Doing the minimum wage right

[Philip_P]

Florida Gets it Right: Raising the Minimum Wage
Commonweal 6/3/05, by Peter Dreier, John Atlas, and Kelly Candaele

Summary rather than article text provided below to avoid copyright infringement, to fit in one post, and to highlight issues I believe most relevant to these forums. Full article at: commonwealmagazine.org/article.php?id_article=1269

Florida passed a ballot initiative in November raising its minimum wage to $6.15/hour and pegging it to inflation, mirroring similar measures already in place in WA, OR, and San Francisco. The initiative passed by 72 to 28% (4.95mm votes to 1.96mm), and passed in every county, including conservative counties which overwhelming voted for Bush in the last election.

Opponents included Gov. Jeb Bush and most of FL’s business community. They argued that the measure was unnecessary, and that most of FL’s minimum wage workers were under 25 or part-time workers. Proponents countered that since poorly paid workers spend almost all their income on necessities, raising the minimum wage is more likely to have a positive economic ripple effect. This is supported by nationwide data, which has shown that increased consumer spending, lower absenteeism, and higher worker productivity and morale more than offset job loss.

Democratic candidates and lawmakers, while supportive of the initiative, were not vocal in their support. Instead, the measure passed thanks to organizing efforts led by ACORN (Assoc. of Commnity Orgs for Reform Now) and supported by labor unions, church based groups, and other sympathetic community organizations. ACORN is planning using a similar grass-roots strategy in pushing for similar minimum wage increases in OH, MI, and AZ.

Federally, the minimum wage is at $5.15 an hour and is not pegged to inflation. This represents an erosion from it’s height in 1968, when the wage was worth $8/hr in today’s money. To raise the federal minimum wage to the official poverty level would require increasing it to $9.50/hour. The USCCB is generally sympathetic to increasing the minimum wage, stating that “poverty-level wages are an affront to human dignity.”

 

[jlw]

Of course, prices of goods and services will now go up.

The difference between Florida and a state like Oregon is the business climate. Both states rely on tourism, but Florida actually welcomes businesses to the state. (Note: no FL state income tax)

Jobs have been on the rise in Florida, and even after being slowed by the horrible hurricane season, the economic outlook under the governance of Jeb Bush is good.

 

[Philip_P]

jlw:

Of course, prices of goods and services will now go up.

The difference between Florida and a state like Oregon is the business climate. Both states rely on tourism, but Florida actually welcomes businesses to the state. (Note: no FL state income tax)

Jobs have been on the rise in Florida, and even after being slowed by the horrible hurricane season, the economic outlook under the governance of Jeb Bush is good.

If I recall from the brief time I lived in the NW (go Gonzaga), Washington doesn’t have a state income tax either, but has a sales tax, while Oregon has no sales tax, but has an income tax. Is this still the case?

I’ve always thought that should provide a nice case study in which way is better, since the states are neighbors and similar in many ways, but I haven’t ever come across anything discussing this. It would also be interesting to be able to compare two similar states, one with a minimum wage and one without (beyond the federal one), but none come to mind right now.

 

[Philip_P]

jlw:

Of course, prices of goods and services will now go up.

The difference between Florida and a state like Oregon is the business climate. Both states rely on tourism, but Florida actually welcomes businesses to the state. (Note: no FL state income tax)

Jobs have been on the rise in Florida, and even after being slowed by the horrible hurricane season, the economic outlook under the governance of Jeb Bush is good.

Goods and services go up anyway; there are other factors besides the minimum wage level which drives inflation. Raising the minimum wage, and pegging it to inflation, appears to drive up wages fast enough that such inflation is much a problem as your comment suggests. In a sense, does it really matter if the price of goods and services rises if your wages also keep pace?

 

[rlg94086]

Philip P:

If I recall from the brief time I lived in the NW (go Gonzaga), Washington doesn’t have a state income tax either, but has a sales tax, while Oregon has no sales tax, but has an income tax. Is this still the case?

I’ve always thought that should provide a nice case study in which way is better, since the states are neighbors and similar in many ways, but I haven’t ever come across anything discussing this. It would also be interesting to be able to compare two similar states, one with a minimum wage and one without (beyond the federal one), but none come to mind right now.

It is still the case, but both states keep trying to add the other tax.

As far as which is better, I vote sales tax only. However, the absolute best is to live/work in Vancouver, WA and shop in Portland, OR.

 

[Thekla]

Apparently, LA passed an ordinance in 1997 requiring that businesses who do work with the city, pay a “living wage.” It did not have the negative impact predicted.

losangeleslivingwagestudy.org/index.html

 

[BLB_Oregon]

jlw:

Of course, prices of goods and services will now go up.

The difference between Florida and a state like Oregon is the business climate. Both states rely on tourism, but Florida actually welcomes businesses to the state. (Note: no FL state income tax)

Jobs have been on the rise in Florida, and even after being slowed by the horrible hurricane season, the economic outlook under the governance of Jeb Bush is good.

If prices have to go up so that people can actually live on what they make at their jobs, then prices had better go up.

As far as Oregon being unwelcoming, it seems that when I was a child we were telling *everybody *to stay home. If there is a mass exodus out of the state now, recent housing prices don’t reflect it, that’s for sure. Somebody’s money is flowing in.

 

[ChrisR246]

Philip P:

In a sense, does it really matter if the price of goods and services rises if your wages also keep pace?

Yes, it discourages savings and encourages taking on debt.

 

[jlw]

Philip P:

If I recall from the brief time I lived in the NW (go Gonzaga), Washington doesn’t have a state income tax either, but has a sales tax, while Oregon has no sales tax, but has an income tax. Is this still the case?

I’ve always thought that should provide a nice case study in which way is better, since the states are neighbors and similar in many ways, but I haven’t ever come across anything discussing this. It would also be interesting to be able to compare two similar states, one with a minimum wage and one without (beyond the federal one), but none come to mind right now.

They have their differences. As someone mentioned, the best approach is living in Clark County Vancouver WA, and shopping in Portland, OR.

HOWEVER, in doing a case study of the NW states, one should consider what they had in common the last few years: High unemployment. Why??

 

[jlw]

BLB_Oregon:

If prices have to go up so that people can actually live on what they make at their jobs, then prices had better go up.

As far as Oregon being unwelcoming, it seems that when I was a child we were telling *everybody *to stay home. If there is a mass exodus out of the state now, recent housing prices don’t reflect it, that’s for sure. Somebody’s money is flowing in.

I’m sorry, BLB, but I still look at the minimum wage as a temporary wage for teens and those just entering the workforce. It is a FIRST step in a career. Yes, people without a highschool diploma or are not fluent in english might find themselves stuck in a MINIMUM SKILLS REQUIRED kind of job, but they too can gain skills, move up, and get raises.

ALSO, it cannot be overstated enough that we don’t really care too much about our gross wages, we care about our TAKE-HOME pay to live on. If taxes are cut, our take-home is more, and it “raises” our living wages.

The recent housing prices are such for several reasons. The Urban Growth Boundary. Permit costs, Regulatory costs. Land-use laws. Certainly, desirability. The influx of HIGH INCOME duel-income-no-kids couples. Those from California (the same house in the Bay Area is 2x what they can get here). Quite frankly, more money is flowing into Clark County than Multnomah County, eh?? What else am I missing??

 

[shockerfan]

BLB_Oregon:

If prices have to go up so that people can actually live on what they make at their jobs, then prices had better go up.

As far as Oregon being unwelcoming, it seems that when I was a child we were telling *everybody *to stay home. If there is a mass exodus out of the state now, recent housing prices don’t reflect it, that’s for sure. Somebody’s money is flowing in.

If Oregon were an overly welcome place for business, then the unemployment rate should be lower. Current rate for Oregon is 6.8%, while the national US rate is 5.1%.

 

[shockerfan]

Philip P:

Goods and services go up anyway; there are other factors besides the minimum wage level which drives inflation. Raising the minimum wage, and pegging it to inflation, appears to drive up wages fast enough that such inflation is much a problem as your comment suggests. In a sense, does it really matter if the price of goods and services rises if your wages also keep pace?

Rising wages contributes to the rise in inflation. If a company has to pay people more than they are worth to that company, then it will look to reduce the number of people (via automation or outsourcing) OR they will raise prices. Why would a company, trying to be competitive in a global market, being willing to pay a person $10 or $15 per hour, if that person only adds $5 or $6 of value per hour? If that person actually generated more value per hour to the company, then the wages would naturally, not artificially, be higher. Simple supply and demand.

 

[vern_humphrey]

shockerfan:

Rising wages contributes to the rise in inflation. If a company has to pay people more than they are worth to that company, then it will look to reduce the number of people (via automation or outsourcing) OR they will raise prices. Why would a company, trying to be competitive in a global market, being willing to pay a person $10 or $15 per hour, if that person only adds $5 or $6 of value per hour? If that person actually generated more value per hour to the company, then the wages would naturally, not artificially, be higher. Simple supply and demand.

Raising the minimum wage:

1. Reduces the number of jobs available to people with no job skills or experience.
2. Results in wage compression (to pay the bottom level more, employers forego raises for the next level.)
3. Raises inflation – which hurts the poor more than anyone.
4. Encourages people to take on responsibilities (such as starting families) when they are unable to meet those responsibilities.

In all this hoorah about minimum wage, how is it no one demands we improve our educations system – especially for schools in the poorest districts? THAT’S the way to ensure poor kids can make a living wage when they graduate.

(The last time I asked THAT question I was told “factory workers don’t need good educations.”)http://forums.catholic-questions.org/images/icons/icon11.gif

 

[SnorterLuster]

Minimum wage is just a tax on the poor. I used to employ 3 minimum wage workers several years ago. As the minimum wage went up, I had to eliminate the positions and use a combination of automation and elimination of some service to stay competitive. As wages go up, automation becomes more attractive.

 

[vern_humphrey]

SnorterLuster:

Minimum wage is just a tax on the poor. I used to employ 3 minimum wage workers several years ago. As the minimum wage went up, I had to eliminate the positions and use a combination of automation and elimination of some service to stay competitive. As wages go up, automation becomes more attractive.

The people who tout the minimum wage mostly never ran a business.

I can recall one telling me he knew all about economics and was willing to debate me on economics and the stock market – which is kind of like debating who is the best shot, without going to the rifle range.http://forums.catholic-questions.org/images/icons/icon12.gif

 

[rlg94086]

While I’m generally against the minimum wage, I’m not that bothered by the LA “living wage”. If it’s going to be done, it should be local! My problem is with advocates of national, or even statewide, minimum wage laws. It’s ridiciculous!

Someone in the sticks of Alabama certainly does not require the same minimum wage as a person living in Boston or San Francisco.

Again, personally I believe the market should decide, but at a minimum, keep it local…

:twocents:

 

[vern_humphrey]

rlg94086:

While I’m generally against the minimum wage, I’m not that bothered by the LA “living wage”. If it’s going to be done, it should be local! My problem is with advocates of national, or even statewide, minimum wage laws. It’s ridiciculous!

Someone in the sticks of Alabama certainly does not require the same minimum wage as a person living in Boston or San Francisco.

Again, personally I believe the market should decide, but at a minimum, keep it local…

:twocents:

When the market doesn’t decide, the poorest people always suffer.

Those who don’t believe that should look at the former Soviet Union. The idea that the market could be commanded caused generations of suffering there – but the ruling elite did not suffer.

 

[JamesD]

I think increasing the min wage and adjusting for inflation are good things under the current circumstances.

At the curent wage I think that automation is preferable. The fact that some jobs will be lost does not concern me much becasue projections are for a continuing labor shortage. While it is true that a labor shortage should increase wages I think that there will always be some employers who will search out those they can exploit.
I also do not fear significant inflation as labor costs (especially min labor costs) in many industries is not a significant part of the total production cost. In manufacturing labor (& not min wage) accounts for ~20% of total production cost.

Perhaps those under 18 should have a lower min wage.

Bottom line I think a higher min wage is good for the working poor, the common good and the economic health of this country.
Having said that I know that there is an upper limit to the min wage that if surpased would do more harm than good. What it is I don’t know but it sure isn’t $5.15 or $5.75 /hr.

 

[rlg94086]

JamesD:

I think increasing the min wage and adjusting for inflation are good things under the current circumstances.

At the curent wage I think that automation is preferable. The fact that some jobs will be lost does not concern me much becasue projections are for a continuing labor shortage. While it is true that a labor shortage should increase wages I think that there will always be some employers who will search out those they can exploit.
I also do not fear significant inflation as labor costs (especially min labor costs) in many industries is not a significant part of the total production cost. In manufacturing labor (& not min wage) accounts for ~20% of total production cost.

Perhaps those under 18 should have a lower min wage.

Bottom line I think a higher min wage is good for the working poor, the common good and the economic health of this country.
Having said that I know that there is an upper limit to the min wage that if surpased would do more harm than good. What it is I don’t know but it sure isn’t $5.15 or $5.75 /hr.

The problem with the “working poor” argument is that this is not a static group. Most people who argue for minimum wage seem to think that there is a group of poor who stay at minimum wage their whole lives.

 

[vern_humphrey]

rlg94086:

The problem with the “working poor” argument is that this is not a static group. Most people who argue for minimum wage seem to think that there is a group of poor who stay at minimum wage their whole lives.

If you debate the issue with the proponents of raising the minimum wage, they will confirm that. They will say, “You can’t raise a family on minimum wage,” as if once on minimum wage, everyone stays there.

The jobs that pay minimum wage serve the poor and unskilled by allowing them to get their foot on the bottom rung of the economic ladder. When we shrink the pool of such jobs by raising the minimum wage, we do the poor a disservice.