# Economics-minimum wage **URL:** \ **Category:** Great Debates\ **Created:** [October 16, 2011, 12:40am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788 "2011-10-16T00:40:48Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [October 20, 2011, 2:31pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/81 "2011-10-20T14:31:33Z")
> [@Lemur866](#): > > If they’re getting paid more than the market would value their skills, why doesn’t their employer fire them? There’s a law that says you can’t pay less than minumum wage. There’s no law that says you have to hire someone. In many cases they do fire them (or at least some of them). Which is sort of the point we are making. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 20, 2011, 3:12pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/82 "2011-10-20T15:12:41Z")
> [@smiling\_bandit](#): > > True, but arbitrary cut offs are rarely useful in dealing with elasticity. And this is one of those rare circumstances. We know what the world was like before the minimum wage, we don’t have to engage in conjecture, we know how the market treats human beings. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 20, 2011, 3:16pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/83 "2011-10-20T15:16:27Z")
> [@msmith537](#): > > Minimum wage essentially amounts to a subsidy for Raman noodle makers, malt liquor companies and OTB gambling. Wow!!! ☹ ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 20, 2011, 3:22pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/84 "2011-10-20T15:22:03Z")
> [@Lemur866](#): > > Migrant farm workers don’t make minumum wage. They invariably get paid by the piece. You get $X for every undamaged unit of Y. You pick 100 units in a day, you get 100X. You pick 50, you get 50X. You pick 10, you get 10X. So if you’re a fast worker, you can make well over minumum wage, if you’re a scrawny white guy you’ll make well under. Well then there is not much variation to correlate now is there. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 20, 2011, 3:23pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/85 "2011-10-20T15:23:12Z")
> [@The\_Tao\_s\_Revenge](#): > > Wow . Was that insult necessary? I grew up poor and up until last spring was poor. Never gambled or been drunk. > > A lot of good people are poor. Why the bigotry against them? Because wealth is a moral virtue and the absence of wealth is an absence of moral virtue. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 20, 2011, 3:29pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/86 "2011-10-20T15:29:11Z")
> [@smiling\_bandit](#): > > Speaking of rent control, it strikes me to be an analogous situation. Normal\* rent control effectively puts a floor on the price charged to any new customers. The result tends to be a high utilization rate of existing housing stock, but limited new stock available and high prices charged to customers. (Yes, in this cae the customers and the “employees” are the same). > > Thus New York might actually see _more_ housing stock created and an increase in supply, although it’s been 60 years of corruption and eventually co-ops, which have tended to drive out almost all the middle-class already. > > \*There are some forms of “rent control” which amount to extremely strong protections for renters, but which are not done entirely the same. The results here may be equal and opposite: spare housing stock exists but isn’t put up for rent. rent control doesn’t put a floor on anything, it restricts available supply and drives up prices. ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [October 20, 2011, 4:19pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/87 "2011-10-20T16:19:44Z")
> [@Damuri\_Ajashi](#): > > And this is one of those rare circumstances. We know what the world was like before the minimum wage, we don’t have to engage in conjecture, we know how the market treats human beings. Uh, well, yes. And history tells us that wages tended to increase over time regardless and that minimum wage laws didn’t noticably affect standards of living, even among the poor. > [@](#): > > rent control doesn’t put a floor on anything, it restricts available supply and drives up prices. Exactly my point. By arbitrarily limiting existing stock, and increasing the risk of new stock, it vastly raises the required rates required. It may be doing so through a twisted mechanism, but it is putting a higher floor on the rates neccessary for rents to be profitable. ---
**Author:** ![The\_Tao\_s\_Revenge](https://avatars.discourse-cdn.com/v4/letter/t/73ab20/32.png) [@The\_Tao\_s\_Revenge](https://boards.straightdope.com/u/The_Tao_s_Revenge)\ **Post date:** [October 20, 2011, 11:32pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/88 "2011-10-20T23:32:27Z")
> [@smiling\_bandit](#): > > Uh, well, yes. And history tells us that wages tended to increase over time regardless and that minimum wage laws didn’t noticably affect standards of living, even among the poor. If you’re making $5.50 an hour and suddenly jump to $7.15 an hour, let me tell you, it’s very noticeable. You can start eating a lot better for one thing. ---
**Author:** ![Taber](https://avatars.discourse-cdn.com/v4/letter/t/ac91a4/32.png) [@Taber](https://boards.straightdope.com/u/Taber)\ **Post date:** [October 21, 2011, 12:57am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/89 "2011-10-21T00:57:48Z")
Let’s take 2 hypothetical jobs, one where an unskilled worker produces $8 an hour of net profit after everything but wages is considered, and another job produces $15 an hour profit, under the same conditions. Let’s further say, due to high unemployment that unskilled American workers are willing to do either job for $5 an hour. The economically optimal solution for commodity goods is the company pays everyone $5 an hour, then lowers prices until its profit margin is what is appropriate for that commodity. It gets fuzzier for non-commodity goods, since Nike isn’t going to pass the savings to the customer, you are just paying a $25 tax on your shoes because you want a Nike instead of a $20 tax. Of course, if people were willing to pay $25 extra for a Nike, Nike would already charge $25 more. Long story short, Nike’s prices will come down, but not as much as with commodity goods. But say that that distribution leaves us with an undesirably large underclass that can’t sustain itself on those wages. If most of the jobs generate $15 hour for the companies, then raising the minimum wage to $8 will get that underclass more money, possibly enough to live off of. Some of the extra cost will be passed down to the customers, but some will be taken out of the companies profit margin (if the company could have raised prices easily it would have already). Plus, the raised cost of the product is spread over all the customers, so the working poor don’t necessarily bear the brunt of it. In this case, raising the minimum wage successfully routes money from the rich and the middle class to the working poor. If most of the jobs only generate $8 profit for the company, then obviously raising the minimum wage to $8 an hour will cause a lot of jobs to be eliminated. How many of each type of job exists is hard to say, especially for jobs that don’t directly pull in money. ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [October 21, 2011, 2:46am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/90 "2011-10-21T02:46:31Z")
> [@The\_Tao\_s\_Revenge](#): > > If you’re making $5.50 an hour and suddenly jump to $7.15 an hour, let me tell you, it’s very noticeable. You can start eating a lot better for one thing. Perception does not matter. Measured reality wins every time. If secondary effects damage that earning power, you can hurt _everyone_. Making your economic piolicy on the basis on what’s good for the very poor (_which it hasn’t been shown to do_) is a knee-jerk reaction, not wisdom. ---
**Author:** ![The\_Tao\_s\_Revenge](https://avatars.discourse-cdn.com/v4/letter/t/73ab20/32.png) [@The\_Tao\_s\_Revenge](https://boards.straightdope.com/u/The_Tao_s_Revenge)\ **Post date:** [October 22, 2011, 2:19pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/91 "2011-10-22T14:19:55Z")
> [@smiling\_bandit](#): > > Perception does not matter. Measured reality wins every time. If secondary effects damage that earning power, you can hurt _everyone_. Making your economic piolicy on the basis on what’s good for the very poor (_which it hasn’t been shown to do_) is a knee-jerk reaction, not wisdom. Cite: everyone was hurt by the last increase? Really if you can’t financially abuse the poor everyone gets hurt? Why must the right be so overly dramatic. Besides what would you know about minimum wage living? Weren’t you whining in the pit about not having a job? That implies someone is supporting you, or you were in a position to build significant savings. Did you ever have to balanced a monthly a budget on (^)$669.5 (including rent, transportation, food, consumables like hygiene products, etc.)? If not then I really don’t think you understand what that extra (|)$273 means. It’s a (#)40.7% increase in pay. Unless you want to claim it caused 40% more unemployment, 40% reduction in hours, 40% inflation, or some combination thereof then you’re forced to admit it did increase the living the standard of anyone who made below $7.25 in 2007. (^)5.15 \* 40 \* .75 \* (4 + (1 / 3)) = 669.5, assumes previous $5.15 federal minimum wage, 40 hour work week, and 3/4 take home (what’s left over from taxes and stuff 7.25 \* 40 \* .75 \* (4 + (1 / 3)) = 942.5, same assumptions except current federal minimum wage (|) 942.5 - 669.5 = 273 (#)273 / 669.5 = 0.40776699 ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [October 23, 2011, 3:32am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/92 "2011-10-23T03:32:33Z")
> [@The\_Tao\_s\_Revenge](#): > > Really if you can’t financially abuse the poor everyone gets hurt? Why must the right be so overly dramatic. Besides what would you know about minimum wage living? You accuse me of favoring “abusing the poor,” and then accues me of being dramatic. The irony burns. Yes, I know a great deal about earning a small wage. I also recognized how very well off that wage made me compared to the alternative. A small wage can go far if you spend it well. And you have missed entirely my point that you’re completely ignoring all the secondary effects of increasing the minimum wage. Well, yeah, if you simply drop all the evidence that doesn’t support your theory, it does look like a pretty good deal. But economics also teaches us to beware simple nostrums which promise cheap benefits, because they don’t work. So let’s get back to basics: before you can claim we should enact a minimum wage law or an increase, you must first show in practice that the minimum wage produces notable improvements in living standards. I would grant you the power to experiment, but of course there’s been long-existing minimum wage laws. You ought to be able to find reasonably clear evidence widely accepted by economists and economic historians. Yet this does not happen, and even economists who I’ve read that do favor minimum wage laws don’t claim they ofer substantial economic benefits. As a minor factor, I would also point out that you go on a brief mathematical tangent which is quite useless, not because it’s precisely wrong, but because it focuses on money and not _value_. It’s a common problem in discussing economic policy. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [October 23, 2011, 4:07am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/93 "2011-10-23T04:07:57Z")
> [@Taber](#): > > Let’s take 2 hypothetical jobs, one where an unskilled worker produces $8 an hour of net profit after everything but wages is considered, and another job produces $15 an hour profit, under the same conditions. Let’s further say, due to high unemployment that unskilled American workers are willing to do either job for $5 an hour. > > The economically optimal solution for commodity goods is the company pays everyone $5 an hour, then lowers prices until its profit margin is what is appropriate for that commodity. It gets fuzzier for non-commodity goods, since Nike isn’t going to pass the savings to the customer, you are just paying a $25 tax on your shoes because you want a Nike instead of a $20 tax. Of course, if people were willing to pay $25 extra for a Nike, Nike would already charge $25 more. Long story short, Nike’s prices will come down, but not as much as with commodity goods. > > But say that that distribution leaves us with an undesirably large underclass that can’t sustain itself on those wages. If most of the jobs generate $15 hour for the companies, then raising the minimum wage to $8 will get that underclass more money, possibly enough to live off of. Some of the extra cost will be passed down to the customers, but some will be taken out of the companies profit margin (if the company could have raised prices easily it would have already). Plus, the raised cost of the product is spread over all the customers, so the working poor don’t necessarily bear the brunt of it. In this case, raising the minimum wage successfully routes money from the rich and the middle class to the working poor. > > If most of the jobs only generate $8 profit for the company, then obviously raising the minimum wage to $8 an hour will cause a lot of jobs to be eliminated. > > How many of each type of job exists is hard to say, especially for jobs that don’t directly pull in money. This is completely wrong. The fact is productivity has gone up like crazy. Workers wages have not. They have actually dropped. The result, the highest corporate profits ever. Companies do not just pass the profits along. They keep them. Corporations would be happy to pay American workers like 3rd country workers. They have not offshored because they were not making money, but because they could make even more. ---
**Author:** ![JustinC](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/justinc/32/8083_2.png) [@JustinC](https://boards.straightdope.com/u/JustinC)\ **Post date:** [October 23, 2011, 5:42am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/94 "2011-10-23T05:42:42Z")
> [@smiling\_bandit](#): > > You accuse me of favoring “abusing the poor,” and then accues me of being dramatic. The irony burns. Yes, I know a great deal about earning a small wage. I also recognized how very well off that wage made me compared to the alternative. A small wage can go far if you spend it well. > > And you have missed entirely my point that you’re completely ignoring all the secondary effects of increasing the minimum wage. Well, yeah, if you simply drop all the evidence that doesn’t support your theory, it does look like a pretty good deal. But economics also teaches us to beware simple nostrums which promise cheap benefits, because they don’t work. > > So let’s get back to basics: before you can claim we should enact a minimum wage law or an increase, you must first show in practice that the minimum wage produces notable improvements in living standards. I would grant you the power to experiment, but of course there’s been long-existing minimum wage laws. You ought to be able to find reasonably clear evidence widely accepted by economists and economic historians. Yet this does not happen, and even economists who I’ve read that do favor minimum wage laws don’t claim they ofer substantial economic benefits. > > As a minor factor, I would also point out that you go on a brief mathematical tangent which is quite useless, not because it’s precisely wrong, but because it focuses on money and not _value_. It’s a common problem in discussing economic policy. Minimum wage has produced results, in practice, and there’s evidence, supported by economists, basically. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [October 25, 2011, 2:25am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/95 "2011-10-25T02:25:57Z")
[http://www.rawstory.com/rs/2011/10/24/professor-explains-how-economic-inequality-harms-societies/](http://www.rawstory.com/rs/2011/10/24/professor-explains-how-economic-inequality-harms-societies/) If you want to discuss the social impacts of wage differentials then listen to this TED talk. It checks out many social variables and accumulates the data.Ironically the rich do not escape the implications of stratifying wages and wealth. They suffer from its impact too. We have the lowest social mobility of any industrialized nation. We lead in mental illness, homicides ,prison population, Nd lots of other terrible categories. We must be doing something dreadfully wrong. ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [October 25, 2011, 3:32am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/96 "2011-10-25T03:32:47Z")
> [@JustinC](#): > > Minimum wage has produced results, in practice, and there’s evidence, supported by economists, basically. Can you provide actual citations? I already discussed the wikipedia article, which does not particualrly support your position. I’m sure you can find something to support you, but can you find reputable citations to this effect? And not a simple once-off study, but years of analysis which supports you? ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [October 25, 2011, 3:58am UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/97 "2011-10-25T03:58:47Z")
[http://www.dol.gov/oasam/programs/history/reich/reports/pay.htm](http://www.dol.gov/oasam/programs/history/reich/reports/pay.htm) This argument is not new. There is endless data supporting the minimum wage as not destructive of employment. This one is from an old Labor Department release. People believe sophistical reasoning the the rich offer. It just sounds like it must be correct. But it is not. ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [October 25, 2011, 1:01pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/98 "2011-10-25T13:01:55Z")
> [@gonzomax](#): > > [http://www.dol.gov/oasam/programs/history/reich/reports/pay.htm](http://www.dol.gov/oasam/programs/history/reich/reports/pay.htm) This argument is not new. There is endless data supporting the minimum wage as not destructive of employment. This one is from an old Labor Department release. People believe sophistical reasoning the the rich offer. It just sounds like it must be correct. But it is not. Your evidence is a political position paper… dating back to the Clinton administration. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 25, 2011, 3:31pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/99 "2011-10-25T15:31:57Z")
> [@Taber](#): > > Let’s take 2 hypothetical jobs, one where an unskilled worker produces $8 an hour of net profit after everything but wages is considered, and another job produces $15 an hour profit, under the same conditions. Let’s further say, due to high unemployment that unskilled American workers are willing to do either job for $5 an hour. > > The economically optimal solution for commodity goods is the company pays everyone $5 an hour, then lowers prices until its profit margin is what is appropriate for that commodity. It gets fuzzier for non-commodity goods, since Nike isn’t going to pass the savings to the customer, you are just paying a $25 tax on your shoes because you want a Nike instead of a $20 tax. Of course, if people were willing to pay $25 extra for a Nike, Nike would already charge $25 more. Long story short, Nike’s prices will come down, but not as much as with commodity goods. > > But say that that distribution leaves us with an undesirably large underclass that can’t sustain itself on those wages. If most of the jobs generate $15 hour for the companies, then raising the minimum wage to $8 will get that underclass more money, possibly enough to live off of. Some of the extra cost will be passed down to the customers, but some will be taken out of the companies profit margin (if the company could have raised prices easily it would have already). Plus, the raised cost of the product is spread over all the customers, so the working poor don’t necessarily bear the brunt of it. In this case, raising the minimum wage successfully routes money from the rich and the middle class to the working poor. > > If most of the jobs only generate $8 profit for the company, then obviously raising the minimum wage to $8 an hour will cause a lot of jobs to be eliminated. > > How many of each type of job exists is hard to say, especially for jobs that don’t directly pull in money. I think a lot depends on what the demand curve look like. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [October 25, 2011, 3:42pm UTC](https://boards.straightdope.com/t/economics-minimum-wage/599788/100 "2011-10-25T15:42:26Z")
> [@smiling\_bandit](#): > > Your evidence is a political position paper… dating back to the Clinton administration. Have the laws of economics changed since the 1990’s? Where are they wrong? [Previous page](https://boards.straightdope.com/t/economics-minimum-wage/599788.md?page=4) [Next page](https://boards.straightdope.com/t/economics-minimum-wage/599788.md?page=6)