What would happen if min wage was $10?

[john5746]

..but personaly I do not want my kid to thing their time is worth less than $10/hour.

 

How about making a C or D in a class? Shouldn't schools give students at least an A or B for their time?

 

I think some sore of minimum wage is OK, since low-wage earners really don't have the mobility and ability to get work anywhere. In some areas, a few companies can dominate and take advantage. Expecting workers everywhere to strike, move around and find work would probably be more costly than having some minimum wage.

 

To raise it like that would increase prices and unemployment no doubt. It would also increase illegal employment. It would also have a ripple effect, moving moderate wages upward. A factory worker wants to get paid more than someone working at McDonald's. Especially when they eat there and the price just shot up.

[Phi for All]

Increasing the minimum wage give people more opportunities for education, makes families more stable, reduces crime and if good for the economy.

I would love to see a study for this. Opportunities for education doesn't mean they will be acted upon, money is only part of family stability and "reducing crime" is a pretty blanket assessment. I think it's been shown increasing to $10 an hour might not be good for the economy.

Personally I find the argument that fast food is more important than a living wage a bit disgusting.

Especially when it's a strawman because no one ever said "fast food is more important than a living wage".

[Rebiu]

Yes, it would make a difference, $5 Big Macs would still cost the $10 an hour worker as much as a $3 Big Mac costs a $6 worker now, 1/2 and hour's pay.

Big Macs are a luxury. There are more affordable alternative to eating at McDonalds and they will not be affected.

By increasing the minimum wage you do not help the class of people that are currently making that wage because the cost of goods remains the same proportionately for that class.

Once again you overestimate the proportion the sub $10 is to the overall economy.

What you do end up with is a bump in the unemployment of that class as their employers try to adjust their new costs with the price of their products. It's not just the fast food industry but that industry makes a good example of the class.

The unemployment rate of that class is extremely low. In fact employers are screaming for guest worker programs to fill these positions.

The effect is the same throughout those industries that are traditionally minimum wage jobs. Even the lowly stock clerk at the grocery store will see Big Mas still costing 1/2 an hours wage. In short' date=' increasing the cost of labor to produce a product will result in an increase of that product's price.[/quote']Perhaps at first. Then production becomes more efficient and prices go back down.

It doesn't matter if it's fast food' date=' groceries or the guy changing oil. [/quote']The guy changing oil makes more than $10 an hour already. So do many grocery store employees.

 

BTW' date=' can you point out any legislation anywhere that indicates that minimum wage is supposed to be a living wage?[/quote']What is it supposed to be then?

[cosine]

ecoli is going to punch you in the shoulder for me for this strawman. Really, really hard. This is not about murder and slavery, and you can't blame people for complying with laws you don't happen to like.

 

Murder was too far, but I don't see how slavery is a poor analogy.

 

Look around you. Poverty has always been around' date=' and our market economy is doing very well. Despite the loss of offshored jobs, despite the low education scores, and despite the minimum wage not being changed since 1997.[/quote']

 

Exactly, poverty has always been around. Does that mean we should force them to stay there? If we don't believe in a decent minimum wage, universal healthcare, childcare, public`education, etc. then we have no right to call ourselves a meritocracy. People in the lower echelons of society are used in a cycle to keep the upper classes absurdly wealthy. The have neither the same opportunities nor chances of their wealthier competitors.

[cosine]

No, workers should be free to negotiate the price they will work for.

They try to do that through unions. However unionization is hard enough as large corporations consistently try to break up unions by legal and illegal means.

[Rebiu]

How about making a C or D in a class? Shouldn't schools give students at least an A or B for their time?

Grades are not compensation for work but a gauge of progress. Personally I would rather my kids never worked for anyone else. I have been self-employed and make far more than I ever did working for someone else.

 

I think some sore of minimum wage is OK' date=' since low-wage earners really don't have the mobility and ability to get work anywhere. In some areas, a few companies can dominate and take advantage. Expecting workers everywhere to strike, move around and find work would probably be more costly than having some minimum wage.[/quote']I agree.

 

To raise it like that would increase prices and unemployment no doubt. It would also increase illegal employment. It would also have a ripple effect' date=' moving moderate wages upward. A factory worker wants to get paid more than someone working at McDonald's. Especially when they eat there and the price just shot up.[/quote']Perhaps McDonalds would develop more efficient methods and be able to cut their staffs and actually provide the workers with a livable wage. Businesses that are unable to adapt will disappear and be replace with ones that can. So are as unemployment goes many say we have a labor shortage and they want to create guest worker programs.

[Rebiu]

They try to do that through unions. However unionization is hard enough as large corporations consistently try to break up unions by legal and illegal means.

Excellent points.

[doG]

They try to do that through unions.

That's bad. Unions will only result in exporting jobs in the global economy. Unions had their place in years gone by when there was no OSHA and no Dept. of Labor to protect worker's rights. Look at how GM and Ford are doing in the world marketplace. Foreign products are beating them on their own turf and it's not because foreign auto workers are being mistreated or poorly paid. Foreign auto workers are not strong arming the hand that feeds them and driving their employer into bankruptcy.

[doG]

Once again you overestimate the proportion the sub $10 is to the overall economy. The unemployment rate of that class is extremely low. In fact employers are screaming for guest worker programs to fill these positions.

No overestimate is needed. If you drive up the labor cost for any products those products will go up. If it costs the manufacturer of yarn more to produce yarn then he must charge more. Now the carpet manufactrurer must pay more for yarn so he charges more to maintain his margin. Now the homebuilder must pay more for carpet so he must charge more to produce housing aqnd maintain his margin. Increased costs cascade through industry.

 

Employers are screaming for guest workers because they will work for the current minimum wage and today's low end american workers won't. I know one young man that's never had a job and he says he won't have a job until someone gives him $12 an hour to start. He doesn't care that he has no skills, he wants a position, not a job.

 

Like I said before, if you can't see the difference at $10, make it $15, $20 or even a $100. Calculate how much everyone else's wage will have to go up to maintain their current purchasing power.

[Rebiu]

That's bad. Unions will only result in exporting jobs in the global economy. Unions had their place in years gone by when there was no OSHA and no Dept. of Labor to protect worker's rights. Look at how GM and Ford are doing in the world marketplace. Foreign products are beating them on their own turf and it's not because foreign auto workers are being mistreated or poorly paid. Foreign auto workers are not strong arming the hand that feeds them and driving their employer into bankruptcy.

I agree. Unions become too powerful and begin to protect their own existence. They buy political influence and compel companies to make promises they cannot keep. If US labor laws would have prevented the corporate abuses that led to Unions they would not have created the problems we have today. This is an argument to ensure that labor laws are adequate. I think it should include a decent minimum wage.

[Phi for All]

Murder was too far, but I don't see how slavery is a poor analogy.

Misleading Vividness fallacy. There is no ownership involved in the minimum wage employee/employer relationship. There was no choice of employers or skill set application involved in slavery.

Exactly, poverty has always been around. Does that mean we should force them to stay there? If we don't believe in a decent minimum wage, universal healthcare, childcare, public`education, etc. then we have no right to call ourselves a meritocracy. People in the lower echelons of society are used in a cycle to keep the upper classes absurdly wealthy. The have neither the same opportunities nor chances of their wealthier competitors.

Well, now you're adding more issues into your argument that weren't there before. Please don't assume that because I argue not to double minimum wage that I'm against universal healthcare, childcare, and public education. That's just more strawman.

[Phi for All]

Personally I would rather my kids never worked for anyone else. I have been self-employed and make far more than I ever did working for someone else.

I think this is more of what Douglas had in mind back in post #3.

Perhaps McDonalds would develop more efficient methods and be able to cut their staffs and actually provide the workers with a livable wage. Businesses that are unable to adapt will disappear and be replace with ones that can.

But it's not the purpose of business to provide livable wages. Their purpose is to create profit. And no one has done more to increase efficiency than McDonald's. I'm no fan, but they have made their jobs so easy to train for that they can actually turn a profit (not much lately) with one of the largest employee turnover rates in the industry (80% are part-timers and they have a 300% turnover rate in the US). They don't have to keep employees as long as they can show profits to their shareholders. And most employees quit McDonald's and go right into a similar minimum wage position, so the problem isn't just the wage.

So are as unemployment goes many say we have a labor shortage and they want to create guest worker programs.

This concerns me, but personally I would prefer that every US citizen had the kind of education, training and personal initiative so that all minimum wage jobs could be held by school kids and guest workers.

[budullewraagh]

what would happen? business would leave and people wouldn't have jobs.

[cosine]

Misleading Vividness fallacy. There is no ownership involved in the minimum wage employee/employer relationship. There was no choice of employers or skill set application involved in slavery.

 

Slavery would be even better for some people because at least in slavery you had to support your laborers. In our system you don't even have to make sure you're supporting them, you just have to pay them the least the government will allow. And what do these workers get in compensation for the decrease in ability to live? They get an illusory concept called "freedom," which barely enables them to do anything since they don't have the resources to move anywhere else (either physically to a richer location, or metaphorically up the ladder through an education).

 

Well' date=' now you're adding more issues into your argument that weren't there before. Please don't assume that because I argue not to double minimum wage that I'm against universal healthcare, childcare, and public education. [/quote']

 

I didn't mean to imply that. I listed those things for completeness, to show that minimum wage is only one factor of the equation. I have more sense to my arguement than to use logical fallacies.

[Phi for All]

Slavery would be even better for some people because at least in slavery you had to support your laborers.

Support? A pallet on the floor, a blanket and some gruel? What would a minimum wage laborer insist on for support?

In our system you don't even have to make sure you're supporting them, you just have to pay them the least the government will allow.

There will always be a low end to the spectrum and by your arguments nothing that is done will ever be enough. I don't know if you've joined the workforce yet, but wages and benefits are all you're likely to get from an employer. In the interview, I wouldn't mention the fact that you expect them to support you.

And what do these workers get in compensation for the decrease in ability to live? They get an illusory concept called "freedom," which barely enables them to do anything since they don't have the resources to move anywhere else (either physically to a richer location, or metaphorically up the ladder through an education).

It's unfortunate that we don't have any members at SFN who can tell you about lack of freedom. The ones we don't hear from live in countries where what we do here is illegal. Freedom is only an illusion if your mind accepts it that way.

I didn't mean to imply that. I listed those things for completeness, to show that minimum wage is only one factor of the equation. I have more sense to my arguement than to use logical fallacies.

OK but correct me if I'm wrong; we're only talking about doubling the minimum wage, not the whole equation. I realize why you brought them up, but when you tell me I "don't believe in a decent minimum wage, universal healthcare, childcare, public`education" just because I don't believe in doubling minimum wage, you go beyond completeness.

[Skye]

One thing, the prices of most things would increase, but not in proportion to the rise in the minimum wage. Minimum wage labour costs only contribute to a certain portion of the cost of goods and services, and so the cost increase would be diluted. Thus people on minimum wage would probably benefit. On the other hand, the demand would fall as richer people would not be able to afford so many goods and services, so unemployment would rise, and productivity would fall, and growth declines. These are the problems that face many countries that have higher minimum wages than the US. That doesn't mean that it would be the end of days. The US doesn't export much stuff dependent on low wage labour, because it can't compete with other countries. So it would mainly hurt the domestic economy, exports would still be driven by high end technology, innovation, etc. The questions comes down to whether it's worth it for the increased living standards of those on the minimum wage.

[patcalhoun]

What would happen if minimum wage was $10 here in the United States?

 

Ten dollars is not very much and I think it would relieve the strain on the various welfare programs that have to subsidise low wage jobs. Some say minimum wage allows more jobs for kids' date=' but personaly I do not want my kid to thing their time is worth less than $10/hour.

 

What are your thoughts?[/quote']

 

That's an incredibly open ended question. For one, there's no single model for wage effects; these can vary across industry and, more irritatingly, geography. Second, even most of these conditional models (at least the quantifiable ones) have yet to demonstrate any reliable predictive power; they remain, for the most part, explanatory. Third, competing models often differ in graininess of application and interpretation; the result is a conflict over whether terms with multiple academic definitions (say, "unemployment") can attach to anything meaningful in a colloquial sense. Fourth, the model most people are advocating or critiquing here is an old, qualitative hypotheses that represents more of toy in macroeconomics than a potential ancestor to a predictive framework.

 

EDIT: Sure, all serious minimum wage models to date start with the competitive labor market hypothesis and the inverse relationship between wage rate and some measure of labor availability. However, calling it a predictive model is like taking Einstein's equations without energy conditions and declaring any toy topology physical.

[Jim]

What would happen if minimum wage was $10 here in the United States?

 

Ten dollars is not very much and I think it would relieve the strain on the various welfare programs that have to subsidise low wage jobs. Some say minimum wage allows more jobs for kids' date=' but personaly I do not want my kid to thing their time is worth less than $10/hour.

 

What are your thoughts?[/quote']

 

Can you say "out sourcing?"

[Rebiu]

what would happen? business would leave and people wouldn't have jobs.

That is already happening. The United States will never be able to provide cheaper wages than the poorer countries. Jobs have already been exported by the bushel. In spite of this we have a robust economy. This is because the United States has made capital investments in itself as a country including roads, utilities, communications, internal security and education. It will take the rest of the world some time to match these investments if the US stopped inproving them now. The US will not stop and the other countries must not only match where we are but overtake our progress in these investments if they want to compete with us. They have cheap labor and we have more productive labor. Our labor is made more productive by the infrastructure, education and security this country provides. Providing security is done in part by ensuring people are taken care of. If wages are two low to live on then crime and insecurity go up. We see this in the crime and riots of inner cities.

 

The greatest threat to the our economy is the disparity of income between the rich and the poor. Since 1975 most of the economic gain has gone to the top 20% of households and the rest have at best stayed the same and many lost ground.

[Rebiu]

No overestimate is needed. If you drive up the labor cost for any products those products will go up. If it costs the manufacturer of yarn more to produce yarn then he must charge more. Now the carpet manufactrurer must pay more for yarn so he charges more to maintain his margin. Now the homebuilder must pay more for carpet so he must charge more to produce housing aqnd maintain his margin. Increased costs cascade through industry.

This is true. There are other factors that bring prices down. Things like capital improvements and that is where much of the increase in our standard of living comes from.

 

Employers are screaming for guest workers because they will work for the current minimum wage and today's low end american workers won't. I know one young man that's never had a job and he says he won't have a job until someone gives him $12 an hour to start. He doesn't care that he has no skills' date=' he wants a position, not a job. [/quote']I was that young man. The year was 1990 and the rate I would accept no less than was $5/hour. I found such a job on the third try. Within a year I was making $8/hour and after two I was at $12/hour. I was able to pay for college completely by working part time. If I had accepted less money and taken the first job I would have had far fewer opportunities. Most often good work is not rewarded until the worker demands it. I moved to California in 1994 my first job was $6.50 at a dry cleaner then $7.00 restaurant host, $8.50 Coffee shop counter, $13.75 Banquet waiter and $15.00 for driving a tow truck. I took the cheaper job right away because I needed it. I quite jobs as soon as I found better ones and lied on applications to cover all the job changes. I did not get any training to increase my value as an employee. I got the better jobs through personal connections.

 

Like I said before' date=' if you can't see the difference at $10, make it $15, $20 or even a $100. Calculate how much everyone else's wage will have to go up to maintain their current purchasing power.[/quote']The real overall affect is to lower the total wealth of the upper tier of society and raise the total wealth of the lower tier.

[ecoli]

The real overall affect is to lower the total wealth of the upper tier of society and raise the total wealth of the lower tier.

 

This is possibly the immediate effect, but the wealthy business owners will raise prices to compensate and all your left with is inflation.

[Pangloss]

The real overall affect is to lower the total wealth of the upper tier of society and raise the total wealth of the lower tier.

 

Ding ding ding. The true nature of the suggestion to raise the minimum wage rears its ugly head. It's not about finding that "living wage" at all. It's about destroying evil corporations and giving everyone two beemers and a boat.

[patcalhoun]

Anybody else notice that in a thread full of declaratives there's not one reference to or application of an actual model purporting to relate wage rate with whatever? Imagine if we carried on like this in the natural science forums.

[Rebiu]

Ding ding ding. The true nature of the suggestion to raise the minimum wage rears its ugly head. It's not about finding that "living wage" at all. It's about destroying evil corporations and giving everyone two beemers and a boat.

I can make a strawman argument to. Lets legaly bind McDonalds employees as serfs.

[Pangloss]

I feel that that is a motivating factor behind the drive for a higher minimum wage for many of its adherents. If you disagree, more power to you.

 

The logical opposing position would not be that McDonalds employees should be bound as serfs, but that they should simply be disallowed to seek other opportunities, educate themselves, move to other parts of the country, and so forth.

 

But in the end, it's actually your side of the argument that wants to "legally bind McDonalds employees as serfs". After all, if you begin to dictate what a company can charge its employees, and continue to insist that that amount isn't high enough, you in essence make it impossible for those employees to ever merit a pay increase.

 

Again so again we logically return to my point, which is that this argument is about big-picture ideologies, not helping the little guy.