Thread: How the minimum wage works

Originally Posted by Gun Grape

As a business owner, If I have to increase my outlay(raising the salary I pay my employees) you can darn well count on it that I will raise the prices that I charge you.

I'm here to make money.

Then why ever pay above minimum wage for non-technical labor? because wages do more than pay wages, they also affect turnover, training costs, recruitment, productivity, product quality and wastage etc. A few well paid long term employees is often cheaper to the business owner than a high turnover.

Originally Posted by zraver

Then why ever pay above minimum wage for non-technical labor? because wages do more than pay wages, they also affect turnover, training costs, recruitment, productivity, product quality and wastage etc. A few well paid long term employees is often cheaper to the business owner than a high turnover.

So why have a minimum wage in the first place if paying people more is in the inherent interest of a business?

becuase unregulated capitol depresses wages. The invisible hand is a boon to some, but a bane to most.

gunnut,

What was the federal revenue in 2000 and 2003?

a problem here- not all, or even most, of federal revenue increases was caused by the tax cuts. global developments, technology- these are all far greater drivers of the economic engine.

yes, tax cuts help the economy. however, given the size of the economy, these cuts mean ultimately little.

zraver,

The invisible hand is a boon to some, but a bane to most.

you have it the wrong way around. it is a boon to most, and a bane to some.

were it the other way, we would have had a revolution a long time ago.

Originally Posted by zraver

becuase unregulated capitol depresses wages. The invisible hand is a boon to some, but a bane to most.

But every time you raise minimum wage forces me to increase my already high wage to my workers. I need to raise my workers who are $1/hr above minimum wage to be higher. I need to pay those who were making 3 times minimum wage even more because they only make 2.5 times the minimum wage now. All these costs will have to be passed on to the consumers. Or I will need to lay off some people to contain costs. Even worse, I will need to shut my business down because it's no longer worth my time to run.

And who are the must vulnerable to a hike in minimum wage? Mom and pop shops. Small time operations that simply cannot cope with this kind of increase.

Originally Posted by astralis

gunnut,



a problem here- not all, or even most, of federal revenue increases was caused by the tax cuts. global developments, technology- these are all far greater drivers of the economic engine.

yes, tax cuts help the economy. however, given the size of the economy, these cuts mean ultimately little.

I understand that. There are a lot of factors coming into tax cuts vs revenue increase/decrease.

Overall tax cuts are good. Watch for capital flight in late 2009 when the Bush tax cut is set to expire in 2010. I want to take my stock profits and run with a 15% penalty instead of waiting until 2010 when I need to pay 40% to Uncle Sam.

Originally Posted by zraver

Then why ever pay above minimum wage for non-technical labor? because wages do more than pay wages, they also affect turnover, training costs, recruitment, productivity, product quality and wastage etc. A few well paid long term employees is often cheaper to the business owner than a high turnover.

The labor pool decides the pay scale. There are jobs that people will not do for less than $XX.

I also compete with the other employers, so competition also effects the pay scale.

And I will sort of agree with your last sentence. A few Hard working , skilled employees....

Originally Posted by ba1025

No one looses purchasing power because someone else's standard of living rises.

In many cases, I'd argue that the increase in income due to increased minimum wages is simply a shell game. It's a transfer from one person to another, and therefore, a zero sum game in those cases. New wealth was not created, simply redistributed.

Originally Posted by ba1025

We gain demand which creates new jobs and new opportunities for capitol.

Your argument here is flawed because the premise is flawed.

Originally Posted by ba1025

Your argument is specious at best and malevolent if the intent is to feel rich because others are poor.

False dichotomy / strawman.

Originally Posted by ba1025

I don't think and anecdotal example is the same as empirical data. The real earnings of the middle class failed to rise the last 8 years w/o a minimum wage increase. Coincidence or does raising the bottom of the boat raise the whole ship? i don't mind paying an extra nickel for my latte.
Let Justice Roll - Raise the State and Federal Minimum Wage seems to me some states with higher minimum wages have higher standards of living as well mmmmm a connection?????

Minimum wage trends: Understanding past and contemporary research They don't have the experience as a drug addled dope head Rush has but they have some credentials.

http://www.krueger.princeton.edu/90051397.pdf I never saw this stuff on Newsmax....maybe I should widen the net and get some facts with my opinions.

“The federal minimum wage increase of 1996/97 was followed by the best low-wage labor market outcomes in decades. When that proposed increase was under discussion, opponents predicted massive job losses among those affected by the increase... Instead, the employment rates of the least advantaged workers soared to unprecedented levels, poverty rates fell to historic lows, particularly for minority populations, the least skilled workers, and single mothers. Low wages rose in step with productivity growth for the first time in almost thirty years. Note that I do not claim that the federal minimum wage increase was solely responsible for these outcomes… But Congress should take note: the 1996/97 increase complemented these conditions; it did not preclude them.”


FACTS count

They sure do.

Let's look at how well your Krueger-Card study holds up: Show-Me Institute - The Economic Effects of Minimum Wages: What Might Missouri Expect from Passage of Proposition B?

How about those states that raised the minimum wage to a "living" wage? Let's see a sample and see how the minimum wage affected employment: http://www.uoregon.edu/~lsingell/Minimum_Wage.pdf

Also, middle class workers are not worker at any minimum wage, federal or state.

Shek, if you have the time could you explain a few things.

1) Washington has about the highest min wage laws and many metropolitan areas (especially Seattle) have a smoking economy. ANYONE can get a job there if they desire. Want ads and signs abound for min wage jobs. How can this be so if a high min wage is such a detriment? I have also noticed that when the job market is good here, the PNW regularly gets an influx of travelers who are mostly from states that have no state min wage laws, and/or are "right to work for less" states.

2) A few years ago, after the Oregon study you cited, the restaurant association tried to get out of paying its wait staff min wage and threatened doom and gloom if they did not get their way. Well, the association did not get their way. As a result, in the northern I-5 corridor area anyway, the "reasonably well run" restaurants are busy most of the week and you either get a reservation or stand in line on the weekends. The restaurants have had to add to their staff to keep up with the demand. Again, What gives?

bonehead,

1) Washington has about the highest min wage laws and many metropolitan areas (especially Seattle) have a smoking economy. ANYONE can get a job there if they desire. Want ads and signs abound for min wage jobs. How can this be so if a high min wage is such a detriment? I have also noticed that when the job market is good here, the PNW regularly gets an influx of travelers who are mostly from states that have no state min wage laws, and/or are "right to work for less" states.

2) A few years ago, after the Oregon study you cited, the restaurant association tried to get out of paying its wait staff min wage and threatened doom and gloom if they did not get their way. Well, the association did not get their way. As a result, in the northern I-5 corridor area anyway, the "reasonably well run" restaurants are busy most of the week and you either get a reservation or stand in line on the weekends. The restaurants have had to add to their staff to keep up with the demand. Again, What gives?

i'm no shek, but-

a high minimum wage does not necessarily equate to high unemployment or a bad economy- it just means that compared to somewhere else, other economic conditions being equal, the unemployment rate will be higher.

thus, in either one of your examples, the state in question could have been benefiting from other economic factors. the positives simply covered up the minuses.

Originally Posted by ba1025

I don't think and anecdotal example is the same as empirical data. The real earnings of the middle class failed to rise the last 8 years w/o a minimum wage increase. Coincidence or does raising the bottom of the boat raise the whole ship? i don't mind paying an extra nickel for my latte.
Let Justice Roll - Raise the State and Federal Minimum Wage seems to me some states with higher minimum wages have higher standards of living as well mmmmm a connection?????

Minimum wage trends: Understanding past and contemporary research They don't have the experience as a drug addled dope head Rush has but they have some credentials.

http://www.krueger.princeton.edu/90051397.pdf I never saw this stuff on Newsmax....maybe I should widen the net and get some facts with my opinions.


“The federal minimum wage increase of 1996/97 was followed by the best low-wage labor market outcomes in decades. When that proposed increase was under discussion, opponents predicted massive job losses among those affected by the increase... Instead, the employment rates of the least advantaged workers soared to unprecedented levels, poverty rates fell to historic lows, particularly for minority populations, the least skilled workers, and single mothers. Low wages rose in step with productivity growth for the first time in almost thirty years. Note that I do not claim that the federal minimum wage increase was solely responsible for these outcomes… But Congress should take note: the 1996/97 increase complemented these conditions; it did not preclude them.”


FACTS count

I don't know what your educational background is, but you sound like you're not stupid. I simply haven't got the time to correct all of your, well I can't call them errors exactly, because they aren't entirely wrong. I would suggest you run out and buy a copy of BASIC ECONOMICS by Thomas Sowell, or ECONOMICS IN ONE LESSON by Henry Hazlitt. Then PLEASE read Greenspans book, as it covers, in specifics, the time period you are referencing.

One thing, the current mortgage crises is a BAD excuse for a REALLY BAD idea, ie; further regulation of the financial markets. The flexibility of our market was the only thing that stood between us are real economic ruin in mid-september 7 years ago. Had our financial markets been as regulated in 2001 as the were, say in 1969, we'd have gone down hard in the weeks that followed that dark day.

Oh, and the stagnation of middle class wages has more to do with a wall coming down and an empire coming apart than anything a bunch of greedy CEO's did. Much more.

Originally Posted by gunnut

Aha so you do care about your relative purchasing power.



Pegging anything to inflation creates a positive feedback effect where one index drives another higher to drive itself higher.



No. Currency devaluation happens when 1) printing too much money and 2) money flowing to another economy.

Zimbabwe has a 100,000% inflation rate because its bank keeps printing money. When money is not scarce any more, it loses value.

We have been buying at a voracious rate over the last 15 years. Most of the manufactured goods came from abroad. Our money moved away. We have less. They have more. Our currency devaluates.



No. Tax cut kept people in the financial market and continue to invest instead of keeping money in other investment options.



What was the federal revenue in 2000 and 2003?



Liberals are all alike. They complain about the rich and want to rip them off to give to the poor. But when it comes to giving, they want nothing to do with it. They don't want to give voluntarily so they pass laws to make everyone give. It's a psychological defense against guilt and hatred of self.

So basically you do wish to return to pre 1900 American style capitalism. Read the Jungle

Actually, yes about the revenustahttp://www.senate.gov/~budget/democratic/charts/2006/packet_DynamicScoring062006.pdfx
it should be called the laughable curve. If you don't think deficits create an enormous downward pressure on a currency you thinking is missing part of the picture. We created 500 billion dollars of currency just for debt last year from the sale of govt bonds to ....well China to a large part. What do you think a treasury bond is???? It's newly printed dollars in the form of securities

No, I don't want to regulate China I wanted to point out the type of environment you create w/o regulation. Read "the Jungle"

Since 1973 the average income of the top 1% of Americans (income at least $90,000) has doubled, and the income of the top 0.1% (145,000 taxpayers with income at least $1.6 million) has tripled. (from Class in America series in the New York Times, May 2005). I fail to see how the rich have been "soaked". The top 10% pay a lower percentage of the total tax revenues than they have in decades.

As to Social Security in 2000 we finally started to reduce the amount of the social security surplus spent on regular federal programs. Remember the Social Security fix under Reagan that created that surplus? Under what was still a congress with some principles and a moderate President We finally started to pay debt down. Did you know Social Security takes in twice what it costs the the U.S. govt? It provides approx 20% of revenue for non social secuirty govt expenses today. Basically we and business pay a 6% tax on wages earned and the govt gave that money to the wealthy in the 2001, 2003 tax cuts. It was all excess social security revenue in that 2000 surplus. I'd imagine if we hadn't doubled the 211 year old national debt from 4 trillion to 8 trillion plus in 8 years we wouldn't be quite so worried about a 2 trillion dollar shortfall over the next century in Social Security. Even that shortfall is based on 2.5% economic growth. how come the tax cuts didn't use the same assumptions?
The real issue with Social Security is our greed. The Program was 100% financed till 2040 but we spend all the surpluses. That has vcreated two problems going forward. One, we will be paying out more in Social Security so the govt will no longer have those $ to "borrow" from itself. The second is under those low estimates of economic growth in about 25 years those notes come due and someone will finally be expected to pay for that capitol gains tax cut et al... So the real crime is me and my employer overpaying Social Security to finance tax cuts for those who pay little or no Social security taxes by income percentage. So not only did thos tax cuts NOT produce revenue growths they have created a hardship for my kids.

reenspan lost all credibility when he sold my kids down the river and supported spending the entire Social Security surplus on tax cuts for the investor class. Ummm CEO pay has exploded and is really not based on stock performance to a large degree. I don't blame them though I blame our trend to tax wages and not tax income earned from investment....it's not like that investment went here. Capitol fled didn't it? Where are the shiny new factories those capitol gains tax cuts created through increased investment? isn't it great that our devalued dollar which IS a result of deficits is allowing NoN U.S. firms to gobble up America! SignOnSanDiego.com > News > Business > Dean Calbreath -- Financing Iraq war is taking toll on economy
Nice and simple
The Weak Dollar Is Not Your Friend

O and BTW I work for UTC so for me personally the adjunct failure of the govt to govern effectively the last 6 years is great for me. Then again when you elect people who think all govt is bad you get bad govt. No surprise there.

I would agree I might be ignorant to a degree but I think Stupid was a bit strong. Where's the beef? you quote theory. Show me actualities.

I'm sorry for generalizing and saying "the West". I didn't mean CA.WA or AR. Actually it/s more like Wyoming and Montana plus the South. All solidly conservative areas that suck hard on the federal tot and receive the tax revenues of new England and the Left Coast

In the end I respect your right to be wrong and agree to disagree. Thanks for giving me some food for thought. I hope you at least aren't so intractable in your OPINIONS you can't even hear others. That's the kind of group think that's been screwing the pooch in the executive branch the last 7 years