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Raising the minimum wage

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Sno.
Posts: 12155 - Karma: 6,152

Ok, am I missing something here?

There has been a big push recently by certain groups of workers in Seattle to get the minimum wage changed from $9.19/hr to $15.00/hr.

Where did these people come up with $15.00/hr? Is it based on anything or is it just a number they pulled out of their ass because they want more money and don't realize that this isn't how economies work?

If the minimum wage was raised to $15.00/hr, what would happen to all of the workers who are currently making $15.00/hr and worked their way up to that rate? What about those making $20.00/hr? If you raised the minimum wage by $6.00, it seem to me that this would just cause complete chaos, and everyone would in-turn want their own wages to be raised $6.00/hr which would just entirely defeat the purpose and just make the dollar worth less, driving up prices and doing absolutely nothing.

Am I missing something, or are these people idiots and completely out to lunch?

Sep 28 2013 2:46PM
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MilaKunis
Posts: 1480 - Karma: 3,646
Raising the minimum wage would hurt more then help.
Sep 28 2013 2:49PM
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MilaKunis
Posts: 1480 - Karma: 3,646
But to answer your question with inflation rates it should be much higher if it scaled
Sep 28 2013 2:49PM
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Sno.
Posts: 12155 - Karma: 6,152
Well right but that applies to most people making less than 50k-- not just minimum wagers.
Sep 28 2013 2:51PM
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Arabian
Posts: 682 - Karma: 1,080
Raising the minimum wage is fucking retarded.

Suppose we raise the minimum wage.

1) Raising the minimum wage forces small and mid-level businesses out of business, since you have effectively doubled their operating costs. Only large corporations can afford to cut half their employees in the way raising the minimum wage would force.

2) You have effectively made it impossible for semi to unskilled workers to get a job, since you have limited the number of positions available in every business, which makes finding the most skilled worker an imperative.

3) You have just raised the cost of goods by a large margin, since, if a company does not downsize, it must maintain it's profit ratio by increasing the cost of goods, making the increase in minimum wage effectively useless in terms of spending power.

4) You have just forced every major corporation out of America, cutting the job market by a massive percentage.



In fact, it may seem cruel to say, but decreasing the minimum wage or getting rid of it altogether shows a statistically better outcome than where we're at now.
Sep 28 2013 3:02PM
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-PoonHammer-
Posts: 281 - Karma: 779
This is one of the grossest examples of greed I've ever seen. Seriously, people have such ass-backward thinking sometimes

Protip: To make more than $9 an hour, go to college so you can get a job that actually requires skills
Sep 28 2013 3:03PM
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Sno.
Posts: 12155 - Karma: 6,152
yes, thank you-- I mean what would be the point of raising minimum wage if by doing so you're decreasing the purchasing power of everyone middle-class and below?
Sep 28 2013 3:08PM
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Arabian
Posts: 682 - Karma: 1,080
The point is it satisfies the feel good property that most Liberal ideas are naively built upon. It feels good to say that we should all make a living wage, but to point to the most grossly incompetent idea ever, raising the minimum wage, is nothing more than idiots legislating stupidity so other idiots feel good about "doing something to help the problem".
Sep 28 2013 3:11PM
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powderdrunkie
Posts: 2034 - Karma: 976
It goes by cost of living so raising it just for shits and giggles is dumb. People that work at walmart need to just try harder to get a higher paying job.
Sep 28 2013 3:16PM
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Benson.
Posts: 2739 - Karma: 3,787
Yup.
Sep 28 2013 3:17PM
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-wakes-
Posts: 358 - Karma: 201
The minimum wage is an extremely complex economic issue. Most people fighting for a huge increase probably have no idea what a price floor is, or how it works. The fast food workers that are protesting certainly have no clue how it would effect the demand for labor.
Sep 28 2013 3:20PM
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Bumblesteeze
Posts: 3092 - Karma: 748
Click for larger image
Sep 28 2013 3:25PM
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cobra_commander
Posts: 16909 - Karma: 4,686
$15/hr is $30k/year (40hr/wk 50 wk/year) - nothing special. It is what these folks view as a 'living wage.' I agree with them, $30k/yr is about the minimum to live 'comfortably' according to post modern standards. The problem is, they think everyone is entitled to a comfortable life. I'm sorry, but if your not willing to do fuck all to advance yourself, society has no obligation to do fuck all for you. While we are defiantly living in an employers market right now, there is little reason to be working a minimum wage job post high school.

At the risk of sounding like an old GOP geezer, many of these people were never took any responsibility in high school. Some were raised in upper middle class households, where they were not expected to hold a job in high school. The focus was on getting to college. Once there they 'explored themselves' in some turd fuck liberals arts major that no one cares about, or dropped out to smoke weed and go to shows full time. The other group are those who most likely lacked parenting in HS, did fuck all there, and continued the trend once they graduated or dropped out. Now they all expect the world to take care of them. Its a lack of responsibility.
Sep 28 2013 3:47PM
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t_rob
Posts: 6433 - Karma: 11,458
At some point, minimum wage labor is included in the price of everything we buy. Increasing the minimum wage increases the prices of everything. It's not like minimum wage goes up, minimum wage workers get more and everything else stays the same.
Sep 28 2013 4:07PM
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Byron_tha_gr8
Posts: 4573 - Karma: 14,299
i feel like small raises over time are necessary, eg here in arizona it went up 10 cents on new years as a cost of living increase. But when i lived in washington where it was already $9.10 or some shit, i really couldn't find a job because the places i wanted to work couldn't afford to hire more employees, even when they wanted to. I found a job in nearby Idaho within 2 days of looking, and im convinced it was because there was a lower minimum wage. Wherever the fuck they got $15, i pray to the lord that doesn't happen since im about to be looking for a job in Washington again. Rarely do i side with the job creator's (aka rich fucks), but how in the fuck do they expect a small business to pay say the 10 minimum wage workers they have now 15 and hour?

as it is now, say they have to pay their 10 employees around 400 work hours at 9 an hour. Before taxes and what not thats around $3,600 a week. Now raise that to 15 and its 6,000 a week. Ive worked for some pretty successful small businesses, but i don't think any could afford losing an additional $2,400 a week out of the bottom line. Most only ended up making $1000-$3000 a week after payroll anyways.

And fuck, I usually vote liberal.
Sep 28 2013 4:12PM
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Willgum
Posts: 3254 - Karma: 3,066
Thank you.

Theres a reason why some people want the minimum wage raised: their stupidity is why they're in a minimum wage job to begin with.

I worked with alot of middle aged folks who made close to minimum wage. Many of them were driven, hardworking, and appreciated that they could get by, and were wonderful people. They recieved raises and one eventually become facilities manager.

But the ones who complained about pay, hours, their shit boss and the government, they were lazy fuckers who did half assed jobs and spent their paycheck on lotto tickets and booze.

Our country may not be a perfect meritocracy, but ultimately you get what you put in when it comes to work.
Sep 28 2013 4:18PM
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BE..
Posts: 1185 - Karma: 81
You are drastically overestimating the effect that a minimum wage boost would have. Most studies have shown that Obama's plan to boost the federal minimum wage to $9 would have a negligible effect on businesses while increasing the earnings of low-income households by 7%.That being said, a raise to $15 an hour minimum is very unrealistic and could have far more negative implications.
Sep 28 2013 4:25PM
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cobra_commander
Posts: 16909 - Karma: 4,686
Another question for you:

What would be the effect on employment of legalizing many of the current illegal aliens and making it easier to legally immigrate from Mexico and South America?
Sep 28 2013 4:47PM
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Arabian
Posts: 682 - Karma: 1,080
I'd like to see the study, since that makes no sense unless they lumped in all possible businesses into the same study in order to force the numbers lower. You cannot look at the totality of businesses in order to say something meaningful about the effect on businesses. It doesn't make sense and it's an involution of the facts.

Although i'd expect it, since it's a government study.
Sep 28 2013 4:53PM
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theabortionator
Posts: 51659 - Karma: 162,374
If we hadn't killed our economy and let inflation get so out of control it wouldn't be a problem. The government has has done some serious damage.

Also you have people graduating school with a sometimes useless degree, a ton of debt, only to find a country with a beat economy and many jobs already outsourced.

If the minimum wage get's raised to $15, good luck getting an entry level job with no skills. Who the hell is going to want to pay some 14 year old with an unproven work ethic that kind of money.

At some point the wage will have to go up because the value of the USD keeps dropping, but jumping up to $15 in one shot is pretty wild.
Sep 28 2013 4:55PM
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s-hand
Posts: 1334 - Karma: 1,800
$9.19??  Minimum wage in MD is $7.25
Sep 28 2013 5:49PM
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yewwwwwww
Posts: 182 - Karma: 46
Nice graph, did you cover that in the first or second week of economics 101. I've posted this before but here goes.

There is significant productivity gains from higher minimum wages. The minimum wage debate is conducted around ideological grounds not actual data. Australia has a minimum wage of $15.96 and an unemployment rate of 5.8%.

All of the research into minimum wage up to about 1990 and some as late as 1999 (which was done by the OECD) used employment to population ratio as the dependent variable, and as most people don't earn the minimum wage this ratio overstates the effect that minimum wage increases have on employment. You can read more here - James, M., Wooden, M. & Dawkins, P. (2001). Minimum Wages and the Fallacy of the Inflated Denominator. Economic Papers 20, 59–70.

This data is for Australia but elasticity for labour demand ranges from -0.03 to -1.04. This is due to how the studies estimate their equations, namely how they treat output as a variable. If output is held constant they have a lower elasticity, while when it is not held constant it leads to higher elasticity. Most of these studies have been found to have an endogeneity problem with the dependant variable as output was only found to be exogenous when it was held constant so the elasticities at the higher end are overestimated.

So almost all studies show that elasticity demand for labour is negative but the actual change in employment is so small as to insignificant. This is because most people earn a wage higher than the minimum, so the effect of imposing a minimum wage increase is to increase the wages only of those would would receive the lowest wages. The effect on the average wage is so small which is why the impact on employment is also small.

The imposition of minimum wages affects only those in low skilled, low paid jobs. These individuals are, generally, very poor substitutes for the majority of the workforce and, therefore, minimum wages have little impact on the wages and employment of most workers. However, those workers earning just above the minimum wage are highly substitutable for those who would otherwise earn below the minimum. This is because although there is still a skill differential between them, the jobs are still, relatively, unskilled. 

So minimum wage increases may lead to substitution of lower skilled workers with higher skilled workers but total employment is responsive to changes in average wages and the minimum wage does not affect average wages substantially. Firms hire extra labour when the value of the extra output produced is greater than the wage. So as long as firms are producing goods and services that the economy is demanding firms will still employ workers as wages rise.

There is a massive body of work surrounding this topic, I support strong minimum wage laws even though I has always earned more. Others don't and that is their prerogative. This area is more complicated than "higher wages = less jobs".
Sep 28 2013 5:52PM
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.Rybak.
Posts: 9017 - Karma: 9,864
Hey atleast minimum wage is 9$ there. In wisconsin its fucking 7.25$.
Sep 28 2013 6:00PM
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howlongcanausern
Posts: 4982 - Karma: 1,737
if the private sector isn't going to provide living wage jobs, it's up to the government to regulate/tax to provide those living wage jobs.
Sep 28 2013 6:53PM
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ObiWanKablowme
Posts: 421 - Karma: 539
came here to post this. +k. im an econ major and this shit pisses me off,
Sep 28 2013 7:01PM
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CassiusClay
Posts: 1757 - Karma: 2
Lol what? Am I reading this from the 80's? I don't disagree with your minimum wage response but you might want to take a look at inflation and 'killing the economy'.
Sep 28 2013 7:07PM
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theabortionator
Posts: 51659 - Karma: 162,374
Inflation is pretty bad. Oh wait no it's not because things are supposed to get more expensive in regards to currency because that's how it's been our whole lives right?

Look at the purchasing power of the USD now compared to 50 years ago.
Sep 28 2013 7:16PM
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Mr.LemonPie
Posts: 4100 - Karma: 1,625
Obviously making a big jump in minimum wage would make chasos, but ready for my just made new economic plan...


Make minimum wage $100/hr, then just have the government pay every single person with money they just printed off at the mint. All the people use this money to buy goods from other countries before they realize there is so much more USD and deflate it so BAM. Loads of cool new shit for cheap. yeah. That just happened.
Sep 28 2013 7:24PM
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esotericjive
Posts: 1889 - Karma: 1,445
NY's minimum wage is $7.26. To double that would be ludicrous, it'd create so many more, deeper, economic issues.
Sep 28 2013 7:26PM
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CassiusClay
Posts: 1757 - Karma: 2
Take a few economics courses, history major.
Sep 28 2013 7:34PM
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yewwwwwww
Posts: 182 - Karma: 46
Anyone who thinks this graph actually represents the economics of the labour market is delusional.

"But I'm an econ major so I know whats up"

Get real.

I challenge you to find a peer reviewed article published in the last 20 years that actually supports that graph.


Sep 28 2013 7:37PM
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the.hellion.
Posts: 861 - Karma: 698
Threads, so I can provide my unsolicited opinion.
Sep 28 2013 7:39PM
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theabortionator
Posts: 51659 - Karma: 162,374
Yes, so I can learn an approach that doesn't work. Spend money to learn how printing money is actually good for the economy etc.

If you're going to be a dick though I made some decent loot on precious metal investments by paying attention to the economy and not listening to the people you think I should pay $ to learn from.

Sep 28 2013 7:41PM
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ObiWanKablowme
Posts: 421 - Karma: 539

Other Effects of Minimum Wages

Aside from changes in employment, empirical studies have documented other methods by which businesses and markets adjust to minimum wage increases. The congressional Joint Economic Committee published a major review of 50 years of academic research on the minimum wage in 1995.32 The study found a wide range of direct and indirect effects of increased minimum wages that may occur. These include

● Increasing the likelihood and duration of unemployment for low-wage work- ers, particularly during economic down- turns;

● Encouraging employers to cut worker training;

● Increasing job turnover;

● Discouraging part-time work and re-

ducing school attendance;

● Driving workers into uncovered jobs,

thus reducing wages in those sectors;

● Encouraging employers to cut back on fringe benefits;

● Encouraging employers to install labor- saving devices;

● Increasing inflationary pressure;

● Increasing teenage crime rates as a result

of higher unemployment; and

● Encouraging employers to hire illegal

aliens.33


http://object.cato.org/sites/cato.org/files/pubs/pdf/PA701.pdf


posted in 2012 by the CATO Institue, a liberal source, and references data analyzed over a fifty year period from the JEC. it outlines many negatives of this policy as well as addressing the rise in unemployment.

Sep 28 2013 8:14PM
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Brule.
Posts: 3921 - Karma: 6,207
At least the minimum wage in your state is higher than it is in NY. It's $7.25/hour.
Sep 28 2013 8:31PM
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cobra_commander
Posts: 16909 - Karma: 4,686
You mean the national economy of a 300 million person country can not be perfectly modeled with a couple straight lines?


It's a pretty darn well accepted general trend however.
Sep 28 2013 8:34PM
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shibby
Posts: 7088 - Karma: -19
Yeah this goes for any political debate on NS. And given the demographic (well off white people) it's just a bunch of confirming each others biases, re: a circlejerk. No data or studies allowed.
Sep 28 2013 8:40PM
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yewwwwwww
Posts: 182 - Karma: 46
Not peer reviewed.

If you handed in an assignment that referenced anything ending in .blogspot.com, which that piece does, you would get laughed at, in the face. Unless your in high school. Some of those articles are from the 1970's, do you think people may have critiqued/built on their work by now? Surely you can do better than that.

This whole area of research is politicised as your gun law debate. You should be able to find peer review stuff put out by your neo theory warriors. Some of it might be ok. Some won't, just the same as people arguing for strong minimum wage laws.

I'll even make this easy for you. Find a study, done ages ago - the 1970/80's (this is the era in which you will find the studies suggest that minimum wage increases have the largest effect on employment) - then, test for endogeneity in their elasticity coefficients (the independent variable is correlated with the error term in a regression).

Bet you find some. Guess what - that means your coefficient is biased.

Seriously, this area is so much more complicated than you realise. I'll grant you that, conceptually, that labour supply/demand graph makes sense. The governemnt sets the the minimum wage to high, this lead to an under supply of labour while at the same generating to much demand, this equals unemployment.

EXCEPT IT IS NOT ACTUALLY THAT SIMPLE.







Sep 28 2013 8:48PM
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deleted5
Posts: 14507 - Karma: 13,507
in macro economics, we did it in the second week, it's in chapter 3 in the text book page 92.
Sep 28 2013 8:48PM
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yewwwwwww
Posts: 182 - Karma: 46
By the way - Is woozy still around here?

If i recall correctly he might have got his gold prediction more correct than me. I think he was calling $2000 while I said $1600, I think. It was a few years back now. Usually he would be all over a thread like this.
Sep 28 2013 8:52PM
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deleted5
Posts: 14507 - Karma: 13,507
no idea what this is about, but I'm waiting for gold to crash and no one seeing it coming.
Sep 28 2013 8:56PM
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theabortionator
Posts: 51659 - Karma: 162,374
He's still around from time to time but doesn't post much. I've talked to him here and there in pm's
Sep 28 2013 8:58PM
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theabortionator
Posts: 51659 - Karma: 162,374
I mean the economics "experts" have been saying that gold was a joke and a terrible investment idea. If that happened it would be the minority that didn't see it coming.

Gold is doing well and the USD is a joke, no surprise there. If we keep printing money gold will only get stronger.

Then again I really haven't been following what anyone's been saying for a while. I just want winter to come. Leaves look awesome right now here. Ski season is just around the corner.
Sep 28 2013 9:04PM
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the.hellion.
Posts: 861 - Karma: 698
It must be 'wage-increase' season - we're raising them here too in Ontario and this far fetched $15 minimum wage was bandied about as well. Wage increases, in and of themselves aren't bad - while it does cost small businesses more money than the year before, their employees have more money to spend on food and rent and phones and whatever other shit people want to spend money on. Leading to growth in the economy. It's about finding that right balance - you don't want to put too much jelly in the donut - you'll have a mess, rather than a delicious jelly donut.
Sep 28 2013 9:20PM
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Heart
Posts: 6156 - Karma: 3,462
This post as well as Arabian's bring up great points. Personally I think a large increase is unrealistic, but pinning the minimum wage to the inflation rate would help low income workers while preventing too much damage to businesses.
Sep 28 2013 9:36PM
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ObiWanKablowme
Posts: 421 - Karma: 539
the two references in that quote were from the JEC in 1995 so i didn't use useless sources.I agree that, if done properly, minimum wage increases can be beneficial, but large ones, more than likely, cannot be sustained in the market.
Sep 28 2013 9:43PM
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the.hellion.
Posts: 861 - Karma: 698
Came back here 'cause I forgot to mention this point above. Business groups in the province are supporting a recurring wage increase tied to inflation. This seems like the most reasonable option - $15/h is downright bonkers. A steady increase at regular (or easily planned for) intervals would soften the blow for the small businesses that would be affected by the increase. Also, I wonder if all this chatter about minimum wage increases explains why my 6 PBR went up by 20 cents, and why prices are going up at Starbucks. Must be coincidence ....
Sep 28 2013 9:46PM
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theBearJew
Posts: 10951 - Karma: 15,633
I hope they raise minimum wage so that everyone who is bitching about getting more money gets fired and replaced by better employees who deserve $15 an hour. If it gets raised, more qualified people will replace them and they're will be less jobs.
Sep 29 2013 4:27PM
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Mr.LemonPie
Posts: 4100 - Karma: 1,625
Is it me or is having gold as an investment just a giant waste of gold...

It's amazing useful for jewelry, computer chips, covering the dome of the capital etc, but smelted into bars to represent money, how is that gold worth anything? You can't do jack shit with it till you melt it down, and as they only represent money no one melts them down...Seriously I just don't get why the govs of the globe didn't just decide to get off gold as the standard.
Sep 29 2013 7:13PM
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.MASSHOLE.
Posts: 7483 - Karma: 11,518
Hyperinflation comes about when the supply of cash is greater than the demand. But, you are sort of correct in your analysis. It also has to do with returns on non-cash assets (bonds, stocks, CDs, etc). Its extremely complicated on why a wage increase isnt as easy as it seems that deals with the Fed, interest rates, rate of returns, present values, future values, etc. Take a money and banking econ class if you can. Trust me, its quite informative.
Sep 29 2013 8:17PM
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