a living wage

The cover story today in the USA Today is about the living wage movement.

In numerous communities around the country there is a push to increase the minimum wage locally. Santa Monica is trying to impliment an ordinence that would make some tourist centered business pay their workers a minimum of $10.50 an hour (federal minimum wage is now $5.15)

Does this help or hurt businesses and workers?

Should there be a federal living wage?

http://www.usatoday.com/news/nation/2001/08/21/living-wage.htm

I don’t think raising the minimum wage has much effect on the minimum wage earners. This proposal will probably drive out some businesses that can’t afford it. I think that raising the minumum wage can only hurt the middle wage earners.

If i was currently earning $11.50hr and the minimum wage is suddenly raised to $10.50 I will feel a double blow. The price for goods and services will rise in an effort to absorb the increased wages. This thereby negates all or most of the relief that the low wage earners might have felt. But, my wages will more than likely remain at $11.50. Suddenly I am barely making minimum wage and will realize a decline in my lifestyle.

Why should someone be afforded a “living wage” for flipping burgers changing sheets on beds?

What should they be afforded then? are you implying that these are worthless tasks?

Not “worthless,” of course. But clearly worth less than $10.50 an hour to most people who need burgers flipped or sheets changed.

It’s economics, baby. The more money is being given out, the less it’s worth.

This is a timely thread, as I just got through reading Barbara Erlichman’s excellent Nickel and Dimed: On Barely Getting By in America. As someone who’s had some pretty low-paying jobs myself, I find myself somewhat sympathetic to the argument that someone who works a full-time job really ought to make enough money to not have to work another full-time job in order to buy food. I also note that federal minimum wage doomsayers have appeared every time an increase is proposed, and that the doom has so far failed to appear.

I do think there’s danger that if the minimum wage was increased to $10.00 an hour, companies would simply pay people in Indonesia $0.25 a day to do the work and eat the cost of relocating, leaving some Americans with no job.

I think a really interesting thread would be why the market seems not to work for setting wages – even when there was a high demand for labor in the mid '90s, wages didn’t increase.

However, I’m also enough of a cynic to think that you can’t just legislate around the problem. Henry Ford payed his workers more than average so they could afford to buy his cars, and he got repaid in fanatic loyalty. I sometimes wonder if Wal-Mart stretches their workers’ paychecks so they’ll be forced to shop at Wal-Mart? In any event, I think companies should realize it’s in their best interest to have motivated, happy, healthy, and well-fed workers, rather than constantly looking at the bottom line. Until then, they’ll just leave the country.

Worthless, not at all. They provide a needed service. But, the service doesn’t require a skill that should afford them a “living wage”. In my minds eye, these are jobs for students and such who are trying to make a little money on the side. They aren’t jobs that should be considered a career.

I worked at Subway making sandwiches years ago when minimum wage was $4.15. I made minimum wage, then got a 10 cent raise, then eventually minimum wage jumped up around $4.65. When it did, my boss started to cut hours to compensate. There used to be two people working the store from 5-close. After the minimum wage hike, the person with less seniority had his hours cut and only worked 5-8. Now this didn’t really matter to me since it was not only a high school job, but a 2nd high school job in addition to the 40 hr a week job I held down at Office Depot.

If, however, we extrapolate this possibility to people to whom an hours cutback would matter, it seems that a living wage could be disastrous to them. It would be great for the people who were lucky enough to have the seniority already built up to keep 40 hours a week. It would be crappy for the people who saw their hours slashed, or were even laid off entirely, just to compensate for the increased cost in labor by demanding higher productivity. It would make it much harder to get hired in the first place.

Remember, most of these minimum wage jobs have NO union protections whatsoever. That means the employer could cut hours, fire people, do whatever he wanted for whatever reason on whatever basis in his attempt to compensate for the drastic increase in wage.

If you want to ensure that people who got stuck trying to raise a family with a job flipping burgers are able to do that, you need to fight for total union penetration in all these industries. Rising wages due to unionization would similiarly impact the employer’s financial decisions, but at least people would be in a position to exert some collective influence to minimize the harmful effects.

Unionize the food service industry so burger flippers make $10.50. Then, all you have to do is charge $13 for a #6 with Coke (and pray to your god of choice that some shmuck will pay it ).

The only thing that will help the burger flippers of the world out of their plight is for them to aquire a skill that will make them worth more to their employer. That or win the lotto (no wonder so many lower income people play the lotto).

Yet due to competition in the job market people who aren’t students wind up getting these jobs. Since burger flipping/changing sheets could be done with a fifth grade education, I’d imagine that most of the people doing these jobs are currently overqualified.

If everybody had an MBA, there’d be a lot of MBA’s flipping burgers.

Also the flip side of managers cutting hours due to a higher wage is employees having to work extra hours because they’re making so little. So a lower wage could result in fewer jobs available as well.

German workers work less than those in the US but are more productive by the hour. Maybe if we raise the minimum wage, we will have better burger flippers who can do more work in less time. So the cost of your fast food meal may not increase significantly.

I don’t think minimum wage should be doubled in one fell swoop. This would definitely be upsetting. But I don’t see any harm in raising it gradually. I think that the minimum wage has increased faster than inflation over the last 6 years, but you don’t see McD’s on the verge of bankruptcy (unless of course they’re pulling an Enron).

Pretty much all the jobs that can be relocated to developing countries already have been. We’re left with service industry jobs. If people in Indonesia were flipping your burgers, they’d be pretty cold by the time you got them.

Touche.

How does raising the minimum wage improve the quality of life for anyone in the long run?

Of course, to acquire the skills, you need to go through college or university. Try paying tuition, rent, food, and bills on minimum wage, part-time. I’m doing that, and it will still be two semesters before I have my teaching certificate, by which time I’ll have student-loan debts I’ll probably never pay off – even assuming I can find a job in my field.

Personally, I’m glad whenever minimum wage is raised, here. Sure, they cut back hours – but they can only do that so much before they impede their ability to operate. Eventually the large corporations that own most of these minimum-wage retail outlets have to face facts and crack down on the enormous waste higher up – bloated middle management, costly “business” lunches, unnecesary “business” trips, executive salary bonuses, etc.

I don’t even think giving employees good wages is bad business. It’s been my observation that companies who treat their employees well and with respect survive better in the long term. The minimum-wage employees are often the only ones who handle the product, deal with the customers, and take in money. Everything else rests on their shoulders.

perspective:

Cite, please, on that second part? American worker productivity is among the highest in the world. And having lived in Germany for quite a few years, my personal impression is that the alleged German work ethic is vastly overrated.

In general, I think raising the minimum wage is a bad thing, for economic reasons.

First, you typically wind up helping minimum wage earners a very small amount by hurting small businesses quite a bit. If McD’s has to pay people more, it’s not a huge deal, the executives just have to wait a little longer to buy that Lotus, and maybe stock prices drop a bit (and they’ll hire fewer people and expand a bit less, cutting job opportunities both in the short and long term, but that’s beside the point I’m trying to make here). If Bob’s Shoe Store sees a minimum wage hike, though, they will likely be faced with the choice of cutting profits (which they need to live), or letting off some employees (which they need to sell their products, and make profits, which they need to live). It’s a lose-lose situation for poor Bob, and if the hike is large enough, Bob will be screwed.

In addition to this, there is a supply/demand effect to raising the minimum wage. Labor is essentially a product, just like guns and butter. If the cost of labor goes up (ie, a minimum wage hike), there will be less demand for it (ie, fewer jobs available). In addition, on the other side of the coin, since there is now more financial incentive to get a job for those currently unemployed, the size of the labor base will increase - more competition. However, the way in which the labor base increases isn’t uniform. Why? Minimum wage workers can be lumped into two categories: those who want to work (the majority of them), and those who need to work to survive. The former group consists of students, elderly people who are bored or want some extra money, and so on. The latter group consists of the unfortunate high-school drop-out who happened to marry young and raise a family, or the guy trying to pay for his way through college, etc.

Now, most of the people who need to work are already in the labor base, because, well, they need to work. Some of those who simply want to work may not be in the labor base yet, because it’s not worth it to them. But jack up minimum wage, and suddenly those jobs start looking more appealing. So we now have a large labor base, with a smaller ratio of people who need to work, and fewer jobs on the market. What happens? You wind up with not only fewer jobs overall, but a lower ratio of those jobs going to people who really need the work.

While I don’t have a cite handy, alas, it turns out that every time there’s a minimum wage spike, you see a corresponding drop in employment. I’ve heard the statistic that for every 10 cent increase in the minimum wage, about 100,000 people go unemployed, but I can’t speak for the veracity of this.

There’s also a moral aspect to my opposing the minimum wage: If I feel that job X is only worth $3/hr to me, what gives the government the right to tell me otherwise? Further, if I’m willing to perform a job for $3 an hour, why can the government preclude me from doing so, thus costing me a job? I know that argument doesn’t fly with a lot of people, though, so I typically use the economic argument. It appeals to the save-the-world mentality of a lot of people better than the moral argument does.

Jeff

Oh, and I almost forgot:

Maximo, while this is just a hunch, it seems that while wages didn’t climb a whole lot during the 90’s (and I would have to see figures to prove this - speaking from personal and anecdotal experience, wages went up quite a bit during the 90’s, especially in the tech industries), overall value of a job did. The value of a job includes such things as benefits and stock options. Even though my salary was pretty high starting fresh out of college, I was still being pelted with benefits packages and stock options right and left, and I don’t think this was the norm just a few years prior. It was an employees market, and we milked it for all it was worth. :slight_smile:

Jeff

How many people out there actually work in a service industry?
I do, and I can tell you what raiseing the minimum wage that much would do.
It would put people out of work.
Not every Mcd’s is owned by the corporation. I don’t forsee them opening their company coffers to help support the struggling franchise owner. There would be a large cutback in hours availible for all employees. The corporation would not hire all these people.

Do you have any idea how many applications a day I receive from
people who are majorly overquailified?
I get people who have job skills that would earn them $10.00 +,
quite easily. If they could find jobs.

Lastly, what about the people on public assistance, that work minimum wage jobs?
I’m talking about single parents who are trying to get an education, while keeping their family fed.
As an employer wouldn’t it be easier to hire people who have more flexible hours? Or maybe I’ll keep the single moms, but cut her hours so she gets no benefits. Everybody will have to pay when she has to take her sick child to the ER to get a doctor to see them.

Another question would be “how high a should a living wage be?” $10 an hour is only about $20,000 a year. Hardly high enough for someone working at a McDonalds in Midtown to live in Manhattan. Rent in NY is high enough without another million people able to afford $2000 appartments.

This assumes that Bob is already running a marginal business based on paying employees the minimum allowed by law. Doubling the minimum wage at once is generally unwise especially at the federal level, but you’re arguing against any raise in principle.
A modest .25 cents an hour raise shouldn’t put most small businesses in the red.

But if people who were working 2 jobs to make ends meet got to quit one of their jobs, things could even out.
The current Federal minimum wage is not enough to keep people above the poverty line at 40 hours a week. It doesn’t make sense to me.

That’s a moral argument? I suppose some people would be willing to perform fellatio for crack, but I don’t think the government is stamping on their civil liberties there.

*minty green, I can’t find the cite I’d originally found. Maybe it’s out of date. Here’s one that says that France and Belgium are more productive per hour. We do lead the world in the number of hours worked per person however. That’s why American workers are touted as the most productive.
http://www.swcollege.com/bef/econ_news/1001/12.html