Kerry's 7 Dollar Minimum Wage - What Do You Think?

[aeroegnr]

I'm just curious what you all seem to think of Kerry's 7 dollar minimum wage that he promised during the debate.

I'm also curious about how he is going to make this economy "exactly like the nineties" where everything seemed to be going well until someone flushed the floater that was the dot com boom.

If 7 dollars is great for minimum wage, why not 10, or 20, or 50 dollars? Hell, that means those poor mcDonalds workers will get 50dollars/hourx40hours/weekx50weeks/year = 100 grand a year!

Isn't it painfully obvious that minimum wage just causes inflation? Isn't it also painfully obvious when states/cities decide to jack up the minimum wage that small companies immediately fire the workers that aren't worth it and cling to the few that are?

 

[Locrian]

/agree

Its stupid.

 

[gravenewworld]

I don't believe there should be a minimum wage at all. The free market should decide "minimum wage." The minimum wage is $5.15/hr, but honestly who really gets paid this much? Hardly anyone. Even teenagers who work at McDonald's get paid higher than that because the labor markets have decided a wage that is higher than 5.15/hr. Raising minimum wages wouldn't cause inflation, however, unemployment may increase.

 

[wasteofo2]

The minimum wage is $5.15/hr, but honestly who really gets paid this much? Hardly anyone.

According to the Bureau of Labor Statistics, in 2003, 2.1 million people were working for the federal minimum wage or less. Then there are the millions of people who would be working for State minimum wages of something like $5.35 or $5.80 etc.

 

[Gza]

The free market should decide "minimum wage."

The minimum wage is a way of protecting lower income individuals from the free market. If the free market had it's way, the workers at McDonalds would be making one cent an hour.

 

[aeroegnr]

The minimum wage is a way of protecting lower income individuals from the free market. If the free market had it's way, the workers at McDonalds would be making one cent an hour.

They would?

 

[aeroegnr]

According to the Bureau of Labor Statistics, in 2003, 2.1 million people were working for the federal minimum wage or less. Then there are the millions of people who would be working for State minimum wages of something like $5.35 or $5.80 etc.

That's what, less than 1% of the population, or less than 2% of the working population.

I wonder what percentage of those working minimum wage are teenagers.

 

[member 5645]

According to the Bureau of Labor Statistics, in 2003, 2.1 million people were working for the federal minimum wage or less. Then there are the millions of people who would be working for State minimum wages of something like $5.35 or $5.80 etc.

Show me a source for your second claim.

 

[member 5645]

I wonder what percentage of those working minimum wage are teenagers.

I guess Kerry really is looking out for the little guy - Kerry/Edwards, fighting to make sure our products cost more to increase the standard of living for high school students!

 

[Moonbear]

I'm just curious what you all seem to think of Kerry's 7 dollar minimum wage that he promised during the debate.

I don't think it will make a difference one way or another. But, before I decide, how many employers really pay minimum wage? I worked minimum wage jobs when I was a student, but then I wasn't trying to support a family, just earn enough to help pay tuition (my parents didn't require me to pay for tuition, but I did my best to help as much as I could) and buy pizza when the dining hall food was inedible. I think it's sad if employers try to get away with paying full-time employees minimum wage, but then, when you have adults doing a job any 16-yr old could do, is that the employers' fault?

Isn't it also painfully obvious when states/cities decide to jack up the minimum wage that small companies immediately fire the workers that aren't worth it and cling to the few that are?

Is that necessarily a bad thing? There are too many people who expect a paycheck for doing nothing all day. Why are they tolerating incompetent employees in the first place if the job can be done with fewer competent employees? This does happen, but it doesn't last long. Those few left will threaten to leave when they find themselves doing the job of two or three people for very little additional take-home pay, so the employers will have to hire back more workers. Of course, they may be more careful to hire more competent people the second time around, which will benefit productivity. And, sometimes, if you have enough incompetent people on the payroll, being forced to weed them out improves productivity by letting the competent ones work unhindered.

Edit: the stats in the above posts were posted while I was still typing.

 

[aeroegnr]

Is that necessarily a bad thing? There are too many people who expect a paycheck for doing nothing all day. Why are they tolerating incompetent employees in the first place if the job can be done with fewer competent employees? This does happen, but it doesn't last long. Those few left will threaten to leave when they find themselves doing the job of two or three people for very little additional take-home pay, so the employers will have to hire back more workers. Of course, they may be more careful to hire more competent people the second time around, which will benefit productivity. And, sometimes, if you have enough incompetent people on the payroll, being forced to weed them out improves productivity by letting the competent ones work unhindered.

I agree, but that wasn't really what I was going for.
Some jobs simply aren't worth 7 dollars, and these are the jobs that are introductory or for younger people, and aren't really meant to be stayed in for 20-30 years.

 

[wasteofo2]

Show me a source for your second claim.

I didn't use a source, but it's common sense. Are you saying without a source, you won't believe that there are people working for state-wide minimum wages in states which have minimum wages higher than the Federal minimum wage?

 

[tumor]

The minimum wage is a way of protecting lower income individuals from the free market. If the free market had it's way, the workers at McDonalds would be making one cent an hour.

Exactly,you took words out off my mouth.
Free market wants you and me to work for free.

 

[Locrian]

No, the employer wants you to work for free. The employee wants to be paid a million dollars for the job.

The free market wants to arbitrate a solution based on supply and demand.

 

[member 5645]

I didn't use a source, but it's common sense. Are you saying without a source, you won't believe that there are people working for state-wide minimum wages in states which have minimum wages higher than the Federal minimum wage?

You said millions. I want to not only see that number validated, but also the actual number itself.
It's not common sense.

 

[member 5645]

Exactly,you took words out off my mouth.
Free market wants you and me to work for free.

With misconceptions like this, no wonder so many people think capitalism is eveil and wealth must be stolen :uhh:

 

[Aquamarine]

The minimum wage is a way of protecting lower income individuals from the free market. If the free market had it's way, the workers at McDonalds would be making one cent an hour.

The labor market works like any other market. Pay is decided by demand (employers) and supply (employees). Competition stops employers from giving too low a pay. On the other hand, employers will not pay so much that they make a loss.

What happens if there is a regulation that forces the lowest pay higher than in a free market? It means that there must be unemployment, employers will not voluntarily pay to make a loss. It also means that the unemployed must be supported by the rest of the population and that the unemployed will produce nothing, lowering the standard of living for the rest of the population.

Regulation like this only creates unemployment and decreased standards of living.

 

[check]

The labor market works like any other market. Pay is decided by demand (employers) and supply (employees). Competition stops employers from giving too low a pay. On the other hand, employers will not pay so much that they make a loss.

What happens if there is a regulation that forces the lowest pay higher than in a free market? It means that there must be unemployment, employers will not voluntarily pay to make a loss. It also means that the unemployed must be supported by the rest of the population and that the unemployed will produce nothing, lowering the standard of living for the rest of the population.

Regulation like this only creates unemployment and decreased standards of living.

It's true. Without a minimum wage the supply and demand would eventually reach an equilibrium point where there would be little or no unemployment and everyone is getting paid fairly. Well, in theory, anyway.

 

[selfAdjoint]

It's true. Without a minimum wage the supply and demand would eventually reach an equilibrium point where there would be little or no unemployment and everyone is getting paid fairly. Well, in theory, anyway.

I'm with you up to "fairly well'. The market never of itself guarantees a living wage. A dollar a day would be a competitve equilibrium with third world labor.

 

[Aquamarine]

It's true. Without a minimum wage the supply and demand would eventually reach an equilibrium point where there would be little or no unemployment and everyone is getting paid fairly. Well, in theory, anyway.

There are of course people with limited ability who can only produce enough to get a very small pay. But it is better to help those people by, for example, no taxes on the first x dollars earned in a year. Or a more direct help.

Those who don't have the ability to produce enough to make a living working must be helped by others.

 

[tumor]

How about not letting to many new immigrants into the USA or Canada.
That might fix in some way problem with min.wage.Why we need anyway so many immigrants here.In Canada, we let I believe 200.000 a year, for a country of 30 millions that is just absurd.
I like "multiculturalism" stuff, but we have to be prudent.

 

[Aquamarine]

I'm with you up to "fairly well'. The market never of itself guarantees a living wage. A dollar a day would be a competitve equilibrium with third world labor.

Cost like training and transports must be included. And the existence of rule of law, property rights and the rest of capitalism in the country in question.

But this has nothing to do with the minimum wage. A minimum wage cannot force the pay to be higher than in a free market, competing third world countres or not. It can only force unemployment.

 

[Aquamarine]

How about not letting to many new immigrants into the USA or Canada.
That might fix in some way problem with min.wage.Why we need anyway so many immigrants here.In Canada, we let I believe 200.000 a year, for a country of 30 millions that is just absurd.
I like "multiculturalism" stuff, but we have to be prudent.

This will lead to other problems like the jobs moving to other countries, more expensive goods and reduced exports. Trying to force American companies to remain in the US will mean that they will be replaced by more competitive foreign companies in foreign markets, meaning less income from exports.

The only way to increase wealth/capita is to make the best environment for the production of wealth. It cannot be raised be decree and force.

Arguably, today the Chinese is the world's best capitalists. It will mean that they tomorrow will be the richest.

 

[gravenewworld]

The free market doesn't want you to work for next to nothing. If employers paid their workers below equilibrium wages, then they would not be producing at their full potential and hence not maximizing their profits. More people would work if they would raise their wages to the equilibrium wage and the company would make more in profit. So it is beneficial for firms to raise wages to what the free market dictates. For example in the 90s, firms were killing each other for workers, offering huge bonuses and enormous hourly wage rates for new college graduates all because the free labor market had decided what the proper wage was. Employers simply can't pay people 2 cents an hour and except to make profits, simply because no one will produce their product/service for that amount.

 

[russ_watters]

I'm also curious about how he is going to make this economy "exactly like the nineties" where everything seemed to be going well until someone flushed the floater that was the dot com boom.

That part in quotes is actually a quote? I mean, Kerry actually said that? Ya know what - I think we should shoot for an economy like the one we had in the 20s! :uhh:

And then people wonder why the guy doesn't impress me.

According to the Bureau of Labor Statistics, in 2003, 2.1 million people were working for the federal minimum wage or less.

I'd really like to know the demographics of those people and their jobs. Yes, it matters.

The minimum wage is a way of protecting lower income individuals from the free market. If the free market had it's way, the workers at McDonalds would be making one cent an hour.

Since workers at most McDonalds' don't make minimum wage now (they make significantly more), that doesn't seem to be a reasonable argument. Further, how many responsible adults are trying to make a living flipping burgers? Doesn't the minimum wage mostly help teenagers (who don't need it) and people who screwed-up so bad they can't do anything else? Should we really be carrying these people on our backs?

Republicans and Democrats have two fundamentally different ideas about the purpose (or the very need) of a minimum wage. Democrats seem to think that the minimum wage should provide a "living wage" for any job. That sounds nice, but in real life, why should it be that way? (and can that actually work?) Republicans think the market should determine the wage for each job and the employees should decide which jobs they do and make a living based on working a "good" job.

I think the Democratic position is wrong for two reasons:
1. This country is supposed to value freedom above all else. Regulations such as the minimum wage restrict economic freedom without a real, positive result.
2. As wasteofo2's and Gza's, and especially tumor's posts show, the democratic position is based on what sounds nice in your head, without any real regard for what actually works in practice or the reality of the situation. Data? Doesn't matter! It works in my head, so it must work in reality, right...? Right?!

As the others show (Aquamarine's clear and concise post, especially), the republican position is based on real facts and real economic theory.

#2 is an important reason why I am not a democrat.

 

[aeroegnr]

That part in quotes is actually a quote? I mean, Kerry actually said that?

It's a paraphrase. He was saying that or the equivalent during the debate last night. He was speaking of returning to the budget surplus days.

 

[russ_watters]

A quick case-study to demonstrate the superiority of my (the Republican) philosophy on economics, re: the minimum wage. The philosophy is (as I said before) Republicans think the market should determine the wage for each job and the employees should decide which jobs they do and make a living based on working a "good" job. Let's test this on school janitors.

Lets assume that the minimum wage is $6 an hour and that starting janitors make this wage and it also just so happens that this is the wage the market equilibrium would specify anyway. Let's also assume that the wage is not a huge concern to schools - they need a specific number of man-hours to keep their schools clean.

Lets say that this year, a significant number of recent high-school grads that had planned to be school janitors take on my philosophy and decide that they should choose to find better jobs to make a better living. $6 an hour isn't their idea of a "living wage." They choose nursing and their parents, proud but not wealthy, lend them the money to go to nursing school (I chose nursing because its a field where right now there are not enough workers for the number of available jobs). Now, quite obviously, this works out great for these guys in that they end up, in short order, earning double or triple what they would have as janitors. That's freedom, that's opportunity, that's the American dream. Bask in the glow. But what about the guys who stayed as janitors?

So this fall, high schools suddenly and unexpectedly find that they are short of new janitors. What do they do? Well, for the short term, they make their existing janitors work overtime to make sure the school gets clean. This works out great for most janitors as they make time-and-a-half for overtime work: $9 an hour. The school, however, quickly decides that's not a good idea. What what do they do? They offer $7 an hour to new janitors in an effort to convince the lazier of those janitors in nursing school that it'd be easier to just take their inevitable janatorial job. Now, of course, some will bite and some won't. The ones who don't bite end up sitting pretty, the ones who do bite still end up better off for the trouble, making $7 instead of $6 an hour.

Thats economic theory (supply and demand 101) combined with the American ideal of freedom: you makes your choices and accepts your consequences. In this case, just the fact that some people bought into the American Dream improves the situation for everyone in their group.

But what if we just make it easy and offer $7 an hour right off the bat by raising the minimum wage? Well, since that's the "living wage" most janitors were looking for, it convinces them not to go to nursing school. It convinces them that they don't need to better themselves because the government will take care of them if they don't. As a result, very few of those janitors leave for nursing school, all janitors make $7 an hour, and most stay janitors rather than becoming nurses. We've convinced them not to improve themselves. Overall, their situation is worse than if the government not upped the minimum wage.

 

[Zantra]

So let me get this strainght- your idea is instead of helping minimum wage earners, we should punish them until they (hopefully) get desperate enough to pull themselves up by their bootstraps, or give up and turn to crime or drugs to survive? Good strategy! How about HELPING them get better jobs with better educational funding and transitional career change programs? You have to deal with the issue, not push it under the carpet.

If you give a man a fish...

The reason there is a minimum wage is because if restaurants could pay mcdonalds workers 1 buck an hour, they would, and probably sell 50 cent big macs every day. But eventually people would strike, and no one would work there because it would be considered a "substandard" wage. People banded together and and said "I"m not willing to work for $2/hour, so pay us more, and so the companies had to. Competition was a factor also. Could you find illegal immigrants to do the jobs? most likely, but not US citizens.

 

[member 5645]

The reason there is a minimum wage is because if restaurants could pay mcdonalds workers 1 buck an hour, they would, and probably sell 50 cent big macs every day. But eventually people would strike, and no one would work there because it would be considered a "substandard" wage. People banded together and and said "I"m not willing to work for $2/hour, so pay us more, and so the companies had to. Competition was a factor also. Could you find illegal immigrants to do the jobs? most likely, but not US citizens.

If that were true, and it isn't, then mcdonald's employees would make only minimum wage. They don't.

 

[gravenewworld]

The reason there is a minimum wage is because if restaurants could pay mcdonalds workers 1 buck an hour, they would, and probably sell 50 cent big macs every day. But eventually people would strike, and no one would work there because it would be considered a "substandard" wage. People banded together and and said "I"m not willing to work for $2/hour, so pay us more, and so the companies had to. Competition was a factor also. Could you find illegal immigrants to do the jobs? most likely, but not US citizens.

No, McDonald's would not pay their workers 1 dollar/hr. People would simply not work for that wage. Really its not that hard to understand. COMPANIES CAN MAKE MORE PROFIT BY INCREASING THE WAGES THEY PAY IN CERTAIN CIRCUMSTANCES. A company's output and productivity depends on labor, if the company refuses to pay the fair market price for wage, they will not produce at a maximized output since they could be highering more workers at a higher wage.

 

[Locrian]

The reason there is a minimum wage is because if restaurants could pay mcdonalds workers 1 buck an hour, they would,

It has already been pointed out that this is an obviously false statement. McDonalds pays over minimum wage now. Lowering the minimum wage would not chnage those jobs pay at all.

 

[selfAdjoint]

The statement that if McDonalds could pay a dollar an hour, they would, is true. Corporations are bound to offer the lowest achievable wage that is compatible with their business plan. In fact McDonalds would always pay a little more than the cheapest rate in order to be more picky about whom they hire. The minimum wage just sets that cheapest wage a little higher.

 

[Aquamarine]

There seems to be a belief that McDonalds could pay much higher wages. Looking the key statistics at Yahoo, McDonalds have a return on assets of 6.98%. That means that the return on money invested is about 7%. The return on the 10-year bond is about 4%. Is is certainly fair that those investing in a stock should earn at least 3% more than on a risk-free investment. Why otherwise do it?

Looking at the only burger competitor I quickly could find listed, Wendy's ROA is 8.47%. So McDonalds are limited by that, they cannot long-term earn much less money than a competitor.

So it is not really possible for McDonalds to pay much more.

It not the evil companies depriving the workers. They are paying what they can. If they payed more, they would lose to competitors due lack of earnings and investments. If they payed less, people would take other jobs.

 

[check]

How about not letting to many new immigrants into the USA or Canada.
That might fix in some way problem with min.wage.Why we need anyway so many immigrants here.In Canada, we let I believe 200.000 a year, for a country of 30 millions that is just absurd.
I like "multiculturalism" stuff, but we have to be prudent.

Canada needs immigrants to maintain a growing population. Canada’s total fertility rate is 1.61 children born/woman. (2004 est.) A country needs at least a net gain of 2.1 people per woman/couple to maintain its current population. That’s where immigration comes in.

Oh, and how would limiting immigration fix the minimum wage 'problem'?

 

[russ_watters]

The statement that if McDonalds could pay a dollar an hour, they would, is true. Corporations are bound to offer the lowest achievable wage that is compatible with their business plan. In fact McDonalds would always pay a little more than the cheapest rate in order to be more picky about whom they hire. The minimum wage just sets that cheapest wage a little higher.

McDonalds is picky about who they want flipping burgers? Are you serious? Is that why they "pick" high school kids and dropouts? I can't believe you would say such a thing.

So let me get this strainght- your idea is instead of helping minimum wage earners, we should punish them until they...

Wait, stop there: how is paying someone what they are worth a punishment? That's what's wrong with America today - people view not getting a handout as a punishment!

How about HELPING them get better jobs with better educational funding and transitional career change programs?

Good idea - just one little thing: first tell me how to keep them from dropping out of high school.

You have to deal with the issue, not push it under the carpet.

Well, how about this: I'll deal with my issues, they can deal with their issues? If you don't like that, please explain to me why in a free society, I should be responsible for the failures of people who I have never met.

The reason there is a minimum wage is because if restaurants could pay mcdonalds workers 1 buck an hour, they would

And you base that on what? They pay $7 an hour and hang big signs out that they are hiring because they're picky like SA was saying, but if the minimum wage didn't exist, they wouldn't have to? In what economics book can I read that theory?