Why do we have a national minimum wage?

Isn’t it stupid to have a national minimum wage? Why is the minimum wage the same for Southern California as rural Alabama? In what way does this make sense? Wouldn’t it be better to have a minimum wage that is tied into the cost of living in the area people live?

The national minimum wage, enacted in 1938, provides a bottom floor. Set at $5.15 an hour for the past ten years, it does not provide a full-time worker a liveable income, even in rural Alabama. (See http://www.epinet.org/content.cfm/briefingpapers_bp151.) There is a “living wage” movement which wants cities and states to establish local minimum wages keyed to local cost of living. See http://www.livingwagecampaign.org/, http://www.universallivingwage.com/, http://www.epinet.org/content.cfm/issueguides_livingwage_livingwage.

Sorry, mistake – the MW has been $5.15 for the past seven years.

Hijack: How can you say that minimum wage does not provide a liveable income to workers? Many people do live on minimum wage. They may not live well or they may have to work more than 40 hours a week, but they do survive?

Or, have no minimum wage at all and let the market decide the relative value of our labor…and us decide whether or not we are willing to work for the amount offered. Why do we have it? More of the nanny government trend to try and take control and pander to the people who don’t understand the free market and think that if you don’t Take Control™ the US will suddenly slide back to the 1890’s. Its a remnant of a time when Government tried to control the economy. I wish I still had the link, but Sam Stone did a thread recently where he gave us a link to the history of economic controls in the US and the world. Maybe I’ll dig it up later.


There’s survival and there’s survival. Read Nickel and Dimed: On (Not) Getting By in America, by Barbara Ehrenreich (Owl Books, 2002).

Put another way: If you work 40 hours a week for $5.15 an hour, that’s $206 a week or $10,712 a year. How do you think you would be living if you had to live on that?

But this does not answer the question.

Since many people do, in fact, live on incomes in this range (the poverty level is close to $8,000 a year and we have a few millions of people in that range), they must make a “living wage”.

I suspect, that “living wage” is a political term which means something quite different. It wouldn’t sound as good in protests to use the phrase “living well wage”, “comfortable living wage”, or perhaps “can afford everything he needs without recourse to charity or help wage”.

You, BrainGlutton are a much more sophisticated person than that. Certainly you have a link handy somewhere which defines the term in the context in which you mean it.

My dictionary simply says “a wage sufficient for a worker and family to subsist comfortably” Which seems to me to be oxymoronic. How can subsistence be comfortable?

Sort of. The poverty level for a family of four is 18K. This is the figure you’ll commonly hear when people talk about poverty level. Usually in the arguments I hear referring to a living wage, they are referring to this figure.

Now, as far as minimum wage…

There’s a couple of ways to look at this. One way is to view it as a payroll tax on employers to support poor workers. To which, we could make the argument that such a tax should be borne by everybody, not just employers, if it is the case that we want to support a floor on worker wages.

So, we ultimately get to the question of what is the goal we’re trying to achieve with a minimum wage (or a living wage)? The goal, obviously, is to provide people who work a minimum standard of living. Personally, I think everyone should be provided with a minimum standard of living, and people who work should be provided with a minimum better standard of living.

Could we provide a minimum standard of living without a minimun wage? I don’t really see how. The only way wages can rise in a free market system is if the labor supply is constant while the economy is growing. Hower, two factors prevent this from happening in the US. The first is that, in general, when wages start to rise, the Fed will raise interest rates to prevent wage inflation. The second is that when wages start to rise, and labor shortages occur, corporations will import workers under the H-1 visa system (or illegally) to depress wages. The H-1/illegal worker system pretty much ensures that employers will never need to pay a decent wage.

Certainly. From http://www.epinet.org/content.cfm/issueguides_livingwage_livingwagefaq:

Where does this law of economics come from? Clearly if it is true with a constant labor supply and X% growth, it will be true with some level of a growing labor supply and >X% growth. No?

So if there’s no minimum wage, and employers decide to go as low as $0.25/hour as a salary for menial work, and some people are desperate enough to take it because there aren’t any alternatives left, it’s okay for the rest of us to just reap the fruits of cheap labor and say, “Hey, market forces, baby!” :confused:

Forget economics for a minute; are you morally comfortable with such a stance?

I agree with you, rjung, but you’ve been around here long enough to know that talk of morals with fiscal conservatives is fruitless. They have the ability to divorce fiscal policy from humanity and morality. And the really astonishing thing is that most of them are really decent and moral people.

I think I’m a decent and moral person, too, but I confess I have no problem sticking a hook through a minnow’s gill in order to catch a bigger fish. I would have trouble morally with the kind of unregulated capitalism of the 19th century. But we all bend morality in our own way.

This is complete horseshit, and you know it. Ever heard of welfare? You’re paying for it. Working for a quarter an hour? You can come up with a better argument than that.

The welfare benefits are what are lost in this argument. Minimum wage would be $10,500 per year ($5.25 is the minimum btw times 2000 hours at 40/week.)

Double that for a married couple that has the sense to know that they have to work 2 jobs to make ends meet. (And I’m sure they hate that tax cut)

Now we get to the crux of this whole bitchfest. If you’re over the age of 21 and still make minimum wage, time to wake the hell up. Get a frigging job that pays better. Hell, even here in North Dakota McDonald’s is hiring at $7.50 an hour.

Poverty doesn’t mean you can’t afford a Lexus and plasma TV. Show me kids starving to death for a reason not related to negligent parents, and I’ll buy into the idea that minimum wage is a huge problem.

In fact, I’ll accept a simple cite of someone raising a family that is at min. wage level.

Among free marketers, the level of opposition to a minimum wage is often matched by the level of opposition to welfare. Fundamentalists reject both altogether (at least when it comes to welfare provided by the state).

Agreed. I should have worded that better. But I don’t think this undoes my point. If the labor supply is large enough, then it will take an immense amount of growth to push up wages, right? The question is how much growth do we need to keep wages stable or rising, given the amount of the labor supply + legal + illegal immigration.

Anyone out there with stats?

Of course, much of the rhetoric about the minimum wage misses the mark. Since most people who are in minimum wage jobs are not the breadwinners in the family, and since many are teenagers, it’s not like many people are actually supporting their families on a minimum wage salary. As the National Center for Policy Analysis reports:

And I must also disagree with this assertion:

Actually, if you want your wages to rise, then improve your skills. I worked at minimum wage jobs before and during college. Guess what? My wages rose dramatically after I graduated. It’s foolish to rely on government to raise your wages. Go out there and get an education or better training. There are plenty of opportunities for this out there.

BTW, the “Federal Minimum Wage” is not absolute or universal. There are whole employee and eployment categories and workplaces that are exempt or subject to “subminimum”, and the individual states/territories may also have their own requirements and exemptions of minimum wage and benefits. Several pages on this.

And yes, it is a way of exerting a market-regulation function by limiting the “range of motion” of the labor market in a direction. However, IMO this is an entirely different animal from the “Living Wage Movement”, which I don’t think MW was created for that purpose.

What of the people that, due to the minimum wage have no job at all instead of a lower than minimum wage job? I don’t know how much it varies by state, but around here welfare pays somewhere around half minimum wage (this based on my friend who was a single mother with one child last year). When the price of labor is forced up to X amount, some of the people whose market wage would be between welfare level and X level will not be hired (or let go if it’s an instantaneous change) and end up on welfare, which would be lower than their wage would be on the free market. Also some of them would have their wages raised to meet the regulation, I’m not ignoring that. I’m just saying it has negative net effect for some.

If welfare and minimum wage were the same level (maybe they are some places, I don’t know) it wouldn’t have the negative effect on some, but there would be some serious problems with incentives.

I see the minimum wage law as helping one group of the poor at the expense of another group of the poor.

The right-wing / libertarian NCPA and the (what looks to be business-funded) Employment Policy Foundation both have an agenda and this can influence how they selectively tell you the facts. In this case, the most obvious problem I see with their analysis is that they are apparently focussing only on those people earning exactly the minimum wage. They don’t look at those earning, say, 25 or 50 cents or $1 more than the minimum wage. Thus, they are clearly going to be seeing the very newest workers in the workforce since nearly everyone gets raises eventually and this skews their figures. By providing a floor, the minimum wage tends to push up wages near the bottom, so that those earning 25 or 50 cents or a dollar more (perhaps even those earning a few dollars more) still are benefitting from that minimum being in place.

Ah, but does it push up the floor by raising everyones wages, or does it simply drop those below the new floor out of consideration? Perhaps some combination?

I’m not sure this is the problem you think it is. Minimum wage is not as universal as it would need to be for this to be such a huge problem. Many people just entering the workforce, for instance, do so only part time. They may not be subject to the same minimum wage restrictions as those working full time. What I’m saying, is that looking at the minimum wage in isolation is not necessarily looking at entry level workers and ignoring all others.

BTW, Renob can you link to where you found that information? I’d like to look at it.