Is minimum wage a bad economic policy?
I will answer your question in the same spirit of energy and dedication with which you asked it:
Yes.
Minimum wage is a very good economic policy. It puts more money in the hands of the people who will spend. It increases demand . It creates a multiplier effect. There are more jobs and more money in taxes.
It helps mitigate the natural tendency of corporations to pay as little as possible to their employees, even if it means those employees must live in abominable conditions.
You’ll hear others who have the opinion that competition for employees will result in competitive wages being paid, so a minimum wage law is simply meaningless government regulation. A look back at how workers were treated in the past should help you see how that turned out. (The “invisible hand” mostly gave the workers the finger)
Let’s raise it to $100,000 per hour, then. Then everyone will be rich and we will all live like kings.
Good Heavens.
What a ridiculous response. Try and get in the conversation like an adult.
Let’s lower it to zero and we will all live like slaves. Good heavens.
Why is anything that prevents screwing the poor bad to you?
Look, the $100,000 dollar an hour argument can be helpful.
What should the mimimum wage be? Obviously, we want a minumum wage that creates the most social benefit, right? So where do we set that wage?
$1 an hour? I think we can agree that setting it that low is pretty much the same thing as not having one, nobody in the United States would work for that wage without a gun at their head.
$2/hr? $3/hr? $10/hr? $20/hr? $100,000/hr?
It seems to me that the current minumum wage is set pretty damn close to the market floor for labor, below which people would simply rather not work. Maybe it’s a bit higher, but not much. So, the real-world consequence of repeal of minumum wage laws would be a small reduction in some people’s wages. But you wouldn’t see McDonalds offering to pay workers $2/hr, because they won’t find more than a bare handful of people willing to work for such a wage. There aren’t that many minumum wage jobs out there, almost all jobs pay higher than minumum wage.
So should the minumum wage be set higher than it is now? A little higher? Substantially higher? What would be the effect of a $10 mimumum wage? If that sounds like a good idea, why not $15, or $18? What criteria would you use to set the minumum wage?
If it doesn’t make much sense to raise or lower the minumum wage except marginally, then my contention is that the minumum wage law has only marginal effects. Lowering it drastically or abolishing it won’t be much different than lowering it marginally
And just why do you think entry level jobs pay slightly more than minimum wage? Is it a coincidence, or do employers pay a bit more than the floor? Right now the minimum wage is very low in constant dollars and our unemployment rate is high. You’d expect the opposite if the minimum wage was a deterrent to employment.
Without minimum wage we have a race to the bottom. Places like McDonalds will keep wages low so as to to have the lowest prices. But it really isn’t all that important if a burger is $0.99 or $0.95, but it does make a huge difference to low wage workers if wages are 5% higher.
What’s the right level? Hard to say, but a good place to start is whether the lowest wage jobs pay enough for people to support themselves with any sort of dignity. Can they afford to commute to work, pay for food, and live in safe housing. It’d be nice if they also had enough left over to pay medical bills, but as long as they can go to emergency rooms for treatment we’re OK, right?
I’m sorry to have to disagree with all ye Min-Wage lovers, but there is essentially zero evidence of any value in the minimum wage. Zero. As in, none whatsoever. most studies find no benefit, and in those studfies which do find benefits, they are trivial.
The basic problem is that labor (and therefore wages) are a commodity no matter how you slice things. It’s simply one input into an economic system. If you price the wage above the market value, you get less of it: this applies quite perfectly to employment. I know many seem to believe that their employers are holding out on them, but at the end of the day most people get more or less the market value of their wage unless they have personal connection and friendships.
In fact, the major argument used by pro-min wage economists is not that the min-wage does any particular good in the macro sense, but that the jobs lost are simply not that economically important, while it helps. This is perhaps a valid point, but when combined with the aforementioned studies, the min-wage is not of much value to society. most economists think the min-wage is low enough that it does not significantly affect employment now - in fact, the only employer who could ever attract me with a minimum wage was a governemnt library which had extremely flexible terms.
Before the current minimum wage increase in 2007 it was IIRC $5.35. People, worked it, but they either had support elsewhere or were heavily reliant on social programs. Further I think you’re mixing up cause and effect. Nothing pays lower than it because (legally) it’s the lowest you can go.
A lot places pay just above it, no matter what it is. When it $5.35 a lot places paid $5.50.
What percentage of the work force worked for $5.35 in 2007?
Jobs lost are critically important to the ones who lost them. And people who don’t work don’t contribute as much to the economy than people who do.
I used to work at a place that had wage adjustments every couple of years. An independent company would survey the area and industry and issue a report. The company I worked for would adjust wages that were lower than average upward. Of course this was in an economic time when retention was mildly important. It became less important starting around 2001 when they discovered that they could save a lot of money by off-shoring jobs. Now layoffs are an ever-present threat there. Nobody works for minimum wage there, but I can’t see companies that do pay minimum wage maintaining their wages. I think they are more likely to lower wages. After all, there are a lot of people desperate for work.
Here’s t problem though: Let’s say it costs $20,000/year for a single person to eke out a living. If companies can lower wages to $10,000/year, what happens to the person? Screw them, because if they really want to work they’ll do it for what we’ll pay them? OK, but how do they live? Government subsidies? Oh, no! That would be Socialist! Who wants to live in the Soviet union circa 1960? :eek: (Never mind that the Soviet Union no longer exists, nor that it isn’t even remotely conceivable except to Conspiracy Theorists and other nutjobs that the U.S. could form such a society.) If people can’t afford to live, how can they buy the products in a consumer economy?
It’s a balancing act. Wages have to be high enough that people can A) make a living; and B) have enough pocket change to buy consumer items that support the economy. Wages have to be low enough so that companies can make a profit and stay in business so that they can employ people who buy products. Without a minimum wage, there’s nothing to stop companies from reducing wages to subsistence levels or lower. Thus there are fewer consumers and the economy continues to decline.
Companies are not ‘job creators’; consumers are. Without consumers there would be no jobs to create.
And, what do you think the minumum wage should be? Exactly what it is now? Or higher? If higher, how much higher? Only a little bit, or a lot?
I don’t think the minumum wage, at the current level, has much of an effect, pro or con. So keep it the same, lower it a little or a lot, abolish it, raise it a little bit, and we’ll see very slight marginal effects. If you want to do any of those, I won’t care enough either way to complain. The only way to make an appreciable difference would be to raise the minumum wage steeply. Unfortunately, I think that would have an appreciable negative effect, so we shouldn’t do it.
If we raise the minumum wage, would companies respond by keeping the same employees and paying them more, or would they respond by offshoring more?
Until people in India can beat US customers with metal pipes I think we are safe.
When China pays 90 cents an hour, we can not go low enough for that argument to matter. But there are plenty of jobs like restaurants and service jobs that can not be offshored. That would include infrastructure work.
Corporations are at an all time high in profits. They do not have to pinch pennies to generate profits. but they always want more. The banks are ass deep in profits, yet are sending 30,000 jobs offshore. It will make more money for those on top. Fuck the workers, they do not matter.
The health of the country does not factor in the equations . They have a prime directive of getting as much latinum as possible.
Ferengi Rules Of Acquisition These are our corporate rules too.
Unknown but a little looking found:
This minimum wage increase would boost earnings for 13 million American workers—9.8 percent of the United States workforce. dated at the start of 2007. The increase to >$7.15 didn’t kick in until later in the year.
Further clouding your question is the fact many states had minim wages greater than the federal. For example the $5.35 IIRC figure was the state, the federal here at that time was $5.15.
Studies show no slippage of jobs in states that have a higher minimum wage than the Fed. It puts more money in workers pockets and therefore increases demand. It helps the lives of a lot of poor people.
Over 650 economists ,including 5 Nobel Prize winners, say increasing minimum wage does not have the impact that critics claim.