Minimum Wage

[UnoMOTO]

The balancing act for most companies is the 40 hour limit for overtime. If one person could do the work of two but need to use overtime pay to accomplish it, more times then not they will hire the second worker and keep them both under 40 hours. Sometimes more is less for the company.

 

[Danoff]

The company will have a target number of employees. 2-4 sackers for example. "We need a minimum of 2, but 4 would be nice". They'll then figure out how much budget they have to hire from. "We have $15/hr extra to spend since Jim left and our branch is doing well this year."

If minimum wage is $7/hr, they hire two. If it's $5/hr they hire 3. If it's $6, they might hire two and spend the extra $3 on Lisa in accounting who's really good but thinking of leaving. Or they could use the extra $3 to get better sackers than they need, or they could spend it in inventory, or the manager could decide to give himself a raise. Or they could hire 3 and give them fewer hours/week effectively cutting their pay.

The bottom line is that the more these workers cost, the fewer job openings there are for them. This is true of all jobs and a basic law of economics. There is no way around this. To deny that increases in minimum wage create unemployment is to deny the basic concept of price. The more it costs, the less you buy. That's about as simple as it gets.

 

[FoolKiller]

How often does deflation happen? Honestly?

In America, almost never. But to create a law based on a current trend and not have a stipulation in the event of a trend reversal is stupid at best. Granted, being government I am expecting a lot of them to prepare for change.

I see minimum wage as having more of an application to big business. Biz owners would pay their workers dirt cheap. They would pay a price at which workers could live, but in the worst conditions. Workers were paid poorly so the business owners could get more profit. In this situation, minimum wage is very useful because the money exists, and in the rich man's hands, it is doing nothing useful. Putting it in the poor man's hands makes life more bearable and can really save lives.

1) Why does government have a right to tell a business owner what legal uses they can or cannot find for their profits?

2) If you mandate that a company use some of their profits in some way do you really expect them to not find some other way to keep their profits higher?

But if you hire two sackers for $5 each, then you would need two sackers. You would then also hire two for $16 total if there was a min. wage. The costco theory of paying less per unit the more you buy doesn't really translate here.

Then please explain why places such as Wal*Mart (and they aren't the only ones to do this) will have excessively long check-out lines and only 5 cashiers when they have 25 cash registers? If they had 10 cashiers then thinsg would move more quickly, they could process more customers, and some customers wouldn't leave their cart and walk out.

It is because, even though they lost 1% of their customers for that day, they had higher profits because they had to pay less. Were they allowed to pay their employees less they could afford to bring in more cashiers, thus creating more jobs.

EDIT: How about it this way: Would a business rather have one worker for $8 per hour, or two for $10 total per hour if that business only needs one more worker?

You forgot one in this scenario. If they can have two for $10, that means they can hire just the one they need for $5. That is the one they want. Then when business grows they have room to hire another employee, but if they only have one for $8 and a budget of $10 it will be more profitable to run understaffed until they grow enough to increase their budget without hurting their profit.

Your problem with this scenario is that you earlier said minimum wage applies more to big business, but you just used a small business scenario.

 

[Sureboss]

My guess is that you're thinking the NHS just needs a little more tax money and it'll be in good shape. Meanwhile the pensioners are freezing to death through no fault of their own. It's not like they should have thought ahead to retirement when considering how much money they needed.

You can't possibly predict the cost of fuel bills and the like in 20 odd years, plus some people don't have enough money to put away for retirement anyway.

As for the NHS, well it needs for more money being put into it anyway, but more essential is getting people who can implement it better. My local hospital is probably going to close for both of the reasons mentioned and it'll leave a huge gap and leave the largest population of over 85s in Europe (probably the world too) without a hospital. The NHS is being run on too tight a budget, drugs should be administered because they are the most effective not because they are 4 times cheaper than a drug which works the best. (Take Herceptin for example).

 

[Danoff]

You can't possibly predict the cost of fuel bills and the like in 20 odd years, plus some people don't have enough money to put away for retirement anyway.

Then they can't retire.

As for the NHS, well it needs for more money being put into it anyway, but more essential is getting people who can implement it better. My local hospital is probably going to close for both of the reasons mentioned and it'll leave a huge gap and leave the largest population of over 85s in Europe (probably the world too) without a hospital. The NHS is being run on too tight a budget, drugs should be administered because they are the most effective not because they are 4 times cheaper than a drug which works the best. (Take Herceptin for example).

Sorry this is too funny. Let me see what it is you want:

- More efficiency
- Larger budget
- Disregard for cost

Numbers 2 and 3 are completely inconsistent with number 1. You gotta love the thinking here. They're doing a bad job, so give them more money. Then expect them to be more efficient when you give them more money (oh, and start doing a good job now that you've been rewarded for doing a bad one), then expect them to disregard cost completely while being efficient.

The biggest problem when dealing with health care (and there is a thread for this discussion), is that people tend to want to remove a critical part of economics when having the discussion. People never want cost to be considered, they just figure "it's worth it, no matter the cost". Obviously everyone thinks "life is more important than money", and to a certain extent they're right. But anytime you take the money equation out of a service industry, you're headed for bankruptcy, no matter how big the budget is. The amount of money you can spend on health care for each and every patient is infinite. Seriously, you could expect you patients to come in for an MRI, blood tests, and a host of other tests every other month - and that's just when they're healthy. There is always a more expensive machine, or a more expensive treatment, or a host of researchers willing to work for years on a better cure.

Fundamentally speaking you cannot remove cost from health care. I know it's hard to hear. The best person to decide what is worth it is the patient, not the general public. Only the patient himself can put a dollar number of pain or health. And make no mistake, a dollar number must be placed.

Ok sorry for the rant. It does count as off-topic for the most part. Still, it's rooted in an understanding of economics (price, supply, demand), and that's very central to the discussion of minimum wage.

 

[Swift]

Here's a question:
Is there anyone in this conversation attempting to support a family on minimum wage?

 

[Duke]

EDIT: How about it this way: Would a business rather have one worker for $8 per hour, or two for $10 total per hour if that business only needs one more worker?

This is totally inrrelevant to minimum wage. If a business only needs 1 worker then they are only going to hire 1 worker, even if they can afford 2. I'm tempted to say "duh".

What danoff is saying is this: Assume you have a healthy business that needs workers, and you have $10/hr for a payroll budget. For this argument, minimum wage is $8/hr.

Are your paid wages better serving your business (and the economy) as $8/hr to ONE worker, or $5/hr EACH to TWO workers?

Here's a question:
Is there anyone in this conversation attempting to support a family on minimum wage?

No. I realized when I was in 8th grade that I would need more money than a laborer makes to support a family. So I finished high school, and then (using a combination of money from parents, grants, loans, and own savings) I went to college and got trained in a professional field.

 

[FoolKiller]

No. I realized when I was in 8th grade that I would need more money than a laborer makes to support a family. So I finished high school, and then (using a combination of money from parents, grants, loans, and own savings) I went to college and got trained in a professional field.

But what about the American dream of debt, welfare, and Social Security?

 

[Swift]

No. I realized when I was in 8th grade that I would need more money than a laborer makes to support a family. So I finished high school, and then (using a combination of money from parents, grants, loans, and own savings) I went to college and got trained in a professional field.

OH!!! so that's how you can afford to support a lovely wife, two daughters(I can only imagine ) and STILL have money left for a BMW 325i. Ok, my fault. I kept thinking that if I work a 7$ an hour job long enough I could do all those things. Thanks for clearing that up.

 

[Omnis]

Not sure what you mean by that, Omins. you being sarcastic or what?

No, I wasn't. I added the Get Money just for the hell of it, though. Bad left-like decisions (not saying all are bad) can be easily avoided with the right planning and action. I'm just saying that I'm glad people are supporting that corresponding side.

 

[Sureboss]

Then they can't retire.



Sorry this is too funny. Let me see what it is you want:

- More efficiency
- Larger budget
- Disregard for cost

Numbers 2 and 3 are completely inconsistent with number 1. You gotta love the thinking here. They're doing a bad job, so give them more money. Then expect them to be more efficient when you give them more money (oh, and start doing a good job now that you've been rewarded for doing a bad one), then expect them to disregard cost completely while being efficient.

The biggest problem when dealing with health care (and there is a thread for this discussion), is that people tend to want to remove a critical part of economics when having the discussion. People never want cost to be considered, they just figure "it's worth it, no matter the cost". Obviously everyone thinks "life is more important than money", and to a certain extent they're right. But anytime you take the money equation out of a service industry, you're headed for bankruptcy, no matter how big the budget is. The amount of money you can spend on health care for each and every patient is infinite. Seriously, you could expect you patients to come in for an MRI, blood tests, and a host of other tests every other month - and that's just when they're healthy. There is always a more expensive machine, or a more expensive treatment, or a host of researchers willing to work for years on a better cure.

Fundamentally speaking you cannot remove cost from health care. I know it's hard to hear. The best person to decide what is worth it is the patient, not the general public. Only the patient himself can put a dollar number of pain or health. And make no mistake, a dollar number must be placed.

Ok sorry for the rant. It does count as off-topic for the most part. Still, it's rooted in an understanding of economics (price, supply, demand), and that's very central to the discussion of minimum wage.

We can all dream though can't we?

It would be 'ideal' for it to be non-money orientated, but you're right it's not possible.

I wasn't thinking of keeping the same idiots in control with the bigger budgets btw.

 

[Duke]

OH!!! so that's how you can afford to support a lovely wife...

...who also went to college and works full time. 👍 We'd be OK on my salary alone, but things would not be as fluffy as they are now (and I don't consider us that fluffy in the grand scheme of things).

 

[Swift]

...who also went to college and works full time. 👍 We'd be OK on my salary alone, but things would not be as fluffy as they are now (and I don't consider us that fluffy in the grand scheme of things).

Nice to have that option though huh? I mean, with education and effort put into your future versus a long career as a floor sweeper.

 

[Zrow]

Devil's advocate: what people that don't have the means or ability to attain scholarships and can't afford to pay for college? Or, people growing up in conditions where college isn't even really on the radar (i.e. low low income areas, gang-ridden neighborhoods, etc)?

Swift (and Duke too, actually) - think inner-city Baltimore, or even parts of Edgewood.

 

[Swift]

Devil's advocate: what people that don't have the means or ability to attain scholarships and can't afford to pay for college? Or, people growing up in conditions where college isn't even really on the radar (i.e. low low income areas, gang-ridden neighborhoods, etc)?

Swift (and Duke too, actually) - think inner-city Baltimore, or even parts of Edgewood.

If you want to bad enough you can. Inner city youth are prime people to get government scholarships. Why would they have financial problems? They could easily get community college paid for and earn scholarships for a 4 year degree. It's the middle class people that have the problem getting money for school.

 

[Danoff]

Devil's advocate: what people that don't have the means or ability to attain scholarships and can't afford to pay for college? Or, people growing up in conditions where college isn't even really on the radar (i.e. low low income areas, gang-ridden neighborhoods, etc)?

Swift (and Duke too, actually) - think inner-city Baltimore, or even parts of Edgewood.

Minimum wage is hardest on these people, because it reduces the number of jobs available to them.

 

[FoolKiller]

If you want to bad enough you can. Inner city youth are prime people to get government scholarships. Why would they have financial problems? They could easily get community college paid for and earn scholarships for a 4 year degree. It's the middle class people that have the problem getting money for school.

Yeah, I clearly remember going to get scholarship information, hearing about how there are thousands of them out there willing to give people money for college, but after I got the white, middle-class, rural male package it was basically a federal academic scholarship, a state academic scholarship, academic scholarships from local businesses, and academic scholarships from the multiple schools I was looking at.

Honestly, what you qualify for is determined from the moment you are born and the more "average" you are the less you get.


Besides, there are too many true story inspirational books and movies about people who fought their way to get out of bad situations for me to think it just can't happen.

 

[Swift]

Honestly, what you qualify for is determined from the moment you are born and the more "average" you are the less you get.

And that's the problem. I believe that qualifications for government scholarships should be solely on performance. You can't control who your parents were, what color you are and in most cases where you live(when you're a teenager). So why should you get rewarded for those things?

And of course, that's the problem with the thinking behind minimum wage(well part of the problem). Let's give people that don't make effort MORE for doing the same amount of work. DUH!!!

 

[Duke]

Devil's advocate: what people that don't have the means or ability to attain scholarships and can't afford to pay for college? Or, people growing up in conditions where college isn't even really on the radar (i.e. low low income areas, gang-ridden neighborhoods, etc)?

Swift (and Duke too, actually) - think inner-city Baltimore, or even parts of Edgewood.

I hear your "devil's advocate" qualification, but frankly, anybody with a GED can get into community college for a 2-year degree in something employable. Community college is not that expensive and tons of grants abound for exactly this type of person. And anybody who's breathing and goes to class can graduate high school, for free, under almost any conditions... if they don't give in to the seduction of dropping out and joining the street life.

It's a very tough situation, and I see plenty of kids whose parents didn't value education who have learned that education is worthless. But the cycle is really not that hard to break, in small steps. It's mostly a matter of inertia that just slows each successive generation down a little further.

 

[Zrow]

I agree with what you're saying, and I know that if you want it, no matter where you're coming from, it can be done.

It's the wanting it part that's the problem for a lot of them, though - I mean you have to be interested in the first place. It just feels like a vicious cycle when the parents grew up a certain way, and have kids who grow up with the same way with the same street mentality, lack of interest in any education (much less higher education) and have no real parental guidence to offer support. Then they, of course, have kids who grow up in the same environment.

I guess there isn't really any solution to it other than try to educate the kids on the value of education, though. Especially at a school like where I went (Edgewood High) where a lot of kids are like I described before - they should be really emphasizing this point, driving it home the whole time, and for the most part they're not. Even if they did, it's their peers are who hold the most power to influence their decisions, not teachers.

 

[FoolKiller]

II guess there isn't really any solution to it other than try to educate the kids on the value of education, though. Especially at a school like where I went (Edgewood High) where a lot of kids are like I described before - they should be really emphasizing this point, driving it home the whole time, and for the most part they're not. Even if they did, it's their peers are who hold the most power to influence their decisions, not teachers.

Right, but when you also have your Jessie Jacksons and Al Sharptons telling them they can't do it because teh man is holding them down and making Uncle Tom comments at people who do make it then the message gets mixed.

Also, having a teacher, who they have decided to not like long ago, tell them to do something is pointless when they see rich rap stars glorifying street life as if that is a step on the way to being a superstar.

We need to find role models that these kids will want to be like, but that didn't get there by rapping their way out of a gang.

 

[///M-Spec]

Devil's advocate: what people that don't have the means or ability to attain scholarships and can't afford to pay for college? Or, people growing up in conditions where college isn't even really on the radar (i.e. low low income areas, gang-ridden neighborhoods, etc)?

And I would submit that not having a college diploma is not an insurmountable barrier to making a decent living. As I shared in the "5 things" thread, I don't even have a highschool diploma (I have a GED.. long story that I won't bore you all with) and I manage to live 'okay'.

Sure, 10-12 years ago after I dropped out of school, I lived paycheck to paycheck and ate ramen noodles for dinner twice a week. But my girlfriend and I lived in a fairly nice apartment in a good part of town, had not nice, but decent cars and could afford to eat out once in a while. All I did was work hard, seized opportunities, make semi-smart decisions and leveraged what (meager) natural talents I had.

It took me 4 years to move from hauling and installing CAT5 cable around offices (which barely paided $7 an hour) to being responsible for the IT network infrastructure at a local newspaper (as LAN admin) and honestly I'm not even particularly smart, motivated or talented. I even managed to overcome near bankruptcy several years later (dotcom bust), then make middle management (without a degree in ANYTHING) while having a kid. So I guess I'm living proof that even an uneducated, lazy slacker can make a decent living in this country so long as you get up every morning and at least try.


M

 

[FoolKiller]

And I would submit that not having a college diploma is not an insurmountable barrier to making a decent living. As I shared in the "5 things" thread, I don't even have a highschool diploma (I have a GED.. long story that I won't bore you all with) and I manage to live 'okay'.

Sure, 10-12 years ago after I dropped out of school, I lived paycheck to paycheck and ate ramen noodles for dinner twice a week. But my girlfriend and I lived in a fairly nice apartment in a good part of town, had not nice, but decent cars and could afford to eat out once in a while. All I did was work hard, seized opportunities, make semi-smart decisions and leveraged what (meager) natural talents I had.

It took me 4 years to move from hauling and installing CAT5 cable around offices (which barely paided $7 an hour) to being responsible for the IT network infrastructure at a local newspaper (as LAN admin) and honestly I'm not even particularly smart, motivated or talented. I even managed to overcome near bankruptcy several years later (dotcom bust), then make middle management (without a degree in ANYTHING) while having a kid. So I guess I'm living proof that even an uneducated, lazy slacker can make a decent living in this country so long as you get up every morning and at least try.


M

Thank you for sharing that. And based on that I don't know if I would call you a lazy slacker, simply based on the fact that you did enough to work your way up.

The key to your story that differs from the people I know who can't seem to hold down a job long enough to get above minimum, from my experience, is that you were willing to do the grunt work before and work up to management-type positions. Every person I know that has trouble holding down a job or just doesn't have one thinks that they should go straight into management and even if they start out low they give it two weeks to see if they get promoted and then quit.

My dad got through high school and immediately went to work in a factory. When they offered machinist classes he signed up and by the time he retired he was as high in the maintenance department as he could get without leaving the union (union man til the day he dies ). My mom's family never liked him because he was "uneducated" but the kicker is that he was making more money than every college educated member of my mom's family, including my uncle who owns his own engineering and inspection company.

The "what about people who can't go to college argument" just can't hold water. If you work hard and try you can get along without a college degree, you just have to start out making les.

 

[///M-Spec]

Thank you for sharing that. And based on that I don't know if I would call you a lazy slacker, simply based on the fact that you did enough to work your way up.

Thanks for giving me the benefit of the doubt but looking back, if I were truly smart and motivated, I would have stayed in school Perhaps if I did, I might be driving a 997 now instead of 'just' a 330i.


M

 

[Mark T]

I went to sixth from college until I was 18, studied Advanced I.T, media studies and English language. The only subject that really helped me was English language.

I was working during my college days in a supermarket earning £2.30 an hour. I started on about 12 hours per week eventually I was working about 40 hours per week and doing college. I'm not particularly intelligent, my grades were average.

My first real job was in estate agency (real estate) I did this for two years as a negotiator. I worked hard did everything I was told to do and kept my head down. I then got offered a job managing a small office which is where I currently I am. The wage I'm on now is way above any of my friends as there all still working in supermarkets and some are still at University.

If you work hard for long enough employers will recognise you. They may take advantage of your "willing" nature aswell. Experience is the critical factor when employers are looking for someone.

 

[Duke]

Thanks for giving me the benefit of the doubt but looking back, if I were truly smart and motivated, I would have stayed in school Perhaps if I did, I might be driving a 997 now instead of 'just' a 330i.

...that you bought NEW, unlike my USED 325i. And me with 7 - count 'em, 7 - years of college in the bag.

 

[Danoff]

It's great that America is the most upwardly mobile country in the world, that here the poor have the best opportunity to make something of themselves, that in this country people can overcome their parents' failures...

But the minimum wage doesn't help them do that, it's a road block. Minimum wage doesn't actually help anyone, except politicians, who it helps get elected.

 

[///M-Spec]

^^^

Couldn't argue with that even if I wanted to.

...that you bought NEW, unlike my USED 325i. And me with 7 - count 'em, 7 - years of college in the bag.

Well that may be more reflective of me being a little more extravagant with my auto hobby than anything else. Some people ski, boat, gamble, do drugs or whatever-- I like to eat, drink and drive cars. Based on your posts in the old personal finance thread, you sound more fiscally conservative than most people. You have real assets and I bet you could swing a 5er if that's what you really wanted.

...and I know deep in your heart of hearts, a 5er is really what you want, Duke. A nice brand spankin new E60.. ..with a signed plaque from Chris Bangle mounted on the dash.


M

 

[Touring Mars]

I had an interesting debate with a workmate of mine today, and for once I found myself on the opposite side of the libertarian argument than I am used to being on. His argument was this: that too small a number of people have too much of the money, and that they use that money to influence government and 'control' the rest of us, hence a) their wealth should be 'redistributed' and b) that salary caps should be introduced i.e. no-one should be allowed to earn more than say £1 million a year, or no-one should be allowed to earn more than 100 times the wage of the average employee, or that the government should impose severe taxes on any income over a certain level e.g. a million.

My counter-arguments were these: regarding a), that would involve theft and is therefore immoral, and b) that a wage cap is unjust because no-one has the right to determine what I can negotiate with a potential employer. This then led to the example that the government already do interfere with this step in the form of the minimum wage, and hence a corresponding maximum wage cap should be similarly justified, although I didn't accept this...

My opponent also countered my points by arguing that the government (and free markets) ought to be concerned with 'making the most amount of people happy as possible' (i.e. opposite to the fact that a small fraction of people enjoy the majority of the wealth, as created by the existing free market economy) and minimising the gap between rich and poor (citing the idea that the smaller this gap, the happier a populace generally is... although presumably only in rich countries). I argued that the percentage of people claiming to be 'happy' is irrelevant, and that the issue was about my right to be able to exchange my knowledge and labour for whatever anyone is willing to pay me for it...

So although it's slightly off-topic, how would you summarise your positions on the possibility of a maximum wage?

 

[TheCracker]

I can't see how a maximum wage could ever be enforced as high-earners wages are generally ramped up from bonuses. Even it was, i'm sure loop-holes would be found in legislation where employee's benefits-in-kind would make up any short-fall. Just as it's done now to fudge tax-bracketing.

You could argue that it's unethical to have some people in a company earning millions whilst many in the same company are on minimum wage. But by the same stroke, it's equally unethical to limit what those at the top are allowed to earn.

On a grander national level it's maybe a bit short sighted to have such a huge imbalance between wealth distribution, not through any ethical arguments, but through simple economic logic. A huge proportion of people scratching around to make a living isn't going to benefit your economy much. If they have no money to spend your economy is going to suffer. The sale of luxury goods to the few isn't going to drive any economy.