Here’s NCPA’s page on the minimum wage:
http://www.ncpa.org/hotlines/min/profiles.html
Sorry for not putting it in my original post.
In order to make my point, I guess that I am going to have to admit to being one of those horrible employers that over a period of 26 years paid new unskilled employees 25 cents to a dollar over minimum wages. As I recall minimum wage was $2.25 when I began hiring. Over the years, minimum wage was increased 4 or 5 times and always with the same consequences. When minimum wages went up of course that meant that anyone making lower than the new minimum wage got a raise, but very soon those who had been making slightly more than minimum wage needed a raise. So far jshore is correct. However, then those making a more respectable wage wanted more and then the highest paying employees felt they were entitled to more. So guess what my costs went up. Increased productivity helped some as did smarter buying, but never enough. The same things were happening to my suppliers, so overall those costs rose. I had to raise our prices and my wife said that the price of living had risen and I gave myself a raise. At the end of this possess, it is my contention that the person who was making minimum wage or close to it was no better off than when the minimum wage was increased. It is also my contention that minimum wage played a big part (but not total part) in this inflationary process.
There was a variation to this. It occurred that last time minimum wage was increased. At the time I was hiring people at around $5.50 an hour. That is what the market demanded, since nobody would take a job for less. So there wasn’t an immediate jump and the whole process slowed down somewhat. However, 3-1/2 years ago, when I sold the company we were starting people at $6.50 and that was only because the recession was starting. I can easily imagine having to pay $7.50 an hour now.
My opinion of minimum wage is that it is a tool for politicians use and well-intentioned people to talk about, but which has very little if any benefit to those it is meant to help.
I tend to agree with Kniz’s view that the minimum wage is probably not that beneficial, and maybe even detrimental. I am not, however, opposed to that concept of a minimum wage that is set at the approximate price equilibrium (with variation among different areas) and is in place to prevent businesses from taking advanage of laborers. I’m not saying business are evil and out to rob laborers, but laborers will get the short straw in either a monopsony situation or if they are uninformed. The usefulness of such a minimum wage may be unlikely, but I doubt it would hurt.
Perfectly comfortable with this stance…as I think its the most ‘moral’. To my mind it benifits the greatest number of people by NOT having a minimum wage law (or certain other government interferences).
I love the way you appeal to emotion and question my ‘morality’ on this issue btw.
Oh please. What country are we talking about here? Only illegal immigrants are going to jump at an offer of $.25/hour for menial work in the US…and guess what rjung? Such people are ALREADY working for such wages and minimum wage laws don’t apply to them. If you are going to make an air headed appeal to emotion, at least be realistic about it.
Well, I must not be a ‘fundamentalist’ then, because I don’t completely reject the idea of a safety net. I reject the idea of an UNLIMITED safety net of course, and I think the program could be revamped and made more efficient…but I certainly think that its in societies best interest to provide a short term safety net for when things go bad (through simple bad luck or a down turn in the market).
I have a real problem with folks questioning my ‘morality’ on this subject when the evidence of nations that have put such controls on their economy (even including the US) seems to indicate that THEY are the ones who have done more to increase the average citizens misery and poverty…and to fuck up their own economies. All for the good of the people of course, and with the very best intentions, with pity in their hearts and stars in their eyes.
-XT
As mentioned above, it’s $5.15, so that’s $10,300 per year.
Can we just once cite something to support keeping minimum wages low without resorting to “non-partisan” organizations that are funded by Scaife and friends, who then quote research from other “non-partisan” organizations that are funded by one of the same “Friend’s of Scaife” (FoS)? Heck, you can get the data, without the distortion, from the Current Population Survey if you want to look for it. At least there you get all of the numbers, not just the ones that FoS want you to see.
Why is it that every time I see a group that goes way out of its way to describe itself as “honest”, “non-partisan”, “fair and balanced”, “spin-free”, etc., I can expect the exact opposite to be true?
The federal minimum wage is a bottom floor. States can increase the minimum wage above the federal level but not below it. California has a minimum wage of $6.75, Alaska has a $7.15 wage.
No, fiscal conservatives have the ability to provide an objective analysis of the pros and cons of a particular fiscal decision and then to proceed with the one that reaps the greatest overall benefit. There is such a thing as “unintended consequeces”. Just because you feel that it is the right and moral thing to set the minimum wage at some arbitrary level, that does not mean that you will receive the desire results - an overall higher standard of living. Just because “market forces” do not product the most desired outcome does not mean that you can simply ignore them and base economic policy and happy thoughts and wishfull thinking.
The generally accepted economic reason for not setting a minimum wage is that it eliminates jobs. Basic market theory tells us that if you raise the cost of a good or service (in this case a job), all of a sudden it becomes less desirable. Market theory also tells us that when you set a price floor (minimum wage law) you create a surplus of that good (unemployment). So in other words, rjungs friend who is so desperate that he would work for $0.25 an hour can’t find ANY work ANYWHERE. Quite the humanitarian.
So does this happen in real life? Depends on how elastic the demand for a particular job is. If those minimum wage workers are a critical part of my business and that business is in demand, I may be able to pass the extra cost to my customers (oh by the way - did I mention that when the costs of labor go up, the costs of goods in general also rise, which means the real purchasing power of that new raise is not as much as you thought). If it’s a service that I really don’t need, on the other hand, those workers might be SOL if I don’t want to pay them the higher minimum wage.
So, is it more “moral” to favor an economic policy that might give you a happy warm and fuzzy feeling but actually hurts the people it is trying to help or one that appears harsh and cruel (or at the very least amoral) but is actually makes everyone better off?
Not before, but that was my argument. In fact my argument was that over a period of time the new raise loses all of its purchasing power. Any true raise in purchasing power will come from increased productivity and other cost savings.
Thanks Kluge. I also tend to agree with the rest of your post, in the same manner that I believe unions are a necessary evil.
Well, that’s just the thing. If you want government to alleviate the ills of poverty, welfare, or a safety net, is a pretty efficient way to do that. Mandating a minimum wage is a blunt instrument that places an invisible tax on everyone while distorting the labor market. Help out the poor directly if that is your goal, but I don’t see the need for both welfare and the the MW to be in place. Middle class teenagers working at Tower Records or the local pizza joint shouldn’t be the beneficiaries of a government aid program.
We have minimum wage laws because the liberals have found that they are a good way to buy votes from the low end of the wage scale.
I’m wondering how much tinkering and off the books manipulation really occurs with “minimum wage” employees.
There’s a day labor service place near a bar I go to sometimes. I’ve heard it is common to pay “minimum” wage on the books and then a sum in cash at the completion of the job. This benefits the owner by enabling him to pay fewer taxes. It also helps reduce employees walking off the job.
The employees often agree to it as it will be added cash and will not further reduce any welfare/food stamps benefits they may be earning. It may also benefit the employee by allowing an Earned Income Tax Credit. However, since the employeer is “legal”, this type of employment arangement satisfies the requirements of parole/probation officers which many of their employees have to report to.
Are these arrangements common? Would this suggest that many adults who are making minimum wage may be in fact making above minimum?
A minimum wage is nothing more than “price fixing” by the government. It is anti-capitalistic, socialistic, and is a monkey wrench in supply-and-demand economics. As with any price fixing scheme, it does not accomplish what it was originally intended to do. A minimum wage has no place in a free society…
That doesn’t addresses the actual arguments relating to this subject, and is not the answer the OP was looking for.
Should I give examples of how conservatives “buy” votes? Let’s not play that game.
Well, there is always a claim that wage increases are inflationary but this does not mean that workers can’t make advances through wage increases. Also, there is the issue of distribution. I would contend that while it is true that the costs of higher wages must be borne somewhere, the result will likely be that a rise (within reason) of the minimum wage will have a net positive effect at the lower end of the wage scale even if it has small negative effects over the higher end…I.e., it will tend to lessen inequality somewhat.
JM: * Middle class teenagers working at Tower Records or the local pizza joint shouldn’t be the beneficiaries of a government aid program.*
Actually, the Fair Labor Standards Act exempts from the federal minimum wage “employees under 20 years old during their first 90 consecutive days of work”, which takes care of middle-class teens working summer jobs. There is an official “sub-minimum” wage for such workers, currently set at $4.25/hour.
That seems like a fair compromise to me: I think that there ought to be some kind of wage floor for all workers, but the one for temporarily employed teens certainly doesn’t have to be as high as that for adults trying to make a living.
In my post I mentioned that during my 26 years minimum wages were raised 4 to 5 times. Every time the raises made their way up thru the ranks (I’ll call it the creep up theory). Soon there were claims that it wasn’t possible to live on minimum wage. Of course, the opponents didn’t respond immediately or else there would have been more minimum wage increases. As mentioned before the last raise the market took care of the problem and effectively raised wages and minimum wage had to catch up. When it is raised (and it will be) it will again be a case of the minimum wage catching up with the market dictates. However, when it is raised the person in North Dakota making $7.50 an hour will say to himself “Hey, yesterday I was making $2.35 above MW and today I’m only making $1.25 above minimum wage. I’m being underpaid.” Then my “creep up theory” will start. It just won’t start as fast as if he was just being paid $6.00 an hour and minimum wage automatically gave him a raise. I will admit that after the last MW increase other factors caused me to keep my salary where it was, so in that manner some of what you refer to as inequality was lessened, but minimum wage really wasn’t directly responsible.
So what? How many people in developed countries want to repeal the minimum wage? I bet it is under 10%, and I bet that 99% of those 10% make more than enough to never have to worry about living on minimum wage.
Here for example
http://www.cfpa.org/issues/workcompensation/minwage/index.cfm
A 2001 poll for the Christian Science Monitor found that 75 percent of Americans support an increase in the minimum wage.6 That support is only increasing: a nationwide poll in 2002 found that 77 percent of likely voters support raising the minimum wage from $5.15 to $8 per hour, and 79 percent favor regular cost-of-living adjustments to the minimum wage.
If 75-79% support increasing the minimum wage you can assume 85-90% support the idea of a minimum wage itself.
And I personally would rather have 90% of poor people make $7/hr with mild unemployment problems than have all poor people making $4/hr with everyone employed. What would making $4/hr accomplish? A person really can’t live on that even with a variety of budgeting skills. I remember reading about a wal-mart opening and they said something like ‘we have 10-15 applicants for each job’. If there were no minimum wage they could offer $3/hr and still hire enough people. Luckily that’ll never happen though.
You know why we have a national minimum wage?
Because the Constitution says that the Federal gov. must promote the common welfare!
A common side effect of price floors and ceilings is “black markets”.
That doesn’t make sense. So it’s better for 10% to make nothing instead of everyone make $4 an hour? Why not have 60% make $60000 and 40% making 30 cents an hour? I’d bet that guy making nothing wouldn’t mind $4 an hour.
That’s why we have markets instead of one person dictating what they think is a fair wage for all.