The right question to ask about the minimum wage

[wheaties]

>>We have great distortion int he economy because of the minimum wage being far too low
That is simply incorrect. Labor is traded in the free market just like shares of AAPL or GOOG.
Then you say: "most labor in most parts of the country is already paid above minimum"
Well is the problem the min wage or not?? If most workers are making more than the minimum, why would raising the min have any effect whatsoever?

>>We absolutely must force these low paying corporations to pay the real cost of minimum wage labor rather then we tax payers subsidizing their operation
No. We must reduce the hugely excessive supply of low wage workers. Deporting them is one way. Educating them is another.
>>it would affect only those employers who are now paying less than $10.50, and nationally that is only a fraction of the low wage work force.
Nope. If a minimum wage worker makes $10.50 and a skilled worker makes $11, when you raise the min wage worker to $11 the skilled worker is going to want and get $11.50.

For the record you will not change the standard of living for any class of worker by passing a minimum wage law.

 

[GoldenMember]

We must reduce the hugely excessive supply of low wage workers.
Deporting them is one way. Educating them is another.

"Soylent Green" is also an option.

 

[dbphoenix]

"Soylent Green" is also an option.

As has been discussed earlier and elsewhere, that appears to be the most attractive option for the poor, the sick, the elderly, the disadvantaged of whatever sort, even disabled veterans: get rid of them.

Conservatives operate according to a different societal contract than progressives do. To argue which is better is a philosophical debate until people begin to suffer.

 

[Maverick74]

The Unseen costs of the minimum wage...

A recent article at US News and World Report by Pat Garofalo quotes Associated Press writer Christopher Rugaber who says that “US states that boosted their minimums at the beginning of the year, the number of jobs grew an average of 0.85 percent from January through June. The average for the other 37 states was 0.61 percent.” However, this appears to be another example of the Broken Window fallacy refuted by Frédéric Bastiat in his famous essay “That Which is Seen and Unseen.” In the introduction Bastiat states that:

"in the economy, an act, a habit, an institution, a law, gives birth not only to an effect, but to a series of effects. Of these effects, the first only is immediate; it manifests itself simultaneously with its cause — it is seen. The others unfold in succession — they are not seen: it is well for us if they are foreseen. Between a good and a bad economist this constitutes the whole difference — the one takes account of the visible effect; the other takes account both of the effects which are seen and also of those which it is necessary to foresee."

By raising wage rates, the public can see their states’ minimum-wage earners making more money. This is the factor that is seen. What is unseen is the number of jobs destroyed or citizens who would have been able to obtain jobs if the minimum wage were never raised in these states in the first place.

But even the government statistics do not add nearly as much support as the pro-minimum wage group implies. Florida, for example, was one of the thirteen states that raised its minimum wage to $7.93 per hour as of January 1, 2014. Looking at monthly seasonally-adjusted employment and unemployment data for Florida, comparing January to May 2014, we find that the unemployment rate actually increased from 6.1 percent to 6.3 percent, respectively. The unemployment rate of Florida might be several times larger but for the fact that only those still actively seeking work are considered to be employed, and do not include those who are underemployed or have given up looking for work. In addition, this data clearly demonstrates that the Florida unemployment rate was decreasing every month prior to the minimum wage being raised from 7.4 percent in July 2013 to 5.9 percent in December 2013 before increasing to 6.3 percent upon introduction of the new minimum wage in January. It’s dangerous to draw broad conclusions from a single statistic like this, but it’s clear that we can hardly conclude, as Garofalo has done, that minimum wage hikes “have little to no effect on employment.”

Another weakness behind the claims that minimum wages raise the well-being of workers, is that it does not state what kinds of jobs are being created. An increase in government jobs, for example, does not create added wealth to a state’s economy. In fact, such jobs are a drag because they have to be paid for by imposing higher taxes on the productive sector of the economy.

Even more uncertainty is added if we consider Cantillon effects, which tell us that in response to money-supply inflation, prices (including labor prices) do not change uniformly and at the same speed, so the effect of raising the minimum wage will be different in each of these thirteen states.

Finally, if raising minimum wages does increase the number of jobs in these states, why don’t their governors and legislatures raise the minimum wage to $100 to $1,000 dollars per hour? To ask the question is to answer it as even these interventionist politicians know that no one besides government bureaucrats would still be employed under such as system. Any first-year economics student knows that, all things being equal, as the price of an item increases, demand for that item decreases accordingly. Wage rates are labor’s price. As wage rates increase, employers demand for workers will decrease. By increasing the minimum wage, politicians in these thirteen states are condemning many of their citizens to unemployment.

Murray Rothbard perhaps said it best when he argued that the minimum wage “is compulsory unemployment, period … the minimum wage law provides no jobs; it only outlaws them; and outlawed jobs are the inevitable result.”

 

[burn8]

You're making some unwarranted assumptions, particularly with regard to demand and supply. Will some people stop buying hamburgers if McDonald's raises their prices? Perhaps. But the price increase wouldn't amount to much, and, as I said earlier, McDonald's hamburgers used to be 15 cents, but increases in prices didn't impede their growth in the least.

If people want the product, they'll pay for it. Whatever growth problems McDonald's and other chains of its ilk are now having are unrelated to wages but rather to changing tastes, e.g., Chipotle.

Do you people actually think that flipping burgers should be a long-term career? At the levels the workers are paid now, they should be getting in and out quickly.

It probably takes 4 months to learn every skill required for that job, after that just the workers just sit and languish instead of learning new skills that actually would earn them more money.

It's a perfect job for somebody entering the workforce to get that valuable work experience that can take you to the next level. Sounds like you people want to pay these people just enough to keep them stuck making breakfast sandwiches for an extended time and you think you are doing them some sort of favor here? Why not spend your effort figuring out how to give these people the knowledge and motivation to improve themselves instead of injecting yourself into the machinations of business and finance just to keep somebody in a job they should be running away from? This makes no sense.

-burn8

 

[dbphoenix]

Do you people actually think that flipping burgers should be a long-term career? At the levels the workers are paid now, they should be getting in and out quickly.

It probably takes 4 months to learn every skill required for that job, after that just the workers just sit and languish instead of learning new skills that actually would earn them more money.

It's a perfect job for somebody entering the workforce to get that valuable work experience that can take you to the next level. Sounds like you people want to pay these people just enough to keep them stuck making breakfast sandwiches for an extended time and you think you are doing them some sort of favor here? Why not spend your effort figuring out how to give these people the knowledge and motivation to improve themselves instead of injecting yourself into the machinations of business and finance just to keep somebody in a job they should be running away from? This makes no sense.

-burn8

Sounds like you've never been poor. There are those who have rent to pay and children to feed.

Of course, they could just all go on welfare . . .

 

[burn8]

Sounds like you've never been poor. There are those who have rent to pay and children to feed.

Of course, they could just all go on welfare . . .

So the only two options are over-paying them and welfare. Do you really believe that?

You want to keep them under your thumb by giving them just enough to not want to do anything more - in effect you want to pay them to remain poor. Your claim is to help. I dont know you so I wouldnt call you evil, but your actions are hurtful at best.

-burn8

 

[dbphoenix]

So the only two options are over-paying them and welfare. Do you really believe that?

You want to keep them under your thumb by giving them just enough to not want to do anything more - in effect you want to pay them to remain poor. Your claim is to help. I dont know you so I wouldnt call you evil, but your actions are hurtful at best.

-burn8

Underpaying them hasn't worked so well so far.

 

[piezoe]

>>"... Labor is traded in the free market just like shares of AAPL or GOOG."

This is only true in economic textbooks and in Libertarian Heaven. In the real world there is seldom anything like a "free market" in minimum wage labor. Nothing could be further from the truth than this statement of yours above. It is a falsehood. There is nothing like a free market when it comes to current minimum wage workers in the U.S.

There are three participants in the minimum wage labor market: government, business, and labor. Two sides hold most of the cards. If you turned the labor market upside down, you'd have labor holding most of the cards, and once again you'd have nothing like a free market. Free markets require that the participants have reasonable choices between alternatives. Your premise is wrong. You can see that clearly, if you take the time to define what it is you mean by "free market" and then attempt to apply your definition to the U.S. minimum wage labor market.

 

[wheaties]

>> There is nothing like a free market when it comes to current minimum wage workers in the U.S.
So how does it work? When the cook shows up at MCD every day he is not shackled and handcuffed. He shows up of his own free will.
>> Free markets require that the participants have reasonable choices between alternatives.
If the cook finds a job that pays .25/hr more he quits, right? Are there not gas stations and restaurants and retail shops on practically every street corner in every city in this land? How many alternatives do you need?
Please articulate the forces that have caused the market for minimum wage labor (or any labor market) to become as skewed as you think it is. Be specific. Let me point out that migrant works have bypassed the safety net of the minimum wage and have chosen to work for some lesser amount. These workers are quite mobile (hence the term migrant) and will return to their native lands if conditions there become more favorable than in the US. In any case we are seeing supply and demand at work as these workers willfully choose their employment or lack thereof.

I will admit that big business has the upper hand in dealing with the little man simply because they can cause him hardship and misery. But wealth has power in every culture, nation, and economic system. Thats just the way the world works. Sorry. In the context of this country as a whole and over the long term, the value of labor is is dictated by the law of supply and demand.
This issue might become clearer for you if instead of dealing with minimum wage workers we discussed some other type of worker... lets say for example.... computer programmers. I am a computer programmer. I am a contractor which means I work by the hour. I compete with other developers for work -- I scan the job boards and talk with recruiters daily (I am looking for my next gig). Let me assure you the market for my labor is quite elastic - when too many developers are competing for the same job wages go down. Fast! Now let me ask you - do you think I would want the government to set a minimum for my labor that is 2x what I make now? Heck no! No, I DO NOT want a 2x raise!! Why? Because if the government did that there would a rush of new developers entering the market trying to make a money grab, and more importantly, many potential employers would delay or eliminate projects that require my skills. Basically any kind of manipulation of the rate for my labor would almost certainly have a negative impact on me - even 5 or 10 percent. So how do I get a raise? I learn new languages and new skills (which is what I should be doing instead of writing this ridiculously long post). Seriously, I study every night and almost every weekend to stay competitive and keep my skills current.
Now here is the bottom line. Burger flippers are no different than computer programmers. Although it is heartbreaking to acknowledge their low income plight, you can be assured that their wage is dictated by same LAWS of supply and demand that my wage is. If they want to earn what a manager does than they have to do the work. Period. Passing a law raising their salary is pointless as many other posters have articulated quite well.

OMG I've said far too much... sorry.