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How To Properly Think About The Minimum Wage Problem
Submitted by Pater Tenebrarum via Acting-Man blog,
Recently debates over minimum wage laws have flared up again. The starting point was president Obama's State of the Union speech, in which he announced that he would push through a higher minimum wage (among other things) regardless of the objections anyone in e.g. Congress might have.
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There can actually not be any controversy over the basic economic laws involved, and yet the debate continues to be revived again and again. The promoters of labor market intervention are certainly not above employing “outrageous political statements dressed up as economic theory” as Caroline Baum has pointed out. As an aside, Ms. Baum cites a number of empirical economic studies in her article that thoroughly debunk the idea that wages are magically exempt from the law of supply and demand, but as a matter of fact, no such studies are required to explain the economic effects of instituting minimum wages.
Institutional unemployment will be the inevitable result, and all that is needed to prove this is economic logic. There is no quantum theory of employment according to which cause and effect are only tentatively ascertainable. No empirical testing of a 'minimum wage hypothesis' is necessary to establish what the effects of the policy will be.
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How to Properly Think About the Problem
Minimum wage laws invariably create institutional unemployment, hit the lowest skilled workers (and hence the poorest members of society) the hardest and infringe on people's freedom to enter into contracts. After all, a low-skilled or unskilled worker who wants to work for less than the minimum wage is no longer allowed to offer his services at a price the market will bear.
There is a very simple and effective way of demonstrating that the pro minimum wage arguments are flawed. Consider the president's proposal from the SotU speech:
“Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour.”
One thing we were immediately wondering about was why no-one stopped to ask: “Why only nine dollars per hour? Why not ten? Or eleven? Wouldn't that be even better?”
It would be a very good question and we'd be extremely curious to hear the answer. Indeed, for those earning the minimum wage, $9 must surely sound like a better deal than $7.50. But $10 would sound even better and $11 even more so. So why does the president not want to impose a raise to $10 or $11?
Obviously, the only thing that can possibly stand in the way of an even bigger increase in the minimum wage is some vague recognition, even if it only exists on a subconscious level (or is not admitted to), that economic laws do indeed exist. The 'good deal' would turn into a very bad deal if people were to begin losing their jobs left and right because keeping them employed had become uneconomic.
In fact, it is easy to test the limits of the belief in the efficacy of minimum wage laws to raise the standard of living by proposing some obviously absurd number. After all, if $9 is better than $7.50, $10 is better than $9, and $11 better than $10, then why not go all the way and raise the minimum wage to $100 or $1,000? Surely almost everyone would regard such a proposal as absurd – at which point it would undoubtedly be highly illuminating to hear the supporters of minimum wage laws explain why exactly it would be absurd.
Lastly, often pro-labor type legislation of this sort is actually a bit of a political trick, designed to pull the wool over voters' eyes (mind, we have not done any calculations or considered any studies on the $9 demand specifically). Since it is not possible for governments to wave a magic wand that suspends economic laws, one will often find that the height of a proposed new minimum wage is in the vicinity of what is already paid in the marketplace for low-skilled labor, due to a combination of inflation effects and rising productivity as a result of capital accumulation. After all, businesses cannot simply offer any arbitrary price for labor, contrary to what many leftists seem to think. Labor remains a scarce resource for which businesses must compete.
So while it is certainly not possible to pay absurdly high prices for unskilled or low-skilled labor, it is also not possible to offer absurdly low wages, as one's offers must be competitive.
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How can workers compete with each other to lower the cost of their labor if we set a minimum?
Why should they lowbrow.
I asked how they "could," not whether they "should."
/seriously
Can we just make the minimum wage $50/hour and get this fucking over with.
If so, massive layoffs will occur! DUH!
The next step will be be Barry putting prices on everything we buy to support the minimum wage. McDonalds $1 menu will now become the $3 menu. Whoppers will cost $10 bucks. A gallon of milk will be $9. All this douchebag is doing is pandering to a group of individuals to buy their votes....meanwhile he's fucking evryone else, but, 90% of everyone else is too fucking stupid to understand. I hate to say it but the stupid people of this country who let it get this far (people like Boehner) and those who voted for them deserve the piece of shit who calls himself president. Put your head in the sand and vote for Pelosi and Reid...you might get a phone but our kids will get fucked.
http://media.tumblr.com/tumblr_m6ptdo7X3J1qcwic6.gif
So while it is certainly not possible to pay absurdly high prices for unskilled or low-skilled labor, it is also not possible to offer absurdly low wages, as one's offers must be competitive.
Competitive? Lol
http://www.bloomberg.com/news/2011-12-28/minimum-wage-in-u-s-fails-to-be...
http://monthlyreview.org/wp-content/uploads/2013/02/2013-03_rom-chart-4.jpg
Ultimately what these paid-per-article dumbasses are flimsily arguing for is no minimum wage. Show of hands who thinks that will have a positive impact on labour compensation in the US?
The larger question, why is zh pushing so many inane arguments against the minimum wage? Tyler on the national restaurant association dole?
You gotta blame somebody - better than blaming the top 20%ers. For the top 20%ers, anyway.
If only slavery were legalized again. Did St. Ayn ever comment on the possibility of voluntary slavery?
You clearly are not aware of the practice of Internships...
Have you seen this?
It's for rich liberal greens to send their kids to so as to assuage their guilt...
The 21st century version of the Kibbutz...
I figured it was a way to get free labor.
My son said he wanted to go do it in Ireland. I said "no."
Mebbe he heard of all those red-headed, green-eyed, comely Irish lasses...
THE minimum wage is and always has been ZERO!
REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE REAL ESTATE
Naaaah, real estate prices can go as high as they like and it won't affect the economy at all. You don't even have to worry about repayments. Just borrow as much money as the banks give you and bid up the price of real estate, and if you can't afford repayments then just borrow more money against the new inflated value of your real estate. As long as the banks decide how much you can borrow it's all good because it is a free market! You can still compete with Chinese wages even if real estate prices are sky high - you just borrow more money and use the increased value of your real estate ...
... and don't forget to ask your local politician about tax exemptions! ...
I'm o.k. with the removal of a minimum wage if there is true labor price transparency. I think said transparency would un-fuck a lot of issues with compensation, including the absurd ratios of executive to avg. worker pay.
Minimum wage jobs were never intended to support a 5 person family. ...if we nkw think it's supposed to then it's all fucked up and so is the US
It would be a start if you could only sell crap in the economy in which it was made. You want two dollar per day workers? You get two dollar per day customers.
Thus proving that minimum wage law(s) are counter-productive, Q.E.D!
He didn't recognize " that economic laws do indeed exist." with obamacare, or bailout/QE/Twist.
Unnecessary.
raising the minimum wage is covert inflation
OVERT
fixed it for ya
Next up, Nixonian price controls and Gerald Ford's Whip inflation Now buttons so we can WIN!
maskone it's inflation for sure, but it's not covert
It is NOT inflation when the workers lose hours and total wages earned remains constant. Forward soviet! Destroying one country at a time.
How does increasing the minimum wage increase the total amount of existing currency?
The problem is, that since we have a system that mandates inflation, there must be a minimum wage with increases.
If we had money that held relatively stable value over time, there would be no need to pay people more each year to keep up with dilution of the money supply.
Isn't Obama raising the pay for government workers / contractors, so supply and demand do not really exist for them anyways? Or is it for all employees?
As for why $9, instead of $11 or $50, there are a couple answers. First, if I drop two cups on the ground, and one lands on cement and shatters, while the other lands on carpet and remains intact. Too much of a rate of change breaks the glass. Also, economists have calculated that the optimum minimum wage is half of median wage.
There are several solutions for workers who are not capable of producing equal to their wage. Where I live, there is a discounted minimum wage for the first, something like 1000 hours worked to get youth employed. Unpaid internships also exist, along with trades programs, wage subsidies, etc.
According to Austrian theory, due to productivity enhancements, the trend for prices is supposed to be down by ~5% per year. That would automatically take care of the needs of low wage workers (that is how much the Fed, the banking system, the credit markets and the 'must have inflation' media propagandists have stolen from us each year)
MTM doesn't define inflation as an increase in the money supply.
"Also, economists have calculated that the optimum minimum wage is half of median wage."
Now that's funny! Which economists?
your question is flawed in an attempt to frame the conversation outside of the topic at hand, which is the effectiveness of price controls on labor... try again
It's the velocity of money that changes the most. More important than the quantity in the short run.
Wouldn't raising wages, and thus the price of goods and services, lead to lower velocity instead of higher?
What price increase is needed to cover the minimum wage increase?
http://abcnews.go.com/blogs/business/2013/07/price-of-big-mac-could-rise-by-68-cents-if-minimum-wage-doubles/
http://www.businessinsider.com.au/peter-schiff-walmart-protest-2013-12
Oh, geeeeee, Fuck! Fuck! Fuck! A doubling of the minimum wage might lead to prices increases of as much as 17% !!! And no way could those on higher wages ever negotiate any kind of pay rise to cover that 17% because, you know, given that they earn more than the minimum wage means they have absolutely no bargaining power! And no way do CEO salaries ever negatively affect the economy as they are always paid for via higher production. And no way did the quadrupling of real estate prices ever negatively affect the economy because you could always borrow all that money back again - right? Right?
Raise the minimum wage, you become less competitive with foreigners who don't raise minimum wages. So you lose jobs. If there are any left to lose. But in a closed economy, you get more customers. At the very least, you dilute debt - everyone makes the same repayments but with higher wages / prices so both consumers and producers are better off. (Banks, not so much - so watch those interest rates.) Given the massive amount of debt in the economy today, it has to be paid for somehow. Either debt is forgiven and real estate prices need to go down, or wages / prices ( don't forget overpriced commercial real estate also has to be paid for ) have to go up. Which to you think The-Powers-That-Be will choose??? So who is really pushing for minimum wage rises???
Raising the minimum wage pushes small business owners out of the way for the globalist companies. There's a reason Wal-Mart is once again donating to Shillary and it's not just food stamps or the 1% cut in food stamps over ten years.
The Farm Bill vs. Americasnip
"This Farm Bill is a monument to every dysfunction Washington indulges to bend our politics and twist our economy to benefit itself at the expense of the American people.
The topline talking point among defenders of this bill is the word “compromise.” “The Farm Bill,” we are told, “may be imperfect, but it’s a compromise we can all live with.”
They said, “Negotiators from both houses and both parties came together and hammered out a deal.”
They said, “This is how you get things done in Washington.”
There is some truth in this. But it’s more of a half truth. There absolutely is compromise in this thousand-page, trillion-dollar mess. But it’s not a compromise between House Republicans and Senate Democrats.
No, it’s collusion between both parties against the American people, it benefits the special interests at the expense of the national interest."
Raise the minimum wage and jobs go overseas to where the wages are not raised. Apart from that, the rise in the minimum wage would create customers, not decrease jobs. See my comment, 4430385, above. Yes, in order to make a minimum wage rise work properly, you will need tariffs. Don't like tariffs? Fine, then try selling your stuff to Chinese workers on Chinese wages because, in order to compete, that is where US wages will be heading, except that you will still have ( for some strange, crazy reason ) US real estate prices biting into your customers' US disposeable income.
How do you corrupt capitalism? What is the easiest way to corrupt capitalism? You lend money to "idiots". Idiots never think of their ability to repay. Idiots borrow more money to repay old debts. Idiots bid the prices of things way above anyone's ability to repay. So sensible people can work as hard as they like and save as much as they like but they will never be able to compete with an idiot and his complicit banker. But that's okay because a banker would never lend out more than what a borrower is able to repay because then in five or ten years time, after all the competing banks have either gone broke or done the same, they will go bankrupt and never get bailed out and never get any more bonuses because Too-Big-To-Fail doesn't exist! (Notice the subtle sarcasm gradually infesting my work? )
Remember that minimum wage workers get paid the minimum because they have no bargaining power. That is why any successful push to increase the minimum wage will come from someone else. Why? As I explained above, the price of real estate got way above everyone's ability to repay - be it the worker with the mortgage, the factory owner with over-priced land, the retailer with over-priced mortgage or rent etc. Either wages have to go up, or debts have to be forgiven and mortgages have to come down ... or we can keep bailing out the "Too-Big-And-Corrupt-And-Well-Connected-To-Fail" indefinitely ... or until they realize that they need one or two small producers to stay alive in order to produce real goods because money without production is not wealth.
Where do the rich "bury" their wealth? Real estate. Do they want the price of real estate to go up? Or down? What keeps the price of real estate high? The greater fool has to have money. Prices have to pay for rents. Wages have to pay for prices. Or you can just bail out the top end of town with QEInfinity and let everyone else fight over the "right" to take on more debt.
The conversation didn't start with Obama's speech. It started when minimum wage workers started striking and protesting about a year ago.
you mean it started when lobbyists paid unemployed individuals to waive signs and look angry. if the MSM is covering it on every channel, then you know it reaks of propaganda.
An extra $1.50 for 115.77 mil. full time employees generates roughly an addition a $1 tril. in tax revenue at a nominal 30% rate. This means the U.S. could spind another $7.5 tril per annum and cover the interest only payment.
Its hard to tell if you're being sarcastic or not. But in the event that you are not......
President Obama gives minimum-wage-earning Federal employees (and physically and mentally handicapped workers) a 39% pay hike to $10.10
State employees do not pay income tax. They receive a salary slip which looks the same as any other salary slip - Gross at the top, deductions in the middle and net at the bottom. However, no gross was ever paid. No deductions were ever taken. The state employee simply received the net (or only) value with a salary slip that said the gross existed. The gross never existed. Not anywhere on the planet. Therefore there are no tax revenues generated by a state employee. Now, all of the rest of your contentions built on that house of cards lie in tatters.
Rex, consider the argument from a different Paradigm:
What if 'you' (i.e. your Biz Model) simply accepted "whatever wages" as a hard Given, and accepted Min. Wages as "The cost of doing business" -- The same way their biz models already accept all kinds of costs as "Given".
Consider also that the objective in business is not "min wages" but "max profits". Decent wages and huge profits are not mutually exclusive, given all the millionaires and billionaires, whose employees make WAY more than minimum wage. E.g. Bill Gates, Lloyd 'Bankfine', etc, etc.
Would spending habits change? Of course, but... so what!? We all bitch & moan here on ZH that we buy way too much crap (from China) anyway. Perhaps "Having less is more", and we'd be forced to focus on the "Quality of the stuff we need", rather than on the "Quantity of crap we want".
p.s. Consider also the (positive) effects on Unemployment if we had decent/livable wages in this country. All of a sudden you'd have Americans doing the jobs that Illegals currently do. Something to think about. :-)
Balance the budget mother fuckers!
Not while the republican party still exists.
There is your problem right there. You believe there is a difference. Get your head out of your ass.
There is no difference between the parties. They are both rotten to the core.
So why do you imply that with a single party system, they would suddenly balance the budget?
Don't bother to point out the obvious discrepancy in their statement. Another pretender has exposed themselves as a liar.
The problem rather is that a one-party system disguised as a two-party system won't change things. Just as the Whigs had to die so the Republicans could replace it, the Republicans will have to die out so that a party that can stand for something other than the status quo can emerge. That Democrats will continue to be Democrats is a given.
living in a fiat world of debt based currencies creates all sorts of distortions... having to periodically raise a so called minimum wage for the serfs is just one them.
Pay me in gold and I care not of a minimum wage.
Sh*t Id take payment in whiskey and gin. Or tobacco, or bullets, or anything other than paper.
OK. Come work for me. I will pay you 1 oz gold for a year of work. You don't care how much you get paid as long as you receive payments in gold, right?
+1. Yup, the true & just wages are exacted one way or another, sooner or later. Whether legally or illegally, via subsidies or crime... but 'paid' they are by the society as a whole.
I'll digress here, but it all ties in to wages and currency...
And all wages (reward for labor) must rest on real assets or other labor (done or promised). If a currency is is based on such timeless basics, an economy can be build on something real, rather than on fraud and usury.
You don't have to base your money on "Dilithium Crystals" (energy source) or on "Latinum" (PM in a scifi future) -- to use my scifi metaphor -- but it highlights that an ENDURING currency must be based on things that are truly Precious and Universal to all people: Precious Energies and Precious Materials.
While Gold is a good standard, it need not be the ONLY precious entity. Adding Platinum and Silver to the Currency Basket would do nicely, as it provides more flexibility to more countries and probably mitigates Arbitrage distortions.
In 1971 we've switched from Gold (PM) to Oil (Precious Energy), and morphed the Fed into a Fiat Money Cartel by pairing it to the Oil Cartel OPEC. There is NO conceptual or fundamental reason why the world (an economic region or super-power) could not base their national or regional currency on both Precious Energy plus Precious Metals. The more you have of one, the less you need of the other. And having a healthy mix of both, offers flexibility in settling national trade balances. IMHO.
What if you are Japan and have neither energy nor resources?
Min. wage is just another .gov idea that we never should have created in the first place. Oh well.
There's another way to look at this: Back when I was an employee, a dept. foreman and I took turns interviewing a prospect.
Afterwards, we got together to compare notes. The foreman said he wanted to hire the guy. I said I agreed but thought he was expecting too high a starting rate. I'll never forget his response- "Well, you might as well give him what he wants. Otherwise, he'll just steal the difference."
Shallow dogshit article.
Agree. Reads like something from Wikipedia.
"mind, we have not done any calculations or considered any studies on the $9 demand specifically"
Well shit if you are going to write an article about $9 minimum wage and claim to know how people should think about it, why don't you go ahead and do your homework first then?
Some far better ZH articles on the subject:
http://www.zerohedge.com/news/2013-02-16/milton-friedman-unholy-coalitio...
http://www.zerohedge.com/news/2013-08-30/guest-post-minimum-wage-myth-wo...
http://www.zerohedge.com/news/2014-01-30/minimum-wage-mendacity
Thanks for the link. I found some cool details within. Here's one from the last article (again, going back to source):
Some "cause and effect" examples would have been nice.
More pay per worker = less payroll available for workers = less workers.
More pay per worker = higher cost of product = less products sold = less payroll available for workers = less workers.
At least obama figured out people will be better off with obamacare. Having healthcare without that pesky showing up at work inconvenience.
Anyone who discusses minimum wage or changes thereof citing only economic theory is a complete moron. The U.S. has had a federal minimum wage continuously since 1938, which has been raised over 20 times. Back up the theory with some facts showing the big increase in unemployment following each increase in minimum wage over the past 75 years, or shut your ignorant piehole.
Minimum wages are always raised during economic expansions, so their deleterious effect on employment is obscured.
In the next recession, unemployment then goes higher than it otherwise would have.
'Back up your theory with some facts showing that the earth revolves around the sun, or shut your ignorant piehole,' the pope demanded of Galileo.
Agreed.
People seem to believe that the only way to offset the increased cost of labor is to reduce the size of the labor force. That's an ideological stance, and it is nonsense.
There are at least four other ways to offset the increased cost of labor. First, you can decrease input costs elsewhere, e.g., by demanding better pricing from your supply chain. Second, you can pass the increased cost along to your customers. Third, you can accept less profit (hint: there is no entitlement to earn x amount of profit). Finally, you can mix and match these three approaches.
Let's use AOL as an example of how increased cost can be addressed . The benefits cut they were discussing would have saved $7.1 million a year. Based on their 2013 Costs of Goods Sold (COGS), demaning an overall price reduction of just 0.5% would net $7.1 million in savings. Such a hardship. Alterantively, using AOL's 2013 revenues, increasing prices by a measly 0.3% would increase revenues by $7.1 million. I know, mega-inflation, right? Finally, if we look at analyst consensus on EPS for 2014 (and assuming they would make the consensus if they did not eat the new expense), eating the $7.1M in additional expense would without doing anything else would have AOL clock in at $2.20 in EPS instead of the consensus $2.29, well within the range (the low estimate is $1.82) and still a year-over-year improvement from the $2.08 EPS in 2013.
Of course, the AOL example does not address the magnitude of a big increase in the minimum wage, but the approach would be the same. A quick calculation shows, for example, that increasing McDonald's SG&A expense by 40% across the board (which would not be the case because this is not all labor expense, and not all labor is at the minimum wage there) would drop McDonald's EPS by about a buck to $4.52, assuming they just ate the increased expense.
All that being said, the minimum wage discussion is a distraction from the larger issue, which is a shortfall in the number of good jobs available in the U.S.
"All that being said, the minimum wage discussion is a distraction from the larger issue, which is a shortfall in the number of good jobs available in the U.S."
Bam. Off-shoring, etc..
Just means the welfare dole is going to be raised too....less jobs..more freebies...really what do we do when 70% of the people are on the government dole....who is going to want a dollar then...who is going to want to live here...????
More pernicious is the employer healthcare mandate. No sane person designing a helathcare system from scratch would include this yet even the mighty and wise Obama has kept this requirement sewn into the system.
Pretend it is the debt ceiling and really jack that bastard up there! You can do it!
To me the main thing to consider from an employer's perspective is "Am I getting my money's worth from this worker? And if not, how can I get my money's worth?" The higher the minimum wage goes, the easier the decision is to replace the worker with some type of automated system.
I always said. If government can stimulate by spending, without causing inflation, then why not send every American a million dollars?
The $100 minimum wage is a similar proposition. If it doens't hurt to raise it by two dollars, then why not raise it by two hundred?
They can't answer, of course.
The root of inequality is not wages, but fiat.
Economic Law? That's almost as bad as Military Intelligence.
As soon as these Newtonian econobloggers figure out that we live in a grossly manipulated fiat economy, maybe they will stop it with their Economic Laws.
The minimum wage argument has been around as long as I can remember and it will never be resolved. I'm more concerned with this statement:
The starting point was president Obama's State of the Union speech, in which he announced that he would push through a higher minimum wage (among other things) regardless of the objections anyone in e.g. Congress might have.
The fact that our system of checks and balances combined with the reality that congress cedes more power to each new administration should be a concern for everybody.
There's a point where all of this becomes absurd. I'm no longer worried about it. This fucker is going down. Hide your daughters.
I pity the foo that does anything my Daughter doesn't like; her Katana is razor sharp, and a third-degree black belt in Tae Kwon Do guarantees some guy is gonna have some broken bonez!
I constantly have to debate this shit all the time with a few of my statist buddies that say wages have stagnated and thus we need to hike minimum wage.
I point out to them that it's not higher wages workers should be demanding, but higher purchasing power with their wages. Fast food workers today would be pretty wealthy if their wages had the same purchasing power as they did back in 1913.
In order to get people to stop having eight children and hoarding shiny rocks, they made pensions.
In order to keep pensions going, they mandated inflation.
The inflation tax, aka dilution of the currency, is used to avoid eugenics, mass poverty for the old, or going back to having lots of children and fighting over shiny rocks. It probably won't work, though.
BS on this article. The guy talks about "economic laws" as if they were some sort of immutable laws of physics; disregarding that economy is a soft science more akin to psychology. Second, he never explains the mechanism by which minimum wage creates unemployment. And most probable, if he were to post data on this, it would falsify his hypothesis.
Immutable economic laws like QE, TARP...that and the efficient market hypothesis. All comedy routines now.
pulled up the sourcewatch on the references in the original article. Care to guess which foundation and who funded it? Let's just say it's just tad bit partisan.
Suggest you read "Economics in one Lesson," by H. Hazlitt, ISBN: 978-0-517-54823-3
Price floors create surpluses.
Price ceilings create shortages.
Goverment intervention creates walls.
Freedom creates a tunnel
Why don't you break on through to the other side and leave the heavy lifting to those that are capable....
Why doesn't anyone talk about what must be one of the most powerful reasons why .gov wants a higher minimum wage? An army of folks making $7.25 suddenly get 10? The only one who benefits is .gov with higher tax collections, whether it be income or one of the many payroll taxes.
True that...but let's go one better.
You know how much your EBT card goes down as you get over $10/hr? Maybe the govt is just sick of subsidizing Walmart workers.
Click happy.
Minimum wage laws just outlaw the employment of workers who are very unproductive at the market value of their services, thereby violating both the rights of employers and those workers.
Simple as that.
So, you're saying that one of those American pop-singers is "more productive" than the a whole bunch of Chinese combined?
You're confusing actual production and value there. And that value is very relative :)
Minimum wage laws just outlaw the sweatshops and forced wage slaving of workers who are very unproductive at the storming of the Bastille, thereby keeping the .01% happily violating the rights of man. Anyone see the Committee for Public Saftey yet?
Simple as that.
I like Australia's minimum wage. $16.88 per hour. What's wrong with that? Sure, the Big Mac's cost $14.00 more. Wait, what? They only cost 40 cents more? Get out of here...
The author is not "thinking"; he's picked an outcome and worked towards it.
Why seven dollars? Why not five? Why not 50ct? Come work for us because it is a valuable work-experience (means no pay at all).
There's a minimum wage because we're not resources nor products. It's not the planets' goal to become the perfect capitalist system - the ball o' mud does not exist to adhere to a theoretical dream.
It's also very easy to tell the difference between resources and humans; a piece of wood will not revolt, because it will not be hungry.
this is a bullshit article !
the arguement proffered in a labor market that is in long term surplus - at the bottom quintile - with ever increasing supply with individuals with no bargaining power means it is a race to the bottom without any support in the authors world.
the same logic could be used to outlaw unions - the fact is higher wage rates "created" by unions by bargaining "collectively" creates the leverage for disporpotionate economics of the pure value of the labor whatever the applied use.
The government in the use of minimum wage is essentially providing the service that a "union" would provide - nothing more than that is going on.
the advocacy on the part of government for labor is a recognition of the exploitation of business for that resource absent government - the same is true for child labor laws, environmental laws, OSHA, mine safety act, etc. - creates bargaining power
the author cannot explain why minimum wages have been there for 50 years plus in many states higher than the federal levels and employment wasnt effected.
ex: Manhattan: subway $2.50 each way for an eight hour day translates into a $.625 amortized cost per hour after tax on the $7.25 federal minimum or 8.6% cost for starters - after tax (FICA etc) at least 10.1% cost to the worker - how do these people live?
the author is a shill for the Koch Bros. - think tanks are all about - tell me where you want to go and ill focus on the selective facts and subjective logic to bring it safely home
Labor is in surplus due to barriers to labor and capital flows.
The long term solution is to reduce barriers and improve economic efficience and labor demand.
The bottom 5th of the population can be given income support that doesn't create barriers to unemployment. Using minimum wage laws to redistribute income harms economic efficiency. There are better ways.
Labour is in surplus because we can produce more shit faster than we can afford to buy it....
The fact that we cannot increase global oil supply ain't helping either...
Workers must be allowed to work for starvation wages, it's the only way they're going to survive!
Was that the point you were trying to make?
The UK has adult minimum wage of £6.31/hour yet I have seen on a consumer forum where a person in fact got less than £1/hour because the employer conveniently did not pay for travel between jobs!
As for Zero hour contracts, where a person goes to work then has to go home again because the employer says they have no work that day. It still costs to get there and back!
If people have to have food stamps to be able to live on the puny wages Walmart gives employees, that is in effect a subsidy by the government to Walmart in order to maximise its profits and pay its bosses huge bonuses!
You know what got Jimmy Hoffa and the strawberry boys going? Kroger had them clock in for 12 to 16 hours a day and only paid them for the four hours that they unloaded the trucks. So when 19 yr old Jimmy saw the truck come in with the Very Very pricey strawberrys...well, maybe they didn't get unloaded that day.
As a worker, I will believe that cutting my wages makes me RICH!
And the WhiteHouse can't figure out why outsourcing work to other countries is such a difficult problem to conquer...HMMMM
No, I think they figured out how outsourcing works with Obamacare.
The new consultant will offshore to fix the previous contracters shit-wad, known as healthcare.gov
We've got to run the code, to see what's in it...
It's really simple, if the dollar had any value left whatsoever you would not need two things in existence today:
1) A minimum wage.
2) Two or three incomes to live comfortably.
See...simple!
You really think that everybody could compete with robots? If the robot can work for 8 hours for less money than it cost you to travel to and from work, guess what ...
Guess I better aquire the skills needed to repair and maintain robots unless they can repair themselves that is.
The "Minimum Wage" argument is being debated with all the wrong Paradigms.
The REAL issue is on of POLICY:
ISSUE: Whether certain businesses and sectors of the economy -- and their Business Models -- should be subsidized by the rest of the country. If people in the Service sector are paid wages they cannot live on, and they're not provided with affordable health care benefits, then their income is subsidized by a combination of (a) Public Assistance and/or (b) Crime. There is NO other alternative, if they are not to starve.
POLICY: The policy question that society and all business sectors have to address, is if it's moral and acceptable for the profits and executive bonuses of "Slave Industries" to be subsidized by the rest of society. These are fundamental morality and policy questions for the nation. Fundamentals, which the lobbyists have thus far succeeded in keeping out of the national debate.
For example: I'm in the high-tech sector, where annual salaries (now 'hourly wages') are multiples of the Minimum Wage. If I want to stay in business, then that's the reality I have to deal with. I wish I could hire people at $8/hr and have Uncle Sam pick up the tab for the rest, but that's just not happening in my industry. So why (the fuck) should it happen in another industry? What, so that Mc-fucking-Donalds and other fast-food and retail chains can bag bigger profits for its execs!? E.g. billionaires Eisenberg & Feinstein at Bed, Bath & Beyond, to give just one example. They pay Min. Wages to its staff, keep the weekly hours under the threshold of having to pay Benefits, etc, etc. All their crap is already made offshore, where slave wages are even lower, and they enjoy "official" margins of 50-75% on every damn item.
If it were me, Id' force the Service sector to pay a min. of $20/hr (if no Benefits), and $15/hr if they offer Benefits. If they don't like it, they can shut their damn slave shops, and let some other entrepreneur show these fat fucks how it's done. I have enough faith in Free Enterprise that plenty of entrepreneurs would replace these Grinches. A good shake-up and RESET is good for the nation every now and then: About once avery hundred years.
Seems to me that there's a whole ton of Sheeple who don't think well or clearly, and simply REGURGITATE the political punchlines with which they've conditioned/programmed: "socialism, communism, bla, bla, bla". They cite everything but FEUDALISM or SLAVERY. I swear these Useful Fools are easily bamboozled or "A few fries short of a Happy Meal".
That was clear. Crystal Clear. Thank you.
There would be mass unemployment and even greater substitution of capital for labor. A vicious spiral ensues where tax rates go higher on the remaining workers to support the increased unemployed, and marginal propensity to work decreases.
Your plan has been tried many times before in many places. These experiments are usually short lived because the harm is quick and readily apparent.
I used to think that people stating such blather as you just did were just a bit slow. You know, the same kind that jump to the front of the line when there's a draft on.
Now, I see that some really intelligent people are truly walking around with the wool over their eyes. They just get caught in a circular logic trap and refuse to see the variables and how they interact. Why not think this back through and keep a humble mind? You may discover occam's razor was waiting for you all along.
This would be apparent at 20 bucks per hour.
At ten buckle per hour the effect is minute
Let's say I have $10 to spend on lunch. If a sudden doubling of wages for the food swervice workers means that lunch costs $20, instead of buying that lunch, I'll pack my own. Now, your economy has shrunk, because the amount of money I have did not suddenly double in order to pay for the higher cost of a service, because you suddenly doubled the minimum wage.
I don't understand why, if they are intentionally printing money to cause 2% inflation each year, they do not simultaneously mandate a 2% increase in minimum wage each year. Of course, we are way behind now, so it would need to be more, say 5%.
Then of course the problem becomes, how do you keep people employed if robots can do their job for 1/4 the cost?
Of course, on that long enough timeline...
...we are all going to be replaced by machines.
Here's the story: a smart enough and capable set machines are created. They can handle most labor and knowledge based tasks adequately enough to support the small population of wealthy business owners and their cronies. The bulk of humanity is not needed. A massive war is waged, with the unstated goal of wiping out most of the world's population. What's left?
It is the big reset, and most of us are NOT in it.
--Kilgore Trout
Kirk, while reading your comment, I had a thought. It happens.
Anyway, in this fucked by financialization environment, a company like McDonalds' becomes a systemically important entity. Ditto for Wally World. Without them, the working poor and the FSA would get hungry real quick. Hungry people take to the streets. The implications are too numerous to list.
We sure have a mess on our hands. Every day, I think about my ol' man telling me "once you fuck a goat, you really can't unfuck it."
If we had no minimum wage law but as a policy people were provided with a basic minimum food and shelter we could end all these hundreds of government programs and then at least everyone would be working a little bit even at a buck an hour.
No further idle welfare beneficiaries, small gradual reduction in basic support (no cliff) as earned income increases.
This would not distort markets and it would improve labor participation rates.
Basic food: flavorless hockey pucks. Basic shelter: bedsitters. Basic clothing: dun-colored jumpsuits.
You want something better? Get a job.
You could find many people who would be willing to work for $1.00/hour (yes, $1/hour) if that dollar were made of silver, as per the Constitution. Silver content alone would value the wage at $15/hr (at current manipulated prices)
The minimum wage talk is just misdirection. The problem is the falling value of the Federal Reserve Note (FRN), which has lost 97% of its buying power since inception (How's that for "stability", Mrs. Fed chairwoman?). Trying to maintain buying power with a constantly inflating (by policy) piece of fiat currency is a fool's game.
Why is there an inflation target? We can see that real deflation in real goods and services is not a real problem, otherwise no one would ever buy televisions, computers or cell phones.
Is inflation required to keep the financial services sector from collapsing? Is it the debt instruments that require inflation to avoid collapse?
As someone else here stated I forgot the user so please chime in and take credit. Raising mimimum wage is nothing more than a stealth tax increase taking it out of the hides of the poorest of the poor disproportionately.
Remember that thing Carlin used to say about language betraying real intentions.
I am paraphrasing their original post
Minimum wage is a stealth tax increase. (Note that the word "STEAL" is the root of stealth")
The mechanism is that the percentages of the FICA TAX, THE FUTA TAX and the MEDICARE TAX remains constant, but as wages increase, so do the REVENUES EXTRACTED FROM THE WAGES INCREASE.
FICA, FUTA, and MEDICARE are NOT REFUNDED unlike that of the Federal and State tax witholdings. Thus the government INCREASES REVENUES.
And they increase revenues only on the poorest of the poor disproportionately by raising minimum wage while everyone else skirts that tax increase. If you raise mimum wage then you really need to raise all wages by the same percentage for it to not be a tax on the poor and at the same time this way everyone up the max threshold for FICA/FUTA and Medicare taxes are increased by the same percentage. The poorest of poor with their increased mimimum wage still don't change their tax bracket if they file and will have to now that Obamacare is the law to get their subsidies to pay for their healthcare insurance plans.
The biggest slap in the face to the poor is the ones who make mimimum wage now have to pay more taxes and when they file with the IRS for healthcare insurance subsidies to pay for an Obamacare plan they are the ones that will not qualify for the subsidies anyways and be forced onto Medicare instead.
You see the twisted evil brilliance of raising mimimum wage and the bait and switch used to get the poorest of the poor into the exchanges without having to offer them an insurance plan all while getting them to file a tax return they would otherwise not file.
DCH for PAG
a provision of the RICO (Racketeer Influenced and Corrupt Organizations) statute which allows a plaintiff to become a “Private Attorney General” when it is necessary in order to address “Prosecutorial Gaps.”
"Labor remains a scarce resource"
really? wasnt the whole point of letting in all the immigrants to drive down the price of that resource?
You'll never see a politician offer up this: Federal felony for anyone hiring an illegal, forfeiture of business license for LIFE and say, $50,000 fine for each count.
I thought that was what NAFTA, CAFTAm WTO, etc. were for -- so Corporations could find the most desparate workers anywhere but move the products of their labors freely anywhere. In this way, all workers will be placed into direct competition with the most desperate people on earth, thus beating down the work force everywhere.
Interesting that capital has been internationalized whereas workforce regulations are strictly limited to individual nations. What's not to love?
*double posted*
Minimum wage is a dangerous beast that usually does more bad than good, but the slippery-slope argument is utterly moronic. Like with almost everything in the real world, effects are never linear and dosage is key. Else, it's like saying that you shouldn't raise your daily intake of calories from 1500 to 2000 because "why not 5000 or 50000".
there are reasons to change the number of calories from 1500 to 2000 or to 5000, it depends on what your goals are, the effect it has on your body is understood
if you advocate for raising minimum wage to $15 then you should explain why $15 is better for acheiving X goals than $16...
Of course one size won't fit all, and of course it needs thought. But I was only rebutting a worthless point.
Still, there are guidlines:
1500 = undernourished
2000 = somewhat better
5000 = obese
50000 = probably dead
Michael Phelps was at something like 10,000 calories per day. 3000 to 3500 calories per day is around the upper sustainable limit for hard labour.
*double posted*
Bad analogy. (calorie intake is a good thing)
OTOH, there is NO level of minimum wage dosage that is good (other than zero). Of course, you find it moronic, because it is an example of reductio ad absurdum, which is used to demonstrate that there is no safe dosage in the world of minimum wage laws.
"Bad analogy. (calorie intake is a good thing)"
So is earning money, chubby!
No, it's a good analogy. Calorie intake is a good thing. Earning a wage is a good thing. Let's go farther.
Too much of a good thing is bad.
Too much calorie intake = early death. Too much $$$ intake = corruption and rampant inequalities not rivalled even in the third world.
Where's the Mother Jones for this evil-doing system?
Where's the trust busters?
Their time is coming. I promise you.
Your pic is yummy.
And btw, I knew someone actually named Harry Dick back in my hometown.
any chance he was a teacher? Now there was someone proud of his name...lol
Funny, I nearly wrote this exact article earlier in response to a story about some idiot polysci major who while working as an unpaid state senate intern, is lobbying for a $10 an hour minimum wage.
How is that idiotic? Seems like a perfectly valid work-around for complaints that unskilled people are not worth minimum wage. Work for free until you are qualified, then you can work for money.
Confidential to Dr Engali: congress has not been in formal session since 1865, when Lincoln adjourned the Congress under the war powers, and the military established martial law over the entire US (everyone assumes it was just over the rebel states - no). Congress then authorized the United States of America Corporation in 1871, with the president being the head of this new corporate government, outside the Constitution. The military still holds legal title to the US (conquered territory), and the president holds beneficial title. The citizens now hold only naked use, ie they are landless serfs. The president is already legally the socialist dictator, since the corporation owns the US and all its 'US citizens.' Congress is now superfluous window dressing, and while everyone is starting to realize this, they do not understand why, because they are unaware of the prior moves in 1865 - 1871.
Fishhawk
Just like our debt limit. Let's just set it at 1,000 Trillion dollars and be done with it.
“Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour.”
Umm, Miss Soetero? The 2013 poverty line for a single person is $11,490. Full-time, that works out to about 5.98/hr. Why exactly was the old "minimum wage" so terrible?
Why no charts to see the effect of minimum wage on unemployment? Maybe because there is no correlation, so best to make statements that seem to make "common" sense? How about the common sense idea that its the movement of money, not profits, that make economies sustainable? Money moves when workers get paid and are able to buy things, not when the wealthy move their winnings offshore or parked in super prime real estate and fine art.
http://www.economist.com/news/briefing/21590353-ever-more-wealth-being-p...
In any case, the proposed raise will do nothing to address the structural unemployment that we are mired in. It was fun to watch our legislature trying to pin that one on Yellin the other day, as if the fact that the Fed has a mandate to deal with unemployment means all they have to do is point the finger. Lets just keep up with the deregulation and tax break strategies that have worked so well up until now, right? Never mind that tax breaks on capital gains for the wealthy have produced nothing for the average worker and helped build the budget deficit that can be used as an excuse to make further cuts on the safety net. Forget about the growing inequality, just keep faith that eventually these things will make the economy healthy and the piss will trickle down on the worker units.
on the front page there appears to be a chart for the article, i get to the article and no chart. this happens a lot here...weird.
"After all, a low-skilled or unskilled worker who wants to work for less than the minimum wage is no longer allowed to offer his services at a price the market will bear"
and he/her is allowd to do that in the USA cause the US taxpayer picks up the difference between what it costs to live here and what employers will pay.
Maybe the problem is that the rent is too damn high. Vote "The Rent Is Too Damn High Party":
https://www.youtube.com/watch?v=Gg5SwyTvAHw
Higher prices cause increased supply and reduced demand. Reduced demand for labor increased unempoyment.
Don't stop there, Papa!
No business pays a wage equal to or greater than labors contribution to wealth creation. If they did, then there would be no profit and so no reason to even be in business.
Increased labor leads to lower wages and decreased demand which leads to decreased sales and decreased employment for goods and services. ADD WATER AND REPEAT...until you eventually have no economic output whatsoever.
This is the dilemma of Capitalism. And it a cycle that has played out since the end of WWII. Globalization and the end of protectionism has accelerated this by freeing up industry to outsource there production to the Global Labor Pool.
Papasmurf...only occasional weak socialist interventions have slowed this process. What would you do?
"Institutional unemployment will be the inevitable result, and all that is needed to prove this is economic logic."
Idiot logic in---idiotic ideas out.
Pater Tenebrarum, when the facts fail to validate your hypothesis, a scientist then relooks at the hypothesis and corrects it. Are you incapable of this? There is no documented instance of modest minimum wage increases eliminating jobs. Period.
It seems that your thesis fails to acknowledge that our economy is based on DOMESTIC CONSUMPTION. Increasing the spending/purchasing power of the consumer/worker actually stimulates more demand and thus more job creation (or at least a steady state but with better living standards).
YEP, it is back to the drawing board for you, Pater.
Why not double it? Why not triple it?
Liberal Baloney * BALONEY * B-A-L-O-N-E-Y. Do a little reasearch people!
There are only 1.2% of the work force that are paid minimium wage at whatever that amount may be. So, the min wage amount has NO SIGNIFICANT EFFECT on the little guy that we all hear about each time the Dems pull this sham. It's all a Liberal/Marxist/Communist game that the Dem Party plays from time to time to get you all to vent. See all the hand wringing comments above.
The real reason for the Dems raising the min wage is not because they are the champion and savior of the poor, it is because there are a huge number of UNION contracts where wages are tied to it. Min wage goes up - Union thugs make more money. GET IT!
I am something of a Malthusian and find myself in arguments with various supporters of the status quo(including Austrian Libertarians) who insist that there is a virtual limitless abundance of resources including energy and the technology that consumes it.
Question? If there is a limitless abundance, and technology has reached such high levels, why can't said abundance be distributed equitably among humankind?
It is always the staunchest defenders of the status quo that fall back on limitless abundance/technology while defending wealth inequality.
The limitless abundance/technology argument is there to defend FIAT. They have zero intention of raising minimum wages for anybody outside of the beltway because they know that will cause hyperiflation and the house of cards will topple. Raising the minimum wage for federal contract workers is actually a deflationary cut in wages for federal contract workers!
Why do you think the defenders of the status quo are also supporters of open borders/arbitrary enforcement of immigration law? There is no way they can let wages rise without crashing the FIAT currency system. If they really wanted higher minimum wages, all thy would have to do is enforce immigration laws and wages would take care of themselves.
Hard to comeup with a more mendacious collection of bullshit than the above article...
Please elaborate.
Minimum-wage, the smoothie for the dumb people who are also satisfied to earn it, stopping to ask for a wage that would reflect their real value. And it reduces the power of unions quite remarkably. Don't fall for the 'minimum-wage will cause joblessness to soar' bullshit, instead it will guarantee most wages to stay on the low-scale and it will be used as a standard to let people feel good if they earn xy% more than minimum-wage.