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axelrose
Cottage Cheese is my Favorite food!!
join:2005-05-25
Chattanooga, TN

axelrose

Member

Min Wage increases cost jobs?

Is there an evidence than each time we raise the min wage that the unemployment goes up just after the increase?

Would a conservative sign into law a min wage increase if raising the min wage was such a job killer?

Also, when people say stuff like 'only X number of people make the min wage wage and will see a pay increase'...that is a lie because the min wage increase would apply to everyone making up to 1 cent below the proposed min wage increase. People are excluding the wage increase for millions of people by excluding them from the list who will receive the raise in hourly wages.

If for example 5 million people earn the min wage that doesn't mean ONLY 5 million people will see an increase in pay from a min wage increase. If 15 Million people earn up to 1 cent below the proposed min wage then all 15 million people will see a raise in hourly wages. But we always hear about those who are EXACTLY earning min wages. Why do people lie about this figure?

I've never seen a study, not a wall street journal article, which proves an increase in unemployment from a small min wage increase. If someone could provide a university level study on this subject that would be great.

Thanks.

yock
TFTC
Premium Member
join:2000-11-21
Miamisburg, OH

yock

Premium Member

Collegiate economists don't study this sort of thing because it's all based on simple math. Consider the types of job that pay minimum wage, food service (non-wait staff), janitorial, transient/temporary manual labor just to name a few. The kinds of jobs where a given employer will staff his or her business mostly with this kind of employee. Lets look at a hypothetical example.

You own a restaurant with 36 employees. 12 of them are waiters and waitresses leaving 24 kitchen and janitorial workers who are at minimum wage or slightly above.

Employees Number Hourly wage Yearly Wages
Wait Staff 12 $2.13 $53,164.80
Kitchen 20 $7.05** $293,280.00
Janitorial 4 $6.55* $54,496.00
Totals 36 $15.73 $400,940.80
*Current Federal Minimum
**Federal minimum plus $0.50


On July 24, 2009, the Federal Minimum Wage goes to $7.25. What does that look like?


Employees Number Hourly wage Yearly Wages
Wait Staff 12 $2.13 $53,164.80
Kitchen 20 $7.25** $301,600.00
Janitorial 4 $7.25* $60,320.00
Totals 36 $16.63 $415,084.80
*Federal Minimum as of July 24, 2009
**Wage structure flattened to compensate for increase


That's a 3% increase in total payroll. If that is designed to keep pace with inflation, then your kitchen staff just got a pay decrease since their raise was $0.50 less per hour than the janitors. If you maintain their pay rate then it gets worse.


Employees Number Hourly wage Yearly Wages
Wait Staff 12 $2.13 $53,164.80
Kitchen 20 $7.75** $322,400.00
Janitorial 4 $7.25* $60,320.00
Totals 36 $17.13 $435,884.80
*Federal Minimum as of July 24, 2009
**Pay structure maintained


You now have a whopping 9% increase in wages year to year. To cover that, you now must raise the average receipts by 9%. That $50 dinner for two is now $55. It may end up being even higher to maintain proper psychological pricing (charging $3.99 as opposed to $4.00) lest your customers perceive less value in your prices. Furthermore, when was the last time you got a 9% raise?

It may not address your immediate question, but I contend that your proposition puts the cart before the horse. Before deciding who benefits and by how much we need to discuss the affects of minimum wage laws on employers. In order to maintain that 3% per year, you had to eliminate about $23,000 from payroll. You just laid someone off so that the others could get their pay raises mandated by government. What's his minimum wage now?

I hope this scenario isn't lost on anyone. It's a good illustration of the real effects of minimum wage, its affect on payroll, consumer prices, and job security.

axelrose
Cottage Cheese is my Favorite food!!
join:2005-05-25
Chattanooga, TN

axelrose

Member

There should be some easy to obtain charts showing the increase or decrease in employment rates just after a min wage increase. If it doesn't show an obvious increase in unemployment then the effect that is talked about simply does not exist and is nothing more than a political point rather than an economic point.

I recall reading the unemployment rates when we had out last min wage increase. It showed no pattern of higher unemployment after a min wage increase. In some years it even showed a decrease in unemployment which should have been impossible.

You mentioned how crazy a 9% wage increase would cause either higher prices or laying off workers. What about the increase in gasoline in the last 8 years? Since my employer isn't paying me for my gasoline increases. When my employer gets an increase in say paper cups is he forced with choosing to fire someone or raise prices? Part of running a small business is taking loses. If lowering prices or firing someone will make your business less attractive then why would you do it? Isn't it better to make $50K per year from your business than to close the business?

Again, each time this 'min wage increases cost jobs' discussion occurs no one seems willing or able to provide hard evidence from the BLS or some other gov't agency. If the association were as simple as some say then the evidence would be easy to find.

yock
TFTC
Premium Member
join:2000-11-21
Miamisburg, OH

yock

Premium Member

I don't know if your charts are easily obtained or not. Considering that you haven't easily obtained them, I can only assume that you're wrong.

I prefer to work at a lower level than you. There's an old saying that goes "Statistical correlation need not imply causation." In other words, having a chart that did or did not show that minimum wage and unemployement moved in lock-step with each other is irrelevant, mostly because there are so many other factors at work you couldn't possibly prove or disprove the significanceof the role minimum wage played in that volatility. That's why I give a scenario demonstrating the strain placed on a businesses and consumers by minimum wage laws. There are fewer variables at work; therefore, it's easier to model.

If you raise minimum wage, you raise the pricees of goods and services produced and provided by anyone affected by minimum wages. Consumers ultimately pay for the increased wages through the price of those goods. If you allow the market to set the wage for given work, then competition for labor works with the competition for sales to lower prices to what consumers can afford. You may not eliminate poverty or hunger, but you're allowing for a far less arbitrary line to be set as to who may afford essential items and who cannot.

How ironic is it too that most often those who cannot afford the essentials just happen to be on minimum wage. I wonder why...

axelrose
Cottage Cheese is my Favorite food!!
join:2005-05-25
Chattanooga, TN

axelrose

Member

said by yock:

I don't know if your charts are easily obtained or not. Considering that you haven't easily obtained them, I can only assume that you're wrong.

I prefer to work at a lower level than you. There's an old saying that goes "Statistical correlation need not imply causation." In other words, having a chart that did or did not show that minimum wage and unemployement moved in lock-step with each other is irrelevant, mostly because there are so many other factors at work you couldn't possibly prove or disprove the significanceof the role minimum wage played in that volatility. That's why I give a scenario demonstrating the strain placed on a businesses and consumers by minimum wage laws. There are fewer variables at work; therefore, it's easier to model.

If you raise minimum wage, you raise the pricees of goods and services produced and provided by anyone affected by minimum wages. Consumers ultimately pay for the increased wages through the price of those goods. If you allow the market to set the wage for given work, then competition for labor works with the competition for sales to lower prices to what consumers can afford. You may not eliminate poverty or hunger, but you're allowing for a far less arbitrary line to be set as to who may afford essential items and who cannot.

How ironic is it too that most often those who cannot afford the essentials just happen to be on minimum wage. I wonder why...
I've been preached too by politicians that a small increase in the min wage will devastate the economy and cause higher unemployment for years.. I've heard this for nearly 3 decades and no one has yet prove this connection, not one person. But they keep saying it...I guess if they say it enough and long enough people will think it's true. I'm not buying it.

yock
TFTC
Premium Member
join:2000-11-21
Miamisburg, OH

yock

Premium Member

Then it sounds to me as if you're maintaining an unreasonable burden of proof. If you reject the sound economic theories that predict the market behavior, what good are surveys predicated on those theories?

axelrose
Cottage Cheese is my Favorite food!!
join:2005-05-25
Chattanooga, TN

axelrose

Member

said by yock:

Then it sounds to me as if you're maintaining an unreasonable burden of proof. If you reject the sound economic theories that predict the market behavior, what good are surveys predicated on those theories?
If the theory that min wages cause unemployment has such a low burden of proof then all economic theories should have low burdens of proof. Since all economic theories have varying burdens of proof then this min wage debate is either a bag of lies or something that people 'think' is true but without evidence.

Every time it rains the winds blow harder therefore when it's windy outside that is a sign that rain is about to occur. This 'min wage is bad' theory has been hot since the 1940s and I've yet to see the evidence of it causing unemployment. Until we see that hardcore evidence then we shall take that negative argument as a subjective belief, not a fact.

You'll have to forgive me if I'm skeptical on this min wage deal. I've literally seen/heard people say 'min wage increases cause higher unemployment' and when someone asks 'what proof do you have' the answer is along the lines of 'we've known this for decades' THAT is not an answer or proof, that is group think and opinion at best.

If increases in the min wage caused economic damage and unemployment then what do you suppose would be our current economic situation if the min wage had not been raised in the last 30 years? By this argument we should REALLY notice a positive economic stimulus. If not then we admit that these small min wage increases have little to no effect on the unemployment model.

Like I said before, I'm willing to read/listen to anything you can provide from research. I won't even question the source of the research. You can provide some research from foxnews if you want, I'll read it.

thanks

yock
TFTC
Premium Member
join:2000-11-21
Miamisburg, OH

yock

Premium Member

Try it from another angle. Explain your hypothesis as to why minimum wage doesn't cause unemployment.

axelrose
Cottage Cheese is my Favorite food!!
join:2005-05-25
Chattanooga, TN

1 edit

axelrose

Member

said by yock:

Try it from another angle. Explain your hypothesis as to why minimum wage doesn't cause unemployment.
You're asking me to disprove YOUR position that you and your group presented first?
It's on you to provide evidence to support the claim you made.

yock
TFTC
Premium Member
join:2000-11-21
Miamisburg, OH

yock

Premium Member

No, I'm asking that you put forth a theory as to why the generally accepted economic effect of minimum wage is incorrect.
horsemouth1
Please Clarify My CSP
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join:2002-03-13
canada

horsemouth1 to yock

Premium Member

to yock
said by yock:

Collegiate economists don't study this sort of thing because it's all based on simple math. Consider the types of job that pay minimum wage, food service (non-wait staff), janitorial, transient/temporary manual labor just to name a few. The kinds of jobs where a given employer will staff his or her business mostly with this kind of employee. Lets look at a hypothetical example.

You own a restaurant with 36 employees. 12 of them are waiters and waitresses leaving 24 kitchen and janitorial workers who are at minimum wage or slightly above.

Employees Number Hourly wage Yearly Wages
Wait Staff 12 $2.13 $53,164.80
Kitchen 20 $7.05** $293,280.00
Janitorial 4 $6.55* $54,496.00
Totals 36 $15.73 $400,940.80
*Current Federal Minimum
**Federal minimum plus $0.50


On July 24, 2009, the Federal Minimum Wage goes to $7.25. What does that look like?


Employees Number Hourly wage Yearly Wages
Wait Staff 12 $2.13 $53,164.80
Kitchen 20 $7.25** $301,600.00
Janitorial 4 $7.25* $60,320.00
Totals 36 $16.63 $415,084.80
*Federal Minimum as of July 24, 2009
**Wage structure flattened to compensate for increase


That's a 3% increase in total payroll. If that is designed to keep pace with inflation, then your kitchen staff just got a pay decrease since their raise was $0.50 less per hour than the janitors. If you maintain their pay rate then it gets worse.


Employees Number Hourly wage Yearly Wages
Wait Staff 12 $2.13 $53,164.80
Kitchen 20 $7.75** $322,400.00
Janitorial 4 $7.25* $60,320.00
Totals 36 $17.13 $435,884.80
*Federal Minimum as of July 24, 2009
**Pay structure maintained


You now have a whopping 9% increase in wages year to year. To cover that, you now must raise the average receipts by 9%. That $50 dinner for two is now $55. It may end up being even higher to maintain proper psychological pricing (charging $3.99 as opposed to $4.00) lest your customers perceive less value in your prices. Furthermore, when was the last time you got a 9% raise?

It may not address your immediate question, but I contend that your proposition puts the cart before the horse. Before deciding who benefits and by how much we need to discuss the affects of minimum wage laws on employers. In order to maintain that 3% per year, you had to eliminate about $23,000 from payroll. You just laid someone off so that the others could get their pay raises mandated by government. What's his minimum wage now?

I hope this scenario isn't lost on anyone. It's a good illustration of the real effects of minimum wage, its affect on payroll, consumer prices, and job security.

It is lost on me.
Just because the cost of wages go up 9% does not make the other costs to go up causing the owner to put up the price on the menu.

yock
TFTC
Premium Member
join:2000-11-21
Miamisburg, OH

yock

Premium Member

said by horsemouth1:

It is lost on me.
Just because the cost of wages go up 9% does not make the other costs to go up causing the owner to put up the price on the menu.
Why not? What money does the owner have but that which he or she take in via sales revenue? The owner cannot take a loss on his business just to pay salaries. The business doesn't last long if it loses money.

So, if not from increased menu prices, where does the money come from?

axelrose
Cottage Cheese is my Favorite food!!
join:2005-05-25
Chattanooga, TN

axelrose to yock

Member

to yock
said by yock:

No, I'm asking that you put forth a theory as to why the generally accepted economic effect of minimum wage is incorrect.
A very tiny part might be the NEGATIVE effect on the economy if people making min wages could never see a raise. I know it's hard to believe people other than teenagers work for the min wage. It's something Limbaugh for example says, he says min wage is for teenagers. A quick look at the BLS stats shows that is clearly a lie.

If you had 5-10 million people making the same min wage for 12-15 years...wouldn't this cause a great deal of strain on gov't social services? Why not provide a modest min wage increase? Why make people poorer and poorer? We're talking about about a $1 min wage hike over 7-10 year periods of time. That is not exactly excessive amounts of money.

Then we have the illegals working in the fields for American farm owners for sub min wages. If a lower min wage, or no min wage, truly helps the economy then is it the contention that people making $2 per hour helps the economy? If those farm owners were strictly forced to pay the official min wage then the workers would have more money to buy products.

I'm curious about this:Do YOU feel we should abolish the min wage act?
If so:What would you predict the lowest prevailing wage would be for entry-level jobs in say 10 years?

Understand I've mentioned 1 aspect of this min wage 'debate'. There are easily 20 more angles to approach this issue.

yock
TFTC
Premium Member
join:2000-11-21
Miamisburg, OH

yock

Premium Member

said by axelrose:

I'm curious about this:Do YOU feel we should abolish the min wage act?
If so:What would you predict the lowest prevailing wage would be for entry-level jobs in say 10 years?
It would be impossible to simply abolish the act overnight. It should have never existed in the first place, but now the damage is done. Consumers and workers alike would have to be weened off of minimum wage slowly as to not shock the system and render low wage earners unable to purchase goods. Over time, consumer prices would fall as a result of labor no longer being artificially inflated. Wages would fall too, but they need to fall to strengthen the value of the dollar.

There are other inputs into the inflated value of labor that must be addressed, such as price controls and some union tactics, but those are out of the scope of this discussion. Nonetheless, they all contribute to inflated labor costs, which means inflated prices of goods and services.

axelrose
Cottage Cheese is my Favorite food!!
join:2005-05-25
Chattanooga, TN

axelrose

Member

said by yock:
said by axelrose:

I'm curious about this:Do YOU feel we should abolish the min wage act?
If so:What would you predict the lowest prevailing wage would be for entry-level jobs in say 10 years?
It would be impossible to simply abolish the act overnight. It should have never existed in the first place, but now the damage is done. Consumers and workers alike would have to be weened off of minimum wage slowly as to not shock the system and render low wage earners unable to purchase goods. Over time, consumer prices would fall as a result of labor no longer being artificially inflated. Wages would fall too, but they need to fall to strengthen the value of the dollar.

There are other inputs into the inflated value of labor that must be addressed, such as price controls and some union tactics, but those are out of the scope of this discussion. Nonetheless, they all contribute to inflated labor costs, which means inflated prices of goods and services.
You just stated 2 things existing to make neither true.
If the negative impacts from abolishing the min wage are so weak then that assumes the min wage law itself is not causing this harm people claim.

Either the min wage is a net benefit or not.

How low is enough? If you argue to let the market decide the prevailing wages then you're going to have to give up a few hundred things in our economy which are not based on market forces. The price of Oil for example is in no way based on free market forces.

I'd still like to know what you think the prevailing wage for entry level workers would be in 10 years if their was no min wage law.

I also find it ironic that everyone who wants to abolish the min wage law or hold off increasing it are almost always people who are many fold higher in income per hour.

I'll agree to abolish the min wage if you do the following.

1. A new income tax of 30% for every $2,500 over $75K in earnings.
2. A "one time" 15% tax on all combined income and assets including retirement vehicles and foreign investments. You must decide when you want to pay this One Time tax as long as you're between 35 and 65 years of age. And the tax is retroactive 10 years so that people can't sell-off assets to avoid taxation.

This would be in addition to the existing tax bracket.

We could take that extra money to help the poor small business owners be able to afford to pay people an amount of money that is in some cases 200% below federal poverty guidelines.

Deal?

yock
TFTC
Premium Member
join:2000-11-21
Miamisburg, OH

yock

Premium Member

The market is not static and will adjust over time, which is why we must come down off of minimum wage slowly. There is no contradiction in my statement.

axelrose
Cottage Cheese is my Favorite food!!
join:2005-05-25
Chattanooga, TN

axelrose

Member

said by yock:

The market is not static and will adjust over time, which is why we must come down off of minimum wage slowly. There is no contradiction in my statement.
If we had kept min wage at Reagan era numbers [$3.35] would you say the prevailing entry-level wage would now be over or BELOW $7.25 per hour?

This is important. I wish you'd answer this.

yock
TFTC
Premium Member
join:2000-11-21
Miamisburg, OH

yock

Premium Member

I don't think I can answer that. The only answer I can give is that, given historical inflationary forces, wages would likely have risen above that $3.35 naturally. In effect, a "minimum wage job" might be a thing of the past. Whether or not that means it would have risen above $7.75 is impossible to tell.

The real question you mean to ask is whether or not someone would have to make $7.75 to earn a minimal living. If all else had been equal in the last 20 years, then $7.75 would be a higher-than-necessary wage to earn a living.

axelrose
Cottage Cheese is my Favorite food!!
join:2005-05-25
Chattanooga, TN

axelrose

Member

said by yock:

I don't think I can answer that. The only answer I can give is that, given historical inflationary forces, wages would likely have risen above that $3.35 naturally. In effect, a "minimum wage job" might be a thing of the past. Whether or not that means it would have risen above $7.75 is impossible to tell.

The real question you mean to ask is whether or not someone would have to make $7.75 to earn a minimal living. If all else had been equal in the last 20 years, then $7.75 would be a higher-than-necessary wage to earn a living.
I think you've admitted that it wouldn't be at or above our current min wage.

Also, you're saying that $7.25 per hour is enough to earn a living? Do you mean if someone works 120 hours per week?

Are people entitled to come home for a few hours, perhaps spend a day with there family?

@ 40 hrs per week $7.25 per hour is $15,080 per year GROSS so that would be lower because of Payroll taxes and sales taxes. That is enough to live on?

Can you hook me up to a landlord renting out apartments for $250 per month?

Seriously say what you're trying to say, don't hold back man.
I'm not attacking you but I'm just so shocked real people think like this is all.
horsemouth1
Please Clarify My CSP
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join:2002-03-13
canada

horsemouth1 to yock

Premium Member

to yock
said by yock:

said by horsemouth1:

It is lost on me.
Just because the cost of wages go up 9% does not make the other costs to go up causing the owner to put up the price on the menu.
Why not? What money does the owner have but that which he or she take in via sales revenue? The owner cannot take a loss on his business just to pay salaries. The business doesn't last long if it loses money.

So, if not from increased menu prices, where does the money come from?
My guess is that you never ran a restaurant before.
Wages are a small part of the total expense.

yock
TFTC
Premium Member
join:2000-11-21
Miamisburg, OH

yock to axelrose

Premium Member

to axelrose
said by axelrose:

I think you've admitted that it wouldn't be at or above our current min wage.
Out of context, sure. In context, I've demonstrated that such a judgment is irrelevant. A living wage is defined by the prices of all essential goods and services in an economy, of which the wages of the people who produce those goods and services are inexorably linked. You can't discuss one without the other, which is what you're attempting to do.

axelrose
Cottage Cheese is my Favorite food!!
join:2005-05-25
Chattanooga, TN

axelrose

Member

said by yock:
said by axelrose:

I think you've admitted that it wouldn't be at or above our current min wage.
Out of context, sure. In context, I've demonstrated that such a judgment is irrelevant. A living wage is defined by the prices of all essential goods and services in an economy, of which the wages of the people who produce those goods and services are inexorably linked. You can't discuss one without the other, which is what you're attempting to do.
No, I'm trying to get an answer from you about my two original questions. You could just answer them and keep me from having a stroke.

yock
TFTC
Premium Member
join:2000-11-21
Miamisburg, OH

yock to horsemouth1

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to horsemouth1
Food cost is the largest expense, but that we're considering a restaurant is immaterial. It's simply an example. If we were including all expenses, then the wages of the company that produces the food they buy would increase as well, thus pushing up the cost of that food commensurately with their own worker's wages.

The price of labor is included in everything we buy; therefore, a 9% increase in the cost of labor results in some increase in the price of goods. How much of an increase will be dependent upon how dependent that particular industry is on minimum wage labor.
yock

yock to axelrose

Premium Member

to axelrose
You can bow out of this at any time if it upsets you. That you don't understand the reality of your own question isn't my fault. I've tried explaining it to you several times now.
pauldenton
join:2003-12-20
London

pauldenton to yock

Member

to yock
said by yock:

.
Lets look at a hypothetical example.

You own a restaurant with 36 employees. 12 of them are waiters and waitresses leaving 24 kitchen and janitorial workers who are at minimum wage or slightly above.

Employees Number Hourly wage Yearly Wages
Wait Staff 12 $2.13 $53,164.80
Kitchen 20 $7.05** $293,280.00
Janitorial 4 $6.55* $54,496.00
Totals 36 $15.73 $400,940.80
*Current Federal Minimum
**Federal minimum plus $0.50


On July 24, 2009, the Federal Minimum Wage goes to $7.25. What does that look like?


Employees Number Hourly wage Yearly Wages
Wait Staff 12 $2.13 $53,164.80
Kitchen 20 $7.25** $301,600.00
Janitorial 4 $7.25* $60,320.00
Totals 36 $16.63 $415,084.80
*Federal Minimum as of July 24, 2009
**Wage structure flattened to compensate for increase


That's a 3% increase in total payroll. If that is designed to keep pace with inflation, then your kitchen staff just got a pay decrease since their raise was $0.50 less per hour than the janitors. If you maintain their pay rate then it gets worse.


Employees Number Hourly wage Yearly Wages
Wait Staff 12 $2.13 $53,164.80
Kitchen 20 $7.75** $322,400.00
Janitorial 4 $7.25* $60,320.00
Totals 36 $17.13 $435,884.80
*Federal Minimum as of July 24, 2009
**Pay structure maintained


You now have a whopping 9% increase in wages year to year. To cover that, you now must raise the average receipts by 9%.
err - no, you need to raise receipts by whatever percentage is required to get the extra wage cost - minimum wage neither increases your rent etc, drinks cost, food cost etc. nor the amount of profit you need to make for the same living standard

your restaurant's wait staff wage bill indicates 24960 "waitperson hours" - that implies a minimum of $110323.20 is received in tips (since otherwise it would be illegal for the owner to pay them just $2.13 - he'd have to pay enough to make up their tips to the (old) minimum wage of $6.55/hr i.e another $4.42 per "waitperson hour" {and of course the new minimum wage also once that's in force..}

that means that, assuming a 15% tip is the norm (and the IRS accept/expect a considerably lower percentage than that iirc), your restaurant turns over at least $735488 a year... accordingly your "9% increase in wages" $34944 can be met with not a 9% increase in turnover, but at most a 4.75% increase

in practice the IRS, presented with that wagebill and an assertion that the restaurant's sales were in the order of $750k would burst out laughing and be auditing your books every single year...raking over your entire life looking for the suppressed cash income - and/or the mobsters you were using part of it to pay the "protection" money to :huh:
restaurants with a kitchen staff bill in the order of $300k are taking millions of dollars a year, not hundreds of thousands :uhh:

yock
TFTC
Premium Member
join:2000-11-21
Miamisburg, OH

yock

Premium Member

Yep, I deliberately left out tips since they're not paid by the business owner.

You'd also be surprised as to how not far "millions" goes in the restaurant business.
horsemouth1
Please Clarify My CSP
Premium Member
join:2002-03-13
canada

horsemouth1 to axelrose

Premium Member

to axelrose
I'm sorry that I don't have the 100% answer for you.
Food for thought.... What if minimum wage goes to $10.00?
Not only will the... [for lack of proper english] shit jobs pay more. But the less shit jobs will have to pay more also.
pauldenton
join:2003-12-20
London

pauldenton to yock

Member

to yock
said by yock:

If you raise minimum wage, you raise the pricees of goods and services produced and provided by anyone affected by minimum wages.


no, it raises the cost to produce those goods/services - it may or may not raise their prices depending on the individual market in those goods
said by yock:

Consumers ultimately pay for the increased wages through the price of those goods.
and/or businesses and their owners in reduced profits...

but some of those consumers are overseas, and the owners of some of those businesses are overseas - whereas by definition all the workers on minimum wage are within the US (otherwise Federal minimum wage would not apply...)
said by yock:

If you allow the market to set the wage for given work, then competition for labor works with the competition for sales to lower prices to what consumers can afford. You may not eliminate poverty or hunger, but you're allowing for a far less arbitrary line to be set as to who may afford essential items and who cannot.
you also allow businesses to be federally or state subsidised by the benefits their workers are entitled to by virtue of their (thanks to their sub minimum wage payrates) low income like "TANF" "Food Stamps" and "section 8" housing vouchers.....
said by yock:

How ironic is it too that most often those who cannot afford the essentials just happen to be on minimum wage. I wonder why...
amongst other reasons because the value of Federal minimum wage has been steadily erroded since 1968..... {it'd need to be about $10 an hour to match it's 1968 purchasing power}

what you are completely ignoring is that a minimum wage increase doesn't just act on the "supply" side of the transaction (raising costs) it also acts on the "demand" side (raising the purchasing power of all those on or slightly above minimum wage...)

you cannot simply take an "it's interfering with the proper operation of the labour market" attitude, unless you also do away with other restraints on the labour market {eg totally unlimited and unrestricted immigration to the US by anyone, allowing children to perform any jobs at any age for an unlimited number of hours per week}

axelrose
Cottage Cheese is my Favorite food!!
join:2005-05-25
Chattanooga, TN

axelrose to yock

Member

to yock
said by yock:

You can bow out of this at any time if it upsets you. That you don't understand the reality of your own question isn't my fault. I've tried explaining it to you several times now.
I'll bow out since you never were able to address my two main questions. It's not the first time a laze-fair conservative wasn't able to answer those two questions.
Kain5
join:2003-05-01
Portland, OR

1 edit

Kain5 to yock

Member

to yock
said by yock:

Try it from another angle. Explain your hypothesis as to why minimum wage doesn't cause unemployment.
I can do that. The problem with the neoclassical(which is far from universally accepted) view of minimum wage jobs is there is simply no meaningful correlation between unemployment and raising the minimum wage. Your model predicts there should be a significant increase in unemployment; there simply isnt.

If you look at it from a production standpoint, most goods are not made in a system where you can say oh the Marginal Revenue of the employee is less than the Wage so I have to fire this employee; most production is done in a manner where all employees are integral to the process. As long as you turn a profit you will hire all of the employees, when you stop making a profit you will fire all of the employees. Considering the transitional costs and the relatively small amount that labor costs figure into most goods, an increase in labor costs on the order of 10%(which translates into 2-5% of the total cost) is rarely enough to turn a product unprofitable.

Look at it this way. A McDonalds needs 5 employees to run, you either run the McDonalds or you don't. You can't downsize to 4 employees because you wouldnt be able to function at all. Most minimum wage jobs are like this, and it insulates them from "market pressures".