# 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:** 3
**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, 11:52pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/41 "2011-08-27T23:52:55Z")
[QUOTE=Snowboarder Bo] First, it seems like you are saying that any minimum wage is a bad idea, as it will force companies to “adjust” in negative ways (higher prices, layoffs, etc.). Is that an accurate paraphrasing of the thoughts behind your post? [/QUOTE] No, I don’t think all minimum wage laws are bad or a bad idea, just that you have to acknowledge that by doing so you are probably killing some non-zero number of jobs and putting pressure on companies to automate or outsource/offshore at the low end. It all depends on where you set the bar. Think of it as a sliding scale. Set it too low and it’s meaningless…you could set a minimum wage law in the US at a dollar an hour, but that doesn’t mean you are actually going to get folks to work for that level. By the same token, you could try and set the minimum wage at $20/hour with full benefits, but that doesn’t mean companies will actually pay that for unskilled labor…not unless they can pass on the price to the customers and actually have the customers pay it. Where minimum wage (at the Federal level) is currently set is probably a good mix of costs to benefits, overall. It could be lower and you would still get workers to work, but I don’t think it’s so high as to be a major drag on the system either. What you have to acknowledge, though, is that by setting it at such a level is that it puts pressure on companies to automate. You can see the results of that pressure everywhere you go these days. Look at the self checkout lines, at the automated gas pumps and smaller and smaller staff levels at places like ‘McDucks’…or the smaller work force needed in manufacturing in the US today compared to, say, 10 years ago…or 20 years ago…or 50 years ago. US manufacturing is actually up, wrt productivity (or it was before the recession), even though jobs in manufacturing have steadily declined. That trend will continue as long as industry feels that automation and outsourcing are cheaper than labor wrt value for service. > [@](#): > > Second, your point that companies are in business in order to make profits is, I think, either incomplete or misplaced. Not all companies are in business to make as much profit as possible, or at least, not all of them should be in business for that purpose. IMO, the principle of sustainability is too often ignored in todays economic and business thinking. All for profit companies (and even many ‘not for profit’ businesses) are in business with the sole purpose of making money. If that isn’t their number one focus then they won’t stay in business very long. Put it this way…name a successful business that works at a loss or just barely breaks even. Not in the short term (there are certainly downturns in any business) but as an overall trend. I can’t think of one who has consistently failed in this aspect…it’s the only reason to have a company, after all. To make money and make a profit. -XT ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [August 27, 2011, 11:57pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/42 "2011-08-27T23:57:32Z")
> [@xtisme](#): > > All for profit companies (and even many ‘not for profit’ businesses) are in business with the sole purpose of making money. If that isn’t their number one focus then they won’t stay in business very long. Put it this way…name a successful business that works at a loss or just barely breaks even. Not in the short term (there are certainly downturns in any business) but as an overall trend. I can’t think of one who has consistently failed in this aspect…it’s the only reason to have a company, after all. To make money and make a profit. > > -XT While I think such companies are the rare exception, there are companies (think of Ben and Jerry’s) that do not put profit maximization as the #1 goal. But I think your point is well taken, even if it’s a bit too black and white for reality. ---
**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 28, 2011, 12:01am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/43 "2011-08-28T00:01:18Z")
Thanks for the clarification on the first point. > [@xtisme](#): > > All for profit companies (and even many ‘not for profit’ businesses) are in business with the sole purpose of making money. If that isn’t their number one focus then they won’t stay in business very long. Put it this way…name a successful business that works at a loss or just barely breaks even. Not in the short term (there are certainly downturns in any business) but as an overall trend. I can’t think of one who has consistently failed in this aspect…it’s the only reason to have a company, after all. To make money and make a profit. > > -XT I don’t at all disagree that businesses are (and should be) out to make a profit. I just think that such a statement, all by itself is truncated and thereby misses an important principle of what a business should be. Businesses should not just be focused on making as much profit as possible, but rather on making profit while also looking to be a sustainable business. Any business not looking for sustainability is, in essence, a predatory enterprise. ---
**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 28, 2011, 12:11am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/44 "2011-08-28T00:11:30Z")
[QUOTE=John Mace] While I think such companies are the rare exception, there are companies (think of Ben and Jerry’s) that do not put profit maximization as the #1 goal. But I think your point is well taken, even if it’s a bit too black and white for reality. [/QUOTE] It’s probably a whole 'nother debate, and don’t want to hijack the thread, but I DO think it’s that black and white. Companies, at their heart, are in business to make a profit. If not they would give their products or services away for free, or in such a way as to not ever make any money in the transaction (note: companies can certainly try and under price their wares in an attempt to gain market share and force a competitor out of business, but this is just another way of saying that their long term goal is to make money in some way or other). As for Ben and Jerry’s, check out their [franchise page](http://www.benjerry.com/scoop-shops/franchise-opportunities/faqs.cfm) (you can look up their profits separately…they make a lot of money, however). Note that they will check out the market possibilities in your area before they will sell you a franchise, meaning that they don’t want to open a store that is going to lose money…even after getting both an upfront flat fee AND royalties and other fees. That means that at least nominally they are looking to make money, not just sell ice cream to the masses (btw, FWIW, I love Ben and Jerry’s…we go there about once a month, and I like it better than the local Cold Stone). I’m not saying here that businesses don’t do anything but try and maximize profits (even though I sort of DID say that :p), because obviously they don’t. Many businesses will make hefty donations to local or national charities, will sponsor local sporting teams and other local activities to help their communities, and do other things that aren’t strictly geared towards a profit. But that’s fluff…businesses are in business to make money. Simple as that. And I’ve hijacked the thread enough. It’s a thread on minimum wage and I apologize for getting it off course here. -XT ---
**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 28, 2011, 12:16am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/45 "2011-08-28T00:16:26Z")
> [@MandaJo](#): > > I agree with this. I’ve said I agree with this in every single post I’ve made. Which makes it all the more curious that you feel the need to repeat the point that it will reduce unemployment. I just don’t understand why that is important. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [August 28, 2011, 12:51am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/46 "2011-08-28T00:51:30Z")
> [@Fear\_Itself](#): > > Which makes it all the more curious that you feel the need to repeat the point that it will reduce unemployment. I just don’t understand why that is important. Did you read the OP? He didn’t ask whether or not we should reduce the MW. He asked what would happen if we did. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [August 28, 2011, 2:39am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/47 "2011-08-28T02:39:18Z")
> [@gonzomax](#): > > Who works 40 at McDucks? They have almost all part time workers. They don’t get benefits. They are supposed to work a part time job and pay for their own healthcare? > You try supporting a life on under 200 bucks a week. Work more. I did. As I mentioned, 70 hours/week will get you over $25k/year. I was able to put money in an IRA and buy health insurance. I couldn’t have done that on half the wage. However, that’s still tangential to the question, “Who makes minimum wage?” Not very many people do, and most of them are young. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 28, 2011, 3:08am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/48 "2011-08-28T03:08:05Z")
> [@Ruken](#): > > Work more. I did. As I mentioned, 70 hours/week will get you over $25k/year. I was able to put money in an IRA and buy health insurance. I couldn’t have done that on half the wage. > > However, that’s still tangential to the question, “Who makes minimum wage?” Not very many people do, and most of them are young. And how many people outside of management work more than 40? Your experience is far from the norm. ---
**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 28, 2011, 3:25am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/49 "2011-08-28T03:25:37Z")
[QUOTE=gonzomax] And how many people outside of management work more than 40? Your experience is far from the norm. [/QUOTE] You realize s/he’s talking about working multiple jobs there, yes? Also, are you talking about people at ‘McDucks’ who in general (assuming they are ‘outside of management’) work less then 40 hours, or are you talking about the average American worker? If you mean ‘McDucks’ type jobs, then, yeah…most non-management jobs in those kinds of places are transitory, so you aren’t going to get a full 40 hours per week until you’ve been there a while. Years most likely in that kind of place. If you mean that the average American worker gets less than 40 hour per week, do you have a cite thingy for that? Because [this](http://www.bls.gov/tus/charts/) chart seems to indicate that the average American worker (between 25 and 54) actually works (on average) more than 8 hours per day (8.7 hours/day according to the chart)…which would be more than 40 hours per week. Of course, since a lot of Americans are paid annual salaries (such as myself), that means they don’t get paid for working that extra time, but it doesn’t fit with your bald statement above, unless you only meant ‘McDucks’ type jobs. -XT ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 28, 2011, 3:40am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/50 "2011-08-28T03:40:46Z")
We were talking about McDucks jobs. It would appear that is what RUKEN was specifically responding to. The thread premise is what would happen if minimum wage was cut. There would be more money in the pockets of the corporations and less in the workers pockets. Profits have been soaring for a long time. Corporations are doing very well. The country would be better served by raising the minimum wage. That would help demand. That might help employment. ---
**Author:** ![dropzone](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dropzone/32/7515_2.png) [@dropzone](https://boards.straightdope.com/u/dropzone)\ **Post date:** [August 28, 2011, 3:44am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/51 "2011-08-28T03:44:33Z")
Didn’t read the thread. In the state of Illinois the Minimum Wage is $8.25/hr. McDonald’s wage. Everywhere else I apply is talking about a buck-seventy-five more, which is obscene when talking about anybody with job skills. THREE-SIXTY-FIVE? When the fuck did it become 1973? ETA: Have you even BEEN in a grocery store in the past 40 years? ---
**Author:** ![MandaJo](https://avatars.discourse-cdn.com/v4/letter/m/ac91a4/32.png) [@MandaJo](https://boards.straightdope.com/u/MandaJo)\ **Post date:** [August 28, 2011, 4:22am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/52 "2011-08-28T04:22:30Z")
> [@Fear\_Itself](#): > > Which makes it all the more curious that you feel the need to repeat the point that it will reduce unemployment. I just don’t understand why that is important. > [@John\_Mace](#): > > Did you read the OP? He didn’t ask whether or not we should reduce the MW. He asked what would happen if we did. This. Also, I made the point once and **gonzomax** kept making blanket statements that I was wrong. I was trying to explain to him how structural unemployment works. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [August 28, 2011, 9:43am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/53 "2011-08-28T09:43:39Z")
Here are the 2010 minimum wage numbers: [BLS](http://www.bls.gov/cps/minwage2010.htm) Multiple job holders: [1st two google links (BLS)](http://www.google.com/search?q=multiple+jobs+site%3Abls.gov&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a) There just aren’t that many minimum wage jobs out there, so I conclude that halving the rate will have little effect. ---
**Author:** ![Naxos](https://avatars.discourse-cdn.com/v4/letter/n/50afbb/32.png) [@Naxos](https://boards.straightdope.com/u/Naxos)\ **Post date:** [August 28, 2011, 9:48am UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/54 "2011-08-28T09:48:38Z")
> [@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? Good for who? It will accelerate the funneling of the wealth of the country to the richest 10% to 5% of the population. That’s a central ideological principle of conservatism throughout recorded human history. ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [August 28, 2011, 1:16pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/55 "2011-08-28T13:16:57Z")
> [@gonzomax](#): > > The country would be better served by raising the minimum wage. That would help demand. That might help employment. Let’s assume the minimum wage is increased with zero effect on employment. Also, let’s ignore the argument that very few jobs are minimum wage jobs and that those jobs are held by the youngest workers. How would raising the minimum wage help demand? I would guess that prices would go up at the same rate that minimum wage increases…which would zero out any benefit to those making minimum wage. The minimum wage worker may not have any additional buying power. I really doubt that an increase in minimum wage would increase demand or employment. I think it has been demonstrated in this thread that employment would drop some. As for demand, this seems like a variation of the broken window fallacy. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 28, 2011, 4:09pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/56 "2011-08-28T16:09:40Z")
If you work for minimum wage and then get a quarter raise, you are no longer working for minimum wage. However your paycheck and life style have not been greatly elevated. People in the range of minimum wage should be counted in the minimum wage category. My son ran a couple restaurants. On his staff, there always were a couple adults working for close to minimum wage. Most of the kids would get small raises after awhile and no longer qualify as minimum wagers. But essentially they all were. ---
**Author:** ![Mighty\_Mouse](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mighty_mouse/32/7776_2.png) [@Mighty\_Mouse](https://boards.straightdope.com/u/Mighty_Mouse)\ **Post date:** [August 28, 2011, 4:36pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/57 "2011-08-28T16:36:06Z")
> [@gonzomax](#): > > If you work for minimum wage and then get a quarter raise, you are no longer working for minimum wage. However your paycheck and life style have not been greatly elevated. People in the range of minimum wage should be counted in the minimum wage category. > My son ran a couple restaurants. On his staff, there always were a couple adults working for close to minimum wage. > Most of the kids would get small raises after awhile and no longer qualify as minimum wagers. But essentially they all were. Definitely my experience in larger companies as well. I worked in a business where we have a lot (thousands) of minimum wage workers (mostly teens), when the minimum wage is increased by either state or federal law, we have a phenomenon called “compression”. People who were twenty five cents above the minimum wage, almost all immediately got a raise to twenty five cents above the new minimum wage. People at a minimum wage + $1 got a raise of twenty cents, minimum wage + $2 got a raise of ten cents. That is because we wanted to maintain a gap between workers who are at the very bottom and those that are not, no matter what that bottom was. The benefits in motivation are more than the costs savings from not “compressing” wages upwards to some extent. But there is no doubt that if there was a $5 minimum wage, we would hire more people and invest less in automation. I’ve seen lots of automation investment proposals that made sense at $8/hour, but not at $5. There is no way that having a minimum wage is not reducing employment by some amount. But that is just the price you pay for having the kind of society we want. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 28, 2011, 6:54pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/58 "2011-08-28T18:54:27Z")
On the other hand ,the purchasing power caused by increasing the minimum wage would cause hiring across the country. Big boost to employment. ---
**Author:** ![gaffa](https://avatars.discourse-cdn.com/v4/letter/g/e68b1a/32.png) [@gaffa](https://boards.straightdope.com/u/gaffa)\ **Post date:** [August 28, 2011, 7:30pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/59 "2011-08-28T19:30:59Z")
> [@Mighty\_Mouse](#): > > But there is no doubt that if there was a $5 minimum wage, we would hire more people and invest less in automation. I’ve seen lots of automation investment proposals that made sense at $8/hour, but not at $5. The flaw in this logic is that technology always gets cheaper. Automating a particular job might not make sense _today_ in your particular market, but as soon as automation is adopted in higher wage areas the price of the equipment will decline. How low would the minimum wage need to be to replace the combine harvester with an army of humans with scythes? Even slaves would be more expensive than the machinery, with the need to feed and house them. Right now, the only jobs left in harvesting are ones that they have not yet devised a machine to harvest - ones that require human sight or touch. But that is very close - teams in Japan and Australia are developing equipment to pick strawberries, citrus growers are funding machinery to pick oranges. There is no job so poorly paid that it won’t be automated out of existence. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [August 28, 2011, 8:48pm UTC](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244/60 "2011-08-28T20:48:37Z")
She is angling for [Wage Slavery](http://en.wikipedia.org/wiki/Wage_slavery). We have seen it before. Also, I seriously doubt she (or conservatives) would be content to stop at whatever number they landed on. If they reduced it to (say) $5/hour then it stands to reason that later reducing it to $3/hour is even better! Continue till it is abolished and you have Wage Slavery back in effect in the US. No thanks. [Previous page](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244.md?page=2) [Next page](https://boards.straightdope.com/t/what-would-happen-if-we-reduced-the-minimum-wage-in-the-us/594244.md?page=4)