Is Raising the Minimum Wage Really Helping the Working Poor?

[kyleb]

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:

How about if a small business has 180 dollars a day for payroll, 3 workers at 6.00 /hr for 10 hrs. Then overnight the minimum wage increases to 7.00/hr, the company still only has the same monies available for payroll and can no longer afford the third person.

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.

To further complicate the issue, the buisiness needed all three workers to assemble enough product to meet payroll, so they decide to raise the price to retain the third worker(from here on we'll assume that the customers still choose to buy the more expensive product, or else the owner and the workers are done already). Since the increase was created by regulation instead of the free market, it is nothing more than inflating the value of the workers labor and in turn inflates the price of the product(government doesn't need to print money to inflate the currency). To compensate, every company as well as every individual that uses their products has to raise prices, and since the workers buy products from these companies(and individuals), they in essence have no more money than they started with(although they do get a bigger paycheck). By letting the market decide none of the workers jobs were ever in danger, and products stay cheaper(no inflation), so even with the smaller wage the workers can buy more with their money.

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?

One other way that not increasing the minimum wage helps the working class and poor is it does not artificially hold people to a job they should leave. If a persons wage can not support them its not the fault of the employer, its either time to learn some new skills so you can find a new job, to re-think your expenditures, or even the crazy notion of starting a buisness(where they might employ even more working class people and poor).

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.

 

[WhoWee]

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.

 

[Jasongreat]

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.

Getting a pay increase is far from the only way one has to improve his/her lot in life, they can also reduce their bottom line, to keep up with the free market. Why is it the person who created the job, was able to sell the product efficiently until the government arbitrarily added to his/her bottom line, the one that has to adjust. I guess it really helps the workers at the buisiness when they are fired so the owner can go find himself a job. Remember the owner will have far more workplace skills than the employees and will be far more capable of landing a job.

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.[/

QUOTE]

I try everyday to convince people to quit believing that government programs are the answer. Every program adds to the inflation of the dollar, and it solves nothing to keep giving people higher wages than the labor they provide is worth, since that in itself is inflationary. I remember at my first job I started at 2.35 /hr in '87, I thought I was worth more so I quit and got a job that paid 2.65/hr, after a few of these starting jobs I started to realize that I wasnt worth more money until I got more knowledge. Once I decided to pay attention to all the details of my job(even the ones that didnt concern me) I found it was far easier to move to the next one. I've had probably 30-40 different jobs so far and will probably have 30-40 more before I die(i hate stagnation). I started as counter help at a fast food place, worked as a car washer, cheese maker helper, mechanic, parts counter sales, farmhand, drillers helper, welder, concrete finisher, mobile home setup carpenter, refractory laborer, and finally ended up(so far) as a heavy equipment operator. I have been from homeless, to living comfortably(not rich by any means)and everywhere in between, I have followed work from one side of the country to the other, it has been hard sometimes and easy others, but I wouldn't trade one struggle for anything. I feel that I have learned more from the stuggles than anything else, and as such I don't want to rob anyone of being able to experience the same things. So I guess in short my reasoning is, I made it to a skill level that I can use to negotiate my wage naturally, and so can they if they try, but they won't try if they don't have to.

 

[kyleb]

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?

No, I said nothing to suggest anything of the sort.

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?

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."

Getting a pay increase is far from the only way one has to improve his/her lot in life, they can also reduce their bottom line, to keep up with the free market.

Sure, but the working poor don't have as much room to reduce their bottom line those with better lots.

Why is it the person who created the job, was able to sell the product efficiently until the government arbitrarily added to his/her bottom line, the one that has to adjust.

Because if he can't provide his employs a decent wage, he should step aside for someone who can.

I guess it really helps the workers at the buisiness when they are fired so the owner can go find himself a job.

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.

Remember the owner will have far more workplace skills than the employees and will be far more capable of landing a job.

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.

I try everyday to convince people to quit believing that government programs are the answer.

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.

 

[Jasongreat]

Sure, but the working poor don't have as much room to reduce their bottom line those with better lots.

So its easier for the rich, and harder for the poor? Its not impossible. I think this is quite a bit of oversimplification though, the rich usually have more responsibilities, the poor usually have far less, although it seems they have more because they worry more about the ones they have.

Because if he can't provide his employs a decent wage, he should step aside for someone who can.

Do the employees have a part to play, or are they just entitled to a wage that society has decided upon? Are they in any way required to contribute to the value of the product or just receive the benefits?

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.

Thats true, but before your regulation the workers weren't looking for a job either.

Well I don't see how you could expect to get far with that without providing a better one.

Im sorry I thought I had, I propose we quit making a new government program to fix a problem caused by a different government program, that way everybody has more of their own money(less taxes, less inflation) in their pockets to do whatever they want. Shrink the national government back to where the enumerated powers are the only powers they have, and give the states and the individual americans their power back, so we can get back to a federal government.

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.[/

QUOTE]

I don't think you should jump to the conclusion that I am a success. I just mentioned my history so that I wouldn't have to answer the question, how can you be so callus against the working class, youre just a cutthroat conservative arent you? Since I am part of the working class and proud of it I figured a little background was in order. I do believe in good fortune and luck, Thomas Jefferson said " I am a firm believer in luck, and I find the harder I work the more luck I have."


Another favorite quote " Being poor is nothing to be ashamed of, but being ashamed of it is"
Benjiman Franklin

SJMHO

 

[kyleb]

So its easier for the rich, and harder for the poor? Its not impossible.

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.

I think this is quite a bit of oversimplification though, the rich usually have more responsibilities...

Sure, like Paris Hilton for example sake.

...the poor usually have far less, although it seems they have more because they worry more about the ones they have.

Rather, poor people often can't hire others to delegate their responsibilities to, while rich people always can.

Do the employees have a part to play, or are they just entitled to a wage that society has decided upon? Are they in any way required to contribute to the value of the product or just receive the benefits?

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.

Thats true, but before your regulation the workers weren't looking for a job either.

Many because they are too worn out by one(s) they are currently slaving away at to do so.

Im sorry I thought I had, I propose we quit making a new government program to fix a problem caused by a different government program, that way everybody has more of their own money(less taxes, less inflation) in their pockets to do whatever they want. Shrink the national government back to where the enumerated powers are the only powers they have, and give the states and the individual americans their power back, so we can get back to a federal government.

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.

 

[Al68]

I am so far at a loss to see how I could oppose increasing minimum wage and still rightly consider myself pro-working poor.

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.

 

[kyleb]

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

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.

 

[russ_watters]

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.

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/

 

[russ_watters]

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.

 

[Al68]

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.

My post was intended to (partly) explain how someone could consider themselves "pro-working poor" and "oppose increasing minimum wage".

I am so far at a loss to see how I could oppose increasing minimum wage and still rightly consider myself pro-working poor.

This is what I responded to. Did I misunderstand?

 

[russ_watters]

My post was intended to (partly) explain how someone could consider themselves "pro-working poor" and "oppose increasing minimum wage".

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.

 

[TheStatutoryApe]

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.

 

[kyleb]

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.

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?

Kyleb, would you care to hazard a guess at what fraction of American workers earn minimum wage?

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'll give you a hint: Even as a food service worker in high school, I never made anywhere close to minimum wage.

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.

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 year.

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.

For the vast majority of Americans - and virtually everyone over 30 - this issue is utterly irrelevant.

It's apparently relevant enough to many to argue against it.

 

[russ_watters]

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.

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.

 

[WhoWee]

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."

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.

 

[russ_watters]

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?

That minimum wage increases increase unemployment is standard economic theory, save for a few papers in the '90s that disagreed:

Coclusion Recently Whaples (1996) reported that most labor economists believe that minimum wage laws decrease employment. Despite this, policy makers have continued to periodically raise the minimum, with the most recent increases occurring in October 1996 and September 1997. The various analyses done by Card, Katz, and Krueger, that showed little to no employment effect of past minimum wage increases, have provided additional ammunition for those who would seek further increases. However, using the estimates of Williams and Mills (1998), we demonstrate that the latest minimum wage increases substantially decreased employment for both sexes. We believe that future increases will do likewise.

http://www.springerlink.com/content/t3305v25n764k71m/

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?

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:

Over the last two decades, the percentage of
employees earning the minimum wage peaked
in 1980 at 5.3 percent and fell to 0.9 percent
in 2003. The absolute number of employees
fell sharply as well, from a peak of 4.4 million
in 1980 to only 1.0 million in 2003.

http://www.epionline.org/studies/macpherson_06-2004.pdf

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 study disputes the notion that minimum
wage employees are dependent on government
policies to receive wage increases. Every
day, minimum wage employees receive raises
based on their hard work and increased skill
levels. Nearly two-thirds receive a raise within
a year of starting employment. These wage
increases far outpace those of employees earning
above the minimum. Furthermore, minimum
wage employees over the last five years—
a time period without a minimum wage hike—
have experienced increasingly larger pay
increases and higher exit rates from minimum
wage employment.

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.

It's apparently relevant enough to many to argue against it.

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.

 

[kyleb]

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/

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?

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

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.

Also useful is the conclusion (in the executive summary): This means that minimum wage employees see the highest wage growth of any income sector!

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.

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.

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.

 

[mheslep]

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. ...

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.

 

[WhoWee]

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!

 

[russ_watters]

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?

You want me to provide more? How about you provide something other than the nothing which your argument is currently based?

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.

My quote was in two parts, sandwiched around the quote from the paper. I'm estimating that the number you are not bothering to look for yourself is around 2% of wage earners.

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.

No. Pretty much the entire second half of the paper is the data and analysis of that. There is no need to pick through the minutae of such a paper - unless of course you believe it to be wrong. In that case, you can find your own papers to support your opinion!

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.

I didn't say you failed to reference claims, I said you are arguing without factual basis. You started the thread and it is your responsibility to both give the thread a point - a thesis - and to support that thesis with facts. Otherwise, you are just being argumentative. Arguing without a point is trolling.

For a start, you could expand on this, kyleb:

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.

You seem to be implying that:
1. A meaningful fraction of adults live off full-time, minimum wage salaries.
2. Minimum wage is or should be a wage people should live one.
3. Therefore, the minimum wage should be higher.

How about forming a thesis around those and supporting it with factual basis. You should address the facts I presented above: For example: how does your idea that the minimum wage should be a living wage jive with the high income mobility and low age of such workers? Also, you should specify exactly how high you think the minimum wage should be.

 

[TheStatutoryApe]

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.

You referenced elsewhere that those living below the poverty line/not paying taxes are approximately 1/3 of the population. Forgive me for lack of citations or numbers but I would hazard a guess that it effects a significant portion of our population, particularly small business owners and their employees which was the thrust of Whowee's argument.

Also note that raises in higher income brackets will become something more like cost of living increases as opposed to raises as minimum wages ladder up and the myriad of union jobs will be demanding cost of living increases evidenced by minimum wage increases.

It may not in fact be all that far reaching but my point, and that of Whowee's argument, is that those most adversely effected by minimum wage increases are very possibly the working poor and those in the nearest income brackets.

 

[kyleb]

You want me to provide more? How about you provide something other than the nothing which your argument is currently based?

Because "I agreed that some business would go under, and did not suggest anything would materialize out of thin air" and in response you argued "That minimum wage increases increase unemployment is standard economic theory". Since you made that authoritative claim, I wanted to know what basis you had for it. So again, is there any more substance to the claim than that derived from "using figures from one minimum wage increase to claim causation"?

Put simply; you haven't given me anything to believe they even made a decent argument, just presented their conclusions. I'm not scrambling to prove anything here, but I'm not going to spend $34 to access the article just to see what the substance of the argument is, particularly with the conclusion itself stating they only looked at figures for one minimum wage increase and their findings stand in contradiction to previously accepted studies.

I'm estimating that the number you are not bothering to look for yourself is around 2% of wage earners.

I've looked, but I've yet to find. If you are accusing me of overlooking such statistics, then please share them. As for your estimate; left to assume, I took your methodology to be simply doubling the percentage of the figure you cited, and hence didn't see any reason to address it.

I didn't say you failed to reference claims, I said you are arguing without factual basis. You started the thread and it is your responsibility to both give the thread a point - a thesis - and to support that thesis with facts. Otherwise, you are just being argumentative. Arguing without a point is trolling.

From my perspective I was trying to continue a discussion which I came into in another thread while respecting the forum rule about keeping threads strictly on topic. What were the people who started this line of discussion in the other thread doing, and would you still be focusing responsibility on me and suggesting I'm trolling if I had simply continued the discussion there?

For a start, you could expand on this, kyleb: You seem to be implying that:
1. A meaningful fraction of adults live off full-time, minimum wage salaries.
2. Minimum wage is or should be a wage people should live one.
3. Therefore, the minimum wage should be higher.

Rather:

1. I don't think in percentages to dismiss individuals, and don't support exploiting people as cheep labor, children or otherwise.
2. In line with the above, I believe minimum wage at a 40 hour work week should be a wage one can be reasonably expected to live on, as I consider anything less exploitation.
3. As we have diluted our money supply though the bailout of corporations, I support a minimum wage increase so anyone working a 40 hour work week at minimum wage can be reasonably expected to live on.

I thought I had been clear enough to those regards from the start, but does my putting it in an outline help for you? Would you prefer if I follow your lead in using bolding for emphasis more in the future too?

How about forming a thesis around those and supporting it with factual basis.

How about respecting the fact that I never claimed to be an economist, nor was I refuting one when I entered into this discussion, which I stumbled upon in another thread?

You should address the facts I presented above: For example: how does your idea that the minimum wage should be a living wage jive with the high income mobility and low age of such workers? Also, you should specify exactly how high you think the minimum wage should be.

I did address them. Again; "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". Granted, that was in regard to the first study you cited, but the second seems to be based on the same standard, and hence my dispute applies equally to it.

 

[rcgldr]

The USA is a consumer based economy. If the mimimum wage is increased, then perhaps unemployment takes an initial hit, but if those making now making more money spend more on consumer goods, the long term effect should be an increase in employment.

I wonder what percentage of minimum wage workers are employed by small mom and pop shops versus large chains? For the small businesses, perhaps some of that cost will trickle upwards, since the minimum wage is raised the same for all businesses, then the rental rates would come down in order to allow any small businesses to operate. Many of the costs of a small business are somewhat flexible in the long haul if a higher minimum wage levels the playing field.

 

[TheStatutoryApe]

Many of the costs of a small business are somewhat flexible in the long haul if a higher minimum wage levels the playing field.

Does it level the playing field? Or does it give smaller businesses a harder time being a competitive employer with larger corporations that are almost always capable of increasing base pay? Large corporations can always afford to hire people who are less than skilled and quality employees and make up for it by volume. Small businesses can not. They have to offer competitive wages to attract employees that will be worth the investment.


edit: too many of these arguments seem to be based around the idea that all employees are essentially equal. They are not. There are plenty of people out there that in reality are hardly worth hiring even for the major corporations that can make up for their lack of productivity by sheer volume of warm bodies.

 

[rcgldr]

Many of the costs of a small business are somewhat flexible in the long haul if a higher minimum wage levels the playing field.

Does it level the playing field? Or does it give smaller businesses a harder time being a competitive employer with larger corporations that are almost always capable of increasing base pay?

The USA is a capitalist system, if some small business can't compete with the given rules, such as a minimum wage and the tax system, then they fail. Minimum wage should reflect some reasonable cost of living in the USA. Utlimately it's the workers that buy the consumer products, which in turn feeds the vast majority of our economy. I'd rather protect a very large number of workers than a relatively small number of small businesses.

too many of these arguments seem to be based around the idea that all employees are essentially equal.

Minimum wage isn't an issue for more skilled workers, so I don't see that argument being made with regard to minimum wage.

 

[TheStatutoryApe]

The USA is a capitalist system, if some small business can't compete with the given rules, such as a minimum wage and the tax system, then they fail. Minimum wage should reflect some reasonable cost of living in the USA. Utlimately it's the workers that buy the consumer products, which in turn feeds the vast majority of our economy. I'd rather protect a very large number of workers than a relatively small number of small businesses.

Considering, as I mentioned, that large corporations are far more capable of dealing with wage increases than small businesses may I assume that you are pro-corporation? And remember that a significant number of workers in the US are employed by small businesses which will be just as effected, probably more so, than the business owners if they fail. Would you say that you are 'for' hedging out small businesses in favour of large corporations as competitive employers?

edit: its a knife's edge and I am unsure where I fall myself. Though I would tend to favour small business over corporations I often see the progressive effect of large corporations (however small and difficult to detect they may be).

 

[Jasongreat]

The USA is a capitalist system, if some small business can't compete with the given rules, such as a minimum wage and the tax system, then they fail. Minimum wage should reflect some reasonable cost of living in the USA. Utlimately it's the workers that buy the consumer products, which in turn feeds the vast majority of our economy. I'd rather protect a very large number of workers than a relatively small number of small businesses.

The USA was a capitalist system. If it still was a capitalist system the only rules would be imposed by the market, not the government. What I mean by rules is, if people will buy a product for $50 but not $51 then the rule is that product has to sell for $50 or less.

IMHO its not at all about what you make, its about how much you spend. Money is not an end, it is a tool to reach the desired end. A person could make 150,000 dollars a year, but if they spend 155,000 dollars they wouldn't be very well off and would eventually become poor no matter how many handouts they received,and if a person that makes 35,000 and can live comfortably on 34,000 and puts the other 1,000 to work for them they would be far better off and will eventually become rich,unless their money keeps shrinking in value thanks to inflation. By raising the minimum wage, it would increase the prices of the products that the workers were going to be able to buy with their pay raise, along with every other product in the economy and finally would raise the skilled workers pay, after which we will hear about how the unskilled workers are falling behind and we need another minimum wage increase. The way to help the largest number of workers is to stand in the way of the least number of buisinesses possible.

Minimum wage isn't an issue for more skilled workers, ...[/

QUOTE]

Thats not true, I along with lots of other more skilled workers have a minimum wage thanks to government sponsored unions. And its just as ineffective as the one for the poor.

 

[WhoWee]

I've owned or manged quite a few businesses through the years. As an employer, my goal has always been to retain the best employees and limit the hiring of people who are not as productive, wasteful, undependable, jump from job to job for a $.05 per hour increase, or routinely seek unemployment benefits.

At the same time, I can only pay a specified (budgeted percentage) amount in total wages and benefits. The time proven solution is to do a good job of qualifying prospects and conducting background checks and reference verifications. The starting wage should always be less than long term reliable employees. Benefits should always be delayed. Performance evaluations need to be structured at regular intervals and a detailed file of personnel issues maintained. These administrative activities are time consuming and costly, but identify the best workers and reward good behavior and production.

I will always choose to pay a good and productive worker 1.5 times more than the minimum wage rather than hire two clowns at the minimum wage. In practice, I pay the good employees a decent wage and share profits with all long term producers based on the budgeted percentage. If profits increase, total compensation increases.

 

[Jasongreat]

I will always choose to pay a good and productive worker 1.5 times more than the minimum wage rather than hire two clowns at the minimum wage. In practice, I pay the good employees a decent wage and share profits with all long term producers based on the budgeted percentage. If profits increase, total compensation increases.

This reminded me of a story I heard last time I was in SoCal working, I met an older guy on the job, he told me a story of the best company he ever worked for. He said that these two brothers started a construction buisiness, they offered a vary minimal wage, however at the end of the year everyone got together and the profits were divided between the workers and company. Whichever crew made the most for the company also made the largest bonus, and if a crew was just getting by they only made the minimum amount. He said the morale of the company was the best of any company he has ever worked for before or since, every employee had a stake in the company's success. Each employee kept an eye on other employees and even their bosses, since each others actions had a positive or negative effect on their salary. On the other side of the equation, they were getting more and more work because they always finished under budget, on time, and it was completed at the highest quality. I asked him what happened to the company if it was so great, he told me that the brothers were approached by some investors wanting to buy them out, they sold. The first thing the new owners did was get rid of the profit sharing, since their belief was that management was the sole reason a company was successful. Within 2 yrs the company that was growing rapidly only a few years earlier was out of buisiness. I believe that a company is only as stong as its whole team, terrible management can destroy a workforce full of good employees, just the same as a bad workforce could destroy an excellent management team. Neither of them could do it alone, It takes two to tango, and as such niether one nor the other is more or less important. However it is much easier to replace labor than management in most fields, but there are some where management could be replaced easier than the worker bees.

 

[kyleb]

The first thing the new owners did was get rid of the profit sharing...

Not surprising. The very concept of sharing evokes images of Soviet Russia for some people, for some strange reason or another.

Within 2 yrs the company... was out of buisiness.

Not surprising either.

 

[Jasongreat]

Not surprising. The very concept of sharing evokes images of Soviet Russia for some people, for some strange reason or another.

It wasnt sharing it was earning, two completely different concepts IMHO.

 

[kyleb]

It was profit sharing, which while far from communism, is still too close for the comfort of some.

 

[mheslep]

It was profit sharing, which while far from communism, is still too close for the comfort of some.

Profit sharing in the form of, say, dividends on stocks is commonplace in capitalist systems. There are many other forms of profit sharing. I'm unfamiliar with anyone calling such not 'far from communism'.

 

[Evo]

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