Just Raise the Minimum Wage!

[SmilezRoyale]

There's been some talk recently about demands to raise the minimum wage

http://dailycaller.com/2013/09/13/liberally-yours-a-living-wage-is-the-essence-of-american-exceptionalism/

As more and more Americans find themselves working part time low paying service sector jobs, like those of the MacDonald's workers, the demands to raise the MW will probably increase.

The two main criticisms of this are that it will either raise the price of whatever the business in question is selling, or create dis-employment that will suppress wages elsewhere, or leave people without jobs entirely.

I don't buy the first argument, since contra-marx the prices of goods are not determined by costs of production but, generally by the price that the producer thinks will maximize his profits [at least generally]. But the second argument carries a great deal more water, especially since it explains how workers wages/salaries can increase but the costs of business can remain constant.

I'm not actually going to attempt to refute the idea that raising the minimum wage will cause unemployment.

Now it may be that it does raise unemployment but the benefits to those still employed are greater than harm done to those who lost their job. I'm not going to make that argument either. For one, whether that would be better is a value judgement. Secondly, I don't have the evidence to prove it's true

Instead I'm going to argue that if we compare the two possibilities, raising the Minimum wage is still a good idea.

Obviously if it's the case that MW increases have little to no effect on employment, increasing the MW is pretty harmless.

If it DOES cause unemployment, *noticeable* unemployment. Two things will happen, both of which in my view are positive.

1. It will prove the economists right. [The ones who predicted such an outcome anyway]
2. It will punish those working minimum wage for their economic illiteracy.

And of course if larger minimum wage increases cause more unemployment, all the more reason to jack them up.

If #2 causes you to raise an eyebrow, consider that opponents of the minimum wage are generally perceived as being heartless. In my mind, since this accusation is not going to die as long as the minimum wage is debated, people who oppose the minimum wage might as well embrace the dark side and become the fiendish villains everyone else thinks they are. And what better way to do that then support something like a 30 dollar minimum wage?

I think it more likely that the economists predicting greater unemployment from a raise in the MW are correct. Call me psychotic, but I think it's more important in the long run to prove a point than to act like a compassionate economist, all the while losing popularity.

[RydiaLockheart]

In all seriousness, if we were to raise the minimum wage, how much do you think would be fair? No way to $15, but maybe there could be a sliding scale for places that are more expensive. Like, minimum wage would be a little higher in NYC than, say, Fargo.

Interesting fact: Ohio's minimum wage is higher than the federal, but it's tied to inflation.

[Warforger]

People are calling to raise the minimum wage because the wage set by market forces is already higher than it so it's not really a minimum wage just an excuse for employers to underpay their employees.

Although Economists generally hold the most unpopular opinions like supporting exporting manufacturing to China or supporting the bailouts of the major corporations so I could see them opposing this. But no one really listens to them, for most people political pundits and leaders are their Economists.

[BrianEtrius]

How does raising minimum wage lower employment? I've never bought this argument, think about the type of jobs that are most affected by the raise: part-timers, retail and fast food. In these cases, the employers can afford a raise in wages, for Christ's sake if minimum wage kept up with production and was not held in check by Congress (which means it would have been subjected to the free market(!!!)) it would be around $22, so even a $10 minimum wage is meager.

Of course, no one listens to economists........

[SmilezRoyale]

At 9/13/13 08:15 PM, RydiaLockheart wrote: In all seriousness, if we were to raise the minimum wage, how much do you think would be fair? No way to $15, but maybe there could be a sliding scale for places that are more expensive. Like, minimum wage would be a little higher in NYC than, say, Fargo.

Interesting fact: Ohio's minimum wage is higher than the federal, but it's tied to inflation.

"Fair" can mean multiple things.

If by fair, you mean a living wage, then 15$ per hour would not cut it in most places. [Especially blue states and metropolitan areas] If I'm not mistaken, a 10 dollar minimum wage is roughly 20,000 dollars per year, or half of the median income of an American.

If by fair, you mean a wage which represents the workers actual productivity, I have no idea.

A better case could be made *now* than could be made in the late 19th century that American workers are not being paid the full value of their labor, and people generally [wrongfully in my opinion] portray that era as an era of mass exploitation of working people. And by better case, I mean that

Conservatives and progressives could come to a compromise. Let progressives bring back the old-timey Labor Union stuff that will supposedly raise workers wages. And in return, progressives can agree to stop supporting policies that make everything [Food, Healthcare, Education, etc.] So goddamn expensive.

I'm personally more confident that price deflation of consumer goods will help the common man then labor unions, but I'm more confident that labor unions can help the common man than i am progressives and conservatives coming to such a compromise.

[SmilezRoyale]

At 9/13/13 08:19 PM, Warforger wrote: People are calling to raise the minimum wage because the wage set by market forces is already higher than it so it's not really a minimum wage just an excuse for employers to underpay their employees.

That seems a bit contradictory. If the wage set by market forces is above the minimum wage, how does a legal minimum actually *help* employers resist market forces?

[TheKlown]

No one is going to be want to be doctors and other high paying jobs if people can make 15 dollars an hour at fastfood places and the food will be overpriced so customers won't be going there anymore. We rarely go to Mcdonalds as it is, but if they jack the prices up on their sandwiches and get rid of their dollar menu, then they will lose many customers.

[Ravariel]

Waitwaitwaitwait... I think my brain just broke.

Smilez... advocating raising the minimum wage.

Today is opposite day, isn't it? Why did nobody tell me?

[Camarohusky]

There are numerous reasons I don't support massive increases in the minimum wage.

First off is that in the end, for the MWer it will end up as a wash. Capitalism encourages businessess to charge as much as possible that the customer will pay. Customers with more money are more likely to pay more for the same good. Increase the wages of a massive chunk of people by 6-10 thousand dollars a year (on the rough calculation that $1/hr = $2000/yr) and that extra wealth will encourage shop owners to cash in by raising their prices. In the end the items will likely raise in the exact proportion to the minimum wage.

Second, the raising of the minimum wage is wholly and completely unfair to everyone else. Someone who went to Community College and busted their butt to be a paralegal getting paid $16/hr will learn that their effort actually turned out to be worth a measly $1/hr. On top of that, the inevitable inflation that would occur would raise prices without ANY of the better than MWers getting a corresponding raise as well.

Lastly, it will hurt those who actually need the MW jobs. Young folk, disabled folk, and folk who can do no better would now be competing with people who have better skills and professionalism because the job is now worth something. This would shut those who could do no better than squeaking into a wholly undesirable $8/hr job completely unemployed.

In the end minimum wage jobs are minimum wage for a reason. Why should we overpay for jobs that are worth so little?

[SmilezRoyale]

At 9/13/13 10:20 PM, Ravariel wrote:

Today is opposite day, isn't it? Why did nobody tell me?

I'm not advocating raising the minimum wage out of a belief that it will help people.

it *might*, though I suspect it won't.

As long as there is a sizable number of people who believe in a minimum wage [that it is a good thing] then there is a rationale behind raising it just to prove those people wrong. The greater the damage done the greater the evidence.

Camaro put forward reasons for not raising the MW that are more or less fancy elaborations on the reasons I put forward for why people generally object to a MW increase.

[BumFodder]

At 9/13/13 07:16 PM, SmilezRoyale wrote: As more and more Americans find themselves working part time low paying service sector jobs, like those of the MacDonald's workers, the demands to raise the MW will probably increase.

stopped reading here

obviously if there are more mcdonald jobs there will be more people in them, no need to be so sensationalist as it makes you and your point look stupid

[SmilezRoyale]

At 9/14/13 01:25 AM, BumFodder wrote:

At 9/13/13 07:16 PM, SmilezRoyale wrote: As more and more Americans find themselves working part time low paying service sector jobs, like those of the MacDonald's workers, the demands to raise the MW will probably increase.

stopped reading here

Matter-of-factly the number of people working in the low paying service sector has been increasing. Another more recent trend is the fall of full time employment and the rise of 1. hiring temp workers 2. hiring part time. Both of which involve people being 'employed' but not being able to earn as much money as they would like. [Not in terms of per hour pay but in terms of hours worked]

Now I'm not actually sure how many people *actually* pay minimum wage. But my guess is that even those who are earning, my guess is though

If more people find themselves at or close to low paying work, and also don't feel like advancement is possible, they will eventually start *demanding* things from their government.

There's nothing melodramatic about it.

The whole reason Socialism [as it was understood in the late 19th century] was so unpopular in the US was because of the relative ease with which one could make a decent living.

of Course it could be that people today simply have a ridiculously high standard for what consists in a decent living.

[TheKlown]

At 9/14/13 09:37 AM, SmilezRoyale wrote:

of Course it could be that people today simply have a ridiculously high standard for what consists in a decent living.

If people want their ipods, laptops, and tvs, than they should look for a job that requires skill. Oh, you say these lamewads claim to have no skills? They can always commit suicide, because they're easily replaceable at their hamburger flipping jobs.

[morefngdbs]

At 9/13/13 10:15 PM, Korriken wrote: I have a better idea. We don't need to go hiking the minimum wage. We need more access to education.

;;;
The education system is part of the problem

the idea that you NEED a university degree & for most people the debt you go in to get it to be successful is bullshit.

THe education system is set up to give the maximum people just enough skills to keep the toilets working, the coffee ready & the floors clean & shiny.
To do this you need millions of peasants so the few elite can live the life of leasure they deserve...a lifestyle paid for by the work & efforts of everyone else !

Oh , bend over the government tax assessor & the banks are here for their never ending tithe on your money !

[SmilezRoyale]

At 9/14/13 12:24 PM, morefngdbs wrote:

At 9/13/13 10:15 PM, Korriken wrote: I have a better idea. We don't need to go hiking the minimum wage. We need more access to education.

;;;

THe education system is set up to give the maximum people just enough skills to keep the toilets working, the coffee ready & the floors clean & shiny.

The college system does not teach job skills. It's an intelligence screen, basically it's an overpriced IQ test and gauge of a person's willingness to do things they don't want to. Both are good worker qualities.

Even with technical degrees like STEM, you find that none of what the colleges teach has anything to do with what you do when working.

http://www.youtube.com/watch?v=bpk_u_VmPD4

http://www.gallup.com/poll/164321/majority-workers-say-job-require-degree.aspx

All an employer needs to know is that a university graduate is probably smarter and harder working than a highschool graduate. Even if the graduate majored in something useless [relative to the job] like Archeology, or women's studies.

[Feoric]

At 9/13/13 10:15 PM, Korriken wrote: Also, businesses will not just absorb this cost increase, they will seek ways to keep their profit margins where they are.

That's not how it works. Businesses are not going to operate outside of market forces. Otherwise they wouldn't be profitable. Typically, paying workers is a small liability for businesses. The jump from a shit 8 dollar wage to a 10 dollar minimum wage is insignificant compared to other expenses. The average consumer would feel no difference in the cost difference, if there even is one to begin with. Prices are locked in to what the market can bear. If a business can't afford paying its workers a livable wage then chances are it isn't profitable to begin with.

Simply raising the minimum wage won't fix the issue because as the price of everything rises, the wage will eventually become insufficient and the wage will have to the elevated again.

God forbid wages remain stagnant like they have been for 30 years now.

[Der-Lowe]

The OP's approach is pretty cynical; all I'll say is that performing such experiments on your people will quickly put you out of the list of the most developed nations in the world. Developed nations base policy on the best quality of research they can get their hands off (but obviously tilt to one side or the other based on their ideological beliefs).
This leads me to the belief that economists (Smileyz was the more conservative one saying most economists) believe that rising the minimum wage would reduce employment. But that is simply not true, the best paper written on the subject by Princeton's economists Card and Krueger find that it doesn't. This means that the theory that best describes reality is one of monopsony: since labor can not flow seamlessly from one firm to the other firms are able to pay employees wages below their productivity.
This also tell us that we probably won't be able to afford raising the minimum wage to infinity and not expect a fall in employment, because people's productivity has a limit, which partially answer's Lydia's question. Brian has said 20 USD/h, which would link wages to productivity, but there's a menu of possible answers: linking to inflation since 1969 would lead to a minimum wage of 9.25, linking it to average wages would push it to 10.50, linking it to productivity to the 20 USD mark Brian said, and more populistically, linking it to the earnings of the 1% would push it to 30. I think a conservative rise would be 9.25, but ideally I would push for minimum wages being linked to productivity. I like the German system best, in which there's no minimum wage, but each sector has its union and they are able to push each sector's productivity increases to wage increases.
Korriken's view is a more fundamental approach, in which one reduces the supply of unskilled workers so that the natural wage of unskilled labor increases by market forces and not by regulation. Although I enjoy the elegance of the approach, I am highly doubftul both of the effects and the implementation. Firstly, I do not think the American higher education system is one of the most open in the world, with a thorough system of scholarships and loans. Secondly, this process is already taking place; the wage premium between unskilled and skilled labor is falling, as all those college graduates flood the labor market. It's a phenomenon quite regular across nations; the higher the level of development the lower the gap between skilled and unskilled labor. And the problem with low wages doesn't seem to come from a clash between unskilled and skilled labor, but between labor and capital:

[RydiaLockheart]

At 9/15/13 11:24 AM, Der-Lowe wrote: The OP's approach is pretty cynical;

Holy crap dude, where have you been all this time? It's been awhile.

[RydiaLockheart]

California is raising the minimum wage to $10 by 2016. Of course, California is an absolute basket case that is hemorrhaging money even when the cost of living is so high there. Obviously there are multiple reasons for this, but that's another topic entirely. I'm wondering what this is going to do to the state.

[Warforger]

At 9/15/13 01:47 PM, RydiaLockheart wrote: California is raising the minimum wage to $10 by 2016. Of course, California is an absolute basket case that is hemorrhaging money even when the cost of living is so high there. Obviously there are multiple reasons for this, but that's another topic entirely. I'm wondering what this is going to do to the state.

Depends, California is only in such a bad place because it was hit the hardest by the Housing crisis. The same with Mass. This is something I've been pondering about as well, most of the recession was caused by decisions made by private firms and individuals yet people still try to put the blame on the recession on political ideologies. What if the private firms instead decided to realize that homes only go up in value because there are potential customers and when you run out of customers you can't sell them for a profit? The main reason the housing crisis happened was because banks were making loans to higher and higher risk applications just so that when they default the bank can take over the house and have an asset that gains value, in order to do this banks then had credit agencies raise the rating of these risks to be safe. Eventually the banks just kept owning more and more homes to the point where there weren't enough customers to make a profit off it, forcing realtors to lower their prices and causing all those assets to become devalued causing banks to get into massive financial troubles. If the free market on its own had enough foresight that this would be a bad idea then California wouldn't even be doing that bad.

[aviewaskewed]

At 9/13/13 10:00 PM, TheKlown wrote: No one is going to be want to be doctors and other high paying jobs if people can make 15 dollars an hour at fastfood places and the food will be overpriced so customers won't be going there anymore.

I was really going to stay out of this one and just sit back and try to get an econ 101 lesson because I'll be the first to admit that my understanding of the principles of the economy is rudimentary at best but sometimes there's just something so stupid said...

For you to make that statement shows that you should have taken the exact attitude I was: Shut up, sit back, let the smarter people talk and you read and maybe learn something. 15 dollars an hour is NOT RICH! It barely is above cost of living in many places. People will of COURSE still seek higher playing jobs in fields like medicine for a few simple reasons:

1. They pay better and offer security that low skilled minimum wage or better jobs do not (yes, even if those jobs pay a 15 dollar an hour minimum. ESPECIALLY if they do in fact).

2. There will always be more prestige and respect afforded to medicine and similar fields because they are high skill, hard to attain, and require a lot of time, effort, and money to obtain the skills and tools necessary to acquire, maintain, and be successful in such positions.

3. Those jobs tend to appeal to a certain type of personality who will derive tremendous pride and self satisfaction in the attainment and establishment of a reputation and ability to help others. Trust me, these emotions are completely absent from most low skill, minimum wage type jobs and workers.

We rarely go to Mcdonalds as it is,

Who is "we"? Millions and billions even go to McDonald's, it's all over the world, it makes amazing profits, it's number 1 in the fast food industry and is in every town, city, and state in the union and all over the world. By "we" I'm guessing you are using either your own family, or some imaginary sample size that came from some dark body cavity directly in back of your scrotum. It's a ridiculous assertion you can't back.

but if they jack the prices up on their sandwiches and get rid of their dollar menu, then they will lose many customers.

Which is kind of my point with the argument that wage increase would mean price increase. If it did, the consumer can always choose to scale down and go with the cheaper brand thus triggering simple supply and demand economics and then forcing the companies to accept that a lower profit margin then prior is simply their new reality. We allowed the corporations to win and play these games, we keep letting them by not saying "fine, raise your price, and I'll not have truck with you or your product...then we'll see who wins".

The only decent argument I've ever heard for not raising the minimum wage is what it does to small business owners who do not have large amounts of capitol and consequently hire less employees due to the costs associated with payroll which increase thanks to a need to pay a higher minimum (and then perhaps a premium on top of that to be competitive).

[ArtistJ]

While I support my local 'fight for 15' campaign amongst low wage workers here in Chicago, I have to submit to the most common critizism brought forward which is that it simply causes inflation and then everyone higher up the ladder demands a higher wage and inequality/purchasing power remains the same.

What is really needed is Maximum wages and to fight the culture of inequality at its base, which is to eliminate the mindset that people of lower class's time is worth less, that physical effort is worth relatively little and that investment is worth a lot, and that people in positions that force them to live below a common dignity are entitled to more.

[ZJ]

At 9/17/13 11:04 PM, Entice wrote:

At 9/17/13 10:41 PM, Korriken wrote: you'll never achieve "equality" no matter how hard you try. There will ALWAYS be someone who has something someone else does not.

The gap could still be smaller than it is now

True, but how do you gauge success over the longterm if perfection is impossible? If we narrow the gap by a few percentage points in 30 years, have we really done anything that special?

[Feoric]

At 9/18/13 01:42 PM, Korriken wrote: the problem with this thinking is that you're focused on the wrong thing.

If you worry about what everyone else has

This is where everyone should have stopped reading. This isn't about having things. You cannot possibly look at this picture and say to yourself "this is not a problem," nor can you in good conscious say "fixing this problem is only about people wanting things."

[Feoric]

At 9/18/13 07:18 PM, LazyDrunk wrote: Maybe technology has enabled people to do more with less, cutting out middle men and (un)skilled labor.

Maybe if people didn't want so much they wouldn't spend more and borrow more than they can afford.

Maybe your picture lacks context.

None of this bears any relevancy to income gains so I'm not sure what your point is. I don't think you do either.

[wildfire4461]

This image circulating on Facebook says it all:

[Feoric]

At 9/18/13 07:27 PM, LazyDrunk wrote: My point is that your graph doesn't make your argument for you.

You haven't actually made an argument, ironically enough. Tell me, what is causing this inequality, and how?

[Feoric]

At 9/18/13 07:28 PM, wildfire4461 wrote: This image circulating on Facebook says it all:

Where do you live where a McDonalds cashier makes 15 dollars an hour? I want to move there. That's twice the national average.

[Feoric]

At 9/18/13 07:32 PM, LazyDrunk wrote: Are you trying to tell me that fast food, gas station and other part-time service industries aren't profitable to begin with? That's sure what it sounds like. Please, correct me if you actually meant something else when you wrote this drivel.

No, I'm not? I'm saying a jump from paying your workers 8 dollars and hour to 10 dollars an hour is going to bring a profitable business down into the red. Wages are typically a small part of overhead for businesses.

Inflation.

Good point. Let's tie the minimum wage to the rate of inflation instead of having ridiculous political battles to raise it an insignificant amount every X years.

I'm trying to illustrate your cheesiness for posting that graph without a truly comprehensive analysis.

You're right, I'm in dire need of some help. Please give me a truly comprehensive analysis of the situation.

What makes you think equality is the state of nature, knucklehead?

I admire your ability to both strawman and dodge the question at the same time.

[wildfire4461]

At 9/18/13 07:33 PM, Feoric wrote:

At 9/18/13 07:28 PM, wildfire4461 wrote: This image circulating on Facebook says it all:

Where do you live where a McDonalds cashier makes 15 dollars an hour? I want to move there. That's twice the national average.

It's what those food industry idiots want. The point of the image is they would be making more money than soldiers do.

Apparently you haven't really been paying attention to this thread (or you're a troll).