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Should minimum wage be tied to inflation?

MaggieD

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I think it should.

In 1974, the Federal minimum wage was $2.00. Using an inflation calculator, the Federal minimum wage should be $9.74. Why isn't it? (It's currently $7.25.)
 

WCH

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I don't know about the rest of the country but, very few are paid that minimum wage here in our area. (they make more)

Could be because of our better than average economic situation.
 

MaggieD

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I don't know about the rest of the country but, very few are paid that minimum wage here in our area. (they make more)

Could be because of our better than average economic situation.

The state of Texas minimum wage is the same as Federal. If companies in your area are paying more, it's because they have to do so to attract employees. That's not at all unusual in certain areas of the country. Still, about 1.7 million employees are paid the Federal minimum wage.

I'm actually surprised some states haven't indexed their minimum wage figure to inflation. It would seem only fair.
 

ttwtt78640

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I think it should.

In 1974, the Federal minimum wage was $2.00. Using an inflation calculator, the Federal minimum wage should be $9.74. Why isn't it? (It's currently $7.25.)

Most "raise the minimum wage" fans use 1968 as their desired baseline, since that was when the federal minimum hourly wage was at its historical high, $10.56 in todays dollars. One could also say that based on 1938, its historical low of $4.07, it is too high now. ;)

A history of the minimum wage since 1938 - Economy
 

cpwill

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I think it should.

In 1974, the Federal minimum wage was $2.00. Using an inflation calculator, the Federal minimum wage should be $9.74. Why isn't it? (It's currently $7.25.)

No. The fact that inflation lowers the minimum wage in real terms is minimum wages' one silver lining. If the minimum wage today was $9.74, all that would change would be that more low-education low-experience Americans would be out of work, and the demand for illegals would be somewhat less higher.
 

WCH

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Wonder how many of those are non-citizens?
 

MaggieD

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No. The fact that inflation lowers the minimum wage in real terms is minimum wages' one silver lining. If the minimum wage today was $9.74, all that would change would be that more low-education low-experience Americans would be out of work, and the demand for illegals would be somewhat less higher.

That's what "they" keep telling us. I don't believe it.
 

cpwill

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That's what "they" keep telling us. I don't believe it.

well, maggie - would you purchase a car that was worth $12K for $23K?
 

KevinKohler

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well, maggie - would you purchase a car that was worth $12K for $23K?

Who says the 23k car is only worth 12?


Seems to me if people pay 23k, it's worth 23k. That's what you folks keep telling me when we discus the nebulous nature of value as it applies to so called economic growth.
 

ttwtt78640

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I think it should.

In 1974, the Federal minimum wage was $2.00. Using an inflation calculator, the Federal minimum wage should be $9.74. Why isn't it? (It's currently $7.25.)

I think that the minimum wage should be tied to the federal poverty rate and that no social "safety net" program should ever allow anyone to exceed that level via gov't assistance. Currently a single worker with a full-time, minimum wage job can support themselves and one other person at slightly over that level.

What are Poverty Thresholds and Poverty Guidelines? | Institute for Research on Poverty | University of Wisconsin–Madison
 

RabidAlpaca

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Who says the 23k car is only worth 12?


Seems to me if people pay 23k, it's worth 23k. That's what you folks keep telling me when we discus the nebulous nature of value as it applies to so called economic growth.
That doesn't really make any sense. Minimum wage is using government force to make someone pay someone else for more than they're worth.

"Well, the government is making them pay $10/hr, so they must be worth it!"
 

MaggieD

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I think that the minimum wage should be tied to the federal poverty rate and that no social "safety net" program should ever allow anyone to exceed that level via gov't assistance. Currently a single worker with a full-time, minimum wage job can support themselves and one other person at slightly over that level.

What are Poverty Thresholds and Poverty Guidelines? | Institute for Research on Poverty | University of Wisconsin–Madison

Federal Minimum Wage is $7.25 x 40 x 52 / 12 = $1257.00 a month. I honestly don't know how one person would be able to live on that. Maybe in some podunk town . . . but certainly not on the outskirts of any metropolitan area.

$600 rent; $50 electric; $40 telephone; $50 car insurance; $50 gas; $96 Social Security/Medicare taxes; $100 car payment. Just those very basics leaves only $271 to pay for food, clothing, dental, medical. I just don't think it could be done.

The poverty level of $11,702 would leave only $85.00. to pay for food, clothing, dental, medical. That poverty level number isn't "poverty level" it's starvation.
 

Fisher

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Tying wages to inflation could theoretically create a feedback loop in which wages drive inflation that drive wages that drive inflation......

It is something that needs to be revisited more frequently than it is, but I do not support automatic much of anything when it comes to economics.
 

fmw

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That doesn't really make any sense. Minimum wage is using government force to make someone pay someone else for more than they're worth.

"Well, the government is making them pay $10/hr, so they must be worth it!"

You have a flaw in logic here. The car example is optional. People can buy the car or not or choose a different car. Minimum wage is not optional. One cannot opt out so it is removed from adjustment by the marketplace.
 

Dittohead not!

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Add up the benefits of living on the government dole, calculate a weekly figure, add 10%, then divide by 40. That should be the minimum wage, unless, of course, you disagree that people working full time should make more than people who don't work.
 

fmw

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I'm about as fiscally conservative as people can be. Yet I disagree with the conservative take on minimum wage. Assuming we can't abolish it, then we should most likely raise it. Firstly, it represents only about 3% of the jobs so its implementation doesn't have large effects on the economy. Secondly, the conservative belief that raising it costs jobs is probably not true. Jobs are created by the employees companies need to operate, not by how much wages are. What raising it does is raise prices. Raising prices for the products and services provided by 3% of the labor force isn't going to change much. To me it is illogical to have a minimum wage in the first place. But it is even more illogical to have one so low that people can't make ends meet on it. The problem with indexing it in my view is the political nature and questionable accuracy of the indices. We always seen to want to adjust to inflation rather than bring inflation under control.
 

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You have a flaw in logic here. The car example is optional. People can buy the car or not or choose a different car. Minimum wage is not optional. One cannot opt out so it is removed from adjustment by the marketplace.

No, you have the flaw. Just like how you can choose a different car, you can choose a different job. You can either find one better paying or work more hours. Furthermore, you can work your way up to a higher salary within the company if you take your job seriously.
 

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No, you have the flaw. Just like how you can choose a different car, you can choose a different job. You can either find one better paying or work more hours. Furthermore, you can work your way up to a higher salary within the company if you take your job seriously.

Fair enough.
 

iacardsfan

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No. The fact that inflation lowers the minimum wage in real terms is minimum wages' one silver lining. If the minimum wage today was $9.74, all that would change would be that more low-education low-experience Americans would be out of work, and the demand for illegals would be somewhat less higher.

My fault, I read your post wrong. Nothing to say anymore :doh
 
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Sisyphus

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I think it should.

In 1974, the Federal minimum wage was $2.00. Using an inflation calculator, the Federal minimum wage should be $9.74. Why isn't it? (It's currently $7.25.)

Why? People are dumb and think it will inflate the cost of stuff we like, such as Big Macs and Lattes (doesn't and in fact can have a price-lowering effect, due to increased demand and competition). In short, we like the idea of poverty wage workers improving our lives with lower prices for stuff, or so we think. But in fact it screws us too, lowering employment and the prevailing wage across much of the middle class earning spectrum. So stupid, greedy, heartless scum who think others should work for crap so they can live better are getting what they deserve: screwed right along with them.

Meanwhile, no; not tied to inflation based on any given year (try picking 76, and tie it to a 2013 Dollar, and see how much that slight change in years impacts the current Dollar equivalent.) So it's both subjective, and in time only treads water and does not improve lives. So it's better to adjust the FMW to a level that increases consumption to a level that we near full employment, and then let the tighter market for workers drive wages higher organically, due to a lower supply of workers and higher demand for them.

Right now business are having a field day and record profits, since workers are in over-supply and low-demand. We can reverse that with a higher FMW, which the business lobby knows as well as I do. So they'll fight wage minimum increases to the death, with all manner of BS scare tactics, but not because the higher minimum wage hurts them or the economy, but because it will mitigate much of the wet dream they're having right now with higher unemployment, allowing them to be selective as hell and paying workers far less, not to mention those already hired sure as heck won't risk losing the job by demanding raises or toying with unionization. Worker are in the palm of businesses' hands, and they'll fight like hell to keep us there.
 
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KevinKohler

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That doesn't really make any sense. Minimum wage is using government force to make someone pay someone else for more than they're worth.

"Well, the government is making them pay $10/hr, so they must be worth it!"

And do companies pay that minimum wage these people aren't worth? If so, it must be worth it to those companies...else, they wouldn't do it.
 

Sisyphus

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And do companies pay that minimum wage these people aren't worth? If so, it must be worth it to those companies...else, they wouldn't do it.

Companies pay the least they have to for workers, and not what the worker is worth. If workers were paid what they're "worth," all companies would be profit-neutral, since everyone in the value chain would get back what their efforts produced.
 

RabidAlpaca

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And do companies pay that minimum wage these people aren't worth? If so, it must be worth it to those companies...else, they wouldn't do it.

It's the salaries they don't pay that matters in this. No successful businessman will hire someone for a net loss. How many people who's value is less than minimum wage can't find a job, and can't get any job skills because of this?

Education costs money, and you can't get money without a job. You can't get a job because your value is less than minimum wage, so you're pretty much just ****ed. Then they go on the government tit. I guess that's better?
 

KevinKohler

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Companies pay the least they have to for workers, and not what the worker is worth. If workers were paid what they're "worth," all companies would be profit-neutral, since everyone in the value chain would get back what their efforts produced.

Right. Better then to place the value on the job, rather than the worker. And if it weren't worth it for companies to pay whatever the minimum wage is for whatever job required it, that job would go unfilled.
 
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