I really don’t get why this is even a debate. This isn’t the first time ever that the minimum wage might be raised. What happened last time? And the time before that? And the time before that? We’ve got years and years and multiple minimum wage raises to look at, so why are we arguing theory when we can look at what happens in reality?
I don’t know what happened, mind you. But someone does. It’s a simple question of correlation, to start. Then if there is one, we can argue about causation until the cows come home…
Negotiations between buyer and seller assume roughly equal power. That is not the case in an economy with 8% unemployment for a generic job.
Don’t pretend that a negotiation between someone with water and someone dying of thirst is equal.
You think a totally unregulated banking system would be a good thing? Remember the savings and loan crisis during the HW Bush era? Do you like runs on banks?
At walmart every extra $4000 a year in extra wages and benefits would drive up prices by 1%, so if workers got an extra $8000 a year in wages and benefits a $2 loaf of bread would cost $2.04. Plus companies could pay for higher wages via various means. They can cut spending in other areas for example, the idea that 100% of the revenue to cover higher wages will come from higher prices is something that would need to be consistently proven in the real world.
The real problem is lowering income inequality. If you raise wages/benefits at fast food restaurants and mcdonalds, that is great and all but the top 1% don’t shop there. People who shop there are in the lower and middle classes, so you are just moving money away from them to distribute it to the poor.
Another positive of rising wages, from what I can see, is it increases the motivation to move to automation. Higher wages makes innovation to increase worker productivity seem more desirable, and worker productivity increases is what drives up our standard of living. If China can offer tons of factory workers at $1/hr, there is no incentive to invest in robotics or other labor saving devices.
As someone who has worked in fast food as a manager and employee, there’s one sure way to handle wage increases: you use less people. That’s how we absorbed two minimum wage increases.
Another observation: when labor is abundant, you get higher quality people. When labor is scarce, you get lower quality. Since our wages were pretty much the same all the time, that just meant that during recessions we could hire laid off executives and college educated professionals, while in good economic times we were literally recruiting at prisons. Wages also increase or reduce demand for your openings. If we were offering $15/hr, I could throw lots of applications right in the trash, whereas at near minimum wage, I had to hire anyone who could correctly fill one out most of the time.
The point is that most of these striking workers would be out of work if they got what they wanted. The average fast food employee is not worth $15/hr. However, there are a lot of unemployed or just retired professionals with a long history of reliability and work experience who you could lure into those positions at that pay rate. Not to mention homemakers who are hard workers but for whom it’s not worth leaving the house for a low wage, and professionals who would like a second job to supplement their income. In other words, students and longtime minimum wage workers need no longer apply. They would be unneeded. At $15/hr, you get more jobseekers, and the lesser qualified ones don’t get considered.
To the OP’s actual question about what’s an appropriate minimum wage, MIT’s Living Wage calculator, which takes into account differences in rent, food, transportation, etc. costs in every county and many cities (“places”) in the U.S., is a handy tool.
A - I am quite aware there are people with degrees, even advanced degrees, in food-service jobs. That does not conflict with my earlier statement - they need skills that someone is willing to pay them for. Having a degree does not necessarily confer upon you skills worth diddly squat - A PhD in Sumerian Literature is probably quite difficult to get, but is a fairly useless degree in the job market.
I don’t mean to be harsh, but frankly if your friend with a master’s in microbiology can’t do better than minimum wage, I would suggest she is lacking the soft skills needed to pursue a career outside of biology. Or, and again this will sound rough but needs to be said, her skills are enough to get her a degree but having a career requires much more. I have a master’s in CS, and I graduated with people I would never let near a compiler.
The fact that they went into debt to get skills that did not turn into a career is unfortunate, but that’s honestly their problem. I can’t go to my boss and say “hey boss, I want a raise because my mortgage is expensive” - I need to go to him and say “hey boss, I want a raise because my skills as an employee are worth more to you than you’re currently paying for, and if you don’t give me that raise I will go work somewhere else”. Note, my personal debt/expenses has zero effect on whether I deserve a raise.
And simply put, no, just because you are able to breathe does not immediately entitle you to free money. Not all jobs should pay a living wage because not all jobs are WORTH a living wage. There was an segment on NPR where they interviewed some locals that were joining the protest for higher wages. One person complained he’d been working fast food for a decade and it wasn’t enough to support his children. While quite heart-wrenching, if he’s gone a decade and not picked up any skills that will get him a wage in the double digits, he has only himself to blame.
And I have not and will not say nobody deserves help from the government, so I resent that implication. I’m a guy that thinks the tax code is not progressive enough, and I would support a simple negative income tax over the frankly confusing and denigrating mishmash of “welfare” that exists now.
I am not sure if I believe in a minimum wage at all. I have an alternate theory that a minimum wage just offers price collusion for employers that employee minimum wage workers. In other words, they can just point to a government chart to justify why they are paying what they are rather than setting their own wages and competing up to the best price even for those with few skills. I don’t stand by that theory wholeheartedly but it is something I have wondered about. We may never know.
My main question is why they suggest $15 an hour and not $12, $20 or even $50. I would want to see some rational explanation for it with detailed and economic theory as to why $15 is the correct number but the people that promote such ideas the strongest don’t tend to have the best grasp of economics to say the least.
I worked in a supermarket in high school in 1990 for $3.35 an hour and busted my ass for it and I was happy to get it. Even adjusted for inflation and geography, that is less than people on minimum wage are making now. I didn’t need to support a family or buy a house however. That was the whole point. I was in high school and used the money to buy my own car, food and clothes. I would not have been happy if someone took that opportunity away just because well intended legislation priced people like me back then out of the low skilled job market and left us with no job opportunities at all.
Do you really want to make it illegal to employee anyone that doesn’t have specialized skills or is willing and capable of doing work worthy of $15 an hour. That is all is this will accomplish if it goes through. You will see a rash of young people that can’t get any (legal) employment at all.
That’s true, and it’s why I support minimum wage laws. But the poster’s point still stands. Wages are merely a price. Labor is not special, it’s just another thing people sell. It gets special treatment politically because nearly everyone sells labor. but that doesn’t mean that labor has different economics from other goods and services. The varying laws governing labor are an attempt to protect labor from those market forces, often unsuccessfully.
Fair enough. I was being lazy because its a pain to read, cut and paste on my iPod. I will happily hunt you down some studies when I return to my desk. If you are really chomping at the bit, you can Google it :). But I will happily put up.
In 1996/97 Bill Clinton raised the minimum wage from $4.25 to $5.15, more than 21%. My impression is that caused none of the dire effects on inflation and unemployment so often feared, quite the opposite in fact. Is there any reason to think those things would happen this time?
Depends on how high it’s raised. Going from $7.25 to $10 is steeper than 21%. $7.25 to $9 is more reasonable.
It also matters what the employment outlook looks like. If employers aren’t hiring now, they won’t start hiring because it got more expensive. Plus they already have a health care mandate to deal with.