Defining/Determining "Living Wage"

[Patrick_R]

If the minimum wage actually worked why stop at $7.55 an hour?

Why not lift it to $50 an hour?

That would provide each American with a minimum wage of around $100,000 a year. We'd have a lot more money to purchase stuff and that would make us all better off right?

 

[Rasmus]

If the minimum wage actually worked why stop at $7.55 an hour?

Why not lift it to $50 an hour?

That would provide each American with a minimum wage of around $100,000 a year. We'd have a lot more money to purchase stuff and that would make us all better off right?

How lame ...

a minimum wage where a day's work earns the provisions to survive at least that one day makes economical sense. Anything less is unjust and harms either society or the employee to benefit the employer and possible his customers. Anything less and the employer will ultimatively starve to death.

(Like this hadn't been covered before ...)

A days work has to be worth at least enough for the employee to live another day. Anything above that, be it 50$ or 5000$ an hour is optional.

 

[leftysergeant]

Now you're just getting goofy, Patrick.

However, I would go along with that if the average CEO were making $500million in a given industry.

But I have a better idea.

A MAXIMUM salary law, compared to the average income of the lowest 10% of the population, with any excess income taken as taxes.

 

[Patrick_R]

How lame ...

a minimum wage where a day's work earns the provisions to survive at least that one day makes economical sense. Anything less is unjust and harms either society or the employee to benefit the employer and possible his customers. Anything less and the employer will ultimatively starve to death.

(Like this hadn't been covered before ...)

A days work has to be worth at least enough for the employee to live another day. Anything above that, be it 50$ or 5000$ an hour is optional.

Says who? A minimum wage is $0. That is the absolute least you could earn. A living wage is whatever you're willing to accept, because you won't voluntarily accept a wage that leads to your starvation (otherwise you'd just do subsistance living rather than work).

Obviously the point of the minimum wage is to A) help people live a better life than the otherwise would and or B) put people out of work to help wealthier people make higher wages by reducing the labor supply.

So assuming it doesn't do B we are helping people so why the heck should we stop at $7.55 which seems pretty arbitrary to me?

 

[Patrick_R]

Now you're just getting goofy, Patrick.

However, I would go along with that if the average CEO were making $500million in a given industry.

But I have a better idea.

A MAXIMUM salary law, compared to the average income of the lowest 10% of the population, with any excess income taken as taxes.

ALl that would do would be to get wealthier people to work less. Worst still, wealthy people might resort to barter to avoid paying the upper levels of that tax.

Meaning if your poor and need a Doctor to help you out and they've already made "enough for the year" you better hope you have some in kind skill to offer that Doctor otherwise you're screwed.

 

[leftysergeant]

None of your last post makes sense, Patrick.


(Not that the others made a great deal, to begin with.)

 

[leftysergeant]

ALl that would do would be to get wealthier people to work less.

That might actually be a good thing.

Worst still, wealthy people might resort to barter to avoid paying the upper levels of that tax.

Until they run out of things to trade, then they would have to start working for a living.

Or they could hire people at a decent wage to make stuff for them to trade.

 

[Rasmus]

Says who? A minimum wage is $0. That is the absolute least you could earn.

Why is it impossible to pay for the privilege?

(It happens: Little girls here tend to like horses. There are places that will charge one part of their customers to ride the horses and another part of their customers (little girls, mostly) for taking care of the horses.

A living wage is whatever you're willing to accept, because you won't voluntarily accept a wage that leads to your starvation (otherwise you'd just do subsistance living rather than work).

I recall a poster here who said they did accept a job that paid less. I guess they must have been lying.

Obviously the point of the minimum wage is to A) help people live a better life than the otherwise would and or B) put people out of work to help wealthier people make higher wages by reducing the labor supply.

So assuming it doesn't do B we are helping people so why the heck should we stop at $7.55 which seems pretty arbitrary to me?

Well, yes, it is A. And I don't have a problem with that. I think humans should be *entitled* to more than just mere survival.

 

[leftysergeant]

I'm still trying to figure out how reducing the labor supply, thus increasing its value, if you believe the free-marketers, is going to make rich people any richer.

 

[Patrick_R]

Why is it impossible to pay for the privilege?

(It happens: Little girls here tend to like horses. There are places that will charge one part of their customers to ride the horses and another part of their customers (little girls, mostly) for taking care of the horses.

Sounds like equivication. Paying someone else so you can do the work is not a wage. A wage is something you earn for work you do or pay for work someone else does.

I recall a poster here who said they did accept a job that paid less. I guess they must have been lying.

Of course people will accept a job that pays less. They could do it because the job is easier, or it offers more days off, or they lost their old job and need a new one. That isn't what I said. I said people won't take a job that makes them worse off than the alternative - in the case of a living or minimum wage the alternative you all present is starvation. People won't take a job that leads to starvation because the alternative to starvation is either the job or subsistance living.

Most jobs in America are way better than subsistance living.

Well, yes, it is A. And I don't have a problem with that. I think humans should be *entitled* to more than just mere survival.

That is great! You should donate more your own money to help others.

 

[Patrick_R]

I'm still trying to figure out how reducing the labor supply, thus increasing its value, if you believe the free-marketers, is going to make rich people any richer.

If you reduce the supply of labor, while demand for labor stays the same, you increase the price at which existing labor can demand for their services.

This is one strategy unions use to increase wages for their members. They manage to use government law to decrease the supply of low-skilled workers (which compete with higher skilled workers and put a downward pressure on wages). This can be done through membership rules (mostly illegal now in the us) and minimum/living wages and more recently fair trade laws and enviornmental regulations.

By putting low skilled workers out of a job (pricing them out of the labor market) you manage to boost your own income. Less supply, same demand, means you can charge higher prices for your service.

 

[leftysergeant]

If you reduce the supply of labor, while demand for labor stays the same, you increase the price at which existing labor can demand for their services.

This is one strategy unions use to increase wages for their members. They manage to use government law to decrease the supply of low-skilled workers (which compete with higher skilled workers and put a downward pressure on wages). This can be done through membership rules (mostly illegal now in the us) and minimum/living wages and more recently fair trade laws and enviornmental regulations.

By putting low skilled workers out of a job (pricing them out of the labor market) you manage to boost your own income. Less supply, same demand, means you can charge higher prices for your service.

You forgot a factor. Unions also demanded shorter work-weeks and days. This opens up two-and-three shift operations, so the demand eventually increases, the supply is the same, but the labor is worth more and more people can be put to work.

And the country will be a lot healthier for it, if we can put the dog leash back on the mangy curs moving our factories off-shore.

 

[Francesca R]

If you reduce the supply of labor, while demand for labor stays the same, you increase the price at which existing labor can demand for their services.

You forgot a factor. Unions also demanded shorter work-weeks and days. This opens up two-and-three shift operations, so the demand eventually increases, the supply is the same, but the labor is worth more and more people can be put to work.

Correction(s):

Minimum wage laws and trade union action raises the price of a unit of labour. In economixspeak that shifts the supply curve left. Unless demand is inelastic, or the demand curve slopes the "wrong way" (not likely) then these developments reduce demand for labour, which clears at a higher unit price.

Restricting hours is no different from asking for wage increases.

If government legislation is what raises the unit cost of labour then (again in economixspeak) this creates a deadweight loss, because presumably some employment contracts which would have been economically viable (to both sides) are not legally viable. If the resulting unemployed people are compensated by social insurance then the deadweight loss is transferred to higher income sectors of the population.

This is well known and understood by those knowledgable in welfare economics although a free-market proponent usually likes to point out that it creates economic "waste" in the system, which it does. The rationale for the creation of this waste is typically a prevailing social consensus that the free choice of the putative below-minimum-wage employees is impaired by inequitably differential bargaining power (IE they have none; the employer holds all the cards)

If minimum wage laws are there to express normative social consensus views then you might expect them to be proposed and voted in by concerned citizens without any help from special interest groups like trade unions. However this is problematic and it is a central prediction of public polocy and group theory that large diverse groups like electorates do not effectively organise themselves to further their own (group) interests. In these circumstances, a smaller highly organised group like a union can counterbalance this, so that society ends up getting what it wants.

None of this is pre-destined to work out for the best of course.