The knee-jerk conservative retort that minimum wage is to some extent counter to sound economic principles is not completely wrong. I, for one, would not argue so strongly for minimum wage hikes if a good safety-net program were in place — perhaps a negative income tax or, as I argue in the other thread, government subsidies for healthcare, childcare, transportation, etc.
Will the conservatives arguing in this thread agree to push for a negative income tax, or something similar? If so, I proudly join you.
But if the political climate in U.S. is such that negative income tax, or expensive safety net (healthcare, etc.) is NOT on the table, then minimum wage hikes are, at worst, a least of evils and I condemn those who oppose them.
In a purely economic sense, he has a point. If someone has access to an oversupply of labor and an abundance of people who can do the job, then the demand for that labor goes down – again, in a purely economic sense. Management pays itself more and gets away with it because there is a limited supply of people with the ability to make the decisions that they make. The fact that this supply of managerial or executive talent is limited doesn’t guarantee that they will make good decisions, but that’s not the point.
None of these economic realities address a different layer of economic realities, which is that individual interests often have a different set of needs and operate with different motives than individual laborers. Modern republicans operate with the assumption that if you address the needs of corporations and executives and just allow the market to operate on its own whims then the benefits will eventually be realized by everyone, or at least everyone who ‘deserves’ to recognize those benefits. That, of course, is economic fiction.
He’s assuming that the labor market for minimum wage labor is price-sensitive, which is probably something of a reasonable assumption.
However, it also assumes there are readily available substitutes, which probably isn’t the case in the short run, so it doesn’t necessarily translate into mass layoffs, as they still need people to do the jobs they’re doing, whether they’re paid $7.25 or $10.
But in the long run, raising wages from the outside probably does make substitutes like automation more attractive to businesses that have a large labor component to their costs.
According to the federal govt:
$11,880 for individuals
$16,020 for a family of 2
$20,160 for a family of 3
$24,300 for a family of 4
$28,440 for a family of 5
$32,580 for a family of 6
$36,730 for a family of 7
$40,890 for a family of 8
That presumes working a forty hour week. Many minimum wage jobs are part time. At the minimum wage, the $11,880 poverty level for a single person works out to slightly less than 30 hours a week.
You mean what is the threshold to be considered living in poverty? I see that was answered. Or what is their average wage? Keep in mind the majority either don’t work or don’t work full time. That’s excluding disabled, students, retired.
And keep in mind that most MW earners are not living in poverty. So like I said, a solution that focuses on one population doesn’t necessarily address the other.
And when I was working 70 hours per week – totally reasonable for a healthy guy in his twenties – for seven and change an hour, I was rolling in money.
All of these reasons are poorly thought out.
[ul]
[li]$10 is good because it’s possible, but $15 is bad because it’s not. Where does that leave $9.90?[/li][li]It’s good because it makes math easier? Because people are calculating wages, taxes, withholdings, etc. with slide rule? Accommodating the technologically challenged and treating them as though they are stupid is not a good reason.[/li][li]It won’t be as bad as something else that is also bad. Lots of things aren’t as bad as really bad things - that doesn’t make them good.[/li][/ul]
I’m philosophically opposed to minimum wage at all - but I do think incremental increases have diffused costs (higher prices, people unhired that otherwise would be, etc.) and concentrated benefits (higher income among minimum wage earners). If we must have it, it should be tied to inflation. And in my area, places already have $10 min wage, or close to it.
It also creates inflation, however slight it might be. If you put more money in people’s pockets absent of market forces, it gives people more purchase power, which isn’t a bad thing. In fact, this additional purchase power can lead to additional economic spending, which is one of the economic arguments for raising the minimum wage. The counter-argument is, how long will this stimulus last, and what the rest of the economy starts catching up to this ‘shot in the arm’ and begins raising prices to keep up with an increase in demand.
I think you can make the economic argument that the minimum wage could be increased to $9-10 and that not only would it boost spending (a good thing) but that the additional ‘costs’ of raising wages could be absorbed throughout most of the economy. Even so, eventually, that stimulus will wear off, and there will indeed be a greater emphasis on economic efficiency.
Which was his/her problem. Obviously if you make specific, general assumptions that don’t always exist in the real world, you can empirically verify a whole host of generally unsupportable sweeping statements.
Lowering your costs via automation is always attractive regardless of the origin of the financial pressure. The issue is if the proposed cost increases via a higher minimum wage are enough of an incentive to automate in ways a given business wouldn’t otherwise. I don’t think there is clear cut evidence either way at $10/hour.
The small population means that the results are more clear. The US is so big that any one policy could be washed away by other events. The South Pacific is a good test of the basic economics and the results are exactly what Econ 101 predicts.