Minimum wage

Discussion in 'Economy' started by Supposn, Jul 21, 2011.

  1. Supposn
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    Supposn Member

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    Decreasing or eliminating the federal minimum wage will generally decrease ALL labor compensations’ purchasing powers more than otherwise.

    The proportional extent of minimum rate’s affect is inversely related to the wages’ amounts thus the lowest earners will be the most severely affected.

    The additional jobs induced by eliminating the minimum wage do not now exist because those tasks are not now worthy of the minimum wage’s purchasing power.


    The numbers of qualified employed and unemployed potential employees, (i.e. the labor pool) now exceeds the number of filled and unfilled jobs. Because there’s a minimum wage, employers refrain from filling such lower paying jobs with lesser qualified people (unless filling the position becomes necessary). Hiring less qualified or motivated workers, (ever at lesser pay rates) is usually a very expensive mistake.


    Because there’s a minimum wage, people refrain as best they can from accepting lower wage employment. That’s why so few jobs are actually now offered at the absolute legal minimum rate. There are some real expenses and penalties attached to any job. The commuting costs of an individual and many other expenses will remain similar regardless of that employee’s pay scale.


    It’s generally agreed that the elimination of the minimum wage will increase the number of lowest wage jobs that are worthy of the labor market’s pay scales, (which will then become severely reduced). The elimination of the minimum wage does create a larger pool of employable labor due to the decreased purchasing power of the lowest wage jobs. With no minimum child labor is financially justified.


    The “ripple effect” due to decreasing or eliminating the minimum rate is decreasing ALL labor compensations’ but particularly lower wage earners’ purchasing powers, inducing greater school drop-outs, and increasing those needing public assistance.


    I’m a proponent of increasing the federal minimum rate and there after annually cost of living adjusting that rate.


    Respectfully, Supposn
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  2. Two Thumbs
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    Two Thumbs Gold Member

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    Forced minimum is nothing short of tyranny.

    And it's a failed idea.

    It was meant to allow people to afford a shitty car and place to live. With each increase the cost of a shitty car and place to live went up in cost.

    It's gotten to the point we are no longer competative on an international scale.
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  3. rightwinger
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    rightwinger Paid Messageboard Poster Supporting Member

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    Minimum wage doesn't buy shit now

    Back in the early 70s I worked minimum wage at $2.10 an hour

    I could afford to pay for college, buy a car and get myself started in life. You can't do shit on min wage now
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  4. Mr Clean
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    Mr Clean Silver Member

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    Yes, by all means what America needs now is even cheaper labor to compete with the Chinese.

    "Prosperity Through lower Wages!"
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  5. imbalance
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    imbalance Senior Member

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    Minimum wage can serve its intended purpose only in a closed protectionist economy.
  6. Itsthejobsstupi
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    Itsthejobsstupi Rookie

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    Here's a fact for your useless information file: Ronald Reagan is the only US president in modern times not to have raised the minimum wage. It stayed at $3.35 throughout his eight year presidency. He did however manage to decrease the top marginal tax rate to 28%. We've been paying for it ever since.
  7. expat_panama
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    expat_panama Senior Member

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    Many people believe that because it's reasonable, and these same poeple don't bother to actually look to see if it happens in real life. The conflict between conventional wisdom and observable fact brings to mind ancient Greece where scientific observation was ridiculed and replaced with official logic structures.

    If anyone here's interested we could go and take a look at the actual records available for historical minimum wages and compare them to labor compensation. The thing is that blanket statements about economics tend to go over better when they agree with fact.
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  8. Supposn
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    Supposn Member

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    Expat Panama, by truncating my sentence you changed the sentences meaning. Similar to quoting out of context, you have misquoted me.
    The sentence as posted was “Decreasing or eliminating the federal minimum wage will generally decrease ALL labor compensations’ purchasing powers more than otherwise”.

    It is a valid statement. I’m sure you can find others who disagree. Despite our space program you can find others who believe the earth is flat.

    I can’t conceive how you can prove or disprove my statement since it is very much dependent upon interpretation.
    An economy is similar to a complex environment of many different living creatures. Causes and effects are not always empirical determinations. If you want to try, knock yourself out.

    Respectfully, Supposn
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  9. Rozman
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    Rozman Gold Member Supporting Member

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    Yeh,why in the world would we want to have been allowed to keep more of the money we earned?
    Last edited: Jul 21, 2011
  10. uscitizen
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    uscitizen Senior Member

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    Yepper lower wages will make people buy more and will jump start our consumer spending driven economy.
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  11. ShackledNation
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    ShackledNation Libertarian

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    Completely false. You are wrongly assuming that if minimum wage is abolished everyone will be paid less. This is clearly not the case, for people are paid more than minimum wage already. Purchasing power has to do with the value of the dollar. Because minimum wage results in unemployment, more people are on welfare, and welfare is often funded by money creation. This devalues the dollar and the purchasing power of the dollar.

    To be honest that sentence makes little sense. The proportional extent of minimum rate's affect is very unclear, and the effect of "minimum rate" is not stated. Please rephrase that argument because I literally cannot comprehend it in its current state, no offense intended.

    Basically you seem to be saying that without minimum wage, people will be making less money and thus will be able to buy less. This may be true of some people, but those unemployed because of minimum wage will get those lower paying jobs. Those jobs do not exist because minimum wage does. To say they do not exist because nobody would take them is completely false. Many immigrants from Mexico are taking these jobs willingly because Americans cannot. Also, if nobody will take a lower paying job, which is incredibly unlikely, if the company wants workers it will have to raise wages.

    Exactly. And if there was no minimum wage, such lower paying jobs would be more likely to come into existence because they would not be prohibited. Keep in mind these lower paid workers would be performing tasks they could perform well. Hiring idiots is possible with or without minimum wage. Workers paid less would be doing simpler tasks worth the value of their labor.

    No shit, its illegal.

    Correct, and if such costs are so high that they outweigh the benefits of getting a lower paying job, people will demand higher wages or seek employment somewhere else. Nobody would ever take a job in which the wage is lower than the cost of driving to work. That is insane.

    So you would rather have a smaller pool of employable labor with people making nothing and having no job than a larger pool of employable labor with people who once made nothing now making something? You are assuming that current low paying jobs will be replaced by even lower paying jobs. That is not how it works at all.

    Yes, repeal minimum wage and our children will work in sweatshops. That is absurd. You are completel forgetting that people getting these lower paying jobs were unemployed before. Earning a little money and having a job does not encourage child labor when the alternative is having no job and making no money.

    That is not true at all, and you have nothing to back up those claims. Ending minimum wage results in greater school drop outs? It increases those needing public assistance? That is simply not true. Because of minimum wage you have people who are unemployable, thus they are trapped on public assistance. Without minimum wage, they would actually make money. The notion that minimum wage decreases public assistance is contrary to reality.

    Demand for labor is downward sloping. The supply of labor is upward sloping. This establishes an equilibrium wage where the quantity demanded and supplied are equal. A minimum wage, if it does anything at all, pushes the wage above this level, so that there is a greater quantity supplied than demanded. We call this surplus supply “unemployment”.


    Why not increase minimum wage to $30 an hour?

    The Keynesian framework that supports minimum wage is dead wrong. The argument against minimum wage amounts to this: The problem is that the marginal revenue product of labor depends on demand for the product – but that demand depends on income, and income depends on wages. So, if wages fall, then incomes fall, which drives down the demand for the product – which, in turn, drives down the demand for labor – in the same proportion that wages fell. So, in the end, there’s no impact on employment. The decrease in wages caused a corresponding decrease in employment.

    Keynes was critically wrong, and misunderstood how wages work.
    1. The demand for labor depends on the expected discounted marginal revenue product. So, what matters is not the present demand for the product, but the expected future demand. For Keynes’s original argument to work, we need a feedback from present prices to expected future prices, so that as one falls the other does so – and does so proportionally. This is not necessarily true – in fact, it’s probably not true.

    Suppose that right now the price of oil is $50 a barrel, and I expect it to go up to $100 a barrel next year. Then, tomorrow, the price of oil shoots up to $75 a barrel. Do I revise my expected future price up to $150, to keep the proportions the same? Maybe, maybe not. But, I will say that “not” certainly feels more likely.

    So, what happens if demand doesn’t fall in proportion with the current price of the product? Employment increases as wages fall. Even if a decreased current price arising from the fall in income does decrease the expected price to some degree, as long as it is less than the fall in present wages, the level of employment will increase.

    2. The entire apparatus fails to realize that there is significant variation in wages across workers – even within the same industry or even the same firm.

    Why does this matter? Because it breaks the argument down entirely. For example, suppose that workers are divided into groups based on seniority. In that case, the fact that new workers are hired at lower wages than before doesn’t mean that ALL workers are paid lower wages. So, wages don’t fall in proportion with the minimum wage – which means that incomes don’t fall by that proportion, so demand for the product doesn’t fall in proportion, so product prices don’t fall in proportion, so demand for labor doesn’t fall in proportion. In the end, what does this mean? In short, that the Principles of Microeconomics story is basically right. When marginal wages fall, employment goes up – and the fact that not all wages move together prevents the Keynesian feedback.

    If you rely on Keynesian economics, you will almost always come to the wrong conclusions. Keynes was wrong.
  12. uscitizen
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    uscitizen Senior Member

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    So now we have people telling us how great is it to learn to live with less?

    Amazing fraggling amazing.
  13. uscitizen
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    uscitizen Senior Member

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    Ok the minimum wage does not apply to all workers, tell us how much better those classes of workers are doing because of that exception.

    waitresses and farm workers are getting rich?
    Last edited: Jul 21, 2011
  14. rightwinger
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    rightwinger Paid Messageboard Poster Supporting Member

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    Republicans blocked minimum wage enhancements for 15 years. Now instead of a wage you can start out at, it doesn't even pay the rent
  15. shintao
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    shintao Take Down ~ Tap Out

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    Minimum wage was never meant to buy a car or place to live. You are thinking of living wage.
  16. shintao
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    shintao Take Down ~ Tap Out

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    Friggin rightwinged Commies!
  17. konkon
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    konkon Member

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    If one argues for an increase in the minimum wage, then many economists, accountants, politicians and large multinationals will argue that this is an inflationary move. Economics, like a lot of disciplines, is predicated on configured reasoning, and just like all forms of reasoning, this configured logic can change over time, especially if one is forced to meet certain outcomes.

    It's amazing that the price of pretty much all everyday items, bills etc have gone up drastically over the past decade and inflation didn't enter the argument up until a year or two ago. The fact is wages haven't even been able to keep up with the rise in price of many items. The central banks around the world look at wages data like hawks, but have largely ignored the drastic increases in prices of many of the things we pay for, utilities, rents etc etc; a major flaw in central bank ethos. If wages, mainly in the past, increase by a factor of .5% then they hit the panic button.

    I think that one of the biggest problems, outside of perpetual debt, overpopulation, lack of resources, is the world being 'run' by accountants and economists, that at large don't create anything in the real economy; maybe the former should just stick to doing our taxes. Now stats, mathematics can (at times) take you in many contrary directions, if you alone rely on these things primarily. If you base ideas about tackling real problems, like those mentioned above, on stats rapped-up in economic jargon, strictly configured to provide certain outcomes that seem to benefit (in the short-term) big business and not the welfare of a nation's longevity, then you are (like we're experiencing) setting yourself up for a major problem in the future. The problem may only be a restructuring of sorts, but a restructuring of the potential magnitude will hurt many on the wrong side of the equation; as was the case in 2008, this would be most people on earth.

    Many economists, accountants are better suited in the art room for all their creativity. The EU debt problem at the moment is being dressed up repeatedly to look like a viable long term plan. But if you ignore all the colorful economic talk, you're pretty much looking at more debt (that the masses will end up paying for) to pay for previous (and even future) debt.

    Economists, accountants, politicians were the driving force behind keeping wages below par and they have no real idea how to tackle a growing perpetual debt problem that has swept the world. In fact, they are creating even more debt, which is paraded as something else, and think that the public is silly enough to believe it will one day get resolved by some clever methods that only accountants/economists understand. It's as if none of us can talk about the direction the world is taking economically, because we're not economists and we don't 'understand' what is going on! It's probably a good thing to be excluded from economic conformity in times like these, because it reduces the chances of you being brainwashed with all this crap about debt restructuring.

    At the end of the day, can you as an individual, company etc pay-down over the course of a period, (all) debt with revenue/profits? When was the last time you saw some expert economist, financial advisor etc on television base his assertions on this fundamental principle? Maybe sales reps don't need to do this!
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    Last edited: Jul 21, 2011
  18. xsited1
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    Minimum Wage increases unemployment which is a good thing doncha know. :thup:
  19. percysunshine
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    percysunshine Silver Member

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    You conservatives that yearn for the old days are pathetic.
  20. Supposn
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    ShackledNation, I suppose it’s feasible an excessive minimum wage rate would be detrimental to a nation’s economy; but I’m unaware of that ever occurring in any nation at any time.

    Certainly increases or decreases of U.S. federal minimum wage rate’s purchasing power positively induces increases or decreases of USA’s median and all other U.S. wages purchasing powers more than otherwise and the extent of the minimum’s affect upon a job’s wages is generally and inversely related to the job’s pay scale.

    Due to the U.S. dollar’s changing purchasing power, the minimum rate is rarely abreast to the rate of the U.S. dollar’s reduced value. The decrease of the minimum wage’s purchasing power is net detrimental to our economy and the lowest wage earning families bear the greatest proportion of the financial burdens due to this.

    I’m among those advocating the minimum rate should be annually cost of living adjusted, (i.e. COLA’d).

    The timing and amount of the minimum rate’s updates should be determined by the calendar and civil service statisticians rather than the eternal political squabbling of the U.S. Congress.

    Respectfully, Supposn
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