The tug-of-war between rich and poor can best be seen in terms of setting a "minimum" wage, whereupon workers are payed more by enforcement of law rather than what they would normally get in the free market. When it was first established in 1938, the industrialists scoffed, the laborers cheered and the economists argued. How does establishing a minimum wage effect american life? God knows Santa Cruz County is about to find out...

Minimum wage

Questions for Debate:
1. Is a minimum wage a good or Bad thing?

2. What are the economic effects of having a minimum wage?

3. What should the minimum wage be set at in america right now?

I'll freely admit that I'm not an economist, so take whatever I'm about to say with that in mind. Nonetheless, I do know that one of the most discredited economic practices is price controls, and wage controls are just a form of price control. They always wind up either making the sought-after commodities scarcer, or altering the effective value of money so as to completely counteract the effects of the controls.

No doubt someone will cite studies purporting to show that minimum wage laws do not exacerbate unemployment, but the questions that should always be kept in mind when evaluating such studies is first of all how much the law raises prevailing wages above what they already were, and secondly, if it merely resulted in an increased cost of living that completely offset the growth in wages.

Questions for Debate:
1. Is a minimum wage a good or Bad thing?

I think it's a good thing for many reasons. Mostly it's a safety net for jobs that could exploit people for much lower wages. The joke of it all is that min wages are poverty wages now. SO all the people that say "we don't need min wage because wages are higher" are missing the point that min wages are actually poverty wages. $5/hr is slave labor wages. In my poor neighborhood it costs $600 for rent, that's 120 hours or 3 weeks at 40 hours for $5/hr to earn 1 month's rent. That leaves $200 left to pay for a car, eat, etc. It's a joke.

At this point, it's a safety net, a pretty pathetic safety net at that. And IMHO, the only reason min wages are so low is so companies can continue to pay temporary legal workers NOTHING.

I think it's a great thing and needs to be RAISED. Along with removing the tax cuts on the billionares.

2. What are the economic effects of having a minimum wage?

From what I've read, the min wage is not detrimental in it's current form. And studies have found that it can be raised with positive outcomes, i.e. increased middle class and wealth for the lower rung people. I'm sure there's some sort of peak at which a further increase in min wages is detrimental and starts to cost jobs and economic growth.

I think the effect is to create and maintain a more wealthy lower class. And in effect it creates more demand. It is a far better stimulant to the economy than tax cuts on the rich. Getting money to those that will spend it is better than getting money to those that invest it.

3. What should the minimum wage be set at in america right now?

I think the Federal min wage should be between $7-$8/hr. And let states determine what their own min wages should be on top of that. Obviously min wages should be adjusted to the locality. $7/hr may be great in rural Alabama but impossible in San Francisco.

The trick with minimum wage is finding a balance. This debate is and always will be a debate of steriotypes. Eventually, on any given debate, someone on one side will inevitably say:

"Well without minimum wage, evil companies will pay people 2 cents a year, and get away with it!"

And just as inevitably, somebody on the other side will say:

"Well why not raise minimum wage to a billion dollars an hour, so everybody is rich?"

Both are of course silly in the extreme. Obviously minimum wages are necessary, one only has to look at the history of the development of minimum wage to see that yes exploitation is a serious concern, and paying people starvation wages was at one point commonplace. Thats why almost every single nation in the first world has a minimum wage. However, the minimum wage needs to be set low enough that it is a baseline. remember its not an ideal wage, its a minimum wage. According to most economists the federal minimum wage in the US is too low, but that is not by any means a universal opinion. Other counytries have set minimum wages where many in the country believe the wage is too high: $9.25 USD in Australia, almost $11 USD in France. The again, Bulgaria's minimum wage is about 48 cents an hour. Obviously, the national price index comes into play here, France is not as outlandish as it seems, as prices are simply higher in France. Germany does not have a national minimum wage, however each trade sector has its own wage agreements including standard minimums.


If the minimum wage is not enough to survive on, then there is a problem. But survival is not enough, capacity for self improvement is also critical. the so called 'minimum wage trap' is when somebody works 50-60 hours a week at a minimum wage job in order to survive, and has no time or money for education, advancement or learning and no job possibility of the same. Minimum wage needs to be high enough to give people the chance to earnb more than minimum wage.

It seesm pretty clear the minimum wage in the US needs to be increased, but probably not by much. I personally don't buy the 'force companies out of business' line: if your company is so eeking by that you need to pay starvation wages to your staff in order to make the bottom line, then perhaps you don't deserve to stay in business. Besides, as somebody else has pointed out, massive tax cuts to the wealthiest is not a good way to justify a low minimum-wage.

1. Is a minimum wage a good or Bad thing?

Generally I disagree on principle with a minimum wage. The market regulates wages better than any governing body. I don't believe in a federally mandated basic pay for services, but if a district or state wishes to establish a minimum, it is certainly their right. A federally mandated minimum wage, on the other hand, is simply a political soundbite to garner votes.

A person living in Rockfish, NC, could live the same, or better, on 18,000 dollars per year as a person in southern California making 50,000 per year. The wage standard has to be adjusted accordingly and the Federal government is not the most efficient means to do so. For that reason, establishing one standard wage across our entire country as minimum, the way it is done now, is pointless.

2. What are the economic effects of having a minimum wage?

At the moment there are no economic effects, because the minimum is so low. However, if the wage were actually priced high enough to afford a starting fry cook a decent living, other wages would have to be raised as well to compensate for the price increase on goods and services. I'm no economist but I see no way that this wouldn't be accompanied by an across the board salary shift, job loss, and inflation to reflect the change.

3. What should the minimum wage be set at in america right now?

Where it does the least amount of damage...right where it is.

So then what do you think of a CEO who makes $400 million? If raising a cook's wage by a few bucks an hour or a few grand per year affects inflation and job losses....what do you think a CEO who makes $400 million does to the economy?

I don't buy this argument at all. Maybe you should think of it as you're just paying people what they are really worth instead of EXPLOTING them. Sorry you have to pay $7 for a meal instead of $4 so the employees there can afford heat and food. People deserve a liveable minimum wage no matter what demeaning or mindless job you have them doing.

Increasing the min wage INCREASES DEMAND. Which do you think stimulates the economy more, giving a million dollars to a billionare or instead to 1000 poor households? Who will actually spend the money instead of gobbling up resources and "owning" more of the countries wealth? And by increasing DEMAND, you CREATE MORE JOBS as well as maintaining a healthy middle class and less poverty.




And the market does indeed do a great job of finding THE LOWEST wages around. This is another argument that I have to scoff at. Our jobs are moving from here to MExico, to China to Vietnam to Laos because those people will take $1/day or less. AND YOU WANT TO LET THESE FORCES DETERMINE MINIMUM WAGES? Not me, thanks.

The market may regulate COMPETITIVE wages, but with the low-end jobs it has too much room to exploit people. If the market did such a great job, no one would be earning the federal min wage but there are people making those wages so you have to wonder how much MORE those people would be SCREWED without the min wage.

And I think there should be a national min wage, albeit higher, because some states would avoid a min wage and all the companies would flock to those states and create mass poverty while the CEOs walked away with all the profits.

Would you happen to have the names of any of these economists, by any chance?


Could this be a chicken/egg thing? Perhaps the reason prices are higher in France is that the minimum wage is so high. That's been one of the criticisms raised against the minimum wage (whether by legitimate economists, I don't know).


So just to make sure I understand you correctly, are you saying that it's better for these employees to be out of jobs than to be working for these wages? What if these wages aren't the only thing they're living off of? Say, they're family members trying to supplement family incomes, or someone in between better-paying jobs trying to make his savings last a little longer?

So let me get you straight, it's better that the CEOs and shareholders make record profits instead of paying their people a LIVING wage, regardless if it's supplemental income or not? You see, I can play strawman games as well.

No, that's not what I said.

So now that I've answered your question, I'll wait for Vermillion to answer mine.

No, because the price index in France predates the imposition of the minumum wage in 1951, same as it does the imposition of the minumum wage in Britain in 1999. In fact in no country which has imposed a minimum wage has there ever been a suden increase in the price index. In both the cases of France and the UK, unemployment went down. Minimum wage opponsents argue that unemployment went down for other reasons...



No, I'm saying the argument is silly; it tried to pretend that tens of thousands of industries run perfectly well in the black at $5.15 an hour, but will suddelny close down and board up their windows at $6.00 an hour.

And to those who say a minimum wage is unecessary as 'market forces' will rule, I am forced to point to the 200-odd years of history between the industrial revolution and the impositio of the minimum wage laws in the first world and say: Que?

If I have to pay twice as much for a meal, I would likely go out half as often. That's how these things work. And your hypothetical figures are really out there...

The average CEO of a Standard & Poor's 500 company made $11.75 million in total compensation in 2005, so I don’t know who you are speaking of with the 400 million dollar a year salary..Bill Gates? I think he’s done a bit more for creating jobs and stimulating the economy than 10,000 fry cooks. Furthermore, CEO compensation is usually related to company performance, reflecting in increased price of shares in the CEO’s compensation package, so there is no job loss associated with that compensation, unless I’m unaware of some fundamental economic law explaining an inverse relationship between the number of jobs and stock price, which is possible because as I mentioned I am not an economist….but it seems a bit counterintuitive. Either way, I don’t believe the government should set a wage for CEOs either.



Well, I’m not sure how many billionaires there are to begin with, let alone how many billionaires we “give a million dollars to”. But regarding your underlying point, I suppose it depends on the industry in which we are referring. Auto and boat manufacturers and construction workers likely won’t see as much of an increase in demand by a two dollar an hour raise for the lowest paid workers, and if there is corresponding job loss they might see a significant decrease in demand.

From Wikipedia

I was hoping you would supply us all with the list of most economists that believe America's federal minimum wage is too low? Most who? Who is this consensus?

I have to admit I was really put off by this debate because of the initial introduction.
I found it so slanted and pushed towards one direction of economic thought from the very origin that I didn't really think it was inviting to those of us who have opposing views. Claiming the great divide or struggle between rich and poor presents itself best in minimum wage laws ignores some of the more important factors of the struggle between labor and capital. There are other ways wealth is shared besides just minimum wage laws and I think those who do not promote federal minimum wage increases focus primarily on these. I know I do.

'Most' was overstating, as I would hope was clear by the context and rest of the sentence, but if it was not, then 'my bad'. 'Many' would have been better, as of course there is in fact no absolute consensus on the issue. However, also to be clear, many think the minimum wage needs to be raised. To name a few, as people were asking, Clive Granger (Nobel Prize economics), Lawrence R. Klein (President American Economics Association, Nobel prize in Economics), Paul A. Samuelson (MIT, Nobel Prize Economics), Alice M. Rivlin (Brookings Institute, Past president American Economics Association), Lawrence Mishel (Economic Policy Institute)... I can easily go on if you like...

I understand that strict free market folks abhor price controls, including minimum wage - but this is a theoretical objection.

Is there any evidence to support the claim that meaningful minimum wages hurt economies?

Economic theory gets very complex, and is often rooted in unprovable assumptions. The best test of a theory is the real world. Are there any examples where applying a minimum wage in country which formerly did not have one resulted in obvious economic harm?

If no real-world evidence of such harm can be found, then it seems safest to leave a meaninful minimum wage in place.


But, to be clear... The minimum wage should be a baseline. We need to maintain the philosophy that each person is responsible for his or her own life. You shouldn't be making 10 bucks an hour for minimum-wage quality work.

Well then maybe the company will change their other payscales to make sure the costs stay in-line with what attracts customers. So maybe there's less of a profit. If the company can't afford to pay a living wage for the least of it's employees then maybe IN REALITY the services are too expensive FOR YOU.

It's like saying "I wouldn't download from allofmp3.com if it actually cost me $15 per album or $1/song" so if you close that website you'll lose those jobs.

It's about paying for what you are REALLY getting. If you can't afford to pay someone a living wage to do the job then maybe, just maybe, YOU CAN'T AFFORD THAT SERVICE.

Just because you can EXPLOIT people doesn't make it OK. It's like saying "if these kids couldn't stack these dirty needles in a pile, they'd have no money" so that makes it ok.

We should pay people, no matter what job, a LIVEABLE wage. Sorry if you can't go out more often or an exploitation store has to close it's doors. A new one will open and people from those stores will have more money so THEY can go out to eat MORE OFTEN.



Just click here:

http://www.abcnews.go.com/GMA/story?id=1841989





And you have PROOF of this? Bill Gates is a monopolist and a scumbag. He used his monopoly TO SHUTDOWN businesses. Apparently you're not aware of this. 10,000 fry cooks have probably done more to stimulate the economy and create more jobs than Bill Gates. Yes, I would say that's very likely.



Wow, you are an idealist. Have you seen what's been going on lately with CEO ENTITLEMENTS? Have you seen where stockholders are getting ticked off at CEO compensation and the good ol' boy network PAYBACKS?

There is no "compensation for performance" with most boards at least not any more than when a Senator gets to vote on his salary increase. Here's a link, and there are many more of the corruption at the top of companies:

http://www.businessweek.com/ap/financialne...me_down&chan=db

http://www.marketwatch.com/News/Story/Stor...9F2%7D&keyword=

http://www.forbes.com/markets/bonds/2006/0...2markets05.html




I guess you missed Bush's tax cuts on dividends and upper income people? Do you need a link?

I'm shocked by your lack of faith! I think my response might be pleasantly surprising.

I have gone back and forth on the minimum wage for quite some time now. Right now, I'm pretty convinced that the minimum wage, in its current form is a bad thing that should be done away with entirely.

In order to follow my argument (and respond), its perhaps best to go over some very simple ideas that led me to this conclusion.

The first ties into the basis of all economic thought: Holding all else equal, when the price of a good rises, people tend to buy less of it. The same holds true for the price of labor; that is, holding all else equal, when the price of labor goes up, employment goes down.

Vermillion said:

I disagree with the last one, particulary. Dealing with extremes shows relationships. In this case, if one employee did cost 1 billion dollars, no one would be hired. We can shows trends as well, for only some would be hired at 1 million dollar, more but few at $100,000, even more at $50,000, a lot more at $20, and, finally as many as we have now at $5. Then trend here being, as wages rise, employment falls. Wages and employment are negatively correlated, that is there relationship, holding all else equal.

I would like to reiterate that arguing with me on this point is futile. I'm pretty much just saying "The demand curve exists and it slopes downwards." Fighting me on this one goes against much of what we know about economics, though you can challenge my qualifier, "Holding all else equal." (Similarly, if you wish to argue with me on this obvious point, you too should use "all else equal" in order to establish a different relationship and explain why I am in error).

Secondly, we shall once again look at the case of the supplier. Now that their employees cost more, the price of every quantity of good they make increases. If the only cost factor of making oranges for me is Jims wage, and Jim makes $10 per orange which we will raise to $20 per orange, every orange I make will be $10 more costly. That concept is pretty straightforward. You should note that while I use a "per orange" price here for simplicity, this concept can be directly translated into hourly wages assuming there is a set amount of oranges Jim can make per hour.

As a supplier, in a economic sense, I can cover this in two ways. I'm first going to make less oranges, because they cost more. Second, i'm going to charge a higher price for oranges. Generally, price increases don't increase by the same amount as wages increases, that is, the burden is shared between consumer and producer. This is the equivalent of the supply curve shifting to the left, or we call it, when done across for every market like a minimum wage would, stagflation.

The general thing to take away here is that, when the cost of making a good increases, suppliers charge more for (To cover increased costs) and make less (To reduce their burden of increased costs).

A third way to get around increasing minimum wages would be to cut other employee benefits, but will say, for simplicity, that this is impossible.

Thirdly, and lastly, a minimum wage denies possible transactions, resulting in dead weight loss. This concept is also fairly simple. If there are workers that are willing to work for $10, but the minimum wage is $20, those are workers that will be left unhired.

An extremely low minimum wage will not be binding. The price for computer programmers, for instance, is determined by the free market, because programmers are worth much more than $5 an hour.

Now lets get into the gritty details:


This idea of exploitation is intriguing, pretty much because no one is forced to work. The only conditions that can potentially produce exploitative environments are those with monopolies, where there is only one company that can possibly hire you and it dictates your wage.

While this idea of monopolies running around was valid in 1938, the implementation of various anti-trust laws has eradicated much of what can really be considered monopolies. In open competition, there are many different companies competing for not only consumers, but workers to make their products.

But if those workers are only worth $3.00 an hour to companies, and there are workers who are willing to work $3.00 an hour, how is this exploitation? A worker would be unwilling to work for $0.01 an hour period, as the price per hour increases the laborer eventually finds a price they are willing to work at.

Take for instance, a working mom. She knows she needs at least $4 an hour to survive. Companies cannot exploit her into working for only $0.01 per hour as she knows this is hopelessly below what she needs to live.

I see a willingness to work, not exploitation.

Remember that it is competition among workers which drives the price of labor downward, not companies exploitation. If only a handful of cheap laborers existed, they would be working for well above the minimum wage now because of their value to companies. It is the fact that there is so much cheap labor that makes competition for low skilled jobs so cut throat in times of economic depression. Workers themselves bid down the price by agreeing to work for lower wages so that they will be hired over the next person.

Ha! Ok I was pleasantly surprised I suppose you were trying too hard to make your debate topic seem neutral.

I agree if you look at it in the context you have described above it is easy to view minimum wage laws as being oppositions to wealth distribution.

Well...now that you have presented your argument I am very interested in seeing the responses, this ought to be a good debate!

1. Is a minimum wage a good or Bad thing?

Its a bad thing. Before I get into why it is economically harmful, I will explain why it is logically harmful to freedom. The law mandating that private businesses pay a minimum wage to its employees is violating the rights of the employer AND the employee to form a consensual contract. We live in a country where you are in no way forced to work anywhere. You don't have to accept a job at Wal Mart, because you can go somewhere else to pursue your own happiness. There is zero coercion. The minimum wage laws is government coercion of private entities and thus inhibits freedom. To me, that is the most important point as to why it should not exist regardless of economic numbers that may support it. However, fortunate for that argument minimum wage is not beneficial in any way to the groups that it is supposed to be helping [teenagers, minorities, women]. As Nobel Prize winning economist Milton Friedman once said, The high rate of unemployment among teenagers, and especially black teenagers, is both a scandal and a serious source of social unrest. Yet it is largely a result of minimum wage laws. We regard the minimum wage law as one of the most, if not the most, antiblack laws on the statute books. I have no doubt that the intentions of those who wish to impose the minimum wage are noble in their beliefs, but the push for the laws are based in ideology and not in facts.

2. What are the economic effects of having a minimum wage?

Well the premise of raising or even having a minimum wage is meant to benefit those workers who might be "exploited" through their consenual contract to accept a job. What this premise leaves out is that it in no way benefits those people who are unemployed and makes it harder for them to find a job. This increases poverty.
Minimum Wage Redux



The Minimum Wage: Washington's Perennial Myth

Furthermore, because a minimum wage hike cuts out of the profit of the employer, it hurts both the small businesses and the consumers because either economic expansion must be forfeited in order to make up the salary difference or the prices of their products will rise and that hurts everyone. Instead of an employer paying an employee his/her actual value, they are forced to pay an arbitrary wage. People think that just because the minimum wage is raised that it automatically means that those low-wage earners will have more money to spend but this is a fallacy. The raise in minimum wage leads to a rise in the price of every day products which negates the effects that the minimum wage was supposed to cure.

3. What should the minimum wage be set at in america right now?

Shouldn't exist my friend.

Neither. Certainly people benefit from it but we should remember it is a “minimum” wage and we should not try to raise it so that it becomes what some call a “living wage”. IMO we should not expect people to live on this wage continuously. IMO this wage also encourages some companies (and individuals) to hire/employ illegal aliens. I feel confident that if we had no minimum wage it would be much harder for a good portion of the 12,000,000 illegal alies from finding work here.



It raises the cost of labor and works as an incentive to either use more automation ( machines ) where possible or move some jobs to lower labor areas (other countries).



The MW should be different in different areas of the country.

But that's not the argument being made, as far as I've been able to see. The argument is actually quite simple: as the minimum wage rises, it puts the squeeze on more companies, either forcing them out of business or preventing their formation in the first place. I don't anyone seriously denies the mere existence of this effect, it's mostly a question of how strong it is. But regardless, your own example spoke of a company that would be forced out of business by a minimum wage hike. So again I ask, given the premise that you yourself laid down in that post, would it be better for the employees of that company to be out of work than to be working at that lower wage? Because at some point or another, that question will have to be confronted.



At which point that company would be out of business, and the employees out of jobs. Is that better than working for less than a living wage? As I said above, at some point you'll have to confront that issue. You can't just wish that dilemma away by assuming that another business will just sprout up and start paying these wages. That's living in denial.

I guess one can find all sorts of studies.

There is no evidence of job loss from the last minimum wage increase.



So whatchya gonna do?



My question to you is, in a country that can have a CEO make $400 million, in a country that has enough wealth to take care of all it's citizens....why can't you pay a living wage to anyone that works? Your DIRE and DRAMATIC conclusion that everything will shutdown and jobs will evaporate is simply YOUR OWN CREATION. ITS CALLED A STRAWMAN and it's considered a LOGIC FLAW. I tried to point that out to you earlier, apparently you didn't catch on.

If companies can't pay a living wage, why should we cry at their demise? When a company goes bankrupt is it not best that the company dissolve? People should be earning a MINIMUM or a LIVING WAGE. That is the issue.

If you increase the min wage to $7.50 will people starve and turn to stealing? Let me clue you in, and this goes for the comment about black folks being hurt by an increase in the min wage, THEY ARE NOT TAKING MIN WAGE JOBS! Because we have SOCIAL PROGRAMS that are better than min wages. I've heard it a million times "why should I work at Burger King when I can get SSI or welfare, BK doesn't pay for crap".

So in a way, a low min wage actually discourages people from working when we have a social safety net. A low min wage is really similar to illegal immigrants, because it pushs people out of the work force that refuse to work for NON-LIVEABLE wages.



Really? So if you can't find work and there are plenty of other people out of work, and there is no social safety net, and there's no welfare, and there's no soup kitchen, you're saying that it's not exploitive for a company to ask you to work for non-living wages?

Because I have to say, that seems like exploitation to me.

ex·ploi·ta·tion n. The act of employing to the greatest possible advantage

When you have someone on the ropes and decide to take advantage of someone's bad situation, I think that's exploitation.



I made a comment earlier and no one against the min wage has responded. With companies obviously leaving the country and bouncing from poorer to poorest country to get the cheapest workers, do you care that it's becoming a race to the very bottom?

Your scenario is playing out.....and jobs indeed are not disappearing, but consumers are. Wages in the US are stagnant if not dropping against inflation. Why? Because of the guys in Mexico, CHina, India, etc. No minimum standard of global wages is making the US POORER.

Want an engineer? Go to India, they're $5/hr there. And I just heard that Mexico is now producing engineers as well!

Need manufacturing done? Move to China or Asia, they work for a few bucks a day.

Tell me what you think about living wages when the US has to slide down to a few bucks a day to compete with these countries.....FOR EVERY JOB YOU CAN THINK OF.

And where is the benefit??? Things definately are NOT cheaper are they? A house is ungodly expensive, cars now made in Mexico and China are still $15K-30K, food and gas are increasing. This is what you trade for having no living global wages.

I understand your ASSUMPTIONS and THEORIES. But when YOU are the one that has to live off of an EXPLOITIVE wage, those assumptions and theories don't mean anything.

And if we can put a man on the moon, why can't we feed all starving children in Africa? Same answer in both cases: because there is no single organization that controls all of these things. Most people working at minimum wage are working for small employers, not giant corporations with $400 million CEOs. How many minimum wage workers do you think Microsoft employs? Or GM? What does the 18-year-old busboy at a mom-and-pop restaurant have to do with a billionaire CEO? Nothing. It's silly to compare them.

I don't think people should have to work at starvation wages, and I don't think people should work at minimum wage for any extended period. Fortunately, they generally don't:



Now, I will say that predictions of large job losses from raising the minimum wage have generally proven false. Even in places like Santa Fe, NM, which currently has a minimum wage of $9.50, set to go up to $10.50 next year, employment has increased faster than it has the rest of the state. I think most economists would find that surprising, and I don't have any explanation for it myself.

QUOTE

I guess one can find all sorts of studies.

There is no evidence of job loss from the last minimum wage increase.

Don't challenge the studies, we can skip the hogwash, the analysts and economist, and break this down to a simple, fundamental idea: Holding all else equal, as the price of a good increases, people tend to buy less of it. As the price of labor increases, less people will be hired. That is a fundamental tenant of economics, undeniably true because of its simplicity.

Increased wages neccesarily put downward pressure on employment. If M&M's start costing $5 a packet, I'm going to buy less of them! That same idea applies here. If laborers cost $20 an hour, I'm going to hire less than I would if they only cost $5.

QUOTE

My question to you is, in a country that can have a CEO make $400 million, in a country that has enough wealth to take care of all it's citizens....why can't you pay a living wage to anyone that works? Your DIRE and DRAMATIC conclusion that everything will shutdown and jobs will evaporate is simply YOUR OWN CREATION. ITS CALLED A STRAWMAN and it's considered a LOGIC FLAW. I tried to point that out to you earlier, apparently you didn't catch on.

There is a fundamental link between higher wages and lower employment (True because of its simplicity that I will mention again: the more a good costs, the less one will purchase. The more labor costs, the less workers will be hired).

While I never used any gloom and doom predictions of the minimum wage, I think you dodged the fundamental question. That is: Are you willing to accept higher unemployment for the benefit of those that keep their jobs? (Given that, all else equal, higher wages lead to more unemployment)

QUOTE

If companies can't pay a living wage, why should we cry at their demise? When a company goes bankrupt is it not best that the company dissolve? People should be earning a MINIMUM or a LIVING WAGE. That is the issue.

If you increase the min wage to $7.50 will people starve and turn to stealing? Let me clue you in, and this goes for the comment about black folks being hurt by an increase in the min wage, THEY ARE NOT TAKING MIN WAGE JOBS! Because we have SOCIAL PROGRAMS that are better than min wages. I've heard it a million times "why should I work at Burger King when I can get SSI or welfare, BK doesn't pay for crap".

So in a way, a low min wage actually discourages people from working when we have a social safety net. A low min wage is really similar to illegal immigrants, because it pushs people out of the work force that refuse to work for NON-LIVEABLE wages.

Lets take your first paragraph. If a company could have survived on wages people were willing to work at, but couldn't because of high minimum wages, the government basically used legislative power to shut down a business. Perhaps that doesn't bring revulsion to you, but I find it disgusting when the government steps in denies freedom to willing individuals. All members, remember, are willing.

Your idea that social programs are better than minimum wage jobs is unfounded, and I can explain why without citing a single article, just running through ideas.

If social programs were indeed better than minimum wage jobs, no one would work a minimum wage job, right? Why would you when you can do virtually nothing and get paid even more!

If no one decides to do those jobs, wages for those jobs will increase. After all, a supermarket absolutely needs cashiers in order to function! They would increase wages to the point where they could attract workers, which would have to be well above the minimum wage because you can, as you stated, parasite off social programs without lifting a finger.

In your case, social programs would promote enough competition among companies to hire workers as to increase wages well beyond the minimum wage! What a reality!

Or, as I would think, social programs are worse than getting a minimum wage. If you can show me substantial proof of the opposite, I will eat my hat. While I did a google search just to make sure, your statement is completely nonsensical.

QUOTE

Really? So if you can't find work and there are plenty of other people out of work, and there is no social safety net, and there's no welfare, and there's no soup kitchen, you're saying that it's not exploitive for a company to ask you to work for non-living wages?

Lets think about this for a minute. If your starving, and a company offers you a job in which your still going to starve, will you take the job? The answer is, of course not! Why would you work, just to starve? Now, lets say the company offered you just enough so that you could survive, barely survive. You would take it because its better than starving.

Now lets say that it wasn't just one company offering you that wage, but all companies. Your market skills are only worth enough for you not to starve, in that instance. That is, all companies are offering you the same wage. I bring up other companies because I want to get away from monopolies.

And here comes the savoir! The minimum wage which makes it so that, if you had your job, you would be living poorly but much better. If your market skills are indeed worth less than the minimum wage, your off the job and back to starving. Companies find your work only valuable at a meager wage.

QUOTE

Because I have to say, that seems like exploitation to me.

ex·ploi·ta·tion n. The act of employing to the greatest possible advantage

When you have someone on the ropes and decide to take advantage of someone's bad situation, I think that's exploitation.

I would define exploitation, as taking advantage of something, like a consumers ignorance. Indeed, dictionary.com's exampe plays into this.

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exploitation of unwary consumers.

What exactly exploitation means is rather subjective. However, is the starving
laborer, who has no safety net, not employing the greatest possible advantage they have by taking the job?

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I made a comment earlier and no one against the min wage has responded. With companies obviously leaving the country and bouncing from poorer to poorest country to get the cheapest workers, do you care that it's becoming a race to the very bottom?

Perhaps. But then again, those workers at the very bottom are willing to work for low wages because if they dont, they will get nothing instead. The companies presence brings something to these workers, who are actually getting money! If the companies were not there at all, these people really would have nothing.

The important thing here, that you seem to ignore, is the term willing. Being in a bad situation is rough, but lifes not fair. If a person is willing to work a low wage job, they have made the decision that the job is better than not having a job at all. They are WILLING to work that job.

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Your scenario is playing out.....and jobs indeed are not disappearing, but consumers are. Wages in the US are stagnant if not dropping against inflation. Why? Because of the guys in Mexico, CHina, India, etc. No minimum standard of global wages is making the US POORER.

Its just a bigger pond. Everything I have said about Americas minimum wage would hold true if you made a global standard. If you raised the minimum wage in china to $5.15 an hour, you better believe hundreds of employees would be fired.

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Want an engineer? Go to India, they're $5/hr there. And I just heard that Mexico is now producing engineers as well!

I just want to point out here that my friends a studying mechanical engineer who informs me engineering is a 5 year college program. I seriously doubt that any engineer anywhere would work for that amount. While this comment is completely irrelevant to the debate (Dont respond), my friend would want me to say that.

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Tell me what you think about living wages when the US has to slide down to a few bucks a day to compete with these countries.....FOR EVERY JOB YOU CAN THINK OF.

I understand your ASSUMPTIONS and THEORIES. But when YOU are the one that has to live off of an EXPLOITIVE wage, those assumptions and theories don't mean anything.

Higher minimum wages would make our workers less competitive on the foreign market. They should, then, be avoided not encouraged.

Don't demise my ideas, challenge them. I did not post them up for my own benefit.

Edit- I Don't know what I did to the quote function, hopefully the bold will help.

EDIT: I believe the maximum number of quotes per post is 10. I merged RedCedar's last two quotes and left your individual responses to them. -AMLord

1. Is a minimum wage a good or Bad thing?
Nobody with a family to support should be relying on Minimum wage. If the Minimum wage is raised in an attempt to give every poor person a middle class lifestyle, then it would be a bad thing. Otherwise, the minimum wage would have little effect, good or bad.

The key to solving this debate is for the politicians and businesss leaders to figure out how to create good opportunities for people, rather than simply buy votes or look good for the camera. Vermillion mentioned the "miniumum wage trap", where some workers make substinence wages and don't have enough money for school. Instead of trying to get someone to earn $10/hr for a $5/hr job, why not do something about the expense of education in this country and have the Government pay for job training programs instead of pork barrel projects?

And then there's the case of the CEO making $400 million. In this case, investors need to take full control of the corporations and clean up the corruption. Having average investors earn more dividends will mean more money into America's communities rather than into the bank accounts of a few billionaires.

Let's also look at the nature of the minimum wage jobs. Many of them are lowpaying service jobs like preparing meals and changing hotel bedsheets. A great way to improve worker productivity (wages) would be for the Government and Business leaders to figure out how to bring back America's manufacturing.

Note that it continually uses "at or below the min wage". God forbid someone is actually making LESS than $5.15/hr. But it also fails to consider someone making $5.16 which is also a slave labor wage in this country.




I think your use of "simplicity" is key here. I think you're being too simplistic. If you're going to compare labor to goods or services, then use the supply and demand curve. Increased cost of goods doesn't necessarily mean demand will go down, we see this with drug use, no?

To make a blanket statement that any increase in labor costs causes downward pressure on employment is a bogus statement. There are so many other factors that one would have to consider. If a company needed a particular worker because that particular worker increased revenue, the value of the worker may exceed the increased cost of the worker and would not affect employment at all.

I think your conclusion is wrong. Increasing min wages can actually increase employment because you are increasing demand.



I see. So you're against child labor laws? I think you are way off on this "people are willing". Generally regarding employment one party is more "willing" than the other and typically that's the employer.

I have no problem and don't find it the least bit repulsive that the gov't shuts down companies that run sweatshops, employ children or pay people exploitive wages.

Like I said before, there is a bar to set for employers and we shouldn't bemoan the demise of companies that treat their workers horribly. I don't believe in "keep jobs at any cost".

And if you really think that people globally are "willing" to work slave labor jobs you are very,very,very misinformed. Just because someone has a gun to your head and you do what they tell you to, doesn't mean that you do it willingly. And even you do consider that as indicating complicity, that's very sad. You seem to be making EXCUSES for treating other people horribly.



Not everyone qualifies for SSI or welfare. You can take my word or not, many people prefer the paychecks from welfare (and I've seen them and they are nearly as good as $800/month pre-tax) over working 40 hours doing a miserable job. People that work min wage jobs probably are in a bind.

And regarding your last paragraph, it sounds like you're making a case for the min wage. If you just increase min wages, super markets still need cashiers! Right?

Well, yes and no.

Let's say you are the owner of the company that makes M&Ms (to use your example).

There is a minimum labor point, wherein you cannot make those M&Ms. Let's say that point is 100 people. This is the absolute minimum number of people needed to make your product, whether it be one package a day, or 10,000 a day. And to do so, still allowing for things like employee days off, etc. Okay so far?

According to you, at $5.00 an hour, your going to be hiring a lot more people than you would at $7.00 or $8.00 or $10.00 per hour. I don't buy it. Why would you employ more people than you require to get the job done? Because you're such a nice guy? No, you wouldn't, because it would cut into your profits.

Any particular job needs a certain number of people to do it, regardless of the rate of pay.


Apparently there is not a fundamental link between higher wages and lower employment. This, from the Economic Policy Institute:


Except, and here's the point - what if, because of the much lower wages in India, for example, US companies all suddenly decided that an engineer should be worth no more than, say $7.00 an hour, and began lowering new hires to that kind of wage? Five year college program or not, if you want to work as an engineer, you would then have to either accept that pay, or go hungry. Every employee is "willing", remember?

No, it's your own creation, and very much a strawman on your part. I never concluded that "everything will shutdown". I just followed your own lead when you said that companies that can't afford a living wage deserve to fold. You repeated that opinion in this last post also:


Are you thinking at all beyond that statement? Because if you are, then you'd have to come to terms with the fact that the demise of such companies will result in their employees being unemployed. So I ask you again: Is that better than working for low wages?

If you can't answer that, then anything else you say on the subject won't matter.

Again, you are making assumptions. For one, why do you assume they would be unemployed?

Maybe because of the companies that did NOT go out of business, there were more people making better wages and demand for other goods and services INCREASED. Hence creating more opportunities for more jobs.

Your assumption, and I reiterate that it is a strawman, is that with these $5/hr jobs, if you force them to pay a better wage they will fire people and there will be less opportunities and those jobs are the ONLY jobs these people can work. You are making a situation that you have no proof will happen.

You say "I must face the facts", but there is no evidence that increasing min wages will increase unemployment or force these people to become unemployed. THIS IS YOUR FABRICATION.

But regardless, let's say that these people are unemployed, it's not really any different than ANY OTHER market force causing them to become unemployed. Are you a protectionist? Do you think we need to protect EVERY job that is out there? I'd bet a million dollars you are NOT. So why protect jobs for employers who refuse to pay a living wage?

Again, I say, I do not support "keep jobs at any cost". That is an insane argument. If you bring that to a logical conclusion then you can argue against ANY worker protections including child labor laws, hazardous work conditions, etc. etc..



So are you encouraging WAGE CAPS? If raising min wages is uncompetitive, what do you say about a single person making $400 million? If a wage of $7.50 is uncompetitive, $400 million has to be off the charts in terms of uncompetitive.

I just wanted to respond to "I want proof" comments.

If you need examples of how min wages actually pull people off of the welfare rolls:



http://www.cbpp.org/529ormw.htm

And regarding engineering wages in India, here's one link for average ANNUAL wages for the following:

Software Engineer / Developer / Programmer $6840 ($3.40/hr)

Sr. Software Engineer / Developer / Programmer $11400 ($5.60/hr)

Team Leader, IT $13680 ($6.60/hr)

http://www.payscale.com/salary-survey/aid-...ALARY/fid-11570

And here are the average wages per state in India for a mechanical engineer:

Karnataka (25) $7980 ($4.00/hr)

Maharashtra (17) $7296 ($3.50/hr)

Tamil Nadu (9) $4560 ($2.25/hr)

http://www.payscale.com/salary-survey/vid-3270/fid-11570

Well, gee, maybe because businesses would have have a harder time staying in business if you increased operating costs. As per your own example.


It's not a question of whether it would be "different" from these other factors. It's a question of whether unemployment would be preferable to working at low wages. Now that you appear to be accepting this scenario, at least for the sake of argument, are you finally going to answer the question I've been asking?

I think this arguments fails because not every job at the M&M factory is going to be unskilled and/or equal to one another. There are entry level jobs yes of course but what about supervisors, management, how would he reward good employees and keep those who have worked there longer? There are many people in the US who make above and beyond minimum wage , and do make 7,8 or 10 a hour, why do you think this occurs?

Also you neglect to consider that the M&M factory does not exist in a vacuum and would experience competition from other companies. It is not always price competition either, it could be quality, production costs, management costs, operation costs. Labor is not the only factor that cuts into a companies profits.


I know the focus on this debate is concentrated on the employment factor but I think that is a very limited reason to object to minimum wage laws. I think minimum wage increases would cause unemployment but not anything really significant and would effect unfortunately the most unskilled labor in the country. I think minimum wage law increases, and I have seen the figure of 30something% kicked around, are just a poor means of addressing the issue at hand, poverty. I think they are just a flashy political flag to wave.

I think the largest effect they would have on unskilled labor would be the quality of a job. A company is going to save that money somewhere. Whether it be operation costs, which could include things like not running the A/C or offering free drinks, a cut in benefits offered such has company sponsored education, no TV in the breakroom, or company sponsored events. Or perhaps the shift managers will be less skilled, and paid less and the employees would experience poorer management.

I also think minimum wage increases would unquestionably be passed on to the consumer, and what employee is not a consumer? This is inflation and inflation can be bad for everyone.

Personally I would rather see things like mortgage liberalization, more educational opportunities and job training services, friendlier, more liberal business practices that encourage self employment, Tax programs like EITC is another means of assisting the poor.

And I just want to focus on EITC for one moment. I find it interesting in debate like this when people advocate eliminating poverty by giving people more money, how about advocating for the government to take less of their money? Why is it private individuals sole responsibility to increase the wealth of our population? Why is our government taking money from people who barely make enough to live on? That is in my opinion far more of a shame than those of us who just advocate paying a fair price for labor. Increased minimum wage is really just another word for tax.

What is your question? That it's better to keep bad-paying jobs than to let people starve? What have I said to you isn't answering your question? I KEEP ANSWERING your question and apparently it's not sinking in.

Would unemployment be preferrable to a job that pays a non-liveable wage? Of course that's what I'm saying. That is a POSSIBLE consequence of forcing companies to pay a liveable wage. Is unemployment preferrable than letting employers expose employees to health hazards? Why not eliminate OSHA so we can avoid unemployment.

I've answered you a MILLION fold. If we choose that a liveable wage is preferrable for everyone then unemployment is a possible outcome.

Then why, pray tell, do people continue to work for such wages instead of quitting? Are you saying that you know what's best for them better than they themselves do?

Because a bit of basic maths demonstrates that a small amount of money is better than no money at all. Do you really think for this poor mother of two who never finished high school, its as easy as just 'take this job and shove it' then spend a few weeks perusing the 'executives wanted' section of the economist?

How many people currently on minimum wage are there because they want to be there? How many of them do you think feel they have a 'choice' about working for the wage they do?

I'd like to build on that question. Let’s forget the state / city variables, and just say that the minimum wage is $5.15 per hour, and a “livable” wage is $10 per hour. Are there any jobs at all which should be exempt from the “livable” wage requirement? Or do all jobs have to pay “livable” wages? As Blackstone has pointed out, people do take minimum wage jobs, so apparently there is “demand” for these jobs.

Also, are wages the only thing that the government should mandate? What about hours? If the living wage is $10 per hour times 40 hours, or $400 per week, shouldn’t we also ban part-time labor? After all, if you work 20 hours at $10 per hour, that’s only $200 per week. Which RedCedar calls “non-liveable” above. Elsewhere, we see $5.16 per hour called “a slave labor wage,” to which I ask “for how many hours?”

Consider the following, and let’s say for argument that we live in the same city.

Carlito makes $5.16 per hour at Joe’s Sweatshop, working 50 hours per week. Joe’s pays me time and a half for overtime, so I get [ (40 X 5.16) + (10 X 5.16 X 1.5)] … $283.80.

Blackstone makes $10.00 per hour at Starbucks, working 20 hours at a “living wage” of $10 per hour, grossing $200.

Would you agree that Carlito, the ‘slave wage’ earner above, makes more money on which to live? Wouldn’t that make it more of a living wage?

Not to mention, Starbucks gets slammed every day from 6 – 9 AM, so needs a couple of 20-hour people to take up the slack and avoid long lines in the morning. Blackstone goes to school in the afternoons, so needs a job which lets out by 11AM. Seems like it works to me. I think it's less likely that part-time jobs are slavery, and more likely that the labor market works at least a little like other markets. Thoughts?**

**Please let’s not argue about companies that limit hours in order to evade benefits, that is reprehensible but a separate topic from minimum wage laws.

No I think they will likely go on welfare.

I really hate how the poor single mothers are dragged here as evidence of or advocation for minimum wage increases. Often the case for the working poor, and this applies more so to single mothers than any other group is not the wage that is paid but the hours that are worked. I think the connection of wages to quality of life is not as solid and fixated as you wish us all to believe.

Perhaps advocation for equal pay for women would be more likely to help the poor mother's burden, or maybe policies that push for more educational opportunities for women would also help lessen their burden. Greater opportunities to safe and affordable day care, state programs to help alleviate the costs of child health care for single mothers, and other state and federal income subsidy programs.
But I think the biggest pushes we should be making for poor mothers in America is for more tax burdens removed....state and federal. And also keeping purchasing power in America strong.

We need to examine and address poverty at the household, not the wage, as that will give us a better ability to address their needs.

CarlitosWhey points out what I think is the crux of the issue when discussing minimum wages. Those in favor of having/increasing them usually use the livable wage argument. This argument makes two assumptions: first, that all jobs should pay a 'livable wage', and second, that there is some concept of what that entails. Let's take the first assumption. CW raises the question 'Do all jobs need to pay a living wage?'. I think this is a very worthwhile discussion, in which a reasonable case can be made for both sides. My concern is that it is usually just left as an assumption, whereas it really should be validated. So, for those arguing in favor of minimum wages: do all jobs need to pay a living wage? If so, why? The argument in favor of this would probably state that everybody needs to be able to live. Fair enough. However, let's look at the basic concept of a minimum wage job. By definition, these are jobs for people that have no marketable skill. Now, I won't argue that such people need to live as well, for they do. However, this becomes important in the discussion of what constitutes a 'living wage'? Is it just enough for 1 person to survive on? Or does it need to be enough to support a family? If so, how big a family? 4 people? 6? 10? Quite often, I see the argument that one can't support a family on such wages. I would respond that this is indeed true. Why would there be an expectation that someone with no marketable skills would be able to support a family? This seems somewhat absurd to me (which is probably why I am a conservative, eh? ). Most middle class people in this country face this issue all the time...many people are restricted in either having a family or in how large a family they might have due to economic considerations. These are people with marketable skills. Expecting that those without such skills shouldn't have to deal with the same issue doesn't make sense to me. As a fiscal conservative, I would also point that persuading me (and others with my viewpoint) of the need for a minimum wage increase would involve a listing of various governmental costs that should decrease as a result, through decreased crime or other governmental outlays. This argument is seldom made. (and if it were, it goes without saying that such decreases should be measured, leading to a repeal of the standard if not met...the type of metrics businesses use all the time but for some reason our largest spender seems to think don't apply )

I will add that those against minimum wages usually use economic effects as the argument, stating either that jobs will be lost or that companies will go out of business. My observation has been that neither of these outcomes has come about as minimum wages have been applied here in the U.S. AT some point economic theory dictates that this would have to have an effect, but I have not seen it so far. However, there is one aspect to this that is often neglected. Captialistic economies are built on the fact that people who are incented to achieve achieve more. Survival is a very powerful incentive. Removing the need to improve oneself in order to survive has a mitigating effect on those people affected (many won't improve their skills because they no longer have to), and on the economy in general. This aspect comes down to a socialist/capitalist issue..for some, this is a worthy tradeoff, whereas for others, it is not.

I think the gov't already regulates hours. Overtime is not a benefit from your employer, just an fyi.

The issue is with what one person's labor is worth per hour regardless of part or full-time. Someone's time should have a minimum value, something that at 40 hours a week is above POVERTY level income which is now like $18K, where $5.15 is like $10K.

No, you shouldn't limit part-time jobs, after all they still have the TIME to do other things. A person who works 80 hours a week may make $400 pre-tax income, but that is a miserable life regardless if they can eek out a livelihood.



You and Blackstone.

Why do you assume something is good simply because people do it? IMHO, this is not an issue of how much demand there is or if people are in such horrible shape they are "willing" to do it.

You guys sound like people trying to make excuses to treat people badly. You sound like some nasty salesman who just sold a toxic dump and says "well he wanted it". Or a salesman who lends money at 45% interest to a poor family and says "well they needed the loan".

Do you realize that? Just because you can treat people poorly doesn't make it justifiable.




I agree that a comprehensive look at what a living wage should be is a desirable thing. But things don't work that way and I don't think you have to go to those lengths. Your average person KNOWS what a liveable wage is and they KNOW what a horrible, exploitive wage is. $5.15 is the later. You don't need a comprehensive study to know that this is far too low regardless of anyone's situation. Simply going to $7.50 an hour is $15K per year, that's STILL below poverty income so it's a NO BRAINER, IMHO.

You need to explain this to RedCedar. He was the one insisting that unemployment is better than a job that pays a non-living wage.



Why do you assume that I'm calling something "good" simply because I've described it? You're still avoiding the question I asked you (quoted at the top of this post). That's a pretty reliable sign that you haven't really thought this issue through beyond emoting over it.

Yes, I'm aware that the gov't regulates hours. I have the right to work less than 40, my employer has the right to give me more than 40. The government says to pay me 150% of my hourly rate for hours over 40 in most cases.

But... If a "living wage" is what you seek, how can you justify part-time employment? After all, it may not be enough to "live" on? If you want "living wages" shouldn't you require that lower-income earners work full-time?


Sounds like your issue is with what one person's labor is worth per hour ... Not the issue, your issue. I'd say that the mere fact that part-time, share-time, wage scales, overtime, etc. exist demonstrates that the labor market is just that - a market. In this market, there are lower, entry-level positions which pay less than what a family of 4 could use to live in Malibu. These jobs are taken by people that lack the skills to do more, and thus earn more. Or, the market has too much labor, not enough jobs, or the companies have moved to Arizona, and the people haven't moved yet.


With due respect, where did I say that anything was "good?" I said that there was obviously demand for minimum wage jobs. There is demand for crack cocaine, and that's not "good."

You asserted that people should not take these jobs because unemployment would be preferable. Well, we still have unemployment benefits and yet people take minim