Employment: Minimum Wage, Maximum Stupidity 81 comments
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In a free market, demand is always a function of price: the higher the price, the lower the demand. What may surprise most politicians is that these rules apply equally to both prices and wages. When employers evaluate their labor and capital needs, cost is a primary factor. When the cost of hiring low-skilled workers moves higher, jobs are lost. Despite this, minimum wage hikes, like the one set to take effect later this month, are always seen as an act of governmental benevolence. Nothing could be further from the truth.
When confronted with a clogged drain, most of us will call several plumbers and hire the one who quotes us the lowest price. If all the quotes are too high, most of us will grab some Drano and a wrench, and have at it. Labor markets work the same way.
Before bringing on another worker, an employer must be convinced that the added productivity will exceed the added cost (this includes not just wages, but all payroll taxes and other benefits.) So if an unskilled worker is capable of delivering only $6 per hour of increased productivity, such an individual is legally unemployable with a minimum wage of $7.25 per hour.
Low-skilled workers must compete for employers' dollars with both skilled workers and capital. For example, if a skilled worker can do a job for $14 per hour that two unskilled workers can do for $6.50 per hour each, then it makes economic sense for the employer to go with the unskilled labor. Increase the minimum wage to $7.25 per hour and the unskilled workers are priced out of their jobs. This dynamic is precisely why labor unions are such big supporters of minimum wage laws. Even though none of their members earn the minimum wage, the law helps protect their members from having to compete with lower-skilled workers.
Employers also have the choice of whether to employ people or machines. For example, an employer can hire a receptionist or invest in an automated answering system. The next time you are screaming obscenities into the phone as you try to have a conversation with a computer, you know what to blame for your frustration.
There are numerous other examples of employers substituting capital for labor simply because the minimum wage has made low-skilled workers uncompetitive. For example, handcarts have replaced skycaps at airports. The main reason fast-food restaurants use paper plates and plastic utensils is to avoid having to hire dishwashers.
As a result, many low-skilled jobs that used to be the first rung on the employment ladder have been priced out of the market. Can you remember the last time an usher showed you to your seat in a dark movie theater? When was the last time someone other than the cashier not only bagged your groceries, but also loaded them into your car? By the way, it won't be long before the cashiers themselves are priced out of the market, replaced by automated scanners, leaving you to bag your purchases with no help whatsoever.
The disappearance of these jobs has broader economic and societal consequences. First jobs are a means to improve skills so that low skilled workers can offer greater productivity to current or future employers. As their skills grow, so does their ability to earn higher wages. However, remove the bottom rung from the employment ladder and many never have a chance to climb it.
So the next time you are pumping your own gas in the rain, do not just think about the teenager who could have been pumping it for you, think about the auto mechanic he could have become – had the minimum wage not denied him a job. Many auto mechanics used to learn their trade while working as pump jockeys. Between fill-ups, checking tire pressure, and washing windows, they would spend a lot of time helping – and learning from – the mechanics.
Because the minimum wage prevents so many young people (including a disproportionate number of minorities) from getting entry-level jobs, they never develop the skills necessary to command higher paying jobs. As a result, many turn to crime, while others subsist on government aid. Supporters of the minimum wage argue that it is impossible to support a family on the minimum wage. While that is true, it is completely irrelevant, as minimum wage jobs are not designed to support families. In fact, many people earning the minimum wage are themselves supported by their parents.
The way it is supposed to work is that people do not choose to start families until they can earn enough to support them. Lower wage jobs enable workers to eventually acquire the skills necessary to earn wages high enough to support a family. Does anyone really think a kid with a paper route should earn a wage high enough to support a family?
The only way to increase wages is to increase worker productivity. If wages could be raised simply by government mandate, we could set the minimum wage at $100 per hour and solve all problems. It should be clear that, at that level, most of the population would lose their jobs, and the remaining labor would be so expensive that prices for goods and services would skyrocket. That's the exact burden the minimum wage places on our poor and low-skilled workers, and ultimately every American consumer.
Since our leaders cannot even grasp this simple economic concept, how can we expect them to deal with the more complicated problems that currently confront us?
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This article has 81 comments:
you cannot deny companies access to cheap labor. you are only fooling yourself if you think it is possible. our declining employment statistics since 2000 is evidence of the problem.
i am not arguing against a minimum wage - but i am arguing against one which changes the employment dynamic.
and raising a minimum wage during a recession is comparable to throwing gasoline on a forest fire.
Free markets might work, in theory, but then again, Communism also looks very well in theory, as someone who has read the various texts would attest.
Ultimately, capitalism, in practice, is not much more but an an economic war between the various economic classes, as Marx said, so while, in theory, increases in productivity would result in increases in the wage of labor, in practice, there is nothing to force the capitalists to follow theory, certainly not the absent "free market".
As for minimum wage jobs and productivity, I know many college graduates who have been out of work for many months now, some more than a year, and are not able to get a job, outside of minimum wage. Once again, theory is put aside by practical capitalism.
Don't get me wrong readers, I am a capitalist, and benefit from it, but I don't turn a "blind eye" to its contradictions, and I don't defend them either since I still personally know many who, having to use their labor, instead of capital, to make a living, are hurt most of the time, rather than helped, by capitalism, as practiced in the USA, certainly within the last ten years, maybe going back to 1974, when the post-WWII boom came to an end, and, coincidentally, when one average wage worker could support a family with the wife staying home to raise the kids...
I have read Mr. Shiffs' various articles on the corrupt USA capitalists and he is balanced in his views with both classes, capitalists and labor, relative to the, in my opinion, absent free market, so I value his articles, even when I disagree with them.
of course it was all evil because i could buy my own 22 rifle and a shotgun and ammunition to hunt with my friends. how abusive and evil.
we have reached the point of absurdity. minimum wage is one more vote buying issue to appease the lazy and imcompetent. a good work ethic has become rare. if you accept a job you owe the employer your best work and loyalty for as long as you take your pay. anyone noticed the attitude of youth that works for minimum wage?
I am a great believer in free market economics but I am not a great believer in private sector dumping its cost on the state by exploiting the weakest members of society who have little bargaining power but are nevertheless entitled to all sorts of social benefits if they exploited enough. At the end of the day bone fide wealth building companies end up picking up the tab for a lot of get rich quick fly by nights.
The low skilled worker earning minimum wage does not necessarily have the time to increase his or her skills to enter a higher paying job, as they are too busy working for such a pitiful amount. Add to this that people who refuse low paid work are subsequently refused unemployment and social security benefits and that competition for entry level positions is extremely high.
An employer can easily starve out an entry level employee in the negotiation process. The negotiation field is not even remotely level.
Basic living expenses make up a significantly higher proportion of income of a minimum wage employee than a non minimum wage employee, with disposable income making up a much smaller percentage.
The other side of this coin is that the minimum wage is also the defacto maximum wage in competitive fields of employment. Employers have little incentive to increase benefits, as the minimum award wage is a "fair wage" for the industry.
On Jul 12 04:58 AM Al-USA wrote:
> We don't have a "free market" for capitalists, so why should there
> be one for labor? Crony capitalism is the rule in USA, since the
> corrupt USA capitalist elites are afraid of the "free market" and
> the competition that entails they are all over Washington with their
> lobbying efforts trying to influence, many times successfully, legislation
> that will favor them, to the detriment of free markets.
Reading the comments, it is sad that simple economic concept like Marshallian supply and demand needs to be explained. Illiteracy is the word for people who can't read. I wonder if there is a word for people who don't have the rudiments of economics.
This is not accurate. The sentence should be:
"In a free market, [quantity] demand[ed] is always a function of price: the higher the price, the lower the [quantity] demand[ed]."
Demand is not effected by price. Quantity demanded is. Demand is effected by things like income, price of complements and/or substitutes, etc.
Price floors (like minimum wage) and price ceilings (like rent control) always cause a decrease in consumer surplus as Schiff so accurately describes. Thanks again!
As Mr. Schiff notes, it would be better for that person to at least have a job, get used to getting up and off to work on time etc. rather than to sit at home and watch TV expecting a check with little incentive to be out hunting for a job that likely isn't out there for him, and if there is, probably won't improve his standard of living much if any. In some cases it's counter productive.
Someone told me of complaining to someone in a grocery store about the lack of help and long lines checking out. The person told her "It's near the end of the month." When the woman asked for clarification she was told that a lot of the workers take off at the end of the month, claiming illness or whatever so that they could qualify for various government aid. I'm not sure if it was medicaid, welfare or food stamps, but the bottom line was that if they worked too much it would cost them money. The woman at the store said people made fun of her for not doing so, claiming she was stupid for not milking the system for all it was worth.
Some sort of negative income tax would seem preferable to me. The harder you work and the more you make the better your standard of living.
The current system stinks. I remember reading of another woman who was raising her grandson. She was on welfare and scrimped and saved so she could help pay for his college education. When the government found out she had savings they came down on her. I don't remember if they canceled her benefits until she spent all of the money she had saved or gave her some time, but the message is clear. Don't be frugal with your benefits. Spend them all or lose them.
You might have missed the recent govt figures that revealed, scandalously IMO, that 1.1million Britons have been continuously on unemployment benefits for at least 12 years. I'm not saying the minimum wage is responsible for this sorry outcome (the huge marginal rates of taxation/benefit withdrawal for those entering the world of work are more likely responsible for consigning those people to the scrapheap) but to praise the minimum wage when so many languish in chronic unemployment seems perverse.
Raise the minimum wage and you are the champion of the little guy.
By extension, throw the little guy out of work completely and you've created another voter for your expanded government.
It's brilliant and diabolical all at once.
American CEO's give themselves big fat bonus because the out-source American jobs to India.
The effect is cascading in that it takes away jobs from Americans, especially educated Americans.
Oracle, IBM, American Express, Bank of American to name a few have removed professional jobs from Americans especially veterans who are now unemployed and watch folks from India come into our country that we fought for and risked our lives for and to be unemployed and watch these folks from India take our jobs.
Shame on the greed of American CEO's. I'm sure if any American CEO was a veteran and served to defend out country this would not be happening.
Even if you dropped the minimum to $4 per hour how could that possibly cause the median wages for skilled labor to deflate? Everybody knows that one house on the block that's a run-down foreclosure can't depress selling prices of adjacent homes. The foreclosure is in a completely lower class and de-linked from the rest of the neighborhood. Thanks Peter. I'm taking notes on this one!
1. the cure for an uncompetitive minimum total cost of hiring someone at the bottom of the employment ladder is, of course, high unemployment or egregious underemployment
2. another cure for uncompetitive real total costs of entry level labor is high inflation
It is the obvious and pernicious policy of our Government to create both high, enduring, unemployment and underemployment and high inflation.........all in the name of the new workers' paradise narurally.
“ - remove the bottom rung from the employment ladder and many never have a chance to climb it.
- So the next time you are pumping your own gas in the rain, do not just think about the teenager who could have been pumping it for you, think about the auto mechanic he could have become – had the minimum wage not denied him a job
- The only way to increase wages is to increase worker productivity.
- Does anyone really think a kid with a paper route should earn a wage high enough to support a family?”
Increasing minimum wages leads to job losses- this has been proven through time and all economic cycles. Fixing/raising wages- sounds populist and of course the politicians jump on it- but it simply leads to search for alternatives – automation or even hiring of illegal’s. That is what we have been seeing last many years.
Raising minimum wages hurt small businesses the most – the biggest driver of jobs in US.
However I would like to throw in a caveat about – immigration, job exports – that simply raises supply and at the same time decreases demand of jobs- this has to be suitably addressed. Peter is a champion of increasing manufacturing in US that would help create lots of jobs of far above minimum wages.
On Jul 12 11:46 AM Fighting Yoda wrote:
> - Does anyone really think a kid with a paper route should earn a
> wage high enough to support a family?”
Since when is $7.50/hr enough to raise a family, or pay tuition for vocational training to become an auto mechanic?
On Jul 12 09:55 AM KMcC wrote:
> @ Dave W
>
> You might have missed the recent govt figures that revealed, scandalously
> IMO, that 1.1million Britons have been continuously on unemployment
> benefits for at least 12 years. I'm not saying the minimum wage is
> responsible for this sorry outcome (the huge marginal rates of taxation/benefit
> withdrawal for those entering the world of work are more likely responsible
> for consigning those people to the scrapheap) but to praise the minimum
> wage when so many languish in chronic unemployment seems perverse.
"- Does anyone really think a kid with a paper route should earn a wage high enough to support a family?”
Increasing minimum wages leads to job losses- this has been proven through time and all economic cycles"
I look at it from the other end, if a job cannot pay a living wage and provide a man with the opportunity to support a family (even if humbly, but with dignity), then that job should not exist. So as you say, let's destroy that job. Do not have the paper delivered to your door, go buy it at kiosk, where it was brought by a van driver that is making a living wage. Or don't read the paper. If that makes the paper more expensive and go out of business, then so be it...but we cannot build business models on the assumption that somebody is desperate enough that is willing to work for a less than what it takes to survive. If we separate business conduct from decency, we are all lost.
On Jul 12 12:29 PM Dave Wrixon wrote:
> Actually, most these are a product of Thatcher's policies. They are
> referred to as the lost generation. All hope was destroyed and work
> ethic was lost. It is virtually not retrievable. If America allows
> the wages of the weakest to be destroyed then it could very end up
> with a much bigger version of the same problem.
Move to Nebraska. It's not enough for a family, but an education, yes.
Until this crisis hit the numbers claiming benefits in total were only about 750K, and I somehow doubt they had all been out for 12 years.
Where do you read all this crap?
On Jul 12 12:48 PM KMcC wrote:
> I mentioned 12 years rather than any other period because a) that's
> the period covered in the figures that came out and b) those are
> precisely the sort of people a Labour govt is supposed to help, and
> didn't. Labour instead concentrated its energies (and massive amounts
> of tax) on moving people from one side of its preferred poverty measure
> to the other. It was a con, and one that Lab should be ashamed of.
>
>
> On Jul 12 12:29 PM Dave Wrixon wrote:
> Spoken with typical capitalist greed; pay someone $5 an hour so you
> can continue to live in a mansion and drive the latest model Benz.
> If productivity were a true measure of earning potential then most
> of the wall street bankers would be in debt. I fail to see what skills,
> if any, are employed in driving a company to bankruptcy?
One dimensional, narrow-minded comment.
1. If $5/hr is all that someone is worth, than that is all they should receive.
2. If that executive can get paid $30 million/year to drive a company into the ground, don't blame that executive. Blame liberals who began regulating industry, which made it necessary for industry to lobby .... thus tipping the balance in industry's favor.
3. Blame government for getting involved with central banking. Blame citizens for not crying out against it. $5/ hr would be worth a lot more if not for the ravages of inflation. The poor always get screwed.
4. Your opinions about "capitalist greed" and $5 hour wages are unimportant. The market will be the market. It has a way of being fair until someone gets an unfair advantage. How do they get that advantage? Government.
You will continue to be mystified why things get worse in this country, because you don't realize your "solution" to all the problems is actually the cause.
I worked while going to school. I worked two jobs and made my way up. There were reasons to aspire to something higher.
After I had employees, I had to pay new people too much at the expense of the better workers. I lost my best employee because I could not pay her what her technical skills were worth, and I wanted her to replace me.
Your skills are a commodity. You are not ENTITLED to $150/barrel for your oil, if it is not needed. You are not ENTITLED to $12/hour just because you have a pulse. Improve yourself, like the rest of us did, and you'll make money.
P.s. - Been to England & Ireland. Lots of unemployment, lots of blokes on the dole, despite the wages. Also been to Mexico - lots of people lined up for work, again despite the wages.
Try it. Your logic is what got us the Obma Magic Machine.
1997 1,406.30
1998 1,181.20
1999 1,105.80
2000 972.7
2001 848.3
2002 827.5
2003 832.3
Minimum wage was introduced in 1999.
Nuff Said!
You can download here if you don't trust me!
www.statistics.gov.uk/...
Full series here
1996 Q4 1905.6
1997 Q1 1827.0
1997 Q2 1619.5
1997 Q3 1559.3
1997 Q4 1403.9
1998 Q1 1445.5
1998 Q2 1354.0
1998 Q3 1361.9
1998 Q4 1288.0
1999 Q1 1370.7
1999 Q2 1280.1
1999 Q3 1250.3
1999 Q4 1150.9
2000 Q1 1219.2
2000 Q2 1109.2
2000 Q3 1073.6
2000 Q4 1007.1
2001 Q1 1064.1
2001 Q2 978.4
2001 Q3 958.5
2001 Q4 931.0
2002 Q1 1014.6
2002 Q2 958.1
2002 Q3 951.8
2002 Q4 910.6
2003 Q1 1001.0
2003 Q2 954.4
2003 Q3 939.0
2003 Q4 889.2
2004 Q1 947.1
2004 Q2 871.8
2004 Q3 839.0
2004 Q4 806.7
2005 Q1 879.8
2005 Q2 865.9
2005 Q3 874.4
2005 Q4 877.6
2006 Q1 976.4
2006 Q2 966.6
2006 Q3 957.5
2006 Q4 926.4
2007 Q1 965.3
2007 Q2 887.7
2007 Q3 846.4
2007 Q4 792.4
2008 Q1 840.7
2008 Q2 834.1
2008 Q3 913.3
2008 Q4 1059.9
2009 Q1 1422.0
Not that I mind, I like to fix my own polish at Costco, I know where my hands have been.
On Jul 12 01:44 PM Gregman2 wrote:
> Excellent article, Peter. It's absolutely amazing how automation
> has taken hold in every aspect of life, and has effectively dumbed
> down the few remaining minimum wage jobs that do exist. Add outsourcing
> to this and we just have a terrible prospect. There's just not going
> to be enough jobs for people.
what scares me is the the retards who thumbed him up; Howard Stern and John Stewart are not news kiddies, they are entertainment. you are all free to create businesses and pay people whatever you want; you telling me how much to pay my employees is Fascism. do not be a fascist, fight for freedom. you cannot be free when you are so horribly ignorant
On Jul 12 04:04 PM Wisdom vs. Information wrote:
> fighting yoda's comment that we should legislate unskilled labor
> out of existence is not just bad, it is retarded. first issue is
> freedom. who is yoda to tell me what i will work for, or you what
> you will pay me? that is fascism, pure, simple and evil. second issue
> is practical. someone has to learn how to do things that are low
> skill, and they should be paid how much they add to the product.
> third, who decides what is a living wage? now, that is retarded!
> finally, the result of yoda's mechanized universe is infinite inflation,
> impossible logically and mathematically.
>
> what scares me is the the retards who thumbed him up; Howard Stern
> and John Stewart are not news kiddies, they are entertainment. you
> are all free to create businesses and pay people whatever you want;
> you telling me how much to pay my employees is Fascism. do not be
> a fascist, fight for freedom. you cannot be free when you are so
> horribly ignorant
On Jul 12 03:17 PM User 357705 wrote:
> Like the T-shirts say:
>
> Bring Slavery Back!
>
> www.tshirthell.com/sea...;Submit.x=11&S...
In reality what those at the affluent end of the scale are doing is using the minimum wage argument to try to shift blame for a mess that they created. It wasn't the working poor who created credit default swaps, advanced derivatives or interest only mortgages.
In reality the problem of low wages carries blame for all sides: for those working poor who've settled for pathetically low wages and simply accepted their lot rather than seeking to start their own businesses and create competition; for the government for failing to effectively enforce anti-trust regulation; for the media for promoting arguments of bought and sold economists who promised "new more productive and higher paying jobs" for displaced workers; and for corporate executives who prattle on about "acceptance and equality," in the workplace when in reality they themselves are Social Darwinist neo-fascists.
Neither min/max wage is really "fair" - neither is life. But absent a min. wage, at the very least, how would the lower echelons of our society function w/o (although already extreme) more social 'safety nets'?
Remove the minimum wage, and I fear a bigger welfare state than we already live in. Institute a maximum wage (something I'll choose randomly as $4M/year, which is still egregious, IMO), and what harm does it do?
More 'peons' would be employed, certainly. Would we lose our highly paid CEO's to other countries? One can only hope. We have enough poison pills to go around.
-AM
On Jul 12 06:24 PM JohnBinTN wrote:
> In addition to a minimum wage, how about a maximum wage, as well?
> At $7.50 min/hour, figure that a CEO compensated at $50M/year is
> making as much as 3,200 peons. Does same CEO benefit XYZ company
> as much as 3,200 people doing the "real" work? I would argue 'no'.
> Can same CEO cause more damage to XYZ company as even 100 peons?
> 200? Most definitely.
>
> Neither min/max wage is really "fair" - neither is life. But absent
> a min. wage, at the very least, how would the lower echelons of our
> society function w/o (although already extreme) more social 'safety
> nets'?
>
> Remove the minimum wage, and I fear a bigger welfare state than we
> already live in. Institute a maximum wage (something I'll choose
> randomly as $4M/year, which is still egregious, IMO), and what harm
> does it do?
>
> More 'peons' would be employed, certainly. Would we lose our highly
> paid CEO's to other countries? One can only hope. We have enough
> poison pills to go around.
www.spectator.co.uk/co...
On Jul 12 03:10 PM Dave Wrixon wrote:
> Official Stats for UK Jobseeker's allowance:
>
> 1997 1,406.30
> 1998 1,181.20
> 1999 1,105.80
> 2000 972.7
> 2001 848.3
> 2002 827.5
> 2003 832.3
>
> Minimum wage was introduced in 1999.
>
> Nuff Said!
>
> You can download here if you don't trust me!
> www.statistics.gov.uk/...
Perhaps more than $7.50/hour (law, as 'minimum wage' is defined here), more if they are deemed worth it (by their perceived/actual value to the Lakers, Fox, whatever), but certainly no more than $4M/year (law, as defined here), because they are not worth it (that's in MY opinion - nobody's worth even THAT much, for whatever 'work' they do - bounce a ball well, read a script, save lives, destroy companies, etc., etc.) Either one of them would still win (richer than the commoners), so relax.
I think calling it 'fascist' is a stretch. If it is, we've been living in a fascist country for many, many years.
On Jul 12 07:29 PM atlasman wrote:
> How much do you pay Kobe Bryant, Simon Cowell, and Kiefer Sutherland
> (or any other movie star) under your fascist plan?
> -AM
On Jul 12 07:29 PM atlasman wrote:
> How much do you pay Kobe Bryant, Simon Cowell, and Kiefer Sutherland
> (or any other movie star) under your fascist plan?
> -AM
On Jul 12 08:56 AM Dave Wrixon wrote:
> Sorry Peter, all these arguments were used before the introduction
> of the minimum wage in the UK which has been a great success and
> not only protected migrant workers but has protected other against
> the impact of migrant worker, although there are still complaint.
> In the end, however, there was never any real evidence of economic
> detriment and our minimum wage is a hell of lot higher than yours.
>
>
> I am a great believer in free market economics but I am not a great
> believer in private sector dumping its cost on the state by exploiting
> the weakest members of society who have little bargaining power but
> are nevertheless entitled to all sorts of social benefits if they
> exploited enough. At the end of the day bone fide wealth building
> companies end up picking up the tab for a lot of get rich quick fly
> by nights.
As for Mr. Schiff, he makes a good point now and then, despite the fact that he is perpetually channeling Ayn Rand. I would be cautious taking his macro advice though, as we are just now beginning to appreciate what happens when the investor class drive public policy. Generally, when unrestrained, they drive it off a cliff.
On Jul 12 05:31 PM LilBob wrote:
> Complaining about the minimum wage is a smoke-screen anyways. What's
> really happening in the US right now is we've got a return of Social
> Darwinist ideals that originated in the 1920s-some would argue those
> attitudes never left-and now we've got a lot of people at the affluent
> end of the scale carrying around these notions that the poor are
> worthless chattle who deserve to live in abject poverty and squalor,
> while still being expected to show up everyday for work on-time and
> with a clean shirt.
A skilled worker can still be paid very little.
If we abolish the minimum wage, one consequence could be radical and economically-pressured restructuring of families across America.
Are we ready for that?
We all know wage price controls don't work - they have been tried and had disastrous consequence.
In the current recessionary times -wages are falling - we cannot artificially raise them - that is what led the Smoot-Hawley - and an important cause of the prolonged Great Depression.
On Jul 12 12:34 PM manya05 wrote:
> Fighting Yoda:
>
> "- Does anyone really think a kid with a paper route should earn
> a wage high enough to support a family?”
>
> Increasing minimum wages leads to job losses- this has been proven
> through time and all economic cycles"
>
> I look at it from the other end, if a job cannot pay a living wage
> and provide a man with the opportunity to support a family (even
> if humbly, but with dignity), then that job should not exist. So
> as you say, let's destroy that job. Do not have the paper delivered
> to your door, go buy it at kiosk, where it was brought by a van driver
> that is making a living wage. Or don't read the paper. If that makes
> the paper more expensive and go out of business, then so be it...but
> we cannot build business models on the assumption that somebody is
> desperate enough that is willing to work for a less than what it
> takes to survive. If we separate business conduct from decency, we
> are all lost.
“should legislate unskilled labor out of existence is not just bad, it is retarded. first issue is freedom. who is Yoda to tell me what i will work for, or you what you will pay me?” – I am actually suggesting the exact opposite – I am saying let the free markets determine what work you do and how much you get paid.
On the other hand promulgating/raising minimum wages actually legislates ‘unskilled labor out of existence’ - This is what I am opposed to.
On Jul 12 04:04 PM Wisdom vs. Information wrote:
> fighting yoda's comment that we should legislate unskilled labor
> out of existence is not just bad, it is retarded. first issue is
> freedom. who is yoda to tell me what i will work for, or you what
> you will pay me? that is fascism, pure, simple and evil. second issue
> is practical. someone has to learn how to do things that are low
> skill, and they should be paid how much they add to the product.
> third, who decides what is a living wage? now, that is retarded!
> finally, the result of yoda's mechanized universe is infinite inflation,
> impossible logically and mathematically.
>
> what scares me is the the retards who thumbed him up; Howard Stern
> and John Stewart are not news kiddies, they are entertainment. you
> are all free to create businesses and pay people whatever you want;
> you telling me how much to pay my employees is Fascism. do not be
> a fascist, fight for freedom. you cannot be free when you are so
> horribly ignorant
On Jul 12 07:42 PM KMcC wrote:
> JSA is not the only benefit, as you well know Dave. Here's a piece
> from the Spectator on the topic. It uses figures provided by the
> Dept of Work and Pensions. As you can see, 1.1million adults have
> been workless for more than 12 years. I'm not trying to say that
> they are all shiftless buggers or whatnot, although some may well
> be; just that on a major social issue the Labour govt have failed
> to improve the desperate lot of some of the nation's poorest.
>
> www.spectator.co.uk/co...
>
Furthermore, if you are trying increase consumption, which is stated government policy, how do achieve that by starving the most needy? You don't have to be stalwart Keynsian to see this is nonsense.
On Jul 12 08:27 PM Bacon wrote:
> I believe Peter was talking about the decision to raise the minimum
> wage now, in the depths of a recession/depression, when millions
> are unemployed and all kinds of costs are being dumped on governments.
>
On Jul 12 09:55 PM AmateurFarmBoy wrote:
> A few years ago, in China, I watched an old man riding a bicycle
> piled with recyclable plastic. The giant mound he carried, and the
> manner in which he carried it, demonstrated a skill.
>
> A skilled worker can still be paid very little.
>
> If we abolish the minimum wage, one consequence could be radical
> and economically-pressured restructuring of families across America.
>
>
> Are we ready for that?
In that case, a lot of people will be out of job.
And they want to work!
Even if the job does not pay them enough to raise a family.
At least it gives them the ability to support themselves and not depend on welfare.
It is easy to talk about 'diginity' and 'decency'. Words are cheap.
There are 500 million hungry Chinese and 500 million Indian workers willing to work for less than US$10 a day. And some of these workers are quite skilled and educated. This is the competition we are up against today.
The Chinese government faces a more much daunting challenge -- feeding its 1.4 billion people. And it knows that every job is important, no matter how low the pay, because in China, if you have a job, you survive. If don't, you starve.
So what is your solution? Print more money? Another stimulus package using borrowed money from China? I guess Americans always think they are special? The Chosen people? God will take care of us? One day, you will get your comeuppance.
While I am for some form of minimum wage to protect workers against exploitation, minimum wage should be very 'minimal' and should not be made so 'decent' and 'dignified' that it makes the job disappear!
On Jul 12 12:34 PM manya05 wrote:
> Fighting Yoda:
>
> "- Does anyone really think a kid with a paper route should earn
> a wage high enough to support a family?”
>
> Increasing minimum wages leads to job losses- this has been proven
> through time and all economic cycles"
>
> I look at it from the other end, if a job cannot pay a living wage
> and provide a man with the opportunity to support a family (even
> if humbly, but with dignity), then that job should not exist. So
> as you say, let's destroy that job. Do not have the paper delivered
> to your door, go buy it at kiosk, where it was brought by a van driver
> that is making a living wage. Or don't read the paper. If that makes
> the paper more expensive and go out of business, then so be it...but
> we cannot build business models on the assumption that somebody is
> desperate enough that is willing to work for a less than what it
> takes to survive. If we separate business conduct from decency, we
> are all lost.
The minimum wage is just a political gimmick, and it's sadly a very effective gimmick because the people at the bottom of the ladder haven't yet learned enough about economics to understand why it's a gimmick. All the minimum wage does is make everything more expensive, increase unemployment, and increase the burden to society of all those receiving "assistance" from the taxpayers.
As someone once said, raise the minimum wage to $100/hour and end poverty for all!
Please tell me how the people at the low end are worse off if everyone suddenly has a job? Do you really think an evil capitalist can keep wages down if there is full employment? Wouldn't they have to compete for a limited labor pool by offering better pay & benefits?
Outrageous executive pay is a completely different issue. Certainly executives will tend to overvalue their own services and since the cost of this relatively minimal, the market won't punish them as quickly as we'd all like.
However, some well-meaning liberal policies have also contributed to the excesses of executive pay. Probably the worst offender is that great liberal favorite - the graduated income tax.
Executive just shifted most of their compensation to stock options to avoid the government's uneven tax code. I expect they probably spend more time trying to wiggle around government regulations than they spend trying to improve the efficiency of their companies.
Since everyone is forced to spend so much time hiding their money from the government, a nasty side effect is that they also are hiding it from their investors. It builds up a base capacity for deception which would be at a competitive disadvantage in a truly free market - but in our current system it's a requirement.
It's easy to look at the current disaster and say we needed more regulation. Just like it's easy to look at California and say they need more taxes to fix their budget problems. Economic thinking like Schiff's can be very counter-intuitive (but it works!).
Likewise, a working person may be replaced by a machine as a result of an increase in the minimum wage, but someone is building, selling and maintaining that machine. Once again the economy benefits.
Minimum wage laws have caused people adopt a sheepishly conditioned mind set, and not exercise their right to negotiate for wages.
However, the Minimum Wage is scheduled to rise.
Hence Romer, Bernstein, and Goolsbee will be in now be making $7.25 an hour.
Apparently, there are no statistics to support the idea that raising minimum wage effects unemployment. This article says that the FED controls unemployment.
I, however, agree with Peter in theory.
and the minimum wage in China is.......
HOw about a health care bill in record time being supported by politicians who still don't have clue one what it will look like, will cost billions more and increase by 50 million the number of people on the system and yet their claim is we won't have health care rationing. Guess you can make an appointment with me for your heart surgery. Good luck, I can't even carve a turkey. Forgot to add the best part, the good government folks will be exempt, they have their own health care and told us they plan to keep it.
> On Jul 12 10:04 AM rick12345 wrote:
To Peter: nice logic, but that doesn't matter today, if it ever did.