No. But considering a reasonable minimum wage to be a cause or cure of economic problems is.
This discussion would be better off focusing on those parts of the issue.
Unfortunately, as we can see from long experience of the Real World;
“Competetive wages” means that companies compete to pay as little as possible and still attract employees. Large pool = lower wages.
At the top, it becomes Small pool = higher wages and “competetive” comes to mean competing to throw as much as possible at a few people for fear that those key people might leave. Even when those key people are grossly incompetent and/or are just as likely to leave for a better offer within a short period of time.
But of course, every time there is a discussion of the Minimum Wage, the corporatists trot out the same old tired examples, dragging out a few “small business owners” to wail and gnash their teeth before the committee, claiming that they’ll be utterly ruined if they have to pay their people another 20 cents an hour. :rolleyes:
If you cut the minimum wage to 2 bucks, you would still not increase unemployment. You have to have something for them to do. You would not hire a bunch of people to stand around and do nothing. It would be dumb. You have to have demand. Which is created when people have money to spend.
Correct.
Companies aren’t offshoring jobs making minimum wage.
Wrong. I mistyped. It would not increase employment because it will not create work . The work does not exist. Therefore the rate of pay is irrelevant.
They will not hire people to do nothing at any price.
Well, the argument is that increasing minimum wage ultimately hurts the poor because it reduces the number of jobs. To use **IdahoMauleMan’s **logically absurd example, clearly we can’t just set minimum wage to $100k a year. Most companies would either not be able to afford to hire any workers or they would need to sell their products for so high a price, that a $100k a year would seem like current minimum wage in purchasing power. So obviously there is some level at which increasing minimum wage has a detrimental effect on the economy.
It is true that businesses will logically seek to pay their employees as little as possible. And yet the national average income is somewhere around $45,000 a year, well above minimum wage. So clearly there is more to it than “evil rich corporations want to make everyone slaves”.
As a point of fact, many businesses like grocery stores do operate on very thin margins. They also happen to employ lots of minimum wage workers. So for those businesses, increasing employment costs is a very real cost.
Easy there “glass house”.
It’s actually a fairly complex problem. First of all these aren’t fixed numbers. You can maintain a certain standard of living at $20,000. A different standard of living at $15,000. But it certainly isn’t healthy for an economy if the average income is below the average cost of what we consider to be a reasonable lifestyle.
The problem with government subsidies of all kinds is that it create distortions in the market. These can lead to bubbles and subsequent crashes. Not to mention these payments don’t just appear out of thin air. They have to come from somewhere else in the economy.
Nonsense. Employers pay the minimum they can, just as they hire the minimum number of people they can, just as they charge s much as they can get away with. As market forces go, the importance of “supply and demand” runs a distant second to “what the market will bear”.
If they could, they’d use slaves or the equivalent and pay them nothing. And they do overseas, when they can get away with it. When they can’t use slaves or some facsimile, they pay as little as possible.
If someone gives you that argument, ask them if they think Milton Friedman and Friedrich von Hayek are commies. Friedman, in the 12th chapter of Capitalism and Freedom (published in 1962, I think) argues for gov’t direct transfers. He wanted a tax credit. About 15 years later, the EITC was adopted. The UK has something similar.
I’ve read that Hayek was in favor of it but I can’t give you a cite.
You might ask them if they think Paul Krugman is a commie (he’s also for it) but some people might just think he is, as inaccurate as that might be. I don’t think many commies win the John Bates Clark medal, the Nobel prize in economics and have worked at the Reagan White House though.
You learn the first day in Econ 101 that things like Rent Control and Minimum Wage are bad and that Free Trade is good. Yet there is still argument about these things.
A minimum wage forces those unable to create value in excess of the minimum wage out of the job market. A number of jobs that previously could be done will be left undone (or move into the black economy). An example often made is that of service personal at gas stations. Some nations with no or a low minimum wage usually have people employed to fill up your car, whereas in nations with a higher minimum wage gas stations will usually be self-service. Government assistance works the same as a minimum wage since most people will not take a job for a wage similar to, or only a little above, what public assistance will give you.
I don’t understand why “the economy” is this higher power that we have to serve, regardless of the quality of life.
They’re not operating on thin margins because people won’t pay more for food. They have thin margins because they can’t differentiate their service, a box of Oreos from your store is identical to the box of Oreos at the store down the street, so you can’t drive a premium for your product. Competition at its finest.
Raise the minimum wage, labor costs go up for you and the guy down the street, so you both take your higher cost and uplift it for your profit, like you do today. Grocery stores aren’t going to suddenly go out of business because a wage increase just like they don’t go out of business when the bulk price of flour or sugar goes up 50%.
I see minimum wage, and other social programs, as revolution insurance. You pay into it to ensure a reasonable minimum standard of living, thus OWS doesn’t turn into Storm Wall Street and we don’t have traders being thrown off the roof of the Exchange.
For accuracy: Friedman was not in favor of a minimum wage (nor was Hayek).
He was in favor of a negative income tax (essentially, a governmentally-provided guaranteed minimum income) on humanitarian, not economic, grounds and because he argued it’d be more efficient than the current multitude of welfare and anti-poverty programs.
So you raise the minimum wage and then the price goes up on staple items and basically everything else. What was accomplished? You now pay teenagers a buck an hour more so they can buy more beer this weekend, but now everyone pays more for food.
You really don’t understand how a modern economy is what provides this quality of life that we have?
You’re right, I should have mentionned that I was specifically adressing Johnny’s last point about gov’t transfers being ungenerously characterized as socialist.
Thankfully, most of the people who benefit from a minimum wage increase aren’t teenagers who are buying beer illegally, they’re adults who need the extra money to afford insulin for their children. You’re not against children getting insulin they need, are you? I’m willing to pay 5 cents more for a can of soup if it means Little Timmy can afford medication this week.
What was accomplished? The people who work at the min wage job have more money than they did last week, and have an increased ability to make ends meet. Is that accomplished at the expense of the economy as a whole? Yes. Is it a less-than-perfectly-efficient intrusion into the economy? Perhaps.
I accept that promoting the public good may entail a burden or two on my finances.
Well, that’s exactly it. It is better for “the economy” to have no minimum wage, but we don’t want to live in a society where people make $.05/hour. Not that that would happen in a 1st world country, but you get the meaning. And so we create a MW, which is a form of welfare. The one thing I can say about the MW is that it’s a pretty efficient form of welfare, since it doesn’t need much, if any, of a bureaucracy to sustain it.