• This is a political forum that is non-biased/non-partisan and treats every person's position on topics equally. This debate forum is not aligned to any political party. In today's politics, many ideas are split between and even within all the political parties. Often we find ourselves agreeing on one platform but some topics break our mold. We are here to discuss them in a civil political debate. If this is your first visit to our political forums, be sure to check out the RULES. Registering for debate politics is necessary before posting. Register today to participate - it's free!

Interesting video explains problems with the minimum wage.

YoungConserv

DP Veteran
Joined
May 13, 2012
Messages
3,083
Reaction score
601
Gender
Male
Political Leaning
Conservative

What are you guys thoughts on this?
 
It will sound too simplistic to some to be true, but it is a very accurate summary. Thanks for posting it.
 
I disagree. Talking about an absurd $100 minimum wage just avoids the reality that as the purchasing power of a dollar declines, the wages need to increase by a corresponding amount just to maintain current demand in the economy for goods and services. While I disagree with fiscal policies based upon consumerism, that is what we have. Without increases in wages, the economy will continue to shed jobs. It is just a matter of finding the right point.
 
I disagree. Talking about an absurd $100 minimum wage just avoids the reality that as the purchasing power of a dollar declines, the wages need to increase by a corresponding amount just to maintain current demand in the economy for goods and services. While I disagree with fiscal policies based upon consumerism, that is what we have. Without increases in wages, the economy will continue to shed jobs. It is just a matter of finding the right point.
but increasing the minimum wage leads to increased prices so that's not sustainable.
 
but increasing the minimum wage leads to increased prices so that's not sustainable.

Not if it adds velocity to the economy. Even beyond that there is something called an "efficiency wage" that never gets discussed in politics much.
 
but increasing the minimum wage leads to increased prices so that's not sustainable.

There's a hell of a lot more involved than just this. The problem with the video is it is far too simplistic. There are countries with high minimum wages that have lower unemployment than countries with a low minimum wage, the economical effects of a minimum wage are greater than what's presented in a single biased video.
 
There's a hell of a lot more involved than just this. The problem with the video is it is far too simplistic. There are countries with high minimum wages that have lower unemployment than countries with a low minimum wage, the economical effects of a minimum wage are greater than what's presented in a single biased video.

Then why don't these high minimum wage countries have a higher GDP than us.
 
Because their not in our leauge.

Right, so to compare GDP and minimum wage, you need to find another country with a large land area, large population, long history of political stability and the ability to militarily back up its economic interests, and that has a higher minimum wage.
 
Right, so to compare GDP and minimum wage, you need to find another country with a large land area, large population, long history of political stability and the ability to militarily back up its economic interests, and that has a higher minimum wage.
right so compare high minimum wage European states to the us and you'll see we are miles ahead.
 
Was there a point to this video? That if we force everybody to pay $100 an hour it will cause unemployment? Do ya suppose?

The minimum wage is $7.25, which is actually $92.75 cheaper.

Sigh.©
 

What are you guys thoughts on this?


So is the guy who made the video really that ****ing stupid, or is he just that dishonest. I am going with the latter based on how he says higher wages make employee costs outweigh benefits, then explains what companies would do to make a higher wage employee still beneficial(raise prices), so the why you can't do it in the first part of the video is shown to be wrong by the second half, which is also wrong(it assumes that labor is the only cost, therefore prices would rise at the rate of labor increases, which is false).

Any time some one tries to simply explain a vastly complex economic situation, they automatically fail since it simply is not possible to do. In reality there are benefits and drawbacks to the minimum wage, it is far from the simple situation the video explains and involves literally hundreds of factors.
 
That video was complete horsecrap. The inflation adjusted minimum wage for 1968 was $10.74/hr, the highest it's ever been. The unemployment rate in 1968 was 3.6%, the lowest level in decades. Demand for labor isn't based on supply of money by employers, but by demand from consumers; raising the minimum wage creates consumption. It's been mathematically and empirically proven that raising the minimum wage does not increase the unemployment rate. We've shown you study after study, chart after chart, and you choose not to understand. Other countries that have higher minimum wages do much better than us, both with their unemployment rates and by their GDP per capita. Reality simply doesn't match what you seem to want it to be.
 
it assumes that labor is the only cost, therefore prices would rise at the rate of labor increases, which is false.

First of all, no I don't think it assumes labor is the only cost. Second, how is that false? Labor is a cost, and prices do what covers costs. Just because some other cost could hypothetically decrease does not change the effect an increased operating cost has on prices.
 
right so compare high minimum wage European states to the us and you'll see we are miles ahead.

Ok, let's take Luxembourg, minimum wage of 13.86 USD an hour (second highest minimum wage), highest GDP per capita in the world.
 
Was there a point to this video? That if we force everybody to pay $100 an hour it will cause unemployment? Do ya suppose?

The minimum wage is $7.25, which is actually $92.75 cheaper.

Sigh.©
It just points out the fallacy that minimum wage doesn't hurt the economy as if it didn't why wouldn't we raise it to a 100?
 
First of all, no I don't think it assumes labor is the only cost. Second, how is that false? Labor is a cost, and prices do what covers costs. Just because some other cost could hypothetically decrease does not change the effect an increased operating cost has on prices.

Because the video assumes that increasing labor costs mean a matching increase in goods/services cost. Without that matching increase, those who get higher wages from a minimum wage increase do in fact benefit with higher spending power. In point of fact, increases labor costs increase the end product/service cost, but not at a one to one ratio.
 
Ok, let's take Luxembourg, minimum wage of 13.86 USD an hour (second highest minimum wage), highest GDP per capita in the world.
See the problems with using per capita statistics when talking about economics it ignores problems of scale.
 
It just points out the fallacy that minimum wage doesn't hurt the economy as if it didn't why wouldn't we raise it to a 100?

That's kind of a strange analogy.

The minimum wage is not very high and there are plenty of exemptions to it. Trying to equate $7.25 to $100.00 is ridiculous. If anyone ever proposed a $100 minimum wage, I will march on Washington with you. But to claim that $7.25 kills jobs is disingenuous. There is a certain standard you hold businesses to. If you can't afford as little as $7.25 - you really don't have much of a business, now do you?
 
It just points out the fallacy that minimum wage doesn't hurt the economy as if it didn't why wouldn't we raise it to a 100?

Because, as the video states, the point of minimum wage is to pay for low experience entry-level workers. It's supposed to be a "starting wage." Problem is, employer's use it as a base wage for ALL employees and so claim that any level of employee can demand a "higher minimum starting wage" as a reason for the problems with the job market.

Another fallacy is that employers would have to raise prices to cover costs created by minimum wage. Notice he does not discuss "profits" in his video? Many employer's in the EU you refer to have high minimum wages which they factor into profit gains or losses, not fixed and variable costs. They are willing to negotiate increases while allowing for decreases in profit.

Not so American companies, especially those run by corporations. Profits are everything, they must be the priority to satisfy investors. Without a minimum wage Corporate run companies would quickly reduce wages across the board wherever the supply of unemployed workers exceeds the demand for their services. Meanwhile, inflation would continue to rise reducing the buying power of currency, while wages go down in order to save expenses and maintain or increase profits.

Finally, even without a minimum wage Corporations would still transfer industry and jobs over seas where they can avoid safety and conservation regulation while paying workers pennies per hour for a 12 - 15 hour workday, something they could not do in the USA even without a minimum wage. Again the motive is to maximize profit by reducing costs.

The video oversimplifies the issues.
 
Because the video assumes that increasing labor costs mean a matching increase in goods/services cost. Without that matching increase, those who get higher wages from a minimum wage increase do in fact benefit with higher spending power. In point of fact, increases labor costs increase the end product/service cost, but not at a one to one ratio.

I did not see anything in the video indicating the matching (1:1) relationship you're describing.
 
Because the video assumes that increasing labor costs mean a matching increase in goods/services cost. Without that matching increase, those who get higher wages from a minimum wage increase do in fact benefit with higher spending power. In point of fact, increases labor costs increase the end product/service cost, but not at a one to one ratio.
They only have increased buying power until the prices catch up and bring them right back to where they started.
 
See the problems with using per capita statistics when talking about economics it ignores problems of scale.

Yeah, a better comparison with Luxembourg would be a rich area within the United States, like say, Silicon Valley. Some wealthy areas employ almost no minimum wage workers. Some states or cities have higher minimum wages than the federal minimum, and maybe there's somewhat rational reasons for this depending on the area. The Oklahoma panhandle, on the other hand for example, may not need or benefit at all from a federal minimum wage hike. As is almost always the case, the liberal end of the spectrum loves across the board feel-good policies without caring very much what the actual implications might be.

Another problem with minimum wage hike advocacy is basically the refusal to look at the actual characteristics of minimum wage workers in this country. I might post some of my thoughts on that in just a few minutes here.
 
Last edited:
Back
Top Bottom