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The point is this: in an unbalanced economy, when supply exceeds demand, sometimes raising wages stimulates the economy as a whole and we all benefit. This is one of the times. Far too many people believe in these two truisms:
Raising the minimum wage increases unemployment and hurts job creation.
Raising the minimum wage ignites inflation.
Under some economic conditions these two assertions are true. Under the current conditions, they are not.
Well, since those two things aren't true, let's just raise minimum wage to 25k per hour, so that everyone who works can be rich.
Not quite right. Rising wages can only push prices up if wages go up faster than productivity. Productivity has been increasing over the last several decades as computers, robots and technology help workers make more stuff per hour. Over the last several years the trend for wages has been flat. Together these two trends -- rising productivity and flat wages -- means there is slack in the economy that wages could be increased without triggering much inflation. And since we are teetering close to deflation, even if rising wages nudged inflation a little higher it would be healthy for the economy.
Having studied quite a bit of economics, I understand and agree with the premise, however, some of the recent studies indicate that productivity has not increased as much as previously thought or many would like to believe (depends on the sector). Also, you need to take into account the "entire" compensation package---not just wages. In some of these low skill, minimum wage jobs, productivity has changed very little over the past 10-15 years. For example: What are the producivity improvements at McDonalds over the past 10 years??? Not much that I am personally aware of. So, if that is actually the case, why should employees be paid a significantly higher salary when they are not more productive? What about employees with more experience-should they be paid more than the entry level employee that just started? What is the impact on the price of goods and services if somebody goes from $8/hr to $15/hr? Obviously there are only a few possible outcomes: The cost of goods/services must increase, the owner looks for methods to increase productivity to offset the increase in wages (ie: automation) or the owners accept lower profit. Then of course one has to consider if the demand for the product is elastic or inelastic. I would submit that a "Big Mac meal" might be acceptible to most people at $6 but certainly fewer would purchase at $9. What happens to employees when fewer people purchase the product?
Let the market decide the right price for a job and leave it at that!
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by Petunia 100
Well, since those two things aren't true, let's just raise minimum wage to 25k per hour, so that everyone who works can be rich.
There. All problems have now been solved.
Um, $25/hour is not going to make anyone rich. That's just under the median family income for the U.S.
Quote:
Originally Posted by carcrazy67
Having studied quite a bit of economics, I understand and agree with the premise, however, some of the recent studies indicate that productivity has not increased as much as previously thought or many would like to believe (depends on the sector). Also, you need to take into account the "entire" compensation package---not just wages. In some of these low skill, minimum wage jobs, productivity has changed very little over the past 10-15 years. For example: What are the producivity improvements at McDonalds over the past 10 years??? Not much that I am personally aware of. So, if that is actually the case, why should employees be paid a significantly higher salary when they are not more productive? What about employees with more experience-should they be paid more than the entry level employee that just started? What is the impact on the price of goods and services if somebody goes from $8/hr to $15/hr? Obviously there are only a few possible outcomes: The cost of goods/services must increase, the owner looks for methods to increase productivity to offset the increase in wages (ie: automation) or the owners accept lower profit. Then of course one has to consider if the demand for the product is elastic or inelastic. I would submit that a "Big Mac meal" might be acceptible to most people at $6 but certainly fewer would purchase at $9. What happens to employees when fewer people purchase the product?
Let the market decide the right price for a job and leave it at that!
In fact the value of the productivity at McD and the like has decreased. Yes, they can produce more products per employee, but the reason is that they have made it easier for the employees with automation, and also the work requires less training and skills. If anything they should be paid less than in the 70s, if based on productivity. No longer do they have to know a price and key it into a register, they simply press the picture of the item. Burgers flip themselves. Press a button and the soda fills to the correct level based on the cup size. Timers determine when food is cooked, so no one has to watch to make sure it doesn't burn.
The 10th Amendment gives plenty of rights to the States, business Owner's and Corporations have plenty of Political sway. It is obvious in areas of Seattle, WA that they are fine with $15 an hour, which means it makes plenty of sense for them. If you do not like it, and you claim Republican, or Conservative, blue dog Democrat etc., then be like Ronald Reagan who said, "vote with your feet." Move to the State of Georgia or Alabama.
$15 an hour does NOT make sense in Seattle because it isn't a living wage unless you ride a bike and live in a flop house with six roommates sharing utilities and rent. $15 an hour isn't even a living wage in a small town place like Waycross, Georgia, where rent is probably half what it is in a city like Seattle.
The best argument for $15/hour is that it would save taxpayers billions of dollars. When wages are too low, the working poor qualify for SNAP cards, EITC tax credits, housing vouchers, and other government assistance. These benefits are means tested, which means the higher the wage, the fewer in government benefits the low wage earner qualifies for.
Opponents say that increasing the minimum wage to $15/hr will increase unemployment and trigger inflation. In those cities and states who have increased minimum wages, there has been little or no sign of either. In King County, WA (Seattle), which has a $15/hr minimum, unemployment declined to 3.3%, a 7-year low.
The Repubs in Congress who vote against raising the federal minimum wage are actually voting to INCREASE public dependence of government aid programs, and voting to INCREASE welfare and assistance expenditures. If they really want smaller government, a good place to start is through a minimum wage that people can live on without needing government help.
You made a good point. IF the Repubs wanted smaller government..... but they DON'T. They just lie and say they do, because that's what the people who vote for them want to hear. But any politician with any brains knows that government is big business. It's an industry. And you don't run a voting-getting business by cutting off freebies. Because even the voters who vote for less government.... don't really want less for themselves. Especially when they've been paying the withholding taxes all these years and it's all they've got.
Anyway.... everybody in America made 1.25 dollars a day average in 1900. And they had longer workdays on top of it. And nobody had a SNAP card. And there was no mass starvation like there was in the Soviet Union or North Korea where everyone was given everything and a guaranteed job. And in 1900 in America, you could buy a year's worth of health insurance for about 2 weeks salary through a fraternal organization or industry plan if offered. Contrasted to now where HC costs for the average working class person amount to about one third to one half their annual pretax income, even after the company pays it's share if it provides benefits. I've got guys I work with making 13-15 bucks who pay 1/3 of their annual net pay for HC benefits after the company kicks in 2/3 of the total cost on the 80/20 plan. People making 9-10 bucks an hour can't afford those premiums. But in 1900, they could have, proportionately speaking.
Nobody's talking about the issue in a sane way. We're talking about the issue in the fantasy political rhetoric sphere, where jingoism and cliches are substituted for real analysis. The bottom line is... .... not what we're interested in, in America.
Last edited by Led Zeppelin; 11-05-2015 at 03:02 PM..
The best argument for $15/hour is that it would save taxpayers billions of dollars. When wages are too low, the working poor qualify for SNAP cards, EITC tax credits, housing vouchers, and other government assistance. These benefits are means tested, which means the higher the wage, the fewer in government benefits the low wage earner qualifies for.
Opponents say that increasing the minimum wage to $15/hr will increase unemployment and trigger inflation. In those cities and states who have increased minimum wages, there has been little or no sign of either. In King County, WA (Seattle), which has a $15/hr minimum, unemployment declined to 3.3%, a 7-year low.
The Repubs in Congress who vote against raising the federal minimum wage are actually voting to INCREASE public dependence of government aid programs, and voting to INCREASE welfare and assistance expenditures. If they really want smaller government, a good place to start is through a minimum wage that people can live on without needing government help.
Does "the best argument" address how to keep people from having (more) babies they can't afford? What about those who refuse extra hours at work and insist on keeping it down to 8, even at $15 per, so their "benefits" won't be decreased?
This whole "livable wage (whatever that means) will reduce welfare" is as short-sighted and/or DISHONEST as the claims that 0bamacare would stop ThePoor from using the ER for "free". I don't believe for a moment that anyone thought that ThePoor would suddenly identify themselves with correct info and voluntarily start paying premiums, deductibles and copays when they could just rip off everyone around them.
True, but the employers in the Seattle area would not want that, and that is the point. In Seattle, when they passed a $15 dollar minimum wage, did businesses shut their doors causing a collapse in the Seattle city limits? They could have, this is evident during the recession when thousands of business owners left California for different States, but even then, it was Republican owners, or those who wanted different conditions.
Seattle, WA business owners are fine with $15 an hour.
Did you speak with each one of them, to state this so unequivocally?
Seattle, WA business owners are fine with $15 an hour.
Yes, it appears they are. Not only are jobs not being lost, the number of permits for new restaurants has increased since the $15/hr law was passed.
Noted financial writer Barry Ritholtz caught a conservative pundit grossly distorting labor data when she asserted that the minimum wage law had cost Seattle 700 jobs. Turns out the pundit used a definition of "Seattle" that extended over an area 70 times the size of Seattle -- using job loss data from suburban and rural areas that had no wage increase.
A local business publication ran a story highlighting how all of the gloom and doom surrounding a minimum wage increase never happened:
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