Consequences of repealing minimum wage rates.

Discussion in 'Economy' started by Supposn, Jul 1, 2012.

  1. Supposn
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    Supposn Senior Member

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    Consequences of repealing minimum wage rates.

    If there were no minimum wage many additional lower wage jobs would be created.
    The vast majority of those newly induced jobs would be what we now describe as sub-minimal wage paying jobs that do not justify the current $7.25/Hr. federal minimum wage rate.

    It’s not inconceivable that the market price for such “sub-minimum” tasks may be as low as a half dollar per hour. How much can we pay for someone to straighten salvaged carpenter nails for reuse? We could reduce the price of transportation by replacing many NY City cabs and drivers with young men operating rickshaws.

    [U.S. railroads have been in disrepair for over a quarter of a century. Our trains run at 50MPH but in Asia and Europe they’re running trains at 200 to 300 MPH. They have much fewer automobiles and consume less petroleum per capita but their public transportation is generally more wide spread and effective].

    Do you think enabling rickshaws to be financially viable by eliminating our minimum wage regulations would decrease our transportation, energy and pollution problems?]

    There are many job tasks that do not justify the minimum rate but they now exist because their performance is necessary to our public or private enterprises. Those jobs will continue to exist but their wage levels will plunge down to sub-minimum rates.

    Sub-minimum jobs will be the vast majority of additional jobs created and (because many of those qualified to perform sub-minimum tasks were previously not qualified for employment at minimum wage rates), we’ll have a pool of eligible labor that will far exceed the number of those additional jobs.

    The affect of those extremely poor paying jobs will ripple throughout our entire labor market. All labor compensation will be somewhat affected but the general extent of the effect upon a task’s wage rate will be inversely related to the difference between the purchasing power of the eliminated minimum wage rate and the job’s rate; (i.e. the more you’re earning, the less you’re hurting. That’s the meaning of minimum wage rate’s inverse affect upon all jobs’ rates).

    Lower wage earners will all then be paid in wages of extremely poor purchasing power. Prior to the elimination of the minimum wage rate, many of those now earning the lesser purchasing powered wages will have been unemployed or not worked steadily but they will be joined by those who already had been the working poor and some who were previously getting by slightly better. There’ll be net increased needs for public assistance and our states can’t now handle the present needs.
    That’s a scenario of increased national poverty.

    I ‘m a proponent of an annually cost of living adjusted minimum wage rate similar to the annually COLA’d Social Security benefits.

    Respectfully, Supposn
     
  2. PoliticalChic
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    PoliticalChic Diamond Member

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    "Lower wage earners will all then be paid in wages of extremely poor purchasing power. Prior to the elimination of the minimum wage rate, many of those now earning the lesser purchasing powered wages will have been unemployed or not worked steadily but they will be joined by those who already had been the working poor and some who were previously getting by slightly better. There’ll be net increased needs for public assistance and our states can’t now handle the present needs.
    That’s a scenario of increased national poverty."


    If you believe that paying people to avoid gainful employment, then your analysis is correct.

    If you believe that the sub-minimum wage skilled individual will remain as such, then your analysis is correct.

    If you believe that living on the dole is more humane than working your way out of poverty, then your analysis is correct.

    If you believe that the government is better at determining the value of labor than the private economy, then your analysis is correct.

    If you believe that there is no self-respect engendered in moving up the economic latter by one's own efforts, then your analysis is correct.

    If you believe that socialism is better than capitalism, then your analysis is correct.


    In conclusion, I disagree with your precis...

    ...that being said, I appreciate the civility of your posts. Rep on the way.
     
  3. ccravens
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    ccravens Rookie

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    If you believe that there is no correlation between wages and prices, then your analysis is correct.

    If you believe that lowering the minimum wage will not also lower prices, then your analysis is correct.
     
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  4. Wry Catcher
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    Wry Catcher Platinum Member

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    Have you learned some 'civility'? Methinks not.
     
    Last edited: Jul 2, 2012
  5. Supposn
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    Supposn Senior Member

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    Political Chic, if the minimum wage laws encourage people to avoid gainful employment, your position is then logical.

    If you believe that the sub-minimum wage skilled individuals remain so due to minimum wage laws, your position is then logical.

    If eliminating the minimum wage laws would reduce instances of poverty, your position is then logical.

    If governments’ enactment of minimum wage laws equates to government determining the value of all labor, your position is then logical.

    If you believe that that the minimum wage laws deny people of their self-respect, your position is then logical.

    The minimum wage laws are certainly not socialism and to contend otherwise is illogical.

    In conclusion, since I do not subscribe to the beliefs these concepts that you listed, I’m comfortable with my position that a minimum wage law is of net economic and social benefit to the nation. I’m also of the opinion that to the extent the legal minimum wage rates are insufficient, that insufficiency is detrimental to the nation’s economic and social net welfare.

    I anticipate your inquiring as to what is a sufficient minimum wage rate. I do not claim to know the answer. I suppose (but do not know) an excessive minimum wage rate would be detrimental to a nation’s economy. I’m unaware of it ever occurring and having that effect upon any national economy.

    I’m a proponent of legal minimum wage rates annually cost of living adjusted by statisticians rather than by the political legislators’ determinations. Only the initial enactment of the rate should be determined by the legislators with the advice of the governments’ civil service statisticians. Of course our elected officials and the courts have oversight powers.

    Mutual respect and consideration can only improve our governments; like chicken soup it does no harm.

    Respectfully, Supposn
     
    Last edited: Jul 2, 2012
  6. Widdekind
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    Widdekind Member

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    making appeal to "Econ 101", jobs that do not economically justify the minimum wage, are eliminated by that price floor. If people cannot profitably be paid $7/hour, then (automatically) paying them $7/hour would cost their employers money. No -- the price floor of a minimum wage eliminates sub-minimum-wage jobs, without much (direct) affect, on others.

    More-than-less, rule-if-not-ever-present-exception, outlawing minimum wages would only legalize many new, low-pay, jobs. Those low-pay jobs would attract the millions of currently unemployed people. They would earn some money, profiting & improving the private sector; they would need less Public assistance (which taxes the private sector); they would develop work ethic & discipline, by which they could work their way up to higher pay, profiting & improving the private sector all the more (and needing still less Public assistance taxation).
    [​IMG]
    minimum wages reduce employment from Q* to Qd. Many poor people, below the bottom rung of the employment ladder, are forced to compete, for the few jobs above the cut-off. Minimum wages make finding jobs more difficult.
     
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    Last edited: Jul 2, 2012
  7. Supposn
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    Supposn Senior Member

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    Widdekind, we disagree regarding the minimum wage. Often employers cannot afford to eliminate a task that doesn’t (in the employers' opinions), justify the legal minimum wage rate. The penalty that befalls the employer is greater than the monetary saving due to the elimination of the task. You’re advocating a great increase of national poverty. I iterate:

     
  8. Widdekind
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    Widdekind Member

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    that bucks basic economics doctrine:
    a minimum wage law, on books, on shelves, in a government building, does not "magically" make low-pay jobs worth more than they are worth. Minimum wage laws "chain-saw off the bottom of the employment ladder", making the "leap up" that much harder, for low-skill, low-pay, young, persons of color, and other economically disadvantaged groups. Minimum wages eliminate jobs; they don't raise wages. If you try to make businesses pay more, they hire less. That leaves teenagers on the streets, looking for money

    SparkNotes: Labor Demand: Labor Demand and Finding Equilibrium
     
  9. PoliticalChic
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    PoliticalChic Diamond Member

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    1. ♦ Prevailing wage laws limit the ability of smaller businesses to compete for
    public construction projects since government-mandated wage ordinances
    take away an employer’s right to negotiate wage rates. The Act also
    imposes burdensome regulations for work practices, wages, and
    paperwork requirements that discourage the vast majority of the nation’s
    contractors from competing for federal construction projects.
    ♦ Prevailing wage laws are a principle reason why minority workers are
    under-employed in the construction trade.
    It discriminates against
    minorities, women and dislocated workers -- new entrants into the
    industry -- because of the often inflated wage and stringent work rules
    associated with the Act.
    ♦ Removing Davis-Bacon restrictions would eliminate the competitive bias
    toward big, union corporations, and improve opportunities for local
    minority companies and workers to compete
    for government construction
    jobs. Because Davis-Bacon serves to benefit a very small, special interest
    sector of government contractors, it has been called union welfare.
    ♦ Although there is a decline in paid wages, this is caused by a shift to a
    semiskilled construction labor force, whereas contractors cannot utilize
    highly-trained journeymen for work that is better suited to semi-skilled
    workers.

    http://docs.sandiego.gov/reportstocouncil_attach/2003/03-111 Attachment 3b.pdf


    2. “Over the past six decades, the Davis-Bacon Act has had a devastating impact on the ability of minorities to find work in the construction industry. As was stated earlier, blacks tend to be disproportionately represented among the ranks of unskilled or low-skilled laborers….Davis-Bacon's enforcement did not recognize categories of unskilled workers except for union apprentices. As a result of this failure, the regulations required a contractor to pay an unskilled worker who was not part of a union apprenticeship program the same wage paid to a skilled laborer. Given that blacks were poorly represented in the unions and their apprenticeship programs, unskilled minority workers were almost completely excluded from working on Davis-Bacon projects. This exclusion effectively foreclosed the only means by which unskilled blacks could learn the necessary skills to become skilled workers.”
    Davis-Bacon Act - Background | The Institute for Justice
     
  10. Supposn
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    Supposn Senior Member

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    This is excerpted from Widdekind’s post within the topic of “Big Business, Corporate Profits, and the Minimum Wage”:

    “Many minimum-wage workers are teenagers. Most people do not work minimum-wage jobs for their whole lives. They work through minimum wage jobs, building job skills, and moving on. Minimum wage jobs "lower the employment ladder" down "to the streets", and allow people to work their way out of nothing (no income), to something (some income)”.

    Widdekind misses the point that the additional entry level jobs created due to elimination of our legal minimum wage rate would not compensate for the great increase of national policy due to repealing the minimum rate.

    That’s why I ‘m a proponent of an annually cost of living adjusted minimum wage rate similar to the annually COLA’d Social Security benefits.

    Respectfully, Supposn
     

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