Warren Buffett sees a smarter fix for inequality than raising the minimum wage

[Svnla]

I agree with him about workers with bare minimum skill set.

“I may wish to have all jobs pay at least $15 an hour,” Buffett wrote. "But that minimum would almost certainly reduce employment in a major way, crushing many workers possessing only basic skills."

Buffett instead has promoted what he sees as a better answer: an expansion of the Earned Income Tax Credit (EITC), which currently goes to millions of low-income workers.

http://finance.yahoo.com/news/warre...-just-raising-the-minimum-wage-122322575.html


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[fskimospy]

I agree with him about workers with bare minimum skill set.

http://finance.yahoo.com/news/warre...-just-raising-the-minimum-wage-122322575.html
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It is better to increase the EITC and the minimum wage. If you only increase EITC then you are basically having minimum wage paying business owners offloading their labor costs to the government. It's better to spread the cost and have taxpayers pick up some and business owners pick up some. If you don't do that you create perverse incentives.

 

[3chordcharlie]

It is better to increase the EITC and the minimum wage. If you only increase EITC then you are basically having minimum wage paying business owners offloading their labor costs to the government. It's better to spread the cost and have taxpayers pick up some and business owners pick up some. If you don't do that you create perverse incentives.

These are massively under-estimated. Market-focused folks like Buffett are big on the market-distorting effects of minimum-wage, but much less aware of the 'traps' set in certain social programs.

That old story about declining a raise because you would have made less after taxes is a myth when you only consider income and taxes. Unfortunately, for many who are on social assistance, subsidized rent or child care, and other programs, marginal tax rates for working harder/longer or getting a raise can actually exceed 100%.

This isn't a sob story, it's a reality check. Enhanced EITC is one way to provide support on the way up, since no one can really support themselves at/near minimum wage.

 

[Conroe]

Or raise the minimum and eliminate the IETC. Simplify the whole tax code. No matter what is done someone will be upset. It would be nice if working harder just payed more. But the more some people make the less assistance they will receive and the less they will take home. It's just a stupid policy. It keeps the very ones it supposed to help down.

 

[3chordcharlie]

Or raise the minimum and eliminate the IETC. Simplify the whole tax code. No matter what is done someone will be upset. It would be nice if working harder just payed more. But the more some people make the less assistance they will receive and the less they will take home. It's just a stupid policy. It keeps the very ones it supposed to help down.

No, because it's true that simply raising the minimum wage to 'living wage' is self-defeating. There is a whole segment of the labor market that needs these jobs. The best way to have low-income/low-skilled people pay as much of their own way as possible is with a nuanced, combined approach. It just also needs to be cohesive so there are fewer cracks to fall into.

Part of any sane EITC or other income-targeted program has to make sure that working actually pays.

This could take the form of minimum-income, with higher marginal taxes but that has it's own set of potential issues, too.

 

[Conroe]

I see no reason why a able bodied person should not be able make a living. Keep the government's tits out of the way. It's hand's are in the way of too many things raising up costs. Government is bleeding us too dry.

 

[3chordcharlie]

I see no reason why a able bodied person should not be able make a living. Keep the government's tits out of the way.

You're just applying an ideology, everyone else in the thread is talking about economics and the actual real world.

 

[MajinCry]

I see no reason why a able bodied person should not be able make a living. Keep the government's tits out of the way. It's hand's are in the way of too many things raising up costs. Government is bleeding us too dry.

Uh. If corporations could, they'd be paying slave-wages (I.E, Taiwan, Thailand, China, etc.). It's thanks to the Government that you can even afford to eat sometimes when you're on minimum wage.

Aren't there loads of people that earn less than $1 a day? Corporations would fuckin' love to pay westerners $1 a day; no skin of their backs, and profits go up.

Evidenced by the whole "if minimum wage goes up, employment goes down" scenario; if paying people enough to actually live and feed their kids gets corporations all antagonistic, the opposite makes them ejaculate profusely.

 

[tynopik]

It's thanks to the Government that you can even afford to eat sometimes when you're on minimum wage. . . . Corporations would fuckin' love to pay westerners $1 a day; no skin of their backs, and profits go up.

You think government regulation is the only thing keeping corporations in the US from dropping wages to $1/day?

 

[MajinCry]

You think government regulation is the only thing keeping corporations in the US from dropping wages to $1/day?

Ya can bet your sweet, juicy ol' humdinger that corporations would shaft yer if they could, honey.

 

[Cozarkian]

I see no reason why a able bodied person should not be able make a living. Keep the government's tits out of the way. It's hand's are in the way of too many things raising up costs. Government is bleeding us too dry.

There is also no reason why every single job in existence should be intended to provide a career-path for a livable wage.

At my first retail job we knew exactly how much our store made in comparison to the other branches in the same region. If they had to pay and the other sales associates a livable minimum wage, that store would either have gone out of business or gotten really expensive, which would have made my life worse, because it was just a summer job for me, but my parents would have paid higher prices all year round, reducing our family's standard of living, which was not a high standard, given that my parents both worked for the school district.

There are some jobs that should be available for high school students to gain experience, as supplemental income for people willing to work a second job, for spouses who want to fill their time with a paying job even though their spouse makes enough for a living, or for retired people who want supplemental income (Wal-Mart really doesn't need greeters and wouldn't pay them $15 minimum wage).

 

[Cr0nJ0b]

Does Raising the minimum wage always result in a corresponding reduction in employment?

 

[ivwshane]

Does Raising the minimum wage always result in a corresponding reduction in employment?

No.

 

[werepossum]

I agree with him about workers with bare minimum skill set.

http://finance.yahoo.com/news/warre...-just-raising-the-minimum-wage-122322575.html

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Then we'll have to raise taxes. Government can't give away anything, either directly or indirectly, without first taking it away from someone else.

There is also no reason why every single job in existence should be intended to provide a career-path for a livable wage.

At my first retail job we knew exactly how much our store made in comparison to the other branches in the same region. If they had to pay and the other sales associates a livable minimum wage, that store would either have gone out of business or gotten really expensive, which would have made my life worse, because it was just a summer job for me, but my parents would have paid higher prices all year round, reducing our family's standard of living, which was not a high standard, given that my parents both worked for the school district.

There are some jobs that should be available for high school students to gain experience, as supplemental income for people willing to work a second job, for spouses who want to fill their time with a paying job even though their spouse makes enough for a living, or for retired people who want supplemental income (Wal-Mart really doesn't need greeters and wouldn't pay them $15 minimum wage).

They aren't really greeters, they are don't-carry-out-our-shit-without-paying'ers. Even Cosco, which doesn't even give you bags for your groceries, has don't-carry-out-our-shit-without-paying'ers.

Does Raising the minimum wage always result in a corresponding reduction in employment?

In theory, yes. In practice, not necessarily significantly. If the economy is good, businesses may have enough profit and consumers enough spendable income to take the hit. And that additional money paid out is also going back into the economy, so that while some jobs are no longer feasible and must go away, other businesses have a new need for more labor for the additional demand. And in any case, it's temporary; the economy always adjusts to the new level, just not necessarily in the same mix of jobs and businesses.

 

[Strk]

So the fix is to subsidize profitable companies more? Yeah, great idea....

 

[HamburgerBoy]

Ya can bet your sweet, juicy ol' humdinger that corporations would shaft yer if they could, honey.

So why don't virtually all jobs pay minimum wage in the United States? I mean, last I checked there was no law saying that engineers must be paid significantly higher than the average fry cook.

 

[sportage]

Oh come on now...
The minimum wage has not increased for years. Not for a very long time.
$7.25 for a minimum wage in these days is totally ridiculous.
If the wage were increased, business would not close up, they'd just have to re-evaluate greed, and wake up to reality.
Instead of business diversified by owning and investing in non-related ventures, maybe its high time business diversified in their own employees.
McDonalds could do it. Wal-Mart could do it. They all could do it.
When you hear of some corporation buying out another corporation for 50 billion dollars, or Version buying out a competitor for billions, you know they have the funds to do $15 if they really wanted to. Or if they truly valued their employees as much as they value diversifying.

Asking for a $15 minimum wage should not be considered as outrageous.
The fact that the minimum wage is still at $7.25 and has been for so many long years should be the outrage.
Everything has gone up.
The cost of utilities have gone up, food prices have gone up, it even costs more to take a cab than it did twenty years ago.
And the cost of buying or renting a roof over your head has gone up.
The only thing business feels does not warrant an increase are wages paid to their employees.

We all know how it works.
You get a raise once a year on your employment anniversary date, then January rolls around and the cost of company benefits go up.
And the sad thing is, that rise in company benefits come January more than eats up all the gain from your salary increase.
So not only does your income once again flatline, most likely you lose ground.
And this keeps on going, year after year.

A minimun wage of $15 is simply fair game.
The employee deserves that.
And 90% of all business could easily afford that.
Business simply needs to re-adjust how they treat their employees, and think of investing in an employee like investing in AT&T.

 

[Jeff7]

Uh. If corporations could, they'd be paying slave-wages (I.E, Taiwan, Thailand, China, etc.). It's thanks to the Government that you can even afford to eat sometimes when you're on minimum wage.

Aren't there loads of people that earn less than $1 a day? Corporations would fuckin' love to pay westerners $1 a day; no skin of their backs, and profits go up.

Evidenced by the whole "if minimum wage goes up, employment goes down" scenario; if paying people enough to actually live and feed their kids gets corporations all antagonistic, the opposite makes them ejaculate profusely.

For sure. We've been there before in the US, and not really all that long ago either. Many people were quite upset about having to give up outright slave labor.

How about doing something about laws that incentivize companies to push labor out of the US economy?

 

[1prophet]

For sure. We've been there before in the US, and not really all that long ago either. Many people were quite upset about having to give up outright slave labor.

How about doing something about laws that incentivize companies to push labor out of the US economy?

Which laws, labor laws like overtime, getting paid for time worked, etc., OSHA laws like safe workspace, hazardous material training and disclosure, perhaps EPA Laws on pollution, disposal of hazardous materials, etc.?

I like someone to list these laws that are forcing companies to leave and tell us if they or their families are willing to work in similar 3rd world conditions without these laws so they can have a job.

 

[3chordcharlie]

Which laws, labor laws like overtime, getting paid for time worked, etc., OSHA laws like safe workspace, hazardous material training and disclosure, perhaps EPA Laws on pollution, disposal of hazardous materials, etc.?

I like someone to list these laws that are forcing companies to leave and tell us if they or their families are willing to work in similar 3rd world conditions without these laws so they can have a job.

God bless free trade.

We have only approx. 6 billion people to raise beyond subsistence before the race to the bottom ends. I have probably under-estimated since I gave' wealthy' status to the entire developed world which isn't really accurate.

 

[Exterous]

Which laws, labor laws like overtime, getting paid for time worked, etc., OSHA laws like safe workspace, hazardous material training and disclosure, perhaps EPA Laws on pollution, disposal of hazardous materials, etc.?

I like someone to list these laws that are forcing companies to leave and tell us if they or their families are willing to work in similar 3rd world conditions without these laws so they can have a job.

While not necessarily forcing jobs to leave the country our corporate tax system encourages companies to keep money earned offshore in those off shore countries. Often this means expansion of overseas manufacturing facilities and jobs, increased overseas R&D budgets and positions, or investment in other overseas opportunities instead of bringing the money back to the US to be taxed here and then used for expansion\investment within the US.

Of course the this is also encouraged by shareholders as they like to see 'smart tax strategies'

 

[IHateMyJob2004]

$10/hour *40 hours * 4 weeks => $1600/month

Sorry but some people can only earn this due to mental or physical limitations. I like to think it is mental. Some people are not highly intelligent. Those that have not encountered a wide spectrum of people in this world live in a vacuum. If not, we'd have PhDs driving school buses where only the best of the best got middle class salaries.

Anyways, try to fathom living on $1600/month. I can't. Heck after food I don't even see how I could afford a trailer.

At some point, you have to do what is right and stop playing the political bullshit game.

And finally: Invert, always invert
Why not lower minimum wage if the effects of raising it are so detrimental. How low should minimum wage be?

 

[WhipperSnapper]

Sorry but some people can only earn this due to mental or physical limitations. I like to think it is mental. Some people are not highly intelligent. Those that have not encountered a wide spectrum of people in this world live in a vacuum. If not, we'd have PhDs driving school buses where only the best of the best got middle class salaries.

It's amazing how many people simply don't understand that if everyone went to college or obtained PhDs, we'd have the world's most highly educated Walmart and McDonalds employees. Someone has to dig the ditches.

 

[Meghan54]

It's amazing that in the 100 years minimum wage has existed in some form in the U.S. that the U.S. hasn't imploded repeatedly, given the dire warnings of massive unemployment and industry shutdowns that each and every minimum wage increase has garnered.

 

[MajinCry]

So why don't virtually all jobs pay minimum wage in the United States? I mean, last I checked there was no law saying that engineers must be paid significantly higher than the average fry cook.

Why work as an engineer, when you can make the same just flipping buggers? Ergo, pay the engineers more so they'll take the job, but not so much that the CEO won't be eating gold-leafed caviar on his private jet.

Look at the Asian countries; engineers over there probably earn less than burger flippers over here, but burger flippers over there are living in fucking shacks.


Basically, minimum wage sets the spectrum. If minimum wage is $1 an hour, $4 an hour looks pretty damn sweet. If minimum wage is £7 an hour, £21 an hour looks pretty damn good.


Besides, if you want to see how livable a lower minimum wage is, take a look at the Native American reservations; lots of lads there are below the extreme poverty line (<$3,500 a year). Shitty food, no/poor education, no security, no emergency services, fuck all telephone access, black mold infestations, etc.

And people have a hard enough time living off of ~$8,000 a year. Food alone would cost around, what, $4,500 a year? For one person?