Minimum Wage

[smellysocks12]

You do see you didn't quote that sage, right?


By the way, I do know not all Americans think like that, only thinking about their own wealth and nobody else's, but a lot do and the system enables them to unlike many European countries.

Eliminating the minimum wages simply will increase inequality, the poor will have a lower income, the rich will get a higher income because they have to pay lower wages. This would be a very bad development, everyone should be able to make at least a decent living by working hard. With a minimum wage level anyone with a job can at least make a decent living (which actually still isn't much).

Sure, wages will increase over time to compensate inflation, but this is a vicious circle since these increases of the wages will be funded by raising the prices once again, their REAL income stays the same. You should look at what a person can purchase with their wages, the nominal income isn't relevant. An increase to compensate inflation will not improve someone's situation, it will just keep them in that same situation.

 

[ledhed]

Here's a good link
http://www.balancedpolitics.org/minimum_wage.htm

 

[Danoff]

Your example pretty much makes it clear why there should be a minimum wage. Some people are dependent of their income, they are trying to make a living. This means lower educated or uneducated people will end up being replaced by 16 year olds who just need some extra pocket money, since they ARE willing to work for $4 an hour. Someone who has to pay rent, food etcetera of his wage, will not have enough money if he earns $4 an hour. This way they will resort to crime, or live on food stamps paid by the government, since if there isn't a huge difference between working and unemployment they won't be motivated to go to work.

Does nobody respond to my posts anymore? Or even read them for that matter? I explained all of this already.

Can you imagine how many jobs there would be out there if minimum wage didn't exist? You could walk up to a store owner and practically convince him to hire you on the spot if you cost that little. Do you know what that would do to unemployment? It would practically vanish!

It's not just teenagers who can't get jobs because of minimum wage, it's adults as well - adults who want to pay for food and rent and can't afford it because they make $0/hr.

You guys are acting like if minimum wage was abolished all of the sudden evil corporations would reduce everyone's salary to 20cents/hr. Very few Americans work for minimum wage, and those that do work at that rate for only a year or two (I posted statistic earlier in this thread). Eliminating minimum wage would result in very little change to our economy - but it would make the lowest end of our economy easier to get into.

When you have no skills, experience or education - you'll probably make $0/hr in a system with a minimum wage. You'll make something like $3-4/hr in a system without it - and you're telling me harm has been done?

Where does the money come from to pay this person 4 bucks now? It comes from the guy who was making minimum wage before and is now making 4 bucks/hr also. His wage was inflated before at the expense of leaving someone else with nothing - without a minimum wage the market restores balance.

 

[MrktMkr1986]

Does nobody respond to my posts anymore? Or even read them for that matter? I explained all of this already.

I read your posts.

Can you imagine how many jobs there would be out there if minimum wage didn't exist?

Yes, actually I can.

You could walk up to a store owner and practically convince him to hire you on the spot if you cost that little. Do you know what that would do to unemployment? It would practically vanish!

If unemployment vanishes, inflation will go through the roof. So the people who make $2/hour or less will find their money "worth less" than the products they wanted to buy originally. Ask any REAL economist and they will tell you that INFLATION IS MORE IMPORTANT THE UNEMPLOYMENT.

It's not just teenagers who can't get jobs because of minimum wage, it's adults as well - adults who want to pay for food and rent and can't afford it because they make $0/hr.

They STILL wouldn't be able to afford it if they made $3/hr either -- ESPECIALLY if they live in high-cost areas such as New York, San Francisco, and Los Angeles.

You guys are acting like if minimum wage was abolished all of the sudden evil corporations would reduce everyone's salary to 20cents/hr.

That's because they would -- and I told you why. For corporation that have high labor costs, they stand to BENEFIT if the minimum wage was abolished.

Very few Americans work for minimum wage, and those that do work at that rate for only a year or two (I posted statistic earlier in this thread).

Eliminating minimum wage will only PROLONG that process.

Eliminating minimum wage would result in very little change to our economy - but it would make the lowest end of our economy easier to get into.

NO and YES. No eliminating minimum wage would result in a DRAMATIC change in our economy. More workers enter the market (as you'd hope for) and then inflation skyrockets. The little money that they do make will be worthless because their BUYING POWER is DECREASED. You're not looking at the big picture.

When you have no skills, experience or education - you'll probably make $0/hr in a system with a minimum wage. You'll make something like $3-4/hr in a system without it - and you're telling me harm has been done?

HUGE HARM WILL BE DONE!

Where does the money come from to pay this person 4 bucks now? It comes from the guy who was making minimum wage before and is now making 4 bucks/hr also. His wage was inflated before at the expense of leaving someone else with nothing - without a minimum wage the market restores balance.

Market restores balance... IT DOES NOT!

Let me explain. If you look at the graph between 1869 and 1949, there are sharp increases and decreases in the GDP. This was before government had any major intervention the US economy in terms of fiscal, monetary, and supply-side policies.

That's the difference between a TOTALLY FREE MARKET ECONOMY and an economy with some government intervention. After the we realized that an uncontrolled market can make mistakes, the government stepped in and created fiscal, monetary, and growth policies. If we take steps back towards a DERESTRICTED market economy, our economy WILL be affected by it.

 

[Danoff]

Market restores balance... IT DOES NOT!

It sure does. The market distributes balance perfectly.

If unemployment vanishes, inflation will go through the roof. So the people who make $2/hour or less will find their money "worth less" than the products they wanted to buy originally.

I think it's funny that you're arguing that minimum-wage-caused unemployment is a good thing.

Explain this to me. Why would inflation go through the roof? One of government's proper functions is to maintain the money supply so that this type of thing does not happen - the government controls the mint and government bond interest rates to make sure that it has a handle on this. Why would removing minimum wage cause the government to lose control of inflation? (I don't think you can answer this)

 

[MrktMkr1986]

It sure does. The market distributes balance perfectly.

NO IT DOESN'T. I'VE EDITED MY LAST POST. Look at the chart, then read the notes. The market does not distribute balance evenly. The variations in the GDP prove that.

I think it's funny that you're arguing that minimum-wage-caused unemployment is a good thing.

It is a good thing. That's not an argument -- it's a fact.

Explain this to me. Why would inflation go through the roof?

More buyers in a market sending prices higher -- that's why.

One of government's proper functions is to maintain the money supply so that this type of thing does not happen - the government controls the mint and government bond interest rates to make sure that it has a handle on this.

Yet you want LESS government intervention?! You're contradicting yourself...

Why would removing minimum wage cause the government to lose control of inflation? (I don't think you can answer this)

If there are more workers, there will be more people spending money. The more people spend, the more prices go up.

 

[Danoff]

Let me explain. If you look at the graph between 1869 and 1949, there are sharp increases and decreases in the GDP. This was before government had any major intervention the US economy in terms of fiscal, monetary, and supply-side policies.

That's the difference between a TOTALLY FREE MARKET ECONOMY and an economy with some government intervention. After the we realized that an uncontrolled market can make mistakes, the government stepped in and created fiscal, monetary, and growth policies. If we take steps back towards a DERESTRICTED market economy, our economy WILL be affected by it.

Sigh. We've been over this. I already told you that one of government's proper functions is to maintain the money supply. That didn't happen prior to the depression, it happened badly during the depression (worsening it) but now we have a handle on it. I'm not arguing against maintaining the value of the dollar - you'll have to find someone else to disagree with you there.

That being said, you haven't responded to my real point - which was that government will still have the tools it currently has to prevent inflation. I didn't think you could answer my question and you still haven't.

It is a good thing. That's not an argument -- it's a fact.

Unemployment is a good thing... got it.

More buyers in a market sending prices higher -- that's why.

More production in the market sending prices lower. Gasp!

Yet you want LESS government intervention?! You're contradicting yourself...

No I'm not. I want less government intervention in some areas. I'm fine with the maintenance of the value of the dollar - at least domestically. Without that there can be no real economy - markets don't work without a fluctuating money supply. It's all part of maximizing freedom while maintaining a society that functions.

 

[Duke]

If there are more workers, there will be more people spending money. The more people spend, the more prices go up.

But that's a false statement.

If you have two people sharing $8 an hour because there is no minimum wage, you still only have $8/hour going through the economy, despite the fact that two people are now spending it instead of one.

If you double the number of workers and KEEP the minimum wage, you are correct, inflation will become a problem. But if you double the number of workers BY CUTTING THE WAGE IN HALF, then the real amount of disposable income does not double and inflation is not fueled.

 

[Danoff]

But that's a false statement.

If you have two people sharing $8 an hour because there is no minimum wage, you still only have $8/hour going through the economy, despite the fact that two people are now spending it instead of one.

If you double the number of workers and KEEP the minimum wage, you are correct, inflation will become a problem. But if you double the number of workers BY CUTTING THE WAGE IN HALF, then the real amount of disposable income does not double and inflation is not fueled.

Productivity goes up still though which means either that people will get raises or prices will go down or both.

 

[MrktMkr1986]

That being said, you haven't responded to my real point - which was that government will still have the tools it currently has to prevent inflation. I didn't think you could answer my question and you still haven't.

Could you ask it again, please?

Unemployment is a good thing... got it.

Depends on which side of the fence you're on. As a general rule, when unemployment increases, inflation decreases. When unemployment decreases, inflation increases. It both increase at the same time (mid-late 1970s) then you have stagflation.

More production in the market sending prices lower. Gasp!

Maybe yes, maybe no. The United States is a SERVICE economy (70-80%)... hence, most of the employed people will be working in some form of service, not actual production.

No I'm not. I want less government intervention in some areas. I'm fine with the maintenance of the value of the dollar - at least domestically. Without that there can be no real economy - markets don't work without a fluctuating money supply. It's all part of maximizing freedom while maintaining a society that functions.

There have to be certain restriction of freedom in order for a society -- err ECONOMY -- to function. Whether it's in the form of a price floor, changes in the prime rate etc. Things the market should have NO control over.

Productivity goes up still though which means either that people will get raises or prices will go down or both.

You think flooding the market with employees is suppose to make productivity go up? And if they get raises (inevitable), then my inflation theory is STILL correct. More buyer in the market, shift in demand curve, prices go up.

But that's a false statement.

If you have two people sharing $8 an hour because there is no minimum wage, you still only have $8/hour going through the economy, despite the fact that two people are now spending it instead of one.

If you double the number of workers and KEEP the minimum wage, you are correct, inflation will become a problem. But if you double the number of workers BY CUTTING THE WAGE IN HALF, then the real amount of disposable income does not double and inflation is not fueled.

Dan suggested (rightly) that wages will increase over time because of the market. If that's the case, then the inflation theory is still correct.

 

[Danoff]

Could you ask it again, please?

Government has the mint and interest rates on its side to curtail inflation. That is a necessary function of government.

How does decreasing the minimum wage reduce the government's ability to use the mint or interest rates to prevent inflation?

Secondly, just because people work in service jobs doesn't mean prices will not go down. I mean products that people purchase - whether it is physical or service.

 

[MrktMkr1986]

Government has the mint and interest rates on its side to curtail inflation. That is a necessary function of government.

I'm glad we can agree on that.

How does decreasing the minimum wage reduce the government's ability to use the mint or interest rates to prevent inflation?

It does not. However, your assertion that it will not have an impact on our economy is wrong. In order to curtain inflation, at least one of the things the government will have to do is INCREASE the interest rates. If rates are high, it becomes more difficult to get a mortgage, a car, etc. It will slow down the economy, and people will be out of work anyway because employers will no longer be able to afford to hire. OR, employers will lower wage rates in order to compensate for the higher interest rates.

Secondly, just because people work in service jobs doesn't mean prices will not go down. I mean products that people purchase - whether it is physical or service.

OK... clarified. 👍

 

[Danoff]

It does not. However, your assertion that it will not have an impact on our economy is wrong. In order to curtain inflation, at least one of the things the government will have to do is INCREASE the interest rates. If rates are high, it becomes more difficult to get a mortgage, a car, etc. It will slow down the economy, and people will be out of work anyway because employers will no longer be able to afford to hire. OR, employers will lower wage rates in order to compensate for the higher interest rates.

Good. Interest rates going up means my money grows a little faster...

I'm still not convinced inflation will occur - as I said, extra productivity means prices drop. That'll counteract any excess wages.

So there's Duke's effect that will occur in part, and then there's the extra productivity to offset raises, and then there's the government's tools to keep a handle on inflation.

I'm not seeing real economic problems here - time to abolish the minimum wage.

 

[bfifteenv]

I'm no economics expert, but I do know a few things from experience working and socializing with minimum wage workers. As long as you have a government that will support people through social programs the unemployment rate will never go down drastically by manipluating the minimum wage.

I would say that a good nummber of the unemployed out there are so by choice because they are better than working at a job that pays minimum wage. I know a guy that is muttling through an engineering program at a good school. He had an entry level enginering job that would have truned into a good job once he graduated, but he got himself fired because they would only pay him $12/hour and he's "better than that". Now he makes his money by selling illegal satellite TV setups and hacking X-boxes, and collecting umeployement. But it's all by choice...

On the other end of the spectrum I know a guy that has worked for the same company for 30+ years. He is VERY uneducated. He has trouble reading things as simple as part numbers on invoices, but he is a hard worker with a strong work ethic. Every year his employer gives him a raise proportional to his increase in productivity, and every few years when the government raises the minimum wage this poor guy is back to making only a few cents more than minimum wage or worse get a bigger raise just to get him up to minimum wage.

Reducing minimum wage WOULD NOT significantly increase the number workers in the work force. No one is going to get off of pulic assistance to take a $3.00/hour job. The only thng it is going to do is make people who have a strong work ethic, but no skills or training have to take a second job to supplement the first job just to continue scraping by and the people that are getting by with no job are going to continue getting by with no job.

People working minimum wage jobs live at substandard levels. They live in rental slums, they barely scrape by to put food on their own table. And that's at current minimum wage levels. Dicking with minimum wage will not help them in their situation. Raising it may help temporarily, but once inflation catches up they will be back to where they are. Lowering it will only encourage more to get on try to get on to public assistance, fake a disability, or turn to crime.

 

[smellysocks12]

But that's a false statement.

That isn't a false statement at all! If people will be spending more then prices will go up. If the demand is higher than the supply prices will raise, that's how simple it is. Also without monetary expansion the amount of money available on the market will stay the same, which means the levels of interest will get enormous. This will result in an increase in prices since companies will want to have revenues larger than when they would have put their money on a savings account.



I can see that mkrtmkr1986 knows his macro economics, most other people in here only know how their own household income works.

 

[smellysocks12]

Good. Interest rates going up means my money grows a little faster...

The nominal value of your money will, yes, but due to inflation your real income won't grow at all. With tomorrow's 100$ you will be able to buy less than with today's $100.... seriously danoff, you don't know anything about economics. Get the book "Macro Economics" by Blanchard... read that and then enter the discussion again.

 

[MrktMkr1986]

That isn't a false statement at all! If people will be spending more then prices will go up. If the demand is higher than the supply prices will raise, that's how simple it is. Also without monetary expansion the amount of money available on the market will stay the same, which means the levels of interest will get enormous. This will result in an increase in prices since companies will want to have revenues larger than when they would have put their money on a savings account.


I can see that mkrtmkr1986 knows his macro economics, most other people in here only know how their own household income works.

Thank you for the backup smellysock12. I'm studying Economics in school so that I can be a "Market Maker" ... Why on earth would I post anything about economics that I'm only "partially" sure about?

The nominal value of your money will, yes, but due to inflation your real income won't grow at all. With tomorrow's 100$ you will be able to buy less than with today's $100....

Exactly. As I said before, inflation is CONSIDERABLY more important than unemployment in the long run.

seriously danoff, you don't know anything about economics. Get the book "Macro Economics" by Blanchard... read that and then enter the discussion again.

That was rather harsh...

 

[PS]

That isn't a false statement at all! If people will be spending more then prices will go up. If the demand is higher than the supply prices will raise, that's how simple it is. Also without monetary expansion the amount of money available on the market will stay the same, which means the levels of interest will get enormous. This will result in an increase in prices since companies will want to have revenues larger than when they would have put their money on a savings account.

Except people won't be spending more. They'll be spending half as much because they'll be working for half the wage.

 

[smellysocks12]

That was rather harsh...

It's harsh, but it is true. He made it obvious that he just thinks a higher number on his bank note is what matters, which isn't a very economic way of thinking in an economic discussion. What matters is how many shopping carts you can fill with the money on your bank account.

I'm not even trying to sound arrogant, but when people constantly make empty statements based on a narrowminded view, then I'll have to ask them to do some more research.


By the way I study computer science and economics, this doesn't matter on this topic, because also without a proper education you can make relevant statements on this topic if you know what you're talking about.

 

[MrktMkr1986]

Except people won't be spending more. They'll be spending half as much because they'll be working for half the wage.

Well, not according to Dan. He asserts that the "market" will create equity and wages will increase anyway. So, according to him, people WILL be spending more.

It's harsh, but it is true. He made it obvious that he just thinks a higher number on his bank note is what matters, which isn't a very economic way of thinking in an economic discussion. What matters is how many shopping carts you can fill with the money on your bank account.

Precisely.

I'm not even trying to sound arrogant, but when people constantly make empty statements based on a narrowminded view, then I'll have to ask them to do some more research.

I agree.

By the way I study computer science and economics,

Cool. 👍

 

[Danoff]

The nominal value of your money will, yes, but due to inflation your real income won't grow at all. With tomorrow's 100$ you will be able to buy less than with today's $100.... seriously danoff, you don't know anything about economics. Get the book "Macro Economics" by Blanchard... read that and then enter the discussion again.

Oh really? Gosh I had no idea! What's inflation? How does that work? You must be a genious!

Why don't you go back and read my posts about why inflation would not occur. And by the way, stop being an ass.

 

[MrktMkr1986]

Oh really? Gosh I had no idea! What's inflation? How does that work? You must be a genious!

Why don't you go back and read my posts about why inflation would not occur. And by the way, stop being an ass.

The violence! ​

Good. Interest rates going up means my money grows a little faster...

It also slows down the economy by making consumer spending more difficult. Raising interests rates will NEGATIVELY impace unemployment as well. So while you are collecting 5-6% interest in your savings account, General Motors just layed off 2,500 people because their bond rating dropped from BB -- C.

I'm still not convinced inflation will occur - as I said, extra productivity means prices drop. That'll counteract any excess wages.

Extra productivity from LOWER wages? These phrases should NEVER be used in the same sentence. You increase wages to increase productivity. That's like saying:

"Let's spend LESS money on R&D in order to come up with newer, greater products." It doesn't work.

So there's Duke's effect that will occur in part, and then there's the extra productivity to offset raises, and then there's the government's tools to keep a handle on inflation.

That's not possible -- no market on our humble planet is that efficient.

I'm not seeing real economic problems here

Your choice -- doesn't mean there won't be any.

- time to abolish the minimum wage.

No. You cannot "abolish" the minimum wage just like that and expect everything to be OK. If you were serious about its abolishment, a suggestion such as "reversing minimum wage (5.15 > 4.00 > 3.15 > 2.00 > 1.15 > 0 minimum wage) would make more sense because it allows the market to adjust to the changes. If the changes were negative, then we revert back to the original minimum wage...

In New York, the minimum wage is now $6.00/hr -- up from $5.15 and I have yet to see any negative consequences as a result of this action. If I can get a job this summer, hopefully this will lay to rest the assertion that teens will find it harder to find jobs when the minimum wage is increased.

 

[Danoff]

First of all Brian, thanks for reading my posts and responding.

The violence!

I prefer that people actually read my posts before going off on me. The guy just opened his mouth and jammed his foot in - and he claimed I was the one being dense...

It also slows down the economy by making consumer spending more difficult. Raising interests rates will NEGATIVELY impace unemployment as well. So while you are collecting 5-6% interest in your savings account, General Motors just layed off 2,500 people because their bond rating dropped from BB -- C.

You make it sound like interest rates being high are all bad, which is totally untrue. Yes it slows consumer spending but it only makes the market more robust. Yes it discourages large loans, but again that only makes the market more robust. The kind of spending spree that goes on when interest rates are low is good only in the short term to get the ball rolling again, it can't last forever.

Extra productivity from LOWER wages? These phrases should NEVER be used in the same sentence. You increase wages to increase productivity. That's like saying:

"Let's spend LESS money on R&D in order to come up with newer, greater products." It doesn't work.

Comeon Brian, you claim to be good at this economics stuff. I hope you're not just responding far enough to disagree with me here because there is an obvious answer to this.

Productivity is hindered when people are paid more than they earn - which is the case with minimum wage. Jobs get paid what they are worth in the free market, competition ensures that. Minimum wage forces some people to make more than they're worth at the expense of increased unemployment. By reducing minimum wage, productivity is boosted. Example...

If have 8 bucks to spend. I have to spend 5 bucks on an employee so I only get one. If I don't have to spend 5 bucks I can get 2 employees for 4 bucks. Now I've spent more and get more productivity from two employees because the government didn't force me to burn a dollar.

That's not possible -- no market on our humble planet is that efficient.

I'm not talking about miracles here. I'm talking about the free market coupled with a smart Fed, that happens on a regular basis.

No. You cannot "abolish" the minimum wage just like that and expect everything to be OK. If you were serious about its abolishment, a suggestion such as "reversing minimum wage (5.15 > 4.00 > 3.15 > 2.00 > 1.15 > 0 minimum wage) would make more sense because it allows the market to adjust to the changes.

Point taken. When I talk about abolishing something I use it as shorthand to describe the end I want. The means to that end would be something ugly like you're prescribing - but the transition isn't as much fun to talk about.

 

[MrktMkr1986]

Dan, could you please try deleting some of your private messages. I would like to send you something.

*edit* It still didn't work...

 

[Danoff]

Dan, could you please try deleting some of your private messages. I would like to send you something.

*edit* It still didn't work...

Got it. Sorry I didn't realize it was full.

 

[Danoff]

http://www.cnn.com/2006/POLITICS/12/22/minimum.wage.ap/index.html


I love the way this story starts out:

Imagine what it would be like to work without a pay raise for nearly 10 years.

That's been the plight of some workers who for almost the past decade have been earning the federal minimum wage. Their last pay increase -- to $5.15 an hour -- came in 1997.

There could be some relief in sight.

Bias? No. Of course not. Let's consider the fact that almost no one works for 10 years without a raise. Minimum wage earners are DIFFERENT PEOPLE from year to year. Most people who start out at minimum wage end up making more very quickly. If someone has made minimum wage for 10 years, they deserve it.

What's more, most jobs pay more than minimum wage. Apparently (according to the article) only 4 percent of workes make minimum wage. That's about the same number of workers that are unemployed. Many of that 4 percent are teenagers working summer jobs or after-school jobs. Some of them probably have multiple jobs. Where do we get this notion that if you're going to get paid by someone, it has to be enough to sustain a socially defined lifestyle or we don't let them pay you at all?

On a side note, I find it hilarious that people voted in democrats because of the Iraq war and the first thing they want to do is institute bad economic policy - slow down the economy and stunt job growth.

 

[Sage]

The starting salary to be a cashier at Sears is $7.30, and they’ll hire anybody, as long as you don’t dress like a goon for the interview. And if you plan on working there full-time, there’s plenty of room for upward movement – my manager was 19 or 20 years old. I have a friend who was offered a managerial position at McD’s when he was 18.

 

[ledhed]

http://www.cnn.com/2006/POLITICS/12/22/minimum.wage.ap/index.html


I love the way this story starts out:



Bias? No. Of course not. Let's consider the fact that almost no one works for 10 years without a raise. Minimum wage earners are DIFFERENT PEOPLE from year to year. Most people who start out at minimum wage end up making more very quickly. If someone has made minimum wage for 10 years, they deserve it.

What's more, most jobs pay more than minimum wage. Apparently (according to the article) only 4 percent of workes make minimum wage. That's about the same number of workers that are unemployed. Many of that 4 percent are teenagers working summer jobs or after-school jobs. Some of them probably have multiple jobs. Where do we get this notion that if you're going to get paid by someone, it has to be enough to sustain a socially defined lifestyle or we don't let them pay you at all?

On a side note, I find it hilarious that people voted in democrats because of the Iraq war and the first thing they want to do is institute bad economic policy - slow down the economy and stunt job growth.

please stop...your making my ribs hurt...the Dems would DESTROY the economy....IF ..they actually did what they PANDER...but they wont...

 

[Danoff]

please stop...your making my ribs hurt...the Dems would DESTROY the economy....IF ..they actually did what they PANDER...but they wont...

They'll get the min. wage change through. I can practically guarantee it.

 

[FoolKiller]

They'll get the min. wage change through. I can practically guarantee it.

Unfortunately, I think this is one of those situations where even if it were put to a vote it would pass. Between people thinking that we should all have more money and teh misinformation you see in that article it gets plenty of support.