well, I'm certainly not showing compassion for the rich. Who do you think I'm showing compassion for? "they" is the government. Just like the mafia, they take a cut of everything. That is where the money that was intended for the poor goes. The government is the "middle man". We get poorer and poorer, and "they" get richer and richer.
Arguments Against Raising Minimum Wage Don't Hold up
- Thread starter dbphoenix
- Start date
What cut did you have in mind other than withholding and FICA?
the cost it takes to "administer" anything done by the government. How much does it take to make sure the min wage is being enforced? Let alone how much they charge us to change it. We could just give all that money to the poor and come out ahead.
wake up. That beloved government of yours is just a parasite and their days of draining their rich friends are over. Now they are taking money from the poor.
that's why I say, food stamps for all, no questions asked. We could just pay one online website instead of who knows how many government workers. Better for you, better for me, better for all except the government.
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How much?
And who would administer that? Who would police it?
How?
And this website would appear by magic, and no one would be required to administer the program represented by the website? That's pretty amazing stuff.
where do you think the money comes from? Does it just magically appear everytime Nancy Pelosi opens her mouth? Dodd Frank? Does Barney just donate the money to administer his new law? Get a grip man. This government is expensive. A little goes to the poor. I like that. Too much goes to the government. I don't like that. Pretty simple.
It comes from taxes. How would you administer your program so that it costs as little as you think it would?
oh for crying out loud. "It comes from taxes"? And what are taxes? An unlimited supply of money? A decent charity can run on 10% or less in administrative costs. And yes, I could give everybody food stamps at way less than 10% commission. And for that matter, Social Security. And I could educate a child for a lot less than what the so called Orwellian "Department of Education" is charging me.
The government is not your friend my friend, they are the ones screwing us
Like the man said, "If you believe government is bad, you will create a bad government."
Taxes are what you pay for the privilege of living and working in whatever society you've chosen.
As for your food stamp and Social Security proposals, why don't you work something up and get back to us? You could change the face of welfare governance.
Hello dbphoenix:
You talk about showing compassion for the minimum wage worker by raising the minimum wage. But raising the minimum wage only makes them as a whole worse off by increasing their unemployment as I already explained earlier (post 4). Compassion for the minimum wage worker is best shown by well thought out strategies that work in the real world. If raising the minimum wage is such a good idea why not be really compassionate and have the government raise the minimum wage so that every one is making at least a $ 100,000/year ? Do you think that would be a good idea ? I would like to hear your answer.
Anubis
Anubis, you are spot on with your cause and effect relationship regarding wages and the demand for labor. As someone who has studied economics (doubt DP has), we know that by raising minimum wages and the cost of labor on one particular cost curve, you cause all the other cost curves to shift in response. In other words, you create both a substitution effect for laborers who were earning a premium to minimum wage who now find themselves at minimum wage as well as affecting the marginal supplier of labor on the supply curve. This is all basic math and not opinion. And you nailed it.
As was pointed out, if you have two groups of people, one currently at 7.25 an hour and let's say another group at 15 to keep things simple. Say the group at 15 an hour has some discernible skill that has afforded them this wage in the marketplace. They possibly have a more stressful job, have greater responsibility and some skill they had to attain. Now you shift the labor curve so that those with no skills, no responsibility and no stress are now making the same wages as the 15 group. Well, this is where the substitution effect kicks in. Those in the 15 group are now sitting on the wrong indifference curve. They are making the same wages as the min group but with harder jobs that require more skill and more responsibility. The optimal strategy for them is to "shift" to the lower curve. That is, they can trade in their current job for the lesser job and earn the same wage. They now have increased their personal utility at no cost to them. But the rub is, they just now took the jobs meant for those in the 7.25 min group. Which means they lose their jobs. Employers will jump at the chance to higher a higher quality worker at the same rate they would have to pay the old 7.25 min group. So the firm has increased their utility as well given the new wage floor. Each actor in this market has maximized their utility while the low end group finds themselves priced out of the labor pool.
This is why economists have never favored raising the min wage. And most of them are center left politically. Instead they have favored for the increase in welfare and gov't benefits. And yes, your observation and one that is frequently brought up is, if more is better, then why stop at 15 an hour? Why not raise min wage to 100,000 a year. Obviously more is not better. So the next question is, is the labor market operating inefficiently. In other words, is the floor for labor too low relative to the value and productivity they provide. Now this is a genuine argument. You are not going to find widespread agreement here. My opinion is that low end of the labor market offers little to no value to most firms. If firms can afford to enter the labor market and purchase this labor at this rate, they are doing so because they are earning a marginal return on that labor in that particular moment in time that justifies the expense.
On the other side, the marginal supplier of labor is highly sensitive to his marginal cost. As we know from economics, the marginal supplier of labor is the last supplier of labor on the supply curve with the smallest margins. Hence why he is "operating on the margin". Any slight increase in cost and he falls off the supply curve. This means he can no longer be a buyer of labor at this higher cost level. This means all the people working for him are out of a job. Now not every firm is operating on the margin. But enough firms are and they will reduce the amount of labor in the marketplace. This is not a controversial subjected and it's implications are widely accepted across economists all political persuasions. This exercise has been researched and researched to death. This example is used in EVERY micro economics text book in the country. Every 10 years though it gets brought up again by someone new thinking they have come across some new idea that has not been well researched.
As was pointed out, if you have two groups of people, one currently at 7.25 an hour and let's say another group at 15 to keep things simple. Say the group at 15 an hour has some discernible skill that has afforded them this wage in the marketplace. They possibly have a more stressful job, have greater responsibility and some skill they had to attain. Now you shift the labor curve so that those with no skills, no responsibility and no stress are now making the same wages as the 15 group. Well, this is where the substitution effect kicks in. Those in the 15 group are now sitting on the wrong indifference curve. They are making the same wages as the min group but with harder jobs that require more skill and more responsibility. The optimal strategy for them is to "shift" to the lower curve. That is, they can trade in their current job for the lesser job and earn the same wage. They now have increased their personal utility at no cost to them. But the rub is, they just now took the jobs meant for those in the 7.25 min group. Which means they lose their jobs. Employers will jump at the chance to higher a higher quality worker at the same rate they would have to pay the old 7.25 min group. So the firm has increased their utility as well given the new wage floor. Each actor in this market has maximized their utility while the low end group finds themselves priced out of the labor pool.
This is why economists have never favored raising the min wage. And most of them are center left politically. Instead they have favored for the increase in welfare and gov't benefits. And yes, your observation and one that is frequently brought up is, if more is better, then why stop at 15 an hour? Why not raise min wage to 100,000 a year. Obviously more is not better. So the next question is, is the labor market operating inefficiently. In other words, is the floor for labor too low relative to the value and productivity they provide. Now this is a genuine argument. You are not going to find widespread agreement here. My opinion is that low end of the labor market offers little to no value to most firms. If firms can afford to enter the labor market and purchase this labor at this rate, they are doing so because they are earning a marginal return on that labor in that particular moment in time that justifies the expense.
On the other side, the marginal supplier of labor is highly sensitive to his marginal cost. As we know from economics, the marginal supplier of labor is the last supplier of labor on the supply curve with the smallest margins. Hence why he is "operating on the margin". Any slight increase in cost and he falls off the supply curve. This means he can no longer be a buyer of labor at this higher cost level. This means all the people working for him are out of a job. Now not every firm is operating on the margin. But enough firms are and they will reduce the amount of labor in the marketplace. This is not a controversial subjected and it's implications are widely accepted across economists all political persuasions. This exercise has been researched and researched to death. This example is used in EVERY micro economics text book in the country. Every 10 years though it gets brought up again by someone new thinking they have come across some new idea that has not been well researched.