Seeking Alpha

Minimum wage debate picks up steam

  • The organized one-day protests at national fast-food restaurant chains (MCD, BKW, WEN) aren't likely to spur an increase in the minimum wage up to $15 per hour as they called for, but an incremental change could occur.
  • More than 100 economists have signed a bill sponsored by a Florida congressman that would lift the minimum wage to $10.50 per hour, while President Obama is on record as saying he supports a hike to $9.
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Comments (10)
  • rayfrechette
    , contributor
    Comments (22) | Send Message
     
    The only thing raising the minimum wage will do is to fuel inflation. Be it $1.00/hr or $100.00/hr the resulting wage is the same and remains the minimum wage capable of buying minimum amount of goods. Nothing is accomplished except to wipe out the value of any money set aside as savings. This is how politicians rape us.
    5 Aug 2013, 07:23 AM Reply Like
  • Jake2992
    , contributor
    Comments (831) | Send Message
     
    False. It erodes profits, that's all. I am fine with fewer profits, especially if it means these workers will no longer be eligible for food subsidies, etc. Frankly, I am tired of subsidizing people's investments into MCD, WMT, and other low wage employers.
    5 Aug 2013, 08:50 AM Reply Like
  • nfultz1
    , contributor
    Comments (74) | Send Message
     
    Sure it would erode profits, at first. But the whole idea behind increasing the minimum wage is that it will spur more demand. However, more demand without an increase in supply = higher prices. I don't see supply increasing to offset this pattern since with eroding profits comes less investment.

     

    I wonder how many minimum wage employees need a living wage? For example, students or supplemental income from a spouse. While I don't think either of those groups would complain if they received a significant raise, there will always be a cost. From your perspective, I think you believe it will only be the expense of profits, but I think that would only be the initial consequence.

     

    Think about this, what is poor? Poor in the USA is not the same as poor in a third-world country, although, both feel lack. To ray's point, there will always be a minimum, and it will never be enough. The objective should not be to minimize the scale but to increase its dynamics and upward mobility. Increasing minimum wage only moves the floor higher while reducing upward mobility. For example, if a manger makes $15 per hour today and the employee's pay is increased $7 per hour, it will not result in the manager's pay increasing by the same percent. It might increase some, but at a much lower rate, let's say 15%. Now, the manager is closer to the floor than before. So now, an employee that works hard and aspires to make it into management can only expect an upward mobility of 15% versus nearly 100% before. This would be great if prices remain the same, but if they rise, it will mean very little to make only 15% more if you are so close to the floor. I think in this scenario that over time prices would rise and so will the manager's pay, and we will eventually be at ground zero again, but with everyone's savings being worth less than it is today.
    5 Aug 2013, 09:43 AM Reply Like
  • cowboy4576
    , contributor
    Comments (187) | Send Message
     
    rayf.- Minimum wage workers tend to "spread the love" a little more if they have a "lil' extra" left over after the essential bills are paid. This has a sort of "snowball" trickle down effect that gets rollin' once people feel that everyone's loosening up and relaxing a little more! Otherwise, the small percentage of rich will keep getting richer, while the poor get poorer, as our middle class, (who spends the most on our economy) shrinks to a smaller and smaller percentage, as they fall into the poor category that sucks from our economy, rather than feeding it.
    5 Aug 2013, 10:47 AM Reply Like
  • Michael Bryant
    , contributor
    Comments (5619) | Send Message
     
    Taking my comment from WSB:

     

    I think the argument for a higher minimum wage is simple. Taking $7.25/hour times 40 hours a week times 52 weeks a year gives $15,080. Can a person live off of $15,080? And it is not like they don't pay taxes. Taxes are withheld from their paycheck. They ONLY get the refund after they file annual taxes in March or April. So assuming taxes are 15% (which is about right according to my paycheck when I make $290), that leaves $12,818 after taxes. If rent + food + electricity + water + heat + insurance + gas (if you drive) is all less than $1068 a month, then there would be no argument. But it is higher than that in most of the country. I think minimum wage should depend on living standards for a given area, meaning there would be different minimum wages in different locations.

     

    And after all, adjusted to inflation, the minimum wage should be about $15, using the minimum wage in 1950.
    5 Aug 2013, 08:47 AM Reply Like
  • cowboy4576
    , contributor
    Comments (187) | Send Message
     
    Michael B- So right you are!
    5 Aug 2013, 10:47 AM Reply Like
  • Mike106
    , contributor
    Comments (2) | Send Message
     
    Mike your right. Up state New York it's a little easier to live on $7.25 while in New York City you couldn't make it from day to day.
    5 Aug 2013, 09:35 AM Reply Like
  • DianeLee
    , contributor
    Comments (356) | Send Message
     
    Minimum wage is generally an *entry* level wage, not meant to sustain somebody for a lifetime. That entry level wage is consistently with minimum training and ability. A mandated increase in the minimum wage will be added to the price of goods or services (hamburgers) and thus inflation, with perhaps fewer customers able to purchase those goods or services. But a fine opportunity for union fatcats to add to their own salaries and benefits. imho
    5 Aug 2013, 09:56 AM Reply Like
  • cowboy4576
    , contributor
    Comments (187) | Send Message
     
    Employees at McDonalds, Burger King and Wall mart would turn right around and spend more where they work (with a smile on their face) if they just had that little extra to spend over and beyond their very basic essentials.
    5 Aug 2013, 10:46 AM Reply Like
  • melissabrittany
    , contributor
    Comments (41) | Send Message
     
    In the mature market, hike in wages was the alarming situation for the company as it would not be feasible to offset the higher labor cost with the price increase in products. These costs might intensify the issue related to the income inequality.
    16 May, 08:04 AM Reply Like
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