My point is that government needs to step in sometimes. Company script, Child labor laws, workplace safety, etc.. A company will keep it business as usual until there is intervention... Oh wait then they just close up shop and ship off to some third world nation and exploit their people.
Oh...I thought you were supporting Napoleon with his "statement of fact".
And...what?
Do you think raising the minimum wage is the intervention that is needed? Do you really equate a fair wage for a fair day's labor with things like company script, child labor or workplace safety?
Prior to the FMW. Half of the country was in poverty because companies could pay as little as possible, exploiting the workforce.
Up until recent decades here in the US, lumber and mining companies were paying their employees in script and company store money until it finally became outlawed. There was no short supply of labor. Those industries preyed on desperate men with no other options and a need to eat. If a business can get away with it, they'll do it. Think about it. Businesses were using child labor until the practice was outlawed.
CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs
'Increasing the U.S. minimum wage may lift some workers out of poverty while leading to as many as 1 million job losses, according to a report from the Congressional Budget Office.
The report was seized on by House Speaker John Boehner, an Ohio Republican who opposes President Barack Obama’s call to increase the minimum wage to $10.10. The federal minimum wage is currently $7.25 an hour.
...A change in employment probably would range from a “very slight reduction” to a decrease of 1 million jobs, CBO said. Some workers would lose their jobs as companies look to offset the change by reducing payrolls, according to the report.'
CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs - Bloomberg
After facing some blowback from the White House over their methods in a study about raising the minimum wage, the Congressional Budget Office (CBO) director defended his work as sound.
“I want to be clear that our analysis on the effects of raising the minimum wage is completely consistent with the latest thinking in the economic profession,” said Douglas Elmendorf Wednesday at a breakfast sponsored by the Christian Science Monitor.
The CBO also responded to criticism from the White House about their analysis. Responding to White House doubts, CBO defends minimum wage study - CBS News
Regardless, I think it is difficult to predict what will actually happen. Previous minimum wage hikes haven't really outpaced the market, but this one seems like quite a jump.
With respect, I think it is rather easy to predict what will generally happen.
Having the government force a 39% rise on the minimum wage - with ZERO increase in productivity - cannot result (IMO) in any other result but a rise in manufacturing/servicing costs, a rise in prices, a reduction in sales in those areas effected and a corresponding reduction in the labor force.
Additionally, as the labor cost rise works it's way through the system (you raise minimum wage, you are going to have to raise those presently making $10/hr. to $12.50/hr. to keep them 'happy' - i.e. stop them from striking; then you have to raise people previously making $12.50/hr. to $15/hr. to keep them 'happy' and so on), a large number of goods and services will increase in price, which further erodes American competitiveness with foreign imports, which erodes sales further, which causes more layoffs.
There is no way realistically possible - IMO - that a U.S. government-forced raise in the minimum wage by 39% cannot result in a significant loss of American jobs.
This does not even mention the negative effect a rise in prices will have to those on fixed incomes.
Not accounting for illegal labor, only 3.6 million Americans were receiving less than or equal to the minimum wage in 2012. The question really becomes: do we want to support the ability to profit from low value production of goods and services?
Because it is a less than optimal use of resources, and as a result diminishes the productive capacity of the nation.
Allowing companies to consistently profit from low wage labor leads to complacency with respect to fixed capital investment.
Slippery slope. Using this line of logic, taxes increase the price advantage of illegal labor.
And yet you don't see hospitals hiring doctors by promising to pay them cash @ 75% the going rate.
In reality, illegal labor is more about a lack of marketable skills than wage floors.
Of course. Increasing the minimum wage to the point where it would exceed the average wage is a ridiculous idea, and would harm most (if not all) businesses.
My apologies, but i trying to provide an example of companies operating at such a tight margin, that they would have to let workers go because they only derive $10.60 from one hour of minimum wage labor. These are the kind of companies we can surely do without.
Prior to the FMW. Half of the country was in poverty because companies could pay as little as possible, exploiting the workforce.
My point is that government needs to step in sometimes. Company script, Child labor laws, workplace safety, etc.. A company will keep it business as usual until there is intervention... Oh wait then they just close up shop and ship off to some third world nation and exploit their people.
It seems to me if the alternative is to make poor people structurally unemployable.... yes. Absolutely.
We should be seeking out more ways for our economy to leverage low-value workers.
Making people structurally unemployable is destructive to them and the greater economy.
On the contrary, that the resources are being utilized there absent coercion indicates that it is likely to be the most optimal use of resources
and (as you seemingly admit) throwing low-wage workers out of jobs in order to marginally increase the wages of low-middle and middle income workers does not increase, but rather decreases the aggregate productive capacity of the nation.
because there is no such thing as competition?
That's because Cash Pay as a salary works for those who are living in the black market, not those who are working in the above-ground economy.
Doctors aren't willing to risk going to jail for tax evasion - illegals know they are extremely unlikely to ever be pursued.
The education and language skills of your average illegal immigrant is not that much better if it is better than your average low-income American.
Hey, as long as you are upfront about the fact that the Minimum Wage Increase would hurt the businesses involved and the low-income people who previously worked for them, I'll admit, I'm left without much else to argue, except an a priori argument that doing so is bad economics, bad policy, and immoral.
On the contrary, those are precisely the kind of companies that we need more of
unemployment among our poor, young, and low-education is at exceedingly high levels, and simply pricing them out of the job market because you find them distasteful is abusive.
It is precisely, in fact, the original argument in favor of the Minimum Wage.
And government or organized labor is different because.......?
Dependence on low-skill/low-wage labor is a characteristic of emerging markets, not a highly developed superpower.
Wrong! WE should be seeking out ways to boost the skill sets of these types of workers, rather than incentivizing low value production which leads to skill stagnation.
See above.
This is nonsense. Coercion is at its highest in low-skill/low-wage labor markets. Many of these people simply do not have a choice.
No need to put words in my mouth, as i made zero reference to anything you stated above. It's about creating more high skilled job opportunities by reallocating resources from the low to high end in terms of production value.
You continue to miss the point. Investment in fixed capital involves risks that supersede employing low-skill/low-wage labor. If you finance, you take on liabilities and if you fund expansion with retained earnings, you face risks of loss in capital/lower dividends.
There are thousands of people who work for cash on the side who also reside in the above-ground economy. However, the overwhelming majority of this market does not have advanced degrees/certifications.
People who have something to lose are not likely to risk it.
Perhaps. Work ethic with respect to opportunity is another factor.
It is a matter of magnitude. Raising the minimum wage from $7.25 to $10.10 will have limited impact on the overall labor market and the prices of goods and services, and is the consensus among economists.
On the other hand, companies that depend on low-skill/low-wage labor will be far more inclined to increase fixed capital investment. Case in point:
You are crazy! We need more high-tech, capital intensive start-ups that depend on highly developed human capital.
We cannot (and do not want to) compete with emerging economies using low-skilled labor.
More companies that you advocate put us at a long term competitive disadvantage.
I don't find them distasteful, so please stop putting words in my mouth; it is a bad habit. These people need to be focusing on improving their skill sets so they can find long term, sustainable employment.
Then you have misunderstood my position in its entirety.
Not accounting for illegal labor, only 3.6 million Americans were receiving less than or equal to the minimum wage in 2012. The question really becomes: do we want to support the ability to profit from low value production of goods and services?
Because it is a less than optimal use of resources, and as a result diminishes the productive capacity of the nation. Allowing companies to consistently profit from low wage labor leads to complacency with respect to fixed capital investment.
Of course. Increasing the minimum wage to the point where it would exceed the average wage is a ridiculous idea, and would harm most (if not all) businesses. Increasing the wage floor to reflect price differentials is not even comparable.
My apologies, but i trying to provide an example of companies operating at such a tight margin, that they would have to let workers go because they only derive $10.60 from one hour of minimum wage labor. These are the kind of companies we can surely do without.
You are mistaking the median worker for the low-income worker who is harmed by increases in the MW.
Sure. When you figure out how to fix our broken family structure, failing education system, and urban culture that encourages anti-social behavior and disdains the idea of success through hard work and academic achievement as a game for suckers, you let me know. Until then, the "oh, well we will just turn all those 23 year old high school dropouts without the social capital or soft skill sets necessary for solid economic performance into program managers" is pie in the sky.
you are simply making those workers structurally unemployable.
And is precisely one of those Social Capital Soft Skill sets that, given that they are absent from much of our lower income population, have to be developed in them through holding the kind of low-income jobs you find distasteful because the idea that a 16 year old kid isn't a computer programer is somehow wrong in a Superpower country.
You aren't going to be able to suddenly instill a strong work ethic in every MW worker simply by outlawing their jobs, meaning that you aren't going to be able to shift them up to the higher-value labor that you seem to envision them in.
That is a strawman - no one was speaking as to coercion as far as labor choices, but rather as to resource allocation.
Resources seek out their greatest return
that resources are already there in those positions indicates that government coercion to create a price floor will have no greater success than other government price-fixing measures have seen.
The resources you are reallocating are financial, not human. Which has been my point in this thread - that raising the minimum wage serves to take resources and reallocate them from the low-income worker to the low-middle and middle income worker. Robbing the poor to give to the middle income.
When you agreed that those people would lose their jobs, I assumed you understood that to be a negative consequence.
If you are now instead claiming that having their jobs destroyed is good for low-skill, low-income labor, then you need to defend that position.
I don't doubt it - though investment in human capital involves risks you are including as well. Employees show up late, steal, prove to not be worth their pay, poison the workplace with bad attitudes, drive away customers with bad service, and quit at inopportune times.
I would be surprised if it was only thousands. Which in no way means that they are not dwarfed by the portion of the underground economy that works for unreported cash.
The effects as measured against the entire economy would agreeably be slight.
That is because the negative effects are concentrated among that small portion of us who are most economically vulnerable and least able to sustain them.
It's like saying that you won't harm a football team that much by taking its' weakest members out and cutting off their legs.
Sure, but if we want to claim that America is a place where you can rise up from any humble beginnings and be successful, (which I would value far above some kind of sniffing and claiming that low-value jobs have no place in a superpowers' economy), if we want to claim that that American Dream is still a reality, then cutting off opportunity for those at the bottom is one of the worst things we could do.
I just think that it's wrong. To the extent that public policy should help any sector of our populace to succeed, it should help the poor. Not pull the bottom rung of the economic ladder out of their reach.
But we also need workers capable of filling those jobs - and we aren't going to get them unless they have the opportunity to develop both hard and soft skills at lower-paid employment.
That's what low-paying jobs do. They provide a starting point. Even for Wal-Mart associates, the average wage isn't minimum wage, but most probably started there.
I made minimum wage starting out, and then I made more, and then I made more, and hopefully in the future I will make more as I continue to add to my skill set and experience. But I was able to build myself up because I was able to start.
On the contrary, shifting a significant section of our populace from social safety net dependents into full time workers would be beneficial for our economy and fiscal outlook.
Again, if you are now going to claim that my sister in law, who is a 17 year old minority single mother high school dropout with tenuous command of the English language, a bad home environment, no picture of how a family is supposed to function, no history of watching a parent work full time regularly, and a self-centered worldview, is going to suddenly become a high-skill employee simply because you have raised the minimum wage, then you need to describe how that is going to work.
We should want to support it when the choice is between it happening here and happening overseas.
America is still one of the most efficient working nations on an aggregate level. It also leads to increased foreign investment. This is most noticeable during the initial times when America went from a goods-oriented market to a services-oriented one.
Know what happens to the "average" when you raise the low end? It increases.
Unskilled labor will always fall below the average in a market even remotely free.
Do you know the profit margins of the companies whose main source of cost is unskilled labor? They're among the lowest.
Walmart's adjusted margin is considerably less than companies who use skilled and educated employees, such as energy companies.
Saying that an almost 50% increase in labor not putting a heavy burden on these corporations is just naïve.
CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs
'Increasing the U.S. minimum wage may lift some workers out of poverty while leading to as many as 1 million job losses, according to a report from the Congressional Budget Office.
The report was seized on by House Speaker John Boehner, an Ohio Republican who opposes President Barack Obama’s call to increase the minimum wage to $10.10. The federal minimum wage is currently $7.25 an hour.
...A change in employment probably would range from a “very slight reduction” to a decrease of 1 million jobs, CBO said. Some workers would lose their jobs as companies look to offset the change by reducing payrolls, according to the report.'
CBO Says Minimum-Wage Rise May Ease Poverty, Cost Jobs - Bloomberg
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