Economics 101: Raise Minimum Wage and Jobs Decrease

Originally posted by Arcane Demesne

Originally posted by Awake and All Seeing
Why Min Wage Hikes are bad.


Mr. Slave is making 5.25(?)
Mr. Guy is making 7.25
Mr. Dude is making 15.00

So you admit it's slave labor. And you think that's necessary this day-in-age? I can see where you come from. CEOs will cry because they can only make 1.5mil this year and not 1.8mil.

There is no economic model that prevents classism in a free society. It's the price you pay.

sure, some job openings may not materialize immediately,
but that state of affairs in almost excusively in the privately
held small business sector.
meanwhile the government bureaus & civil servants, the mega corps and defense industries will get increased budgets and/or tax incentives to
hire the needed personnel at the newer 'baseline' wage.



another point of view is that with the minimum wage @ $6.75 & increasing,

And...as the mega corps. continue outsourceing positions overseas,

then the $10 hr worker that gets laid off.....will only 'fall' so far in a wage decrease ($10-$7.50),
& will probably be the 1st choice for that megaMart opening,
being that 's/he' has a mortage and other ongoing obligations-
-and by all logic , should take much more stuff from the boss & employer than a college kid that would tell the boss to 'take this job & shove it'


next....there is another insidious 'unwinding' that must take place
(more so than a decrease of jobs...)
it has to do with those on fixed income, like Social Security $$

@ minimum wage of $6.75 equals a income of $54.20 day = $1,138.00 Mo.

whereas......................Social Security average is ~ $900.00 monthly
wheeas.......................Supplimental Security avg ~ $623.00 monthly
(source: www.nami.com.../ContentManagement/ContentDisplay.cfm&ContentID=4857)

the big difference is that the SocialSecurity receipient will, over the course of years get a COLA (cost of living adjustment) and recover the added inflation adjustments caused by the raising of the minimum wage across the nation with millions of people.
But for several years, the fixed income people will suffer the most.

after all, if your just entering the job market as a teen, you don't miss a job that wasn't there in the first place...you just stay home under the parents wing until the economy improves.

If your a prime pair of hands & feet, you can tighten the belt even on a minimum wage job, or maybe cut out the smokes/brew/video rentals/bling-bling/partys or whatever.
because as i see it the minimum-wage arena isn't a career option, its a stepping stone!
But, what will happen is that the new money from the minimum wagers
will chase a lot of the same money stretching goods/services/products that the fixed incomers target to help them survive! You can guess who will lose in the short-to-intermediate term.

just some food for thought, a broader landscape as it were, thanks

Originally posted by CAConrad0825
To those who praised the wage increase, you need to realize that two things occurred: 1) That most minimum wage workers are not adults struggling to raise a family, but younger workers who are trying to supplement an income. 2) The increase in set wages increases the black market for labor, something that people claim is already happening too often in this country. This first policy of the democratic congress has blown up already, but I know that it will be refuted with nonsense and non-logical thinking.

Please site your sources for points 1 and 2.

Somebody answer this question, please:

Why not just raise the minimum wage to $25/hr?

Wouldn't that satisfy supporters and solve poverty?

Originally posted by jsobecky
Somebody answer this question, please:

Why not just raise the minimum wage to $25/hr?

Wouldn't that satisfy supporters and solve poverty?

Not really. Everything is relative. If minimum wage was $25 an hour then all the products and services would just increase as well. In the end $25 would be worth $5. Nothing is gained or lost. Most businesses relying on Part time minimum wage jobs simply raised their prices thus passing on the wage increase to the customer.

But if the complaint is that all the minimum wage jobs go to people under the age of 25 then you have to believe that might be good for the economy. Who spends money better than kids? Give them more and they will spend more.

Originally posted by Arcane Demesne

Originally posted by Awake and All Seeing
Why Min Wage Hikes are bad.


Mr. Slave is making 5.25(?)
Mr. Guy is making 7.25
Mr. Dude is making 15.00

So you admit it's slave labor. And you think that's necessary this day-in-age? I can see where you come from. CEOs will cry because they can only make 1.5mil this year and not 1.8mil.

I think thats the flaw in the system right there.

Mr. Slave is making 5.25(?)
Mr. Guy is making 7.25
Mr. Dude is making 15.00
...and Mr. Employer is making 72,547.00 an hour.

Somewhere along the line, big businessmen decided they were entitled to make 400 times what their employees do. The concept of "tighten the belt" vanished in a puff of metaphorical smoke.

Before that, Mr. Employer only made 1,800.00 an hour, but would gladly take 1,200.00 an hour to ensure his staff could make a decent living, and still count himself fortunate to be making that much. These days, Mr. Employer , believing himself entitled to his 72,547.00 an hour, would never dream of reducing his own astronomical income, so he reduces his workforce, raises his prices, borrows everything he can against his company, puts it all in his bank account, has the company declare bankruptcy, shuts it down and starts another one just like it, beginning the cycle all over again.

Just my opinion, of course.

I agree, it is quite a conundrum. You can either artificially increase wages at the risk of higher inflation, or abolish minimum wage and leave it to the corporations to find the absolute minimum wage people are willing to work for.

A thought outside the box:
Giving companies with a baseline wage at a certain level tax breaks for complying?
Encouraging (by some means, tax breaks or otherwise) better employee benefits for low wage workers so that they won't be so disadvantaged - medical plans, 401k, etc?

just getting the ball rolling for other thoughts because its pretty much been butting heads thus far

Originally posted by jsobecky
Somebody answer this question, please:

Why not just raise the minimum wage to $25/hr?

Wouldn't that satisfy supporters and solve poverty?

NO! it wouldnt!

Why do you think "outsourcing" exists?!?!?!?!

because american labor is already too expensive compared to the rest of the world, not to mention the astronomical amounts of money the CEOs make.

Increasing the minium wage that high would effectively send the american economy into the toilet.

you want to help the poor/middleclass people?

Force federal legislation capping CEOs salaries and force them to invest that money into their companies. You would do poor/middleclass people a much better service this way.

In other words, dont try to stop the leak by widening the hole, plug it at it's source.

Originally posted by XphilesPhan

Originally posted by jsobecky

Force federal legislation capping CEOs salaries and force them to invest that money into their companies. You would do poor/middleclass people a much better service this way.

that sounds like a good idea except it may overstep the boundaries of the government by placing a specific value on an employee....

Zerotime, subject x, and steve22
Thank you. You have seen through the fallacy of artificially imposed wages. It will solve nothing, because all prices will need to rise to meet the new wage and the costs of it. In the meantime, the largest segment employers, small businesses, will be devastated.


XphilesPhan, income re-distribution is not the answer. It is socialism, and will not be accepted here in the US. It has failed everywhere it has been tried.

Originally posted by jsobecky

XphilesPhan, income re-distribution is not the answer. It is socialism, and will not be accepted here in the US. It has failed everywhere it has been tried.

Where did you get that I was advocating redistribution of wealth? I said cap CEO sallaries and mandate that a percentage of that be invested in their company.

I am ot advocating that the money cut from CEO wages and given to the government. :shk: you completely misunderstood me.

Originally posted by CAConrad0825
Just as any basic economics student finds out during the first weeks of class, a price floor will crowd out, creating a shortage. This not only applies to products but to the labor market as well.

 

www.azcentral.com
Companies maintain the new wage was raised to $6.75 per hour from $5.15 per hour to help the breadwinners in working-poor families. Teens typically have other means of support.

Mark Messner, owner of Pepi's Pizza in south Phoenix, estimates he has employed more than 2,000 high school students since 1990. But he plans to lay off three teenage workers and decrease hours worked by others. Of his 25-person workforce, roughly 75 percent are in high school.

"I've had to go to some of my kids and say, 'Look, my payroll just increased 13 percent,' " he said. " 'Sorry, I don't have any hours for you.' "

Messner's monthly cost to train an employee has jumped from $440 to $580 as the turnover rate remains high.


Please visit the link provided for the complete story.

To those who praised the wage increase, you need to realize that two things occurred: 1) That most minimum wage workers are not adults struggling to raise a family, but younger workers who are trying to supplement an income. 2) The increase in set wages increases the black market for labor, something that people claim is already happening too often in this country. This first policy of the democratic congress has blown up already, but I know that it will be refuted with nonsense and non-logical thinking.

Actually... no and yes.

For the minimum wage people it will take maybe 6 years or so to catch back up. For those in the lower middle class making 8-12 an hour, they now make just above minimum wage which will hurt them because inflation will hit them first.

As for how to prevent it? ... The OP original example.

If the companies where not so concerned with making 3,000% more then their highest paid employee in profits, then they would not be such stingy @#% about the payroll. I have had more then once a pay cut so the company could "save" money, then go buy some outlandish BS project.

Greed really will hurt society. But it is at least a move to help our countries poor. It is better then saying it is OK to allow the poor to stay poor.

Also if you stay at $5.15 an hour for 10 years........ do you think inflation will cease? NO.. inflation continues no matter what.. infact inflation since 9/11 has been pretty rough for the middle class who has not been receiving the regular pay increases of the 90's, while corporate taxes skyrocketed to all time highs, shattering records. There needs to be a sense of responsibilty among the corporations that they owe their success to the PEOPLE of the country.

We officially have a average negative savings in America per household. A feat not seen since the great depression. We have no more money, people are stretched thin, if the wages do not keep up with spending and corporate income/inflation... we can see a colapse. you can only abuse the middle class so much.

Originally posted by jsobecky
Somebody answer this question, please:

Why not just raise the minimum wage to $25/hr?

Wouldn't that satisfy supporters and solve poverty?

No. It must be done gradually. To keep up with the inflation.

In Ohio, every January starting in 2007 the minimum wage will increase EVERY year. Thats right, every year, what $7.75 was in 2007 will be adjusted to 2008 and $7.75 might stay the same, go up a few cents but mostly not to much. that was the minimum wage is always a "survivable" wage.. not "livable" which is around 9-15 an hour.. which wont go up, thats where it will hurt employees the most.

XphilesPhan, income re-distribution is not the answer. It is socialism, and will not be accepted here in the US. It has failed everywhere it has been tried.

Yeah right. Do you know a thing about socialism? Canada, where I live, is a melting pot of socialism and capitalism. It's working.

You may think that USSR was socialist? No it was a dictatorship, not even communist.

The point is that if rich people (the 2%) take their fortunes (in billions and trillions) and re-invest it in their corporations and in the economy, it creates more job. You take this money, you educate your employees so they can be more productive, or you start another business so you create more jobs. That's what XPhilesPhan was trying to say I think. The richs should be obligated to invest a certain percentage of their income in their business or in the economy so it could profit for more people.

most rich people don't posess all that money...its mostly held in the stocks of their companies. Bill Gates doesnt have $10B in the bank, its all in his company. It would be difficult for him to put his stock money back in the company while holding a majority in his ownership because that would mean he has to sell his stock.

Originally posted by Rockpuck


Actually... no and yes.

For the minimum wage people it will take maybe 6 years or so to catch back up. For those in the lower middle class making 8-12 an hour, they now make just above minimum wage which will hurt them because inflation will hit them first.

The minimum wage is not designed for people to live on it for 6 years or so. And it was never intended to be able to fully support an individual; it is meant as a supplemental income. Remember, there is a difference between minimum wage and living wage.

We officially have a average negative savings in America per household. A feat not seen since the great depression. We have no more money, people are stretched thin, if the wages do not keep up with spending and corporate income/inflation... we can see a colapse. you can only abuse the middle class so much.

The middle class does not live on the minimum wage. The minimum wage hurts the middle class instead of helping it.

Originally posted by Vitchilo

XphilesPhan, income re-distribution is not the answer. It is socialism, and will not be accepted here in the US. It has failed everywhere it has been tried.

Yeah right. Do you know a thing about socialism? Canada, where I live, is a melting pot of socialism and capitalism. It's working.

It is only working because of the influence of capitalism. Iow, it is working despite socialism.

You may think that USSR was socialist? No it was a dictatorship, not even communist.

My example would be France. Stagnant economy, high unemployment, high inflation, nepotism in jobs, race riots because of income inequality.

Soon to follow: Venezuela.

The point is that if rich people (the 2%) take their fortunes (in billions and trillions) and re-invest it in their corporations and in the economy, it creates more job. You take this money, you educate your employees so they can be more productive, or you start another business so you create more jobs. That's what XPhilesPhan was trying to say I think. The richs should be obligated to invest a certain percentage of their income in their business or in the economy so it could profit for more people.

Obligated. In other words, forced. Income re-distribution. Destined for the crapper.

Obligated. In other words, forced. Income re-distribution. Destined for the crapper.

And what's wrong with that? You would mind that Exxon CEO give back millions to the economy? You would mind that the Rothchild family invest some of their trillions in the economy? Are you kidding me?

My example would be France. Stagnant economy, high unemployment, high inflation, nepotism in jobs, race riots because of income inequality.

Well it's because of the BS globalisation that globalists are pushing and the European Union.. it's not for nothing that people in France want to get out of the EU.

[edit on 12-2-2007 by Vitchilo]

Thank you to all who have returned to the discussion of Minimum Wage, and not bickering about the stance the others have taken. Earlier this thread disintegrated into argument and not a discussion, thank you for making ATS what it is.


CAConrad0825 ~Thread Author

Originally posted by Vitchilo
Obligated. In other words, forced. Income re-distribution. Destined for the crapper.

And what's wrong with that? You would mind that Exxon CEO give back millions to the economy? You would mind that the Rothchild family invest some of their trillions in the economy? Are you kidding me?

[edit on 12-2-2007 by Vitchilo]

Who says the people you mentioned aren't giving back $millions to the economy? Take away the business incentive and why bother, let someone else do it. Who? Why there's always the government. Let them do it. Right?

But then we'd be talking about that shining hope for mankind - socialism.

[edit on 2/13/2007 by centurion1211]