The Gaming Den

So raising minimum wage. There's been some talk on it. I'm pretty sure doing that would be a good thing so why aren't we?

blah blah blah job creators blah blah discouraging investment blah blah blah socialism blah blah blah blah blah

That's basically it, I'm afraid. There isn't really any space for intelligent debate or discussion.

The argument is that labor is subject to supply and demand. If you raise the minimum wage, you lower the amount of available jobs and unemployment rises. And if you stake out really laughably large numbers, that is actually true: if you set the minimum wage to a million dollars a month, only Warren Buffet and Bill Gates would still have a job and the economy would collapse.

But there's actually a quite large range where it doesn't work like that at all. Over the last 30 years, wages have been largely stagnant while productivity has doubled. Corporations were perfectly happy to pay the higher relative wages of the past, just as they'd be perfectly happy to pay higher wages today. They'd rather pay their employees less and keep more profits for themselves, but as long as an employee is still producing more for the company than it costs to keep them employed it doesn't make any real sense to fire them.

Meanwhile, the huge profits of corporations are actually a tremendous drag on economic growth. Companies overwhelmingly say that the number one reason for them not investing is lack of consumer demand, and low consumer demand is driven in large part by the fact that companies are sitting on the their largest piles of cash ever. Profits are higher than they've been since reliable records have been kept, and that's holding the economy back!



Anything that forcibly transferred money from the cash reserves of corporations to the bank accounts of workers would improve the economy. The corporations would want to sell more things, and there would be people to buy the things they sold, and they'd have to hire more people to get the things to those people. Unemployment would go down and real standards of living would rise.

It doesn't matter whether that transfer is arranged by raising wages by edict or by raising taxes and spending the money on hiring people. The effect is that cash reserves have to shrink for companies and grow for consumers. Supply and demand effects on labor itself aren't even an issue right now.

-Username17

inflation occurs with minimum wage increases among other things, so it really doesnt help. just a soon as people have more, the "value" of products go up, so their price does, while the cost of those products never changed at first until everyone started raising prices to get in on the action.

supply and demand:

1980s:
a small supply and high demand commands a higher price
a large supply and lower demand causes a price drop to liquidate product and replace COGS

2000s:
a company that supplies anything demands $x for it, no exceptions, especially in the case of modern day necessities. (DTV caused the price of those replacement analog antenna converters to go up, cable providers prices went up, cable box prices went up)

the government supports the newest version, so the dollar no longer gives the consumer power to "speak with their wallet" because the exorbitant prices on everything makes you too poor to pay attention to.

the only way it would help is the tax cuts given to the rich being taken away, and back taxes being collected on them so they return to reality on how much money people really have so you dont have comments like:

Herman Caine wrote:The only reason more people arent rich is because they dont want to be, and dont work hard enough to be.

Glenn Brit wrote:$200 for TV service and $100 for internet service is easy to afford for the average American

when in 2011 the poverty level was 15% making less that $24k for a household of 4 (nuclear family), and the average household income was $50k.

these people who dont pay the same taxes on their $1+ million dollar salaries (and probably dont have a nuclear family to support) cannot comprehend the living conditions of its employees that make 1/20th or less what they do.

Current minimum wage for a 40 hour week, BEFORE taxes would be $290 a week, or $15080 a year. roughly $9k below poverty level. to be out of "povert6y level income" would require minimum wage to be set to at least $11.50 @ 40 hours per week.

the average listed would mean that most people made $24/h @ 40 hours a week. except the figure surely includes those CEOs and their yearly salary of $1 million or more which greatly offsets the true average income.

Glenn Brit 2011 $721/h
Minimum Wage worker $7.25/h

the average of these 2 is $364.12/h but this number is useless since it is well outside of any feasible range, not unlike the $24/h figure for those making $50k per year.

of course these numbers aren't taking out taxes so actual minimum wage earners get less that $15k per year, and to clear $50k per year would require more than $24/h.

minimum wage doesnt even cover cost of living. so the law needs a Robin Hood law that can take from the rich and give back to the 99% population.

what is needed is a maximum wage to end the modern day oil (literally) and robber (also literally) barons.

there was a time in this country the highest paid person was the president of the country. (stocks and bonds and such could earn you more, that is why Glenn Brit has a salary of 1.4 million but makes about 14 million more in stock options), but now the president earns $400k per year, half or a third of what most CEOs and other executives earn.

hell the president's pension is currently $191,300 a year!

so not only is business out of touch with its consumer, but also the government because they make more than twice on average than the average person.

the minimum wage will NEVER work so long as CEOs get the lions share of a companies income, none is reinvested in a company, and none is giving to pay those that really run the company and make the products a company sells.

salary caps work for sports, so the experiment has succeeded, now it needs to be applied to all fields, since you still have people willing to play sports with those caps.

And don't forget the other side of the coin. If you are cynic enough, you expect corporations to lower wages down to minimum wage . .

The argument I generally hear is that "if minimum wage increases, companies have to increase prices to pay it," which is laughable in light of Frank's post, but is an actual thing which Conservatives believe, and seems to, at least in some cases, happen, if not for the reason conservatives believe it does.

The thing is, even that is a good thing because rising inflation makes the corporations' big bundles of cash worth less.

My token libertarian friend insists that banning minimum wage will make all wages go up. I told him he's hitting the crackpipe too hard and it's hard to say something that's closer to the opposite of what actually happens than that.

Ted the Flayer wrote:My token libertarian friend insists that banning minimum wage will make all wages go up. I told him he's hitting the crackpipe too hard and it's hard to say something that's closer to the opposite of what actually happens than that.

That is a "freshman mistake". The line of argument goes like this:

• Removing the minimum wage causes wages to fall. (not contentious)
• Falling wages increase employment by increasing virtual demand for labor. (contentious: falling wages also reduce consumer demand which in turn reduces demand for both capital and labor - which effect dominates depends on circumstances)
• Increased employment reduces the labor supply, which puts an upward pressure on wages. (not contentious)

So reducing wages will (assuming that the economy is not consumer demand limited, which is a bad assumption even in boom times) increase demand for labor and reduce the supply of labor. That would increase wages. But these are both knockdown effects of a shock to the wages itself. All that means is that the economy is a partial equilibrium where the effects of wage shocks are partially undone by the invisible hand. Your starting point is still "reduced wages" and equilibrium effects are never going to push that change past the zero point.

What that looks like is that when you take the minimum wage from $7.25/hr to zero dollars an hour, that these "upward pressures" are going to keep peoples' wages from falling all the way to the new minimum wage of zero dollars an hour. Sounds like your friend doesn't understand "equilibrium".

-Username17

Or, to put it another way: employers know they are not going to be able to hire people for zero dollars an hour, but they will constantly test to see how little they can pay (cf. paying migrant farm workers), with the understanding that if you are desperate enough you will work for a pittance. Of course, if you have a bunch of people working for pittances, they don't have money left over to buy things, so demand falls, and even though you've got lots of people working very cheaply, you need to find a market to sell your products - probably in another country (cf. factories in China and Taiwan).

Now, what could happen is that you get all the unemployed people together and they form a union and negotiate for higher wages - but you get pretty much the same situation.

There was some Australian billionaire who was saying Australia ought to be paying workers what African workers make.

You know, 2 dollars a day.

Ted the Flayer wrote:My token libertarian friend insists that banning minimum wage will make all wages go up. I told him he's hitting the crackpipe too hard and it's hard to say something that's closer to the opposite of what actually happens than that.

I always thought the most obvious rebuttal to this argument was to point out that before we had the minimum wage we still had unemployment and people made less. Although trying to mix Logic with Libertarianism is like mixing oil and water.

Juton wrote:

Ted the Flayer wrote:My token libertarian friend insists that banning minimum wage will make all wages go up. I told him he's hitting the crackpipe too hard and it's hard to say something that's closer to the opposite of what actually happens than that.

I always thought the most obvious rebuttal to this argument was to point out that before we had the minimum wage we still had unemployment and people made less. Although trying to mix Logic with Libertarianism is like mixing oil and water.

There are people who believe that the markets weren't free in the 1800s.

So they'll say that was why there were poor people when there was no minimum wage; it was nasty things like the establishing of child labor laws that caused the problems.

That being said, I've met a few intelligent Libertarians, but they are the exception to the norm.

Maxus wrote:There was some Australian billionaire who was saying Australia ought to be paying workers what African workers make.

You know, 2 dollars a day.

Yeah, that bitch who has never worked a day of her life. I really hope she drops something on her foot and it hurts quite badly but isn't a real injury that garners sympathy.

For what it's worth, she doesn't live anywhere near the workers of Australia, as she knows she'd be shivved like she were in prison. And because this is Australia, it kind of is a prison.

I know it's a radical theory, but I'd be willing to wager that eliminating the minimum wage would actually raise the average wage across the US. Right now, there are thousands of businesses who are paying the minimum wage because it's the minimum that they're allowed to pay.

If there was no obvious minimum, the psychological factor of 'we're paying minimum wage because it's the lowest we're allowed to pay and therefore we're doing right by the shareholders' would vanish, and the only factor in wages would be actual worker value.

Essence wrote:If there was no obvious minimum, the psychological factor of 'we're paying minimum wage because it's the lowest we're allowed to pay and therefore we're doing right by the shareholders' would vanish, and the only factor in wages would be actual worker value.

If the workers and the shareholders were next door neighbors, that might be true. As long as the shareholders don't have to see their workers, they won't give a fuck about actual worker value and only what they can earn in dividends and increasing share value.

Essence wrote:I know it's a radical theory, but I'd be willing to wager that eliminating the minimum wage would actually raise the average wage across the US. Right now, there are thousands of businesses who are paying the minimum wage because it's the minimum that they're allowed to pay.

If there was no obvious minimum, the psychological factor of 'we're paying minimum wage because it's the lowest we're allowed to pay and therefore we're doing right by the shareholders' would vanish, and the only factor in wages would be actual worker value.

You know that's stupid, right? These same corporations have branches in countries with no minimum wage, and they pay their workers less in those places.

-Username17

Yeah. In retrospect (particularly after reading the thing I posted in the new thread about the differences between national corporations and multinational corporations), you're both right.

There any links that actually support raising the minimum wage? I mean conjecture is fine and all but has any institution done any research on it?

did not the US just about DOUBLE the min wage? Did the sky half fall?

I would just think that for all the press and shit that is AGAINST raising the minimum wage there'd be some kind of institution that did some research on the subject that people can whip out for all the text book examples that say minimum wage raising hurts.

LargePrime wrote:did not the US just about DOUBLE the min wage? Did the sky half fall?

Are you high?
The US Federal Minimum wage is $7.25. It became effective in 2009, it was a raise from 2008 from $6.55.
That's not even close to doubling.
The current Minimum wage, is not quite double the minimum wage from 1990. I'm not sure how you can cal that 'recent'. It went from $5.15 in 1997 to 5.85 in 2007 to 6.55 in 2008 to 7.25 in 2009.

Here's a few results from the first page of a google search for "minimum wage research," taking various positions on the minimum wage:

The Wage and Employment Impact of Minimum‐Wage Laws in Three Cities

Minimum wage hikes don’t eliminate jobs, study finds

Research Papers on The Impact of the Minimum Wage on Jobs

MINIMUM WAGES AND EMPLOYMENT: A REVIEW OF EVIDENCE FROM THE NEW MINIMUM WAGE RESEARCH

sabs wrote:

LargePrime wrote:did not the US just about DOUBLE the min wage? Did the sky half fall?

Are you high?
The US Federal Minimum wage is $7.25. It became effective in 2009, it was a raise from 2008 from $6.55.
That's not even close to doubling.
The current Minimum wage, is not quite double the minimum wage from 1990. I'm not sure how you can cal that 'recent'. It went from $5.15 in 1997 to 5.85 in 2007 to 6.55 in 2008 to 7.25 in 2009.

So from 2006 to 2009 it went up 45%, by federal law. Some States did more.
and the sky did not fall.

And whats wrong with being high????