Decreasing or eliminating the federal minimum wage will generally decrease ALL labor compensations purchasing powers more than otherwise.
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.
The proportional extent of minimum rates affect is inversely related to the wages amounts thus the lowest earners will be the most severely affected.
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.
The additional jobs induced by eliminating the minimum wage do not now exist because those tasks are not now worthy of the minimum wages purchasing power.
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.
The numbers of qualified employed and unemployed potential employees, (i.e. the labor pool) now exceeds the number of filled and unfilled jobs. Because theres 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.
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.
Because theres a minimum wage, people refrain as best they can from accepting lower wage employment.
No shit, its illegal.
Thats 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 employees pay scale.
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.
Its generally agreed that the elimination of the minimum wage will increase the number of lowest wage jobs that are worthy of the labor markets 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.
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.
With no minimum child labor is financially justified.
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.
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.
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.
Im a proponent of increasing the federal minimum rate and there after annually cost of living adjusting that rate.
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, theres 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 Keyness 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, its 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 doesnt 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 doesnt mean that ALL workers are paid lower wages. So, wages dont fall in proportion with the minimum wage which means that incomes dont fall by that proportion, so demand for the product doesnt fall in proportion, so product prices dont fall in proportion, so demand for labor doesnt 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.
