What theories are there for raising wages?

[Shodan]

Congress mandated that the minimum wage in American Samoa go up in three fifty cent increments until it was level with the rest of the country. This represented a 26% raise for workers in American Samoa who made minimum wage. What happened? If liberals are correct and mandated higher wages mean prosperity, the economy of American Samoa should have thrived as workers spent their new found windfall. Instead, just as conservatives would predict unemployment skyrocketed. The total number of jobs on the island fell 14 percent in three years with the most affected industry, tuna canning, losing 55% of jobs. Because of the thousands of newly unemployed average income fell by 11% in just three years.

But this time it’ll work!

Regards,
Shodan

[octopus]

@Damuri_Ajashi

Of course that runs counter to everything we know about countervailing power and labor economics.

If you simply let the market set the price of labor, the day laborer will eventually be paid enough to survive for that one day while the employer will reap whatever value the labor helps create.

Iron law of wages - Wikipedia

Absent things like minimum wages, a laborer who generates $100 worth of value still only gets enough to live for one more day. The employer keeps the rest because as long as there is one more laborer than there is jobs, the marginal pay for that labor drops to what you need to live for that day. That is what happens when you subject labor to the raw forces of supply and demand.

And yet for the majority of human history that involved paying labor labor wasn’t paid an homogenous rate. Currently, we have a minimum wage and yet most people, that aren’t priced out of the market, make more. Why? Labor functions just like corn. When there is a shortage prices go up. It’s that simple.

Now if you want to fix a problem instead of merely appealing to an economically stupid electorate you eliminate the floor and pay a basic income. Now we have a more productive and more efficient market. Man-hours go up and money velocity increases where it’s needed. Why politicians don’t go for the rational approach is obvious. Why seemingly compassionate and educated liberals don’t is confounding.

[octopus]

@Fear_Itself

So why don’t we subsidize labor the same way we subsidize investment?

@Fear_Itself

The only thing I object to is socialism for the investment class, and rugged individualism for the labor class. Investors should pay the same rate as workers.

Are you talking about taxing capital gains? That money was already taxed when it was earned income. And before dividends are paid aren’t corporate profits taxed? Double taxation sucks.

[Ruken]

@octopus

Are you talking about taxing capital gains? That money was already taxed when it was earned income. And before dividends are paid aren’t corporate profits taxed? Double taxation sucks.

You’re mixing up some concepts here. Dividends may be taxed at the capital gains rate, but they are not capital gains.

[Slash1972]

@YogSothoth

The official poverty line is about $22000. If you take the number of hours in a full time week times the number of weeks, then divide $22000 by the hours, you’d come out to be about $10 an hour.

Where are you getting the $22000 poverty line from?

[Ruken]

@Slash1972

Where are you getting the $22000 poverty line from?

it was about that for a family of four about five years ago.

For an individual today, it’s about $12k.

[XT]

@Ruken

it was about that for a family of four about five years ago.

For an individual today, it’s about $12k.

Yeah, it’s an outdated figure (the $22k) for a family of 4. Today it’s $24k for a family of 4 (in the CONUS) and nearly $12k for an individual, according to this:

United States Department of Health and Human Services (HHS) figures for Federal Poverty Level in 2015[23] Persons in
Family Unit 48 Contiguous States
and D.C. Alaska Hawaii
1 $11,770 $14,720 $13,550
2 $15,930 $19,920 $18,330
3 $20,090 $25,120 $23,110
4 $24,250 $30,320 $27,890
5 $28,410 $35,520 $32,670
6 $32,570 $40,720 $37,450
7 $36,730 $45,920 $42,230
8 $40,890 $51,120 $47,010
Each additional
person adds $4,160 $5,200 $4,780

[Ruken]

**XT **internets better than I.

[Fear_Itself]

@octopus

Are you talking about taxing capital gains? That money was already taxed when it was earned income. And before dividends are paid aren’t corporate profits taxed? Double taxation sucks.

Oh god, not the double taxation nonsense. Let’s see how that works again.

[octopus]

@Fear_Itself

Oh god, not the double taxation nonsense. Let’s see how that works again.

What Is Double Taxation?

The corporation which the shareholder owns equity in had its profits taxed pre dividend distribution. If the dividend distribution was an expense and not a distribution of post tax profit than you’d have a point.

Let’s say I own a business are you saying that the profits should be taxed prior to paying salaries?

[Ruken]

And this only applies to the small minority of C corporations anyway.

[Salvor]

@Damuri_Ajashi

This used to be the “conservative” answer to welfare and as liberals started moving towards it, conservatives started moving away. Its like they think that anything that liberals would accept must be too generous.

I find a lot of merit in the notion of a universal basic income. But, people don’t really understand it and think it will be abused.

I think the source of this is that conservatives tend to be FAR more irritated by free riders and cheats in a system than liberals. Liberals care too, but their focus is on trying to help those in genuine need.
Pick your poison. Would you prefer to err on the side of helping the decent, or punishing the wicked?

[Ruken]

The discussion poverty is a tangent from “theories for raising wages.” Most Americans living in poverty do not work or only work part time. And most people earning MW are not living in poverty.

Not to say poverty isn’t an issue here. It’s just a different one. You can increase wages and increase poverty.