Should minimum wage be tied to inflation?

[KevinKohler]

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?

An employer doesn't hire because its cheap to do so...they hire because they have work that needs doing, and the existing staff is unable to accommodate.

Do increases in minimum wage coincide with increases is failed businesses?

 

[Sisyphus]

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.

No. Better is to raise the value of the worker, with higher pay. Our value is not what we do; it's what we make and spend.

Bear in mind, economies are highly complex and relational entities. Take millions of lower-paid workers and up their earnings, which are highly likely to be spent from paycheck-to-paycheck, and things happen on the demand side, and not merely the cost side. A checkout person who served Dollar Menu items and water, now serving an Angus Burger Value Meal in the same time as they did before ringing up less and selling lower margin items is increased in value not because of what they're doing, BUT BECAUSE OF HOW ECONOMICALLY EMPOWERED THE CUSTOMER IS, who is merely a worker for another company. McDonald's thus cannot raise pay unilaterally, but when all companies have higher wage minimums, they win, due to more business, making each and every worker more valuable in parallel or even more so than the employee cost increase.

Look at the last FMW increase, circa 40% over two years. The inflation in the cost of the Big Mac actually SLOWED!!!!

 

[RabidAlpaca]

An employer doesn't hire because its cheap to do so...they hire because they have work that needs doing, and the existing staff is unable to accommodate.

Do increases in minimum wage coincide with increases is failed businesses?

No, but it correlates with unemployment. If what you're saying is true, why don't we just make the minimum wage $40 an hour? Every company will be able to afford this, because they need workers to continue operating. Right?

 

[Sisyphus]

No, but it correlates with unemployment. If what you're saying is true, why don't we just make the minimum wage $40 an hour? Every company will be able to afford this, because they need workers to continue operating. Right?

Because it would scale consumption to too great a level and be inflationary, due to over employment and out of scale money supply.

You're using the "take it to an absurd extreme" tactic, which is absurd. It's like saying to your doctor who just advised you drink more water, "Why not just drown me, Doc?"

Ridiculous, and merely shows ignorance of where the economy is and how wage policies need to be adjusted in order to improve it.

 

[RabidAlpaca]

Because it would scale consumption to too great a level and be inflationary, due to over employment and out of scale money supply.

You're using the "take it to an absurd extreme" tactic, which is absurd. It's like saying to your doctor who just advised you drink more water, "Why not just drown me, Doc?"

Ridiculous, and merely shows ignorance of where the economy is and how wage policies need to be adjusted in order to improve it.

In case you haven't noticed, we have massive unemployment problems. Minimum wage makes it worse, not better. Employers do not say "Oh, higher minimum wage? We should hire more minimum wage workers!"

 

[Sisyphus]

In case you haven't noticed, we have massive unemployment problems. Minimum wage makes it worse, not better. Employers do not say "Oh, higher minimum wage? We should hire more minimum wage workers!"

Wrong. Workers are hired for one reason only: to meet demand for goods and services. So when demand increased per capita, unemployment drops.

The best example of that was an increase in the minimum wage of over 80%, when unemployment was north of 6.5%. Within 24 months, unemployment fell to about 3.1%.

You're only looking at the cost-side, and ignoring the far more important demand-side.

 

[KevinKohler]

No, but it correlates with unemployment. If what you're saying is true, why don't we just make the minimum wage $40 an hour? Every company will be able to afford this, because they need workers to continue operating. Right?

It correlates with unemployment, yes. But that's because companies all across the US are cutting costs (usually in payroll) even while their store fronts are seeing increases in business over previous years...in order to continue to facilitate the upward trend of executive compensation. I myself am now a part of this. I'm a cutter. I find ways to get rid of older, higher paid employees, in favor of new hires that cost less...not so that we can add payroll hours, or increase compensation for the other hourlies (it's also my job to keep the raises of those other hourlies bellow .75 cents per year), not so we can invest in facilities, but so that the bonus structure of executive staff can increase by 2% this year.

THAT is what puts companies out of business, and thousands of people on government tits. The people who run the companies that employ millions have more power over us as individuals than any elected official could ever dream of wielding. And the trend is, they are using it to get rich and get out, regardless of what doing this does to the companies they run. If they won't act responsibly, we have publicly elected officials who wl MAKE them do so, and that's the bottom line. So it's either give up some profit to increase payroll, or give some up to bare yet more of the tax burden.

 

[Beaudreaux]

Federal minimum wage is one of the few Federal Mandates I support. Although it is way too low. As fiscal conservative, it only makes sense to have a minimum wage that is realistic. The key term is realistic.

Unions have taken the extreme alternate path in establishing minimum wage determinations is legislation such as the Davis-Bacon Wage Act. Wage determinations that are too high can have a stifling effect on the economy. As can wages that are so low that consumers do not have enough income to make purchases and drive the economy.

The problem is finding the mean level. Not too low as it is now, and not too high that it raises prices and slows the economy. And that is why this is such a volatile political subject. Politicians are afraid that if not controlled, the minimum wage could go the way of Davis-Bacon or Union wages.

Tying the Federal minimum wage to the True CPI would make sense. However, the CPI has many variables that can skew the true cost of living.

This is a great subject and thanks to the OP for starting this thread.

 

[KevinKohler]

In case you haven't noticed, we have massive unemployment problems. Minimum wage makes it worse, not better. Employers do not say "Oh, higher minimum wage? We should hire more minimum wage workers!"

No, they say, "Oh my, the nations largest body of consumers(the 47%) have suddenly got more disposable income, and are spending it...on MY stuff! Better higher more help, increased cost be damned!"

 

[RabidAlpaca]

It correlates with unemployment, yes. But that's because companies all across the US are cutting costs (usually in payroll) even while their store fronts are seeing increases in business over previous years...in order to continue to facilitate the upward trend of executive compensation. I myself am now a part of this. I'm a cutter. I find ways to get rid of older, higher paid employees, in favor of new hires that cost less...not so that we can add payroll hours, or increase compensation for the other hourlies (it's also my job to keep the raises of those other hourlies bellow .75 cents per year), not so we can invest in facilities, but so that the bonus structure of executive staff can increase by 2% this year.

THAT is what puts companies out of business, and thousands of people on government tits. The people who run the companies that employ millions have more power over us as individuals than any elected official could ever dream of wielding. And the trend is, they are using it to get rich and get out, regardless of what doing this does to the companies they run. If they won't act responsibly, we have publicly elected officials who wl MAKE them do so, and that's the bottom line. So it's either give up some profit to increase payroll, or give some up to bare yet more of the tax burden.

So we make the corporate taxes off-settable by wage increases for the lower half workers in a company. As of now when a company starts paying a lower end worker more, they're losing profit, if they're just offsetting their tax burden, everybody wins.

Wrong. Workers are hired for one reason only: to meet demand for goods and services. So when demand increased per capita, unemployment drops.

The best example of that was an increase in the minimum wage of over 80%, when unemployment was north of 6.5%. Within 24 months, unemployment fell to about 3.1%.

You're only looking at the cost-side, and ignoring the far more important demand-side.

And what happens when the prices of a product go up? Do you really think demand increases? The newer wages increase prices which offsets demand.

 

[Sisyphus]

So we make the corporate taxes off-settable by wage increases for the lower half workers in a company. As of now when a company starts paying a lower end worker more, they're losing profit, if they're just offsetting their tax burden, everybody wins.

Taxes are on profits and not volume, and are in effect, and after-thought. 99.9% of a business owner's thought energy is on being more profitable, regardless of the taxes on that profit.

And paying workers more, as long as other companies are too, does not reduce profit, it increases it, due to the number becoming larger.

Workers being paid a percentage of gross, do no necessarily go up as a percentage when wages and consumption increase. Sales can offset the higher wage cost. And even if not, the math can still be to the positive side. Maybe workers do become a larger percentage, even with higher sales, but other, FIXED costs, such as building leases / loan payments, equipment lease, utilities, etc, are now a lower percentage compared to the higher sales. So the percent loss on wages accrues back in a percent gain on other costs of running the enterprise. Consider McDonalds. Up go wages, but not the cost of bread, meat, equipment leases, etc, etc. Plus even if gross (pre tax) is a few percent lower, it's of a higher number ... some even in some of the worse scenarios, penny-profit (what the owner pockets) is HIGHER!!!

Would you rather have 12% net of $700,000 or 10% net of $1 Million? For most small businesses, the percentage are academic. In the end, they want to know: WHAT DID I MAKE THIS YEAR???

 

[KevinKohler]

So we make the corporate taxes off-settable by wage increases for the lower half workers in a company. As of now when a company starts paying a lower end worker more, they're losing profit, if they're just offsetting their tax burden, everybody wins.



And what happens when the prices of a product go up? Do you really think demand increases? The newer wages increase prices which offsets demand.

Except the share holders.


When I say increase taxes on profits...I mean capital gains.

 

[RabidAlpaca]

Taxes are on profits and not volume, and are in effect, and after-thought. 99.9% of a business owner's thought energy is on being more profitable, regardless of the taxes on that profit.

And paying workers more, as long as other companies are too, does not reduce profit, it increases it, due to the number becoming larger.

Workers being paid a percentage of gross, do no necessarily go up as a percentage when wages and consumption increase. Sales can offset the higher wage cost. And even if not, the math can still be to the positive side. Maybe workers do become a larger percentage, even with higher sales, but other, FIXED costs, such as building leases / loan payments, equipment lease, utilities, etc, are now a lower percentage compared to the higher sales. So the percent loss on wages accrues back in a percent gain on other costs of running the enterprise. Consider McDonalds. Up go wages, but not the cost of bread, meat, equipment leases, etc, etc. Plus even if gross (pre tax) is a few percent lower, it's of a higher number ... some even in some of the worse scenarios, penny-profit (what the owner pockets) is HIGHER!!!

Would you rather have 12% net of $700,000 or 10% net of $1 Million? For most small businesses, the percentage are academic. In the end, they want to know: WHAT DID I MAKE THIS YEAR???

This didn't really make much sense. Apparently paying workers more means more profit. If you'd like to backup that statement with facts of some kind, I'd like to hear it.

Except the share holders.


When I say increase taxes on profits...I mean capital gains.

How does it effect the shareholders negatively? That 15% was going to be gone no matter what, it just went to the lower wage instead of the government. There is no situation where they'd get it.

 

[sawyerloggingon]

I'm against a minimum wage altogether.

 

[Jerry]

Should minimum wage be tied to inflation?

No. It should be eliminated.

 

[Mr.Nick]

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.)

Minimum wage should be "tied" to regional standard of living.

At least you're using your mind and pondering "what if" instead of just accepting reality for what it is.

 

[Sisyphus]

Minimum wage should be "tied" to regional standard of living.

At least you're using your mind and pondering "what if" instead of just accepting reality for what it is.

What "standard?"

 

[ttwtt78640]

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.

We (myself and my girlfriend) live on a little more than that now, in a podunk town, rural central Texas about 25 miles from Austin. I work for cash (no taxes taken out) usually 3 to 5 days per week making about $350/week, she works 2 to 4 days per month making about $50/week. Our rent is $300, electric $150, cable/internet $120, water $40 and car insurance $57. $670 in basic monthly bills leaves us about $1100/month for food, gasoline, a few nights per week drinking beer and anything else that comes up.

 

[MaggieD]

Minimum wage should be "tied" to regional standard of living.

At least you're using your mind and pondering "what if" instead of just accepting reality for what it is.

That's an interesting thought. I think it makes sense, actually. I've lived in two areas -- Metropolitan Chicago and Pondunk, Wisconsin. While one would think that Podunk would be less expensive, we really didn't find it that much different. The cost of utilities and food in Podunk just about made up for the other differences. Those being mainly real estate taxes. But if it could be figured out? I'd vote for that!

 

[MaggieD]

We (myself and my girlfriend) live on a little more than that now, in a podunk town, rural central Texas about 25 miles from Austin. I work for cash (no taxes taken out) usually 3 to 5 days per week making about $350/week, she works 2 to 4 days per month making about $50/week. Our rent is $300, electric $150, cable/internet $120, water $40 and car insurance $57. $670 in basic monthly bills leaves us about $1100/month for food, gasoline, a few nights per week drinking beer and anything else that comes up.

Actually, that sounds like a healthy budget -- that $300 rent is awesome. Untouchable in metro areas, I'd guess. I'm glad you do well. ('Course I wish you were paying taxes like the rest of us, but . . . you're paying a price for that, as long as you don't care.)

 

[ttwtt78640]

Actually, that sounds like a healthy budget -- that $300 rent is awesome. Untouchable in metro areas, I'd guess. I'm glad you do well. ('Course I wish you were paying taxes like the rest of us, but . . . you're paying a price for that, as long as you don't care.)

Care to elobarate on that? No rush, as we are going off to drink beer now.

 

[MaggieD]

Care to elobarate on that? No rush, as we are going off to drink beer now.

You run the risk of being caught red-handed, of course. Doesn't give you much room to complain about the illegals in Texas taking your jobs, because, in essence, you're one of them. If you are injured at work, you have no workers' compensation or opportunity for Social Security disability. Or the unemployment safety net. Other than that, if you're okay with not paying your fair share, I really can't think of anything else.

Don't get me wrong -- No offense. I realize we do what we have to do. But, in my opinion, your employer is taking advantage of you; you just don't look at it that way.

 

[Mr.Nick]

What "standard?"

Well I can rent a place in Rockford Illinois for 200 a month however, I cant rent a pace in Chicago for anything less than 500.

Does that make any sense?

 

[Mr.Nick]

That's an interesting thought. I think it makes sense, actually. I've lived in two areas -- Metropolitan Chicago and Pondunk, Wisconsin. While one would think that Podunk would be less expensive, we really didn't find it that much different. The cost of utilities and food in Podunk just about made up for the other differences. Those being mainly real estate taxes. But if it could be figured out? I'd vote for that!

That's the funny thing about Wisconsin and Illinois.. Some things are cheaper but it seems everything offsets unless you go way north (Green Bay) or west (Rockford)...

I'm up on the Chain-o-lakes so I'm right on the border (Lake County).. Smokes are cheaper in Illinois (Lake County) , however smokes are like 2 bucks more in Wisconsin, yet gas is cheaper...

I suppose I get the best of both worlds. haha.

 

[sawdust]

Wages should be tied to productivity. When government interferes in market in an attempt to impact price through control, subsidy or tariff there are always unintended consequences. Low income individuals are always impacted to a greater degree by fluctuations in minimum wages than others with higher incomes.