Minimum Wage

[Garfield1966]

As was stated by my self and others, not everyone can be a brain surgeon. Someone has to mop up the operating room after the surgeon is done. That is just their lot in life. No one is advocating that they be paid $20 or $30 an hour, but they do deserve to be paid enough so that they can afford the minimum necessities in life such as food, shelter, health care. While market forces may be good for real-estate, I do not feel they should be the soul determination for wages, especially the bottom of the wage scale.

 

[Gilding the Lily]

Generally, most would agree that Democrats argue for MW on the grounds of "redistribution of wealth" and "making work pay for the worker."

Also, generally, many would agree that most Republican politicians oppose increasing the MW and may, if available, support the repeal of MW.

Surprisingly though in 1996, the general sentiment held by the public was so strong that congress (led by Republicans) voted to increase the MW by nearly a dollar.

 

[Leto2]

You say you think there are better ways to solve it. Like what? I do not mean that as a snide remake but really, what’s your idea? Barring numerous other changes, market forces will not work IMO. Perhaps this is just a mental exercise as I do not think we will solve the issue but I am curious about a different approach.

I think that the welfare state we have and are furthering through welfare progams and minimum wage (which is a welfare program) does not solve poverty-it worsens it.

My solution, although generalized and vague, is to stop welfare where it is. Do not increase it anymore--that means leave MW at $5.15, no more increases in welfare/medicaid/medicare, etc. If we abolish it at once I'm afraid it would cause chaos. However, let's stop it where it is and let it be phased out via inflation. Eventually the market equilibrium will be above MW and MW will be obsolete. Welfare payouts would eventually be too paltry to help anyone.
MEANWHILE, people would have to become more dependent on themselves and private charities. The govt would be saving a little money each year which they could give back to the people through decreases in taxes. With the increase in take-home income, people would then have more money to give to charities.

Essentially, I think the govt should take its hand out of welfare and leave it to private charities, which can do a much more efficient job with less bureacracy.

I agree with you, Garfield, that we should undertake initiatives to help less developed countries progress. That would solve a lot of our problems. One way the govt can do that is support good governments and use diplomacy and other means to oppose bad ones. One way you and I can help other countries, is by giving funds to NGO's that help people in those countries educate themselves. One fund I contribute to essentially gives loans to people so that they can get post-secondary education. The people are expected to contribute to the fund with their earnings once they get a degree and start working at a much better wage.

So that's the beginning of my solution. Govt welfare programs, like minimum wage, only make the problem worse

 

[Gilding the Lily]

Eventually the market equilibrium will be above MW and MW will be obsolete.

Ah, wouldn't it be great to live in Candyland where everything is perfect. That is a mighty assumption!

First, the "market equilibrium" is different for every job pay scale, and some pay scales may be above and some below the floor at any given time. Second, the market equilibrium for a particular job pay scale fluctuates constantly and may dip below the floor on occasions.

Lastly and most importantly, the "market equilibrium" for job pay scales is largely dependent on unemployment rates, birth rates, and death rates. You are assuming that all job pay scales would eventually be above the MW, making MW obsolete; but as long as there is unemployment, the pay scales for certain jobs will always be as low as possible. When there is unemployment, many people will take any job they can get. When employers recognize this, they lower the pay rates; simple supply and demand analysis.

Furthermore, you also suggest that inflation will make MW obsolete. I think it is readily obvious to most economists that MW, and other favorable work force laws, have led to sharp increases in inflation. For example, when employers are forced to pay the workers more, they pass the costs on to the consumers. The consumers happen to be the same workers that just got the extra $.25 an hour; thus, inflation occurs. If we stop increasing MW (and other corporate paid welfare), then inflation will not typically rise at the level we have seen in recent decades. (There are numerous reports claiming that sharp increases in inflation are consequences of worker friendly statutes)Therefore, MW will not quickly be made obsolete in that regard either.

I do not necessarily disagree with your general stance however. I particularly agree with your "Private Charity" option.

 

[Leto2]

Ah, wouldn't it be great to live in Candyland where everything is perfect. That is a mighty assumption!
......

I think you missed my general point. Hasn't the $5.15 MW become more obsolete in the last decade? I'm not saying it has totally disappeared, but the market equilibrium of all markets which would pay less than MW (if they were allowed to) has most likely come closer to $5.15, do to inflation. Since I didn't give a time frame in which inflation would eventually make MW obsolete, I don't think I was wrong. You said a lot about markets and inflation, but I don't think that you proved my point wrong in any degree.

If you still think I'm wrong, then let me change what I said:
Instead of relying on inflation to make MW obsolete, let's slowly roll MW back $.10 or so a year until it's 0.

 

[Gilding the Lily]

I think you missed my general point. Hasn't the $5.15 MW become more obsolete in the last decade? I'm not saying it has totally disappeared, but the market equilibrium of all markets which would pay less than MW (if they were allowed to) has most likely come closer to $5.15, do to inflation. Since I didn't give a time frame in which inflation would eventually make MW obsolete, I don't think I was wrong. You said a lot about markets and inflation, but I don't think that you proved my point wrong in any degree.

If you still think I'm wrong, then let me change what I said:
Instead of relying on inflation to make MW obsolete, let's slowly roll MW back $.10 or so a year until it's 0.

Talk about missing the point?!?!?

Don't get me wrong; like I mentioned at the end of my last post: I do not disagree with your general stance.

In fact, much of what I said about markets and inflation appears to bolster your main point more than it discredits it. I was not attempting to prove you wrong.

My point was simply that inflation and "market equilibrium" will not quickly make MW obsolete.

Of course $5.15 is not valued as much as it was decades ago. I am not suggesting that the value of a dollar is worth the same today as it was decades ago. That is part of the reason why certain politicians suggest that we should raise the MW.

I am suggesting this: One reason why the dollar is not as valuable is because of MW and other "corporate paid welfare" mandated by the government. There is a correlation between inflation and corporate paid welfare. (of course, inflation is not caused solely by this). Look at any state that has recently raised its state MW above the fed MW; you will also see that inflation rose proportionally as well, above the typical state inflation in a given year.

It is all a wash in the end... but it is done to appease the public because it seems favorable. The people working in MW jobs think "wow, I will earn another $1.50 an hour; this will really help me budget." What they fail to realize is that the companies who have to pay their workers more are now passing it to the consumers and charging more for their products/services. So, in essence, their extra $1.50 is going right back to where it came from. Although I do not know of any studies suggesting this, I would presume that many of the people making MW are also the customers buying services/products from MW employers. If this is the case, MW is more of a wash than I first imagined.

If we are going to rid ourselves of MW, then yes, we must do it incrementally. As we have seen in history, deflation occurs, if at all, at a much slower rate than inflation.

I wonder, however, now that we established a MW, if it is now a necessary evil in order to keep up with the inflation that it itself created? What a vicious cycle!