It’s fascinating the way people prattle opinions on economic matters based on what suits their political agenda, with no regard to actual studies, or the opinions of professional economists. When pointed toward the facts, they keep prattling unbothered, apparently assuming that what little they remember from Simple Introduction to Supply and Demand for Twelve-Year Olds trumps the thinking of actual economists! Mind-boggling! Are they the same people who know more about climatology than climatologists? The same people who know more about skyscraper collapse than structural engineers?
Yeah, see, here’s the thing - what are the odds they would have done that anyways? Here in America, we have this thing called a “standard of living”. People here expect a certain lifestyle as a bare minimum. In china, you can basically pay slave wages for people to do unskilled labor. Even without minimum wage, these companies would be going to places without labor safety laws, without child labor laws, without overtime, without workman’s comp, without all of the regulations that we’ve put in since the industrial revolution. And even without those laws, they’d still move, because the fact of the matter is that if you offer people pennies to work here, they’ll tell you to fuck off, but in China or India you might have a few buyers. Really, what this argument sounds like is “let’s become a third-world country”. Yeah, no, thank you.
Is that really the argument for raising the MW? Because I know that for me, I’m under no illusion that raising the MW will elevate people out of poverty. Because poverty is relative. The poor guy, by definition, is at the bottom. He will be at the bottom whether he’s being paid $7.25 or $15 an hour.
I think the MW should be raised simply because the cost of living has risen. The laborer’s costs have increased, so why shouldn’t this be reflected in his wages? Furthermore, the folks at the top have seen incredible increases in their profit margins over the past three decades. It is crazy that the bottom shouldn’t reap some benefits as well.
Another reason for increasing the MW is to incentize working over receiving government assistance. It does not make sense to work for wages that are lower than social welfare benefits. Sure, there are lazy people who wouldn’t work if you offered them tons of money. But we can’t seriously vilify people who do the calculation in their heads and decide to go with the less dignified route.
Honestly, I take poverty as equal to a living wage because that’s supposed to incorporate what it takes to live. If you are below that mark, you have financial troubles - something is being sacrificed so that you can “live”. Medical care? Rice every night for the rest of their lives? No sort of entertainment? And so forth. As for being at the bottom, I don’t mind that people are at the bottom. Even if we were all millionaires, someone would be slightly less millionaire-y than the rest the group. There will always be a bottom and a top, even if we set everything else in the world as perfectly equal, we will still find a top and bottom because of our natural in-born talents and deficiencies. Trying to eliminate “the bottom” is a fool’s errand.
I mind that people are stepped on top of so that others can reap millions or billions in profit and then turn around and spit on those they stepped on. But, to me, minimum wage isn’t useful in this regard any more than it is in ending poverty. MW increases are always planned for in advance. Colorado did a stepped MW increase and several months before each step, the prices in a lot of stores rose. The MW is a day late and a dollar short in this regard. We have been talking about raising it for several years, now, and prices have been going up in the mean time. By the time we get enough support to raise it over x years by y amount, it will already mean nothing unless we do crazy types of raises.
I agree, but I think a different approach should be had for my preceding reason. Instead of concentrating on the minimum wage, how about something like profit sharing instead? Take half of the profit and distribute among the workers with an exclusion on anyone making more than, say, $150,000 a year?
If we look at WalMart, they have 1.4m employees and had $17b in profits in 2013. That’s $2.92/hour in a raise for all of those employees (assuming, laughably, full time. Plus obviously without trying to adjust for excluded positions). This would both stay with companies permanently without needing constant adjustment like the MW does and it would provide some flexibility for smaller businesses that might be trying to hold on during startup or during bad downturns.
Maybe, but I’ve never seen it as much of an incentive. And companies like WalMart (used again simply because they are an easy target) have labor practices that encourage their employees to get food stamps and other social programs while still working. Any employer could do this and there isn’t a plan to push this cost off onto the employers that I’ve seen. Minimum wage wouldn’t combat this simply because WalMart does this by employing people part time. All they’d really have to do to keep exploiting the social services in this way is to drop everyone’s hours another 4 per week.
Minimum wage just isn’t an effective tool. You need other reforms to go with it.
It’s basic eoncomic theory - increasing minimum wage above the market wage will increase unemployment. How this plays out in the real world with more variables than the theory model is debateable. It’s disengenous to act as if those who agree with the majority of ‘professional economists’ are somehow ‘prattling unbothered.’
It actually is really fascinating to look at how people take things out of context to suit their political agenda. That site you linked is a perfect illustration of just that very thing.
For instance, the first “benefit” of what you quoted says " For employers, the benefits include decreased turnover." and then when you go into the article, the synopsis of the Reduced Turnover bullet point says:
So, labor turnover is about 8% of the total labor cost. To reduce this cost by 2.6% for restaurant workers (which the synopsis isn’t clear if that’s 2.6% of the 8% or the total labor cost. For easy math and benefit of the doubt, I’ll say it’s a direct 2.6% of the same number the 8% is based on: total labor costs) you have to give a 10% increase in minimum wage, which is roughly 12-14% increase in labor costs (because the dollar amount of the wage is taxed, variance based on where you live in the US).
So, the conclusion you quoted concentrates on the fact that turnover is reduced, but ignores the full picture - you pay 3x to 5x the amount you would save by trying to reduce turnover via the MW.
So, who here will walk up to a person on the street, hold out a $100 bill and say “You can have this if you give me $20.” ? I’m not the smartest crayola in the box, but I certainly wouldn’t.
You can also find an interesting bit of information in these two quotes:
and
So…minimum wage workers bring in $250 more per quarter and spend $700 more per quarter? :dubious: Sounds to me like their 1982 to 2008 review period might have included something like, I don’t know, the huge easy credit bubble that has popped and thus this wouldn’t allow the same effect in the here and now?
So, again, the summary is that they make more and spend more…but that the overall benefit to the economy is a postponed overall negative is conveniently ignored.
Another problem is this gem:
They assert that the public assistance costs will decrease, but they provide no basis for that assertion. They just cite numbers of the actual costs. If you look to a company like WalMart that has public assistance use by it’s employees down to an art, those McDonalds franchises will simply hire three people for each full time position and not decrease the costs of public assistance at all.
You are correct, many of these businesses would have moved anyway(though some would probably have remained had wages fallen more). It would be next to impossible to compete with such Labour. My point was simply that wages do affect the employment situation here in the West. Something that a few posters seemed to be denying. Doesnt really matter if such jobs move because of an artificial minimum wage or market level wages not falling enough in the West. My point was that jobs, employment and industry do** move.
BTW, Previous thread on this exact subject.. Less than a year ago.
Yes, it was a brilliant move to attract the best workers and lock them in. But that has nothing to do with a government-imposed minimum wage.
But as Shodan alluded to hyperbolically, why just a small amount? And how small is small?
And I think you’re just guessing that it will, writ large, help people. Sure I want more per hour. Until my hours get cut. And the notion that it generates a net increase in disposable income I think is just pulled out of thin air. If Company A spends $X per month on labor and that cost goes up, 10%, you’re asking that business to take a 10% hit and what is often their largest single cost. That means that they will either reduce the overall labor costs by cutting hours, or people.
On the other end, if Company A seeks to make up that 10% but charging customers more, do you expect him to make up for the additional cost. If so, shouldn’t you recommend that every business raise their prices right now? Why wait for the government to force them to take in more money? If your answer is that the people will have more money ion their pockets to spend, how about those businesses that hire MW workers but don’t have them as customers?
Because it’s possible there could be negative consequences if the minimum wage is too high. So a gradual, periodic increase gives us a chance to evaluate that.
I’ve suggested approximately $1 per year until the desired amount is reached.
My belief that this would help is based on the past few minimum wage increases, in which it helped.
Or they increase prices, or reduce salaries at higher levels, or reduce expenses in some other way. For the Wal-Mart example, I posted a cite in which raising the minimum wage so that all Wal-Mart employees were no longer eligible for food stamps would result in a 1.4% increase in Wal-Mart’s prices – about 1 cent per dollar.
These might be valid concerns, as they were with the many past increases of the minimum wage. But the naysayers have always raised these issues, and with the increases of the past few decades, these things haven’t happened in a significant manner. If the raise is gradual, with periodic pauses to evaluate the ramifications, I think these problems could continue to be avoided.
So rising wages decrease employment. Thank you Captain Obvious. Very few goods or services show negative elasticity. The relevance is in the details; from your cite, for example
Instead of 100,000 teens working for $10 (making $1.00 million aggregate), you’d have 994,000 teens working for $11 (making more than $1.09 million aggregate). The 6000 teens laid off would tend to be the less productive. If you tell me that’s an inferior outcome, someone needs a check-up.
And, of course, focussing on the “market rate” for anything, especially labor, ignores that market rates are controlled by … markets. If the market rate is forced higher by legislation then the market rate will be … higher. This isn’t intended as word-play; it’s a misconception to think of “market rate” as an absolute. (Perhaps instead of “market price” you meant “marginal value.” If so … asked and answered in the quote above.)
I suspect the Ford example is evidence that not every business model is the same. Try doubling the wages of a bunch of Mexican cleaners in one Southern Californian cleaning company and you’ll soon see that business close down.
Or how about continuing to do what is already happening. Each State has its own minimum wage. That way we can compare in the long term what effect they have on prices and employment.
I see little need for the minimum wage to be the same in Pumpkinsville Alabama as it is in downtown Manhattan.
Emphasis added. That comes up in every MW thread. If you do the math, and I encourage you to do so, you will find that any effect on the overall economy is probably not even measurable.
Hint: Raise the MW by $1 or $2, figure the amount “injected” into the economy, and then calculate the % of our economy that would amount to.
In your castigation of others no where did you mention that increased unemployment was a trade off of higher minimum wage. Do you concede this is true?
Why do you treat it as a given that one potential outcome (higher aggregate earnings with lower employment) is better than the other (lower aggregate earnings with higher employment)? What value judgment are you making to come to that conclusion?
Helping at the margins, especially the lowest margins, is still helping.
I’m fine with that. I just think the federal minimum wage should be higher than it currently is. States can still feel free to set it higher.
I was simply using Ford’s well documented wage to show how much wages have increased over the last 100 years, and how much we can expect for the next 100 years, assuming comparable inflation.
Can you show your math? I’d be interested in seeing if we are capable of measuring these alleged affects "at the margins’. Because if they can’t be measured, then we’re going on faith.