Consequences of repealing minimum wage rates.

[Supposn]

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

Widdekind, USA’s economic history is one of ups and downs. Within the Bureau of Labor Statistics sites I find nothing to support what you describe as your prima facie case.

For minimum wage data, refer to
U.S. Department of Labor - Wage and Hour Division (WHD) - Minimum Wage

Can you demonstrate your case explicitly and specifically?
Respectfully, Supposn



Series Id: LNS14000000
Seasonally Adjusted
Series title: (Seas) Unemployment Rate
Labor force status: Unemployment rate
Type of data: Percent or rate
Age: 16 years and over




For minimum wage data, refer to
U.S. Department of Labor - Wage and Hour Division (WHD) - Minimum Wage

 

[Supposn]

Consequences of repealing minimum wage rates.
.................................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............................But that's just my two cents on the matter.

ItsJustMeIThink, regarding USA’s global trade deficit of goods please refer to the topics:
”Warren Buffett's concept to significantly reduce USA's trade deficit”
and
“Trade deficits are ALWAYS detrimental to their nations’ GDPs”.

Respectfully, Supposn

 

[The Rabbi]

Supposn:
Mercantilism is dead.
Respectfully,

 

[Supposn]

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.

Widdekind, the federal minimum wage rate is a legal minimum benchmark. If USA’s labor market would ever determine the legal minimum is too low, it is the market rather than the legal minimum that would prevail.
The ONLY POINT to eliminating the legal minimum is to permit the market to reduce the minimum bench mark; (the elimination would never cause any increase of wages).

Wages are depressed within a poor economy. The depressed wage levels within such an economy do not increase hiring because consumer spending is similarly depressed. To the extent that legal minimum rates are enforceable, they’re the “bottom” beyond which pay scales do not fall.

Within more favorable economic durations, the elimination of the legal minimum induces the creation of sub-minimum wage jobs that were not previously justified by the legal minimum. The decreased wage rate also qualifies the hiring of many lesser qualified persons to perform those sub-minimal wage jobs. During favorable times this is economically net detrimental; during less favorable times it’s disastrous.

Respectfully, Supposn

 

[Widdekind]

To the extent that legal minimum rates are enforceable, they’re the “bottom” beyond which pay scales do not fall.

Minimum wages get (some) people fired completely -- their "pay scale" becomes zero.

Within more favorable economic durations, the elimination of the legal minimum induces the creation of sub-minimum wage jobs that were not previously justified by the legal minimum. The decreased wage rate also qualifies the hiring of many lesser qualified persons to perform those sub-minimal wage jobs.

Carefully scrutinizing the monthly unemployment figures, through the last three minimum wage increases (1990-1991; 1996-1997; 2007-2009), shows that increasing the minimum wage consistently increases overall unemployment by a few tenths of one percent, i.e. a few workers out of every thousand lose their jobs. The low-pay sector of the US economy involves a tiny minority of workers (few percent). If minimum wage workers (few percent) bore all of the increased overall unemployment (few tenths of a percent), then perhaps 1/10 minimum wage workers loses their job, when the minimum wage is increased. That amounts to several hundred thousand workers.

In particular, making the strongest possible case, for the impact of minimum wage increases upon unemployment; increasing the minimum wage by $1.00 may increase unemployment by up to a half percent. Thus, eliminating the current minimum wage, i.e. decreasing the minimum wage by over $7, all in one fell swoop, might decrease unemployment by 3% or more, perhaps more than 3 million low-pay jobs. If so, then each US Congressional district -- of which there are more than 500 -- would gain:

• thousands of jobs
• tens of millions of dollars per year of job income
• millions of dollars per year in tax revenues, from those incomes (income taxes), and the spendings on those incomes (sales taxes)

Note, there are two types of "minimum wage" workers, those working for below minimum wage ("low-pay plus tips", e.g. waitresses), and those working at minimum wage. The latter are much more strongly impacted, by changes in the minimum wage, than the former.

Against the above, historically, when the real minimum wage has been "eroded" by inflation, down to $5 / hr. (current dollars), then nearly nobody has still been working at minimum wage (only a couple tenths of a percent of the workforce). Thus, whilst decreasing the minimum wage from $7 to $5 per hour might have some impact, further decreases might not, since US businesses don't hire anybody below $5 / hr. anyway. So, eliminating the minimum wage altogether, might be no better than reducing the same by -$2 to $5 per hour; and so reduce overall unemployment by only a percent, re-generating only a million jobs.

Inexpertly, i predict, that eliminating the Federal minimum wage altogether, could create up to a million jobs, perhaps primarily in the types of jobs paid "at" minimum wage, including:

• service occupations (restaurant cooks, janitors, barbers, bellhops, ushers, gaming & amusement park attendants)
• office & sales occupations (clerks, cashiers)

Most of those jobs would pay at least about $5 / hr. A million such jobs might generate up to $10B per year in total income, essentially all of which would be swiftly spent back into the economy. By comparison to unemployment insurance benefits to poor people, the Keynesian "multiplier", translating an income [dollars per year], into total spending, throughout the economy, from that original income [dollars per year], is most of two (low-income earners spend once, and the same dollars change hands again, before the end of the year). So, eliminating the minimum wage might generate up to a million jobs, and billions to tens of billions of dollars of GDP. Meanwhile, of the over 1.5 million workers currently earning "at" the minimum wage, many might witness their wages decrease slightly. Politically, perhaps a million unemployed would gain a job; perhaps more than a million minimum wage workers would lose a little of their current incomes. Perhaps a "Walmart solution", whereby workers could apply for partial unemployment benefits ("under-employment insurance"), could, comparatively, benefit everybody -- more jobs for unemployed people, less unemployment benefits paid by the Public, offsetting some subsidies for low-pay workers? Perhaps the minimum wage could be converted, into a wage level, below which paychecks were not taxed?




http://www.bls.gov/cps/minwage2011.pdf
http://www.bls.gov/oes/current/oes390000.htm
http://www.economy.com/mark-zandi/documents/JEC-Fiscal-Stimulus-102909.pdf

 

[Rshermr]

To the extent that legal minimum rates are enforceable, they’re the “bottom” beyond which pay scales do not fall.

Minimum wages get (some) people fired completely -- their "pay scale" becomes zero.

Within more favorable economic durations, the elimination of the legal minimum induces the creation of sub-minimum wage jobs that were not previously justified by the legal minimum. The decreased wage rate also qualifies the hiring of many lesser qualified persons to perform those sub-minimal wage jobs.

Carefully scrutinizing the monthly unemployment figures, through the last three minimum wage increases (1990-1991; 1996-1997; 2007-2009), shows that increasing the minimum wage consistently increases overall unemployment by a few tenths of one percent, i.e. a few workers out of every thousand lose their jobs. The low-pay sector of the US economy involves a tiny minority of workers (few percent). If minimum wage workers (few percent) bore all of the increased overall unemployment (few tenths of a percent), then perhaps 1/10 minimum wage workers loses their job, when the minimum wage is increased. That amounts to several hundred thousand workers.

Well, widde, again you provide information but no sourse. Where did you get the information, or did you carefully study it yourself??

 

[Supposn]

To the extent that legal minimum rates are enforceable, they’re the “bottom” beyond which pay scales do not fall.

Minimum wages get (some) people fired completely -- their "pay scale" becomes zero.

Within more favorable economic durations, the elimination of the legal minimum induces the creation of sub-minimum wage jobs that were not previously justified by the legal minimum. The decreased wage rate also qualifies the hiring of many lesser qualified persons to perform those sub-minimal wage jobs.

Carefully scrutinizing the monthly unemployment figures, through the last three minimum wage increases (1990-1991; 1996-1997; 2007-2009), shows that increasing the minimum wage consistently increases overall unemployment by a few tenths of one percent, i.e. a few workers out of every thousand lose their jobs. The low-pay sector of the US economy involves a tiny minority of workers (few percent). If minimum wage workers (few percent) bore all of the increased overall unemployment (few tenths of a percent), then perhaps 1/10 minimum wage workers loses their job, when the minimum wage is increased. That amounts to several hundred thousand workers.

Widdekind, you can read the table and graph within these two sites and find proof of minimum wages economic detriment? That’s BS!
Refer to:
http://www.bls.gov/cps/cpsaat01.htm
and
http://www.dol.gov/whd/minwage/chart.htm

You’re attributing every increase of unemployment to a legal minimum wage and no annual unemployment decrease is ever attributed to increased consumer spending which to some extent was attributable to an increase of the minimum wage?

As I explained within message #44, there’s no bottom to a market determined minimum benchmark. For every sub-minimum paying job created by eliminating the legal minimum, there will be more than two job applicants.

The elimination of the legal minimum will more or less reduce the purchasing power of all wages. The proportional extent of lost purchasing power will be inversely related to the difference between the jobs’ pay scales and the market's unspecific minimum benchmark,.

You keep referring to those who are now unemployed (but seeking work). After we eliminate the legal minimum, the newly created sub-minimal jobs could employ a quarter or possibly as many of a third of them at wages purchasing powers severely less than the prior legal minimum.

Those newly hired workers will continue to need public assistance and because the market determined minimum benchmark continues (as did the legal minimum) more or less affect all wages, Those newly hired workers will be joined by the working poor that previously were able to avoid joining that club.

Eliminating the federal minimum wage rate will be economical a net detriment to our nation.

Respectfully, Supposn

 

[Widdekind]

The elimination of the legal minimum will more or less reduce the purchasing power of all wages.

that makes no sense. Wages at or near minimum wage might decrease slightly. Historically, the lowest wages ever paid by US businesses translate into $5/hr. (current dollars). Minimum wage earners are a tiny minority. Increasing the minimum wage only has small, and brief, affects on overall unemployment. You can construe up to a half percent increase in unemployment, for a few months after minimum wages are increased by $1. Eliminating the minimum wage would probably not reduce any wages below about $5/hr. Some people, who were "carried up" to the higher minimum wages in 2007-2009, might "fall back down" to lower wages, if the minimum wage were repealed. Hundreds of thousands, and perhaps a million, jobs would be re-created. Some of the 1.5 million current minimum-wage workers might lose a little income. Eliminating the minimum wage, would give the "benefit of the doubt", to US businesses. Is that bad?

i offer,

• eliminate the minimum wage
• offer "under-employment insurance", which would plausibly be less than current un-employment insurance, essentially a subsidy for low-pay jobs

 

[Againsheila]

The elimination of the legal minimum will more or less reduce the purchasing power of all wages.

that makes no sense. Wages at or near minimum wage might decrease slightly. Historically, the lowest wages ever paid by US businesses translate into $5/hr. (current dollars). Minimum wage earners are a tiny minority. Increasing the minimum wage only has small, and brief, affects on overall unemployment. You can construe up to a half percent increase in unemployment, for a few months after minimum wages are increased by $1. Eliminating the minimum wage would probably not reduce any wages below about $5/hr. Some people, who were "carried up" to the higher minimum wages in 2007-2009, might "fall back down" to lower wages, if the minimum wage were repealed. Hundreds of thousands, and perhaps a million, jobs would be re-created. Some of the 1.5 million current minimum-wage workers might lose a little income. Eliminating the minimum wage, would give the "benefit of the doubt", to US businesses. Is that bad?

i offer,

• eliminate the minimum wage
• offer "under-employment insurance", which would plausibly be less than current un-employment insurance, essentially a subsidy for low-pay jobs

Good grief, you are advocating for more corporate welfare, that's what it amounts to when the taxpayer is subsidizing the worker. Greed is why the mw is necessary. Do you know that Americans have limited their reproduction to LESS than replacement value? Now if it weren't for greed (read guest workers, illegal immigrants and more legal immigrants than all other nations combined) we'd have a reasonable mw without a law. Right now the low paid workers would be in big demand, which equals higher wages and a lower income gap.

 

[ItsjustmeIthink]

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.

I think we're talking about different things maybe. A union comes from within, its created essentially by unhappy labor working together to make themselves heard.

"American corporations bribed the foreign governments to keep out the unions"
Thats just not possible, at least the way you're describing it. If you had said something like "American corporations bribed foreign governments to repress unions" I'd say you're right.

It seems like, to me, you think Unions are very similar to corporations, in that they are based somewhere and expand elsewhere.

 

[Againsheila]

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.

I think we're talking about different things maybe. A union comes from within, its created essentially by unhappy labor working together to make themselves heard.

"American corporations bribed the foreign governments to keep out the unions"
Thats just not possible, at least the way you're describing it. If you had said something like "American corporations bribed foreign governments to repress unions" I'd say you're right.

It seems like, to me, you think Unions are very similar to corporations, in that they are based somewhere and expand elsewhere.

I think you are arguing semantics.

 

[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.

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!

Plenty. Do you not understand the value of unpaid internships? Perhaps without minimum wage they would pay these interns a small amount rather than nothing.

 

[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!

Plenty. Do you not understand the value of unpaid internships? Perhaps without minimum wage they would pay these interns a small amount rather than nothing.

That works great for internships, sure. What about everything else?

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.

I think we're talking about different things maybe. A union comes from within, its created essentially by unhappy labor working together to make themselves heard.

"American corporations bribed the foreign governments to keep out the unions"
Thats just not possible, at least the way you're describing it. If you had said something like "American corporations bribed foreign governments to repress unions" I'd say you're right.

It seems like, to me, you think Unions are very similar to corporations, in that they are based somewhere and expand elsewhere.

I think you are arguing semantics.

A government that has been "bribed" to "keep out unions" would be suppressing its people. That's all i'm saying. Its my "bottom line"

You don't prevent the formation of a union through bribery. It just doesn't work that way. Maybe you can bribe the union leaders, but chances are they won't be union leaders very long if they take personal payoffs without getting done their members' goals.

Sure, you can pay your workers more to keep them happy if they feel they're not being paid enough, but that would be "pay raise" not "bribery". Idk if theres much difference tho.
Unless you're not talking about labor unions....

 

[ShackledNation]

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!

Plenty. Do you not understand the value of unpaid internships? Perhaps without minimum wage they would pay these interns a small amount rather than nothing.

That works great for internships, sure. What about everything else?

Why would everything else be any worse? I just displayed the already existing opportunities for advancement of sub-minimum wage labor. In fact, the opportunity for advancement was based on no money wage at all.

You assume that sub-minimum wage labor will not allow opportunities for advancement. You then agree that $0 wage labor does work well for advancement, despite it being sub minimum wage. Plain and simple, your argument has been debunked.

 

[ItsjustmeIthink]

Why would everyhing else be worse? Oh, I don't know, because people can't support themselves on 7.25 an hour and now you want them to live on 5.00 an hour. You care to explain how that'll work?

I assume that sub-min. wage labor won't advance because existing oppurtunites for advancement in jobs paying the current minimum are scarce.

You didn't "debunk" anything, you sidestepped my question.

What percentage of the US job's market is internships?

Furthermore, how does one pay for student loans and other expenses with a non-paying job?

 

[JFK_USA]

I dont believe that getting rid of minimum wages lower prices. I went to the movies the other day and their were automated movie ticket machines and did prices go down? Nope still 15 dollars a piece. So in my opinion businesses aren't going to cut prices ever, they don't want to leave money on the table. They are greedy and want more money. They won't stop trying to make money and they will screw their workers into making more and they don't care. So why should I care?

 

[The Rabbi]

I dont believe that getting rid of minimum wages lower prices. I went to the movies the other day and their were automated movie ticket machines and did prices go down? Nope still 15 dollars a piece. So in my opinion businesses aren't going to cut prices ever, they don't want to leave money on the table. They are greedy and want more money. They won't stop trying to make money and they will screw their workers into making more and they don't care. So why should I care?

Do you know anyone who is not greedy and wants more money?

 

[JFK_USA]

I dont believe that getting rid of minimum wages lower prices. I went to the movies the other day and their were automated movie ticket machines and did prices go down? Nope still 15 dollars a piece. So in my opinion businesses aren't going to cut prices ever, they don't want to leave money on the table. They are greedy and want more money. They won't stop trying to make money and they will screw their workers into making more and they don't care. So why should I care?

Do you know anyone who is not greedy and wants more money?

That's why we have things like overtime pay and minimum wages. Some people are rich, but to compromise the standard of living in America is ridiculous.

Every business wants to pass the buck, cut employees and pay yet who actually buys the freaking products? Lots of people with jobs.

Less money equals less purchasing power.

Less purchasing power mean less stuff is bought.

Less stuff bought means profits go down.

See everything has a consequence in an economy.

Plus you want to know why crime happens in the ghetto? Not because they are black but because you have a generation of kids growing up seeing their parents or parent work 2 minimum wage jobs and barely scraping by. So they see the neighborhood drug dealer and he is making bank, driving mercedes and living the good life. And the reality is with the quality of education they get, drug dealing is about the best bet for most of them.

Now they could have gotten a good factory union job but that got shipped out because hey gotta defend businesses. Now we talking about eliminating minimum wage? Crime will then turn to the suburbs as they either try to move product or get some stuff to sell.

Eventually we have to stop doing whats best for businesses when it becomes detrimental to society. When it begins to destroy it.

 

[Supposn]

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!

Plenty. Do you not understand the value of unpaid internships? Perhaps without minimum wage they would pay these interns a small amount rather than nothing.

Shackled nation, my understanding of our labor laws is employers are permitted to compensate employees for incidental expenses incurred while they’re being employed.

Unpaid interns ARE ALSO covered by such legal provisions.

Employees can be compensated per for exact expenditures or on the basis of reasonable per diem allowances. This could cover a great variety of items such as living expenses, meals, commuting costs, clothing and laundering.

There’s no legal mandate and thus most employers of unpaid interns do not do so.

This is very similar to concept of a market rather than a legal minimum wage. A market driven minimum wage benchmark is a “race to the bottom”.

Respectfully, Supposn

 

[editec]

Wages lag behind increasing prices, folks.

I know that many of you think otherwise, but kiddies? You're just flat out wrong.

Increasing wages (minumum or otherwise) seldom initiate inflation since increasing wages DO NOT INCREASE the amount of specie in circulation.