Minimum Wage, Revisited

Discussion in 'Politics, Religion, Social Issues' started by Desertrat, Feb 10, 2007.

  1. Desertrat macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #1
    We've argued before, here, about the effects of minimum wage increases on employment. Here's a current article:

    http://www.azcentral.com/news/articles/0210biz-teenwork0210.html

    "The Employment Policies Institute in Washington, which opposed the recent increases, cited 2003 data by Federal Reserve economists showing a 10 percent increase caused a 2 percent to 3 percent decrease in employment.

    It also cited comments by noted economist Milton Friedman, who maintained that high teen unemployment rates were largely the result of minimum-wage laws.

    "After a wage hike, employers seek to take fewer chances on individuals with little education or experience," one institute researcher told lawmakers in 2004."

    I note that the Federal Reserve economists and Milton Friedman have more expertise and availability to data than most of us.

    But I won't do a headline saying, "Pelosi favors teen unemployment." :D

    'Rat
     
  2. mactastic macrumors 68040

    mactastic

    Joined:
    Apr 24, 2003
    Location:
    Colly-fornia
    #2
    Now 'Rat, you know that's hardly the final word on the matter.
    And there are other studies, such as the one from Florida who raised their minimum wage in 2004, and also saw employment gains better than the nation as a whole after the wage hike.

    And while the government's claim deserves attention, it is not automatically correct. This issue is far from settled.

    But I won't resort to a headline of "Conservatives Favor Lower-Class Poverty" :D
     
  3. Desertrat thread starter macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #3
    There IS the rest of that newpaper article, which shows to go ya what's happening outside the World Of Studies. I'd have to call the studies a wash, but I do tend to go along with the hiring/firing folks. They're doing the same as my wife did, when her business got hit by that last increase. Same as what I've seen, decade after decade.

    I don't care how many laws anybody passes, Economics 101 is always gonna win: Cost goes up, demand goes down. It's only after the market system reworks itself that the demand for more employees increases. Sure, the unemployment increase isn't permanent, but that doesn't help those jobless who have to wait around hoping things will get better.

    Who'm I s'posed to believe, studies? Or my own lyin' eyes? :)

    Somebody did some number crunching as an exercise in futility to figure the added tax-take of the feds. A few billions is chump change in today's budget, of course, but it's still billions less for folks to spend...

    'Rat
     
  4. emmawu macrumors 6502

    Joined:
    Jan 19, 2005
    Location:
    Wauwatosa, WI
    #4
    What about a two tiered system base on age and experience?
     
  5. hulugu macrumors 68000

    hulugu

    Joined:
    Aug 13, 2003
    Location:
    the faraway towns
    #5
    Nonetheless, while the immediate short-term may see a decrease in hiring, the new wealth may actually spur the economy, thus helping out small and large businesses alike.

    My own experience, with my lyin' eyes, suggests that low-wage workers spend their new found earnings thus injecting that money right back into the economy.

    I just read an article in the Economist that suggested that the wage-increase in Washington state helped draw workers from a nearby Idaho town. However, the workers tended to spend their money in Washington, resulting in a net-gain for the western city, while the eastern town's economy languished.
     
  6. mactastic macrumors 68040

    mactastic

    Joined:
    Apr 24, 2003
    Location:
    Colly-fornia
    #6
    Exactly. If you only measure jobs lost because of a wage increase, sure things may look bleak. But if that wage increase causes more spending by the lower rung, some new jobs are created as well, no?
     
  7. zimv20 macrumors 601

    zimv20

    Joined:
    Jul 18, 2002
    Location:
    toronto
    #7
    similiar to the administration's reasons for "giving back" $300 to each taxpayer.
     
  8. hulugu macrumors 68000

    hulugu

    Joined:
    Aug 13, 2003
    Location:
    the faraway towns
    #8
    Hey worked for me, I bought Apple stock! ;)
     
  9. steve_hill4 macrumors 68000

    steve_hill4

    Joined:
    May 15, 2005
    Location:
    NG9, England
    #9
    Businesses looking to lower costs and maximise profits will always ignore this simple fact.

    When the minimum wage was first introduced in this country, right-wing parties and big business cried foul and predicted mass unemployment. Nearly 10 years down the line and several increases later unemployment is still falling year on year and while spending on the high street may be faltering in some areas, inflation and interest rates are still steady and the economy still looks pretty healthy. The other year the Conservative party that opposed its introduction finally admitted it had been a good thing for the economy.

    Current minimum wage in the UK for 22 and over is £5.35, which at the current exchange rate works out at about $10.40 an hour. I believe in the US it's $5.15 and while I know goods and services and generally cost of living is cheaper there, that's disgusting. For those earning minimum wages in both countries, it appears a similar level of income tax would be charged, although we do also get charged National Insurance, (i.e paying for pensions and healthcare), at 11%.
     
  10. Desertrat thread starter macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #10
    You get down to it, there's a lot more than just the pay itself. Did any of you read the article, fully? Did you note the comment about training?

    You don't hire a warm body off the street and get any notable productivity until there's some amount of training. Depending on the job and the smarts of the trainee, there's a net loss for some period of time. Newbies screw up. They break things. They get orders wrong and stuff has to be thrown away. All that is a dead loss to the employer. There is a cost to that training.

    And some jobs just aren't worth much. A homeowner wants some day labor to pick up trash and shrub/tree cuttings around the house and yard. and/or hold the other end of a board to be nailed. This isn't worth much, and if it's required to pay more than some free-market, agreed-upon price, there's no job at all to hire into.

    Or a car repair shop wants somebody to sweep the floor and be a "go-fer". It's full-time for hours, but darned little actual work.

    Minimum-wage is some five percent of the workforce. A very high percentage of those are high-schoolers, strictly entry-level with no work experience as background. This is not work for people who are married and have kids. Anybody who's gotten that far is supposed to be beyond that stage of Beginning Newbie.

    Yeah, in an expanding economy these folks will find work--eventually. But they have a cost associated with that job hunt, in transportation and time without income.

    And prices rise and eat up the pay raise...

    'Rat
     
  11. hulugu macrumors 68000

    hulugu

    Joined:
    Aug 13, 2003
    Location:
    the faraway towns
    #11
    Even if the short term effect is negative, the long term effect is positive according to most of the information and case studies I've read. Furthermore, let's talk about something like yard-work, there's no requirement for you to pay the neighbor's kid $5.15 to rake up leaves, or to have some guy hold a board, rather it means if you own a landscaping company, you're going to pay your workers a little more, and hopefully a growing economy will mean more houses that need landscapers. Remember, while economics started out as the study of zero-sum games, modern stastics has exposed a system that is far more dynamic and complex. Prices don't rise with wages, they rise and fall because of a myriad of other factors. Each time the minimum wage has been raised business have fought against it, and each time after it was enacted the economy accelerated. This is a good thing.

    Also, something occured to me when I read the article, if the minimum wage was decreased via law to $2.00 an hour would Pepi's Pizza hire more teenaged workers or give them more hours? Or drop prices?
     
  12. mactastic macrumors 68040

    mactastic

    Joined:
    Apr 24, 2003
    Location:
    Colly-fornia
    #12
    These are minimum wage jobs for a reason. How much freakin training does it take to get someone to be capable of flipping a burger? Work a cash register? Mow the lawn?

    Your training costs are minimal for these jobs. And if an auto-body place is paying someone to do "very little work" for 8 hours, how is that my, or anyone else's problem, but their own?
     
  13. zimv20 macrumors 601

    zimv20

    Joined:
    Jul 18, 2002
    Location:
    toronto
    #13
    i was a waiter at a pizza hut while in college. my training consisted of watching a 10 minute video before they handed me a tray and told me to go take some orders.

    $2.01 an hour that job paid, plus tips.
     
  14. mactastic macrumors 68040

    mactastic

    Joined:
    Apr 24, 2003
    Location:
    Colly-fornia
    #14
    That's 10 minutes more training than I recieved at my first minimum wage construction site go-fer job.
     
  15. Desertrat thread starter macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #15
    mac, I'd think it would take danged little--if they could ever get my order straight at KFC! Sheesh!

    My wife's little manufacturing operation made unfinished wooden boxes for the Tole Society types to paint up with all their little cutsie-poo designs. I'd watch her work force in action and I figured those boxes were hospital-level sanitary: Untouched by human hands. :D

    Job applicants would show up. Okay, one prerequisite: Be able to read a ruler. I was amazed that people from the local Tech College would show up and not be able to figure out, say, 17-11/16 inches on a ruler! And, worse yet, not even be able to understand any teaching! They could figure the one-half, and "sorta" get one-quarter, but eighths and sixteenths? Forget it!

    My wife would draw pictures and write fractions and all that, and they'd look at her like a dying calf in a hailstorm and shake their poor little heads...What can they do that's worth even a danged dollar an hour, much less $5.15?

    Probably the happiest days of my life were when I first got laid, when I won my first car race, and the day my wife sold her business and retired. :D

    'Rat
     
  16. Swarmlord macrumors 6502a

    Swarmlord

    Joined:
    Sep 18, 2006
    #16
    Mine too, but at $1.53 an hour.
     
  17. zimv20 macrumors 601

    zimv20

    Joined:
    Jul 18, 2002
    Location:
    toronto
    #17
    i hear ya, but i think your issue here should be with the education system, not the minimum wage.
     
  18. mactastic macrumors 68040

    mactastic

    Joined:
    Apr 24, 2003
    Location:
    Colly-fornia
    #18
    HA! I have contractors making union wages who have a hard time with fractions...

    But again, that is (was) your wife's problem to hire competent folks. That's why employers are allowed discretion as to who to hire. Wise managers hire good people. Poor managers hire poor employees. That, however, has nothing to do with what you pay people. As Zim notes, that is more of an education problem. A guy who can't learn fractions at minimum wage won't be able to do it for any higher wage.
     
  19. Desertrat thread starter macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #19
    Round and round and round: The problem for many employers is that many jobs aren't profitable at a pay scale above minimum wage. A high percentage of people who are minimum wage people can barely do those jobs. If you gotta raise their pay, you get rid of them and do something else. If you lay them off, you're less likely to have to raise the pay of others who were just above minimum wage--which is rarely thought of, apparently.

    Somebody shows up who's bright and competent, you're happy to pay more than minimum wage. You get more than minimum output.

    Wait until May or June. You'll start seeing articles about how hard it is for the high school crowd or the recent non-college-bound graduates to find summer work. Past articles have had interviews similar to that of the opening post, about the cost of higher minimum wage wrt unskilled labor.

    'RAt
     
  20. mactastic macrumors 68040

    mactastic

    Joined:
    Apr 24, 2003
    Location:
    Colly-fornia
    #20
    Let's start here. Since when does Burger King pay it's "bright and competent" any more than anyone else? Sure you might make manager faster, but when you start out, it don't matter how bright and talented you are -- you ain't gonna get corporate to agree to pay more than the minimum.

    Remember, the bulk of these jobs are not of the kind your wife created. Most of them are people who are only looking for a warm body -- and in fact often will not hire the bright and talented specifically because they don't want to have to pay any more than they have to.

    That's been the case for years while the minimum wage has remained stagnant. Correlation is not causation.
     
  21. Desertrat thread starter macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #21
    "Remember, the bulk of these jobs are not of the kind your wife created."

    Yeah, could well be. I've spent a lot more time around smaller, independent businesses than around the world of corporate chains.

    'Rat
     
  22. solvs macrumors 603

    solvs

    Joined:
    Jun 25, 2002
    Location:
    LaLaLand, CA
    #22
    The head of Costco seems to think raising the minimum wage would be a good thing. Not that it would affect them, since they already pay their workers a living wage. But I don't see Walmart or MacDonalds saying that while they make millions (maybe billions). This isn't about small businesses, or high schoolers, this is about big businesses who don't want to cut into their profits and the politicians who have no problem helping them.

    At least the other side is pretending to care about the little people they screw over vs. the old regime who just liked to talk about it.
     
  23. Desertrat thread starter macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #23
    Y'know, you stop and think about it, the focus seems to be on those minimum wage folks who work for some chain operation. Pick one; McDonald's or WalMart. The negative impacts that last are those on the small, independent business folks. The mom'n'pop-sized operations. Car repair shops, arts/crafts stores, local cafes, small-town small stores, etc. They already have problems fighting the big chains' pricing.

    Run the minimum wage high enough and all that's left is the WalMarts.

    'Rat
     
  24. leekohler macrumors G5

    leekohler

    Joined:
    Dec 22, 2004
    Location:
    Chicago, Illinois
    #24
    Then why is it that every "mom and pop" I worked for here in Chicago in the the early 90's paid over 7.50/hour to start? It was the corporate places that paid crap. I'm sorry but, this increase is NOT unreasonable.

    The reason mom and pops have a hard time is because all the tax breaks go to the big corporations. Address that for me.
     
  25. Desertrat thread starter macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #25
    "The reason mom and pops have a hard time is because all the tax breaks go to the big corporations. Address that for me."

    Tax breaks such as?

    One thing where larger businesses have an edge over small ones is that the clerical overhead is a much smaller percentage of total overhead. That's less obvious to most than is the relative size of purchases--whether for in-house use or for resale--with the accompanying greater discounts. Which is all separate from taxes, of course...

    'Rat
     

Share This Page