Minimum wage

[schaeffer]

I have a few questions (assume for discussion that new minimum wage is to be $15):

1. There are a number of jobs that require specialized training that pay around $15 right now. What will happen to those jobs if other jobs with less skills required pay the same? (For example: Electrician’s apprentices make $13-15 per hour…have to work outside in the hot sun or freezing cold…would the higher minimum wage make flipping burgers more attractive?)
2. You imply that businesses owe a specific wage to employees based more on the needs of the employee and not the value they add to the business. Do you not think this mindset will encourage businesses to invest more in automation and make the unemployment situation worse? Is it immoral for a business to automate their processes at the expense of the eliminating jobs?

Curious.

I assume a higher minimum wage would make certain jobs more attractive than they are now, but people also work at jobs they prefer sometimes even though they could earn more at a different job.

As far as value to a business…no one flipping burgers, cashiering, etc…NO business. Those employees are not “non essential”. Minimum wage or not, it appears that businesses have always and will always move toward automation unless it would truly be a significant savings in every direction to have human staff.

So, if we want to “save jobs” by allowing companies to pay $1.50 an hour so someone can avoid unemployment, has the issue of being able to earn a living wage truly been addressed? Automation is cheaper because machines don’t need uniforms, sick days, liability insurance, managers, parking places, and potty breaks. Truly to get to a point where people are cheaper than machines, the wage would have to be so ridiculously low that it wouldn’t be worth working there at all. The term “sweatshop” comes to mind.

I don’t think that is the direction the United States wants to go using the excuse "but hey, if we only pay them two bucks an hour, we can have three times as many people who can’t afford to pay their bills.

 

[johnmann]

That’s the point.

Disruptive moves, like tripling min wages, are not sensible because they are “disruptive” - they deprive enterprises at large of the means to adjust.

They’re disruptive because they would cause sudden disemployment even if layoffs are temporarily blunted by business’ inability to adapt quickly. We could triple the min wage gradually. Say over 10 years. It would be better than all at once but only because you’re delaying disemployment. Implicitly everyone believes large rises in the min wage would have a disemployment effect.

 

[johnmann]

I assume a higher minimum wage would make certain jobs more attractive than they are now, but people also work at jobs they prefer sometimes even though they could earn more at a different job.

As far as value to a business…no one flipping burgers, cashiering, etc…NO business. Those employees are not “non essential”. Minimum wage or not, it appears that businesses have always and will always move toward automation unless it would truly be a significant savings in every direction to have human staff.

So, if we want to “save jobs” by allowing companies to pay $1.50 an hour so someone can avoid unemployment, has the issue of being able to earn a living wage truly been addressed? Automation is cheaper because machines don’t need uniforms, sick days, liability insurance, managers, parking places, and potty breaks. Truly to get to a point where people are cheaper than machines, the wage would have to be so ridiculously low that it wouldn’t be worth working there at all. The term “sweatshop” comes to mind.

I don’t think that is the direction the United States wants to go using the excuse "but hey, if we only pay them two bucks an hour, we can have three times as many people who can’t afford to pay their bills.

Is it better for 2 people to earn $7/hour or 1 person to earn $10/hour? Notice it isn’t the same total. A min wage prevents market clearing and lowers the total amount of economic activity.

Sure, it’s still a problem that 2 people earn $7. But the better solution would be to take money in the most efficient way possible and distribute it in the most efficient way possible. The min wage fails that test horribly. Why not tax the wealthy and give the poor more money instead?

 

[Rau]

…Lets say the average wage for an entry level McDonald’s employee is $10.00 per hour. Now if someone will take that job for $7.00 per hour…then that is what that job is worth.
Sure $10.00 is better but let’s say the minimum wage goes to $15.00. (That would be great…right?) But why stop at $15? How about $20.00, $25, $30…???

At some point, you and everybody who believes in a minimum wage will say, “No, wait a minute. That’s too much,” and at that point, you have demonstrated that that there is no market relationship. You’re just talking emotion. You’re just talking “fairness.” You’re just talking being nice, and that’s not how the market works.

Employers don’t pay wages to be nice. They pay wages because there is work that needs to be done so they can make a profit. Employers are not buying support or loyalty. They’re buying “work”, and they’re paying what the market says it’s worth.

None of us live in an unfettered capitalist economy such as the first part of your scenario above might suggest. We don’t allow wages to be “bid down arbitrarily” because in such a pure capitalist economy power and wealth are by nature severely unbalanced and the consequences for the weak would be grave. The idea of “unionism” is an intrinsically good one simply because it acts to address the power imbalance. *

All governments interfere with the “free market”, and that is necessary, because the actors have vastly unequal power, and the sense of fairness that the society wants to achieve demands some independent rule-setting. By all means we can debate what types of interference, particular polices etc. make for a better society, but anyone arguing absolute laissez-faire in labour relations or in most other areas of the economy has read no history.*

 

[schaeffer]

If someone has so few skills that he/she is only worth $8 an hour to a business, and if Monday morning that business is required to pay him/her $10 an hour, or $15 an hour (as two City Council members in Los Angeles proposed for hotel workers), how long will it take before he/she is let go? In the most basic example, if the minimum wage were applied to the kid you hire to mow your lawn, as the cost rises how long before you will eventually get to the point where you tell him “no thanks” and just do it yourself?

Remember when someone pumped your gas and cleaned your windows and checked your oil/coolant levels? Why do you think those jobs no longer exist (except in Oregon and New Jersey, which I will get to later)? Simple – increases in the minimum wage made them too expensive for the low-skilled service they provided. However, the mechanic, whose skills are much higher, still has his job – because he contributes more to the profitability of the business, and receives substantially higher pay as a result.

What anyone is willing to pay you is based on two factors, the level of skills or talents that you have to offer, and the number of other people in the job market with the same skills. Obviously, very highly skilled workers (CPAs, heart surgeons, IT professionals, etc.) possess desirable skills AND they are in short supply, therefore they get bigger paychecks – much bigger. But unskilled workers have minimal skills which are of considerably less value to an organization, and there are plenty of them – thus the minimal wages they can command.

As for Oregon and New Jersey, it is actually illegal in those states for drivers to pump their own gas. Oregon and New Jersey don’t trust people to not blow themselves up while pumping gas, and would rather leave the job to professionals (gas station attendants), who undergo rigorous training where they learn that it’s bad to smoke while pumping gas, bad to leave the car running, and bad to put gas anywhere except a car’s fuel tank or other approved containers. Yes, this adds jobs (in this case, for gas station attendants).

You know what else would add jobs? Make it illegal for people to cook food at home, and make them go to restaurants for every meal.

I might have the freedom to tell the neighbor’s kid I’ll now mow my own lawn and do it myself, or I might not, and have to still pay someone to mow my lawn.

But in a business…hey those burgers aren’t going to flip themselves now are they?

Gas stations don’t provide svcs because they found out they can get by without them, oil companies weren’t in ANY danger of going broke because someone was pumping gas. And while there were still stations that offered svc, I know many people who paid more per gallon to go there, but sadly they all went by the wayside.

The pretense that somehow magically businesses will find a way to get the job done with NO workers if they have to pay fair wages is bogus. However it IS a fact that if no minimum wage is set, businesses in general will drop wages as low as they possibly can and still get anyone willing to do the work. So we would end up with the vast amount of workers making below poverty wages because the businesses could get away with it. Hey, free market economy right!

The idea that certain workers aren’t even worth a decent wage is a curious one. Who indeed will cook the food, do maintenance, cleaning, cashiering if those minimum wages jobs are simply eliminated? Think those employees aren’t worth much?

Try running a business without them and find out just how valuable they actually are.

In many businesses it is those VERY jobs that keep the place operating at all.

One well paid manager is worth beans if they don’t have staff to manage.

No one is suggesting the receptionist gets paid what the dr’s and nurses do, but try running even the smallest medical practice without a receptionist. The idea that those workers are non essential and not valuable is ridiculous.

 

[Rau]

They’re disruptive because they would cause sudden disemployment

Sudden large changes in one parameter are often disruptive, producing large changes in others (employment being a likely candidate in this case).

We could triple the min wage gradually. Say over 10 years. It would be better than all at once but only because you’re delaying disemployment.

In a healthly economy and society - growing real incomes should be occurring (and not just for the most privileged as we see in the US experience.)

You forgot to mention the point you made earlier – “That effect [disemployment] may be blunted by other factors”.

 

[schaeffer]

Let me use good old McDonald’s as an example.

James, when you walk into a McDonald’s, do you ask the employee, “Am I paying enough here so that you can get a livable wage?”

When you buy a Big Mac do you look at the price and wonder are the employees are receiving a livable wage?" Or do you just get a little upset when you think it’s a little too expensive?

Lets say the average wage for an entry level McDonald’s employee is $10.00 per hour. Now if someone will take that job for $7.00 per hour…then that is what that job is worth.
Sure $10.00 is better but let’s say the minimum wage goes to $15.00. (That would be great…right?) But why stop at $15? How about $20.00, $25, $30…???

At some point, you and everybody who believes in a minimum wage will say, “No, wait a minute. That’s too much,” and at that point, you have demonstrated that there is no market relationship. You’re just talking emotion. You’re just talking “fairness.” You’re just talking being nice, and that’s not how the market works.

Employers don’t pay wages to be nice. They pay wages because there is work that needs to be done so they can make a profit. Employers are not buying support or loyalty. They’re buying “work”, and they’re paying what the market says it’s worth.

You and the democrats will sit around and demand that the evil owner pay a “fair wage” to people. But when you walk in there, are you making sure you’re paying enough for whatever you’re buying so that the evil owner can pay a “fair wage”? Do you do that when you go to Walmart? Do you do that when you buy gasoline at the gas station?

No…you want the lowest price.

Good plan, I say that every three months (or more frequently if they care to) every business owner puts every position in their company up for grabs to the person willing to do that job for the absolutely lowest wage!

Lets see how quickly even the top execs wages plummet. Why pay anyone 100grand if you can get someone to do the job for 50? or 10? Why have any guarantees or benefits at all?

Why force poor honest businesses to have to provide safe work places either? It cuts into profits and there are always some people willing to work in unsafe conditions. Why have 40 hour work weeks or five day work weeks? Everyone who isn’t willing to work 7 days a week and 12 hour days…can just be outbid by someone who IS willing to.

Funny how a generation of people who got where they are because of labor reforms that made the USA a wealthy and stable country, now claim those very labor reforms are breaking their backs.

It’s come to a point where people claim that paying a person a living wage is the equivalent of taxing the rich to give to the poor.

People should be happy to work 60 hours a week and still not be able to pay their bills, how dare they expect their employers to “subsidize” them by paying them a fair wage.

 

[shockerfan]

I assume a higher minimum wage would make certain jobs more attractive than they are now, but people also work at jobs they prefer sometimes even though they could earn more at a different job.

As far as value to a business…no one flipping burgers, cashiering, etc…NO business. Those employees are not “non essential”. Minimum wage or not, it appears that businesses have always and will always move toward automation unless it would truly be a significant savings in every direction to have human staff.

So, if we want to “save jobs” by allowing companies to pay $1.50 an hour so someone can avoid unemployment, has the issue of being able to earn a living wage truly been addressed? Automation is cheaper because machines don’t need uniforms, sick days, liability insurance, managers, parking places, and potty breaks. Truly to get to a point where people are cheaper than machines, the wage would have to be so ridiculously low that it wouldn’t be worth working there at all. The term “sweatshop” comes to mind.

I don’t think that is the direction the United States wants to go using the excuse "but hey, if we only pay them two bucks an hour, we can have three times as many people who can’t afford to pay their bills.

But the owner of the hamburger restaurant has a choice: pay the wage you “feel” they should pay, OR, simply buy one of these:
momentummachines.com/
This company has made burger flippers “non-essential”. If you don’t think cashiers can be replaced, then simply visit your local grocery store and discover the self-checkout.
Either the worker delivers $15 per hour of value or they don’t. (And its really not just $15 per hour, there is also the other costs of employment for the business, like insurance, FICA, etc.)

 

[shockerfan]

Good plan, I say that every three months (or more frequently if they care to) every business owner puts every position in their company up for grabs to the person willing to do that job for the absolutely lowest wage!

Lets see how quickly even the top execs wages plummet. Why pay anyone 100grand if you can get someone to do the job for 50? or 10? Why have any guarantees or benefits at all?

Why force poor honest businesses to have to provide safe work places either? It cuts into profits and there are always some people willing to work in unsafe conditions. Why have 40 hour work weeks or five day work weeks? Everyone who isn’t willing to work 7 days a week and 12 hour days…can just be outbid by someone who IS willing to.

Funny how a generation of people who got where they are because of labor reforms that made the USA a wealthy and stable country, now claim those very labor reforms are breaking their backs.

It’s come to a point where people claim that paying a person a living wage is the equivalent of taxing the rich to give to the poor.

People should be happy to work 60 hours a week and still not be able to pay their bills, how dare they expect their employers to “subsidize” them by paying them a fair wage.

If you want to avoid a situation where salaries continue to drop, then we need to create a climate of economic growth, where businesses and jobs are created. When businesses need to compete for people, salaries and benefits will rise. Unfortunately, for the first time in history, we now have a situation where more businesses are closing that are being created. We need to encourage are youth to be entrepreneurial and teach them the basics of business. We also need a government that actually doesn’t treat private business like “the enemy”.

 

[Mickey_Finn]

I have a few questions (assume for discussion that new minimum wage is to be $15):

1. There are a number of jobs that require specialized training that pay around $15 right now. What will happen to those jobs if other jobs with less skills required pay the same? (For example: Electrician’s apprentices make $13-15 per hour…have to work outside in the hot sun or freezing cold…would the higher minimum wage make flipping burgers more attractive?)
2. You imply that businesses owe a specific wage to employees based more on the needs of the employee and not the value they add to the business. Do you not think this mindset will encourage businesses to invest more in automation and make the unemployment situation worse? Is it immoral for a business to automate their processes at the expense of the eliminating jobs?

Curious.

Shockerfan, as the saying goes a rising tide raises all ships. There is no shortage of wealth, and it is false to believe raising the minumum wage will lead to an economic disaster. Unless of course the wealthiest choose to punish us for our insolence.

The problem has never been a lack of wealth rather the poor job we do of disbursing it.

ATB

 

[Mickey_Finn]

So you’re willing to tell an unemployed person, “We had to kill your job because people with jobs need more money?” We are killing off their jobs to feed the greed of billionaires, and corporations now.

Subsidizing oil companies isn’t the end of the world either but it’s bad policy because it is a misallocation of resources that makes the world, and disproportionately the more vulnerable, worse off.

For raising the min wage to be defensible, you have to show that the rise in income for the poor would exceed the income lost due to the dis-employment effect. And even then, you would only prove that the policy is better than nothing, not that it’s the best policy.

Again, the historic dis-employment has been extremely low as it relates to raising the minimum wage. I would like to point out that the question today is not whether or not we should raise the wage. But how much, and how fast.

Your faulty assumption is that raising the min wage would improve matters. Again, you need to articulate why raising the price of labor doesn’t proportionally depress the demand for labor. Well as we are talking about the question of $15.00/hr for fast food workers. lets hear you explain how these jobs might go away at all. The workers are employed by extremely wealthy corporations, and serve millions of Americans everyday. Beyond that the historic record shows positive results each time the minimum wage is raised. The only downsides are less wealth for the wealthy, and a small percentage of displaced workers. But as the increase has positive effects of the economy it’s natural to assume that these workers will find work at the new wage before long.

By “unconditional cash transfers” I meant no work requirements. I did misuse the term.

 

[shockerfan]

Shockerfan, as the saying goes a rising tide raises all ships. There is no shortage of wealth, and it is false to believe raising the minumum wage will lead to an economic disaster. Unless of course the wealthiest choose to punish us for our insolence.

The problem has never been a lack of wealth rather the poor job we do of disbursing it.

ATB

The best way to disburse it is to create more jobs and put people to work vs. creating policies that impede job creation

 

[Rau]

The best way to disburse it is to create more jobs and put people to work vs. creating policies that impede job creation

And yet, for 10 years, incomes in the US are static or falling, for all but the top end. What will change that? Why is the system delivering so little yo so many?

 

[stinkcat_14]

The best way to disburse it is to create more jobs and put people to work vs. creating policies that impede job creation

Of all the policies that impede job creation, the minimum wage is very far down on the list, if at all. Other policies, such as social security and medicare taxes are far more damaging to job creation and yet no politician of either party is willing to take on those policies.

 

[stinkcat_14]

And yet, for 10 years, incomes in the US are static or falling, for all but the top end. What will change that? Why is the system delivering so little yo so many?

Actually income for people at the top as done quite well and corporate profits are very strong. I hope our next president has a much anti-business rhetoric as this one, since I would rather have a president tell me I am evil and have my income go up than have a president who says nice things about me but the result is stagnant or falling income.

 

[styrgwillidar]

While it may be very well true that all jobs will become eventually automated to some extent, if not entirely, there is the customer service aspect that will continue to draw customers. That can’t be simply dismissed. People like to have an actual human to do business with or complain to.

Exactly. I never use the self-service lines in the grocery store, I’d rather wait in line because the more folks use those, get conditioned to use them - than the more the grocery stores will shift to them. I don’t want the jobs to go away, I don’t want the interaction to go away.

 

[Mickey_Finn]

The best way to disburse it is to create more jobs and put people to work vs. creating policies that impede job creation

If we raise wages. Not only will there be more money saved. But more spent on goods, and services as well. This of course will cause growth in the job market.

ATB

 

[shockerfan]

Of all the policies that impede job creation, the minimum wage is very far down on the list, if at all. Other policies, such as social security and medicare taxes are far more damaging to job creation and yet no politician of either party is willing to take on those policies.

I would agree…I should have been more clear in my post. This particular president supports numerous policies that are impediments to business which add more and more cost, and making automation and off-shoring more attractive.

 

[shockerfan]

If we raise wages. Not only will there be more money saved. But more spent on goods, and services as well. This of course will cause growth in the job market.

ATB

Unless of course the burger flippers are replaced by that burger making machine I linked to in a previous post. In my mind there is a balance that needs to be struck…I’m for higher wages, but be careful about going to a point where automation becomes more financially attractive

 

[stinkcat_14]

I would agree…I should have been more clear in my post. This particular president supports numerous policies that are impediments to business which add more and more cost, and making automation and off-shoring more attractive.

For all his supposed anti-business policies, it certainly doesn’t show up in the economic data, since corporate profits are at record levels and they grew much faster under Obama than they did under Bush. So it does raise the question, which is better: is it better to have a supposed pro-business president with mediocre results or a supposed anti-business president with good results?