Actually Mr. President, we should get rid of the minimum wage

[ReformCollege]

Here's a nice paper that encapsulates a large variety of studies on the effects of minimum wage hikes on youth and low-skill employment. You'll find that not only do a handful of analyses show much more modest effects than those claimed, some, given the right market and locale, result in an improvement.

http://www.nber.org/papers/w12663.pdf

Did you read your own source?

 

[The Man]

Higher spending by individuals at the lower income levels means higher demand.

And higher demand (and increased labor costs) leads to higher prices, which would negate any increase in the minimum wage, and also hurt everyone who earns anything above minimum wage who won't be getting a government mandated pay raise.

 

[Velvet Elvis]

I like how these arguments always take it as a foregone conclusion that employer profits cannot ever be allowed to go down.

I like how these arguments always pretend that employer profit margins are always astronomical (I know, I know...leftists don't know what "profit margins" are). Why do leftists never complain about Apple's 24% profit margin, but cry to all holy hell over Exxon's 6% margin? That Starbucks coffee you never complain about? 55% profit margin. Bank of America's profit margin? 5%

But do the idiots even know what profits go for? Here...let me break it down for you ignorant "Government-schooled" folks:

Profit = Revenue - Costs

Revenue = Income.
Costs = All the expenses the company accumulates (payroll + overhead)

See children...stuff like "research & development" and "expansion" are not "costs." How do you suppose businesses (including itty-bitty "mom & pop" places) grow? How do they research better materials for their products? How do they come up with money for more employees? Profits. Sure they might budget for some of these things, but in the end, that budget is based on speculation (like Clinton's "surplus" during his administration). If that speculation is inflated, then there go the profits (which means: there goes the research, the development, the expansion, etc.).

So see? For every person who complains about "profits," is a person who has no clue how business works. For every fool who says "employer profits shouldn't be so high," is a person who is against the hiring of more workforce. These are people who couldn't run a lemonade stand at Times Square.

 

[274ina]

been there, DONE THAT. Sorry borgeois, your agruments are just as dumb in 2013 as 1880.

 

[Real Korimyr #9]

been there, DONE THAT. Sorry borgeois, your agruments are just as dumb in 2013 as 1880.

Yeah, and this is why Leftist economies fail-- because Leftists fundamentally reject economic principles as being scientifically valid. Point blank, the laws of economics are as immutable as the laws of physics. Stupid policies have negative consequences.

 

[Paschendale]

Yeah, and this is why Leftist economies fail-- because Leftists fundamentally reject economic principles as being scientifically valid. Point blank, the laws of economics are as immutable as the laws of physics. Stupid policies have negative consequences.

It's not about principles, or science, or math. It's about power. It's about who has it, and how its used. But ideas like the invisible hand of the market, or a maxim that centralizing things dooms them to failure aren't principles or science. They're political positions that are also about power. Communal ownership, and gearing the economy for the benefit of all, rather than for a few, that's about power, too. And it's about power for many, instead of power for the few. Much as lessez faire capitalists like to pretend otherwise, their way is not mathematically superior, nor necessary for a healthy, happy, and powerful culture.

 

[Real Korimyr #9]

It's not about principles, or science, or math. It's about power. It's about who has it, and how its used. But ideas like the invisible hand of the market, or a maxim that centralizing things dooms them to failure aren't principles or science. They're political positions that are also about power. Communal ownership, and gearing the economy for the benefit of all, rather than for a few, that's about power, too. And it's about power for many, instead of power for the few. Much as lessez faire capitalists like to pretend otherwise, their way is not mathematically superior, nor necessary for a healthy, happy, and powerful culture.

You're not wrong. But you're not talking about the minimum wage there-- I have nothing against regulations that make sense. I have nothing against progressive taxes and social safety nets. But when you're talking about laws that hurt everyone, and don't help the people they're supposed to help, I'm not going to support that. Economics is a science, it's a matter of natural law, and to get good results the government has to pass laws that function in accordance with natural law.

 

[penn]

And higher demand (and increased labor costs) leads to higher prices, which would negate any increase in the minimum wage, and also hurt everyone who earns anything above minimum wage who won't be getting a government mandated pay raise.

Higher demand doesn't lean to higher prices when coming out of a recession (see figure 2.7 graph a in this PDF). So what would actually end up happening with an increased minimum wage? More aggregate demand. And more aggregate demand would cause total output to increase, as the equilibrium point would shift to the right, closer to Long Range Aggregate Supply.

 

[Wayno]

Higher demand doesn't lean to higher prices when coming out of a recession (see figure 2.7 graph a in this PDF). So what would actually end up happening with an increased minimum wage? More aggregate demand. And more aggregate demand would cause total output to increase, as the equilibrium point would shift to the right, closer to Long Range Aggregate Supply.

Increased cost of labor = Increased Prices.

Increased Prices = Decreased Demand.

 

[penn]

Increased cost of labor = Increased Prices.

Increased Prices = Decreased Demand.

The increased cost of labor is more than offset by workers' increased purchasing power.

 

[Wayno]

The increased cost of labor is more than offset by workers' increased purchasing power.

No it's not.

Folks earning minimum wage still have very little disposable income, but the costs for everyone else would go up, whether they made minimum wage or not, creating a DRAG on the economy.

That's the same reason President Poodle Stew didn't raise taxes on the rich when he FIRST had the opportunity to do so...

And why both Kennedy and Reagan CUT taxes to stimulate the economy.

Taking money away from folks to give to people who just buy for mainly their necessities would hurt all.

 

[Heebie Jeebie]

Higher spending by individuals at the lower income levels means higher demand. I thought that was obvious! Even in an enclosed system with no other variables income equals spending. Hence why it's impossible to create some ficticious sitution where "all things are equal".



Some may go for those things some will go into disposable income. You seem to have a habit of pulling numbers out of thin air or arguing against made up statements.

So we can't make a statement about all things being equal but we need to set a minimum wage that applies to all people as if all things were equal. Got it.

You must be detached from reality if you think that politicians and supporters of raising the minimum wage do not claim it's so families can pay thier rent or feed themselves or somesuch. If they said it was so people could buy a better TV or have a steak dinner or just have more money to buy stuff they would be rightly laughed out of town.

 

[Heebie Jeebie]

The increased cost of labor is more than offset by workers' increased purchasing power.

Well then gee whiz, we should make the minimum wage $1,000,000/hour and we would just have a booming economy with all that purchasing power!

 

[penn]

No it's not.

Folks earning minimum wage still have very little disposable income, but the costs for everyone else would go up, whether they made minimum wage or not, creating a DRAG on the economy.

That's the same reason President Poodle Stew didn't raise taxes on the rich when he FIRST had the opportunity to do so...

And why both Kennedy and Reagan CUT taxes to stimulate the economy.

Taking money away from folks to give to people who just buy for mainly their necessities would hurt all.

It creates a net benefit for the economy, as demand goes up. For people whose incomes don't rise with the minimum wage increase, they have a little bit less purchasing power; for people on the minimum wage, they have a lot more purchasing power. A minimum wage hike is not "taking money away" from anybody.

 

[KLATTU]

Well then gee whiz, we should make the minimum wage $1,000,000/hour and we would just have a booming economy with all that purchasing power!

Many liberals stiil believe the fantasy that Henry Ford raised the wages of his workers so that they would buy more of his cars, thus helping create the middle class.

 

[Fletch]

It creates a net benefit for the economy, as demand goes up.

Demand for what? What is an extra $25 in some teenagers pocket going to increase demand for? Beer? You have to keep in context what a minimum wage job is: It is a no skill, entry level, transient position. Demanding that employers pay more than that job is worth only causes a market distortion elsewhere. Prices for the goods that business sells will go up or the number of people employed there or their hours will be cut. Chances are, the business is not going to increase its employee expense, it will simply cut the hours for those people who work there. Explain how that helps them.

 

[YoungConserv]

How can we think of raising the minimum wage when there isn't a demand to suport this? Nearly a hundred million people are not in the work force so the price of labor is lower.

 

[ReformCollege]

It creates a net benefit for the economy, as demand goes up. For people whose incomes don't rise with the minimum wage increase, they have a little bit less purchasing power; for people on the minimum wage, they have a lot more purchasing power. A minimum wage hike is not "taking money away" from anybody.

Having more purchasing power means nothing if they don't have a job.

Raising the minimum wage does NOT increase the supply and demand for wages. All it does, is cut off the people at the lower end of the distribution.

 

[Real Korimyr #9]

How can we think of raising the minimum wage when there isn't a demand to suport this? Nearly a hundred million people are not in the work force so the price of labor is lower.

They don't care if it works. They're just trying to win votes from people who don't know better. It's feel-good legislation at its worst.

 

[ReformCollege]

Demand for what? What is an extra $25 in some teenagers pocket going to increase demand for? Beer? You have to keep in context what a minimum wage job is: It is a no skill, entry level, transient position. Demanding that employers pay more than that job is worth only causes a market distortion elsewhere. Prices for the goods that business sells will go up or the number of people employed there or their hours will be cut. Chances are, the business is not going to increase its employee expense, it will simply cut the hours for those people who work there. Explain how that helps them.

I think anytime someone even mentions "minimum wage" we need to immediately remind them that these are jobs for 16-24 year olds, not jobs for people to raise a family on. Its pretty simple, raising the minimum wage cuts employment and job training for these age groups, which leads to less productive job skills later on in life.

 

[ReformCollege]

been there, DONE THAT. Sorry borgeois, your agruments are just as dumb in 2013 as 1880.

View attachment 67142631

Lol! You do realize, that child labor predates the industrial revolution, and child labor and working hours were already trending downward before congress even passed any legislation?

Might I remind you, that the period from 1860-1920 was the period of the fastest wage growth in our countries history. Keep hating all you want.

 

[solletica]

It seems comical to me that someone can be smart and charismatic enough to become the POTUS, and still lack a basic understanding of how things actually work in the world.

Raising the minimum wage doesn't help working class families. In fact, its going to dramatically hurt them

Wrong.

Assuming it could be realistically enforced (fat change, but let's just assume), and assuming not all jobs are outsource-able (again, fat chance, but let's just assume),

min wage increases boost both unskilled labor wages and employment in monopsonistic/oligopsonistic labor markets (i. e. where there a only a few min wage employers compared to the number of individuals competing for those jobs).

The relevant issue is enforcement.

Businesses that allow employees to receive tips don't have to pay them min wage; they only have to pay them the difference between the tips and their wages. Furthermore, in the US, businesses can easily hire undocumented labor.

However, in any case, min wage laws are an affront to a Libertarian economy and therefore I oppose them.

 

[Heebie Jeebie]

Assuming it could be realistically enforced (fat change, but let's just assume), and assuming not all jobs are outsource-able (again, fat chance, but let's just assume),

Are you saying all jobs are out-sourcable? Damn I hope my furnace doesn't go out. They'll probably tell me then technician will be out between May and September and if I'm not there I'll have to re-schedule!

 

[ReformCollege]

It's not about principles, or science, or math. It's about power. It's about who has it, and how its used. But ideas like the invisible hand of the market, or a maxim that centralizing things dooms them to failure aren't principles or science. They're political positions that are also about power. Communal ownership, and gearing the economy for the benefit of all, rather than for a few, that's about power, too. And it's about power for many, instead of power for the few. Much as lessez faire capitalists like to pretend otherwise, their way is not mathematically superior, nor necessary for a healthy, happy, and powerful culture.

Power takes two forms.
1. Hard power- which requires the use of force, oppression, violence, etc.

2. Soft power- which is a relational, not well defined, entity determined by natural human interaction and involves all individuals making decisions based on their best rational self interest.

In order to get rid of the second, you need the first. You can make everyone perfectly equal, but its going to require hard power to do so and hard power to maintain, and I strongly believe that is a greater evil then the soft power you demonize.

You can have community ownership, but who runs the community? What happens, when someone builds their own privately owned business that is superior to the community owned one? Are you going to suppress the free market, or the individual? Will there be a central body that runs for the "good" of the community, at the expense of any opposing individual? What is that going to look like?


What I would rather see, is less of a disconnect between workers and their bosses. I don't know any billionaires personally, but I know a couple of multi-millionaires who built their own small business. A fundamental feature of every single one of them is they take great care to invest in their workers and take their ideas. However, they are not run as a "collective" there is a definite and defined power structure and they interact with their workers as individuals rather then as a collective (ie unions). But perhaps that is what we are missing right now (if we are indeed, missing something), is that two way street of ideas. Individual workers should be rewarded for their ideas and contributions.

 

[radcen]

Might I remind you, that the period from 1860-1920 was the period of the fastest wage growth in our countries history.

Is this another misleading statistic where percentage is touted and actual effect in relation to other eras is ignored?

Reminds me of how President Obama is constantly portrayed as the most fiscally conservative President in the last 50 years based on the fact that the percentage increase in spending during his administration has been the lowest. Never mind that deficit spending was already high, and has remained so during his administration, hence the lower percentage increase would deceptively look better to those who are easily fooled.