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News Being Pro-Working Poor

  1. Sep 25, 2009 #1
    I'm making this thread based on a discussion in another which basically started https://www.physicsforums.com/showpost.php?p=2364140&postcount=175", and responding to the last post on the subject from that thread:
    Cutting employees is far from the only way to cut expenditures, and if the business owner can't figure out a way to improve his bottom line to keep up with society, then I contend he should stand aside for someone who can provide desired products more efficiency. Worst comes to worst, he can sell the business off and get himself a minimum wage job working there or somewhere else.
    Yet the government has printed a lot of money since the last time minimum wage went up, so how can one be pro-working poor while make no attempt to adjust for that?
    Surely you can see how putting the work into learning new skills and looking for a better paying job is made harder by living on a minimum wage set before we further diluted the value of our dollar? And what about those just entering the workforce to help their families or work though school? I get the impression you are thinking under laboratory conditions where there hasn't been wild inflation and there is a fixed workforce, rather than the real world situation we are in. Granted, I'm not in that situation personally, and haven't been in a long while, but out of empathy for those who are, I am so far at a loss to see how I could oppose increasing minimum wage and still rightly consider myself pro-working poor.
     
    Last edited by a moderator: Apr 24, 2017
  2. jcsd
  3. Sep 25, 2009 #2
    kyleb, are you suggesting it's better for the minimum wage worker to reject the low paying job in order to return to school (on either a Government grant or loan I would assume) rather than continue to struggle?

    Or, on the other hand, are you saying that it's better to burden small business owners (the people who actually pay minimum wages) with even higher wage and tax obligations to better the lives of their employees and thus put their own personal investments and families at risk?

    Please clarify.
     
  4. Sep 25, 2009 #3
     
    Last edited by a moderator: Apr 24, 2017
  5. Sep 25, 2009 #4
    No, I said nothing to suggest anything of the sort.
    Again, "if the business owner can't figure out a way to improve his bottom line to keep up with society, then I contend he should stand aside for someone who can provide desired products more efficiency. Worst comes to worst, he can sell the business off and get himself a minimum wage job working there or somewhere else."
    Sure, but the working poor don't have as much room to reduce their bottom line those with better lots.
    Because if he can't provide his employs a decent wage, he should step aside for someone who can.
    It helps if they aren't stuck to pick between jobs which pay them so little that they are so busy struggling to get by that they can't spare the effort to improve their lots.
    Or rather, if he does have far more workplace skills than the employees, he won't be shopping in the same segment of the job market as them anyway.
    Well I don't see how you could expect to get far with that without providing a better one.

    As for your personal success story, do you believe good fortune played no part in that? I've known many intelligent hard working people throughout my years seem poor out of misfortune more than any fault on their part, and plenty of lazy dolts who got cushy jobs though what seems more like luck rather than skill.
     
  6. Sep 25, 2009 #5
     
  7. Sep 26, 2009 #6
    Sometimes it is, as after all, rich people don't die out of an inability to afford medical care. By the way, the tone of your argument seems to suggest you are discussing this with a poor person, when in fact I live of a fraction of my investments had have no reason to suspect I'd ever need to work another day in my life. So please don't I am arguing for my own sake here, as to the contrary I am arguing for what I believe would be best for our nation as a whole.
    Sure, like Paris Hilton for example sake.
    Rather, poor people often can't hire others to delegate their responsibilities to, while rich people always can.
    They are required to contribute a unskilled man hour worth of work to earn what it takes to reasonably get by in this society we have created, and if they are contributing more than that their compensation should be increased accordingly, assuming you want to treat people with respect anyway.
    Many because they are too worn out by one(s) they are currently slaving away at to do so.
    I'm down with that, but as long term goal, and one that needs a considerable boost in support for us to ever hope to accomplish. Regardless, I'm not suggesting any new government program here, but rather simply an adjustment to an existing one.
     
  8. Sep 26, 2009 #7
    Well, most people just don't understand the issue well enough to see the disadvantages to poor people of raising the minimum wage, which I believe greatly outweigh any apparent (but superficial) advantage.

    There are many resources on the net, and I will never come close to covering the issue, but a few points:

    We do not have a "fixed value" currency. In short, the value of a dollar depends on how hard it is to obtain a dollar. This statement pretty much says it all, but I'll continue.

    For those that believe "more dollars" in a general sense would help poor people "buy more stuff", where does this extra "stuff" come from?

    Increasing the number of dollars used to buy "stuff" simply doesn't increase the amount of "stuff". If it did we could just make everyone rich by printing dollars. And taking dollars from the rich to give to the poor doesn't result in more "stuff" for the poor, because the rich only had dollars (stock in companies), not "stuff". If a dollar had any intrinsic value, this would not be true, but it doesn't.

    One requirement for a job to ever exist (other than as an act of charity) is that the buying power of the wages must be less than the value of the labor. Companies simply don't employ people unless their labor is worth more to the company than the cost. A job isn't an act of charity by a company. Charity is fine, but it's a different topic.

    Raising the minimum wage is a de facto devaluation of the dollar, and a cruel joke on the poor by buying their votes (and yours) with a policy that increases their "dollars" per hour while simultaneously devaluing the dollar to more than make up for it. If this were not true, the result of a minimum wage increase would simply result in the elimination of the jobs for the most part.

    The actual big picture long term result is that increases in the minimum wage reduce the amount of "stuff" that each hour of labor will buy.

    Another effect of raising the minimum wage is the same as most government regulation in general, it greatly, greatly increases the advantage of big businesses over medium and small businesses. Big businesses already have a natural advantage, which is fine, since it results in lower prices and is kept in check by fear of competition, but the artificial advantage that minimum wage increases give to big business over small business reduces competition, resulting in higher(real) prices for everything that poor people must spend their entire income on.

    The bottom line is that power hungry politicians simply rely on the fact that most people don't have a sufficient understanding of economics to realize that they are keeping poor people poor to maintain power.
     
    Last edited by a moderator: Sep 26, 2009
  9. Sep 26, 2009 #8
    I said nothing to suggest anything of the sort, and your whole post seems to be built on ignoring what I did say. If you care to address what I have said, I'd be happy to respond.
     
  10. Sep 26, 2009 #9

    russ_watters

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    Being dismissive isn't an answer, it is a refusal to address the question. The situation described is a reality that exists whether you want to hear it or not. The fact of the matter is, if you raise the minimum wage, some businesses will go under, others will just lay off workers and be able to stay afloat, but either way, the unemployment rate will go up. New businesses will not materialize out of thin air to take their place.

    Though not exactly the same issue, there are quite a number of companies who rely heavily on immigrants (leagal or illegal) to provide low wage labor in order to remain competitive. A recent crackdown on illegal immigrants and tightenting of restrictions on legal ones has harmed American companies who can't get people to do the jobs for the wages required for the companies to turn a profit: http://www.vosizneias.com/37804/200...attacks-obama-crackdown-on-immigrant-workers/
     
  11. Sep 26, 2009 #10

    russ_watters

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    Kyleb, would you care to hazard a guess at what fraction of American workers earn minimum wage? I'll give you a hint: Even as a food service worker in high school, I never made anywhere close to minimum wage.

    The point of this question? Minimum wage is not intended to be a living wage for full time adult workers. In order to make minimum wage as an adult, a person must either be an immigrant with no qualifications, credit, etc., or have screwed-up exceedingly badly in their formative years. For the vast majority of Americans - and virtually everyone over 30 - this issue is utterly irrelevant.
     
  12. Sep 26, 2009 #11
    My post was intended to (partly) explain how someone could consider themselves "pro-working poor" and "oppose increasing minimum wage".
    This is what I responded to. Did I misunderstand?
     
    Last edited by a moderator: Sep 26, 2009
  13. Sep 26, 2009 #12

    russ_watters

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    I can handle that: The minimum wage has been increased a lot over the last 15 years (mostly set in motion by the Clinton admin). So I think it should stay the the same for a while. How does this make me "pro working poor?" I would prefer the "working poor" not be the "not working poor". It is better to have a low wage job than have no job at all because the minimum wage got set too high.

    Perhaps more to the point - virtually no one above high school age (working poor or otherwise) makes minimum wage, so it is largely just an irrelevancy that politicians and liberals like to proselytize about.
     
  14. Sep 26, 2009 #13
    There is also the fact that many employers must offer a pay rate over minimum wage to remain a 'competitive employer' and to attract more quality workers. When minimum wage goes up they have to increase their employees wages too or worry about losing them.
     
  15. Sep 26, 2009 #14
    I agreed that some business would go under, and did not suggest anything would materialize out of thin air. That said, can you cite any a notable rise in unemployment in connection with any previous minimum wage increase to substantiate your argument?
    I've seen statistics answering that question, but I consider it the wrong question to ask. I'd like to see how many people's income would increased if we upped the minimum wage by $1 from what it is now, or how many were working hours for less than $7.25 before we started the move to raise it to that. I don't suppose you've seen any statistics for such either, eh?
    I am at a loss as to what you are trying to get at with that "hint". When I was in high school, I waited tables for the fanciest restaurant in town, and averaged easily over double minimum wage after tips, some nights pulling in over triple. That does nothing to stop me from empathising with people who are less fortunate than us.
    Sure, or something along those lines anyway, but I don't see that as any excuse to work them for less than one can reasonably expect a person to live off of at 40 hours of work each week.
    It's apparently relevant enough to many to argue against it.
     
  16. Sep 26, 2009 #15

    russ_watters

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    Yes, but I wonder how far that really goes. I'm sure my company wouldn't even notice if the minimum wage was increased. I suspect no one above $10 an hour is affected by an increase in the minimum wage from $6 to $7.
     
  17. Sep 26, 2009 #16
    I think it's safe to assume that you've never risked your home and savings to start or purchase a small business?

    Unlike you, I have financed and operated a diverse mix of small businesses over the past 30 years. I've owned wholesale, retail, financial services, manufacturing, and agricultural businesses. I've created jobs and paid fair wages. I've extended benefits and rewarded production. I've earned profits and sustained substantial losses.

    My employees were paid first either way - profit or loss. I've NEVER had an employee tell me they understood if I couldn't pay them or to pay them when I could - and I never asked them to wait. Instead, if I was struggling, I kept employees focused on OUR mutual interests. I've always made it clear, if the business isn't viable, they won't have a job. There are no guarantees (unless you work for GM/UAW or Government).

    Last summer, I did you as you advised and sold an underperforming business (at a loss) to someone who thought he could do a better job. I owned the business, facility, and equipment but didn't control the land. I had a right of first refusal and couldn't justify matching his offer. I made my decision based upon personal and financial considerations. The only way I could make the deal work would have been to eliminate employees and personally commit to work 12 hours plus per day on site. I chose to take a loss and move on.

    Conversely, he quit a corporate job, mortgaged his home, borrowed from friends and family, and made the investments I wanted to make but couldn't justify as being financially viable. I have significant experience in the industry and he doesn't. However, he offered jobs to my employees and raised their guaranteed pay levels to mirror the total compensation I paid with incentives and expanded group health benefits. He told them I didn't understand the business and they would have many more opportunities working for him. The employees provided unsolicited routine updates.

    After making the changes, and risking everything he owned as well as his personal relationships, revenues remained constant - he based his business plan on increased revenues. His response was to cut back on hourly workers, which led to a reducion of revenues. Panicked, he cut staffing levels to the bare minimum required to operate. As a result, revenues collapsed, the business failed, and he filed Chapter 7 - total liquidation.

    This business was founded in 1964 and operated successfully until he overpaid to acquire it in May 2008 - it closed in July 2009. A few of the employees have asked me to help them. I've helped a few of them find jobs and provided honest letters of recommendation for all of them.
     
  18. Sep 26, 2009 #17

    russ_watters

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    That minimum wage increases increase unemployment is standard economic theory, save for a few papers in the '90s that disagreed:
    http://www.springerlink.com/content/t3305v25n764k71m/ [Broken]
    Well, we can certainly look at some easily available statistics to put upper bounds on the size of the groups you are describing. Currently, the minimum wage workforce is on the order of 1 million people or 1% of the workforce:
    http://www.epionline.org/studies/macpherson_06-2004.pdf [Broken]

    It'll have to be an estimate, but I think it is safe to say that no more than about 2% of the workforce gets affected by such a change in minimum wage (the workers at it and those just above it).

    Also useful is the conclusion (in the executive summary):
    This means that minimum wage employees see the highest wage growth of any income sector! This directly refutes the common refrains about people getting trapped in minimum wage jobs. What it tells us is that people at the minimum wage do not need help getting their income up: they help themselves plenty.
    Funny, kyleb, but that really just makes this thread, at the very best, just wrongheaded idle speculation. That's why I'm here arguing against it. Countering misinformation is relevant to me because the quality of this forum is a personal responsibility of mine.

    Anyway, you started this thread and your posts so far have yet to contain a single referenced fact. I asked you if you knew the statistics because you are arguing without factual basis. Please correct that.
     
    Last edited by a moderator: May 4, 2017
  19. Sep 26, 2009 #18
    Based on the stated conclusions of the study you linked, it seems they are using figures from one minimum wage increase to claim causation. Is there any more substance to their argument than that? Besides, what are their figures for decreased employment specifically anyway?
    It seems the figure you are citing is strictly "earning the minimum wage", apparently discarding anyone who earns a penny more, and even those who get payed more than minimum wage at one of multiple jobs. Hence isn't even the lower bounds of the the group you are describing, and it is over half a decade old at that.
    Would you please cite the actual data this claim is based on? I'm digging though the paper at the moment but have yet to locate it.
    I started this thread in response to others arguing against minimum wage in another thread. I did not make a statistical argument, nor was refuting one when I started this thread. If I have made any statements of fact which you take issue with, please quote them directly and I will be happy to cite references to substantiate them.
     
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  20. Sep 26, 2009 #19

    mheslep

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    Ehhh, it is very to make a simple declarative statement on the consequences of minimum wage like that. I'm in agreement that this is the way the world works eventually, i.e. a straight supply and demand mode, a) over the long enough term and b) if the minimum wage is raised high enough, say doubled. Unfortunately it is very difficult to consistently show that unemployment goes up with the minimum wage and there are several good arguments as to why - they're trotted out every time Congress raises the subject. The wiki http://en.wikipedia.org/wiki/Minimum_wage#Debate_over_consequences"summarizes all the ones I've commonly seen.

    Counter Arguments:
    - Product is inelastic (electricity, water, baby formula). So wages and product price can go up, 5-10% but people buy the product just the same.
    - "higher wages may reduce turnover, and hence training costs" so net cost increase is nil.
    - wage rate was already below the supply-demand curve wage equilibrium point, because the employers somehow (e.g. hiring monopoly) have more power in hiring than the employees do in their power to go work elsewhere.
    - For employees in job markets where minimum wage does not apply (e.g. self employed, farms), it has been very difficult to show they have higher employment there.

    Edit: I see later you've dug into the complications.
     
    Last edited by a moderator: Apr 24, 2017
  21. Sep 26, 2009 #20
    The first column represents profit and loss projections based upon actual (time proven) operating history for a small restaurant/carryout. The second column represents a single change - the effect of the minimum wage increase. If the UNION Bill is passed, cap and trade greatly increases utility rates, and an employer health care mandate is imposed, the owner will likely have to choose between closing down (and negotiating a settlement with the landlord) or subsidize losses for the remaining 5 years of the lease. The business employees 6 part time people and a full time manager.

    Operating Revenue
    Daily..........................600.....................600
    Weekly....................4,200...................4,200
    Mos.......................15,600..................15,600

    Expenses
    Rent........................1,550 9.94% 1,550 9.94%

    Utilities and Services
    Electric.......................550.....................550
    Gas............................350.....................350
    Water..........................65.......................65
    Phone..........................75.......................75
    Cintas..........................70.......................70
    Dumpster......................75.......................75
    total........................1,185 7.60...........1,185 7.60%

    General Labor.............2,721 17.44%.......3,140 20.13%
    Management..............2,000 12.82%.......2,300 14.74%

    COGS.......................4,992 32.00%.......4,680 30.00%

    Marketing....................780 5.00%...........780 5.00%

    Monthly Cash Flow
    Pre-Tax and Depreciation..2,372 15.21%...............1,966 12.60%

    The total at risk investment is about $100,000 for building, equipment, and other assets. The contingent liability on the ground lease is about $104,000 over a 5 year period.

    The increase in minimum wage results in a reduction of income of $406 per month, $4,872 per year and about $24,360 over the term of the remaining lease. A reduction of the return on investment of $24,360 on an investment of $100,000 is HUGE!
     
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