Sure, everyone’s wage increases. If you raise the minimum wage from $5 to $10, then the people that were previously making $10 are going to demand more money. Why? Because their skills are harder to raplce and are more valuable than the minimum wage employee (hence the fact that they were making more $$ to begin with). It goes on up the line, the $10 earner will bump up to $17 or $20, the managers to $50 and so on. In order to pay for all of this companies will raise their prices, some jobs will be lost to overseas competition or more efficient production (i.e. robots that were too expensive to replace $5 workers may cost less than $10 workers) and everyone’s relative quality of life is unchanged. You can’t make minimum wage people middle class by raising the wage.
Money doesn’t have a value in and of itself, all it does is hold debt. The value of goods realtive to one another is determined by the market, even with a minimum wage. In the absence of money an employer could pay its workers in widgets. But, then when the worker needs to hire a plumber, he would need to find a plumber willing to trade her labor for the widgets. You can see how quickly a barter type economy would bog down. Instead we use money, money is a way of holding debt but because it is universally accepted, it is much more efficient. In the end though, the plumber’s price is still determined by the realtive value of her work vs. the work that the unskilled employee does at the widget factory.
In response to Apos point – I should have been more clear, raising the minimum wage will not increase the quality of life for the working poor at all (which is what I meant by making no difference), what it will do is fuel inflation which harms everyone. So, I am against the minimum wage for that reason.
No, it’s just not that simple. It could increase the quality of some people’s lives, decrease others, and leave some the same. It’s not something you can tell without knowing lots of other important variables, which can change the outcome.
Good point. One of the more intellectually dishonest things that people do when they try to argue that there is a lot of social mobility in our country is to count teenagers and recent college grads of wealthy and middle class parents as poor, and then make a big fuss when their internship at Salomon Smith Barney turns into an investment banker job.
Ok, it might help some people, and hurt others, but as a class the working poor’s position will not change. To predict the impact on a particular individual we need more information, but on a macro level the quality of life of the working poor will remain more or less the same no matter what the minimum wage is. Can we agree on that?
Ok, it might help some people, and hurt others, but as a class the working poor’s position will not change. To predict the impact on a particular individual we need more information, but on a macro level the quality of life of the working poor will remain more or less the same no matter what the minimum wage is. Can we agree on that?
(setting aside the impact on inflation for the time being)
I’ve never worked anywhere where I could get a raise simply because minimum wage increased. I would be willing to bet even money that anyone who makes salary vs hourly wouldn’t be able to, either.
There is a lag in the response, I didn’t mean to suggest that everyone’s wages suddenly jump overnight. In the long run though, they will. This would be especially true if the minimum wage were to be raised a substantial amount, to the point where a full time minimum wage job would put you over the poverty line. The lareger the amount you raise the minimum wage, the more quickly other wages will react.
In what long run? I don’t believe most jobs even pay anything near minimum wage (near ~$1). It might strike the food industry most quickly, but I can’t see it affecting plumbers (for example). Until minimum wage represents a competitive wage for most jobs, bumping it won’t have such terrible effects. Ask for a raise and the boss will say, “If you want your wage to follow minimum wage, go get a minimum wage job.”
Neither will raising minimum wage increase the perceived value of products. If a doublecheeseburger is worth a buck to me, I am not going to raise my expectations just because minimum wage increased. Prices aren’t so arbitrary, and wages do not dictate perceived value.
No, I didn’t miss it. I was agreeing with you on this point. I also agree that many of the people recieving minimum wage are only doing so temporarily. The article I linked to above indicates that (2002) half of the minimum wage earners are under 23. And that only a very small percentage of minimum wage earners are independant “bread winners”.
I just had a thought. What if we instituted a welfare prgram to encourage working. Something like a means tested minimum income level. So for the very poor, we would suplement their income so that they have a living wage. In order to encourage working, we make the time limit variable depending on how much they contribute to that income. So, an complete indegent could have 10,000 (as an examople pulled from an unnamed place) a year for 5 years. But someone who earned $5000 a year on his own could be given another $5000 for 10 years. We could even increase the bar depending on how much they were able to contribute. So somone who contributed $5000 a year to his income could be given $6000 for the same 10 years.
We do something like this and drop the minimum wage. Let teenagers work for $2.00 and hour but if any single mothers are forced to, we help her to make ends meet.
I’d want some limit on the amount of money we provided to such a program, but you get the idea.