Minimum wage

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stinkcat_14 said:
Actually in the US the minimum wage is not much of a barrier to entry into the labor force. Most jobs that we would think of as “minimum wage jobs”, i.e. store clerks, etc, actually pay more than the minimum wage.
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That’s good. It pretty much makes the minimum wage meaningless, but also mitigates any harm it might otherwise cause.
 
I don’t always agree with Aquinas. But if a man is capable of taking my wallet by force, then he is capable of doing productive work and should be supporting his family that way.
The trouble with this false morality is that the “rich” man could be as poor as the thief and to steal his crust of bread could be worse for him than the “noble” thief.
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Well, the issue here is not whether he’s capable of performing work, but whether there is sufficient work for such an individual to perform that would meet the needs of him and his family. So many of us here think it’s quite possible for such an individual to be able and willing to work, but simply not have access to work that pays well enough for him to feed and house and clothe his family. Maybe no one is hiring unskilled labor in his area, or maybe there are enough workers that unskilled labor is going for below the cost of what he needs to be bringing in.

This definitely happens in real life. A friend of mine had a case where the jobs he was being offered would have literally cost him money to take. He lost his job with two young children and his wife was working but not making enough to support the family. When he looked at the jobs, he would have needed to purchase and maintain a second car to get to jobs (since no one was hiring in the immediate area and it lacked public transit) and pay someone to watch two young children. He was willing and able to work and wanted to be off welfare but the work in his area was simply not paying well enough to cover the costs.
 
styrgwillidar said:
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.
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Agreed!🙂 There’s a value in human solidarity-I like knowing my banker, asking the grocery clerk how his daughter is doing, and getting a live voice on the phone when I have to call a company for customer service.
It’s difficult to put a price on the problem of alienation in our society, but I’m guessing many people recognize it as a problem.
The costs of automation such as speedup/repetitive motion injuries are also an issue (as is trying to get companies to internalize these concerns and their costs instead of them being treated as externalities in the marketplace).
This is not to say that all automation/ robotics are necessarily bad, but that there are different costs associated with different practices which we may wish to take into consideration as we think about how best to care for one another.
 
Zoltan_Cobalt said:
Please just consider this…

The nineteenth century … for the first time in history, it created a new economic system, the necessary corollary of political freedom, a system of free trade on a free market: Capitalism.
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Hi Zoltan,

I’m a latecomer to this thread and am playing catch-up with fellow readers/posters.

I was hoping you might further explain the necessary connection between political freedom and free market capitalism.

It seems to me that a group of people might freely choose to regulate themselves, or to create a mixed, collective or managed economy. I’m not sure that I see a necessary connection between that political freedom and free market capitalism.

Thank you for your insights.
jt
 
JamesATyler said:
commentarymagazine.com/2014/03/03/unskilled-labor-and-the-minimum-wage/

Another point of view on it.
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From the referenced link (emphasis mine):
Like single-payer medical care, the minimum wage has one great advantage as a political idea: It can be explained on the back of a post card. If employers are forced to pay a living wage then no one will live in poverty. For low-information voters (and the vast majority of political reporters) that’s all there is to it.
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As Mark Twain would probably say, “But I repeat myself.”
 
stinkcat_14 said:
Actually in the US the minimum wage is not much of a barrier to entry into the labor force.
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As other posters have shown, an increase in the legal minimum wage would dampen hiring at the level where most workers first enter the labor market. The labor market is clearly still far below full employment (the employment-to-population ratio has not improved, and any drops in the official unemployment rate are almost all attributable to a drop in the labor force participation rate), so of course increasing the minimum wage (and dampening hiring at that level) will raise the barrier to entry.
 
Erich said:
As other posters have shown, an increase in the legal minimum wage would dampen hiring at the level where most workers first enter the labor market.
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Actually, some have alleged this, but nobody has shown this.
The labor market is clearly still far below full employment (the employment-to-population ratio has not improved, and any drops in the official unemployment rate are almost all attributable to a drop in the labor force participation rate), so of course increasing the minimum wage (and dampening hiring at that level) will raise the barrier to entry.
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You might have a point if 95% of people were working at the minimum wage, however only about 2% of workers earn the minimum wage, so changing the minimum will not have much affect on either jobs or participation.
 
jeannetherese said:
Hi Zoltan,

I’m a latecomer to this thread and am playing catch-up with fellow readers/posters.

I was hoping you might further explain the necessary connection between political freedom and free market capitalism.

It seems to me that a group of people might freely choose to regulate themselves, or to create a mixed, collective or managed economy. I’m not sure that I see a necessary connection between that political freedom and free market capitalism.

Thank you for your insights.
jt
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Great question Jeanne…

I hope I can explain to your satisfaction.

No government ever formed a society and established an economy. So it it true that a group of people can freely choose their own form of “regulation” if they are so inclined. Also, they may choose the type of economy they want.

When I refer to Free Market Capitalism, I mean a full, pure, uncontrolled, unregulated laissez-faire Free Market Capitalism…with a separation of state and economics, in the same way and for the same reasons as the separation of state and church.

For Free Market Capitalism to flourish and survive it MUST enjoy political freedom.

The only proper functions of a government are: the police, to protect us from criminals; the military, to protect us from foreign invaders; and the courts, to protect our property and contracts from breach or fraud by others, to settle disputes by rational rules, according to objective law.

Free Market Capitalism needs no regulation. Rational and objective LAWS protect us from those who would steal, cheat or defraud us. These laws apply equally to individuals as well as corporations.

The Free Market ceases to be free when the first government regulation is issued.
 
stinkcat_14 said:
You might have a point if 95% of people were working at the minimum wage, however only about 2% of workers earn the minimum wage, so changing the minimum will not have much affect on either jobs or participation.
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January 2007:
  • number of unemployed persons: 7.0 million
  • unemployment rate: 4.6 percent
  • employment-population ratio: 63.3 percent
  • civilian labor force: 153.0 million
  • labor force participation rate: 66.3 percent
mid-2007 through mid-2009:
  • the Federal Minimum Wage rose three times
January 2010:
  • number of unemployed persons: 14.8 million
  • unemployment rate: 9.7 percent
  • employment-population ratio: 58.4 percent
  • civilian labor force: 153.2 million
  • labor force participation rate: 64.7 percent
 
Erich said:
January 2007:
  • number of unemployed persons: 7.0 million
  • unemployment rate: 4.6 percent
  • employment-population ratio: 63.3 percent
  • civilian labor force: 153.0 million
  • labor force participation rate: 66.3 percent
mid-2007 through mid-2009:
  • the Federal Minimum Wage rose three times
January 2010:
  • number of unemployed persons: 14.8 million
  • unemployment rate: 9.7 percent
  • employment-population ratio: 58.4 percent
  • civilian labor force: 153.2 million
  • labor force participation rate: 64.7 percent
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Once again, you are claiming that an increase in the minimum wage that affects 2% of the labor force caused 7 million more people to become unemployed? Can you explain your causal mechanism here?
 
stinkcat_14 said:
Once again, you are claiming that an increase in the minimum wage that affects 2% of the labor force caused 7 million more people to become unemployed? Can you explain your causal mechanism here?
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That is not exactly what Erich is claiming.

What he is showing is that a government required minimum wage increase has NEVER done anyone any good.

Simply logic asks if a minimum wage increase is a positive thing why are we not doing better economically after all previous minimum wage increases?

The truth is the belief that increasing the minimum wage is socially beneficial is a delusion.

It is short-sighted and ignores evident reality. Workers who retain their jobs are made better off but only at the expense of unskilled, mostly young, workers who either lose their jobs or can’t find a job at the legal minimum.

No legislator has ever overturned the law of supply and demand, which says that when the price of labor rises, prices rise and the quantity demanded will fall. That same law tells us that quantity demanded (i.e., the number of jobs for low-skilled workers) will decrease more in the long run than in the short run, as employers switch to labor-saving methods of production—and unemployment will increase.
 
Zoltan_Cobalt said:
No legislator has ever overturned the law of supply and demand, which says that when the price of labor rises, prices rise and the quantity demanded will fall. That same law tells us that quantity demanded (i.e., the number of jobs for low-skilled workers) will decrease more in the long run than in the short run, as employers switch to labor-saving methods of production—and unemployment will increase.
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You really think that an increase in the federal minimum wage has a significant effect on the aggregate demand for labor when only 2% of wage earners earn the minimum wage?
 
Zoltan_Cobalt said:
That is not exactly what Erich is claiming.
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It is exactly what he is claiming.
What he is showing is that a government required minimum wage increase has NEVER done anyone any good.
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Never? Never ever? That is simply not true. Some people do benefit from an increase in the minimum wage and some do not. But you cannot claim that no one benefits from an increase in the minimum wage.
 
freeRadical said:
You really think that an increase in the federal minimum wage has a significant effect on the aggregate demand for labor when only 2% of wage earners earn the minimum wage?
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There are two ways of looking at that…

One would be…if ONLY 2% of the work force is working for a minimum wage…why bother?

The other is a more serious concern. An increase in minimum wage goes way beyond the 2%. Many labor union contracts call for a pay increase equivalent percentage wise to ANY minimum wage increase. Therefore a 12.5% minimum wage increase ($9.00 to $10.10) could mean that a journeyman welder making $25.00 per hour would now be entitled to $28.13 per hour.

When there is a minimum wage increase, small business owners need to raise the pay for most, if not all, hourly workers in order to preserve their wage structure and retain quality employees. This is the ripple effect of a minimum wage increase.

But…

When wages increase, and overall business does not increase…employers are left with two options: cut back on staff or raise prices. But sometimes, one or both of those can’t be easily altered. In most cases someone will lose their job or have their hours cut.

So yes…there will be a significant effect on the aggregate demand for labor. Just as there has been after every minimum wage increase.

When will they ever learn???
 
Zoltan_Cobalt said:
The other is a more serious concern. An increase in minimum wage goes way beyond the 2%. Many labor union contracts call for a pay increase equivalent percentage wise to ANY minimum wage increase. Therefore a 12.5% minimum wage increase ($9.00 to $10.10) could mean that a journeyman welder making $25.00 per hour would now be entitled to $28.13 per hour.
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Union wage rates tend to lag behind non-union wage increases.
When there is a minimum wage increase, small business owners need to raise the pay for most, if not all, hourly workers in order to preserve their wage structure and retain quality employees. This is the ripple effect of a minimum wage increase.
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Do you have proof of this?
When wages increase, and overall business does not increase…employers are left with two options: cut back on staff or raise prices. But sometimes, one or both of those can’t be easily altered. In most cases someone will lose their job or have their hours cut.
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But aggregate wages are not increasing. Raising the minimum wage does not have a significant effect on overall wages.
So yes…there will be a significant effect on the aggregate demand for labor. Just as there has been after every minimum wage increase.
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There are many things that effect the aggregate demand for labor. Just because the aggregate demand for labor changed after a minimum wage increase does not mean that the minimum wage increase caused the change. Correlation does not equal causation. It is hard for me to believe that a minimum wage increase will have any effect on the aggregate demand for labor when only 2% of workers earn the minimum wage.

You, of course, have proof for all these claims you are making right?
 
freeRadical said:
You, of course, have proof for all these claims you are making right?
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Of course…just as you can provide sources for your claims.

Profit-making companies must earn more than they spend. Workers must produce more than they are paid. As government raises the minimum wage, it prices some employees out of the market.
“These behavioral responses usually offset the positive labor market results that policymakers are hoping for.”…“The main finding of economic theory and empirical research over the past 70 years is that minimum wage increases tend to reduce employment.”—Mark Wilson of Applied Economic Strategies in a Cato Institute study.
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The Department of Labor concluded that the first minimum wage, 25 cents per hour in 1938, cost the jobs of 30,000 to 50,000 of the 300,000 workers who were covered and had previously earned below the minimum.

In 1977 Congress established the Minimum Wage Study Commission. The panel concluded that the
“time-series studies typically find that a ten percent increase in the minimum wage reduces teenage employment by one to three percent.”
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Similar were the results of more recent research.
“most studies of previous [pre-1996] rate hikes (such as 1990-1991) show clear evidence of job losses.”
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"…although the wide range of estimates is striking, the oft-stated assertion that the new minimum wage research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. Indeed … the preponderance of the evidence points to disemployment effects.”---- A 2007 review of 102 studies starting in the 1990s by David Neumark and William Wascher
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After the July 2009 minimum wage increase,
“nearly 600,000 teen jobs disappeared, even with nearly four percent growth in the economy,” which “compared to a loss of 250,000 jobs in the first half of the year as GDP growth declined by four percent.”— Economist William Dunkelberg,
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Last year the unemployment rate for teens was 24.9 percent and for minority teens was 38.2 percent.

If government can make the poor rich, enhance consumer demand, boost the economy, and heal the human spirit with a wage increase, why stop at $9 an hour? Why not set the minimum at $15 per hour? Or $25 per hour? The difference between $9 and $25 is one of degree, not kind.

When will they ever learn?
 
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