$9/h minimum wage

[Skeptic Ginger]

....
I've already mentioned many problems with raisiong minimum wage in an effort to boost the standard of living. Why don't you respond to those rather than asking me to restate them?

Have you posted any studies, or just your assertions?

 

[Skeptic Ginger]

I.... About every 10th low wage employee is laid off, and everyone else told to "pick up the slack".....

Do you have any evidence this is the case? Because I posted lots of studies that did not find the job loss claim was true.

 

[Skeptic Ginger]

But, mathematically, it has the potential to hurt a small company.

If I had a business, and I'm paying 5 full-time 40 hour employees the current minimum, my payroll is $1,450 per week.

With a $9/min, that jumps to $1,800.

$350 extra per week. That's more than hiring a 6th full-timer at the current minimum.

Again, if it were me, my small business is going to make changes. I might choose one or more of the following options:

- Reduce the hours of 2, 3, or all my employees.
- Layoff one employee altogether.
- Raise prices of my merchandise/services.
- Reduce hours of operation.

So what are the consequences of these choices?:

- Reducing the employee hours saves me money, but it still keeps them in the same "poverty" pay scale.
- Reducing staff to 4 instead of 5 saves me money, but increases the workload of others. If other small businesses in the area do the same, now we have less jobs in the area.
- Raising prices might help in the interim, but eventually, we are going to end up in the same damn boat. People make more, but the prices of items go up, so where's the benefit?
- Reducing hours of operation may help offset wage cost with reduced overhead cost, but I have to hope my clientele can fit into my new hours.

I saw this happen first hand back when the min went from $4.25 to $4.75. I was working as a manager for a local chain of car maintenance shops back then. Company wide, we had 96 employees. When the increase came, each shop had to reduce staff by 1 or 2 people. When the change took effect, we had 79 employees company wide.

I don't think min wage should go any higher than it is now. Thing is, when I made minimum wage, I worked that much harder to get out of a minimum wage job.

You have an hypothesis and an anecdote. Got anything else?

 

[The Don]

I look to the Nordic nations with their smaller inequality and higher happiness as an example. I am sure they rate as the best places to live because they have a system which has entrepreneurship that does not mean workers have to be low paid with few rights.

I agree, but perhaps their sense of collectivism is based relates to historic factors of being small communities battling against nature as opposed to British feudalism and the class system.

I would prefer that UK society was more like the Nordics but rather like discussions on US gun control there are huge societal factors at work which seem to be unfixable (but that doesn't mean we shouldn't try)

 

[Mudcat]

Your argument is based on an unsupported premise, that giving the poorest workers a living wage drives inflation.

Try reading my post again, for comprehension. My argument is based on the supported premise that inflation is driving wage.

My argument is that inflation needs to be addressed or we'll be bumping wages constantly with no end in sight.

 

[Sabretooth]

You have an hypothesis and an anecdote. Got anything else?

What's wrong with the hypothesis?

I assume your trying to back up what you posted in #86 http://www.internationalskeptics.com/forums/showpost.php?p=8998756&postcount=86.

In particular, I'm skeptical of the reasoning on your second link:
(Employment and the Minimum Wage, etc.)
I don't see where there's proof positive that A = B. I'm not saying that the analytic of the data are wrong, but I wouldn't be so quick to call them conclusive either. Look at the chart for OR for example; they show spikes of UE after the min was raised at a faster (and more sustained) rate than the rest of the USA. I find it too coincidental to blame this solely on the OR manufacturing market as quickly at the articles author did.

Not to mention that the Figure 7 chart shows a declining manufacturing job market trend through 2000-2003 and divides the States down the middle quite nicely. So trying to convince me that raising min wage is good all around for the country by using data of 3 states is a bit trivial. Not to mention, not showing those 3 states even have conclusive evidence.

 

[theprestige]

There is that. Too many failed businesses, the banks being a prime example of such, in the UK Rover being another, in the USA Enron being another, means that the directors leave with tons of money and the workers leave with a box with their own bits and pieces from their desk.

"Hello! Thank you for taking the time to answer our advetisment for a CEO. So here is what the position entails: We'd like you to be more competent, more ethical, and more successful than your peers in this field. In exchange for this superior performance, we propose to pay you less than what your peers are paid.

"In addition, your success must derive, in part, from your commitment to compensating workers at all levels in excess of the market value of the work they do for this company. In some roles, this "overcompensation" policy may result in the value of the work actually being less than the cost of employing the worker. In such cases the loss will, of course, be made up by deductions from your salary.

"We feel that you are the right person for the job, and we are certain you will give us your very best work. So! When can you start?"

 

[Nessie]

"Hello! Thank you for taking the time to answer our advetisment for a CEO. So here is what the position entails: We'd like you to be more competent, more ethical, and more successful than your peers in this field. In exchange for this superior performance, we propose to pay you less than what your peers are paid.

"In addition, your success must derive, in part, from your commitment to compensating workers at all levels in excess of the market value of the work they do for this company. In some roles, this "overcompensation" policy may result in the value of the work actually being less than the cost of employing the worker. In such cases the loss will, of course, be made up by deductions from your salary.

"We feel that you are the right person for the job, and we are certain you will give us your very best work. So! When can you start?"

That will be CEO of Strawman Inc then

 

[Skeptic Ginger]

Try reading my post again, for comprehension. My argument is based on the supported premise that inflation is driving wage.

My argument is that inflation needs to be addressed or we'll be bumping wages constantly with no end in sight.

I read your post. I comprehend your post. You have three problems.

Given inflation is affected by multiple variables, you cannot say raising the minimum wage will indeed fuel inflation. It may not have a significant impact.

And suppose it does, there are other consequences which might make it a positive outcome when the dust settles. For example, more money in the hands of the poor is money that will definitely be injected directly into to economy, they don't make enough to save much of it. More money injected into the economy, more jobs. I believe the ideal economy has a small amount of built in inflation as the economy expands.

And third, you still have not said how you propose to bring about deflation or what the consequences of that would be.

 

[respect]

This is a good article on the topic, besides being a basic overview on general economic thought on the subject, it includes a lot of potential reading sources if one is inclined. This study does a good job elaborating on the "invisible" nature of those harmed relative to beneficiaries of minimum wage hikes. Whereas the concerns about dire layoffs are generally overstated by conservative talking heads to say the least, there is a very real and likely concern that new job creation will decline. And people who just don't get a job are "invisible". Like a lot of subjects, one can likely find a study that supports whatever conclusion they like, but studies that claim all sorts of great things associated with minimum wage laws and hikes tend to be isolated and outside the norm or extremely flawed as the first link mentions about the famous Card/Krueger study that is the backbone of most of these arguments, but in actuality, used inaccurate volunteered information which was contradicted by hard evidence.

 

[Skeptic Ginger]

What's wrong with the hypothesis?

Well for one, suppose a company has those 6 minimum wage workers. How much is that owner making? Typically someone with 6 employees is going to be making more than enough profit to absorb $350/week and still be doing well. If not, they would likely have laid that 6th worker off anyway.

You don't make just enough money to give a worker a job, you hire them because growing the business is profitable.

It's not that these companies which hire the bulk of minimum wage workers are barely getting by. In reality, they are enjoying tax payer subsidized workers all the while making larger and larger profits. Walmart, for a glaring example, doesn't provide a lot of its workforce health insurance. Guess who subsidizes their health care? Government and people who carry health insurance cover all those costs. How convenient for Walmart we are all subsidizing their workforce while they present a facade of low prices. You just don't see the true costs of the goods sold there.

And as for hiring the 7th, your hypothesis has a glaringly false underlying premise, the same glaringly false underlying premise all the ideologues who think everything is a supply side problem have. If there's business you need that employee for, you're going to hire them. If there's no demand you aren't. It's not about how many employees you can afford, it about how many you need to supply the demand. And maybe that's why the job loss myth exists in the first place. Supply side ideologues can't understand a demand side economic imbalance like the one we currently have.

I assume your trying to back up what you posted in #86 http://www.internationalskeptics.com/forums/showpost.php?p=8998756&postcount=86.

In particular, I'm skeptical of the reasoning on your second link:
(Employment and the Minimum Wage, etc.)
I don't see where there's proof positive that A = B. I'm not saying that the analytic of the data are wrong, but I wouldn't be so quick to call them conclusive either. Look at the chart for OR for example; they show spikes of UE after the min was raised at a faster (and more sustained) rate than the rest of the USA. I find it too coincidental to blame this solely on the OR manufacturing market as quickly at the articles author did.

Not to mention that the Figure 7 chart shows a declining manufacturing job market trend through 2000-2003 and divides the States down the middle quite nicely. So trying to convince me that raising min wage is good all around for the country by using data of 3 states is a bit trivial. Not to mention, not showing those 3 states even have conclusive evidence.

That single study only looked at a single outcome, the impact on the fast food industry. Try the end summaries:

Based solely on their own research—using highly questionable data—Neumark and Wascher concluded that the minimum wage had a negative impact on employment. They did, however, acknowledge that many of their results are not statistically significant. Even more telling, after reviewing the results of the second Card and Krueger study that used government data and combining that with their own findings, Neumark and Wascher hedge by saying that they can only decisively conclude that “New Jersey’s minimum wage increase did not raise fast-food employment in that state” (Neumark and Wascher 2000, p. 1,391). From the point of view of a voter or policy maker, this is not an indictment of increased state minimum wages because the rationale for raising the minimum wage is improving the lives of minimum wage workers, not increasing employment at fast-food establishments.

Ultimately, the difference between the final Neumark and Wascher conclusion and that of Card and Krueger may be of interest to labor economists and statisticians, but not to low-wage workers and policy makers. Even if, based on Neumark’s and Wascher’s research, the suggestion of “a small positive effect” is removed from Card and Krueger’s findings, the evidence still suggests that states can raise minimum wages without hurting employment in fast-food restaurants. That being the case, it is even more difficult to believe that a state’s minimum wage can be the cause of statewide labor market distress in industries far less affected by minimum wages than the fast-food industry.

The point is, the paper reexamines the studies and conclusions supposedly supporting the job loss myth and found multiple reasons the conclusions were not supported.

And, even more importantly, it's one of how many studies I cited? 8? 10? I'd have to go back to look. I didn't add in the following because I thought I'd posted plenty. Bottom line, other than cherry picking whatever it is you cherry picked from that single paper, surely you must be able to come up with more evidence than that? There are bound to be dozens of studies supporting the supply side claims?

 

[respect]

Agreed. It wouldn't take long for $1.00/hr to become status quo, would it? It's in every corporation/company's mandate to try to pay for the cheapest labour possible, especially in the "unskilled" labour market because there they can get away with it (at least easier) and with the people having no bargaining power and the government sitting back and letting capitalism "run free" the underclass would double in an instant, IMO.

Out of all of the arguments for minimum wage laws, this "race to the bottom" type is easily the dumbest and could not be held by anyone with even the most rudimentary understanding of economics.

There is no race to the price floor now and no valid reason to believe there would be a race to less than the price floor in its absence. Does it perplex you that cars, houses, televisions and blue jeans cost more than a dollar even in the absence of price floors?

 

[Mudcat]

Given inflation is affected by multiple variables, you cannot say raising the minimum wage will indeed fuel inflation. It may not have a significant impact.

I see what your problem is. I'm not making the claim that wages fuel inflation. It'll keep on going wether there is a wage increase or not because its something independent of wages. But in order for people to be able to make ends meet the wages must go up in response.

I don't think it's wrong to say that increasing the wages, yet again, is anything but a short term solution at best.

 

[StankApe]

I will.

Another thing I would like to see is no work contract is allowed which means that person cannot be dismissed without having to give them lots of money as a golden goodbye or pay off. If you are incompetent, you should be sacked, get your wages to that day, pension contributions back and that is it.

Hire me! i work hard and love your television programs ,pubs and weather!


ETA: much of those so called "golden parachutes" is the company agreeing to purchase back the stock options held by the executive. It's usually not just severance cash.

 

[theprestige]

That will be CEO of Strawman Inc then

Help me understand: Which part, exactly, is a strawman?

The part where you want to hire the best manager you can possibly afford?

The part where you want to underpay them, compared to other managers with commensurate skills and experience?

The part where you want them to overpay your workers, compared to other workers with commensurate skills and experience?

The part where you still expect your manager to excel at their work, and lead your company to great success, even though you're going to pay them less than the going rate for good management?

The part where you'll use the savings from the manager's pay cut to offset losses incurred where employees are being paid more than the value they contribute is actually worth?

Because as far as I can tell, all of those are logical consequences of your proposal that management be paid less and labor be paid more.

 

[daenku32]

I haven't had a chance to read all the responses, but let me just add something:

Given all the objection to the minimum wage, I guess that speaks to how strongly the nation's economy depends on the labor of the poorest workers. It's almost like, our wealth is derived from the sweat of their labor and our ability to pay them less than they deserve for providing us with a growing economy.

 

[theprestige]

I haven't had a chance to read all the responses, but let me just add something:

Given all the objection to the minimum wage, I guess that speaks to how strongly the nation's economy depends on the labor of the poorest workers. It's almost like, our wealth is derived from the sweat of their labor and our ability to pay them less than they deserve for providing us with a growing economy.

You're thinking of Chinese labor, for which your guess might be somewhat accurate.

Americans who get paid the minimum wage do so because they are unskilled laborers doing unskilled labor, and they have a lot of competition.

McDonald's has no shortage of pimply-faced youth that can be taught to operate a french fryer in in half an hour or less. I really doubt that our economy is growing on the backs of fry clerks.














Okay, snark and sarcasm aside, seriously?

Seriously, I think the real problem is not that we're paying unsilled laborers too little to do low-value work.

I think the real problem is that we're not doing enough to produce citizens who enter the workforce with actual valuable skills that are worth paying for.

I think that there's too much emphasis on college education, too much subsidizing of low-value liberal arts degrees, and not nearly enough of a trade school track for students. Our high-schoolers are producing too many fry clerks, too many indebted college students, and not nearly enough apprentice welders or entry-level IT support technicians.

 

[respect]

I haven't had a chance to read all the responses, but let me just add something:

Given all the objection to the minimum wage, I guess that speaks to how strongly the nation's economy depends on the labor of the poorest workers. It's almost like, our wealth is derived from the sweat of their labor and our ability to pay them less than they deserve for providing us with a growing economy.

What nonsense, especially considering that only a small percentage of the workforce makes as little as minimum wage. Do you really think that the economy is built on the backs of high school students working part time jobs for gas and beer money? Or was your intention simply to argue against a fictional opponent?

 

[Skeptic Ginger]

I see what your problem is. I'm not making the claim that wages fuel inflation. It'll keep on going wether there is a wage increase or not because its something independent of wages. But in order for people to be able to make ends meet the wages must go up in response.

I don't think it's wrong to say that increasing the wages, yet again, is anything but a short term solution at best.

Are you young? Just curious.

A gradual increase in wages and prices is not a sign of a bad economy, it's a healthy one. What we have here now is a growing imbalance between some people's wages and inflation. By not adjusting the minimum wage to keep up with the rest of the economy it's become too far out of balance.

This has many drawbacks, the largest one is the rest of us are subsidizing the labor costs of the Walmarts and the McDonalds while those corporations reap more than sufficient profits. While it appears that income is being shifted downward in the form of things like Medicaid and food stamps, income is really being shifted up in the form of corporate labor subsidies. The people who benefit encourage the false image that welfare recipients are all getting free stuff from the government, but the truth is corporations are getting supplemented labor costs paid to the working poor.

And that's not even mentioning the suppressed demand that is hurting the economy right now which increasing wages on the lowest incomes would help to correct.

 

[Skeptic Ginger]

What nonsense, especially considering that only a small percentage of the workforce makes as little as minimum wage. Do you really think that the economy is built on the backs of high school students working part time jobs for gas and beer money? Or was your intention simply to argue against a fictional opponent?

That's a very outdated view of the minimum wage workers in the US

Try some 2008 demographics.

12% of the workforce
80% age 20 or older
60% women
40% have at least one child
70% have a high school education or more.