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Minimum Wage

Minimum wage jumped again this week.



I want someone to present a valid argument against this statement.



Minimum wage should be abolished.
The minimum a person should be payed in a free market, capitalist society is the minimum they are willing to work for. If they don't like a wage, don't take the job.



The best scenario I can lay out is this.



Imagine you owned a pizza place and had 16 employees. 5 making minimum wage, 5 making MW+ 25 cents, 5 making MW+50 cents and 1 making MW + 75 cents.



Yesterday you had to give everyone of those people a 70 cent raise right? Say all those people together work 300 hours a week. Your small business just took on over $300 dollars a week in additional expenses. Over $15,000 a year in extra expenses. Actually quite a bit more than that with all the payroll expenses.



How do you think small businesses deal with that. They raise their prices!! Only possible option! Smart ones also probably eliminate some of the payroll and work more hours themselves which eliminates jobs.



They see a reduction in sales because the pizza is more expensive, there are less jobs available because less SMb.'S can pay and everything costs more.



I don't care about these numbers... I made them up so please don't get into that, its the principles of the argument that matter.



I don't get it I really don't and I would love for someone who did to explain the ecponomics of it to me.



Thanks have a great weekend.

Great Pics from The Reno County Fair here. Really there is some good ones.





Cody Heitschmidt

www.codytalks.com

www.whatsuphutch.com

Sent from my BlackBerry

33 comments:

  1. The bottom line is that as a Country, we haved decided that we want to encourage work, and ensure that those at the bottom of the labor pool earning wise will not be exploited. Economic consequence arguments are always trotted out regarding the minimum wage, and I always respond that it is a human right/decency argument. We want to encourage a days work and treat it with dignity and respect

    I am aware of the economic costs of the minimum wage, yet it is important to have. I am also aware of the economic costs of heath and safety regulations, but believe it is important to ensure a safe workplace for all. Same with social security, unemployment insurance, medicare/medicaid, public education, overtime law, prohibitions on child labor, anti-discrimination laws, small business loans, etc. These all have economic consequences and are not pure Capitalism, but it is important as a healthy functioning society to have them there.

    In a purely Capitalist society, workers with fewer skills would compete in a race to the bottom for wages to keep their jobs, work in an unsafe environment and not be able to buy anything that they are producing--often leading to a radicalized workforce.

    In Cody's example, one nice thing about the minimum wage is that it is a floor, and therefore, the competitor pizza joint can't pay her workers less to lower her costs to drive you out of business.

    In addition, while pizza costs may have to go up to pay the additional wages, that would be shared across the board in all businesses. Plus, now, more people have additional wages to pump into the economy.

    FYI, Cody's example ignores the reality that the restaurant industry has already carved a loophole in the minimum wage law called the tip credit. No way everyone working at this fictional pizza joint is getting paid the true minimum wage.

    We have had a minimum wage since the 1930s with FDR, and somehow, I don't think the minimum wage has stifled America's incredible economic expansion over the last 70 years.

    Bottom line: we don't have a purely capitalist society, we take any intangibeles such as decency and respect, and I think we are a stronger nation for it.

    ReplyDelete
  2. Ok,

    I hope the reason we have such good discussion on here is that I am not an ass that refuses to admit he is wrong.

    Ok that said I am not admitting total defeat to the bleeding heart Labor Law lawyer that posted the first damn comment.

    But... He makes points in a way that I have never thought of. Maybe there is something to be said for sticking it out at college.

    I can shoot a Marine sniper rifle better than you Dave so HA!

    Again not admitting defeat but I am gonna try and read the comment again open my mind up and come back to it.

    I still think the current ramp up of minimum wage was a giant factor in hurting small businesses in a time they couldn't afford to be hurt anymore. I don't like it, just as much as i didn't like it before Dave's comment. But I will admit I am having trouble destroying Dave's comments like I have on every other post on this site. hehe lol !

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  3. I agree with Dave. Some people would take the low pay regardless because some work is better than no work. Take a look at Mexico where they earn $5.00 a week. It's no wonder they come here even if they don't speak english. Our minimum is better than most of their jobs.

    I would also like to point out that the pizza joint owners would not have to give a pay raise to everyone - only the people making below the new level. The others are already making above so no adjustment is required (although their employees may grumble a bit since only a few people would be getting raises). My hourly pay has never been adjusted because of a hike in MW since I've always been paid more than that.

    I'm sure most of the people on this blog also do not make bare minimum wage and are not directly affected by the changes.

    FDR put in a lot of good programs to keep the poorer people from being taken advantage of. Think outside of our idealistic midwestern life and ask a man living in New York, making minimum wage, living in a closet size apartment under the train station and still barely making ends meet if he things the raise is a good idea.

    There are lots of reasons why this man may be in the state he is but bottom line is he takes the job because he needs the money to survive. His choices may not be the same as yours.

    While opportunity exists for everyone to go to college and get a well paying job, the reality is that not everyone can afford it or cannot get out of the social level they were born in.

    I think it's crazy that people are homeless because of all the opportunity out there but I've also been through hard times where if things had gotten much worse I could have been one of those people looking for help. Sometimes, instead of opportunity knocking, it's fate who knocks you down, kicks you and runs off with your wallet.

    Unfortunately, there are a lot of bad people out there who would take advantage of the situation. I guess our government is actually forcing decency into the common man by requiring a minimum way.

    ReplyDelete
  4. Josie..

    In a sense I agree with you but 2 points.

    1. The pizza guy absolutely has to raise everyone's wage. Has to!! Look the math. If he just raises the bottom groups wage, they are now making more than people that have worked there for longer than them or that have just gotten raises. All of the people in that scenario have to get a raise, or the higher paid ones are getting cheated. There are issues with that.

    2. In response to your "ask the guy under the train station in the closet" remark. Is it not also fair to say ask his boss that owns the family deli that is getting crushed by the Kroger store how he feels about it?? I care about the guy under the train station in the closet, I really do, but I also care about the guy that busts his ass to run a business that provides the job for the guy under the train station living in the closet. I am in favor of protecting both.

    But, if you make the business pay more to his employees the cost of things will go up. To some extent does that not negate the extra wage the man in the closet under the train station got?? It also makes things more expense for the guy that is making above minimum wage and didn't just get a Government mandated pay increase.

    Right??

    I am admitting I am more open minded than I was this morning when I posted blog but I still don't like it.

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  5. Cody, glad I am so convincing, but one quick response. Your point #1, is true in a perfect world. However, when I was 16 working at a pizza joint, I was hired at minimum wage...a month or so later the minimum wage went up and I got a raise, but the boss didn't raise people who were making more then minimum wage. Therefore, suddenly the new kid on the job was making the same as someone who had been there several years.

    also, now that I can keep a rifle without a trigger lock in DC, maybe I will work on my marksmanship skills. watch out, ha!

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  6. i came here to make the econ 101 argument that the minimum wage is more of a negative than a positive. now that dave has posted all his (good, as usual) lawyer stuff, that argument doesn't look as intelligent as it did in my head, but i'm still going to make it.

    Artificial influences on the market are bad. i'm sure there are a million websites/people out there who can explain it better than I can, but I know this for an economic fact. I believe it should be pretty easy to find a graph that shows how minimum wage creates a surplus of demand vs supply, which directly leads to unemployment. Matter of fact, standy...

    http://www.answers.com/topic/wage-labour-svg
    there it is.

    I have no idea what the minimum wage is anymore, but if people are making $6.50 and others are making $7, and they raise the minimum to $7, those $7 people are not getting raises. Everyone will be at $7. So, in actuality, the raise of minimum wage is helping teenagers working at McDonalds. Even if you're an adult who is working at McDonalds, if you've been there for a year or two, you're going to have earned enough raises to not qualify for the minimum wage raise.

    I'm not sure an extra 70 cents is going to encourage anyone who is not working to go get a job, but in the long run, it may cost someone a job when the business owner can't afford to pay as many positions.

    And on a pure capitalist (greedy) note, I didn't get a 70 cent raise, but the cheeseburger I buy for lunch is probably going to cost me more, so it's just another example of me getting hurt for going to school and working hard to get ahead in life.

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  7. sorry i didn't actually link that...

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  8. Scott...

    I agree with all your points, unfortunately I agree with some of Dave's as well.

    i don't have an answer and I don't like griping without having a solution but something isn't right and needs to be better.

    ReplyDelete
  9. vicious circle. The only true winners are the teenagers making a great minimum wage with no skills and Wal-mart who is crushing the small business owner.

    Can't please all the people all of the time. Maybe we should all just go back to bartering and no money. That would eliminate minimum wage but the poor unskilled people would suffer. So is this really Darwinism? Those that don't evolve and adapt die? Sometimes, I wish it were that easy to weed out some of those kinds of people from our society. I am not prejudice about race, sex, religion, etc. but stupidity I can't stand. The library is public and free, anyone can use it.

    ok. getting off my soap box now...

    ReplyDelete
  10. I'm not sure where I stand on this, really. There are truly compelling points from both sides.

    I will say this, though: I was a salaried manager at a fast food restaurant during a minimum wage increase several years back. There were a few people that had worked there for a year or so, and all of a sudden, new people were making the same as them.

    I made a point to do everything I could to make sure that the people with a little tenure got raises to keep the pay relative to ability and experience. Unfortunately, I couldn't do it for all of them (and there were some that I thought were overpaid to begin with), but I got the hardest workers a bump beyond minimum.

    My argument with my bosses at the time was that the raise in minimum wage is indicative of a higher cost of living, and that the employees that had put in a decent amount of time and effort to earn previous raises deserved to maintain a (at least slightly) higher level of living than the minimum wagers who had either just started or just plain weren't worth more than that.

    It worked to get a few people bumped up, at least.

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  11. My opinion is going to be compleatly selfish! I am raising a daughter on less than 25,000 a year. This will have an impact on me. I can not afford for the cost of everything to go up more than it has with the gas prices. It seems to me that sometimes while trying to look out for those who may or may not CHOOSE to work minimum wage jobs, those of us who have worked hard to be kinda making it, keep getting hammered. JMO!

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  12. karen has the point of view I have as well. We can be characterized as the jerks who think we should not care about Minimum wage people (which is completely not true) or it can be realized that we feel like everyone should be held accountable to carry there own wait if capable.

    Hope I didn't speak out of place karen.

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  13. Nope, you are good. I do care about others, I just have to care for my family first.

    ReplyDelete
  14. I don't disagree with your side at all. I wish our society in general were held more accountable and we were less litigious (sorry if that hurts business Dave). Maybe our parents were right about the "good ol' days." I deal with it regularly where most of what transpires is to cover your own ass so someone doesn't sue you for this or for that. Those kinds of costs drive up the bottom line too. Like the gal who sued McDonald's after spilling the hot coffee in her lap. Common sense would tell you it was hot. Now we pay more for that cup of coffee cause they have to put the warning on it so you know that the hot coffee you ordered it probably pretty hot.

    Minimum wage links us back to the women's lib issue too. I say, best man, woman, black, white, etc for the job and get paid by your skills, no question. Unfortunately, the good ol' boys in the good ol' days decided that their son should make more money than a regular employee because they are blood, not because of the skill set. They had the same arguments going on in France while I was there two years ago (you may remember the fire filled riots). They had a major transportation strike, plus teachers, fire fighters and postal workers were protesting for better salaries. Oh and the tobacconists were striking against new anti-smoking laws. They are about 30 years behind us in civil rights and still deal heavily with nepotism and religion discrimination (heavily christian country with lots of Muslim immigrants).

    Sticking up for the little guy is what our country was founded on and what most democracies struggle with. Equality is a great concept but not always easy. That's why our constitution says the right to life, liberty and the pursuit of happiness. No one can guarantee it.

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  15. In theory, market dynamics would work and there would be no need for a minimum wage.

    In reality, illegal immigration provides a seemingly endless labor force, flooding the market with available workers.

    As long as there's no scarcity of workers, the working poor will never gain ground.

    Minimum wage laws are one of the few hedges the working poor have against being completely undercut and having their wages decrease.

    Generally speaking, I favor market solutions for the economy but in the case of minimum wage, the market solution will never come to pass as things stand with illegal immigration.

    Really my only gripe with the minimum wage increase is that it didn't happen years ago. Politicians and their grandstanding so they can "claim" their party helped the working poor. In reality, the mimimum wage increase has been on the table for a long time. Stonewalled by one party because they claimed anything less than 40% would be meaningless. Unwilling to compromise to 20% that the other party wanted. In the end, the "victory" they claimed was pretty close to the 20%.

    I just think of all the poor folks who would have loved the raise 5 years ago if politicians hadn't been fighting over who got to send out news announcements "they" won it for the American people.

    But then I come from the working poor and my viewpoint is largely shaped by that culture.

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  16. Just to bring things into perspective - Someone making $7.50 an hour (the eventual minimum wage), would only be making $15,600 per year before taxes, presuming that they worked 40 hours a week every week. Since most minimum wage jobs don't offer paid sick leave or vactation, this means that if our theoretical person got the flu, had to attend a funeral, or had to stay home with a sick child, they would earn even less.

    For a high school or college kid, $15,600 is a lot of money, but for people who have few skills or experience, or who have fallen on hard times and cannot secure a better paying job, $15,600 is a tight squeeze to pay rent, utilities, and grocery bills for even for one person, much less a child or unemployed spouse.

    No matter how you feel about our nation's welfare programs, most of us would be disturbed by the sight of a sane, non-drug-addicted homeless person. We would be even more appalled at the sight of a starving child.

    There are generally two ways to keep people from being homeless and starving - by paying part of their income through purchasing products and services OR through your TAXES.

    As a country we've decided that we would rather take a little bit of everyone's wages to keep people, especially children, from starvation and homelessness. We've decided that we won't just let people starve without some sort of intervention, because just sitting by and watching someone die of starvation would make us feel like bad people.

    Increases in minimum wages do cause a modest increase in the overall cost of living throughout the country, but they usually are reflective of an even greater increase in the costs of goods and services that happened before some federal mandateed wage increase.

    The cost of living has already gone up - we were going to have to pay for this one way or another. Either we pay people directly so that they have less of a need for welfare programs, or we pay more in taxes to the government so that they can help keep our consciences clear.

    Plus a higher wage makes crimes like stealing and drug dealing look less desireable. If you can actually make enough money working to feed yourself, you're less likely to say "I'm just going to steal - ONCE" or "I'm just going to sell pot - ONCE" (and as we know, ONCE usually turns into "until I get caught"). Keeping people in prison is a lot more expensive than raising the minimum wage.

    $7.50/hour = $15,600/year
    To me, I'd be willing to give up an extra dollar or two every time I go out to dinner or to the store if it will keep someone out of jail and from having to make the decision to either buy medicine for their child or feed them.

    So I'm a bleeding heart liberal, shoot me. I just believe in treating people like human beings instead of just another piece of corporate machinery or another means to lower the bottom line.

    And yeah, F--- ups piss me off too, but I still don't want to see them starve.

    ReplyDelete
  17. Coincidentally, I found this article that addresses the issue of how poverty is calculated on Slate.com: http://www.slate.com/id/2195897/

    Basically there are 2 ways to calculate poverty:

    1. Percentage of an area's median income.

    2. Ability to buy "necessities".

    Lots of people split hairs over the definition of "necessities". They argue over whether it should mean just survival basics or all of the things necessary to actively participate in a normal society (Is a phone line a necessity? What about an internet connection? Is a car a necessity?).

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  18. Amy,

    If a person did have a child, they'd qualfiy for EIC and probably low income housing or section 8 housing. If the child were young, they'd also qualify for WIC.

    I'm not claiming it's not a tough road to support a child at poverty level, I'm saying that other in-kind benefits are not counted as "income" although they greatly impact quality of life.

    I've known so many folks who were statistically impoverished with a child or children and many of them also had:

    A medical card (for free medical care)
    Food Stamps
    WIC
    Low income housing or Section 8 housing

    Depending on circumstances, some had sustantial benefits from EIC.

    Also, depending on circumstances, some had:

    Free tuition
    Free babysitting

    ...and, though I don't know it's current status, CETA paid an hourly wage to the impoverished while they went to higher than high school level school.

    Voc-Rehab did the same although poverty was not a pre-requisite for benefits. After Reagan fired all the air traffic controllers, I saw a number of them go through Voc-Rehab for retraining.

    ReplyDelete
  19. Jolene,

    My point exactly. We can either pay people enough to get out of poverty through our purchases, or or pay to cover the rest of their expenses through our taxes.

    I would rather pay higher prices for things if it allowed people a living wage rather than pay more in taxes to support the welfare system. I am not against welfare, but I think more people would benefit from earning a livable wage than by being in "the system".

    So many people complain about "welfare freeloaders" (most recipients of welfare work), but then complain about wage increases causing their cost of living to go up. You can't have your cake and eat it to. Either you pay enough for products so that the people making and selling them can earn enough to live off of, or you keep paying tax money into the welfare system.

    I support a living wage. It allows people to control their own lives rather than depend on the government.

    ReplyDelete
  20. Does that make me a "bleeding heart libertarian"?

    ReplyDelete
  21. As someone who has been on both sides of the fence--a mom who made 7.00 an hour with state and federal benefits for my child, and now works for enough that I don't qualify for any help--I had more money when I was making 7.00 an hour than I do now. The point is that if you put your head into it--you can make a living wage without the government stepping in, if you CHOOSE to do so. You may have to start out at the bottom. I did.

    ReplyDelete
  22. Amy,

    Thanks for joining in with some great comments.

    My final stance on this post is this.

    1. I think increasing minimum wage enables people to not better themselves. Not everyone don't come back at me with all the arguments that it helps some people too... I am conceding that. I think our whole system is full of enabling issues that we probably can't get rid of. If someone who is in favor of the the minimum wage would admit that it is a band-aid and the solution is actually getting adults into better paying jobs... I would also concede that minimum wage is a band-aid that we might need right now.

    2. Amy, I would expand on your High School and College kid statement. $15,600 is a lot of money for a high school college kid is a true statement. It is also alot of money to make a small business (any business) pay a high school or college kid with Zero experience. Just another way to look at it I guess.

    In closing (Dave... have you ever said "In closing" in a great big fancy courtroom? I would Love to see video of that) Sorry!

    in Closing I think all of the arguments here are pretty valid and I am willing to admit that in the immediate situation we are in right now we may in fact need some sort of a minimum wage. I don't think it's a good thing, I think it is a band-aid for a situation that we have created. I don't think it's fair to the business owners of the world either, not at all, but i guess I don't have a realistic better solution.

    Great discussion... I really appreciate you folks being able to discuss and disagree without getting upset or nasty.

    We should all say "Hi Amy" seems like she just jumped in full force.

    Hi Amy

    ReplyDelete
  23. Amy,

    When it comes to minimum wage, establishing a baseline so that illegal immigrants as part of the work force can't further degrade the salaries of the working poor is, IMHO, both necessary and productive.

    Even better though would be to actually fix immigration so that the market system could operate as it was intended to do.

    I also strongly believe in having a social safety network for both the physically and mentally disabled as well as the elderly.

    With that acceptance of a social "need", I fully understand that if we have x amount of folks who need to be cared for because they can't care for themselves, then we need to have y amount of folks who pay the bills to fill that need.

    IMHO, current theology has embraced way beyond the scope of the disabled and elderly as a "needy" population. There's just not enough money in the world for what some folks believe are "needs" that government should meet. In short, somebody has to pay the bills and the social network was never intended, at it's inception, to take up the slack for able-bodied people.

    IMHO, the point many people are trying to make but which is rarely heard is entirely different than we-want-our-cake-and-be-able-to-eat-it-too one.

    IMHO, many people are saying we're tapped out and struggling to make it and now "this" (insert whichever topic which places additional burden on others is being discussed) comes along.

    IMHO, what many people are saying is, the dynamics need to change somehow.

    Those who believe expanded government will fill those needs as they come along will take that to mean, we need a new program, people are hurting.

    Those who believe in less government will often take it to mean something entirely different. In this example of minimum wage, they make take it as a sign to fix illegal immigration so that the market system raises wages naturally across the board instead of to a fixed amount of people in a fixed situation.

    Or...people could actually be saying, we can't support yet another social program to help the few at the expense of the many.

    ReplyDelete
  24. Cody,

    The minimum wage laws are a bandaid solution.

    IMHO, we should have fewer enabling programs and a more defined sense of who the social network should cover, and to what degree.

    Social engineering is, IMHO, a very dangerous thing and not something to be done lightly or to be seen as a "right".

    ReplyDelete
  25. I kinda thought I wasn't going to post again on here but i really like Jolene's last two comments.

    ReplyDelete
  26. Hi Cody. I think you know me by my other name - Farleys_Fruit_Snacks.

    Because comments here are associated with a Gmail account, the name I have on that account comes up automatically.

    ReplyDelete
  27. I guessed it was you Farley's. Thanks again for coming over here and discussing crap with us.

    ReplyDelete
  28. Good comments everyone. I agree Jolene, this is a band-aid. I know some welfare junkies that would have a kid every three years so they could stay on assistance. There are some true people in need but the system is abused regularly and now is difficult to fix. It's hard to help those who truly need it and keep the bad people from abusing it.

    I admire those people who have taken up the job of trying to fix it while I sit back on the sidelines and offer my 2 cents worth (20 cents with inflation? lol).

    Unfortunately the bureaucrats take so long to do anything that the laws and social network don't evolve as quickly as day-to-day society - always behind the curve. Even in my dealings with the government on real estate - they are using forms that were created in the 1980s or before. There is a lot of technology to account for in that gap. Who pays for the reform on that? Ultimately, we humble tax payers do. In the meantime, we push through little fixes like minimum wage hikes. Reform of the whole system takes time and is costly.

    Can we talk about health care reform next? Did I mention I was having a home birth? Keeping down the costs of unnecessary hospitalization....

    ReplyDelete

I love the discussion in the comments.. so... GO FOR IT!

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