There isn’t going to be a way to resolve the economic impact issue because it’s probably too small to seperate from all the other factors affecting the economy.
I feel like the greater issue here isn’t with people at the minimum wage level, I think it will likely have some positive effect on people making minimum wage. If I’m a business owner and I’m paying several employees minimum wage, I’m unlikely to lay anyone off since I’m happy with their production at the minimum rate now so there’s no reason for me to get rid of them, so I either have to let it eat into my profits or I raise the price of my products and services to compensate. Thus, the minimum wage workers will end up better off either at my expense as the business owner or at the market’s expense through raised prices, which essentially is everyone once it reaches equilibrium. Either way, they’ll likely end up better off.
Instead, I think the greater issue with minimum wage laws is that it will hurt everyone who isn’t making minimum wage, particularly those who are making just above minimum wage. Consider a scenario where, with the minimum wage being $7.25, as it is right now, and I’m an employer who has a bunch of workers making $9. Now we pass the new minimum wage law and I don’t have to do anything because everyone is already making the new minimum wage. I don’t have to raise my prices at all, but the costs of some goods will have to increase because of the aforementioned issue with companies that do have to pay some employees more. Thus, even though these employees’ wages are directly unaffected, they’re indirectly negatively impacted because they’ll have to pay at least a little bit more for some products and services.
More, these people were, prior to the change in law, valued about 24% above minimum labor rate, now they’re paid at minimum labor rate. So now to remain where they were in terms of purchasing power, they have to all get raises which means either I give it to them and eat into my profits or raise my prices as well. This cycle continues as it works it way through the economy.
The thing is, as mentioned upthread, a huge number of businesses are small and employ a relatively small number of people. So while we’d like to see these additional costs absorbed by the wealthiest people, like your WalMarts that can likely afford to eat that additional cost, most of the crunch is going to be felt by smaller businesses by business owners that aren’t rich and can’t necessarily afford to just eat into their profit like that.
So in the end, it seems like it will be a small help to the lowest earning workers, but it’ll come primarily at the cost of moving more of the middle class down rather than from the wealthiest people. So, sure, it’ll have the desired affect of helping the poorest people, but I’m not sure that cost is worth it.
Another issue to consider is that cost of living isn’t going to be the same everywhere. Making $7.25 here in Northern Virginia is bad, there’s almost no way to raise a family on that amount of money without help and pretty crappy living conditions. But at the same time, I have friends doing jobs that might traditionally get paid minimum wage, like retail, restraunts, labor, and all of them make more than minimum wage. But now take the $7.25 and take it somewhere else, even just a few hours from here, and it’s not nearly as unreasonable. So how do we set a federal minimum wage standard? And as I’ve mentioned above, if we do raise it, it will help those people who a few hours away from here, but as a consequence, it’ll end up hurting the people who live around here who are already making above minimum wage but have more or less the same living conditions as those farther out. As an example, when I was in high school I had a job bagging groceries, which really ought to be about minimum wage, yet I was making about 2/3 above what the minimum wage was at the time because the minimum wage just doesn’t fly in this area. So, in essence, by raising the minimum wage, we’re helping those living near poverty in one area at the expense of those living near poverty in another area.
Another issue is, as mentioned up thread, there really aren’t a whole lot of families where the there is one person working full time making minimum wage. A lot of the minimum wage earners are teenagers working part time. Teenagers are just looking for some spending cash, they don’t need to raise a family, so they’re more willing to accept those minimum wage jobs. So, in effect, these sorts of laws disproportionately help teenagers with part-time jobs, who don’t really need the help.
So, yeah, if we just look at the minimum wage earners as a group, this will help them, but considering non-minimum wage earners, differences in cost of living, and some of the actual demographics of the minimum wage earners, I feel like a flat minimum wage increase is just too simple of a solution to problem that is actually quite complex. It seems to me like this would probably help some in poor rural areas, but would probably hurt the poor in urban and suburban areas and the cost would be disproportionately spread onto the middle class rather than the wealthy. We definitely need to work to raise the standard of living for those living at or below poverty, but we also need to put more effort into the solution than a feel-good, one-size-fits-all approach.
Absolutely. But in terms of people whining about the massive layoffs that will result, it’s just not going to happen.
I hate to get into a nationalist pissing match, but Canada has a minimum wage of about ten bucks US (there is no federal standard but every province is very close to ten bucks) and our unemployment rate is lower. If minimum wage resulted in a big loss of jobs it’s sort of hard to explain why Canada doesn’t have a huge unemployment rate as compared to the USA. It shouldn’t be possible to keep the economy in burger-flippers and warehouse workers, and yet somehow they still get hired and paid.
This (and other posts upthread) seem to assume that a 10% hike in MW would cause a 10% hike in general price levels. :smack: A 10% across-the-board hike in unskilled and semi-skilled wages might cause a general price hike of 4% or so, but you also seem to assume that the MW hike will not lead to hikes of low-but-not-minimal wages. 
(I’d certainly expect a MW increase to exert upward pressure on low-but-not-minimal wages, though I don’t know how strong the effect is.)
In any event, the progressive way forward for America requires that its middle class – which remains quite rich materially by objective standards – work to uplift the poorest. This seems to be rejected by SDMB centrists, e.g. in the recent thread Middle Out Economics: The Trickle Down Killer (which, for that reason, I found too painful to contribute to). By encouraging Middle-vs-Poor conflict, the right-wing plutocrats enjoy undeserved political success.
Most companies do have more people than they need. The lean, efficient corporation is a pipe dream - they’re run by people and people kinda suck at being efficient in groups. Ask any productivity consulting firm - they can promise crazy increases because they know hardly anyone monitors their staffing/productivity levels, so they look like heroes for pointing out the obvious. We paid millions to such a firm to be told we were carrying 40% too many staffers (and it was worse than that, lots of depts. fudged their productivity numbers); we thanked them, paid them, didn’t change a thing.
This is my real position, barring theories to be brought out in debate. Fundamentally, the minimum wage issue is a skilled vs. unskilled labor issue, which is ultimately why it’s a Republican vs. Democrat issue as well (adding in some complicated historical issues).
I would also like to thank septimus for explaining his numbers, and point out one cdritical flaw: it assumes all that money simply gets added. Because the minimum wage doesn’t increase production, it cannot make the economy grow. There are no more goods or services being produced. You may trivially affect what’s being produced, but not noticably so. Hence the position above: it can only . It’s also unlikely to grab money from stereotypical “corporate fatcats” or “investment bankers”. It’s going to come down hardest on more-or-less Middle Class small business owners.
Uh, dude. I started that Middle out Economics thread, and it had NOTHING to do with Middle vs. Poor conflicts. As a general rule, when the middle class does well, the poor do well, in fact, they tend to get sucked into the lower middle class as members of the lower middle class move up.
What’s more, the distinction between the middle class and the poor is an outmoded one. The middle class and the poor have pretty much the same interests, economically speaking,. The changes that the One Percent are putting our economy through are having the effect of squeezing the poor and the middle class into a single oppressed majority … used to call them the peasantry in the middle ages, and that’s pretty much how the One Percent and our political leadership think of us now.
But thanks for not playing!
I apologize; I think I over-reacted just to the thread title.
But, unrelated to your thread, I stand by my general comment. I see “centrist” middle-class Dopers complain that their health insurance will suffer under “Obamacare,” rather than celebrate that health care for the underclass will improve. Americans should have stood together and pushed for better, single-payer, universal health care, rather than let the right-wing push a wedge between the Middle and the Bottom, as they did.
Obama’s proposal to raise the minimum wage is not about unemployment. It’s because he feels that "t could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead." And of course, as has been stated here and in various studies that I won’t bother to quote, there seems to be no consensus on whether raising the minimum wage would result in higher unemployment anyway.
- We could play “dueling studies” all day…
No problem. Most of the Dopers in my experience feel Obamacare did not go far enough. I was under the impression that the the right wingers who crippled Obamacare from what it should have been did it on purely political grounds, they would have scuttled it whether the centrists liked it or not, because it was from Obama and the Democrats, and they had sworn to get Obama out of office. But I believe that some centrists might have fallen for their line, though I generally associate blind adherence to their own self interest without understanding their implications (“Down with them damn guvvamint assistance programs, but DON’T TOUCH SOCIAL SECURITY!”) with Tea Partiers.
My biggest problem with a Federal MW is that cost of living is so different across the nation (as mentioned by Blaster Master). Maybe it would be better to base the MW on county medians or something.
Yeah, I definitely think it should be more locally controlled.
And we should have a different MW for teenagers. Maybe 3/4 of the rate for anyone less than 18 years old. I’m pretty sure this is normal in many countries with high MWs.
Maybe it isn’t intended to be, but it is going to affect employment. Raising the minimum wage raises the cost of hiring entry level workers, obviously. And unemployed people are more likely to resort to food banks and the other things Obama mentions.
Which is the same issue with most government proposals - the unintended consequences, which those who push the proposal would like to minimize or dismiss. Obviously that applies to Republican proposals as well as Democratic ones.
The first law of ecology, I learned in college, was “you can’t do just one thing”. Actions have consequences, and they aren’t always the consequences you intend. If we raise the minimum wage, those who are earning minimum wage get a raise. In theory. Unless they are generating less than $9 per hour in profit for their company, in which case they get fired. Or more probably, not hired in the first place.
The other issue is that most of those who earn minimum wage are not supporting a family, or working full time (cite, cite). So Obama’s idea that we can raise families out of poverty is probably less than accurate.
Regards,
Shodan
Did he actually say that this action was intended to do that?
I have mixed emotions. As a citizen and taxpayer, I believe that companies should be paying their workers a living wage. And $7.25/hour is not a living wage.
On the other hand, my company employs approximately 50,000 people making under $9/hour (mostly part-time). Let’s say just for a ballpark estimate they average $8/hr for a 20-hour week. That means raising the minimum to $9 will cost us $52 million per year.
And obviously we can’t just take the new person making $7.25 and raise them to $9 while taking the experienced person from $8.75 to $9 – so in reality, we’re looking at (let’s say) $1.50 raise for all 85,000 hourly employees, including the 10,000 or so who are full time. Now my back of the envelope calculations put the cost at about $143 million dollars per year.
So the effect will be higher costs for all our products - and the irony is that minimum wage workers are some of our core customers, so they’ll be paying more at the register.
In my heart I know higher wages is a good thing, but it’s not going to be painless.
min. wage is oregon is $8.95, and i make $10/hr currently. i went to school to become a cook a few years ago. i hope my wage goes up.
they need to raise the min wage to at least $12/hr…i have student loans and bills i need to pay off.
There is no “they”. Just us. You need to convince us and so far I find you argument most unconvincing.
Really? Do you want me to hold your hand too?
There’s about 6 relevant studies linked. You can read it yourself.
Yes.
[QUOTE=Obama]
This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank, rent or eviction, scraping by or finally getting ahead.
[/QUOTE]
Unless you don’t think the reference to “families” means “families”, or that going to the food bank and being evicted doesn’t mean you’re poor, or “finally getting ahead” doesn’t mean getting out of poverty.
Regards,
Shodan
[QUOTE=me]
We could play “dueling studies” all day…
[/QUOTE]
Your turn. 