs, some ideological values, but simply because of a technical, mathematical way of looking at the world. I was amazed and saddened at the dehumanization expressed here.

Now, I wasn't trying to change anyone's mind on politics, but just in case someone was expressing his views simply because he's grown accustomed to looking at the world through equations and algorithms, I was hoping maybe my words could jar him out of his technical sleep. Saying "Hey here's a way some people can make some money, maybe some will find it acceptable" without considering whether or not the idea is ethical, whether or not it is humane, seems so... callous. Of course someone will find it acceptable - like I said someplace else, someone will find it acceptable to sell his own organs for money; someone will agree to go into slavery so that he'll have something to eat - but that doesn't make it right. And I'm not even saying you should take my definitions for right and wrong. Use your own. But the first question you should ask yourself is "is this right?" and not, "will this work?"

(All of this is not to say that I cede the "rational" argument, or agree that unregulated free-market capitalism has actual economic merit - I don't. It's just more important for me to address the lack of ethical thinking, or the precedence of economic thinking to it rather than argue economics)

I doubt young age of commenters is the reason for their stance and for many intentions are as good as they pay. Crucially, most people here imagine themselves as (future) bosses and do not empathize with the poor operating mechanical turks. Also consider that many here unconsciously are mechanical turk operators while believing they are entrepreneurs.

There are of course others here as well. But look at the brightness of your comment and you will find out who is the majority.

But I think you're wrong. I think what we're reading here is not a heartfelt, confident business or social ideology, but a hacker's frame of mind. A hacker mostly thinks about how to do things well. Sometimes he thinks about what to do. Only rarely does he consider the question of why, in the grand scheme of things. Very few hackers consider the social ramifications of technology, and when they do, it's usually very short-term.

If people are willing to do the work for a given wage, the free market should be able to pay them (or so Libertarians believe).

I'd like to suggest that instead of building work booths for the poor where machines will pay them money, perhaps the big companies should do everything in their power to make sure these people have a chance at a proper education, so that some day they could have jobs that would give them some dignity. Jobs that the mechanical-turk mega-farmers would wish for their children.

In fact, I think the market for human organs is an interesting analog. Personally, I think that introducing free-market principles into organ exchange would be beneficial to all! The notion of paying someone to agree to donate their organs at the end of their life benefits all of society (see wikipedia article http://en.wikipedia.org/wiki/Organ_donation): LIVES are saved with the greater availability of organs, and the life of the donor is improved with access to money that he/she would otherwise not have. This is not a zero-sum game in which one person must lose for another to win. A principal of economics is that through commerce/trade/exchange we both prosper! Both sides want what the other side is giving them more than what they have to give up. ie the donor wants money more than organs, and the recipient wants organs more than money. Both sides win!

I have absolutely no problem with compensating organ donors for actually helping other humans and improving society through their generous donation.

Likewise, if 2 consenting adults want to engage in a relationship in which 1 works for an agreed upon wage, and the other provides that work, I see no reason to intervene in that arrangement. As long as each party is aware of the risks and the full terms of the deal are openly on the table (ie if doing this work could be deleterious to worker for some reason and that information is not disclosed) then people should be free to engage in their course of business.

The reason they would consider selling a FUTURE interest in their organs is because it would be the best option on the table. Since it's not currently available as an option, they must be choosing considerably worse option now (which is the best currently available option).

How is your alternative more just, more fair, better?

---------------- EDIT ----------------

Imagine YOUR loved one received a liver/heart/kidney in this manner, thereby saving his/her life. And in so doing it DID improve the welfare of someone loved by the donor allowing him/her to get a better education, get better housing, or something else worthwhile.

What is so horrible about that? Your insurance company would cover it and it would make the world a BETTER PLACE for everyone. By the way, the surgeon gets paid a lot of money for a complex procedure like organ transplant; what's wrong with a donor getting a tiny fraction of that for his/her contribution providing the amazing, wonderful gift of life?

And while it creates an incentive to donate organs, it also allows wealthier people to hoard them. Remember that the circumstances which allow the organs of a person to be successfully extracted for transplant are pretty rare[1], they essentially have to die in a hospital of brain death with their organs intact, so even if more people are willing and legally bound, offer may still fail to satisfy demand, only this time it will be mostly a matter of who has more money. And that's not exactly fair.

1. http://www.organtransplants.org/understanding/death/

I must say, if it became an outright bidding system some people who society might say are less deserving than someone else might benefit. But that happens already! Look at Mickey Mantle who received a liver after a lifetime of alcoholism (and died soon thereafter). Or Steve Jobs who shopped around for the best region to receive a new organ (he's not FROM Tennessee after all...).

So please tell me, how would a MORE market based system be significantly worse? It seems like we have the worst of everything right now in our pursuit of the idealistic fantasy that the system treats everyone equally and that organ donation should be a purely altruistic gesture.

My expectation is that donors would be paid based on expected value, which is how (I believe), the issue is being framed in debates.

ie assume there's a 1% probability that potential donor will be a.) young enough b.) die under right circumstances.

Then we should offer that potential donor 1% of the expected value of his/her organs (ie if organs are worth $100k then we should offer $1k).

Obviously these are all made up numbers. But the idea of paying up front based on expected value makes sense to me in theory.

EDIT: Though, again, my main complaint isn't about one opinion or another regarding this issue, but about the lack of discussion of what is, in-fact, the real issue here. Instead, I see commenters suggesting ways to deal with vandalism or "crap data". To me it sounds like discussing the (efficient) mechanics of, well, I don't want to give extreme historical analogies here which do not apply, but the point is that people are quick to suggest ways for improving a process before giving serious, and I mean serious, thought to the question of whether this process should exist in the first place, and what could its effect be on the minds and souls of the people its targeting.

I will admit, there are roles for government regulation in the marketplace. I simply do not know enough about the chicken I buy at the grocery to make an informed choice. I appreciate the health inspectors, organic labels, and other regulations that facilitate a free, fair, and efficient marketplace in which I do not need to know the farmer to be confident my chicken will not poison me.

However, I do not think lack of open (and understandable) information is the issue in this particular case.

Regarding your last point, I agree with you. The more interesting aspect here is not the implementation details, but rather the questions you're raising of free enterprise, the freedom to work, and the freedom to engage in free & fair commerce of your choosing.

What you're describing isn't libertarianism. It's simply a way to preserve power in the hands of those who already possess it. You can't condone the government's right to legislate laws that permit economic exploitation but prohibit violent opposition.

If there were no people who are so poor as to need what meager pay the future mechanical-turk farmers are willing to give, those farmers wouldn't close down their services - they would either settle for less profit, or find another long term solution. This option exists only because of some people's hardships, and it's more profitable for the farmers to take advantage of this option, namely, people's misery, hence - exploitation.

However, the have-nots (who are willing to work) can probably find several occupations, from different employers. They will have some range of choice concerning the salaries, the conditions and so on. Maybe not a large choice, but some choice. And one thing is clear: the less minimum wage there is, the more choice of occupations there will be, since there will be more employers generating occupations where profit can be made, since you lower the costs of labor at first.

Those occupations would not exist if it is easier or more profitable for people to stay on welfare.

And as it has been demonstrated in so many cases/countries, the longer one stays on welfare, the most likely one is not going to look for a job, welfare is actually a promoter of misery in the long term, especially for those who are at the very bottom, since they get no real incentive of getting out of it.

In a sense, politicians are guilty of exploitation as well, based on your definition. They take advantage of some voters' misery to promise them continuous welfare for which they are not responsible to pay for, and they further their own goals by getting rich in the process.

But, to come back on "exploitation" again. You are considering that is is a zero-sum game, basically. One, the exploiter, is gaining something while the exploited is losing. But economics almost never work that way. Both employer and employee have something to gain out of it. Both profit from the situation. The Employer makes money, can extend his business and ends up needing more people in his payroll. The Employee makes enough money to survive, has an occupation and has a social activity within society - they build relationship/reputation and somehow experience. They may not be making much monetary profit, but they are still gaining something out of it.

Please do not forget that all people who lived before us had to go through misery before reaching nowadays' living standards. If you come back a hundred years ago, then you may well consider that everyone then was being "exploited", but that is not how they would see themselves at the time.

Patients with horrible, painful, fatal diseases are certainly miserable. Pharmaceutical companies are certainly looking to further their own goals through the development and sale of life saving drugs.

Until that happens, we have before us the suggestion to build working-booths for the poor, where they can simply walk in and work for us, and get paid directly by a money dispenser so that we won't even have to see them or talk to them. And they won't even have to commute - we'll build those hi-tech sweatshops right in their slums. We won't even know their names, and if one of them gets sick - well, someone else will take his place and we won't even have to know about it because we can't really be bothered by poor people and their problems. They should be thankful that we need cheap labor so much that we're even willing to employ them (as long as they don't have to come into the office) - it's certainly better than whatever they must be doing now; selling drugs, probably - after all, that's what poor people do, right? All we have to think about now is how to prevent them from cheating us and stealing our money.

How come people are so sure they can revolutionize the world with some stupid web or mobile app, sure that they can disrupt the market and unseat market leaders, but when it comes to social issues some of those very same people sound like slaves to power themselves? How come hackers who are supposedly able to "think outside the box" sound like old, bitter, fatalist, soulless conservatives?

Also, in your attempt to achieve "perfect" you will end up achieving nothing.

I understand your thought process and it DOES make sense but we are not living in a perfect world, we are living in capitalism. And if you don't pay poor people in America a few pennies to type in "cat" next to a picture of a cat, that business owner will go to another country and get them to type "cat" next to a picture of a cat.

In the perfect world this wouldn't be an issue, there would be a world wide minimum wage but there isn't. So we have to stick with what works, not what's perfect. Not what's right. Not what's correct. But what works at the moment. That's what the world was built on.

Go look up the definition of slavery. Your post is internally contradictory.

As someone who turks occasionally, you can't consistently make $7 an hour unless you have some skill that you could probably use on the job marketplace. $3-$4 is more like it.

$3/hr on Turk is pretty good, and you need some education and diligence to do it.

Having a terminal where someone can sit for hours on end being the same place as a cash dispenser isn't the best idea. The users would probably be better off breaking into it. They need to be separated.

Perhaps a better solution would be to start a sweat shop full of terminals where the sweatshop owner pays them on approved tasks, after taking a cut.

I say go for it.

Anyone have an concerns about the ethics of this? On one had 6 net is better than 0, on the other hand it is fairly predatory.

There were several problems: 1. Many of the more valuable task required you to meet certain 'skill' levels which these staff didn't 2. Motivation was a huge problem as spending hours per day clicking on images with people or editing text you don't understand was very dull 3. We had problems with internet bandwidth being too slow to allow running through tasks rapidly

It was a pity this experiment failed as it would have been a great way to scale up and create income opportunities for some very destitute people.

Globalization is not friendly to the homeless and mentally ill. This proposal may buoy up some folks who have fallen through the cracks, but there are a number of other social safety nets (a la worker retraining) that offer that same sort of chance to those down on their luck but still able to turn around from a bad situation or bad break.

If you are not able to read coherently or quickly - this doesn't necessarily mean uneducated, it could simply be crippling dyslexia - this doesn't help you. And if you are suffering from drug addiction or mental illness or even poor lifestyle choices, this may be significantly less advantageous and doable than panhandling.

First, you can't just give people cash. They will immediately turn to spamming, and you'll get crap data. You need to do statistics, comparing turks to other turks, and only pay the ones who don't spam. It's highly likely you can't do this in realtime.

Second, you need to track the identity of your turks. If worker X is known not to be a spammer, then you want to assign work to X preferentially. Similarly, if worker Y is a known spammer, you want to refuse him work.

Third, most poor people are not working and are not looking for work. Only 30% or so of poor adults are in the labor force at all. Why would they decide to start working at a mechanical turk station when they seem to have little desire to work anyplace else?

just because somebody is not looking for a structured job, doesn't mean they won't do tasks for money. think about the homeless guy who wanders around with his shopping cart collecting discarded cans all day. the only social issue i see with a turk kiosk is that it would essentially be a "do things in exchange for drugs" terminal.

When getting instant, reliable cash is the result, people will jump through an enormous number of hoops - and even pay money themselves the for opportunity.

For instance, you could require users to create an account on mturk and/or w/ the mturk shop so they can be tracked. If it is simple to do and prompted it should be fast an easy. If they can't even figure this out, they probably aren't qualified to be doing the work anyway.

http://hci.berkeley.edu/cs260-fall10/images/b/ba/FinalPaper-...

Combine with a Vegas pokie/slot machine. Complete menial hits in exchange for a few more cents to play.

Or combine with vending machines. You want that can of Coke? Pay by categorising 30-40 photos quickly.

A more beneficial concept for the poor is microlending, helping the poor in third-world countries start their own businesses.

If you want to magically improve the plight of the poor, make cheap housing available in urban areas without a qualification process (ie. Section 8, public housing)

I could categorise 50 images in 2-3 minutes. It'd take me 1-2 minutes to get out my wallet, get the right credit card and enter the info if I were to pay manually.

I ran the idea past two employees (neither homeless...) who both seemed to think they'd consider a quick spot of Turking in exchange for a digital good.

Micro lending has more of a humanitarian goal - most organizations tend to lend at reasonable rates (3-15%/year).

Payday shops charge reasonable fees per loan, the same fees that all vendors and governments charge for you hanging on to money they want from you. The problem is that payday loan customers get trapped into taking excessive numbers of loans, multiplying fees.

It should be noted that ordinarily vendors and governments do have reasonable late fees(certainly much less than one from payday shop). I do not remember paying more than 24% when I run late on some Accounts Payable when I run my shop at the turn of the millennium. Maybe it is now normal for vendors to ask for 100+% when a 30day net invoice runs late, who knows?

It is when a vendor is about to deny service completely(ie pay $50 to reconnect electric utility), then a payday loan becomes a relatively reasonable option.

There are a multitude of factors which go behind the rates(I am bundling in all of the fees into catch all rate) that payday shops charge:

* Likelihood of borrower to repay * Ability of borrower to do simple math * Human psychology (goes with the simple math to calculate rate from fees) * Demand from borrowers

Overall, payday shops charge more than regular lending institutions because they should(higher risk and some expenses). They also raise their effective rate beyond their "should rate" because they can.

Their customers are not comparison shopping between 240% APR and 300% APR. I would argue that it should be made easier for their customers to do so, but that is another discussion.

Someone working all day at mechanical turk, is likely to fall below the federal minimum wage rate in terms of what they're pulling down per hour. Is it ok for companies to utilize mass scale labor at what becomes in reality a sub minimum wage rate? Particularly if mechanical turk stations were to become wide spread.

Obviously mechanical turk is a per unit pay system, not a job with an hourly pay rate. However, if you're doing it full time, I call bullshit on that difference. If you had 100,000 people working on mechanical turk 40 hours per week, making $6 per hour, those are very much jobs paying sub minimum wage.

It would be no different than if a thousand companies banded together to source labor below minimum wage by paying per task, and sharing that labor around rather than employing each laborer in a "job" (eg in a metro area with high population density). Those companies would be paying for net full time labor, while evading the minimum wage responsibility.

One solution to this legal boundary, would be to require that mechanical turk style tasks pay at least equivalent to minimum wage based on the time they take. I expect in any large scale adoption of mechanical turk, this issue will jump to the forefront.

Minimum wages are implemented with noble motivations, but are based on a broken mental model, where the edict alone can lift everyone who would have made less up to the new statutory minimum.

In fact, many of the people who would be employed at lower wages aren't (yet) productive enough to justify a higher wage. An employer will pick a mix other adaptations rather than simply 'the same number of employees at a higher cost' once the wage floor is enforced. (These might include shorter opening hours, more automation, a few higher-paid workers replacing many lower-paid workers, longer waiting lines, less customer service, less attention to cleaning/inventory, and outsourcing work to other lower-cost entities or countries.)

These dynamic adaptations leave a few people bumped up to the higher minimum, but more left completely unemployed, idle and dependent on other social assistance. They're not building work habits or a work history that would put them on the path to much higher wages.

Even if we wanted, as a society, to ensure a certain minimum wage, why would we make the responsibility for paying it fall solely on those particular companies and industries that can best utilize inexperienced and low-skilled labor? Their manufacturing and simple services fill a important role, in the goods they provide and the meaningful productive work they offer those without other skills. By making them and them alone face this costly extra non-market constraint on hiring, they become disadvantaged and shrink, relative to other sectors and overseas competitors.

It would be like deciding "every low-income family requires a computer", but rather than buying it out of common public funds, making it a legal requirement for just the domestic computer industry to provide free computers, out of their own revenues. Would that properly value the exact thing you want to happen – more computer production – or impair it by making it less profitable than other uses of the same talent/capital? The same goes with employment opportunities for the low-skilled. The minimum wage has been thinning such domestic opportunities out, for decades, rather than expanding them. Intended to reduce income disparities, it's increasing them.

This is in fact their purpose. Minimum wage laws destroy low-paying jobs by making them illegal, preventing the least competitive members of our society from having the hours and days of their lives "mined" by an employer for negligible compensation.

That having these laws "reduces welfare" is, I believe, a conclusion not supported by fact.

A living example can be found in urban Brazil. By failing to outlaw and enforce certain minima (building codes, wages), large Brazilian cities have created vast marginal neighborhoods that no one wants to live in.

Based just on the example of favelas alone, I would argue that having laws to guarantee minimum wages is one thing a government can do immediately to protect the weaker members of a society.

I think you have not addressed another important duty of governments: to provide a reasonably rigorous educational launchpad so that the less fortunate need not always remain so.

Pass all the laws you want, there is simply not enough wealth (i.e., not enough material and skilled labor) for everyone to live in a house that meets building codes. No matter what you redistribute (note: India has very low inequality [1]) or demand from people, you can't squeeze water from a stone.

[1] Nominal inequality is low, but inequality of living conditions is high. This is the exact opposite of the US, where the rich have a PS3 and an XBox, and the poor are stuck with only a PS2.

Brazil has a minimum wage. If it's not enforceable maybe that's because it's based on wishful thinking, pandering to those with an unrealistic mental models, rather than what's sustainable.

These 'vast marginal neighborhoods that no one wants to live in', they are empty ghost towns because no one wants to be there? I don't think so. And the favelas would just disappear if the firm-handed authorities were just a bit more insistent everyone get paid more (or nothing at all!)?

Rich societies can afford nice neighborhoods and rigorous building codes. Societies get rich by accepting every opportunity for voluntary coordination and incremental improvement. Societies stay poor by enacting showoff policies that appear generous but destroy more productivity than they enable, satisfying the aesthetic hopes of comfortable do-gooders, but trapping the really poor.

Perhaps yes.

A price is a signal. As with any restriction on free speech, outlawing certain prices (low wages) should show a clear and easily demonstrated social benefit.

In this case, private free enterprise is clearly harmed, but the benefit returned to society is an intangible, a void: society receives only the absence or reduction of sweatshop working conditions.

I think we are actually in violent agreement on most of these issues.

The major exception, I think, is that I am deeply skeptical of a society's ability to check the worst behaviors of private corporations. I believe that certain entire business models are better legislated against and rendered completely illegal, to prevent regulatory capture [0].

EDIT: This view seems to be controversial. May I suggest a little light reading? [1]

[0] http://en.wikipedia.org/wiki/Regulatory_capture

[1] http://en.wikipedia.org/wiki/The_Jungle

Except this is simply not true. Germany, where workers enjoy generous terms and privileges even for Western Europe, has no minimum wage, and its labour unions vocally oppose introducing one. Countries such as the US and UK with minimum wages have higher unemployment, and things are more precarious even for those in employment.

To measure the effectiveness of the policies that lead to German job creation, we need to count every worker who is receiving a wage in the German national currency against the workers who wanted to, and legally could have received wages in that currency.

When we look at the whole picture, the situation is ugly and getting worse. Headline unemployment averaged across the European single currency area is now 10.4% and rising rapidly. [0]

Germany is a manufacturing powerhouse, and its exports are currently red hot. Any breakup of EMU would brutally reprice those goods. I would expect this to lead to significant German unemployment.

[0] "Eurozone unemployment hits new record" http://www.bbc.co.uk/news/business-16808672 - 31 January 2012

There's the rub: how many unemployed Greeks have the skills to work in a German factory?

Cite, please.

Often analytical (rather than emotional) minimum wage proponents admit a small decrease in total employment but think the benefits to those who make the cutoff helps offset that. That might even be true in a growing economy with generally low unemployment and short unemployment terms. In one with ~20% youth unemployment, and workers discouraged by multi-year stints of unemployment, any job – even a low-paying job – is better than prolonged idleness. Employers are understandably loathe to take a chance on those who have gone years without a reliable work history, or never started a work history at all.

When he wasn't quite as partisan, even Krugman could make an eloquent case that bad jobs at low wages were better than no jobs at all at wishful-thinking wages. See for example:

In Praise of Cheap Labor: Bad jobs at bad wages are better than no jobs at all

http://www.slate.com/articles/business/the_dismal_science/19...

Even today, while Krugman is against any sort of lowering-nominal-wages or lowering-minimum-wages for macroeconomic adjustment, he'd like to achieve the same thing through massive fiscal and monetary stimulus, essentially lowering wages through inflation.

In the funhouse mirror world of politics, the 1-2 punch of higher minimum wages but also inflation is a perennial winning strategy. Give people a superficially popular, though actually harmful, boost in minimum wages: an easy focal point on which to campaign. But prevent its full damage with harder-to-assess, noticeable-only-after-the-election inflation. Or at least keep the celebrated raises below other growth/income indicators, so that it's mostly a symbolic measure. (Any raise large enough to make a 'big difference' for minimum-wage earners would also make a 'big difference' in boosting unemployment.) Via the only-slightly-harmful symbolism, everyone (who is a politician) wins!

Pretty much right now minimum wage workers usually do service jobs (fast food, waiting, etc), household chores (cleaning, landscaping), farming, or no-skill manufacturing.

No-skill manufacturing is largely dead in this country. Changing the minimum wage won't change the fact that you still have to follow environmental and safety regulation. That is expensive in its own right. You also can pay $3/hour in a different country and get good people. You can pay $10-15/hour and get great people. If you pay $3/hour in the US, you are going to get the people who can't even get a minimum wage job. I doubt a lot of companies want to hire those people for any price.

For service jobs, you usually have a fairly fixed number of people. If McDonalds has 3 registers, they already have 3 cashiers at lunchtime. Lowering minimum wage just hurts all those people because the pay will be less. It won't create many more jobs.

Farming could see a big increase in people, or at least a big increase in paying people on the books. A lot of migrant farmers are paid off the books below minimum wage as is.

So where is this giant pent up demand for hiring $3/hour workers? All I see is a marginal increase in jobs, and a massive decrease in wages for everyone else near the bottom.

There are some people who can only be hired with a wage below the minimum:- high school dropouts, immigrants, physically disabled, blind, mentally ill, elderly, long term unemployed. By setting up a minimum wage too high you are ensuring all these people will not get jobs even if they want or need one. To the employers eyes: if you had to pay $7/hr anyway to hire someone, you might as well hire someone who is physically strong, understands english and has graduated high school.

The minimum wage makes people on the lowest tier unemployable. Arguably it does raise wages for workers on the people near the bottom but not quite there. As you can see there is certainly a trade-off to be made.

All you are saying here is that the min wage is harmless because it's set below market rates. I.e., it's like setting a $0.25/gallon price floor for petrol, or passing any sort of "keep doing what you are already doing" law.

But if that is the case, then why would wages decrease if we eliminated the min wage?

As for the pent-up demand for $3/hour workers, you can see it every time a company outsources or offshores. My company (located in India) wouldn't exist if we had to pay $7.25/hour, for example. (Of course, market rates for the people we need would probably be higher than $7.25 in the US, so the min wage is a moot point - lowering it would not affect our costs or our hypothetical US employee's wages.)

without the minimum you are correct that theoretically more jobs would exist, but at a pay rate so low that it would create an incentive not to work at all. the government assistance required for an employeed unskilled worker and an unemployed one would be about the same, whats the motivation to work?

You'd have... a republic with a minimum wage law.

Another solution would be to use worker reputation (something explored by Panos Ipeirotis @ http://www.behind-the-enemy-lines.com/ )

Because MT workers are unreliable, you often need to have several doing the same task. Better workers require fewer checks, and are therefore much more cost effective. Right now MT is a market for lemons.

So the challenge then would be to let poor people build up a reputation to fix that market...

This is not the sort of disruption we want in the marketplace. Let's say someone rolls this out, with moderate success. What's to say a company like Wal-Mart wouldn't crowdsource stocking shelves? We already see some people taking advantage of low-income workers (giving less than 36 hours to avoid health insurance coverage, etc). This would be another opportunity to lower costs all around without much of an upside for those doing the work.

Also, the possibility for automation is then great as well. Companies could offer assistive devices and software to the freelance shelf stackers for increasing their productivity, all they way to full blown robots.

Can also apply this to other tasks such as crowdsourced burger flippers and crowdsourced cleaners.

There's a lot of opportunity in automation of service businesses such as retailer and restaurants, but it seems like the industry does not take much interest in applying robotics to the task. This crowdsourcing system would be a way for nimbler companies to introduce more technology into the system without going through the management.

What would robots capable of stocking shelves cost? $500k? It's just not worth it. McDonalds has how many thousands of stores - and they don't bother automating that much. Amazon.com still uses people to pick their orders (for the most part). The companies aren't stupid, someone has run the numbers and figured out that robots are too expensive.

It's not even Moore's law thing. Computer are plenty powerful. You can make a robot do these things. But by the time you buy good quality motors, batteries, and sensors, it gets expensive no matter how cheap the computer is.

If the above is true, why hasn't it been done you might ask.

I might be wrong, but you could have the said the same thing about why a search engine that didn't suck wasn't around in 1997 - why didn't microsoft, or yahoo, or ibm have that, or even buy it from sergey and larry?

What mechanical turk does allow companies (and individuals) to do however is to hire people for a very short term (a few seconds) for, literally, pennies.

And assuming that enough work was available we should expect the rate to increase since there will be less spam bots.

And at any rate it is better than the alternative of make work.

This is unrealistic in practice. The Simple Dollar article cited describes making >$7 in an hour, but $6.55 of that comes from writing an article on email autoresponder marketing and writing a review of an unspecified service. Those aren't the kind of tasks that anybody can accomplish in a timely and competent manner, nor is the supply of those tasks reliable.

There are also exceptions for people with disabilities, special minimum wages (you can actually pay the disabled less than minimum... sometimes), etc.

So, I think the basic answer is that you still have to respect minimum wage, but how you do that is pretty complex.

http://www.youtube.com/watch?v=Dw3h-rae3uo

Also, cashiers and receptionists. Is it really necessary for person to be there in person.

And marketing. Testing which ads/videos work best.

No one would let a random person on the street control their half a million dollar machine.

> And marketing. Testing which ads/videos work best.

Urban poor are definitely not the group advertisers are targeting.

So, for example, if the factory robot knocks something over, and there are 10 different people watching a few frames of video, it's pretty likely they'd spot the mistake.

Same goes for ad critiques. You wouldn't ask "is this a good ad". You'd split it up. "Is this actor better wearing a blue shirt than a red shirt" - ask 10 people.

But you're still asking the "wrong" people. And you're asking, instead of observing the actual behaviour.

http://en.wikipedia.org/wiki/Assembly_line#Ford_Motor_Compan...

You know that there are loads of actual poor disabled people? Not everyone on social welfare is a leech on society. Have some compassion.

Here's how I look at it. You can either apply force (by making the urban poor work at some crappy job) ; or you can apply attraction, and have them move themselves (by offering a significant economic incentive to work). Ye old carrot and stick solution. :)

I believe the former (stick) has been tried many times, and it doesn't work quite as well. People just don't like others telling them what to do.

But by giving a significant incentive (a carrot), you make the person themselves affect change; and it is more sustainable.

Anyways: these are just ideas that I'm hoping can spur some discussion. Looking at the number of urban poor, the current system isn't working.

Google what happened in New Jersey when they raised minimum wage above the federal level years ago (low paid jobs got wiped out, companies fired workers and attempted to become more efficient, particularly it hammered fast food workers).

Or this:

"Dr. Peter Brandon of the Institute for Research on Poverty studied how raising the minimum wage affect the transition from welfare to work. He found that raising it keeps welfare mothers on welfare longer. Mothers on welfare in states that raised their minimum wage remained on welfare 44 percent longer than mothers on welfare in states where it was not raised"

http://www.house.gov/jec/cost-gov/regs/minimum/against/again...

You do understand the point I'm trying to make: that there should be _some_ _significant_ economic incentive for people to get off welfare and on to work! Right now the incentive is minimal at best.

So how do you create the gradient that moves people off of welfare and on to jobs? You can either take away welfare benefits; or you can give much more rewards for working.

A third, mostly unexplored option, is to reduce the status/luxuries of people accepting welfare.

I.e., instead of receiving housing vouchers and money to buy food/clothing, they could receive dormitory rooms (no TV or XBox), healthy dormitory meals and government issued grey jumpsuits.

Under such a system, there would be a significant incentive to get a job and no one would go hungry.

Depends on what you mean by "abuse". Most poor people don't work and don't even look for work, preferring to collect free money. That's not "abuse" in the sense that welfare rules allow people to do this, but it is behavior we should try to prevent.

Ultimately I favor eliminating welfare and replacing it with a guaranteed unskilled job having below market pay. That's the perfect way to distinguish between the deserving and undeserving poor - no work, no welfare.

I'm not sure how this relates to the republican platform - as far as I know, the two front runners (Romney and Santorum) are basically democrats on economic issues. But I haven't followed closely, so feel free to correct me.

http://www.bls.gov/cps/cpswp2009.pdf

I exclude children from the numbers here:

http://crazybear.posterous.com/why-the-poor-dont-work

Net result, 36% of poor adults work or look for work at least 26 weeks/year, and 25% of poor adults work full time or look for full time work.

All this data says is exactly what the last line of your last post does. There is no "preference" stated here. The reasons why are not explored (and would probably be out of the scope of this paper anyways).

Keep in mind, our unemployment rate right now is absurdly high right now. I somehow doubt that's because people "prefer" to remain poor.

Without compelling evidence otherwise, I tend to subscribe to the theory of revealed preferences - our actions reveal what we really want.

But you are logically correct, there are some possibilities, e.g., the poor would prefer to have a job but irrationally don't look for one.

I somehow doubt that's because people "prefer" to remain poor.

You are looking at the wrong choice set. The choice set is not [ poor, middle class]. The choice set is [ (poor, leisure), (middle class, hard work) ]. The theory I'm pushing is that for some people, utility(leisure)-utility(hard work) > utility(middle class) - utility(poor). See my blog post for more details.

Also, this is not caused by the current recession. The numbers have been similar since 1996 (the year of the earliest report I can find with a quick google search).

http://www.bls.gov/cps/cpswp96.htm

http://www.bls.gov/cps/cpswp2002.pdf

http://www.bls.gov/cps/cpswp2006.pdf

(Tweak URLs to get data for intermediate years.)

It doesn't make sense to assume that people who are not working are doing so just out of a desire to avoid work.

>But you are logically correct, there are some possibilities, e.g., the poor would prefer to have a job but irrationally don't look for one.

Or there are no jobs within distance that pay the bills (i.e. what's the point of flipping burgers for minimum wage - it won't pay the rent and feed the kids). In which case it stops being an argument of utility and one of common sense - it makes none to work at a job which would be a pointless treadmill in which you stand a zero chance of ever getting back on your feet.

What bothers me is that you're assuming preference from raw data. This is a problem when the data does not support (or even attempt to) support any such conclusion - does it take into account local conditions?

If not, then any such analysis (including yours) is baseless.

I am surprised, and a little disappointed, that there has been no mention yet in these comments of Marshall Brain's story "Robotic Nation". It is a well-reasoned exploration of exactly this issue.

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The January 20, 2003 issue of Time magazine notes the trend:

"Cities have lost patience, concentrating on getting the homeless out of sight. In New York City, where shelter space can't be created fast enough, Mayor Mike Bloomberg has proposed using old cruise ships for housing."

This is not science fiction -- this is today's news. What we are talking about here are massive, government-controlled welfare dormitories keeping everyone who is unemployed "out of sight". ...

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He says there would be many sectors where human jobs are replaced. I'd say many sectors gone, completely. Who needs to go to a fast food restaurant when your robot can make it for you for... the price of bread? Who needs tax accountants when your computer can do it?

The solution will probably be something that I think is silly today.

An example. I was a fairly early adopter of the Internet. By the time I got around to reading Ender's Game, the leading search engine was Archie, and the web had not been invented. But I recognized Usenet (or something like it) in Card's description of discussion boards.

I thought the idea that anyone might achieve anything practical in the real world based on the strength of electronically published rhetoric was not just silly, but slap-my-knee hilarious.

Just look, I thought, at the laughable impotence of all these "letters to the editor" in newspapers. Surely electronic journalism will be cheaper, easier and much more accessible, therefore much more popular, and therefore of exponentially less value.

I kept chuckling for years, even as blogging gained popularity and influence.

Even though I was quite interested in an outcome like Card predicted, and had even been involved in getting the machinery in place to support a future like he imagined, I still reached a conclusion that was completely unsound.

We will probably be fine.

If you want to incentivize with $20 / hour minimum wage, you'd have to mandate hiring, or change the laws governing firing employees. Businesses would rebel against it immediately otherwise.

Bill Clinton & the Republicans worked together in the mid 1990s to successfully overhaul the existing welfare system by altering the terms of how you could get welfare and for how long and so on. Prior to that, the system was largely resulting in a stagnant perpetual welfare cycle, where people went in and never came out. It seemed to work great right up until the big economic implosion of the last few years.

As for the welfare reform: people route around obstacles. I think people have been able to game the current system too. "Disability" is one such option; claim a physical disability, and get $1000/month in disability payments (or that's what I've heard). Earned Income Credit is another such option.

My basic point is: just like in any learning algorithm, we need a gradient that will drive people in the right direction. The larger the gradient, the faster the movement. :)

Some stores on the margin will be driven bankrupt by the increased costs, and these stores will close up shop.

Other than Walmart, you'd be hard-pressed to find a business where the minimum-wage employees are a significant cost item in the budget.

Which just eats up the increase in minimum wage.

Does anybody have numbers on this sort of thing? Because if we just assume the cost is passed on to {all consumers}, much of it would be eaten up by non-minimum wage-earners, the majority of the workforce (and thus the majority of consumers).

And much of those costs may also be passed on to products that aren't generally bought by minimum-wage earners, too.

Which just shows that the minimum wage is a convoluted and inefficient form of welfare. If you want to help poor people, give them money. The end.

1. should people be made to flip burgers or stand in cashier booths when society doesn't really need that. You can order off amazon for example, or eat healthier food that you make at home. Those burgers flippers could then instead be training to become engineers. It might take them longer than an academically gifted person, but they'd get womewhere if they didn't need to flip burgers everyday.

2. If you increase the price of labor by increasing the minimum wage, more opportunities for automation come into play. If burger's flippers were too expensive, restaurant chains might install robots that did it instead. Over time, burger slipping would be even cheaper than the previous minimum wage burger flipper.