$12 minimum wage

[mark the shoeshine boy]

ok,,,,,maybe it wasn't 12 bucks an hour that congress has a bill to vote on, i think it is more in the 7's per hour....how do you feel about this idea.

Will it hurt small businesses ? what will happen to retailers ? Resturants ?

I hear every time the wage goes up so does the prices....

What do you think ?

mark tssb

[Mama Bear]

I can't fathom how anyone can make a living, much less support a family on $5.75/hour. This is an obstacle that I think drives folks to 'easier' ways of making money...and creates an impossible environment for someone to realize the American Dream. Many of the folks working for minimum wage have no insurance.. we end up paying their hospital bills for them via our tax payments!

What is wrong with making enough to live on??

Hugs,

Sue (Mama Bear)

[randomtw]

imagine how much gas is now and how most ppl drive 1-2 hrs just to get to work

even at $7 for min wage it takes like 1-2 hrs just to pay for a 30min-1hr roundtrip back and forth from work

[TheChefs]

We have it in australia and it's a good thing. No ghethos or anything like that. Every one who has a job has enough to live on.

[EL Alamein]

Personally, I support getting rid of the minimum wage. It actually hurts people more than it helps them, especially minorities. The market is what determines what a job is worth not government. When government tries to give people a raise (a very very small percentage of the working population - about 3 %) it actually eliminates jobs for other people and shrinks the job pool. Prices don't go up - jobs goes down. You temporarily help the person in the minimum wage job who will probably move on to a higher paid job very soon but again, you hurt many others who get the minimum wage job as an entry level position. This is because now the employer cannot create as many jobs because the one's he's got cost him even more. He may actually have to lay off someone to stay in business and in that case what is better - a minimum wage job or no job at all?

I say get rid of it. It's an artificial price that impedes the market from creating even more entry level jobs from which people can step up the ladder to greater success. And if we're not ready to get rid of it, leave it where it is.

Chris

[Jim]

I think it would be great if every job paid enough to support a family of 4 but its not going to happen. As a small business owner there are jobs that are only worth paying 6 bucks an hour for to have done, if I had to pay 30.00 an hour (a living wage in NY) they would not be done at all. I believe a minimum wage is an essential tool to prevent exploitation of children and others,but it is designed as an starting point, not a place to live from and stay. I certainly do not have the answers- but you cannot transfer wealth with legislation.

[ada8356]

A few articles that can articulate points better than I can.

The Minimum Wage: Washingtons Perennial Myth

Minimum Wage, Maximum Folly

[moses]

I really do not think there is a good direct solution to this.

I agree with Sue that the minimum wage is not enough to live on, and it seem very problematic to me that a lot of jobs do not provide enough for one person to live on, much less enough to support a family. Fine for high schoolers trying to make a little spending money, but what about unskilled people trying to get of public assistance, or just generally trying to support their family?

At the same time, I think raising it causes serious problems. It is inevitable that some jobs will be lot. Further, it will put greater pressure on small business, which are probably the major driving force in our economy, and which are under a great deal of pressure already.

Also, an argument made a lot less often is the impact on retirees and others on a fixed income. Raising the minimum wage is a strong inflationary force, so the net impact is that pensioners effectively get a cut. Again pinching people who often can't really afford it.

Btw, although as pointed out earlier only a very small percentage of the work force makes minimum wage, and change will impact a rather larger group, for better or for worse. There are an awful lot of jobs that pay just over minimum wage. So an increase in the mimimum might directly force them up. Also, competitive forces will likely cause wages close to the minimum to go up as an indirect effect of an increase.

[ada8356]

I don't think the minimum wage, or pushes by politicians to increase it, have anything to do with actually helping folks... it is simply a vote buying scheme... don't we have mid-term elections around the corner?

[jscott]

couple of points i think are problematic with this all.

- current minimum wage has not increased with inflation and is not nearly enough to support a family on

- many of the people that make ONLY minimum wage are younger people without families working at retail stores/fast food who do not have families and which its only dispossable incoming for them to buy cd/movies/shoes..etc etc.

- increased minimum wage obviously cuts into business profits which can lead to small businesses shutting down or passing along these costs to shoppers which means we are spending more so at some point the question is if the increase in minimum wage going to be enough to offset the increase in prices and how much bitching will the majority of people paid salary who are not getting an increase in wage going to have about paying these new higher prices on goods/services?

- on the larger scale there is the huge problem of import/exports due to our higher cost of making goods becuase of this minimum wage. it goes up, cost of our exports have to go up and then we dig a bigger hole against 10cents an hour people working in china. how are we ever going to catch up. our ecomony is very dependant on imports.

- will higher minimum wages push jobs overseas? outsourcing to places like china/india where 10k $ a year salary is very good and you will get all college graduates applying.

- back to the US. i am a big fan of paying someone what they are worth. is there any need to pay a burger flipper more money? what added benefit are they bringing to the business that makes them worth more money? i think people deserve raises as they work somewhere, learn the business, can do activities faster and thus more efficient. however starting offf someone new with no schooling and no hands on experience...why?

- there is the idea that perhaps more knowledgable and schooled people will apply for jobs if the pay rate was higher. someone more qualified whos working at 7$ an hour beucase its higher then minimum wage. perhaps they would be willing to fill a roll if both positions were offering 7.25$ minimum wage.

- if someone can work hard and earn minimum wage all day everyday for a year and make 14k a year or sit at home doing anything they want with their free time and be on welfare and make 10k a year plus get benefits of cheaper housing, medical insurance and then with their all day free time do some work under the table or even illegal and make more then the 4k difference why would they want to bust their ass working for minimum wage? i think this is more of a problem then most are aware of. free time + welfare > working minimum wage. perhaps increasing the minimum wage will tilt this back towards working thus bringing in new job seekers.

- a huge problem that most people do not realize is that the very largest % of people that will benefit from increase in minimum wage are union employees. most think that the person down at mcdonalds deserves 7.25$ an hour instead of 5$... but they are not realizing that the union painter that gets 32$ an hour is actually paid at 27$ + minimum wage via his contract..and so he is now going to make 34.25$ an hour and likewise majority of unions people are also. is this the person you are trying to help out by this incentive? do you want to pay more for good/services becuase you are helping the plumber make 45$ vs 42$ an hour?


in the end who knows. i think its about time to raise the minimum wage as it has stagnated for long enough not moving with inflation and cost of living. but i am aware that this will cuase problems that will have larger effects on our economy then the benefits of paying the pure minimum wage workers higher payouts will be.

[Gatorade]

It's funny that the people who say raising the min wage would hurt things haven't lived on min wage in years.

Min wage is used as a level to keep profits in the pockets of the ones with the deepest pockets.

A single mother that has to take a min wage job because she has to be able to take care of a young child would disagree with you that we don't need to raise the min wage.

Min wage creates a level that allows businesses to lower the wage ammount by meeting legal necessity.

[Jim]

couple of points i think are problematic with this all.

- current minimum wage has not increased with inflation and is not nearly enough to support a family on

- many of the people that make ONLY minimum wage are younger people without families working at retail stores/fast food who do not have families and which its only disposable incoming for them to buy cd/movies/shoes..etc etc.

- increased minimum wage obviously cuts into business profits which can lead to small businesses shutting down or passing along these costs to shoppers which means we are spending more so at some point the question is if the increase in minimum wage going to be enough to offset the increase in prices and how much bitching will the majority of people paid salary who are not getting an increase in wage going to have about paying these new higher prices on goods/services?

- on the larger scale there is the huge problem of import/exports due to our higher cost of making goods because of this minimum wage. it goes up, cost of our exports have to go up and then we dig a bigger hole against cents an hour people working in china. how are we ever going to catch up. our economy is very Dependant on imports.

- will higher minimum wages push jobs overseas? outsourcing to places like china/India where 10k $ a year salary is very good and you will get all college graduates applying.

- back to the US. i am a big fan of paying someone what they are worth. is there any need to pay a burger flipper more money? what added benefit are they bringing to the business that makes them worth more money? i think people deserve raises as they work somewhere, learn the business, can do activities faster and thus more efficient. however starting off someone new with no schooling and no hands on experience...why?

- there is the idea that perhaps more knowledgeable and schooled people will apply for jobs if the pay rate was higher. someone more qualified who's working at 7$ an hour because its higher then minimum wage. perhaps they would be willing to fill a roll if both positions were offering 7.25$ minimum wage.

- if someone can work hard and earn minimum wage all day everyday for a year and make K a year or sit at home doing anything they want with their free time and be on welfare and make 10k a year plus get benefits of cheaper housing, medical insurance and then with their all day free time do some work under the table or even illegal and make more then the 4k difference why would they want to bust their ass working for minimum wage? i think this is more of a problem then most are aware of. free time + welfare > working minimum wage. perhaps increasing the minimum wage will tilt this back towards working thus bringing in new job seekers.

- a huge problem that most people do not realize is that the very largest % of people that will benefit from increase in minimum wage are union employees. most think that the person down at mcdonalds deserves 7.25$ an hour instead of 5$... but they are not realizing that the union painter that gets 32$ an hour is actually paid at 27$ + minimum wage via his contract..and so he is now going to make 34.25$ an hour and likewise majority of unions people are also. is this the person you are trying to help out by this incentive? do you want to pay more for good/services because you are helping the plumber make 45$ vs 42$ an hour?


in the end who knows. i think its about time to raise the minimum wage as it has stagnated for long enough not moving with inflation and cost of living. but i am aware that this will cause problems that will have larger effects on our economy then the benefits of paying the pure minimum wage workers higher payouts will be.

You make a some fine points above- the flaw in all these augments is that you cannot "live' on 6-7-8 -10 bucks an hour independently in most urban areas at 10.00 bucks an hour you would bring home 270.00 a week at the most, a studio apartment in a basement is 1200 a month! I submit that 15.00 an hour is not a living wage.. 18.00- 25.00?? or should we just say if you work you get paid 50,000.00 a year for any job... its a slippery slope. If the minimum wage was renamed the ''start at the bottom and work your way up wage'' would it be more palatable? (please Do not confuse my pragmatic statements with a lack of compassion for the working poor.)

[NMMB]

This is a difficult topic... as an economist I certainly understand the "let the market take care of it" line... but that gets me thinking... if we are going to let the market take care of minimum wage (so people would probably end up working at a wage as low as or lower than present minimum wage) should we also let the market take care of the prices for fuel, electricity, food, etc (all of which are heavily subsidized - especially in North America, and if my memory is correct more in the US than Canada, but don't quote me on that)? In our economies we have so many artificial prices (either artificially high, such as Cigarettes and Dairy - in Canada at least - or artificially low, such as gas or lettuce grown in the deserts of the Southern US that is sold for less than the price of pumping the "free" water to the farmers).

I expect that letting the market take care of it is more palatable when it is applied to minimum wage than when it is applied to fuel/energy (which should be far more expensive but is subsidized) - since the line is most often, but not always, spoken by those who haven't seen a minimum wage cheque in years but consume a great deal of energy.

[Nick]

Michael,

Your support of minimum wage makes the baby Milton Friedman cry.

-Nick

[moses]

Michael,

As to the minimum wage, you make a very good point. As to fuel and energy costs, I would note that they tend to impact people making minimum wage more than the rest of us. We all use a lot of energy as a rule (although I've saved a lot there by making it through this NYC summer without AC - in my apartment anyway), but I doubt energy consumption changes a huge amount relative to income (within a given country). Certainly it is a much higher percentage of income for low income folks. Growing up in a rural area, I am very aware of the impact higher fuel costs have on people who do not make much and have to drive a fair distance as part of daily life. This is compounded by the fact that lower income usually equals forced to live farther from work in order to have lower housing costs.

[thatbrian]

Personally, I support getting rid of the minimum wage. It actually hurts people more than it helps them, especially minorities. The market is what determines what a job is worth not government. When government tries to give people a raise (a very very small percentage of the working population - about 3 %) it actually eliminates jobs for other people and shrinks the job pool. Prices don't go up - jobs goes down. You temporarily help the person in the minimum wage job who will probably move on to a higher paid job very soon but again, you hurt many others who get the minimum wage job as an entry level position. This is because now the employer cannot create as many jobs because the one's he's got cost him even more. He may actually have to lay off someone to stay in business and in that case what is better - a minimum wage job or no job at all?

I say get rid of it. It's an artificial price that impedes the market from creating even more entry level jobs from which people can step up the ladder to greater success. And if we're not ready to get rid of it, leave it where it is.

Chris

I agree 100%. Although the min. wage seems like a good idea, it actually keeps wages too low, remove it, wages go up and that will really help the poor.

[Andre]

This is a subject where you need to separate "common sense" and knee-jerk reactions from reality.

If you ask someone on Min wage whether they need to earn more, they will say yes, inevitably. Just as anyone would. Likewise, everyone would agree that everybody would like a raise. Personal opinion is no answer.

You have to look at the facts of U.S. wage demographics: Only 3-4% of the population makes min wage. 64% of them are the children of middle class families working a temp job. Min wage jobs are not, and never were INTENDED for working families. Min wage jobs are ENTRY LEVEL jobs that one takes to gain experience for entering the real job market. Nobody should be looking to spend their career at min wage (and almost nobody, if anybody, does), if they are, they are not doing what they need to do. Government can't mandate that people work to improve themselves. If you break the American workforce into quintiles, after a decade, only 4% of the bottom quintile (20%) are STILL in the bottom quintile. Most move up to the middle class.

That said, it's basic economics (at least as it's taught in non-socialized countries): You raise the price of anything, you sell less of it. If you raise the price of labor, less of it will be purchased (fewer hires). It works this way every time it is studied, to the point where you will see it as an example in most every econ book (except in France). Raising the min wage costs jobs.

The REAL fix is to increase the value of what you are selling. Be a good worker, work to better yourself. take a job, any job, that will move you toward your eventual goal and perform your best at it. If you need more schooling - get it. The only person in the U.S. who makes min wage does so because they are either not qualified for anything else (say a high schooler on his first job), or they haven't bothered to aquire the skills neccessary to get a better job - and that's THEIR fault, not mine. Nobody is preventing ANYBODY from getting ahead, except themselves.

Statistically, if you finish high school, don't have kids before marriage, and don't get married until you are a little further along in life than right out of high school, you have a 90% chance of being successful. Contrarily, if you do these things, you have more than an 80% chance of living in poverty. You tell me if the solution is raising the min wage?

Furthermore, why stop at $12/hr. Why not $15...$25...$50? After all, who wouldn't want $50/hr? Think of how far ahead a person could get with that kind of raise? Except that the cost of living would go through the roof and nobody would be better off, least of all the poor. Talk about mean reversion!

Andre

[NMMB]

Your support of minimum wage makes the baby Milton Friedman cry.

...As to fuel and energy costs, I would note that they tend to impact people making minimum wage more than the rest of us...

I wasn't even considering any compound effects - just noting that fuel (especially gas) prices are artificially low in North America (especially US)... and while the ratio of energy costs to total income is certainly more of a concern for a low income individual I do think that if people were to be charged a "real" price for their energy we would see fewer North Americans driving large SUVs with the AC cranked as they move slowly through city traffic between their air conditioned office and air conditioned homes. While the well-off may have a different energy cost to total income ratio, they certainly use more energy.

...If you ask someone on Min wage whether they need to earn more, they will say yes, inevitably...

Ah, self-selection bias - the bane of social scientists.

...The REAL fix is to increase the value of what you are selling. Be a good worker, work to better yourself...

Indeed - but it is not always that easy... like many things it is easy to prescribe a simple and eloquent solution when you are not directly facing the problem.

...Statistically, if you finish high school, don't have kids before marriage, and don't get married until you are a little further along in life than right out of high school, you have a 90% chance of being successful. Contrarily, if you do these things, you have more than an 80% chance of living in poverty...

Two questions on this... (1)where did you get these stats and remind me again (2) what the official and accepted definition of "successful" is (I've not been able to find one)?

[Andre]

Two questions on this... (1)where did you get these stats and remind me again (2) what the official and accepted definition of "successful" is (I've not been able to find one)?

The data comes from the most recent U.S. Census data. I don't remember what data point was used as the deffinition of "success" in a paper I read on the subject once, nor do I care to try to find it all again. It was basically some wage point in the middle class - a reasonable number as I recall it. As an economist, you shouldn't be acting surprised by any of it...but then you are Canadian!

Indeed - but it is not always that easy... like many things it is easy to prescribe a simple and eloquent solution when you are not directly facing the problem.

You know, LIFE isn't easy sometimes. Sometimes you've got to get up early, stand in line somewhere, and then spend 10 hours doing something you don't really want to do. And maybe you have to do that for YEARS. Maybe adding another few hours of schoolwork on top of your workday. But then EVENTUALLY you will be able to get where you want to go. I worked damn hard to get where I am in life and I've got nothing but opportunity open to me now. Why should I now pay for someone else, who doesn't want to do the work involved, to get up to my level for free? I HAVE been poor, and I said screw it, that's not for me, and worked hard to get past it. There are VERY FEW people in America that can offer the excuse legitimately that they can't do the same thing. The net should be set for them, not people who just think it's unfair that they aren't rich by Governmental fiat! It's a cop out to claim that you just can't understand it unless you are IN the situation.

Andre

[mr_economy]

Without getting into the nitty-gritty of minimum wage laws, I have a question for those who oppose them: why is it that everybody ignores the automatic yearly salary increase (paid 100% from the pocketbooks of American citizens) for members of Congress, who are already making well over $100,000/year, yet those same people hit the roof when speaking of something similar for the lower wage earners?