The rich have money -- and passion

[Texas_Roofer]

Hmmm, I’m assume you got that somewhere, so what exactly do you have to back that up, I think it might be hard to isolate an economic boost for what would occur naturally. Plus does it take into account, not the nominative effect, but the real effect? I guess too it can also increase inflation, though that too might be hard to isolate from inflation that would occur anyway.

I read a lot of economics, it is true. Also it follows my personal experience on the subject. If you think about it it makes sense. One of the flaws with the conservative stand is the “cost” of minimum wage is not isolated from “consumption” meaning the low wage labors can spend more after the change. Studies show this out paces the negative affects. BTW it can not cause inflation; inflation requires an increase in money supply.

Also I think, because increasing the minimum effects a broader spectrum of people than just the slow and handicapped, it would be better to take a more precise intervention to help them. Granted I think it will cause problems when trying to get that through the government. But I think to back to the OP, that too might be apart of the values to be taught too, to make sure that those that need extra care are cared after. A local program might really do a better job of meeting their needs, and less red tape to get help to people hard on their luck for a short period of time.

In regard to handicap in addition to the classic handicapped person inside a free market which also relies on “perfect knowledge” anyone who does not know how to develop their resources in the free market is handicapped. These may not be the classical handicapped.

 

[vern_humphrey]

IMO is our job to take care of the needy not the governments.

That’s exactly what Saint Paul tells us in Chapter 5, 1 Timothy.
“And whoever does not provide for relatives and especially family members has denied the faith and is worse than an unbeliever.”

 

[mary_bobo]

IMO is our job to take care of the needy not the governments.

And before the thirties that was the way it was done. Families looked after the family.

 

[jman507]

I read a lot of economics, it is true. Also it follows my personal experience on the subject. If you think about it it makes sense. One of the flaws with the conservative stand is the “cost” of minimum wage is not isolated from “consumption” meaning the low wage labors can spend more after the change. Studies show this out paces the negative affects. BTW it can not cause inflation; inflation requires an increase in money supply.

Either it will be consumed or reinvested, if you can consume what would other wise go back to capital, if it diminish capital, it can decrease supply causing even fewer goods to be chased after the same money. Though I think it’d all be rather insignificant to the overall economy.

Actually in the mesoeconomic structure of the workers who earn near min. wage, you are increasing the money supply. There is the same amount of goods being chased after with more money. You increase the demand you can increase the price.

To a point there can be others who bring in investments to go build the capital to get the people those goods, but at the same time you hurt those who all ready cater to that group. So I guess in the end, WalMart wins, and sole proprietors lose out since they may not be able to cope with the initial bump in wages and be at a disadvantage since the big chains can take the hit and not raise prices so much until things settle back into place.

I guess though it’d be great boon for those that sell car audio equipment.

 

[Texas_Roofer]

Either it will be consumed or reinvested, if you can consume what would other wise go back to capital, if it diminish capital, it can decrease supply causing even fewer goods to be chased after the same money. Though I think it’d all be rather insignificant to the overall economy.

Actually in the mesoeconomic structure of the workers who earn near min. wage, you are increasing the money supply. There is the same amount of goods being chased after with more money. You increase the demand you can increase the price.

To a point there can be others who bring in investments to go build the capital to get the people those goods, but at the same time you hurt those who all ready cater to that group. So I guess in the end, WalMart wins, and sole proprietors lose out since they may not be able to cope with the initial bump in wages and be at a disadvantage since the big chains can take the hit and not raise prices so much until things settle back into place.

I guess though it’d be great boon for those that sell car audio equipment.

:ehh:

The change shifts ( called a transfer) money from one source to another in this case gross profit and taxes to low wage laborers. The studies show the low wage labor uses the money with great efficiency, greater than that of the government or company owner. (surprise, surprise) If the laborer were less efficient the economy will slow, not grow. Wal-Mart would be a winner and a loser their labor cost would probably bump up a minimal amount, yet their low wage customers would have more to spend. The big winner is the Mom and Pop store as they are not under the minimum wage increase.

 

[jman507]

The change shifts ( called a transfer) money from one source to another in this case gross profit and taxes to low wage laborers. The studies show the low wage labor uses the money with great efficiency, greater than that of the government or company owner. (surprise, surprise) If the laborer were less efficient the economy will slow, not grow. Wal-Mart would be a winner and a loser their labor cost would probably bump up a minimal amount, yet their low wage customers would have more to spend. The big winner is the Mom and Pop store as they are not under the minimum wage increase.

Ahh ok, I see. I’d like to see these studies though. One problem with theories and models is that there could be all types of hidden variables that can affect outcomes, so it’s actually nice to see the studies to try to come up with ideas that can hurt the validity of the theory in practice. Plus you got to wade through the statistics. If people are putting it out with an agenda, they can color them as they like intentionally or not.

I think you also have to try to understand where exactly is the best set point. At a point in change of wages the negatives will have to outpace the positives, any idea when that’ll come?

If the Mom and Pop store ever wants to grow, some would have to get in the market of finding low wage workers, that’ll cut into their profit margins, while other big competitors can weather that due to volume.

 

[cynic]

…butting in… I wasn’t neccessarily in favour of raising, just that there *be *a mininum, so that those earning it or near it can, you know, do horribly wasteful things with all that money, like paying a modest rent and buying enough food. How are rents affected buy a minimum wage? how is the cost of health insurace affected?, how is the cost of goods that aren’t made locally affected? How will any of those costs go down if it is abolished?

 

[Texas_Roofer]

Ahh ok, I see. I’d like to see these studies though. One problem with theories and models is that there could be all types of hidden variables that can affect outcomes, so it’s actually nice to see the studies to try to come up with ideas that can hurt the validity of the theory in practice. Plus you got to wade through the statistics. If people are putting it out with an agenda, they can color them as they like intentionally or not.

I think you also have to try to understand where exactly is the best set point. At a point in change of wages the negatives will have to outpace the positives, any idea when that’ll come?

If the Mom and Pop store ever wants to grow, some would have to get in the market of finding low wage workers, that’ll cut into their profit margins, while other big competitors can weather that due to volume.

First you may want to do a refresher on supply side economics verses other models. A supply side economist is paid to focus on the increase expense and predict its affect. He usually ignores the customer benefit as that is not the focus he is paid for. This is the reason I believe with many new economists that historical studies were intently skewed. Second the labor market has changed considerable over the last 50 years currently a family produces 1.5 workers for the next generation not the 5+ it used to supply. Third and most important during most of my lifetime minimum wage has been a non issue. A current minimum wage 40 hour would pay about $260 while the middle of the labor pack (medium) earning from 2000-2007(Q1) show a low of $569 and last # of $693. In essence the government has effectively eliminated minimum wage by allowing a wage so low it is irrelevant.

Concerning the other question you may have been asking when a minimum wage will have a negative affect. The answer is when the wage eliminates more jobs than the consumer benefit exceeds. This will occur as the new targeted minimum wage exceeds the free market wages. Statistically we could use 2 or 3% this will occur as we approach about $300 per week (current report bls report says $327=10%). So a safe number as $280 per week or ~$7 per hour shows the current safe range for raising the minimum wage. All moves to day from $5.15 to $7 will be positive in their affect on the economy.

requested report references

Card, David. 1992b. Do Minimum Wages Reduce Employment? A Case Study of California, 1987-89. Industrial and Labor Relations Review, vol. 46 (October): 38-54. -Finds no evidence that an increase in the California state minimum wage in July, 1988 led to any loss in teenage employment, but does find evidence of higher wages.

Adams, F. Gerard. 1987. Increasing the Minimum Wage: The Macroeconomic Impacts. Briefing Paper, Economic Policy Institute (July). -Finds that an increase in the minimum wage from $3.35 to $4.65 over three years would increase the unemployment rate by less than 0.1% and the inflation rate by 0.2%.
Card, David, and Krueger, Alan B. 1994. Minimum Wages and Employ-ment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania. American Economic Review, vol. 84 (September): 772-793. -Finds no evidence of reduced employment from an increase in the New Jersey state minimum wage in April, 1992.

Katz, Lawrence F., and Krueger, Alan B. 1992. The Effect of the Minimum Wage on the Fast-Food Industry. Industrial and Labor Relations Review, vol. 46 (October): 6-21. -Finds evidence that an increase in the minimum wage led to an increase in employment in Texas.

Brown, Charles. 1988. Minimum Wage Laws: Are They Overrated? Journal of Economic Perspectives, vol. 2 (Summer): 133-145. - Finds that they employment impact of the minimum wage and its impact on reducing poverty are both less than generally believed.

Brown, Charles; Gilroy, Curtis; and Kohen, Andrew. 1981a. Effects of the Minimum Wage on Youth Employment and Unemployment. In Minimum Wage Study Commission (1981), vol. 5, pp. 1-26. -Finds that a 10% increase in the minimum wage will reduce teenage employment by 1% to 3%.

Brown, Charles; Gilroy, Curtis; and Kohen, Andrew. 1981b. Time-Series Evidence of the Effect of the Minimum Wage on Teenage Employment and Unemployment. In Minimum Wage Study Commission (1981), vol. 5, pp. 103-127. -Finds that a 10% increase in the minimum wage will reduce teenage employment by 1%.

 

[stinkcat_14]

:ehh:

The studies show the low wage labor uses the money with great efficiency, greater than that of the government or company owner. (surprise, surprise)

How are you measuring efficiency? Are there any studies that show this?

One of the problems with some of the studies that you have cited is that some of them have a geographic focus that will affect their results. For example, one of David Card’s studies looked at the effect of the minimum wage in New Jersey and showed little effect. That is not surpising because the minimum wage is set below the equilibrium wage rate.

On the other hand, if we did a study looking at the effect of the minimum wage in rural Alabama, we would probably get a much stronger impact.

 

[LJN21]

…butting in… I wasn’t neccessarily in favour of raising, just that there *be *a mininum, so that those earning it or near it can, you know, do horribly wasteful things with all that money, like paying a modest rent and buying enough food.

I’m not sure I’m against a minimum per say, really feel if the people feel like its needed is the States Job. Living in NYC requires much more money than living in OKC. Washington isn’t going to be able to set down a fair minimum wage for all. My in-laws raised 9 kids on about $20,000 a year.

How are rents affected buy a minimum wage? how is the cost of health insurace affected?, how is the cost of goods that aren’t made locally affected? How will any of those costs go down if it is abolished?

Statistically speaking the people make minimum wage aren’t paying rent, or their health insurance their Mommies and Daddy’s are doing that.

I would still like to see any research in to this idea that the minimum wage actually keeps wages from getting to low. I would think supply and demand would keep wages at a reasonable rate.

Health Insurance is a major issue with me. Its insanely expensive and the people that really feel it are middle income families. If you don’t make much you can qualify for Medicaid. If you make a reasonable income (we make about $40k) and you job doesn’t provide reasonable coverage you pay out the noise. We went uninsured a while because it was costing $600 a month, we found out we were going to be having another baby and decided we better get us on my husbands insurance at work. When we did the math we figured that assuming everything went just the way it was supposed to my OB, hospital, baby bills we would just brake even paying in to insurance with premiums and co pays what we would pay out of pocket. The only reason we did it is in case something went wrong. Which was a good thing we did since our daughter ended up staying in the hospital a week. All in all our health care costs for that year alone was over $10k, including $800 a month insurance premium. Fortunately he now has a new job with amazing benefits for the same pay. Tort reform NOW!

 

[Frankk]

That is not surpising because the minimum wage is set below the equilibrium wage rate.

On the other hand, if we did a study looking at the effect of the minimum wage in rural Alabama, we would probably get a much stronger impact.

I was surprised to read recently that the minimum wage in the U.S. is about to go up after 10 years and is currently less than $6.

What surprised me is that this level is much less than Spain’s minimum wage and Spain is far lower in the ‘league of wealthy nations’ than the U.S.

I’m not sure this adds anything to the debate but it did make me wonder, considering the US is the wealthiest country in the world. [or one of the wealthiest]

 

[stinkcat_14]

I was surprised to read recently that the minimum wage in the U.S. is about to go up after 10 years and is currently less than $6.

What surprised me is that this level is much less than Spain’s minimum wage and Spain is far lower in the ‘league of wealthy nations’ than the U.S.

I’m not sure this adds anything to the debate but it did make me wonder, considering the US is the wealthiest country in the world. [or one of the wealthiest]

It is not terribly surprising that our minimum wage is lower, because in the US we tend to be a little bit more free market oriented. In addition, in many places the minimum wage is irrelevent, since I could go work for my local grocery store and earn $9 per hour. They are not paying $9 because they are benevelent, it just happens to be the state of our local labor market.

 

[Frankk]

It is not terribly surprising that our minimum wage is lower, because in the US we tend to be a little bit more free market oriented.

Interesting point but I’m not sure how the US could be more free market oriented than Spain. Spain had a free market economy under Franco although it, obviously, had no democratic legitimacy.

The Moncloa Pacts in 1977 were designed to bring Spain’s economy into a fully free market system which they did and where it has remained.

 

[John_Mailer]

Poor should be thankful that they are allowed to live.

 

[Trader]

What’s the big deal about making a million dollars? Almost every day I open my email to find I have won another lottery I didn’t even enter.

Seriously, one thing I did not see here is the huge financial benefit to be gained from maintaining good credit. There are many factors that go into a good credit rating, but the most important is the answer to the simple question, “Does this person keep his word?” Put another way, "If this person agrees to pay by the first of the month, doee he pay by the first?

Your credit rating not only determines what rate you are charged for loans like mortgages and car loans, but also the price of insurance, and your elegibility for the best credit card deals. I am amazed by the amounts some people pay to banks in fees and late charges when I get the same or even greater services for free. Over a lifetime the difference can be in the hundreds of thousands of dollars. It is a lot like getting paid for what you should do anyway.

 

[vern_humphrey]

What’s the big deal about making a million dollars? Almost every day I open my email to find I have won another lottery I didn’t even enter.

Seriously, one thing I did not see here is the huge financial benefit to be gained from maintaining good credit. There are many factors that go into a good credit rating, but the most important is the answer to the simple question, “Does this person keep his word?” Put another way, "If this person agrees to pay by the first of the month, doee he pay by the first?

Your credit rating not only determines what rate you are charged for loans like mortgages and car loans, but also the price of insurance, and your elegibility for the best credit card deals. I am amazed by the amounts some people pay to banks in fees and late charges when I get the same or even greater services for free. Over a lifetime the difference can be in the hundreds of thousands of dollars. It is a lot like getting paid for what you should do anyway.

It’s all tied to the theme of this forum, Social Justice.

“Charity” is doing our duty under the Corporal Works of Mercy – feeding the hungry, sheltering the homeless, and so on.

“Social Justice” extends beyond charity and is aimed at fixing the underlying problems that leave people hungry and homeless. Clearly a key component of Social Justice is education Educated people are usually able to support themselves and to contribute their share to charity as well.

A key part of everyone’s education should be what you talk about – and more. It should instil a positive value system of respect for education, hard work, saving and investing. A true Soicial Justice goal would be that everyone be able support himself and to save enough to live comfortably when he can no longer work.

 

[Trader]

It’s all tied to the theme of this forum, Social Justice.

A key part of everyone’s education should be what you talk about – and more. It should instil a positive value system of respect for education, hard work, saving and investing. A true Soicial Justice goal would be that everyone be able support himself and to save enough to live comfortably when he can no longer work.

You won’t find a bigger supporter of education on this forum than me, but the even larger barrier to success in life than limited education is the lack of will to do what you know is right.

Every one of the 25% of American adults who still smoke after 43 years of warnings knows it is a bad idea. I understand a lot about addictions. What I do not understand is why so many people tried it the first time when they already knew it could kill them.

My father had only one year of high school. He did not teach me about credit cards, I taught him. What he did teach me is that if my library book was due on a certain date, I should return that book on time, every time. It wasn’t so much about the two cent fine as it was about another person not being able to use it if I failed to abide by the rules. He also taught me not to buy what I could not pay for, and that people without good educations would have to work very hard to support a family. Choosing not to support your children was never an option.

A really good social justice program would be the vigorous enforcement of laws we already have on the duty of parents to support their children. We could have a lot of deadbeat dads on work release during the day and in night school for the evenings.

 

[vern_humphrey]

You won’t find a bigger supporter of education on this forum than me, but the even larger barrier to success in life than limited education is the lack of will to do what you know is right.

Every one of the 25% of American adults who still smoke after 43 years of warnings knows it is a bad idea. I understand a lot about addictions. What I do not understand is why so many people tried it the first time when they already knew it could kill them.

Human learning theory defines three realms:

• Cognative – logic, language, and so on
• Psychomotor – running, throwing, jumping and so on
• Affective – feelings and values

You can’t teach calculus by having kids shoot hoops, and you can’t teach a kid to ride a bike by having him read a book. You must use a strategy appropriate to the realm in which you are working.

The affective realm strategies include things like peer-pressure, pride, recognition, status (or lack thereof) and shame. If you want kids not to smoke, you have to make smoking a shameful, low-status thing. If you let them make it a source of pride and status amongst their peers, you’ll never stop it.

The same is true of work ethics – people who work hard must be accorded status, and those who will not work seen as low-status and shameful.

My father had only one year of high school. He did not teach me about credit cards, I taught him. What he did teach me is that if my library book was due on a certain date, I should return that book on time, every time. It wasn’t so much about the two cent fine as it was about another person not being able to use it if I failed to abide by the rules. He also taught me not to buy what I could not pay for, and that people without good educations would have to work very hard to support a family. Choosing not to support your children was never an option.

And in the process, he built a picture in your mind of what a true man was – a true man took pride in paying debts on time, living up to his word, and so on. A man who did not do that was low-status and ought to be ashamed of himself.

A really good social justice program would be the vigorous enforcement of laws we already have on the duty of parents to support their children. We could have a lot of deadbeat dads on work release during the day and in night school for the evenings.

I agree. The same with mothers – let them work with their children if they aren’t employed. Hold them responsible for their children’s performance.