Myth Pro and Con about the Minimum Wage

[Rob Lister]

Here are some of the costs of running a business:

1. Rent (if you're renting the building);
2. Mortgage payments (if you're buying it);
3. Repairs and maintenance to the building;
4. Equipment repairs and maintenance;
5. New equipment when 4) isn't an option;
6. Gas;
7. Electricity;
8. Water;
9. Supplies needed to operate the business;
10. Materials needed to make what you're selling;
11. Taxes;
12. Insurance;
13. Losses due to theft;
14. Wages.

Do you believe that increases in any of the items 1-13 will increase a business's expenses? (Y/N)

Do you believe that if a business's income remains the same, but its expenses increase, its profits will decrease? (Y/N)

If you answered "yes" to the above, how are the rules for #14 different from those for 1-13?

And, just so we keep things in perspective, a MW increase will also likely increase the the end cost of providing, and thus buying, the following from your list

[*]Repairs and maintenance to the building;
[*]Equipment repairs and maintenance;
[*]New equipment when 4) isn't an option;
[*]Gas;
[*]Electricity;
[*]Water;
[*]Supplies needed to operate the business;
[*]Materials needed to make what you're selling;

MW doesn't doesn't just impact the the burger seller/flipper, it impacts the burger and bun maker, the cow and wheat raiser, the feed and fertializer producer, etc up and down the economic line.

 

[Dancing David]

It's generally considered to be a good idea to have an understanding of a situation before one ventures a rant about it.
Yes, perhaps that's the way it's done in New Zealand; not here. If you have an empty LP tank, you can't refill it yourself unless you happen to own a gas distributorship. You take it to your local mega-home improvement store, and they take it back from you and give you a filled replacement. The replacements are kept in a cage under lock and key.

Now, if Home Depot's "customer associate" whose job it is to carry the key around and unlock the cage can't be bothered to answer three successive storewide pages over the space of 15 minutes, should I:

1. Get a sledge hammer from the lawn and garden department and attack the locked cage with it until it yields its treasure, or;
2. Take my business elsewhere?

Being a poofter, I opted for #2. I'm sure you would have taken #1, but we can't all be working class heroes such as you.

Now, as for the guy with the key, I ask you: If this is typical of his work ethic, is he worth minimum wage?

As you say , it would help to have more information, although i do find your post funny.

Why didn't he answer the page?

Could it be that they were busy doing something else, like helping another customer or 'dropping a duece'?

I recall very clearly when I worked at the Wonderful Land of Kmart, that I might be responsible for hardware (such as it was, and not a knowledgeable area for me), appliances and layaway at the same time. Some one once got very mad bacause I was in layaway, it was a Friday afternoon, always very busy, and there was no '01', grunt to carry heavy items around, so this customer got very mad because they had purchased a patio set and there was no one to lug it for them.

And why was that?

Because the desire and need for profit of KMC was the dominant factor is scheduling employees to work. This is a corporation that at the time had a policy against hiring full time employees , unless they had to, and also believed that it was best to schedule only employees that were absolutely needed. that makes sense from the profit sense but not from the customer service sense.

I also consistantly had the highest number of customer compliments of any employee in the store, was always found to be busy and productive when watched by the store security and had very high preformance reviews.

Yet my inability to answer the page for assistance to lug the pation furniture was not because of my skills or abilities but due to the corporate structure.


On the other hand, when it comes to giving an employee the keys to a dangerous or valuable item a store is very unlikely to give them to the lowest person on the totem pole. usualy you have to have training to open the gun case and I hope that you have to have training to oopen the LP cylinder case, so a lackwit who is working at the lowest pay scale is usualy not the one you give the keys to, usualy it is a manager or someone who has showed some sort of smarts or intiative. Unless you want the valuable item to walk out the door, guns to be sold to people without FOID cards or the charged cylinders to rocket around your custormers.

I believe that Home Depot usualy pays it's grunts more than minimum wage as well.

 

[Dancing David]

Sure, lack of education is only one reason why someone might be stuck working a minimum wage job long term. Others include lack of marketable skills (which goes hand in hand with lack of education), lack of motivation (otherwise known as laziness) and retardation (which might be one of the few legitimate excuses for lack of education and lack of skills). Of course, that doesn't change the fact that if someone is not interested in acquiring the education or skills necessary to move beyond the exciting world of mop-technician, it's not the responsibility of the employer to pay that individual any more than someone else who is willing to do that very same job.

I'm not sure what my age has to do with anything. I'm merely stating the obvious.

Due to your obviously great skills in other areas, which dominate so much of your brain power, you have left out the two most imporatant.

1. Learning disability, a very real thing, and the reading and comprhension problems are the greatest hardship for those who try to get through school with them.

2. Home enviroment; parents who lack skills to help with hoemwork, lack sufficient income or ability or desire to nuture thier children are a huge reasons.

But by all means continue to show a lack of criical thinkinking and show your religous devotion to the dominat paradigm of those in pwoer.

 

[Dancing David]

OMG!!! That exact scenario just happened to me about two weeks ago --- I went over to the person in the gardening department and asked to have two empty tanks replaced with full ones. He had to call for the "key person". As we waited (and waited), I asked him "Why is the key (the key that only opens the propane tank cage) not here with the person in the garden department?" He had no answer --- but did come to realize how foolish it seemed to be otherwise. Finally, after the "key person" came and opened the cage, I asked if it should be left here in this department. "Can't do that", was the reply. "Why not?" Well, that had no answer from this person as well --- just a shrug. Now, it may not be their fault of all this ... but somewhere someone is being paid for these types of decisions, and I assure you, this type of reasoning is not limited to propane tank cages.

And if you really want to start pulling your hair out ... come out my way and get your gasoline pumped here.

Hmm, who makes those decisions and what do they get paid for thier obvious lack of skills?

 

[Dancing David]

I was using the examples as someone at a young age messing up. It happens.

If they do so at 18 it often is the end of any future. That to me is unfair.

It is also unfair, that an individual also capable of making equaly poor choices to tise to become president of the uSA.

He has made the poor choices, he had lied to get where he is, he has scammed the government for his wealth, he lacks the skills to even be a self made man. But because his father, and his father's father have power and money, he is able to cover his mistakes, buy off the judge, dodge the draft and become a wealthy shyster who becomes president.

And then he is called, smart, visionary and a good example of hard work and the American Way.

Despite the fact that they are an ignorant, coniving thief, who would have had many a trip to jail if they came from another SE class.

(Warning all characters in this scetch are imaginary and any resmblances to actual politics of either party are purely intentional)

 

[Rob Lister]

In an attempt to get back on topic, it is my humble opinion that MW is nothing more than price-fixing. Although the goal is nobel, some would say, it ends up inflating prices such that the increase in MW is evenually negated.

It feels good, but it accomplishes nothing in the long run...the market adjusts.

Raising, especially as planned -- slowly -- will have minimal long term impact, good or bad. Wanna raise it? Go for it. Lots of people will feel better. That must be worth something.

 

[Dancing David]

Please. I don't know where you are, but in the United States the government practically falls over itself trying to give people money to go back to school to qualify for higher paying jobs. Have you never heard of student loans? Why people don't take advantage of such opportunities is beyond me.

Your ignorance is amazing, you can't just go to college dofus, if you haven't made it through high school you won't make the admissions for college, most loan programs will not cover you for remedial education.

Again , you show a true lack of critical thinking, and must be one of the 'non-sceptics alike'.

"Are there not poor houses?"

To be sceptical of blleding heart liberals and then just tow the religous line of those in pwoer shows that you lack critical thinking, or don't apply to.

 

[Dancing David]

Right back at you ...


That's exactly how I did it.

Still shows a lack of critical skills, if you work to to three jobs and already work twelve hour days, what are the chanes you will be able to go to college on a lack of sleep. especialy if you don;t have a car.
The fact that you pulled your self up by your bootstraps does not mean all acn do it.

1. did you already have a high school diploma?

2. How many jobs did you work at the time?

3. Did you have children, and a partner to care for the?

Pulling up by ones bootstraps is great, many people are holding themselves up with thier bootstraps already and just going to school might cause them to fall.

Student loans don't actualy cover living expenses for most people.

 

[Dancing David]

Well, you must be a poofter, too.
Heh. My mom and my sister both live in NJ. I've learned to never say, "Fill it up..." because if you do that, they pop the hose into your tank and wander off to the next guy. Then, when the filler clicks off, you have to stand there waiting until he decides it's finally your turn to get waited on again.

So when I pull in, I do some quick mental arithmetic and tell 'em, "Twenty dollars of regular..." Now they know there's a limit to how much gas I want, and they keep an eye out. And if by chance it gets to twenty, I shut it off myself and noisily replace the hose to get their attention. When they complain, I can either point to my Virginia license plate and say, "Oh, so sorry, I didn't know," or, if I'm feeling combative, "I said I only wanted twenty."

Tangent (<> derail): All my credit cards say, "DEMAND PHOTO I.D." in the signature block on the back. I gassed up in NJ a while back. Slow day, just me and the teenager attendant there, so I told him to fill it up. I gave him my credit card, which he twirled around in his hand, checking out the design and the pretty colors, flipped it over, saw the back (...c'mon, you gonna ask for I.D. now...?), flipped it over again, twirled it around some more, the filler clicked off and he topped it off to the next dollar, swiped the card, gave it back to me with the receipt to sign...

Someone explain to me why this pimply-faced, slack-jawed knuckle dragger deserves to be paid minimum wage to do something I can do just as well and twice as fast, despite my complete lack of formal training in the lucrative field of gas pumping.

Again very funny!

But why assume that the pumper is the knucle dragger who makes the decisions that bother you so much, thier knuckles do not set policy.

True fact at KMC I was told that it was coporate policy to not 'pop' (sieze) expired or stolen cerdit cards because that would be 'bad for business". So I was told not to do the right thing and told not to recieve the bonus you get for each popped card. (Back in the day, don't ya know. Had to look through that little book to see if the card was valid.)

 

[Dancing David]

Fixed.

Student loans also cover cost of living. Mine did.

I find that hard to believe, my daughter who is smart and works to supliment her loans, and she recieves not inconsiderable support form me to pay her bills.

So I really question that you recieved enough to pay your living expenses. My daughter is currently in college, her expenses are comparitivly low, and she works twelve to twenty five hours a week.

Did you have scholarships or grants, when did you do the hard work to change your life?

If I had the choice of working from 7:00 a.m. to 11:00 p.m. for minimum wage or attending school to better my chances for a non-minimum wage future, I know what I would do.

Oh, wait. I did.

Did you have kids?
Or parents without income?
Did you already have debt?

I don't know what you consider young. But it amazes me that people choose to make things so difficult for themselves and not take advantage of the opportunities that are right in front of their faces.

And it amazes me that you think every one in the world is just like you, have you met epopel with a reading comprhension problem? Do you know how a learning disability is defined, and it is not based upon a 'pixie fairy' standard it is based upon solid measures.

Kudos to you for what you have done, it doesn't follow that every one can do it the way you did.

 

[Dancing David]

Yes, but student loans cover the cost of living for the student and NOT for his family. I'm assuming that you weren't a single parent while you attended school.

Explain to me how it's possible for a single-mother of two to get a better-than-minimum wage job while working, caring for her children and being able to afford adequate child-care? Throw on top of that tuition, the cost of books, lab fees, etc.

The government doesn't support anyone while they go to school (that's not what student loans are for, right?), but raising the minimum wage might help her better support herself while she goes to school.

Loans do not cover living expenses for every one!

In fact they don't cover for a whole lot of people. The standards are aribitrary, they include all sorts of things like family income, even if your family refuses to help you, and some states have higher loans amounts than others.

 

[Dancing David]

Common misconception on the "what the market will bear" part. That pricing theory doesn't pass the diamond water paradox at all.

Let's suppose we have a competitve market. Company A tries to charge a very high price (whatever the market will bear, whatever that means, exactly). Companies B, C, D, E... will all undercut them. In short you've left out the supply side of supply and demand.

That assumes that prices are set competitivly, which is a good thing. have you ever purchased a video game, or perscription drug( being a monopoly, I know)?

There seems to be a lack of competition there.

The free market is not always free.

I do understand more than you might think. To just say that competition could do something does not mean, competition will do something.

But I feel your posts are a contibution to the thread.

Now let's suppose we have a monopolistic industry. This would be closer to your ideas. We have ONLY company A producing the good or service. Now, they can't be undercut. So do they raise their prices? Oh, yes! But to "whatever the market will bear?" Well, I don't know what that phrase means. But like any company a monopoly is a profit maximizer. And whatever they produce follows the Law of Demand (which says that as the price rises the quantity demanded falls.) In otherwords, as they raise prices they sell fewer. Of course the per unit profit increases. This is a simple optimization problem. I can't SOLVE it without knowing the marginal costs for the production as well as the shape of the demand curve. But the company is still restrained by prices. And that's when it's a monopolistic (read non-free market) scenario.

I know, but that does not mean that free market forces will always prevail to lower prices, there is always the desire for profit, which in some areas seems to dominate over the competitive factor in increasing sales at a lower profit.

And do you think such critisisms are valid? By "we," I meant we in these forums. I am aware that society at large criteques science and scientific conclusions with non-scientific reasons. But aren't we supposed to act differently in that regard?

I was reffering to these forums.

And human behavior is what it is, a free market is a great thing as well, if it was the only determinant of behavior.

You misunderstand rational as defined by economists. Rational behavior for individuals is that which maximizes expected utility. Which is basically what you said (power, benifits them personally, etc.)

Aaron

I think we agree on the last, I meant rational in the general sense.

 

[Dancing David]

Depends what you want. Flipping burgers actually pays better than selling crack. Or didn't you know that?

So why DOES anyone sell crack on the corner instead of flipping burgers? The real answer isn't the money, because they don't make as much money, and that's why they pretty much all live with their parents. The real answer is status. That's a cultural problem, not an economic one.

Hmm, either the crack dealers you knwo are user or they pay burger flipper well where you live.

the mules don't make much, but the distributer usualy makes about $200/hour or more. While the transporter usualy triples thier money.

Which part of the crack economy are you addressing? If you do a turn around on a large quantity of cocaine the profit margin is usualy around 80%.

An aggresive dealer on a good corner can make up to $5000 in a single evening, after the cut to the boss and crew. But if you are a penny ante user trying to support your habit then you will usualy loose money.

 

[Dancing David]

Hey, if that's what it means, than I'm all for it. But that seems an odd definition of the term to me. And I doubt people who use it mean that. But absolutely a firm SHOULD charge whatever price maximizes their profits (or minimizes their losses.) It so happens that in a truly competitive market that is also the most efficient pricing for society as a whole. Which seems to run counter to the notions people who use the term seem to have in mind.

Aaron

Should, and do are different, the profit motive is very strong. So you can theorheticaly run a bussiness into the ground for your own profit and then skedaddle.

 

[Dancing David]

Since no-one else has pointed this out, we're not just talking about a raise for burger-flippers. Whiel relatively few people receive minumum wage now, there are a lot that get aren't very far above it. The usual proposal is to raise minimum wage to $7.50/hr. Let's say right now fast food jobs start at minimum wage, $5.15 an hour. Retail jobs start at $7.50/hr and customer-service jobs start at $11/hr. While retail doesn't require skills per se for non-sales jobs, it is a lot more complicated than fast food (actual numbers on the register and whatnot) and requires more responsibility. If minimum wage goes up to $7.50, they'll be paying the same as fast food. If they want to be able to get the better workers, they'll have to pay more. Customer service jobs require fairly little education, but are stressful to many people and involve skills that are far from universal. I fretail wages get raised to within striking range of customer service, they'll have to raise their wages and so on up the line. How could such a broad increase in wages not increase business costs, leading to higher prices? Ganted, there's no reason to think the resulting raises would be enough to cancel out the increase as the increased wage effect will be more pronounced at the lower end and there are costs other than labor, but I don't realistically see how a minimum wage increase wouldn't lead to price hikes.

Hmm, they seem to pay more where you live, a good 'factory wage' here is $8.00/hour while retail might pay around $6.00 to $7.00, but not very often.

 

[Dancing David]

What do you mean "luck"? An event whose occurence is not readily predictable? If so, we all have luck, every single day, some of it good, some of it bad.

But there are a few of us who can create something the whole world wants and will pay dearly for. Creation is very rarely a matter of luck, despite what a_u_p might think.

Quite true, luck is the ability to get there first in this case, and to do something that could be done, that others weren't. maybe not always the case.

Most luck is 'character'.

 

[Dancing David]

Problem is, if the price was higher the "white wingers" (whatever the hell that is) would just clean up themselves. Labor, as does everything else, has a market value. A cleaning job simply isn't worth $50,000 a year in salary. It would be swell if it worked that way, my rental apt. upstairs currently rents for $995/month. I feel I deserve $2,000/month for it, I could sure use the extra cash, but for some reason the market doesn't agree. So $995 it is.

BTW, cleaning women here are quite often white-skinned eastern European (esp. Polish and Russian) immigrants, in numbers disproportionate to the population as a whole. So beat your racism drum somewhere else.

Wierd thing, I have a friend that easily makes that($50,000) in the service economy cleaning things that others hire him to clean. but that does not mean a custodian should make that either.

But then he works so fast it is just amazing, and a good example of the free market at work.Here in central Illinois, most bussinesses hire other companies to do thier cleaning, which seems to be a very positive thing.

 

[Ziggurat]

Hmm, either the crack dealers you knwo are user or they pay burger flipper well where you live.

I'm talking the typical dealer, and it's true countrywide. Sure, there are guys who make lots of money dealing drugs, but they aren't the typical dealer, just like the manager at the fast food joint makes a lot more than the burger flipper. BPSCG was right: I was reading Freakonomics.

 

[HeavyAaron]

That assumes that prices are set competitivly, which is a good thing. have you ever purchased a video game, or perscription drug( being a monopoly, I know)?

There seems to be a lack of competition there.

The free market is not always free.

Umm... did you bother to read my entire post before replying? The bulk of it was in response to just this objection. And by the way, a monopoly is NOT a free market device. In fact your beloved government is to blame for the granting of monopoly for the two examples you cite. That's not a free market solution to the innovation problem. It's a government solution. It's disingenious to suggest that the government is the solution to free market problems then cite a GOVERNMENT problem, instead of a free market one. As a matter of fact the going belief is that all monopolies are government caused. A free market abhores them.

I do understand more than you might think. To just say that competition could do something does not mean, competition will do something.

In this case that "thing" is stay price competitive. Well, shock if I believe that a truly competitve market keeps competitive pricing. It's only one of the most solidly empirically backed prediction of economics. But go ahead, give me a counter example. Provide an example of a truely competitive good (read commodity) which without government interference fails to have a competitive price. I'll wait.

But I feel your posts are a contibution to the thread.

Thanks. I am usually most parpicatory in threads where I think my expertise has value. For the full disclaimer I do not work as an economist. Like a number of people have mentioned on this thread, I've chosen a career based on my love of it, not on what pays the best. I'm a software writer. But one of my degrees is a bachler's degree in Economics (with a 4.0 GPA.) If i ever burn out on writing software (which I cannot imagine) I'd like to teach economics at the community college level. It is a passion of mine. Just the non-academic career options for economists I find a bore.

I'd like to think that my motivation for participating in such threads is an intent to educate, not persuade. Of course reality is somewhere in between.

I know, but that does not mean that free market forces will always prevail to lower prices, there is always the desire for profit, which in some areas seems to dominate over the competitive factor in increasing sales at a lower profit.

You seem to think those are competing notions. They aren't. It's the desire to maximize profits which cause competitive markets to keep competitive pricing. Now, there is an incentive for collaboration instead of competition. (I.e. a cartel.) But cartels aren't free market devices. They are cheats. But have you ever wondered why cartels so rarely crop up? Because there exists a HUGE incentive for the members of the cartel to cheat on one another. And what does it mean for them to cheat on each other? It means to overproduce their cartel quota or to under cut the price. Both of which bring them closer to the competitive pricing. The profit motive DRIVES companies to competitive pricing in competitive industries.

You claim to know a fair deal about this sort of thing. But your statements indicate a lack of knowledge about introductory micro economics. I would suggest picking up a high school text book and reading the chapter entitled "competitive industry" or perhaps "price takers." It so happens that in a competitive industry the producers DON'T EVEN GET TO SET PRICES. Think of the tomato farmer. Do you think he gets to choose the price to sell his tomatos at? Heck no. He takes the market price. If he tried to raise it to increase profits he wouldn't sell a single tomato.

I was reffering to these forums.

Hmm... I have not seen much arm-chair critisms of mainstream science fields. Global warming I guess would be a major exception.

And human behavior is what it is, a free market is a great thing as well, if it was the only determinant of behavior.

It's the single determinate of FIRM behavior. A firm has one function... maximizing profits. You seem to intuitively know this, but you consider it a vice instead of a virtue. According to behavior theory individual behavior is utility maximizing, which is a little different.

I think we agree on the last, I meant rational in the general sense.

Okay, I've taken this subthread back. So what you're saying is that economists have a consensus of belief simply because that belief benifits them? You do know the whole point of the scientific method is to avoid that sort of problem, right?

Aaron

 

[Just thinking]

I agree teacher salaries are too low. Wouldn’t you agree this is a good indicator that something in society is broken? Or an abuse is taking place somewhere in the system?

This may be (in part) the result of a material/service-based economy; not to mention one that expects immediate results (relatively speaking). How does one show the end-product of a year of teaching? What exactly can one take to the table and exchange for a class of 4th graders that just finished their school year? Just how much profit can advertisers get sponsoring an 8th grade basketball game? How many crucial problems (even around the home) can be repaired or solved from those 6th graders? Years and years with no tangible results --- even at the end of high school. Of course, most everyone understands the need for a good education, but when it comes down to it, it's more on the order of long term investing --- something that usually never yields a high return from year to year.