I mean, there is a point under which wages cannot go for fear of the workers deciding en masse that it’s not worth their time to make that little. But what is that point? Can it support an economy in general? How does anyone but business owners benefit, exactly?
Of course, some of this would depend on whether an abolishment of the minimum wage would be accompanied by any laws forbidding states from setting them themselves. How likely is that, exactly? What effect would that have on the whole issue?
A relevant concept is the reservation wage, the wage at which is “the lowest wage rate at which a worker would be willing to accept a particular type of job.”
I’m not sure if a ban on state/local wages would pass a legal challenge. But if we pretend…
I haven’t seen evidence for large elasticity at the current MW, which you would need for decreasing MW to boost employment significantly.
For the minority of MW earners who are supporting themselves and living in poverty, I would expect life to suck worse.
For the vast majority of workers who earn above the MW, there could be a drop in wage, but estimating that will be difficult.
We already have minimum wage earners who also collect public assistance because they cannot make ends meet. The classic case in Walmart, where in 2014 to the tune of $6.2 billion. Walmart payroll obligations are subsidized by the taxpayers. (In 2014, Walmart had agross profit of $127 billion, with a net income of $16.7 billion). There are stories that some military families also make ends meet with public assistance.
So if the minimum wage is abolished and basic necessities for life (housing, utilities, food, medicine) need to be paid for, who is going to pay it and who is going to benefit by not paying a living wage?
[QUOTE=Duckster]
Walmart payroll obligations are subsidized by the taxpayers.
[/QUOTE]
Can you point to the relevant law or statute that dictates that Walmart has an obligation to pay but isn’t and that it’s, therefore devolving on the taxpayers to pay it for them? If so, my question is why hasn’t legal action been brought against Walmart for flagrantly disobeying said law/statute? :dubious:
Agreed. It is frustrating to continue to read such a statement. If an employee of Wal-Mart cannot find a job which pays enough to pay the bills, then such a deficiency is not the fault of Wal-Mart. If anything, Wal-Mart helps society by alleviating at least a part of the worker’s poverty.
I was once told by social service worker that having (owning) a business that produces income below the limits that would allow for assistance of welfare services (food stamps, heating assistance, medicaid) means that the business should close and the person should be looking for another means of income as social services is not there to subsidize businesses and keep failing businesses from closing.
Seems like if Walmart can not make it without having Government subsidize its workers it should likewise close.
One thing which anti-MW people often say is that why pay someone $X when they are only “worth” < $X ?
But of course the employee is worth (much) more than $X or the company wouldn’t employ them. The minimum wage doesn’t force companies to hire.
The reason the company wants to keep the wage low is because they think the employee is replaceable – which is a different thing altogether. So they choose to maximize their profits at the expense of the worker and society at large.
It’s natural for employers to do that, but I think it equally makes sense for society to say, no: there will be no race to the bottom.
And you’d be wrong. Labor theory of value is tautological and we live in a global world. So corporations will move. Or speed up automation. It’s sad people are still stuck in a 1920s mindset. The Western worker is not special anymore.
That’s the problem with economics. Economists treat everything as if it’s solely an economic issue.
Now think about the real world implications if it was legal to pay people what they’re “worth” and if you’re correct that some people are worth nothing. Would society as a whole be better off? We’d either have a group of people moving from the category of working poor to the category of completely dependent on social services. Or the much worse problem of a group of people moving from the category of First World poverty to the category of Third World poverty. Forcing businesses to pay some employees more than they’re worth is a lot less disruptive to society.
Manufacturing jobs moving or being automated? Sure, that’s happening but those weren’t typically minimum wage jobs.
Minimum wage jobs are usually the sort that aren’t going anywhere: cleaner, janitor and the aforementioned wal-mart shop assistants.
ETA: Not sure what you mean by labor value being tautological. The employer must think an employee is worth more than their pay or they wouldn’t hire them. Same as with any free economic transaction.
I doubt that, as shop assistants have varied duties including stacking shelves, removing out of date items, cleaning up, locking up and helping customers with miscellaneous issues (yes, including finding items, which is the one thing that conceivably could be replaced with a smartphone app).
But even if it were true that this one job (out of the ones I listed) was vulnerable to being replaced by a smart phone app, what’s the relevance to the topic at hand?
How does a minimum wage make that more or less of an issue?
If you can get a job at Wal-Mart that pays part of the bills and also qualifies you for food stamps, child care assistance, Medicaid, subsidized housing, and free lunch for the kids, then you’ve got a job that pays enough to pay the bills. It’s just that Wal-Mart is paying only part of your wages; the rest come from the taxpayers.
Now, what’s your motivation to get a “better” job, if getting that better job means you lose part of your food stamps or housing subsidy and end up with net income+benefits that are no higher? What’s Wal-Mart’s motivation to increase wages, if there are plenty of people who can make a go of it on Wal-Mart wages+welfare?
If you work at Wal-Mart while collecting welfare benefits, Wal-Mart reaps the full benefit of your labor, but they pay only part of the cost of your labor, meaning they are essentially no different from any other subsidized business, be it Solyndra before the collapse or 1970s-era British coal mines. If Wal-Mart employees could not collect all of the welfare benefits, then the company would have to decide whether the value of the labor was worth the cost of paying higher wages or not. Right now, they don’t have to make that decision.
How many times has this Walmart subsidy myth been squashed? It has yet to stand up to scrutiny.
If I have no job, I still have needs, which the government may support. If I get a job at Walmart, I need less support. I wouldn’t get support if I worked at Walmart right now. Unless I chose to have enough kids to qualify. Same work, same pay. My personal choices aren’t Walmart’s problem. We taxpayers have chosen to make it our problem.
This is an argument to remove benefits cliffs. You’ll not get much fight on that here.
The cost of my labor does not equal the income I need. If I work less or reproduce and subsequently receive more government support, Walmart has not been subsidized. If my government support is decreased, I’m still working. I’ve worked in the red before. A small negative number on the personal balance sheet is better than a large one. And nothing changes for Walmart.
Never mind that minimum wage is plenty enough to live on of you can get enough work; most actually poor people can’t. And if course most MW earners aren’t living in poverty.
The difference is that in scenario 2 the corporation is also getting the benefit of that labor in a way that may not have been possible if their pay wasn’t getting subsidized by the taxpayer.
I’m not saying that’s how welfare scales in the US; as I’m not American and don’t know much about that. But in principle, workers topping up their salaries with benefits is the state subsidizing low-paying employers.
I’m not sure what the point of this is. You are in favor of MW, or are you implying that MW means fewer jobs are available?
Minimum wage is not the solution. It’s better to meet needs with direct need based assistance.
Robots can.
You have it backwards. If you have no job for the person’s market value they are making 0 and society is paying ALL their bills. If that person has a market value of $5.25/hr at least they are producing something and society has to chip in less for their needs.
We live in a global economy now. The American or other Western civ worker is no longer special. Labor is now a global commodity. Yeah there are a few jobs that a domestic workforce is necessary for but if you haven’t been paying attention there are millions of economic migrants who cross the border and will work for less.
So there is actually a cash economy where services can be be purchased from folks chilling on the corner. Need something moved or some mulch spread? Folks are loitering near gas stations and home improvement stores looking for work. No 1099, no taxes, no minimum wage.
Mr. XT is of course correct. The notion that employers have special obligations to their employees is an example of the very confused leftist thinking the backlash against which helped lead to the recent electoral tragedy.
Higher WalMart wages may come from unionization or from minimum wage laws. WalMart’s primary obligation is to obey laws and contracts and to promote the interests of their stockholders.That’s the American way. We can just hope that the Walton family uses its huge wealth for Good (à la Gates) rather than for Evil (à la Koch).