Economics 101: Raise Minimum Wage and Jobs Decrease

To say that a third party can do nothing, or that change cannot be achieved is to deny history. The Colonists of India and the US went against the odds, Joan of Arc fought against the grain as did the Protestants against the Papacy. People can achieve what they wish if enough people have the heart to attain it.

Originally posted by grover
I never said Greenspan "killed the economy" but I stand by my assertion that he created the 2000 recession both through consistantly increasing interest rates and taling about an overheated economy.

The hi-tech bubble burst in 98 and from what I saw it effected large investors and people foolish enough to rush into the game late (just like the late and unlamented housing bubble) but for the average business, worker and even investor, it didn't do much at all. It certainly did not cause the recession.

I beg to differ. I know many people whose investment portfolios nosedived when a dot-com stock plummeted from $100/share to $5/share in less than a quarter. The companies themselves were also adversely affected, since their net worth fell accordingly. Almost everybody today relies on their 401K plans because company-funded retirement plans are becoming a thing of the past.

Of course it caused a recession. Tens, probably hundreds, of billions were lost overnight. Money that people counted on to educate their children, or fund their retirement. How could it not cause a recession?

Originally posted by CAConrad0825
Obviously you have not had much experience with unions. The things that you claim unionist cannot do, they do all the time. To fire a unionist risks a full strike,

For all the workers who might then face extra harassment at work; striking is not something workers choose ( and i am talking about the vast vast majority of cases) to do without having exhausted their other options or patience in general.

as well as you have to pay them outrageous compensation for the time in which YOU cannot find them a new job.

Is this really part of all agreements?

The unionist crowd out the labor force of non unionists and decrease the wages allowed for nonunion workers.

Nonsense i wont dignify with any more words.

Foreign automakers like Honda however have set a trend of high paid non-union labor, and still make great profits.

Because in Japan people actually have rights and a government that seems interested in ensuring that workers are enabled to defend themselves without having to resort to people need to in so many other countries.

To say that a required wage helps the economy is bunk.

Maybe it wont when you have a 'free market' where people have to compete with EVERYONE else in the world. What is surely more 'bunk' is to suggest that no wage specification is compatible with decent standards of living when assuming a truly free global labour market. Should the 'free' citizens of the west really have to compete with near slave labour conditions in the third world?

A true free trade of a labor market is the only true way to achieve economic growth.

Tell that to the billions of people who work 10 or 12 hours a day and still starve or barely make ends meet. The best way to achieve economic growth ( for most countries as it's obvious what the US should do; protect it's workers and invest in their already generally high skill base) for a given third world nation is imo to build up it's own consumer base and that can not be done without regulating a wage that enables a consumer class.

I would much rather have a global minimum wage ( if we are going to have a global labour pool we should have something to protect the lowest rung from the massive and logical exploitation) than global socialism as i feel the average employer is far less likely to inefficiently manage minimum wages than sovereign states are and since every company must now reward their workers with such a wage no employed person will have no home to go to or no food to put on his table.

It really is that simply but since people like you derive so much standing from the suffering and hardship of others ( you must be doing something 'right - and thus be a better man or something- as their doing so badly) your unlikely to ever be in favour of a level playing ground, where there is something approximating equal opportunity, for fear that you might not then seems so awesome.

The fact that you think your hard days work is worth a living wage while someone else is not is the unforgivable 'sin' in my eyes.

Stellar

Why would someone pay $50 for a shirt manufactured in a controlled-wage country when they can buy the equivalent for $20 from a country where there is no minimum wage?

Noble intentions aside, people vote with their wallets first and foremost.

the free markets decide wages in economies unless the people agree to a tyrant. BTW Happy 67th Kim Jong Il...#ing loser

Originally posted by jsobecky

Originally posted by grover
I never said Greenspan "killed the economy" but I stand by my assertion that he created the 2000 recession both through consistantly increasing interest rates and taling about an overheated economy.

The hi-tech bubble burst in 98 and from what I saw it effected large investors and people foolish enough to rush into the game late (just like the late and unlamented housing bubble) but for the average business, worker and even investor, it didn't do much at all. It certainly did not cause the recession.

I beg to differ. I know many people whose investment portfolios nosedived when a dot-com stock plummeted from $100/share to $5/share in less than a quarter. The companies themselves were also adversely affected, since their net worth fell accordingly. Almost everybody today relies on their 401K plans because company-funded retirement plans are becoming a thing of the past.

Of course it caused a recession. Tens, probably hundreds, of billions were lost overnight. Money that people counted on to educate their children, or fund their retirement. How could it not cause a recession?

I am not well versed in the world of stocks and bonds etc. i will be the first to admit that.

However, unless you sell those stocks and bonds the value of their shares is on paper only as opposed to actual cash. SO I have a hard time understanding a drop in value equates to an actual loss if you know what I mean. It is not the same of losing actual capital such as property, cash reserves or a business.

One thing I do know though is that you should never put all your eggs in one basket. As I have heard only a small percentage of your stock portfolio should ever be invested in one brand.

Also all stock trading is is high stakes gambling and as always the craps are loaded in the dealers favor. If you don't go into it with that type of attitude you are setting yourself up for a loss.

Originally posted by grover
I am not well versed in the world of stocks and bonds etc. i will be the first to admit that.

However, unless you sell those stocks and bonds the value of their shares is on paper only as opposed to actual cash. SO I have a hard time understanding a drop in value equates to an actual loss if you know what I mean. It is not the same of losing actual capital such as property, cash reserves or a business.

One thing I do know though is that you should never put all your eggs in one basket. As I have heard only a small percentage of your stock portfolio should ever be invested in one brand.

Yes, I know what you mean, and I am by no means an expert, either. But consider this:

Let's say you have a stock investment plan that you put $100/month into. After a year, you have $1200 invested. You buy 12 shares of XYZ at $100/share.

You have put in real hard cash. The value of XYZ is $100/share on paper.

Stocks nosedive, and XYZ falls to $10/share. Now your 12 shares of XYZ are worth $120. If you needed to sell them today and take the cash, that is what you would receive. You have lost $1080 in real hard cash.

And that is not an exaggerated example. Many, many high-tech and dot com stocks were selling for triple digit prices and took a dive to single digit values almost overnight.


Eggs in one basket, well smart investing means spreading your risk. But most people invest in segments, such as technology, medicine, etc. And that's what happened to the dot com bust. Prices rose astronomically, people invested, and when there was no steak to back up the sizzle, people went broke.

Of course, the old adage of "Buy low and sell high" always applies.

Also all stock trading is is high stakes gambling and as always the craps are loaded in the dealers favor. If you don't go into it with that type of attitude you are setting yourself up for a loss.

Never invest what you cannot afford to lose.

Again as i understand it no stock has ever permanently lost value, unless the company tanked... for example if those people whose stock values dropped in 98 had held onto those stocks that were still good for the long haul, which you are supposed to anyway, they would still come out ahead 9 years later.

Originally posted by grover
Again as i understand it no stock has ever permanently lost value, unless the company tanked... for example if those people whose stock values dropped in 98 had held onto those stocks that were still good for the long haul, which you are supposed to anyway, they would still come out ahead 9 years later.

The majority of stocks have bounced back to their pre-98 levels. Most have even come back to return a decent amount. But there were many dot.com and tech companies that completely went under ... but that is the risk you take investing in a startup instead of a Microsoft or Apple. Big gains can also mean big losses.

The few stories I've heard where the poor single lady in her late 60's can't retire because all of her $$'s were lost in the market seem to deal with people who made very bad, greed based decisions. One story in Time or some similiar magazine a few years ago told of a lady past retirement age that had put over $300,000 dollars into a SINGLE company taht went belly up and she got nothing. She was having to survive off social security and working part time somewhere.

I have no idea why someone who managed to put away that much money over their lifetime would put it all into any ONE investement. If your past mid 40's the stock market is not where the majority of your retirement funds should be ... it'd be like relying on a trip to Vegas to provide for your retirement. At that age it's better to start moving $$'s into bonds and CDs and small return but gauranteed investments.

Originally posted by CAConrad0825
No one has refuted the point that the higher the required wage the lower amount of jobs available.

Since it's not logical why would anyone have to disprove it? How can a living wage that stimulates the growth of consumer spending ever lead to less jobs?

The money has to come from somewhere.

The inflationary conditions in the US comes from printing money but since American wages are stagnating or declining ( and most certainly in purchasing power) it's clearly not going to the consumers. Clearly this is not about printing money as they are doing plenty of that to finance their criminal activities all around the world.

We live in a nation where you are paid on your ability, not effort or need.

Do you really believe that the ability to create wealth for your employer , but not apparently yourself, is a just system or something that American workers spent hundreds of years working towards?

Get over it. And Grover, stop posting until you have something constructive to say other than you are old and senile.

Well in my opinion there is absolutely nothing constructive about free markets as long as there is no specification to ensure that a minimum wage can create a consumer of more than just basic food stuffs.

Also as a student worker, I work the jobs you claim are so awful.

Some of us have lower standards, and apparently expectations, in life than others do and some even seem revel in the hardships imposed on them by the 'system' clearly not realising that there are alternatives to struggling for a decent standard of living.

Stellar

Originally posted by jsobecky
They won't teach it because it goes against their liberal philosophy. They would have to justify border protection, which most (liberal) professors are against.

Actually such lunacy goes beyond liberal and conservative as any chosen representative who does not believe in a America for Americans first is nothing but a traitor to his nation. I really do not see how anyone can turn this into a liberal bashing issue as both parties are equally guilty of allowing cheap labour ( and not so cheap) to flood into the US.

No they don't. They endorse it because it gives them another reason to argue for higher wages which are not accompanied by higher productivity.

As long as corporate profits are rising while wages are declining or stagnating workers have every right to demand a larger share of the profits without any added productivity. Unless the corporation can prove that it is employing those funds to ensure future job security for their workers they really have no excuse not to pay higher wages; not doing so is simply old fashioned class warfare and we should fight them every step of the way.

And "higher purchasing power" is an illusion, used to sell the idea of forced wages.

How is higher purchasing power a illusion when people can work half a day in some countries and still afford the same general standard of living that Americans enjoy? Nothing is changed by a higher minimum wage if it can be ensured that the newly printed money finds it's way into the hands of consumers and not simply into the hands of large corporate interest. At worse prices of locally produced consumer goods would simply rise ( if no net demand results from the infusion of resources enabling higher education, mobility,communication and so forth) in tandem but there is nothing to suggest that well planned program can not have the result it had in Japan, Taiwan and South Korea for instance.

Nobody ever mentions the accompanying higher prices that go along with artificially high wages. That leads to....Inflation.

It may lead to inflation if there is now simply more money chasing the same goods but if those money comes in grants for education/transportation and general development of the civil population a net increase in productivity must also result. Inflation in the US is happening while wages are declining or stagnating so clearly inflation and higher wages are not nearly as logically related as you suggest.

And please expand your "good of the country" argument. I would like to hear it fleshed out.

It would be wasted while you think tens of millions of American workers should simply accept the terrible standards of living 'enjoyed' by so many third world workers. When you can begin to work from the assumption that all Americans deserve a equal opportunity , meaning they do not have to compete with near slave labour in the third world, to prosper no matter how inefficient they are currently being 'employed' by their current task masters.

If governments can not protect their workers from the so called 'free market' ( they in fact seem to want their workers to have to compete against workers in police states and the like) what use are they and why do we put up with them?

Stellar

Originally posted by FredT
market forces and job demand drive wages not an artifiicaly created wage.

But why should i be forced to compete against the market forces resulting from sweat shops in Asia,Africa and South America? Why do workers all around the world try to prevent this from happening only to watch their selected officials betray their trust?

In high cost areas like the SF Bay Area, they guy making the latte at Starbucks gets $13.00 an hour. In say North Dakota, I would expect him or her to make alot less. Its market dynamics.

That's supply and demand and not nearly as 'dynamic' as you seem to be suggesting. In upper market areas frequented by local and foreign tourist one can expect such things to happen.

Increasing the wages can hurt the biggest employers out there small businesses.

Only when they are forced to compete with massive state subsidised international or national conglomerates. Ideally local producers should be protected against such entities but since the aim of most world governments seems to be the destruction of the small business economy it's hardly surprising that they are succeeding by allowing corporations to move their production areas to the third world thus undermining not only manufacturing wages but the service jobs and wages a nation of manufacturers can slowly give rise to.

They have less margin and less capital to absorb such costs thus stunting job growth.

A service economy must be based on the actual creation of wealth and i am still one of those people who believe that the only true wealth creation is in manufacturing and the general production of goods. A nation which is slowly losing it's manufacturing base can only retain it's service economy by political ( military really) force and how they will maintain a military sufficient to scare others into the transfer of actual wealth ( goods) without real manufacturing capabilities is quite beyond me.

Soon the US navy will have to construct it's warships in China and if that does not seem insane to you i can assure you that it is and simply not sustainable at that. Much like Rome came to rely on foreigners to supply the manpower for their army the US is outsourcing it's 'defense' and that can and will not work in even the near term.

A fewer may benifit, but more may be shut out as expansion and growth is curtailed.

The US economy is being kept afloat ( and it's clearly sinking no matter the sea of money being printed to float it on) by cheap credit as provided by Asian lenders and when they no longer feel sufficiently intimidated , or when it no longer serves their general economy interest, the bubble will burst and American banks ( read British and European) will have a field day repossessing millions of homes and businesses for fractions of their values as was the intent all along. That is the standard operating procedure ( or what economist call the 'boom&bust' cycle) but this time a recovery will be so much harder considering that the means to such a recovery has largely been 'outsourced'.

This is the way freedom is really destroyed but people wont see it coming as it's "just the economy, stupid".

Stellar

Originally posted by SmallMindsBigIdeas
The majority of stocks have bounced back to their pre-98 levels. Most have even come back to return a decent amount. But there were many dot.com and tech companies that completely went under ... but that is the risk you take investing in a startup instead of a Microsoft or Apple.

Your position would be reasonable excepting that many of those companies that completely went under did so not because of free market forces, they went under because the FED kept tilting the playing field in the middle of the game in favor of the large dollar rich corporations. It was not a matter of poor risk analysis by investors, it was a financial conspiracy between corporatists and government. Big tech benefited by having competitors forced out of business with the bonus of then being able to buy up their technical innovations for little more than pocket change.

Originally posted by SmallMindsBigIdeas

Originally posted by grover
Again as i understand it no stock has ever permanently lost value, unless the company tanked... for example if those people whose stock values dropped in 98 had held onto those stocks that were still good for the long haul, which you are supposed to anyway, they would still come out ahead 9 years later.

The majority of stocks have bounced back to their pre-98 levels. Most have even come back to return a decent amount. But there were many dot.com and tech companies that completely went under ... but that is the risk you take investing in a startup instead of a Microsoft or Apple. Big gains can also mean big losses.

We've all heard of Sun Microsystems, right? In mid '01 they were trading at around $70/share; in mid '03 they were at $3.XX/share. Today, they hover around $6/share.

And they are still around, and there are plenty of companies like them, stock-wise.

but that really is not a fair comparison because most internet company stocks were wildly overinflated, and in my opinion still are. The internet bubble is one of those economic events that convinced me that the stock market actually has little if anything to do with the actual economy but is all about what investors think a company is worth. I really believe we could do away with the whole stock exchange and the actual economy would barely notice its absence.

Originally posted by CAConrad0825
To say that a third party can do nothing, or that change cannot be achieved is to deny history.

Which is why i am not denying history or suggesting that change is impossible.

The Colonists of India and the US went against the odds,

And opportunistically exploited the fact that Britain were involved in very hard fought wars both times? Why did they have to wait for Britain to be on her knees if revolution were such a easy thing to manage?

Joan of Arc fought against the grain

And i feel that i must remind you that she got burned at the stake for her 'efforts'.

as did the Protestants against the Papacy.

And considering the history of the protestant movement how sure are we that the world is a better place for their 'success'?

People can achieve what they wish if enough people have the heart to attain it.

And if they do not mind dying far sooner than their oppressors were likely to kill them... It's not like that is always the case today ( and certainly not to any serious extent in the US and Europe) but history certainly did not favour the reformers who attempted fighting for liberty and general rights.

Stellar

The points that you've taken piece by piece rather than in context, stellar, point out that they did achieve their goals of reform. However success is not measured by having your cake and eating it too. Sacrifices have to be made in order to attain goals. For some that means death, others it means leaving the job you are at to seek a more profitable position.

The role of an entrepreneur is what has built, maintains and will save our economy. This role is filled by those who rather than scream and shout over injustice do something about it. This may lead to discomfort but that is how the world works. No injustice can withstand the tides of change if it is constant.

A society is not an aggregate of business concerns, it is a community of people and people are far more than mere consumers... that is the fundamental flaw with looking at the world through a single lens such as economic indicators or business plans or whatever, religion, race, gender etc. We are far more complex that no one of them can even begin to give a realistic portrait of a single individual, much less that of a culture.

Originally posted by grover

Originally posted by CAConrad0825

Originally posted by grover
He's a child, he doesn't know what the hell he is talking about. Lets hope he has a comfy existence so that he is not confronted by reality...he won't be able to handle it.

Yet another instance of Grover attacking the person and not the issue. By the way Grover, I have taken the initiative to not work a minimum wage job and am pursuing an MBA at the age of 21. How about them apples? Rather than stay in my family's history of only one level of college or working skilled labor, I have pursued a position higher, one which anyone who has the skills can attain. The key is effort.

thats nice. You still don't know what you are talking about. 21 year olds rarely do. Its a matter of blood and guts experince.

And how old are you exactly, as you don't seem to have a grasp of economics yourself? Companies don't operate in a vacuum- not only do they have to look at the costs of business(overhead, salaries, advertising, profitability), but what their competition is doing. Their competition in terms of minimum wage jobs might not even be a company in the same field of endeavor. Your overhead is fairly fixed(though minimum wage hike mandates raise this). All other factors are based on the profitability, because unless a company can turn a profit, it's not going to be in business long anyhow. Whenever the cost of business rises, the costs of goods and services rise too. The only other option is to lay workers off to try to offset this(lowering the tax base). All one is doing is decreasing the number of those employed, which isn't helping those at that income bracket. You can't tax yourself into prosperity, and raising minimum wages is form of tax on businesses. Not every business has 50,000 employees with CEOs making $100 million/year. There are far more small businesses out there than big businesses, and they don't have the assets to absorb huge overhead increases, and simply raising the prices might make them completely uncompetitive in market. The low pay of minimum wage is a disincentive to stay at that tax bracket. If one has the drive and ambition, they can get the skills for better paying jobs. The only exceptions would be those that are mentally/physically disabled.
In other cases it's just a lack of motivation.
Government meddling with market forces is never a good idea

Socialism and minimum wage help society?

how do you explain 1 in 6 Europeans living under the poverty line?
Their rates are different than the US poverty line, yet, but the point is the same.

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