Consequences of repealing minimum wage rates.

[Supposn]

Get rid of the illegals and put Americans back to work,with not just jobs but well paying jobs ,problem solved.....

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Nova78, tightening up our porous borders and a minimum wage annually cost of living adjusted are not mutually exclusive remedies. We could and should do both.

Respectfully, Supposn

 

[Supposn]

Transcript of message #34 within the topic discussion of “Big Business, Corporate Profits, and the Minimum Wage”.

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Quote: Originally Posted by OohPooPahDoo
The entire low wage range is controlled by minimum wage. Not at lot of folks get minimum wage but a lot of folks work in the $1, $2, $3 above minimum wage range. Those wages tend to move when the minimum wage moves.


Although there is evidence that a hike in the minimum wage can cause small short term bump in teenage unemployment, the idea that modest minimum wage hikes is detrimental to the economy is not reflected by factual reality. One of the chief employers of minimum wage and near minimum wage labor - fast food restaurants - has expanded greatly since the minimum wage hike under Clinton and they show no signs of slowing down after the more recent minimum wage hike. Clearly they aren't affected that much.
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OohPooPahDoo, what you wrote is correct but you’ve only described those jobs and wages that most greatly reflect modifications of the minimum wage rate.

Refer to message #19 ”Minimum wage (more or less) affects ALL wage scales
within the topic discussion of “Consequences of repealing minimum wage rates”.

Respectfully, Supposn

 

[Widdekind]

Although pay scales of ALL lower compensated employees with pay scales approaching the minimum wage rate were not directly mandated by the minimum rate, They are affected by the minimum wage rate... the common practice among large, medium and most small scale employers is to adjust ALL of their hourly and “piece work” pay scales to reflect the increase of the minimum rate.

so, most US businesses pay wages equal to the minimum wage, plus some fixed "bonus" salary ?

wage = minimum + ($X per hour)​

If so, then the minimum wage has become a "benchmark wage", affecting the entire labor market, or at least the entire "low pay labor market", of all jobs within a few dollars per hour of the minimum. If so, then now i understand what you are arguing. Never-the-less, that would only amplify the impact of raising the minimum wage. Instead of increasing minimum wages only eliminating jobs at minimum wage, jobs even near minimum wage would also be eliminated.

Psychologically, the word "minimum" is derogatory. Workers earning "minimum" wage may feel intrinsically denigrated, instead of understanding, that they are working for (current) fair market wages. If a box of cereal is only worth $1, then must it be a "bad box of bad cereal"? No, prices are set by market forces, of supply & demand.

Eliminating the minimum wage would re-authorize millions of low-pay jobs, and (possibly) reduce wages for those working near minimum wage today. But, without any benchmark wage to refer to, why would employers suddenly decrease wages? And, employing millions of Americans would reduce competition, for all other jobs, tending to increase wages?

 

[Supposn]

So, most US businesses pay wages equal to the minimum wage, plus some fixed "bonus" salary ?

wage = minimum + ($X per hour)​

If so, then the minimum wage has become a "benchmark wage", affecting the entire labor market, or at least the entire "low pay labor market", of all jobs within a few dollars per hour of the minimum. If so, then now i understand what you are arguing. Never-the-less, that would only amplify the impact of raising the minimum wage. Instead of increasing minimum wages only eliminating jobs at minimum wage, jobs even near minimum wage would also be eliminated.

Psychologically, the word "minimum" is derogatory. Workers earning "minimum" wage may feel intrinsically denigrated, instead of understanding, that they are working for (current) fair market wages. If a box of cereal is only worth $1, then must it be a "bad box of bad cereal"? No, prices are set by market forces, of supply & demand.

Eliminating the minimum wage would re-authorize millions of low-pay jobs, and (possibly) reduce wages for those working near minimum wage today. But, without any benchmark wage to refer to, why would employers suddenly decrease wages? And, employing millions of Americans would reduce competition, for all other jobs, tending to increase wages?

Widdekind, we agree that the minimum wage is a specific “bench mark” that (more or less) affects all if the nation’s other wage scales.

If we would eliminate the federal minimum wage rate our “bench mark” would then be an imprecise approximation of what’s the lowest wages being paid within our nation’s labor markets. That would be bench mark of an unspecified minimum rate.

Unless there’s a mitigating additional economic factor such as a shortage of labor, eliminating the minimum wage would CERTAINLY reduce the purchasing power of lower income earners; (which are wage earners rather than investors). The bench mark rate’s affect upon jobs’ wage rates are inversely related to the bench mark and the job’s wage rate.

Toilet cleaners and other low wage unskilled laborers are now paid at or near the federal minimum wage even if their employers’ doubt the justification of that pay scale.
One of employers alternatives are the risking any legal problems by hiring workers “off the books”. Our alternative illegal economy are (due to many reasons), is a less reliable labor source. Employers’ other alternatives were doing the cleaning themselves or paying some of their other employees something extra to do these lesser tasks, or not providing clean toilets or just going out of business. Employers’ competitors appreciate doing with one less adversary.
These lesser desirable jobs will continue to be done regardless of the existence or non existence of a federal minimum wage; but without the federal minimum these job’s wage scales will have much less purchasing power.

You correctly conclude that the elimination of the legal minimum wage would induce the creation of many jobs that were economically not previously justified. The elimination of the legal minimum would also increase the labor pool for lower paying jobs. Additionally people that were unemployable become justifiable hires at lesser pay scales. I contend the supply and demand is not a “wash”; the lowest pay, (i.e. the unspecific bench mark rate will have much lesser purchasing power than the previous federal minimum wage rate. The net result would not be lesser but rather greater need for public assistance. Many of the working poor that were just scrapping by will now be in dire need.
Remember the minimum, (i.e. the bench mark) more or less affects ALL other wage scales.

Respectfully, Supposn

 

[ccravens]

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.

huh??

But both of those beliefs are false.

Exactly. That is just part of the reason why the OP's analysis is incorrect.

 

[rdean]

[ame=http://www.youtube.com/watch?v=DDr4oQ7KyFw]Lt Gov Andre Bauer: Don't Feed the Poor They'll Breed - YouTube[/ame]

Someone making minimum wage who has a family barely scrapes by. Even then, they need food stamps and government health care.

Look at all those "Staples" jobs created by Romney he's so proud of. Minimum wage without healthcare or any other benefits. And still, Republicans feel minimum wage is "too much".

 

[Widdekind]

The following figure plots the fraction of wage-workers earning minimum wage (%) vs. the real minimum wage (2010 USD). Historically, after the minimum wage is increased, inflation erodes the real minimum wage, over the following years. And, as the real minimum wage decreases, the fraction of wage-workers earning minimum wage decreases, proportionately. But, when the minimum wage is again increased, the fraction of wage-workers earning minimum wage falls below trend, because many wage-workers earning minimum wage lose their jobs. (Over the following 5-10 years, as inflation again erodes the real minimum wage, the fraction of wage-workers earning minimum wage gradually returns to trend.) Now, the minimum wage was increased by nearly a dollar in 1990-1991; nearly a dollar in 1996-1997; over two dollars in 2007-2008. The fraction of wage-workers earning minimum wage fell -2%, -4%, and -6% below trend (respectively), translating into an estimated -1.3M, -2.8M, and -4.4M low-pay jobs. So, at present, immediately eliminating the minimum wage (or reducing the same to $5.00 per hour) would re-legalize over 4 million jobs, perhaps halving the unemployment rate. Otherwise, lost low-pay jobs will not re-generate, until inflation erodes the real minimum wage, requiring up to ten years.

4 million low-pay jobs, paying perhaps $10K per year, would generate $40B per year in total income. Low-income earners have the highest propensity to spend, so essentially all of that income, would re-enter the US economy, as spending. Therein, tens of billions of dollars per year of income, might generate hundreds of billions of dollars per year of spending, as the money changed hands over & over, throughout the year (the "velocity" of money is nearly 10). Such an increase in spending would be 1-2% of US GDP.


http://www.bls.gov/cps/minwage2011.pdf

 

[Widdekind]

Over the past generation, increases in the minimum wage have cost increasingly many low-pay workers their jobs. Evidently, US employers are decreasingly willing, to "carry people" when their minimum wage is increased. So, for the same increase in minimum wage, businesses now retain fewer, and fire more, of their low-pay employees. Heeding the advice, of Reverend Jesse Jackson, and increasing the minimum wage, to $10 per hour, would likely cost 25 million jobs -- the entire bottom quintile of US income earners -- based on extrapolating past trends:

Re-employing millions of Americans, in low-pay jobs, could re-grow thousands of small shops, all of which would need to borrow from banks, to begin business. Banks could earn points, on thousands of business loans. Then, banks might need to raise points for deposits, to attract more money from the public. Bank customers, banks, businesses, and millions of Americans would all gain.

 

[Supposn]

Excerpted from message #40of the topic
”Big Business, Corporate Profits, and the Minimum Wage”.


I advocate the federal minimum wage rate should be annually cost of living adjusted, (i.e. COLA’d) in a similar manner as Social Security retirement benefits.

Widdekind, we agree that a specific legal minimum wage rate or a market’s unspecified lowest rate are both “bench marks”. You wrote “I have argued generalities -- minimum wages eliminate low-pay jobs”. Would you consider COLAing the federal minimuim wage rate (which doesn’t increase its purchasing power) as not being a real rate increase?

Respectfully, Supposn

 

[Widdekind]

The Federal minimum wage was enacted in 1938. Of the dozen major recessions to afflict the US economy since then, at least half co-occurred, simultaneously together at the exact same time, as increases in the minimum wage. Prima facie, minimum wages are a major cause, inflicting recessions, on the US economy.

Minimum wages do not help low-skill, low-pay people. Minimum wages get them fired, by eliminating the only jobs they are currently qualified for, kicking them back out onto the street. Moreover, "fears" that without minimum wages, American workers would be paid "sweatshop wages", are unfounded. The foregoing figures (previous posts) all indicate, that the lowest wage US businesses have historically paid people, is about (and above) five 2010 US dollars per hour.




List of recessions in the United States - Wikipedia, the free encyclopedia

 

[ShackledNation]

I would rather work for $5 an hour to get my foot in the door than waste years of my life searching for jobs I am less qualified for.

 

[ItsjustmeIthink]

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

I like where you're coming from, but I think its a slippery slope. In an increasingly global market America will find itself competing more and more with other countries over where businesses want to base most of their operations.

A big NEGATIVE for America in the global economy is our min. wage. Many countries are OK with their populace working for pennies on the dollars; others, such as India, do have a minium wage, but its on a DAILY standard.

IF a annual increase in min. wage were possible, it would have to be offest by either de-regulation in other sectors of the economy, or very effective incentives (which tend to cost a lot). In order to keep America's competive edge in our global economy.

But that's just my two cents on the matter.

 

[Widdekind]

I would rather work for $5 an hour to get my foot in the door than waste years of my life searching for jobs I am less qualified for.

Inexpertly, you have the "home-field advantage", in the earth-global market-place. Ceteris paribus (all else at parity), US businesses would prefer to hire you, "here", than move their whole business abroad. (That they do the latter should indicate, how economically over-priced US labor has become.) Your $5/hr. job, "here", would keep (say) textile jobs in the US; cheap clothes at department stores could be just as cheap, and read "made in the USA" on the tag too. Prices would stay low, and jobs would stay "here".

 

[Rshermr]

I would rather work for $5 an hour to get my foot in the door than waste years of my life searching for jobs I am less qualified for.

Inexpertly, you have the "home-field advantage", in the earth-global market-place. Ceteris paribus (all else at parity), US businesses would prefer to hire you, "here", than move their whole business abroad. (That they do the latter should indicate, how economically over-priced US labor has become.) Your $5/hr. job, "here", would keep (say) textile jobs in the US; cheap clothes at department stores could be just as cheap, and read "made in the USA" on the tag too. Prices would stay low, and jobs would stay "here".

And there you are again, Widde, pumping out that con dogma. No independent studies. Completely ignoring that most economist agree that raising the minimum wage is good for our economy. You just keep on pumping out that unsupported con dogma.

 

[ShackledNation]

I would rather work for $5 an hour to get my foot in the door than waste years of my life searching for jobs I am less qualified for.

Inexpertly, you have the "home-field advantage", in the earth-global market-place. Ceteris paribus (all else at parity), US businesses would prefer to hire you, "here", than move their whole business abroad. (That they do the latter should indicate, how economically over-priced US labor has become.) Your $5/hr. job, "here", would keep (say) textile jobs in the US; cheap clothes at department stores could be just as cheap, and read "made in the USA" on the tag too. Prices would stay low, and jobs would stay "here".

And there you are again, Widde, pumping out that con dogma. No independent studies. Completely ignoring that most economist agree that raising the minimum wage is good for our economy. You just keep on pumping out that unsupported con dogma.

Most economists agreed that the US was not heading into recession. Your appeal to them is silly.

 

[Rshermr]

Inexpertly, you have the "home-field advantage", in the earth-global market-place. Ceteris paribus (all else at parity), US businesses would prefer to hire you, "here", than move their whole business abroad. (That they do the latter should indicate, how economically over-priced US labor has become.) Your $5/hr. job, "here", would keep (say) textile jobs in the US; cheap clothes at department stores could be just as cheap, and read "made in the USA" on the tag too. Prices would stay low, and jobs would stay "here".

And there you are again, Widde, pumping out that con dogma. No independent studies. Completely ignoring that most economist agree that raising the minimum wage is good for our economy. You just keep on pumping out that unsupported con dogma.

Most economists agreed that the US was not heading into recession. Your appeal to them is silly.

Depends on when, me boy. They did indeed by late 2007. But then, I, as compared to you, do not keep up with what "most" economists think all the time. But if I did, I would provide some evidence of a claim of the type you just made..

 

[ItsjustmeIthink]

I would rather work for $5 an hour to get my foot in the door than waste years of my life searching for jobs I am less qualified for.

How many opportunities for advancement do you think will be for sub-minium wage labor?

You could be...Head Sidewalk Sweeper and make $6 an hour!

 

[Againsheila]

I would rather work for $5 an hour to get my foot in the door than waste years of my life searching for jobs I am less qualified for.

Inexpertly, you have the "home-field advantage", in the earth-global market-place. Ceteris paribus (all else at parity), US businesses would prefer to hire you, "here", than move their whole business abroad. (That they do the latter should indicate, how economically over-priced US labor has become.) Your $5/hr. job, "here", would keep (say) textile jobs in the US; cheap clothes at department stores could be just as cheap, and read "made in the USA" on the tag too. Prices would stay low, and jobs would stay "here".

They would never have done the latter if our government pay them to do so and they didn't bribe the foreign governments to keep out unions...

 

[ItsjustmeIthink]

I would rather work for $5 an hour to get my foot in the door than waste years of my life searching for jobs I am less qualified for.

Inexpertly, you have the "home-field advantage", in the earth-global market-place. Ceteris paribus (all else at parity), US businesses would prefer to hire you, "here", than move their whole business abroad. (That they do the latter should indicate, how economically over-priced US labor has become.) Your $5/hr. job, "here", would keep (say) textile jobs in the US; cheap clothes at department stores could be just as cheap, and read "made in the USA" on the tag too. Prices would stay low, and jobs would stay "here".

They would never have done the latter if our government pay them to do so and they didn't bribe the foreign governments to keep out unions...

Foreign governments "keep out unions" by repression, not bribes.

 

[Againsheila]

Inexpertly, you have the "home-field advantage", in the earth-global market-place. Ceteris paribus (all else at parity), US businesses would prefer to hire you, "here", than move their whole business abroad. (That they do the latter should indicate, how economically over-priced US labor has become.) Your $5/hr. job, "here", would keep (say) textile jobs in the US; cheap clothes at department stores could be just as cheap, and read "made in the USA" on the tag too. Prices would stay low, and jobs would stay "here".

They would never have done the latter if our government pay them to do so and they didn't bribe the foreign governments to keep out unions...

Foreign governments "keep out unions" by repression, not bribes.

American corporations bribed the foreign governments to keep out the unions. People in Mexico were killed. That's the major reason why our influx of corporations into Mexico primarily hired women, they are much less likely to form a union.