Obama plans to raise the min. wage to $9 an hour.

[John_Mace]

@Evil_Economist

I think if you use an EITC then you need a MW as well. Otherwise employers would just reduce wages to offset the EITC. I’m not sure that EITC is any less blunt than MW

Perhaps. But remember that very few employees make MW now, so one would assume that anyone making > MW would not have his wages decreased if the MW disappeared. I think we’d see a spectrum of jobs being offered to current MW employees everywhere from very low to right up to the MW. And since there would be some jobs being offered, and taken, for quite low wages, unemployment would go down, making the job market tighter. I think a lot of people assume that if the MW went away, everyone’s wages would suffer. But that doesn’t make sense, otherwise “everyone” would be making MW now.

Of course, I could be wrong, and some combination of the two is the best policy.

[rogerbox]

If someone is working for $4 an hr and “unemployment went down”, who cares? What does it accomplish? They will still qualify for food stamps and whatever welfare, and they would still be struggling with homelessness or near homelessness, and they would still be just as likely for their children to become criminals, other than some deepseated conservative “gut feeling” that people should work because it has value no matter how useless the job is for quality of life, what does lowering the unemployment rate aquire for society if those jobs don’t improve quality of life for those people or their burden on the already weak social safety net?

[Rawdogvillian]

@Evil_Economist

Maybe. A minimum wage also puts more money in the economy, which increases demand for goods and services, which increases the demand for jobs. You are aware that several economists have found that increases in employment resulted from increases in minimum wages? Even when they find decreases in employment, those decreases are small.

Yes.

Where does the money from EITC come from? Does it come from taxes? Then it has exactly the same impact on the economy as a minimum wage. Also, as in your Walmart example, it would result in lowered wages; it would in effect be a subsidy from successful businesses to unsuccessful ones.

Several economists have also found studies that show there is no net benefit from increases in the minimum wage. You can have Keynes, and you can have Hayek. More money in the economy does not translate entirely into increased demand. This is more Keynes for you, if that was the case the stimulus would have worked due to the old fiscal multiplier. What if those people who receive the wage increase save, or pay down debt? Your one to one assumption implies that these beneficiaries will spend their money in the same industry which employs them.

An example would be, 5 workers at mcdonalds make an extra 100 dollars in a pay period. 2 are laid off. The extra money goes towards buying Iphones, which make money for Apple, and its supply chain. Apple does not employ low wage workers. Their chinese supply chain does. Thus this money does not return to helping the low income unemployed.

The money from EITC DOES come from taxes, but these are not directly levied on the employer in question. The burden is spread throughout the tax. Its a fundamental “incidence of a tax” question as it relates to consumer/producer surplus. In the min wage case the employer is paying 100% of the “tax”, which is in this case, the price floor increasing. In the EITC they may pay a portion of it, but not 100%, as it is an indirect method which achieves the same outcome.

The overall economic effects could be similar, but not at a micro level. The difference in direct benefits to the intended recipients is starkly in favor of EITC.

Let us look at another issue, if we raise the minimum wage, people MAY work less to continue receiving federal assistance. I see this first hand every day. Those benefits have a financial value (STAMP, Section 8, etc). People like to remain near the bracket but not over, similar to how upper level income people straddle tax brackets. So, this being the case, the Federal Gov needs to re-index those benefits, or people will work less and productivity drops, then unemployment increases.

[Evil_Economist]

@Rawdogvillian

Several economists have also found studies that show there is no net benefit from increases in the minimum wage.

I’m not familiar with any study showing this; could you give me a link?

The money from EITC DOES come from taxes, but these are not directly levied on the employer in question. The burden is spread throughout the tax. Its a fundamental “incidence of a tax” question as it relates to consumer/producer surplus. In the min wage case the employer is paying 100% of the “tax”

So none of the wage increase will be passed on to consumers? There will be no productivity increases from higher wages? You’re making some very strict assumptions here.

Let us look at another issue, if we raise the minimum wage, people MAY work less to continue receiving federal assistance. I see this first hand every day. Those benefits have a financial value (STAMP, Section 8, etc). People like to remain near the bracket but not over, similar to how upper level income people straddle tax brackets. So, this being the case, the Federal Gov needs to re-index those benefits, or people will work less and productivity drops, then unemployment increases.

Upper income people don’t straddle tax brackets, unless they have no idea how the tax system works.

[John_Mace]

@rogerbox

If someone is working for $4 an hr and “unemployment went down”, who cares? What does it accomplish? They will still qualify for food stamps and whatever welfare, and they would still be struggling with homelessness or near homelessness, and they would still be just as likely for their children to become criminals, other than some deepseated conservative “gut feeling” that people should work because it has value no matter how useless the job is for quality of life, what does lowering the unemployment rate aquire for society if those jobs don’t improve quality of life for those people or their burden on the already weak social safety net?

Well, it’s better to have a job than no job, and that’s $4/hr they don’t have to get from public assistance, even if they’re getting the equivalent of $5/hr from assistance. That’s less than giving them $9/hr. Plus, there are lots of people making MW who are not primary income earners in their families.

To say it’s better to be unemployed than to be employed and making $4/hr doesn’t make sense to me. Why do you think that?

[rogerbox]

@John_Mace

Well, it’s better to have a job than no job, and that’s $4/hr they don’t have to get from public assistance, even if they’re getting the equivalent of $5/hr from assistance. That’s less than giving them $9/hr. Plus, there are lots of people making MW who are not primary income earners in their families.

Please explain to me how making $4/hr=getting $4/hr less in benefits over unemployment, I don’t believe you. There is no 1:1 ratio like that anywhere in the welfare system.

It’s ironic conservatives talk out of both sides of their mouth. People don’t work because they make more sitting at home being a welfare queen, now you are making the argument that these same people who just want to live on the government teat would rather work for slave wages that don’t improve their lives rather than do nothing. Which is it?

IMO slave wages like $4/hr literally encourage not working because there would be no increase in quality of life whatsoever for getting such a job. Whereas in a state with a decent minimum wage, any fulltime MW job will have a marked improvement in lifestyle over staying at home, or begging on the streets.

Someone making $4/hr working 38 hrs a week (so as to avoid having to be “full time” and having to provide benefits is typical) will make $152 a week, or $608 a month before taxes/Social security/whatever. Assume you need to take the bus to get to work, that is $6 a day in with one adult peak hours (Seattle fare), or 30 a week in bus fare, or $120 a month in bus fare. So after taxes and bus fare a person working for $4/hr would be making much less than $400 a month, for working full time. It would literally be better to try to sell your foodstamps and try to game the welfare system as much as you can than to work such an idiotic job. However if the same job paid WA’s current minimum wage of $9.19, a person could actually have a quality of life over twice as good that suddenly makes working fulltime more appetizing than literally doing nothing. (I’ve worked for wages like those in the past, and an extremely ascetic lifestyle with no government assistance is actually possible, though difficult).

Seems like the only people who win in $4/hr are the businesses exploiting people with slave labor wages and the chumps who actually pay taxes to support the welfare these people will need to not die in the streets, which the biggest corporations are not a fan of doing. Since they are simultaneously attacking fair wages for a fair day’s work AND the social safety net, it is obvious for anyone with a brain and their head not stuck in the sand, that the end game is intended to be serfdom. This is America and “libertarians” want to emulate third world countries re: wages.

To say it’s better to be unemployed than to be employed and making $4/hr doesn’t make sense to me. Why do you think that?

1. I didn’t say it was better to be unemployed, I said no one benefits from a $4/hr job.

2. There are benefits that are available to the unemployed that aren’t available to the under-employed or just working and poor. You have to make minimum wage more appetizing than just giving up. Also people making $4/hr are going to have literally NO respect for society or working, you are re-inforcing to poor people that there is no value in work, not the opposite. I don’t want a bunch of desperate $4/hr people anywhere NEAR where I live.

[rogerbox]

Also, I will say something that might be controversial: I am more worried about the poor than middle class, the rich, or corporations. I don’t believe corporate profits trickle down. So don’t try to tell me that lowering the poorest people’s wages helps them, I’ve read 1984 and we haven’t always been at war with EastAsia.

[John_Mace]

@rogerbox

Please explain to me how making $4/hr=getting $4/hr less in benefits over unemployment, I don’t believe you. There is no 1:1 ratio like that anywhere in the welfare system.

No, I was just using some shorthand. It’s never 1:1, correct, but whenever you make some money, then you need less assistance to just get by.

It’s ironic conservatives talk out of both sides of their mouth. People don’t work because they make more sitting at home being a welfare queen, now you are making the argument that these same people who just want to live on the government teat would rather work for slave wages that don’t improve their lives rather than do nothing. Which is it?

I’ll tell you what. If you ever catch me making that argument, you can ask this question again, and I’ll answer it. Until then, you’ll need to get some “conservative” to do so.

IMO slave wages like $4/hr literally encourage not working because there would be no increase in quality of life whatsoever for getting such a job. Whereas in a state with a decent minimum wage, any fulltime MW job will have a marked improvement in lifestyle over staying at home, or begging on the streets.

If no one would take the job, then what’s the harm?

But, you can always structure things so that “work + public assistance” > “public assistance alone”, no matter what value you give “work”.

Someone making $4/hr working 38 hrs a week (so as to avoid having to be “full time” and having to provide benefits is typical) will make $152 a week, or $608 a month before taxes/Social security/whatever. Assume you need to take the bus to get to work, that is $6 a day in with one adult peak hours (Seattle fare), or 30 a week in bus fare, or $120 a month in bus fare. So after taxes and bus fare a person working for $4/hr would be making much less than $400 a month, for working full time. It would literally be better to try to sell your foodstamps and try to game the welfare system as much as you can than to work such an idiotic job. However if the same job paid WA’s current minimum wage of $9.19, a person could actually have a quality of life over twice as good that suddenly makes working fulltime more appetizing than literally doing nothing. (I’ve worked for wages like those in the past, and an extremely ascetic lifestyle with no government assistance is actually possible, though difficult).

Again, if no one would take such a job, then it seems like there isn’t a problem. Of course, you’re ignoring all the people who work for “extra money” and aren’t the primary bread winner in their household.

Seems like the only people who win in $4/hr are the businesses exploiting people with slave labor wages and the chumps who actually pay taxes to support the welfare these people will need to not die in the streets, which the biggest corporations are not a fan of doing. Since they are simultaneously attacking fair wages for a fair day’s work AND the social safety net, it is obvious for anyone with a brain and their head not stuck in the sand, that the end game is intended to be serfdom. This is America and “libertarians” want to emulate third world countries re: wages.

But, according to you, no one would take that job. Which is it?

1. I didn’t say it was better to be unemployed, I said no one benefits from a $4/hr job.

Well, you’re just wrong on that. Some people would benefit, whether they are secondary breadwinners, or kids just getting started, or someone with no skills and needs some job experience.

2. There are benefits that are available to the unemployed that aren’t available to the under-employed or just working and poor. You have to make minimum wage more appetizing than just giving up. Also people making $4/hr are going to have literally NO respect for society or working, you are re-inforcing to poor people that there is no value in work, not the opposite. I don’t want a bunch of desperate $4/hr people anywhere NEAR where I live.

Some of us are willing to let people make their own choices instead of assuming we know best and we have one size that will fit all. And there is no reason we can’t structure things so that you don’t lose benefits by taking a job that doesn’t pay much. I would not advocate eliminating the MW and then doing nothing else. Our system is set up based on their being a MW. Predicting disaster because nothing else would change is just a strawman, at least when you are arguing with me. I’ve always said we’d have to make adjustments to the social safety net. Perhaps you are thinking of those “conservatives” you mentioned earlier.

[panaccione]

@Rawdogvillian

Pannacione103

• An ignorant voting public, most likely assumes, as you do, that DEMOCRACY is what this country was built upon. The US is a Federal Republic, and was started as so because direct democracy can lead to tyranny of the majority by the “ignorant voting public” in instances such as what you propose. Furthermore, if you would like to see a direct democracy in action, you can go to California and wade through the public sector corruption and nepotism, the horrid business climate, the extremely high car insurance rates, high dependency on welfare, and the net migration out of the state by business.

Now that that is said, back to the topic.

Who is to say how much is too much, or how little is too little? Subjective definitions often have the trouble that comes with other relative definitions, in that they change from person to person. Thus, I say “Pannacione is paid too little” where John Mace would say “Pannacione is paid too much”, Pannacione can either be a victim or beneficiary of majority opinion in this case. The crowd decides. Sounds like gladiators in the coliseum, or “witches” in protestant colonial times.

Wal-Mart is a retailer, and as such, should be compared to other retailers of a similar nature. We have established, Wal-mart is on the low end of the pay scale. One interesting fact to note is that Wal Mart is losing market share to Costco, who pays employees 18-20 an hour, and has much lower employee turnover. Costco is committed to targeting a markup on all products at the same low margin despite good times or bad. Costco is known for efficiency in their workforce. That is a good business model, that is paying off as an investment in Human capital. Henry ford did the same thing, paying workers double the going rate at the time. The point is, they are not doing this at gunpoint, which would be something similar to a minimum wage law. They are doing it as strategy to employ and retain people.

Now we can look at walmarts work force. They employ many people of retirement age that are already collecting fixed income payments from SSI and such. Thus, they can afford themselves to be paid less.

An increase in the minimum wage, by default, puts firms that are currently on the margin, out of business, or reduces their workforce. Plain and simple. This is less employment overall. Now, some might say that the overall net income increase is more favorable than the employment decrease. This is tantamount to saying you tacitly accept unemployment. Its similarly unsaid in regards to unions, like the service workers union who stands to “benefit” from this. Its really no different than the Good Ole boys club, if you’re in, you win, but most are left looking in from the outside. That MAY be a bit of hyperbole, but the rationale is the same.

Now, if we are talking about liveable wages, how about the net reduction in payroll taxes from reduced employment? Do you think a marginal increase in the salary of a few offsets the entirety of payroll taxes paid by those who will have lost their job? Take into account that these workers who do not have the living wage are those that are most likely to use these social services. There goes your “good for low income people” argument.

Furthermore, many of these min wage workers are on the stepping stone to something else, such as teenagers or entry level job workers. This gains experience that can then be used to gain other jobs. I am sure many of you who graduated recently know how tough it is to get a job in this economy, and that all jobs want “experience” right? So why make that HARDER?

Another way to look at this is… if low income peoples standard of living was that important, why not achieve these ends through expanding the Earned Income Tax Credit? This doesnt hurt employers, and returns funds to employees, increasing their purchasing power parity.

Its also pretty interesting to look at the immigration bill, which goes against the AFL-CIO and other large supporters of Obama, and see this as throwing them a bone in return. You see, immigration reform is something both parties want to latch on to now for more votes. Obama goes after it first before the primaries and gets brown votes for Blue. This angers the unions, so he throws them a bone with minimum wage increase because MANY UNION CONTRACTS ARE TIED TO A MULTIPLE OF THE MINIMUM WAGE.

Simply put, if you think any of this legislation is altruistic, you are certainly NAIVE.

Enjoy,

Pannacione103

A “republic” is a form of government in which the country is considered a “public matter”, not the private concern or property of the rulers, and where offices of state are subsequently directly or indirectly elected or appointed rather than inherited.

“Democracy” is a form of government in which all eligible citizens have an equal say in the decisions that affect their lives. Democracy allows eligible citizens to participate equally—either directly or through elected representatives—in the proposal, development, and creation of laws

Technically, you’re right. But, you’re just playing semantics buddy. Can I get a cite for all those claims about California?

I imagine that the bulk of Walmarts employees, are NOT, in retirement. Let’s try to focus on the majority here. Also, the MAJOR problem here is income inequality. Walmart, McDonalds, and millions of other companies like these are ALWAYS hiring. They just don’t pay enough to live. Do you think these companies will stop hiring if the minimum wage is raised to $9?

Actually, a lot of these people are NOT on the stepping stone of something bigger. For a lot of people, it IS their livelihood. It might not be minimum wage, but it’s not very much higher. Why do you assume that raising the minimum wage is going to result in all these layoffs? It seems pretty clear that these corporations are doing well and can afford the slight increase in wages.

So what do you propose? I can agree with expanding the EITC. What else?

Lastly, since we have a minimum wage already set, why is it naive to think that raising it with inflation is a good thing? I would think it’s naive to just leave it where its at when it’s quite clear that millions are struggling to survive off of it.

[panaccione]

@rogerbox

Seems like the only people who win in $4/hr are the businesses exploiting people with slave labor wages and the chumps who actually pay taxes to support the welfare these people will need to not die in the streets, which the biggest corporations are not a fan of doing. Since they are simultaneously attacking fair wages for a fair day’s work AND the social safety net, it is obvious for anyone with a brain and their head not stuck in the sand, that the end game is intended to be serfdom. This is America and “libertarians” want to emulate third world countries re: wages.

Thank you. I keep hearing all this talk about “choice” too. Whenever, in actuality, income inequality is continuing to expand. People are being paid less at the bottom, while those at the top are getting more. So when one side has all the money, power, and resources, at what point does it stop being a choice?

[magellan01]

@rogerbox

1. I didn’t say it was better to be unemployed, I said no one benefits from a $4/hr job.

If no one benefits, then no one would take the job. Right? And the employer would have to offer more, and then more again, until someone felt they would benefit from the wage.

But if someone did take the $4 job, wouldn’t you have to conclude that he feels he’d benefit from it?

[magellan01]

@panaccione

Thank you. I keep hearing all this talk about “choice” too. Whenever, in actuality, income inequality is continuing to expand. People are being paid less at the bottom, while those at the top are getting more. So when one side has all the money, power, and resources, at what point does it stop being a choice?

Never. It may be not much of a choice, but it is still a choice.

[panaccione]

I don’t even know how to respond to that. Yeah, I guess the choice is take the pittance or die. Why in the world would anyone get behind something like that?

[magellan01]

@panaccione

Actually, a lot of these people are NOT on the stepping stone of something bigger. For a lot of people, it IS their livelihood.

If your plan in life is to work for minimum wage, you don’t need a higher minimum wage, you need a better plan.

It might not be minimum wage, but it’s not very much higher. Why do you assume that raising the minimum wage is going to result in all these layoffs? It seems pretty clear that these corporations are doing well and can afford the slight increase in wages.

I don’t think you’ve thought this through. Corporations exist to make money for their shareholders. Large corporations like the ones cited are competing with every other corporation in existence for investments. If they decide to eat the rise in minimum wage, it eats into the return investors get, and that means they look elsewhere to invest thier money. So the benevolence of Panaccione, Inc., reduces the amount of money invested in the company. And that means less growth and fewer employees hired. And that means more people without a job.

Now, one could argue that it could be a wise longterm business decision to pay people a dollar or two more. The work might be better performed and customers like it better and the company, subsequently, grows. But any company can try to do that right now without a higher minimum wage. Take the Costco example.

Here’s another problem with raising the MW. They did this in San Francisco a few years ago. Prior to that, the Starbucks in my neighborhood had the best service. Why? Because they decided to attract the best people by offering more money. So, they could be very picky and it made for a better experience. Enter the SF Board of Supervisors who raised the MW. So what happened. Well, Starbucks couldn’t afford to keep the same disparity in wages, so they couldn’t be as picky any more. and the service freakin plummeted. They had the same group of clueless hipsters working there as everyone else on the block. True story.

[magellan01]

@panaccione

I don’t even know how to respond to that. Yeah, I guess the choice is take the pittance or die. Why in the world would anyone get behind something like that?

So you don’t die? And can live another day and figure out how to get someone to pay you more than a pittance? And then get a little better job, and a little better one after that?Seems pretty easy to answer, actually.

[rogerbox]

@John_Mace

If no one would take the job, then what’s the harm?

Because people who have no power have to take what they can get, this is something that has been repeatedly stated to you and you can’t quite grasp it. Maybe some day.

But, you can always structure things so that “work + public assistance” > “public assistance alone”, no matter what value you give “work”.

I think that is a good thing for our current framework of MW+social safety net, but there is no good argument I have seen anyone make that minimum wage should be lowered. We all know where that extra money would go, and it’s hard when wages have stagnated for how many years (including the MW) to make an argument to me that wages are too high for ANYONE except for maybe CEOs of unprofitable companies that are getting gov’t handouts.

Again, if no one would take such a job, then it seems like there isn’t a problem. Of course, you’re ignoring all the people who work for “extra money” and aren’t the primary bread winner in their household.

They WOULD take the jobs. And secondly, if someone isn’t the primary breadwinner, they can find a current MW job if they don’t have the skills to find something better. The current MW is the MINIMUM, and most people actually support raising it, that an hour’s worth of work is worth. I know it goes against free-market-above-all religionist principals, I don’t however, care.

But, according to you, no one would take that job. Which is it?

You would have two groups of people, ones who decided to sell their welfare stamps and get more public assistance, and then people who DO take the job and are being exploited because they have no power to bargain for a wage that is not exploitive and has a degree of dignity. Neither is desireable. The only argument you are making is bored soccer mom with wealthy husband who wants money for an extra purse and is willing to work for $4 an hour but couldn’t get a current MW job and is thus barred magically from working because MW causes SO MUCH UNEMPLOYMENT. It isn’t convincing.

Well, you’re just wrong on that. Some people would benefit, whether they are secondary breadwinners, or kids just getting started, or someone with no skills and needs some job experience.

All those things are currently available at MW jobs. Show me some cites of your claim of how many people are wanting to work for a $4/hr job and can’t get a current MW job which is higher since you are making that claim. Because MY claim that the status quo is better for those same people is that they’d be making more money and receiving more benefit from current MW jobs at more pay. I think you’re the one making the outrageous claim here that somehow the poorest people are best served by making less than more. It’s Orwellian.

Some of us are willing to let people make their own choices instead of assuming we know best and we have one size that will fit all. And there is no reason we can’t structure things so that you don’t lose benefits by taking a job that doesn’t pay much. I would not advocate eliminating the MW and then doing nothing else. Our system is set up based on their being a MW. Predicting disaster because nothing else would change is just a strawman, at least when you are arguing with me. I’ve always said we’d have to make adjustments to the social safety net. Perhaps you are thinking of those “conservatives” you mentioned earlier.

So is your argument that we should allow $4/hr jobs and beef up social safety nets to make up the difference?

[rogerbox]

@magellan01

So you don’t die? And can live another day and figure out how to get someone to pay you more than a pittance? And then get a little better job, and a little better one after that?Seems pretty easy to answer, actually.

You would’ve had a BLAST in Victorian England. From a chimney sweep boy to The Guv’nah with YOUR gumption and stiff upper lip! It’s a wonder ANYONE is poor, they must be stupid!

[magellan01]

@rogerbox

They WOULD take the jobs.

So, these low paying jobs either would be taken or they wouldn’t. You seem to agree that they, in fact, would be taken. That means that someone feels it’s in his best interest to work for that particular wage. Right? So I’m not seeing the problem.

[magellan01]

@rogerbox

You would’ve had a BLAST in Victorian England. From a chimney sweep boy to The Guv’nah with YOUR gumption and stiff upper lip! It’s a wonder ANYONE is poor, they must be stupid!

THAT is your response? :rolleyes: Well, let me respond to it: this isn’t Victorian England. You do realize that workers in the here and now have a slew of protections that workers back then didn’t have, right? You do realize that? Right?

[Evil_Economist]

@magellan01

THAT is your response? :rolleyes: Well, let me respond to it: this isn’t Victorian England. You do realize that workers in the here and now have a slew of protections that workers back then didn’t have, right? You do realize that? Right?

Protections like minimum wages?