Minimum wage, where did the Government mess it up?

[Jimbo]

<< There's another interesting facet of minimum wage that nobody discusses: increasing the minimum wage decreases the number of people employed (or at least, makes it lower than what it would have been had there been no increase). >>


That's not really a valid argument. Raises in minimum wage does force certain industries to become more efficient by shedding labor that can be replaced with automation. You also get much more bang per buck within an economy through wage increases rather through corporate profit investing by about a 3-1 ratio.

Good Dept. of Labor Info.

Generally I?m a real hard core conservative except in this case. My personal opinion is that the minimum wage should be $9.00/ Hr. with an additional offset of ANOTHER $2.50/HR if the employer does not provide health benefits.

Go ahead and flame away. Call me a commie.

 

[AU Tiger]

Government messed up by leading people to beleive minimum wage should support a family. This would mean every worker at the local grocery store and McDonalds would be making $12+ a hour based on an average annual income of $25,000. That $1.99 Happy Meal would be $3.99. Everything would be more expensive. That same minimum wage worker would need even more money to afford to feed their family. The price of foreign labor would destroy many industries here in America leaving more people unemployed. I don't see how a higher minimum wage would be a good thing.

There are those people who believe they are entitled to all things in life and then there are those who work their asses off to ensure they get the things they want/need.

 

[dleiss]

Wanting a living wage makes me a commie???? You must be rich or stupid.

There are many cities and counties that have raised the minimum wage
because they are tired of having the families of the working poor live
in the parks.

If a business cannot pay a living wage than they do not need to be
in business.

 

[drewshin]

not quite sure where you're going with this.... the middle class makes more than minimum wage.

gopunk, i think he was referring to the fact that reagan caused a lot of people that were in the middle class to slip into the lower classes because of his minimum wage policies. families that were comfortable with their minimum wage salary, suddenly found that prices of everything had increased and their income was still the same, thus moving them down.


jimbo's link shows this in the 1980's. the 2000 dollar value of the minimum wage reached a high of $7.00 in 1978, but reagan never increased it the whole time he was in office, so by 1989, it had gone down to $4.65.

 

[Jimbo]

<< That $1.99 Happy Meal would be $3.99. Everything would be more expensive. >>

Not even close. That would assume that the number of employees stayed constant and that each employee only produced an aggrate average of 1 happy meal per hour. It may make a .25 cent difference but you also have a greater customer base buying more happy meals that give you a higher gross dollar sales.

 

[drewshin]

autiger,

as you said though, a lot of minimum wage jobs are in fast-food/restaurant type positions. i dont think we'll be losing those jobs to foreign labor anytime soon. a lot of the industry type jobs that pay min wage are already gone, like garments, etc.

i agree with you though about the government thinking that the min wage should support a family in all cases. maybe we should have a separate min wage for anyone under the age of 18, and a higher one for anyone over.

 

[dullard]

<< you win a nobel prize in my eyes >>


Thanks.



<< would be making $12+ a hour based on an average annual income of $25,000. That $1.99 Happy Meal would be $3.99. Everything would be more expensive. That same minimum wage worker would need even more money to afford to feed their family. >>



You are partially correct, as labor costs increase, costs of goods and services have a tendancy to increase. If starting today everyone doubled their salaries, and every good/service doubled in price then nothing has changed (assuming savings and debt also doubled but lets keep things simple). The extra amount earned is perfectly offset by doubled costs. This type of situation was shown in your post by doubling the minimum wage to $12 and doubling the Happy Meal price. However you made one major mistake often made by anti-minimum wage opponents: doubling the labor cost doesn't double the overall cost of a good.

One way to look at the cost of an item is like this:
cost = (labor) + (fixed costs) + (raw material costs) + (variable cost) + (profit)
I'll use made up numbers for a happy meal:
labor = $0.50
restaurant and other fixed costs = $.05
hamburger, bread, toppings, pop, paper = $1
electricity and other variable costs = $.05
profit = $.39
Total cost for a happy meal = $1.99.

Now lets double the minimum wage and thus labor costs to $1. Now the price of a happy meal is $2.49.

Do you see my point, the poor will earn double while in my made up example the cost of goods and services only increased by 25%. Thus the poor people are better off.

 

[308nato]

<< Wanting a living wage makes me a commie???? You must be rich or stupid.

There are many cities and counties that have raised the minimum wage
because they are tired of having the families of the working poor live
in the parks.

If a business cannot pay a living wage than they do not need to be
in business. >>



No. Wanting to make a living wage doesn't make you a commie. Expecting the government to pick up the tab for your slacking does.

 

[Zenmervolt]

<<Wanting a living wage makes me a commie???? You must be rich or stupid.>>

No, wanting a living wage does not make you a commie per se. Claiming that social security recipients eat dog food and that Reagan wanted to destroy the middle class, however, does mark you as sharing all of the platform views of the commies here on campus. If it walks like a duck, looks like a duck, and quacks like a duck...

I am against a government mandated minimum wage simply because there are some industries in which productive input is necessary but is not worth $9.00 per hour. In such cases a higher minumum wage is simply creating a welfare state by another name. I think that the market should determine pay rates. If someone can't make enough money, then he should better himself and learn the skills necessary to raise his value as an employee. I do not support any measure which raises the reward for sub-par workers. I don't give a damn if the guy has a family to support, he should be paid what his input is worth, not what he needs to get by. The value of the productive input should determine the amount of compensation, not the needs of the worker.

For the record, I'm far from stupid (with the SAT's, ACT's, and GPA to prove such), and far from rich. I am, however on a merit scholarship to college because I worked my ass off. People who are not willing to work to better themselves do not deserve advantages in life.

ZV

 

[dullard]

<< In such cases a higher minumum wage is simply creating a welfare state by another name. >>


That is the point of a minimum wage - someone working full time should never need welfare. As it currently stands, about 90% of families on welfare have at least one family member working full time. These people don't make enough so the government must pick up the slack. A living wage means those 90% of families are OFF government welfare. Government will no longer pick up the slack as businesses will pay instead. With 90% less welfare, government can give all that money to business as tax breaks (thus it helps offset the higher labor costs).

A higher minimum wage almost eliminates governmental welfare and reduces business taxes. This in effect makes businesses the new welfare.

 

[Zenmervolt]

<<This in effect makes businesses the new welfare.>>

Exactly. Any welfare is too much. A person is responsible for himself. Neither his neighbor, his government, nor business should take care of him.

<<Government will no longer pick up the slack as businesses will pay instead.>>

Great, so the people who are slacking off still don't feel any repercussions from their own failings. Wonderful lesson. Why not just come out and say that no-one should be responsible for his own screw-ups? The point is that no-one should be picking up any slack.

ZV

EDIT: Fixed italics.

 

[MajesticMoose]

<< If they paid $4000 for a car in 1970 that same style car would not be $40,000 today >>


Without saying anything about the other points, this is not true. My dad's 1970 corvette stingray was ~4500 when he bought it. You would easily pay more that 45,000 for one now. I'm not sure about other cars, but i imagine that they have undergone similar changes

 

[Arschloch]

dullard,

While I agree with your description of how a 2X increase in labor costs will not cause Happy Meals to cost twice as much, that still isn't enough information to say, "Therefore, increasing the minimum wage will be a Good Thing."

First of all, my perception is that the percentage of people making minimum wage is fairly small. That could be incorrect -- but that's just my perception. The Wendy's near me is hiring at $8 to start! So, it's even unclear how much raising minimum wage would affect the economy.

But let's say, for example, that everyone that works at McDonalds makes minimum wage. Using your example, if labor costs double, then the employees of McDonalds are making more money, and the cost of a Happy Meal increases by 50 cents. However, the salaries of those people who do NOT work at McDonalds does NOT increase. They now have the same amount of money to spend on more costly goods. As a result, those employees at McDonalds (and the other small percentage of people making minimum wage) are making more money, but the rest of the country is WORSE off. Unless 50%+ of the people in the country are currently making minimum wage, the economy as a whole will be hurt.

Finally, something should be said about demand curves (everyone who doesn't give a lick about economics, stop reading here). If the elasticity of demand for Happy Meals is high (that is, the demand curve slopes downward steeply), that extra 50 cents (~ 25% of the original cost) will cause a large drop in demand for Happy Meals. Given that fast food has many good substitutes, I think a high elasticity is a fair assumption. That being the case, McDonalds will likely lose money in the long run, unless the people making minimum wage now spend a huge amount of money at McDonalds.

 

[mithrandir2001]

I'd like to remove the minimum wage requirement all together. Obviously, it allows some people to get paid more than they should, but it creates distortion side-effects such as higher goods and services prices for all and artificially high unemployment for the least skilled members of society. Even worse are the cries for a living wage. I don't believe that simple employment should guarantee someone a certain standard of living. A living wage is a slap in the face for those of us who actually worked and took risks to get where we are now. Nobody should be entitled to a free ride.

Removing the minimum wage requirement may indeed lower the going market wage for certain jobs, but this should provide an incentive for these workers to aim for something higher, if they want more money. But the more disadvantaged segments of our population have been told by the class warriors that their plight is none of their own fault, but the fault of the middle and affluent classes.

Perhaps they could add the requirement of a high school diploma or GED to qualify for the minimum wage. If people refuse the education that society is willing to provide, then society shouldn't have to pay for the unmarketability of certain individuals. Individual responsibility.

 

[Moonbeam]

We should either do away with minimum wage laws, or change the anticompetitive laws that necessitate them. The people who already got theirs fix the laws to prevent the poor from taking the hard working inititive they would otherwise spontaneously resort to to better their condition. Islam, for example, calls the empty bellies of the poor the sword of God. Nothing can stand before the sword of God.

If the poor were given back the right to take what they want by force, we could do away with minimum wage. Naturally all the hard working dedicated wage slaves who have prostituted their lives to developing competative skills within a legal framework would scream bloddy murder when faced with the actual superiority of those with true gift, the power to take what they want. A return to the law of the jungle would benefit the gene pool, it would reduce overpopulation, and would remind many ivory tower types that there can be more types of terrorism than just economic.

Now since we are all created in the image of God and put on earth for some purpose know to him, we could also begin to see God shining in our neighbors eyes and make sure to his welfare. Alot of God's purposes may not be what we consider to have economic value. A stay at home Mom may be doing God's work bu raising a child with 'heart capacity' a child destined to be the living exemplar of God. So we had better value her work at least at levels that allow her to raise her childern without external work. We don't want only the poor being the only ones with time to have kids. Also, we need to pay dreamers and visionaries and the spriritually gifted minimum wage so they can stop scrambling for something to eat and increase their gifts to us. Finally, we need to educate people to see that all they can ever really call their own is what they can carry between their ears. So we need to identify the wise, listen to them, and emulate them.

 

[Arschloch]

Quoting moonbeam:



<< <snip> >>


Lenin, anyone?

Well, I thought so, until he started talking about God in the last paragraph...

 

[LoTecha]

From an economic perspective, the minimum wage does not benefit the poor as most of you seem to think. It creates excess supply and insufficient demand for labor. In other words, it creates more unemployment and less jobs (although admittedly, those with jobs will get paid more.) Those who were willing to work below the minimum wage now face the possibility of being jobless. In terms of the minimum wage, I say let supply and demand run its course.

 

[Zebo]

<< We should either do away with minimum wage laws, or change the anticompetitive laws that necessitate them. The people who already got theirs fix the laws to prevent the poor from taking the hard working inititive they would otherwise spontaneously resort to to better their condition. Islam, for example, calls the empty bellies of the poor the sword of God. Nothing can stand before the sword of God.

If the poor were given back the right to take what they want by force, we could do away with minimum wage. Naturally all the hard working dedicated wage slaves who have prostituted their lives to developing competative skills within a legal framework would scream bloddy murder when faced with the actual superiority of those with true gift, the power to take what they want. A return to the law of the jungle would benefit the gene pool, it would reduce overpopulation, and would remind many ivory tower types that there can be more types of terrorism than just economic.

Now since we are all created in the image of God and put on earth for some purpose know to him, we could also begin to see God shining in our neighbors eyes and make sure to his welfare. Alot of God's purposes may not be what we consider to have economic value. A stay at home Mom may be doing God's work bu raising a child with 'heart capacity' a child destined to be the living exemplar of God. So we had better value her work at least at levels that allow her to raise her childern without external work. We don't want only the poor being the only ones with time to have kids. Also, we need to pay dreamers and visionaries and the spriritually gifted minimum wage so they can stop scrambling for something to eat and increase their gifts to us. Finally, we need to educate people to see that all they can ever really call their own is what they can carry between their ears. So we need to identify the wise, listen to them, and emulate them. >>



When I read your posts it reminds me when I used to do mushrooms.

 

[FoBoT]

minimum wage laws are evil

they should be unconstitutional, as it interferes with the right to negotiate a contract between private citizens

 

[gopunk]

i am willing to concede that dullard and other may be right, though i still contend the jury is out. HOWEVER... even if you guys are right, and it does not result in signficant increased unemployment, why should companies be forced to pay wages that are higher than what the employee would have accepted? the company has NO obligation to see to it that their employees are happy with their pay, they do not have any obligation to send them on trips to disneyland, nor do they have any obligation to make sure their employees can pay for their stuff.

 

[Freejack2]

Hmm...
Husband and Wife, working minimum wage jobs earning $5.15 an hour, 2 children Mid level expense area.
$5.15 * 80 = $412 - taxes of 20% = $329.60 a week * 4.3 = $1417.28

Monthly expenses
Rent - $500 2 bedroom on bus line
Power bill - $90 (utilities are not cheap here)
Phone - $35
Child care (25hours a month at $6r) - $150
Bus passes x 2 + times taking kids with them - $150 (Source: local public transit)
Groceries - $380 (Eating healthy food, not surviving on ramen noodles)
Medical care (no health insurance, just occasional visits to a doctor) - $80
Clothes - $40 (Salvation army, used, etc)
Supplies - $70 (toiletpaper, bath soap, cleaning materials, lightbulbs, etc)
Laundromat - $25
Misc - $50
----------------------------------------------------------------------------------------------------
$1570

$1417.28 - $1570 = -$152.72 * 12 = $1832.64 a year windfall. Good thing for earned income credits or they would never make it.

This is bare living in a low-mid level expense area. If the family has a medical emergency things could get very bad.
Also in high expense areas (in and around major cities usually) Minimum wage does not work. Costs can be up to double for many things in major cities. I hear in San Francisco a person can pay $1500 a month for a studio apartment. $1000 a month in NYC and $700 month in the surrounding area.

 

[gopunk]

if people don't have the means to make a living in a city, maybe they should move to the country and grow their own food.

 

[FoBoT]

um , Freejack2, people making that low of income do NOT pay 20% taxes, in fact they most likely qualify , with 2 children in your example for the Earned Income Credit, which means not only is their federal tax zero, but they would likely get a couple thousand dollar tax "refund" every year under the EIC program (which is really a welfare program)

so you should knock that 20%, if they live in a state/city with an 8% sales tax, then i think even if they lived in a high state income tax state like new york, 15% would be extremely conservative (high) with 10-12% being more reasonable, although if you offset the sales tax they pay with the EIC money they get, it would probably be even lower like 5% , so i think 10% would be more realistic

poor people don't pay income taxes

 

[777joee]

Long, but if you get this far you should read it!



<< At its creation, the point of making a minimum wage was for a person working full time, could support his entire family, which at the time was considered to be 2 children and a wife. And this worked! A middle aged man making minimum wage working full time could do it!

So what has happened? Because you definetely can't live on one minimum wage worker in a household, and I doubt anyone could do it with both the wife and husband working a minimum wage job.

My only idea was that they have not raised minimum wage with inflation, but instead whenever they feel like it.

Think that is an accurate depiction of what is happening? >>



The problem is this:

"At its creation, the point of making a minimum wage was for a person working full time, could support his entire family, which at the time was considered to be 2 children and a wife. And this worked! A middle aged man making minimum wage working full time could do it!"


That is wrong.

The "Minimum Wage" was set up by the government to make sure employers to pay a "Minimum Wage" set by the government that would be for "all" employers regardless of what market or type of job. It has always been a starting wage and not necessarily a "Living Wage" that would "support a family of four" just how that rumor got started is anyones guess.

Now I will aggree with you that it is closer to poverty than it is to riches but what is the incentive for workers to work if they will be paid sometimes more than they are worth just for what? Good looks? The incentive for the worker is to make him/herself a value to the company that is highly regarded and then paid a compensation that reflects their worth.

When I started working in 1971 at a Chevron Station I started at $1.65 an hour. That was the "mimimum wage" then after 90 days I got a raise to $1.85 an hour. When I graduated HS in 1972 I left that job and got a job cleaning swiming pools for $2.25 an hour (6 days a week avg. 60 hours a week) and thought I was in tall cotton. In 1972 I thought if only I could make $1000.00 a month I would be on easy street, what a laugh. Its 2002 and I gross over 70K + expences (I started with the company 14 years ago at $9.00 an hour) and my wife makes 40K+ (teacher we paid for her college) and we are just barely able to pay tuition for my kids to go to school. Just so they won't have bills to pay once they get out.

It all came from hard WORK, sacrifice and the ability to make myself a value to the company.


Quit crying that you only get "minimum wage" and put forth the effort to make yourself a value to the company and not just "dead weight".

Just my $.02

 

[Arschloch]

On a slightly tangential topic...

For any Europeans out there: What is the minimum wage in your country, and how does that compare to how much one could make in your country if one did not work at all, and merely collected welfare?