Nope. If the MW is $5, and you make $8, but I can suddenly only afford to pay you $3, I’ll lay you off. No job for YOU!
Ah, but if we tie welfare benefits to being employed in the workforce, then there is a big advantage to work, even if you’re paid a pittance. And the reason I think it’s not “inhumane” to add that requirement is precisely because no one’s skills are worth less than $.01. BTW, this is EXACTLY the same motivation used by the recent welfare reform in certain states (you have to do community service to get welfare) that motivated people to choose work over welfare, when they could. For example, check out this article in the most recent NYT Sunday magazine:
I’m only suggesting we offer more work options to those who need welfare.
Actually that’s not correct either. If 20 employees make $8 and hour and all of a sudden I can only afford to pay 8 employees $8 an hour, 12 of you are losing your jobs. I’m not going to drop all your salaries to $3.20 an hour. I’m going to lay off whatever number of employees maximizes productivity vs cost so that I am within my budget. I won’t reduce their salaries to keep everyone employed because the market wage for their services is independent of my labor costs. If I reduce their salaries, anyone who can leave for a market wage job will leave, leaving me with only those employees who are too incompetant to work anywhere else. The same holds true if your are making $5 an hour or $300 an hour.
I still don’t understand what part of “if there were no minimum wage, the unemployment rate would go to zero” you think is valid. Changing the minimum wage would have no effect on layoffs for people who make more than minimum wage (which is most people). It’s not as if there were no minimum wage companies would just reduce people’s wages to almost nothing instead of laying them off. And it’s not as if an unemployed person who made $70000 a year will take $5 an hour unless they are truly desperate. (Typically the more you made before you were laid off, the more likely you have extra money stashed away to provide a cushion while you look for more work and the more likely you aer to have skills that will get you a poisition in that salary range). Companies lay off people when they amount they can afford to pay them falls below the MARKET wage OR when they simply do not need that position anymore.
Why not? If I can pay the 20 employees $3.20/hr (AND retain them), why wouldn’t I do this instead of laying off 12? I’d be more productive seemingly with 20 people than with 8, no?
The real problem would be…would you retain your workforce at such a reduced rate or would they go elsewhere? Maybe you determined that you could drop the rate to $5.00/hr instead and be able to retain 15 of the employees, with promises that when business picked back up their salaries would be restored. The point is, the market would be driving both your decisions and their’s.
Market conditions could very well drop the salaries your competitors are willing to pay also, so $3.20 per hour might BECOME the prevailing wage. But you don’t even need to create wild hypotheticals-- I know of companies here in Silicon Valley (big semiconductor companies) that chose across-the-board salary cuts instead of layoffs during difficult economic periods. Happens all the time.
For one thing, it would change the calculus for automation. Why do you think semiconductor back-end assembly is done in SE Asia? Because it’s more labor intensive than the front-end wafer fab processes. Companies like Intel and AMD don’t send their chips for assembly/test to Asia just for shits and giggles. If wages were lower in the US, most of those jobs would still be here. You can argue about he desirability of that, but it’s clearly true.
You might, for example, see the return of full service gas stations. If I can hire someone for peanuts, I might just do so if I think I can provide better service to my customers by doing so.
I suspect you’re stuck on the idea that you couldn’t actually hire someone for $1/hr in the US-- that no one would take such a job. If you HAD to have a job in order to get general assistance from the state, then you probably could. Same for $2/hr and $3/hr. You’d want to design the welfare system so that there is a strong incentive to move from the $1/hr job to the $8/hr job, but that should not be hard to do.
I’m getting that opening-a-whole-nother-can-of-worms feeling in the pit of my stomach bringing this up, is a 0% unemployment rate actually desirable? I am talking about the “tradeoff” between unemployment rates and inflation (low unemployment can mean high inflation). If we are talking about doing the most good for the most people, maybe ultra-low unemployment isn’t the absolute best way to go?
We’ve had relatively low inflation and low unemployment for quite some time. The key is keeping wages in check, or keeping productivity high (or both). I can’t see how adding a bunch of very low paying jobs to the economy would fuel inflation.
And how come we have laws against slavery? Clearly the free market dictates that if someone has the wherewithal to grab people off the street and force them and their descendants into obligatory labor, the rest of us benefit. And why the child labor ordinances? If a kid wants to work in a dangerous factory with no concept of the risks involved to earn a few extra bucks, why shouldn’t said kid be able to? What evil Stalinist would deny such a basic right?
Jeez, to listen to these evil liberals talk, you’d think the government had some sort of constitutional right to regulate trade. Or that the government functions as a bully pulpit for the many to counterbalance the tyranny of plutocratic minority. Some of them even suggest that the collusionary nature of the “free” market dictates that the most abysmal working conditions continually become the norm, and only regulatory pressures keep us from descending into a feudal nightmare that most of us good free market types get big googly eyes just thinking about.
Yes. And the only condition for maintaining those low wages would be a standard of living similar to SE Asia. Of course then wages would be cheaper somewhere else, but if we were reaaaally smart, we could lower our standard of living until everywhere on earth was a nightmarish hellscape that voided the reasons we came down from the trees to begin with. And of course, if everyone on earth enjoyed sufficiently low wages to accomodate a small increase in the profit margin for chips, nobody could actually buy them anymore. But… wait, it’ll come to me…
A large, wealthy middle class with the spending capacity to sustain a large industrial and service base is the keystone of capitalism. Without a middle class, without wealth distributed widely enough to actually buy the stuff people are making, you collapse into the Middle Ages. You cannot sustain public buying power by constantly pushing wages down to allow for minor price decreases, because labor is not the only (or often, the primary) driver for price. You wind up with a tiny leisure class buying small amounts of high end goods and a vast sustenance-level economy.
Here’s a few actual facts: there are currently a lot of people in this country who are receiving minimum wage. So a natural assumption is that there are a lot of employers who are willing to pay some of their workers as little as they are legally obligated to do.
Now what would happen if there was no such legal obligation? Would these employers for some reason continue to pay these employees this wage when their was no longer a necessity to do so?
If you say yes, please explain how the government managed to guess the exact amount, to the penny, of how little employers were willing to pay. And then explain why there are protests against the minimum wage if everyone would pay that amount voluntarily anyway.
If your answer is no, the employers would pay them more money, then please explain why they aren’t doing so already when there’s nothing stopping them. If paying higher wages makes their business run better, they are already doing so.
If your answer is no, the employers would pay them less, then congratulations you are now connected with the real world. Now the question is, how low would these wages go? I’ve already pointed out that there are millions of workers in countries with no minimum wage who are working for less than a dollar a day. Nobody has offered any realistic reason why similar wages would be impossible in this country.
So if there were no minimum wage laws there would be people in this country working for less than a dollar a day. Why would they work for that kind of money? Because their only alternative is not working at all and starving to death slowly is better than starving to death quickly. Arguments about Biff, Tiffany, and MD’s are spurious; none of these people need to work minimum wage jobs now and none of them would need to work lower paying jobs either. But there are people who need to work these jobs. And I don’t think they should be forced to become third world peasants.
Yes. More precisely, some would, and some would not.
They did not guess. It was a natural coincidence. Think about it this way. If the minimum wage were $30,000 employers would simply not hire the workers we are talking about. Or perhaps they would do so illegally. The point is that the government did not discover or guess some magic number. They created a number out of whole cloth and it now to coincides with people working in jobs which are worth somewhere near that wage.
Because not all jobs are the same. Some of the jobs now recieving minimum wage are really worth less, and those would go down. Other jobs which do not now exist are also worth less than minimum wage and would be created.
They would be possible in this country. Care to explain why 0 is better? Or are you contending that a job which is only worth $1 a day can still support a worker at $5.15 an hour? Who is connected to the real world again?
Of course. But you and I differ on how to accomplish this. You think that forcing employers not to hire them is the best solution. I think allowing employers to hire them is a better one.
No. The freedom for indivuduals to own and use property is the keystone of capitalism. A large wealthy middle class is simply a side effect of the fact that capitalism has created so much wealth in the last couple hundred years.
That’s the law of supply and demand. For the demand side, the higher the price (wages), the lower the quantity demanded of the good (the good is labor service). For the supply side, the higher the price, the greater the quantity supplied. Market forces (i.e. competitive overbidding and undercutting) push the price to the point at which there is the same number supplied as demanded (the price at this point is known as the equilibrium point). A minimum wage which is above the equilibrium price keeps market forces from driving the price down to equilibrium. In this case, we will have a surplus, as the quantity demanded is less than the quantity supplied. If the price is pushed even higher, even fewer jobs are going to be supplied to those who want them, so the higher the minimum wage, the higher the unemployment, if the minimum wage is above the equilibrium price in the first place. Now, it seems to be the case that the minimum wage is below the equilibrium price and as such, isn’t making that much of a difference. In which case, I’m happy, so long as there is local variation to account for local differences in the equilibrium price. That isn’t the case, though…
As for what John Mace had to say, he only pointed out the flaw in this:
The flaw is, I never said that the relationship is “linear” (is that even a linear relationship John? I’m pretty sure inverse relationships such as the example he gave are not straight lines, though my math is rusty so I could be wrong.), I only said there was a relationship. You, however, seem to think that a relationship means that if x is halved, y is doubled. In real life, however, if x is doubled, y may be decreased to a quarter. You are oversimplifing the function, and that’s all John Mace was pointing out. Of course, if you already knew that and I have merely misunderstood your meaning, then nevermind.
That isn’t an argument, that’s just rhetoric. No one denies that basic human rights should be protected. MW isn’t a basic human right. And besides, it’s better to be making less than MW than being unemployed, or do you disagree?
Please, everyone else is participating in rational debate. Care to join us?
Ugh, for some reason, I feel like I’m sticking out my ass to be paddled.
Yes, actually you are arguing against basic human rights. The free market position is that moral considerations have no weight in an economic discussion. What you are now embracing is a much derided concept called “socialism,” the idea that regulatory power should be used to promote public values in the economic sector. Provide a free market economic justification for outlawing slavery, or start thinking up a new strawman to hide behind.
I’d say it’s better to have a regulation-ensured safety net you can’t fall through. A minimum wage is part of that. Welfare is another part. Despite the gibberish getting tossed around here, the balance between the two is just shuffling numbers between overhead accounts, or at least it would be if we didn’t keep finding excuses to cut holes in the net in the name of the free market. Slice away unemployment here, pare down overtime there, limit the terms of benefits there, and presto! The rich can now afford an extra SUV, and all it cost was letting a few more people live in cardboard boxes and a few more kids that barely know their parents.
Why are you ignoring the other half of my proposition? I am simply saying that if your goal is to fight poverty, there is a better way to do it (ie, direct cash assistance) than the MW. I’m not saying eliminate the MW and eliminate the social safety net, which is what you are implying.
Where do you think the money comes from to pay people making the MW if the market price for their labor is less than the MW? It’s simply a tax, and an ineficient one, on everyone who buys products from that labor. If it weren’t, you could just mandate the MW to be $100/hr and everyone would live like kings.
I think I’ve said everything I have to say on this subject in this thread. If anyone has any direct questions, I’ll be glad to answer them, but I’m done with replying to strawman arguments and “appeals to emotion”.
Note that there is said nothing about moral issues being ignored. People who advocate the free market do so because they think it will be better for everyone, and yet even the most rabid deregulationist won’t advocate slavery, since everyone knows there shouuld be limits to markets. Deregulationists simply have different views on what those limits should be. Obviously, there will exist restrictions to satisfy the moral issues.
And FYI, I’m not advocating free market, though it may seem like it. I’m a fiscal moderate, and I used to be a fiscal liberal. I am simply and in agreement with the deregulationists on this issue, because it doesn’t make sense to have a minimum wage when it causes unemployment.
Your free market fears aside, I again pose this question to you: is it better to have lower wages or be umemployed? What type of safety net causes unemployment?
Certainly. Provide a definition of the word free which includes the concept of slavery and we’ll talk.
The problem, of course, is that you don’t back up this opinion with any sort of analysis of the points brought by others, any sort of evidence of any kind, nor even a basic understanding of the things you are railing against. That’s fair enough as far as it goes. But it is hardly the way to fight ignorance.
Surely this is trivial. A free market dictates that people and businesses should be able to trade what is theirs to trade, free of regulation. A man’s labour is perhaps his most fundamental tradable asset, thus use of another man’s forced labour is outright theft. Clearly theft is anathema to the free market, as how can any market exist if people are allowed to simply steal what they need?
Excepting of course the bit about the lack of regulation which denies any role to non-economic considerations. But aside from thus completely denying the ability to enforce moral values, yes. So aside from being totally wrong, you’re certainly right.
Piffle. People advocate a free market because they think they’ll be the fastest to steal everything that isn’t nailed down. Free marketeers don’t advocate slavery because they know it’ll get them laughed off their soapbox. Instead, they try as hard as possible to isolate issues so that they don’t have to attack the entire idea of modern civilization at a go.
In that case, I renew my argument that this is mere sophistry. The economy is a system. You don’t grow or shrink it by shuffling money around inside. All government assurance of a minimum standard of living IS a minimum wage. If you don’t directly create a direct minimum wage that constitutes a tax on business, you have to tax business (or the people who ultimately take home its money) to give the money away in government benefits. There is no solution that involves magic-ing together a social safety net at no cost. The money is going to come from somewhere.
False dichotomy. The safety net includes both. Raising taxes for government benefits eliminates funding that could go to jobs as well. There is no magic solution that protects people at the bottom for free. You might as well ask how I’m going to do it without taxes, I’m not. You do lose some jobs in the process of creating a social safety net, but you ensure the livelihoods of a larger number of people. And the people who lose out are the people most likely to need those protections at some point as well. The people on the bottom (as always) get stuck with the short straw, but they get something back that makes the risk worth the reward.
It makes perfect sense. Most people in the developed world, myself included, support a minimum wage. THe reason is so a person is guaranteed an ability to clothe and feed himself if s/he is willing to work a full work week. And I would rather have the majority of poor people making a living wage than all poor people not making a living wage. Then again alot of places pay higher than the minimum wage.
