Democrats block minimum wage increase

[Foolmewunz]

But it does cause hours to be cut back. Or did you really think that employers would really pay more for the same amount of work?

Well, since the idea of the increase would be just that,... yes. The purpose of a minimum wage LAW would be to make it a requirement that people get paid a working wage.

If they are able to cut back hours then they weren't managing their labor well before the increase. Most places like McDonald's need X number of people to perform Y number of functions for Z number of minutes. Do you think they close down a queue and lose the customers to the BK next door. They need the people on the counter, on the grill, on the fries, etc... They either pass on the costs, eat them, or find other revenue opportunities like longer business hours, different products, promotions, etc....

 

[Mudcat]

To think that they would rather forego earning any profits at all, because they are forced to pay fair and reasonable wages, is to deny reality and good sense. Business owners are used to thinking in terms of margins. They don't abruptly give up the venture because the margins shift, if they did they would quit their businesses daily, because most all marginal costs are variable and shift on a daily basis, at least in the real world.

I'm not a business major, could you break that down more simply for me please?

 

[Grizzly Bear]

Thanks for coming back and responding. I thought the thread was dead and almost didn't even look at it today.

Okay..... but none of that really lends credence to the claim I was commenting on. Yeah, your company might get some blowback if the economy is bad, but that is only related to the minimum wage if you assume that a raise in the minimum wage is somehow going to cause a drop in the economy. There are many other and more significant factors in a rising or falling economy than the minimum wage rate.

The minimum wage rise would be more an exasperating factor than a causation to an economic downturn. Like I said I started above current minimum wage anyway. I was laid off as it was because they didn't have enough work for me, and in essence they were burning money for me to just sit there, so I won't be blaming minimum wage laws for that; there were other factors at play. I'm just saying adding that to businesses during a recessions probably isn't the best idea in light of the other issues the recessions pose.

 

[Trakar]

I'm not a business major, could you break that down more simply for me please?

All business expenses and costs fluctuate based upon a variety of outside influences (generally, based on changes of supply and demand in the market of customers and suppliers interested in that product - this is true whether you are looking talking about the T.V.s your company is building, the price of the raw materials and power needed to produce those T.V.s or the cost of the labor to produce those T.V.s). There is a float/buffer built into most pricing which absorbs short term fluctuations in the changes within these cost systems. If the total increase in production costs are more permanent, then either a business will accept lower profit margins or they will adjust their product pricing based on marginal revenue production calculations to return their profit margins to levels that they feel are appropriate while maintaining competitive marketplace pricing. For most industries, labor cost increases (or decreases) are hardwired into the price of the product or service being produced, meaning that permanent changes in labor costs are generally passed on quite quickly to customers in the form of price increases of product/service. For most industries, labor is a minor cost factor. This means that the cost of doubling the labor costs to produce the same product, would only raise the marginal costs (the price required to produce 1 additional unit of product) by a small amount. For instance, if all non-managerial staff that worked at McDonald's were to have their wages doubled, and administrators wanted to maintain current profit levels, the entire cost of their increased wages could likely be more than offset by an across-the-board increase of a few dimes per product sold.

 

[Trakar]

The minimum wage rise would be more an exasperating factor than a causation to an economic downturn. Like I said I started above current minimum wage anyway. I was laid off as it was because they didn't have enough work for me, and in essence they were burning money for me to just sit there, so I won't be blaming minimum wage laws for that; there were other factors at play. I'm just saying adding that to businesses during a recessions probably isn't the best idea in light of the other issues the recessions pose.

The best and most effective way to reverse a recession is to pump money into the economy to stimulate growth and increased productivity. This is most efficiently performed through minimum wage increases and refunding or offsetting the taxes of the low-end wage earners. The reason this is the most efficient means, is that the low-end wage earners spend the increased money to pay off debts and buy new products and services. This generates increased demand which drives business owners to invest in expanding their operations and growing their market. Top down incentives are more difficult to realize and much less efficient at effectively stimulating the economy.

 

[thaiboxerken]

The reason the minimum wage exists is because there are plenty of businesses that would pay much less.

 

[Trakar]

The reason the minimum wage exists is because there are plenty of businesses that would pay much less.

Actually, the first wage laws were maximum wage laws and they were enacted because the plague had killed off much of the low-level workers/serfs, when the suppliers of labor are few, their efforts become a more valuable resource and there were incentives for the nobles to compete for the services of those they needed to work their fields and tend their lands. Thus there were many localities where serfs were venturing into the middles-class income ranges formerly reserved for merchants, manufacturers and artisans.

In general, of course you are correct that US minimum wage laws were designed to get rid of the US sweat shop factories and garment mills. I didn't mean to imply that they are typically used to make economic adjustments, merely that they can serve in that role and may be a better mechanism to use than EIC or similar tax-"refund" measures.

 

[Francesca R]

The best and most effective way to reverse a recession is to pump money into the economy to stimulate growth and increased productivity. This is most efficiently performed through minimum wage increases and refunding or offsetting the taxes of the low-end wage earners. The reason this is the most efficient means, is that the low-end wage earners spend the increased money to pay off debts and buy new products and services. This generates increased demand which drives business owners to invest in expanding their operations and growing their market. Top down incentives are more difficult to realize and much less efficient at effectively stimulating the economy.

Why do you think minimum wage increases and reduced taxes for low-income earners are not "top down"?

 

[Trakar]

Why do you think minimum wage increases and reduced taxes for low-income earners are not "top down"?

Your question suggests that you are referring to how such policies are
instituted, whereas my discussion is about how such policies impact
economies. A top down economic impact makes changes at the top end of the
economic financial structure (e.g. financial institutions and top end wielders of
economic power, AKA "trickle down" or "supply-side" theories) a bottom up
economic impact makes changes at the base of the economic financial
structure (e.g. end use consumers, and low wage earners, AKA "demand-side"
theories).

 

[mgidm86]

While a majority of jobs lost during the downturn were in the middle range of wages, a majority of those added during the recovery have been low paying, according to a new report from the National Employment Law Project.


Lower-wage occupations, with median hourly wages of $7.69 to $13.83, accounted for 21 percent of job losses during the retraction. Since employment started expanding, they have accounted for 58 percent of all job growth.

So the previous increase in the minimum wage appears to be justified.

http://www.nytimes.com/2012/08/31/business/majority-of-new-jobs-pay-low-wages-study-finds.html?_r=0

Are you saying the loss of high paying jobs to low paying jobs is a good thing?


Minimum wage will always be just that - a minimum wage. Everything will rise accordingly.

 

[Francesca R]

Your question suggests that you are referring to how such policies are
instituted, whereas my discussion is about how such policies impact
economies. A top down economic impact makes changes at the top end of the
economic financial structure (e.g. financial institutions and top end wielders of
economic power, AKA "trickle down" or "supply-side" theories) a bottom up
economic impact makes changes at the base of the economic financial
structure (e.g. end use consumers, and low wage earners, AKA "demand-side"
theories).

Ah OK I understand what you are saying. But top-down more usually means macro, whereas bottom-up is micro.

But you have the incorrect associations of supply-side- and demand-side-economics. Supply-side economics is not "trickle down economics" (only its critics wrongly call it that) and it is wealth and income level agnostic. Likewise with demand-side (Keynsian) economics which is not asymmetrically oriented to low wage earners.

 

[Trakar]

Ah OK I understand what you are saying. But top-down more usually means macro, whereas bottom-up is micro.

At that point of that discussion, that would have been more confusing rather than more clear in meaning,...just as would the qualifiers of Austrian versus Keynesian approaches, but please, feel free to interpret as you see fit.

 

[Trakar]

Are you saying the loss of high paying jobs to low paying jobs is a good thing?


Minimum wage will always be just that - a minimum wage. Everything will rise accordingly.

Everything else rises regardless of whether minimum wage does. That is part of the problem.