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  1. #1
    spoonitnow's Avatar
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    Default Raising the Minimum Wage

    Raising the minimum wage is actually lowering the bar. Minimum wage jobs have never been meant to be life sustaining but entry level. What happens when we take away entry level pay? Well that's very simple we remove jobs.
    Think about this for a minute. You have an idea to start a business. Lets say you're going to start a company building widgets. You start out by yourself and your typical day is spent with 50/50 you build widgets then you go out and sell those widgets. There will be a maximum number of widgets you can build in that time period which is half of your working day. Now anybody who has been self employed knows your working day isn't 8 hours but more like 12-16. So you've maxed out on the number if widgets you can build in 8 hours and you have to spend the next 5 hours out pounding the pavement in order to sell these widgets. You can't take away time from selling in order to make more widgets because sells will plummet and if you can't sell them you can't afford to build them. Congratulations you've reached a milestone and you have to expand ie: hire your first employee.
    Now even though you've reached this milestone you're still barely making it financially because well you knew you'd have to make sacrifices in order to build your business. Most entrepreneurs don't make even today's minimum wage if they factor in how many hours the out in.
    Now back to you're dilemma you have to hire somebody. You do the math and if you hire somebody to help build widgets you'll have slightly more time to sell but if you're only hiring one other person you're not going to double production and sales. Business isn't going to automatically be 100% better. But wait a minute if you're not even making minimum wage and barely getting by how the heck are you going to hire somebody else to make widgets and pay them this new and improved minimum wage plus all the taxes and benefits that you the business owner now owe this entry level widget maker? I guess you could take away from the small amount you've been pulling out to feed your family who has already made so many sacrifices in order for you to take the risk if starting this widget company. But wait why would you do that? Why would you want to take a step back after busting your ass to get to this level. After risking your home and putting your ass on the line?
    People if we continue to raise the minimum wage we are shooting ourselves in the foot. Smart people aren't going to start small businesses if it doesn't pencil out. Remember they are the smart ones!
  2. #2
    Renton's Avatar
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    http://www.thedailyshow.com/watch/tu...st-the-machine

    That awkward moment when one of my favorite shows is completely wrong and unfunny. I like that they had a pretty smart guy, Peter Schiff, on there to do the counter point of view and butnahhed every one of his strong points.
  3. #3
    bikes's Avatar
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  4. #4
    It's irritating that this whole "pay fast food workers $15/hr" thing is getting so much airtime. I worked in fast food in high school -- there is zero skill required for that job. If you want to make more money than minimum wage, stop spending so much time complaining about the minimum wage and spend that time learning a marketable skill.
  5. #5
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    Quote Originally Posted by NightGizmo View Post
    It's irritating that this whole "pay fast food workers $15/hr" thing is getting so much airtime. I worked in fast food in high school -- there is zero skill required for that job. If you want to make more money than minimum wage, stop spending so much time complaining about the minimum wage and spend that time learning a marketable skill.

    it's that whole living wage argument warble garble

    ?wut
  6. #6
    spoonitnow's Avatar
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    Opinion: Unskilled labor by a single person in a single, full-time job should not necessarily be sufficient to live on.
  7. #7
    Quote Originally Posted by spoonitnow View Post
    Opinion: Unskilled labor by a single person in a single, full-time job should not necessarily be sufficient to live on.
    What are people meant to do if those are the only types of jobs that they are qualified for or are available?
  8. #8
    I think all these liberal economic problems will go away after the GOP extinguishes its evangelical base. The "welfare queen" was something designed to help create an evangelical base, but that is now backfiring since it frames the argument in a way that makes it super easy for liberals to point at the real welfare queens: multinational corporations. Which is absolutely true within that dichotomy, but the dichotomy is false. Pre-Reagan-Revolution conservatives believed welfare was a good thing, and this allowed their economic policies to dominate because they weren't based on lies. Americans are naturally capitalistic, but when the "pro-capitalism party" essentially disregards the means in pursuit of an end, liberal economics, even when wrong, will win.

    Unfortunately, it will be a long time before the GOP can rid itself of its evangelical base. But between now and then, the Democrats can definitely be molded into the pro-capitalism party by endorsing guys like Brian Schweitzer. I'd say the Democrats already are pro-capitalism in a lot of ways, many of which they do better than the GOP, but they're not without problems of bad economics or regulatory capture.

    Ultimately, I do not think a rising minimum wage policy will matter much. In a shrinking economy, it's terrible policy, but in a growing one, its effects are marginal or non-existent. We're entering an age of monetary policy that will keep the economy growing similar to Australia, so I don't think minimum wage policies or sentiments will have much effect over the long run

    Also Peter Schiff is right about regulation stuff, but wrong about money stuff. Very wrong about money stuff, and that sucks because money stuff is what he talks about the most
  9. #9
    We need work for strong idiots. We ran out.

    Fucking machines.
  10. #10
    Quote Originally Posted by ImSavy View Post
    What are people meant to do if those are the only types of jobs that they are qualified for or are available?
    Those are never the only jobs available, and if they're the only ones a person is qualified for, it's their issue, not anybody else's. Everybody has the ability to work hard and move up or sideways, and we should support a welfare system that also includes the ability to get an education

    Every single person I've ever known who is stuck in shitty low tier jobs are shitty punkass bitches who blame all their problems on other people. Hard workers and good employees are virtually never stuck in this problem. However, that isn't the only dynamic, and we've gotten some problems like single mothers supporting children are stuck in these low tier jobs and can't do much to get out of them. First off, the state or other people are not to blame for people who think it's cool to have babies when they're poor, and a solution to this problem involves things like improving the education system so that nobody grows up believing stupid shit like they don't need no rubbers

    Again, it always boils down to religion in politics. Get religion out of it, and everything gets better, even dumb policy gradually evolves into good policy as long as religion is out of the game. Currently, the GOP is trying to make a case about how it's a cultural problem that lots of Americans raise their kids to be nitwits, and they're right, but they're wrong in that they don't address the underlying reason that these cultural problems are nurtured: religious idiocy like abstinence-only sex ed
  11. #11
    Also I'd say you can blame the economic crisis on religion. The crash and virtually all the problems we have today are a product of shitty monetary policy. Conservatives used to be great on monetary policy, but then the fuckstick religious wackos took over, and Milton Friedman's sound monetary economics turned into W Bush's faith-based administration. It's no wonder everything fucked up when the Economy Party became the Jesus Party. Tack on a whole bunch of dumbass socially regressive regulations from both parties, and you get what we have had for years
  12. #12
    Just watched Paul's SOTU response. If he's going to quote Friedman, he needs to stop being so stupid on monetary policy. Even if I agreed with Rand on every single thing under the sun, I couldn't vote for him because his position on the Fed is about the worst it possibly could be, and the Fed has by far (by far!) the biggest impact on the health of the economy

    Nutshell: Paul's monetary policies would work only if Congress passed a law that allowed private currencies. This would be fantastic, but since we live in a society with a state currency monopoly, it is absolutely imperative that that monopoly (the Fed) manipulates and uses the currency in ways that keep NGDP stable and growing. As the president, Paul would usher in ever worse "hard money" sentiments into the institutional economics consensus. We can't have this because we're already suffering from many of Obama's appointees who believe in bubble hysteria, which has similar contractionary effects. However, it is possible that Paul could change on this because if he's the GOP nominee, he would be more likely to listen to current-day Friedman economists (market monetarists) than Obama types do. Interesting to note, Obama types were Friedmanites until 2007. When the economy went bad, Keynesians like Krugman swiftly diverted from some econ 101
  13. #13
    spoonitnow's Avatar
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    Quote Originally Posted by ImSavy View Post
    What are people meant to do if those are the only types of jobs that they are qualified for or are available?
    Have a roommate.
  14. #14
    Quote Originally Posted by wufwugy View Post
    Those are never the only jobs available, and if they're the only ones a person is qualified for, it's their issue, not anybody else's. Everybody has the ability to work hard and move up or sideways, and we should support a welfare system that also includes the ability to get an education

    Every single person I've ever known who is stuck in shitty low tier jobs are shitty punkass bitches who blame all their problems on other people. Hard workers and good employees are virtually never stuck in this problem. However, that isn't the only dynamic, and we've gotten some problems like single mothers supporting children are stuck in these low tier jobs and can't do much to get out of them. First off, the state or other people are not to blame for people who think it's cool to have babies when they're poor, and a solution to this problem involves things like improving the education system so that nobody grows up believing stupid shit like they don't need no rubbers
    1) In some places they are the only types of jobs available.

    2) You're implying that being motivated and hard working is something people can just switch on and off, when in reality that's not the case at all. Lots of kids in shitty schools don't have the support network at home to push them, they're essentially allowed to do whatever they want, and on top of that they don't see education as a tool for going anywhere and they don't trust people in authoritative positions.

    Also you should drop the anecdotal evidence, I know people who are very hard working who will never move out of the shitty dead end jobs that they are in.

    Quote Originally Posted by spoonitnow View Post
    Have a roommate.
    Solid solution. Nothing wrong with getting 20 people in a house built for 2.
  15. #15
    Renton's Avatar
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    Same old something for nothing. Let's just magically conjure up the extra dollars to pay everyone more and then all will be well. Hey, while we're at it, lets just make the minimum wage 40 dollars an hour. I mean, if the theory holds that increasing the minimum wage increases the amount of money people spend which feeds back into the economy, let's just pay everyone at McDonalds 75 dollars an hour. Then there will be a shitload of money feeding into the economy, right?!?

    Say I own a lumbermill. My business model allows me to hire 10 employees at 7 dollars an hour, for 10 hours of work each per day. I pay them 700 dollars a day to make my lumber which I then sell.

    If the minimum wage is increased to 10 dollars an hour, I don't just have a pile of cash lying around to give everyone a 40% raise. I have to do one or more of the following things.

    1. Invest in expensive machinery to make my employees more productive to justify the higher salary I will be forced to pay them.
    2. Invest in training/apprenticeship to teach my employees to be more productive, or just fire them all and find people with more experience/training.
    3. Fire half my staff, the least productive among them.

    The goal will be a smaller staff, maybe 6 people, using more sophisticated equipment to make my product. Even still, it will be at a significantly higher cost than before which will increase the price I have to my product at. After all, if it were better for my business this way with the higher productivity workers with better tools, I'd have done that on my own without force from the federal government, right? So four people lost their jobs, the national employment rate slipped a point or two, and that's not even the end of my problems.

    So now since i have to sell my product at a higher price, the demand for my product will decrease. People will conserve and buy less lumber when it is more costly. So my business falters a bit. After a few months in the red, I am forced to fire another employee. My much larger and more efficient competitors suffer as well, but not as much as I. After a few more months, I default on my business, and now 10 (well, 11) jobs are gone.

    gg minimum wage, wp
    Last edited by Renton; 01-30-2014 at 08:05 AM.
  16. #16
    spoonitnow's Avatar
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    ITT: Savy doesn't understand plural vs singular.
  17. #17
    Or maybe I do and my post meant something more. And for the record I have no idea if raising the minimum wage would be a good/bad thing in different economies around the world, but people against it should be able to answer some questions.
  18. #18
    spoonitnow's Avatar
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    Quote Originally Posted by ImSavy View Post
    Or maybe I do and my post meant something more. And for the record I have no idea if raising the minimum wage would be a good/bad thing in different economies around the world, but people against it should be able to answer some questions.
    Two people making minimum wage and working full-time each week can get their bills paid and save some money without too much trouble in most parts of the country.
  19. #19
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    Quote Originally Posted by spoonitnow View Post
    Two people making minimum wage and working full-time each week can get their bills paid and save some money without too much trouble in most parts of the country.
    So families should just move in together?
    It seems you're implying that these min. wage workers are all young males capable of much more. There are a gazillion folks who aren't capable of doing more. So we should just pack 'em all in a big warehouse or something.... Maybe they could live in the back of McDonald's?
    I manage a couple of low-rent buildings - - ~1/2 of tenants are on disability (mental/physical) & the other half that are working mostly are doing so at min.wage jobs. This building is probably the 2nd or 3rd cheapest in the entire town. These people can barely afford to eat. They should just all double-up & move in together... fk 'em! They should've just been born into a better social network with more supportive/healthy families. And for the ones who have physical ailments/chronic illness & are still trying to work... pff.. suck it up & get a job! Just work harder! or go to school... get some training!
  20. #20
    spoonitnow's Avatar
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    Quote Originally Posted by Poker Orifice View Post
    So families should just move in together?
    It seems you're implying that these min. wage workers are all young males capable of much more. There are a gazillion folks who aren't capable of doing more. So we should just pack 'em all in a big warehouse or something.... Maybe they could live in the back of McDonald's?
    I manage a couple of low-rent buildings - - ~1/2 of tenants are on disability (mental/physical) & the other half that are working mostly are doing so at min.wage jobs. This building is probably the 2nd or 3rd cheapest in the entire town. These people can barely afford to eat. They should just all double-up & move in together... fk 'em! They should've just been born into a better social network with more supportive/healthy families. And for the ones who have physical ailments/chronic illness & are still trying to work... pff.. suck it up & get a job! Just work harder! or go to school... get some training!
    You've decided that "two people" now means "multiple families," and that's making it very difficult for me to take anything you say after that seriously.

    There's a lot of, "Oh no, I wasn't born with a silver spoon shoved up my ass, so I'd better not try to do anything with my life," out there in the world.

    Some people, through no fault of their own, don't make very much money or have fallen on hard times. There are safety nets in place to help those people through charity, government handouts, and whatever.

    Raising the minimum wage means fewer jobs, period.
    Last edited by spoonitnow; 01-30-2014 at 04:24 PM.
  21. #21
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    himself fucker.
    What if your widgets themselves make more widgets?

    You're just in the wrong widget business, son.
    <a href=http://i.imgur.com/kWiMIMW.png target=_blank>http://i.imgur.com/kWiMIMW.png</a>
  22. #22
    Quote Originally Posted by spoonitnow View Post
    ITT: Savy doesn't understand plural vs singular.
    Is he being savvy by using savy? Or is it supposed to be savy like wavy?
  23. #23
    spoonitnow's Avatar
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    wp
  24. #24
    Quote Originally Posted by ImSavy View Post
    1) In some places they are the only types of jobs available.
    In dynamic and freer markets, they aren't. For example, in Washington state, nobody, and I mean nobody, has the option of only those kinds of jobs unless they're disabled or lazy. Every single region of the state has a variety of service, trades, and professional jobs with entry positions and ladders. In the modern world, the economy is dynamic enough that those who work hard and smart to a moderate degree will move up the ladder.

    2) You're implying that being motivated and hard working is something people can just switch on and off, when in reality that's not the case at all. Lots of kids in shitty schools don't have the support network at home to push them, they're essentially allowed to do whatever they want, and on top of that they don't see education as a tool for going anywhere and they don't trust people in authoritative positions.
    That's why I talked about education and stuff

    Also you should drop the anecdotal evidence, I know people who are very hard working who will never move out of the shitty dead end jobs that they are in.
    The anecdote isn't as weak as you'd think. I'm basically referring to hundreds of people who are, for the most part, a big enough representative of the average person in the state. I spent years in restaurant work, where turnover is huge and virtually all level of people except the super rich are employed. In a very efficient manner, the people who were good employees moved up or diagonally, and the bitchass morons who were more of a burden than a good employee didn't move anywhere but sideways or down. The same exists at college. It blows me away how underachieving most students are, and how proud of their mediocrity they are.
  25. #25
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    Quote Originally Posted by wufwugy View Post
    Every single person I've ever known who is stuck in shitty low tier jobs are shitty punkass bitches who blame all their problems on other people.
    +1

    I don't have sympathy for people who were not dealt a shitty hand in life ie. parents wouldn't send them to elementary and high school.When you get to a certain age, all of your problems are your own.
  26. #26
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    As far as the min wage argument goes: I think if it's raised, there will be less jobs. Isn't the unemployment rate a strong indicator of economic health?
  27. #27
    Quote Originally Posted by wufwugy View Post
    In dynamic and freer markets, they aren't. For example, in Washington state, nobody, and I mean nobody, has the option of only those kinds of jobs unless they're disabled or lazy.
    Did you know that the minimum wage in Washington state is $9.32/hour, a tad higher than the $9 the President has proposed? Because your whole argument is defeated by this fact. Raising the minimum wage does not hurt the economy. This is a fact that's been proven over and over again... every time we've raised the minimum wage. The projected disasters don't happen. Every state, like Washington, that has a higher minimum wage proves it. They are not behind other states in jobs.

    Most of this thread is full of falsehoods that a little actual research would easily dispel. It only effects 6% of the work force (which is why the $40/hour absurdity should be laughed off any serious discussion... we are only discussing a small portion of people).

    Numerous studies of the actual effect that increases in the minimum wage have had show that there that the effect isn't job loss. Productivity does go up and turnover goes down. Prices go up about half a percent for a ten percent increase.

    Take the fake widget example that started this thread. You are maxed out making widgets and only making the minimum wage? You are in the wrong business. You simply can't make widgets profitably. Because in order to make hiring someone profitable, you have to take a cut of the profit that they produce and they won't be producing any. Besides, once you train them, you are going to voluntarily pay more than the minimum because you will risk losing them. They now have experience and you don't want to be in the business of training people. My brother runs a small business and he learned that lesson the hard way. You have an investment in your employees and you should be motivated to keep them happy. It's the big businesses, not the small guys, who would be hit by a minimum wage increase.

    Meanwhile, we are all paying for the minimum wage employees, a good percentage of whom get government assistance. We will save a lot of money when they are being paid more.

    One of the reasons we have so many 30+ year olds in these dead end jobs is that the manufacturing jobs they used to have were shipped overseas. Americans can't compete with someone making a few dollars a day. NAFTA cost us over 700,000 jobs and yet people want to blame it on the workers who lost their jobs. They do have skills, help them get back into factories. Encourage your congressmen to reject the Trans-Pacific Partnership (TPP) so we don't continue to make the same mistake. And oh yeah, support the $9 minimum wage - help get people off government assistance.
  28. #28
    spoonitnow's Avatar
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    "Take the fake widget example that started this thread. You are maxed out making widgets and only making the minimum wage? You are in the wrong business. You simply can't make widgets profitably."

    l2math

    "Numerous studies of the actual effect that increases in the minimum wage have had show that there that the effect isn't job loss. Productivity does go up and turnover goes down."

    Turnover going down = fewer jobs available
  29. #29
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    Citing a reduced need for government assistance as the reason for increasing the minimum wage is like saying we should set price controls on heroin so addicts don't have to steal as much. If government assistance, i.e. a direct subsidy to the poor, is something we think is necessary for a healthy society, then fine. But that should happen independently of the free market. Price controls on labor are very destructive in a number of ways.

    The reason why increases in the American minimum wage don't have a noticeable calamitous effect on the economy is because the entry level wages in America are often very competitive with the minimum wage anyway. As in, as you said, it effects so few percent of people to such a small degree that it doesn't have a great economic impact. If we raised the minimum wage to levels that the left would want, it probably would have a calamitous effect. That'll never happen though cause republicans will prevent it from happening tooth and nail as long as they possibly can. And then the next minimum wage will happen at a point in time when natural wages have risen to a higher point anyway.

    The point is that the american minimum wage is a joke; a wedge issue just like gay marriage that has no meaningful impact on any of us, and only serves to divide us politically.
  30. #30
    Quote Originally Posted by dasher View Post
    Did you know that the minimum wage in Washington state is $9.32/hour, a tad higher than the $9 the President has proposed? Because your whole argument is defeated by this fact. Raising the minimum wage does not hurt the economy. This is a fact that's been proven over and over again... every time we've raised the minimum wage. The projected disasters don't happen. Every state, like Washington, that has a higher minimum wage proves it. They are not behind other states in jobs.

    Most of this thread is full of falsehoods that a little actual research would easily dispel. It only effects 6% of the work force (which is why the $40/hour absurdity should be laughed off any serious discussion... we are only discussing a small portion of people).

    Numerous studies of the actual effect that increases in the minimum wage have had show that there that the effect isn't job loss. Productivity does go up and turnover goes down. Prices go up about half a percent for a ten percent increase.

    Take the fake widget example that started this thread. You are maxed out making widgets and only making the minimum wage? You are in the wrong business. You simply can't make widgets profitably. Because in order to make hiring someone profitable, you have to take a cut of the profit that they produce and they won't be producing any. Besides, once you train them, you are going to voluntarily pay more than the minimum because you will risk losing them. They now have experience and you don't want to be in the business of training people. My brother runs a small business and he learned that lesson the hard way. You have an investment in your employees and you should be motivated to keep them happy. It's the big businesses, not the small guys, who would be hit by a minimum wage increase.

    Meanwhile, we are all paying for the minimum wage employees, a good percentage of whom get government assistance. We will save a lot of money when they are being paid more.

    One of the reasons we have so many 30+ year olds in these dead end jobs is that the manufacturing jobs they used to have were shipped overseas. Americans can't compete with someone making a few dollars a day. NAFTA cost us over 700,000 jobs and yet people want to blame it on the workers who lost their jobs. They do have skills, help them get back into factories. Encourage your congressmen to reject the Trans-Pacific Partnership (TPP) so we don't continue to make the same mistake. And oh yeah, support the $9 minimum wage - help get people off government assistance.
    It appears you didn't read what I said. Also, I'm well aware of fantastic economies like Australia with super high minimum wages and Germany with no minimum wages

    If you want to talk about something that matters, don't talk about minimum wage, regardless of the side you're on. It is clear that its effects are marginal, and people fighting over it are just frying teensy fish when there are mammoth salmon in the freezer

    If you wanna get somewhere great on this issue, look to molding the welfare programs into scaling subsidized wages
  31. #31
    Quote Originally Posted by Renton View Post
    The point is that the american minimum wage is a joke; a wedge issue just like gay marriage that has no meaningful impact on any of us, and only serves to divide us politically.
    Bingo. It's "pro-life" all over again. I look forward to the day that people stop arguing about things that have marginal effects and start arguing about things that are big freaking deals
  32. #32
    Quote Originally Posted by dasher View Post
    Meanwhile, we are all paying for the minimum wage employees, a good percentage of whom get government assistance. We will save a lot of money when they are being paid more.
    I should add that this isn't true, and the overwhelming majority of economists all over the spectrum agree with that assessment. The idea gets a ton of play in the media, though. Anyways, regardless of the fact that any extra labor costs would be passed on as higher consumption costs which eliminate savings, the idea that business is taking from taxpayers is the opposite of how it should be framed. Business is what drives the economy and upward mobility, not taxes, and if taxes are meant for anything it's to help business and labor. This is why a scaling subsidized wage would work phenomenally well at reducing welfare costs while skyrocketing employment and economic growth. But scaling subsidized wages are not popular to talk about because most forms of welfare that people like are captured by special interests and those who are against welfare tend to be against it wholesale, which means even if they could improve the welfare system, they don't want to because they want it to not work at all so it's forced to be scrapped entirely.

    Scaling subsidized wage is loved by economists and has gotten some play on the internet, but not much. It's politically unfeasible as well, just like other incredibly important things like eliminating tax incentives to consume mortgages and healthcare
  33. #33
    copypasta from some dude on r/economics

    Consider Europe.

    There are nine countries with a minimum wage (Belgium, Netherlands, Britain, Ireland, France, Spain, Portugal, Greece, Luxembourg). Their unemployment rates range from 5.9% in Luxembourg to 27.6% in Greece. The median country is France with 11.1% unemployment.

    There are nine countries with no minimum wage (Iceland, Norway, Sweden, Finland, Denmark, Austria, Germany, Italy, Switzerland.) Five of the nine have a lower unemployment rate than Luxembourg, the best of the other group. The median country is Iceland, with a 5.5% unemployment rate. The biggest country in Europe is Germany. No minimum wage and 5.2% unemployment.

    So the countries in Europe with no national minimum wage have about half as much unemployment as the countries that have a minimum wage.

    Germany used to have really high unemployment. Then they did labor reforms to allow more low wage jobs, combined with subsidies for low wage workers. Now they don’t have high unemployment.
    Still want to raise our minimum wage to $10?

    Regarding your statistic "1.1% of the US works for minimum wage", what actually matters are what percent of the US is already prevented from working by the minimum wage. People who have poor job skills and limited experience or are in a group that is (for whatever reason) discriminated against can get stuck for long periods in a "no job, no experience; no experience, no job" loop. If there were no minimum wage, the market could clear; all those people could offer a lower starting wage, acquire some experience, prove their value, and quickly move up the economic ladder.

    The incremental cost of raising it by small increments might be small or hard to tease out of the data, but the TOTAL cost of the minimum wage is horrendous.
  34. #34
    Turnover going down does not mean fewer jobs are available. Someone quitting doesn't mean they moved on to a different job. A decent wage means that people are happier with their jobs, productivity goes up and they see value in remaining employed.
  35. #35
    Yes, it's true. Fast food workers alone receive over $7 billion dollars in government money. We are paying for that. It money we save there does offset the tiny bit of inflation that would result. A ten percent increase in the minimum wage typically results in a half a percent increase in prices. This isn't a wash... it's much better to pay people, which motivates them to do more. Getting them off government assistance helps break that chain.

    The Earned Income Credit and the Make Work Pay programs both attempt to achieve what you're saying, but the same people who vote against the minimum wage increase and who vote to cut the food stamp programs vote against those as well.
  36. #36
    There are nine countries with no minimum wage (Iceland, Norway, Sweden, Finland, Denmark, Austria, Germany, Italy, Switzerland.)
    Is a lie.

    Germany doesn't have a single minimum wage, they have different minimum wages for most jobs and the rate varies between the East versus West. Those that the government doesn't set are set by collective bargaining and enforceable by the government. It's a more complex system, but they do have minimum wages:
    www wageindicator.org/main/salary/minimum-wage/Germany [couldn't post the link].

    Denmark, Norway and Finland also have minimum wages set by collective wage agreements, but there are still nationally enforced minimum wages. Austria's minimum wage is one of the highest in Europe - so I can't see how it got on that list.
    www minimum-wage.org/international/en/Austria
    www statistik.at/web_en/statistics/social_statistics/index_of_agreed_minimum_wages/index.html

    So your blogger isn't telling you the whole story, is he?
  37. #37
    ^^Uh, that isn't the same kind of minimum wage. A negotiated minimum between entities is definitively not the same kind of thing

    One of Germany's main strengths is labor mobility and fluctuating wages
  38. #38
    Chicks that are cool with no rubber are the best. Amirite.
  39. #39
    They're the best, most qualified at giving you the AIDS or leaky peepee, yes.

    But don't worry - a cure is due any day.
  40. #40
    Aids is so 90s
  41. #41
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    Quote Originally Posted by Renton View Post
    Same old something for nothing. Let's just magically conjure up the extra dollars to pay everyone more and then all will be well. Hey, while we're at it, lets just make the minimum wage 40 dollars an hour. I mean, if the theory holds that increasing the minimum wage increases the amount of money people spend which feeds back into the economy, let's just pay everyone at McDonalds 75 dollars an hour. Then there will be a shitload of money feeding into the economy, right?!?

    Say I own a lumbermill. My business model allows me to hire 10 employees at 7 dollars an hour, for 10 hours of work each per day. I pay them 700 dollars a day to make my lumber which I then sell.

    If the minimum wage is increased to 10 dollars an hour, I don't just have a pile of cash lying around to give everyone a 40% raise. I have to do one or more of the following things.

    1. Invest in expensive machinery to make my employees more productive to justify the higher salary I will be forced to pay them.
    2. Invest in training/apprenticeship to teach my employees to be more productive, or just fire them all and find people with more experience/training.
    3. Fire half my staff, the least productive among them.

    The goal will be a smaller staff, maybe 6 people, using more sophisticated equipment to make my product. Even still, it will be at a significantly higher cost than before which will increase the price I have to my product at. After all, if it were better for my business this way with the higher productivity workers with better tools, I'd have done that on my own without force from the federal government, right? So four people lost their jobs, the national employment rate slipped a point or two, and that's not even the end of my problems.

    So now since i have to sell my product at a higher price, the demand for my product will decrease. People will conserve and buy less lumber when it is more costly. So my business falters a bit. After a few months in the red, I am forced to fire another employee. My much larger and more efficient competitors suffer as well, but not as much as I. After a few more months, I default on my business, and now 10 (well, 11) jobs are gone.

    gg minimum wage, wp
    So devil's advocate here, where does a 'race to the bottom' end in a country like the US in regard to labour prices in the event of no minimum wage? You've talked before about someone in a Far East factory being paid $1 an hour as an option better than the alternative for that particular country and an overall situation that lifts third-world countries out of poverty. What is an outcome 'better than the alternative' for a low-skilled worker in the US?

    yesterday the UK introduced a Living Wage at £7.20 an hour and rising to £9 an hour by 2020, replacing the £6.50 minimum wage, but the cost to small businesses has been offset by reductions in national insurance contributions. Thoughts?
  42. #42
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    That's pretty easy to answer, just look at the times in recent history where the federal minimum wage hasn't been increased for a few years. Like back when I was in high school it was $5.15, and I got the shittiest job working for a movie theater and was paid $5.50. Basically the minimum wage was obsolete, the market price of a high school student part time was higher. Probably very few people in the U.S. would make substantially less than the minimum. One thing is certain, the people who work those <minwage jobs will be happier than if the law forbade them to.

    The U.S. is a rich country with a low standard of living. The poor in the U.S. are generally poor due to their actions, and I don't mean being lazy or something. Usually issues with personal debt, running up credit cards or payday loans. It is possible to live frugally in rural parts of the country for a few hundred dollars a month if you really have to, and that isn't even taking into account the federal benefits that are available, such as welfare, medicaid, negative income tax, supplemental nutrition, free/cheap education. The minimum wage isn't doing Americans any favors.
  43. #43
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    Quote Originally Posted by spoonitnow View Post
    Opinion: Unskilled labor by a single person in a single, full-time job should not necessarily be sufficient to live on.
    I know this is a year old but I basically agree except maybe to say that it shouldn't be enough to support a family. I think it should be sufficient to live on, providing the living is very frugal.

    The shit that drives me crazy is when leftist bash walmart because their employees don't make enough to support their families. It's like fuck man, you work at walmart, maybe settling down with a family wasn't in the cards. And I get that circumstances happen, but just because you made some bad relationship and condom decisions doesn't mean you are entitled to an American Dream salary for pouring sawdust on the puke on aisle seven. These sorts of jobs are meant for young people, presumably part time while they are in college. Also, it's well-established that if you want your family to have an information age standard of living, you need two household incomes so tell that hoe she needs to put on her Sunday best and start selling avon or something.

    /rant
    Last edited by Renton; 07-09-2015 at 07:14 AM.
  44. #44
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    Quote Originally Posted by Renton View Post
    I know this is a year old but I basically agree except maybe to say that it shouldn't be enough to support a family. I think it should be sufficient to live on, providing the living is very frugal.

    The shit that drives me crazy is when leftist bash walmart because their employees don't make enough to support their families. It's like fuck man, you work at walmart, maybe settling down with a family wasn't in the cards. And I get that circumstances happen, but just because you made some bad relationship and condom decisions doesn't mean you are entitled to an American Dream salary for pouring sawdust on the puke on aisle seven. These sorts of jobs are meant for young people, presumably part time while they are in college. Also, it's well-established that if you want your family to have an information age standard of living, you need two household incomes so tell that hoe she needs to put on her Sunday best and start selling avon or something.

    /rant
    Yeah I just want to point out that this is what I meant in terms of not being able to support a family (though it is possible to support yourself).

    Additionally, the idea of living frugally is beyond the realm of comprehension for so many people at this point that it's ridiculous.

    I also want to point out that the OP was a copy/paste from something else and that I didn't write it.
  45. #45
    Quote Originally Posted by pantherhound View Post
    yesterday the UK introduced a Living Wage at £7.20 an hour and rising to £9 an hour by 2020, replacing the £6.50 minimum wage, but the cost to small businesses has been offset by reductions in national insurance contributions. Thoughts?
    Interesting post and discussion on the topic

    http://econlog.econlib.org/archives/...ns_new_mi.html

    My preferred explanation is as follows (but really I don't know):

    The Conservative government might be using this as a form of protectionism to appease the anti-immigration voters. It may be that they don't realize that this makes illegal immigration more likely than legal immigration, but that also isn't necessarily bad because illegal immigration is better than legal immigration when you have a welfare state (this assumes the unintended consequences aren't known, which they aren't). But UK doesn't have much of a problem with illegal immigration in the first place, so this is probably just protectionism. The lobbies for minimum wage policies have a long history of this motivation. There's no better way to keep incumbents employed than by making competition harder.
  46. #46
    Quote Originally Posted by spoonitnow View Post
    Opinion: Unskilled labor by a single person in a single, full-time job should not necessarily be sufficient to live on.
    I disagree. With no incentive to work due to insufficient pay being offered at entry level, millions of people are choosing not to use their talents for what are essentially slave wages. In the 70's I made enough money during high school as a bagboy to have my own apartment at age 16, making $2 an hour. Why should todays kids not be offered the same opportunity? Oh, for a CEO can become a billionaire these days instead of becoming a millionaire when I was growing up. Some things never change.
    Last edited by eberetta1; 07-09-2015 at 11:14 PM.
    It takes 2 years to learn to talk, but a lifetime to learn when to shut up.
  47. #47
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    Eberetta the problem is that it is anybody's opinion what constitutes "living." A $7.25/hour job working 40 hours a week is enough to have an apartment in most of the U.S. with a couple of roommates and enough money to spare for food, gas, and insurance. It isn't, nor should it be, enough to raise a family or enough to have your own place + car + all of the things you want. It is hard to compare today with the 70's. Our standards of living have matured significantly since then, with everyone wanting to spend 600 on a phone, 100/month on a phone bill, 60/month on high speed internet. At the same time, many goods have gotten much more cheap since those times. If it seemed to be so much better for you back then, maybe that's because the U.S. was still riding the end of the post-war economic boom. Since then, other countries actually have been competing with us on the global economic stage and it has caused our standards of living to even out a bit.
  48. #48
    Quote Originally Posted by eberetta1 View Post
    I disagree. With no incentive to work due to insufficient pay being offered at entry level, millions of people are choosing not to use their talents for what are essentially slave wages. In the 70's I made enough money during high school as a bagboy to have my own apartment at age 16, making $2 an hour. Why should todays kids not be offered the same opportunity? Oh, for a CEO can become a billionaire these days instead of becoming a millionaire when I was growing up. Some things never change.
    Three things I'd like to point out:

    (1) The incentive to not work for a low wage that you're talking about exists because of welfare. If the only source of revenue for people was payment for production, a low wage would not be a disincentive since it would be the only way to get revenues, as it should be.

    Additionally, the most effective way to increase earning potential is to work, regardless of wage. On the job skills are second to none, and every field has many ladders that can be climbed.

    (2) The consideration that matters when evaluating what wage people should get is what their productivity allows them to get. If the cost of your labor is $8/hr, you have to have productivity higher than that. If it's lower, every hour you work is losing money for your employer and also the economy at large. There are no two ways around this. The higher the minimum wage goes, the more low productivity workers are forced into unemployment. If the minimum wage is $20/hr, guess what happens at McDonald's. The only people who get hired to flip burgers will have bachelors degrees, impressive resumes, probably be white or Asian, and couldn't have a single blemish that would make an employer think they might produce below $20/hr in production. Unemployment would shoot up big time. A whole bunch of poor, young, and minorities would be kicked out of the job market for good.

    The only benefit minimum wage gives is to the relatively affluent. It allows them to work jobs that are beneath their skill level while maintaining a higher standard of living than the skills needed for that job suggest they should. This is because minimum wage laws make it illegal for less productive workers to compete against them. The cost of minimum wage is the ultimate form of inequality, where the poor are turned into perpetual victims in order to make life easier for the relatively well educated and skilled.

    There is a great deal of irony in that policy-makers claim they want to help the poor by increasing the minimum wage, when the truth of what the minimum wage does for the poor is the exact opposite.

    (3) Cost of living is unnaturally high today, mostly because of regulation. I think a low wage job actually would be enough to pay for your own living space if housing and zoning regulations were cut to a bare minimum. The demand for affordable housing is super high, but the supply is greatly restricted by law. This helps a small group of people who own a select few properties, all at the expense of the poor and the working class. Capitalism is the pursuit of profit by creating abundance. With abundance comes low prices. This is why a chicken sandwich, which without capitalism would have a real cost in the hundreds or thousands, is just a dollar and is affordable on any wage. The same can be done with virtually any resource, be they housing, healthcare, education, or whatever. But we don't get abundance without prices and markets.
  49. #49
    probably the best post on minimum wage ive seen

    https://www.reddit.com/r/explainlike...t_be_a/cms8pru
  50. #50
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    The incentives set up from this Obamacare bullshit are hurting people more than minimum wage being "low." It effectively cut hours down by 25 percent for a whole lot of people who were able to work full time (plus overtime in many cases) at a single job.
  51. #51
    Quote Originally Posted by spoonitnow View Post
    The incentives set up from this Obamacare bullshit are hurting people more than minimum wage being "low." It effectively cut hours down by 25 percent for a whole lot of people who were able to work full time (plus overtime in many cases) at a single job.
    But don't you get it, because rich people exist, nobody should be allowed to do anything until they no longer exist. And for sure don't allow a mechanism for people to become rich. That defeats the purpose.

    Socialism is the worst idea in the history of civilization.
  52. #52
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    it's here to stay though, so we might as well set about convincing people that certain policies are far worse than others, such as the minimum wage.
  53. #53
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    Agree on principle... im a pretty hardcore libertarian.

    But after looking at the data, I think a min wage bump is a reasonable stop gap measure that can be implemented quickly and have success, but we need a long term plan to address our growing income inequality.

    Truth is corporate profits have never been higher, workers have never been more productive, and yet Real wages have not changed since 1975.

    http://ftalphaville.ft.com/files/2013/11/Wages-vs-productivity.png

    Who cares if the economy grows, when that growth doesnt get to the people and gets gobbled up by the megarich?

    http://currydemocrats.org/in_perspective/cumulative_change_in_real_household_income.png

    (That graph is everything you need to know the problem imo)

    We need to set up some way of tying wages to profits. Im not sure how its done. Other countries tie a companies minimum worker wages to some multiple of the highest executives total yearly compensation. There are then exemptions for small businesses which employ fewer than 50 people.

    That seems fairly reasonable. But now we get to argue over the multiplier... is a ceo worth 1000x the janitor on an hourly basis or only 333x?
    Last edited by euphoricism; 07-15-2015 at 08:19 AM.
  54. #54
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    Quote Originally Posted by euphoricism View Post
    Agree on principle... im a pretty hardcore libertarian.
    You might think you are, but nothing you just said reflects that. Tying wages to profit makes absolutely no sense whatsoever and would keep any business from being able to grow and hire more people. I'm not even going to waste my time on the rest of that feel good nonsense you just spewed.
  55. #55
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    That reddit post wuf linked to made a great case that minimum wage and related policies have caused the de-coupling of wages and productivity, so its kind of odd to cite that graph as your reason for supporting such practices.

    In truth, there should really be no connection at all between wages and productivity, except that more productive employees in the same field are usually paid more. Architects and MEP engineers probably have equally important roles in building design, but MEP people are paid far more, even though they require less education and a shorter internship. Is this unjust, or merely a reflection that MEP engineers are in shorter supply?

    You can debunk most fair-pay arguments by replacing labor in the equation with a tangible good. For example, running water and electricity allow me to be highly productive. By the cost ~ productivity logic, shouldn't I have to pay much more than market for these products? It's obviously a bit callous to compare human beings to products, but economics views them the same, and economic forces will be expressed on human beings regardless of what policy is in place to protect them.
    Last edited by Renton; 07-15-2015 at 10:07 AM.
  56. #56
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    Well, im operating under the viewpoint that growing income inequality in America is a bad thing. You guys seem to be operating under the viewpoint that American workers are just too damn expensive compared to the rest of the world and they should quit whining.

    I think both can be true.
  57. #57
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    Quote Originally Posted by euphoricism View Post
    Well, im operating under the viewpoint that growing income inequality in America is a bad thing. You guys seem to be operating under the viewpoint that American workers are just too damn expensive compared to the rest of the world and they should quit whining.

    I think both can be true.
    Poverty may be a problem, but income inequality is not a problem. Just because person A has more than person B does not obligate person A to give anything to person B.
  58. #58
    euphoricism's Avatar
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    Its a matter of degree

    When the top 1% of the world holds 10% of all wealth in the world? Maybe thats okay. When 1% holds 99%?

    Its absurd to say that wouldnt matter. That would have life altering results for the entirety of the world. It would certainly matter.

    For what its worth, the top 1% of households globally currently own 50% of the wealth in the world.
  59. #59
    It's cool to see you here.

    Quote Originally Posted by euphoricism View Post
    Agree on principle... im a pretty hardcore libertarian.

    But after looking at the data, I think a min wage bump is a reasonable stop gap measure that can be implemented quickly and have success, but we need a long term plan to address our growing income inequality.

    Truth is corporate profits have never been higher, workers have never been more productive, and yet Real wages have not changed since 1975.

    http://ftalphaville.ft.com/files/201...oductivity.png

    Who cares if the economy grows, when that growth doesnt get to the people and gets gobbled up by the megarich?

    http://currydemocrats.org/in_perspec...old_income.png

    (That graph is everything you need to know the problem imo)

    We need to set up some way of tying wages to profits. Im not sure how its done. Other countries tie a companies minimum worker wages to some multiple of the highest executives total yearly compensation. There are then exemptions for small businesses which employ fewer than 50 people.

    That seems fairly reasonable. But now we get to argue over the multiplier... is a ceo worth 1000x the janitor on an hourly basis or only 333x?
    The graph is not accurate. The decoupling of wages and productivity is explained by compensation in forms of benefits instead of wages. This decoupling likely would not have happened without a convoluted tax and regulatory system. Additionally, digital deflation is an effect of prosperity that goes unaccounted for. This means that not only has compensation stayed with productivity, but living standards have increased at an exponential rate during all that time too.

    Well, im operating under the viewpoint that growing income inequality in America is a bad thing. You guys seem to be operating under the viewpoint that American workers are just too damn expensive compared to the rest of the world and they should quit whining.

    I think both can be true.
    If income inequality was bad, minimum wage hikes would make it worse. The economics of a minimum wage shows that it has the opposite effect of the intended.

    That aside, income inequality is not bad. If the incomes of every person in the country was tripled overnight, poverty would be eliminated yet there would be a far greater income gap between the rich and poor. Additionally, income isn't that meaningful of a metric. For example, if Bill Gates' income tax rate is increased yet it doesn't change his consumption habits (consumption includes investments), the tax increase on Gates' income has not had an effect on Gates. Consumption is a hard and fast metric that economists understand. Income, not so much.

    Its a matter of degree

    When the top 1% of the world holds 10% of all wealth in the world? Maybe thats okay. When 1% holds 99%?

    Its absurd to say that wouldnt matter. That would have life altering results for the entirety of the world. It would certainly matter.

    For what its worth, the top 1% of households globally currently own 50% of the wealth in the world.
    Assuming that does matter, redistributive policies make it worse because they are a disincentive for production. All they end up doing is lowering the amount of real wealth of the poor, lowering the amount of capital for investment from the non-poor (which hurts the poor more than the non-poor), and lowering the total wealth in the economy. Prosperity is not about money but about production and productivity. Even with money being a reflection of the value of a resource, that value is a product of production and productivity.



    BTW I think your view on the minimum wage helps explain why conservative regions like Arkansas overwhelmingly passed an increase by initiative. Even most conservatives and libertarians believe that some people are too rich, redistribution works, and that price restrictions are good. I guess that leaves me more confused since those ideas are antithetical to free-market principles. It's probably that the view that the rich are a problem and the poor are oppressed is powerful while economics is not well understood by most people regardless of political identification.

    Or maybe it's that Arkansans understand economics so well that they know a higher minimum wage is a great way to keep legal immigration away from their state. I doubt this is it even though it is a significant driver of why the minimum wage is a thing in the first place. Unions and incumbent labor abhor competition. More barriers to work mean more money for a select few people.
    Last edited by wufwugy; 07-15-2015 at 06:40 PM.
  60. #60
    Renton's Avatar
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    Quote Originally Posted by euphoricism View Post
    Its a matter of degree

    When the top 1% of the world holds 10% of all wealth in the world? Maybe thats okay. When 1% holds 99%?

    Its absurd to say that wouldnt matter. That would have life altering results for the entirety of the world. It would certainly matter.

    For what its worth, the top 1% of households globally currently own 50% of the wealth in the world.
    Income inequality is not bad in and of itself. Suppose you had an island society of 100 people that had a wealth of $100,000. One of the people owned $50,000, and the remaining 99 each had $505. This would be the analog of the situation you described for the current world, with 1% owning 50%.

    Then suppose that over 100 years, that society grew its population by 2% annually and its economy by 5% annually. So, after 100 years of developing its economy, it now has a population of 725 and a wealth of $13.2 million. If you assume that the 99% had constant living standards throughout this period, then they would each still have $505 of wealth, for a total of $362k, leaving the top 1% with the lion's share of $12.8 million, about 97% of the wealth.

    In other words, if the wealth had shifted from the 1% having 50% at the beginning to 75% at the end, the lives of the remaining 99% would have still DRAMATICALLY improved. 25% of $13.2 million is $3.3 million, divided among the 717 residents would give them $4,602, almost a ten-fold increase from their ancestors.

    What matters are median living standards, which have been constantly skyrocketing since the industrial revolution. The poor and middle class are getting richer in the most important sense. Except when, you know, the state destroys their lives, as is happening in Greece.
    Last edited by Renton; 07-15-2015 at 07:32 PM.
  61. #61
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    Philosopher of Economics talks about the philosophy of Economics.

    http://opinionator.blogs.nytimes.com...n-and-cant-do/

    Notable points:

    -Talks about what Economists can and can not do in terms of predictive power.
    -Talks about what Economists do in terms of engineering solutions to political problems.
    -Talks about this very debate about raising the minimum wage
    One might believe, naïvely, that the economic effect would be simply to raise the wages of those who are currently earning the minimum wages. But basic economic theory maintains that to protect their profits in the face of a higher minimum wage, firms will reorganize their production so as to employ fewer unskilled workers, whose labor is now more expensive. The logic is impeccable, but the conclusion depends on many assumptions that may not be true. It may not be easy for firms to find substitutes for unskilled labor, and with higher wages, unskilled workers may be more productive. Economic theory helps to identify the relevant factors and to set the terms of intelligent debate.
    -Why there may not be consensus among Economists
    -Touches on how easy it is to corrupt the conversation when bringing it to the public
    Reputable academic economists are united in rejecting the genuinely unfounded economic claims that politicians make. There may not be complete unanimity, because some economists are ideologues without scientific scruples. Furthermore, as the example of climate change shows, powerful interests can make an overwhelming scientific consensus appear to the public to be a matter of scientific controversy.
    And more.

    Solid read.
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    I like the "set the terms of intelligent debate" part.
  63. #63
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    You would.
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  64. #64
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    Why do you all assume that raising the minimum wage would lead to job loss?

    A few things
    - Businesses use exactly the amount of labor that is necessary. They dont have extra employees for the sake of charity.
    - Businesses already get the most out of their labor. To think they arent optimizing labor is nonsense.
    - Robot Workers are unrelated to minimum wage. The cost of such workers is continually dropping, and we already see its implementation in a variety of places (self-serve checkouts. Self-pump gas stations). If the price is currently too much in comparison to labor, it wont be for long.

    - Do small businesses even exist anymore, which would be subject to the minimum wage? Restaurants, for example, arent. Most mom and pop stores are also dead or dying. Private practitioners pay their secretaries more than minimum.

    -Couldnt a small business operate such that it avoided the minimum wage? Im fuzzy here, but if you really wanted a tiny store, you could organize it as a limited partnership or something, no?

    It seems to me, that the most likely result of a wage hike is a product price hike, not job loss. But would this really be so bad? How much of a price hike is necessary to compensate for the loss in profit?
  65. #65
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    Raising the minimum wage leads to job loss because it eliminates positions that the employer can profit from. If a position is worth 10/hr to the employer, and that position pays 8/hr to the employee, raising the minimum wage to 10.50/hr eliminates that position.
  66. #66
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    That assumes that the cost isnt made up somewhere else, that the profit/employee is knowable, and that the employee is expendable.

    For most places that use a minimum wage, these arent necessarily the case.

    What is the profit/bagger at a grocery store? They dont actually sell anything, but they do collect the carts, and say "have a good day" while they bag groceries. The economic impact here isnt really knowable...there needs to be someone employeed to collect shopping carts...and customers with more money may be more willing to buy more groceries...thus creating more profit to offset the higher cost.

    It doesnt seem entirely clear
  67. #67
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    I agree that jobloss COULD be a result of a rise in the minimum wage. Thats obvious. I just have difficulty seeing it as the only, or even the most likely, result.
  68. #68
    Quote Originally Posted by JKDS View Post

    A few things
    - Businesses use exactly the amount of labor that is necessary.
    Not exactly. Businesses expand where they feel they can and contract where they feel they must. Minimum wage decreases the quantity of expansion as well as the varied and innovative ways in which they expand.

    - Businesses already get the most out of their labor. To think they arent optimizing labor is nonsense.
    That just isn't true. Recessions tend to increase productivity for companies as they need to become more efficient to survive. Labor isn't optimized so much as it's standardized and pushed on the margins in order to compete. The more expensive labor is, the less the margins are capable of being pushed, and the greater the economy stagnates and the poorer labor is.

    - Robot Workers are unrelated to minimum wage. The cost of such workers is continually dropping, and we already see its implementation in a variety of places (self-serve checkouts. Self-pump gas stations). If the price is currently too much in comparison to labor, it wont be for long.
    Higher wage floors increase the pace of mechanization. If it costs more to employ somebody to cook food, it costs less to own a machine that cooks food.

    - Do small businesses even exist anymore, which would be subject to the minimum wage? Restaurants, for example, arent. Most mom and pop stores are also dead or dying. Private practitioners pay their secretaries more than minimum.
    A ton exist. Much of it is illegal labor, and a much larger amount is non-existent because of how hard it is to legally employ people. The irony of worker protections is that they do not protect workers at all. They only make it much harder for employers to hire and they make it much harder for employees to use their skills. You're hard pressed to find thriving new businesses in countries with strict regulations. The China miracle exists mostly because several industries have been completely deregulated and in those sectors people are free to run any business any way they please and pay any worker any amount they will work for. Living standards in the country are skyrocketing in a way greater than imagined. Contrast this to living standards in countries with extreme regulatory and welfare states, where living standards are stagnant and any increases they do get depend on appropriation of innovations created by less regulated regions.

    -Couldnt a small business operate such that it avoided the minimum wage? Im fuzzy here, but if you really wanted a tiny store, you could organize it as a limited partnership or something, no?
    Sure, but it's harder and even more expensive than the current minimum wage. The price market is extremely effective at paying people what they're worth as is. Complex contractual obligations and collective ownership would be vastly more expensive than just hiring somebody to do a job for a number reasonably less than the amount of value they produce.

    It seems to me, that the most likely result of a wage hike is a product price hike, not job loss. But would this really be so bad? How much of a price hike is necessary to compensate for the loss in profit?
    Price hike does happen, but it's a fraction of the effect. Consumers hate price hikes, so businesses avoid them as much as they can. The main effect of minimum wage is a reduction in new hires of marginal workers. This is one reason why all the studies on minimum wage tell us nothing. They don't come close to evaluating how it affects the new hires of marginal workers. What we do know is that the theory says the higher costs of labor and lower incentives for labor (which include far more than just wage floors) should increase the "natural" rate of unemployment. We see this effect throughout the world.
  69. #69
    Quote Originally Posted by a500lbgorilla View Post
    One might believe, naïvely, that the economic effect would be simply to raise the wages of those who are currently earning the minimum wages. But basic economic theory maintains that to protect their profits in the face of a higher minimum wage, firms will reorganize their production so as to employ fewer unskilled workers, whose labor is now more expensive. The logic is impeccable, but the conclusion depends on many assumptions that may not be true. It may not be easy for firms to find substitutes for unskilled labor, and with higher wages, unskilled workers may be more productive. Economic theory helps to identify the relevant factors and to set the terms of intelligent debate.
    While this is true, it doesn't end there. I think this philosopher does a little disservice by making it seem like there is ambiguity about the minimum wage. What the bold seems to imply is that if a company can't find a way around a higher wage floor, then it ends up digging into profits more to pay the workers. But that isn't true, or when it is true it is bad, since it increases exposure and reduces the productivity of the company's capital. The bottom line of prices is arithmetic. The only way an increased wage floor would increase prosperity would be if, by some unspecified, tangential psycho-social reason, it increased total productivity. But we can be pretty sure that isn't the case since the evidence points to the opposite direction and it doesn't make logical sense in the first place.

    Besides, if higher wage floors were good, we could just pass a law that increases wages by 5%/yr until everybody makes $100/hr. Clearly, this wouldn't work, and the obvious arithmetic reason exists regardless of what the wage floor increase is. Minimum wage is among the least "economic" things that are spoken of in economic circles. It's a focus on money as if money itself has inherent value. Inherent value exists only in utility of resources, and increases in inherent value exist when resources are used more efficiently.
  70. #70
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    Quote Originally Posted by wufwugy View Post
    re # of employees
    Not exactly. Businesses expand where they feel they can and contract where they feel they must. Minimum wage decreases the quantity of expansion as well as the varied and innovative ways in which they expand.
    I dont understand. Even when they expand or contract, they use the amount of labor that is necessary, and nothing more. A pizza shop with 3 delivery drivers when only 1 is ever needed is very soon going to have only 1 delivery driver. If they decide to expand to more stores, theyll only hire the exact amount that they need.

    re optimizing labor

    That just isn't true. Recessions tend to increase productivity for companies as they need to become more efficient to survive. Labor isn't optimized so much as it's standardized and pushed on the margins in order to compete. The more expensive labor is, the less the margins are capable of being pushed, and the greater the economy stagnates and the poorer labor is.
    Well, you got me asking 'why' now. If I was an employer, I'd want my employees doing as much as they could for me. I'd be the Mr Krabs of business. Why wouldnt every company be interested in making their employees 'earn their wage'?

    I know that they are optimized in grocery stores. Those guys are work horses. And every manager I've ever worked for had cute sayings like "if you got time to chat, you got time to [some work that needed to be done]".

    Higher wage floors increase the pace of mechanization. If it costs more to employ somebody to cook food, it costs less to own a machine that cooks food.
    Oh, I understand this. However, I dont believe we arent there already, and I dont believe we wont be quickly approaching that point even without a wage boost. (Except the food cooking robot...thats a few years away development wise.)


    Small businesses exist?

    A ton exist. Much of it is illegal labor, and a much larger amount is non-existent because of how hard it is to legally employ people. The irony of worker protections is that they do not protect workers at all. They only make it much harder for employers to hire and they make it much harder for employees to use their skills. You're hard pressed to find thriving new businesses in countries with strict regulations. The China miracle exists mostly because several industries have been completely deregulated and in those sectors people are free to run any business any way they please and pay any worker any amount they will work for. Living standards in the country are skyrocketing in a way greater than imagined. Contrast this to living standards in countries with extreme regulatory and welfare states, where living standards are stagnant and any increases they do get depend on appropriation of innovations created by less regulated regions.
    It seems like the small businesses which do exist only do illegally then? If thats the case, a higher minimum wage wouldnt effect them at all. Im not sure we can identify exactly why china's economy is so great though. It seems that would be harder than analyzing why ours sucks.

    limited partnerships

    Sure, but it's harder and even more expensive than the current minimum wage. The price market is extremely effective at paying people what they're worth as is. Complex contractual obligations and collective ownership would be vastly more expensive than just hiring somebody to do a job for a number reasonably less than the amount of value they produce.
    I dont believe people are paid what theyre worth. They're paid the smallest amount of money the company can get away with paying them, and they get away with it because they have incredible bargaining power. A private practitioner is probably paid what hes worth...but they dont get paid minimum wage. But...if you wanted to open a comic shop...you could concievably open it as a limited partnership, hire a bunch of people as limited partners, have them share in the profits of the company (but at a smaller rate than you, a general partner), and then bypass the minimum wage. I think. Since theyre sharing profits, they're still getting paid only what theyre actually worth. They also get a bigger incentive to contribute to the company, and stuff. But Im talking out my ass on this point, way further out my ass than on any of the others.

    price hike

    Price hike does happen, but it's a fraction of the effect. Consumers hate price hikes, so businesses avoid them as much as they can. The main effect of minimum wage is a reduction in new hires of marginal workers. This is one reason why all the studies on minimum wage tell us nothing. They don't come close to evaluating how it affects the new hires of marginal workers. What we do know is that the theory says the higher costs of labor and lower incentives for labor (which include far more than just wage floors) should increase the "natural" rate of unemployment. We see this effect throughout the world.
    Maybe they shouldnt avoid them then? You could have two competing grocery stores...one deals with the minimum wage by firing some employees. In return, they are worse at collecting grocery carts, have longer lines (or more, annoying, self serve checkouts), and a store that is less clean...among other things. The other store instead increases their prices by a marginal amount (everything increases by 10 cents). Consumers would hardly notice the 10cent increase, and would likely be willing to pay it to avoid the long waits and unclean store that cut labor.

    I mean...its obvious that the more expensive labor is, and the less productive it is, the less an employer would want it. But its also true that theres a point where its so inexpensive and productive that the employer loves it (Point A), so expensive and nonproductive that the employer hates it (Point B), and where we currently are, (Point C). Your argument suggests the catastrophic result, that we go from here

    (good) A--------C---------B (bad)
    to
    (good) A----------------C-B (bad) such that labor is crap now. but im not certain the result would be so bad, and it may actually be

    (good) A----------C-------B (bad)
    Last edited by JKDS; 07-18-2015 at 01:49 AM.
  71. #71
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    Quote Originally Posted by wufwugy View Post

    Besides, if higher wage floors were good, we could just pass a law that increases wages by 5%/yr until everybody makes $100/hr.
    Renton made a similar statement earlier in this thread. It seems like a scare tactic populated by people who stand to lose, because it doesnt really make sense. I think I heard fox news suggest $1,000,000/hr or something preposterous.

    But no one is suggesting that. $100/hr, same with $50/hr, is a crazy amount of money for unskilled labor. We know this because people with actual skills make less.

    Meanwhile, we know that wages like $1/hr and $0.50/hr are similarly crazy little amounts of money for unskilled labor, because children make more in allowance without doing any work.

    But the people arguing for a minimum wage are asserting that there is a range that exists within the reasonable amounts that should be paid to all skilled workers. (Seattle did $15/hr i think? That seems high, since a paralegal with college education gets paid near that, same with lab techs).

    Just to pull out a range... I imagine an acceptable Minimum wage could be anywhere from $6/hr to $12/hr. The range is probably narrower. I lean towards the higher side, because $7.25/hr doesnt seem to do much, and it appears like companies could easily afford to pay their employers more (and closer to what theyre worth instead of the least amount possible). I lean towards $10/hr. That wage allows someone to live in an apartment with roommates, and still have a car/phone/internet and some spending money. Its also not too far off what people are paid now.

    But to expand on why i picked that range...Seattle's $15/hr would be an insane change. That big of an increase would cause the catastrophe ya'll are worried about, because its more than double the current wage. Prices would have to increase substantially, with more products sold, and more productive employees to compensate...and im not sure thats possible.
  72. #72
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    The ad infinitum argument has merit because it demonstrates that the living wage is unknowable. One dollar an hour is a living wage because people in third world countries live on it all the time. By live on it I mean they have an apartment, a hot plate, an ice box, a mattress, etc. They can afford the most basic healthcare, and they eat more than once per day.

    Meanwhile, in America, $7.25 an hour is considered not to be a living wage because it falls short of an entirely arbitrary and ever-shifting living standard floor. Now there's clearly a cost of living difference between the U.S. and elsewhere so I'm not suggesting that $7.25 is necessarily too high to be a minimum living wage, nor am I suggesting that people in the U.S. be paid $1 an hour. I'm just trying to dismantle the concept of a living wage because I find it to be irrelevant and distracting. For a worker, the living wage is simply the highest wage he can get, given his options. It's probably a big part of the meaning of life that we strive to achieve a better living standard than we have, regardless of how good or bad we have it. This isn't always financial, but often it is.

    For an employer, one could be symmetrical and say that the best wage is the lowest wage, but it's much more complicated than that. The employer seeks to get the maximum return on his investment. That is his bottom line. If he has a job opening, sure he would like to pay the minimum possible wage to fill that opening, but he loses profits for every day that position isn't filled. As he offers a higher salary, the position gets filled more quickly. He also has to balance his need to minimize wages with his need for quality people, so he may offer higher than "market" to attract gifted people. Once hired, the employer must continually balance the potential productivity boost that might come from giving the worker a raise or more benefits.
  73. #73
    Quote Originally Posted by JKDS View Post
    I dont understand. Even when they expand or contract, they use the amount of labor that is necessary, and nothing more. A pizza shop with 3 delivery drivers when only 1 is ever needed is very soon going to have only 1 delivery driver. If they decide to expand to more stores, theyll only hire the exact amount that they need.
    "Need" doesn't assess it. I worked in a restaurant for years and we always could have used much more labor than we had. Managers focused on nothing as much as sending employees home because labor was the biggest cost under WA's high minimum wage. The restaurant suffered tremendously from this because we couldn't handle any periodic, unexpected boosts in customers. The restaurant had a million opportunities to grow, but never did, partly because of this.

    Assessment of necessity or potential value is complex. Businesses never know what they need. They know what they think will increase revenues, and the less capital they have, the less they can do this.

    Well, you got me asking 'why' now. If I was an employer, I'd want my employees doing as much as they could for me. I'd be the Mr Krabs of business. Why wouldnt every company be interested in making their employees 'earn their wage'?
    Well, they are, but there are drawbacks. Low skill work is hard. A laborer in a low skill job has to work harder to increase his productivity. The higher a wage floor for a low skill job, the more the worker is required to work in order to have a job.

    Oh, I understand this. However, I dont believe we arent there already, and I dont believe we wont be quickly approaching that point even without a wage boost. (Except the food cooking robot...thats a few years away development wise.)
    There isn't a point where this is achieved. Every field has marginal workers regardless of what the wage or technology is at. Wage floors are just a way of turning more marginal workers into the unemployed. Lowering wage floors does the reverse.

    It seems like the small businesses which do exist only do illegally then? If thats the case, a higher minimum wage wouldnt effect them at all.
    Well if we want to encourage more illegal and/or off the books work...

    Im not sure we can identify exactly why china's economy is so great though. It seems that would be harder than analyzing why ours sucks.
    Sure we can't do exactly, but we have gotten quite close. Imagine NYC if no licensing for street vendors were required and no zoning laws existed. Entrepreneurs and laborers would be flocking in droves. Many thousands of new tiny businesses would pop up everywhere and the amount of small, cheap apartments would skyrocket. This is basically what happened in China. The poor rural folk flocked in droves to the reformed big cities where there are virtually no regulations on street businesses and housing.

    I dont believe people are paid what theyre worth. They're paid the smallest amount of money the company can get away with paying them, and they get away with it because they have incredible bargaining power.
    So do workers. If businesses had the type of bargaining power that outweighs the worker so greatly, then why are workers constantly getting raises and constantly moving to new jobs for more money? I've gotten a bunch of raises I never even asked for or expected because I was a more productive worker than my coworkers and my bosses knew that if they didn't have a policy of rewarding productivity, they would have a lower quality of employee than their competitors. All industries behave like this.

    Nobody is ever paid exactly what they're worth, but regardless of what you do, if your wage is too low relative to your productivity, it is not hard at all to get raises or to find a different company who will give you higher pay. Typically, most people aren't that aggressive about getting the most of what they're worth, but they still benefit from a competitive market economy that makes it hard for employers to pay them less than close to what they're worth regardless.

    Maybe they shouldnt avoid them then? You could have two competing grocery stores...one deals with the minimum wage by firing some employees. In return, they are worse at collecting grocery carts, have longer lines (or more, annoying, self serve checkouts), and a store that is less clean...among other things. The other store instead increases their prices by a marginal amount (everything increases by 10 cents). Consumers would hardly notice the 10cent increase, and would likely be willing to pay it to avoid the long waits and unclean store that cut labor.
    They don't fire the employees (for the most part). They hire new employees more stringently. In your scenario, assuming one grocer raises prices and the other just hires new employees more stringently, the latter will have a smoother transition and will gain some marginal customers who did notice the price increases.

    I mean...its obvious that the more expensive labor is, and the less productive it is, the less an employer would want it. But its also true that theres a point where its so inexpensive and productive that the employer loves it (Point A), so expensive and nonproductive that the employer hates it (Point B), and where we currently are, (Point C). Your argument suggests the catastrophic result, that we go from here

    (good) A--------C---------B (bad)
    to
    (good) A----------------C-B (bad) such that labor is crap now. but im not certain the result would be so bad, and it may actually be

    (good) A----------C-------B (bad)
    I'm not suggesting catastrophe. A wage floor hike mostly just kicks out the marginal laborer from the workforce. Seattle's 50% increase may only make the long term natural rate of unemployment 0.5% higher, more or less. It's not the end of the world. But that's 0.5% more marginal laborers that become perpetual unemployed and qualify as those who "fall through the cracks" that pro-welfare people wish to avoid.

    Renton made a similar statement earlier in this thread. It seems like a scare tactic populated by people who stand to lose, because it doesnt really make sense. I think I heard fox news suggest $1,000,000/hr or something preposterous.

    But no one is suggesting that. $100/hr, same with $50/hr, is a crazy amount of money for unskilled labor. We know this because people with actual skills make less.
    It's not a scare tactic. It's meant to give perspective, because if the theory that $1 increase in minimum wage increases prosperity, it would be true for any number. That is, unless you could identify a negative feedback trigger, but nobody has even considered one to begin with. So, making the number huge shows the ridiculousness of the claim that wage floor hikes increase prosperity.

    Meanwhile, we know that wages like $1/hr and $0.50/hr are similarly crazy little amounts of money for unskilled labor, because children make more in allowance without doing any work.

    But the people arguing for a minimum wage are asserting that there is a range that exists within the reasonable amounts that should be paid to all skilled workers. (Seattle did $15/hr i think? That seems high, since a paralegal with college education gets paid near that, same with lab techs).

    Just to pull out a range... I imagine an acceptable Minimum wage could be anywhere from $6/hr to $12/hr. The range is probably narrower. I lean towards the higher side, because $7.25/hr doesnt seem to do much, and it appears like companies could easily afford to pay their employers more (and closer to what theyre worth instead of the least amount possible). I lean towards $10/hr. That wage allows someone to live in an apartment with roommates, and still have a car/phone/internet and some spending money. Its also not too far off what people are paid now.

    But to expand on why i picked that range...Seattle's $15/hr would be an insane change. That big of an increase would cause the catastrophe ya'll are worried about, because its more than double the current wage. Prices would have to increase substantially, with more products sold, and more productive employees to compensate...and im not sure thats possible.
    With low immigration levels, the negative of wage floors is greatly subdued. It's not entirely subdued, but most of the people born in the country have skills above the minimum wage. However, most of the people in the world do not, and most of the people in the country who are unemployed do not. The kinds of jobs we would have where people were free to work for whatever wage they wanted (this necessarily means they are free to migrate for it too and are not burdened by regulations) would be a bit different than what the current average US citizen would. We can't predict the types of jobs just like we couldn't predict them several decades ago when we got new jobs on the same principle. For example, cheap house cleaning and landscaping wasn't a thing until Mexicans showed up and started offering the services for pay cheap enough for people to no longer do it themselves. Hole-in-the-wall Eastern food joints weren't a thing until Asians introduced them and did so for self-employed pay less than minimum wage. Whole new industries and new tiers to existing industries emerge when the threshold to enter the labor force is low enough.

    Doesn't it strike you as ridiculous that if you're self-employed you're allowed to work for less than minimum wage but if you're not you have to work for minimum wage? What is so special about seeking employment that you can't work for what you want to work for, but when self-employed you can? Where's the law that forces the government to give minimum wage to any self-employed person? Obviously, this would be a disaster, but only for the same reason that wage floors are problems. If a self-employed person can only afford to pay himself $5/hr, well, then he gets $5/hr. But somehow if an employee can only be paid $5/hr, it's illegal to do so?

    The story of rising out of poverty has nothing to do with wage floor mandates, and everything to do with government restricting itself from intervening in the market. The success story of the country has been for low skill immigrants from every continent over the history of this country to use their dirt low skills to gain dirt cheap work and rise up from there. Irish, Italians, Asians, Germans, and every other established immigrant group started off at the bottom. Mexicans are in the middle of it now. Sadly African Americans have been left out of this, I think because it's the only American group that hasn't embraced capitalism and the mainstream ethic. One day, it probably will, but its road will be different since it's not an immigrant group and its identity involves a lot of being rejected by the mainstream culture and in turn itself rejecting the mainstream culture.
  74. #74
    Quote Originally Posted by JKDS View Post
    Just to pull out a range... I imagine an acceptable Minimum wage could be anywhere from $6/hr to $12/hr. The range is probably narrower. I lean towards the higher side, because $7.25/hr doesnt seem to do much, and it appears like companies could easily afford to pay their employers more (and closer to what theyre worth instead of the least amount possible). I lean towards $10/hr. That wage allows someone to live in an apartment with roommates, and still have a car/phone/internet and some spending money. Its also not too far off what people are paid now.
    I think this is important to add: affordability isn't a natural number; it's a price that emerges from a myriad of factors that basically boil down into everything that makes up productivity. For example, we tend to think that a living wage may include $2000/mo as a natural rate. But what's really going on is that the $2000 consists of a multitude of factors, everything from regulations restricting housing supply to core foods being more expensive because water is a "public good" that farmers don't have to pay for so they waste gargantuan amounts on almonds instead of a far more productive crop; from drug regulations increasing taxes to pay for extra judiciary and cops to education subsidies creating significant overconsumption and increased taxes/loans needed to pay for it; from licensing vastly increasing the natural rate of unemployment and turning healthcare expenses into a juggernaut to welfare and minimum wage inflating prices.

    With enough relief from government restriction of freedoms, that $2000/mo can easily be cut in half or even a quarter. The "natural cost" of a chicken sandwich is unquantifiably huge, but because food is mostly unrestricted by government, an unpredicted cascade of innovation has made the actual cost of a chicken sandwich $1. The same can be true of virtually any product or service, even housing or healthcare or transportation. The markets work because they incentivize abundance. Abundance is what turns a low skill low pay job into a living job.
  75. #75
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    Don't forget: experiment suggests raising minimum wage does not necessarily raise unemployment.

    http://davidcard.berkeley.edu/papers/njmin-aer.pdf

    This well known paper examines the relationship between the minimum wage and employment, an issue on which economists still have a beautifully symmetrical lack of consensus. Card & Kruegers research design was simple. To quote their abstract: “On April 1, 1992, New Jersey's minimum wage rose 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 [neighbouring] eastern Pennsylvania before and after the rise. Comparisons of employment growth at stores in New Jersey and Pennsylvania (where the minimum wage was constant) provide simple estimates of the effect of the higher minimum wage”.

    The graph (made by me based on the original data) shows the results. Since Pennsylvania did not change its minimum wage, this makes it the control group. If we consider New Jersey and Pennsylvania to be comparable, then we would have expected to see Pennsylvania’s downwarding sloping trend replicated in New Jersey if New Jersey had not increased its minimum wage. But we don’t see this; in fact there is a slight increase in the average number of employees in New Jersey restaurants. The authors interpret this as showing that the rise in the minimum wage did not reduce employment. Further studies on this topic are reviewed here ( http://www.cepr.net/documents/public...ge-2013-02.pdf ) by Schmitt (2013).
    <a href=http://i.imgur.com/kWiMIMW.png target=_blank>http://i.imgur.com/kWiMIMW.png</a>

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