The Fallacy of Forcing Higher Wages

[The Rabbi]

An argument we often see here from the lib side is that if businesses would raise wages, their employees would be able to afford to buy their products, increasing sales and paying for itself. They often point to Ford, who offered much higher wages, supposedly to allow his workers to buy his automobiles.

The first argument is nonsense. If a firm employs 100 people and raises their wages $5/hr then they will be paying out $20,000/week more in labor costs. If the firm runs a 20% profit margin then the employees would have to buy $100,000 more of product per week than they currently do, 1,000 per employee. That won't happen. Period.
As to Ford, the real reason he raised wages was because the market forced him to. Until then of course there were no assembly lines. Ford's workers generally came from machine shops. The employees there would not take the demeaning assembly jobs that they felt dehumanized them. Ford boosted wages and put the machine shops out of business. It also helped him retain employees, as previously he had to hire 300 employees a year to fill 100 slots.
Businesses will pay what they need to in order to attract the best talent the job requires. Forcing them to pay more will result in lower paid employees simply losing their jobs to automation or other forms of increased efficiency.

 

[Machaut]

As to Ford, the real reason he raised wages was because the market forced him to. Until then of course there were no assembly lines. Ford's workers generally came from machine shops. The employees there would not take the demeaning assembly jobs that they felt dehumanized them. Ford boosted wages and put the machine shops out of business. It also helped him retain employees, as previously he had to hire 300 employees a year to fill 100 slots.

NOT CALLING YOU A LIAR SO DON'T GET BUTTHURT, but can you please cite a source for your claims here?

 

[The Rabbi]

As to Ford, the real reason he raised wages was because the market forced him to. Until then of course there were no assembly lines. Ford's workers generally came from machine shops. The employees there would not take the demeaning assembly jobs that they felt dehumanized them. Ford boosted wages and put the machine shops out of business. It also helped him retain employees, as previously he had to hire 300 employees a year to fill 100 slots.

NOT CALLING YOU A LIAR SO DON'T GET BUTTHURT, but can you please cite a source for your claims here?

The turnover figure is from Wiki. The general strategy is from some book, it might have been Freakanomics. It might have been Thomas Sowell.

 

[NYcarbineer]

An argument we often see here from the lib side is that if businesses would raise wages, their employees would be able to afford to buy their products, increasing sales and paying for itself. They often point to Ford, who offered much higher wages, supposedly to allow his workers to buy his automobiles.

.

That argument is frequently made here? Isn't the real argument made that increasing wages increases overall consumption, thus benefiting our consumer driven economy overall?

 

[OKTexas]

An argument we often see here from the lib side is that if businesses would raise wages, their employees would be able to afford to buy their products, increasing sales and paying for itself. They often point to Ford, who offered much higher wages, supposedly to allow his workers to buy his automobiles.

.

That argument is frequently made here? Isn't the real argument made that increasing wages increases overall consumption, thus benefiting our consumer driven economy overall?

Can you really have a benefit to the overall economy when wage increases are forced and not driven by the market? Forced wage increases just boost overhead and inflation, there is no other way for the market to handle them.

 

[NYcarbineer]

An argument we often see here from the lib side is that if businesses would raise wages, their employees would be able to afford to buy their products, increasing sales and paying for itself. They often point to Ford, who offered much higher wages, supposedly to allow his workers to buy his automobiles.

.

That argument is frequently made here? Isn't the real argument made that increasing wages increases overall consumption, thus benefiting our consumer driven economy overall?

Can you really have a benefit to the overall economy when wage increases are forced and not driven by the market? Forced wage increases just boost overhead and inflation, there is no other way for the market to handle them.

Is there any benefit to forcing companies to provide a safe work environment or not pollute? Why not companies decide whether or not they can make more money by deciding those issues for themselves?

 

[Againsheila]

The people who are against raising wages now are just like those people who fought against the unions in the industrial revolution. They thought those jobs didn't demand living wages either.

 

[hazlnut]

How about this -- by earning a living wage, employees can get off food stamps and medicaid.

Currently, the U.S. taxpayers support Walmart employees while the Walton kids earn billions doing nothing.

Walmart is capable of providing a living wage and health care w/o raising prices.

That notion that businesses will have to raise prices to provide health care is Bullshit -- there are other options like cutting executive compensation and perks.

 

[The Rabbi]

That argument is frequently made here? Isn't the real argument made that increasing wages increases overall consumption, thus benefiting our consumer driven economy overall?

Can you really have a benefit to the overall economy when wage increases are forced and not driven by the market? Forced wage increases just boost overhead and inflation, there is no other way for the market to handle them.

Is there any benefit to forcing companies to provide a safe work environment or not pollute? Why not companies decide whether or not they can make more money by deciding those issues for themselves?

Deflection.

 

[The Rabbi]

How about this -- by earning a living wage, employees can get off food stamps and medicaid.

Currently, the U.S. taxpayers support Walmart employees while the Walton kids earn billions doing nothing.

Walmart is capable of providing a living wage and health care w/o raising prices.

That notion that businesses will have to raise prices to provide health care is Bullshit -- there are other options like cutting executive compensation and perks.

Actually WalMart subsidizes tax payers by paying people who would otherwise be totally dependent on the government.
If WM could provide a "living wage" (whatever that is) they would be doing it as they could attract better employees.
btw, how do you propose they pay the higher labor costs without raising prices?

 

[buckeye45_73]

An argument we often see here from the lib side is that if businesses would raise wages, their employees would be able to afford to buy their products, increasing sales and paying for itself. They often point to Ford, who offered much higher wages, supposedly to allow his workers to buy his automobiles.

.

That argument is frequently made here? Isn't the real argument made that increasing wages increases overall consumption, thus benefiting our consumer driven economy overall?

8

How is that, people have more money, but everything costs more. The only thing you do is make our products less competitive in the world and the people who were a little above the min wage, are at the min wage

and this ismwhy they wont make the min wage a huge jump because if what you said was true, then lets make it $100 an hour

 

[percysunshine]

Price controls lead to shortages. Labor, cheese, tinker toys....does not matter.

Maybe we should pass a law making the sky purple.

 

[OKTexas]

That argument is frequently made here? Isn't the real argument made that increasing wages increases overall consumption, thus benefiting our consumer driven economy overall?

Can you really have a benefit to the overall economy when wage increases are forced and not driven by the market? Forced wage increases just boost overhead and inflation, there is no other way for the market to handle them.

Is there any benefit to forcing companies to provide a safe work environment or not pollute? Why not companies decide whether or not they can make more money by deciding those issues for themselves?

Those regulations like most government involvement have gone overboard and are costing companies far more than are necessary. How about addressing what I said instead of trying to change the subject?

 

[OKTexas]

How about this -- by earning a living wage, employees can get off food stamps and medicaid.

Currently, the U.S. taxpayers support Walmart employees while the Walton kids earn billions doing nothing.

Walmart is capable of providing a living wage and health care w/o raising prices.

That notion that businesses will have to raise prices to provide health care is Bullshit -- there are other options like cutting executive compensation and perks.

Really, you don't think the commies in congress wouldn't just raise the level of income for the poverty line? The minimum wage will always be the minimum and it will always be considered poverty wages for families. It has happened every the government has dictated a raise.

 

[AvgGuyIA]

That argument is frequently made here? Isn't the real argument made that increasing wages increases overall consumption, thus benefiting our consumer driven economy overall?

Can you really have a benefit to the overall economy when wage increases are forced and not driven by the market? Forced wage increases just boost overhead and inflation, there is no other way for the market to handle them.

Is there any benefit to forcing companies to provide a safe work environment or not pollute? Why not companies decide whether or not they can make more money by deciding those issues for themselves?

Good point!

 

[OKTexas]

Can you really have a benefit to the overall economy when wage increases are forced and not driven by the market? Forced wage increases just boost overhead and inflation, there is no other way for the market to handle them.

Is there any benefit to forcing companies to provide a safe work environment or not pollute? Why not companies decide whether or not they can make more money by deciding those issues for themselves?

Good point!

Not a great point at all, it was an attempt to change the subject. It's called a deflection, he had no point to answer my on topic points.

 

[GHook93]

I have come to the side that raising the minimum wage wouldn't be a bad worse thing that could happen.
(1) We have real world examples of $15 being the starting McDonald's wage in North Dakota and the price of ND McDonald's food is less than it is in Chicago. I guarantee ND doesn't have a 100th of the traffic Chicago has. ND has gone to machines. Lack of worker than the workers have the power.
(2) The conservative argument is if wages increase then those jobs will be replaced by machines. It's a flawed argument. If the fast food industry could replace people with machines so easily they would have done it a while ago. Same with shipping the drive through to India.
(3) Ith won't effect manufacturing. Manufacturing and assembly already pays a ton more than $15 an hour.
(4) Loss of jobs. I don't buy that argument either. It is most service jobs that are at the minimum wage level. These jobs can't be outsourced or they already would have been. Maybe some downsizing, but not the do and gloom many of see.

I wouldn't have as drastic effect as conservatives make it out to be. I personally think they should trade a $13 minimum wage for draconian immigration reform. By draconian one that starts with a 3 layer border fence, the national guard on the border, eVerify and well becomes an all out war on illegal immigration. Won't happen with this President.



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[The Professor]

As to Ford, the real reason he raised wages was because the market forced him to. Until then of course there were no assembly lines. Ford's workers generally came from machine shops. The employees there would not take the demeaning assembly jobs that they felt dehumanized them. Ford boosted wages and put the machine shops out of business. It also helped him retain employees, as previously he had to hire 300 employees a year to fill 100 slots.

NOT CALLING YOU A LIAR SO DON'T GET BUTTHURT, but can you please cite a source for your claims here?

The turnover figure is from Wiki. The general strategy is from some book, it might have been Freakanomics. It might have been Thomas Sowell.

I got the same information from multiple sources some time ago, but can't remember where. However, I found the following link on the Blaze recently and I believe it describes the book you're thinking about:

A lesson from Henry Ford on the minimum wage and economics that the left won?t like | TheBlaze.com

 

[NYcarbineer]

Can you really have a benefit to the overall economy when wage increases are forced and not driven by the market? Forced wage increases just boost overhead and inflation, there is no other way for the market to handle them.

Is there any benefit to forcing companies to provide a safe work environment or not pollute? Why not companies decide whether or not they can make more money by deciding those issues for themselves?

Those regulations like most government involvement have gone overboard and are costing companies far more than are necessary. How about addressing what I said instead of trying to change the subject?

If corporations are willing to employ Chinese factory workers for 50 cents an hour, then they're certainly willing to employ Americans at the same wages;

all they need to accomplish that is the removal of impediments to market forces being allowed to work,

and some time.

Is that what you really want for this country?

 

[The Rabbi]

Washington State. Highest Minimum wage in country going through economic boom. I really don't know how many times republicans must be shown their beliefs are BS but it sure is fun doing so.

Correlation is not causation.
/fail.