How much should minimum wage be?

[Joe]

This is a pathetic aside to the actual point of his reply, which was that the sacrifices of the upper class would be a pittance compared to those who are already suffering in their attempts to survive off of their pitiful incomes... which you'd be more than happy to slash.

I do not advocate slashing their incomes, you ignoramus, I advocate subsidizing them. But since you'd rather score rhetorical victories than read my fucking posts, pat yourself on the back. You've earned it.

[aerius]

As for low-income earners being able to pay their bills, I have stated that I do not believe they should be left in the cold as you so desperately want to imply, I believe they should be given income subsidies. I am not going to repeat myself again.

So to clarify things, it'll go something like this: Mop guy at Mickey D's gets paid $3 an hour by the company, and the government kicks in an extra $5 or whatever so he won't starve on the street. Is this the system you propose?

[Pick]

As for low-income earners being able to pay their bills, I have stated that I do not believe they should be left in the cold as you so desperately want to imply, I believe they should be given income subsidies. I am not going to repeat myself again.

Fine. Given that money invariably comes from somewhere, and not magical gold-shitting leprechauns, why do you think that they should recieve it as an income subsidy instead of in their initial income? Why should it need to go through the government instead of the company that is occupying their time and enriching itself through the results of their efforts?

Edit- Also, don't be a moron. You said you wanted to make companies able to slash their income. You just happen to be additionally proposing that the government should step in so that these people... have the same effects as if they'd just been paid reasonably in the first place? Doesn't this seem like adding an unncessary step?

[Joe]

As for low-income earners being able to pay their bills, I have stated that I do not believe they should be left in the cold as you so desperately want to imply, I believe they should be given income subsidies. I am not going to repeat myself again.

So to clarify things, it'll go something like this: Mop guy at Mickey D's gets paid $3 an hour by the company, and the government kicks in an extra $5 or whatever so he won't starve on the street. Is this the system you propose?

I don't have the expertise to crunch the numbers, but essentially yes. Also, I'd prefer for the state governments to handle it, ideally.

[Joe]

Fine. Given that money invariably comes from somewhere, and not magical gold-shitting leprechauns, why do you think that they should recieve it as an income subsidy instead of in their initial income? Why should it need to go through the government instead of the company that is occupying their time and enriching itself through the results of their efforts?

I have already stated why - because minimum wage laws cause price inflation, they likely cause unemployment, and they shift the burden of subsidizing lower incomes from society as a whole - as it should be - to a minority of consumers and firms.

Edit- Also, don't be a moron. You said you wanted to make companies able to slash their income. You just happen to be additionally proposing that the government should step in so that these people... have the same effects as if they'd just been paid reasonably in the first place? Doesn't this seem like adding an unncessary step?

It's not unnecessary if the costs of minimum wage laws to the economy outweigh the benefits, which is essentially what I'm arguing.

[edit]And I might add - it already does. The government pays out large amounts of money in welfare that do not come to recipients as earned income.

[aerius]

Right, so we got that part settled. Which brings up the question, where the fuck is the state government going to find the money to pay for this proposed program?

[Pick]

Right, so we got that part settled. Which brings up the question, where the fuck is the state government going to find the money to pay for this proposed program?

Not to mention what happens if the state does not have suffient funding to maintain this program? What might work in one economic climate might fail in another.

[Knife]

Right, so we got that part settled. Which brings up the question, where the fuck is the state government going to find the money to pay for this proposed program?

I would assume that if wages are lower, costs are down, more people will buy useless crap, tax revenue from sales tax will increase. Whether it would be enough to cover the expenses, I don't know.

[aerius]

Not to mention what happens if the state does not have suffient funding to maintain this program? What might work in one economic climate might fail in another.

Well you can always do what the Republicans are doing now, borrow more money, go into more debt, and let the next poor schmuck worry about the damn mess.

[Pick]

I would assume that if wages are lower, costs are down, more people will buy useless crap, tax revenue from sales tax will increase. Whether it would be enough to cover the expenses, I don't know.

That wouldn't help too much where I live, for instance, considering we have no sales tax.

Maybe we could tear into public education like a ravenous wolverine/Republican. Oh wait, we already did that. Every year in recent memory.

[Joe]

Right, so we got that part settled. Which brings up the question, where the fuck is the state government going to find the money to pay for this proposed program?

General revenues, and the federal government could cut payroll taxes for the very poor like I mentioned earlier to make up the difference. There's also programs like the earned income tax credit that could potentially be expanded.

[brianeyci]

The primary cost of low-income earners is not food or game boys or anything purchasable by disposable income, but rent.

Oh, OK, so another expense is larger than the cost of food. Obviously that means the latter is completely negligible!

Who said it was completely negligible? I said that poor people would not be the hardest hit. The people who live off minimum wage likely do not spend their disposable income (if they have any) on useless junk, they buy food, rent, utilities and that's it because that's all they can afford. Raise the minimum wage and they'll be more wiggle room, but they won't be the hardest hit. They'll finally be able to buy more shit.

That is not the way it works. Corporations are concerned with their shareholders first; shareholders may take a hit, but whenever possible the corporation WILL pass costs onto other groups first.

Depends on how high the minimum wage goes, and if the cost of consumer goods raises less people will buy and they'll make less profit if less people are willing to buy meaning shareholders get hit. It's all interrelated and I see no reason to assume that no minimum wage would mean a magical stimulus to the economy rather than fucking poor people over.

As for low-income earners being able to pay their bills, I have stated that I do not believe they should be left in the cold as you so desperately want to imply, I believe they should be given income subsidies. I am not going to repeat myself again.

Poor people would need to apply for the income subsidies. Poor people being generally the least intelligent less able members of society, many of them will be hurt just by not knowing an income subsidy will exist. And many who deserve it will not qualify depending on how the strict the rules are. You are basically subsidizing big business, not poor people. Big business will lower their minimum wage to as low as they want then cry "market value" and they will no longer be responsible because they can point at the government and say it's their job to pay for those poor smucks.

As for this idea "they're too stupid to apply that's their fault", the whole concept of minimum wage is to help stupid people too stupid to look for better work. Since you agree with a minimum wage, just not the implementation of it, I assume you agree with the motives of minimum wage. There are people less intelligent than you and they will get fucked.

Meanwhile the long term impact is that the government will be eventually unable to pay for these huge subsidies as the corporations go into a neverending price war (look at how successful Wal-Mart is, it's basically in a perpetual price war). Once the snowball starts it'll be hard to stop and big business won't have the minimum wage to stop them. Wait a century and with no minimum wage or increase in minimum wage, the poor will be in ghettos and big business will reign supreme. Slippery slope? Don't think so, because big business will never have any incentive to raise their wages ever because like you pointed out Joe they want more profits, while there is every reason to cut and over time the cuts will build up and inflation will make the wage even if it stays the same worthless.

Brian

[Middleclass]

I too have heard that minimum wage's impact on unemployment levels is minimum at best, but I don't have a link to a study. However, I think I can show that minimum wage is an awful way to help people out without depending on that.

Basically, an increase in the minimum wage is intended to help those who are at the bottom of the economic ladder. But the aid, in this case, comes from a very tiny minority of people: employers. Not rich fat-cat megacorp employers, either. Mostly small, independant businesses. Most large companies pay well over minimum wage. Wal-Mart starts at about $7.00 per hour. Home Depot, 9 to 10. Even the franchise fast food stores start at about 6 an hour.

So, in essence, minimum wage at all is unfairly balanced against small business owners. I think it's we can agree that it would be better spread over the whole populace. So, why not get rid of minimum wage and replace it with an increase in EITC in the countries that use it, or similar programs elsewhere. That way the money would come from all taxpayers. It also has the added benefit of not accidentally paying out to someone who seems outside the group of people who are intended to benefit. People who are working single, low wage, part time jobs (such as teenagers) do not have a large tax burden here.

To answer the OP, I think that EITC benefits should be balanced so that a full time job can pay for the basics of life. Food, modest shelter, utilities. So however much that is.

For people in countries that do not use EITC or citizens of America, Britain, Canada, Ireland, New Zealand, Finland, Belgium, France, the Netherlands and Denmark who need a civics lesson: EITC at Wiki

[brianeyci]

If the minimum wage increased to $10.00 an hour, Wal-Mart would be hit and so would other businesses. They pay more than minimum wage so they can attract better employees, and if the minimum wage went up their wages would have to go up or they'd lose the competitive edge in attracting employees. Yes, retail experience needs skill but just a different kind of skill. I'm guessing the turnover is high too so unless they offered more than minimum they'd have problems.

So Wal-Mart might end up having to pay 11 or 12 bucks an hour just to keep its recruitment up. Wal-Mart's CEO already said that if the minimum wage was raised, he would raise wages of his own employees IIRC so the idea that minimum wage hurts small businesses disproportionately is silly.

<edit>To elaborate MiddleClass, even though the minimum wage is 5.15 and Wal-Mart gives their people seven bucks, that doesn't mean that raising it to 5.50 means Wal-Mart keeps it at seven bucks, and definitely not if they raise it over seven bucks. They pay their employees as much as they think they can get away with, and if employees start leaving because of attrition or they think they can get better working conditions or wages somewhere else, they'll leave so corporations will always have a couple bucks over the minimum wage.</edit>

Brian

[Joe]

Who said it was completely negligible? I said that poor people would not be the hardest hit. The people who live off minimum wage likely do not spend their disposable income (if they have any) on useless junk, they buy food, rent, utilities and that's it because that's all they can afford. Raise the minimum wage and they'll be more wiggle room, but they won't be the hardest hit. They'll finally be able to buy more shit.

So will they be with income subsidies, only they won't have to contend with artificially high prices for goods and services thanks to minimum wage laws.

Depends on how high the minimum wage goes, and if the cost of consumer goods raises less people will buy and they'll make less profit if less people are willing to buy meaning shareholders get hit.

No; if the cost of consumer goods that happen to be necessities rises, people will still have to buy them, the "necessity" part being the key here. Whatever hit shareholders take they can likely more easily absorb than poor people, since investors tend to be wealthier than the average American.

Poor people would need to apply for the income subsidies. Poor people being generally the least intelligent less able members of society, many of them will be hurt just by not knowing an income subsidy will exist.

This is a non-starter. Poor people currently apply for welfare - where do you think those dollars go? And employers can be required to post information about income subsistence programs, just like they are currently required to post information about equal employment opportunity and workplace safety.

You are basically subsidizing big business, not poor people.

Except for the fact that poor people get checks to help them pay their bills and no wealth is transferred to businesses - they simply do not incur expenses they had previously incurred. How fucking dense are you?

Big business will lower their minimum wage to as low as they want then cry "market value" and they will no longer be responsible because they can point at the government and say it's their job to pay for those poor smucks.

They will not. As other people have pointed out, most large corporations already pay well above them minimum wage. And there is a certain point at which people will simply walk off the job and seek employment elsewhere rather than accept too-low wages. Repealing the minimum wage will not suspend the laws of supply and demand.

Slippery slope?

A finer example I've never seen.

[brianeyci]

So will they be with income subsidies, only they won't have to contend with artificially high prices for goods and services thanks to minimum wage laws.

Okay, fine, I've heard this artificially high from a number of people now and there's been no proof. I'd like to see how minimum wage makes prices artificially high if Wal-Mart pays 7 bucks and you claim that minimum wage has no effect on large corporations if it's below their hiring rate. And if it's artificially high for mom and pop grocery stores, well I want to see it too since many small businesses are family run and cut corners anyway.

No; if the cost of consumer goods that happen to be necessities rises, people will still have to buy them, the "necessity" part being the key here. Whatever hit shareholders take they can likely more easily absorb than poor people, since investors tend to be wealthier than the average American.

Depends what is necessity. Like I said necessity for poor people who will help with minimum wage is not the same as your necessity. Food, rent, utilities, will be the basic things and food will not increase dramatically in price with a minimum wage hike. The only thing is food, but I can't imagine food increasing in price because poor families tend to prepare their own meals and the price of raw foodstuffs is liked to agriculture which won't really be affected by a minimum wage hike. Meanwhile poor people will actually get more food on the table, instead of starving more often. Some families can and do go without meat for weeks.

Poor people would need to apply for the income subsidies. Poor people being generally the least intelligent less able members of society, many of them will be hurt just by not knowing an income subsidy will exist.

This is a non-starter. Poor people currently apply for welfare - where do you think those dollars go? And employers can be required to post information about income subsistence programs, just like they are currently required to post information about equal employment opportunity and workplace safety.

The question is whether even a minority of poor people like single mothers or English-as-a-second-language or even illegal immigrants (they will be hurt by the 0 minimum wage too) will be hurt with an active rather than a passive program, and the answer is yes so your proposal hurts people whether you like to admit it or not. They may deserve it for being stupid, but that's besides the point.

You are basically subsidizing big business, not poor people.

Except for the fact that poor people get checks to help them pay their bills and no wealth is transferred to businesses - they simply do not incur expenses they had previously incurred. How fucking dense are you?

See below.

Big business will lower their minimum wage to as low as they want then cry "market value" and they will no longer be responsible because they can point at the government and say it's their job to pay for those poor smucks.

They will not. As other people have pointed out, most large corporations already pay well above them minimum wage. And there is a certain point at which people will simply walk off the job and seek employment elsewhere rather than accept too-low wages. Repealing the minimum wage will not suspend the laws of supply and demand.

Large corporations pay over minimum wage because if they paid at minimum wage they would not retain employees. If you raise the minimum wage from $5.15 to $6.00 that doesn't mean Wal-Mart stays at seven, it means Wal-Mart must raise their wage to keep their job attractive. At my old job I was at twelve bucks an hour to make fries and burgers not because of minimum wage but because if they didn't pay me that much they wouldn't be able to attract people. And if you raise minimum wage, they would have to pay more to keep me.

Now if minimum wage was very low, the low end businesses would pay less and the higher end businesses would feel no incentive to pay such a high salary and pay less. Everybody is hurt by no minimum wage.

For the laws of supply and demand, that is the problem, you are assuming the corporations will not fuck people over. Do you know how much they pay people in Vietnam? The laws of supply and demand are exactly the problem, once the demand goes away the people can be fucked. Capitalism is harsh that's why you need a combination with socialism and supply and demand can't cut it for everything.

Slippery slope?

A finer example I've never seen.

I can list third world countries with minimum wages several times less than America and show you what these benevolent corporations pay their workers. Why don't you give proof that big business would have any incentive to raise wages at all unless they're forced to either by legislation or unions? I can give proof that they will lower wages if they have a chance and cost-cut by moving to different countries. If they could get away with cost-cutting here they would.

If they do not raise wages on their own, then over time if the wage stays the same the salary becomes worthless or people exist as paupers, bare minimum starving from paycheque to paycheque. That's what supply and demand would do to unskilled workers.

<edit>And yes Joe, I know you're saying that the government would make up for the big business, but I think you have to look at it this way... you're basically supporting minimum wage but paid for by the government, and why the government who can least afford it being in deficit and not big business or the consumer who can definitely afford it more than the government and arguably there will be no waste since you're letting the economy decide with a higher minimum wage while you let the government decide with an income subsidy program.</edit>

Brian

[Uraniun235]

Not to mention what happens if the state does not have suffient funding to maintain this program? What might work in one economic climate might fail in another.

Well you can always do what the Republicans are doing now, borrow more money, go into more debt, and let the next poor schmuck worry about the damn mess.

Actually, no, we couldn't. Oregon's state constitution prohibits deficit spending.

[theski]

A little Edumcation...

No one argues that artificially raising wages makes the economy more productive and actually boosts total national income. So the logic is inescapable. If low-wage workers receive more income after a minimum wage hike, someone must be paying for it.

When pressed, most minimum wage advocates suggest that "slight" price increases will be the primary source for paying for legislated wage increases. They heartily reject the view that low-wage workers will pay much directly through job loss or lowered employee benefits. An alternative is that firms will pay for those wage increases through lower profits, but it is unlikely that firms would bear significant profit losses without eliminating jobs. In relying on higher prices for covering mandated increases in wages, job loss can be kept to a minimum.

But then the question becomes, Who pays the higher prices to cover costs? A comprehensive analysis of the 1996 federal hike in the minimum wage estimates that prices rose on a broad range of commodities to fund this increase and that families of all income groups purchase these goods. Families in the lowest 20 percent of the income distribution pay annually an average of $61 in higher commodity costs, whereas families in the highest 20 percent pay only $150 more. The implied coverage of costs is at least as regressive as a conventional sales tax. Moreover, nearly 75 percent of poor families receive no additional earnings, but all paid higher costs following the minimum wage.

In fact, then, increasing the minimum wage amounts to a policy that artificially raises prices in an income-regressive manner, using the proceeds to pay higher earnings to workers in one in four families selected irrespective of their income. One wonders why such a policy enjoys the popularity it does.

WAGES AND PRICES

[brianeyci]

Oh no, 75% of poor families. How do they define poor, and what about that 25% who got more earnings? What is their methodology? 61 bucks a year is only a couple dimes a day and moving from 4.25 to 5.15 gives someone at the bottom tier an extra 36 bucks a week or around 1.8k a year. The poorest are still benefiting.

Of course it's pretty easy for me to find sources which say that a low minimum wage has hurt the American economy.

Contrary to the "conventional wisdom," there are at least three constructive outcomes that can be anticipated from an increase in the minimum wage. First, the minimum wage, through its impact on the distribution of income, has a positive impact on the level of effective demand. Up to a point, such an increase can promote economic growth. Second, in an appropriate institutional context, a high-wage economy can induce a regime of rapid technical change. Firms faced with high wages are forced to employ more advanced equipment and eliminate "X-inefficiency" or leave the industry. The result is a more productive society as newly adopted technologies and processes are embraced by the surviving firms and their competitors. In the end, these new processes are disseminated throughout the economy. Third, the minimum wage is one among a number of factors that has the capacity to equalize bargaining power in labor markets. As such, the minimum wage enables people to "earn a living," which is an elementary component of human dignity and social justice. This paper will review the theoretical principles that support each of these expected outcomes.

Effective Demand and Economic Growth

Since the initial passage of the Fair Labor Standards Act of 1938, economists have generally been opposed to the minimum wage [Stigler 1946]. Today this consensus is so entrenched that it holds a prominent place among the "insights" provided in introductory textbooks [Katz and Rosen 1991, 378-380, 406-407].1 Over these 50 years, it has become an article of faith that any floor or ceiling placed upon a supposedly autonomous and self-ordering "free market" will lead to a substantial misallocation of resources. In the case of the minimum wage, market intervention is held to be detrimental to the very group that it is intended to be of service tonamely low-skilled labor. The orthodox argument is a quintessential example of what Albert O. Hirschman calls "the futility thesis" [Hirschman 1991, chap. 3].

The facts of the recent situation are clear. Between 1981 and 1990, government policy allowed inflation to erode the value of the federally mandated minimum wage. As a result, the real value of the minimum wage fell by approximately 25 percent over this period. This fall was due to a deliberate policy decision. Economists and policymakers who came to positions of power during the 1980s were convinced that a lower minimum wage would induce businesses to hire and provide experience to more unskilled workers. Even a passing familiarity with the economic record of that decade suggests that the promised reduction in structural unemployment simply failed to occur. A lower wage does not appear to be the high road to American economic prosperity.

Only the beginning of that paper. No link since this is an academic journal and you need pay, but if anybody is really interested and has otherwise access to a university library but doesn't want to go through the hassle of finding it themselves, pm me and I can give you the PDF file and you can look it over. Or you can find Volume 30, Issue 2 from June 1996 of Journal of Economic Issues.

If you want a more recent source I can find more. The crux of the issue, often ignored is that big business will have no reason to raise their wages to match inflation and therefore over time the poor will keep getting poorer and the rich getting richer. But go ahead, someone try and address this point with no minimum wage and show your incredible corporate conscience that will force corporations to keep wages above inflation. That's the whole fucking point of living wage--costs of living like healthcare, rent, utilities are increasing and wages are not keeping pace.

The effect of no minimum wage is that over time people will get poorer and rich will get richer until the poorest members of society have exactly the market value of their skills. Some of course have no problem with this, but I do because human beings deserve dignity regardless of their skills.

<edit>Oh no, this is the Hoover Institute with the esteemed Donald Rumsfeld and Condolezza Rice as former fellows and their mission statement saying,

This Institution supports the Constitution of the United States, its Bill of Rights and its method of representative government. Both our social and economic systems are based on private enterprise from which springs initiative and ingenuity … Ours is a system where the Federal Government should undertake no governmental, social, or economic action, except where local government, or the people, cannot undertake it for themselves … The overall mission of this Institution is, from its records, to recall the voice of experience against the making of war, and by the study of these records and their publication, to recall man's endeavors to make and preserve peace, and to sustain for America the safeguards of the American way of life. This Institution is not, and must not be, a mere library. But with these purposes as its goal, the Institution itself must constantly and dynamically point the road to peace, to personal freedom, and to the safeguards of the American system. (Emphasis in original.)

In other words an anti-government pro-business anti-universal healthcare think tank. Donald Rumsfeld and Rice, great people there. So no theski I don't accept your source as legitimate.</edit>

Brian

[SirNitram]

The concept of removing minimum wage and replacing it with a government provided 'bare necessities' program got pulled up in another thread with me and Ossus; and I still feel it's the best possible synthesis of social programs and capitalism.

The biggest problem is quite apparent from my vantage point, IE, poverty level land. People down here aren't always responsible with money. So to make this idea effective you have to throw out giving out checks and instead cut out the middleman; directly provide shelter, food, medical care, and transportation.

If one can guarantee this, the reason we have minimum wage evaporates. The laws can be repealed, because any cash you bring in lets you lift yourself above the baseline. That's where capitalism comes in, once again turning greed into a positive economic force.

[brianeyci]

Homeless shelters are incredibly inefficient. In Toronto there's about 30000 to 40000 spent per homeless person on homeless people every year.

IIRC food banks are in use by the majority of public school children at one time or another and they are at the breaking point in Toronto.

Medical care is another question, I think medical care is the exception because medical care at times is beyond the means of one person. But even then making doctors government employees is stupid, they're private practitioners.

Raising the minimum wage is a straightforward way to address poverty, and if you raise it to around ten dollars an hour there will be layoffs and hard times but the floors still need to be swept the burgers still need to be made, they'll cut off the inefficiencies and the people left will have more money. The ones out of a job can go on government assistance until they can get themselves up on their feet.

Brian

[SirNitram]

Apartments are efficient. Supermarkets are efficient. The key is to find a way to use them instead of the models used for homeless. Won't necessarily be easy.

Mind you, we could always use all those crops we keep burning instead of shipping.

[brianeyci]

Well then you eventually come to the same problem that there are a large majority of people who will not be motivated to do anything unless their survival is at stake, and if they can get bare essentials and survive do nothing they will. Don't say these people don't exist--these are the same people who bag your groceries and if they could get by without bagging groceries I think they would do it and sit on their ass and watch television all day.

Minimum wage is good for the economy in that it forces people to go out and work and breeds out inefficiencies. Minimum wage promotes capitalism.

Brian

[Big Phil]

Minimum wage is good for the economy in that it forces people to go out and work and breeds out inefficiencies. Minimum wage promotes capitalism.

Brian

Can you provide evidence to back up this statement?

[Pick]

I would worry about the human angle of this system. Though this may not be as quantifiable as other aspects of the economy, people tend to want to feel like they are valued and appreciated. People often shun handouts for exactly this type of reason. There is an intrinsic human worth to feeling as though you are sustaining yourself and worthy of what you are receiving. I have a hard time believing that being paid 25 cents an hour is going to fulfill a person's sense of entitlement, and thus feeds a motivation to work to a level that corresponds with said income.

Additionally, I always worry when a government program is brought in with the intent that it would be appropriately utilized. My father has worked for the federal government for 26 years, and my mother worked for state goverment and with state government for quite a while as well. The experiences that both have relayed to me do not give me confidence in the goverment's ability or desire to actually uphold their given tenants, nor do the news articles that pop up on a regular basis (such as the education crisis in Oregon.) However, the system of minimum wage actually works, because the government actually does have some rather amazing capability when it comes to seeing the splinter in other's eyes and not the log in their own, as you could say. I tend to like the system that appears to have the least capability for human exploitation in the worst-case scenario (which tends to be the eventual fate of hopeful systems.)