Raising the minimum wage - Pluses and minuses.

[pampango]

I support raising the minimum wage because I think that it helps more poor people than it hurts and does so without causing unreasonable harm to businesses.

http://www.economist.com/debate/freeexchange/2007/01/it_looks_very_much_as.cfm

This article in the Economist has some interesting assertions some of which seem questionable and some provocative.

"It is probable that the minimum wage increase will not cost enough jobs to make its effects readily distinguishable from random economic variation. It is also probable that it will improve the lot of a few poor people, though not many, as fewer than 20% of those who earn the minimum wage live in poor households now. On the other hand, it also seems probable that much of any benefit that goes to poor families will come out of the pockets of other poor people—very probably even poorer people, such as convicts, who are currently barely hanging onto the fringes of the labour force."

(Does anyone know what real percentage of minimum wage earners who live in poor households actually is? Got to be higher than 20%.

"Jim Sinegal, a maverick entrepreneur who founded Costco in 1983 and has resisted Wall Street pressure to cut wages and benefits for his 130,000 employees, said he signed onto the effort because he thinks a higher minimum wage would be good for the nation's economy as well as its workers."

"CEO's who support higher minimum wages are not, as the media often casts them, renegade heros speaking truth to power because their inner moral voice bids them be silent no more. They are by and large, like Mr Sinegal, the heads of companies that pay well above the minimum wage. Forcing up the labour costs of their competitors, while simultaneously collecting good PR for "daring" to support a higher minimum, is a terrific business move. But it is not altruistic, nor does it make him a "maverick". Costco's biggest competitor, Wal-Mart, also supports a higher minimum wage, and for the same reason. Wal-Mart's average wage is already above the new minimum; it will cost the company little, while possibly forcing mom-and-pop stores that compete with Wal-Mart out of business."

I understand the advantage that Wal-Mart would get from increasing the costs to its smaller competitors (who are probably going to be forced out of business by Wal-Mart anyway), but the author does not cite any source to verify that Wal-Mart does support the increase in the minimum wage. Do they?

[leftofthedial]

1. what minuses?

There are none.

[cynatnite]

2. I watched one of the repukes talking on the senate floor about this...

It was really hilarious. He said that EITC makes up for the low wages, hurts our economy, hurts business and basically would be the end of civilization as we know it. Okay, I exaggerated at the end, but to hear him talk about it an increased minimum wage would cause so much harm. I can't believe these people's rationale sometimes.

I can't remember who it was that said these things.

[pampango]

4. Did you mean EITC?

Or is IEC something I don't know about?

[cynatnite]

5. Oops...

I meant EITC. :blush: sorry about that. Will correct. :)

[leftofthedial]

6. any random repuke might say that

any random Democrat might vote as if that's what they believe

[SanCristobal]

7. That is what I say about the positives.

The minimum wage causes much more harm then good. It's just a price control on the labor market that, if raised, may force the market out of equilibrium and cost people jobs, raise prices, and/or lower profits for businesses.

Recommended #1

[Commie Pinko Dirtbag]

14. So, tell me, WHO exactly should earn less that $5.15 an hour?

[Susang]

16. Why children, of course!

:eyes:

[SanCristobal]

20. No one, which is why very few people would ever take a job paying that.

The minimum wage is currently below market equilibrium, and thus below the actual average wage rate. Most people don't make minimum wage, they make more. I live in a state with a high minimum, and most low level jobs still pay above it.

As long as the minimum wage stays low, it doesn't hurt anyone and arguably protects people from falling below market demands. As soon as it rises above equilibrium, it will have a negative effect on the economy. One or more of three things will happen, job availability will decrease, prices will go up, or profit margins will go down.

[Commie Pinko Dirtbag]

23. So, when has that happened, historically?

Feel free to point us where and when minimum wage increases harmed the economy.

[SanCristobal]

24. Any and every time an increase brought the madatory wage above the natural wage.

[Yavin4]

3. Everything Has Increased in Price Since 1997 BUT The Min. Wage

I just don't understand how everyone is so up in arms over raising the min. wage when the cost of EVERYTHING ELSE has gone up over the past 10 years? In inflation adjusted terms, labor costs have gone down. Raising the min. wage would just stop the slide not actually increase the cost.

Maybe I'm wrong.

[John Gauger]

8. "Wal-Mart's average pay is above the new min."?

According to whom? Wal-Mart? Wal-Mart is notorious for bilking its workers out of pay. Within a certain radius of Indian reservations, their average pay is $4.50 an hour. It has any number of tricks up its sleeve to get around paying the new minimum, while its smaller competitors do not.

[BuyingThyme]

9. I guess if you count managers, execs, and Waltons,

it gets up there.

[SanCristobal]

10. All the WalMarts around here start at $8.50,

which is a dollar above the NY minimum.

[pampango]

11. If they have such tricks, I guess that would explain why they

would support an increase. Their competitors are more likely to have to pay it, thus raising their costs, than Wal-Mart is.

I have not idea what their average pay, or starting pay, is or whether is varies greatly from region to region.

[Igel]

12. Here's one.

http://www.businessweek.com/ap/financialnews/D8MIMCBO0.htm

---------
Wal-Mart Stores Inc., the nation's largest big box retailer, said Wednesday it supports a minimum wage increase to help working families.

Wal-Mart noted that in 2005, Chief Executive Leo Scott called on Congress to raise the wage, saying $5.15 an hour was "out of date with the times."

"We believe this statement is truer now than ever before," the company said Wednesday.
---------

The 20% figure gets cited a bit, and isn't that unreasonable. Most places give raises within 6 months to a year of starting to work, so instead of 5.15 you get 5.25/hr--above minimum wage. And a lot of minimum-wage jobs are filled by part-timers that don't support themselves.

[pampango]

17. Thanks for the Business Week link.

I did want to see some evidence that Wal-Mart supported the minimum wage increase. One does wonder how much of their position results from "doing what is right" and how much is to hurt their small competitors.

[MaineYooper]

13. Of course it's good economic policy! To paraphrase Bill Maher:

If you want to jumpstart the economy, don't give more money to the rich. They already have enough- that's why they're called "the rich"! Give it to the people who don't have it. They'll spend it.

Why the democrats in congress don't jump all of this idea is beyond me...

[jdlh8894]

15. Maybe because there is nothing

in that "it's just a piece of paper" that gives the govt. any authority to set wages! JMO

[TahitiNut]

18. Most "Mom & Pop" businesses are not covered by the FLSA.

Thus, the specious claim that this hurts "small business" is bogus ... since most of the smallest businesses are not required to comply with the federal minimum wage since it's part of the FLSA. Furthermore, family-owned businesses are not required to pay their own children such wages. The exceptions to the minimum wage requirement are plentiful ... and the opponents of raising the minimum wage habitually make reference to classes of businesses which are largely exempt.

When people rely on falsehoods and partial truths to make a case, the case is bankrupt.

[pampango]

21. That is a great point.

As I said, I suspect that most Mom & Pop businesses are eventually driven out of business by Wal-Mart anyway, regardless of the minimum wage. I do wonder about the small franchise operations around here like the Sherwin Williams paint store and the Ace Hardware store. They are not family businesses but seem to be pretty small scale operations. We just had a Super Wal-Mart open here a couple of months ago.

[TahitiNut]

26. Franchises of national corporations are in a different position.

They're not, strictly speaking, (independent) "Mom & Pop" operations. They're more akin to agents or a limited kind of pyramid operation (a la Amway). Most of them fall under FLSA because they're engaged in interstate commerce - an exception to the test for number of employees (size) - even if they pass the size test for exemption. I don't pretend to be an expert in the details, and I'm aware that states with their own minimum wage rules often have different standards. Nonetheless, the hue and cry is going up from the cheapest of the cheap labor exploiters. Labor costs are NOT the big deal for "Mom & Pop" operations - they're threatened because suppliers don't give them the favorable treatment that the corporate operations get and because other cost overheads don't get the kind of relief Wal*Mart and others get. Has anyone ever heard of a "Mom & Pop" store getting a tax holiday? (I haven't.)

Small business is threatened by big business, not by labor costs. If anything, the independent small business is in favor of raising the minimum wage.

[gatorboy]

19. Boy, the pro slave labor trolls are out in droves today!

I'll be off your bridge shortly. ;)

[pampango]

22. Thanks for the informed commentary.

I left out the paragraph from the Economist article in which they proposed a return to slavery, as a way of trimming labor costs. I am glad you were on top of that.

[gatorboy]

25. Hey, no problem!

Just doing my part! :hi: