Minimum Wage

[Oafman]

Anyway, a minimum wage is only half the battle. We need companies to start paying a living wage, so taxpayers can stop subsidising hard working underpaid people (of course, in reality, it's the profitable companies we're subsidising), and our tax bills can be reduced.

Look for companies who pay the living wage, and give them your custom. Demand that your elected officials only give contracts to such companies.

 

[ananda]

$10.10 raises the price of your Happy Meal by a few pennies. $1 billion does what? For myself, I am more than willing to pay a few pennies more to enable quite a few minimum wage earners to get off food stamps and the like and to contribute to the health of our economy.

What happens to the man whose skills are only worth $9 an hour?
What happens to the boy who I could consider employing for $5 an hour to paint the side of my house?
What happens to the man who works for $10.50 an hour, when he sees his fellow (lower skilled) co-worker get a raise from ~$7 to $10.10 an hour?

That you apparently don't give a hoot about your fellow man through their economic well being speaks volumes.

I do, that is why I argue against a minimum enforced wage.

 

[iluvatar5150]

What happens to the man whose skills are only worth $9 an hour?

How do you calculate the worth of those skills?

What happens to the man who works for $10.50 an hour, when he sees his fellow (lower skilled) co-worker get a raise from ~$7 to $10.10 an hour?

He gets a raise, too.

I do, that is why I argue against a minimum enforced wage.

Then you won't mind telling us about how great life was before the minimum wage laws were passed.

 

[ananda]

How do you calculate the worth of those skills?

By the limits of my own salary. Or, if a corporation, the limits of their income.

If I myself only make $25 an hour, I will not hire a handyman to fix my roof for $10.10 an hour, I'll do it myself - thus putting him out of business. I cannot not hire a boy to paint my wall for less than $10.10/hr (since I am prohibited from doing so), I'll do it myself, thus destroying my chance to help a young man save for his future, and it also destroys community bonds, leaving us both poorer. The boy might have been happy to paint for $5/hr - a wage reasonable according to his skills - and I would be happy for him to do so. But now, I am banned from doing so.

He gets a raise, too.

Really? How does that automatically happen? Does the $25/hr man get a raise too? What about the $100/hr man? The $1000/hr man?

Then you won't mind telling us about how great life was before the minimum wage laws were passed.

There are other variables besides minimum wage which contributes to conditions in society.

 

[whatbogsends]

What happens to the man whose skills are only worth $9 an hour?
What happens to the boy who I could consider employing for $5 an hour to paint the side of my house?
What happens to the man who works for $10.50 an hour, when he sees his fellow (lower skilled) co-worker get a raise from ~$7 to $10.10 an hour?

I do, that is why I argue against a minimum enforced wage.

First, you need to understand what "worth" means in our economic system.

A worker might produce $20 an hour of value, but only be "worth" $5, because "worth" (i.e. what a person receives as compensation) isn't tied to productivity, it's tied to supply and demand of labor in the marketplace.

More than likely, the worker who's "worth" $9 an hour from a supply and demand perspective is already producing more than $10 of value, and as such, what happens is that worker will now be paid closer to the value of their productivity.

As far as the implied jealousy of the man who is aggrieved because now others have increased their compensation, nothing really happens to him other than being less well off relative to them.

If we're positing these types of questions:

What happens now to the workers who see how painfully undeserving CEOs are of their multi-million dollar compensation packages when the company they run performs poorly?

What happens now to the workers who see disgraced executives get ousted, yet receive millions of dollars (i.e. golden parachute) on their way out, despite having performed poorly, and layed off productive workers in the process?

 

[MikeCarra]

By the limits of my own salary. Or, if a corporation, the limits of their income.

That is a pretty weak metric.

If I myself only make $25 an hour, I will not hire a handyman to fix my roof for $10.10 an hour, I'll do it myself

Unless you yourself are a skilled roofer you will likely end up costing yourself MORE in the long run:

1. Cost of hospitalization after you've fallen off the roof
2. Increased insurance rates after you have continuous flooding of your house
3. Cost of doing the job multiple times (since you are not a skilled roofer)

- thus putting him out of business.

I am not a roofer, hence I would not be able to put him out of business. I will, in fact end up paying him AND the ham-fisted attempts I made at fixing it myself.

The boy might have been happy to paint for $5/hr - a wage reasonable according to his skills - and I would be happy for him to do so. But now, I am banned from doing so.

Does minimum wage apply to private enterprise?

But that aside, if we look at realistic scenarios of COMPANIES, then indeed the ONLY thing that happens in that scenario is that young man never has a chance to fulfill any dreams.

Since minimum wage now has a lower purchasing power than it did back in the 1960's it is a constant march backwards.

If the minimum wage exists it should maintain at least the same value in real dollars and purchasing power over time. To go backwards is actually pretty bad.

Really? How does that happen? Does the $25/hr man get a raise too? What about the $100/hr man? The $1000/hr man?

Most scenarious of increasing minimum wages don't extend up the ladder. If I am making $96,000 a year I'm quite capable of meeting all my needs and then some.

The point of the exercise is to ensure there's a FLOOR. Not that you lift the entire house up into the sky.

 

[ananda]

First, you need to understand what "worth" means in our economic system.

A worker might produce $20 an hour of value, but only be "worth" $5, because "worth" (i.e. what a person receives as compensation) isn't tied to productivity, it's tied to supply and demand of labor in the marketplace.

More than likely, the worker who's "worth" $9 an hour from a supply and demand perspective is already producing more than $10 of value, and as such, what happens is that worker will now be paid closer to the value of their productivity.

As far as the implied jealousy of the man who is aggrieved because now others have increased their compensation, nothing really happens to him other than being less well off relative to them.

If we're positing these types of questions:

What happens now to the workers who see how painfully undeserving CEOs are of their multi-million dollar compensation packages when the company they run performs poorly?

What happens now to the workers who see disgraced executives get ousted, yet receive millions of dollars (i.e. golden parachute) on their way out, despite having performed poorly, and layed off productive workers in the process?

You made my point.

Things should be tied to supply and demand. When "government" attempts to impose a certain wage (in other words, price-fixing), it forcibly unbalances the law of supply and demand, it might lead to short-term gains among specially protected individuals (whether to minimum-wage earners or CEOs), but to long-term negatives for the overall economy.

The examples you gave re: CEOs are a perfect example of a "government" (e.g. corporate boards) price-fixing things (in these cases, golden parachutes).

 

[ananda]

That is a pretty weak metric. Unless you yourself are a skilled roofer you will likely end up costing yourself MORE in the long run:

1. Cost of hospitalization after you've fallen off the roof
2. Increased insurance rates after you have continuous flooding of your house
3. Cost of doing the job multiple times (since you are not a skilled roofer)
I am not a roofer, hence I would not be able to put him out of business. I will, in fact end up paying him AND the ham-fisted attempts I made at fixing it myself.

That's our individual decisions to make, based on individual circumstances, but my argument stands.

I've passed up "professionals" in the past because their costs were too great in relation to my income, and I found it reasonable instead to study all I need to know about the skill on my own and to do the project myself. I judge that the consequences (whatever failures might happen) are something I can risk absorbing.

You might not pass up the "professional" because you've judged that, in your case, exchanging a part of your income for his expertise is worth more than learning what you need to know to do the job yourself.

Do you do any work on your own? Cleaning up your yard, or purchase groceries on your own? How do you know if your yard will be cleaned correctly, or groceries correctly purchased, if not done by a professional? Practical experiences support my argument.

Does minimum wage apply to private enterprise? But that aside, if we look at realistic scenarios of COMPANIES, then indeed the ONLY thing that happens in that scenario is that young man never has a chance to fulfill any dreams. Since minimum wage now has a lower purchasing power than it did back in the 1960's it is a constant march backwards. If the minimum wage exists it should maintain at least the same value in real dollars and purchasing power over time. To go backwards is actually pretty bad. Most scenarious of increasing minimum wages don't extend up the ladder. If I am making $96,000 a year I'm quite capable of meeting all my needs and then some. The point of the exercise is to ensure there's a FLOOR. Not that you lift the entire house up into the sky.

Lawfully and economically speaking, companies are treated like persons, just like men, women, and human beings. What applies to a corporate body applies also to the natural man.

 

[iluvatar5150]

Really? How does that automatically happen? Does the $25/hr man get a raise too? What about the $100/hr man? The $1000/hr man?

Wages compress upwards. Those closes to the bottom will see the biggest boost, while those farther from it will see less of one. At some distance from the new minimum, wages will stop being affected.

 

[ananda]

Wages compress upwards. Those closes to the bottom will see the biggest boost, while those farther from it will see less of one. At some distance from the new minimum, wages will stop being affected.

How's that accomplished?

By government dictate, that all wages are to increase 33%?

Why should I, as an employer, add to the wages of those receiving more than minimum wage?

 

[stamperben]

So is there tax relief for employers forced to pay higher wages?
If employers cost are increased, doesn't that automatically translate to higher product and service costs?
Do employers also eliminate what they consider as nonessential workers to minimize costs?

From my personal example, I cited how I thought it would effect me. (No extra money in my pocket, potential for paying more for stuff, and my son not bringing in extra income.)
I don't understand how this equates to most normal people having more disposable income.

Tax relief? Why should there be?
The rest I thought I addressed in other posts. Your Happy Meal would cost pennies more. Okay, I'm happy to pay mere pennies for what benefits an increase in money circulating would bring - less social safety networks used by minimum wage workers and your son might in fact get that job as demand for goods and services increases.

 

[MikeCarra]

That's our individual decisions to make, based on individual circumstances, but my argument stands.

Your argument stands only in a world where everyone can do everything just like everyone else.

Otherwise you are stuck with "society" in which people act in accord with their skills.

I've passed up "professionals" in the past because their costs were too great in relation to my income

Ever tried that when it comes to non-elective surgery?

, and I found it reasonable instead to study all I need to know about the skill on my own

Well, that works...sort of. I am doubtful you would be able to do EVERYONE's job that way.

and to do the project myself. I judge that the consequences (whatever failures might happen) are something I can risk absorbing.

Oh I've done that too! And because I have to live with the consequences I usually ended up calling in the professional (you know the guy who got the training in that specific skill) to fix my errors.

But let me ask you: if you make $25/hour, why is it that everyone around you MUST make LESS/hour than you in order to get your business?

I find that to be a very weak and strange metric.

For instance if you only make $25/hour you could neither afford ME, nor could you purchase that material that I make. Yet you actually do. Pretty much every day. You use something I make like it or not.

Do you do any work on your own?

Yes. And I guarantee you that you couldn't just "learn it" on a spare weekend. Yet you purchase the products I am involved in.

Cleaning up your yard, or purchase groceries on your own? How do you know if your yard will be cleaned correctly, or groceries correctly purchased, if not done by a professional? Practical experiences support my argument.

That isn't an appropriate question for me since I didn't make the original claim of how much someone must make in relation to my salary.

I am MORE than willing to pay MORE for goods and services if I know it will help my society out. If my neighbor has a better standard of living (or at least not a HORRIBLE one) then I'm willing to pay more for their goods and services.

Lawfully and economically speaking, companies are treated like persons, just like men, women, and human beings. What applies to a corporate body applies also to the natural man.

Not in practice. Legally, yes, (but only insofar as one is "incorporated" I believe), but in practice the real difference lies in the fact that YOU currently buy something I make and there's no way with your $25/hour salary you could afford me. Not by a long shot.

But you don't know that and the cost is built out rather differently.

In addition the example you gave of the young man unable to live out his dreams because you couldn't pay in $5 but had to pay him $10 an hour isn't how the real world works when it comes to companies and corporations.

 

[MikeCarra]

How's that accomplished?

Probably the way it was accomplished when the Minimum Wage was enacted in the 1930's. Or when people got increases in the minimum wage up through the 1960's.

By government dictate, that all wages are to increase 33%?

I believe the other poster pointed out that wages compress upwards. Just like in the 1930's when people got a minimum wage which might have increased their daily salary by 100% doesn't mean that suddenly JP Morgan got to double his income.

Why should I, as an employer, add to the wages of those receiving more than minimum wage?

No one is asking you to. Indeed that would be a wholly irrational approach to the minimum wage.

The minimum wage is a FLOOR....not a skyscraper.

Why would anyone even THINK that wages wouldn't compress upwards?

Are you actually thinking that if minimum wage folks got a 33% raise that I'd give up my nearly 6 figure income because it WON'T get a 33% raise and will instead opt to start working for minimum wage?

 

[MikeCarra]

Tax relief? Why should there be?

I believe the thought is that since the employers GIVE jobs out that they shouldn't have to ALSO give more money.

Remember, employers don't actually NEED workers. Work and jobs are a charity program from those blessed by lord God with money who wish to "help out" people who are less blessed.

But the "workers" (ie "takers") shouldn't get too grabby-grabby.

The employer is kind enough to give them a job, a wage is actually a great bonus on top of that!

The rest I thought I addressed in other posts. Your Happy Meal would cost pennies more.

I suspect he would go and learn how to make Happy Meals(tm) himself and hence save the pennies. (This of course completely obliterates the idea of "economy of scale"...but we aren't talking about real world business here.)

Okay, I'm happy to pay mere pennies for what benefits an increase in money circulating would bring - less social safety networks used by minimum wage workers and your son might in fact get that job as demand for goods and services increases.

But then there would be more poor people thinking they did something right and not being reminded daily that they are solely responsible for being poor.

It is punishment for their sins that they are poor. If we make them LESS poor they will forget how to be "good" and they will turn into monsters of greed and excess.

This is really the best of all possible worlds.

 

[ThatRobGuy]

I don't think raising the minimum wage will necessarily kill jobs as some other opponents of the practice suggest...

Really, the biggest impact is on everyone who already has jobs that make more than minimum wage.

For example, a person who makes $40k/year when the minimum wage is $7.35 has more money left over after all expenses are paid than a person making $40k/year if the minimum wage were $10.10.

...simply because the cost of goods go up.

I think raising the minimum wage also has a somewhat negative impact on smaller companies by making them less competitive with the big box stores.

Stanford (I believe???) did a study that showed that a big box store like Walmart or Target could offset a minimum wage increase to $14/hour and only raise the price of their products by an average of $0.12. (The simply logic being, the number of sales they make is exponentially larger than the number of employees they have).

This study is often cited by several people who support minimum wage increase as their rationale behind why it should be dramatically increased.

If you only look at big box stores, then the answer appears to be cut and dry...however, if you look at smaller operations that don't do the kind of volume that walmart does, like a hometown grocery store...do you think they could support an increase like that by only raising the cost of goods $0.12? Not a chance...

The impact of minimum wage increases is the smallest on companies that are already the biggest.

As it is, you can walk into a Walmart and get a digiorno pizza for $4.99...you buy that pizza at a small hometown grocery store, it's $6.59 (I use this example because I picked one up on the way home last night from my local grocery store )

...small businesses already have a hard enough time competing with big box stores like walmart...do you really want to throw a curve-ball into the market that only big box stores can absorb and handle gracefully within their business model? You're asking to have an eventual big box monopoly.

The only reason Walmart and Target's prices are as low as they are right now is because there's still enough small business out there that they need to undercut to stay in business (competition keeps prices lower)...you make it tougher and tougher for small companies to compete with walmart, those prices won't stay low forever. Now, instead of $4.99 for that frozen pizza to undercut the $6.59...walmart can charge $6.99 to undercut the small store's $8.59.

Go through this cycle one or two times, whatever gains that minimum wage increase initially provided have been negated by price increases and inflation.

(which, I'm surprised inflation hasn't been brought up more in this thread...inflation is one of the biggest detriments in the market today...way more than a low minimum wage)

 

[HannahT]

(which, I'm surprised inflation hasn't been brought up more in this thread...inflation is one of the biggest detriments in the market today...way more than a low minimum wage)

I have to agree with you there.

I honestly don't have a problem with increasing the min. wage, but I do question such a large JUMP. Small business was why. People always look to Walmart or Salaries of the CEO's, and pretty much ignore other driving forces.

I never really understood why though - ignored them that is.

 

[MikeCarra]

I have to agree with you there.

I honestly don't have a problem with increasing the min. wage, but I do question such a large JUMP.

Isn't it interesting that we've seen a steady DECLINE in the real value of the minimum wage for decades now, and suddenly when someone wants to right that it is unimaginable as to why it must be so large.

But all along the way we had politicians (mostly on the left) who were trying to get it increased in smaller adjustments. Yet some fought it.

Increasing an unlivable wage by a percentage or two will not fix any of the problems that are incumbent on an unlivable wage.

Small business was why. People always look to Walmart or Salaries of the CEO's, and pretty much ignore other driving forces.

I never really understood why though - ignored them that is.

We as a nation have somehow "swallowed" the "need" to pay CEO's and other C-Suite denizens ever spiraling salaries which have increased in some cases by 100's of percentage points over the years but we balk at modest increases in the wages of the poorest.

As if we thought incentivizing the wealthiest would keep the country growing but incentivizing the poorest would somehow damage our nation.

What a strange, strange country we live in.

Oh, yeah and the reason why Big Box Stores can deal with these price shocks better than small players is in large part because so many of the well-paid CEO's have offshored manufacturing to places where minimum wage is less than livable.

And we have rewarded these CEO's with our undying fealty. And lambasted those who would dare to ask for a few of our pennies.

 

[ThatRobGuy]

Oh, yeah and the reason why Big Box Stores can deal with these price shocks better than small players is in large part because so many of the well-paid CEO's have offshored manufacturing to places where minimum wage is less than livable.

In terms of big box stores vs. small stores, off-shoring only plays a very small part.

A bottle of Windex purchased as Walmart is ultimately coming from the same manufacturing resources as a bottle of Windex from "Joe's Drug Store"

As I stated before, the true advantage big box stores have is volume.

Here are some rough numbers on it it to demonstrate what I'm talking about.
(we'll just use some nice round numbers to keep it simple)

Let's say we have two stores...

SuperStore Plus
Mom & Pop Shop

...we'll call them

Both stores currently sell Windex for $3.79/bottle (obviously both stores sell things other than Windex, but to keep it simple, let's just pretend they both only sell Windex)

SuperStore Plus is a larger operation... has 1,000 employees making $7/hour... convenient location... and sells ~6 million bottles of Windex per year

Mom & Pop Shop is a much smaller operation... has only 250 employees making $7/hour... only sells about ~500,000 bottles of Windex per year

Okay...new federal mandate, all employees must be paid $8/hour

For SuperStore Plus, that equates to an additional $2,080,000 in payroll
For Mom & Pop shop, that equates to an additional $520,000 in payroll

Superstore plus only has to raise their price per bottle $0.35 to cover the difference

Mom & Pop Shop has to raise their bottle price by $1.04...


Granted, this was just a very simple example, but I think it illustrates how massive volume is the key factor that allows big box stores to more gracefully handle new expenses.

 

[MachZer0]

$10.10 raises the price of your Happy Meal by a few pennies. $1 billion does what? For myself, I am more than willing to pay a few pennies more to enable quite a few minimum wage earners to get off food stamps and the like and to contribute to the health of our economy. That you apparently don't give a hoot about your fellow man through their economic well being speaks volumes.

Nothing stops you from tipping those workers when they provide a service for you

 

[GoldenBoy89]

Nothing stops you from tipping those workers when they provide a service for you

Except for the fact that McDonald's employees are not allowed to accept tips.