NationStates Jolt Archive

Mythology of the Minimum Wage
by DW MacKenzie

Once again politicians and pundits are calling for increases in the legal minimum wage. Their reasons are familiar. Market wages are supposedly immoral. People need to earn a "living wage." If the minimum wage went up at least to $7, or better still to near $10 an hour, millions would be lifted out of poverty.[1]

The economic case against minimum wage laws is simple. Employers pay a wage no higher than the value of an additional hour's work. Raising minimum wages forces employers to dismiss low productivity workers. This policy has the largest affect on those with the least education, job experience, and maturity. Consequently, we should expect minimum wage laws to affect teenagers and those with less education. Eliminating minimum wage laws would reduce unemployment and improve the efficiency of markets for low productivity labor.

There are a few economists who have been leading the charge for higher minimum wages. Some of these economists have obvious ideological leanings. Economists connected with the Left -orientated Economic Policy Institute and the Clinton Administration have concocted a rational for minimum wage increases. According to these economists higher wages make employees more content with their jobs, and this leads to higher worker productivity. Thus workers will be worth paying a minimum wage once their employers are forced to pay these wages. Of course, if this were true — if employers could get higher productivity out of less educated and experienced workers by paying higher wages — they would be willing to do this without minimum wage legislation. But the economists who make this case claim to have empirical evidence that proves them right. Economists David Card and Alan Krueger have published studies of the fast food industry indicated that small increases in the minimum wage would cause only minor job losses, and might even increase employment slightly in some instances. These studies by Card and Krueger show only that a small increase in minimum wage rates might not cause much of an increase in unemployment. Such studies ignore the fact that the current level of minimum wages are already causing significant unemployment for some workers.

The economic case for minimum wage increases has gained some ground with public and even professional opinion. Even some free market leaning economists, like Steven Landsburg, have conceded that minimum wages increases do not affect employment significantly.[2] Landsburg notes that critics of minimum wage laws emphasize that they have a disproportionate effect on teens and blacks. But he dismisses these critics because "minimum wages have at most a tiny impact on employment … The minimum wage kills very few jobs, and the jobs it kills were lousy jobs anyway. It is almost impossible to maintain the old argument that minimum wages are bad for minimum-wage workers."

Real statistics indicate that the critics of minimum wage laws were right all along. While it is true that minimum wages do not drive the national unemployment rate up to astronomical levels, it does adversely affect teenagers and ethnic minorities. According to the Bureau of Labor Statistics the unemployment rate for everyone over the age of 16 was 5.6% in 2005. Yet unemployment was 17.3% for those aged 16-19 years. For those aged 16-17 unemployment was 19.7%. In the 18-19 age group unemployment was 15.8%. Minimum wage laws do affect ethnic minorities more so than others.[3] The unemployment rate for white teens in the 16-17 age group was 17.3% in 2005. The same figures for Hispanic and black teens were 25% and 40.9% respectively. Of course, these figures decrease for older minorities. Blacks aged 18-19 and 20-24 had 25.7% and 19.9% unemployment in 2005. For Hispanics unemployment was slightly lower — 17.8% at age 18-19 and 9.6% at age 20-24.

Landsburg might maintain that most of these lost jobs are lousy jobs that teens will not miss. DeLong thinks that minimum wage laws can help to avert poverty — workers who keep their jobs at the minimum wage gain much, while unemployed workers lose little. Part of the problem with this argument is that it involves arbitrary value judgments. According to mainstream economic theory, we achieve economic efficiency when markets clear because this is how we realize all gains from trade. With teen unemployment in double digits — running as high as 40.9% — it is obvious that some labor markets are not clearing. If labor market imperfections led to such levels of unemployment, economists like DeLong, Card, and Krueger would call for government intervention to correct these "market failures." Yet they find double digit teen unemployment acceptable when it derives from government intervention. Why? Because they want to use such policies to redistribute income.[4]

Mainstream economic theory lacks any basis for judging the effects of income redistribution. According to textbook economics we attain the highest level of economic efficiency when markets clear, when we realize the maximum gains from mutually advantageous trade. Income transfers benefit some at the expense of others. Economists have no scientific methods for comparing gains and losses through income transfers.[5] Once economists depart from discussing efficiency conditions and begin to speak about income redistribution, they become advocates of a political agenda, rather than objective scientists. The jobs lost to minimum wage laws might not seem worthwhile to DeLong or Landsburg, but they obviously are worthwhile to the workers and employers whom these laws affect. Why should the value judgments of a few armchair economists matter more than the interests of would be employees and employers? These jobs may be "lousy jobs," but one could also argue that these jobs are quite important because they are a first step in gaining job experience and learning adult responsibility.

A second problem with the case against minimum wages is that they affect older workers too. As already noted, workers in the 20-24 age group appear to be affected by minimum wage laws. Unemployment rates in the 25-34 age group are higher than for the 35-44 age group. The unemployment rate for blacks and Hispanics aged 25-34 were 11.1% and 5.8% in 2005. Unemployment for whites and Asians in this age group were 4.4% and 3.5%. In the 35-44 age group the unemployment rates for these four ethnicities were 7.2%., 5.1%, 4.4%, and 2.7%. A comparison of black to Asian unemployment is revealing. In the United States, Asians tend to attain higher levels of education than blacks. Thus minimum wage laws are relatively unimportant to Asian Americans. Consequently, Asians are able to attain unemployment as low as the 2-3% range. For Asians aged 16+ the unemployment rate was only 3.3% in 2005. For Asians in the 20-24 age group unemployment was 5.1%. These figures are only a fraction of the unemployment rates experienced by blacks in 2005. There is no reason why white, Hispanic, and black Americans cannot also reach the 2-3% range of unemployment.

Supporters of minimum wage laws do not realize that prior to minimum wage laws the national unemployment rate did fall well below 5%. According to the US Census, national unemployment rates were 3.3% in 1927, 1.8% in 1926, 3.2% in 1925, 2.4% in 1923, 1.4% in 1919 and 1918, 2.8% in 1907, 1.7% in 1906, and 3.7% in 1902.[6] Even today, some states have unemployment rates as low as 3%. Virginia now has an unemployment rate of 3.1%. Wyoming has an unemployment rate of 2.9%. Hawaii has an unemployment rate of 2.6%. National unemployment rates seldom drop below 5% because some categories of workers are stuck with double digit unemployment. Given these figures, it is quite arguable that minimum wage laws keep the national unemployment rate 3 percentage points higher than would otherwise be the case.

Economist Arthur Okun estimated that for every 1% increase in unemployment GDP falls by 2.5-3%. If minimum wage laws are responsible for keeping the national unemployment rate 3 percentage points above where it would otherwise be, then the losses to minimum wage unemployment are substantial. Since Okun's law is an empirical proposition it is certainly not constant. Eliminating minimum wages might not increase GDP as much as this "law" indicates. However, the elimination of minimum wage laws would surely have a positive effect on GDP. In any case, economic theory and available data indicate that minimum wage laws do result in economic inefficiency. The implementation of a "living wage" would only increase these losses. Do proponents of living wages really want to see unemployment rates among ethnic minorities and teens climb even higher?

The economic case for a living wage is unfounded. Current minimum wage rates do create high levels of unemployment among low productivity workers. Higher "living wages" would only make these problems worse. The alleged moral case for a living wage ignores the fact that minimum wage increases adversely affect the very people whom advocates of living wages intend to help. If politicians wish to pursue sound policies, they should consider repealing minimum wage laws, especially where teens are concerned. Unfortunately, most politicians care more about political expediencies than sound economic policy. This being the case, minimum wages will increase unless public opinion changes significantly.


[1 (http://www.mises.org/story/2130#_ftnref1)] See Dreier and Candeale A Moral Minimum Wage (http://www.thenation.com/doc/20041220/dreier), April 27 2006 and Cauchon States Say 5.15 too little (http://www.usatoday.com/news/washington/2005-05-30-minimum-wage_x.htm) April 27 2006.

[2 (http://www.mises.org/story/2130#_ftnref2)] See "The Sin of Wages (http://www.slate.com/id/2103486/)" by Steven Landsburg and "The Minimum Wage and the EITC (http://www.j-bradford-delong.net/movable_type/2004_archives/001170.html)" by J. Bradford DeLong.

[3] This is likely due to the poor quality of many inner city public schools.

[4] It is worth noting that Landsburg opposes redistribution via minimum wage laws.

[5] This would require interpersonal comparisons of welfare. Robbins (1933) proved that such comparisons are unscientific.

[6] US Bureau of the Census Historical Statistics p135.

Now, applaud, attack, laud, flame, or debate this article to your heart's content.

Oh, and here's the link: http://www.mises.org/story/2130

So the message is what?

Abolish the minimum wage so salaries can go back down to a dollar or two an hour so they won't get fired for lack of productivity?

The market will not pay "fair" wages. I remember my first job I worked my ass off and was praised to no end. My reward. A nickel an hour more.

I left and they didn't care as they just hired somebody else.

The ultimate of no minimum wage is slavery. Except in slavery the owner cared if the workers remianed healthy and survived because he couldn't replace them without additional cost. With no slavery and no minimum wage, workers become disposable cogs.

The Abolishment of Minimum Wage is based on the same deluded notion of corporate altruism that fuels Supply Side Economics: Basically the idea that giving companies more money will enable them to give more money to their employees and thus consumers.

Corporations never give more than they are forced to and will gladly take more than they have to whenever the chance is presented. Otherwise there would have been no such thing as an outsourcing epidemic in the United States.

Abolish the minimum wage so salaries can go back down to a dollar or two an hour so they won't get fired for lack of productivity?

Emotional pony pucks.

What drives increases in real wages is increases in productivity.

The market will not pay "fair" wages. I remember my first job I worked my ass off and was praised to no end. My reward. A nickel an hour more.

An anecdote is not evidence, nor is your own assessment of the value of your work in terms of the marginal utility.

The Abolishment of Minimum Wage is based on the same deluded notion of corporate altruism that fuels Supply Side Economics: Basically the idea that giving companies more money will enable them to give more money to their employees and thus consumers.

You clearly don't understand free market economics.

The raising of wages has nothing to do with altruism, and everything to do with marginal utility, competition, and supply and demand.

Supply siders believe nothing of the sort, they believe that tax cuts will free up money which can be invested in more production.

In any case, the abolition of the minimum wage is hased on the fact that if you hold prices above the market clearing level, a surplus is the result. People buy less of a commodity than is offered for sale. A surplus of labour is called unemployment.

The ultimate of no minimum wage is slavery. Except in slavery the owner cared if the workers remianed healthy and survived because he couldn't replace them without additional cost. With no slavery and no minimum wage, workers become disposable cogs.

Horse hockey.

I think that the minimum wage is fine for teenagers but certainly not for people with families. I hesitate to say that we should raise it, though, because most adults who earn minimum wage hardly contribute that much to the companies they work for, in my observation. I live in a state with wages near the bottom of the barrel, comparatively, and I never worked for less than $8 since I was 16. I'm sorry, but picking up toys at Wal-Mart that have been knocked onto the floor and providing no customer assistance (in English) is something most eight-year-olds could do. I was probably more responsible when I was 8...
*edit* And this teen unemployment BS isn't accurate. Most teens today have everything handed to them. Why would they work? They live with their PARENTS...

You clearly don't understand free market economics.

The raising of wages has nothing to do with altruism, and everything to do with marginal utility, competition, and supply and demand.

Supply siders believe nothing of the sort, they believe that tax cuts will free up money which can be invested in more production.

In any case, the abolition of the minimum wage is hased on the fact that if you hold prices above the market clearing level, a surplus is the result. People buy less of a commodity than is offered for sale. A surplus of labour is called unemployment.

I'm no economics major but I know more than you assume. You also conveniently declined to reply to my second paragraph which contains a key argument to my case against abolishing minimum wage. Corporations will not pay a realistic living wage to low-level employees unless they are forced to by government. If anything they consistently seek to reduce overhead by any means, with outsourcing being the most en vogue means currently. Abolishing Minimum Wage would simply be an overhead reduction that will be utilized to a ridiculous amount as allowed by law.

If Minimum Wage was abolished, there would likely be a Wal-Marting of various blue-collar entry-level jobs where the wages substantially decline. Likely some companies in desperate need of labor will set their wages to a comparatively attractive level but eventually there will be corporate collusion to set the informal minimum wage to a level that comes dangerously close if not hitting smack dab on the Third World Sweatshop Rate of Pittance.

Trickle-down economics:

The government cuts taxes on the rich and they piss all over the rest of us, and it trickles down.

I think that the minimum wage is fine for teenagers but certainly not for people with families. I hesitate to say that we should raise it, though, because most adults who earn minimum wage hardly contribute that much to the companies they work for, in my observation. I live in a state with wages near the bottom of the barrel, comparatively, and I never worked for less than $8 since I was 16. I'm sorry, but picking up toys at Wal-Mart that have been knocked onto the floor and providing no customer assistance (in English) is something most eight-year-olds could do. I was probably more responsible when I was 8...
*edit* And this teen unemployment BS isn't accurate. Most teens today have everything handed to them. Why would they work? They live with their PARENTS...

Teenagers work because living with your parents doesn't pay for college or get you a car. The things one needs to aquire en route to adulthood aren't just given as gifts from mommy and daddy.

I agree with the article 100%.

The only trouble I have is with a small partical of reality that points out that the last time the U.S. increased minimum wages nothing bad happened. In fact the economy boomed. Since the last increase has almost all been eaten away be inflation this small particle of reality makes me think that an increase to $7 an hour wouldn't really hurt.

And why is business so anti minimum wage increase in America? In other countries businesses that cater to working class people are often pro wage increase because they recognise that their customers will have more money to spend.

And why is business so anti minimum wage increase in America? In other countries businesses that cater to working class people are often pro wage increase because they recognise that their customers will have more money to spend.

Because in the United States, an atmosphere of corporate prostitution and welfare has been a long standing tradition along with the myth that the poor are poor simply because they're lazy good-for-nothings.

What increasing, or keeping the minimum wage will do is simply force US firms to hire illegal immigrants for low skilled jobs, and outsource everything else.

This is already happening. Labour costs in the US are too high, so the firms are looking for a better price.

If we were discussing the buying of computers, and I told you that I shopped around several places looking for the best computer at the lowest price, you'd think me a prudent buyer.

Exactly why you would think that an employer is anything other than prudent for doing the same thing is a mystery.

Likely some companies in desperate need of labor will set their wages to a comparatively attractive level but eventually there will be corporate collusion to set the informal minimum wage to a level that comes dangerously close if not hitting smack dab on the Third World Sweatshop Rate of Pittance.

Leaving out the emotional mule fritters, collusion cannot stand in a free market. In the scenario you describe, it pays for firms to increase their wages in order to attract good workers. The collusion wouldn't stand because one firm in the cartel would decide to pay more, perhaps offering non-monetary incentives so as to evade the watch of the cartel, in order to get good workers from the other firms.

Corporations will not pay a realistic living wage to low-level employees unless they are forced to by government.

That is an untested hypothesis, and is backed by spurious logic.

Your second paragraph contained little of insight, unless you think you're making a profound statement when you point out that the aim of any buyer is to obtain the maximum for the minimum cost, just as the aim of the seller is to obtain the maximum price for the minimum of commodity sold.

I can't believe this corporatist bullshit is raising it's head again. They've been trying this since WW1 -- and failing, I might add, because people are not stupid enough to work for free.

Footnote 2 in the OP article mentions "The Sin of Wages" by Steven Landsburg. This piece of "the peasants are revolting" nonsense came out when Reagan was president (big surprise), and it was tout le rage at all the corporate management seminars. Click on the title in the footnote and it takes you to an essay by Landsburg at Slate.com which includes the following:
The minimum wage is nothing but a huge off-the-books tax paid by a small group of people, with all the proceeds paid out as the equivalent of welfare to a different small group of people. If a tax-and-spend program that arbitrary were spelled out explicitly, voters would recoil. How unfortunate that when it is disguised as a minimum wage, not even our Republican president can manage to muster a principled objection.

This is the ultimate lie of this entire concept. People like Landsburg like to act like wages are a gift. No, they are not a gift given out of misguided altruism. And they're not like rent, either, which is paid in advance of use. And they are not a tax, by which he means a cost for which the employer receives no benefit. Wages are a debt owed to the worker for labor/services already performed. They did the work. You* owe them the money. Period. They don't owe you a damned thing because the paycheck is the payment of your debt to them, not some contract for the future. Period. (*rhetorical "you.") Every time the paycheck is delivered, the work contract is complete. Each new week starts a new employment period in which the employer incurs a debt to the worker. Period.

The only thing to debate is how much the wage will be. How much is a job worth? We can answer that by asking "How much does your business need it?" You need the workers at least as much as they need you -- and if you have competitors, then they need you less. Workers need to recognize that they have both the ability and the right to negotiate their pay and not settle for less than they can live on. And they don't necessarily need unions for this. I support unions wholeheartedly, but I've never worked in a unionized business. I negotiated every wage I got for the last 20 years. Everyone can do it.

But goons like this Landsburg act like workers should have some kind of religious vocation to work for them. Please. :rolleyes:

Teenagers work because living with your parents doesn't pay for college or get you a car. The things one needs to aquire en route to adulthood aren't just given as gifts from mommy and daddy.

You're telling me that only 17% or so of teenagers have parents that provide a car and college tuition? Maybe in Mexico... Certainly no teenager ever procrastinated saving for college until after highschool graduation. A lot of kids that I went to highschool with didn't have jobs. They walked or were spoiled.

And why is business so anti minimum wage increase in America? In other countries businesses that cater to working class people are often pro wage increase because they recognise that their customers will have more money to spend.

Wal-Mart is on record as supporting an increase in the minimum wage.

Of course, Wal-Mart is in favour of any government measure that destroys its competition.

What increasing, or keeping the minimum wage will do is simply force US firms to hire illegal immigrants for low skilled jobs, and outsource everything else.

This is already happening. Labour costs in the US are too high, so the firms are looking for a better price.

If we were discussing the buying of computers, and I told you that I shopped around several places looking for the best computer at the lowest price, you'd think me a prudent buyer.

Exactly why you would think that an employer is anything other than prudent for doing the same thing is a mystery.

Think of it this way then. Reducing the amount that companies have to pay workers is an economic inbreeding that leads to drain and stagnation. Take example with Wal-Mart, where a significant number of employees often end up
applying for state welfare- which of course sucks the state's budget significantly when added up over time.

Reducing the workers' wages in turn reduced their spending power as a consumer, which will then eventually affect the companies' revenue and lead to the surplus of labor which you described as there are more workers than products being sold or service being rendered which leads to the company slashing the excess workforce and the cycle repeats. In effect, paying an unreasonable wage to employees is financial anorexia.

Leaving out the emotional mule fritters, collusion cannot stand in a free market. In the scenario you describe, it pays for firms to increase their wages in order to attract good workers. The collusion wouldn't stand because one firm in the cartel would decide to pay more, perhaps offering non-monetary incentives so as to evade the watch of the cartel, in order to get good workers from the other firms.

Again, if the companies involved in the collusion all agreed to pay the same lowly amount of wage, there wouldn't be any visible alternatives for workers to turn to within the country. In effect it would become a cartel monopoly on worker wages.

That is an untested hypothesis, and is backed by spurious logic.

Your second paragraph contained little of insight, unless you think you're making a profound statement when you point out that the aim of any buyer is to obtain the maximum for the minimum cost, just as the aim of the seller is to obtain the maximum price for the minimum of commodity sold.

About as spurious as the numerous state lawsuits against Wal-Mart for paying substandard wages to employees and offering no health care coverage which forces the said employees to drain the states' budget through welfare applications.

It's also a zero-sum situation. When everyone wants to buy low and sell high I think there's going to be a problem akin to Too Many Chiefs Not Enough Braves where there's nothing to balance out the intake.

Since the purpose of business is to sell the least expensive product at the highest price, perhaps we should instead have a maximum wage law. If we don't waste 400 million dollars compensating CEO's maybe there will be more money for the workers who actually get the work done. There seems to be a fallacious thought that somehow a CEO's time is more valuable than the person who actually gets the work accomplished. While I will concede that the CEO is important in organizing the place where labor needs to be focused any monkey in a suit could do as well.

Reducing the amount that companies have to pay workers is an economic inbreeding that leads to drain and stagnation.

There are jobs that pay above the minimum wage.

Take example with Wal-Mart, where a significant number of employees often end up applying for state welfare- which of course sucks the state's budget significantly when added up over time.

That is the State's problem, not the employers, and is best solved by better management of the budget, and the government's programs. Employers already pay for those welfare programs through their taxes.

Reducing the workers' wages in turn reduced their spending power as a consumer, which will then eventually affect the companies' revenue and lead to the surplus of labor which you described as there are more workers than products being sold or service being rendered which leads to the company slashing the excess workforce and the cycle repeats. In effect, paying an unreasonable wage to employees is financial anorexia.

Since when did the minimum wage have anything to do with real wages. Incidently, since 1980, the minimum wage has been raised from $3.10 to $5.15, yet they have declined in real terms by 30%.

What the minimum wages doesn and what increasing it does is arbitrarily raise labour costs, which raises prices, which means that by the time the worker gets around to spending his increased pay packet, he can buy less with it.

Again, if the companies involved in the collusion all agreed to pay the same lowly amount of wage, there wouldn't be any visible alternatives for workers to turn to within the country. In effect it would become a cartel monopoly on worker wages.

Why would they agree to do that? Each company in the cartel is out to maximise his own profits, and since your contrived cartel is price fixing in labour, it profits each member of the cartel to evade its arrangements, and offer higher wages to attract better workers.

It's also a zero-sum situation. When everyone wants to buy low and sell high I think there's going to be a problem akin to Too Many Chiefs Not Enough Braves where there's nothing to balance out the intake.

No, it isn't. It means that buyers and sellers must come to a compromise between each parties' desires. This compromise can be termed the market clearing price.

Incidently, this compromising has gone on without government intervention for a very long time.

Since the purpose of business is to sell the least expensive product at the highest price, perhaps we should instead have a maximum wage law. If we don't waste 400 million dollars compensating CEO's maybe there will be more money for the workers who actually get the work done. There seems to be a fallacious thought that somehow a CEO's time is more valuable than the person who actually gets the work accomplished. While I will concede that the CEO is important in organizing the place where labor needs to be focused any monkey in a suit could do as well.

Here here. From what little I know of economics, the incomes of CEO's are one of those anomalous elements of capitalism that can't be altered in by any means other than federal/state intervention. (i.e. as opposed to the exorbitant income of movie stars and sports players, which can be regulated by the amount of credence the general public gives them and/or their services.)

In fact, I'm going to be so bold as to say that if this problem were rectified, much of the other issues would be (at least minimally) mitigated as well.

You're telling me that only 17% or so of teenagers have parents that provide a car and college tuition? Maybe in Mexico... Certainly no teenager ever procrastinated saving for college until after highschool graduation. A lot of kids that I went to highschool with didn't have jobs. They walked or were spoiled.

Spoiled kids get cars.

The rest of us work to be able to afford them.

What drives increases in real wages is increases in productivity.

good luck explaining the wage situation in america then, cause it's not like productivity has stagnated or fallen since the 70s.

..the article mis-states Chad and Kreuger's reasonings.

What they were saying is that a higher minimum wage encourages unemployed people to seek out jobs, because they know their efforts will receive a minimum payment in return. Because of these increased numbers who seek out jobs, more employers can afford to maintain their wages at the minimum. If there was no minimum wage, finding a job that paid enough would require more effort for the job-seeker and at a certain point (especially among teens who work more from desire for extras than need) they simply don't bother looking. This results in a smaller labour pool, which in theory should result in higher wages. Unfortunately, theory rarely takes into account that employers don't have perfect information and, like with pricing, are often simply guessing at what makes a good wage. Some will, given a shortage, offer far too much for the work they require (thus hampering their business as much or more than a minimum wage) while others will continue to offer too little, and so go for a longer period without being fully staffed, leading to inefficiencies in their business as well.

In short, minimum wage smoothes out the peaks and valley of the low-wage bracket, making it more predictable, hence more attractive for job-seekers and more stable for minimum wage employers.

Increasing minimum wage, then, increases the threshold that these peaks and valleys are smoothed for. The trick is trying to make the minimum wage as close as posible to the threshold where the majority of low wage job-seekers stop looking without making it so much above that it hurts the low-paying businesses. As the cost of living goes up, this threshold naturally rises.

Disraeliland, you seem to assume that companies will pay their employees fairly even without minimum laws.

That’s pure bull…

In all the jobs I’ve had so far, and it’s been quite a few by now, I have gotten nothing but the bare minimum. Nothing more, nothing less. Why should the companies pay more than strictly necessary? Especially when their principal customers are other companies and not the common man…

That’s the kind of attitude that drives McDonald and their like. "You don’t like our low wages and generally shitty work environment? You don’t like it here? Go take a hike then…" And every time you go to get a burger the entire staff has been changed because no-one wants to work there for more than a few weeks…

If anything, minimum wages needs to be increased so that the common worker gets an economic boost and is able to spend more money…

<snip>
If anything, minimum wages needs to be increased so that the common worker gets an economic boost and is able to spend more money…

That is faulty logic which only drives inflation. In the perfect system inflation would be nonexistent. With no mandated wage increases. The goal should be to make it desirable to pay a living wage.

The proles can not be trusted to be content with the meager pay that their work actually deserves. A minimum wage is necessary to keep short-sighted businessman from inadvertently spawning a revolution. Besides, outsourcing has proven to be an acceptable solution to the problem as long as you’re neither a nationalist nor a humanitarian.

The proles can not be trusted to be content with the meager pay that their work actually deserves. A minimum wage is necessary to keep short-sighted businessman from inadvertently spawning a revolution. Besides, outsourcing has proven to be an acceptable solution to the problem as long as you’re neither a nationalist nor a humanitarian.

Once again Undelia your response makes me want to kick your mom in the ovaries for spawning such an unfeeling conceited synonym for male reproductive organ.

Emotional pony pucks.

What drives increases in real wages is increases in productivity.


sure it does. That's why people are working longer hours for less.


An anecdote is not evidence, nor is your own assessment of the value of your work in terms of the marginal utility.


:rolleyes: Of course a retarded worker never can see the full picture.

The proles can not be trusted to be content with the meager pay that their work actually deserves. A minimum wage is necessary to keep short-sighted businessman from inadvertently spawning a revolution. Besides, outsourcing has proven to be an acceptable solution to the problem as long as you’re neither a nationalist nor a humanitarian.

You've summed the world up nicely. :)

What increasing, or keeping the minimum wage will do is simply force US firms to hire illegal immigrants for low skilled jobs, and outsource everything else.


Ahh a job is better then no job arguement. So it's better to pay 2-5 an hour here right?

This is already happening. Labour costs in the US are too high, so the firms are looking for a better price.

That's fine. Bump up their taxes. If they create jobs here, give them breaks.


If we were discussing the buying of computers, and I told you that I shopped around several places looking for the best computer at the lowest price, you'd think me a prudent buyer.

A computer you can live without.

Exactly why you would think that an employer is anything other than prudent for doing the same thing is a mystery.

It's funny they want to pay shit and yet expect highly trained output.


Leaving out the emotional mule fritters, :rolleyes: Whatever dude.

collusion cannot stand in a free market.

Works rather well for coke and pepsi.


That is an untested hypothesis, and is backed by spurious logic.


Try reading about the work life in the late 1800s. Especially in the mines and factories.

So the message is what?

Abolish the minimum wage so salaries can go back down to a dollar or two an hour so they won't get fired for lack of productivity?

The market will not pay "fair" wages. I remember my first job I worked my ass off and was praised to no end. My reward. A nickel an hour more.

I left and they didn't care as they just hired somebody else.

I always find it amusing when I hear the anti-minimum wage doomsayers complaining about all that would happen if the minimum wage were increased.

"It would cause inflation"
"It would cause unemployment"
"It would cause more illegal immigration"

It would probably cause ozone depletion, global warming, and interracial marriages too if conservatives cared, and admited to caring, about those things.

What they never seem to realize is that several cities and states already increased their own minimum wages above the federal minimum, and everything that the doomsayers say would happen, doesn't.

And yet, conservatives don't seem to think that it's odd that there's no match-up between what would happen and what has happened. They've got an explanation as to why it would happen, and that trumps the fact that it hasn't and won't.

I think it's time for the right-wing economists to admit the real reason that they oppose the minimum wage hike. They know that it's good for people. Conservatives have a plethora of defenses for their positions whenever they seem to contradict what would be in accordance with a true conservative philosophy, but the common thread with all conservative positions is that it's always the more intolerant, cruel, and fearful position that is possible to take.

sure it does. That's why people are working longer hours for less.

perhaps when he says "real wages" he is actually talking about the wealth going to executives and stockholder. they certainly seem to be reaping the rewards of increased productivity.

That is faulty logic which only drives inflation. In the perfect system inflation would be nonexistent. With no mandated wage increases. The goal should be to make it desirable to pay a living wage.


True enough. However, I would rather live with a few percents of inflation and be able to pay my rent than live on the street…

..the article mis-states Chad and Kreuger's reasonings.

What they were saying is that a higher minimum wage encourages unemployed people to seek out jobs, because they know their efforts will receive a minimum payment in return. Because of these increased numbers who seek out jobs, more employers can afford to maintain their wages at the minimum. If there was no minimum wage, finding a job that paid enough would require more effort for the job-seeker and at a certain point (especially among teens who work more from desire for extras than need) they simply don't bother looking. This results in a smaller labour pool, which in theory should result in higher wages. Unfortunately, theory rarely takes into account that employers don't have perfect information and, like with pricing, are often simply guessing at what makes a good wage. Some will, given a shortage, offer far too much for the work they require (thus hampering their business as much or more than a minimum wage) while others will continue to offer too little, and so go for a longer period without being fully staffed, leading to inefficiencies in their business as well.

In short, minimum wage smoothes out the peaks and valley of the low-wage bracket, making it more predictable, hence more attractive for job-seekers and more stable for minimum wage employers.

Increasing minimum wage, then, increases the threshold that these peaks and valleys are smoothed for. The trick is trying to make the minimum wage as close as posible to the threshold where the majority of low wage job-seekers stop looking without making it so much above that it hurts the low-paying businesses. As the cost of living goes up, this threshold naturally rises.
Thank you, Mr. Waterkeep, for pointing out the reason I continue to support minimum wage laws, despite my Libertarian view of economics.

Disraeliland, you seem to assume that companies will pay their employees fairly even without minimum laws.

He has said nothing of the sort. What he's trying to say is that the companies will pay the worker what their labor is worth to the company--no more, no less.

Let me put it this way. Your neighbor, whether he's a landscaper, a day laborer, or a factory owner is not obligated to furnish a living for you or anyone else. If you have a service to offer him , you're free to offer it an haggle over the price as necessary. A lot of people here seem to be laboring under the notion that just because one person or one group of people might operate in an unscrupulous fashion, that everyone will hasten to do so in a free market system. I'm not going to deny that a few bad apples are going to try to fuck people over, but its interesting that so many of you "humanitarians" seem to be suggesting that everyone else on the planet [except for you of course] is willing to walk over a pile of corpses to acheive one's own ends. Maybe if you stopped whining about how heartless business owners are and started one yourself you could make your own little worker's paradise. Just don't expect it to last very long.

I'm a 21 year old blue collar worker. I load UPS trailers for about 5 hours every day: it's hard work and by the end of it I've probably lost a good pound or so in sweat. I'll be doing this for about another year, after which time I'm likely to make a bid for management. Just because I work my ass off doesn't mean I'm entitled to something greater than what the company is prepared to offer me--because I know I'm basically grunt work at this point. They need to have literally thousands of us working every day across the nation, and it's ridiculous to assume that they have an unlimited amount of money with which to pay us all ten or more dollars an hour.

Pay attention now because this last part is really important. Minimum wage is $5.15 but I have to date never worked a minimum wage job or anything near it. Federal regulations don't dictate wages and never have--the market does, and that's the main reason why [b]the wide majority of jobs in this country are not minimum wage ones. The people who are complaining that companies "won't pay fair wages" are quite clearly failing to recognize the patently obvious fact that the wide majority of them are paying well above--in some cases even double--the federal minimum wage. The reason they do this is because that labor is at this point more valuable to them than $5.15 on the hour. Raising the minimum wage again will only do two things: it will give the feds more money to piss away on stupid-ass programs like the War on Drugs/Terror/Poverty/Wool/Mohair/Honey/Corn/My Paycheck, and it will force employers to eliminate the workers whose labor actually is worth about $5.15 on the hour. The shame of it all is that the people who would be hurt most by such an increase [low-income earners] are likely to be the ones most angry about it if the bill doesn't end up passing.

I was wondering if this would catch your attention. ;)
He has said nothing of the sort. What he's trying to say is that the companies will pay the worker what their labor is worth to the company--no more, no less.


Actually that is you talking.

Companies will pay the cheapest they can. Not what the labor is worth. I remember one boss that would pull up the pay scales in Arkansas and Alabama and go into a long bitch about the work force being overpaid.

He got a tad nasty when somebody asked why didn't he live in Arkansas or Alabama(this was in California).

-edit-
I forgot to mention I had 2 jobs that paid the limit.

Companies will pay the cheapest they can. Not what the labor is worth. I remember one boss that would pull up the pay scales in Arkansas and Alabama and go into a long bitch about the work force being overpaid.

He got a tad nasty when somebody asked why didn't he live in Arkansas or Alabama(this was in California).
Of course they'll pay the lowest amount they can get away with; but they're not going to make it very far if $COMPETITOR offers a better package. Ever notice how if there's a gas station on either side of the street their prices will always be within about 1 cent or so of the other? It's the same principle.

Companies can't produce goods--i.e. they can't make the very products under your fingers, across from your eyes, or under your ass right now if they suddenly decide that the well-being of $CITIZEN is worth more to them than the production and sale of their chosen product. No employer in his right mind is going to pay a janitor $50,000 a year if he doesn't have to--it doesn't mean he's cruel or that he wants the janitor to live in a ditch, it just means he has a certain amount of overhead, and that money doesn't grow on trees [and ironically, if it did it wouldn't be worth anything and we'd all be worse off]. Cost effects and similar consequences don't just go away because we're "dealing with someone's livelihood."

Raising the minimum wage again will only do two things: it will give the feds more money to piss away on stupid-ass programs like the War on Drugs/Terror/Poverty/Wool/Mohair/Honey/Corn/My Paycheck, and it will force employers to eliminate the workers whose labor actually is worth about $5.15 on the hour. The shame of it all is that the people who would be hurt most by such an increase [low-income earners] are likely to be the ones most angry about it if the bill doesn't end up passing.

Actually, it won't do anything of the sort to employers. Minimum wage going up does not decrease demand after all. If anything, it tends to increase it slightly for the lower priced goods. This can lead to a small rise in price, but the rise in aggregate is generally less than the increase in the minimum wage. This is because of all the people earning more than minimum wage. They typically don't see an increase when minimum wage increases, meaning they actually compensate for that inflationary pressure as their real wages decline in comparison.

ie, If I'm making 5.50 and you're making 11.00, and my wage goes up by 50 cents, there will only be inflationary pressure on the products within my price range, not yours. However, since you've likely been buying products in my price range as well, the inflationary pressure I put on things by wanting more of them is partially compensated by you wanting less of them because they will cost a bit more than you were paying before.

So really, the people who are most hurt by a minimum wage increase are those who were making only slightly above it in the first place. Those at minimum wage benefit, essentially at the expense of those above it.

Actually, it won't do anything of the sort to employers. Minimum wage going up does not decrease demand after all. If anything, it tends to increase it slightly for the lower priced goods. This can lead to a small rise in price, but the rise in aggregate is generally less than the increase in the minimum wage. This is because of all the people earning more than minimum wage. They typically don't see an increase when minimum wage increases, meaning they actually compensate for that inflationary pressure as their real wages decline in comparison.
You seem to be ignoring the fact [unless I'm missing something, which is a possibility as it's 5am and I was busy workin' my blue collar job today ;) I can see your side's anecdotal arguments are valid and shoud be entertained by the opposition but it's okay to ignore mine] that an employer isn't obligated to keep all of his employees after a wage hike. He can just as easily fire them; and historically most employers have done so whenever wages get increased by a large enough margin. Saying it "won't do anything of the sort to employers" is another excellent example of burying one's head in the sand when it comes to the negative effects [of which there are many] to perpetuating such a ridiculous and wasteful policy.

Basically you're only looking at half of the picture. Sure, prices might rise, but so will unemployment, at least within certain largely racial demographics. IIRC, the proposed increase is something to the order of $7 an hour, which is an [i]enormous increase. If we raise our minimum wage to $7 an hour nationwide, Asia will eat us alive within 20 years, guaranteed. I like a little competition, but I also like to win. I'd prefer not to hand them an economic victory. Being number one owns.

ie, If I'm making 5.50 and you're making 11.00, and my wage goes up by 50 cents, there will only be inflationary pressure on the products within my price range, not yours. However, since you've likely been buying products in my price range as well, the inflationary pressure I put on things by wanting more of them is partially compensated by you wanting less of them because they will cost a bit more than you were paying before.

So really, the people who are most hurt by a minimum wage increase are those who were making only slightly above it in the first place. Those at minimum wage benefit, essentially at the expense of those above it.
No, those at minimum wage probably get their asses fired, and the people who were making just a bit above it are suddenly making minimum wage.

Besides, whos to say the rest of us won't start clamoring for wage increases as well? If the government thinks that all low-income earners are suddenly worth $2 more an hour [nevermind that they're not actually any more productive], why should I get screwed out of a bonus just because my boss was nice enough to pay me more? The inflationary effects of wage increases are far more wide-reaching than you seem to think, as a lot of companies like to attract workers by paying well above the minimum wage. Increasing the minumum wage will force companies that want to cultivate a "look at me, I pay more than he does!" image to increase everyone else's wage benefits as well. This means thinner profit margins, a greater possibility for layoffs, or both. Yes, corporations can potentially make lots of money, but that doesn't mean they have an infinite supply of it. Labor is the single largest expenditure in nearly any company already and increasing it to an outrageous extent [like, say, +$2 an hour for menial labor] will only cripple our economy in the long run. No politician will ever get away with actually lowering the minimum wage, so you're basically perpetuating an irreversable policy--a policy which has shown its economic detriments every time its been enacted since minimum wage legislation was passed in the first place. It might seem to you that a higher wage just makes for more spending power, but what good is that spending power when the company you got that wage from is forced to close out or outsource just to keep up with demand? It's not that simple and it never has been. Anyone who is wondering why America is being so seriously threatened by Asian markets need look no further than the sorry state of worker's rights and minimum wage in the US.

I guess it's gonna piss you guys off that I'm a student who works part time for £7 an hour ($13).

But my boyfriend works twice as hard as me and gets £5.

C'est la vie.

.....
Companies will pay the cheapest they can. Not what the labor is worth. I remember one boss that would pull up the pay scales in Arkansas and Alabama and go into a long bitch about the work force being overpaid.
.....
Companys happen to be bound by law to keep porits at a maximum, which means keeping costs at a minimum. So indeed, if a company is paying what labour is worth, say 50x, when it could be paying 3x, someone could be heading for a courtroom. Henry Ford did, for example.

If a company pays what the job’s worth, then why all the outsourcing? Because the job is worth as little as possible.
Why pay a Dane $10+ an hour to make shoes when a Chinese will do it for $1? Why pay a Danish computer scientist $20+ to write a program when an Indian computer scientist will do it for $10? The companies will always try to press the wages as low as possible.
Why would a company ever pay more than the bare minimum required? Either because the job is so shitty / unpleasant / dangerous that no-one is willing to do it unless offered a good pay, or because you happen to have to hard-to-find skills that they cannot find anywhere else. For anyone else, that means most ordinary workers, the company has no reason whatsoever to pay more than necessary.
That’s why we have Unions and minimum wages laws: to protect the little man. The average worker whom can be easily replaced if he complains.

I wonder if there is a correlation betweeon minimum wage increases and the avaliability of jobs to illegal immigrants? I would expect so. Raising min wage likely results in few jobs for Americans and more incentive (room) for illegals. Raising the minimum wage without addressing illegal immigration is futile.

If a company pays what the job’s worth, then why all the outsourcing? Because the job is worth as little as possible.
Why pay a Dane $10+ an hour to make shoes when a Chinese will do it for $1? Why pay a Danish computer scientist $20+ to write a program when an Indian computer scientist will do it for $10? The companies will always try to press the wages as low as possible.
Why would a company ever pay more than the bare minimum required? Either because the job is so shitty / unpleasant / dangerous that no-one is willing to do it unless offered a good pay, or because you happen to have to hard-to-find skills that they cannot find anywhere else. For anyone else, that means most ordinary workers, the company has no reason whatsoever to pay more than necessary.
That’s why we have Unions and minimum wages laws: to protect the little man. The average worker whom can be easily replaced if he complains.

It couldn't possibly be that the Dane is overcharging to do simple unskilled labor, no? IF it is cheaper to take the material to another countyr, pay someone else to assemble it, and ship it back to yours, and it STILL COSTS LESS than having it made domestically, then there is a serious problem with the domestic cost of labor. Outsourcing is very good for emerging markets since more jobs = less unemployment. It has worked in Taiwan, Hong Kong and now we are seeing evidence that it is working again in China.

I wonder if there is a correlation betweeon minimum wage increases and the avaliability of jobs to illegal immigrants? I would expect so. Raising min wage likely results in few jobs for Americans and more incentive (room) for illegals. Raising the minimum wage without addressing illegal immigration is futile.

There is such a correlation. It is in the economic interests of parties bound by regulation to evade it. An illegal who complains gets turned into the INS.

By the way, your last sentence is not a valid conclusion. If the minimum wage is raised, and the border is closed, all that companies will do is outsource.

If a company pays what the job’s worth, then why all the outsourcing? Because the job is worth as little as possible.

A buyer will try to get the most of a commodity for the lowest price. How insightful.

That’s why we have Unions and minimum wages laws: to protect the little man.

Except they don't protect him. They make it harder for him to buy what he wants and needs by arbitrarily increasing prices, and make it harder for him to get a job.

I always find it amusing when I hear the anti-minimum wage doomsayers complaining about all that would happen if the minimum wage were increased.

"It would cause inflation"
"It would cause unemployment"
"It would cause more illegal immigration"

It would probably cause ozone depletion, global warming, and interracial marriages too if conservatives cared, and admited to caring, about those things.

What they never seem to realize is that several cities and states already increased their own minimum wages above the federal minimum, and everything that the doomsayers say would happen, doesn't.

And yet, conservatives don't seem to think that it's odd that there's no match-up between what would happen and what has happened. They've got an explanation as to why it would happen, and that trumps the fact that it hasn't and won't.

I think it's time for the right-wing economists to admit the real reason that they oppose the minimum wage hike. They know that it's good for people. Conservatives have a plethora of defenses for their positions whenever they seem to contradict what would be in accordance with a true conservative philosophy, but the common thread with all conservative positions is that it's always the more intolerant, cruel, and fearful position that is possible to take.

If you can't make an argument, simply don't hit the reply button. Insulting people for disagreeing with you simply makes you look fearful and stupid.

perhaps when he says "real wages" he is actually talking about the wealth going to executives and stockholder. they certainly seem to be reaping the rewards of increased productivity.

Colour me unsuprised, you don't even know what a "real wage" is, yet you presume to post on a thread dealing with how workers are paid. Talk about conceit.

Real wages represent what you can buy with your wages.

Let us take two workers in two different countries.

Worker A makes $0.50 a week. With that fifty cents, he can pay his rent and bills, buy all the food etc he needs, and still have a little for a rainy day.

Worker B makes $100/hr. He has been served with an eviction notice for not paying his rent on time, he is just eating, and the bank manager would like a word with him.

Worker B has a higher wage rate. Worker A has a higher real wage.

Is that simple enough, or would crayon be more suitable?

Ahh a job is better then no job arguement. So it's better to pay 2-5 an hour here right?

Are you saying that it is better to have nothing, than have a little?

That's fine. Bump up their taxes. If they create jobs here, give them breaks.

So, if they stay in the US, their costs are too high, and they'd be put out of business. If they leave, their costs are too high and they'd be put out of business.

If you give them breaks, something elsewhere has to give, remember that all government expenditure must come from taxation. A reduction in taxation somewhere necessarily requires a reduction in spending sometime, or an increase of taxation elsewhere. (As for deficits, they must be paid eventually, and they can only be paid in the end by taxation)

All you'd really do is make domestic production a worse option than imports generally.

A computer you can live without.

A meaningles statement if ever I heard one.

It's funny they want to pay shit and yet expect highly trained output.

Yet another meaningless statement.

You ought to know that what happens is that sellers and buyers (if they are not prevented by state coercion) come to a compromise at which the seller is willing to sell, and the buyer willing to buy. This is called the "market clearing price", as I said before, and you completely ignored.

If anything, minimum wages needs to be increased so that the common worker gets an economic boost and is able to spend more money…

See real wages. Anyway, were that really the point, then it is entirely unnecessary. If all you want to do is effect a purchasing power increase through the use of government force, then all the government need do is give people a certain amount of money.

It couldn't possibly be that the Dane is overcharging to do simple unskilled labor, no? IF it is cheaper to take the material to another countyr, pay someone else to assemble it, and ship it back to yours, and it STILL COSTS LESS than having it made domestically, then there is a serious problem with the domestic cost of labor. Outsourcing is very good for emerging markets since more jobs = less unemployment. It has worked in Taiwan, Hong Kong and now we are seeing evidence that it is working again in China.

Of course it works – that was my point. A company will always try to minimize wages, even to the point of moving the entire production to the Far East. Therefore laws are needed to ensure minimum wages for all workers.

And yes, we Danes are overcharging for our work. But with a tax rate between 40 and 60 percent, we need a big income to be able to live. But then again, the western economic system is completely FUBAR’ed…


Except they don't protect him. They make it harder for him to buy what he wants and needs by arbitrarily increasing prices, and make it harder for him to get a job.

If you’re thinking about outsourcing, then yes, it does cost jobs. But that is an unfortunate side effect of the western system – not much that can’t be done about it.

I hesitate to say that we should raise it, though, because most adults who earn minimum wage hardly contribute that much to the companies they work for, in my observation.
Really? How about you imagine your local Wal Mart with no cashiers, no shelf stockers, no greeters (ok, so the greeters are useless) basically nothing but managment. Now try to buy something. Minimum wage workers are the backbone of retail unless you live in a big city, then generally wages go up because the cost of living is higher.

At any rate, demolishing minimum wage to increase employment is like the argument for using sweatshop labour, saying that well, some money, even if you can't live off it, is better than no money. Which is total bullshit. If you don't think that Wal Mart and McDonald's, companies that have enormous profits already can't afford to pay their minimum wage employees better then you have some serious issues.

They've been raising minimum wage here (Ontario) for the last couple years... not sure if it applies to all of Canada or not. Anyway, the idea is that minimum wage will go up to $8.00/hr next year, I think.
This is what happens, step by step:
1- Gov't pats itself on the back for giving people more money.
2- Companies pay their employees more.
3- Companies see a dip in their profits, and raise prices of their goods or services.
4- People moan and groan because prices of things go up, and they need more money.
5- Rinse and repeat.

With the first pay raise that was dished out, wages went up by something like $0.25/hour, and the price of bread went up $0.10. And that was just one thing. A LOT of very basic things increased in price when minimum wage went up. So, I think effectively the poverty line goes up with minimum wage increases, which only serves to make the poor feel even MORE poor.

With the first pay raise that was dished out, wages went up by something like $0.25/hour, and the price of bread went up $0.10.
It went up $0.30 an hour and the price of bread stayed the same, I don't know what the people in your town's grocery store did, but the prices here stayed the same.

And that was just one thing. A LOT of very basic things increased in price when minimum wage went up. So, I think effectively the poverty line goes up with minimum wage increases, which only serves to make the poor feel even MORE poor.
As someone who was earning minimum wage at the time, it certainly did not make me feel more poor. I was celebrating my $0.30 raise which the company would only give me if I worked there for 3000 hours, regardless of how hard I worked, but they weren't going to get me up to that many hours in a hurry since the union kept me from working more than my coworkers with more senority even if they didn't work as hard or called in sick constantly.

It went up $0.15 an hour and the price of bread stayed the same, I don't know what the people in your town's grocery store did, but the prices here stayed the same.

It wasn't the store, it was the companies that brought the bread in. The store itself makes very very little money on basics such as bread and milk.

As someone who was earning minimum wage at the time, it certainly did not make me feel more poor. I was celebrating my $0.15 raise which the company would only give me if I worked there for 3000 hours, regardless of how hard I worked, but they weren't going to get me up to that many hours in a hurry since the union kept me from working more than my coworkers with more senority even if they didn't work as hard or called in sick constantly.

Sounds like a normal union to me. As someone who's worked in a unionized environment for 5 years, all I can say is that it pays off if you stay with the company long enough to get seniority. It doesn't necessarily inspire people to work hard, but workers can be fired still if they don't do their job. There are legal limits to the number of sick days a person can take a year (10) without doctor's notes, and that's not the union, that's just labour laws. If the company doesn't do anything about it after that point, that's just poor management. And it's management's right to mismanage, unfortunately.

It wasn't the store, it was the companies that brought the bread in. The store itself makes very very little money on basics such as bread and milk.
Well, the increased cost of bread and milk didn't get passed onto the consumer here.

Sounds like a normal union to me. As someone who's worked in a unionized environment for 5 years, all I can say is that it pays off if you stay with the company long enough to get seniority. It doesn't necessarily inspire people to work hard, but workers can be fired still if they don't do their job. There are legal limits to the number of sick days a person can take a year (10) without doctor's notes, and that's not the union, that's just labour laws. If the company doesn't do anything about it after that point, that's just poor management. And it's management's right to mismanage, unfortunately.
I quit that job. I wouldn't stay there very long in the first place, I'm done school next year and I'll be damned if I work a minimum wage job at a grocery store with a degree in astrophysics... But yeah, now if I'm going to earn minimum wage, I'm going to do it without giving away a chunk of my earnings to a union that does nothing for me. Except make me nearly invincible to firing. (I had to do something like not show up for three shifts without calling in to get fired... or steal...)

Oh, and the girl was pregnant, so my manager took it easier on her I think.

I quit that job. I wouldn't stay there very long in the first place, I'm done school next year and I'll be damned if I work a minimum wage job at a grocery store with a degree in astrophysics... But yeah, now if I'm going to earn minimum wage, I'm going to do it without giving away a chunk of my earnings to a union that does nothing for me. Except make me nearly invincible to firing. (I had to do something like not show up for three shifts without calling in to get fired... or steal...)

Oh, and the girl was pregnant, so my manager took it easier on her I think.

Hahaha. I have an Honours Degree in Psychology, and I still stock shelves at a grocery store. :) Well, not for much longer... my last shift is on Monday. I'm going to miss that place. After 5 years, everyone there feels like family.
Our managers came up with an ingenius scheme to save money... they said, "Well, the union didn't negotiate for higher wages, because minimum wage was going up... so according to us, you're earning $6.75, still. But the gov't is forcing us to pay you $7.50. So, instead of working 1000 hours to get your first raise, you now have to work over 2000 to get over where the gov't minimum wage is set to!"
Man, were there ever some angry newer workers when they found that out. But they didn't bother to show up for the union vote, so I have little sympathy for them. The union is what the membership makes of it.

I don't know if it would be possible to add a poll to this thread, but it might be interesting to get a survey of how many people currently work for minimum wage.

While the article in the OP is a bit too unscientific for my tastes, some of the responses are worse.

Others are taking care of the supply-demand issue, so I'll just say this- it is entirely possible to live off of a wage well under the legal minimum. I have friends going to university working an $8/hr job for 20 hours/week, making about 2/3 what a full-time minimum-wage earner does in a year (minimum wage in Ontario is $7.75, climbing to $8 in February), and yet they are paying rent, eating well, and even (gasp!) spending money on concerts and parties. Hell- there are millions of illegals in the US doing the same. I think that the "we must increase minimum wages to keep people off the streets" argument isn't just silly, it's factually incorrect.

Hahaha. I have an Honours Degree in Psychology, and I still stock shelves at a grocery store. :) Well, not for much longer... my last shift is on Monday. I'm going to miss that place. After 5 years, everyone there feels like family.
Our managers came up with an ingenius scheme to save money... they said, "Well, the union didn't negotiate for higher wages, because minimum wage was going up... so according to us, you're earning $6.75, still. But the gov't is forcing us to pay you $7.50. So, instead of working 1000 hours to get your first raise, you now have to work over 2000 to get over where the gov't minimum wage is set to!"
Man, were there ever some angry newer workers when they found that out. But they didn't bother to show up for the union vote, so I have little sympathy for them. The union is what the membership makes of it.
Yeah, that's exactly what happened at my old job. We were supposed to get a $0.15 raise after working 300 hours, but since the minimum wage had increased since the union negociated the contracts last, we had to wait until 3000 hours.

While the article in the OP is a bit too unscientific for my tastes, some of the responses are worse.

Others are taking care of the supply-demand issue, so I'll just say this- it is entirely possible to live off of a wage well under the legal minimum. I have friends going to university working an $8/hr job for 20 hours/week, making about 2/3 what a full-time minimum-wage earner does in a year (minimum wage in Ontario is $7.75, climbing to $8 in February), and yet they are paying rent, eating well, and even (gasp!) spending money on concerts and parties. Hell- there are millions of illegals in the US doing the same. I think that the "we must increase minimum wages to keep people off the streets" argument isn't just silly, it's factually incorrect.
Hmm.. your friends probably also live in student housing (which, at least here is a hell of a lot cheaper than normal rent) and I'm going to guess that your friends have financial backing from their parents. I know I couldn't pay tuition, rent and buy food for myself last year with my minimum wage job so I had to rely heavily on help from my parents. I made more in a summer when I didn't have a steady job than I did last summer when I worked the whole four months earning minimum wage.

This summer so far I have one job that will pay minimum wage, but will only give me 10-15 hours so I'm looking for a waitressing job that will give me some awesome tips and hopefully that will fill in for the rest.

Hmm.. your friends probably also live in student housing (which, at least here is a hell of a lot cheaper than normal rent) and I'm going to guess that your friends have financial backing from their parents. I know I couldn't pay tuition, rent and buy food for myself last year with my minimum wage job so I had to rely heavily on help from my parents. I made more in a summer when I didn't have a steady job than I did last summer when I worked the whole four months earning minimum wage.

This summer so far I have one job that will pay minimum wage, but will only give me 10-15 hours so I'm looking for a waitressing job that will give me some awesome tips and hopefully that will fill in for the rest.

They are living together in a 4-bedroom flat, and paying for their education with bursaries, scholarships and student loans.

They are living together in a 4-bedroom flat, and paying for their education with bursaries, scholarships and student loans.
I bet they don't have kids, don't need health care, don't have to pay loans (yet) etc

The minimum wage is one of the biggest jokes there is. It comes from the same notions that cause the limits the US places on welfare recipients. If we weren't such half-assed idiots and weren't so concerned with giving someone a free lunch, we would offer vouchers to guarantee a decent living standard and then erase the minimum wage laws.

The ultimate of no minimum wage is slavery. Except in slavery the owner cared if the workers remianed healthy and survived because he couldn't replace them without additional cost. With no slavery and no minimum wage, workers become disposable cogs.

High minimum wages raise the dispensibility of workers, it raises the cost of maintaining unskilled workers, while increasing the labor pool for those jobs. Workers must be far more productive to validate the cost of their labor in order to avoid being released or replaced.

Corporations never give more than they are forced to and will gladly take more than they have to whenever the chance is presented. Otherwise there would have been no such thing as an outsourcing epidemic in the United States.

You know that the minimum wage is a large reason that there is an outsourcing epidemic, right?

This is the ultimate lie of this entire concept. People like Landsburg like to act like wages are a gift. No, they are not a gift given out of misguided altruism. And they're not like rent, either, which is paid in advance of use. And they are not a tax, by which he means a cost for which the employer receives no benefit. Wages are a debt owed to the worker for labor/services already performed. They did the work. You* owe them the money. Period. They don't owe you a damned thing because the paycheck is the payment of your debt to them, not some contract for the future. Period. (*rhetorical "you.") Every time the paycheck is delivered, the work contract is complete. Each new week starts a new employment period in which the employer incurs a debt to the worker. Period.

And if the compensation is artificially high? I have no disagreement that wages are owed to the employee and neither does the author. He is stating that the minimum wage, by its nature, must have added labor cost (otherwise it isn't necessary) and behaves exactly as a tax on labor.

In the UK minimum wage laws are no harm to our economy, I dont see what all the fuss is about in America.

The minimum wage is one of the biggest jokes there is. It comes from the same notions that cause the limits the US places on welfare recipients. If we weren't such half-assed idiots and weren't so concerned with giving someone a free lunch, we would offer vouchers to guarantee a decent living standard and then erase the minimum wage laws.
I am 100% with you on this one. Since it's the responsibility (and benefit) of the public at large to make sure people are not in desperate situations (so as to prevent desperate measures) it makes more sense for the public at large to ensure that rather than for individual corporations to take on the burden. Requiring private corporations to do it is nonsense, as there's no guaruntee of universality.

I am 100% with you on this one. Since it's the responsibility (and benefit) of the public at large to make sure people are not in desperate situations (so as to prevent desperate measures) it makes more sense for the public at large to ensure that rather than for individual corporations to take on the burden. Requiring private corporations to do it is nonsense, as there's no guaruntee of universality.

The minimum wage just isn't sensible policy.

Guaranteed living standards are counter to my feelings on income redistribution, but making it a public process is far greater than encumbering private businesses with the task.

They are living together in a 4-bedroom flat, and paying for their education with bursaries, scholarships and student loans.
Well, then there you go. They aren't actually just scraping by on minumum wage, they're going into debt as they go along.

Well, then there you go. They aren't actually just scraping by on minumum wage, they're going into debt as they go along.

Yeah, but that post didn't say they were working, either. So they're going into debt because they're not bringing in any income.
I've gone through 8 years of university debt free simply by getting a few bursaries, and working.

Yeah, but that post didn't say they were working, either. So they're going into debt because they're not bringing in any income.
I've gone through 8 years of university debt free simply by getting a few bursaries, and working.
Read a couple posts earlier, he said that they were working.

I have to agree with those who say minimum wage isn't a good thing. I've worked 2 jobs so far, and both of them payed above minimum wage (albeit not much). One thing that people are forgetting is that the higher you raise minimum wage, not only does outsourcing become more attractive, but expensive technology becomes more attractive as well.

In supermarkets self checkout machines are becoming more popular, partially because of increasing wages. When wages were low it was cheaper to hire people, but when they go up then the loss from buying these machines is less, and they will most likely pay back faster. Not only are people going to lose jobs to outscourcing, but they will also lose them to expensive technology.

And yes, we Danes are overcharging for our work. But with a tax rate between 40 and 60 percent, we need a big income to be able to live. But then again, the western economic system is completely FUBAR?ed?

Surprise surprise.

So basically you're saying that it's hard to earn a living because the govenrnment insists on a hefty cut? And the solution to this is to give it more money and power? Circular logic if I ever heard it. A lot of people seem to be forgetting that most of the [sane] people who are against minimum wage [like myself, and I imagine Disraeliland] are not only against minimum wage, but are also against outrageous taxes too. If, for example, the minimum wage and income tax systems were abolished, workers would end up with a lot more money than you might think. Both practices are ridiculous and need to be done away with post-haste.

Are you saying that it is better to have nothing, than have a little?

Poverty with a little income is still poverty.


Let us take two workers in two different countries.

Worker A makes $0.50 a week. With that fifty cents, he can pay his rent and bills, buy all the food etc he needs, and still have a little for a rainy day.

Worker B makes $100/hr. He has been served with an eviction notice for not paying his rent on time, he is just eating, and the bank manager would like a word with him.

Worker B has a higher wage rate. Worker A has a higher real wage.

Is that simple enough, or would crayon be more suitable?

Wow. So the message is pay them less so everything else will cost less?

Now in the real world COL follows the average income of the area. Companies aren't going to reduce the cost of their products because all of a sudden they don't have to pay minimum wage.


So, if they stay in the US, their costs are too high, and they'd be put out of business. If they leave, their costs are too high and they'd be put out of business.

"Costs are too high" is a matter of opinion. If you were paying a great deal of money and getting crap then you would have an argument.


All you'd really do is make domestic production a worse option than imports generally.

It already is and *shock* it's not because of minimum wage.


A meaningles statement if ever I heard one.

Your example got what it deserved.


Yet another meaningless statement.

Translation: A real world example to which my text book can not answer.

Here you go: Two companies set up shop in Bangalore India (I set the networks up on both) because the wages were cheaper. In both cases the companies bitched about level of crap that was produced and had to be re-written by the over paid people back in the states.

Paying shit and expecting highly trained output.


I said before, and you completely ignored.

You ignore. I ignore. That's life on the General Board. You should be used to it by now.

You know that the minimum wage is a large reason that there is an outsourcing epidemic, right?


Wow so we set up software engineering shops in Bangalore because of minimum wage? The janitors cost THAT much?

The ultimate of no minimum wage is slavery. Except in slavery the owner cared if the workers remianed healthy and survived because he couldn't replace them without additional cost. With no slavery and no minimum wage, workers become disposable cogs.

Excuse me, but in the USA, we are already disposable cogs.

Anyone who believes differently is fooling themselves.

Wanna buy a lottery ticket?

Wow so we set up software engineering shops in Bangalore because of minimum wage? The janitors cost THAT much?

Technology is far from the only industry that is largely outsourced.

Technology is far from the only industry that is largely outsourced.

It would have been outsourced even if the minimum wage laws didn't exist.

If we didn't have it, then people like Disraeliland would be bitching about the area costing too much because of environmental laws and workplace safety laws.

Surprise surprise.

So basically you're saying that it's hard to earn a living because the govenrnment insists on a hefty cut? And the solution to this is to give it more money and power? Circular logic if I ever heard it. A lot of people seem to be forgetting that most of the [sane] people who are against minimum wage [like myself, and I imagine Disraeliland] are not only against minimum wage, but are also against outrageous taxes too. If, for example, the minimum wage and income tax systems were abolished, workers would end up with a lot more money than you might think. Both practices are ridiculous and need to be done away with post-haste.

Eh, no, I like my free healthcare and education, thank you very much.

In supermarkets self checkout machines are becoming more popular, partially because of increasing wages. When wages were low it was cheaper to hire people, but when they go up then the loss from buying these machines is less, and they will most likely pay back faster. Not only are people going to lose jobs to outscourcing, but they will also lose them to expensive technology.
The self checkouts hardly cut down on how many employees you need. The supermarket here usually has three employees buzzing about the self checkout section because it has problems accepting cards sometimes and the like. Considering how much room they take up, you'd only fit three extra cash registers in the area, so really, you're not missing out on any employees.

I love watching Disraeli and Melkor tear apart the emotionally-driven responses advanced by their opponents. :) Good thing that the world has not yet lost its wits and Capitalism still has formidable champions in its favour.

I happen to come from the jurisdiction with the lowest minimum wage in Canada, but the highest standard of living, and the lowest number of people who work for minimum wage.

Wages are kept high by labour shortages. If there's too much labour, then the wages fall. This makes perfect sense. Employers will pay as little as possible, but they compete with one another for labour. Labour is a commodity; let us treat it as such.

I happen to come from the jurisdiction with the lowest minimum wage in Canada, but the highest standard of living, and the lowest number of people who work for minimum wage.

Wages are kept high by labour shortages. If there's too much labour, then the wages fall. This makes perfect sense. Employers will pay as little as possible, but they compete with one another for labour. Labour is a commodity; let us treat it as such.
Pretty much sums it up. :)

The self checkouts hardly cut down on how many employees you need. The supermarket here usually has three employees buzzing about the self checkout section because it has problems accepting cards sometimes and the like. Considering how much room they take up, you'd only fit three extra cash registers in the area, so really, you're not missing out on any employees.

The supermarket I use has only one employee monitoring the self-checkout, and there are four stations, so they have saved the cost of hiring/keeping/paying benefits to three employees.

Plus it allows them to keep more registers closed, so they save having to pay more full-time cashiers and wrappers...

Someday, they will probably outsource the monitor. The self-checkout stations already speak aloud, why not have a two-way connection to some call center in India?

I happen to come from the jurisdiction with the lowest minimum wage in Canada, but the highest standard of living, and the lowest number of people who work for minimum wage.
'Cause most people don't want to live in Alberta so they have to pay people more. It doesn't work in the rest of the country where we have more workers than jobs.

The supermarket I use has only one employee monitoring the self-checkout, and there are four stations, so they have saved the cost of hiring/keeping/paying benefits to three employees.

Plus it allows them to keep more registers closed, so they save having to pay more full-time cashiers and wrappers...

Someday, they will probably outsource the monitor. The self-checkout stations already speak aloud, why not have a two-way connection to some call center in India?
That's not how the supermarket here is. Most of the time (except very early in the morning and on closing shifts) all the registers are open as well as the self checkout. The self checkout actually closes long before the store does, leaving everyone to go to the cashiers if they want to leave.

I happen to come from the jurisdiction with the lowest minimum wage in Canada, but the highest standard of living, and the lowest number of people who work for minimum wage.

Wages are kept high by labour shortages. If there's too much labour, then the wages fall. This makes perfect sense. Employers will pay as little as possible, but they compete with one another for labour. Labour is a commodity; let us treat it as such.
Hear, hear. I'd like to challenge the conventional wisdom that the worker cannot realize a profit. Our labor, skills, training all have a market value and are ours to sell for the highest possible price. We may not be able to realize the same profits that capitalist business owners can, but there is no reason that our labor should not be able to generate surplus money for private savings and investments.

But I still support the minimum wage as a tool of business regulation, to avoid hostile confrontations like what the US saw in the 1900s and 1920s.

For the record, my great-grandfather worked as a coal-miner after WW1 (without a union to protect his wages), my grandmother was a proud member of the International Ladies' Garment Workers Union, but I have never worked in a unionized business and am currently self-employed. I support both unions and "free agency" in different contexts.

But I still support the minimum wage as a tool of business regulation, to avoid hostile confrontations like what the US saw in the 1900s and 1920s.

Recognizing unions as viable representatives of labor concerns (not to mention not allowing union busters to shoot striking workers) are all that is needed to avoid those hostile confrontations.

Eh, no, I like my free healthcare and education, thank you very much.
Umm... I've got news for you: your healthcare and education are not free. Observe, for example, the tax rates I was referring to in my post. Why do you people still insist on calling it "free" healthcare and education?

Just because something is subsidized doesn't mean that the people working for said subsidy are willing to do it for nothing. Nationalized healthcare is largely paid for by people who will never even have need for it, which is like me pre-emptively paying for a plumber every week when I'm not even sure my pipes will ever need fixing.

Nationalized healthcare is a great deal for a very small amount of people and a horrendous ripoff for everyone else. The more money you make, for instance, means you're paying a higher premium for services you may never end up using; and when you do, you have to wade through miles of red tape to get it done. If you think healthcare costs a lot now, wait till you see what it costs when its free.

I love watching Disraeli and Melkor tear apart the emotionally-driven responses advanced by their opponents. :) Good thing that the world has not yet lost its wits and Capitalism still has formidable champions in its favour.

Wow so much static.

Nationalized healthcare is largely paid for by people who will never even have need for it, which is like me pre-emptively paying for a plumber every week when I'm not even sure my pipes will ever need fixing.

Congratulations. You've identified how insurance works. Wouldn't matter if it was public or private.

Minimum wage is not a bad concept, as I identified above, it smooths out the hills and valleys of the minimum wage-employer, making business easier for them to accomplish. The trick is identifying the minimum wage that makes it worthwhile for the minimum wage employee to bother looking (as pointed out, if you can't support yourself at a certain job anyway, why bother spending your time working at it when you could be spending your time on yourself or family) while not making it high enough to signficantly harm those businesses.

One might suggest that if a person can't make a business that is capable of profiting when paying a wage that allows a person to live, they shouldn't be in business in the first place.

If you think healthcare costs a lot now, wait till you see what it costs when its free.

less than now, actually. but who needs evidence anyway?

Congratulations. You've identified how insurance works.

wait til you see his next trick

"Yet unemployment was 17.3% for those aged 16-19 years."

But what about people like I in that demographic; I choose not to lend myself to a job that is below me.

Nationalized healthcare is a great deal for a very small amount of people and a horrendous ripoff for everyone else. The more money you make, for instance, means you're paying a higher premium for services you may never end up using; and when you do, you have to wade through miles of red tape to get it done. If you think healthcare costs a lot now, wait till you see what it costs when its free.
Funny, since the U.S. government spends more per capita on health care than anyone else, yet not everyone is covered.

What, we're on healthcare now?
Most are far too emotional to turn away a sick person at a hospital, and they will treat those that can not pay but have a serious illness or injury. Many hospitals and clinics, especially in Southern California, have gone out of business because of this. Instead, we should be preventing the poor from getting sick in the first place.
The government has the resources to pay for basic private medical insurance for everybody who can't afford it in the country without raising taxes, those resources are just tied un in Iraq.

I think that the minimum wage is fine for teenagers but certainly not for people with families. I hesitate to say that we should raise it, though, because most adults who earn minimum wage hardly contribute that much to the companies they work for, in my observation. I live in a state with wages near the bottom of the barrel, comparatively, and I never worked for less than $8 since I was 16. I'm sorry, but picking up toys at Wal-Mart that have been knocked onto the floor and providing no customer assistance (in English) is something most eight-year-olds could do. I was probably more responsible when I was 8...
*edit* And this teen unemployment BS isn't accurate. Most teens today have everything handed to them. Why would they work? They live with their PARENTS...

Not everyone gets a car and an Ivy League education and a condo near campus from the trust fund mommy and daddy set up for them. Some kids actually have to work to get the money they need to buy and fuel a car, attend college, etc. Damn, but the naivete of the children of the wealthy. I'll tell you one thing: the parents of most trust-fund kids didn't laze about on their parents' dole. Money comes from work done by someone, sometime, not from a magical tree called the "trust fund tree" that grows dollars instead of leaves and has crude oil for sap.

On larger topic, I completely agree with the article. Minimum wages are a feel-good political maneuver implemented without consideration of the basic economic common sense related to it.

Really, it's pretty simple what would happen if you raised the minimum wage at the current jucture: outsourcing and immigrant labor. You think outsourcing is bad now, or that companies are pushing it with the illegal hiring of aliens? You can't even imagine how it will go after a rise in minimum wage. Corporations will have no choice but to ramp up outsourcing and put their weight politically behind a guest-worker program at best or just salutary neglect of illegal immigrant hiring laws at least. Americans will lose jobs to Mexicans and Chinese on a massive scale. Simple as that.

Not everyone gets a car and an Ivy League education and a condo near campus from the trust fund mommy and daddy set up for them. Some kids actually have to work to get the money they need to buy and fuel a car, attend college, etc. Damn, but the naivete of the children of the wealthy. I'll tell you one thing: the parents of most trust-fund kids didn't laze about on their parents' dole. Money comes from work done by someone, sometime, not from a magical tree called the "trust fund tree" that grows dollars instead of leaves and has crude oil for sap.

On larger topic, I completely agree with the article. Minimum wages are a feel-good political maneuver implemented without consideration of the basic economic common sense related to it.

Really, it's pretty simple what would happen if you raised the minimum wage at the current jucture: outsourcing and immigrant labor. You think outsourcing is bad now, or that companies are pushing it with the illegal hiring of aliens? You can't even imagine how it will go after a rise in minimum wage. Corporations will have no choice but to ramp up outsourcing and put their weight politically behind a guest-worker program at best or just salutary neglect of illegal immigrant hiring laws at least. Americans will lose jobs to Mexicans and Chinese on a massive scale. Simple as that.

And if minimum wage was abolished, will there be a positive gain for those seeking employment? The only reason there's outsourcing and illegal labor is overhead. Basically the situation will turn from "We'll outsource and use illegal labor so we don't have to pay the workers so much" to "Why outsource and use illegal labor when we don't have to pay the workers so much?" Sure it'll take care of a major employment drain, but with companies like Wal Mart setting a shining example of employee treatment it's not going to give anyone at the bottom a realistic living wage.

So may I assume that everyone here who is against the concept of minimum wage would be willing to do their respective jobs for a dollar (or pound, etc.) a day?

So may I assume that everyone here who is against the concept of minimum wage would be willing to do their respective jobs for a dollar (or pound, etc.) a day?

Of course they wouldn't. That's the point. If I don't find a firm who is willing to pay me the wage I want, I just go somewhere else. I have choices too, you know.

In reality, a simple minimum wage is silly to start with. It isn't adjusted for cost of living based on place or station in life. 5.15 an hour is pretty silly in Manhattan, and may be almost as silly in West Texas. The minimum wage is a joke anyway, because no one works it, except illegals who don't have the protection (and even most of them don't work it) and teenagers who live with their parents. There might as well not be one at all.

In reality, a simple minimum wage is silly to start with. It isn't adjusted for cost of living based on place or station in life. 5.15 an hour is pretty silly in Manhattan, and may be almost as silly in West Texas. The minimum wage is a joke anyway, because no one works it, except illegals who don't have the protection (and even most of them don't work it) and teenagers who live with their parents. There might as well not be one at all.
I'm earning minimum wage. How about, fuck you, I'm not no one at all.

I'm earning minimum wage.
In Canada, though, eh?

Least it is good...but people are getting paid to much for crap work.

Least it is good...but people are getting paid to much for crap work.

Never suggested there wasn't abuse. It happens on all levels. Golden Parachutes for example.

In Canada, though, eh?
Yes. I'm sure there are a lot of american university students earning minimum wage too.

It's hard to be choosy for work when you can only do a lot of work 4 months of the year. You tend to take what you can get.

Yes. I'm sure there are a lot of american university students earning minimum wage too.

It's hard to be choosy for work when you can only do a lot of work 4 months of the year. You tend to take what you can get.
I think what he meant when he said "nobody" makes minimum wage is that no full-time year round employees make minumum wage.

True...or those idiots who do boxing.. 30 mins of work 30 mins of slacking.

I think what he meant when he said "nobody" makes minimum wage is that no full-time year round employees make minumum wage.
What about all the full timers at Wal Mart?

What about all the full timers at Wal Mart?
Or Mickey D's or any fast food joint.

What about all the full timers at Wal Mart?
I was only clearing up what I thought he said.

As I poster earlier, I support the minimum wage. Keeps the proles from rebelling and taking my shit.

I would agree that productivity helps workers more than the artificial minimum wage does- I believe that the latter actually hurts workers by encouraging the layoffs and prevention of hiring of less productive workers. I say scrap the income tax and replace it with a rebated sales tax. That way, we won't be punishing investment anymore, which will allow capital and technology to rise, which will increase wages. Also, business decisions will now be based on profit instead of ridiculous tax exemptions. Although the minimum wage will be gone, the rebate that will be in place to cover the costs of expenditures on the poverty line will allow workers to buy and live without the need of aid. With capital and technology rising, productivity will rise, which will make it easier to accomodate worker's real wages. Everyone benefits.

(And, dammit, real wages are the real amount of money after adjusting for inflation, not this weird crap that some of you people have been making up in some ridiculous effort to win an argument. Facts are a better way to win a debate, I can tell you, instead of fantasy land.)

Poverty with a little income is still poverty.

So it is better to have nothing, than a little of something? Let us take a trip outside of fairyland for a while. Perfection simply doesn't exist, and history has shown that the more economic freedom a place has, the better the living standards, there'll be, and the less poverty will be evident.

Of course, it must be noted that capitalism has meant the what is poverty today was damned wll off 150 years ago.

Wow. So the message is pay them less so everything else will cost less?

Have you any economic sense at all.

Let me put this simply:

For a company to remain profitable, they must cover all their production costs, plus some profit within the selling price of the item.

If the costs of labour are arbitrarily raised (by such measures as a minimum wage), the selling price of the goods and services on offer must be raised to compensate.

The prices increase. Labour costs (direct, and indirect) comprise the vast majority of the selling price in any item.

Let me explain the difference between direct and indirect labour costs.

An example: The ACME Widget Company sells Widgets. Its direct labour costs are what ACME pays its workers.

To produce Widgets, ACME needs goods and services from other companies, from raw materials, to phone/internet services. ACME pays these companies for these goods and services, and these companies pay their employees. The latter payments are ACME's indirect labour costs.

"Costs are too high" is a matter of opinion. If you were paying a great deal of money and getting crap then you would have an argument.

Since US firms are outsourcing, and hiring illegals, I'd say my opinion has found wide agreement. Obviously these firms think labour costs in the official US labour market are too high. If they were satisfied with these costs, they would simply pay them.

So may I assume that everyone here who is against the concept of minimum wage would be willing to do their respective jobs for a dollar (or pound, etc.) a day?

Hell yeah if the CEO of the company made 2 dollars a day

So may I assume that everyone here who is against the concept of minimum wage would be willing to do their respective jobs for a dollar (or pound, etc.) a day?

While this reply carries a lot of feeling, it makes no sense whatsoever.

If we were discussing the buying of computers, and I told you that I shopped around several places looking for the best computer at the lowest price, you'd think me a prudent buyer.

Exactly why you would think that an employer is anything other than prudent for doing the same thing is a mystery.


Leaving out the emotional mule fritters, collusion cannot stand in a free market. In the scenario you describe, it pays for firms to increase their wages in order to attract good workers. The collusion wouldn't stand because one firm in the cartel would decide to pay more, perhaps offering non-monetary incentives so as to evade the watch of the cartel, in order to get good workers from the other firms.

That is an untested hypothesis, and is backed by spurious logic.

Your second paragraph contained little of insight, unless you think you're making a profound statement when you point out that the aim of any buyer is to obtain the maximum for the minimum cost, just as the aim of the seller is to obtain the maximum price for the minimum of commodity sold.

You free marketers are all the same. Robots. Every last one of you.

Is it a coincidence that you compared people to computers? Nay! Nay, says I! You are but a shambling mass of tangled wire and circuitry, and your every cybernetic breath cuts me to the quick!

Yours is a dream of cogs and wires, and prudence and impudence.
Yours is the future where the "workers" stick to their whistles and the guard is changed with perfect effacacy and accuracy.

Some people work for tips. It's not funny to leave a penny on top of the dollar. It's a little funny when they spit in your food the next time. All you penny leavers out there. Look out.

Minimum wage laws provide an immediate economic windfall to the social class that requires it the most. The U.S. economy is not equipped to handle the cataclysmic changes that approach in the 21st century. The Free Market and the Free Marketplace of Ideas are in for the grudge match of the century.

Good v. Evil.

But, if you'll excuse me my mule and I have our hearts to wear on your sleeves. Bleeding all over the place.

So it is better to have nothing, than a little of something? Let us take a trip outside of fairyland for a while. Perfection simply doesn't exist,

Wow now that was a waste of typing.

and history has shown that the more economic freedom a place has, the better the living standards, there'll be, and the less poverty will be evident.

You really don't have a clue about economic history do you? Everybody was really living well before the unions right.


Of course, it must be noted that capitalism has meant the what is poverty today was damned wll off 150 years ago.

Have you any economic sense at all.

Let me put this simply:

For a company to remain profitable, they must cover all their production costs, plus some profit within the selling price of the item.

If the costs of labour are arbitrarily raised (by such measures as a minimum wage), the selling price of the goods and services on offer must be raised to compensate.

The prices increase. Labour costs (direct, and indirect) comprise the vast majority of the selling price in any item.

Let me explain the difference between direct and indirect labour costs.

An example: The ACME Widget Company sells Widgets. Its direct labour costs are what ACME pays its workers.

To produce Widgets, ACME needs goods and services from other companies, from raw materials, to phone/internet services. ACME pays these companies for these goods and services, and these companies pay their employees. The latter payments are ACME's indirect labour costs.

Ahh the text book again.

You have yet to PROVE that the minimum wage laws hurts corporations.


Since US firms are outsourcing, and hiring illegals, I'd say my opinion has found wide agreement. Obviously these firms think labour costs in the official US labour market are too high. If they were satisfied with these costs, they would simply pay them.

If you bothered looking, firms have no choice in the matter. Venture capitolists will not talk to you if you don't have a plan that includes outsourcing.

Of course the firms think the wages are too high, they want more money for themselves. They will always want more money for themselves. If you reduced everybody to India's wage, they will still say it's too much because they are cheaper in China. Then they will say it's cheaper in Egypt....

So slick whats your solution? It's easy to bitch about being riped off. How do you solve the job situation?

I, on behalf of all of those here with sane economic views, would like to offer you a steaming cup of f*** you.

If you cannot come up with a decent economic argument without flaming, then don't hit the reply button. There are already enough cookie-cutter socialists posting emotional drivel without you.

I, on behalf of all of those here with sane economic views, would like to offer you a steaming cup of f*** you.

If you cannot come up with a decent economic argument without flaming, then don't hit the reply button. There are already enough cookie-cutter socialists posting emotional drivel without you.

So said the pot to the kettle

[N.B. Previous post was directed at IIlyria]

You really don't have a clue about economic history do you? Everybody was really living well before the unions right.

Capitalism inherited poverty, and has done more to solve it than anything else.

You obviously don't know your economic history.

If you bothered looking, firms have no choice in the matter. Venture capit[a]lists will not talk to you if you don't have a plan that includes outsourcing.

Which shows that my opinion has even wider support. People won't even invest unless there is outsourcing.

You seems enthusiastic about proving that the over regulated US labour market is a bad place in which to invest and operate.

These venture capitalists are looking to put their money to profitable work. Evidently they do not believe that the US is the place in which to do it.

Of course the firms think the wages are too high, they want more money for themselves. They will always want more money for themselves. They will bitch if a software engineer is making $10 an hour. That is a DUH statement.

They may well indeed, on the other hand, if the firm across the road was offering $9/hr, they won't bitch because they're getting the better engineers.

While this reply carries a lot of feeling, it makes no sense whatsoever.

Actually it would have be simplier to say "no"

Actually it would have be simplier to say "no"

Maybe, however most of the socialist responses here are grounded in emotion. That needs to be pointed out.

[N.B. Previous post was directed at IIlyria]
Ahh



Capitalism inherited poverty, and has done more to solve it than anything else.

You obviously don't know your economic history.

Good lord. Have you EVER read anything about the Mines and working conditions before the unions? The railroads? The Coolie trade?


Which shows that my opinion has even wider support. People won't even invest unless there is outsourcing.

You seems enthusiastic about proving that the over regulated US labour market is a bad place in which to invest and operate.

These venture capitalists are looking to put their money to profitable work. Evidently they do not believe that the US is the place in which to do it.

Ok. Is that overpriced market because it's crap labor?

So who is to blame for the high salaries?


They may well indeed, on the other hand, if the firm across the road was offering $9/hr, they won't bitch because they're getting the better engineers.

I don't think we will convince the other so let's leave it with this.

You reduce the cost of living and I will take the lower salary.

Good lord. Have you EVER read anything about the Mines and working conditions before the unions? The railroads? The Coolie trade?

Have you ever read anything about feudalism?

Of course early capitalist economies had poor wages, and conditions. The only thing that has genuinely improved either is capital accumulation, and investment. All a union can ever do is increase the cost of business for an employer, and this is not good for workers as it will tend to get them sacked.

Capital accumulation and investment means more productivity. More productivity means that a worker's work produces more revenue, and is therefore worth more. That means not only an increase in wages, but a general reduction in prices because the increasing productivity means more goods are available.

A union doesn't ever focus on this, instead focussing on the superficial wage rate, driving up the cost of business. Unions also try to restrict production. These mean that while the worker might take home a larger number of dollars, the goods are more expensive, and prices will tend to rise generally. The union makes him worse off.

Is that overpriced market because it's crap labor?

So who is to blame for the high salaries?

I blame regulation of labour markets.

You reduce the cost of living and I will take the lower salary.

All well and good, except you have been blowing your top advocating measures that would lead to a higher cost of living. If you increase labour costs, you increase shelf prices.

The free market comes up with better prices more quickly than government ever can. The inability of government to come up with good prices (i.e. prices at which markets will tend to clear) played a large part in the fall of socialist regimes such as the USSR.

Maybe, however most of the socialist responses here are grounded in emotion. That needs to be pointed out.

Well?

It could be because they see a great fuckover in the making. Hard work and dedication are not admired qualities in an outsourcing world. It all depends on your salary.

I just find it amusing when I hear managers and executives bitch about the loyalties of workers.

Even with the two companies I mentioned. Even though they got crap for software and had the few engineers they had left fix it, they still said it was a great move and they are saving money.

Bad problems are ahead. Especially when you hear Computer Science enrollement is declining(I mention it because I am a WAN engineer). Heck even Bill Gates said he was going to start a foundation to get kids interested. Even now I can't honestly advise kids to look into the IT world. I understand high speed WANs and am seeing the technology to where firms will only need a monkey here to push buttons. Apps like webex no longer make it necesary to have a technical IT guy on site. Once India and China get their crap wiring corrected, another wave of IT outsourcing will happen.

Don't get me wrong. I understand cheap food means cheap labor. You will not find me bitching about Mexicans "stealing" our jobs. I lived on a farm. I did the work and it's something I would not want to do.

However, I also understand that corporate farming adds cost to the equation as well.

I wish I had a solution but I don't.

I tend to be polyanna about such things. ;) Good people should be rewarded and bad peole should be punished. It disgusts me to no end when I see a guy go into a company, fuck it up and then leave with a great payout for leaving.

I have no problems when I see a talente boss get the great rewards. My boss is that way and he earns it. Then there are guys like Exxon. It's obscene what he got. As VO2 has said. In this climate I could have produced the same results.

Ahhh well.

What are we fighting about? :p

The Abolishment of Minimum Wage is based on the same deluded notion of corporate altruism that fuels Supply Side Economics: Basically the idea that giving companies more money will enable them to give more money to their employees and thus consumers.

Corporations never give more than they are forced to and will gladly take more than they have to whenever the chance is presented. Otherwise there would have been no such thing as an outsourcing epidemic in the United States.
There is no such thing as an outsourcing epidemic in the US.

Have you ever read anything about feudalism?
Actually yes. Well a little. You should see the looks I get when I say the Black Death was a great thing for people as it led to the rise of the Yoeman(sp?).


Of course early capitalist economies had poor wages, and conditions. The only thing that has genuinely improved either is capital accumulation, and investment. All a union can ever do is increase the cost of business for an employer, and this is not good for workers as it will tend to get them sacked.

The unions of today are a waste for the most part. Even my father-in-law who was a lifetime Electrician says the unions have problems now.

Hoever, before the unions, things were bad really bad. The "capitalist" bosses had a sweet deal. Dangerous work conditions. Overpriced stores. Low wages. It was almost slavery. Capitalism didn't correct it. The unions did.


Capital accumulation and investment means more productivity. More productivity means that a worker's work produces more revenue, and is therefore worth more. That means not only an increase in wages, but a general reduction in prices because the increasing productivity means more goods are available.

Alright I really don't follow prices on everything. Excluding the obvious such as computers (remembers the cost of his first Mac, dotmatrix printer, and a f400 K drive), what "standard" living things actually have reduced in cost.

What company willing reduces prices? We have moved 1/3 of the work force to India and we have not reduced our prices.

Support contracts are handled by Indians and they continue to go up in cost and my workers time on the phone has increased by 20-30 minutes.


A union doesn't ever focus on this, instead focussing on the superficial wage rate, driving up the cost of business. Unions also try to restrict production. These mean that while the worker might take home a larger number of dollars, the goods are more expensive, and prices will tend to rise generally. The union makes him worse off.

Actually no. My father has a damn good retirement from the union. The younger guys are going to get screwed however.

You won't be able to convince him he was worst off in the union(well in the past that is). It took care of him and it still takes care of him. He would have been worst off without it and it allowed him to send his daughter to college.


I blame regulation of labour markets.

Regulation? How so?


All well and good, except you have been blowing your top advocating measures that would lead to a higher cost of living. If you increase labour costs, you increase shelf prices.

The free market comes up with better prices more quickly than government ever can. The inability of government to come up with good prices (i.e. prices at which markets will tend to clear) played a large part in the fall of socialist regimes such as the USSR.

It doesn't always work that way. Take Medicine. Especially cough medicine. Vicks is what 20-40 years old and it costs way more then ever. We have flu seasons and there is tons of product on the shelves. It's price is not going down anytime soon. Even in heathy times.

Take PGE. They argued that they needed rate hikes because people were conserving energy. Now they are saying they need rate hikes because they are using too much.

But like you said. It's not a perfect world.

There is no such thing as an outsourcing epidemic in the US.

Clarify that if you would.

Clarify that if you would.
Well, primarily I don't believe that there is any such thing as a "national" job. I don't believe that there are "American" jobs, "German" jobs, "French" jobs or any other sort of jobs. A job is a job is a job.

But, getting beyond my normative viewpoints of economics...

The primary manner in which jobs are "outsourced" in the United States is interstate outsourcing. From the data that was provided to my family when the company my dad worked for was undergoing severe local cuts it would seem that around 90% of "outsourced" jobs are actually outsourced to other states in the US. For example, if he had lost his job, my dad's job would have been outsourced to Iowa. I also remember that more jobs have been lost to the increases in productivity of the American worker, but concurrently, more have been made as well.

Beyond that, it seems as if there are firms that are making investments in the United States. Honda, Toyota, Mercedes and BMW all seem to find it very viable to operate in the US.

Well, primarily I don't believe that there is any such thing as a "national" job. I don't believe that there are "American" jobs, "German" jobs, "French" jobs or any other sort of jobs. A job is a job is a job.

But, getting beyond my normative viewpoints of economics...

The primary manner in which jobs are "outsourced" in the United States is interstate outsourcing. From the data that was provided to my family when the company my dad worked for was undergoing severe local cuts it would seem that around 90% of "outsourced" jobs are actually outsourced to other states in the US. For example, if he had lost his job, my dad's job would have been outsourced to Iowa. I also remember that more jobs have been lost to the increases in productivity of the American worker, but concurrently, more have been made as well.

Beyond that, it seems as if there are firms that are making investments in the United States. Honda, Toyota, Mercedes and BMW all seem to find it very viable to operate in the US.

Ahh thank you.

In my case, jobs are outsourced out of the country. Be it my vendors, be it my company.

The economic impact of local living wages (http://www.epi.org/content.cfm/bp170)

The economic impact of local living wages (http://www.epi.org/content.cfm/bp170)

Interesting read. thanks.

Hoever, before the unions, things were bad really bad. The "capitalist" bosses had a sweet deal. Dangerous work conditions. Overpriced stores. Low wages. It was almost slavery. Capitalism didn't correct it. The unions did.

As I pointed out, nothing the unions do could correct it. Merely forcing employers to pay more cannot solve these problems alone. It is praxeologically incorrect. Merely raising the costs of labour will just raise the retail prices of goods and services. All you could get is falling real wages.

What company willing reduces prices?

Your question implies that companies make such decisions based purely on whims. A company will charge the most the market will take. That means a company which charges significantly more than the market clearing price will not be able to sell its goods. What that means is that companies which are capable of producing the goods at the lowest price will advance, and prices will move towards that level.

Actually no. My father has a damn good retirement from the union. The younger guys are going to get screwed however.

You won't be able to convince him he was worst off in the union(well in the past that is). It took care of him and it still takes care of him. He would have been worst off without it and it allowed him to send his daughter to college.

When a union advances the interests of its members, it cannot do so except at the expense of others. In your case, your union was able to force a price rise in labour to the point that your father could send your sister to college. What you are not seeing is the consumers who have to pay more for the goods produced by your father's company. The difference could have gone into other goods and services, thereby increasing the wealth of society.

It is essential in any economic discussion to look into not only what is visible, but what is not, and it is equally essential to look at not only the small interests, but the wider interest.

The wider interest of society, generally is having more goods and services. Unions stand in the way of this.

Regulation? How so?

Forced recognition of unions, maximum hours, minimum wage etc. What regulation does is raise the cost of employing someone, and generally make it more risky to employ people. This also has the effect of making a surplus in labour, or unemployment.

Other government interventions must be held as responsible, such as manipulation of the currency, taxes, tariffs, regulations etc.

It doesn't always work that way. Take Medicine. Especially cough medicine. Vicks is what 20-40 years old and it costs way more then ever. We have flu seasons and there is tons of product on the shelves. It's price is not going down anytime soon. Even in heathy times.

Taking medicine as an example of how prices operate in a free market is like taking Iraq as an example of World Peace In Action. The government makes enourmous manipulations into the medicine market, at all ends of that market, from drug development, right to retail sales.

There are also other government interventions affecting the price, particularly the Fed's printing presses.

Take PGE. They argued that they needed rate hikes because people were conserving energy. Now they are saying they need rate hikes because they are using too much.

Again, you are going to Iraq to look at World Peace In Action.

The energy market, particularly the retailing of electricity, is subject to huge manipulations by the government.

To whom were PGE arguing for a rate increase? The authorities who control prices.

As I pointed out, nothing the unions do could correct it. Merely forcing employers to pay more cannot solve these problems alone. It is praxeologically incorrect. Merely raising the costs of labour will just raise the retail prices of goods and services. All you could get is falling real wages.

Actually what should means nothing to the example. Coal mines, etc did not have standards of safety because the owners thought it was in their interests. The Unions forced them.


Your question implies that companies make such decisions based purely on whims. A company will charge the most the market will take. That means a company which charges significantly more than the market clearing price will not be able to sell its goods. What that means is that companies which are capable of producing the goods at the lowest price will advance, and prices will move towards that level.


Actually you said:
"Capital accumulation and investment means more productivity. More productivity means that a worker's work produces more revenue, and is therefore worth more. That means not only an increase in wages, but a general reduction in prices because the increasing productivity means more goods are available.
"

So you basically explained what I said.

When a union advances the interests of its members, it cannot do so except at the expense of others. In your case, your union was able to force a price rise in labour to the point that your father could send your sister to college. What you are not seeing is the consumers who have to pay more for the goods produced by your father's company. The difference could have gone into other goods and services, thereby increasing the wealth of society.

I mispoke. Father-in-law. So it's my wife.

However, what you describe is trickel down economics. The wealthy make a ton of money and the rest will get more. Except it really don't work that way.

In the greator scheme of things what matters is what gets you ahead. The business leaders practice that to no end and yet you say my father-in-law shouldn't have done that for the greator good of the whole?

It is essential in any economic discussion to look into not only what is visible, but what is not, and it is equally essential to look at not only the small interests, but the wider interest.

The wider interest of society, generally is having more goods and services. Unions stand in the way of this.


A businessman is only interested in self gain. A worker is only only interested in self gain. The unions are only intererested in self gain.

You make it sound like it's a bad thing for my father-in-law and yet its ok for the business owner?


Forced recognition of unions, maximum hours, minimum wage etc. What regulation does is raise the cost of employing someone, and generally make it more risky to employ people. This also has the effect of making a surplus in labour, or unemployment.


Ah but a surplus of labor and unemployment is to the business owners interest.


Other government interventions must be held as responsible, such as manipulation of the currency, taxes, tariffs, regulations etc.

Taking medicine as an example of how prices operate in a free market is like taking Iraq as an example of World Peace In Action. The government makes enourmous manipulations into the medicine market, at all ends of that market, from drug development, right to retail sales.

Again: " but a general reduction in prices because the increasing productivity means more goods are available.
"

The goverment is involved in the US because the pharmis want them invovled. Other countries sell drugs far less then they do here.

Also their "development" claims are usually bogus. They tend to buy the drug the research from a University and they also include marketting as development costs.


There are also other government interventions affecting the price, particularly the Fed's printing presses.

Again, you are going to Iraq to look at World Peace In Action.



The energy market, particularly the retailing of electricity, is subject to huge manipulations by the government.

To whom were PGE arguing for a rate increase? The authorities who control prices.

Not at all. Is it a free market when there is no competition? PGE is a monopoly. The authorites control them since they had this habit of gouging people. Electricity is not really one of those frivilous expenditures anymore.

In my view the reason why the prices of things rarely drop for basic essentials is this:

Each year (though not always) the workers (or their unions) ask for a wage increase because either to compensate for their increased productivity or because the cost of living has gone up (therefore the cost of the labour provided by the employee is higher, same reasoning why companies raise prices because of raising costs). The second reason is much more likely in firmly established/old industries (read basic essentials) as in most cases the way of running the business/doing the industrial process have become firmly fixed (little/no inovation done to improve these) and so it is difficult to increase the productivity of the labour.


This tends to mean that the costs (overheads) to companies have gone up so they need to raise their prices. This results in inflation and so increases the cost to the employee of providing the labour and so they demand a wage increase to take this into account. This then starts the cycle again.

Now I should point out that in new/rapidly developing industries (e.g. computers) there is still a lot of room for inovation that improves productivity (or improves product quality) which means the price will drop (or stay static if the product becomes better). This means labour will be asking for a wage increase due to better productivity and is affordable by the company, this will not have such an impact on the final cost per item produced.

I should point out that outsourcing is only better if the company can save money by employing someone else in a different country. For services (e.g. call centres) this is quite easy but for industry it is harder because the extra cost of shipping/transpot need to be taken into account. As soon as the cost of labour starts increasing in these other countries then outsourcing become less attractive. In the very long run when the majority of countries economies become developed then outsourcing will massivly decrease (especially with a global economy) as labour costs will even out globally for each industry. At this stage products will be more likely produced in a location that minimises transportation costs rather than labour costs (have to balance between the raw material transport cost and getting from factory to shelf transport cost).

For me the minimum wage is useful in the short run (if not set to high) as it benifits the poor, though I do understand that it will contribute to unemployment. However in the very long run I don't think the minimum wage is required as market forces from a fully developed global economy will even things out.

So you basically explained what I said.

No, I didn't. You did imply that it was a mere act of will that forced reductions in price. It is not.

However, what you describe is trick[le] down economics. The wealthy make a ton of money and the rest will get more. Except it really don't work that way.

It cannot work that way independently. The reason it sometimes doesn't work is an environment that is generally hostile to investment, or an environment in which the government makes huge amounts of cheap credit available through central banking manipulations.

In any case, it is not trickle down economics. I am simply point out the fact that money chases something, even in the bank, it is lent out to buy goods and services, therefore, when prices get lower, there can be more wealth.

In the greator scheme of things what matters is what gets you ahead. The business leaders practice that to no end and yet you say my father-in-law shouldn't have done that for the greator good of the whole?

Were unions a free market phenomenon, I would agree with you, however they are not. A union is a cartel which (like all cartels) is a consortium in which the members agree to restrict output and increase prices. In a free market, all this does is invite players outside the cartel into the market, it also invites the members to evade the cartel for their own profit.

Unions have only survived in a potent, relevant form where the government has made it illegal to refuse to deal with them. Where the government has relaxed such rules, unions tend to falter, as you have pointed out.

The equivilent is the government telling you that you must buy your milk at "corner store A", and never "corner store B".

A businessman is only interested in self gain. A worker is only only interested in self gain. The unions are only intererested in self gain.

You make it sound like it's a bad thing for my father-in-law and yet its ok for the business owner?

The differences between the businessman, and the union is that the businessman advances his interests through mutually consensual trade to the advantage of both parties, while a union's purpose is to use force to extract wealth from people. It is not mutually consensual, or mutually beneficial, if it were, unions would never have existed.

Ah but a surplus of labor and unemployment is to the business owners interest

Who said anything about being pro-business? I'm pro-market. Which in the current US climate means being against most big-business because most of it is entirely dependent on the government, and uses the government to increase its wealth.

Not at all. Is it a free market when there is no competition? PGE is a monopoly. The authorites control them since they had this habit of gouging people. Electricity is not really one of those frivilous expenditures anymore.

The electricity monopolies are the result of government. In fact, it is impossible for a real monopoly to rise without the aid of government, because it is only government force that can actually stop someone going into business. You might talk about difficulties concerning capital and infrastructure, however such talk presumes a right to enter business in a good position (as opposed to a right to try), and such difficulties, provided they arise from the operation of a free market, are not true barriers because you don't have a right to enough capital to start, only the right to ask investors to provide it.

When does a price rise go from being entirely fair to being "gouging". I have never been able to find a consistant, logical definition of "gouging". People may talk of "excessive" increases, but who can define objectively what is an "excessive" price increase?

It seems to me that laws against "gouging" (whatever that is) are nothing more than arbitrary law, designed to help politicians gain votes by scapegoating.

Actually what should means nothing to the example. Coal mines, etc did not have standards of safety because the owners thought it was in their interests. The Unions forced them.

I agree, you make a valid point here. The problem comes when labour it self (by the union) becomes a monopoly. I say more below.



Ah but a surplus of labor and unemployment is to the business owners interest.

Not always, yes it makes labour cheaper but it also decreases the size of your potential market as there are less consumers (or should say people who now consume less becasue they can't afford it)



Not at all. Is it a free market when there is no competition? PGE is a monopoly. The authorites control them since they had this habit of gouging people. Electricity is not really one of those frivilous expenditures anymore.

That is why the government needs to intervene because the market breaks down when there is a monolpoly. When I say this I also include some of the labour unions as they are doing the same as monopoly companies. An example of when the unions had too much power is in the UK in the 70's which were one reason why the economy was stagnating. The problem is that the market will only work when there is plenty of competition otherwise organisations (unions, employers etc) will abuse their positions.

Each year (though not always) the workers (or their unions) ask for a wage increase ... because the cost of living has gone up (therefore the cost of the labour provided by the employee is higher, same reasoning why companies raise prices because of raising costs).

You are confusing cause and effect. Labour costs (indirect, and direct) are the largest proportion of the retail price of any item we purchase. I would suggest that it is the increase in wage rates that drives the cost of living up.

The exception is government interference such as higher taxes, tariffs, regulations, and inflation of the money supply.

I should point out that outsourcing is only better if the company can save money by employing someone else in a different country.

I think we all understood that.

For me the minimum wage is useful in the short run (if not set to high) as it benifits the poor, though I do understand that it will contribute to unemployment.

That is a contradiction in terms. Surely it is not good for the poor to be kept out of work.

You are confusing cause and effect. Labour costs (indirect, and direct) are the largest proportion of the retail price of any item we purchase. I would suggest that it is the increase in wage rates that drives the cost of living up.

It is both cause and effect. If something is in a cycle then there is neither begining or end and all are casuses and effects. I am sure I typed that the process begins again or something like that. If you are analysing a problem you have to start somewhere but that does not mean that where you start is actually a begining. I could have started at increaseing costs raise prices and then gone to say why the costs are rising. Then said the reasons I said before, but this does not change the actual essence of my logic as both starting points give the same overall argument.


The exception is government interference such as higher taxes, tariffs, regulations, and inflation of the money supply.

I agree that these contribute to market distortions and so higher prices (though I do support soem regulations - health and safety and minimum standards).



That is a contradiction in terms. Surely it is not good for the poor to be kept out of work.

I am sorry at this point I was getting fed up with typing and the last part was my gut feeling rather than logic. with gut feelings you often get contradictions. However this does not invalidate the logic I applied for the rest of my post (even if it was stating the obvious).

*Clicks into Econ-Mode*

1)
The studies done by the two economists mentioned in the article have been criticised and recriticised. Their results seem valid. You can think of all sorts of theoretical constructs to make them less important, but the fact is that in the surveyed industry the increase in the minimum wage did not seem to lead to lost jobs. Instead, prices rose somewhat (whether that's any better is for you to judge).

2)
Even though I have come to appreciate their message, I still have an aversion to the Austrians and their friends themselves. This article is poorly written, makes a poor case and lacks conclusive evidence. Random (descriptive, not inferential!) statistics are pulled out of nowhere (what exactly is "teenage unemployment" to mean?), once more confirming the stereotype that statistics is worth nothing. An economist should know better.

3)
Nonetheless, the evidence also suggests that the existence of minimum wages is a tiny factor as far as both the economy as a whole and the relative poverty of the unskilled workers is concerned. Germany doesn't have minimum wages, the US does. You tell me where you'd rather be an uneducated slob of a worker.

While I probably dont or cant understand the economic complexities, I do know that since the introduction of the minimum wage in Britain, the standard of living has increased. now it is over £5 per hour (thats about $8.75 I think) even working class people can afford to live! thats right. a few years ago I had to work for £3.20 an hour. this meant that I could basically afford food. now I can actually buy nice things occasionally. I can even afford a weeks holiday. in another country! (in may but its still good). prices have increased, but not at the same rate as wages.

Because of the minimum wage I have the internet to post this crap. In a while im gonna have a shower, with hot water and everything.

Under the conservative government 10 years ago the idea of me owning a computer or going to university or ever going on holiday seemed ridiculous. God Bless Tony and Gordon. Whatever other shit they have done, they have made my life and the life of my family much better than I ever expected.

Minimum wage kicks ass.

The studies done by the two economists mentioned in the article have been criticised and recriticised. Their results seem valid. You can think of all sorts of theoretical constructs to make them less important, but the fact is that in the surveyed industry the increase in the minimum wage did not seem to lead to lost jobs.

Their results are useful to minimum wage proponents, ergo, they seem valid.

The methods used in that particular survey are highly questionable, and frankly, amateurish. The only reason it could have been published is that its conclusion was useful to minimum wage proponents, as it allowed them to seem to step above the emotional arguments.

Instead, prices rose somewhat (whether that's any better is for you to judge).

Good for those in that industry. Bad for everyone else. The differnce is price could have gone to all manner of other goods and services. Society as a whole is stuck with less wealth due to state interference.

It must also be pointed out that the market can only take so much price raising to compensate for political whims.

This article is poorly written, makes a poor case and lacks conclusive evidence. Random (descriptive, not inferential!) statistics are pulled out of nowhere (what exactly is "teenage unemployment" to mean?), once more confirming the stereotype that statistics is worth nothing. An economist should know better.

The problem with trying to prove economic arguments is the single-cause fallacy. Zolworld is the biggest perpetrator of this, attributing everything good in Britain to the minimum wage.

Nonetheless, the evidence also suggests that the existence of minimum wages is a tiny factor as far as both the economy as a whole and the relative poverty of the unskilled workers is concerned. Germany doesn't have minimum wages, the US does. You tell me where you'd rather be an uneducated slob of a worker

The evidence suggests nothing more than a coincidence, the minimum wage happens to be somewhat close to the market clearing level, at least within a tolerable range of it, with a price increase to compensate.

All this in fact indicates is that the government was moderate in its interference.

However, it must be noted that employment statistics regarding minimum wage workers are probably unreliable because of the millions of illegal immigrants, who don't have to be paid the minimum wage.

I could have started at increaseing costs raise prices and then gone to say why the costs are rising. Then said the reasons I said before, but this does not change the actual essence of my logic as both starting points give the same overall argument.

There is no reason for a price rise without increasing costs, unless you're going to contrive some notional company with a perverse desire to price itself out of the market.

Their results are useful to minimum wage proponents, ergo, they seem valid.
Yeah, right.

The methods used in that particular survey are highly questionable, and frankly, amateurish.
You read it? I did. Standard Econometrics, nothing special about it.

But maybe you'll believe my review of the article, which I wrote last semester for one of my courses more.
Card, D. and Krueger, A. D. 1994. Minimum Wages and Employment: A case study of the Fast-Food Industry in New Jersey and Pennsylvania. The American Economic Review, 84(4): 772 – 793.

This article by David Card and Alan Krueger investigates the effects of an increase in the government-legislated minimum wage on the employment of workers in the fast food industry. Using various statistical tools for the analysis, the authors come to the conclusion that employment levels either remained fairly unchanged or actually increased rather than decreased – contrary to what various labour market models suggest.

In November 1989 the US state of New Jersey decided that the minimum wage for the state should be increased from US$3.35 to US$5.05 over two years. As this would primarily affect the lower end of the labour market, and presumably force businesses to reduce employment levels, the legislation was opposed and almost defeated. Another three years later, the authors decided to investigate whether the predictions made by standard labour market models were in fact correct.
For this, they surveyed about 400 fast-food stores both before and after the new laws came into effect, establishing such things as the price of a simple meal and how many full-time equivalent employees are currently employed. Instead of only focussing on New Jersey, they used neighbouring Pennsylvania, where there was no minimum wage change as a control sample. They furthermore assert that the economic situation is unlikely to affect the sample significantly, as a time of recession permeated the entire sampling period.

Their results were surprising: There seemed to be no significant decrease in employment levels after the minimum wage was increased. In fact, the two authors found that there was evidence supporting an increase in employment, something that goes against the traditional understanding of this market.
They thus attempt to explain this unusual result primarily through a possible decrease in non-wage components of the employee’s remuneration, and perhaps also on-the-job training programs and the like, but further statistical analysis did not indicate that this was the case. A second possible explanation was that new employees would remain on minimum wage for longer, without receiving a raise, but this too was not shown to be the case.
Thirdly they see whether or not prices increased as a result, such that the increase in cost would be offset by higher revenues. The evidence in this case is mixed, for while prices as a whole rose in accordance with expectations for New Jersey, the nature of the price rises did not fully reflect the individual impact the changing legislation had on the business. The authors explain this through pressures in the market which make it impossible for great price differences to persist.
In another investigation the Card and Krueger hope to see whether the increase in minimum wages discouraged the opening of new restaurants. Since this could not be seen from their survey, the instead used data on the number “McDonald’s” Restaurants before and after the changed legislation. But a regression on this data yields that the discouraging effect of higher minimum wages on store openings is negligible.

Of course when such a counter-intuitive result is obtained, it is not easily accepted. Thus the authors continue by assessing employment statistics for the whole of the relevant states obtained from the local government. They find here that New Jersey did grow slightly slower than neighbouring states as far as adult employment is concerned, but in teenage employment New Jersey actually performed better. They conclude that the standard error of this is probably too great for it to be proper evidence, although it at least does not go against the results of their study.

But it is obvious that such a study will have to stand up to criticism from many. The traditional labour-market models have long been accepted as correct, and so various authors have criticised the findings of Card and Krueger and provided their own data. Particularly the 2000 comment by Neumark and Wascher stands out here, as it provides a different data set to test for the same result, namely payroll records in the industry, and find a different result. A number of other authors have criticised the actual statistical analysis undertaken by Card and Krueger as well, but Neumark and Wascher have probably provided the most compelling case for why the results are false, despite a reply that re-assesses various data sets and comes to the conclusion that at least there has not been a decrease in employment.

Indeed it can be said that the sample and the survey methods used by the Card and Krueger has some weaknesses. It is difficult to accurately establish whether the employees at any given restaurant are actually working on the minimum wage without having access to the payroll, and a simple comparison of hours worked before and after may not provide enough of an insight into the structure of the labour force in the market.
This important topic is covered by another study by Neumark and Wascher, who contend that changes in the minimum wage do have significant effects on the teenage labour market through affecting the number of school leavers. A simple comparison of the possible benefits from attending school compared with earning a minimum wage at work supports the notion that a higher minimum wage makes school more attractive compared to further education. The authors find statistical evidence for this and again conclude that traditional models do apply in this situation, and that results which indicate a different view likely stem for errors in the analytical process.
On the other hand, a study by Belfman and Wolfson published in Australia in 1999 investigates many American industries with methods similar to Neumark’s and Wascher’s and finds the effects of minimum wages on employment as a whole to be fairly small. They explain this partly through information asymmetry, citing papers by Akerlof and Stiglitz.

Ultimately the results of the original study by Card and Krueger may well be questioned, as their sampling method may indeed have missed a number of vital factors. Nonetheless it is often a good idea to challenge conventional wisdom, as the debate that follows often serves to add new evidence to our understanding of economics.
As far as the specific topic of minimum wages is concerned, it is probably unlikely that a simple neo-classical labour market model is an accurate reflection of reality (be it for difficulties in forming demand or supply curves without given marginal benefits and costs or for other reasons), but that the conclusions reached by the model ultimately remain somewhat true. If the employer faces higher costs, he or she will strive to reduce them, and that usually entails a revision of his employment-structure. In this process, the low-skilled employees are then most likely to find their employment terminated, and this needs to be kept in mind when policymakers are to make a decision.

References

Neumark, D. and Wascher, W. 2000. Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment. The American Economic Review, 90(5): 1362-1396.

Neumark, D. and Wascher, W. 1995. Minimum Wage Effects on School and Work Transitions of Teenagers. The American Economic Review, 85(2): 244-250.

Belfman, D. and Wolfson, P. Its Bark is Worse than its Bite: The Wage and Employment Effects of the Minimum Wage in the US. Australian Economic Papers, 38(2): 143-163.
As you can see, there has been extensive criticism, as well as replies to the criticism. The jury is still out, but I for one would not claim that it is impossible for their original results to be true.

The only reason it could have been published is that its conclusion was useful to minimum wage proponents, as it allowed them to seem to step above the emotional arguments.
All those mimimum wage proponents running the American Economic Review? Come on, man, get over yourself for once.
There are always exceptions to a rule, and a scientist knows that even a proven relationship can at times be cancelled out by other influences.

Society as a whole is stuck with less wealth due to state interference.
It may interest you that in the past months of your absence my stance on a number of issues has changed quite a bit.
And while I'll still stand up to your at times over-the-top arguments if they are incorrect, you can rest assured that on economic issues at least, I am much closer to your views now than I was a few months ago.

Blame my grandma.

I happen to come from the jurisdiction with the lowest minimum wage in Canada, but the highest standard of living, and the lowest number of people who work for minimum wage.

Wages are kept high by labour shortages. If there's too much labour, then the wages fall. This makes perfect sense. Employers will pay as little as possible, but they compete with one another for labour. Labour is a commodity; let us treat it as such.

I reckon this region you're talking about is Alberta and happens to be a bubble economy because of the oil industry (betuminous sands oil), extremely polluting.
That is an extremely artificial and volatile, big money oasis, which by the way it is going isn't going to last very long (50 years or so), and leave alberta a wasteland afterwards, with insurmountable environmental costs, not billed to the companies causing it.
It also happens to be a very good example of what happens when corporate decisions and market pressure win over the government decision makers (the only ones which can be directly evaluated and reprimanded by the general population).

There is no reason for a price rise without increasing costs, unless you're going to contrive some notional company with a perverse desire to price itself out of the market.

There are several possible reasons that could cause the price to rise without increasing cost:

1. Demand massively increases so increasing the market clearing price (e.g chinas demand of oil is a big factor in the increase in oil prices).

2. Supply become restricted (e.g import quotas increased so oversea firms are priced out of market so reducing supply. e.g the EU)

3. Government increases VAT/sales tax, this increases prices to the consumer and so the cost to workers of providing their labour increases. Thus starting the cycle at a price increase not cost increase to company.

4. consumer fasion (e.g nike label, Apple ipod), higher number of consumers more willing to pay a higher price than normal.

5. Disasters, (usually apply to primary industries, like drought affects agriculture). I admit this is like point 2.

6. Cartel, market breaks down, so can keep prices artificially high (like your example on unions).

All the above cause a price increase that then leads onto higher costs due to inflation rather than the other way round.

I reckon this region you're talking about is Alberta and happens to be a bubble economy because of the oil industry (betuminous sands oil), extremely polluting.
That is an extremely artificial and volatile, big money oasis, which by the way it is going isn't going to last very long (50 years or so), and leave alberta a wasteland afterwards, with insurmountable environmental costs, not billed to the companies causing it.
It also happens to be a very good example of what happens when corporate decisions and market pressure win over the government decision makers (the only ones which can be directly evaluated and reprimanded by the general population).

I thought one of the conditions for allowing the companies to work there was that they had to return it back to the way it was before (except without the oil). So the companies have agreed to take on the costs of repairing any damage they do and also limiting the damage they do.

So it is better to have nothing, than a little of something? Let us take a trip outside of fairyland for a while. Perfection simply doesn't exist, and history has shown that the more economic freedom a place has, the better the living standards, there'll be, and the less poverty will be evident.

Of course, it must be noted that capitalism has meant the what is poverty today was damned wll off 150 years ago.



Have you any economic sense at all.

Let me put this simply:

For a company to remain profitable, they must cover all their production costs, plus some profit within the selling price of the item.

If the costs of labour are arbitrarily raised (by such measures as a minimum wage), the selling price of the goods and services on offer must be raised to compensate.

The prices increase. Labour costs (direct, and indirect) comprise the vast majority of the selling price in any item.

Let me explain the difference between direct and indirect labour costs.

An example: The ACME Widget Company sells Widgets. Its direct labour costs are what ACME pays its workers.

To produce Widgets, ACME needs goods and services from other companies, from raw materials, to phone/internet services. ACME pays these companies for these goods and services, and these companies pay their employees. The latter payments are ACME's indirect labour costs.



Since US firms are outsourcing, and hiring illegals, I'd say my opinion has found wide agreement. Obviously these firms think labour costs in the official US labour market are too high. If they were satisfied with these costs, they would simply pay them.



It doesn't strike you as odd, that tighter work regulations with better social protection (free healthcare, free education,etc.) works in actual real-life countries, that end-up with there being much less poverty and injustice, and still having strong businesses, only better managed and actually producing good quality goods, BECAUSE the employees are paid good, fair wages for their good, fair work. (eg Sweden, opposed to the US which has the biggest gap in personnal annual earnings on the planet)
Wall-Mart is shit all-round, from its labour policies to its services. Many big corporations follow the same line of thinking. Others don't, those are the ones I buy from, because those are the ones I would like to work for.
Cut taxes for comapnies say the corporate money guzzlers, cut subsidies I say and see how much the likes of Wall-Mart benefits from that. It sucks out billions annually out of american tax-payers because it basically hands it's social responsibilities to the govt..

As you can see, there has been extensive criticism, as well as replies to the criticism. The jury is still out, but I for one would not claim that it is impossible for their original results to be true.

Their method of survey was to call them, and ask what they intended to do as regards hiring.

That is amateurish in anyone's book.

What the study proved was that New Jersey happened to be moderate on that occasion. By moderate, I mean the increase in the minimum wage was small enough, and the market flexible enough to absorb the rise with a price increase.

I, for one don't have faith that they can keep this up. Something must give eventually.

Their method of survey was to call them, and ask what they intended to do as regards hiring.
Such is the beauty of econometrics, my friend.

Data collection is always the Number One problem, but the methodologies once you have a set of data are valid. And as I indicated in my review, after the authors were criticised for having used this particular method of collecting sample information, they redid parts of the study using more in-depth data (including actual payrolls) and found that the negative relationship still didn't manifest itself.

Whatever the reason, the study found that there can be cases in which increases in the minimum wage do not lead to the massive suffering some would predict. And the article from the OP does not make a very good case against it. Which was my point.

Neu Leonstein

Hi, just a quick check as you seem to have research it in some detail. Did they take into account that companies may be incouraged by a minimum wage to employ people who are not part of the official labour market. An example would be taking on illegal imigrants to replace the workers who would benifit from the increased wage. From reading another thread people seem to think that a large number of employees of the fast food comapnies were not part of the official labour market.

I am not critising yet, I just want to know if they took this into account as not doing so would undermine their results. If they did take this into account them I am impressed with the results, though confused as it does not seem logical to me.

Though I would agrue that a previous increase/introduction of the minimum wage may have different results to increasing the min wage further as it may go above the market clearing price (as people have said on this thread already) while it wasn't before.

I thought one of the conditions for allowing the companies to work there was that they had to return it back to the way it was before (except without the oil). So the companies have agreed to take on the costs of repairing any damage they do and also limiting the damage they do.

To the original state only without the oil. Right, the comanies are going to suck out the third of the oil mined that is used to power the refineries out the air. Transport trillions of cubic meters of soil (from where I ask?)to replace the extracted oil, and still manage to make a profit... Not likely, the original 'state' has changed since the mining started. Ask the locals what they think of the dead fish floating down the river, where they used to teach their kids how to fish. People can't eat money or live on it like land.

To the original state only without the oil. Right, the comanies are going to suck out the third of the oil mined that is used to power the refineries out the air. Transport trillions of cubic meters of soil (from where I ask?)to replace the extracted oil, and still manage to make a profit... Not likely, the original 'state' has changed since the mining started. Ask the locals what they think of the dead fish floating down the river, where they used to teach their kids how to fish. People can't eat money or live on it like land.

I stand corrected, i was going by what I heard on the news

Did they take into account that companies may be incouraged by a minimum wage to employ people who are not part of the official labour market.
Not really. They really just tested that one relationship - minimum wage & employment levels.

It wasn't a huge study with heaps of detail. Not sure whether you have access to JSTOR, but here is the whole thing:
http://links.jstor.org/sici?sici=0002-8282%28199409%2984%3A4%3C772%3AMWAEAC%3E2.0.CO%3B2-O&origin=repec

And if you don't, here is their reply to some of the criticisms, which is free to access:
http://www.irs.princeton.edu/pubs/pdfs/90051397.pdf

Once again Undelia your response makes me want to kick your mom in the ovaries for spawning such an unfeeling conceited synonym for male reproductive organ.
Well, he is right. Look at Britain, early 20th century concessions to socialism got them a relatively content working class. Tsarist elitism and wealth hoarding gave the Russians a working class revolution.

Not really. They really just tested that one relationship - minimum wage & employment levels.

It wasn't a huge study with heaps of detail. Not sure whether you have access to JSTOR, but here is the whole thing:
http://links.jstor.org/sici?sici=0002-8282%28199409%2984%3A4%3C772%3AMWAEAC%3E2.0.CO%3B2-O&origin=repec

And if you don't, here is their reply to some of the criticisms, which is free to access:
http://www.irs.princeton.edu/pubs/pdfs/90051397.pdf

Thankyou, I read their reanalysis of data and the way they did it excluded my assertion (or most of it any way) as they looked at official payrolls. These would not include employees not in the official job market (unless using stolen idenitiy etc) and they still showed a small increase in employment. If my assertion was correct then on official payrolls employment should go down.

All they need to do now is do a more indepth analysis as thiers looked at single factor which made no adjustments (or very little) for outside influences. They need to look at the demand/number of customers which if increased would cause employment to increase, they also need to look at inflation effects which would each away at the wage increase (lessening its effect). They also need to look at the state economy as a whole (is it growing or shrinking) and the propensity of customers to go to the sample resturants depending on the economic outlook (ties in with demand). They also need to look at any changes in other state regulations that affect restaurants. Also looking at population changes between the states (ties in with demand)

I do admit though that due to the fedural wage increase they had two data sets to look at which would usually minimise these effects on the data, however these should be investigated to confirm their results. As they have looked at the data in more detail they should try and explian why the min wage is having this effect and also have another research group do further analysis on atleast two other states. This would then fully convince me, at the moment it just puts doubt in my mind about the conventional theory.

I wish minimum wage had never gotten started. On the other hand, I think that employers should be encouraged to pay a good wage through social pressure, such as public disclosure of wages paid for certain positions. If the minimum wage went to zero, only the most unscrupulous employers would lower wages for existing employees. Those employees would then have an opportunity to look for a better paying job or relocate to a more competitive market.

Industry should be in the position of competing for the best workers. Good pay and benefits will attract a larger pool of applicants and workers will compete for these attractive jobs. Is a win-win.

When employers are forced to pay a minimum wage for unskilled labor it forces prices up and inflation. The unskilled laborer should be motivated by the low wage to gain skills and improve thier lot. No one should work for less than they feel they are worth, but a low paying manual labor job can be a stepping stone to a better position. People should not view these positions as lifetime carreers, and folks with families should not consider them as such. Its a matter of education and personal development. If someone is willing to work for .03 and hour, its fine by me. I would, however have a dim view of the employer who capitalized on such a relationship and take my business elsewhere.

Cities that encourage employers to pay well will reap the benefits of an increased tax base and prosperity. Tax abatements and whatnot can be based upon a contract where the employers promise to meet certain employment expectations in order to qualify. Greater social awareness and education can have so much more of a profound affect on an economy than mandated minimum wages do, and at less expense to the tax-payer.

I would say that one explanation for that study is that it dealt only with retail, and it is quite possible that retail employment is more often tied to production costs and inventory than to direct retail labor costs.

Needless to say, the idea that a minimum wage will not reduce labor demand makes absolutely no sense to me.

On the other hand, I think that employers should be encouraged to pay a good wage through social pressure, such as public disclosure of wages paid for certain positions.

The labour transaction should be confidential. If the parties want to disclose the terms of a contract, that is their business. If they do not, then it is a violation of their rights to order them so to do.

What drives increases in real wages (what you're suggesting cannot increase real wages, only wage rates) is increases in productivity.

The labour transaction should be confidential. If the parties want to disclose the terms of a contract, that is their business. If they do not, then it is a violation of their rights to order them so to do.

What drives increases in real wages (what you're suggesting cannot increase real wages, only wage rates) is increases in productivity.

Only way you would have this increase in productivity is if workers worked harder to create and innovate products. TO do so i profess the idea that corporations should pay a salary and give employees stock in the company to tie thier productivity to the companies profit earnings. Would cause people to work in a team spirit (win win situation for all)

Only way you would have this increase in productivity is if workers worked harder to create and innovate products. TO do so i profess the idea that corporations should pay a salary and give employees stock in the company to tie thier productivity to the companies profit earnings. Would cause people to work in a team spirit (win win situation for all)

Not necessarily. Increases in productivity tend to be tied to capital accumulation, allowing the purchase of more tools. It is also tied to technological advancement, better tools if you will.

Let us take a hypothetical example, the transport of small chocolates from a factory to a place 100 miles away.

Worker A has very little capital behind him, less than a dollar, and primitive technology. He transports his chocolates in two buckets on a stick which he carried across his shoulders. He would take up to 10 days to transport 10 kilograms of chocolates 100 miles.

Worker B has several hundred thousand dollars behind him, and sophisticated technology. He is a train driver. He transports 20000 kilograms of chocolates in less than two hours to the destination.

Now, as to profit sharing, if a firm wants to do it, fine, but the call for profit sharing resolves itself to the government forcing firms of engage in the practice. Firstly, if the government wishes to use force to give workers more, then they should tax more, and give the money out of general revenue. Secondly, wages are simply a price for labour. Workers are not themselves responsible for the success of a business, factors such as good managment, good tools etc are also repsonsible, but the single factor which is behind them all, and is therefore the reason for the success of a business is the sound use of capital. Those who risked their wealth to provide capital should be rewarded fully for investing prudently. To steal these rewards due to investors is to reduce the incentive to invest. This means that the growth of productivity is restrained, which means the lot of the worker is not improved as much as it would be in a free market.

Thirdly, of a business is making a loss, under a profit-sharing arrangement, the workers should have to pay from their own salaries in order to meet the business' obligations. Profit-sharing must also include loss-sharing.

Fourthly, profit-sharing, like the idea that workers wages should be paid enough to buy what they produce, is simply another scheme to arbitrarily raise the costs of labour. Arbitrarily raising the costs of labour leads to a loss of real wages, and an increase in unemployment. No matter what dodges you use, the effect is the same.

[QUOTE=Disraeliland 3]The labour transaction should be confidential. If the parties want to disclose the terms of a contract, that is their business. If they do not, then it is a violation of their rights to order them so to do.
QUOTE]

Actually, this information is already available on the web in very general ways. You can google "wages paid in Kansas" for instance, and get a run down of the average wage paid for thousands of positions. Then you can compare that to what an employers averages for that same position and make a decision based on that. This is extremely helpful for folks moving from one economic area to another, for example from New York to the midwest.

Now the only reason that employers want wages kept secret is because they are embarassing low pr they are hiding other inequities such as discrimination in pay rates. An employer that pays fairly and well will readily admit it. So that is horseshit about wages being private.

Workers need to recognize that they have both the ability and the right to negotiate their pay and not settle for less than they can live on. And they don't necessarily need unions for this.

OMG, thank you for saying this.

I just recently endured six weeks of unemployment to hold out for the wage I figured I needed to continue my lifestyle and comfort at the level I am accustomed. Its a self-esteem thing. Being unemployed and having crediters calling and utilities being shut off is demeaning, but if you can hold out and not get bogged down in a low paying job, you will make up for lost time quicker than if you were underemployed.

Being underemployed does nothing for self-esteem and makes one largely too exhausted and beat down to look for better wages. Don't take a stop gap, low-paying job if you have a choice. But the whole time you are not employed, you better make acquiring a good job your FULL TIME JOB. Nothing pays better than the effort to obtain a higher wage, and it very empowering.

If you are worth what you think you are, you WILL find someone to pay that price. Self-confidence is a very sexy and admirable trait. But self-confidence without self-esteem is an act everyone can see through. Do what you need to do in your life to boost your self esteem and you will always end up on top.

The other thing you have to remember is this: If somebody comes along and takes that job I just refused, it is NOT MY LOSS. That wage you just refused may actually be a step up for the person who just got it. It's all good.

In effect, paying an unreasonable wage to employees is financial anorexia.

And you don't think the employer's realize this? Here is the other side of this coin: Not all employers are huge corporations. Small business owners make up a huge segment of the job market. As a small business owner, I realized that you get what you pay for. You pay minimum, you get teenagers who don't need jobs. You pay well, you get lots of applicants to choose from, very low turn-over (constant turnover is much more expensive than reasonable wages), and a better staff.

The minimum wage is irrelevant to smart business. It only matters when the need is quantity over quality such as manual labor situations. Anyone who wants THOSE jobs is welcome to them, says I.

we should instead have a maximum wage law. If we don't waste 400 million dollars compensating CEO's maybe there will be more money for the workers who actually get the work done.

THIS IS PURE GENIUS! I LOVE IT! =D

Disraeliland, you seem to assume that companies will pay their employees fairly even without minimum laws. That’s pure bull… In all the jobs I’ve had so far, and it’s been quite a few by now, I have gotten nothing but the bare minimum. Nothing more, nothing less.

I fail to understand how your willingness to work for peanuts requires any government intervention at all. If you are willing to eat dog food, do we need to pass a law banning the human consumption of dog food?

You work for minimum wage because that is all you think you are worth.

So may I assume that everyone here who is against the concept of minimum wage would be willing to do their respective jobs for a dollar (or pound, etc.) a day?

I don't think you have been reading the thread.

Those of us who would do away with the minimum wage generally believe that people seeking jobs should refuse to work for less than they believe they are worth. THIS is what holds up wages: A refusal to work for less.

The minimum wage laws are an act of futility for all but the most unskilled, uneducated, unintelligent workers, um yeah, and those that don't read.

The labour transaction should be confidential. If the parties want to disclose the terms of a contract, that is their business. If they do not, then it is a violation of their rights to order them so to do.

What drives increases in real wages (what you're suggesting cannot increase real wages, only wage rates) is increases in productivity.

Why should it be private?

If you belive in "market competition" then the wages paid doesn't need to be private.

And again which you LOVE to ignore is the fact that productivity does NOT increase wages. As told to you time and time and time and time and time and time again. Americans are working longer and making less.

You work for minimum wage because that is all you think you are worth.

If it was only that simple.

Sometimes that is all there is.

And again which you LOVE to ignore is the fact that productivity does NOT increase wages. As told to you time and time and time and time and time and time again. Americans are working longer and making less.

Wow, that's an interesting assumption to make. There are some who would disagree with you, but I suppose you're more qualified than the United States Bureau of Labor Statistics, who say that real wages have gone up with productivity.

Wow, that's an interesting assumption to make. There are some who would disagree with you, but I suppose you're more qualified than the United States Bureau of Labor Statistics, who say that real wages have gone up with productivity.

Well the problem with the states is that they don't include hours worked. If you are salaried then all the include is 40 hours. Many people these days are putting in 50-70 hours.

I have seen many news reports over the the last few years that talk about working long for less.

-edit-

I might add to is the level of increase. If you get 1-2% and the Cost of Living increases 3% every year. Sure by simple numbers you did get an increase.....

Why should it be private?

The dealings of others are only your business if they directly affect you. What I, and someone else might agree is nothing to do with you.

If you belive in "market competition" then the wages paid doesn't need to be private.

That is not the point, the only people with a right to know what is in a deal are those participating in that deal. Third parties have no right to know, though the parties of the deal may decide to give them permission to know.

And again which you LOVE to ignore is the fact that productivity does NOT increase wages. As told to you time and time and time and time and time and time again. Americans are working longer and making less.

Increases in productivity increase real wages. In any case, you so-called point (I refuse to call it a serious point) is simply a single-cause fallacy. There are many other factors affecting the real earnings of Americans. The fact that prices are rising alone ought to show you that.

Working longer does not necessarily mean higher productivity. Also, America constantly debases its currency, causing prices to rise. Regulations add yet more costs to business (or otherwise prevent more productive strategies), a heavily regulated labour market adds more, and taxes add still more.

Whatever increases in productivity are being absorbed and then some.

Actually, this information is already available on the web in very general ways. You can google "wages paid in Kansas" for instance, and get a run down of the average wage paid for thousands of positions. Then you can compare that to what an employers averages for that same position and make a decision based on that. This is extremely helpful for folks moving from one economic area to another, for example from New York to the midwest.

That knowledge does not come to you as a matter of right, but as a privilege the employer gives you. Unless he tells you, or in some other way permits you to know, you've no right to know. In any case, you and I both know (or ought to) that such prices are merely an asking price, the real price agreed may be different.

I, and everyone else has a right to have confidential dealings with others. You have no right to poke your nose into my affairs. I may decide to tell you of my dealings, but that decision is up to me, and those with whom I deal.

THIS is what holds up wages: A refusal to work for less.

No, it doesn't. It holds up wage rates, while increasing prices due to increased labour costs. It holds down real wages.

Well the problem with the states is that they don't include hours worked.

No, they actually DO include hours worked. They have an average amount of time spent on work in their statistics.

If you are salaried then all the include is 40 hours. Many people these days are putting in 50-70 hours.

I know. And they account for this in their statistic for how many average hours worked.

I might add to is the level of increase. If you get 1-2% and the Cost of Living increases 3% every year. Sure by simple numbers you did get an increase.....

I know this. So does the Bureau of Labor Statistics, and they have accounted for the rise in CofL by adjusting it for inflation, which equates real wages. Still, real wages have risen with productivity, for each hour worked.

The dealings of others are only your business if they directly affect you. What I, and someone else might agree is nothing to do with you.

Ahh but you are after the best workers for the best salary. If you hide what you are paying then you probably aren't paying much. The fact you want this hidden says you don't want to pay what the market will bare.

So I am getting the picture you believe in the market system with some modifications.


That is not the point, the only people with a right to know what is in a deal are those participating in that deal. Third parties have no right to know, though the parties of the deal may decide to give them permission to know.

We make the executives of a company publish their income. What's wrong with posting the salary levels of a job classification?

Unless of course you don't like the idea of having to compete for the best workers.


Working longer does not necessarily mean higher productivity. Also, America constantly debases its currency, causing prices to rise. Regulations add yet more costs to business (or otherwise prevent more productive strategies), a heavily regulated labour market adds more, and taxes add still more.


The fact they are working longer is because they have to cover the workload that would require an extra employee. When you get the work done with less people that is a PRODUCTIVITY increase! Especially when you don't have to pay by the hour!

No, they actually DO include hours worked. They have an average amount of time spent on work in their statistics.

I know. And they account for this in their statistic for how many average hours worked.

I know this. So does the Bureau of Labor Statistics, and they have accounted for the rise in CofL by adjusting it for inflation, which equates real wages. Still, real wages have risen with productivity, for each hour worked.

Guess it depends on the industry and the state......

If it was only that simple.

Sometimes that is all there is.

There is always self-employment....

The Abolishment of Minimum Wage is based on the same deluded notion of corporate altruism that fuels Supply Side Economics: Basically the idea that giving companies more money will enable them to give more money to their employees and thus consumers.

Corporations never give more than they are forced to and will gladly take more than they have to whenever the chance is presented. Otherwise there would have been no such thing as an outsourcing epidemic in the United States.
I agree. Corporations are the cancer of the world.

Ahh but you are after the best workers for the best salary. If you hide what you are paying then you probably aren't paying much. The fact you want this hidden says you don't want to pay what the market will bare.

So I am getting the picture you believe in the market system with some modifications.

I said nothing of the sort. I said you had no right to know. It is in their interests to tell you the possible salary, but that is not the point. It was suggested that companies should be obligated to tell you as a means of "social pressuring".

We make the executives of a company publish their income.

That is the first relevant statement you've made. I don't see why anyone save the shareholders has any right to know the incomes of executives. The reason the shareholders have a right to know is they own the company, and are therefore employing the executives. They should not be forced to tell anyone else.

What's wrong with posting the salary levels of a job classification?

Unless of course you don't like the idea of having to compete for the best workers.

I said companies should not be forced to tell people. That they can decide to if they wish to, but there is no reason to force them as was suggested originally. Do you read what I post. Where do you link the idea of people deciding freely to do something because they believe it to be in their best interests on the one hand, and being forced to do it?

They're complete opposites. How can you link them together?

Guess it depends on the industry and the state......

Of course. But the overall trend has been that rises in productivity have been mirrored by rises in real wages.

There is always self-employment....

True.

I should have clarified. I was thinking in my moms case. Divorsed young woman with 2 children. No skills. She lived the "family values" and tried the stay at home mom thing.

She tried for a job and did the minimum wage thing because that was all she could find.

She later confessed to doing welfare(which I am sure D3 thinks is an abomination ;) ) which allowed her to do night school rather then 2-3 jobs to get by. She eventually became an RN......

Teenagers work because living with your parents doesn't pay for college or get you a car. The things one needs to aquire en route to adulthood aren't just given as gifts from mommy and daddy.

It would if teenagers were pulled out of the workforce, increasing competition among employers to hire the remaining adult workers.

I said nothing of the sort. I said you had no right to know. It is in their interests to tell you the possible salary, but that is not the point. It was suggested that companies should be obligated to tell you as a means of "social pressuring".

That is the first relevant statement you've made. I don't see why anyone save the shareholders has any right to know the incomes of executives. The reason the shareholders have a right to know is they own the company, and are therefore employing the executives. They should not be forced to tell anyone else.


:D As I suspected. You support the "market system" from the managment/owners side.


I said companies should not be forced to tell people. That they can decide to if they wish to, but there is no reason to force them as was suggested originally. Do you read what I post. Where do you link the idea of people deciding freely to do something because they believe it to be in their best interests on the one hand, and being forced to do it?

Forced to is a matter of opinion. The only one talking about being forced is you.

If you don't want to complete for the best workers then yes you don't want to post salaries.

Compitition for employees involves salary.

They're complete opposites. How can you link them together?

As I suspected. You support the "market system" from the managment/owners side.

Mule fritters. I don't know where you get this stuff, but it certainly isn't from me.

Forced to is a matter of opinion. The only one talking about being forced is you.

Not correct. And I quote:

On the other hand, I think that employers should be encouraged to pay a good wage through social pressure, such as public disclosure of wages paid for certain positions.

Clearly, such disclosure is firstly, not intended to be used for competition for the best workers, and secondly, intended to be involuntary. Were it voluntary, it would become entirely useless for the purpose Unrestrained Merrymaki advocated.

If Unrestrained Merrymaki had advocated purely voluntary disclosure, no one would do it, except in the prospective manner for the purpose of competing with other employers. They would certainly not disclose every wage scale so that the mob (sorry, "society") can scrutinise it, and give its approval, or disapproval. For this idea of "social pressure" to work, firms must be forced to disclose.

Also, where used to compete with other potential employers, the figure is disclosed before the deal and is an approximate figure subject to negotiation. The final figure may vary from the advertised figure, and that figure (which is the final figure representing the actual salary to be paid, plus other benefits etc) need not be published as it is no one else's business.

If you don't want to complete for the best workers then yes you don't want to post salaries.

Compitition for employees involves salary.

All entirely irrelevant to what I was discussing with someone else. If you're going to reply, you should at least trouble yourself to read what I wrote, and read what it was I was replying to.

The fact they are working longer is because they have to cover the workload that would require an extra employee. When you get the work done with less people that is a PRODUCTIVITY increase! Especially when you don't have to pay by the hour!

Productivity is (should) be calculated on output per unit time per unit inputs. If the total extra time you and other employees put in to cover the missing employee are greater than what the extra employee would have put in then the productivity is lower not higher. If the extra time you put in is less then you will have an increase in productivity.

Gents.

Let's change over to the job thread as this discussion has long since left the minimum wage topic.

-a link would be useful-
http://forums.jolt.co.uk/showthread.php?t=481321

I fail to understand how your willingness to work for peanuts requires any government intervention at all. If you are willing to eat dog food, do we need to pass a law banning the human consumption of dog food?

You work for minimum wage because that is all you think you are worth.

No, I work for minimum because that’s all that’s being offered. At least with my qualifications at that point in time…
That’s why I quit my job and started studying again. Not that I actually like spending 40+ hours a week reading and doing assignments, but I keep reminding myself of the big fat paycheck I’m getting when I’m done…

Mind you, due to the excellent Union support and the minimum wages laws, minimum payment is adequate to live on. You won’t get rich, but you won’t be starving either.

Point is, that unless the government and Unions had forced the companies to accept a certain standard as regards wages, then the jobs I had would not have been enough to support me. The companies’ unwillingness to pay more than minimum does not exactly give me confidence that they would pay me any more than strictly necessary unless forced to do so.

I do not work for minimum wages because that’s all I’m worth. I’m working for it because it’s all that’s being offered. And because having a minimum paying job, shitty as it might be, is better than not having a job at all…

Don't let Undelia hear that...he won't believe you. If you make minimum wage it is because that is what you are worth.