Minimum Wage Increase (again)

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I was prepared to make this exact argument...but Stossel does it so much better than I can:
Sticking it to Low-Skilled Workers

Yet again the US government spins its wheels doing "feel good" things that really accomplish nothing and are arguably detrimental.

Yep the Democrats are getting out the in front and proving that they can lead...that is as long as it is on the same old road map they have been using since the Carter Administration.

 

I think 5.15 dollars a hour is actually quite reasonable as a minimum wage. Considering that US has cheaper prices and less taxes than Finland people probably end up with more money than they do around here. Most jobs pay more than the minimum wage anyhow. I've worked for a few years as "low-skilled workforce" to finance my studies and I've never recieved the minimum wage.

 

5.15 is absolutely nothing, nothing at all. Prices in the US are in average the same as here. Some things are cheaper and some are more expensive and there are large regional variations. 5.15 is about 4€ an hour and that is nothing, nothing at all. The minimum wage in Sweden is around 9$ an hour and I dont think the taxes in those lower brackets differ that much no matter where you go.

I dont know what the Democrats are proposing or if there are any negative tag ons or something of their proposal but any attempt to raise the scandalously low minimum wage in the US is to be applauded. A minimum wage is just that a minimum wage and should be the lowest legal fee paid for services provided but it should be a fee that is actually worthwhile doing the job for. I have a hard time seeing the motivation to go work your ass off at Mickey D or something similar for minium wage when one hour of work barely buys you a meal at the place you work.

End rant, I think but I cannot see how raiding the disgracefully low minimum wage in the US can be a bad thing.

 

They say that every time that there is an increase. The typical scare tactic. The reverse is that big business has been riding the government gravey train for a long time, and now they have to give something back to the people who actually do their share to make business its money. This is a revolving argument.

Wal Mart, which supports the increase - has been running small Mom-and-Pop stores out of business for years, and that's just called supply and demand; now that workers might get more of their share - and it may have the same impact on the little Mom and Pop stores - it is no longer supply and demand, or the free markert but unfair government treatment of these little stores. So, those which run on the margins will be impacted by this in some way. They will have to better manage their business - what a concept.

There is nothing wrong with a national standard for labor. Everyone knows that when there was no standard, workers were abused by big business. In the old days, there was a lot of chaos and blood shed to make things fair. Today, we make laws to affect change and to make the system equatible. The idea of a completely "free market" only exists in the imagination.

 

From the article I linked:

This is a policy that does nothing to raise the standard of living for anyone...families can't live on $5.15 an hour, they also can't live on $7 an hour. If we are going to do this lets get meaningful...$15 an hour or more...but you can't because all that will do is create inflation and unemployment...anyone remember the late 1970's in America? The fact is that the government cannot directly legislate or tax people into prosperity. The only policy that will help the poor is one by which we increase the number of high paying jobs and increase the availability of training for these jobs, and these are both best accomplished by tax cuts...not more entitlements.

 

Any business which hires less workers because of a small increase in wages, will only find that it is that much less productive. The business will produce less and have poorer customer service, while competitors will be glad to hire more workers to produce more and expand its client base at the expense of those companies who are too cheap to take care of their wokers and their customers.

 

People here (the UK) complained when the minimum wage was introduced way back when, and whenever it's been increased since, along exactly the same lines as the folks in the US. But we're still having to import workers from Poland and other EU countries to do our "unskilled" labour, so it doesn't follow that minimum wage means less jobs. Don't overlook the fact that people working on less than minimum wage will often have to work two (or in extreme cases, more) jobs just to make ends meet.

No society prospers from overly great gaps between rich and poor and I firmly believe that the cost of a minimum wage is far better than social security. If a minimum wage guarantees a reasonable standard of living it creates motivation to escape the benefit trap. Businesses are a part of society too, so there's no reason why they shouldn't be called upon to do their bit. It's worth remembering that the costs of poverty include high crime rates and other undesirable factors that are far greater drains upon society. No one strategy can eliminate such problems, but enabling people to work their way above the breadline is the minimum needed. Social Justice is not about stifling growth, but ensuring that growth affects everyone.

 

I see it mostly as an idealogical issue and dont really care much what the so called economists say (they are generally as more of soothsayers than experts, finances and economics are so unpredicatable that a financial expert is more or less an oxymoron and their faith in the market tends to blind them to reality). Is it right that one hour of labour is worth no more than five bucks? Five bucks an hour is what you pay your twelve year old son to mow the lawn or the neighbours kid to babysit your baby. Five bucks is not a wage, it is an insult for an adult person it also presses the salaries generally down and be damned with the spook talk about inflation. The minimum wage sets the bar to which all other wages are compared and from what I have seen in the US the wage spread is immense and the lowest paying jobs even if they are above the minimum wage is impossible to survive on.

Where is all the crying about the illegal immigrants now? I am confident that one reason they keep coming is that they take the minimum wage jobs no American want and this is of course a vicious cycle but if the minimum wage is raised then perhaps the businesses would get some native applicants on their low end jobs and the flood of immigrants so many of you are so worried about would be stemmed.

My final point is that the right always have the same argument for why the "working man" shouldnt get more money and they always claim they dont give him more money for his own good and I just dont buy it, simple as that.

 

Around here the minimum wage is reserved for those who work only part-time next to studying to earn some extra money, and even for them minimum wage seems to be quite rare. Paying minimum wage for fulltime work won't do because people make more out of wellfare so they would not accept minimum wage anyway (and under current legistlation they aren't forced to do so either).

 

That minimum wage is absolutely diabolical. The minimum wage in Britain is higher than that in POUNDS. It's at least double what that is. I'm surprised that's not been raised way before now. It should be at least $9.50 an hour minimum wage, really (that's approx what it is here I'd say).

 

Am I the only one who's aware it has been generally accepted by economists that minimum wage increases, um, don't actually cause the loss of jobs?

At least, not the min. wages we have anywhere in America; a min. wage of $20 or $50 or so on, well, would.

However, the minimum wage levels are low enough that they have no noticeable impact. But don't take my word, take The Economist's. I may be a bleeding heart liberal, but they sure ain't.

 

While in principle the "higher minimal wage=> less employment" idea holds water, I'd agree with those that say that it needs to be a lot higher than $5.15 for any serious effect. IIRC the last serious minimal wage increase happened (twice) during the Clinton presidency. Now, while I can't say I followed the world economy that closely then, I can't say there was any definite effect.

Perhaps it may impact a profit margin or two, but I'd suppose most companies have a little more flexibility than that, and would find a way to economize. Seriously, $5.15? An au-pair from eastern Europe could get more than that (in Euro) in Germany while I was there, and everyone had been lamenting the sorry state of German economy.

So, perhaps a serious raise in lower and even middle-class wages would have disastrous effects by leading to capital flight and closing down of many businesses. It is possible. Yet imo it's possible that it leads to a boom in consumption and actually invigorates the economy. I'm no professional, but that seems more likely than the trickle-down effect we studied in our economics classes.

 

Sorry, but I interpret that article totally differently...basically it says that there may be minor impacts to jobs, and that it does nothing to help the poor. Well, I guess it is a minor impact as long as you aren't the one losing your job.

I will tell you what it does with absolute certainty...it eliminates summer and after school jobs for teenagers and college students...many of whom don't end up on unemployment...they just end up with a lower standard of living and more debt coming out of school. It also forces businesses to eliminate services that are no longer worth paying the additional amount. For instance, the largest grocery store chain in this part of the country eliminated courtesy clerks (teenagers and mentally deficient people supplementing their disability) just after the 1997 increase...it was cheaper to pay for damage (read liability insurance) to, and caused by, shopping carts than to pay to have them shlepped back and forth. Seen a full service gas station lately (unless you live in Oregon)?

Controlling immigration into this country will do far more to raise wages by making it impossible for employers to abuse illegal employees. Growing the economy and bringing high tech jobs back to America would help as well. Instead they are wasting their vaunted 100 hours on worthless legislature like this.

 

Whatever happens to the minimum wage, it is still going to 100 times higher than the equivalent wages in many other countries, notably Asia. It is this unsustainable imbalance that will ultimately have the biggest impact on the lower income sector of the American workforce, as more of the low paid jobs in factories and call centres etc migrate to those countries. What that impact will end up being is beyond my meagre comprehension, but there will have to be something, because in this global economy, such geographical imbalances will be difficult to sustain in the long term.

 

True. I interpreted that as unnoticeable. I may very well be wrong, however.

Not quite; it does little to help the poor, and has little impact on jobs.

Don't mistake me; I'm not saying it's wonderful legislation. I just don't think calling it 'sticking it to the poor' is accurate.

The Economist's suggested solution is interesting, though I have concerns about giving people a lump sum at one point in the year. I'd also argue that exempting the poor from tax, period (perhaps even sales, though I'm not sure about the logistics of that) would be a good idea; they still lose upwards of 20% of their tax to the government after state and federal taxes are taken into account (social security, medicare/aid, assorted other stuff). Yeah, some of it comes back to them at the end of the year in the form of the EITC at present, but it'd probably be better to simply not tax them in the first place; rent and utilities need to be paid every month, not once a year after tax time.

 

Correct me if I'm wrong but isn't tipping a major factor that dictates the minimum wage in the states? Considering that in New Zealand tipping is something that constitutes "keep the change" when the change is 10 cents but in the states it's considered impolite not to tip.

Now I understand that in some fields of work tipping doesn't happen because it's simply not possible. Such as butchers or hired farm help since they're not in hospitality and tipping at Mc Donalds doesn't happen because there's no real way to tip without it looking like the cashier just pocketed some of Mc Donald's money.

Yet I was under the illusion that minimum wage jobs are the ones where tipping is possible and those that are above the minimum wage would be jobs where tipping is not possible. Yet perhaps it's just because of the country I live in where unemployment is so low, we have a rather high minumum wage when compared to America's CPI and I dare say we appreciate the work people do.

I find it hard to see that a business would be so inefficent that hiring a person for $5.something an hour wouldn't be worth that business' money. Are these people making paper clips with their hands or something? Strange, I thought all of that type of work has already gone to China or Cambodia, Vietnam or some other Asian country that pays bugger all an hour.

 

This argument really sickens me. It is one of those debates that has no test in reality. All of the conservatives out there are telling those of us who support the wage increase about how it will impact business. Give me a GD break! Take a gander at this, which was just in the news yesterday:

I hear a lot about the cost of doing business as a result of those who make the least from most of you, yet there is little regard about those at the top and how they are making the most, while this out of control situtation effects most businesses. And those at the top are making how much an hour? Let's take a look at the Home Depot idiot: What does $200,0000,000.00 add up to an hour?

Go figure...

http://www.msnbc.msn.com/id/16528378/

[ January 11, 2007, 05:43: Message edited by: Chandos the Red ]