The Minimum Wage Tradeoff

[mark46]

We should consider the current situaion.

Folks who make the minimum wage and have a child are eligible for welfare, food stamps and other programs. Paying more reduces that welfare cost.

There are indeed lots of jobs that will be lost. I submit that many of those jobs SHOULD BE LOST. The obvious example is that of marginal small businesses that pay the minimum to their workers so that the family owners can just get by. What would happen if these businesses closed? Would the number of people eating out go down. No, of course not. More successful businesses would serve the public. These workers would need to find jobs at those establishments or elsewhere.

Let us say that we are now getting our meal at our local small Chinese restaurant for $25. That price is artificially low because of the sweat shop labor. If these marginal businesses were replaced by restaurants that could succeed if they charged us $35 because labor costs were higher, would society be better or worse off.
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Just BTW, many low cost stores have increased their labor costs. Last I heard, Walmart was not in danger because they pay their employees a minimum of $11 an hour in GA where it is acceptable to pay minimum federal levels. Walmart would survive well with the proposed schedule of minimum wages increase. After all, the current minimum wage (adjusted for inflation) is lower that when it was first implemented so many years ago.

 

[grasping the after wind]

We should consider the current situaion.

Folks who make the minimum wage and have a child are eligible for welfare, food stamps and other programs. Paying more reduces that welfare cost.

There are indeed lots of jobs that will be lost. I submit that many of those jobs SHOULD BE LOST. The obvious example is that of marginal small businesses that pay the minimum to their workers so that the family owners can just get by. What would happen if these businesses closed? Would the number of people eating out go down. No, of course not. More successful businesses would serve the public. These workers would need to find jobs at those establishments or elsewhere.

Let us say that we are now getting our meal at our local small Chinese restaurant for $25. That price is artificially low because of the sweat shop labor. If these marginal businesses were replaced by restaurants that could succeed if they charged us $35 because labor costs were higher, would society be better or worse.
====================
Just BTW, many low cost stores have increase their labor costs. Last I heard, Walmart was not in danger because they pay their employees a minimum of $11 an hour GA where it is acceptable to pay minimum federal levels. Walmart would survive well with the proposed schedule of minimum wages increase. After all, the current minimum wage (adjusted for inflation) is lower that when it was first implemented so many years ago.

How many businesses have you owned?

 

[OldWiseGuy]

We should consider the current situaion.

Folks who make the minimum wage and have a child are eligible for welfare, food stamps and other programs. Paying more reduces that welfare cost.

There are indeed lots of jobs that will be lost. I submit that many of those jobs SHOULD BE LOST. The obvious example is that of marginal small businesses that pay the minimum to their workers so that the family owners can just get by. What would happen if these businesses closed? Would the number of people eating out go down. No, of course not. More successful businesses would serve the public. These workers would need to find jobs at those establishments or elsewhere.

Let us say that we are now getting our meal at our local small Chinese restaurant for $25. That price is artificially low because of the sweat shop labor. If these marginal businesses were replaced by restaurants that could succeed if they charged us $35 because labor costs were higher, would society be better or worse.
====================
Just BTW, many low cost stores have increase their labor costs. Last I heard, Walmart was not in danger because they pay their employees a minimum of $11 an hour GA where it is acceptable to pay minimum federal levels. Walmart would survive well with the proposed schedule of minimum wages increase. After all, the current minimum wage (adjusted for inflation) is lower that when it was first implemented so many years ago.

Minimum wage and inflation: These two charts show how much workers have fallen behind - CNNPolitics

1960 United States Minimum Wage in Today's Dollars

In today's dollars worker's actual wages are about the same as in 1960. The difference is that there are many more (so-called) minimum wage jobs available.

 

[Nithavela]

The "sad fact" about modern industrialised nations is that there is not enough low qualified work to go around for everyone to put in 40-ish hours per week. It's probably more like 30, maybe even 25.

Sadly, we as a civilisation have decided that it's more reasonable to have 3 people work 40 hours and one person to be left in the cold, instead of 4 people working 30 hours and being payed a living wage for that. Following that, workers without skills that are high in demand are forced to take whatever they can get, lowering the worth of their work.

Once machines have made every worker obsolete, humanity will die out because nobody will be able to find work to buy the products of the machines.

 

[hedrick]

Last time I looked at what economists said, raising the minimum wage doesn't have that large a price in raising unemployment. But I agree that having full-time workers that can't live decently is a mistake. The rest of us are subsidizing the companies that do this.

 

[OldWiseGuy]

The "sad fact" about modern industrialised nations is that there is not enough low qualified work to go around for everyone to put in 40-ish hours per week. It's probably more like 30, maybe even 25.

Sadly, we as a civilisation have decided that it's more reasonable to have 3 people work 40 hours and one person to be left in the cold, instead of 4 people working 30 hours and being payed a living wage for that. Following that, workers without skills that are high in demand are forced to take whatever they can get, lowering the worth of their work.

Once machines have made every worker obsolete, humanity will die out because nobody will be able to find work to buy the products of the machines.

There are too many low skilled workers. It's a supply and demand thing. Nothing immoral. The whole world is overpopulated.

 

[mark46]

How many businesses have you owned?

perhaps only small business owners should vote or have opinions.

My family, my step father, my father, and one my grandfathers have owned restaurants. I don't recall whether my other grandfather owned his own meat shop (he was a butcher).

Of course, you didn't say SMALL BUSINESSES. My career was spent primarily with the finance department of large businesses doing business analyses. My MBA is from a top 10 MBA program.
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and you?

 

[Clare73]

We should consider the current situaion.

Folks who make the minimum wage and have a child are eligible for welfare, food stamps and other programs. Paying more reduces that welfare cost.

There are indeed lots of jobs that will be lost. I submit that many of those jobs SHOULD BE LOST. The obvious example is that of marginal small businesses that pay the minimum to their workers so that the family owners can just get by. What would happen if these businesses closed? Would the number of people eating out go down. No, of course not. More successful businesses would serve the public. These workers would need to find jobs at those establishments or elsewhere.

Let us say that we are now getting our meal at our local small Chinese restaurant for $25. That price is artificially low because of the sweat shop labor. If these marginal businesses were replaced by
restaurants that could succeed if they charged us $35 because labor costs were higher, would society be better or worse.

You don't think increasing the cost to the customer by 40% affects business, which then affects jobs available?

 

[grasping the after wind]

perhaps only small business owners should vote or have opinions.

My family, my step father, my father, and one my grandfather have owned restaurants. I don't recall whether my other grandfather owned his own meat shop (he was a butcher).

Of course, you didn't say SMALL BUSINESSES. My career was spent primarily with the finance department of large businesses doing business analyses. My MBA is from Berkeley.
========
and you?

I thought as much.

 

[hedrick]

There are too many low skilled workers. It's a supply and demand thing. Nothing immoral. The whole world is overpopulated.

I'm not sure this is really true. There are plenty of low-wage things to do. One area that's growing rapidly is home health aide. The traditional ones are still there.

 

[OldWiseGuy]

I'm not sure this is really true. There are plenty of low-wage things to do. One area that's growing rapidly is home health aide. The traditional ones are still there.

My ex-wife and my daughter both worked as home health aides for elderly people but there weren't enough hours of work to make it worthwhile, not to mention the physical and mental stress of the job (the most common complaint of caregivers).

 

[mark46]

The "sad fact" about modern industrialised nations is that there is not enough low qualified work to go around for everyone to put in 40-ish hours per week. It's probably more like 30, maybe even 25.

Sadly, we as a civilisation have decided that it's more reasonable to have 3 people work 40 hours and one person to be left in the cold, instead of 4 people working 30 hours and being payed a living wage for that. Following that, workers without skills that are high in demand are forced to take whatever they can get, lowering the worth of their work.

Once machines have made every worker obsolete, humanity will die out because nobody will be able to find work to buy the products of the machines.

We don't have the answer to the fact that we need fewer unskilled workers. In the US, we create new service jobs. In cities, folks are paid to walk dogs, shop for others, be personal trainers, and many other service jobs.

The other problem is that we have a great need for skilled workers, many of which are not "college" jobs.
We will always need plumbers, carpenters, installers, technicians, and lots of other skilled jobs. We need increased training, especially for "new" jobs such as solar and wind technicians

We also pay people to mow our lawns, pick our crops, work at our restaurants and provide other service functions. In 2021, we could creat millions of jobs in a government program to fix our transformation infrastructure.
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BUT IN THE END, YOU ARE RIGHT
The US has virtually NO employment for those with college decrees or for those who are highly skilled. We will need the face the fact that we will need to constantly create service jobs, and the fact that there will always be significant welfare costs.

ALSO, we will need to deal with the fact that even under full employment, the income gap will likely continue to grow.

 

[mark46]

You don't think increasing the cost to the customer by 40% affects business, which then affects jobs available?

Jobs will be lost, and they SHOULD BE. Marginal businesses will close, and they SHOULD CLOSE.
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So, it is your position that we will stop going out to eat if we close the restaurants who survive by paying their workers $7.25 and hour (actually less)? If your analysis is correct, we should allow businesses to pay $5 and hour, because more inefficient small businesses will survive.

It is NOT efficient for society to have workers being paid amounts so low that the state needs to pay then welfare. And why? So that owners can keep their labor costs down.

 

[Nithavela]

There are too many low skilled workers. It's a supply and demand thing. Nothing immoral. The whole world is overpopulated.

My suggestion would be to just feed a third of them into the meat grinder. Repeat as neccessary.

 

[mark46]

My ex-wife and my daughter both worked as home health aides for elderly people but there weren't enough hours of work to make it worthwhile, not to mention the physical and mental stress of the job (the most common complaint of caregivers).

I suppose that this situation is a function of location. However, it is clear that there is a huge need for home health workers, and for workers at our various elder care facilities and centers. These folks are among those in MOST need of having increased wages. In our area, most health aide workers are employees of health care services companies (some quite small).

 

[OldWiseGuy]

My suggestion would be to just feed a third of them into the meat grinder. Repeat as neccessary.

"We're gonna need a bigger meat grinder."

JAWS: We Need a Bigger Boat - YouTube

Hey, maybe we can get 'Bruce' to eat them.

 

[Clare73]

Jobs will be lost, and they SHOULD BE. Marginal businesses will close, and they SHOULD CLOSE.
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So, it is your position that we will stop going out to eat if we close the restaurants who survive by paying their workers $7.25 and hour (actually less)? If your analysis is correct, we should allow businesses to pay $5 and hour, because more inefficient small businesses will survive.

Of course there is less eating out when the prices go up, many can't afford to eat out as often.

It is NOT efficient for society to have workers being paid amounts so low that the state needs to pay then welfare. And why?
So that owners can keep their labor costs down.

Labor costs are a factor of supply and demand. When there aren't enough workers for unskilled jobs, the wages go up, which makes the cost of the product go up, which then prices some consumers out of the market, especially the disadvantaged.

 

[Ringo84]

How many businesses have you owned?

As we all know, the only way that a person can comment on minimum wage or other economic issues is by owning several businesses.


If we can't pay workers enough to be able to live on, then how can we call ourselves a "Christian" nation or even a just one?
Ringo

 

[gaara4158]

You don't think increasing the cost to the customer by 40% affects business, which then affects jobs available?

Studies show that there is no significant disemployment effect associated with raising the minimum wage up to 60% of the median, and possibly higher.

 

[chevyontheriver]

Let us say that we are now getting our meal at our local small Chinese restaurant for $25. That price is artificially low because of the sweat shop labor. If these marginal businesses were replaced by restaurants that could succeed if they charged us $35 because labor costs were higher, would society be better or worse off.

I would be no worse off because I can neither afford the $35 cost nor the $25 cost of such meals. I'll be eating my peanut butter sandwich just the same.