The Minimum Wage Destroys Jobs
 

The NCPA explains why.

While it may sound nice that the Guvernator is raising the wage standards for Californians, the end result is that those jobs are going to be shifted to a labor force that will be able to work for less. Namely, illegals. Sorry, Black People.

The EPI throws in some research to support the conjecture.

Those points are fair enough. My beef with minimum wage increases is that they're not unilateral for all workers; only those whose wage would be lower than the minimum receive any sort of benefit, presuming they have a job at all.

To me, this devalues those workers who've invested time and dedication into a job. Consider two scenarios:

A: James has been working for "Big Burger" for a year. In that time, he's worked hard and has earned several raises. When he began at Big Burger, he earned the minimum wage of $5.50 per hour. Now, he earns $6.80 per hour. It's not fantastic but it's a job and James is glad to have one.

B: Doug has been working for Big Burger for one month. While he's not a horrible employee, he's sometimes unmotivated and cocky. Doug figures that if Big Burger wants him to work harder, they should pay him more for the trouble. As it stands, Doug is earning minimum wage, $5.50 per hour. He thinks he's worth far more.

Doug is loafing around one day, reading a newspaper. He learns that their state has approved a raise in the minimum wage. Effective in one month, the minimum wage will become $6.75 per hour, up $1.25 from its former rate.

Doug is thrilled, since this means that Big Burger will have to pay him more for the same amount of work. On top of that, since Big Burger didn't order the raises, Doug feels no increase in loyalty to the store.

James, however, is bummed. While Doug will be getting an automatic raise, he, James, will not. James's income is already above the standard for the new minimum wage, albeit only by $.05 per hour. James is the harder, more dependable worker but his pay scale will no longer reflect this. It is a tremendous blow to James's morale to know that even the most incompetent beginner will be be earning practically the same wage he had to work long and hard to acquire. While it's not Big Burger's fault, James's loyalty plummets. He can now work any low-end job in town and get pretty much the same sized paycheck.


In each case, the business suffers. They're made to pay more for unmotivated employees, and they lose the overhead profits needed to show appreciation to the dedicated ones.

Because these raises cut into profits, businesses are forced to compensate in several ways: raise prices, discontinue services, or eliminate employees. Each of these represents a potential reduction in the gross profit base, and ultimately serves to force the inflation rate higher as customers are made to pay extra so that the store can continue operations while adhering to the wage requirements.

The alternative to raising the minimum wage is lowering it and granting businesses the extra overhead to provide new services, keep more employees and hold better sales. But the downside to this is that few unemployed would be happy taking a job for considerably less than they would've been guaranteed only months before. Businesses would have the capacity to hire more, but there would be less willingness to work.

And without production, all business grinds to a halt. Yet when mandatory wage hikes cut into profits and employers can't afford to hire a full staff, productivity suffers equally and business, once again, grinds to a halt.

If there were a way to pay people what they're worth, I'd be all for it. But that's too subjective to be a reality.

Free labor is quite the Sword of Damocles.

For the comment you made...perhaps the problem then isn't the minimum wage, but it is non-enforcement of immigration laws.


Here is why minimum wage can't be looked at as a free market item like a sweatshirt: there is no incentive for employers to pay more than minimum wage for their minimum wage employees.

I don't make minimum wage. But the amount I pay on a hamburger increases with time. The rate of increase isn't set in stone for a period it might even go down, but over a long stretch, the price goes up. But the increase in the price of my movie ticket will almost never translate to a rate increase for those making minimum wage. The rich will get richer. Which might be a good thing, you know, incentive and communism is bad and all that jazz.

But what usually gets left out of this equation is that now the minimum wage ticket tearer at the theater has to work an extra 40 minutes to be able to buy the product his company was selling. Small price increases on products massively hurts people who make minimum wage. You can't just have the entire economy moving along without the wages keeping pace.

And why would they raise their wages? There is no competition for a 17-year old popcorn filler (while there is a massive amount of competition for my entertainment dollar), so there is no incentive to ever raise the wage. Hell, they pay minimum wage and most places still treat their employees like a piece of dirt and they get away with it because the demand for jobs is higher than the supply. I don't want to use the term exploit, but the ability to do so is there sometimes.

The teenage workforce is affected, sure, but let's remember they aren't the only people who make the bare minimum: most people working off tips (people who pull lunch shifts where tips are low), janitorial staffers (no, not everyone who does that is illegal), non-teenage fast food workers (someone flips burgers during the day during the school year).

And most teenage jobs are still classified as seasonal, which of course are the first workers to go. It's not like employers are dumping off 40-hour a week employees who work 52 weeks a year. The effect on the economy is not negative, because we're losing people who work 4 months a year for 20-hour weeks.


I am mostly a fan of a free market economy, but the reality is that we have too many people to fill these low-wage jobs and a situation where corporations and business are given 400 concessions before their workers are even given 1.

Minimum wage increases are good in that it gives minimum wage workers more buying power versus those of us who make more. Prices go up for everyone, but their increase doesn't out pace the wage increase.

If you can convince me that higher profits translates to higher wages, then I'm convinced that no minimum wage is needed. Otherwise, you are saying that minimum wage is required, and, if it is, it is ridiculous not to keep up some pace with inflation.

Honestly, Crash's argument hits it right on the head for me.

Before I got promoted, I was PISSED that Florida raised the minimum wage, because suddenly, I wasn't making more than the crappy guys on the job. Admittedly, my work paid off with a promotion into management, but that just gave me a better view of why it's not a great idea.

When I'm working, I'm expected to keep the wages we pay around a certain amount per customer. As a movie theater, we have slow weekdays and busy weekends, so weekdays give us more leeway to have a higher cost per customer, since it's to be expected. When weekends hit, however, if it turns out to be less busy that we thought it would be, we then have to start sending people home early to cut down on payroll. With an increased minimum wage, it makes us have to keep that payroll figure that much more in the forefront of our minds.

Management also allowed me to appreciate the benefits that having a motivated, hard-working and dependable staff can bring. Having a good staff makes my job that much easier, so I'm that much more inclined to recommend certain employees for raises, making them even more motivated. A staff that knows it's gonna get paid a certain amount if they work their asses off or slack off is only going to piss off customers, not get anything clean, loaf around, and some might eventually steal from you. Customers won't get mad if my staff is polite and efficient, so it's in my best interest to get staff members that have these qualities, and pay them as such so they retain said qualities.

While I do understand that due to inflation, people are, over the long run, going to have to get higher wages, but inflation is caused, in part, by minimum wage increases. A vicious cycle, indeed. This makes the minimum wage issue that much more complex, with employees needing higher wages, and employers put in the uncomfortable position of paying everyone the same wages. This reminds me of one of the major problems with communism: If everybody gets the same wages and benefits, where is the motivation to work more?

In all honesty, there is no simple or easy answer to the question. People need to get paid more, but how is anybody supposed to get ahead of the curve, when the curve keeps on moving ahead of them?

Some really interesting posts here. I wish all threads (at least in PP) could be this cool and productive without having to resort to name calling lol.

Anyway, my opinion is similar to that of Crash's, but BlueMikey makes some good arguments as well (particularly his first line).

I remember reading something a few months ago from a border patrol agent, who said that there's no job an American would do if the pay was higher. Fact of the matter is, minimum wage jobs don't make enough to give you a decent standard of living (and if you disagree, go to a "ghetto" area near where you live, and look around), and when that guy who's been working in the factory for 18 years gets laid off, and can't afford to go to school to learn new stuff (cause he probably has a family to support, and big bills to pay off, so college might be a bit out of his league at that point in life), what about him (and don't say he's an exception, because of all these layoffs we keep hearing about on the news, he's going to be more of the rule than exception).

Unfortunately, there is really no easy or cheap solution. I can't think of anything atm either (if that was my job though, I sure as heck would research it like mad).

I remember something one of my professors taught me, I think it was called the "Principle of Less Eligibility". What this means basically is, poor people can't have any accomodations that are better than what someone working minimum wage could afford. For example, don't expect to go to a homeless shelter and expect beds that are hotel-quality, or meals that look like you could serve that in a rich-person restaurant. I never quite understood why things were like that until recently, cause if a poor homeless person can get something that is better than what that minimum wage person could reasonably afford, why should they bother working?

Of course, this isn't to say that I don't see the business owner's point of view either, who's only real objective is to have the highest profit margin as possible. And it's even worse if it's a corporation, because lower profits is kind of hard to explain to shareholders, who only want as much money as possible too. And when management has to say something like "well, we had lower profits because we had to pay our employees more, and give them more benefits.", you can bet they'll be out of the job shortly after (so what they do is probably just so they can continue having a high paying job).

Heck, at my Home Depot, they're now starting to cut people's hours (that aren't full time anyway), because it's starting to get cold, so not as many people are shopping there. It's kind of funny too because just a month ago, they were hiring people like mad because customers kept complaining that there weren't enough people on the floor to help them (it's true, I even had to help some customers find things that aren't in my department, and when trying to find an associate for a specific department, I couldn't find anyone who worked there either). I suppose the solution in this case would've been to hire people in the springtime, so they could actually be around when customers needed help, then let go of the ones who aren't cutting it in the fall, rather than the "recruit like mad then not give anyone enough hours". Since I need this job atm, I can't do much because if I complain too much about it, then next thing I know, I'll be out of the job completely (although for me it's not as big a deal cause I can get another job. The main reason I like Home Depot is because I can get medical benefits as a part time employee. Good luck getting that at most other places as a part-timer).

The more I think about it, the more I also begin to wonder how this current president is willing to spend gobs of cash overseas, but isn't as willing to devote that much energy to domestic issues (like part of his solution to illegal immigrants was to build a large fence, instead of hiring more border agents and enforcing immigration laws). It's too bad Lyndon B. Johnson wanted to help America, but because of Vietnam he had to divert all his resources to that. I wonder if this is what's happening today again.

I'd say if anything, force companies to pay illegal immigrants the same wages as Americans. That way, you destroy the incentive of hiring them in the first place (cause they're willing to work for less, lest the company rat them out and they get sent back). At the same time, I suppose they could grant amnesty to all illegals that are here now, but as part of that amnesty, they have to friggin learn English and study US history as well (it's kind of dumb if you live in a country, and don't know about its past at all), and work towards becoming a US citizen.

Sorry if I seem to go all over the place with my post, just wanted to rant stuff before school :p

If you forced companies to pay illegal immigrants the same wages, they just wouldn't report they they were paying less. I mean, that's the whole point, that you can get away with paying less than minimum wage. And since they wouldn't report it, the enforcement issue for that is just as hard as it is for not allowing them to hire illegals period.

Even if you could enforce Illegal Immigration you're still faced with the conundrum of outsourcing.

Both problems are a damned if you do, damned if you don't equation, because if you kick out all of the illegals and maintain a minimum wage, then farms that can't afford to mechanize will go under. With outsourcing, American jobs are lost to foreign competitors, but if you illegalize outsourcing then you ruin businesses and increase the price of goods.

I don't really have time to address everything right now, but those are the most immediate things I'd like to point out.

I call bullshit.

Without wage increases, minimum rates included, there would be less money flowing in the economy. Without that money in the economy, the people who make minimum wages will be forced to look towards the government for help.
As more and more require gov't assistance, the tax rates would have to go up.
With higher tax rates comes less income margins ---> comes less net income ---> comes more companies losing customers ---> comes more companies cutting jobs (aka downsizing) ---> comes more Americans looking for assistance ---> comes more tax rate increases ---> etc.
The inflation is already there, without the minimum wage increasing as well we'll go into a recession and our economy will crumble.


I'd post a lot more but I don't have the time. Hopefully the above summed up what I want to say.

Your equation lacks the demand side. Less people buying things, prices go down so demand goes up. More people making less can buy more things. Downsizing is a result of poor profit margins, which usually has to do with existing inefficiencies or a company where the salaries are too top heavy.

And I don't know that not increasing minimum wage would send anything into a recession. We're talking about people with the smallest buying power anyway. Not increasing the minimum wage ever as inflation goes up does increase the poverty rate, but the money is just in different hands, so the economy is as robust as it would be anyway.

Possibly, but I don't see much outsourcing of minimum wage jobs. Janitors, fast food people (yeah, we've all heard about the drive-through intercom stuff being outsourced), farm workers, those job require warm bodies.

If the farms that can't mechanize go under, then the prices go up, but only temporarily, because at higher prices, it becomes more lucrative to become a more efficient farmer, so larger corporations come in, buy up the farms, run them efficiently, and the price goes back down.

An economics prof I had didn't want to admit this point:lolsign:

Of course it creates unemplyment. Since labour is among the biggest expenses for a business, raising them rises (?) the costs for the products. And we're not talking about unionized jobbs...

On the other hand, a minimum wage is, to me, essential. Otherwise, people can barely had the necessary money to buy vital commodities. However, finding the right level is hard...

Which is true, but one also has to consider the appeal of the market independant farmers create. Regardless of whether or not he hires a bunch of Mexicans to pick strawberries a few weeks out of a year, Joe Blo Farmer is going to have an easier time selling his produce in some hippy Farmer's Market. It's not bad economically, but in a way it hurts consumers because it eliminates the availability of a product.

This is true, but then there's also the argument presented in the article that work-related benefits are cut entirely due to raises in minimum wages. The end result, I think, would be a demand for full-time minimum wage earners superceding part-time workers like high school kids.

Those aren't the only jobs that are entry-level, though. Why do you think people make such a big stink about customer-service jobs going overseas? When there's a will there's a way, and besides, not everybody can work at a fast food joint or be a janitor for every business in the country.

Those positions, still, can be filled by illegal immigrants presuming that we don't secure our borders. People in New England may not consider it a problem, but they'll go where they can find jobs, just like anybody else.

Also, while I may support this fully, if you increase the minimum wage then it encourages industries to seek out ways to automate job functions. I know we won't have robots taking our orders, but we've already got automatic vacuums (as primitive as they are), imagine if entire industries were willing to put in finance for that kind of research to undercut costs.

There's also something I've failed to point out, and that's that people surviving on tips don't make minimum wage as it is. Granted, an employer is required to make up the difference if their tips and $2.15 wages don't add up to the minimum sum, but the majority of that, in theory, still isn't supposed to come out of the employer's pocket.

I don't have any statistics, but I live in one of the call center hotbeds in the United States, and, while we've lost quite a few jobs to Asia, it has been my experience (at the three I've worked at) that they all pay above minimum wage.

The minimum wage in my state has matched the federal minimum wage changed 9 years ago. And these jobs still left, despite having no obligation whatsoever to raise wages. Outsourcing will happen if the minimum wage goes up or not, business owners just want an excuse to not look as bad.

Part of the problem is that you have to pay well above minimum wage in the US to get any sort of skill level that doesn't involve a mop. If they lowered their wages, they wouldn't get workers with enough skill, and their customer service would suffer. So they send it overseas, get comparable workers for a lot less because they have no good jobs there to begin with.


I've always been under the impression that people who work in the tip industry have their minimum go up if the minimum wage for non-tipped employees goes up. I could be wrong, I haven't read the Arizona proposition close enough to know if that is going up.


A discussion like this is hard to have without encompassing all of health care too. The cost of health care is so out of whack that it is basically ruining these businesses, not wages. Either you can afford to give benefits or you can't afford good workers.

In Ontario, there is a bill being read that will increase the minimum wage in the province to $10 an hour. Currently, it is around $7.75, to be increased to $8.00/hr soon.

$10 an hour is a lot for minimum wage.... I wonder what businesses will be able to do having to pay that much.

It's a private members bill, Vivi. Meaning it has about a 15% chance of being passed. Not only will corporations and small business be against it, but also municipal governments, who, subsidize their summer student workforces with grants from the federal government through HRDC, which I believe right now, is $2.00?, of the total hourly wage. The Feds will not increase the percentage basis for Ontario just because it thinks it's labour force is special and needs help. In the end, the municipalities would end up having to foot the bill, and raise taxes to pay for it. If the NDP want to make a statement, going with Howie Hampton's plan and raise the MW to $8.00 would see a greater benefit in the long-term. Raising it to $10 is just going to create a massive ripple effect throughout the entire governmental/bureaucratic system, and will not pull Ontario out of it's "have-not" provincial status.

As with the proposed Ontario organ-donor refusal card, it's a fleeting concept. I love the NDP, but their thought process is somewhat similar to deciding who's going to cater the marriage reception, before they even ask the girl on a first date.

while i concede that minimum wages eliminate jobs, i would urge you to find the families who are being supported by less than $6/hr and tell me their quality of life is acceptable.

now comes the argument that low pay is better than no pay -- well, that may be true. in fact, it is true for the individual worker. but at the same time, on a larger scale -- a scale closer to state or national levels, fewer jobs does mean more competition for the positions available, which means people will work harder once they have a job so that they don't lose it / so that they might get a raise. this simple concept is what drives productivity in the work force. you could imagine a world where everyone is guaranteed employment but does less work because they don't have to worry about being employed.

don't get me wrong, i'm actually a pretty socialist guy, but at the same time we do have to keep our economy afloat, or else we won't be able to sustain ourselves as a nation and have all the government services that should be inalienable to all our citizens (while this may not yet be the case in the US, as we lack things like universal health care, we could never get to a place where universal health care is a possibility with a sinking economy).

What kind of idiot tries to support a FAMILY on six bucks an hour? If the only job you can get is a minimum wage job and you have a wife and kids, then it's quite obvious that you have virtually no marketable job skills and you would be exactly the type of person who would be fucked over by a raise in the minimum wage because you'll be the first one to get the axe when employers have to cut costs when you raise the wage.

Sinking economy? The economy hasn't been this strong in decades. Tax revenues are at an all time high, unemployment is at 4.4% (which most economists consider to be basically full employment), So what sinking economy are you talking about?

have you been to an urban area?

like i said later in the post: true, sad for the individual, but better for an economy.

the hypothetical one in which minimum wage is never raised.

Can you even call the USA minium wage a minium wage? Doesn't it go up when prices inflate more? I think the minimum wage is just something that goes up as prices go up. It's more so, to keep people floating/alive then to really do anything much more then that.

The unemployment number is a bit of a falsity; it doesn't represent the number of people who are underemployed. I've heard/read several times over the past year/couple years that the country is underemployed at a higher rate than any time since such measurements were made. And, not that it matters, but I can attest to that.

The economy, for the first time last year, spent more than it made. The first time ever, in the history of the country. How? By buying itself into massive credit card debt. (That, and we still had a huge Christmas retail season.) Part of this is because people believe they will have better jobs more suited to their skills/training/education, part of it is because we are in an irresponsible age.

There is going to be a time where the bills have to be paid and because the labor market is filled with such poor job offerings, they won't be. People will max their credit cards with necessities, get stuck paying off interest, and non-need good purchases will go down. The economy will fall into a recession, and the only people who will make money are the banks, because they rack up huge amounts of interest on debt that will be paid eventually by someone because of new bankruptcy laws which don't allow people to write off debt like they used to. Purchases fall, so prices dip and people get laid off, leading to higher unemployment.

It might not be so grim that it affects everything, but the day is coming. If/when it hits, a lot of us are going to see a lot of people in a world of financial hurt.

(This has nothing to do with minimum wage. This is largely a middle-class issue.)

(Also, there might come a time when we look at all the money we spent in Iraq and wonder if it might have been better spent on Americans if/when the shit hits the fan. But that's another discussion altogether.)

Ok, here's a good question. If raising the minimum wages reduces the number of jobs (which it does) and hurts the poor, what should governments do? You have that money you wanted to plough into helping the poor, where should you put?

I'm sure an economist would say put the money into education, but unfortunately, you gotta give something to keep people at the bottom of the ladder going as inflation chugs along. Do you help them pay off some of their bills (healthcare?) so in a way you're giving them a raise, but still making them cheap to employ?

Yes, several. In fact, the music I make tends to be marketed towards them.

Now play fair, I've answered yours - answer mine.

I'm talking about federal revenues. States, counties, and muncipalities collect their own taxes which fund their operations. As such, federal revenues being at an all time high really has nothing to do with whether or not a city government itself is broke because cities have a separate revenue stream.

Let the people you took it from keep it in the first place.

i can see that ontario has its share of, er, cloud shovelers (pelleteur de nuages, or making irrealistic statemetns such as raising MW to 10$).

With this measure, québec solidaire (our socialist party) wants to help poverty... Is it me or socialist have absolutely no idea on how economy works?

Increases in minimum wages wouldn't be such a bitch to the economy if CEO's weren't being such greedy bitches.

http://kennedy.senate.gov/downloads/fairsharereport.pdf

How are CEO's being greedy?

Their income is increasing at a ridiculous rate.

What is a ridiculous rate? Who determines whether or not it is ridiculous?

socialists and labour unions, usually. They always complain that women (mostly them) don't get paid enough because they are on minimum wage

I'm curious: do women try to get better jobs? Or they are all waitresses?

answer your what?

My question, genius:

the kind that doesn't have any other better choice --- like i said, visit an urban center and the poor there are often working for minimum wage and supporting a family (trying, anyway)

Ok, so then the question is - why don't they have a better choice?

Why do they have children when they can't do any better than a minimum wage job?

The simple fact of the matter is this: I've probably been to more hoods than you've ever heard of and people who work minimum wage jobs trying to support families are people who:

1) Got pregnant or knocked someone up while in high school
2) Had to drop out of school as a result to support those children
3) Have neither the requisite job skills or the education to get better-paying jobs

As such, raising the minimum wage will only hurt these kind of people because these are the FIRST people who lose their jobs when businesses have to cut expenses.

i conceded that in my first post of this thread -- it's sad, but this kind of measure would indeed hurt the individuals, if the economists are right about minimum wage raises being equal to job loss. at the same time, those very economists would predict that higher minimum wage would help our overall national economic strength.

that's my point, it's a conundrum and it's going to be a decision whose outcome no one will like either way.

The problem with the "minimum wage" is that the minimum wage is universal. It is zero. No job, no income, no wage. As it has been pointed out several times minimum wages decrease jobs, thus more people unemployed. However, what has not been pointed out is that most people who benefit from minimum wage are not the people who the minimum wage is intended to benefit. Most people on minimum wage are teenagers/students living at home, people using it as secondary income, people who are supported by non-minimum wage earners. Thus why is the extra cost incurred by society at large from businesses passing costs on to consumers being used to give more money to kids who work at burger king for the summer? What should be done is the minimum wage should only be applied to those who really need it. (The aforementioned, but rarer, $6.hr families). However companies would just not hire those individuals as they would just have to pay them a higher wage.

An aside to the poster who called Ontario a "have not" province. Are you nuts? Ontario is the havingest province to ever have in have-town.

I hope someone comes back to post more about CEOs/Executives/Greedy Republicans/Mysterious Cabals of Old White men being greedy and making "too much money". That argument is rational and not at all laughable.

one little known fact is that waiters get paid less than minimum wage :3 they actually depend on tips. think about that the next time you go eat out at some restraunt ;p

and as a working woman, i get paid $7.00 an hour working in a deli at a grocery store. Keep in mind, I've worked in the same store (i started at about $5.15, minimum wage at the time) for nearing four years. Lets just say men who start working there just recently get paid as much as me (and even more than me), and all they do is cashier.
Iowa is raising minimum wage to $7.15 (i believe, its off the top of my head), and hell, that makes me feel like shit. I'd enjoy the extra money, etc, but the fact that a 14 year old boy who bags groceries will get paid just as much as me when I'm actually holding down 8 hour shifts and 30 hour workweeks (I'm still a student at this time, but during the summer I will most likely work 40+ hours).
:eagletear: But at least I'm getting paid more...

That or you'll be fired.

They also don't depend on tips, employers are required by law to make up the difference if tips earned don't add up to the minimum wage.

Lots of interesting perspectives here. I have a related story.

I work at Starbucks, in Iowa, where minimum wage was 5.15/hour.

Iowa just recently passed a law to increase the minimum wage from 5.15 to 7.25, (in steps, the first step was to 6.20 on April 1st, and the second stop is to 7.25 on January 1st, 2008).

Starbucks hired me at a starting wage of 7.00/hour. In a state that pays a minimum wage of 5.15/hour, that makes Starbucks a pretty attractive entry-level job. 1.50 more than the minimum wage? Awesome! Not to mention all the amazing benefits (but those have nothing to do with minumum wage so I'll leave those out of this discussion).

As a result, we got many many many applications for new employees, and we always had our pick of the litter for people wanting jobs.

To put all this into context...Starbucks is a fairly physical intensive job. You're on your feet your whole shift, you're moving around, lifting moderately heavy to heavy items (gallons of milk repeatedly, up to boxes and cambros filled with coffee and liquids). Basically, when I get home I'm usually pretty tired, and sometimes even exhausted. But the wage was worth it.

With the new minimum wage, Starbucks is going to comply by raising the starting wage to 7.25. What once was a job that paid more than 1.50 over minimum is now going to be a minimum-paying job.

It makes little difference to me in terms of pay now that I'm in management and my salary is not affected by minimum wage... but it's frustrating because we can't find the same quality of help as we used to be able to -- people can get easier jobs where they just stand (or sit!) around and make just as much as the hard-working employees at our store. What we're faced with now more than ever is a huge influx of highschoolers wanting jobs at our store, and the more dependable and harder working employees quitting (unemployment is low in Iowa, no shortage of jobs). People that are still in grade school are great help during the summer... but labor laws and school hours really limit the availability we can get out of them during the rest of the year. And people with office cubicle jobs want coffee every day of the year.

I'm slightly disappointed with the way that Starbucks intends to compensate for the increase of minimum wage. It's one of the few things that I haven't agreed with them on. But I can also understand how they don't want to affect their bottom line more than is necessary. I just hope they will realize the mistake if/when the quality of workers degrades to the point where it affects business and customer loyalty. Ideally they would maintain a steady 1.50 wage gap over the minimum to keep employees happy and keep the quality ones around.

Or with their increased pay they'll be able to put more money into the economy, which means that grocery stores will sell more or be able to sell their products for more, which means that a person who makes $7.15/hour can also get a raise.

Or, like in Guru's case, with everyone who was making minimum wage making $1.50 more an hour, they can now spend their money at Starbucks, which means that Starbucks could similarly raise their base pay.

Or, one could argue that Starbucks was paying their employees a fair living wage while people only paying $5.15 were not (yeah, yeah, teenagers and bullshit, there are plenty of family earners on minimum wage).

Last time my state raised the minimum wage was ten years ago. Maybe it shouldn't be pegged to inflation - I think the libertarian argument that minimum wage will destroy your livelihood and lead to rampant inflation is just ridiculous, but I'm not educated enough in economics to say that a minimum wage hike every single year will have minimal adverse effects - but honestly it was well overdue.

And for the record, I too was pissed that I was working a wage slave job for a year, with an additional year's experience previously, and that new hires were getting paid the same I was. It sucks but on the grand scheme of things, it's less 'destruction' and more 'kick in the pants'.

And another thing, and I don't care how many of you disagree, but if a company resorts to hiring illegals and paying them less than minimum wage, they broke two laws and they should be punished for both. If that means I have to pay a little more for my milk - and I don't think the market would bear some sort of dire out-of-control markup like some people will say - I honestly don't care. Fighting illegal immigration by rounding up families and throwing the book at charities is hilariously inept.

I don't even DRINK milk, that's why I don't care. I am totally unaffected by the problem of outsourced labor!

Increasing their current entry-level pay would constitute a massive increase in overhead, though, meaning that they would seek to decrease their overall employment and increase the burden of an already physically demanding job to their remaining employees. The end result is better workers, like you said, but it also means limited opportunities for expansion.

There's also a laughably poor understanding of buying power going on here. If the prevailing minimum is 5 dollars, and then you suddenly increase that by a dollar, you're looking at 1/5th of the current employees on minimum wage losing their jobs. While those remaining have more money to pay for goods, the ones that have been fired have nothing. Alternatively, prices would go up to meet the increase in overhead, which also means that on the net, nobody has increased buying power.

Nothing about a minimum wage increase reflects any real creation of wealth, which is how workers are able to increase their buying power on the net, you're just shifting the burden of production to a smaller amount of workers, or lowering the buying power of consumers on the net.

Also, Lurker, about inflation. The lack of raise in pay to meet inflation is reflected in the overall price in goods. If workers aren't being payed more, then the price of goods provided by the employer will also remain the same, all things being equal. Unfortunately the devaluation of currency raises the price of raw materials, meaning that products have to rise in price relative to commodity prices. The solution isn't to raise the minimum wage, but to end inflation.

So the choices are everyone gets next to nothing, or some people get nothing and the rest get a bit more?

That's how it works. Arbitrarily raising the minimum wage without any reflection on the actual productivity of minimum wage workers is zero-sum. Workers on the net aren't any more productive after the minimum wage hike than they were before. So the choice is, either everybody suffers, or the lowest skilled become economic and political losers doomed to cronic unemployment.

Of course, the other solutions would be to not increase the minimum wage and end inflation, but those are laughed at as entirely "unrealistic" by people who think inflation is a force of nature and not a real result of government fiscal policies.

It doesn't and wont work that way for Kroger. The #1 Grocery Retailer that is known for paying thier employees crap pay(8 years with them, 7.75/hr - quitting in 2 weeks) they also have the worst overall work ethic among employees(which probably affects how future employers will percieve me when reading my application).

This will happen with places like Publix.

If it's zero sum, then why would anyone care if it happens or not? =\/

Also, aren't you assuming that every dollar earned is of equal importance? What if the dollar between earning $5 and $6 for four people is much more valuable than the $5 the one person loses?

It's not the same. In fact it's less. You're looking at a dollar less being circulated in the work place. So I guess my math is pretty off, I made a B in Pre Algebra Plus for Christ's sake.

But yeah, all other things being equal, that extra dollar being earned is of same relative value to the 5 dollars lost.

There's no real increased amount of consumption going on, because you have more money circulating among fewer people.

But the value to a certain person. Could their standard of living increase enough with the extra $1 enough to outweigh the decrease in standard of living for the person making $5? Not talking about total economic wealth going on here, I'm talking about standard of living (where curves don't necessarily have to be straight lines).

Think of it this way, if you take away $100,000 from a CEO's salary and give $10,000 of it to 10 people making $10,000 a year already, would their quality of living most likely increase more than the decrease in quality of life for the CEO that lost 5% of his salary?

Yes, but we're not talking about wealth distribution whose end result is a marginally smaller loss for the CEO, you're talking about wealth distribution that forces a fraction of the population into destitution. People think blacks must be stupid or lazy to be so poor in the inner city, but the fact is that you can't be either to survive ghetto economics! They can't get legitimate work because they simply can't perform well enough to be hired at the prevailing wage! Attempting to justify this kind of "benefit" is inhuman! Socialist bastards and unions have stacked the odds against the poor of this country by denying them the ability to compete and I'm sick of it.

I guess it wouldn't be a Brady thread without "socialist bastards" making an appearance.

I hate unions, but I also am not about to allow a corporation to justify paying workers $1/hour.

You can't claim that raising the minimum wage forces businesses to both fire people and raise prices. It's one or the other (assuming the owner knows anything about balancing a checkbook).

You felt you were paid crappy but you stayed for eight years??

That's the equivalent of spending $100,000 on a Toyota Corolla. If you feel you were getting a raw deal, you were free to quit. And if enough people shopped their employment services around, then they would be forced to treat their employees better.

You, effectively, are a justification for them paying people who have worked for them for 8 years $7.75 an hour.

Umm...that seems like it's more aimed at the analogy than the actual point I was trying to make. If everyone is going to live in destitution at $5 an hour, but at $6 an hour some people can stop taking those second jobs and working eighteen hour days while one person gets fucked over, then isn't it beneficial to give those people $6 an hour instead of $5 an hour?

Ummm...ok? :confused:

It's still not working. Nobody all of a sudden stops taking on a new job because they just earned an extra buck an hour instantly. You're also looking at a zero-sum game. At what point do you have to get before minimum wage workers stop taking on multiple jobs? 9 dollars an hour? 12 dollars an hour? How many people have to become unemployable just so 1/3 of the people at the minimum skill bracket don't have to take two jobs for a "living wage?"

Also, since I didn't clarify, the idea that an employer would keep all of their employees and raise prices is ludicrous. Doing so lowers sales and revenue, and a business owner would much rather keep the same overhead and keep the same product marketability than raise overhead and lose marketability. Like I said a long time ago, minimum wage hikes hurt small businesses and help the large corporate ones like Wal-Mart since they can easily eat the overhead.

And who's going to work a dollar an hour for, anything? You could make better money mowing lawns. The reason we even get payed higher than minimum wage is because entrepreneurs and other rival corporations compete for labor, and the wage earnings of a position as a result naturally gravitate to the actual worth of the labor.

Isn't that what I said? I thought I presented it as an either/or situation, but I could've screwed up the delivery. My bad.

Indeed. If you think you're deserving of a raise, nobody is going to negotiate for that except you. (Winter Storm) If you can't negotiate for one, then shop around for a job that will pay you more, and if you can't get a job that pays more then start saving money and go to classes in order to learn a trade. Then later on if you're dissatisfied with the trade you've learned you can use the money you saved from that to go towards a degree.

Addenda: Savings, though are a vicious game. Due to inflation it's being constantly devalued, and since the establishment of the Federal Reserve in 1913 the dollar has dropped in value 90%. Why would anybody want to save in an environment that forces people to constantly spend in order to derive the maximum value from their labor? It's why 401ks and other retirement plans which involve investing in stocks have become so popular. At least in that case your money can make some earnings (or by some horrible twist of fate you lose everything). With CODs and inflationary trends, there's no guarantee that the amount you saved will be worth any more or less by the time the account appreciates.

There's some wage amount that will get people to stop working a second job in order to get by. I don't know what it is, and I doubt you do either, but do you see the reason why knowing that point could be important?

Also, do you know what zero sum actually means? Taking all the wealth in a country and giving it to one person creates a zero net change in wealth for a country, but I don't think anyone out there would argue the two situations are equivalent from any standpoint other than raw numbers.

Don't smaller businesses tend to make one of their main selling points their exceptional customer service? You know, it's worth going to your local hardware store over Walmart because even though it's a little more expensive you're going to get expert assistance while you're shopping.

Have you ever ever heard of labor demand elasticity? Have you ever considered that it's not 1, so maybe your calculations are too simplistic? If you're going to argue with math, then you have absolutely no credibility if you can't even grasp one of the most basic parts of the equation, and did no research to find out whether your "intuitive" economics makes any real sense. Research in the last decade and a half has confirmed that elasticity in fast-food businesses (most highly effected by any wage hikes) is virtually zero. (Take this recent report, by an institute that held onto the notion of high elasticity longer than most - check their report archives.) The numbers don't add up, so we fall back on emotional arguments or outright falsehoods, like Brady's.

In other words, Brady, your argument here is as much an anachronism as your other fanciful notions. I suppose that you'd dismiss economic research by anyone who doesn't put their faith in a gold standard, though, bless your heart.

RR's analogy was closer than you thought anyway; minimum wage hikes' intended purpose is to narrow the disparity between upper management and the lowest workers, but until directors' salaries are based on corporate profitability (regardless of whether I think that's a good idea), such a roundabout trick as minimum wage is only going to do a half-assed job of it.

That's exactly what I'm saying it means. In your example everybody save one person is a loser of wealth. In the real example of a minimum wage hike, the real losers are in a minority, yet are also the ones who are most purported to be the benefactors. This doesn't seem insane to you? The inability of any central authority to measure such items is why Keynesianism is bullshit.

Knowing the drop off point for when a person stops taking a second job is impossible, because it can only be applied on a case-by-case basis. How much is one man going to be content with compared to another? How much does he need compared to another? These are impossible terms to measure, and expecting somebody working 6 hours a day at one job to stop working the other 6 hours because they're making an extra few bucks is absurd. It won't apply all over the board, and the people who it may apply to aren't going to be significant enough to provide any net benefit. In any case when you increase the minimum wage both federally and at the state level, you create more economic losers, and more chronically unemployed who are incapable of climbing out of their rut without being able to underbid the wages of their competing employees.

And in order to maintain that expert assistance they'd have to eat expert costs. Which increases with the minimum wage hike. It's an unnecessary burden that shouldn't be placed on small businesses.

Ah yes, the EPI report. A document signed on by "scientists" who valued the social impacts of the findings more than the actual real economic ones.

Yes, in the short term the elasticity of labor demand means that small increases in the minimum wage won't be significant. However, what we're looking at is a wage increase that creates no statistically significant level of unemployment. This doesn't account for the affects on the chronically unemployed economic underclass, or how minimum wage hikes actually affect long-term solutions to a loss of real income and buying power among existing workers.

Lurker's statement that the libertarian argument claims that a minimum wage hike will create inflation is false. The argument made by libertarians is that inflation creates a loss of real wages, and the solution to stopping the deterioration of buying power among the poor is to end inflation. Otherwise attempting to peg the increase of minimum wages would constantly involve accounting practices and costs reaching into the billions, which damages the economy on the net, and may even be practically impossible.

As for the Washington example:
Considering the recession, it's hard to tell whether the effects of the minimum wage are really that insignificant, or whether the damages were outpaced by the boom following 2001.

In all cases, accounts for the "growth" which occurs in job markets doesn't account for the possibility of a marginal return, i.e. that without the minimum wage these markets would have experienced greater growth and provided even more jobs on the net.

How much more expansion would've been possible in the absence of a minimum wage hike?

There's also something else which the hikes of minimum wage don't account for: automation. When setting a price floor on labor, one encourages firms to seek the increased automation of jobs previously worked by low-skilled labor. While in the short term unemployment may not indicate a noticeable increase, in the long term the increasing automation of an industry means that the employment opportunities for unskilled labor will go down.

Also, how do any of these studies reflect any real increase of buying power amongst minimum earners following a mandated hike in the face of monetary and commodity inflation?

If there are more low-wage workers than there are low-wage jobs, theoretically (since Libertarians ideas mostly are just theory), employers could pay whatever they wanted.

You argue that people should be paid for their productivity, but that wouldn't happen: people would be paid on a market value. Higher skill workers are paid that now, but, with no minimum wage, there's nothing to keep the baseline from spiraling to a point where workers are getting paid well below their worth to a company and we're talking at your levels of destitution.

Theoretically in a baseline status quo. However, entrants into the market and entrepreneurs keep employers competing for labor in order to avoid a potential staff flight.

People are already payed in accordance to their real rate of productivity. The reason we have minimum wage jobs is because they're just barely productive enough to justify the pay. Once you increase the minimum to a certain point, you lose demand for an entire industry. It's why farmers imported illegals to pick strawberries, and contractors imported them to rebuild New Orleans. Cheap, menial labor costs too much to justify a minimum wage.

There's no guarantee whatsoever that companies would attempt a "race to the bottom" in the absence of a minimum wage. If that were the case then why doesn't everybody make a minimum wage?

So, in other words, all that matters is the total amount of wealth in the economy and everyone that disagrees can go suck a cock (obviously what they'd be doing to get by)?

Also, welcome to the soft sciences, the inability to measure anything worthwhile is what makes them very speculative and difficult to determine. But just because we can't get an exact number for something doesn't mean we shouldn't at least go for a best shot.

I thought you said we couldn't measure this sort of thing, yet you're magically making assumptions about how exactly the distribution will fall.

Well, we create more economic losers, but we're also creating even more economic winners. You know, all the minimum wage people that are keeping their jobs.

Also, I'm actually curious, how many people do you know that have been unable to find employment from places that hire at minimum wage? The only people I knew in high school that couldn't find work were those that valued their time at considerably more than minimum wage, so they felt it was better to not even spend their time working in the first place. Much like how if I were to have difficulty during a job search, I'd consider my time being worth more than minimum wage, so instead of working 40 hour weeks at Walmart I'd feel I'd be better off working very little and putting my time towards finding a better line of employment.

Nothing is forcing the small company to pay their employees more since we're assuming they're already paying more than minimum wage prior to the hike, so why should we make the assumption that they will increase their wages to keep a notch above the rest?

Is McDonald's or Wal-Mart concerned about turnover?

Why are you so forgiving of the farmer? Who says that he wants to pay someone what they are worth? The farmer imports illegals because it makes him the most money, not because it is the most fair price to pay for someone to pick strawberries.

Everyone doesn't make a minimum wage because there is high demand for high-skilled workers. If there were too many lawyers or chemists for how many lawyer or chemist jobs are available, they wouldn't get paid as much. They don't get paid as much when that situation arises, which is proof that if more low-skill jobs are available and no wage safeguard, wages would drop drastically.

That's hardly saving anyone from destitution.

No, which is also why they're not particularly concerned about a minimum wage hike. They are concerned insofar as it affects their competition. Besides, McDonalds and Wal-Mart have undergone massive automation in the past decades, and have severely decreased their overhead as a result. Wal-Mart by an large was paying its minimum earners above the minimum wage before the hike in the first place. Indeed, right around the projected increase.

Yes, Mikey, 2 dollars an hour is the most fair price to pick strawberries, as it's cheaper on labor costs than automation in the long-term. Do you really think that farmers can afford to pay 40 people 7.25 an hour to pick strawberries for a month?

Actually the indicators regarding an abundance of high skilled labor isn't lower earnings, but restricted employment opportunities. Cheap education has flooded the labor market for high-skilled workers, which makes it harder for graduates to receive entry-level positions.

Besides, Norway, Sweden, Finland, Denmark, Switzerland, Germany, Austria, Italy, and Cyprus, all have no minimum-wage laws. Most of them do, however, have some form of wage control.

The minimum wage is a myth paraded around by politicians as the new form of bread and circuses for the 1% on minimum wage which never addresses the real cause of loss in buying power.

Here's a summary of 50 Years of Research into the negative affects of minimum wage as of 1995:

The costs of a minimum wage go beyond employment.

But companies are free to automate now and a person making $2/hour might as well not work at all. So what do you care?

(Yes, I am ignoring that $2 is a lot in Mexico for an illegal immigrant. I don't believe in basing policy on law-breakers, though.)

Who said we were basing policy on law-breakers? Why not expand the quotas for unskilled labor and eliminate a minimum wage for imported workers?

Because what happens between a farmer and an immigrant worker is their business. If an immigrant, legal or otherwise is willing to underbid the minimum wage he should be able to. Denying them the ability encourages both them and their employers to break the law, and denies Mexicans a much-needed income. Yes, the Mexican government needs to get its shit together, but there's no good reason why we should be impeding trade, even in a labor market.

So we should allow people to break the law to encourage them to not break it.

Oh.

Oh wait I see, this is another one of your arguments where what you want isn't dependent on changing 1 thing, but 4,000.

I hate to cut in (I'm a liar), but

If a person does work for pay, that work is by law the business of the government. I'm really sorry if you don't agree with that, but it's not your call.

Not in this thread, no. Any "trade agreement" is a horrible international beurocracy which inevitably redistributes wealth so that the most powerful and wealthiest nations acquire an economic club to use against the disadvantaged parties in the agreement. Plus there's that whole global government thing which I'm having none of.

As a voter, it is my call to make (partially). I don't get what your point is.

You can vote the law to change. Until that happens, any monetary transaction is lawfully the business of the government, and Farmer Joe is going to have to pay his workers minimum wage. Sorry. :(

So since when have I made a legal argument?

That's because the inequities are by and large deserved. CEOs get payed exhorbitant salaries because they bring shareholders exorbitant profits. Shareholders are the ones which negotiate CEO salaries, not a Board of Directors. Even in the case that they don't make profits for the company, they're still entitled to an income, as otherwise they wouldn't take the job.

Do you really think that libertarians should unite as one against fraud? Stealing from pensions is fraud, and something that libertarians have despised from day-one. Denouncing fraud is such a non-issue, and one that should be enforced by the government, that there's no point in making a big stink about it. What we do make a big deal out of, is when fraud is committed with government protection and subsidizing, e.g. Enron.

I dunno, the strawberry farmers in my area always hired middle/high school kids to work the fields and the kids like to do it because they could earn at least minimum wage doing it.

Of course, the other question is why would the farmer not be able to pay 40 people $7.25 an hour. Is it because all the other farmers in the area are able to get their labor for much cheaper?

From a legal standpoint, that is factually false. That's all I'm saying.

Very similar arguments were used to argue for slavery. Somehow our economy survived it.

And all I'm saying is nigga I don't give a fuck.

Slaves weren't payed, stupid.

First: The word is paid, stupid.

Second: They talked about how they'd never be able to compete or do anything if they had to spend that much more on paying laborers. They survived.

It's because they were wrong in the face of free market theories. The problem with slavery wasn't that they couldn't afford to pay them real money it was that it created a massive labor force that would passively resist to the point where they would be as little productive as possible and get away with it.

If you can import workers who are willing to work for 2 dollars an hour compared to hiring a bunch of kids to work 7 dollars an hour, you've got the edge on the competition. That's how unskilled labor markets work. The unskilled worker willing to work for the smallest wage is the most attractive, and since the exchange is voluntary the problems of passive resistance do not rear up as they do with slavery.

That's too bad. :(

So in other words farmers that try to stay legal in their hiring prices are coerced into practices they'd rather not do because of their criminal neighbors or are forced to go out of business?

Either that or they crunch to automate. Illegal immigration is as inevitable as the drug trade so long as there's a demand for labor which is willing to work below the minimum. Either the solution is to legitimize immigrant workers, or it's to get rid of the minimum wage.

Hey and Brady wins either way.

Yay Libertarianism.

hate coming in political palace anymore

That's not really fair, Mikey. Yeah, according to him, his ideals will win in either situation, but neither one will come to pass. He's doing the economic version of vore fetishism - it's easy to call yourself kinky when you make up a fetish you can never act out on.

And in the meantime illegals cause leprosy.

You know I love you guys. :3:

That explains why they love Jesus so much.

:racism:

Some of them say you can see the Virgin Mary in their sores.

See, I still only see her in my toast. No fair.

Can't you also try to prevent illegal immigration?

Of course you can try, but until the legitimate methods are more attractive than human smuggling to the smugglees you can't stop it. Also we're talking about miracle sores here, so get with the program.

No I think that stopping illegal immigration is good because it clears up our borders and allows people that deserve to come through legally.

Plus it makes sure that when they come over they can speak english because I get upset sometimes when I'm trying to go to the store and buy something and they person that's helping me doesn't speak the same language I do (english for you ignorants) and I don't get mad I try not to because it's not their fault and I know they are disadvantaged because of it and it's not their fault and I can respect them for that and trying so hard.

At the current state of immigration policy, the only way you could conceivably stop all illegal immigration is to shoot them on sight.

Myself or the government?

Because I think "at sight" would entail other alternatives if you're talking about the government.

It wouldn't be much of a stretch to classify them as invaders and have them shot by the Border Patrol. It would deter all save the most absolutely desperate and dent the Coyote business, but then there's the whole killing people thing.

Darn they people ignorants who not speakin any english.

I don't even think Dickens wrote sentences of that length.

It shouldn't be so funny that the guys who insist on english-speaking immigrants can barely speak the language themselves.

It really shouldn't.

Wut's the matter Jorje, you can't speak inglish good?

Oh yeah lol I know what you mean! Like when ignorants try and tell black people of african american descent that they're not speaking english properly because they use slang is stupid! It's just slang! Get over it! :p

Ok, I read the whole thread, and I'm not exactly sure who's arguing what. it seems to have deviated quite a bit from the original topic, at any rate!

So before I jump in, am I right in assuming that BlueMikey thinks the minimum wage destroys jobs, while everyone else thinks it will make everyone better off?

So that's black people English?

I really don't know. I haven't gone to the hood recently, my nizzy.

Are you sure you read the whole thread?

Apparently not as well as I thought, since I confused you for Bradylama :tpg:

:smack:

Ok, so what's the consensus? The minimum wage is good? Or is the minimum wage bad? Someone, please summarize!

The consensus is I'm fighting windmills.

Here's a chart I knocked up on the data located in:
http://en.wikipedia.org/wiki/List_of..._minimum_wages
http://money.cnn.com/pf/features/lis...ent/state.html

Anyone care to draw some conclusions? :D

That looks to have a correlation of about 0.

Are you sure?

I think this one can be buried now, too.