# What would happen if we reduced the minimum wage in the US? **URL:** \ **Category:** Great Debates\ **Created:** [August 26, 2011, 11:42pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244 "2011-08-26T23:42:17Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [August 26, 2011, 11:42pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/1 "2011-08-26T23:42:17Z")
Michelle Bachmann was in Jacksonville Beach, FL today talking about how she thinks we need to reduce corporate taxes in order to seem more attractive to corporations. Then she was asked a question about minimum wage. [ > [@](#): > > She was asked by a reporter afterward whether changes to the minimum wage should also be considered to balance the cost of labor here and overseas. > > Bachmann said she’s “not married to anything,” but she didn’t rule it out. ]([http://hosted.ap.org/dynamic/stories/U/US\_BACHMANN\_2012?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-08-26-19-05-06](http://hosted.ap.org/dynamic/stories/U/US_BACHMANN_2012?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-08-26-19-05-06)) The minimum wage has not been raised in more than 2 years, and currently stands at $7.25 per hour. So my question is: what would happen if the US did this and reduced the minimum wage by, say, half (to $3.65 per hour)? Would it entice corporations to relocate here? Would it stop them from leaving (if they are in fact leaving now)? Would it force millions into abject poverty? Would it benefit millions with lots of new jobs? Would it force inflation up or cause massive deflation? I am not an economist, but it seems to me that the effects would be far-reaching and largely detrimental to the population as a whole. I’m not at all convinced that _anything_ good could come from such a move; am I wrong? ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [August 26, 2011, 11:54pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/2 "2011-08-26T23:54:48Z")
> [@](#): > > The minimum wage has not been raised in more than 2 years, and currently stands at $7.25 per hour. So my question is: what would happen if the US did this and reduced the minimum wage by, say, half (to $3.65 per hour)? We’d probably find out if people were indeed willing to work for those wages. My guess is that some would, some wouldn’t…mostly kids, at a guess, would still be willing to do jobs for less. Overall, you would probably see an uptick in employment at the lowest levels (depending on how far you allowed minimum wage to drop), but we’d be hearing even more about ‘underemployment’ and the like. > [@](#): > > Would it entice corporations to relocate here? I doubt it. It might encourage some companies to hire more unskilled kids instead of continuing on with automation, but maybe not even that. I don’t see foreign companies as generally hiring people in the US for minimum wage, though if someone has a cite that this is the norm I’d appreciate it. > [@](#): > > Would it stop them from leaving (if they are in fact leaving now)? I doubt that too. It’s not just wages that are causing some companies to relocate (and this isn’t the major issue that some folks make it out to be in any case), it’s the combination of wages, regulation and uncertainty. Automation seems to be causing more job loss than companies fleeing the US…automation and more efficiency in the business process, but that’s just my uneducated guess. But think about it next time you are at a store and you see how automated the process of checking you out is, or how automated even buying a McBurger is (I’ve seen some McDonald’s where they don’t even have the folks taking orders from the drive through anymore, but instead it’s from some central office). Minimum wage has certainly factored into that, but I think the automation was coming anyway, regardless. > [@](#): > > I am not an economist, but it seems to me that the effects would be far-reaching and largely detrimental to the population as a whole. I’m not at all convinced that anything good could come from such a move; am I wrong? I’m not an economist either, but I don’t think the effect would be all that profound at this point. If you lowered minimum wage to nothing then that doesn’t mean that businesses would be able to get labor for free…they would still have to pay people something they were willing to take for their labor. It might convince some companies that they don’t need to spend so much capital right this minute on more automation, but I think that train has left the station now. You would probably get folks like McDonald’s and WalMart lowering the wages for new employees, but how many people would take those jobs if they offered them at $4/hour? Enough to fill their rosters? I don’t think so, considering that even at minimum wage they have a tough time with employee retention. Just my uneducated take. -XT ---
**Author:** ![Quasimodem](https://avatars.discourse-cdn.com/v4/letter/q/e274bd/32.png) [@Quasimodem](https://boards.straightdope.com/u/Quasimodem)\ **Post date:** [August 27, 2011, 12:20am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/3 "2011-08-27T00:20:16Z")
Crap n/m Q ---
**Author:** ![OneMissedPost](https://avatars.discourse-cdn.com/v4/letter/o/8e7dd6/32.png) [@OneMissedPost](https://boards.straightdope.com/u/OneMissedPost)\ **Post date:** [August 27, 2011, 1:06am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/4 "2011-08-27T01:06:35Z")
> [@Snowboarder\_Bo](#): > > The minimum wage has not been raised in more than 2 years, and currently stands at $7.25 per hour. So my question is: what would happen if the US did this and reduced the minimum wage by, say, half (to $3.65 per hour)? No one would be willing to work for minimum wage. Honestly, who would want to work at $3.65/hr? Jobs are not easy to get nowadays. As a graduate student, I am struggling even to keep up with rent and tuition fees. Many other students are in the same boat as me as far as graduate school is concerned. Right now, I am dependent on the jobs that pay that $7.25 minimum wage to afford textbooks and pay rent (and tuition of course). Minimum wage jobs would not exist anymore (at the $3.65/hr rate) because no one would be willing to work at $3.65 per hour. People that work minimum wage would no longer be able to afford many basic needs. It might motivate people to become more educated and more qualified; however, you have to take into consideration that somehow, they are going to half to pay their student loans, because I doubt they would be able to afford tuition on their own. > [@Snowboarder\_Bo](#): > > I am not an economist, but it seems to me that the effects would be far-reaching and largely detrimental to the population as a whole. I’m not at all convinced that _anything_ good could come from such a move; am I wrong? No, you aren’t wrong (at least in my opinion). Nothing good would come from this. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [August 27, 2011, 1:13am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/5 "2011-08-27T01:13:00Z")
[QUOTE=OneMissedPost] No, you aren’t wrong (at least in my opinion). Nothing good would come from this. [/QUOTE] Why? You said it yourself…no one would work at those rates. What would business do? Force people to work at those rates by putting guns to their heads? -XT ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [August 27, 2011, 1:34am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/6 "2011-08-27T01:34:07Z")
> [@Snowboarder\_Bo](#): > > I’m not at all convinced that _anything_ good could come from such a move; am I wrong? The last year black unemployment was lower than white unemployment was the year before enactment of Davis-Bacon. The stated purpose of Davis Bacon was to protect white construction workers from having to compete with their black counterparts. Minimum wage laws have a disproportionate effect on young, unskilled minorities…the very people that many now claim a minimum wage law is supposed to protect. ---
**Author:** ![thelabdude](https://avatars.discourse-cdn.com/v4/letter/t/dc4da7/32.png) [@thelabdude](https://boards.straightdope.com/u/thelabdude)\ **Post date:** [August 27, 2011, 2:33am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/7 "2011-08-27T02:33:32Z")
I doubt lowering the minimum wage would make much difference. There is a point where few would take the jobs. As siggested, mostly kids. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [August 27, 2011, 3:00am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/8 "2011-08-27T03:00:43Z")
Worried about American jobs going to third world countries? No problem. Vote for Michele Bachmann and she’ll bring third world jobs to America. ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [August 27, 2011, 3:29am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/9 "2011-08-27T03:29:23Z")
> [@yorick73](#): > > The last year black unemployment was lower than white unemployment was the year before enactment of Davis-Bacon. The stated purpose of Davis Bacon was to protect white construction workers from having to compete with their black counterparts. Minimum wage laws have a disproportionate effect on young, unskilled minorities…the very people that many now claim a minimum wage law is supposed to protect. False: [ > [@](#): > > Representative Bacon initially introduced the bill after a contractor employed African-American workers from Alabama to build a Veterans’ Bureau hospital in his New York district. Complaints about “negro” or “colored” labor taking federal construction jobs appear sporadically through the legislation history of both prior bills that anticipated Davis-Bacon,and Davis-Bacon itself. Beyond that, the legislative history of Davis-Bacon reflects a clear desire by Congress to reserve jobs on federal projects for local workers. Not only did local workers complain about non-locals taking these jobs, but Congressmen were frustrated that their efforts to bring “pork barrel” projects home to their districts did not result in jobs (and therefore political support) from their constituents. > > Opponents to the Davis–Bacon Act have emphasized the racist intent to the law, but critics have countered that this is a red herring, claiming that the law was a sincere attempt to preserve federal jobs for local workers and to maintain local wage standards against migratory workers of any race. Critics dismiss the claim that racist sentiments expressed in the legislative history were a significant factor in the passage of the act. ]([Davis–Bacon Act of 1931 - Wikipedia](http://en.wikipedia.org/wiki/Davis%E2%80%93Bacon_Act#History)) SCOTUS says “false” as well: [ > [@](#): > > Union supporters of Davis-Bacon point to a 2002 case known as Brazier Construction vs. Elaine Chao, Secretary of the Department of Labor. In it, Judge William B. Bryant rejected that Davis-Bacon was a Jim Crow law, stating: “Americans of all races were in need of aid from the government during the Great Depression. Congress enacted the DBA (Davis-Bacon Act) to assure workers a fair wage, provide local contractors a fair opportunity to compete for local government contracts and to preserve its own ability to distribute employment and federal money equitably through public works projects.” ]([Davis–Bacon Act of 1931 - Wikipedia](http://en.wikipedia.org/wiki/Davis%E2%80%93Bacon_Act#History)) ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [August 27, 2011, 3:52am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/10 "2011-08-27T03:52:02Z")
> [@yorick73](#): > > The last year black unemployment was lower than white unemployment was the year before enactment of Davis-Bacon. The stated purpose of Davis Bacon was to protect white construction workers from having to compete with their black counterparts. Minimum wage laws have a disproportionate effect on young, unskilled minorities…the very people that many now claim a minimum wage law is supposed to protect. Sure, they have a disproportionate effect on the young: on teens working part-time. Generally, though, employers simply don’t cut hourly staff in response to minimum wage hikes; the work still has to be done. Instead, they slow pay increases to higher paid workers, and push prices up slightly. Is there a reason to increase the minimum wage right now? Probably not; the CPI is virtually static. There’s certainly no reason to abolish it, though. I do have one problem with the federal minimum wage, which is that cost of living varies hugely by region, state and city. I don’t know how anyone lives in New York on minimum wage, but you can live relatively well in Bumfuck, Tennessee. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 27, 2011, 4:06am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/11 "2011-08-27T04:06:26Z")
There are no jobs. There is no work to be done. All it would do is cut the wages of the poor working class who have bad jobs. It would hurt the overall economy more by decreasing the purchasing power of American citizens. It would put more profits in the pockets of the poor suffering rich though. If you are keeping up with demand now, why would you hire workers if they were cheaper? Would you pay to have people sit around? The premise that the economy would get a boost is ridiculous. ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [August 27, 2011, 4:09am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/12 "2011-08-27T04:09:08Z")
> [@Snowboarder\_Bo](#): > > False: > > [ > > SCOTUS says “false” as well: > > [url=[Davis–Bacon Act of 1931 - Wikipedia](http://en.wikipedia.org/wiki/Davis%E2%80%93Bacon_Act#History)]]([Davis–Bacon Act of 1931 - Wikipedia](http://en.wikipedia.org/wiki/Davis%E2%80%93Bacon_Act#History)) Nice bit of revisionist history by the always reliable Wikipedia. Don’t believe me…just look up Bacon’s own statements on the matter. Just because SCOTUS doesn’t consider it to be Jim Crow law doesn’t change its effect. ---
**Author:** ![Snowboarder\_Bo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snowboarder_bo/32/229_2.png) [@Snowboarder\_Bo](https://boards.straightdope.com/u/Snowboarder_Bo)\ **Post date:** [August 27, 2011, 4:32am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/13 "2011-08-27T04:32:48Z")
> [@yorick73](#): > > Nice bit of revisionist history by the always reliable Wikipedia. Don’t believe me…just look up Bacon’s own statements on the matter. Just because SCOTUS doesn’t consider it to be Jim Crow law doesn’t change its effect. Your claim about history has been debunked. If you’d like to contribute to the discussion, please stay on topic. This thread isn’t about a bill passed 80 years ago, and certainly not one which had nothing to do with a minimum wage. If you’d like to talk about the the Davis-Bacon Act of 1931, please start a new thread to talk about that. ---
**Author:** ![aruvqan](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/aruvqan/32/2891_2.png) [@aruvqan](https://boards.straightdope.com/u/aruvqan)\ **Post date:** [August 27, 2011, 4:55am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/14 "2011-08-27T04:55:56Z")
> [@Snowboarder\_Bo](#): > > So my question is: what would happen if the US did this and reduced the minimum wage by, say, half (to $3.65 per hour)? The bitch is fucking insane if she thinks matching wages is the answer. Back on my first job _ever_ in 1975 minimum was $3.10. Unless the government was to go and mandate rollbacks on the cost of living [residence rental, electricity, food, telephone and everything else] to mid 70s prices, there is no freaking way that anybody could manage to live on that wage. Hmmm, $584 gross per month, $7008 gross per year. You realize that for many people that is half what they pay in rent? ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [August 27, 2011, 5:09am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/15 "2011-08-27T05:09:01Z")
> [@Snowboarder\_Bo](#): > > Your claim about history has been debunked. If you’d like to contribute to the discussion, please stay on topic. This thread isn’t about a bill passed 80 years ago, and certainly not one which had nothing to do with a minimum wage. > > If you’d like to talk about the the Davis-Bacon Act of 1931, please start a new thread to talk about that. Broaden your reading list to more than Wikipedia before you claim that something has been ‘debunked’. You think Davis Bacon has nothing to do with minimum wage? That explains a lot. The point, which seems to escape you, is that the history of minimum wage law was racist in its intent. These days, the higher the minimum wage, the less likely that young, unskilled workers will be hired…they simply can’t compete. But, you know this already. You read Wikipedia! ---
**Author:** ![MandaJo](https://avatars.discourse-cdn.com/v4/letter/m/ac91a4/32.png) [@MandaJo](https://boards.straightdope.com/u/MandaJo)\ **Post date:** [August 27, 2011, 12:30pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/16 "2011-08-27T12:30:11Z")
The classic economic answer is that lowering the minimum wage would decrease unemployment until and unless you lower below the natural market price for labor. This is easier to see if you think of it as price floor for a product. If the government passed a law stating that cheeseburgers could not be sold for less than a nickel, it wouldn’t have any effect at all, because no one is looking to sell cheeseburgers for less than a nickel, anyway (though plenty of people would be willing to buy those cheeseburgers). If, on the other hand, the government were to say that no one could sell a cheeseburger for less than $5, fewer cheeseburgers would be produced because some people who are willing and able to buy a $2 cheeseburger today would not be willing and/or able to pay $5 for the same burger (though of course many people would be willing to make such a burger). In the same way, if you lowered the minimum wage by a dollar, it would decrease unemployment. Someone out there is willing to work for $6/hour, and someone out there is willing to hire him at that wage, but isn’t willing to pay $7.15. That person (and others like him) is unemployed as a direct consequence of having a minimum wage. If there are no cases like that, then our minimum wage is pretty pointless. Weirdly enough, it can only be said to be doing anything if it is creating unemployment. However, you do reach a point past which it it meaningless (the five cent cheeseburger) and I think that point is probably north of $4. This isn’t to say a minimum wage is a bad thing, and I am not trying to argue against having one. But part of the cost is a certain amount of unemployment. ---
**Author:** ![Fear\_Itself](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/fear_itself/32/19637_2.png) [@Fear\_Itself](https://boards.straightdope.com/u/Fear_Itself)\ **Post date:** [August 27, 2011, 12:42pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/17 "2011-08-27T12:42:57Z")
> [@MandaJo](#): > > Someone out there is willing to work for $6/hour, and someone out there is willing to hire him at that wage, but isn’t willing to pay $7.15. That person (and others like him) is unemployed as a direct consequence of having a minimum wage. . A more likely unintended consequence would be immediate wage cuts for people making $7.15 by employers chasing those who are willing to work for $6.00. The net result is a contracting economy, as workers have fewer net dollars to spend. ---
**Author:** ![MandaJo](https://avatars.discourse-cdn.com/v4/letter/m/ac91a4/32.png) [@MandaJo](https://boards.straightdope.com/u/MandaJo)\ **Post date:** [August 27, 2011, 1:45pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/18 "2011-08-27T13:45:23Z")
> [@Fear\_Itself](#): > > A more likely unintended consequence would be immediate wage cuts for people making $7.15 by employers chasing those who are willing to work for $6.00. The net result is a contracting economy, as workers have fewer net dollars to spend. Right. But that wouldn’t increase unemployment–the $6 workers still have a job, and the people who are unwilling to work for $6 don’t count as unemployed. Presumably some employers would use their freed up cash to hire some shmuck who wasn’t worth $7.15 but is worth six. It would be a very bad idea and not at all good for the economy. I never said otherwise. But, given the way we calculate unemployment, it would reduce it. That’s not to say it’s a good idea. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 27, 2011, 3:14pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/19 "2011-08-27T15:14:09Z")
> [@MandaJo](#): > > Right. But that wouldn’t increase unemployment–the $6 workers still have a job, and the people who are unwilling to work for $6 don’t count as unemployed. Presumably some employers would use their freed up cash to hire some shmuck who wasn’t worth $7.15 but is worth six. > > It would be a very bad idea and not at all good for the economy. I never said otherwise. But, given the way we calculate unemployment, it would reduce it. That’s not to say it’s a good idea. Hire them to do what? You hire when you need people to meet an increase in demand. If workers had to work for a buck an hour, would a company hire a bunch of them to sit around? Nope, it would just hurt the poor and help the rich, something we love to do nowadays. People starting out at the bottom would have a terrible time making ends meet. The economy would suffer from decreased demand. It would be a lose for the workers. A lose for the economy. It would be a win for owners. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [August 27, 2011, 3:23pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/20 "2011-08-27T15:23:42Z")
We have a relative “herd immunity” when we have a minimum wage higher than the “natural wage” for many jobs. The economy is boosted because many people – although not all – who work minimum wage jobs are able to keep above dire poverty and so are able to spend money to keep the economy going. Whereas if we lowered the minimum wage, it would help the first few companies that took advantage of it, sort of like how not getting immunized will save you money and you won’t be infected because everyone else is immunized. But when more and more of a slice of the public has absolutely no discretionary income, the economy as a whole will suffer greatly, and even those precious below-sustainability-income jobs will start to go away as well since no one has money to spend on burgers and dollar-store clothes. [Next page](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244.md?page=2)