Minimum Wage destroys jobs--again!

[shanek]

Gee, it's just amazing how the predictions of economics just keep coming true, despite the claims of many on this board to the contrary. Like, the claim that the Minimum Wage doesn't destroy the jobs of the very people it's purporting to guarantee higher wages for.

New Study Reveals Minimum Wage Hikes Lead to Job Loss for Minorities and High School Drop-Outs (http://www.epionline.org/news_detail.cfm?rid=95)

A study released today by the Employment Policies Institute (EPI) reveals the increasing job losses that plague minorities and high school drop-outs following minimum wage hikes.

The research, conducted by Dr. David Neumark, economist at the University of California, Irvine, looks at the effects minimum wage hikes have had since the welfare reforms of the 1990s. The author focused specifically on the impact of minimum wage hikes on employment levels, wages, and income for teens and young adults.

The author found that for every 10% increase in the minimum wage:
Minority unemployment increased by 3.9%
Hispanic unemployment increased by 4.9%
Minority teen unemployment increased 6.6%
African American teen unemployment increased by 8.4%
Low-skilled unemployment (i.e., those lacking a high school diploma) increased by 8%The study:

Minimum Wage Effects in the Post-welfare Reform Era (http://www.epionline.org/studies/Neumark_2007.pdf)

[TragicMonkey]

Is it better to have two people working full time but not making enough to survive on, or have one person make enough to survive on while the other is unemployed?

(Not that you can actually survive on minimum wage, even with the increase. Pretend you can, though, because you inherited a fully-paid for house that is, for some reason, tax free and you can walk to work and have no health problems.)

[Overman]

How many of those numbers overlap?

[Skeptic]

Is it better to have two people working full time but not making enough to survive on, or have one person make enough to survive on while the other is unemployed?

For the employers? The former, definitely.

[Ziggurat]

Is it better to have two people working full time but not making enough to survive on, or have one person make enough to survive on while the other is unemployed?

Both people working, of course.

If helping out the working poor is your objective, there's a much more direct and effective solution than raising the minimum wage: raise the earned income credit. Raising the minimum wage doesn't affect most working poor, but it does affect a whole lot of middle class teenagers. The earned income credit is the opposite: it misses those middle class teenagers and directly targets the working poor. And it doesn't price anyone out of the labor market either. There's really no good argument, even from a strongly progressive and pro-wealth redistribution persepective, to raising the minimum wage.

[TragicMonkey]

Both people working, of course.

But if they're both requiring state assistance even while working, and will have to declare bankruptcy if they get sick, then what's the point?

If I'm going to starve to death whether I'm working or not, I don't see what my motivation is to work. To drag it out a little longer?

[Francesca R]

I would prefer a negative income tax to a minimum wage. Doesn't destroy jobs, but raises taxes and admin burdens. There's no free lunch.

[Luke T.]

Is it better to have two people working full time but not making enough to survive on, or have one person make enough to survive on while the other is unemployed?

Actually, if you look at Neumarks study, it is more like, "Is it better to have 100 people working full time but not making enough to survive, or have 95 people make enough to survive on while 5 are unemployed?"

[TragicMonkey]

Actually, if you look at Neumarks study, it is more like, "Is it better to have 100 people working full time but not making enough to survive, or have 95 people make enough to survive on while 5 are unemployed?"

It'd work out perfectly if all 95 were employees at the welfare office, seeing to the needs of the 5.

[Snide]

Actually, if you look at Neumarks study, it is more like, "Is it better to have 100 people working full time but not making enough to survive, or have 95 people make enough to survive on while 5 are unemployed?"Good point. I would like to see the numbers in more detail (didn't have time to thoroughly check all of the charts). Is their idea of a 3.9% increase in unemployment like having unemployment go from, say, 5% to 8.9%? I doubt it. What it probably means (and should) is that for every 1000 people who were already unemployed (minorities, in the 3.9% example), there were, after the minimum wage hike of 10%, a total of 1039.

So for every how-many-thousand employees got raises, 39 lost their jobs. Still not a "good" result, but a lot less alarming.

[ConspiRaider]

The state of Florida disagrees with this thread title:

http://www.floridatoday.com/apps/pbcs.dll/article?AID=/20070130/BUSINESS/701300323/-1/archives

But, I guess I can understand why a company like, oh, ExxonMobil, who had nearly $40 billion in profit last year, might balk at paying its service station employees a more livable wage. If they do that - then how could they fund "experts" to minimize the warnings about global warming?

[Ziggurat]

But if they're both requiring state assistance even while working, and will have to declare bankruptcy if they get sick, then what's the point?

Because they can GET government assistance. And because I believe that working is good for you, and sitting on your rear end getting a government check for nothing encourages social pathologies.

If I'm going to starve to death whether I'm working or not, I don't see what my motivation is to work. To drag it out a little longer?

Can you find a single case of someone in the United States starving to death in the last 50 years due to anything other than infirmity, insanity, or being lost in the wilderness (all causes which can strike the rich)?

[Ziggurat]

I would prefer a negative income tax to a minimum wage.

That's effectively what the earned income credit is, and it already operates that way.

[Skeptic]

Let's take an extreme case: suppose there are no minimum wage laws. Suppsoe further A is B's slave but, to avoid charges of human slavery, B pays A a symbolic $1 a year for his 16 hours of work per day. Now, a minimum wage law is passed; B, cursing, instantly fires A, who--lacking the ability to find a job--is now unemployed.

On Shane's interpretation, the minimum wage law had horribly hurt A by causing his unemployment, thus "hurting the very people it proposes to help".

The problem with this claim, as the example illustrates, is that the minimum wage law is in there no to maximize employment per se, but to prevent exploitation of the poor. The idea is, it is sometimes better to be unemployed than to be exploited.

[Luke T.]

The author found that for every 10% increase in the minimum wage:
• Minority unemployment increased by 3.9%
• Hispanic unemployment increased by 4.9%
• Minority teen unemployment increased 6.6%
• African American teen unemployment increased by 8.4%
• Low-skilled unemployment (i.e., those lacking a high school diploma) increased by 8%

I am curious to know for how long the employment level is depressed after a mininum wage hike.

[Random]

Can you find a single case of someone in the United States starving to death in the last 50 years due to anything other than infirmity, insanity, or being lost in the wilderness (all causes which can strike the rich)?
Death by starvation may be rare, but poor nutrition can lead to any number of medical conditions ranging from diabetes to immune deficiency to, ironically, obesity. These can lead to large medical costs, lost work time, etc.

[marksman]

That's true, Skeptic. but Shanek's post was merely to respond to only one, apparently erroneous, defense of minimum wage: that it doesn't affect unemployment.

Responding with a different defense shifts the goalposts. Shanek is not, not in this thread to date, anyway, claiming that minimum wage laws do not reduce the exploitation of the poor, only that they do increase unemployment.

Of course, the question is at which point the costs of increased unemployment and employer wage costs outweigh the benefits of diminished exploitation of the poor. And that's something upon which I think reasonable minds will differ.

[Snide]

Let's take an extreme case: suppose there are no minimum wage laws. Suppsoe further A is B's slave but, to avoid charges of human slavery, B pays A a symbolic $1 a year for his 16 hours of work per day. Now, a minimum wage law is passed; B, cursing, instantly fires A, who--lacking the ability to find a job--is now unemployed.

On Shane's interpretation, the minimum wage law had horribly hurt A by causing his unemployment, thus "hurting the very people it proposes to help".

The problem with this claim, as the example illustrates, is that the minimum wage law is in there no to maximize employment per se, but to prevent exploitation of the poor. The idea is, it is sometimes better to be unemployed than to be exploited.I think you're right in principle. If, say 50,000 got 10% raises, while 40 lost their minimum-wage jobs and thus had to go on welfare, is that really such a bad result? Maybe, but let's debate that instead of starting the discussion in the manner this one was.

[Snide]

That's true, Skeptic. but Shanek's post was merely to respond to only one, apparently erroneous, defense of minimum wage: that it doesn't affect unemployment.

Responding with a different defense shifts the goalposts. Shanek is not, not in this thread to date, anyway, claiming that minimum wage laws do not reduce the exploitation of the poor, only that they do increase unemployment.

Of course, the question is at which point the costs of increased unemployment and employer wage costs outweigh the benefits of diminished exploitation of the poor. And that's something upon which I think reasonable minds will differ.OK, that's a good point regarding this post. I too was quick to shift the goalposts because of the past discussions we've had here with Shane. IMO, Shane over-emphasizes the counter-"no effect on unemployment" argument.

IOW, we get it, we're (mostly) not stupid...we KNOW minimum wage hikes lead, at least temporarily, to lost jobs. If one finds someone arguing otherwise, he should please go after that particular poster and straighten him out.

[Beerina]

Let's take an extreme case: suppose there are no minimum wage laws. Suppsoe further A is B's slave but, to avoid charges of human slavery, B pays A a symbolic $1 a year for his 16 hours of work per day. Now, a minimum wage law is passed; B, cursing, instantly fires A, who--lacking the ability to find a job--is now unemployed.

On Shane's interpretation, the minimum wage law had horribly hurt A by causing his unemployment, thus "hurting the very people it proposes to help".

The problem with this claim, as the example illustrates, is that the minimum wage law is in there no to maximize employment per se, but to prevent exploitation of the poor. The idea is, it is sometimes better to be unemployed than to be exploited.

I think someone paid a dollar a year would die of starvation rather quickly. Hence it would not be in their interest to work for such a wage (nor anybody's interest). Hence the job position would remain unfilled.

So A could either raise his wage offer, or do without. It isn't A's fault that B is poorly educated, not very smart at figuring things out, lazy, or some combo of the above. B, and everyone else, should be glad A even offers the job to begin with.

"Four dollars an hour? No? Five? No? Six? Ahh, three takers. I pick...you. Off you go!"

[Ziggurat]

Death by starvation may be rare,

It's not just rare, it's nonexistent as far as I can tell.

but poor nutrition can lead to any number of medical conditions ranging from diabetes to immune deficiency to, ironically, obesity. These can lead to large medical costs, lost work time, etc.

Sure. But even if income itself was the primary culprit in poor nutrition among the poor (there's reason to suspect that it's primarily about education, not income), the EIC would STILL be a better tool for combatting that poor nutrition than the minimum wage.

[Luke T.]

I think someone paid a dollar a year would die of starvation rather quickly. Hence it would not be in their interest to work for such a wage (nor anybody's interest). Hence the job position would remain unfilled.

So A could either raise his wage offer, or do without. It isn't A's fault that B is poorly educated, not very smart at figuring things out, lazy, or some combo of the above. B, and everyone else, should be glad A even offers the job to begin with.

"Four dollars an hour? No? Five? No? Six? Ahh, three takers. I pick...you. Off you go!"

Guess you have never heard of sweat shops. Do you believe that workers aren't exploited around the world? Do you believe that someone won't submit himself to an indecent wage because he knows that if he doesn't, someone else will take the job, and a few dollars is better than no dollars? Do you believe that employers are ignorant of this and don't take advantage of it?

[Random]

It's not just rare, it's nonexistent as far as I can tell.
I wouldn't say it is non-existent, but it may be hidden. A homeless man in Boston who doesn't get enough calories to maintain his body heat this time of year dies of "exposure", not starvation.

Sure. But even if income itself was the primary culprit in poor nutrition among the poor (there's reason to suspect that it's primarily about education, not income), the EIC would STILL be a better tool for combatting that poor nutrition than the minimum wage.
Actually, a good chunk of it is availability and cost of food. Urban poor and middle-class people can find themselves actually paying more for lower quality food than other groups. Do a google search on “grocery gap” to see what I mean.

[Ziggurat]

I wouldn't say it is non-existent, but it may be hidden. A homeless man in Boston who doesn't get enough calories to maintain his body heat this time of year dies of "exposure", not starvation.

A homeless man in Boston who isn't at a shelter on a cold night probably has mental problems, too. And increasing the minimum wage won't help him.

[Luke T.]

Liberty of Contract is dead!

[burnvictim77]

Let's take an extreme case: suppose there are no minimum wage laws. Suppsoe further A is B's slave but, to avoid charges of human slavery, B pays A a symbolic $1 a year for his 16 hours of work per day. Now, a minimum wage law is passed; B, cursing, instantly fires A, who--lacking the ability to find a job--is now unemployed.

On Shane's interpretation, the minimum wage law had horribly hurt A by causing his unemployment, thus "hurting the very people it proposes to help".

The problem with this claim, as the example illustrates, is that the minimum wage law is in there no to maximize employment per se, but to prevent exploitation of the poor. The idea is, it is sometimes better to be unemployed than to be exploited.


No, minimum wage laws effectively make those with minimal to no job skills unemployable.

In you scenario, why does A work for B? Probably due to desperation, right? Clearly A has no job skills.
In a scenario where you have to pay A a minumum of let's say, $10,000 a year instead of $1, what you have done accept set the price of craptastic labor extremely high?

[burnvictim77]

I am curious to know for how long the employment level is depressed after a mininum wage hike.

Probably until inflation catches up.

[Tmy]

There are ALWAYS min wage jobs available. Fast food, wallymarts, they are always hiring.

[aerosolben]

It isn't A's fault that B is poorly educated, not very smart at figuring things out.
So the wealthy and smart should be allowed to exploit the poor and ignorant?

[Ziggurat]

There are ALWAYS min wage jobs available. Fast food, wallymarts, they are always hiring.

This can be an indicator of vacant positions, or it can merely indicate fast turnover. With high turnover, it is easy to get jobs where there are far more applicants than openings, and yet openings still get advertised on an almost continual basis.

[SezMe]

I think it is intellectually dishonest to cite one particular study and declare your own preferred answer is the Truth, once again.

There are innumerable studies on this issue that reach opposite conclusions. Go to wiki (http://en.wikipedia.org/wiki/Minimum_wage) for just a start.

To counter Shanek, I could cite this study (http://www.epi.org/content.cfm/briefingpapers_bp150):
In general, there is no valid, research-based rationale for believing that state minimum wages cause measurable job losses.
and it would be just as wrong for me to conclude, "So, there. End of discussion."

I went to the Employment Policies Institute (http://www.epionline.org/) and learned two things:
1. It is not a unbiased organization.
2. They reveal NOTHING about their funding sources.

Regards the latter, I'm sure Shanek would agree with the political maxim to "follow the money" which is why point #2 is relevant.

Finally, note that I take no position on this matter because there are enough studies and experts on both sides that I don't think there is one simple answer. THAT is the crux of my objection to the OP.

[Tmy]

This can be an indicator of vacant positions, or it can merely indicate fast turnover. With high turnover, it is easy to get jobs where there are far more applicants than openings, and yet openings still get advertised on an almost continual basis.


True.

But dont these places also work with a bare minimum # of workers to be as effiecent as possible?? They dont have extra workers lying around just for the heck of it.

So if Wallymart needs 10 guysto run a shift, THey have 10 guys. If the min wage goes up, theyre not going to just have 9 guys on shift. They NEED 10.

[burnvictim77]

So the wealthy and smart should be allowed to exploit the poor and ignorant?

Define exploit.

[burnvictim77]

I went to the Employment Policies Institute (http://www.epionline.org/) and learned two things:
1. It is not a unbiased organization.
2. They reveal NOTHING about their funding sources.

I would like to point out two things:

1. In economics, there is no unbaised organization.
2. Bias, in itself, does not disprove their arguments.

Do you believe there is simply no evidence upon which one could judge whose economic theories make more sense?

[Luke T.]

Define exploit.
http://forums.randi.org/imagehosting/108645d4e65d84eab.jpg

[Luke T.]

Define exploit.

Lochner v. New York

[The Painter]

I don't know of anyone who makes minimum wage. Even the illegal immigrants get $120 per day plus lunch. Than again this is New York.

[Ziggurat]

True.

But dont these places also work with a bare minimum # of workers to be as effiecent as possible?? They dont have extra workers lying around just for the heck of it.

So if Wallymart needs 10 guysto run a shift, THey have 10 guys. If the min wage goes up, theyre not going to just have 9 guys on shift. They NEED 10.

No, actually, it's not that simple. There are a whole lot of possibilities for how things could change if wages were more fluid, but the basic issue is that there is not, in fact, a lump sum of labor that needs to be accomplished. There is an essentially unlimited pool of labor that could be done, and it never all gets done. Walmart, along with every other employer, will keep hiring employees as long as the value of the marginal work (that is, the work each additional worker would contribute) exceeds the cost of hiring, and they will fire people (or refrain from hiring) when the marginal cost exceeds the marginal value. Now it's true that for many situations, the marginal value of labor decreases as the amount of labor increases (diminishing returns, which can lead to relative inelasticity in the demand for labor), but it's pretty much never the case that the demand for labor is completely inelastic.

[burnvictim77]

True.

But dont these places also work with a bare minimum # of workers to be as effiecent as possible?? They dont have extra workers lying around just for the heck of it.

So if Wallymart needs 10 guysto run a shift, THey have 10 guys. If the min wage goes up, theyre not going to just have 9 guys on shift. They NEED 10.

No, they will quite likely only have 9 and attempt to get them to do the work of the former 10. Human 'labor units' are not so easy to calculate. And thus, socialist prices make very little sense to me and the market.

[burnvictim77]

http://forums.randi.org/imagehosting/108645d4e65d84eab.jpg

Children are quite a different issue.

Define exploitation of a consenting adult?

[Luke T.]

Children are quite a different issue.

Define exploitation of a consenting adult?

See post #36.

[Luke T.]

Also, see post #25. :D

[Tmy]

people like to get caught up in economic theory. You know, where there is that mythical employee who can leave a jon whenever he chooses.

Who can do this in real life?? If it was so easy to leave a job and pick up another we'd all do it every time we had a bad day at the burger stand!

[Luke T.]

New Study Reveals Minimum Wage Hikes Lead to Job Loss for Minorities and High School Drop-Outs (http://www.epionline.org/news_detail.cfm?rid=95)
The author focused specifically on the impact of minimum wage hikes on employment levels, wages, and income for teens and young adults.


Another question.

How many teens who allegedly end up unemployed due to a minimum wage increase are dependent on their job to survive and not for the spending money?

[WildCat]

So if Wallymart needs 10 guysto run a shift, THey have 10 guys. If the min wage goes up, theyre not going to just have 9 guys on shift. They NEED 10.
Not if there is a technological solution that is cheaper than hiring a 10th worker.

[Snide]

Not if there is a technological solution that is cheaper than hiring a 10th worker.Well, yes, but that happens irrespective of minimum wage hikes.

[shanek]

Is it better to have two people working full time but not making enough to survive on, or have one person make enough to survive on while the other is unemployed?

Better question: is it right to force the latter?

Besides, the overwhelming majority of people on minimum wage are teens/college students or people just entering the workforce or after a long absence. And they generally don't stay there long. Minimum Wage means eliminating these entry-level jobs for many people.

[shanek]

If helping out the working poor is your objective, there's a much more direct and effective solution than raising the minimum wage: raise the earned income credit.

That's exactly what the author of the study advocated (which should nix any possibility of people here claiming he's a libertarian with bias).

[shanek]

But if they're both requiring state assistance even while working, and will have to declare bankruptcy if they get sick, then what's the point?

To get work experience and move on to a better-paying job.

If I'm going to starve to death whether I'm working or not, I don't see what my motivation is to work. To drag it out a little longer?

Fortunately, most people have better foresight than you. They realize that their MW job is getting them the experience and references they need.

[shanek]

Let's take an extreme case: suppose there are no minimum wage laws. Suppsoe further A is B's slave

That's it, folks. No need to read further.

I'd like for you to go to those poor who just lost their jobs and tell them how wonderful it is for them that they're not "exploited" anymore. See how many punch you in the face...

[shanek]

I think you're right in principle. If, say 50,000 got 10% raises, while 40 lost their minimum-wage jobs and thus had to go on welfare, is that really such a bad result?

For that 40 it is. Why do you feel you get to harm that 40 to benefit the others?

I mean, it's kind of like the whole, "here's a healthy guy in the waiting room let's kill him and take his organs so that 10 other people here can live" kind of thing.

[shanek]

OK, that's a good point regarding this post. I too was quick to shift the goalposts because of the past discussions we've had here with Shane. IMO, Shane over-emphasizes the counter-"no effect on unemployment" argument.

Really? Last MW thread was about two dozen pages of almost nothing but.

[DanishDynamite]

Even assuming this crackpot study has it's facts right, the only comment I have to the results is: so what?

How are they in any way relevant to anything at all?

[shanek]

Guess you have never heard of sweat shops.

Guess you've never heard of "weasel words."

Guess you also don't remember me showing how Nike's so-called "sweatshop" in Thailand that everyone was making such a big deal about was resulting in many people for the first time being able to own cars. And yes, they were people who worked at Nike. Those poor, "exploited" people...

Do you believe that someone won't submit himself to an indecent wage because he knows that if he doesn't, someone else will take the job, and a few dollars is better than no dollars?

So, better to take that job away so that he won't be making any money, then?

Do you believe that employers are ignorant of this and don't take advantage of it?

I believe that supply and demand applies in the job market, too. This is a perfect example of it; after all, MW is nothing but a price support.

[Tmy]

. Minimum Wage means eliminating these entry-level jobs for many people.

Wouldnt the nature of entry level jobs (which you say people dont stay at long) mean that they would be the most plentiful jobs anyway.

[shanek]

Probably until inflation catches up.

Maybe, but it would be helped along by the growing economy. Basically, what has to happen is for the equilibrium wage (due to either nominal or real increases) to reach the point of the MW. A MW set at or below equilibrium has no effect.

[shanek]

I think it is intellectually dishonest to cite one particular study and declare your own preferred answer is the Truth, once again.

This is just the latest in a long line of study after study after study showing the same thing.

[shanek]

So if Wallymart needs 10 guysto run a shift, THey have 10 guys. If the min wage goes up, theyre not going to just have 9 guys on shift. They NEED 10.

Unless the work output they produce is not worth MWx10.

[Tmy]

No, they will quite likely only have 9 and attempt to get them to do the work of the former 10. Human 'labor units' are not so easy to calculate. And thus, socialist prices make very little sense to me and the market.

Why wouldnt they just get the 9 to do the work of 10 even without the hike in wages?

[shanek]

How many teens who allegedly end up unemployed due to a minimum wage increase are dependent on their job to survive and not for the spending money?

How many people on MW in toto who allegedly end up unemployed due to a minimum wage increase are dependent on their job to survive and not for the spending money?

[shanek]

Well, yes, but that happens irrespective of minimum wage hikes.

Well, no. The technological solution might cost $7/hour to operate. If MW goes up from $6.50 to $7.50, all of a sudden that technological solution is the cheaper option.

[Luke T.]

How many people on MW in toto who allegedly end up unemployed due to a minimum wage increase are dependent on their job to survive and not for the spending money?

Answer my question, and yours is answered.

[Tmy]

Well, no. The technological solution might cost $7/hour to operate. If MW goes up from $6.50 to $7.50, all of a sudden that technological solution is the cheaper option.


Ok lets say that happens. Joe is laid off cause the widget factory now buys a machine to replace him. He can just go down the street and find another min wage job at McDs. the result is that Joe hsi making another buck an hour.

[Luke T.]

That's it, folks. No need to read further.

I'd like for you to go to those poor who just lost their jobs and tell them how wonderful it is for them that they're not "exploited" anymore. See how many punch you in the face...

I'd like for you to go those poor who are trying to survive on minimum wage and tell them they don't need a raise in the MW and discuss the so-nineteenth-century concept of "liberty of contract". See how many punch you in the face.

[DanishDynamite]

Even assuming this crackpot study has it's facts right, the only comment I have to the results is: so what?

How are they in any way relevant to anything at all?
Please answer the simple question, shanek. Thanks.

[Tmy]

I get the MW economic theory. But in theory communism works.

Lets look at reality. Weve had min wage laws in place for some time, yet our economy thrives. The "poor" in the US live like kings compared to some other freewheelin non-mw countries.

In the US we have a fed min wage, but many states have higher min wage laws. You would think all the jobs would flee those states for the cheaper states, but many of them do quite well within the country.

there are just so many factors that go into local empoyee/er dance.

[Snide]

For that 40 it is. Why do you feel you get to harm that 40 to benefit the others?Where do you get the idea I feel that way?

I mean, it's kind of like the whole, "here's a healthy guy in the waiting room let's kill him and take his organs so that 10 other people here can live" kind of thing.Well, since you choose to compare initiating a process that will lead to layoffs to killing someone to help others, I submit that it is more kind of like a bunch of colonists saying they're sick of Mother England and how she's treating us. We need a revolution...some of us will die (and a LOT more than 40 per 50,000+) for the benefit of others, but the end result is better.

[Snide]

Really? Last MW thread was about two dozen pages of almost nothing but.I will check it out when I get time and see how close it was to 24 pages of almost nothing but "minimum wage laws have no effect on unemployment" arguments.

If your claim holds up, I will admit it here.

[Snide]

Well, no. The technological solution might cost $7/hour to operate. If MW goes up from $6.50 to $7.50, all of a sudden that technological solution is the cheaper option.You are correcting me on this exchange?:
Tmy: So if Wallymart needs 10 guysto run a shift, THey have 10 guys. If the min wage goes up, theyre not going to just have 9 guys on shift. They NEED 10.

Wildcat: Not if there is a technological solution that is cheaper than hiring a 10th worker.

Snide: Well, yes, but that happens irrespective of minimum wage hikes. (Simple translation: Walmart will employ 9 instead of 10 if technology can replace the 10th worker, regardless of whether there ever was a minimum wage hike.)

shanek: Well, no.
So you are telling me I am wrong that regardless of whether there was a minimum wage hike, the practice of more efficient technology replacing human labor does occur. Nice.

Because I am in 100% agreement with the rest of your response (as would be anyone who has made it through 9th grade), I will take the high road and presume you mis-read the exchange, or misunderstood my response.

[Solitaire]

I am curious to know for how long the employment level is depressed after a mininum wage hike.

If we assume a ten percent hike in the minimum wage and an annual inflation rate of three point two percent then it will take approximately three years to return to normal.

Often reporters will note that the the minimum wage rises in states with fast growing economies and the minimum wage doesn't rise in states with slow growing economies. This creates a false impression that raising the minimum wage causes a growing economy. In fact, politicians, who raise the minimum wage, understand the effects of a minimum wage, and have good access to the economic data. They know that practically no one in their state works for minimum wages, thus if they raise the minimum wage then they will pay no political costs and get the benefits of appearing to help the working poor. It's a simple game.


Here's the most recent NewsHour reports on the matter:

Business Divided Over Impact Of Higher Minimum Wage (http://www.pbs.org/newshour/bb/social_issues/jan-june07/wage_02-02.html)

Grassley And Rangel Debate Competing Minimum Wage Bills (http://www.pbs.org/newshour/bb/politics/jan-june07/wages_02-15.html)

[SezMe]

I would like to point out two things:

1. In economics, there is no unbaised organization.
2. Bias, in itself, does not disprove their arguments.
There may well be no unbiased organizations, period. And while your second point is theoretically true, practically, bias can play a huge role in the effectiveness and validity of a study done by an organization that has, itself, a stake in the outcome.

Take, as the quintessential example, all the smoking/cancer studies done 50 years ago by groups funded by the tobacco industry.

Do you believe there is simply no evidence upon which one could judge whose economic theories make more sense?
Much too broad a question. I imagine PhD theses have been written on a more narrowly drawn question.

[SezMe]

This is just the latest in a long line of study after study after study showing the same thing.
Geeez, Shane, you didn't even look at that wiki page, did you? The EXACT same statement can be made by those who disagree with you. While you may not like that fact, there it is. Again, it is intellectually dishonest to ignore those studies, trumpet those that support you and make the claim in the title of this thread.

[Ace_of_Sevens]

I notice those drops aren't huge. Surely the 10% increase would mean an overall increase in the total pay of low-end jobs. I'd gladly take a situation where I was paid 10% more and spent 4% more time between jobs. It's more pay and less work.

[burnvictim77]

Why wouldnt they just get the 9 to do the work of 10 even without the hike in wages?

Saves the hassel. If they are making a comfortable profit, they may not feel the need to cut staff. Now, if you pass a law which raises their costs, what do you think they are going to do? Simply accept lower returns on their investments?

[burnvictim77]

I get the MW economic theory. But in theory communism works.

Lets look at reality. Weve had min wage laws in place for some time, yet our economy thrives. The "poor" in the US live like kings compared to some other freewheelin non-mw countries.

In the US we have a fed min wage, but many states have higher min wage laws. You would think all the jobs would flee those states for the cheaper states, but many of them do quite well within the country.

there are just so many factors that go into local empoyee/er dance.

And in areas where you raise the minimum wage, you also have higher costs of living. Do you see a possible connection there? We are in one of the most expensive nations to live in. And every time we raise the minimum wage, we see more people working below it. There are studies to support this, even those by our own benevolent Gov't.

[burnvictim77]

There may well be no unbiased organizations, period. And while your second point is theoretically true, practically, bias can play a huge role in the effectiveness and validity of a study done by an organization that has, itself, a stake in the outcome.

Take, as the quintessential example, all the smoking/cancer studies done 50 years ago by groups funded by the tobacco industry.


Much too broad a question. I imagine PhD theses have been written on a more narrowly drawn question.

Are the studies wrong because there were funded by the tobacco industry? Or are they wrong because their science is flawed?

And the broad question can be rephrased as this: What evidence would convince you that MW is good, or, conversly, bad?

[shanek]

Answer my question, and yours is answered.

My answer is, probably very few. Yours?

[shanek]

I get the MW economic theory. But in theory communism works.

Lets look at reality. Weve had min wage laws in place for some time, yet our economy thrives.

Fallacious reasoning. There's a reason for the concept of ceteris paribus.

I will fully recover from my injuries; a year from now I'll be just as I was before (or near enough). So, it must be a good thing to be hit by a drunk driver, right?

Just because people, or the economy, can recover from something, and even thrive in spite of it, doesn't mean that that something isn't a bad thing.

The "poor" in the US live like kings compared to some other freewheelin non-mw countries.

Or even many Socialist MW countries. The poor, as I established in another thread, are so much better off because we've had much more of a free market than just about anywhere else.

In the US we have a fed min wage, but many states have higher min wage laws. You would think all the jobs would flee those states for the cheaper states,

And many do, as the old MW thread shows.

Your arguments would only make sense if MW were the only factor in unemployment. Clearly, it isn't. So everything you have said is specious.

[shanek]

Well, since you choose to compare initiating a process that will lead to layoffs to killing someone to help others, I submit that it is more kind of like a bunch of colonists saying they're sick of Mother England and how she's treating us. We need a revolution...some of us will die (and a LOT more than 40 per 50,000+) for the benefit of others, but the end result is better.

The difference is, those people chose that path, after a very long and tumultuous debate. And besides, the alternative was to do nothing and let the crown continue to oppress and kill people. They were fighting an active foe. There is no such foe here.

[shanek]

So you are telling me I am wrong that regardless of whether there was a minimum wage hike, the practice of more efficient technology replacing human labor does occur.

I am saying that MW hikes make the technology more cost-effective. You said it happens irrespective of MW; that's the part I was disagreeing with.

[shanek]

Geeez, Shane, you didn't even look at that wiki page, did you? The EXACT same statement can be made by those who disagree with you. While you may not like that fact, there it is. Again, it is intellectually dishonest to ignore those studies, trumpet those that support you and make the claim in the title of this thread.

Yeah, well, you can find lots of studies that support homeopathy, too. We're talking about something that is not contested in economic circles. We're talking about something that is taught in basic economics classes. Denying it is like a creationist denying evolution.

[corplinx]

The state of Florida disagrees with this thread title:
But, I guess I can understand why a company like, oh, ExxonMobil, who had nearly $40 billion in profit last year, might balk at paying its service station employees a more livable wage. If they do that - then how could they fund "experts" to minimize the warnings about global warming?

Does exxon own these stations or do small business owners who franchise? Does exxon lose money if the station has to pay the workers more or does exxon make its money from selling wholesale gas to the station and from franchise fees.

[Snide]

The difference is, those people chose that path, after a very long and tumultuous debate.And people choose the MW path after very long and tumultuous debates. How high the MW should be, they disagree, but most people want it in place. So please don't tell me that it's kind of like me killing a guy to help others.

[strathmeyer]

And the broad question can be rephrased as this: What evidence would convince you that MW is good, or, conversly, bad?

Evidence that all my Economics teachers were lying to me when they told me it was bad. Or, conversely, either evidence that it is somehow good or a description of how minimum wage benefits anyone besides the politicians who get votes by promising people they're going to give money to the poor that magically comes from nowhere.

[Snide]

I am saying that MW hikes make the technology more cost-effective. You said it happens irrespective of MW; that's the part I was disagreeing with.False. I said technology replaces jobs regardless of MW laws.

I will again take the high road and not call you a liar.

[E.J.Armstrong]

Better question: is it right to force the latter?


Better question: is it right to boost your profits at the expense of the poor?

[Skeptic]

I think someone paid a dollar a year would die of starvation rather quickly. Hence it would not be in their interest to work for such a wage (nor anybody's interest). Hence the job position would remain unfilled.

So A could either raise his wage offer, or do without. It isn't A's fault that B is poorly educated, not very smart at figuring things out, lazy, or some combo of the above. B, and everyone else, should be glad A even offers the job to begin with.

"Four dollars an hour? No? Five? No? Six? Ahh, three takers. I pick...you. Off you go!"

For the record, of course my example wasn't supposed to be realistic, but merely to illustrate a point.

The problem with your argument is that it only works this way when there is indeed significant freedom to choose on both the employer's and employee's part. All too often, instead of raising the four dollars an hour to six, the real offer is "take these $3.50 an hour or I am moving the job overseas where I can pay people $0.50 an hour."

Now, mind you, workers can flex their muscles unfairly as well (e.g., unjustified strikes). And to be honest, I am FOR sweatshops, in a way--ever since I discovered that virtually *every* country where most sweatshops existed decades ago is now prospering (Taiwan, Japan, China, Korea...) while those who, in the name of "the people" refused to be "exploited", remained behind (most of the middle east, Africa, etc.)... and that they are exploited by countries which had sweatshops 150-200 years ago.

My point is merely that your example doesn't actually work that way.

[Ziggurat]

Better question: is it right to boost your profits at the expense of the poor?

In many situations, yes, of course it's right. If you answer this with a categorical no, then you're basically demanding total wealth redistribution (because anything short of that is at the expense of the poor). And we've seen how well that works out.

[Francesca R]

Better question: is it right to boost your profits at the expense of the poor?Yes indeed. A baker selling a poor person a loaf of bread is doing this.

[Snide]

In many situations, yes, of course it's right.In what situations would that be? The only situations I can think of is when it actually is not at the expense of the poor, but rather to their benefit as well as the rich's.

[Snide]

Yes indeed. A baker selling a poor person a loaf of bread is doing this.Then it's really not at the expense of the poor, is it?

[Skeptic]

Better question: is it right to boost your profits at the expense of the poor?

It's not a zero-sum game: that if someone is rich, someone else must be poor. (That's the mistake Marx made). The poor today in the USA are a lot less poor than most people were 100 years ago, and that is very much due to free enterprise.

Stephan Leacock lampooned the "greedy capitalists who exploit the poor" idea with his short essay, "How to Make Money on the Back of the Poor".

You see, you buy land next to a city. You buy the land in the direction the city is going to grow. Do not but it in the direction the city is not going to grow.

Then you wait for the city to grow.

After a while, your land's value goes up. Then you sell it, and--voila!--make a profit on the back of the poor.

[Francesca R]

Then it's really not at the expense of the poor, is it?No, I agree.

[Ziggurat]

In what situations would that be? The only situations I can think of is when it actually is not at the expense of the poor, but rather to their benefit as well as the rich's.

If a business could sell a loaf of bread for $1.50 to a poor person and make a $0.50 profit, then not selling the bread to that person at $1.00 and no profit is taking a profit at the expense of that poor person. That is the way I read E.J.'s question, though he's free to correct me about what he meant. I suppose it's possible to read it instead as benefiting the poor person if he's still willing to pay the $1.50 (since he wants the bread more than the $1.50 he's paying), but if you read "at the expense of the poor" that way, then there are damned few cases where companies do increase profits at the expense of the poor, and pretty much no market mechanism for doing so.

[Francesca R]

if you read "at the expense of the poor" that way, then there are damned few cases where companies do increase profits at the expense of the poor, and pretty much no market mechanism for doing so.Well legally a business can impose many externalities on the poor (and the rich) which are a true uncompensated expense and which boost the businesses profits. So this is "right" insofar as it is permitted. In many cases it is also "right" in utilitarian terms. But a lot of cases it is probably "wrong" ethically in the eyes of many people—but there is no mechanism enforced to extract compensation.

I'm sure there are some such negative externalities that are disproportionately loaded onto the poor, but I can't come up with any now.

[shanek]

And people choose the MW path after very long and tumultuous debates. How high the MW should be, they disagree, but most people want it in place. So please don't tell me that it's kind of like me killing a guy to help others.

Well, please don't tell me that forcing people into unemployment to suit your Socialist agenda is helping others. And there are plenty of people who disagree. 116 House members voted against the MW increase.

[shanek]

False. I said technology replaces jobs regardless of MW laws.

Regardless = without regard to. Exactly the same thing. And it's not true; I gave an example where the job replacement would absolutely happen with regards to the MW.

[shanek]

Better question: is it right to boost your profits at the expense of the poor?

Who's doing that? The market determines the equilibrium wage. If a company tries to boost profits by lowering the wage below that, then they'll find themselves without a sufficient pool of workers to choose from.

[CFLarsen]

Guess you've never heard of "weasel words."

You have had no problems using the term yourself:

Claus, once again, you are wrong, wrong, WRONG. Check out "Two Cheers for Sweatshops" by Nicholas D. Kristof and Sheryl WuDunn, New York Times, 9/24/2000. Here are a couple of excerpts:

Hmmm.....let's scratch the surface here, shall we?

House Passes Increase in Minimum Wage to $7.25 (http://www.washingtonpost.com/wp-dyn/content/article/2007/01/10/AR2007011001666.html)
Thursday, January 11, 2007

The House yesterday overwhelmingly approved the first increase in the federal minimum wage in nearly a decade, boosting the wages of the lowest-paid American workers from $5.15 to $7.25 an hour over the next two years.

The 315 to 116 vote could begin the process of ending Congress's longest stretch without a minimum-wage increase since the mandatory minimum was created in 1938. In the past decade, inflation has depleted the value of the minimum wage to the lowest level in more than 50 years.

Verified by the...oops....Economic Policy Institute (http://www.epinet.org/issueguides/minwage/table4.pdf).

Something shanek didn't tell you. Or, didn't know, because he didn't bother to check.

[Chaos]

Yeah, well, you can find lots of studies that support homeopathy, too. We're talking about something that is not contested in economic circles. We're talking about something that is taught in basic economics classes. Denying it is like a creationist denying evolution.

Uh... no.

Sorry, but basic economics classes aren´t all there is.

In fact, basic economics classes teach models depicting an ideal state which does not and cannot exist - and which economist know and admit does not and cannot exist.
The models exist only as baselines, in order to explore what effect the real and in most cases unavoidable distortions have on the market.

[Tony]

Gee, it's just amazing how the predictions of economics just keep coming true, despite the claims of many on this board to the contrary. Like, the claim that the Minimum Wage doesn't destroy the jobs of the very people it's purporting to guarantee higher wages for.

New Study Reveals Minimum Wage Hikes Lead to Job Loss for Minorities and High School Drop-Outs (http://www.epionline.org/news_detail.cfm?rid=95)

The study:

Minimum Wage Effects in the Post-welfare Reform Era (http://www.epionline.org/studies/Neumark_2007.pdf)

This just in, laws against slavery, high-tech machinery, automation, the cotton gin, the spinning loom all destroy jobs. The solution is clear, we need a return to slavery and we need to revert to a 17th century economy.

[Tony]

The problem with this claim, as the example illustrates, is that the minimum wage law is in there no to maximize employment per se, but to prevent exploitation of the poor. The idea is, it is sometimes better to be unemployed than to be exploited.

Are you trying to make me love you? ;)

[Tony]

In many situations, yes, of course it's right. If you answer this with a categorical no, then you're basically demanding total wealth redistribution (because anything short of that is at the expense of the poor). And we've seen how well that works out.

Quite well actually. If great inequities in wealth distribution are a good thing, I take it you think countries like Mexico, Saudi Arabia, Jordan, and North Korea are examples of economic utopias? It's odd that such countries are generally regarded as ****-holes while countries like the USA, UK, France and Sweden, with our evil middle-classes, are regarded as well-off. Odd.

[Ziggurat]

Quite well actually.

Maybe you didn't understand what I meant, but I said total wealth redistribution, not just some wealth redistribution. We can manage fine with a certain amount of wealth redistribution, but EVERY time it's been tried totally (meaning, try to make everyone have the same amount of wealth) on any significant scale, it's been a disaster.

If great inequities in wealth distribution are a good thing, I take it you think countries like Mexico, Saudi Arabia, Jordan, and North Korea are examples of economic utopias?

Strawman. It is not wealth inequality which is desirable, it's economic freedom (which has, as ONE of its outcomes, wealth inequality). And the countries you list, while they certainly have wealth inequalities, do not have nearly the amount of economic freedom that the United States does (though Mexico probably comes closest on your list).

[Snide]

Well, please don't tell me that forcing people into unemployment to suit your Socialist agenda is helping others.Now I have a Socialist agenda. Quite amusing, especially coming from someone who throws around the word "liar" so freely.
And there are plenty of people who disagree. 116 House members voted against the MW increase.Yep. Plenty of the House members. But not most of the people. I am right again.

eta: Furthering my analogy, plenty disagreed with the revolution too.

[Tony]

Maybe you didn't understand what I meant, but I said total wealth redistribution, not just some wealth redistribution. We can manage fine with a certain amount of wealth redistribution, but EVERY time it's been tried totally (meaning, try to make everyone have the same amount of wealth) on any significant scale, it's been a disaster.


Of course. I don't advocate TOTAL wealth re-distrubution. But I recognize that it's not a good thing to have great wealth inequalities.

It is not wealth inequality which is desirable, it's economic freedom (which has, as ONE of its outcomes, wealth inequality).

If there is wealth inequality, there isn't total economic freedom.

[Snide]

Regardless = without regard to. Exactly the same thing. And it's not true; I gave an example where the job replacement would absolutely happen with regards to the MW.From m-w.com:

Main Entry: regardless of
Function: preposition
Date: 1784
: without taking into account

Without taking into account whether any MW laws were passed, technology replaces jobs.

[Ziggurat]

If there is wealth inequality, there isn't total economic freedom.

You and I must have different definitions of economic freedom, then, because I don't see how wealth inequality is avoidable unless you restrict economic freedom. Nor is wealth inequality in and of itself a problem. Supposing you and I had equal opportunities and skills, for example, but you choose to work 50 hour weeks and I choose to work 30 hour weeks. You SHOULD end up with more wealth than me in such a situation, and the only way to prevent that is to restrict your economic freedom.

[Merko]

That's true, Skeptic. but Shanek's post was merely to respond to only one, apparently erroneous, defense of minimum wage: that it doesn't affect unemployment.
I got the feeling that he is referring to this thread (http://forums.randi.org/showthread.php?t=73611&page=2), where shanek was ridiculing me for not agreeing:

No, you're lying again, and anyone who read the chapter can see that. Minimum wages hurt the very people they're purported to help. It's not even a controversial stand in economics anymore! They'll teach it to you in a beginning economics course!

The problem is of course that shanek is making the leap-of-faith between "MW reduces employment " to "MW hurts the poor". And I'm not even sure if shanek notices this himself.

There's no doubt that as an immediate consequence of a rise in minimum wages, employment will decrease somewhat. Some employments will become marginally unprofitable. However, enacting a ban on employers requiring sexual services by employees will of course have the same negative effect. Additionally, it is certainly a question for much serious debate whether an increase in minimum wages may have positive effects on the economy in the long run, for example by stimulating consumption, or by shifting employment towards more productive jobs, or by reducing employers' stakes to work politically in order to keep a large number of people unable to qualify for more productive jobs to keep up competition in the rock-bottom labour market.

Anyway, I doubt minimum wage [I]laws per se have that much of an effect either for good or bad, the issue should rather be de-facto minimum wages. Here in Sweden we have no minimum wage law at all, however we do have a high de-facto minimum wage for a number of rather complex reasons, but it's related to having very strong unions.

[Snide]

If a business could sell a loaf of bread for $1.50 to a poor person and make a $0.50 profit, then not selling the bread to that person at $1.00 and no profit is taking a profit at the expense of that poor person. That is the way I read E.J.'s question, though he's free to correct me about what he meant. I suppose it's possible to read it instead as benefiting the poor person if he's still willing to pay the $1.50 (since he wants the bread more than the $1.50 he's paying), but if you read "at the expense of the poor" that way, then there are damned few cases where companies do increase profits at the expense of the poor, and pretty much no market mechanism for doing so.I read it as more like the latter, but it's too vague a term to have a meaningful debate around.

The high-level question seems to be, "Of all the profit being made, how much should the low-end workers be sharing?" MW law proponents say "more than they are," while MW law opponents say "whatever the market will bear." Or something like that.

[shanek]

Of course. I don't advocate TOTAL wealth re-distrubution. But I recognize that it's not a good thing to have great wealth inequalities.

Oh? Without "wealth inequalities," what incentive do people have to improve themselves? What incentive to people have to work and go to school to work at jobs requiring more skills if they're not going to get paid for it?

If there is wealth inequality, there isn't total economic freedom.

Ridiculous; exactly the opposite is true. The more "equal," the more "fair" you try to make things, the less free you make them.

The high-level question seems to be, "Of all the profit being made, how much should the low-end workers be sharing?" MW law proponents say "more than they are," while MW law opponents say "whatever the market will bear." Or something like that.

No, we say that all prices--including wages (a wage is just the price of labor)--operate at equilibrium, and trying to set it above (price supports, like MW) or below (price caps) only causes problems.

[Tony]

You and I must have different definitions of economic freedom, then

I think you're looking more at the collective scale and I'm looking more at the individual scale.

Nor is wealth inequality in and of itself a problem.

I think the historical record shows otherwise. A small, wealthy and powerful upperclass in contrast to a large poor underclass has been that cause of many atrocious problems throughout history.

Supposing you and I had equal opportunities and skills, for example, but you choose to work 50 hour weeks and I choose to work 30 hour weeks. You SHOULD end up with more wealth than me in such a situation.

I'd end up with more $$, but not neccessarily more wealth. That 20 hours of free-time to pursue what ever you want could be worth more to you than any dollar amount your skills could provide working at your job.

[Tony]

Oh? Without "wealth inequalities," what incentive do people have to improve themselves?

Are you a whore? Is money the only thing that motivates you to do anything to improve yourself? Personally, love and respect for myself is a greater motivation to improve myself than any dollar amount.

What incentive to people have to work and go to school to work at jobs requiring more skills if they're not going to get paid for it?

Love for self, personal enjoyment, intellectual enlightenment, pursuit of happiness. I can think of many reasons, it's telling that you can't. I don't consider it a virtue to elevate venality to an ideology, you obviously do.

Ridiculous; exactly the opposite is true. The more "equal," the more "fair" you try to make things, the less free you make them.

Yet, you've never tried to provide evidence for this assertion in contrast to the vast amounts of evidence that have been presented to debunk it.

[Ziggurat]

I think you're looking more at the collective scale and I'm looking more at the individual scale.

I don't see how.

I think the historical record shows otherwise. A small, wealthy and powerful upperclass in contrast to a large poor underclass has been that cause of many atrocious problems throughout history.

Name such a case, and I bet you I'll be able to show you how the economic freedoms of those poor underclasses were restricted by government force. Certainly serfdom, for example, isn't merely a problem of wealth disparity: the nobility had the force of law (and the force of arms to back it up) to subjugate serfs, and did not do so merely by being so much wealthier. And right now, Bill Gates has vastly more money than I do, but he can't subjugate me because his economic power doesn't permit him to infringe upon my own freedoms, including my economic freedom.

I'd end up with more $$, but not neccessarily more wealth.

Unless that money happens to devalue into nothing, then yes, you'll have more wealth.

That 20 hours of free-time to pursue what ever you want could be worth more to you than any dollar amount your skills could provide working at your job.

That may be preferable to me, but that's still not wealth. Which is why nobody talks about all the wealth that unemployed people have in the form of free time.

[CFLarsen]

Oh? Without "wealth inequalities," what incentive do people have to improve themselves? What incentive to people have to work and go to school to work at jobs requiring more skills if they're not going to get paid for it?

Personal satisfaction?

I don't get paid for my writing, yet I want to improve how I write. I like to see that my writing skills improve, simply because it enables me to communicate my thoughts, ideas and arguments better.

I also like to improve on other things, too, without getting paid for it. Money is a drive, but it isn't the only motivation I have for improving myself.

Frankly, I find those who are only driven by a need for money rather pathetic. Is that what they want to spend their lives on? A blind hunt for money, more money?

Don't you play the piano because you like it? Don't you ever practice, even though you don't get paid for it?

Ridiculous; exactly the opposite is true. The more "equal," the more "fair" you try to make things, the less free you make them.

You equate "free" with "strong". Those who are "free" are free to exploit those that are not strong, thereby taking their freedom away.

Are you "free" if you are exploited?

No, we say that all prices--including wages (a wage is just the price of labor)--operate at equilibrium, and trying to set it above (price supports, like MW) or below (price caps) only causes problems.

Nonsense.

[Tony]

Name such a case, and I bet you I'll be able to show you how the economic freedoms of those poor underclasses were restricted by government force. Certainly serfdom, for example, isn't merely a problem of wealth disparity: the nobility had the force of law (and the force of arms to back it up) to subjugate serfs, and did not do so merely by being so much wealthier.

Now you're getting dogmatic. The rich/powerful/nobility ALWAYS eventually get force of the law. To do otherwise would restrict their "economic freedom". Anytime you have great wealth inequalities, you have a restriction of economic and personal freedom because the wealthy use their power to solidify their position and work for their interests. This is why the "free-market", like communism, is totally bogus. It fails to account for human nature and the fact that power and wealth are absolute corrupting forces.

And right now, Bill Gates has vastly more money than I do, but he can't subjugate me because his economic power doesn't permit him to infringe upon my own freedoms, including my economic freedom.

Riiiiiiight. You use Windows because it's the best, most secure and easiest to use operating system and not because of it's dominance of the market. Keep living that fantasy.

That may be preferable to me, but that's still not wealth.

Yes, it is. Wealth is more than a dollar amount.

[shanek]

Are you a whore?

:rolleyes: Like I keep saying...

Is money the only thing that motivates you to do anything to improve yourself?

No, but if I'm going to go tens of thousands of dollars in debt getting an education I need to be able to make that back with higher wages after I graduate.

Yet, you've never tried to provide evidence for this assertion in contrast to the vast amounts of evidence that have been presented to debunk it.

What vast amounts of evidence??? Your side has presented nothing!!! And I've had thread after thread after thread over several years of evidence showing that this is absolutely the case.

[Darth Rotor]

Oh? Without "wealth inequalities," what incentive do people have to improve themselves? What incentive to people have to work and go to school to work at jobs requiring more skills if they're not going to get paid for it?
Shane, it looks to me like you are conflating wealth inequality and wage inequality. Wealth and wages are non synonymous.
Ridiculous; exactly the opposite is true. The more "equal," the more "fair" you try to make things, the less free you make them.
The fair part is why we have laws, and contracts. (I appreciate how loaded a term "fair" is, as well as "equal.") They are the framework within which an economic system works. Are you advocating an anarchic labor market, or an anarchic market in the broader sense?
No, we say that all prices--including wages (a wage is just the price of labor)--operate at equilibrium, and trying to set it above (price supports, like MW) or below (price caps) only causes problems.
I disagree slightly. Prices and wages seek their own level, and sometimes achieve a temporary equilibrium. Any number of forces, be they market or social, can disturb that equilibrium and thus they seek the new level again. The market is dynamic, as are the two elements you have broken out to analyze separately in your observation.

ETA: "Only causes problems" isn't as accurate an effect as "induces a correction." Minor quibble.

DR

[Tony]

:rolleyes: Like I keep saying...


I take that as a yes.

No, but if I'm going to go tens of thousands of dollars in debt getting an education I need to be able to make that back with higher wages after I graduate.

Fair enough.

What vast amounts of evidence??? Your side has presented nothing!!!

Umm, I was once on your side when it came to this subject Shane. It was your dearth of evidence, your failure to debunk opposing evidence and arguments, and your extreme dogmatism that led me to the conclusion that you're wrong.

And I've had thread after thread after thread over several [I]years of evidence showing that this is absolutely the case.

I don't think you have. I think you let ideology and theory blind you to reality.

[Ziggurat]

Riiiiiiight. You use Windows because it's the best, most secure and easiest to use operating system and not because of it's dominance of the market. Keep living that fantasy.

I use a variety of operating systems, including windows. But I still choose to use Windows, and should I choose not to, NOTHING Gates could do could force me to use it.

Yes, it is. Wealth is more than a dollar amount.

Wealth is not ONLY dollars, yes. But damned straight if you've got a lot of dollars, you're wealthy.

[Tony]

I use a variety of operating systems, including windows. But I still choose to use Windows, and should I choose not to, NOTHING Gates could do could force me to use it.


I didn't mean you as in you Ziggurat (or whatever your real name is) but you as in the "man on the street", "joe-six-pack" ect.. Understand?

Wealth is not ONLY dollars, yes. But damned straight if you've got a lot of dollars, you're wealthy.

That's what I was saying. Let me re-iterate that I'd consider leasure time a form of wealth.

[Darth Rotor]

Wealth is not ONLY dollars, yes. But damned straight if you've got a lot of dollars, you're wealthy.
Not if you have a lot of Confederate dollars. ;)

DR

[burnvictim77]

Better question: is it right to boost your profits at the expense of the poor?

You've got to love rhetoric.

What does this even mean: at the expense of the poor.

[burnvictim77]

Then it's really not at the expense of the poor, is it?


Poor people take on the expense of purchasing food, yes? This statement of something being 'at the exspense of the poor' has no significance outside the platitudes of vote-for-me politics.

[burnvictim77]

Personal satisfaction?

I don't get paid for my writing, yet I want to improve how I write. I like to see that my writing skills improve, simply because it enables me to communicate my thoughts, ideas and arguments better.

I also like to improve on other things, too, without getting paid for it. Money is a drive, but it isn't the only motivation I have for improving myself.

Frankly, I find those who are only driven by a need for money rather pathetic. Is that what they want to spend their lives on? A blind hunt for money, more money?

Don't you play the piano because you like it? Don't you ever practice, even though you don't get paid for it?

All these things have value to yourself. However, where we generate wealth is by producing something that someone else values. No one would work at McDonalds for the personal satisfaction of it, unless there were severely mentally derranged.

[burnvictim77]

That may be preferable to me, but that's still not wealth. Which is why nobody talks about all the wealth that unemployed people have in the form of free time.

BWAHAHAHAHAHA!

[Cheesejoff]

Gee, it's just amazing how the predictions of economics just keep coming true, despite the claims of many on this board to the contrary. Like, the claim that the Minimum Wage doesn't destroy the jobs of the very people it's purporting to guarantee higher wages for.

Is it right for a company to increase it's profits by firing redundant workers, and if so, why?

[CFLarsen]

All these things have value to yourself. However, where we generate wealth is by producing something that someone else values.

Not to sound haughty or anything but...when I improve my writing, it also has value to others, since others read what I write.

Is "wealth" only generated in currency? Are we not getting "wealthier" by becoming (hopefully, when people read what I write) more knowledgeable?

[Darth Rotor]

Not to sound haughty or anything but...when I improve my writing, it also has value to others, since others read what I write.

Is "wealth" only generated in currency? Are we not getting "wealthier" by becoming (hopefully, when people read what I write) more knowledgeable?
Yer killin' me, Claus, but I'll give you a hearty "Amen, Deacon!" on the principle of hope. One can always hope that one's quillwork has more value than as bird cage lining. 'Tis the hope of any of us who fancy ourselves scribes.

DR

[burnvictim77]

Not to sound haughty or anything but...when I improve my writing, it also has value to others, since others read what I write.

Is "wealth" only generated in currency? Are we not getting "wealthier" by becoming (hopefully, when people read what I write) more knowledgeable?

Not in any tangible, economic sense. Now, it may indirectly inspire others to become better producers (though, I'm not sure what sort of a book one would have to write to accomplish that, and it doesn't sound like one I'd read if that's the case). And indirrectly improve the economy, increasing overall wealth in our system. But your writing, itself, is not wealth until someone else values it with dollars.

I think you are conflating two different kinds of value. Wealth is more specific. It is something that people will trade for.

[burnvictim77]

Is it right for a company to increase it's profits by firing redundant workers, and if so, why?


Yes, it is right. If workers have nothing to offer a company, there is no job. Likewise, it is right for a worker to quit when the company is not giving them a job they desire, be it for its value for learning, income, or satisfaction.

Voluntary contracts. No one is the slave of the other.

[Tony]

All these things have value to yourself. However, where we generate wealth is by producing something that someone else values.

Irrelevant. Claus was answering a question as to his motivations for improving himself.

[shanek]

Is it right for a company to increase it's profits by firing redundant workers, and if so, why?

Yes, because it frees up both capital and labor that can now be used on other things and generate even more wealth in the economy. Redundant busywork doesn't contribute anything.

[shanek]

Since people have taken it upon themselves to completely distort what I was saying (as usual), let me put it this way:

Why would anyone take on the stress and hard work of, for example, managing a company when he could be doing any number of other things--maybe almost as fulfilling--that are far less stressful and risky?

[Tony]

Yes, because it frees up both capital and labor that can now be used on other things and generate even more wealth in the economy. Redundant busywork doesn't contribute anything.

I agree with Shane here.

[Tony]

Why would anyone take on the stress and hard work of, for example, managing a company when he could be doing any number of other things--maybe almost as fulfilling--that are far less stressful and risky?

Because he is irrationally pursuing money at the expense of his health and happiness. Seriously, if he has an option to go for something that entails less "hard work" (ie, more freedom), less stress and less risk but almost as fulfilling (if it's really fulfilling, it's hard to image it being more stressful and requiring more hard work, but whatever), then he is a sucker for sacrificing his long term health and his personal happiness for money (because there really is no dollar amound you can put on health and happiness). If it's money he is after, I say he's better off doing gay porn.

[CFLarsen]

Yer killin' me, Claus, but I'll give you a hearty "Amen, Deacon!" on the principle of hope. One can always hope that one's quillwork has more value than as bird cage lining. 'Tis the hope of any of us who fancy ourselves scribes.

Yep. Yet, writing can change the world, and for the better. So why not try?

Not in any tangible, economic sense. Now, it may indirectly inspire others to become better producers (though, I'm not sure what sort of a book one would have to write to accomplish that, and it doesn't sound like one I'd read if that's the case). And indirrectly improve the economy, increasing overall wealth in our system. But your writing, itself, is not wealth until someone else values it with dollars.

I think you are conflating two different kinds of value. Wealth is more specific. It is something that people will trade for.

Writing can definitely change the world in a very tangible, economic sense. New ideas is the basis of an improved economy: Hey, here's an idea, let's try that!

Economy isn't like science, we can't predict an outcome the same way we can make scientific predictions. But we can try out ideas, and those can only come from people who put forth such ideas. Usually in writing. Which, on the surface, is not producing "wealth". But in reality, it is.

[burnvictim77]

Because he is irrationally pursuing money at the expense of his health and happiness. Seriously, if he has an option to go for something that entails less "hard work" (ie, more freedom), less stress and less risk but almost as fulfilling (if it's really fulfilling, it's hard to image it being more stressful and requiring more hard work, but whatever), then he is a sucker for sacrificing his long term health and his personal happiness for money (because there really is no dollar amound you can put on health and happiness). If it's money he is after, I say he's better off doing gay porn.


The economy sure isn't better off though. And it seems that millions of Americans would rather do a job as a manager than gay porn. So for them it presents a value. So that's what they do.

Free Market.

[Tony]

The economy sure isn't better off though.

Ahhh, you're an Econommunist. I see where you're coming from, but the interests of the individual are more important than the interests of the economy to me.

And it seems that millions of Americans would rather do a job as a manager than gay porn.

That doesn't mean they're not idiots.

Free Market.

Pixies, fairies, trolls, viable communsim, god, unicorns. It's fun to spell out mythological creatures.

[ConspiRaider]

Why would anyone take on the stress and hard work of, for example, managing a company when he could be doing any number of other things--maybe almost as fulfilling--that are far less stressful and risky?
But that all depends upon the individual.

For example, a person managing a company may not, from his or her perspective, evaluate that activity as hard work or overly stressful. Some people are simply born to it and love it. I'll bet Sam Walton loved it. I'll bet Al Gore loves traveling the world for his environmental cause. I'll bet Oprah loves what she's doing. Other activities may in fact be seen as stressful and hard work to the driven company manager or self-marketer. Perhaps because they are seen as boring or unchallenging or trivial.

[Snide]

Poor people take on the expense of purchasing food, yes? This statement of something being 'at the exspense of the poor' has no significance outside the platitudes of vote-for-me politics.No it's not "at their expense" if they get food for it. It was an even trade.

I am purposely playing devil's advocate with you; we are in agreement that the phrase is too flawed/vague/whatever to use.

[Snide]

Since people have taken it upon themselves to completely distort what I was saying (as usual), let me put it this way:

Why would anyone take on the stress and hard work of, for example, managing a company when he could be doing any number of other things--maybe almost as fulfilling--that are far less stressful and risky?Just a question...am I one of those people? If so, please quote where. Just curious...really.

To answer your question...pride and ego come to mind, for starters. And you said "maybe almost as fulfilling." Not "definitely," and not "100% as," but "maybe almost." That's a lot of speculation there. Anyway, certain egos preclude any notion of "as fulfilling" if it doesn't come with, say, a new title and position of more superiority. It happens all the time where I work at a lower level. People get a 5% raise for a title change, but with longer hours and much more than a 5% increase in stress. If they really just wanted the raise, they could have been a lot stressed and worked fewer extra hours by getting a job at the driving range, liquor store, etc.

[Tmy]

Heres an ineresting article about a couple of Washington/Idaho boarder towns.

http://www.nytimes.com/2007/01/11/u...=rssnyt&emc=rss

LIBERTY LAKE, Wash., Jan. 9 — Just eight miles separate this town on the Washington side of the state border from Post Falls on the Idaho side. But the towns are nearly $3 an hour apart in the required minimum wage. Washington pays the highest in the nation, just under $8 an hour, and Idaho has among the lowest, matching 21 states that have not raised the hourly wage beyond the federal minimum of $5.15.

Idaho teenagers cross the state line to work in fast-food restaurants in Washington, where the minimum wage is 54 percent higher. That has forced businesses in Idaho to raise their wages to compete.

[Chaos]

*snip*
That's what I was saying. Let me re-iterate that I'd consider leasure time a form of wealth.

Let me just say you´re on to something here.

In Agency Theory, instead of money we use the "benefit" that the agent, i.e. employee, derives from a contract. This of course increased with higher salary, but in not equal, and usually not proportional, to "money".
We also consider the work effort you have to put in to fulfill a contract to be a "hardship", i.e. a negative amount of benefit.
So, while leisure time is not, technically speaking, considered wealth, it definitely contributes to your benefit, inasmuch as a lack of leisure time (i.e. having to work) decreases your benefit.

Ahhh, you're an Econommunist. I see where you're coming from, but the interests of the individual are more important than the interests of the economy to me.


To a certain extent - although certainly not as much as "the economy" would want us to believe - the interests of the economy overlap with those of the individual.

[burnvictim77]

Ahhh, you're an Econommunist. I see where you're coming from, but the interests of the individual are more important than the interests of the economy to me.

The interest of the individual is all that there are. I was making a general observation as to the viability of a system where every one decide to pursue gay porn stardom instead of entreprenuership. Not that anyone should be forced to stay out of porn, mind you.



That doesn't mean they're not idiots.

Nor does it mean that people in gay porn are not idiots.



Pixies, fairies, trolls, viable communsim, god, unicorns. It's fun to spell out mythological creatures.

Ah, dismissiveness. It's been a while since that tactic was used.

Tell me, how can you value the interest of the individual and not support the Free Market?

[burnvictim77]

No it's not "at their expense" if they get food for it. It was an even trade.

I understand you are playing devil's advocate. But 'even trade' is a bit of a redundant phrase in my opinion. We trade because it is in our interest to do so. Otherwise, we would not trade if we saw no benefit from it.

[burnvictim77]

Heres an ineresting article about a couple of Washington/Idaho boarder towns.

http://www.nytimes.com/2007/01/11/u...=rssnyt&emc=rss

LIBERTY LAKE, Wash., Jan. 9 — Just eight miles separate this town on the Washington side of the state border from Post Falls on the Idaho side. But the towns are nearly $3 an hour apart in the required minimum wage. Washington pays the highest in the nation, just under $8 an hour, and Idaho has among the lowest, matching 21 states that have not raised the hourly wage beyond the federal minimum of $5.15.

Idaho teenagers cross the state line to work in fast-food restaurants in Washington, where the minimum wage is 54 percent higher. That has forced businesses in Idaho to raise their wages to compete.

Yes, causing costs to rise in Idaho, leading to inflation.

[shanek]

Ahhh, you're an Econommunist.

A what?

I see where you're coming from, but the interests of the individual are more important than the interests of the economy to me.

Why do you see them as separate? If someone can be encouraged to do something to help out a company, the people they employ, the investors, and the economy as a whole, just by charging some extra money for it, what's the problem?

[shanek]

Just a question...am I one of those people?

No.

To answer your question...pride and ego come to mind, for starters.

But if pride and ego can be put into motion to help a company, its employees, its investors, and the economy, just by paying some extra money for it, why not do it?

And you said "maybe almost as fulfilling." Not "definitely," and not "100% as," but "maybe almost." That's a lot of speculation there.

Of course. Any such undertaking is speculative.

[shanek]

So, here's an idea: if the MW is such a good thing, why not pass a law requiring all wages to be increased every year to adjust for inflation? Think it's a good idea?

(Hint: look what happened in Brazil when they tried that.)

[Tony]

The interest of the individual is all that there are. I was making a general observation as to the viability of a system where every one decide to pursue gay porn stardom instead of entreprenuership. Not that anyone should be forced to stay out of porn, mind you.

Of course, and said system would be just as unviable if everyone pursued entreprenuership.

Nor does it mean that people in gay porn are not idiots.

Yep.

Ah, dismissiveness. It's been a while since that tactic was used.

It's not dismissiveness. It's the conclusion to which I've come after participating in many discussions about the freemarket.

Tell me, how can you value the interest of the individual and not support the Free Market?

Because I think the individual should be entitled to things like bathroom breaks, a life away from work, a limit on required hours per week, weekends, time off, vacations, lunch hours, a fair wage ect.. In short, I think the individual shouldn't be a slave to his/her employer.

[Tony]

A what?


Pretty much a communist who, instead of subjugating the individual to the collective, subjugates the individual to the economy.

Why do you see them as separate?

Because they fundamentally are.

If someone can be encouraged to do something to help out a company, the people they employ, the investors, and the economy as a whole, just by charging some extra money for it, what's the problem?

I don't see how this question relates to anything I've said.

[burnvictim77]

Because I think the individual should be entitled to things like bathroom breaks, a life away from work, a limit on required hours per week, weekends, time off, vacations, lunch hours, a fair wage ect.. In short, I think the individual shouldn't be a slave to his/her employer.


Okay, I think we are both man enough to skip the bickering on the minor points.

Here's our real contention: 1. What are the rights of the individual?
Does an individual not have the right to make themselves more competitive by agreeing to work in conditions that others may choose not to (ie. gay porn, or work in a job that does not permit a break)?

2. Who is an individual?

Meaning - If I start a business, do I have different rights than my employees?

[Tony]

Heres an ineresting article about a couple of Washington/Idaho boarder towns.

http://www.nytimes.com/2007/01/11/u...=rssnyt&emc=rss

LIBERTY LAKE, Wash., Jan. 9 — Just eight miles separate this town on the Washington side of the state border from Post Falls on the Idaho side. But the towns are nearly $3 an hour apart in the required minimum wage. Washington pays the highest in the nation, just under $8 an hour, and Idaho has among the lowest, matching 21 states that have not raised the hourly wage beyond the federal minimum of $5.15.

Idaho teenagers cross the state line to work in fast-food restaurants in Washington, where the minimum wage is 54 percent higher. That has forced businesses in Idaho to raise their wages to compete.

Wait, are you telling us the minimum wage creates jobs?

[Tony]

Here's our real contention: 1. What are the rights of the individual?
Does an individual not have the right to make themselves more competitive by agreeing to work in conditions that others may choose not to (ie. gay porn, or work in a job that does not permit a break)?

Companies should be mandated to permit breaks and should be aggressively prosecuted for coercing, or encouraging employees to forego their breaks. However, the individual should remain free to work during the break should he/she want. Just like, although I think we need a 30-35 hour work week, people should still be free to work more if they want. In both instances, the choice is up to the individual alone.

The same goes for gay porn, if someone is willing to do it, they should have that right. But, outside of working in the gay porn industry of course, an individual shouldn't be coerced into being in a gay porn simply because their boss might decide one day to make that a condition of employment. So far, I have seen no protection in the "free market" that would prevent such a situation.

2. Who is an individual?

Meaning - If I start a business, do I have different rights than my employees?

Short answer yes. It's your business, you can do things with it that your employees can't.

[69dodge]

Not in any tangible, economic sense. Now, it may indirectly inspire others to become better producers (though, I'm not sure what sort of a book one would have to write to accomplish that, and it doesn't sound like one I'd read if that's the case). And indirrectly improve the economy, increasing overall wealth in our system. But your writing, itself, is not wealth until someone else values it with dollars.

I think you are conflating two different kinds of value. Wealth is more specific. It is something that people will trade for.Odd.

What's so great about "inspir[ing] others to become better producers"? Producers of what? Stuff that people want, presumably. If people want to read what he writes, then he's already directly producing stuff that people want. Why the perceived need for an extra step?

If we all had magic wands we could wave, which could give us whatever we wanted, would you not agree that we'd all be very wealthy, even though no one would be paying anyone any money for anything?

As I see it, money is just to buy stuff I want. If stuff I want is available for free, then of course that's better, not worse. If you value nothing for itself, but rather consider that the sole purpose of everything is to be sold for as much money as you can sell it for, then what's the point of anything?

[burnvictim77]

Odd.

What's so great about "inspir[ing] others to become better producers"? Producers of what? Stuff that people want, presumably. If people want to read what he writes, then he's already directly producing stuff that people want. Why the perceived need for an extra step?

If we all had magic wands we could wave, which could give us whatever we wanted, would you not agree that we'd all be very wealthy, even though no one would be paying anyone any money for anything?

As I see it, money is just to buy stuff I want. If stuff I want is available for free, then of course that's better, not worse. If you value nothing for itself, but rather consider that the sole purpose of everything is to be sold for as much money as you can sell it for, then what's the point of anything?


I think you are trying to pick a fight here that I won't give you. Money is not the most important thing in my life, nor do I recommend people stop pursuing their art or entertainment.

It's just that we are talking about an economy, and my personal pursuits don't contribute as much to that economy as do things like my labor that I see to a business to produce goods and services people pay for.

[shanek]

It's not dismissiveness. It's the conclusion to which I've come after participating in many discussions about the freemarket.

Okay, then: why do you think a free market cannot exist?

Because I think the individual should be entitled to things like bathroom breaks, a life away from work, a limit on required hours per week, weekends, time off, vacations, lunch hours, a fair wage ect.. In short, I think the individual shouldn't be a slave to his/her employer.They aren't. They can demand shorter hours, quit, whatever. I think it's an insult to the millions of people who really were enslaved when someone equates a Wal-Mart employee with slavery.

[burnvictim77]

Companies should be mandated to permit breaks and should be aggressively prosecuted for coercing, or encouraging employees to forego their breaks. However, the individual should remain free to work during the break should he/she want. Just like, although I think we need a 30-35 hour work week, people should still be free to work more if they want. In both instances, the choice is up to the individual alone.

The same goes for gay porn, if someone is willing to do it, they should have that right. But, outside of working in the gay porn industry of course, an individual shouldn't be coerced into being in a gay porn simply because their boss might decide one day to make that a condition of employment. So far, I have seen no protection in the "free market" that would prevent such a situation.



Short answer yes. It's your business, you can do things with it that your employees can't.


I'll have to get back to you on this one, for now I must pursue my art and my passion (seriously!).

But you are getting us started in a good direction. I will address these points.

[shanek]

Pretty much a communist who, instead of subjugating the individual to the collective, subjugates the individual to the economy.

How does one become subjugated to the economy?

Because they fundamentally are.

That's not an answer.

I don't see how this question relates to anything I've said.

It directly relates to the point at hand.

[shanek]

Wait, are you telling us the minimum wage creates jobs?

That's not what's happening. What's happening is that demand for the higher-wage jobs has increased--exactly as economics predicts.

[shanek]

Companies should be mandated to permit breaks and should be aggressively prosecuted for coercing, or encouraging employees to forego their breaks. However, the individual should remain free to work during the break should he/she want.

But that's completely contradictory! It's like you're saying that the employee gets to break the law and the employer doesn't!

And in any sense, it doesn't work that way. The law does not recognize that employees can give up their break times. There have been quite a number of cases on that basis. Either they both get to do it, or neither does.

The same goes for gay porn, if someone is willing to do it, they should have that right. But, outside of working in the gay porn industry of course, an individual shouldn't be coerced into being in a gay porn simply because their boss might decide one day to make that a condition of employment. So far, I have seen no protection in the "free market" that would prevent such a situation.

Again, quitting? Just refusing to do it?

[shanek]

If we all had magic wands we could wave, which could give us whatever we wanted, would you not agree that we'd all be very wealthy, even though no one would be paying anyone any money for anything?

I think there are several works of literature which show that this would not be the case. Also, an old Chinese curse goes, "May your every wish be instantly fulfilled." There's something to be said for working for and earning things. You value those more than things which are just given to you.

I once heard a story (I don't know if it's actually, true, but it easily could be) about a guy who bought a new fridge and just wanted to get rid of the old one. There was nothing wrong with it, he just wanted a new and better fridge and wasn't interested in getting anything for the old one; just to be rid of it. So he put it out in his yard with a sign that says, "Free refrigerator--just come and haul it away."

Weeks went by; no takers. So then he removed the sign and replaced it with one that said, "Refrigerator: $50."

The next day someone stole it.

[Merko]

Yes, because it frees up both capital and labor that can now be used on other things and generate even more wealth in the economy. Redundant busywork doesn't contribute anything.

I agree with Shane here.
So do I, and this is one of the reasons why increased minimum wages can be beneficial to the overall economy. If low wage jobs are replaced by machinery (because that gets relatively cheaper when the wage rises) then that can be a good thing. Of course, that presupposes that these workers can find something else to do which is more productive. Assuming that social and political forces will act in order to make use of the freed productive potential, this will happen.

[Merko]

And it seems that millions of Americans would rather do a job as a manager than gay porn.
Who says you've got to choose (http://en.wikipedia.org/wiki/Fredrik_Eklund)? :D

[Tony]

But that's completely contradictory! It's like you're saying that the employee gets to break the law and the employer doesn't!


No it isn't. This is a strawman.

Again, quitting? Just refusing to do it?

So the "freemarket" offers no protection. Thanks for proving my point. This is what I'm talking about, you don't have a solution, you have dogma. I'd like to add that it's pretty sick that you think an employer should be entitled to violate the human and individual rights of his employees by making gay sex a condition of employment.

[69dodge]

I think you are trying to pick a fight here that I won't give you. Money is not the most important thing in my life, nor do I recommend people stop pursuing their art or entertainment.No. Sorry if it sounded that way. I don't know you personally, of course. I was just speaking generally.

It's just that we are talking about an economy, and my personal pursuits don't contribute as much to that economy as do things like my labor that I see to a business to produce goods and services people pay for.Claus was talking about stuff that he writes. Not just for himself, but for other people to read. If they want to read it, and they get to read it, then that's good. If he doesn't charge money to read it, that's even better, because then some people will get to read it who couldn't otherwise afford to.

[Tony]

That's not what's happening.

It's not? Job aren't being created in Washington because Idaho can't compete? I guess all those people jumping the border into Washington are working for imaginary companies.

[Tony]

Okay, then: why do you think a free market cannot exist?

Because control will always fall to those with the greatest power.

They aren't.

Yes, they are. If they quit, what are their options? Go work somewhere else that denies them the same rights because said rights aren't protected by the government? Because, historically, that's pretty much been their only option.

They can demand shorter hours.

Of course you're assuming they have that right.

I think it's an insult to the millions of people who really were enslaved when someone equates a Wal-Mart employee with slavery.

I don't know who you're reading, but I never brought up wall mart.

[Tony]

How does one become subjugated to the economy?


Laws, and the way the system is allowed to operate. In short, the exact same way anyone becomes subjugated to anything.

That's not an answer.

Yes it is, you just don't like it. Furthermore, I think the onus is on you to justify how you can equate the economy and the individual.

It directly relates to the point at hand.

No it doesn't. I have said nothing about "someone can be encouraged to do something to help out a company, the people they employ, the investors, and the economy as a whole, just by charging some extra money for it, what's the problem?"

[Foolmewunz]

The problem with the study is that it ignores nearly 50% of the MW earning population. There should be emphasis that this study is 16 to 24 year olds. After reading the entire report, I'm not sure why they left off the million persons who don't fit into that category. That's a huge number.

Now, it's possible that the study was written or commissioned to specifically address the claims by people who insist that it is precisely this group who are helped by increases in the MW, but it's equally possible that the older workers are more skilled/educated (this is implied in the study but not documented) and thus not effected.


Bolding/emphasis added.....

Quote:
A study released today by the Employment Policies Institute (EPI) reveals the increasing job losses that plague minorities and high school drop-outs following minimum wage hikes.

The research, conducted by Dr. David Neumark, economist at the University of California, Irvine, looks at the effects minimum wage hikes have had since the welfare reforms of the 1990s. The author focused specifically on the impact of minimum wage hikes on employment levels, wages, and income for teens and young adults.

The author found that for every 10% increase in the minimum wage:
Minority unemployment increased by 3.9% for workers between 16-24 y.o.
Hispanic unemployment increased by 4.9% ditto
Minority teen unemployment increased 6.6% ditto
African American teen unemployment increased by 8.4% ditto
Low-skilled unemployment (i.e., those lacking a high school diploma) increased by 8% ditto


I'd also like to see some of the famed trickle-down economy folks comment on the trickle up effect. Does anyone presume that MW earners are not going to be spending their increased salaries in the community on goods and services? Even allowing for an average (temporary, as in one year) DECREASE in the number of MW earners at an astronomical 4%* (averaging the impact on minorities as mentioned in the study), the net effect of the proposed increase is an injection of roughly 2.0 billion USD into the economy.

Further, examination of MW earners in the last quarter century shows that the overall number of MW earners did not consistently decrease in the year of or year after an increase. This would seem to negate the contention in the OP.

The tendency seems to be more related to the economy as a whole, not to the marginal hourly increase of the lowest tier of the economy. Ergo the asterisked comment above that I was allowing for an "astronomical 4%" in the mentioned added cash to the service economy. The actual figure for the overall decrease in the few years that it has occurred is actually less than 1%.

Ergo, what is the purpose of the study, and its purpose in singling out the statistically significant sampling only?

Addendum: As to the cost of the technological solution versus the cost of labor, this theory shows little understanding of business practices. Any solution that can be introduced that will reduce the workforce at a cost even roughly close to (even marginally higher than) the cost of labor, WILL BE INTRODUCED. The initial investment can be written off, the announcement of labor reductions to come increases the share prices, and the main attraction is the relative certainty of relying on a single technician or service rep rather than being buffeted by larger labor pools. If McDonald's could replace little Johnny with an automatic burger flipper, it would.

[pipelineaudio]

want to help minimum wage earners?

STOP speculating on real estate pigs

get rid of homeowners associations which are made to solely increase real estate value

STOP thinking of homes as investments and start realizing that people need somewhere to LIVE!!!!!!!!!!!

Nice that you can afford 4 houses, but MUST you???

My city is becoming a ghost town, the poor and middle class are all moving into overpriced apartments because their homes are WAY out of their league pricewise now

greedy pigs abound, Im sure Ill be told off, but whatever

[Darth Rotor]

want to help minimum wage earners?

STOP speculating on real estate pigs

get rid of homeowners associations which are made to solely increase real estate value

STOP thinking of homes as investments and start realizing that people need somewhere to LIVE!!!!!!!!!!!

Nice that you can afford 4 houses, but MUST you???

My city is becoming a ghost town, the poor and middle class are all moving into overpriced apartments because their homes are WAY out of their league pricewise now

greedy pigs abound, Im sure Ill be told off, but whatever

Try coherence, it is a virtue.

DR

[Tony]

want to help minimum wage earners?

STOP speculating on real estate pigs

get rid of homeowners associations which are made to solely increase real estate value

STOP thinking of homes as investments and start realizing that people need somewhere to LIVE!!!!!!!!!!!

Nice that you can afford 4 houses, but MUST you???

My city is becoming a ghost town, the poor and middle class are all moving into overpriced apartments because their homes are WAY out of their league pricewise now

greedy pigs abound, Im sure Ill be told off, but whatever

I got a feeling you're talking about something important here. Can you elaborate or post a story about the phenomenon you're describing?

[CFLarsen]

Claus was talking about stuff that he writes. Not just for himself, but for other people to read. If they want to read it, and they get to read it, then that's good. If he doesn't charge money to read it, that's even better, because then some people will get to read it who couldn't otherwise afford to.

And if I come up with an idea, or somebody else comes up with an idea based on what I write, that creates wealth, then my unpaid interest in improving myself has created wealth.

Shanek believes all human beings are nothing but selfish greed-heads. Everything is done for money.

Fortunately, he is wrong.

[Totovader]

The problem with the study is that it ignores nearly 50% of the MW earning population. There should be emphasis that this study is 16 to 24 year olds. After reading the entire report, I'm not sure why they left off the million persons who don't fit into that category. That's a huge number.

Seems to me, that's what the study was about- and that was quite clear.

Now, it's possible that the study was written or commissioned to specifically address the claims by people who insist that it is precisely this group who are helped by increases in the MW, but it's equally possible that the older workers are more skilled/educated (this is implied in the study but not documented) and thus not effected.

I'm not sure you're reading it right- these jobs do not simply get reassigned to older or more skilled people: they get abandoned, or merged with the already higher paid jobs. One person starts doing 2 jobs.

I'd also like to see some of the famed trickle-down economy folks comment on the trickle up effect. Does anyone presume that MW earners are not going to be spending their increased salaries in the community on goods and services?

Goods and services that are now more expensive? How does that trickle up?

Even allowing for an average (temporary, as in one year) DECREASE in the number of MW earners at an astronomical 4%* (averaging the impact on minorities as mentioned in the study), the net effect of the proposed increase is an injection of roughly 2.0 billion USD into the economy.

Money just gets invented? From what?

Further, examination of MW earners in the last quarter century shows that the overall number of MW earners did not consistently decrease in the year of or year after an increase. This would seem to negate the contention in the OP.

No, I don't think it does- but I'd like to see your analysis on this.

The tendency seems to be more related to the economy as a whole, not to the marginal hourly increase of the lowest tier of the economy. Ergo the asterisked comment above that I was allowing for an "astronomical 4%" in the mentioned added cash to the service economy. The actual figure for the overall decrease in the few years that it has occurred is actually less than 1%.

I'm not quite sure I follow- but it's a decrease, right? If the claim of proponents of MW is that it creates wealth, creates jobs, etc- a decrease is a decrease.

Ergo, what is the purpose of the study, and its purpose in singling out the statistically significant sampling only?

I'm not quite sure why you're confused?

[Schneibster]

you don't have a solution, you have dogmaThis is why I don't talk to it. Anything that accuses someone of lying about whether a browser works because they's a librul and must be lying about everything isn't worth the time to talk to.

[pipelineaudio]

I got a feeling you're talking about something important here. Can you elaborate or post a story about the phenomenon you're describing?

How much simpler does it need to be?

Investors (who already have a home to live in) are driving house (as in a place to live) prices to insane dimensions, by buying (paying money to purchase something), more, sometimes many more houses than they plan on living in.

Regular people, as in not rich, are not able to afford housing. Even apartments have gone insane

Belive it or not, this hurts people

[pipelineaudio]

Try coherence, it is a virtue.

DR

reading comprehension problems? Maybe the dumbed down version for Tony will help

[Foolmewunz]

Seems to me, that's what the study was about- and that was quite clear.

To some, perhaps. But from the posts in this thread, apparently not to all. I wanted to re-emphasize that it's talking about 16-24 year olds, and while the survey/report covers all sub-groups within that age range, the article at EPI doesn't mention them at all.



I'm not sure you're reading it right- these jobs do not simply get reassigned to older or more skilled people: they get abandoned, or merged with the already higher paid jobs. One person starts doing 2 jobs.
Did you read the study cited in the OP? It does not say that. Several posters in this thread assume that, but the study merely covers statistics in the groups cited. The full study also indicates that there are other key minority segments that actually benefit from MW increases.



Goods and services that are now more expensive? How does that trickle up?
Where do you get the assumption that the costs for goods and services will go up by 2.0 billion dollars in the first year of an increase in the MW. That's a very lowball under-estimation of the amount of additional earnings those 2.1 million people working at or below MW would get under the proposed increases. And the lowest end wage-earners aren't going to be investing in stock portfolios. They're going to be buying better food, furniture, etc.... In short, pumping money back into the economy.



Money just gets invented? From what?
It's not invented, it's paid out in wages. Multiply 2.1 million workers times the amount of the increase, which is rather large this go-round, and deduct a suitable number (allowing for the survey cited in the OP) who will lose their jobs, and you still get a net increase in the billions. (Yes, billions.)



No, I don't think it does- but I'd like to see your analysis on this. As you wish. http://www.bls.gov/cps/minwage2003tbls.htm



I'm not quite sure I follow- but it's a decrease, right? If the claim of proponents of MW is that it creates wealth, creates jobs, etc- a decrease is a decrease.
It's a decrease in only the highlighted minority categories mentioned in the OP. As mentioned, the full study actually mentions differing effects in certain sub-sets of that same 16-24 y.o. group.

To be more specific, the research cited in the OP states that this segment of the population suffers, i.e. loses those MW jobs. But the overall MW population does not suffer, it actually increases in the year of an increase in the MW. Check the tables in the above link.
Obviously, what happens is that in the year of an increase the number of workers and percentage of workers are now statistically larger because workers earning slightly over the MW (old) are now in that statistical pool. Notwithstanding that factor, it's not until one and two years after a MW increase that the numbers in those categories go down. And there is NOTHING in the report cited that indicates that they can say whether that is because of a good economy, persons working their way up from the lowest paying jobs, or other causes. All that the studies show are statistics.


I'm not quite sure why you're confused?

I wasn't, actually. I'm questioning the article cited for cherry-picking the portions of the study that assisted its agenda, ignoring the portions that detracted from its view (young women 16-24, for instance), and not including a million people who evidently were of no use to them statistically. Maybe one ought to find out who EPI are.

[Chaos]

I think there are several works of literature which show that this would not be the case. Also, an old Chinese curse goes, "May your every wish be instantly fulfilled." There's something to be said for working for and earning things. You value those more than things which are just given to you.

I once heard a story (I don't know if it's actually, true, but it easily could be) about a guy who bought a new fridge and just wanted to get rid of the old one. There was nothing wrong with it, he just wanted a new and better fridge and wasn't interested in getting anything for the old one; just to be rid of it. So he put it out in his yard with a sign that says, "Free refrigerator--just come and haul it away."

Weeks went by; no takers. So then he removed the sign and replaced it with one that said, "Refrigerator: $50."

The next day someone stole it.

First, this is an anecdote, and as such proves nothing.

Second, even if we assume it did prove something, it would prove that humans do not act in a rational way.
However, the model that say that the free market works are based, among other things, on the assumption that all humans always act in a completely rational way - so if your anecdote actually proves anything, it also proves that the free market cannot work.

[69dodge]

Where do you get the assumption that the costs for goods and services will go up by 2.0 billion dollars in the first year of an increase in the MW. That's a very lowball under-estimation of the amount of additional earnings those 2.1 million people working at or below MW would get under the proposed increases. And the lowest end wage-earners aren't going to be investing in stock portfolios. They're going to be buying better food, furniture, etc.... In short, pumping money back into the economy.I don't understand. "Pumping money back into the economy"? Why is that a good thing? How will the better food, furniture, etc. get made?

It's not invented, it's paid out in wages. Multiply 2.1 million workers times the amount of the increase, which is rather large this go-round, and deduct a suitable number (allowing for the survey cited in the OP) who will lose their jobs, and you still get a net increase in the billions. (Yes, billions.)"Net increase"? Employees get paid more, but employers pay more. How is this a net increase of anything?

[Foolmewunz]

I don't understand. "Pumping money back into the economy"? Why is that a good thing? How will the better food, furniture, etc. get made?

"Net increase"? Employees get paid more, but employers pay more. How is this a net increase of anything?

Remember "trickle-down" economics. Give breaks to the upper classes and corporations and they have more money and that money goes into the economy, or so the theory said. Well, this is trickle-up. Give a better wage to the workers and they will spend it.

"Net increase" for the working pool that is on minimum wage. As mentioned, if the OP is correct and X number on minimum wage lose their jobs, but Y number get an increase, how much is that increase worth in dollars. That's the net increase of money that is being paid out... to people who will spend it.

If this means that in order to protect their dividends McDonald's or Walmart have to decide between laying off people or raising prices, then they will have to do one or the other. Since they need little Johnny to flip burgers, they're going to raise prices, and frankly, I don't really care if your Big Mac costs you another twenty cents or you have to pay an extra buck for the three-pack of boxer shorts in the long run. I'd like to know that the workers are getting a living wage. The current minimum wage comes out to two hundred bucks a week, before taxes.

Look at the link I provided. We're not talking about the majority of the population, here. We're talking about the work force living on minimum wage, a percentile that's gone down and down over the past twenty years. Then look into the funders of the institute in the OP. Would they have any motive in keeping minimum wages down?

[Mangafranga]

Since they need little Johnny to flip burgers, they're going to raise prices, and frankly, I don't really care if your Big Mac costs you another twenty cents or you have to pay an extra buck for the three-pack of boxer shorts in the long run.

How does this not effect inflation and therefore the real wage?

[Totovader]

To some, perhaps. But from the posts in this thread, apparently not to all. I wanted to re-emphasize that it's talking about 16-24 year olds, and while the survey/report covers all sub-groups within that age range, the article at EPI doesn't mention them at all.

Because the article is talking specifically about job losses. Again, it goes back to what you believe the purpose of minimum wage is. Is is to create wealth for some individuals at the expense of others- including their jobs? Do certain groups- groups which are otherwise specifically protected- suddenly become a moot point when they lose their jobs?

Your argument seems to be "yeah, who cares that these people lose their jobs, we're creating wealth!" (which isn't true, but more on that later).

So, for you, the ethics of minimum wage is simply that it redistributes wealth to other groups who may not necessarily need it as much, and for minorities, teens, and unskilled workers... screw them?

You see, I'm confused as to what it is about minimum wage that you're defending.

Did you read the study cited in the OP? It does not say that. Several posters in this thread assume that, but the study merely covers statistics in the groups cited. The full study also indicates that there are other key minority segments that actually benefit from MW increases.

It's not an assumption- it's economics. We know it happens, and we know why. (http://www.azcentral.com/arizonarepublic/news/articles/0210biz-teenwork0210.html)

Where do you get the assumption that the costs for goods and services will go up by 2.0 billion dollars in the first year of an increase in the MW. That's a very lowball under-estimation of the amount of additional earnings those 2.1 million people working at or below MW would get under the proposed increases. And the lowest end wage-earners aren't going to be investing in stock portfolios. They're going to be buying better food, furniture, etc.... In short, pumping money back into the economy.

I made no such assertion- your figure is $2B, which I cannot see you possibly justifying with empirical data. They are not going to be buying better food, furniture, etc- they're going to be buying the same exact stuff at a higher price, if they haven't lost their job.

It's not invented, it's paid out in wages. Multiply 2.1 million workers times the amount of the increase, which is rather large this go-round, and deduct a suitable number (allowing for the survey cited in the OP) who will lose their jobs, and you still get a net increase in the billions. (Yes, billions.)

And where do wages come from? Are they invented?

It's simple economics- if you have to increase the cost of wages, you either lay off some of your workforce and merge their jobs with other people, or you increase the price of your product to cover the new expense. You do not simply get more money for wages from nowhere. Your calculations are specious at best- to just assume that you can multiply the available workforce by what they will now be getting as a result of the regulations and then claim it will be a net increase is intentionally excluding the factors I just mentioned. You cannot simply assume that money will come from nowhere to pay these individuals their new wages.


As you wish. http://www.bls.gov/cps/minwage2003tbls.htm

This information indicates that the number of workers working at minimum wage. It also shows this number as a percent of the total wage workers.

What you claimed was that this information would show no decrease in the number of minimum wage workers on the year of or year after a minimum wage increase. Not only is this not true, but we see a steep decline in the percentage of wage workers who are minimum wage. This information does not even account for total population and unemployment rates- which the study you seem to want to compare it to does. How you can insist that this contradicts the findings of the OP is beyond me.


It's a decrease in only the highlighted minority categories mentioned in the OP. As mentioned, the full study actually mentions differing effects in certain sub-sets of that same 16-24 y.o. group.

I'm still confused as to why this is troubling you. What is the purpose of minimum wage?

To be more specific, the research cited in the OP states that this segment of the population suffers, i.e. loses those MW jobs. But the overall MW population does not suffer, it actually increases in the year of an increase in the MW. Check the tables in the above link.

Actually- those tables show quite the opposite- but I again point to my overall confusion on your point. If minimum wage is supposed to be defending these workers- why is it a valid rebuttal to claim that some portions of this group will get screwed, but others will benefit?

If the goal of minimum wage is to protect these people- it's undeniable that it does not work.

If the goal of minimum wage is to help the economy and provide more jobs- it's undeniable that it does not work.

If the goal of minimum wage is to redistribute the wealth of some people to others- it sort of works.

If the goal of minimum wage is to make it far more difficult for minorities, unskilled workers, and teens to enter the workforce- then clearly the data shows that it works.

It's quite socialist indeed to just claim that for those who are losing out and getting tossed aside- others are benefiting on their behalf...

Obviously, what happens is that in the year of an increase the number of workers and percentage of workers are now statistically larger because workers earning slightly over the MW (old) are now in that statistical pool. Notwithstanding that factor, it's not until one and two years after a MW increase that the numbers in those categories go down. And there is NOTHING in the report cited that indicates that they can say whether that is because of a good economy, persons working their way up from the lowest paying jobs, or other causes. All that the studies show are statistics.

Which is why it takes further research to understand the full effects.

[Foolmewunz]

Totovader - the purpose of MW is not to create jobs. It is to give a fair wage to workers.

Try the math.
How many workers on the MW level in 2003? 2.1 million
The proposed increase is higher, but let's say it's a dollar an hour. And assume, like the OP that say 4 (heck, let's say ...5)... 5% lose their jobs.
That's over a hundred thousand jobs lost, but still nearly two million workers at that level. Again, this is conservative.*
Two million workers at an extra dollar per hour is two million dollars per hour or 80 million per week if they work a forty hour week. Multiply that times 52 weeks and you get four billion, easily.

So, let's assume that many work 20 hour weeks, or assume that all of them work 20 hour weeks. That will take you down to the two billion figure, but that's very conservative*, as I've said.

And I don't know why you guys keep assuming the inflationary spiral. You do realize that all your clothing, toys, and furniture are made over here, don't you? Please go into IKEA and check the price of a standard model desk today, and tell me that it goes up when MW goes up. The cost of labor, factored into the final purchase price for your goods is nearly negligible. (e.g. the plush toy you buy for your kid at 19.95.... labor is at six and a half cents!) I work in this industry and ship consumer goods from all over Asia into the markets in North America and Europe. (And yes, I fight for fair working wages over here, too.)

If the tobacco lobbies fund a cancer study, you question it, don't you? If the alcohol lobby comes out with a report recommending Remy Martin for three year olds, I'd certainly have my worries. Check out EPI. The abbreviation is not a coincidence - they want to sound as though they're the Economic Policy Institute. They are NOT. They're a mouthpiece for the restaurant/fast food industries.

[69dodge]

Remember "trickle-down" economics. Give breaks to the upper classes and corporations and they have more money and that money goes into the economy, or so the theory said. Well, this is trickle-up. Give a better wage to the workers and they will spend it.I don't know anything about economics, really. I wasn't comparing your proposal to "trickle-down economics", because I don't know how that's supposed to work either. I was just thinking about it on its own.

Whether the poor workers spend it or whether their rich bosses spend it, I don't see what difference it makes to anyone else. (Of course, it makes a difference to the workers and the bosses.)

"Net increase" for the working pool that is on minimum wage.Ok, sure. But it doesn't come from nowhere.

As mentioned, if the OP is correct and X number on minimum wage lose their jobs, but Y number get an increase, how much is that increase worth in dollars. That's the net increase of money that is being paid out... to people who will spend it.I still don't get why spending it is such a good thing. To spend it on stuff, first the stuff has to get made somehow. This means someone else has to work to make the stuff.

Hoarding money seems like a selfish thing to do, but really it's the opposite. It means that you've provided stuff for other people (the stuff they paid you for), but you don't expect them to provide stuff for you in return (stuff you might have bought but didn't).

If this means that in order to protect their dividends McDonald's or Walmart have to decide between laying off people or raising prices, then they will have to do one or the other. Since they need little Johnny to flip burgers, they're going to raise prices, and frankly, I don't really care if your Big Mac costs you another twenty cents or you have to pay an extra buck for the three-pack of boxer shorts in the long run. I'd like to know that the workers are getting a living wage. The current minimum wage comes out to two hundred bucks a week, before taxes.Little Johnny needs to eat food and wear underwear too. So I'm not sure it's quite that simple.

[shanek]

So do I, and this is one of the reasons why increased minimum wages can be beneficial to the overall economy. If low wage jobs are replaced by machinery (because that gets relatively cheaper when the wage rises) then that can be a good thing. Of course, that presupposes that these workers can find something else to do which is more productive.

And that is the bad assumption. If they could do more productive work, and hence, get paid more, don't you think they'd be doing it already?

All the MW does is take jobs away from people who can only demand (say) $6 in wages and give them to the people who are worth $7.

[shanek]

So the "freemarket" offers no protection.

That is the protection! Why don't you get that?

[shanek]

It's not? Job aren't being created in Washington because Idaho can't compete? I guess all those people jumping the border into Washington are working for imaginary companies.

No, they're competing with Washington workers for the jobs. There is absolutely no evidence whatsoever that there are now more jobs in Washington as a result.

[shanek]

Laws, and the way the system is allowed to operate. In short, the exact same way anyone becomes subjugated to anything.

Then it's government doing the subjugating, not the economy.

Yes it is, you just don't like it. Furthermore, I think the onus is on you to justify how you can equate the economy and the individual.

Who do you think makes up the economy? Whose decisions do you think drive economic forces? Martians? Or individual human beings?

[shanek]

The problem with the study is that it ignores nearly 50% of the MW earning population. There should be emphasis that this study is 16 to 24 year olds. After reading the entire report, I'm not sure why they left off the million persons who don't fit into that category. That's a huge number.

Because it's extremely rare that any of them work for minimum wage.

I'd also like to see some of the famed trickle-down economy folks comment on the trickle up effect. Does anyone presume that MW earners are not going to be spending their increased salaries in the community on goods and services?

Broken Window fallacy.

[shanek]

Second, even if we assume it did prove something, it would prove that humans do not act in a rational way.

Actually, they're acting very rationally, in an economic sense. In the first instance, the owner of the refrigerator is declaring that the fridge isn't worth anything, and so people wonder why it's worth the bother of hauling it away and hooking it up. They don't want to do that just for a fridge that isn't going to work. After the sign was changed, the fridge was declared to have a value, and therefore there was value in obtaining it for nothing.

However, the model that say that the free market works are based, among other things, on the assumption that all humans always act in a completely rational way

How many times am I going to have to debunk that claim? No, it does not--it never has and it never will!

[shanek]

Remember "trickle-down" economics. Give breaks to the upper classes and corporations and they have more money and that money goes into the economy, or so the theory said. Well, this is trickle-up.

And it was wrong.

Give a better wage to the workers and they will spend it.

But again, that's a Broken Window fallacy. What do you think would have happened to the money otherwise? You think it would have just been in a vault somewhere gathering dust?

"Net increase" for the working pool that is on minimum wage.

Support this. As the pool is now smaller, you cannot assume a net increase.

As mentioned, if the OP is correct and X number on minimum wage lose their jobs, but Y number get an increase, how much is that increase worth in dollars. That's the net increase of money that is being paid out... to people who will spend it.

As far as I'm concerned, that's irrelevant anyway. You may as well have gone to X, robbed them of their money and taken food off their table, and given it to Y.

and frankly, I don't really care if your Big Mac costs you another twenty cents or you have to pay an extra buck for the three-pack of boxer shorts in the long run. I'd like to know that the workers are getting a living wage.

They aren't. You've taken their jobs and given them to people who could have demanded that wage anyway.

[shanek]

Here's the question that nobody in the old MW thread could answer, and it's a question that really sheds light on the whole rest of the discussion:

Where is the extra money going to come from?

[Mangafranga]

But again, that's a Broken Window fallacy. What do you think would have happened to the money otherwise? You think it would have just been in a vault somewhere gathering dust?


Not that I agree with Foolmewunz, but isn't savings distinct from expenditure in economics?

[shanek]

First of all, you don't know that it necessarily would have been saved. Second, savings = investments. It could have been used to expand the economy and create even more jobs.

[burnvictim77]

Companies should be mandated to permit breaks and should be aggressively prosecuted for coercing, or encouraging employees to forego their breaks. However, the individual should remain free to work during the break should he/she want. Just like, although I think we need a 30-35 hour work week, people should still be free to work more if they want. In both instances, the choice is up to the individual alone.

The same goes for gay porn, if someone is willing to do it, they should have that right. But, outside of working in the gay porn industry of course, an individual shouldn't be coerced into being in a gay porn simply because their boss might decide one day to make that a condition of employment. So far, I have seen no protection in the "free market" that would prevent such a situation.


Okay, I see here that you don't think employment is a voluntary contract terminable at any time, at least not for both parties. Though, in the absence of another specially agreed upon contract that specifies a length of time and guarantees of employment, it should be by default. That is, if I can quit at any time for any reason, so should my employer be able to fire me at any time for any reason.

The protection in the free market that keeps things like coercion into gay porn from happening is competition. The average supermarket clerk WILL NOT decide to film porn because their boss says it is now part of their job. Because there is clearly a competing grocery store or some other retail outfit that will hire them without this absurd requirement. Additionally, we haven't even mentioned the strength of collective bargaining in discouraging these more obvious "abuses" of employees. Collective bargaining would still be present in a free market.

Also, what consitutes coercion in your opinion? That is, if I ask Johnny to film gay porn, and he says no, and then I mention that Chad and Richie both agreed to do it and that I don't really have room on my payroll for those who will not perform the "fullness of their job," have I coerced him, or I am saying that he's replaceable by someone who WILL do what I ask? I should say it's not coercion. If I actually threaten force upon him, that would be coercion, but terminating a voluntary contract is not force.

So, what this comes down to is that you want to hold me, the entreprenuer, to much stricter standards than any other individuals. My employees can quit without repercussions, but I cannot fire them without expecting repercussions. My employees can demand better jobs, better benefits, etc. but I cannot demand they take on new/exotic tasks, nor lessen their benefits.

How does one justify seeing this as just?

Short answer yes. It's your business, you can do things with it that your employees can't.

As shown above, you are already putting restraints on the owner, however, of course the owner 'can do things' that the employees can't, but this isn't in regard to rights. If the employees started their own business, they then 'can do things with it' as well.

Does a car owner have more rights than someone who takes the bus?

I think we are hitting a communication wall.

[Merko]

Two million workers at an extra dollar per hour is two million dollars per hour or 80 million per week if they work a forty hour week. Multiply that times 52 weeks and you get four billion, easily.

So, let's assume that many work 20 hour weeks, or assume that all of them work 20 hour weeks. That will take you down to the two billion figure, but that's very conservative*, as I've said.

I agree with you that this effect exists and is likely very beneficial, however, you can't just say that this means two billions being 'injected', because clearly the money comes from somewhere. I think it could be argued that we're switching this money from 'trickle down' to 'trickle up' (or rather, 'trickle around'). And if you, like me, believe that 'trickle around' is more beneficial to the economy as a whole, then this will indeed be beneficial to the overall economy.

[Merko]

Does a car owner have more rights than someone who takes the bus?

Obviously the car owner has rights to this particular car. If you don't agree, you must have a very weird definition of rights. Courts will certainly agree that the car owner has such additional rights.

[burnvictim77]

Obviously the car owner has rights to this particular car. If you don't agree, you must have a very weird definition of rights. Courts will certainly agree that the car owner has such additional rights.

But the rights aren't granted because you own a car. Your rights apply to your car because you own it.

Agreement?

[Merko]

But the rights aren't granted because you own a car. Your rights apply to your car because you own it.

There's no material difference. In the eyes of the non-owner, it is all the same.

Consider a mother with two starving children she can't provide for. They will both die soon if she doesn't get an income. Now someone offers her to work all day at a wage which will allow her to feed one of her children, while the other will still die. The employer will however make a profit from that work of about twenty times what he offers to pay this woman.

Now of course you can argue the example, saying that in the US or wherever, people aren't starving. Or that in the US, or wherever, employers' profits from the work of a single employee is not twenty times the wage amount. It's an example illustrating a principle.

Now, considering this example, someone may argue that the woman should in fact be thankful for getting this offer, since she will be able to save one of her children, which should be priceless to her. Still, I suspect most of us will instinctively feel that the employer is abusing her desperate condition. He could easily have paid her enough to save both her children. It wouldn't have made a dent in his earnings.

Personally, I don't believe in morality, and I think it's up to the woman and the rest of us to organise a political system where employers are forced to pay reasonable wages whether they want to or not. And what is reasonable, I contend, is dependant not only on the labour market - eg what someone else is willing to work for - but also on the value of what the worker produces.

[burnvictim77]

There's no material difference. In the eyes of the non-owner, it is all the same.

Consider a mother with two starving children she can't provide for. They will both die soon if she doesn't get an income. Now someone offers her to work all day at a wage which will allow her to feed one of her children, while the other will still die. The employer will however make a profit from that work of about twenty times what he offers to pay this woman.

Now of course you can argue the example, saying that in the US or wherever, people aren't starving. Or that in the US, or wherever, employers' profits from the work of a single employee is not twenty times the wage amount. It's an example illustrating a principle.

Now, considering this example, someone may argue that the woman should in fact be thankful for getting this offer, since she will be able to save one of her children, which should be priceless to her. Still, I suspect most of us will instinctively feel that the employer is abusing her desperate condition. He could easily have paid her enough to save both her children. It wouldn't have made a dent in his earnings.

Personally, I don't believe in morality, and I think it's up to the woman and the rest of us to organise a political system where employers are forced to pay reasonable wages whether they want to or not. And what is reasonable, I contend, is dependant not only on the labour market - eg what someone else is willing to work for - but also on the value of what the worker produces.

Good example.

My question would be this: what is the value of entreprenuership? Can we give an exact percentage that the business owner and his managers are due?

[Merko]

My question would be this: what is the value of entreprenuership? Can we give an exact percentage that the business owner and his managers are due?
No, but I do believe that in an ideal situation, where the power gap between employers and employees is small, such a balance will be found. Additionally, just because someone is a business owner, much less a manager, does not necessarily make that person an entrepreneur. There's such a thing as inheritance, and lots of people become managers because of their connections rather than for having any entrepreneurial skills.

[burnvictim77]

No, but I do believe that in an ideal situation, where the power gap between employers and employees is small, such a balance will be found. Additionally, just because someone is a business owner, much less a manager, does not necessarily make that person an entrepreneur. There's such a thing as inheritance, and lots of people become managers because of their connections rather than for having any entrepreneurial skills.

However, taking the risk of economic liability is really what constitutes the value of the entrepeneur in many instances. Providing capital to run a business doesn't necessarily take skill, but it takes risk.

[69dodge]

Here's the question that nobody in the old MW thread could answer, and it's a question that really sheds light on the whole rest of the discussion:

Where is the extra money going to come from?I guess the assumption is that the rich business owner is not running his business right on the very edge of profitability, and so he can afford to pay his workers more and himself less.

I do not really know how often this assumption is correct.

On the one hand, I suspect that not too many business have lots of extra money just lying around that they can give away to employees without any business repercussions at all. On the other hand, it is undoubtedly true that some people are rich and some people are poor, and the poor ones will be helped more by a small pay raise than the rich ones will be harmed by a small pay cut.

[69dodge]

However, taking the risk of economic liability is really what constitutes the value of the entrepeneur in many instances. Providing capital to run a business doesn't necessarily take skill, but it takes risk.Would it be unfair to say that the risk is great because the entrepreneur is operating in a very capitalistic, free-market type of system?

In a different sort of system, the opportunity for becoming very rich is less, but so is the risk of becoming very poor.

How shall we decide which system is better?

[burnvictim77]

Would it be unfair to say that the risk is great because the entrepreneur is operating in a very capitalistic, free-market type of system?

In a different sort of system, the opportunity for becoming very rich is less, but so is the risk of becoming very poor.

How shall we decide which system is better?

I would say be the system that affords the most freedom to the people without being inconsistent.

However, if you are looking for some sort of functionalism, then I would say the system which motivates people to take on the roles of creating businesses, which seems that a system with higher rewards would be more likely to do. But I don't have a chart of figures to reference. It's very complicated.

But I don't simply look at ends to justify means. I think that would produce an insufficiently ethical system

[shanek]

Consider a mother with two starving children she can't provide for. They will both die soon if she doesn't get an income. Now someone offers her to work all day at a wage which will allow her to feed one of her children, while the other will still die. The employer will however make a profit from that work of about twenty times what he offers to pay this woman.

See, it's things like this that show you Just Don't Get It. 20 times what they pay??? Man, that's a niche that's ripe for some competition! Even if such an absurd condition were to exist, it wouldn't for long. And she'd have plenty of offers from other companies knowing that they can have her work for them at greater pay. If her work is that valuable, it's all but inevitable.

See, that's the wonderful thing about competition. Even if she generated 2x what was paid out, another company might think it's still pretty good to make only 1.5x if they can have their pick of the people doing that particular job.

Personally, I don't believe in morality, and I think it's up to the woman and the rest of us to organise a political system where employers are forced to pay reasonable wages whether they want to or not.

Who defines what is reasonable, and how? And where does the money come from? And how do you deal with the economic ramifications of setting this level above wage equilibrium?

And what is reasonable, I contend, is dependant not only on the labour market - eg what someone else is willing to work for - but also on the value of what the worker produces.

Well, that's exactly what the equilibrium is! If you're having to use government force to raise it, then you must be using some other criteria, or at the very least giving too much weight to the labor (supply) side and not the production (demand) side.

[shanek]

I guess the assumption is that the rich business owner is not running his business right on the very edge of profitability, and so he can afford to pay his workers more and himself less.

I do not really know how often this assumption is correct.

That was the answer in the other thread--"Take it from the profits!" But what about all the reports we see of companies not making a profit for a particular quarter? And where do people think profits go? Should investors (which include little old ladies and their retirement accounts, if you want a nice emotional aspect to it) forego some of the return on their investment? Should they have less money to retire on, or send their kids to college on, or whatever?

Also, profits != cash flow. A lot of times, profits are made up by assets that aren't readily liquidated. Example: a company spends $10,000 landscaping its grounds; this increases the value of the property by $15,000. They've just made $5,000 profit, but they actually have $10,000 less in funds.

(Note: this is the very reason for the "two sets of books" so many people complain about.)

[Earthborn]

Where is the extra money going to come from?There is no extra money, just a different way of dividing it. Employers can do several things to be able to pay the higher wages: Firing a few people, causing more unemployment
Make people work fewer hours, so they can continue to be paid the same
Cutting back on other expenses
Demand that the government gives them a few tax breaks, arguing that those are needed to avoid greater unemployment

[Foolmewunz]

Shane's right about the marginal profits from the labor portion of most products. As mentioned last night (I can't keep up, guys - I'm in Hong Kong and the clock is completely reversed) there are studies in the cheapest labor market in the world, China, that show that the actual labor component is about 1% of the value of the item. As I mentioned, about 6.5 to 10 cents on a 20 dollar retail item in the US.
Even if you triple the wage they get in China (which would get you above MW level), it's still only a 3% component in the total cost. There are many more important factors than the labor component.

Since most MW earners in the USA aren't doing measurable piece work (forget the sweat shops - 76% of MW earners are in service industries), the 20 x argument is waaay off. If MickeyD could make 2000% profit off of a counter helper's labors, Burger King would would drive them out of town at every location. (Say Johnny rings up and bags 100 orders in an hour and earns .07 per order.... that'd mean McD was charging and exta 1.40 for that sack of lunch. They'd get their butts kicked in the fast food market in no time flat.)

In corporate economics any increase in cost is going to have to be offset in one of three areas:
Layoffs to balance the ledger so that payroll is back to previous level.
Increase prices to offset the higher cost.
Decrease profits to shareholders.

This is often not measurable, because these huge retail and fast-food consortia are equally buffeted by their own marketing strategies, the overall economy, and various other factors.

[Mangafranga]

First of all, you don't know that it necessarily would have been saved. Second, savings = investments. It could have been used to expand the economy and create even more jobs.

Which is fine, but you countered the claim of (my paraphrases) "expenditure leads to an increase in GDP" with "but expenditure comes from savings". But of course expenditure is distinct from savings, so this counter doesn't seem very good. I'm just being picky though since I thought you were making a better case than Foolmewunz anyway.

My own simple analysis is a MW increase would lead to inflationary pressure and the only mitigation of the inflationary pressure would come in the form of reduced employment.

[ZirconBlue]

Shane's right about the marginal profits from the labor portion of most products. As mentioned last night (I can't keep up, guys - I'm in Hong Kong and the clock is completely reversed) there are studies in the cheapest labor market in the world, China, that show that the actual labor component is about 1% of the value of the item. As I mentioned, about 6.5 to 10 cents on a 20 dollar retail item in the US.
Even if you triple the wage they get in China (which would get you above MW level), it's still only a 3% component in the total cost. There are many more important factors than the labor component.

But, you're only considering the direct labor component in manufacturing. Even if you don't take indirect labor (supervisors, engineering, sales, etc.) into acount, there is still the labor component of the employees in distribution or at the point of sale that you are not including.

[shanek]

There is no extra money,

But there must be! The business still has the expenses it has. It still has the investors it has. It still has the stockholders it has.

Where will the money come from?

[Totovader]

Totovader - the purpose of MW is not to create jobs. It is to give a fair wage to workers.

Considering that the minority population loses their jobs because of minimum wage increases and regulations- do you consider that a "fair wage" can be accomplished by instituting minimum wage?

Try the math.
How many workers on the MW level in 2003? 2.1 million
The proposed increase is higher, but let's say it's a dollar an hour. And assume, like the OP that say 4 (heck, let's say ...5)... 5% lose their jobs.
That's over a hundred thousand jobs lost, but still nearly two million workers at that level. Again, this is conservative.*

Two million workers at an extra dollar per hour is two million dollars per hour or 80 million per week if they work a forty hour week. Multiply that times 52 weeks and you get four billion, easily.

So, let's assume that many work 20 hour weeks, or assume that all of them work 20 hour weeks. That will take you down to the two billion figure, but that's very conservative*, as I've said.


It's also arbitrary and not based on any fact. I understand your calculations- but I find them to be overly simplistic. It's not looking at individual workers, it's considering them as one, which is painfully socialistic- it also doesn't consider where that money is coming from. If the minimum wage increases the standard of living at the same time it increases the cost of living, how can you insinuate that it's a profit?

And I don't know why you guys keep assuming the inflationary spiral. You do realize that all your clothing, toys, and furniture are made over here, don't you? Please go into IKEA and check the price of a standard model desk today, and tell me that it goes up when MW goes up.

People making minimum wage are not purchasing their clothing, toys, and furniture from Ikea... Not to mention that- even though these companies are manufacturing these goods elsewhere, they're selling them here. They still need a workforce- they still need to pay taxes. To limit your scope to just the manufacturing sector is flawed... it also kind of has that odor of socialism again.

The cost of labor, factored into the final purchase price for your goods is nearly negligible. (e.g. the plush toy you buy for your kid at 19.95.... labor is at six and a half cents!) I work in this industry and ship consumer goods from all over Asia into the markets in North America and Europe. (And yes, I fight for fair working wages over here, too.)

I posted a link to an article in my last thread which shows that we're not talking about plush toys. For your company- for your toys- it may be $.06, and maybe increasing the total cost of the product by a few dollars would cover all the labor involved, but when it's cheaper and easier to lay off those workers and merge their duties into other higher paid jobs to deal with the immediate cost, that's exactly what's going to happen.

If the tobacco lobbies fund a cancer study, you question it, don't you? If the alcohol lobby comes out with a report recommending Remy Martin for three year olds, I'd certainly have my worries. Check out EPI. The abbreviation is not a coincidence - they want to sound as though they're the Economic Policy Institute. They are NOT. They're a mouthpiece for the restaurant/fast food industries.

Questioning it is not the same as ad hominem. If you have any reason to challenge their findings- you can present that. To claim, however, that simply because they represent an interested party they should be ignored is fallacious. If anyone should be heard on this issue- it's this group of individuals. Again, that link I provided showed you why.

If your argument is that you need to provide a "fair wage" by legislation- you would think that the restaurant and fast food industries wouldn't care... but instead they're trying to show that it's a bad idea: people lose their jobs, it hurts the economy, and it stifles competition.

[Foolmewunz]

But, you're only considering the direct labor component in manufacturing. Even if you don't take indirect labor (supervisors, engineering, sales, etc.) into acount, there is still the labor component of the employees in distribution or at the point of sale that you are not including.

Well, because we're discussing MW earners and the impact of THEIR wages on costs. What I cited was the actual costs of the low-end labor in the finished product. If we want to examine the costs of the white collar coterie, we have to go get a whole 'nother set of figures, obviously.

[Foolmewunz]

Jeez, Totovader - I know label-making is the primary cottage industry of the Politics forum but I thought this kind of thing went out with the hanging chad debates. (Oooh, you don't agree with me and I'm a conservative, so you must be a commie. WTF, well I'm a liberal so you must be a fascist if you don't support my ideas.)

I'm not in manufacturing, nor am I a Chinese Socialist. Does everyone who proposes any standardized program or balance in the approach get tagged a socialist?

The model I mentioned in costing is from a study, not from my work. I'm in supply chain logistics, and I would never cite figures from my own client base; I'd soon be out of a job and I like what I do. Further, we're about the most typical lower-case-C capitalists you can find - we earn our money in the middle by buying wholesale, selling retail, and putting value-add in between the two.

Having stated that, let me clarify my nit-picking on the report, because a lot of it still seems to be being missed. (I have no hope after reading the thread that it'll ever be accepted, but I have a wont to be understood.)

First, the EPI is an "institute" set up by a company that sets up many such, and is chiefly a lobbying organization for restaurant and fast-food corporations. Secondly, from what I can see, they intentionally focused (sponsored) the study on the 16-24 y.o. group, I feel (yes... my opinion) because if they studied the impact on the ENTIRE minimum wage earning population, they would not find the total statistics proved their case.

As I stated, that ignores about a million people on MW, and frankly, the group that should be under consideration! The 16-24 bloc is made up of a lot of students and non-primary wage earners. But that other million at >25 y.o. is much more likely to be PWE.

Further, the study, for the group being examined, comes to much more complicated conclusions that the total impact of EITC, Federal MW, and State MW all have to be brought to bare in any discussion of the topic. If I read the text correctly (the math is beyond me), the conclusion seems to be that further study is needed.

The salient factor in all of this is that MW earners are going down as a percentage of the workforce. This ought to be viewed as a positive, I'd say. This does not mean that the 8% of the minority workforce who may lose their jobs should be ignored, though.

I actually support the concept of 'at will' employment. If I had actually stated my opinion on MW and adjustments of same, it would be:
As long as the government has already stuck their noses in and created the damned thing, then there ought to at least be adjustments for inflation or a pegging to the CPI or some other sort of mechanism, rather than every ten years trotting out the old warhorses and rallying cries.

(I don't have a solution to it, though. I do not think that you can go totally "free market" with labor in a world that has seen such overwhelming consolidation of corporations. If RoadToad is listening, maybe he'd comment on what de-regulation did to the owner-operator in the trucking industry.)

[Chaos]

But there must be! The business still has the expenses it has. It still has the investors it has. It still has the stockholders it has.

Where will the money come from?

Productivity is steadily increasing. Prices are steadily increasing. Both of which means cash flow towards to the employer is steadily increasing.

[shanek]

The 16-24 bloc is made up of a lot of students and non-primary wage earners. But that other million at >25 y.o. is much more likely to be PWE.

You keep saying that, but you don't back it up. Most of the people on MW are students and non-primary wage earners, people just entering the workforce. And they don't stay at MW for very long.

As long as the government has already stuck their noses in and created the damned thing, then there ought to at least be adjustments for inflation or a pegging to the CPI or some other sort of mechanism,

Oh, yes, that worked out so well for Brazil...

(I don't have a solution to it, though. I do not think that you can go totally "free market" with labor in a world that has seen such overwhelming consolidation of corporations.

You wouldn't have corporations in a totally free market.

[shanek]

Productivity is steadily increasing. Prices are steadily increasing.

And wages increase along with them. So that's already being compensated for.

Where will the money come from?

[Earthborn]

Oh, yes, that worked out so well for Brazil...Please explain what problems you are refering to. Have the same problems occured in other countries that compensate minimum wage for inflation?

You wouldn't have corporations in a totally free market.Why not?

[shanek]

Please explain what problems you are refering to. Have the same problems occured in other countries that compensate minimum wage for inflation?

Yep. It was called "Indexing," and it caused Brazil to spiral into hyperinflation. People were making millions or even billions of dollars a month...with almost nothing to show for it.

Why not?

Because corporations are a creation of government. Without government, they'd just be businesses.

[Earthborn]

Where will the money come from?Some people, including me, have already presented suggestions where it might come from. So the question that needs to be asked is: where do you think the money will come from?

[Totovader]

Jeez, Totovader - I know label-making is the primary cottage industry of the Politics forum but I thought this kind of thing went out with the hanging chad debates. (Oooh, you don't agree with me and I'm a conservative, so you must be a commie. WTF, well I'm a liberal so you must be a fascist if you don't support my ideas.)

I'm not in manufacturing, nor am I a Chinese Socialist. Does everyone who proposes any standardized program or balance in the approach get tagged a socialist?

The model I mentioned in costing is from a study, not from my work. I'm in supply chain logistics, and I would never cite figures from my own client base; I'd soon be out of a job and I like what I do. Further, we're about the most typical lower-case-C capitalists you can find - we earn our money in the middle by buying wholesale, selling retail, and putting value-add in between the two.

Having stated that, let me clarify my nit-picking on the report, because a lot of it still seems to be being missed. (I have no hope after reading the thread that it'll ever be accepted, but I have a wont to be understood.)

First, the EPI is an "institute" set up by a company that sets up many such, and is chiefly a lobbying organization for restaurant and fast-food corporations. Secondly, from what I can see, they intentionally focused (sponsored) the study on the 16-24 y.o. group, I feel (yes... my opinion) because if they studied the impact on the ENTIRE minimum wage earning population, they would not find the total statistics proved their case.

As I stated, that ignores about a million people on MW, and frankly, the group that should be under consideration! The 16-24 bloc is made up of a lot of students and non-primary wage earners. But that other million at >25 y.o. is much more likely to be PWE.

Further, the study, for the group being examined, comes to much more complicated conclusions that the total impact of EITC, Federal MW, and State MW all have to be brought to bare in any discussion of the topic. If I read the text correctly (the math is beyond me), the conclusion seems to be that further study is needed.

The salient factor in all of this is that MW earners are going down as a percentage of the workforce. This ought to be viewed as a positive, I'd say. This does not mean that the 8% of the minority workforce who may lose their jobs should be ignored, though.

I actually support the concept of 'at will' employment. If I had actually stated my opinion on MW and adjustments of same, it would be:
As long as the government has already stuck their noses in and created the damned thing, then there ought to at least be adjustments for inflation or a pegging to the CPI or some other sort of mechanism, rather than every ten years trotting out the old warhorses and rallying cries.

(I don't have a solution to it, though. I do not think that you can go totally "free market" with labor in a world that has seen such overwhelming consolidation of corporations. If RoadToad is listening, maybe he'd comment on what de-regulation did to the owner-operator in the trucking industry.)

There's nothing much for me to respond to, here. You've just repeated your earlier claims- claims which I addressed.

[Earthborn]

Yep. It was called "Indexing," and it caused Brazil to spiral into hyperinflation. People were making millions or even billions of dollars a month...with almost nothing to show for it.Shanek, one of these days you are going to have to learn to support your argumentation, and not just make claims. Please provide us with a link that shows us when this all happened and how it relates to the indexing of minimum wage.

Also, you didn't answer my second question: "Have the same problems occured in other countries that compensate minimum wage for inflation?"

[shanek]

Some people, including me, have already presented suggestions where it might come from. So the question that needs to be asked is: where do you think the money will come from?

That's just the point--it won't come from anywhere! The jobs will be destroyed.

[shanek]

Shanek, one of these days you are going to have to learn to support your argumentation, and not just make claims. Please provide us with a link that shows us when this all happened and how it relates to the indexing of minimum wage.

Indexing of wages directly led to the hyperinflation. The effect would be less pronounced if only MW was indexed, but still there. The old Macroeconomics thread (which I have archived (http://www.shanekillian.org/jref/macroeconomics.html)) covered it. Here's the relevant part:

The question is whether unemployment could be brought down permanently at the expense of higher inflation. So part of the reason this tradeoff between inflation and unemployment was interesting is that it promised a way for policy makers to think about how significant unemployment problems could be resolved. Perhaps nowhere in recent times was this balancing act more keenly challenged than in the wildly dramatic economic history of Brazil. In the 1980s, inflation turned the richest country in Latin America into an economic wreck. The inflation rate hit hundreds or even thousands of percent per year. Prices, wages, and interest rates were rising by up to 2% every day.

Alex Castro, Brazilian National: I used to go to grovery stores, and I could never knew what I was going to find there. The cost of bread one day was not going to be the same the second day. Lots of times, people get change in coins and just throw them away, because it's not worth carrying a lot of change in your pocket when it is worth nothing.

Connolly: By the mid-80s, inflation was built into Brazil's economic system. A policy called "indexation" pegged wages to the rate of inflation.

Jose de la Torre, DBA, former Senior Policy Analyst, US Department of Commerce: All you had to do was calculate the rate of inflation for the last month, and then everything that was paid out would be indexes accordingly the next month. Which, of course, had a tendency to build into the system a continuation of the forces of inflation.

Castro: I remember once my salary was over one million and a half a month. That's pretty good, eh?

Connolly: As the inflation rate soared, Brazil's economy continued to grow. Middle-class workers with indexed wages faced inflation of up to 80% a month. Bank interest rates kept pace with inflation, sometimes paying 70% interest a month. But the poor and unemployed were in a desperate situation. By 1990, one-fifth of Brazil's 150 million people were malnourished. Brazil's inflation-ravaged industries couldn't compete in international markets. By 1994, the Brazilian people were so frustrated with the economy, they elected Fernando Cardoso. Cardoso was committed to tackling inflation at its source, and his first move was to abolish indexation. He also announced massive cuts in government spending. Unemployment soared.

Marta Ribiero, Brazilian National: Nobody believed it was going to work. We'd been with inflation for over 20 years and got used to it, so we said it's not going to happen, but it worked.

Connolly: Adapting to the new reality of an economy with normal levels of inflation wasn't easy. But the stability benefitted the majority of Brazilians...Brazil's battle with inflation provides important lessons for the future. Think about what happens in the labor market. As AD is increasing and firms want more capital goods and consumers want more consumer goods, businesses, of course, try to meet that demand. To meet that demand, they need to run longer hours and hire more people and buy more materials. The idea is that as AD increases, the demand for individual inputs increases, including the demand for labor. This directly reduces unemployment. As we get farther and farther along in the business cycle, moving towards the peak, what we notice is that employment goes up, unemployment of course goes down, and labor markets begin to tighten.

Again, this isn't anything controversial in economics.

(Or heck, you can just ask Luciana. She knows what I'm talking about.)

Also, you didn't answer my second question: "Have the same problems occured in other countries that compensate minimum wage for inflation?"Why don't you present some examples of other countries that have established indexing and we'll see?

[Merko]

See, it's things like this that show you Just Don't Get It. 20 times what they pay??? Man, that's a niche that's ripe for some competition! Even if such an absurd condition were to exist, it wouldn't for long. And she'd have plenty of offers from other companies knowing that they can have her work for them at greater pay. If her work is that valuable, it's all but inevitable.
No, this is completely wrong. Just because someone makes 20 times her pay in profit from her work, does not mean someone else would be willing to pay her more, not even in the very long run. On a completely market-driven labour market, wages have absolutely no connection to the values produced (or to the profits made).

Assume, for example, that she is picking oranges. Orange-pickers' wages would typically make up a very small part of the costs involved in orange growing. It would dwindle compared to land rent, caring for the trees, fertiliser, pesticides and transportation of the fruit. It is not at all improbable that the profit from selling one extra orange amounts to twenty times the wage an orange picker gets from picking that one orange. And still, orange growing does not have to be exceedingly profitable. There's absolutely no reason to assume that investors would scramble to get into the orange-growing business. Wages can remain low forever. But raised wages still would not make a dent in the overall profit.

[Merko]

However, taking the risk of economic liability is really what constitutes the value of the entrepeneur in many instances. Providing capital to run a business doesn't necessarily take skill, but it takes risk.
Under ideal circumstances, the competition for investment is very strong, and so the premium for the risk will approach zero (of course it will never quite reach zero, but it can get arbitrarily close).
Compare this with the risk the employee is taking. He or she will frequently have to relocate in order to take up a job, for example. There is frequently no compensation at all for this risk. This is because the competition in the labour market is cut-throat, while there is everywhere a shortage of investment, leading to low competitivity in that sector.

As Adam Smith put it (http://books.google.com/books?vid=OCLC20104292&id=70759KjSs0sC&pg=RA1-PA1-IA2&lpg=RA1-PA1-IA2&dq=adam+smith+wealth+of+nations&as_brr=1#PRA2-PA40,M1):
"In a country which had acquired its full complement of riches, where, in every particular branch of business, there was the greatest quantity of stock that could be employed in it, as the ordinary rate of clear profit would be very small, so the usual market rate of interest which could be afforded out of it would be so low as to render it impossible for any but the very wealthiest people to live upon the interest of their money."

[ZirconBlue]

Well, because we're discussing MW earners and the impact of THEIR wages on costs. What I cited was the actual costs of the low-end labor in the finished product. If we want to examine the costs of the white collar coterie, we have to go get a whole 'nother set of figures, obviously.

Fair enough, but there are MW workers in other parts of the chain besides manufacturing: cashiers selling the product at stores, for example.

[Chaos]

And wages increase along with them. So that's already being compensated for.

Where will the money come from?

Wages are increasing more slowly than prices and productivity. So that´s NOT already being compensated for.

[shanek]

No, this is completely wrong. Just because someone makes 20 times her pay in profit from her work, does not mean someone else would be willing to pay her more, not even in the very long run.

Sure it would! Her work is that valuable--they'd be idiots not to!

On a completely market-driven labour market, wages have absolutely no connection to the values produced (or to the profits made).

Completely and utterly false. Value of production is one of the biggest factors driving wages. In fact, that's pretty much the whole demand side of the equation.

[shanek]

Under ideal circumstances, the competition for investment is very strong, and so the premium for the risk will approach zero (of course it will never quite reach zero, but it can get arbitrarily close).

Again, completely and utterly false. In fact, starting a business is one of the riskiest endeavors you can enter into. In terms of long-run ROI, you'd be an idiot to do it if your only motivation were making money.
(http://books.google.com/books?vid=OCLC20104292&id=70759KjSs0sC&pg=RA1-PA1-IA2&lpg=RA1-PA1-IA2&dq=adam+smith+wealth+of+nations&as_brr=1#PRA2-PA40,M1)

[69dodge]

No, this is completely wrong. Just because someone makes 20 times her pay in profit from her work, does not mean someone else would be willing to pay her more, not even in the very long run. On a completely market-driven labour market, wages have absolutely no connection to the values produced (or to the profits made).

Assume, for example, that she is picking oranges. Orange-pickers' wages would typically make up a very small part of the costs involved in orange growing. It would dwindle compared to land rent, caring for the trees, fertiliser, pesticides and transportation of the fruit. It is not at all improbable that the profit from selling one extra orange amounts to twenty times the wage an orange picker gets from picking that one orange. And still, orange growing does not have to be exceedingly profitable. There's absolutely no reason to assume that investors would scramble to get into the orange-growing business. Wages can remain low forever. But raised wages still would not make a dent in the overall profit.Something seems wrong with this analyis. Not quite sure what...

Maybe this?

Why are you only looking at the wage of the orange picker? What about all the other costs? Each of those costs get paid to people too. If you look at each person individually, it looks like he's getting paid much too little: his work is essential, after all; with it a large profit will be made, and without it no profit will be made. But they're all essential. The business owner has to pay all of them. And the profits aren't enough to pay all of them much more.

It's like, Bill Gates is really rich, he could certainly afford to give me a million dollars. So why doesn't he? Well, sure, but he couldn't afford to give everyone a million dollars each.

[69dodge]

Under ideal circumstances, the competition for investment is very strong, and so the premium for the risk will approach zero (of course it will never quite reach zero, but it can get arbitrarily close).
Compare this with the risk the employee is taking. He or she will frequently have to relocate in order to take up a job, for example. There is frequently no compensation at all for this risk. This is because the competition in the labour market is cut-throat, while there is everywhere a shortage of investment, leading to low competitivity in that sector.

As Adam Smith put it (http://books.google.com/books?vid=OCLC20104292&id=70759KjSs0sC&pg=RA1-PA1-IA2&lpg=RA1-PA1-IA2&dq=adam+smith+wealth+of+nations&as_brr=1#PRA2-PA40,M1):
"In a country which had acquired its full complement of riches, where, in every particular branch of business, there was the greatest quantity of stock that could be employed in it, as the ordinary rate of clear profit would be very small, so the usual market rate of interest which could be afforded out of it would be so low as to render it impossible for any but the very wealthiest people to live upon the interest of their money."I don't understand. Can you say this in different words, or something?

[Luciana]

Found this thread when looking for another. Well, I don't have a formed opinion on minimum wages. What I can say is that even in a middle-income country like Brazil, very few people earn it. They earn more. But in the poorest regions some people earn less, and they accept it, even though it's illegal. On a gut level, I favor MW, because I've seen people earning less than the minimum and that's very sad. We like to think that in the 21st c. we should be above little more than slavery. As for unemployment, I've also seen very creative ways of dealing it, informally. The informal sector cannot be underestimated. But it's not an issue I have strong positions on.

Indexing of wages directly led to the hyperinflation. The effect would be less pronounced if only MW was indexed, but still there. The old Macroeconomics thread (which I have archived (http://www.shanekillian.org/jref/macroeconomics.html)) covered it. Here's the relevant part:

Indexing is indeed wildly considered to have been the culprit of the 1980s inflation in Brazil. It all started in the 1970s, under authoritarian regimes that curtailed the power of unions by indexing wages and impeding employer/employee negotiation. Also, the fast expansion of basic services in the country (and back then Brazil grew an average of 11% a year, we were the China of the decade) was based on the assumption that prices for those services would be guaranteed, as a means to boost investment.

Therefore, the government set prices for electricity, gas, water services, etc. Wages started to be negotiated yearly, that is, every profession had a month when the wage for the next year would be decided. And that's when the rollercoaster started - past inflation became embedded in wages, and its expectation was perpetuated as more inflation. By the 1980s, growth was only kept by the general lowering of wages, which led to many of the social problems we face today in the big countries.

Let's say last month's inflation was 30%. Therefore you calculate wages for next year on that basis, all the twelve months. So in the first month you were a "wealthy" person, your salary is "pumped up". By month 6, you have reached the average, because inflation has eaten a significant part of it. From then on, your wages are declining, proportionately, until you reach the bottom, now time for a new negotiation. Consequences: if inflation ran faster, you could only compensate months from now. If it ran slower... but it never did. You could not plan to buy a car, because Ed only knew if your salary would cover it months from now. That in itself depressed the whole economy.

Next came food. If some prices were indexed, why not those for the basics? People started to demand artificial prices for wheat, milk, meat. Which, if you think about it, it's only fair, considering the government controls wages. Then the madness was complete.

To make a long story short, after at least 6 economic "plans", dozens of ministers of Economics, and an inflation that reached 80% a month in late 1989 (I remember that), the only thing that halted inflation was the desindexation of prices. Little by little government allowed prices and wages to go free. They did that by creating a parallel currency, fictional for 3 months, that provided an "index" and was adjusted for inflation daily. What happened is that people started to convert everything in the new currency, and by doing so they regained the idea of prices in relation to each other. If you earned X cruzeiros, that meant you earned Y reais. The value of real changed daily, therefore there was not reason to demand a raise in reais, you see? One day the government pulled the blanket off everybody's feet - and prices kept standing. Desindexation had happened and the new currency was the strongest we had in decades, even more valuable than the dollars for a short time. :)

No good memories of hyperinflation. By the age of 13 I earned a debit card from my parents, even though they were seriously broke. More than once, at school, I shared two meals between three friends, because the price had increased overnight and we didn't have enough for us all. Having the debit card meant I could have lunch no matter what.

It got so bad that new bills had to be printed every two years, or every six months, and they were running out of people to put their faces on the bill. Many descendants of prominent people wouldn't hear of the "distinction". That's when they started to put crocodiles and parrots in our bills. :D

[Merko]

Why are you only looking at the wage of the orange picker? What about all the other costs? Each of those costs get paid to people too. If you look at each person individually, it looks like he's getting paid much too little: his work is essential, after all; with it a large profit will be made, and without it no profit will be made. But they're all essential.
We can easily find an example where there is only one worker to be paid.

Consider someone investing in a small but well-visited museum. There is only one employee who guards the place, charges visitors and keeps the place clean. The costs of investment in the priceless objects at display, and of insurance, far outweighs the salary of the single employee. The overall profit, though twenty times the employee's salary, is not exceptional.

You may say that the insurance company has some employees and that we should factor these in. No, we should not. They are neither directly or indirectly a part of this company. The insurance company makes their own profits. The insurance company may pay their employees well or poorly, or they may be run by computers and robots only and have no employees at all, for all we know and care about.

So, what is going on? Well, as I think you know, what is considered a good profit depends on the profit compared to the overall investment, not just salaries. If salaries are a very low part of the investment - perhaps because workers are being paid extremely poorly - then the rate of salaries may have no significant impact on profitability.

[Merko]

I don't understand. Can you say this in different words, or something?
I already offered two versions, mine and Adam Smiths. But ok, I'll try a third time.

What is considered a good profit on an investment? As everything on the market, this is dependant on supply and demand. If supply is high (there are many investors), their price (required profit on investments) will go down.

In times of plenty, many people are able to save some money. Thus, the number of investors will increase. After a long time of economic improvement, there will thus be a multitude of investors, unless by some intervention of government, the wealth is kept to a few hands only.

Basically, there is no such thing as a 'fair profit'. If everybody had a lot of capital to invest, nobody could live off the profit of capital alone. You might say that in such a situation, inflation would make everybody poor. That would be wrong: the wealth does not have to be in money. Consider the situation where the farmer has plenty of seed, plenty of lands, and plenty of cattle. The manufacturer has plenty of materials, and owns some power plants too. The cook owns a restaurant, fully stocked with food, and so on. In other words, everyone has plenty of capital - and during current conditions, they could perhaps live off the capital alone, hiring someone else to do the work. But in this condition of general affluence, no one can.

For a somewhat longer explanation, why don't you read the chapter 'On the profits of stock' in the link I provided. It is only five pages, and Smith explains it very well.

[Tony]

Sure it would! Her work is that valuable--they'd be idiots not to!



Completely and utterly false. Value of production is one of the biggest factors driving wages. In fact, that's pretty much the whole demand side of the equation.

More dogma. No reality.

[Merko]

Let me inject some more of what Adam Smith had to say on the subject.

"What are the common wages of labour, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little, as possible. The former are disposed to combine in order to raise, the latter in order to lower, the wages of labour.

It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily: and the law, besides, authorises, or at least does not prohibit, their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work, but many against combining to raise it. In all such disputes, the masters can hold out much longer. A landlord, a farmer, a master manufacturer, or merchant, though they did not employ a single workman, could generally live a year or two upon the stocks, which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year, without employment. In the long run, the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.

We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines, upon this account, that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform, combination, not to raise the wages of labour above their actual rate. To violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbours and equals. We seldom, indeed, hear of this combination, because it is the usual, and, one may say, the natural state of things, which nobody ever hears of."

How very little has changed during the centuries.

[Snide]

I'm not in manufacturing, nor am I a Chinese Socialist. Does everyone who proposes any standardized program or balance in the approach get tagged a socialist?Heck, I was just making arguments on sub-issues of the general MW debate, and was told, with nothing to back it up, that I had a "Socialist agenda." :)

[Darat]

Let me inject some more of what Adam Smith had to say on the subject....snip...

How very little has changed during the centuries.

Yeah but everyone knows Adam Smith was a socialist....... ;)

[cafink]

The problem with this claim, as the example illustrates, is that the minimum wage law is in there no to maximize employment per se, but to prevent exploitation of the poor. The idea is, it is sometimes better to be unemployed than to be exploited.

If this is indeed the case, then there should be no need for a minimum wage law. Anyone for whom unemployment is better than "exploitation" can simply choose that better option--no employer can force someone to take a job he doesn't want. If, however, someone chooses low-paying "exploitative" work over unemployment, that person obviously does not agree that unemployment is the better option (for himself, at least). It is not the business of the government to tell him otherwise.

[quixotecoyote]

If this is indeed the case, then there should be no need for a minimum wage law. Anyone for whom unemployment is better than "exploitation" can simply choose that better option--no employer can force someone to take a job he doesn't want. If, however, someone chooses low-paying "exploitative" work over unemployment, that person obviously does not agree that unemployment is the better option (for himself, at least). It is not the business of the government to tell him otherwise.

Problem is, that with any labor pool of sufficent size, wages are competitive in a downwards direction. If I'm paying $3/hr and you're paying $2/hr and there's enough laborers to go around (which is the case in most of the scenario's we're discussing), then you have no incentive to raise wages while I have every incentive to lower them. The MW is necessary to ensure that something resembling a living wage (MW =/= LW) is available.

This is in addition to the point that if we are operating in an 'all things being equal' mindset, it's better to be laid off than quite because you're eligible for benfits you would otherwise not get. So while it might be better to be unemployed them exploited, it's not always better to quit than be exploited if there aren't other employers willing to pay fair value for your labor.

[burnvictim77]

Problem is, that with any labor pool of sufficent size, wages are competitive in a downwards direction. If I'm paying $3/hr and you're paying $2/hr and there's enough laborers to go around (which is the case in most of the scenario's we're discussing), then you have no incentive to raise wages while I have every incentive to lower them.


This is only true if you don't care about the quality of the labor you get, which is rarely the case. If you can pay slightly more get better labor, you will. Won't you?

[Thanz]

"The masters, being fewer in number, can combine much more easily: and the law, besides, authorises, or at least does not prohibit, their combinations, while it prohibits those of the workmen. We have no acts of parliament against combining to lower the price of work, but many against combining to raise it."

How very little has changed during the centuries.
And yet, how much. Now there is specific anti-trust legislation against employers and enabling legislation for Unions that make it much much easier to form a union.

[Ziggurat]

This is only true if you don't care about the quality of the labor you get, which is rarely the case. If you can pay slightly more get better labor, you will. Won't you?

That depends. In cases where the value of the labor is highly sensitive to its quality, then it's frequently worth paying more for better labor. In case where the value of the labor is barely sensitive to its quality, then it's often better to go quite cheap with that labor. The value of brain surgery is VERY dependent upon the quality of the labor. Stacking toilet paper rolls? Not so much.

[burnvictim77]

That depends. In cases where the value of the labor is highly sensitive to its quality, then it's frequently worth paying more for better labor. In case where the value of the labor is barely sensitive to its quality, then it's often better to go quite cheap with that labor. The value of brain surgery is VERY dependent upon the quality of the labor. Stacking toilet paper rolls? Not so much.

But you pay $2 an hour and you get the sort who stack toilet paper rolls something like 1/4 as quickly as if you'd pay $3. This is a made-up example, but this type of thing can be seen in practice all over the place, especially in retail. Now, some employers won't care, but some will, making a competitive market with room for people with zero job skills at the lower end.

[Snide]

But you pay $2 an hour and you get the sort who stack toilet paper rolls something like 1/4 as quickly as if you'd pay $3. This is a made-up example, but this type of thing can be seen in practice all over the place, especially in retail. Now, some employers won't care, but some will, making a competitive market with room for people with zero job skills at the lower end.THe problem is that, even though you admitted the example was made up, it is far from reality. The difference between quality of labor for that type of labor tends to not be so much.