How Do We Calculate a Just Wage?

[CPA2]

A minimum wage, or price floor, comes from the Socialist platform of the 1920s. Another dumb idea is a price ceiling.

October 2, 2002

Hurricane Lili is still bearing down on us. If the hurricane continues on its course we will have 80mph – 85mph winds tonight, along with flooding. All areas south of I-10 are under forced evacuation. We live slightly south of I-10 and will leave for higher ground at noon today.

Our Louisiana Legislature, in its infinite wisdom, passed a law making it a crime for merchants to raise their prices above pre-hurricane levels. I guess the Louisiana Legislature never heard of place utility! Price ceilings below the equilibrium price cause shortages in the long-term. We know that an expectation of a hurricane will shift the demand curve (increase demand) for motel rooms. I spent two hours Monday trying to find a vacancy in any motel north of I-10. I finally found one room in Monroe, Louisiana. They could not raise their room rates, but they did demand payment in advance. I had to pay for the room whether I used the room, or not.

 

[Texas_Roofer]

Price ceiling during a Hurricane are quite reasonable. It would be a terrible mistake to set the ceiling at 0% increase. A 50% increase would be reasonable. These ceilings have no detrimental economic affect. The ceiling exists not for economic reasons at all, they exist for humanitarian reason. During a Texas hurricane scare 100,000s tried to leave Houston. These evacuees quickly drained supplies from the exit routes. Imagine being told if you need a tank of gas to transport your family north it will cost you $1,000 or $10,000 per 20 gallons! Compare that to a 150% ceiling which would allow the gas to be legally sold at $120 verses its pre-scare price of $80. More importantly the 50% increase allows a profit potential to encourage the private market to send gas into Houston and alone the exit route.

Price ceiling are usually taught based on New York City’s rent control attempt which was not a short isolated ceiling but long term project. It was a miserable failure.

Hope that helps

 

[CPA2]

There should be no price floors or price ceilings. The motel owner that I mentioned was not stupid. The Louisiana legislature was blind. The motel owner could not legally raise his rates, but he could demand a nonrefundable payment in advance for 3 nights. I think that the motel owner that I paid was smarter than the Louisiana legislature.

The role of government is an umpire, not a participant in the economy. These ideas go back to Adam Smith and Thomas Jefferson. Fairness is equal opportunity. It is not equality of outcome.

 

[Texas_Roofer]

XXXXXXXXXXXXX:

In the South, before the introduction of the minimum wage, many middle class white families could afford to hire maids and gardeners because levels of black unemployment were so high and opportunities for them so low. After the minimum wage, I would take a SWAG and say that perhaps half of them lost their jobs.

It is unarguably a good thing that such conditions no longer exist for minorities but the point is that a lot of people lost their jobs then … and the effect continues today.

Exactly

Once minimum wage forced a price floor it what:

A) lead to all black people becoming unemployed

B) lead to a drop in discrimination because black people cost the same as non black people

 

[royal_archer]

Price ceiling during a Hurricane are quite reasonable. It would be a terrible mistake to set the ceiling at 0% increase. A 50% increase would be reasonable. These ceilings have no detrimental economic affect. The ceiling exists not for economic reasons at all, they exist for humanitarian reason. During a Texas hurricane scare 100,000s tried to leave Houston. These evacuees quickly drained supplies from the exit routes. Imagine being told if you need a tank of gas to transport your family north it will cost you $1,000 or $10,000 per 20 gallons! Compare that to a 150% ceiling which would allow the gas to be legally sold at $120 verses its pre-scare price of $80. More importantly the 50% increase allows a profit potential to encourage the private market to send gas into Houston and alone the exit route.

Price ceiling are usually taught based on New York City’s rent control attempt which was not a short isolated ceiling but long term project. It was a miserable failure.

Hope that helps

The alternative is for those who live under threat of disaster to make reasonable preparations for such a disaster such as keeping a full tank of gas and an extra 5-10 gallons at the ready.

 

[Texas_Roofer]

There should be no price floors or price ceilings. The motel owner that I mentioned was not stupid. The Louisiana legislature was blind. The motel owner could not legally raise his rates, but he could demand a nonrefundable payment in advance for 3 nights. I think that the motel owner that I paid was smarter than the Louisiana legislature.

It would seem you have a plan (name removed by moderator)lace to prevent monoploy problems, what is that plan.

The role of government is an umpire, not a participant in the economy. These ideas go back to Adam Smith and Thomas Jefferson. Fairness is equal opportunity. It is not equality of outcome.

What rules should this umpire enforce?

 

[Texas_Roofer]

The alternative is for those who live under threat of disaster to make reasonable preparations for such a disaster such as keeping a full tank of gas and an extra 5-10 gallons at the ready.

Um, the normal 3 hour drive to Dallas usually took 10-15 gallons of gas, no food or drink necessary. During the scare it was a 30+ hours 5-10 gallons for 30+ hrs sounds unwise. But that was then so what will happen next time? See it is not just gas, a 3 hour food, drink, medicine, etc…, supply would not have worked either. Even those who were prepared to reasonable levels found their supplies quickly exhausted. This is an example when a 50% price ceiling is effective. See free market principles allow the potential customer to walk away without purchasing. In these conditions people are under duress and possibly even in life or death scenarios, so it really can be give me your money or lose your life. Or even worse: sorry you must die because another will pay more than you have!

 

[royal_archer]

Um, the normal 3 hour drive to Dallas usually took 10-15 gallons of gas, no food or drink necessary. During the scare it was a 30+ hours 5-10 gallons for 30+ hrs sounds unwise. But that was then so what will happen next time? See it is not just gas, a 3 hour food, drink, medicine, etc…, supply would not have worked either. Even those who were prepared to reasonable levels found their supplies quickly exhausted. This is an example when a 50% price ceiling is effective. See free market principles allow the potential customer to walk away without purchasing. In these conditions people are under duress and possibly even in life or death scenarios, so it really can be give me your money or lose your life. Or even worse: sorry you must die because another will pay more than you have!

If you are driving a large SUV you will of course need more gas. But everyone should have three days worth of supplies in case they have to evacuate on short notice, more so for those living in an area under threat of disaster. Everyone should also have a plan in place for an evacuation point, such as where an out of town relative lives, and ample supplies to get them there.

Fixing prices does not guarantee supply.

Unfortunately to many people have the attitude that the government will take care of them and they do not make prudent preparations.

 

[CPA2]

Fixing prices does not guarantee supply.

Unfortunately to many people have the attitude that the government will take care of them and they do not make prudent preparations.

Absolutely correct! Remember New Orleans and Hurricane Katrina. Those people who entered the Superdome thought that the government would take care of them. Poor people!

 

[Texas_Roofer]

If you are driving a large SUV you will of course need more gas. But everyone should have three days worth of supplies in case they have to evacuate on short notice, more so for those living in an area under threat of disaster. Everyone should also have a plan in place for an evacuation point, such as where an out of town relative lives, and ample supplies to get them there.

So how were they to know how long it takes, and how many supplies it takes? Will a 3hr trip needing 15 gallons of gas and no food always turn into a 33hr, 30 gallon of gas, 4 meals per person trip? Maybe it will change every disaster?

Fixing prices does not guarantee supply.

No one fixed prices the government often puts a ceiling on prices temporarily

Unfortunately to many people have the attitude that the government will take care of them and they do not make prudent preparations.

Absolutely correct! Remember New Orleans and Hurricane Katrina. Those people who entered the Superdome thought that the government would take care of them. Poor people!

Short term or long term? No one who understands economics believes a government can provide all care for citizens. Yet government exist only to provide certain types of care (police, fire) and one of these types is emergancy care.

A bigger lacking knowledge originates in “cash is king”. When some individuals attempt to be 100% self sufficient they end up a burton on society! This is because they attempt to breakdown all forms of specialization which were used to increase productivity. They develop a everybody does everything poorly micro society. Part of the “cash is king” teaching refers to using your talent to trade for cash, then use cash when and where you need. ( Bomb shelters anyone, gas masks 2 for 1)

hope that helps

 

[Ender]

Exactly

Once minimum wage forced a price floor it what:

A) lead to all black people becoming unemployed

B) lead to a drop in discrimination because black people cost the same as non black people

Neither. Those who kept their jobs were certainly better off, just as those who lost their jobs were clearly worse off. The former was the effect the law was designed to create but the latter effect was inevitable… then and now.

Ender

 

[royal_archer]

Fixing prices does not guarantee supply.

Unfortunately to many people have the attitude that the government will take care of them and they do not make prudent preparations.

Absolutely correct! Remember New Orleans and Hurricane Katrina. Those people who entered the Superdome thought that the government would take care of them. Poor people!

On the radio they were interviewing a hatian who was complaining that the support was not getting their fast enough.

 

[royal_archer]

So how were they to know how long it takes, and how many supplies it takes? Will a 3hr trip needing 15 gallons of gas and no food always turn into a 33hr, 30 gallon of gas, 4 meals per person trip? Maybe it will change every disaster? No one fixed prices the government often puts a ceiling on prices temporarily Short term or long term? No one who understands economics believes a government can provide all care for citizens. Yet government exist only to provide certain types of care (police, fire) and one of these types is emergancy care.

A bigger lacking knowledge originates in “cash is king”. When some individuals attempt to be 100% self sufficient they end up a burton on society! This is because they attempt to breakdown all forms of specialization which were used to increase productivity. They develop a everybody does everything poorly micro society. Part of the “cash is king” teaching refers to using your talent to trade for cash, then use cash when and where you need. ( Bomb shelters anyone, gas masks 2 for 1)

hope that helps

Do you want people waiting like sheep hopelessly dependent on the government and not making any effort to take care of themselves?

 

[stinkcat_14]

In some cases entire categories of jobs are wiped out. When the minimum wage was first passed, many teenage boys, who worked for trivial wages at filling stations pumping gas and washing windshields, not only lost their own jobs but saw that service entirely disappear. In the South, before the introduction of the minimum wage, many middle class white families could afford to hire maids and gardeners because levels of black unemployment were so high and opportunities for them so low. After the minimum wage, I would take a SWAG and say that perhaps half of them lost their jobs.

As to the gas station attendant jobs, I would argue that those jobs were lost not because the minimum wage was increased, but because those people could find better wages and working conditions working elsewhere in the economy. Also, they lost their jobs because customers were not willing pay extra for the extra service. Once gas stations went to self serve, virtually all of them did, because self serve was a couple of pennies cheaper. Also, last I checked, the average salary of a gas station cashier was a dollar or so per hour higher than the minimum wage. Sitting in the building taking cash is clearly preferable to being out in the elements breathing the fumes, so to get people to pump gas it would require a premium over what the cashier gets.

As to the gardeners and maids. If I could get someone to work for me for the current minimum wage, I would easily have both. But I would have to pay at least $12 per hour to get someone, at least someone reliable.

 

[royal_archer]

As to the gas station attendant jobs, I would argue that those jobs were lost not because the minimum wage was increased, but because those people could find better wages and working conditions working elsewhere in the economy. Also, they lost their jobs because customers were not willing pay extra for the extra service. Once gas stations went to self serve, virtually all of them did, because self serve was a couple of pennies cheaper. Also, last I checked, the average salary of a gas station cashier was a dollar or so per hour higher than the minimum wage. Sitting in the building taking cash is clearly preferable to being out in the elements breathing the fumes, so to get people to pump gas it would require a premium over what the cashier gets.

As to the gardeners and maids. If I could get someone to work for me for the current minimum wage, I would easily have both. But I would have to pay at least $12 per hour to get someone, at least someone reliable.

I wish they would bring full service back, especially on cold days.

but minimum wage is just one factor, another is welfare. The reason those entry level jobs pay so much is that they are competing with the government paying people to do nothing. Many of those millions of jobs that would be going to the adults if there were no welfare are being filled by kids. With jobs that can not be performed by kids, the wages will go up to attract the few adults who are willing to work.

 

[Ender]

As to the gas station attendant jobs, I would argue that those jobs were lost not because the minimum wage was increased, but because those people could find better wages and working conditions working elsewhere in the economy.

You should consider what you’re suggesting here: people only took better jobs when the poorer jobs were eliminated? Actually, a lot of teenage boys enjoyed working on cars and often took those jobs as a way to learn more about auto repair. At the time, it wasn’t all that hard to fill those positions.

Also, they lost their jobs because customers were not willing pay extra for the extra service.

You have this exactly backwards. There was no charge to the customer for the service: you pulled into a gas station, someone came out, pumped your gas, checked your oil, cleaned your windshield, took your money, and returned your change … all for the price charged at the pump. The change was driven not by technology but by cost: when the minimum wage drove up the cost of providing that service, stations simply stopped offering it.

Ender

 

[CPA2]

I have to pay the government for the privilege of hiring employees. Therefore, I do not hire employees. I am a one man band.

 

[Texas_Roofer]

You should consider what you’re suggesting here: people only took better jobs when the poorer jobs were eliminated? Actually, a lot of teenage boys enjoyed working on cars and often took those jobs as a way to learn more about auto repair. At the time, it wasn’t all that hard to fill those positions.
You have this exactly backwards. There was no charge to the customer for the service: you pulled into a gas station, someone came out, pumped your gas, checked your oil, cleaned your windshield, took your money, and returned your change … all for the price charged at the pump. The change was driven not by technology but by cost: when the minimum wage drove up the cost of providing that service, stations simply stopped offering it.

Ender

? ? I actually did that job, we charged more for full service. In those days most purchases were about 8 gallons. So for $0.80 - $1.20 you got gas pumped, windows washed, oil checked, and if you asked air pressure and antifreeze checked. Good luck providing that service today for an equal wage. (about $2.25 today). I would advise any who complain to simply take a day or two and work that way. Btw - we used to haul hay in the heat of the day for $2.10/hr. Believe me when I tell you I do not want to go back to that pay.

But in the big picture stink cat is correct, the job is gone because people choose not to pay the increase needed to provide the job. Probably $5 per car upcharge today, if enough paid the job would exist.

 

[Trader]

Why should I hire unskilled and teenage workers when I can hire skilled and older workers for the same minimum wage?

Well, you might do it to avoid government scrutiny for not hiring your “fair” share of disadvantaged workers. “Equal protection under the law” actually is in our constitution, but for some reason is not the big vote-getter that promising better than equal treatment to some special interest groups has become.

This will really shock the closet socialists out there, but markets are just. They are not charitable and they can never be sufficient for human happiness, but they are just. The “Robin Hood” economy pushed by socialists is neither just nor charitable. Voting to give away the money unjustly taken from others is not charity at all.

If you fall for the fallacy of moral relativism, it is impossible to explain how all the allegedly equal choices people make have such disparate outcomes. It must be the outcomes that are unjust if choices are all equal.

If unequal outcomes are unjust, then God is unjust for allowing both heaven and hell to exist.

 

[royal_archer]

You should consider what you’re suggesting here: people only took better jobs when the poorer jobs were eliminated? Actually, a lot of teenage boys enjoyed working on cars and often took those jobs as a way to learn more about auto repair. At the time, it wasn’t all that hard to fill those positions.
You have this exactly backwards. There was no charge to the customer for the service: you pulled into a gas station, someone came out, pumped your gas, checked your oil, cleaned your windshield, took your money, and returned your change … all for the price charged at the pump. The change was driven not by technology but by cost: when the minimum wage drove up the cost of providing that service, stations simply stopped offering it.

Ender

I remember seeing two rates one for full and one for self service. At such stations they used to have a dedicated line for full service. in any case some stations offered full service while others did not. but I remember having to pay slightly more for full service.