Wake up: the American Dream is over

[j2k4]

So your argument is that paying a living wage is silly as they will still be payed less than those at the top

Your definition of a "living wage" (family of four, was it?) does not and cannot exist at the bottom end of the scale.

If it did, what are we to pay those who don't require it?

If those requiring a "living wage" may hold the same jobs as those who do not, how is that to be handled?

As an employer, should I expect to be subject to some sort of government regulation as to which of the two candidates I hire?

Remember:

The object of being in business is to make money; less so to see how many jobs one can create.

Jobs are a very nice side effect of what is basically (let us not beat about the bush) greed.

Vid-

In Busyman's post he typed the phrase, "You are quite silly"-I think he was speaking to you.

Explain how having a maximum wage would not have an effect on inflation. Yes it is silly, but given the context of your argument against paying a living wage, justify one against the other.

How does one go about seriously addressing something silly?

You first...oh wait, you already did.

[vidcc]

Your definition of a "living wage" (family of four, was it?) does not and cannot exist at the bottom end of the scale.

If it did, what are we to pay those who don't require it?

Show me where I gave such statistics.

If those requiring a "living wage" may hold the same jobs as those who do not, how is that to be handled?

As an employer, should I expect to be subject to some sort of government regulation as to which of the two candidates I hire?

You are just adding a straw man to the debate

Remember:

The object of being in business is to make money; less so to see how many jobs one can create.

Jobs are a very nice side effect of what is basically (let us not beat about the bush) greed.

Hold on............

The "hoarding factor" is largely a fiction, and mainly a rhetorical device designed by liberals for the expression of liberal...hmmmm...I hesitate to call them "thoughts" or "ideas"...how about, "schemes"?

Who is arguing against what being in buisness is about? Who is saying it's about job creation. If you need 4 people to do a job why hire 5? How would removing the minimum wage create a vacancy for that 5th person?

Explain how having a maximum wage would not have an effect on inflation. Yes it is silly, but given the context of your argument against paying a living wage, justify one against the other.

How does one go about seriously addressing something silly?

You first...oh wait, you already did.

Having a maximum wage is silly but the question about its effect on inflation is not....please answer.

If that were allowed, you will see an expansion of the economy (especially at it's lower-end, which seems to be the current topic here) the effect of which would also aid in addressing our immigration problems

The data shows a greater expansion in states with higher minimum wage than those with the fed rate.... you still have not explained this.
Immigrants (illegal and payed lower than minimum wage) do the jobs americans wont do....right?..... why wont americans do those jobs?

could it be because they don't pay enough to live in america? and if so then why would they do those jobs if the minimum wage was erradicated and "the market" payed less?

[j2k4]

You wish me to respond to this:

Logic would dictate that there should be maximum pay then if inflation is such a concern.

Not true.

Inflation is driven by the general economic tendency to bleed money from the largest classes, which are also those least able to avoid it.

These would be the lower and middle classes, whose earning power and sheer numbers make them the real cash cow of the economy, rather than the wealthy.

Your definition of a "living wage" (family of four, was it?) does not and cannot exist at the bottom end of the scale.

If it did, what are we to pay those who don't require it?

Show me where I gave such statistics.

If you subscribe to a different formulation than the standard, it behooves you to state what it might be.

If this is the case, please provide us with your numbers.

If those requiring a "living wage" may hold the same jobs as those who do not, how is that to be handled?

As an employer, should I expect to be subject to some sort of government regulation as to which of the two candidates I hire?

You are just adding a straw man to the debate

Do you mean to imply this dilemma would not occur; that it is not a factor that would need to be addressed?

Remember:

The object of being in business is to make money; less so to see how many jobs one can create.

Jobs are a very nice side effect of what is basically (let us not beat about the bush) greed.

Hold on............

The "hoarding factor" is largely a fiction, and mainly a rhetorical device designed by liberals for the expression of liberal...hmmmm...I hesitate to call them "thoughts" or "ideas"...how about, "schemes"?

Who is arguing against what being in buisness is about? Who is saying it's about job creation. If you need 4 people to do a job why hire 5? How would removing the minimum wage create a vacancy for that 5th person?

What are you talking about?

Is there a third or fourth side to this debate you have undertaken?

I employ 5 people; that is the number of employees I need to do the job I have contracted to do, no more, no less.

Shortly after I started my endeavor, circumstances caused me to operate with three people, and I found myself working 108 hours a week for two months.

Oddly enough, this did not result in any significant savings, although I did keep two slots open for employees I wanted to retain.

Explain how having a maximum wage would not have an effect on inflation. Yes it is silly, but given the context of your argument against paying a living wage, justify one against the other.

How does one go about seriously addressing something silly?

You first...oh wait, you already did.

Having a maximum wage is silly but the question about its effect on inflation is not....please answer.

See top of post.

If that were allowed, you will see an expansion of the economy (especially at it's lower-end, which seems to be the current topic here) the effect of which would also aid in addressing our immigration problems

The data shows a greater expansion in states with higher minimum wage than those with the fed rate.... you still have not explained this.
Immigrants (illegal and payed lower than minimum wage) do the jobs americans wont do....right?..... why wont americans do those jobs?

To what data do you refer?

Expansion of what, precisely?

Illegal immigrants don't "do jobs Americans won't do", they do those jobs that Americans will do, if they are paid more money.

Actually, the illegal-immigrant workers are providing a splendid example of "can-do"-ism, which used to be a distinctly American trait, at least before the minimum wage was established.

could it be because they don't pay enough to live in america? and if so then why would they do those jobs if the minimum wage was erradicated and "the market" payed less?

Ah, but remember:

THEY DON'T OFFICIALLY "LIVE" HERE!

If "they" decided not to do "those jobs", we could continue this discussion while talking about Americans.

Who do you think would do the jobs?

Perhaps the jobs would no longer exist...

Any such job would be evaluated by those who want the job done-it would be up to them to determine how this occurs.

The government need only ensure slavery is not an option.

The market will provide, fear not.

BTW-Please start a fresh post without all these fucking quotes?

It is tiresome to spend more time typing brackets, slashes and caps just to stay in theme.

I've had enough of that.

[vidcc]

The terrible effect of raising the minimum wage

reality has a liberal bias

[j2k4]

From "Asymetrical Information: An opinion ridden free-for-all".

Please read it carefully.


March 05, 2006

From the desk of Jane Galt:

Is raising the minimum wage a good idea?

A friend who was recently in a heated debate on the topic got me musing.

To answer the question, though, we first have to set aside the (important!) value judgements about the rights business owners have to set wages, how much help poor workers deserve, and so forth. Those questions will probably never be settled, though they certainly are a lot of fun to debate.

But we probably can settle, to a reasonable approximation, how well the minimum wage will accomplish the policy goals its advocates have set for it, and at what cost. So let's assume, arguendo, that we don't really care about the property rights of our nation's small businessmen, and all we're really interested in is helping poor people By Any Means Necessary--provided the relationship of costs to benefits isn't entirely outlandish. Then we're in good shape to ask: should we raise the minimum wage?

I won't go into the putative benefits, since they're pretty obvious: poor people get more money. No, what we have to look at is the costs; and specifically, costs to poor people, since we've already agreed that that's pretty much all we care about.

Standard economic theory tells us that if you artificially raise the price of something, suppliers want to sell more of it, while buyers want to purchase less. In the labour market, this means that more people want to work, but employers don't want to hire so many of them, so you end up with too many people chasing too few jobs.

But while virtually every economist would agree on the direction of the change in employment--unemployment goes up--there is some disagreement between liberal and conservative economists over the magnitude of the change. Many liberals, citing Card and Krueger's paper on changes in the minimum wage, say that any fall in employment is so small that it might as well be zero; it is too small to detect in the constantly fluctuating marketplace. The abstract describes their findings:

On April 1, 1992 New Jersey's minimum wage increased from $4.25 to $5.05 per hour. To evaluate the impact of the law we surveyed 410 fast food restaurants in New Jersey and Pennsylvania before and after the rise in the minimum. Comparisons of the changes in wages, employment, and prices at stores in New Jersey relative to stores in Pennsylvania (where the minimum wage remained fixed at $4.25 per hour) yield simple estimates of the effect of the higher minimum wage. Our empirical findings challenge the prediction that a rise in the minimum reduces employment. Relative to stores in Pennsylvania, fast food restaurants in New Jersey increased employment by 13 percent. We also compare employment growth at stores in New Jersey that were initially paying high wages (and were unaffected by the new law) to employment changes at lower-wage stores. Stores that were unaffected by the minimum wage had the same employment growth as stores in Pennsylvania, while stores that had to increase their wages increased their employment.

This makes conservative economists say "Whoa!" Card and Krueger didn't simply find that effect of a relatively small change in the minimum wage was too negligible to measure; while a conservative might dislike this finding, it wouldn't be obviously, outrageously wrong. But Messrs Card and Krueger actually found that raising the minimum wage increased low-wage employment, a result that simply makes no sense to all but a handful of hard-left activists who used the study to argue that they'd found some sort of magic money machine. No one has posited any plausible reason that an employer whose wage bill has just gone up would respond by . . . taking on more, now more expensive, workers. Without such a mechanism. . . and colour me suspicious that we will find one . . . we are left with two possibilities:

1) There is some other effect, such as a boom in New Jersey's fast food sector, that masked the employment drop

2) There's something wrong with the data.

Number 1 seems possible, and number 2 seems very likely, because they relied on survey data, and surveys are notoriously unreliable. Just ask the folks at Coca-Cola, who did the most extensive surveys in history, and unveiled "New Coke" only after every single study had reported that consumers overwhelmingly favoured the new taste. A later study using more-reliable payroll data (but funded by the retail/restaurant industry, and involving a smaller data set) found the effect you'd expect: minimum wage employment in New Jersey went down compared to Pennsylvania. Other criticisms of the study's methodology helped to seriously weaken their assertion that there was no measurable employment effect. Most of the studies that have been done in the past have tended to reinforce the economic conventional wisdom.

Nonetheless, while modest increases in the minimum wage may increase unemployment, the effect doesn't seem to be huge; when the studies tend to point both ways, that's a good sign that whatever change you're looking at is pretty small. Might we not make a dent in poverty by helping a lot of poor workers to higher wages, at a modest cost in employment to the few?

Possibly . . . but the problem is that, as a poverty fighting weapon, the minimum wage is an exceptionally blunt instrument. Only about half of the people earning the minimum wage are adults; the rest are teenagers and young adults, many of whom come from relatively affluent families. According to this paper from the Clinton-era Department of Health and Human Services, only about 30% of the people receiving minimum wage live in families near or below the poverty line . . . a result that is hardly surprising, since the overwhelming majority of minimum wage workers worked less than twenty hours a week--so much less that the average workweek for all minimum wage workers was less than 10 hours in 1998. This would suggest that most people working at minimum wage are supplementing their studies, or their spouse's income, rather than trying to support themselves with such a job. So in order to get to the relatively small number of people who need the money, we provide a subsidy to the 71% who do not. This is not very efficient social policy.

Even worse, there is evidence that whatever job losses there are fall disproportionately on minorities and women, the groups most likely to be dependant on the minimum wage to support themselves. So there is a real possibility that the minimum wage is a subsidy to affluent workers at the expense of the poor workers it is supposed to help. Or, as the HHS paper sums up the moderate consensus on the minimum wage:

* A disproportionate share of minimum wage workers are teenagers and most do not live in poor families.

* A sizable portion of minimum wage workers are poor parents.

* Negative employment effects, if any, appear to be slight and are difficult to detect.

* Minimum wages curb employer-provided training opportunities for low-wage workers and may reduce educational attainment for some at-risk groups.

* Moderate minimum wage increases will not reduce poverty rates.

Pay close attention to that second-to-last point. Another little-considered downside of minimum wage increases is that employers who are forced to pay higher wages often find ways to get it out of their employees in other ways; as Tyler Cowen pointed out:

Gordon notes that the government can make an employer raise nominal money wages, but can't stop him from turning off the air conditioner. [A more optimistic scenario is that the employer invests in creating a higher-productivity job.] Surely just about every job out there can be made worse, one way or another, in a way that saves the employer money.

So the scenario is now simple. The government boosts the minimum wage. Low-wage workers earn more. Few lose their jobs. Workers sweat more too, one way or another. Few are much better off.

This point was made in a slightly different way by Kevin Murphy et al. in their critique of Card and Kreuger:

A popular idea among those who favor increasing minimum wages is that firms will respond to an increased minimum by "getting more out of" their employees. But how would this be accomplished? If greater productivity is achieved by substituting higher-quality workers, then low-skilled, and thus low-wage, workers take it on the chin. If, on the other hand, the same workers are now working harder, there is still a problem. Work has two dimensions, time on the job and effort at the job. At the previous wage the employer and his employees had reached an understanding about what constituted an hour's worth of work for an hour's pay. They could have reached an agreement on a greater amount of effort per hour and a greater hourly wage. But the fact that they did not suggests that the agreement they did reach was preferred to other potential agreements involving higher wages and greater effort. If low-skilled workers must put forth more effort just to keep their jobs and earn the higher wage, then they have actually taken a step backward. Their earnings have risen, but not by enough to make up for their increased effort. This must be true, otherwise the employer could have been "getting more out of" his workers all along simply by paying the higher wage.

In effect, by removing the worker's ability to trade off cash for better working conditions, the government might be making low-wage workers worse off. Oh, and it might prevent poor teenagers from getting a toehold in the labour market.

So the minimum wage does not look like a very good programme for fighting poverty, especially compared to alternatives like the Earned Income Tax Credit (EITC). To this, there are two possible responses from minimum wage advocates:

1) The problem is that we are not increasing the minimum wage enough. If we had a really high minimum wage, then there would be big benefits to poor workers to offset the employment loss.

2) Even if there are big efficiency costs--excess subsidies to middle-class workers and so forth--they are necessary to gain support for the programme. "A programme for the poor is a poor programme", and even though straight income redistribution system like the EITC might be a more effective poverty-fighter, it is much easier to get political support for the minimum wage than for a program that targets the poor.

To number one, I'd point out that really big increases in the minimum wage are likely to correspond to really noticeable losses in employment--once again, falling disproportionately on the low-skilled, minorities and women, exactly the groups you're trying to help. Even Mr Krueger is careful to emphasize that his work applies only to small wage increases; no one (or at least no economist) thinks that if you suddenly ratcheted the minimum wage up to $10 an hour, you'd see no effect on labour markets.

(But employers can just raise prices! say advocates. Mmmm, yes . . . unless there are substitutes for their product. McDonalds competes with frozen dinners and 7-11 burritos and Kraft Mac n' Cheese; The Gap competes with the J Crew catalogue. No, McDonalds won't shut its doors, but it doesn't have to in order to reduce employment; if 15% of its customers defect to cheaper alternatives, it will need fewer burger-flippers and order-takers. There's also the fact that workers complete with labour-saving equipment, which may become cost-effective if wages skyrocket. Plus, since poor people are disproportionately likely to shop at places that pay minimum wage, including fast-food outlets, the higher prices often come out of their pockets.)

To number two, I'd argue that the political evidence for this is thin; IIRC the EITC has been expanded more recently than the minimum wage. But more importantly, I'd want to ask: is the point to "DO SOMETHING!", or is it to help the poor? Given the enormous uncertainty as to whether the minimum wage helps the poor more than it hurts, it would seem obvious that the focus should be placed upon expanding known poverty-fighters like the ETIC and Medicaid, rather than lobbying for another middle-class subsidy because a few dollars might eventually trickle poorwards. Even if the minimum wage helps more than it hurts, the effect is far too modest to merit expending political energy on its expansion.

There's a sort of nostalgia halo around policies like the minimum wage. Minimum wages and unionization were high in the 1950's; income inequality was low; therefore if we implement the former, we will produce the latter result. But it seems at least as plausible that unionization and the high minimum wage were the result of high demand for labour, which also caused income inequality to shrink. If this is true, enacting the minimum wage, or getting the NLRB to beat up on companies, will be no more effective at bringing back those halcyon days of income compression than resurrecting Burma Shave billboards across the land . . . and considerably less entertaining.

We are finally starting to get a hazy idea about which poverty programmes solve more problems than they create. Given the huge questions about its effectiveness, and its obvious inferiority to programmes such as the EITC, it's hard to understand why raising the minimum wage is even in the standard liberal policymaker's toolbelt.

I could have merely provided a link, or done a cut-and-paste; instead, I transcribed this just for you.

[vidcc]

We are all aware of the theory......We have had to listen to it for a long time.........However........The reality in all the states that have increased the minimum wage doesn't match the theory......

Now there are exceptions to every rule but as the theory you posted doesn't mention exceptions it's hardly worth using an exception to counter the reality.

Don't you find it odd that she pointed to an increase in the fast food sector (a low paying sector) when saying that increasing the minimum wage lowers employment in low paying sectors ?

The way to help the poor is to pay them less apparently

[j2k4]

We are all aware of the theory......We have had to listen to it for a long time.........However........The reality in all the states that have increased the minimum wage doesn't match the theory......

Now there are exceptions to every rule but as the theory you posted doesn't mention exceptions it's hardly worth using an exception to counter the reality.

Don't you find it odd that she pointed to an increase in the fast food sector (a low paying sector) when saying that increasing the minimum wage lowers employment in low paying sectors ?

The way to help the poor is to pay them less apparently

Are you saying that the fast food sector is not a suitable "general indicator" of trends in lower-paying jobs?

Why do you suppose the term ""burger-flipper" is held in such rhetorical favor?

Besides which, if you choose to regard your just-discovered wonder-fix as a panacea, perhaps you'd consent to construct an argument in favor of raising the minimum wage to a level which would allow each "burger-flipper" to drive a Ferrari and sail about on yachts...after all, it's naught but sunny skies, right?

BTW-

What do you suppose an expansive market for fast-food could possibly mean?

For one, it could mean expanding population, or be attributable to population movement.

It could also mean the steak-and-lobster joints are suffering.

[j2k4]

We are all aware of the theory......We have had to listen to it for a long time.........

Speaking of theories, why do you suppose that, it having been conclusively proven that proper tax cuts result in increased revenues, liberals still "theorize" that raising taxes is the only fix for the deficit?

It is a well known fact that the more money made available to the government, the more it will spend.

Have you any non-theoretical ideas to refute that?

[Busyman™]

I love how j2 comes back to what I've already said.

Immigration (mainly illegal) and greed (hoarding factor).

Apparently j2 wants a new legal "bottom" so the employer of those landscapers can rest easy.

@j2 - I was wondering when you'd paste something to "prove" your point.

I'll actually read it one day. I know you've read many similar articles across multiple topics to help form your opinions.
---
I think there are about 5 states with no minimum wage laws and 1 that is lower than the federal rate. I know DC and Maryland are about $6.50 and hour (something like that).

[Busyman™]

We are all aware of the theory......We have had to listen to it for a long time.........

Speaking of theories, why do you suppose that, it having been conclusively proven that proper tax cuts result in increased revenues, liberals still "theorize" that raising taxes is the only fix for the deficit?

It is a well known fact that the more money made available to the government, the more it will spend.

Have you any non-theoretical ideas to refute that?

So you'd give the farm to business? There has to be middle ground. Fuck, lets cut taxes down to the cuticle then.

You know, outsourcing call center jobs to India and taking peoples land to put a shopping mall on it will most likely increase revenues too.