The virtues of a $10/hour minimum wage

[Shodan]

Raising MW is to liberals what tax cuts are to Republicans - it’s free money with no downside.

Increasing the minimum wage would have two principal effects on low-wage workers. Most of them would receive higher pay that would increase their family’s income, and some of those families would see their income rise above the federal poverty threshold. But some jobs for low-wage workers would probably be eliminated, the income of most workers who became jobless would fall substantially, and the share of low-wage workers who were employed would probably fall slightly.

Cite. This is for an increase to $10.10.

Regards,
Shodan

[Shodan]

@davida03801

Also many financial illiterates do not take into the account the labor burden. The $10 you propose is not the cost to the employer. There is SS tax, unemployment tax, etc that is on top of that. Your proposal effectively raises all those taxes also.

It also raises the cost of daycare, since many child care workers earn low wages.

Regards,
Shodan

[Fear_Itself]

@Shodan

Raising MW is to liberals what tax cuts are to Republicans - it’s free money with no downside.

Ask Kansas if there is no downside to tax cuts. Their current financial crisis is a direct result of the supply side voodoo Republicans inflicted on that state.

[Ruken]

@BobLibDem

Only because Republicans have opposition and aren’t able to eliminate minimum wage and destroy the safety net.

@Czarcasm

Are you claiming that they aren’t trying to get rid of the minimum wage?

There is no races to the bottom, and removing the minimum wage will not create one.

[Ruken]

@Fear_Itself

Ask Kansas if there is no downside to tax cuts. Their current financial crisis is a direct result of the supply side voodoo Republicans inflicted on that state.

I think that was his point

[D_Anconia]

The vast majority of American workers make more than the minimum wage. Those who don’t tend to be young people working in fast food and the like.

[Fear_Itself]

@Ruken

I think that was his point

My point was, while there is ample evidence for economic crisis following tax cuts, there is none for raising the minimum wage.

[Shodan]

Nonsense - there is no downside to free money. There is such a thing as a free lunch.

Regards,
Shodan

[funky_little_lee]

@pkbites

People who get paid minimum wage are the only people who get paid more than their worth. Everyone else gets paid what they are worth or less. Generally there is no “set” legal wage for doctors, policemen, widget makers, teachers, etc… In fact every vocation where people make more than minimum wage could get paid just that but don’t because they are worth more than that.

If you’re at a job and make exactly minimum wage, then you are over paid. Your employer would pay you less, but can’t, it’s illegal. And you’re obviously not worth more than that or you would get more.

That’s pretty cruel.

I’m in a skilled trade. I have 11 years in the trade. That’s 11 years of hard work and skills and knowledge that burger-flippers etc. don’t have. And one of the benefits of acquiring those skills is that you can make a half-decent living. Well, if the minimum wage gets raised to $15…I’ll be working for minimum wage. Do you think my employer is going to say, “Well, your skills are worth more than that, so we’re going to pay you $30 an hour now?” I doubt it. And then, when prices rise, I’ll be unable to keep up, or else I’ll be dis-employed because my employer can’t afford to keep me. So I will be driven to the bottom, even though I worked my ass off to get where I am now.

It seems you think only white-collar professionals are “worth more than that.” There are a lot of people in the skilled trades that would disagree.

[DigitalC]

@Ruken

Nonsense. Have you ever employed people? I have never “need[ed] a fixed amount of labor,” nor have any of my employers.

I have and we do need a fixed amount of labor. If i fire someone i would have to do their work myself, whether that is worth 10 dollars an hour (it sure as hell is, working in a dry cleaners in florida in the summer is hell) is up to me.

[inscrutable]

Once again, we seem to be debating a subject with little or no context and actual data.

How many workers have actually been mired at minimum wage for the past two or five or ten years, and why? Have they tried to find better jobs? ISTM that an employee’s lack of ambition is not a reason for an automatic pay raise. What about the employee who has busted his ass for a few years to work his way up to $10.25/hour? Isn’t he going to expect a raise when entry-level people start coming in at $10? This situation is not going to improve productivity or moral. Maybe the problem isn’t minimum wage, but rather the wage ceiling for these types of basic unskilled labor.

[puddleglum]

@Fear_Itself

My point was, while there is ample evidence for economic crisis following tax cuts, there is none for raising the minimum wage.

There is plenty of evidence for economic damage done by minimum wages. Look at the Marianas Island and American Samoa. They are poor territories which had a separate lower minimum wage than the rest of the US. Then there was a law passed that mandated the raising of those wages to match the rest of the US. The result was a closing of one of the main factories, a huge rise in unemployment, and a slow down in the economic growth.
Also look at employment patterns in the US. It used to be that minorities had higher labor force participation rates and lower unemployment rates than white people. Now unemployment rates for minorities are higher and for minority youths they are much higher.
It is difficult to quantify the effects of minimum wage but that does not mean they are not there. A little more than 1% of americans make minimum wage so if a raise put all of them out of work then the effect on the economy as a whole would still be minimal. No one has ever predicted a zombie apocalypse or economic meltdown over the raising of a minimum wage.
It is also hard to quantify because the changes do not all happen at once. For some reason increases are never changed immediately but go into effect at a later date. As soon as a future minimum wage increase is announced businesses start planning how to adjust to it. Usually by slowing hiring and increasing automation. This adjustment period can last for years and does not stop when the wage increase is implemented. This lack of a discrete time to use as a baseline makes studying minimum wage increases difficult. Hereis a survey about the research on minimum wages and unemployment. It found that " reasonable estimate based on the evidence is that current minimum wages have directly reduced the number of jobs nationally by about 100,000 to 200,000, relative to the period just before the Great Recession".
A drop in the number of jobs of 150,000 is just barely measurable.
Since minimum wages workers are by definition the least productive the negative effects mostly impact the poorest in society. These are the people who can least afford to be unemployed. For many of these people a minimum wage job is the first rung on the ladder out of poverty. If you take away the lowest rung then they have to turn to welfare or crime.
Even if the minimum wage were neutral in terms of money, that every cent lost by the unemployed was made up by higher wages to the employed it would still be a bad policy. This is because a raise is good to have but unemployment can be devastating. All the surveys point out that long term unemployment is one of the most devastating things that can happen to a person while getting a slightly higher wage results in small benefits in terms of life satisfaction.

[TriPolar]

@inscrutable

Once again, we seem to be debating a subject with little or no context and actual data.

How many workers have actually been mired at minimum wage for the past two or five or ten years, and why? Have they tried to find better jobs? ISTM that an employee’s lack of ambition is not a reason for an automatic pay raise. What about the employee who has busted his ass for a few years to work his way up to $10.25/hour? Isn’t he going to expect a raise when entry-level people start coming in at $10? This situation is not going to improve productivity or moral. Maybe the problem isn’t minimum wage, but rather the wage ceiling for these types of basic unskilled labor.

No fair! You can argue anything with context and data. We’re talking about a magic rock that stops tiger attacks.

Let’s stick to the argument here, as we know there are a fixed number of minimum wage employees, a fixed number of minimum wage jobs, there is no inflation, the costs and value of all goods and services are invariant, there are no other market forces affecting wages, everyone always gets paid exactly what they are worth, therefore if minimum wage goes up then unemployment goes up. It is as readily demonstrable as the sun orbiting the earth, which is flat.

[Ruken]

@DigitalC

I have and we do need a fixed amount of labor. If i fire someone i would have to do their work myself, whether that is worth 10 dollars an hour (it sure as hell is, working in a dry cleaners in florida in the summer is hell) is up to me.

No, you don’t need a fixed amount of labor. Business decisions that could lower your labor needs include reduced hours, increased automation, and increased prices (dry cleaning has a relatively high negative price elasticity, as you no doubt know as a businessperson in the dry cleaning business.) None of those may be sound business decisions today, but they may be if your labor cost increases 50%.

[Damuri_Ajashi]

@davida03801

My reasoning for that is Economics 101. Raise the price of any goods or service will reduced the demand for that product or service.

Yeah, sure. But it will probably not be a noticeable decrease in demand for labor.

[Damuri_Ajashi]

@ziper1221

Are you kidding me? Do you think raising minimum wage just creates wealth? It eliminates anyone who can only provide labor that is worth less than the minimum wage from getting a job. A price floor causes there to be a surplus of workers, that is, unemployment. Are you denying the most basic of supply of and demand?

And what labor do you think does not provide $10/hour of value? The pricing mechanism for labor is different from almost any other good. Labor prices are sticky and the bargaining power of labor suppliers and labor purchasers are very different unless there is a union or some other countervailing force in place.

[Damuri_Ajashi]

@spamforbrains

and also to local costs of living. It may make a lot of sense to have a $15/hour minimum wage in expensive areas like San Francisco and New York, but here in the backwaters of nowhere it does not. All that will happen is a lot of small businesses will go under due to not being able to pay workers and jobs will be lost.

And that is why the $15/hour minimum wage is hard to swallow. It provides a minimum wage that exceeds the median income in over 100 counties.

[Damuri_Ajashi]

@BobLibDem

I disagree. Employers need a fixed amount of labor. They aren’t keeping anyone on the payroll out of the goodness of their hearts, they keep them on the payroll because they need them. Paying them more will cause them to suffer a minimal reduction in their profit margins, or minor raises in prices of their products, neither of which will bring about the zombie apocalypse that conservatives predict.

That’s not really how it works.

Every employer will hire anyone that they can profitably employ (on a risk adjusted basis). So if hiring you can increase my net income, then I might hire you. This is marginally easier to do with a lower minimum wage but in the scheme of things, wages are frequently such a small part of the cost of goods sold or services provided that a $3 increase at the low end probably doesn’t make too many of my employees unprofitable propositions for me. If the minimum wage increases consumption then the minimum wage might actually be a good thing for my net income despite the fact that I have to pay my lowest paid workers an additional $3/hour.

[ziper1221]

@TriPolar

No fair! You can argue anything with context and data. We’re talking about a magic rock that stops tiger attacks.

Uhh, you have this backwards. The “there are no tigers around this rock, therefore this rock repels tigers” is entirely a misinterpretation of data. Arguing that there is some mechanism of the rock that stops tiger attacks would be what those of us who are arguing using the laws of supply and demand are doing, and that would clearly show what a stupid idea that is.

And what labor do you think does not provide $10/hour of value? The pricing mechanism for labor is different from almost any other good. Labor prices are sticky and the bargaining power of labor suppliers and labor purchasers are very different unless there is a union or some other countervailing force in place.

Well, digging holes in some fertile area might be worth 10 dollars an hour, while in a more barren area with only half the crop yield it would be only 5 dollars an hour. The company can then either cut into some other part of the organization, or cease operating there.

Also, I absolutely support unions. They provide a way for workers to more effectively leverage their actual worth without resorting to such heavyhanded measures as an across the board minimum wage.
A lot of people in this thread seem to be arguing from ideology without any attention to the actual economics. I recognize that Keynesian and classical theories both have their places where they can be used to great benefit, all depending on the situation. Minimum wage, however, is just stealing from one hand stealing from the other, with the best case of causing no harm.

[Fear_Itself]

@puddleglum

There is plenty of evidence for economic damage done by minimum wages. Look at the Marianas Island and American Samoa.

Let’s not. Those examples are not applicable to the larger market on the mainland (or even Hawai’i for that matter) because the population is too small for accurate comparison. The labor pool is small, as well as the demand in the market. Any change to market is going to be magnified immensely, in a way that just doesn’t occur in a mainland market.